Citigroup to buy Wachovia banking operations
Citigroup to buy Wachovia banking operations
Monday September 29, 9:24 am ET
Citigroup will buy Wachovia's banking operations;FDIC says Wachovia didn't fail
NEW YORK (AP) -- In the latest byproduct of the widening global financial crisis, Citigroup Inc. will acquire the banking operations of Wachovia Corp. in a deal facilitated by the Federal Deposit Insurance Corp.
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Citigroup will absorb up to $42 billion of losses in the deal, with the FDIC covering any remaining losses, the government agency said Monday. Citigroup also will grant the FDIC $12 billion in preferred stock and warrants.
The deal greatly expands Citigroup's retail outlets and leaves it among the U.S. banking industry's Big Three along with Bank of America Corp. and J.P. Morgan Chase & Co.
The deal comes after a fevered weekend courtship in which Citigroup and Wells Fargo & Co. both were reportedly studying the books of Wachovia, which was suffering from mounting mortgage losses linked to its ill-timed 2006 acquisition of mortgage lender Golden West Financial Corp.
The FDIC asserted that Wachovia didn't fail, and that all depositors are protected and there will be no cost to the Deposit Insurance Fund.
Federal Reserve Chairman Ben Bernanke, in a statement Monday, said he supports the "timely actions" taken by the FDIC "which demonstrate our government's unwavering commitment to financial and economic stability."
Treasury Secretary Henry Paulson also welcomed the sale of Wachovia to Citigroup, saying it would "mitigate potential market disruptions." Paulson said he agreed with the FDIC and the Fed that a "failure of Wachovia would have posed a systemic risk" to the nation's financial system.
"As I have said before, in this period of market stress, we are committed to taking all actions necessary to protect our financial system and our economy," Paulson said.
The sale of the Wachovia assets comes just days after the government's seizure of Seattle-based Washington Mutual Inc. -- the largest bank failure in U.S. history. As details of its takeover unfolded, Wachovia shares plunged 91 percent in Monday premarket trading to 91 cents. The stock had closed Friday at $10, down 74 percent for the year.
Wachovia has been among the banks hardest hit by the ongoing crisis in the mortgage market. It paid roughly $25 billion for Golden West 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.
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[B][SIZE="6"]Citigroup to buy Wachovia banking operations[/SIZE][/B]
Monday September 29, 9:24 am ET
Citigroup will buy Wachovia's banking operations;FDIC says Wachovia didn't fail
NEW YORK (AP) -- In the latest byproduct of the widening global financial crisis, Citigroup Inc. will acquire the banking operations of Wachovia Corp. in a deal facilitated by the Federal Deposit Insurance Corp.
ADVERTISEMENT
Citigroup will absorb up to $42 billion of losses in the deal, with the FDIC covering any remaining losses, the government agency said Monday. Citigroup also will grant the FDIC $12 billion in preferred stock and warrants.
The deal greatly expands Citigroup's retail outlets and leaves it among the U.S. banking industry's Big Three along with Bank of America Corp. and J.P. Morgan Chase & Co.
The deal comes after a fevered weekend courtship in which Citigroup and Wells Fargo & Co. both were reportedly studying the books of Wachovia, which was suffering from mounting mortgage losses linked to its ill-timed 2006 acquisition of mortgage lender Golden West Financial Corp.
The FDIC asserted that Wachovia didn't fail, and that all depositors are protected and there will be no cost to the Deposit Insurance Fund.
Federal Reserve Chairman Ben Bernanke, in a statement Monday, said he supports the "timely actions" taken by the FDIC "which demonstrate our government's unwavering commitment to financial and economic stability."
Treasury Secretary Henry Paulson also welcomed the sale of Wachovia to Citigroup, saying it would "mitigate potential market disruptions." Paulson said he agreed with the FDIC and the Fed that a "failure of Wachovia would have posed a systemic risk" to the nation's financial system.
"As I have said before, in this period of market stress, we are committed to taking all actions necessary to protect our financial system and our economy," Paulson said.
The sale of the Wachovia assets comes just days after the government's seizure of Seattle-based Washington Mutual Inc. -- the largest bank failure in U.S. history. As details of its takeover unfolded, Wachovia shares plunged 91 percent in Monday premarket trading to 91 cents. The stock had closed Friday at $10, down 74 percent for the year.
Wachovia has been among the banks hardest hit by the ongoing crisis in the mortgage market. It paid roughly $25 billion for Golden West 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.
saw that on the news this morning
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saw that on the news this morning
Shit, FDIC isn't worth crap and the whole thing about "In 75 years the FDIC blah blah blah" if truth be told it's never been tested at this level. What will the fed gov just continue to write bonds and print unsubstanciated money to cover these insurances...borrowing from other countries? These takeovers/bailouts are necessecery to not put the feds in a postion to cover failed institutions. We broke!!!!and that's brass tacks for ya!
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Shit, FDIC isn't worth crap and the whole thing about "In 75 years the FDIC blah blah blah" if truth be told it's never been tested at this level. What will the fed gov just continue to write bonds and print unsubstanciated money to cover these insurances...borrowing from other countries? These takeovers/bailouts are necessecery to not put the feds in a postion to cover failed institutions. We broke!!!!and that's brass tacks for ya!
noooooooooooo we were suppose to buy them at wells fargo!!! =[
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noooooooooooo we were suppose to buy them at wells fargo!!! =[
Related Press Release
September 29, 2008 Wachovia Corporation Dear Colleagues, Today, Citi took another bold step to expand our capabilities to serve clients in the U.S. and strengthen our overall capital and liquidity positions. We reached an historic agreement-in-principle to acquire the banking operations of Wachovia Corporation (NYSE: WB) for approximately $2.16 billion in stock. Included in the transaction are all of Wachovia bank branches and deposits, the corporate and investment bank, and private bank. Wachovia's retail brokerage and asset management business are not part of the transaction. The addition of Wachovia immediately establishes Citi as a leading U.S. retail bank, with deposits totaling $600 billion and a U.S. deposit market share of 9.8%. After closing, our total deposit base of $1.3 trillion will exceed that of our nearest U.S. competitor by $350 billion. Wachovia's very attractive retail bank footprint is highly complementary with that of Citi, with just 31% of Wachovia branches located in existing Citi markets and a strong, attractive customer base. In fact, the transaction propels Citi to a top three ranking in seven metropolitan statistical areas (MSAs): New York, Miami, Atlanta, Washington D.C., Las Vegas, Charlotte, and San Francisco. When the transaction closes at the end of December, Citi will have about 4,300 branches and 28,000 fee-free ATMs in the U.S. The transaction also brings a strong, highly complementary U.S. cash management platform to Citi's leading Global Transaction Services business; a strong U.S. mid-market corporate banking franchise; and a small yet successful and competitively significant U.S. private bank that Citi intends to integrate into its existing Global Wealth Management business. The acquisition of Wachovia is consistent with our ongoing efforts to "get fit" as an organization by greatly enhancing our U.S. banking capabilities and adding a team of exceptional managers and employees to our ranks. Our press release provides additional details about the overall transaction and I encourage you to
read it.
Specifically, I want to highlight that this transaction provides Citi with important downside loss protection through the FDIC from Wachovia's loan portfolio and caps credit losses well below Wachovia's earnings power. In addition, we look to achieve substantial expense savings and ongoing efficiencies for Citi through integration and building on Wachovia's best-in-class retail technology platform. To maintain our strong capital position, we will be raising additional capital and our Board has decided to reduce the quarterly dividend to a level more in line with our leading competitors. These are prudent steps given the ongoing volatility in the markets and the challenging economic environment around the globe. As I said before, the unprecedented changes in the financial services industry provide unique opportunities for strong companies such as Citi. Today's agreement will transform our U.S. banking operations and we look forward to integrating these two leading banking franchises to better serve clients. Vikram This Should be apart of Citigroup but it is divided into many parts .. CitiBank .. Citi Financial .. Citi Cards .. Citi Smith Barney ... ect ... subprime upcome IMO .... will be interestng to see how the largest Company plays in the game of Monolopy :shrug:
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[FONT=Garamond][IMG]http://www.citigroup.net/citigrouptoday/image/h_announcement.gif[/IMG][IMG]http://www.citigroup.net/citigrouptoday/image/spacer.gif[/IMG][/FONT][SIZE=4][URL="http://www.citigroup.net/citigrouptoday/pressrelease08/pr080930a.shtml"][U][FONT=Garamond][COLOR=#0000ff]Related Press Release[/COLOR][/FONT][/U][/URL]
[I][FONT=Garamond]September 29, 2008 [/FONT][/I][/SIZE][FONT=Garamond][SIZE=4][IMG]http://www.citigroup.net/citigrouptoday/image/spacer.gif[/IMG][B]Wachovia Corporation[/B] [IMG]http://www.citigroup.net/citigrouptoday/image/spacer.gif[/IMG]Dear Colleagues,[/SIZE][/FONT] [FONT=Garamond][SIZE=4]Today, Citi took another bold step to expand our capabilities to serve clients in the U.S. and strengthen our overall capital and liquidity positions. We reached an historic agreement-in-principle to acquire the banking operations of Wachovia Corporation (NYSE: WB) for approximately $2.16 billion in stock. [/SIZE][/FONT] [FONT=Garamond][SIZE=4]Included in the transaction are all of Wachovia bank branches and deposits, the corporate and investment bank, and private bank. Wachovia's retail brokerage and asset management business are not part of the transaction.[/SIZE][/FONT] [FONT=Garamond][SIZE=4]The addition of Wachovia immediately establishes Citi as a leading U.S. retail bank, with deposits totaling $600 billion and a U.S. deposit market share of 9.8%. After closing, our total deposit base of $1.3 trillion will exceed that of our nearest U.S. competitor by $350 billion. [/SIZE][/FONT] [FONT=Garamond][SIZE=4]Wachovia's very attractive retail bank footprint is highly complementary with that of Citi, with just 31% of Wachovia branches located in existing Citi markets and a strong, attractive customer base. In fact, the transaction propels Citi to a top three ranking in seven metropolitan statistical areas (MSAs): New York, Miami, Atlanta, Washington D.C., Las Vegas, Charlotte, and San Francisco. When the transaction closes at the end of December, Citi will have about 4,300 branches and 28,000 fee-free ATMs in the U.S. [/SIZE][/FONT] [FONT=Garamond][SIZE=4]The transaction also brings a strong, highly complementary U.S. cash management platform to Citi's leading Global Transaction Services business; a strong U.S. mid-market corporate banking franchise; and a small yet successful and competitively significant U.S. private bank that Citi intends to integrate into its existing Global Wealth Management business. [/SIZE][/FONT] [SIZE=4][FONT=Garamond]The acquisition of Wachovia is consistent with our ongoing efforts to "get fit" as an organization by greatly enhancing our U.S. banking capabilities and adding a team of exceptional managers and employees to our ranks. Our press release provides additional details about the overall transaction and I encourage you to [/FONT][URL="http://www.citigroup.net/citigrouptoday/pressrelease08/pr080930a.shtml"][U][FONT=Garamond][COLOR=#0000ff]read it[/COLOR][/FONT][/U][/URL][FONT=Garamond]. [/FONT]
[/SIZE] [FONT=Garamond][SIZE=4]Specifically, I want to highlight that this transaction provides Citi with important downside loss protection through the FDIC from Wachovia's loan portfolio and caps credit losses well below Wachovia's earnings power. In addition, we look to achieve substantial expense savings and ongoing efficiencies for Citi through integration and building on Wachovia's best-in-class retail technology platform. [/SIZE][/FONT] [FONT=Garamond][SIZE=4]To maintain our strong capital position, we will be raising additional capital and our Board has decided to reduce the quarterly dividend to a level more in line with our leading competitors. These are prudent steps given the ongoing volatility in the markets and the challenging economic environment around the globe.[/SIZE][/FONT] [FONT=Garamond][SIZE=4]As I said before, the unprecedented changes in the financial services industry provide unique opportunities for strong companies such as Citi. Today's agreement will transform our U.S. banking operations and we look forward to integrating these two leading banking franchises to better serve clients. [/SIZE][/FONT] [FONT=Garamond][SIZE=4]Vikram[/SIZE][/FONT] [FONT=Garamond][SIZE=4]This Should be apart of Citigroup but it is divided into many parts .. CitiBank .. [COLOR=yellow]Citi Financial[/COLOR] .. Citi Cards .. Citi Smith Barney ... ect ... [/SIZE][/FONT] [FONT=Garamond][SIZE=4]subprime upcome IMO .... will be interestng to see how the largest Company plays in the game of Monolopy :shrug:[/SIZE][/FONT]
dont you work for Citigroup James?? lol
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dont you work for Citigroup James?? lol
I do .. What I posted was Directly from the man himself for you guys to read was only for me but I won't tell if you don't ;p
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I do .. What I posted was Directly from the man himself for you guys to read was only for me but I won't tell if you don't ;p
inside word is that here at WELLS FARGO we are making a deal with wachovia.
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inside word is that here at WELLS FARGO we are making a deal with wachovia.
yeh i heard that citi pulled out....
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yeh i heard that citi pulled out....
vzuptnguyen;193033 wrote:inside word is that here at WELLS FARGO we are making a deal with wachovia.
damn so i guess Wells bought wacho ... so does that mean you'll be getting smaller paychecks???
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[quote=vzuptnguyen;193033]inside word is that here at WELLS FARGO we are making a deal with wachovia.[/quote]
damn so i guess Wells bought wacho ... so does that mean you'll be getting smaller paychecks???
