Wachovia Merger Okayed
The Federal Reserve approved Wachovia Corp.'s $14.6 billion merger with First Union Corp., a deal that ended a bitter takeover battle of Southern bank titans and will create the nation's fourth-largest banking company.
The approval came in a vote Monday by the Fed's board of governors, who determined that First Union's acquisition of Wachovia would not threaten competition. Both banks are based in North Carolina. They already have put 38 branches up for auction to satisfy regulators' concerns about competition.
"We are extremely pleased to have received this approval from the Federal Reserve, which represents the final major hurdle in the merger process," said L.M. Baker Jr., Wachovia chairman and chief executive officer, and chairman of the new Wachovia. "We look forward to closing the merger and building a premier financial services organization. The new Wachovia will be the nation’s fourth largest bank holding company with a strong presence in 11 states and Washington, D.C., a nationwide brokerage operation, great opportunities in growth businesses such as wealth management and capital markets, and best-in-class products and services for all customers."
Wachovia shareholders on Aug. 3 ended months of fighting when they approved First Union's takeover bid. Rival SunTrust Banks Inc. conceded defeat in its $15.1 billion unsolicited offer.
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The new bank will have some $328.6 billion in assets, 19 million customers on the East Coast and 90,000 employees. The merger partners expect eventually to cut 7,000 jobs - about half through attrition - and close roughly 325 branches. Atlanta-based SunTrust, the 12th-largest U.S. bank, had argued that its merger with Wachovia would have brought fewer job cuts and branch closings.
Company officials have said it will take as long as three years to fully integrate the two banks, and no branches will be closed in the first year.
On April 16, Wachovia and First Union announced plans to merge in a stock swap. A month later, SunTrust jumped in.
Wachovia's 140,000 shareholers were bombarded in the ensuing months with letters and advertisements from all three banks.
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