Jump to content

Wachovia: Difference between revisions

From Wikipedia, the free encyclopedia
Browse history interactively
← Previous editNext edit →
Content deleted Content added
VisualWikitext
No edit summary
Line 5: Line 5:
| name = Wachovia
| name = Wachovia
| logo = [[Image:Wachovia logo.svg|200px|Wachovia logo]]
| logo = [[Image:Wachovia logo.svg|200px|Wachovia logo]]
| type = [[Subsidiary]]
| type = [[Farting]]
| genre = [[Financial Services]]
| genre = [[Large intestine]]
| foundation = 1908
| foundation = 1908
| founder =
| founder =
| location_city = [[Charlotte, North Carolina]]
| location_city = [[Charlotte's Web|Charlotte, North Carolina]]
| location_country = [[United States]]
| location_country = [[United States]]
| locations =
| locations =

Revision as of 17:38, 16 June 2009

Template:Otheruses2

Wachovia
Company typeFarting
GenreLarge intestine
Founded1908
Headquarters
Charlotte, North Carolina
,
United States
Number of employees
121,890[1]
ParentWells Fargo
Websitewww.wachovia.com
One Wachovia Center headquarters in Charlotte, North Carolina.
A typical Wachovia Bank branch in Durham, North Carolina.

Wachovia, based in Charlotte, North Carolina, is a diversified, wholly owned financial services subsidiary of Wells Fargo. As an independent company, it was the fourth-largest bank holding company in the United States based on total assets. Wachovia is the name under which Wachovia Bank, N.A. and Wachovia Bank of Delaware, N.A. do business.

Wachovia Corporation was purchased by Wells Fargo on December 31, 2008, and it ceased to be an independent corporation on that date. Over the next three years, the Wachovia brand will be absorbed into the Wells Fargo brand. [2] Wachovia Corporation's stock was traded on the New York Stock Exchange (NYSE) under the ticker WB.

Business Lines

Wachovia provides a broad range of banking, asset management, wealth management, and corporate and investment banking products 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.[3] Wachovia provides global services through more than 40 offices around the world.

It served retail brokerage clients under the name Wachovia Securities nationwide as well as in six Latin American countries, and investment banking clients in selected industries nationwide. In 2009, Wachovia Securities was the first Wachovia business to be converted to the Wells Fargo brand, when the business became Wells Fargo Advisors. Wachovia also operates Calibre, its wealth management services to ultra-high net worth families with net worth exceeding $25 million.[4]

The company's corporate and institutional capital markets and investment banking groups operate under the Wachovia Securities brand, while its asset management group operates under the Evergreen Investments brand.

Corporate history

Wachovia Corporation was originally created by the merger of the legacy Wachovia Corporation and First Union Corporation. First Union was considered the acquiror in the transaction with Wachovia, although the transaction was structured as a tax-free union of equals and the combined entity chose to retain the Wachovia name.

Origin of corporate name

Main article: Wachovia, North Carolina

Wachovia, IPA: [wəˈkoʊvijə] (wah-KO-vee-yah), has its origins in the Latin form of the Austrian name Wachau.[3] When Moravian settlers 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.[3] The area formerly known as Wachovia now makes up most of Forsyth County, and the largest city is now Winston-Salem.

First Union

Longtime First Union logo

First Union Corporation was founded as Union National Bank on June 2, 1908, a small banking desk in the lobby of a Charlotte hotel by H.M. Victor.

The bank merged with First National Bank and Trust Company of Asheville in 1958 to become First Union National Bank of North Carolina.[5] First Union Corporation was incorporated in 1967. Other Predecessor companies include the Bank of North America, the first bank proposed, chartered and incorporated in America on December 31, 1781.

As part of a corporate reorganization in 1968, a predecessor of First Union National Bank and First Union Mortgage Corporation, a mortgage banking firm acquired in 1964 became subsidiaries of First Union Corp creating the structure the bank utilized until the 2001 merger.

Starting in 1985, with the Supreme Court decision upholding regional interstate banking legislation, First Union focused on an aggressive growth strategy and from 1985 through the merger with Wachovia in 2001, First Union completed over 90 banking-related acquisitions, 50 of which were completed between 1985 and 1995.[6][7]

CoreStates

CoreStates logo

In April 1998, First Union acquired CoreStates Financial Corporation, headquartered in Philadelphia. At the time, this was the largest merger in US banking history.

Core States traced its history to 1781 and the Bank of North America, the first bank chartered in the United States. Once the merger was accomplished, First Union began to claim 1781 as its founding date. Wachovia still operates The Bank of North America's first branch, opened in 1782, which is now the longest continuously operated branch in America.[5]

The acquisition of Core States brought problems with it. Many of these problems arose when First Union attempted a too rapid integration of CoreStates' systems into First Union's. Initially, CoreStates tellers received insufficient training with the new systems and the two systems were unable to communicate with each other. This led to problems with account access and with payments not being correctly applied to loans.

The Money Store

On June 30, 1998, First Union paid $2.1 billion for The Money Store, a loan outfit known for their commercials featuring Baseball Hall of Fame shortstop Phil Rizzuto and pitcher Jim Palmer. Two years later, it closed the unit, writing off $1.7 billion.[8]

Legacy Wachovia

Legacy Wachovia logo

Legacy Wachovia Corporation began in 1879 in Winston-Salem, North Carolina as the Wachovia National Bank. In 1911, the bank merged with Wachovia Loan and Trust, which had been founded in 1893. Wachovia grew to become one of the largest banks in the Southeast partly on the strength of its accounts from the R.J. Reynolds Tobacco Company, which was also headquartered in Winston-Salem.[9] 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. Legacy Wachovia ceased to exist when First Union purchased the company in 2001.

Merger of First Union and Wachovia

On April 16, 2001, Charlotte-based First Union Corporation announced it would merge with Winston-Salem based Wachovia Corporation. As an important part of the deal, First Union would shed its name and assumed the Wachovia identity and stock ticker. This merger was viewed with great surprise by the financial press and security analysts. [10] 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.[11]

The deal met with skepticism and criticism. Analysts, remembering the problems with the CoreStates acquisition, were concerned First Union's ability to merge with another large company. Winston-Salem's citizens and politicians suffered a blow to their civic pride because Wachovia's corporate headquarters would move to Charlotte, a larger city than Winston-Salem. The city of Winston-Salem was concerned both by job losses and the loss of stature from losing a major corporate headquarters. First Union was concerned by the potential deposit attrition and customer loss in the city.[12] 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.[13]

Wachovia's board of directors rejected SunTrust's offer and supported the merger with First Union. SunTrust continued its hostile takeover attempt, leading to a bitter battle over the summer between SunTrust and First Union.[14] 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.[15] On August 3, 2001, Wachovia shareholders approved the First Union deal, rejecting SunTrust's attempts to elect a new board of directors for Wachovia and ending SunTrust's hostile takeover attempt.[16]

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 MBNA in August 2000.[17] 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.

On September 4, 2001, First Union and Wachovia officially merged to form the new Wachovia Corporation, though First Union was the surviving entity. In order to prevent a repeat of the CoreStates problems, the new Wachovia took its time phasing-in the conversion of legacy Wachovia computer systems 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.[18]

In comparison to the CoreStates purchase, the merger of First Union and Wachovia was billed as a success by analysts. The company's deliberate pace of conversion seems to have prevented any large-scale customer attrition. 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.[19]

When Wachovia and First Union merged, 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 Philadelphia and 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 the Wachovia Center, Wachovia Spectrum, and Wachovia Arena at Casey Plaza, respectively.

The following is an illustration of the company's major mergers and acquisitions and historical predecessors (up to the Wachovia and First Union merger of 2001). The list is not comprehensive.

Wachovia logo
Wachovia 
(merged 2001)
First Union logo
First Union Corp. 
(est. 1998)
First Union Corporation 
(Formerly: First Union National Bank)
 (est. 1958)

Union National Bank
(est. 1908)

First National
Bank & Trust

CoreStates Financial
(dates to 1781)

Legacy Wachovia logoWachovia 
Corporation 
(merged 1986)
Wachovia Bank & Trust
(merged 1911)

Wachovia National Bank
(Formerly: Bank of Salem)
(est. 1879)

Wachovia Loan & Trust
(est. 1893)

First Atlanta
(Formerly Atlanta National Bank)
(est. 1865)

Acquisitions

Between 2001 and 2006, Wachovia bought several other financial services companies in an attempt to become a national bank and comprehensive financial services company.

Prudential Securities

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%.[20] 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.[20]

Metropolitan West Securities

On October 22, 2003, Wachovia announced it would acquire Metropolitan West Securities, an affiliate company of Metropolitan West Financial.[21] This acquisition added a portfolio of over $50 billion of securities on loan to the Wachovia Global Securities Lending division.

SouthTrust

SouthTrust logo

On November 1, 2004, Wachovia completed the acquisition of Birmingham, Alabama-based SouthTrust Corporation, a transaction valued at $14.3 billion. The merger created the largest bank in the southeast United States, 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.[22]

Failed MBNA Purchase

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 a competitor. 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

Westcorp

Westcorp logo

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.[23] On February 12, 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

File:Worldsavingslogo.jpg
WorldSavings logo

Wachovia agreed to purchase Golden West Financial for a little under $25.5 billion on May 7 2006.[24][25] 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.[24]

Golden West, which operated branches under the name World Savings Bank, was the second largest savings and loan in 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. In 2006, Golden West Financial was named the "Most Admired Company" in the mortgage services business by Fortune magazine.[26] By the time Wachovia announced its acquisition, Golden West had over $125 billion in assets and 11,600 employees. By October 2 2006 Wachovia had closed the acquisition of Golden West Financial Corporation. The Sandlers agreed to remain on the board at Wachovia.[24]

The Sandlers sold their firm at the top of the market, saying that they were growing older and wanted to devote themselves to philanthropy. A year earlier, in 2005, World Savings lending had started to slow, after more than quadrupling since 1998. Some current and former Wachovia officials say that the merger was agreed to in days and that it was impossible to conduct a thorough vetting of World Savings’ loans. They noted that the creditworthiness of World Savings borrowers edged down from 2004 to 2006, while Pick-A-Pay borrowers had credit scores well below the industry average for traditional loans. World Savings lending volume dipped again in 2006 shortly after the sale to Wachovia was initiated. This prompted World Savings to attract more borrowers by taking a step that some regulators were starting to frown upon, and which the company had been resisting for years: it allowed borrowers to make monthly payments based on an annual interest rate of just 1 percent. While World Savings continued to scrutinize borrowers’ ability to manage increased payments, the move to rock-bottom rates lured customers whose financial reliability was harder to verify. [27] New York Times reporter Floyd Norris has called World Savings a "ticking timebomb" that created "zombie homeowners".[28]

While Wachovia Chairman and CEO G. Kennedy "Ken" Thompson had described Golden West as a "crown jewel", investors did not react positively to the deal at the time. Analysts have since said that Wachovia purchased Golden West at the peak of the US housing boom. Golden West's mortage-related problems led to Wachovia suffering writedowns and losses that far exceeded the price paid in the acquisition, ending up in the fire-sale of Wachovia to Wells Fargo.[29]

A.G. Edwards

On May 31, 2007, Wachovia announced plans to purchase A. G. Edwards for $6.8 billion to create the United States' second largest retail brokerage firm.[30] 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.

Atlanta, Georgia Headquarters at Atlantic Station

2007-2009 financial crisis

Exposed to risky loans, such as adjustable rate mortgages acquired during the Golden West acquisition, Wachovia began to experience heavy losses in its loan portfolios during the subprime mortgage crisis.[31][32]

In the first quarter of 2007, Wachovia reported $2.3 billion in earnings, including acquisitions and divestitures.[33] However, in the second quarter of 2008, Wachovia reported a much larger than anticipated $8.9 billion loss.[34]

On June 02, 2008, Wachovia Corp. chief executive officer Ken Thompson was pushed out as head of Wachovia. [35] 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.

On 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 company's financial trouble.[36]

Forced Government Sale

After Steel took over, he insisted that Wachovia would stay independent. However, its stock price plunged 27 percent during trading on September 26 due to the seizure of Washington Mutual the 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." Ultimately, Wachovia lost a total of $5 billion in deposits that day—about one percent of the bank's total deposits.[37] The large outflow of deposits attracted 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.[38][39]

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.[39]

On 29 September 2008, the Federal Deposit Insurance Corporation (FDIC), acting under a 1991 law empowering it to deal with large bank failures on short notice, announced that Citigroup would 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 Reserve and the Secretary of the Treasury in consultation with the President. 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 a potential failure of 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.[39][40][41][42]

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.[40][43][44][45] The transaction would have been 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.[43][46] Citigroup intends to sell ten billion dollars of new stock on the open market to recapitalize its purchased banking operations.[43] The proposed closing date for the Wachovia purchase was by the end of the year, 2008.[47]

Wachovia expected to continue as a publicly traded company, retaining its retail brokerage arm, Wachovia Securities and Evergreen mutual funds.[46] At the time, Wachovia Securities had 14,600 financial advisers and managed more than $1 trillion, third in the U.S. after Merrill Lynch and Citigroup's Smith Barney.[43]

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 controlled 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 Charlotte Observer that such a strategy is very risky since federal regulators helped broker the deal. One financial expert told the Observer that if Wachovia's shareholders voted the deal down, the OCC could have simply seized Wachovia and placed it into the receivership of the FDIC, which would then sell it to Citigroup. Had this happened, Wachovia's shareholders risked being completely wiped out.[48]

Bidding battle for Wachovia

On September 29, 2008, Wachovia announced its intention to sell its banking operations to Citigroup for $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 Edwards and Evergreen Investments. The sale was agreed to be completed by December 31, 2008.[40][41][47][49]

However, on October 3, 2008, Wells Fargo and 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 Citibank along the Atlantic Seaboard and in the South. Citigroup explored 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.[50][51]

On October 4, 2008 a New York judge issued a temporary injunction blocking the transaction from going forward while the situation is sorted out.[52] However, this ruling was overturned.[53]

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, $20 billion in compensatory and $40 billion in punitive damages, against Wachovia and Wells Fargo for alleged violations of the exclusivity agreement.[54]

The Federal Reserve approved the merger with Wells Fargo on October 12, 2008.[55] The merger is, however, contingent on certain conditions, that the Federal Reserve has yet to announce.[56]

Purchase by 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. [51] Citigroup has already taken measures to stop the Wells Fargo-Wachovia merger, claiming that Wells Fargo has engaged in "tortious interference" with an exclusivity agreement between Citigroup and Wachovia. That agreement states in part that until October 6, 2008 "Wachovia 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."[57] Wachovia and Wells Fargo argue that the Citigroup agreement was never binding, and that the Wells Fargo deal is better for Wachovia.[58] However, Citigroup convinced Justice Charles E. Ramos of the New York State Supreme Court to grant a preliminary injunction temporarily blocking the Wells Fargo deal.[59] This ruling was later overturned by Judge James M. McGuire of the New York State Court of Appeals, partly because he believed Ramos did not have the right to rule on the case in Connecticut.[53]

On October 12 the U.S. Federal Reserve approved Wells Fargo's takeover of the bank, a deal that would create the largest bank branch network in the United States. A Federal Reserve statement said: "The Federal Reserve Board [today] announced its approval of the application ... by Wells Fargo & Company, San Francisco, California, to acquire Wachovia Corporation and its subsidiary banks," the Fed said in a statement on its website. The approval was adopted by a unanimous board decision following Citigroup's decision three days earlier to end court efforts to block Wachovia's merger with Wells Fargo, after having claimed it was illegal after its own, and U.S. government-backed, takeover deal forged Sept. 28.[60]

In filings unsealed two days before the merger approval in a New York federal court, Citigroup argued that its deal was better for U.S taxpayers and Wachovia shareholders. They said that they had exposed themselves to "substantial economic risk" by stating their intent to rescue Wachovia after less than 72 hours of due diligence. Citigroup had obtained an exclusive agreement tn order to protect itself.[61] Wachovia suffered a $23.9 billion loss in the third quarter.[62]

Wells Fargo's purchase of Wachovia closed on January 1, 2009.

Controversies

Michael Serricchio, a broker for Prudential Securities, was called to active duty in the Air Force reserve, but was not offered his old position back after his military stint was over. He sued Wachovia, who had purchased Prudential. A jury found that Wachovia had breached the Uniformed Services Employment and Re-employment Rights Act by intentionally making Serricchio an offer that they knew that he would reject.[63][64]

A New York Times article titled "Corporate Profits, From Data Sold to Thieves"[65] published on May 20 2007 described 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."

On April 25, 2008, Wachovia agreed to pay up to $144 million to end the investigation without admitting wrongdoing.[66] 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.

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. [67] In July, 2008 a couple claimed that, at an Orlando, Florida branch, 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. [68] In both incidents the Secret Service investigated.

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.[69]

References

  1. ^ "Wachovia dealt to Citigroup after 129 years as independent". Winston-Salem Journal. 2008-09-30.
  2. ^ "Wells Fargo Completes Wachovia Purchase". Wells Fargo. 2008-12-31. Retrieved 2009-01-01.
  3. ^ a b c "Wachovia Company Facts". Wachovia. 2007-04-16. Retrieved 2007-06-14.
  4. ^ "Calibre Wealth Management". Wachovia. 2009-01-01. Retrieved 2009-01-01.
  5. ^ a b "First Union". Wachovia Corporation. Retrieved 2007-10-14.
  6. ^ First Union Corp. SEC Form 10-K Annual Report for 2000. (Final 10-K prior to announcement of the Wachovia merger)
  7. ^ First Union Corp. SEC Form 10-K Annual Report for 1995.
  8. ^ Anderson, Mark (2000-06-30). "Down in flames: Why Money Store was a bust". Sacramento Business Journal. American City Business Journals, Inc. Retrieved 2007-10-14.
  9. ^ Burrough, Bryan (2003). Barbarians at the Gate. HarperCollins. p. 40. {{cite book}}: Italic or bold markup not allowed in: |publisher= (help)
  10. ^ "Big Banking Merger: Investors, Beware". The Motley Fool. 2001-04-16.
  11. ^ "THE MARKETS: Market Place; First Union Pursues Wachovia, Making Offer of $13.1 Billion". The New York Times. 2001-04-17.
  12. ^ "Wachovia and First Union announce Winston-Salem as base for the new Wachovia's Wealth Management Business" Wachovia press release, August 30, 2001
  13. ^ "SunTrust Makes Bid for Wachovia, Criticizing First Union's Offer". The New York Times. 2001-05-15.
  14. ^ "Market Place; First Union's Bid for Wachovia Gains Momentum". The New York Times. 2001-06-01.
  15. ^ "Rivals Waging A Media War Over Wachovia". The New York Times. 2001-07-21.
  16. ^ "Wachovia Says Takeover Vote Went Its Way". The New York Times. 2001-08-04.
  17. ^ "THE MARKETS: Market Place; Questions over the sale of a credit card operation cloud a deal to merge banks". The New York Times. 2001-05-02.
  18. ^ "Wachovia Completes Merger Integration On Schedule, Under Budget, With Added Convenience For Customers" (Press release). Wachovia Corporation. 2003-08-18. Retrieved 2007-10-14.
  19. ^ "Scores By Industry" (chart). American Customer Satisfaction Index. Retrieved 2007-08-06.
  20. ^ a b "Wachovia Corp. and Prudential Financial, Inc. Complete Combination of Brokerage Units" (Press release). Wachovia Corporation. 2003-07-01. Retrieved 2007-10-14.
  21. ^ "Wachovia Announces Agreement To Acquire Metropolitan West Securities, LLC" (Press release). Wachovia Corporation. 2003-10-22. Retrieved 2007-10-14.
  22. ^ "Wachovia Completes SouthTrust Merger Integration" (Press release). Wachovia Corporation. 2005-12-05. Retrieved 2007-10-14.
  23. ^ "Wachovia Completes Merger With Westcorp and WFS Financial Inc" (Press release). Wachovia Corporation. 2006-03-01. Retrieved 2007-10-14.
  24. ^ a b c "Wachovia acquires Golden West Financial". Associated Press. 2006-05-08. Retrieved 2007-07-18.
  25. ^ "Wachovia To Acquire Golden West Financial, Nation's Most Admired and 2nd Largest Savings Institution" (Press release). Wachovia Corporation. 2006-05-07. Retrieved 2007-07-18.
  26. ^ "Fortune: America's Most Admired Companies 2006". CNNMoney.com. Retrieved 2007-07-18.
  27. ^ [1]
  28. ^ http://www.nytimes.com/2009/05/15/business/economy/15norris.html?ref=business
  29. ^ [2]
  30. ^ "Wachovia to buy A.G. Edwards for $6.8B". CNNMoney.com. 2007-05-31.
  31. ^ "Wachovia reportedly in talks with three suitors". Dow Jones. Retrieved 2009-05-01.
  32. ^ "Wachovia dealt to Citigroup after 129 years as independent". Winston-Salem Journal. 2008-09-30.
  33. ^ "Wachovia Earns $2.30 Billion, EPS Up 10% to $1.20 in 1st Quarter 2007". Press release. Retrieved 2007-04-26.
  34. ^ "Wachovia Details 2nd Quarter Loss; Outlines Initiatives to Preserve and Generate Capital, Protect Strong Liquidity and Reduce Risk". Press release. Retrieved 2008-07-22.
  35. ^ IEVA M. AUGSTUMS, AP Business Writer (2008-06-02). "Wachovia board forces out CEO Ken Thompson" (HTML). Yahoo News. CHARLOTTE, N.C. Retrieved 2008-06-02. {{cite news}}: |author= has generic name (help)
  36. ^ "Wachovia names Treasury undersecretary new CEO" (HTML). USA Today. USA Today.
  37. ^ Rothacker, Rick. $5 billion withdrawn in one day in silent run. The Charlotte Observer, 2008-10-11
  38. ^ St. Onge, Peter. Stunningly swift fall for Wachovia. The Charlotte Observer, 2008-09-30.
  39. ^ a b c Rothacker, Rick; and Kerry Hall. Wachovia faced a ‘silent' bank run. The Charlotte Observer, 2008-10-02.
  40. ^ a b c "Citigroup Inc. to Acquire Banking Operations of Wachovia: FDIC, Federal Reserve and Treasury Agree to Provide Open Bank Assistance to Protect Depositors". Press Releases. Federal Deposit Insurance Corporation. 2008-09-29. Retrieved 2008-09-29. {{cite news}}: Cite has empty unknown parameter: |coauthors= (help)
  41. ^ a b "Wachovia Announces Bank Subsidiary Divestitures to Citigroup: Wachovia Corporation to become a focused leader in retail brokerage and asset management". Wachovia Press Release. 2008-09-29. Retrieved 2008-09-29. {{cite news}}: Cite has empty unknown parameter: |coauthors= (help)
  42. ^ Financial Times (2008-09-29). "Citi to acquire Wachovia" (HTML). Financial Times. LONDON, UK. Retrieved 2008-09-29.
  43. ^ a b c d Dickson, Steve (2008-09-29). "Citigroup Agrees to Buy Wachovia's Banking Business (Update6)". Bloomberg.com. Bloomberg LLC. Retrieved 2008-09-29. {{cite news}}: Unknown parameter |coauthors= ignored (|author= suggested) (help)
  44. ^ http://www.nytimes.com/2008/09/30/business/30bank.html?ref=business
  45. ^ http://www.bizjournals.com/tampabay/stories/2008/09/29/daily1.html
  46. ^ a b Dash, Eric (2008-09-29). "Citigroup Buys Bank Operations of Wachovia". nytimes.com. New York Times. Retrieved 2008-09-29. {{cite news}}: Unknown parameter |coauthors= ignored (|author= suggested) (help)
  47. ^ a b "Citi and Wachovia Reach Agreement-in-Principle for Citi to Acquire Wachovia's Banking Operations in An FDIC-Assisted Transaction". Press Room. CitiGroup. 2008-09-29. Retrieved 2008-09-29. {{cite news}}: Cite has empty unknown parameter: |coauthors= (help) Cite error: The named reference "Citigroup-Press Release-2008-09-29" was defined multiple times with different content (see the help page).
  48. ^ Rexrode, Christina; and Jen Aronoff. Shareholders talk of fighting Citi deal. The Charlotte Observer, 2008-10-02.
  49. ^ Sara Lepro (2008-09-29). "Citigroup to buy Wachovia banking operations". The Associated Press.
  50. ^ Dash, Eric (2008-10-03). "Wells Fargo in a Deal to Buy All of Wachovia". The New York Times. Retrieved 2008-10-03.
  51. ^ a b "WELLS FARGO, WACHOVIA AGREE TO MERGE" (PDF). Wells Fargo. 2008-10-03. Retrieved 2008-10-03.
  52. ^ Citi: Wells Fargo blocked from buying Wachovia
  53. ^ a b "Weekend Legal Frenzy Between Citigroup and Wells Fargo for Wachovia". The New York Times. 2008-10-06. Retrieved 2008-10-06.
  54. ^ "Wells Fargo plans to buy Wachovia; Citi ends talks". AP/Yahoo. 2008-10-09. Retrieved 2008-10-10.
  55. ^ "FRB: Press Release--Approval of proposal by Wells Fargo & Company to acquire Wachovia Corporation". Federal Reserve Board. 2008-10-12. Retrieved 2008-10-12.
  56. ^ "Fed Approves Wells Fargo's Takeover Bid for Wachovia". Bloomberg. 2008-10-12. Retrieved 2008-10-12.
  57. ^ "Wachovia-Citigroup Exclusivity Agreement" (PDF). The New York Times. 2008-10-03. Retrieved 2008-10-05.
  58. ^ Rothacker, Rick; and Christina Rexrode. Citigroup strikes back at proposed Wachovia-Wells Fargo merger deal. The Charlotte Observer, 2008-10-03.
  59. ^ Dash, Eric (2008-10-04). "Citigroup Says Judge's Order Suspends Wachovia Deal". The New York Times. {{cite news}}: Unknown parameter |coauthors= ignored (|author= suggested) (help)
  60. ^ http://www.etaiwannews.com/etn/news_content.php?id=762220
  61. ^ http://www.bizjournals.com/jacksonville/stories/2008/10/13/daily6.html Filings outline demise of Citi-Wachovia deal
  62. ^ "Wachovia Reports $23.9 Billion Loss for Third Quarter". The New York Times. 2008-10-22. Retrieved 2008-10-22.
  63. ^ [3]
  64. ^ [4]
  65. ^ "Corporate Profits, From Data Sold to Thieves". New York Times. Retrieved 2007-05-20.
  66. ^ Charles Duhigg (2008-04-26). "Big Fine Set for Wachovia to End Case" (HTML). The New York Times. The New York Times Company. Retrieved 2008-04-27.
  67. ^ WFTV 9 (2008-06-26). "Woman Claims She Was Given Counterfeit $20 Bills At Bank" (HTML). WFTV 9. ORANGE COUNTY, FL. Retrieved 2008-07-23.{{cite news}}: CS1 maint: numeric names: authors list (link)
  68. ^ LOCAL 6 (2008-07-22). "Bank Gave Counterfeit Bills, Couple Says" (HTML). Local 6 News. ORLANDO, FL. Retrieved 2008-07-23.{{cite news}}: CS1 maint: numeric names: authors list (link)
  69. ^ CNNMONEY.COM (2008-04-26). "Feds look at Wachovia in drug money probe" (HTML). CNN. CNNMONEY.COM. Retrieved 2008-07-23. {{cite news}}: |author= has generic name (help)

External links

Wikimedia Commons has media related to Wachovia Bank.
Retrieved from "https://en.wikipedia.org/w/index.php?title=Wachovia&oldid=296793568"