Thursday, September 18, 2008

Washington Mutual is up for sale?!?!?






Washington Mutual, the giant US savings and loan bank beleaguered by mortgage losses, has put itself up for sale.
The Seattle-based bank has hired Goldman Sachs and Morgan Stanley to run an auction and potential suitors include Citigroup, HSBC Holdings, JPMorgan Chase and Wells Fargo, one source said.
A sale is neither imminent nor guaranteed and the bank is exploring other options, a second source said.
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Analysts have long expected the credit crisis would force weaker lenders into the arms of stronger rivals. A sale of Washington Mutual, the largest US savings and loan bank, had been widely expected.
On Monday, Bank of America agreed to pay $50 billion for Merrill Lynch, which has lost $19.2 billion in the last four quarters.
Wachovia, which lost $9.11 billion in the second quarter, approached Morgan Stanley about a merger yesterday, according to published reports.
WaMu overcame a critical hurdle to a merger yesterday when its largest investor, David Bonderman's private equity firm, TPG, agreed to let the bank raise capital, even if TPG's holdings were diluted.
Washington Mutual shares rose have fallen 94% in the last year on concern about mortgage losses and that, in a worst case scenario, it might face the same fate as mortgage lender IndyMac Bancorp, which regulators seized in July.
Washington Mutual has lost $6.3 billion in the last three quarters and was downgraded to junk status by Moody's Investors Service and Standard & Poor's. The bank has projected $19 billion of mortgage losses until 2011.
Last week, Washington Mutual said it expected to set aside $4.5 billion for credit losses in the third quarter, down from the second quarter's $5.9 billion, and that it expected to remain well-capitalised.
JPMorgan Chief Executive Jamie Dimon is considered the most likely acquirer, given his goal of expanding in retail banking in the western US.
Washington Mutual ended June with $309.7 billion of assets and 2,239 branches.
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Later - Monty

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