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Wednesday, 22 October 2008

Wachovia reports $23.9 billion third-quarter loss

NEW YORK (Reuters) – Wachovia Corp on Wednesday posted a $23.9 billion third-quarter loss, a record for any U.S. lender in the global credit crisis, underscoring the challenges Wells Fargo & Co will face after it acquires the big lender.
The loss totaled $11.18 per share, and followed a $9.11 billion loss in the second quarter.
Wachovia said results included an $18.7 billion writedown of goodwill. About two-thirds related to its retail and small-business operations, where a troubled $118.7 billion portfolio of "option" adjustable-rate mortgages lies. Most of the rest related to commercial banking operations, and some to asset management and wealth management operations.
The bank said the loss per share was $2.23 excluding items. Analysts on average expected a loss of 27 cents per share, according to Reuters Estimates.
Wachovia announced results after Wells Fargo this month agreed to pay $15.1 billion for the Charlotte, North Carolina-based lender, without any government backing to cover potential loan losses. The value fell by Tuesday to about $14 billion because Wells Fargo's share price has declined.
San Francisco-based Wells Fargo won a bidding war against Citigroup Inc, which offered $2.16 billion for Wachovia's retail and investment banking units but not its asset management or brokerage units. Citigroup had obtained government backing to limit loan losses.
The Federal Reserve Board on Tuesday said emergency conditions, including Wachovia's weakened financial state, warranted its quick approval of the Wells Fargo transaction, just three days after Citigroup pulled out.
"The market environment changed more precipitously than anyone had expected," Wachovia Chief Executive Robert Steel said in a statement.
Wachovia shares closed Tuesday at $6.09 on the New York Stock Exchange.
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