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Things are not so good at the Banks


monsoon

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For some reason I was under the assumption that such a large bank would not be able to exist in the US. Is it really possible for someone to get approval to buy or merge with Wachovia? The only ones able to do it are already huge and it would no doubt overshadow any other bank to engulf something as large as Wachovia.

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domestic rival. There would certainly be significant domestic autonomy and it would be too expensive to relocate those positions to NYC. That being said, I don't think a foreign acquisition is likely. I think Wachovia as we know it will withstand the current turmoil.
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For some reason I was under the assumption that such a large bank would not be able to exist in the US. Is it really possible for someone to get approval to buy or merge with Wachovia? The only ones able to do it are already huge and it would no doubt overshadow any other bank to engulf something as large as Wachovia.
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It's not like this recession and bank problems are in Charlotte only. Banks all over this country are having problems too. BofA and Wachovia still posted 4th quarter earnings in January, although only in the tens of millions which was small compared to what they normally make, while other banks were reporting losses. I think Citibank reported losses in the BILLIONS, and there were other banks reporting huge losses also.

BofA has right at 10% of national deposits if I'm correct, which makes them nearly impossible to be taken over by another bank. There's probably some sort of senerio where they could move or be sold, but I think it's very, very unlikely.

Wachovia I would say is not as safe as BofA, but there's only three banks larger than them if I'm not mistaken, one being BofA. While there is a possibility of a takeover, I still think it's unlikely at this time unless there stock continues to drop.

I would think that there are other banks just as worried about being takenover also. Even if Bush doesn't want to admit it, we are in a recession nationally.

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I think there's too much turmoil at the moment to see 1 large bank acquire another, but it may happen once the capital markets settle down. JPMorgan Chase has 3x the market cap of Wachovia (which has last half of its value in a year) and although I read recently that together they would exceeed the deposit cap significantly, that can be worked around. Wells has a bigger market cap than Wachovia; US Bank is about the same. Citi is too weak to acquire anyone.

I sadly think that Wachovia will end up being acquired, either by Wells or Chase and the negative ramifications for Charlotte will be huge. I think this recession will take a couple of years to play out and during that time, I think Wachovia's stock (along with all the others) will sink some more. Isn't it odd that these guys didn't see this coming? They all say "no one could have seen this coming." Bull!@#$. Greed and poor decision-making have done them in.

Maybe BofA will acquire Citi, Chase will acquire Wachovia and Charlotte and New York will call it a draw. :rolleyes:

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Um, I hate to be a wet blanket, but C, JPM, WFC, BAC and WB aren't getting bought by anyone.

Aside from the deposit issue, no one has the cash to buy Citi or BofA, and that would still be true in the absence of a credit crisis.

Moreover, it doesn't matter how low Wachovia's stock price goes; they're not going anywhere. In fact, once WB does away with the mystery behind just how much the dividend is being cut (and it will be cut, despite KenTard's protestations to the contrary), the stock should at least find some footing. Firing Kentard would also be tremendous, as his stewardship has been especially abysmal (hey smart guy, if you've only got a couple bil in subprime exposure, trot that out sooner than later you dumbass).

There's one other problem: Wachovia's worth substantially more than WFC on a book value basis, C and BAC can only grow organically, and JPM's looking at a probable 100% premium to pay for the pleasure, so that's right out. Finally, Wachovia's worked too hard to get to #4; they're not taking a backseat to anyone. Wachovia and Wells aren't getting bought, period, but if either were up for sale, it would be Wachovia doing the buying, not the other way around.

Truth be told, if I'm Wachovia, I'm looking at getting into the Midwest via Nat City for a song right now. Banks in Charlotte may do some headcount reduction, and it's no secret that BofA likes NYC, but Charlotte doesn't have to worry about losing its status as a banking capitol any time soon.

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This article says there will be 200,000 layoffs from the the US commercial banking industry over the next year to year and a half. If that is true, it's hard to imagine that Charlotte would escape unscathed given the percentage of banking jobs located in the city. I would predict it would have some ramifications because this will have a ripple effect on the rest of the local economy.
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Don't be so sure. They just allowed the United Arab Emirates to purchase a $7.5B stake in Citicorp. This is going to give them some influence over what happens at that bank. It's a slow selloff of American assets to foreigners to keep the cash flow coming into the USA.
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MSNBC is reporting that Wachovia announced some pretty dismal business results. In addition the network reports that Wachovia, like Citicorp is faced with having to raise over $7B in capital. It was mentioned the same people in Dubai that gave the deal above to Citicorp said they would not touch Wachovia. I don't know if that means they are afraid of investing in the bank or they won't invest in a bank that is not located in NYC. (prestige thing)
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They don't have to raise that much, they just want to.

And the reason foreigners won't touch WB is that it's run by an idiot. Slashing the dividend over 40% while doing a stock offering for $3.5 bil sends two messages, both of them awful: 1) we don't have enough cash, and; 2) our stock price is too high.

It'll be interesting to see how subscribed the follow-on is. Who wants that dog anyway? Nice to see that a reasonably run bank from Winston is being royally buggered by a bunch of incompetents in Charlotte.

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It does sound as if Thompson bought into the very over priced California real estat market at exactly the wrong time. Now that prices are tanking there, the bank is going to be left holding the bag on all of those mortgages on depreciating property. Along with this news seems to be an announcement that another 500 investment banking jobs are going to be eliminated.

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It does sound as if Thompson bought into the very over priced California real estat market at exactly the wrong time. Now that prices are tanking there, the bank is going to be left holding the bag on all of those mortgages on depreciating property. Along with this news seems to be an announcement that another 500 investment banking jobs are going to be eliminated.
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It does sound as if Thompson bought into the very over priced California real estat market at exactly the wrong time. Now that prices are tanking there, the bank is going to be left holding the bag on all of those mortgages on depreciating property. Along with this news seems to be an announcement that another 500 investment banking jobs are going to be eliminated.
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I realize how that came across now, and I wasn't trying to suggest it was a Charlotte-specific thing; banks everywhere are guilty of incompetence bordering on criminal negligence.

I guess my point was that Ken is an especially egregious offender. Nearly eveyone got the mortgage crisis wrong, but his management of the situation oughtta be an HBS case study in how NOT to be CEO.

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Wachovia cut its dividend in half in early 1999 after an expensive, poorly-timed acquisition of a California-based subprime lender (The Money Store). They need to hire a company historian to keep track of these things and rap their knuckles with a ruler when they're tempted to make the same mistake again.

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