Sunday, September 28, 2008

Yet Another Shoe Drops In The Banking World

Wachovia May Get Bids by Citigroup, Wells, Santander (Update1)

By David Mildenberg

Sept. 28 (Bloomberg) -- Wachovia Corp., whose stock has tumbled 80 percent in 12 months because of unpaid mortgages, may get bids from Citigroup Inc. and Wells Fargo & Co. that value the bank at less than last week's close, the New York Times reported.

Neither New York-based Citigroup nor San Francisco-based Wells Fargo are likely to bid more than a few dollars a share for Wachovia, the Times reported today, citing people involved in the talks. Wachovia finished last week at $10 a share during regular New York Stock Exchange trading and fell to $8.50 in extended hours. Separately, the Wall Street Journal said Banco Santander SA of Spain may make a bid.

The Federal Reserve and Treasury Department are involved in talks and are resisting the idea of guaranteeing part of Wachovia's assets, the Times said. The newspaper said the government also hasn't agreed to a deal similar to the one last week for Washington Mutual Inc., whose banking operations were seized by regulators and then sold off to JPMorgan Chase & Co. for $1.9 billion.

``Either the government will end up helping someone buying Wachovia, or it's not going to happen,'' said Nancy Bush, an independent bank analyst in Aiken, South Carolina, in an interview with Bloomberg News.

Christy Phillips-Brown, spokeswoman for Charlotte, North Carolina-based Wachovia, and Wells Fargo's Julia Tunis Bernard declined comment. Citigroup spokeswoman Christina Pretto didn't immediately respond to messages seeking comment. Santander's Peter Greiff in Madrid also declined to comment.

Golden West

Wachovia, the sixth-biggest U.S. bank by assets, paid more than $24 billion in October 2006 for Golden West Financial Corp., the California lender that specialized in option-ARM home mortgages. Kennedy Thompson, the chief executive officer at the time, later admitted that the purchase at the height of the real estate boom was ill-timed.
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