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Investing time in bank merger

By JEFF HARRINGTON, Times Staff Writer
© St. Petersburg Times
published November 10, 2002

It's been 19 months since First Union and the former Wachovia Corp. announced plans to merge. It's been 14 months since the deal closed after an unsuccessful bid by rival suitor SunTrust to break it up.

Yet the most visible sign of the Southeast's big banking marriage has yet to appear on Florida's landscape. All over the state, new blue-and-green Wachovia signs are wrapped in cloth covers displaying the soon-to-be-extinct First Union name.

Starting Thursday, the wraps will come off, and all First Union branches in Florida will be converted to the Wachovia brand name. Most of the changes in Florida, the first of 11 states plus the District of Columbia that will experience the switchover, will be complete by Nov. 18. But some First Union branches elsewhere in the country won't be switched until the end of 2003.

The unusually long timetable for the conversion isn't due to any snafu. It's by design.

David Pope, a Wachovia Corp. executive overseeing the branch merger from the bank's Charlotte, N.C., headquarters, said the lengthy switchover has allowed the bank to gradually educate customers, convert some divisions ahead of time and avoid customer service problems that have plagued past mergers, both at First Union and at other banks.

"We have been able to execute well and plan and test much more effectively than we have been able to do in past mergers," Pope said. "It makes our customer retention and employee retention figures look pretty good right now."

First Union, the second-largest bank in Florida, took control of the old Wachovia, but it adopted the Wachovia name as part of the deal. Given the old Wachovia's small presence in Florida, that means relatively few branches in the state are being converted to First Union's computer system, but hundreds of First Union branches will be switching to the new name over the next week.

Just three Tampa Bay area branches are being closed as part of the consolidation, all of them in Tampa: Wachovia branches at 300 N Franklin St. and 1322 S Dale Mabry Highway and a First Union branch at 3845 Northdale Blvd.

Pope, the 42-year-old co-head of Wachovia's retail bank, talked with the St. Petersburg Times about how well the merger is going and changes in store for the bank's Florida customers. Here are excerpts:

* * *

Question: First Union and Wachovia merged Sept. 1, 2001, more than 14 months ago. What took so long for the new signs go up?

Pope: This did start some time ago, which is delivering on one of the promises made when (First Union chief) Ken Thompson and Bud Baker (head of the former Wachovia and new Wachovia chairman) first led the effort to bring these companies together: the promise that this was going to be a different kind of merger.

We would take the time to plan the activities around the merger in such a way that we didn't lose any customers. In my perspective, we actually added customers in the process.

A lot of conversion activity has already taken place unbeknownst to people. . . . The brokerage system and the loan system (have been switched). We've already moved to a common set of products. Today, in First Union and Wachovia we offer all the same kinds of products. So we've got a lot of this under our belts.

Q: Florida has had its share of bank mergers that have uprooted customers or resulted in poor customer service. Computer glitches and customer complaints in the Barnett acquisition by what's now Bank of America come to mind. What are you doing to ensure that doesn't happen this time?

Pope: A lot of things. One is: Communication to customers is so important to us. We've shared an extensive amount of information with both customers and employees. The details around the way this has been managed are awesome.

We also have in our company a customer service focus that is sponsored by Ken Thompson at the top of the organization. Every month there is an executive committee that sits down and goes through any customer service issue.

Q: Are you drawing lessons from previous merger miscues?

Pope: Golly, I hope so. Our biggest lesson . . . is this time period really allowed us to plan very efficiently, to test all the changes that we've made with system changes or product changes.

Q: Banks in previous mergers have been caught off guard in particular by how to handle the complaints and questions that came in afterwards. Are you prepared?

Pope: Yes. There are lots of ways we've come at that (such as) the amount of communication that we put out to people prior to the conversion of the deposit accounts. We've given them the tools to answer a lot of questions that they may have -- (something) that we probably didn't do with other mergers. We've given them the power on the front end.

Plus each branch will have someone who is an expert to answer questions. Our (customer service) call centers are well prepared for the volume that will be coming in.

Q: Why did you pick Florida as the first state to be switched over?

Pope: There are lots of points on this one. One of the more obvious ones: It allows us to start geographically at one end of our franchise and move to the other.

Second, Florida is a busy place for the winter time frame, and this allows us to get through the deposit conversion in Florida so (bank employees) can take advantage of the business opportunities that present themselves in wintertime.

Also, Wachovia has a relatively small presence in Florida. It allows us to go through the exercise and do the name change and, if we learn any lessons out of it, it prepares us as we move forward.

Q: So Florida is a test for you?

Pope: It's really not a test. We've approached the Florida conversion activities the same way we've approached all the other ones.

We're prepared. We're very confident in the work that we've done. We're ready to bring these companies together under the one banner. There's just a real excitement.

Q: How many of the former Wachovia customers in Florida and nationally have you been able to retain? How many do you predict you will lose as the conversion moves forward?

Pope: I don't have that figure. . . . Our goal is not to lose any of them. We're in a time period right now where we're actually growing customers, so it's hard to say.

The difference with the approach makes it difficult to compare this to past mergers.

Q: Can you describe the logistics of making it work the next few weeks? What's involved? Computers being switched over? Obviously sign changes, etc?

Pope: I'll speak broadly to it because so many things have been happening already. Over a two- to three-week time period, there's all kinds of work in terms of the codes that will actually drive the system being positioned in the computer system. People are going through detailed checklists. . . . It's an amazingly detailed schedule, on hard copy, many, many pages, each one owned by an individual.

The most visible change is the signs. Florida is the biggest state in terms of sign changes. There's 22,000 sign changes in Florida. That's big and little signs. . . . It's a ton.

Q: How many people are devoted to the merger integration?

Pope: If you said, "How many people come to work and it's their full-time job 12 hours a day to do this?" It's a couple hundred. But keep in mind that every employee, every Florida leader, has taken on merger responsibilities for execution and leadership.

Employees have had 175,000 hours of training in Florida. It'll be in the millions before we get through with the conversion everywhere.

For all of us, merger execution is our life right now.

Q: Do you think the Wachovia name has caught on or will catch on? Some in Florida still don't know how to pronounce it (wah-KO-vee-a), let alone realize that it's First Union's new identity.

Pope: That is something we're focused on. We've got material in our branches that help people understand the name and know how to pronounce the name. The Wachovia name has been spread across Florida already by the extensive credit card operation Wachovia has. There are people that may have a Wachovia credit card in their pocketbook or wallet. And we've been putting the Wachovia name in front of the customer for months now by virtue of the merger newsletters.

As we move through the conversion, we'll then get into a pretty extensive (marketing) campaign about the name change with TV ads, radio ads, print ads.

We won't get upset with the customer if they don't pronounce the name correctly. We'll still love them anyway.

-- Jeff Harrington can be reached at harrington@sptimes.com or (813) 226-3407.

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