Citigroup Buys Wachovia Banking Operations

  • 16 years ago
  • Uncategorized
In the US its seems there in no end to big company buy outs the latest take over comes from Citigroup which have agreed to buy Wachovia’s banking operations, a move that that would concentrate power within the nation’s banking industry in the hands of a few giant lenders.
Citigroup will absorb up to $42 billion of losses in the deal, with the FDIC covering any remaining losses, the government agency said Monday. Citigroup also will grant the FDIC $12 billion in preferred stock and warrants.Citigropu will now have a bigger platform to sell home loans.
In a statement, the FDIC, which insures the nation’s retail bank deposits, emphasized that Wachovia did not fail and that the Deposit Insurance Fund would not be affected.
Wachovia has been among the banks hardest hit by the ongoing crisis in the mortgage market. Its current problems stem largely from its acquisition of mortgage lender Golden West Financial Corp. in 2006 for roughly $25 billion at the height of the nation’s housing boom.
The sale to Citigroup further concentrates Americans’ bank deposits in the hands of just three banks: Bank of America, JPMorgan Chase and Citigroup would control more than 30 percent of the industry’s deposits.
Meanwhile today saw the dollar shot up against the euro and also rose versus the yen on  as US lawmakers prepared to vote on whether to rubber-stamp a 700-billion-dollar bailout of stricken Wall Street banks.

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