After flip-flopping on the issue of where its Northeast regional headquarters would be located, First Union Corp. said last week it would definitely move to Philadelphia.
The five-state regional headquarters is currently in Summit, N.J., but confusion reigned after the Charlotte, N.C.-based company announced in November that it had a deal to buy Philadelphia-based CoreStates Financial Corp.
The $156 billion-asset First Union employs 300 people in Summit, its base of operations for New York, New Jersey, Pennsylvania, Connecticut, and Delaware. First Union has had its Northeast headquarters there since the spring, a result of its 1996 purchase of First Fidelity Bancorp. of New Jersey.
The move to Philadelphia was not First Union's initial plan. When chairman and chief executive officer Edward E. Crutchfield negotiated the CoreStates deal, he and CoreStates chairman Terrence A. Larsen agreed a relocation would not be necessary.
They decided that only the Delaware and Pennsylvania operations would be supervised from Philadelphia. The other three states would continue to report to Summit, Mr. Crutchfield said in a recent interview.
First Union did agree at the time to make Philadelphia its base for corporate banking functions and a major center for customer service. It had also committed to set up a $100 million community foundation there and fund a $16 million program for helping displaced bank employees.
But a mix-up occurred when First Union announced the $16.6 billion deal. Public relations staff members who had not been fully briefed on the final agreement put out the word that First Union would move the regional headquarters to Philadelphia, Mr. Crutchfield said.
At the same time, a memo explaining the company's true intention was distributed to employees, but it was already too late. Philadelphians, who were used to a long history of community involvement with $47.6 billion- asset CoreStates, were already counting on the jobs and prestige the new headquarters would bring.
When a Philadelphia newspaper published excerpts from the memo saying the headquarters would not be moved, the mayor's office and the Pennsylvania Department of Community and Economic Development were up in arms.
"The state was disappointed when it was revealed that First Union might not locate those jobs in Philadelphia," said Lauren Cotter, a spokeswoman for the Pennsylvania Department of Community and Economic Development. "The state did put a call out expressing the disappointment," she added.
A Dec. 16 letter to the editor from Alison B. Graham in The Philadelphia Inquirer accused First Union of employing a "bait and switch" strategy, "promising to keep jobs and charity in Philadelphia when it had no intention of doing so." The letter called on the CoreStates board to back out of the deal.
In the end, First Union said it would move the headquarters to Philadelphia. Spokesman Jeep Bryant declined to say how many jobs would be involved in the move.
In its announcement Nov. 18, First Union put it this way:
"First Union expects to bring 3,000 new jobs to the greater Philadelphia metropolitan area as Philadelphia becomes the headquarters for the combined five-state regional banking group. ... Philadelphia will also become the headquarters for the combined corporate banking functions for the entire corporation and a major center for the combined bank's customer service operations. The new jobs are expected to significantly offset the impact of merger-related job reductions.
On Dec 17, First Union said it would bring 3,000 jobs to a 13-county region, including New Jersey and Delaware.
