Rus News Journal

Citigroup has not kept up with cheapness

the American financial corporation Citigroup declared the termination of negotiations on an occasion of the purchase large American ssudo - savings bank Wachovia. The active has got to bank Wells Fargo, whose largest shareholder is Warren Baffet. He has won at Citigroup struggle for Wachovia, and now Wells Fargo becomes the retail bank largest in the USA.
late at night on October, 9th the American financial corporation Citigroup has informed on the exit from struggle for large American retail bank Wachovia, the leader of the American market of mortgage loans with the variable rate. We will remind, Citigroup has agreed about purchase Wachovia at intermediary of the federal authorities of the USA on October, 29th - after within last week September of action Wachovia from - for sharp deterioration of a situation in the financial market have gone down in price on 46 %, to $21,6 mlrd and the bank has been compelled to declare search of the strategic investor. Citigroup has offered for retail operations of bank of $2,16 mlrd, thus the corporation was ready to take on the balance possible losses in $42 mlrd on the credit portfolio Wachovia estimated in $312 billion the Help in amortisation of these expenses Citigroup should render the federal authorities subsequently. for clients Wachovia this transaction will provide continuation of current operations and safety of all deposits - has declared then the head of Federal corporation of the USA of insurance of contributions (FDIC) Shejla Bejr (see from September, 30th).

After only four days Wachovia has entered into the agreement on purchase with other American bank Wells Fargo. It is the fourth on the size of actives bank of the USA ($609 mlrd) with the branched out retail business. He has offered for problem Wachovia more than Citigroup - $15,1 mlrd, on 0,1991 actions for each action Wachovia. The largest shareholder Wells Fargo is the known financier Warren Baffet - it posesses 8,8 % of bank. Thus mister Baffet has already spent $8 mlrd for investments into the problem American companies: in the end of September he has agreed about purchase of preference shares Goldman Sachs on $5 mlrd, and in the beginning of October - preference shares of American industrial concern General Electric on $3 billion For carrying out of transaction Wells Fargo has planned dopemissiju the actions for the sum $20 billion After that Citigroup has submitted the claim on $60 mlrd against Wachovia and Wells Fargo, asserting that the agreement on absorption which these two companies have concluded on October, 3rd, contradicts the previous agreement between Citigroup and Wachovia.

past Thursday Citigroup has explained the exit from struggle for Wachovia essential differences in structure of transactions and different views on risks . Thus Citigroup continues to achieve payment to it of indemnifications from both banks. Wells Fargo has won, it takes Wachovia with all giblets - the professor of university of Charlotte (has declared in interview Chicago Tribune staff Northern California) to Tony Plat.

from - for falling of stock value Wells Fargo and Wachovia since October, 3rd on 22 % and 8 % accordingly now the sum of transaction makes almost $11,7 billion Absorption Wachovia, serving deposits for the sum of $498 mlrd, will allow Wells Fargo to become the retail bank largest in the USA on number of branches - more than 6600 in comparison with more than 6100 at the present leader, Bank of America. Besides, the transaction will allow Wells Fargo to become to the full obshchefederalnym bank: the basic business Wells Fargo is at the western coast while the most part of branches Wachovia is in east part of the USA.

however, experts, underlining importance of this transaction for the American bank sector, are not inclined to do iridescent estimations in a present situation in the financial markets. the biggest question now consists that Wells Fargo it is necessary to involve for the transaction the capital in such market where affairs are at present much worse, than several days ago - Bush quotes San Francisco Chronicle an analyst of research company NAB Research Nensi.