Wacky Wachovia: Bank posts record $8.9 Billion loss

[marmar]

from Bloomberg:




Wachovia Has Record $8.9 Billion Loss, Cuts Dividend (Update2)

By David Mildenberg

July 22 (Bloomberg) -- Wachovia Corp., the U.S. bank that hired Treasury Undersecretary Robert Steel as chief executive officer two weeks ago, reported a record quarterly loss of $8.9 billion and slashed the dividend. The stock fell as much as 12 percent in early New York trading.

The second-quarter loss of $4.20 a share compared with net income of $2.3 billion, or $1.23, a year earlier, the Charlotte, North Carolina-based company said today in a statement. The loss included a $6.1 billion charge tied to declining asset values.

The writedown and second dividend reduction in three months reflect Steel's response to setbacks including the Golden West Financial Corp. acquisition in 2006, which cost former CEO Kennedy Thompson his job after eight years. Wachovia has dropped more than 75 percent in New York Stock Exchange composite trading since it spent $24 billion two years ago to buy Golden West just as house prices were peaking.

``This is Steel's chance as the new guy to set the bar low so that he can increase the dividend going forward if their performance improves,'' said David Dietze, president and chief investment strategist at Point View Financial Services in Summit, New Jersey, which owns Wachovia shares.

Wachovia shares have declined 65 percent this year, the second-worst performance on the 24-company KBW Bank Index behind National City Corp., Ohio's largest bank. The stock fell to $12.20 as of 7:50 a.m. in New York. The cost of protecting the bank's debt rose 10 basis points to 315, according to broker Phoenix Partners Group. Fitch Ratings cut Wachovia one level to A+ from AA-, citing its mortgage business.

Job Cuts

Wachovia lowered the dividend to 5 cents a share from 37.5 cents and plans to fire 6,350 workers and leave 4,440 positions open, according to a presentation to analysts today. Steel, 56, also said the company is moving to ``sell selected non-core assets'' and reduce the number of business customers who only use the bank for loans rather than other services. Wachovia expects to cut expenses during the second half of this year by $490 million and then reduce 2009 spending by $1.5 billion. ............(more)

The complete piece is at: http://www.bloomberg.com/apps/news?pid=20601087&sid=a2vGn0_kFQIU&refer=home

[Auggie]

1. The purchase of Golden West should be remembered as one of the biggest

financial blunders of the decade. I wonder how much Thompson walked away with?

[supernova]

2. This is stupid

Of all the NC banks, Wachovia used to be viewed as the most staid, boring, conservative one. Bank of America was the wild child.

:crazy:

[LiberalEsto]

3. It's a terrible bank

My daughters are both closing their accounts at Wachovia today because of the way they've been hit with endless and unwarranted overdraft charges for the past few years. That bank gives a whole new meaning to the term "rip-off artists."

I guess when a bank is mismanaged from the top, they have to compensate for the lost money by screwing college kids with $35 fees, and then fining them additional $35 fees when there isn't enough money to cover the initial fees, and so on.