name = Wachovia Corporation
type = Public (nyse|WB)
slogan = Are You With Wachovia?
foundation = 1908 (but with heritage dating to 1781)
Charlotte, North Carolina
Robert K. Steel, CEO
revenue = increase
US$55.5 billion (2007) [ [http://money.cnn.com/magazines/fortune/fortune500/2008/snapshots/2543.html Fortune 500 2008: Wachovia Corp. - WB ] ]
US$783 billion (2007) [ [http://money.cnn.com/magazines/fortune/fortune500/2008/snapshots/2543.html Fortune 500 2008: Wachovia Corp. - WB ] ]
net_income = loss
US$6.3 billion (2007)cite press release|publisher=Wachovia Corp.|date=2007-01-23|title=Wachovia Earns $7.8 Billion, EPS Up 11% to $4.63 in Full Year 2006 |url=http://www.wachovia.com/inside/page/0,,134_307%5E1438,00.html]
num_employees = 122,000cite web |title=Wachovia Company Facts |publisher=Wachovia |date=2007-04-16 |url=http://www.wachovia.com/inside/page/0,,132_148,00.html |accessdate=2007-06-14 ]
Finance and Insurance
homepage = [http://www.wachovia.com/ wachovia.com]
Wachovia Corporation (nyse|WB), based in
Charlotte, North Carolina, is a diversified financial servicesholding company provided via its operating subsidiaries a broad range of banking, asset management, wealth management, and corporate and investment bankingproducts and services. It is one of the largest providers of financial services in the United States, operating financial centers in 21 states and Washington, D.C., with locations from Connecticut to Florida and west to California. It also serves retail brokerage clients under the name Wachovia Securitiesnationwide as well as in six Latin American countries, and investment banking clients in selected industries nationwide. Wachovia provides global services through more than 40 offices around the world. Presently it is the fourth-largest bank holding companyin the United Statesbased on total assets. [ ]
Bidding battle for Wachovia
On September 29, 2008, Wachovia announced its intention to sell its banking operations to
Citigroupfor $2.2 billion in an open bank transaction facilitated by the Federal Deposit Insurance Corporation; according to the FDIC, Wachovia "did not fail." Wachovia would have continued to operate as a separate, publicly traded company as the owner of Wachovia Securities, AG Edwardsand Evergreen Investments. The sale was agreed to be completed by December 31, 2008.  cite news | first= | last= | coauthors= | title= Citi and Wachovia Reach Agreement-in-Principle for Citi to Acquire Wachovia's Banking Operations in An FDIC-Assisted Transaction
date= 2008-09-29 | publisher= Citigroup | url = http://www.citigroup.com/citi/press/2008/080929a.htm | work = Press Room | pages = | accessdate = 2008-09-29 ]
However, on October 3, 2008,
Wells Fargoand Wachovia announced they had agreed to merge in an all-stock transaction requiring no FDIC involvement, apparently nullifying the Citigroup deal. Wells Fargo announced it had agreed to acquire Wachovia for $15.1 billion in stock. Wachovia prefers the Wells Fargo deal, as it is a much higher valuation than the Citigroup deal, it keeps the banking and brokerage businesses together, and has less of an overlapping territory between the banks, as Wells Fargo is dominant in the West and Midwest compared to the redundant footprint of Wachovia and Citibankalong the Atlantic Seaboard and in the South. Citigroup is exploring their legal options, demanding that Wachovia and Wells Fargo cease discussions, citing an exclusivity agreement between Citigroup and Wachovia. The deal still requires shareholder and regulatory approval. [cite news |first=Eric |last=Dash |title=Wells Fargo in a Deal to Buy All of Wachovia |url=http://www.nytimes.com/2008/10/04/business/04bank.html |work= The New York Times|date=2008-10-03 |accessdate=2008-10-03 ] cite news | title = WELLS FARGO, WACHOVIA AGREE TO MERGE| url= https://www.wellsfargo.com/downloads/pdf/press/WFC_WB_100308.pdf|date=2008-10-03|accessdate=2008-10-03|publisher= Wells Fargo]
On October 4, 2008 a New York judge issued a temporary injunction blocking the transaction from going forward while the situation is sorted out. [ [http://biz.yahoo.com/ap/081005/wells_fargo_wachovia.html?.v=15 Citi: Wells Fargo blocked from buying Wachovia] ] However, this ruling was overturned.
On October 9, 2008, Citigroup abandoned their attempt to purchase Wachovia, allowing Wells Fargo to proceed with a transaction instead. However, Citigroup is still pursuing its $60 billion claims against Wachovia and Wells Fargo for alleged violations of the exclusivity agreement. [cite news
title=Wells Fargo plans to buy Wachovia; Citi ends talks
Wachovia is divided into four divisions: General Bank, Wealth Management, Capital Management, and Corporate and Investment Banking.
The general bank services retail, small business and commercial customers. The bank is number two by national deposit market share. Wealth management serves the high net worth, personal trust, and insurance business. Wachovia is the fourth largest wealth manager in the United States. Capital management provides asset management, retirement, and retail brokerage services. Wachovia is currently the third largest full service retail brokerage house. The corporate and investment bank is a fully integrated capital raising, market making, and financial advisory services bank.
Origin of corporate name
Wachovia, pronounced|wəˈkoʊvijə (wah-KO-vee-yah), has its origins in the
Latinform of the Austrian name " Wachau". When Moraviansettlers arrived in Bethabara, North Carolina, in 1753, they gave this name to the land they acquired, because it resembled the Wachau valley along the Danube River. The area formerly known as Wachovia now makes up most of Forsyth County, and the largest city is now Winston-Salem.
Today's Wachovia Corporation was originally created by the merger of the legacy Wachovia Corporation and First Union Corporation. While the transaction was billed as a union of equals, the transaction was actually a purchase of the legacy Wachovia by Charlotte-based First Union. First Union then took the Wachovia name.
Wachovia National Bank
Legacy Wachovia Corporation traced its history to 1879, when it was established as the Wachovia National Bank in Winston-Salem, North Carolina. The bank merged with Wachovia Loan and Trust (founded 1893) in 1911 and remained located in Winston-Salem. On
December 12 1986, Wachovia purchased First Atlanta. Founded as Atlanta National Bank on September 14, 1865, and later renamed to First National Bank of Atlanta, this institution was the oldest national bank in Atlanta. This purchase made Legacy Wachovia one of the few companies with dual headquarters: one in Winston-Salem and one in Atlanta. In 1998, Legacy Wachovia acquired two Virginia-based banks, Jefferson National Bank and Central Fidelity Bank. In 1997, Wachovia acquired both 1st United Bancorp and American Bankshares Inc, giving its first entry into Florida. In 2000, legacy Wachovia made its final purchase, which was Republic Security Bank.
in 1958 to become the First Union National Bank of North Carolina. Over subsequent decades, but particularly during the 1990s, First Union purchased over 80 other banks before purchasing Wachovia.
CoreStates Financial purchase
CoreStates Financial Corporation, headquartered in Philadelphia, was acquired by First Union in April 1998. At the time, this was the largest merger in US banking history. The company traced its history to 1781, when the first bank in the United States was chartered as
Bank of North America.
After the First Union-CoreStates merger, First Union began claiming a 1781 founding date. The Bank of North America's first branch, opened in 1782, is still operated by Wachovia today, making it the longest continuously operated branch in America.cite web |title=First Union |publisher=Wachovia Corporation |url=http://firstunion.com/ |accessdate=2007-10-14 ]
This acquisition was burdened with many problems. Many of these problems arose when First Union attempted to rapidly integrate CoreStates' systems into First Union's. CoreStates tellers did not receive sufficient training with the new systems and First Union and CoreStates' systems were unable to communicate with each other. This led to such problems as account access issues and payments not being correctly applied to loans.
The Money Store
June 30, 1998, First Union paid $2.1 billion for The Money Store, a loan outfit known for their commercials featuring Baseball Hall of Fameshortstop Phil Rizuttoand pitcher Jim Palmer. Two years later, it closed the unit, writing off $1.7 billion. [cite web |last=Anderson |first=Mark |title=Down in flames: Why Money Store was a bust |work=Sacramento Business Journal |publisher=American City Business Journals, Inc. |date=2000-06-30 |url=http://www.bizjournals.com/sacramento/stories/2000/07/03/story7.html?t=printable |accessdate=2007-10-14 ]
Merger of First Union and Wachovia
April 16, 2001, Charlotte based First Union Corporation announced it would merge with Winston-Salem based Wachovia Corporation. This was viewed with great surprise by the financial press and security analysts. While Wachovia had been viewed as an acquisition candidate after running into problems with earnings and credit quality in 2000, the suitor shocked analysts as many speculated that Wachovia would be sold to SunTrust.
As an important part of the deal, First Union would shed its name and assumed the Wachovia identity and stock ticker. Analysts said this move was most likely to help First Union acquire a new identity, as Wachovia's reputation was far better with consumers than First Union. At the same time, Wachovia's name and corporate identity would survive.
The deal was met with criticism and doubt by several groups. Analysts were concerned of First Union's ability to merge with another large company because of the CoreStates deal. Citizens and politicians of Winston-Salem suffered from a hurt of their civic pride because the city would lose Wachovia's corporate headquarters to Charlotte, partly because Winston-Salem is a much smaller city than Charlotte. The city of Winston-Salem was concerned both by job losses by the move and the loss of stature from losing a corporation. First Union was alarmed by the potential deposit attrition and customer loss in the city. [ [http://www.wachovia.com/inside/page/0,,134_307_348_1272_1280%5E221,00.html "Wachovia and First Union announce Winston-Salem as base for the new Wachovia's Wealth Management Business"] Wachovia press release, August 30, 2001] First Union responded to these concerns by placing the wealth management and Carolinas-region headquarters in Winston-Salem.
On May 14, 2001, Atlanta-based SunTrust announced a rival takeover bid for Wachovia, the first hostile takeover attempt in the banking sector in many years. In its effort to make the deal appeal to investors, SunTrust argued that it would provide a smoother transition than First Union and offered a higher cash price for Wachovia stock than First Union.
Wachovia's board of directors rejected SunTrust's offer and pledged to continue its merger with First Union. SunTrust continued its hostile takeover attempt, and a bitter battle between SunTrust and First Union took place over the summer. Both banks increased their offers for Wachovia, took out newspaper ads, mailed letters to shareholders, and initiated court battles to challenge each other's takeover bids.
August 3, 2001, Wachovia shareholders approved the First Union deal. They rejected SunTrust's attempts to elect a new board of directors for Wachovia, and thus, ended SunTrust's hostile takeover attempt.
Another problem concerned each bank's credit card division. In April 2001, Wachovia agreed to sell its $8 billion credit card portfolio to
Bank One. The cards, which would have still been branded as Wachovia, would have been issued through Bank One's First USA division. First Union had sold its credit card portfolio to MBNAin August 2000. After entering into negotiations, the new Wachovia agreed to buy back its portfolio from Bank One in September 2001 and resell it to MBNA. Wachovia paid Bank One a $350 million termination fee.
September 4, 2001, First Union and Wachovia officially merged to form the new Wachovia Corporation. In order to prevent a repeat of the CoreStates fiasco, the new Wachovia took a deliberately long period of time to combine the banking operations of the new company. Over a period of several years, legacy Wachovia computer systems were converted to First Union systems. The company first began converting systems in the southeast United States (where both banks had branches) before moving to the Northeast, where First Union branches only had to change their signs to reflect the new company name and logo. This process officially ended on August 18, 2003, almost 2 years after the merger took place. [cite press release |title=Wachovia Completes Merger Integration On Schedule, Under Budget, With Added Convenience For Customers |publisher=Wachovia Corporation |date=2003-08-18 |url=http://www.wachovia.com/inside/page/0,,134_307%5E927,00.html |accessdate=2007-10-14 ]
In comparison to the CoreStates purchase, the merger of First Union and Wachovia has been a success. The company's slow strategy to combine seems to have prevented large customer attrition rates. In fact, every year since the merger, Wachovia has been ranked number one in customer satisfaction among major banks by the
University of Michigan's annual American Customer Satisfaction Index. [cite web |title=Scores By Industry |publisher=American Customer Satisfaction Index |url=http://www.theacsi.org/index.php?option=com_content&task=view&id=147&Itemid=155&i=Banks |format=chart |accessdate=2007-08-06 ]
When Wachovia and First Union merged, the multiple
skyscrapers with First Union's name came under Wachovia's name. Charlotte, North Carolina's One, Two, Three, and Four First Union buildings became One, Two, Three, and Four, Wachovia Center (respectively), and the 55-story First Union Financial Center in downtown Miami became the Wachovia Financial Center. The merger also affected the names of the indoor professional sports arenas in Philadelphiaand Wilkes-Barre, Pennsylvania. Formerly known as the First Union Center and the First Union Spectrum (both Philadelphia) and First Union Arena (Wilkes-Barre), they are now known as the Wachovia Center, Wachovia Spectrum, and Wachovia Arena at Casey Plaza.
Acquisitions since 2001
Wachovia Securities and the Prudential Securities Division of
Prudential Financial, Inc.combined to form Wachovia Securities LLC on July 1, 2003. Wachovia owns 62% of this entity, while Prudential Financial owns 38%. At the time, the new firm had client assets of $532.1 billion, making it the nation's third largest full service retail brokerage firm based on assets.cite press release |title=Wachovia Corp. and Prudential Financial, Inc. Complete Combination of Brokerage Units |publisher=Wachovia Corporation |date=2003-07-01 |url=http://www.wachovia.com/inside/page/0,,134_307%5E906,00.html |accessdate=2007-10-14 ]
Metropolitan West Securities
October 22, 2003, Wachovia announced it would acquire Metropolitan West Securities, an affiliate company of Metropolitan West Financial. [cite press release |title=Wachovia Announces Agreement To Acquire Metropolitan West Securities, LLC |publisher=Wachovia Corporation |date=2003-10-22 |url=http://www.wachovia.com/inside/page/0,,134_307%5E963,00.html |accessdate=2007-10-14 ] This acquisition added a portfolio of over $50 billion of securities on loan to the Wachovia Global Securities Lending division.
November 1, 2004, Wachovia completed the acquisition of Birmingham, Alabama-based banking competitor SouthTrust Corporation, a transaction valued at $14.3 billion. The merger created the largest bank in the southeast United States, and the fourth largest bank in terms of holdings, and the second largest in terms of number of branches. Integration was completed by the end of 2005. [cite press release |title=Wachovia Completes SouthTrust Merger Integration |publisher=Wachovia Corporation |date=2005-12-05 |url=http://www.wachovia.com/inside/page/0,,134_307%5E1282,00.html |accessdate=2007-10-14 ]
Westcorp, Western Financial Bank's parent company, WFS Financial Inc. and Wachovia announced a proposed acquisition by Wachovia in September 2005. Westcorp and WFS Financial Inc. shareholders approved the acquisition on Jan. 6, 2006 and on March 1, 2006, the merger was complete. This acquisition made Wachovia the ninth largest auto finance lender in the competitive U.S. auto finance market and provided Wachovia with a small retail and commercial banking presence in
southern California. [cite press release |title=Wachovia Completes Merger With Westcorp and WFS Financial Inc. |publisher=Wachovia Corporation |date=2006-03-01 |url=http://www.wachovia.com/inside/page/0,,134_307%5E1323,00.html |accessdate=2007-10-14 ] On February 12th, 2007, the former 19 Western Financial Bank branches opened under the Wachovia name. These branches became the launching point for a much larger Wachovia presence in California with the acquisition and integration of World Savings Bank in 2007.
Golden West Financial
Wachovia agreed to purchase Golden West Financial for a little under $25.5 billion on
May 7 2006. [cite press release |title=Wachovia To Acquire Golden West Financial, Nation's Most Admired and 2nd Largest Savings Institution |publisher=Wachovia Corporation |date=2006-05-07 |url=http://www.wachovia.com/inside/page/0,,134_307%5E1344,00.html |accessdate=2007-07-18 ] This acquisition gave Wachovia an additional 285-branch network spanning 10 states. Wachovia greatly raised its profile in California, where Golden West held $32 billion in deposits and operated 123 branches.cite news |title=Wachovia acquires Golden West Financial |publisher=Associated Press |date=2006-05-08 |url=http://www.msnbc.msn.com/id/12680868/from/RSS/ |accessdate=2007-07-18 ]
Golden West, which operated branches under the name World Savings Bank, was the second largest
savings and loanin the United States. The business was a small savings and loan in the San Francisco Bay area when it was purchased in 1963 for $4 million by Herbert and Marion Sandler. By the time Wachovia announced its acquisition, Golden West had over $125 billion in assets and 11,600 employees. The Sandlers agreed to remain on the board at Wachovia. In 2006, Golden West Financial was named the "Most Admired Company" in the mortgage services business by Fortune magazine. [cite web |title=Fortune: America's Most Admired Companies 2006 |publisher=CNNMoney.com |url=http://money.cnn.com/magazines/fortune/mostadmired/snapshots/574.html |accessdate=2007-07-18 ]
October 2 2006Wachovia had completed the acquisition of Golden West Financial Corporation. The integration process is scheduled to be completed mid-2008. [cite press release |title=WACHOVIA COMPLETES GOLDEN WEST MERGER |publisher=Wachovia Corporation |date=2006-10-02 |url=http://www.wachovia.com/inside/page/0,,134_307%5E1403,00.html |accessdate=2007-07-18 ]
On May 31, 2007, Wachovia announced plans to purchase
A. G. Edwardsfor $6.8 billion to create the United States' second largest retail brokerage firm. [cite web |title=Wachovia to buy A.G. Edwards for $6.8B |publisher=CNNMoney.com |date=2007-05-31 |url=http://money.cnn.com/2007/05/31/news/companies/wachovia.reut/index.htm?postversion=2007053106] The acquisition closed on October 1, 2007. In early March 2008 Wachovia began to phase out the AG Edwards brand in favor of a unified Wachovia Securities.
Wachovia is currently ranked number 46 on the
Fortune 500list for 2007, [cite web|title=Fortune 500 2007|publisher=Fortune|url=http://money.cnn.com/magazines/fortune/fortune500/2007/full_list/index.html|accessdate=2007-04-17] with $46.8 billion in revenue, and is the fourth largest bank holding company in the United States, with banking centers in 15 east coast states and Washington, D.C.Wachovia provides brokerage services through a subsidiary, Wachovia Securities. Wachovia also has an asset management division, operating as Evergreen Investmentsin the United States and as Wachovia Global Asset Management abroad.
In 2005, Wachovia was among 53 entities that contributed the maximum of $250,000 to the second inauguration of President
George W. Bush. [cite news |first=Jim |last=Drinkard |title=Donors get good seats, great access this week |url=http://www.usatoday.com/news/washington/2005-01-16-inauguration-donors_x.htm |publisher=USA Today |date=2005-01-17 |accessdate=2008-05-25 ] [cite news |title=Financing the inauguration |url=http://www.usatoday.com/news/washington/2005-01-16-inaugural-donors_x.htm |publisher=USA Today |date= |accessdate=2008-05-25 ] [cite news |title=Some question inaugural's multi-million price tag |url=http://www.usatoday.com/news/washington/2005-01-14-price_x.htm |publisher=USA Today |date=2005-01-14 |accessdate=2008-05-25 ]
In June 2005, Wachovia negotiated to purchase monoline credit card company MBNA. However, the deal fell through when Wachovia balked at MBNA's purchase price. Within a week of the deal's collapse, MBNA entered into an agreement to be purchased by Wachovia's chief rival,
Bank of America. Wachovia received $100 million out of this deal, the result of an agreement Wachovia predecessor First Union made in 2000 when it sold its credit card portfolio to MBNA. This agreement required MBNA to pay this sum if it were ever sold to Bank of America. In late 2005 Wachovia announced that it would end its relationship with MBNA and start up its own credit card division so that the bank could issue its own Visa cards.
In the first quarter of 2007, Wachovia reported $2.3 billion in earnings, including acquisitions and divestitures. [cite web|title=Wachovia Earns $2.30 Billion, EPS Up 10% to $1.20 in 1st Quarter 2007|publisher=Press release|url=http://www.wachovia.com/inside/page/0,,134_307%5E1461,00.html|accessdate=2007-04-26] However, in the second quarter of 2008, Wachovia reported a much larger than anticipated $8.9 billion loss. [cite web|title=Wachovia Details 2nd Quarter Loss; Outlines Initiatives to Preserve and Generate Capital, Protect Strong Liquidity and Reduce Risk
2008 financial crisis
Proposed divestiture of banking subsidiaries to Citigroup
On 29 September 2008, the
Federal Deposit Insurance Corporation(FDIC) announced that Citigroupwould acquire Wachovia Corporation's banking operations. The transaction was to be an "open bank" transfer of ownership. Wachovia's bank subsidiaries did not fail, nor were they placed into receivership. The transaction would have been facilitated by the FDIC, with the concurrence of the Board of Governors of the Federal Reserveand the Secretary of the Treasuryin consultation with the President.] ] 
After Steel took over, he insisted that Wachovia would stay independent. However, its stock price plunged 27 percent during trading on
September 26due to the seizure of Washington Mutualthe previous night. On the same day, several businesses and institutional depositors withdrew money from their accounts in order to drop their balances below the $100,000 insured by the FDIC--an event known in banking circles as a "silent run." The exact amount of money withdrawn is still unknown, but according to " The Charlotte Observer", it was large enough to attract the attention of the Office of the Comptroller of the Currency, which regulates national banks. Federal regulators pressured Wachovia to put itself up for sale over the weekend; had Wachovia failed, it would have been a severe drain on the FDIC's insurance fund due to its size.St. Onge, Peter. [http://www.charlotteobserver.com/business/story/222685.html Stunningly swift fall for Wachovia] . " The Charlotte Observer", 2008-09-30.] Rothacker, Rick; and Kerry Hall. [http://www.charlotteobserver.com/business/story/226799.html Wachovia faced a ‘silent' bank run] . " The Charlotte Observer", 2008-10-02.]
As business halted for the weekend, Wachovia was already in talks with Citigroup and
Wells Fargo. Wells Fargo initially emerged as the frontrunner to acquire the ailing Wachovia's banking operations, but backed out due to concerns over Wachovia's commercial loans. By this time, regulators were concerned that Wachovia wouldn't have enough short-term funding to open for business on September 29. In order to obtain enough liquidity to do business, banks usually depend on short-term loans to each other. However, the markets had been so battered by a credit crisis related to the housing bubble that banks were skittish about making such loans. Under the circumstances, regulators feared that if customers pulled out more money, Wachovia wouldn't have enough liquidity to meet its obligations.
On the morning of September 29, the FDIC board, acting under a 1991 law empowering it to deal with large bank failures on short notice, voted to order Wachovia to sell itself to Citigroup. The FDIC's open bank assistance procedures normally require the FDIC to find the cheapest way to rescue a failing bank. However, the FDIC bypassed this requirement after determining that Wachovia posed a "systemic risk" to the health of the economy. Steel had little choice but to agree, and the decision was announced roughly 45 minutes before the markets opened.
In addition, the FDIC said that the agency would absorb Citigroup's losses above $42 billion; Wachovia's loan portfolio is valued at $312 billion. In exchange for assuming this risk, the FDIC will receive $12 billion in preferred stock and warrants from Citigroup. [http://www.nytimes.com/2008/09/30/business/30bank.html?ref=business] [http://www.bizjournals.com/tampabay/stories/2008/09/29/daily1.html] The transaction is to be an all-stock transfer, with Wachovia Corporation stockholders to receive stock from Citigroup, valuing Wachovia stock at about one dollar per share for a total transaction value of about $2.16 billion. Citigroup will also assume Wachovia’s senior and subordinated debt. Citigroup intends to sell ten billion dollars of new stock on the open market to recapitalize its purchased banking operations. cite news | first= Steve | last= Dickson | coauthors= David Mildenberg | title= Citigroup Agrees to Buy Wachovia's Banking Business (Update6) | date= 2008-09-29 | publisher= Bloomberg LLC | url = http://www.bloomberg.com/apps/news?pid=newsarchive&sid=agVqu_CIqFyw | work = Bloomberg.com | pages = | accessdate = 2008-09-29 ] The proposed closing date for the Wachovia purchase was by the end of the year, 2008. cite news | first= | last= | coauthors= | title= Citi and Wachovia Reach Agreement-in-Principle for Citi to Acquire Wachovia's Banking Operations in An FDIC-Assisted Transaction
date= 2008-09-29 | publisher= CitiGroup | url = http://www.citigroup.com/citi/press/2008/080929a.htm | work = Press Room | pages = | accessdate = 2008-09-29 ]
Wachovia expected to continue as a publicly traded company and would retain its retail brokerage and Evergreen asset management subsidiaries. ] The brokerage unit has 14,600 financial advisers and manages more than $1 trillion, third in the U.S. after
Merrill Lynchand Citigroup's Smith Barney.
The announcement drew some criticism from Wachovia stockholders who felt the dollar-per-share price was too cheap. Some of them planned to try to defeat the deal when it came up for shareholder approval. However,
institutional investors such as mutual funds and pension funds control 73 percent of Wachovia's stock; individual stockholders would have had to garner a significant amount of support from institutional shareholders to derail the sale. Also, several experts in corporate dealmaking told the "Observer" that such a strategy is very risky since federal regulators helped broker the deal. A finance professor at the University of North Carolina at Charlottetold the "Observer" that if Wachovia's shareholders voted the deal down, the OCC could simply seize Wachovia and place it into the receivershipof the FDIC, which would then sell it to Citigroup. If this were to happen, the professor said, Wachovia's shareholders risk being completely wiped out. [Rexrode, Christina; and Jen Aronoff. [http://www.charlotteobserver.com/408/story/226825.html Shareholders talk of fighting Citi deal] . " The Charlotte Observer", 2008-10-02.]
Proposed merger with Wells Fargo
On October 3, Wachovia announced the entire company would instead be merging with Wells Fargo. Wells Fargo will pay $15.1 billion--roughly $7 per share--to buy Wachovia. Unlike the Citigroup deal, the Wells Fargo deal will require no assistance from the federal government. The combined company will be headquartered in
San Francisco, home to Wells Fargo. However, Charlotte will be the headquarters for the combined company's East Coast banking operations, and Wachovia Securities will remain in St. Louis. Three members of the Wachovia board will join the Wells Fargo board. Both companies' boards unanimously approved the merger on the night of October 2, but the deal must still be approved by the shareholders of both companies as well as regulators. Citigroup has already taken measures to stop the Wells Fargo-Wachovia merger, claiming that Wells Fargo has engaged in "tortious interference" with an exclusivity agreementbetween Citigroup and Wachovia. That agreement states in part that until October 6, 2008"Wachova shall not, and shall not permit any of its subsidiaries or any of its or their respective officers, directors, [...] to [...] take any action to facilitate or encourage the submission of any Acquisition Proposal." [cite news
title=Wachovia-Citigroup Exclusivity Agreement
publisher=The New York Times
accessdate=2008-10-05] Wachovia and Wells Fargo argue that the Citigroup agreement was never binding, and that the Wells Fargo deal is better for Wachovia. [Rothacker, Rick; and Christina Rexrode. [http://www.charlotteobserver.com/100/story/229509.html Citigroup strikes back at proposed Wachovia-Wells Fargo merger deal] . "
The Charlotte Observer", 2008-10-03.] However, Citigroup convinced Justice Charles E. Ramosof the New York State Supreme Courtto grant a preliminary injunction temporarily blocking the Wells Fargo deal. [cite news
title=Citigroup Says Judge’s Order Suspends Wachovia Deal
publisher=The New York Times
coauthors=Jonathan D. Glater] This ruling was later overturned by Judge
James M. McGuireof the New York State Court of Appeals, partly because he believed Ramos did not have the right to rule on the case in Connecticut.cite news
title=Weekend Legal Frenzy Between Citigroup and Wells Fargo for Wachovia
publisher=The New York Times
New York Times" article titled "Corporate Profits, From Data Sold to Thieves" [cite web|title=Corporate Profits, From Data Sold to Thieves|publisher= New York Times|url=http://www.nytimes.com/2007/05/20/business/20tele.html?pagewanted=1&hp|accessdate=2007-05-20] published on May 20 2007described Wachovia's negligence in screening on taking action against companies connected to identity theft. These companies used stolen identities to remove funds from personal Wachovia bank accounts via unsigned checks.
The article goes on to say "In all, Wachovia accepted $142 million of unsigned checks from companies that made unauthorized withdrawals from thousands of accounts, federal prosecutors say. Wachovia collected millions of dollars in fees from those companies, even as it failed to act on warnings, according to records." Furthermore, the article adds "In a lawsuit filed last year, the United States attorney in Philadelphia said Wachovia received thousands of warnings that it was processing fraudulent checks, but ignored them."
April 25, 2008, Wachovia agreed to pay up to $144 million to end the investigation without admitting wrongdoing. [cite news |author=Charles Duhigg |title=Big Fine Set for Wachovia to End Case |url=http://www.nytimes.com/2008/04/26/business/26banks.html?th=&adxnnl=1&emc=th&adxnnlx=1209304849-yun0i8HcekxKsJp5Iz9MUQ |format=HTML |work=The New York Times |publisher=The New York Times Company |date=2008-04-26 |accessdate=2008-04-27 ] The investigation found that Wachovia had failed to conduct suitable due diligence, and that it would have discovered the thefts if it had followed normal procedures. The penalty is one of the largest ever demanded by the Office of the Comptroller of the Currency.
June 02, 2008, Wachovia Corp. chief executive Ken Thompson was pushed out as head of the nation's fourth-largest bank, becoming the latest financial services executive to be ousted amid turmoil in the U.S. housing market. [cite news |author=IEVA M. AUGSTUMS, AP Business Writer|title=Wachovia board forces out CEO Ken Thompson|url=http://news.yahoo.com/s/ap/20080602/ap_on_bi_ge/wachovia_ceo |format=HTML |work=Yahoo News|publisher=CHARLOTTE, N.C |date=2008-06-02 |accessdate=2008-06-02 ] The board of the Charlotte-based bank said it asked Thompson, 58, to retire and replaced him on an interim basis with Chairman Lanty Smith. Smith had already replaced Thompson as chairman last month in a move the bank said "strengthens independent leadership" at the company.
July 09, 2008, Wachovia Corp. hired Treasury Undersecretary Robert K. Steel as chief executive, citing his vast and varied financial experience as critical to managing the company through the turbulent environment. [cite news |format=HTML |url=http://www.usatoday.com/money/industries/banking/2008-07-09-wachovia-ceo_N.htm?csp=34 |work=USA Today |publisher=USA Today |title=Wachovia names Treasury undersecretary new CEO ]
There have been at least two documented incidents where customers encountered receiving or almost receiving counterfeit money from Wachovia bank tellers. In June 2008 a woman in Orange County,
Florida, claimed she was almost given a pair of counterfeit $20 bills and the teller realized it before giving them to her. [cite news |author=WFTV 9|title=Woman Claims She Was Given Counterfeit $20 Bills At Bank|url=http://www.wftv.com/news/16714957/detail.html |format=HTML |work=WFTV 9|publisher=ORANGE COUNTY, FL|date=2008-06-26 |accessdate=2008-07-23 ] In July, 2008 a couple claimed that, at an Orlando, Floridabranch, they withdrew 36 $100 bills. Upon an attempt to deposit them at a Bank of America, 10 of them were found to be counterfeit. Wachovia did not refund any of the money, citing that it could not be proven that the counterfeit money came from them. [cite news |author=LOCAL 6|title=Bank Gave Counterfeit Bills, Couple Says|url=http://www.local6.com/news/16960809/detail.html |format=HTML |work=Local 6 News|publisher=ORLANDO, FL|date=2008-07-22 |accessdate=2008-07-23 ] In both incidents the Secret Serviceinvestigated.
In April 2008 Wachovia was investigated by United States federal prosecutors as part of a probe into drug money laundering by Mexican and Colombian money-transferring firms. The investigation of the alleged laundering also included other large U.S. banks. Meanwhile at the same time Wachovia announced a $144 million settlement for federal charges that it had failed to stop telemarketers from taking advantage of thousands of elderly consumers. [cite news |author=CNNMONEY.COM|title=Feds look at Wachovia in drug money probe|url=http://money.cnn.com/2008/04/26/news/companies/wachovia_mexico/index.htm?section=money_topstories |format=HTML |work=CNN|publisher=CNNMONEY.COM|date=2008-04-26 |accessdate=2008-07-23 ]
* [http://www.wachovia.com/ Wachovia Corporate Website]
* [http://www.wachoviasec.com/ Wachovia Securities Website]
* [http://biz.yahoo.com/ic/103/103806.html Yahoo! - Wachovia Corporation Company Profile]
*cite web|url=http://www.fdic.gov/bank/historical/reshandbook/ch5obas.pdf|publisher=FDIC|title=OPEN BANK ASSISTANCE TRANSACTIONS
Links to acquired companies
* [http://www.corestates.com/ CoreStates]
* [http://www.firstunion.com/ First Union]
* [http://www.gdw.com/ Golden West]
* [http://www.southtrust.com/ SouthTrust]
* [http://www.westcorpinc.com/ Westcorp]
* [http://www.wfb.com/ Western Financial Bank]
* [http://www.worldsavings.com/ World Savings]
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