Wachovia biggest loser in US credit crisis

October 22. Wachovia announced the biggest loss on the third-quarter than any other US lender hit by the global credit crisis, posting a loss of a staggering $23.9 billion which amounts to a loss of $11.18 per share. Wachovia lost $33 billion in the last two quarters. This just outlines the problems Wells Fargo will have once the take-over deal goes.

The third quarter loss was announced after Wells Fargo had agreed to pay $15.1 billion for the troubled lender without any government backing to cover possible losses. As Wells Fargo’s share declined the value dropped down to about $14 billion.

Citigroup originally was bidding for part of Wachovia and had offered $2.16 for a slice with a government backing limit loan loss, But Citigroup lost the bid to the San Francisco based Wells Fargo when they agreed to buy the company and absorb losses of $74 billion.

Due to the merger break-up between the two lenders, Citigroup is now suing Wachovia for $60 billion in damages.

Once Wells Fargo takes over Wachovia which should be by the end of the year, the merged lender will have 280,000 employees, 6,600 branches, and $700 billion of deposits and $1.4 trillion of asset.
On Tuesday Wachovia stocks closed at $6.09.

Source: nytimes