It was widely reported that Wachovia (WB), the sixth-largest U.S. bank by assets, has begun discussing a merger with several other bank companies. The New York Times said on Friday that Wachovia has been in preliminary talks with Citigroup (C). The Wall Street Journal said Wachovia has entered preliminary merger talks with Citigroup, Banco Santander SA (SAN) and Wells Fargo & Co (WFC), citing a person familiar with the situation. Bank executives are expected to be in New York this weekend for talks, it said.
The market value of Wachovia was about $21.6 billion as of Friday's market close, Reuters data showed. Citigroup's was $109.7 billion, Santander's was $99.8 billion and Wells Fargo's was $123.4 billion.
Earlier this month, Wachovia began merger talks with Morgan Stanley following the bankruptcy of Lehman Brothers Holdings, but people familiar with the matter said earlier this week that those talks had ended.
On Friday, Wachovia came under pressure as investors worried about the fate of a $700 billion government rescue of the financial sector (You can read Joe's post This is NOT a Bailout!!).
For Citigroup, combining the two companies would create by far the largest U.S. retail brokerage, with close to 30,000 brokers before attrition. Citigroup would also get the major U.S. retail banking presence it has long lacked, and make it a strong rival to Bank of America, JPMorgan and Wells Fargo.
Citigroup has also raised well over $40 billion of capital in late 2007 and early 2008, leaving Chief Executive Vikram Pandit perhaps better positioned for acquisitions than rivals that failed to raise enough and could not do so now.
Any Wachovia merger talks would come amid uncertainty of the fate of the proposal by Treasury Secretary Henry Paulson. Wachovia would be a prime candidate for help, depending on the types and amounts of securities the government would accept.
Sources: Reuters, Wall Street Journal, Yahoo
The market value of Wachovia was about $21.6 billion as of Friday's market close, Reuters data showed. Citigroup's was $109.7 billion, Santander's was $99.8 billion and Wells Fargo's was $123.4 billion.
Earlier this month, Wachovia began merger talks with Morgan Stanley following the bankruptcy of Lehman Brothers Holdings, but people familiar with the matter said earlier this week that those talks had ended.
On Friday, Wachovia came under pressure as investors worried about the fate of a $700 billion government rescue of the financial sector (You can read Joe's post This is NOT a Bailout!!).
For Citigroup, combining the two companies would create by far the largest U.S. retail brokerage, with close to 30,000 brokers before attrition. Citigroup would also get the major U.S. retail banking presence it has long lacked, and make it a strong rival to Bank of America, JPMorgan and Wells Fargo.
Citigroup has also raised well over $40 billion of capital in late 2007 and early 2008, leaving Chief Executive Vikram Pandit perhaps better positioned for acquisitions than rivals that failed to raise enough and could not do so now.
Any Wachovia merger talks would come amid uncertainty of the fate of the proposal by Treasury Secretary Henry Paulson. Wachovia would be a prime candidate for help, depending on the types and amounts of securities the government would accept.
Sources: Reuters, Wall Street Journal, Yahoo
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