US economy is going with its worst era. After Washington Mutual (WaMu) seized by the US government and put in the pocket of JP Morgan Chase, it wrote a new chapter of biggest bank failure in US history.
it seems next in the line is Wachovia Corp., USA’s 6th largest bank, by assets, was hunting for a merger partner as reported by Reuters. The Wall Street Journal reported that Wachovia had entered preliminary merger talks with Citigroup, Banco Santander SA and Wells Fargo & Co, citing a person familiar with the situation. Bank executives are expected to be in New York this weekend for talks, it said.
Wachovia was estimated about $21.6 billion after the Friday’s market close, Reuters data show. It’s stock price dropped to $8.90 from the regular trading close of $10. Currently, New York-based CitiGroup, Banco Santander of Spain and San Francisco-based Wells Fargo are in line up to bid for Wachovia. Market value estimated for Citigroup’s was $109.7 billion, Santander’s was $99.8 billion and Wells Fargo’s was $123.4 billion, the data show.
These talks are early, however, and no deal may emerge from them. But it appears that Wachovia is seeking out potential alternatives should the financial rescue package being debated in Washington is not quickly passed, or fails to provide enough help.
Takeovers can wipe out bank stakeholders if they occur after regulators seize the company. Similar had happened to Seattle-based Washington Mutual Inc., the nation’s biggest thrift and now the largest bank failure in history. JPMorgan Chase & Co. paid $1.9 billion for deposits and branches of WaMu, leaving the company with about $28 billion in debt according to Bloomberg data and little means to pay it off.
WaMu was taken over by regulators yesterday after customers of the Seattle-based lender withdrew $16.7 billion from accounts since September 15.
According to the latest reports, Wachovia Corp. suitors may wait to let regulator seize the bank, resulting best assets in their pocket and leave rest with government to sort out.