Wells Fargo wins Fed approval on Wachovia bid

Thank God that has been decided. What a roller coaster ride us depositors have had!

WASHINGTON (Reuters) - The Federal Reserve on Sunday gave its stamp of approval to the takeover of Wachovia Corp by Wells Fargo & Co of San Francisco, which had battled New York-based Citigroup for ownership of the wounded bank.

In an unusual Sunday afternoon announcement that appeared timed to precede the opening of shaky global financial markets, the Fed said it already had been in touch with the U.S. Department of Justice and banking regulators about the deal.

"Those agencies have indicated that they have no objection to the approval of the proposal," the Fed assured.

The fight between Wells Fargo and Citigroup over Wachovia, which is based in Charlotte, North Carolina, was acrimonious right up to the point when Citigroup finally backed out last Thursday.

It had drawn particular attention because it took place amid the frantic scramble by the U.S. government and regulators to devise ways for shoring up hard-pressed financial institutions, including through possible direct injections of capital into banks.

The Fed cited the "unusual and exigent circumstances affecting the financial markets, the weakened financial condition of Wachovia and all other facts" in its decision, saying it had shortened the usual notice period it generally gives regulators about such takeovers.

The deal could be completed in five days, the Fed said.

— Full Reuters story

PR: Wachovia Announces Bank Subsidiary Divestitures to Citigroup

From the Wachovia Website:

September 29, 2008
Wachovia Corporation to become a focused leader in retail brokerage and asset management.

CHARLOTTE, NC—Wachovia today announced intentions to sell its retail bank, corporate and investment bank and wealth management businesses to Citigroup. Wachovia Corporation will remain a public company with two main operating subsidiaries: Wachovia Securities, the nation's third largest brokerage firm, and Evergreen Asset Management, a leading provider of asset management services.

"During recent weeks, the financial landscape has changed significantly and presented us with unprecedented challenges," said Robert K. Steel, CEO and President of Wachovia. "Today's announcement is the best alternative for the company, enabling a resolution on the Golden West portfolio."

Under terms of the transaction, Citigroup will pay $2.1 billion to Wachovia and assume the senior and subordinated debt of Wachovia Corporation.

The transaction is expected to close before year-end. It has been approved by directors of both companies and is subject to shareholder approval of Wachovia and the appropriate regulatory approvals.

Customers of both companies should continue banking as usual, and feel confident that their deposits are secure. Also, employees and vendors should continue to operate business as usual.

At this time, there are no changes to Wachovia's board of directors and two Wachovia directors will join Citigroup's board.

Wachovia Corp. will remain headquartered in Charlotte, NC. Wachovia Securities will continue to be headquartered in St. Louis, MO. Citigroup will headquarter the retail bank in Charlotte and the investment bank in New York.

Wachovia's investment bankers were Goldman Sachs, Perella Weinberg Partners and Wachovia Securities, and its legal advisors are Sullivan & Cromwell and Simpson Thacher & Bartlett.

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About Wachovia
Wachovia Corporation (NYSE:WB) is one of the nation's largest diversified financial services companies, with assets of $812.4 billion and market capitalization of $33.5 billion at June 30, 2008. Wachovia provides a broad range of retail banking and brokerage, asset and wealth management, and corporate and investment banking products and services to customers through 3,300 retail financial centers in 21 states from Connecticut to Florida and west to Texas and California, and nationwide retail brokerage, mortgage lending and auto finance businesses. Globally, clients are served in selected corporate and institutional sectors and through more than 40 international offices. Our retail brokerage operations under the Wachovia Securities brand name manage more than $1.1 trillion in client assets through 14,600 financial advisors in 1,500 offices nationwide. Online banking is available at wachovia.com; online brokerage products and services at wachoviasec.com; and investment products and services at evergreeninvestments.com.

Citigroup buying Wachovia banking operations

FDIC says Wachovia didn’t fail, and that all depositors will be protected.

NEW YORK - The government said Monday that Citigroup will acquire the banking operations of Wachovia in a deal facilitated by the Federal Deposit Insurance Corp.

The FDIC says Wachovia didn’t fail, and that all depositors are protected and there will be no cost to the Deposit Insurance Fund.

The sale of Wachovia Corp. comes just days after the government’s seizure of Seattle-based Washington Mutual Inc. — the largest bank failure in U.S. history.

— Full MSNBC Story

Wachovia Update

Citigroup is near a deal for Wachovia, a move that would concentrate power within the nation’s banking industry in the hands of a few giant lenders, The New York Times’s Eric Dash and Andrew Ross Sorkin reported Monday morning.

Citigroup executives are meeting to complete the deal Monday morning, these people said, cautioning that the talks could unravel. Wells Fargo, which had also been in talks with Wachovia, could also revive its bid.

Although the Federal Reserve and Treasury Department were pushing for a sale, the government was resisting pressure to provide financial guarantees to the buyer, which both Citigroup and Wells Fargo had sought.

A sale to Citigroup would further concentrate Americans’ bank deposits in the hands of just three banks: Bank of America, JPMorgan Chase and Citigroup would control more than 30 percent of the industry’s deposits.

— NYTimes Story

My bank is in trouble!

Wachovia Corp. is in trouble. It purchased a bank that had questionable lending practices in 2006 and is now paying the price.

At least two major banks were reportedly in talks Sunday to buy Wachovia Corp., the latest U.S. bank to be the focus of investor anxiety over mounting losses tied to toxic assets.

The New York Times reported on its Web site that Citigroup Inc. and Wells Fargo & Co. are bidding in a possible emergency takeover of Charlotte, N.C.-based Wachovia.

The Wall Street Journal also listed Spain's Banco Santander SA as a possible bidder.

Wachovia spokeswoman Christy Phillips-Brown declined to comment on the reports, as did Citigroup spokeswoman Christina Pretto. Wells Fargo spokesmen could not be immediately reached for comment.

Wachovia's shares fell 27 percent in regular-session trading on Friday, and shed another 15 percent in after-hours dealings to end the week at $8.50, as investor worries heightened.

Wachovia's current problems stem largely from its acquisition of mortgage lender Golden West Financial Corp. in 2006 for roughly $25 billion at the height of the nation's housing boom. With that purchase, Wachovia inherited a deteriorating $122 billion portfolio of Pick-A-Payment loans, Golden West's specialty, which let borrowers skip some payments

But like many other banks, Wachovia stands to benefit from the passage of the government's proposed $700 billion rescue plan — the details of which were emerging from Washington on Sunday.

This summer, Wachovia reported a $9.11 billion loss for the second quarter, announced plans to cut 11,350 jobs — mostly in its mortgage business — and slashed its dividend. Wachovia also boosted its provision for loan losses to $5.57 billion during the second quarter, up from $179 million in the year-ago period.

Earlier this month, Wachovia said it is on track to reduce securities and outstanding loans on its balance sheet by $20 billion this year, which will free up $1.5 billion in capital.

Additionally, Wachovia still expects to reduce expenses by $2 billion by the end of 2009.

However, the second-half expense benefit will be more than offset by $525 million to $650 million in severance and benefit costs related to previously announced job cuts, Wachovia said.

— AP Story via Yahoo! Business news