Global Banking Directory 2.0
Press Release Distribution Service
Add Bank | Banking Forum Online
BankDEP Crypto Bank
BanksDaily on Twitter BanksDaily on LinkedIn BanksDaily on Instagram

Financial and Banking News

Wells Fargo to buy Wachovia for $15.1 billion

Wells Fargo said Friday that it would merge with Wachovia - including the troubled Charlotte bank's banking operations - in a $15.1 billion all-stock merger.

The announcement comes only four days after Citigroup agreed to buy Wachovia's retail banking operations for about $1 a share, at the government's behest and with a guarantee to absorb most of the losses on Wachovia's massive loan portfolio. That deal, which Wachovia now appears to be spurning, would have left the Charlotte bank with only its securities and retail brokerage businesses.

Wells Fargo, based in San Francisco and considered one of the strongest banks amid the market turmoil, said that the deal requires no assistance from the Federal Deposit Insurance Corporation or any other government agency. It will raise up to $20 billion by issuing new shares, primarily common stock.

Wells Fargo had expressed interest in buying Wachovia as late as Sunday, but suddenly withdrew from negotiations to buy the company, citing concerns over some of the bank's loan portfolio. Citigroup then received the blessing of the FDIC to acquire Wachovia's banking operations but the government agency allowed the banking giant to absorb only the first $42 billion of Wachovia's riskiest mortgages, in return for $12 billion in preferred stock and warrants.

In its statement, Wells Fargo trumpeted its intention to buy Wachovia without such assistance. "This agreement is an outstanding opportunity for Wachovia common and preferred shareholders and debt holders, team members and customers, for the Charlotte and St. Louis communities and indeed all of the communities that Wachovia serves, and for the U.S. government and our banking system," Richard Kovacevich, Wells Fargo's chairman, said in a statement.

By acquiring Wachovia, Wells Fargo will now gain the big retail banking network it has long sought. Though it has long been well-regarded by bank analysts and observers - and counts Warren E. Buffett as one of its largest shareholders - the firm has not had a significant presence east of the Mississippi.

Wachovia's retail banking management team is also considered among the strongest in the industry, so much so that Citigroup said earlier this week that it had planned to consolidate its own operations into Wachovia's.

The big question about Wachovia has been its loan portfolio, which has been saddled with billions of dollars in troublesome adjustable-rate mortgages it acquired from its merger with Golden West Financial in 2006. Loans like "Pick a Pay" mortgages, which allowed borrowers to defer some of their monthly payments, began to crumble as homeowners fell behind on their obligations. Wachovia ended the program earlier this year.

Wells Fargo said Monday that it would mark Wachovia's assets down to fair value, a potential sticking point for other banks because of the charges that would incur. A big-enough capital-raising campaign would alleviate pressure on Wells Fargo.

Wells Fargo will maintain Charlotte as an important hub of Wachovia's operations, making it the headquarters for the combined company's East Coast operations. St. Louis will remain the headquarters of Wachovia Securities (as it was the home base of A.G. Edwards, the retail brokerage that Wachovia bought in 2007.)

The merger would involve $10 billion in costs, Wells Fargo said.

Source: International Herald Tribune
Date: 05.10.2008 [196]
Get your content published on in just a few clicks.

Financial and Banking News
 Post-Pandemic Economic Recovery: Key Factors Driving Growth and Stability

The COVID-19 pandemic caused a global economic halt, resulting in disruption, job losses, and uncertainty. However, as vaccination efforts progress and countries adjust to the new normal, there is hope for an economic recovery.

 Wiki Finance Expo Sydney 2023 Is Coming Soon!

Regulation, Forex, Crypto, Web 3.0, Metaverse, AI, ESG Will Be in Focus. Taking place on November 16th, Wiki Finance Expo, Sydney 2023 is Aussie largest and most anticipated fintech event of the year. 30.10.2023 | Source: WikiExpo

 Blockchain Economy Dubai Summit 2023: Just Two Weeks Away and Buzzing with Anticipation

Dubai, UAE - The Blockchain Economy Dubai Summit is generating palpable excitement within the blockchain and crypto communities, with only two weeks remaining until the event. Scheduled for October 4-5, 2023, at the Le Meridien Dubai Hotel & Conference Center, this prestigious event gathers over 3,000 blockchain entrepreneurs, crypto enthusiasts, and industry leaders from 85 countries. 20.09.2023 | Source: Teklip

 📰 News Archive

2007-2024 © | All Banks in One Place | Privacy Policy