Troubled Wachovia Seeks Out a Merger

By ROBIN SIDEL, DAVID ENRICH and DAN FITZPATRICK
Wachovia Corp. has entered into preliminary talks with a handful of possible buyers — the latest in a parade of banks to look for safety in the arms of a suitor amid concerns that the weak economy is pushing them deeper into peril.

The talks came as Washington Mutual Inc.’s late-Thursday failure rattled the shares of other troubled banks. Shares in Wachovia fell 27% on Friday as investors fretted about its massive mortgage portfolio.

People walk by a Wachovia branch in New York City

Investors are growing concerned that a host of banks nationwide, both large and small, could come under fresh pressure to either raise more capital or else find someone willing to buy them. The trouble stems in part from the fact that a broad range of borrowers, not just mortgage holders, are now starting to default on their debt. For instance, about 2.4% of payments on credit cards are more than 90 days overdue, according to the Federal Deposit Insurance Corp., the highest level since 1991.

Wachovia is talking to potential buyers including Wells Fargo & Co., Banco Santander SA of Spain and Citigroup Inc., according to people familiar with the situation. Wachovia officials don’t believe they need to rush into a deal, and the bank isn’t feeling immediate pressure on its financial condition, people familiar with the company said.

WaMu Is Seized, Sold Off to J.P. Morgan, In Largest Failure in U.S. Banking History

By ROBIN SIDEL, DAVID ENRICH and DAN FITZPATRICK

In what is by far the largest bank failure in U.S. history, federal regulators seized Washington Mutual Inc. and struck a deal to sell the bulk of its operations to J.P. Morgan Chase & Co.

Pedestrians walk past a Washington Mutual branch in downtown Seattle.

The collapse of the Seattle thrift, which was triggered by a wave of deposit withdrawals, marks a new low point in the country’s financial crisis. But the deal, as constructed by the Federal Deposit Insurance Corp., could hold some glimmers of hope for the beleaguered banking system because it averts any hit to the bank-insurance fund.

Instead, J.P. Morgan agreed to pay $1.9 billion to the government for WaMu’s banking operations and will assume the loan portfolio of the thrift, which has $307 billion in assets. The full cost to J.P. Morgan will be much higher, because it plans to write down about $31 billion of the bad loans and raise $8 billion in new capital. All WaMu depositors will have access to their cash, but holders of more than $30 billion in debt and preferred stock will likely see little if any recovery.

HSBC cited as possible Morgan Stanley suitor

Wed Sep 17, 2008 10:57pm EDT
SINGAPORE (Reuters) – London-based bank HSBC has been cited as a possible buyer of U.S. investment bank Morgan Stanley, broadcaster CNBC reported.

CNBC said according to unnamed sources, Morgan Stanley is in talks to possibly be acquired by China’s CITIC Group, though no deal was certain.

“Morgan Stanley’s senior management has been in talks with a number of potential buyers, and a deal becomes more likely as the investment bank’s stock — which plunged more than 24 percent Wednesday — declines further. London-based HSBC has also been cited as a possible suitor for Morgan Stanley,” CNBC reported on its Website.

Spokesman for both Morgan Stanley and HSBC in Hong Kong declined to comment on the report.

(Reporting by Lincoln Feast)

Morgan Stanley in talks with Wachovia

By Francesco Guerrera, Julie MacIntosh, Henny Sender and Saskia Scholtes in New York
Published: September 17 2008 21:01 | Last updated: September 18 2008 01:44

Morgan Stanley is in preliminary merger talks with Wachovia, the troubled regional lender, and is exploring other potential deals in an effort to avoid becoming the next victim of the credit crunch.

Wachovia’s approach to Morgan Stanley came after the shares of Morgan Stanley and Goldman Sachs plunged and the cost of insuring their debt rose sharply – a sign of waning investor confidence in Wall Street’s last two large investment banks.

Washington Mutual, the Seattle-based lender, is also looking to sell itself and has hired Goldman to run an auction, according to people close to the situation.

Lloyds TSB seals £12bn HBOS rescue

By FT Reporters
Published: September 17 2008 10:25 | Last updated: September 18 2008 07:15

Lloyds TSB on Wednesday night agreed a £12bn rescue takeover of HBOS after the government brokered a deal to save the country’s largest mortgage lender from a crisis of confidence.

After three days of turmoil in the financial markets triggered fears for HBOS’s viability, the government signalled it was willing to waive competition rules to allow the merger that will create Britain’s biggest retail bank.

Bank of America to buy Merrill for $50 billion

WASHINGTON/NEW YORK (Reuters) – Bank of America Corp said it agreed to buy Merrill Lynch & Co Inc in an all-stock deal worth $50 billion, snagging the world’s largest retail brokerage after one of the worst-ever weekends on Wall Street.

The deal came after tense negotiations over the fate of Lehman Brothers Holdings Inc, which triggered concern that market participants would lose faith in other investment banks. Lehman said early on Monday that it would file for Chapter 11 bankruptcy protection.