- The Washington Times - Tuesday, August 14, 2001


The Federal Reserve yesterday 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 Fed's board of governors voted 5-0 yesterday in favor of the merger, determining that First Union's acquisition of Wachovia would not threaten competition. The banks, both based in North Carolina, already have put 38 branches on the auction block to satisfy regulators' concerns about competition.

In its order approving the merger, the Fed noted that the Justice Department also conducted a review and advised the central bank that, given the proposed sales of branches, the combination "would not be likely to have a significantly adverse effect on competition in any relevant banking market."

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 unsolicited $15.1 billion offer.

The combined bank will take the name Wachovia Corp. and will be based in Charlotte, N.C., the home of First Union.

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 to eventually 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; no branches will be closed in the first year.

On April 16, Wachovia and First Union announced plans to merge in a stock swap. SunTrust jumped in a month later.

Wachovia's 140,000 shareholders were bombarded in the ensuing months with letters and advertisements from all three banks. Individual investors, as opposed to mutual funds, pension funds and other institutions, own more than half of Wachovia's shares.

First Union, which also is active in the securities brokerage business, has operations in Connecticut, Delaware, the District, Florida, Georgia, Maryland, New Jersey, New York, North Carolina, Pennsylvania, South Carolina, Tennessee and Virginia.

Wachovia, based in Winston-Salem, N.C., operates in Delaware, Florida, Georgia, North Carolina, South Carolina and Virginia.

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