47-Miami Real Estate-Wachovia standstill
Many Miami Real Estate Businesses, Companies and Corporations as well as our own use Wachovia as their main bank.
A deal reached among Wachovia, Citigroup and Wells Fargo to stall the contested purchase of Wachovia for more discussion will end Wednesday unless extended. In other news: Third-quarter earnings of Bank of America slid 68 percent.
Associated Press
Wachovia, Citigroup and Wells Fargo agreed to a standstill of all formal litigation activity — a sign that the banks and the Federal Reserve are working feverishly to reach an agreement over the fate of Wachovia.
In other banking news, Bank of America said it will sell stock and cut its dividend to raise capital after third-quarter earnings dropped 68 percent. And Japan’s largest bank, Mitsubishi UFJ Financial Group, has been given approval to buy up to 24.9 percent of Morgan Stanley.
To continue reading the following article in Spanish click the following: La Parada de Wachovia
The standstill agreement over the purchase of Wachovia caps a weekend of talks and court volleys, as Wells Fargo and Citigroup dueled over who would be the winning buyer. The agreement will end at noon on Wednesday, unless extended.
The discussions could result in the two suitors carving up Wachovia’s network of 3,346 branches along geographical lines, with Wells Fargo taking Wachovia’s branches in the Southeast United States, the Wall Street Journal reported. Wachovia is the largest bank in Florida by deposits.
Citigroup’s deal to buy Wachovia’s banking assets for $2.1 billion was brokered by the Federal Deposit Insurance Corp. But then, Wells Fargo & Co. surprised investors by announcing it would pay $15.1 billion. Wells Fargo’s deal did not require any government support.
Earlier Monday, Citigroup sued Wachovia, Wells Fargo and directors of both companies, seeking more than $60 billion in damages for interfering with its planned takeover of Wachovia’s banking operations.
All the parties have stressed the urgency of reaching a resolution, as a prolonged court fight could further weaken the ailing Wachovia.
”If this goes into a protracted legal battle, everybody loses,” said Frederick Cannon, an analyst at Keefe, Bruyette & Woods. “Wachovia is big enough that it would be a negative for the financial system. Given that situation, we will see a resolution pretty quickly.”
Wachovia, like many banks, has been slammed over the past year by defaulting mortgages, particularly in its portfolio of option adjustable-rate mortgages, which allowed many customers to pay less than the monthly interest owed on the loan.
TROUBLES DETAILED
In reporting its earnings two weeks earlier than scheduled, Bank of America acknowledged its own troubles with mortgages, credit cards and other souring debt.
The Charlotte, N.C.-based company said it plans to sell $10 billion of common stock and cut its quarterly dividend to 32 cents from 64 cents.
”These are the most difficult times for financial institutions that I have experienced in my 39 years in banking,” said Bank of America CEO Kenneth D. Lewis. “We believe it is prudent to raise capital to very substantial levels in this uncertain environment. Both economic and financial market conditions have changed significantly in the last two months.”
Bank of America said Monday it made a $6.45 billion provision for credit losses — up from $5.83 billion in the second quarter and from $2.03 billion in the third quarter last year — after seeing massive deterioration in unsecured consumer loans, credit cards and residential mortgages.
Bank of America has been regarded as a stronger players on the U.S. banking landscape, thanks in large part to its overall size and massive base of deposits. It agreed to buy Merrill Lynch, the world’s biggest brokerage, last month after discussions between banking executives and government officials that led to the bankruptcy of Lehman Brothers Holdings Inc. and the government’s takeover of American International Group.
Lewis made the decision even as his company continued to absorb the troubled mortgage lender Countrywide Financial — a major reason behind Bank of America’s poor third-quarter results.
OTHER FED ACTION
Also Monday, the Federal Reserve issued an order saying it had approved Japanese bank Mitsubishi’s request to acquire up to 24.9 percent of the voting shares of Morgan Stanley.
Both Morgan Stanley and Goldman Sachs, the last two major independent investment banks in the United States, won approval last month from the Fed to convert to bank holding companies in an effort to withstand the severe financial storms raking Wall Street.
The Fed said it had reduced its normal 30-day review period to 10 days ”in light of the unusual and exigent circumstances” roiling financial markets.
