Citigroup is buying Wachovia’s deposits, $300 billion of its loan portfolio, and about $42 billion of debt for an undisclosed sum, reports CNN.
Part of Wachovia will remain independent — including its massive brokerage business which ballooned after it purchased AG Edwards in 2007, as well as its Evergreen investment management division.
Soon, we will all be Chase or Citibank customers.
“Citigroup to buy Wachovia banking assets” [CNN] (Thanks to humphrmi!)
(Photo: hyku)
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Okay so if I have a brokerage/checking account (an account that’s part banking, part brokerage) at Wachovia is that now part of Citi or is it considered part of the brokerage business and remaining independent?
@Morac: I’m guessing that link will be broken. You will now need to fund the brokerage account the good ol’ way – checks and wires!
@Morac: If you’re talking about the CAP account thingy the investment side has, which has check writing privileges, I called and asked my Wachovia broker that on Friday…he said it is fully on the investment side of the house despite the checking privileges and so shouldn’t be affected. But I do wonder if those privileges are gonna evaporate…
Well, I’d rather this than a massive bank run leading to a generous helping of FAIL.
Damn it! Ah well, at least it wasn’t bought by Chase. What’s that you say? CITIBANK? Oh shit …
@Geblah187: damnit, i was hoping it would either succeed or be bought out by that spanish bank.
Is Citigroup going to make good on all the Way2Save matching funds they owe customers starting early next year?
Well.. Guess thats a wrap for Wachovia..
I’m a Wachovia customer that is about to become a former customer. I already transfered some money out to another bank, USAA. I just don’t want to bank with a company that has reckless management
@ECLyons: We used a regional sized bank (and a credit union for mad money). I do not know about USAA, but I have no problems with the regionals.
is there a bank-death pool i can join? my money is on capital one bank
@bsalamon: There used to be, but the SEC banned short-selling of bank stocks a few weeks ago.
@rekoil: nice, +1
@bsalamon: Were it not for the FDIC, that would probably be a very safe place to keep your money.
@bsalamon:
Capital One’s mortgage portfolio is fairly stable- it’s mostly traditional, locally originated fixed term fixed interest mortgages. They closed their wholesale/brokered Alt-A lending arm (inherited from North Fork) last year.
Their credit card portfolio also seems strong- they’ve long had strict standards for issuing CCs and are well known for having some of the lowest credit limits in the industry. But if things keep getting worse, look at the credit card lending to start biting them in the ass- they used to give a lot of subprime borrowers $1000 limits and that can add up.
Boosting their retail banking presence is still a priority so look at them to pick up failing banks on the cheap. Just in the last five years they’ve picked up Hibernia, North Fork and Superior savings and created a significant presence in NY, NJ, CT, TX and LA.
@EarlNowak: Already Capital One has been warning their shareholders that they are expecting credit defaults to go way up this year.
@bsalamon: Capital One looks like a great candidate, but I’m wondering if Wells Fargo will go under. (More like “Hells Farto”, amirite?)
I just hope by the end of this mess we aren’t left with three banks that are “too big to fail”.
And there was much wailing and gnashing of teeth.
@Coles_Law: If this article is true (Smaller Banks Thrive Out of the Fray of Crisis) then maybe this will make the local banks and credit unions bigger.
@Rectilinear Propagation: overall, very true. smaller institutions are much more prepared to weather this storm – many of them have ZERO exposure to this current problem (though they might have significant exposure to the commercial lending crisis that has yet to come).
however, let me point to an alarming trend among some community banks & that is positioning your institution to be purchased by larger institutions. there are two “smaller” banks in my state – people’s united & webster bank – that have done just that & now they’re stuck between a rock & a hard place. banks aren’t paying a premium for other banks in this market & positioning yourself to be bought often involves maximizing short-term profits at the expense of long-term sustainability (you can thank insider enrichment for that).
what results are smaller banks that arguably have greater exposure to risk in this marketplace. how do you know if your institution is exposed? some telltale signs are aggressive expansion (new branches in new markets as well as purchasing sprees of other banks, brokerage houses, operational units) &/or massive layoffs. executive upheavals can also signal issues – especially if you see a flight of long-time middle & upper-level management. this often signals a major change.
you’re money is still safe at these institutions (up to insurance limits), but be careful if you are an investor or have more than the maximums on deposit.
Well, I guess it might be a good idea to switch over to the SECU my wife uses.
You know, there was a REASON that I gave all my business to Wachovia and not to Citi or Chase.
I’ll be moving my checking back over to Regions for sure, but I don’t know about my mortgage. I have a real problem with Citi getting my interest when they won’t give me service anywhere near the level that Wachovia did.
@feralparakeet:
Considering “WalkAllOverYa”‘s reputation for bad service, that’s a scary thought.
@feralparakeet: Yea well, there was a REASON I gave my business to WaMu, and you see how that worked out.
Regions changed the way they operate after they merged with AMSouth…they went all draconian. It’s bad when 2 branch managers look at you with a straight face and tell you that instead of moving forward, they moved backwards by 20 years. Which, is why I changed to WaMu…so watch out with Regions.
@Ben Popken: yea right! when you can remove the concept of greed from the human race, it might happen.
@feralparakeet:
I haven’t heard of Regions until you mentioned it (not in my region), so I did a quick Google search and find that they ranked worst in customer service by JD Power ([www.bizjournals.com]).
@SniDa: Eh, I haven’t used Regions since before they bought AmSouth, but I never had a problem with them. The rest of my family uses them, and they’re happy too.
BofA was evil (and still is).
BB&T was decent, but not that great.
WaMu gave me some of the worst service overall, but not quite as bad as BofA.
I’m tempted to cut a hole in my mattress, if I had enough money to make it worth cutting up a perfectly good mattress.
@SniDa: My wife and I opened an account with them (in addition to our credit union accounts) and we’ve had no problems at all. Actually, they’ve been rather helpful, and even moved the due date of her car loan to match her pay schedule.
As we go along, they seem to be improving. This time the bank got bought before it failed. Maybe by the end they’ll learn enough to stop overly risky banking practices will be stopped before they start.
@Ben Popken: If they didn’t figure it out after the banking crisis of the 80s, they won’t figure it out now.
@B: Perhaps if we don’t get fooled into the “business can best regulate itself” and “investing in white-collar crime is anti-business” memes when they surface again (and you know they will), we won’t have to rely on the sterling kindness and ethical unimpeachability of bankers and Wall Street tycoons the next time, hmm?
I thought Citi was on the FDIC list of the 117, now 116 banks that are probably going to fail.
So the deal makes so much sense to the Federal Reserve & FDIC: One giant failed bank is bought by an even larger about to fail bank.
How much can I get when I default on my Citibank credit card?
As if I don’t know that answer!
I’ve used a credit union for the past 10 years or so. Even after moving I was able to join another credit union. They have great rates and almost no fees, I even had a mortgage that they kept in-house. Why do individual consumers use banks?
@thancr: I’ve been using traditional banks for over 10 years, and I’ve never paid a fee on my checking account.
@thancr: Why do individual consumers use banks?
Because when you’ve lived in Massachusetts, Rhode Island, New york, and Virigina in the last five years — and when your family is in Connecticut, Vermont, Pennsylvania, and Rhode Island, and your significant other’s family is in North Carolina — sometimes it’s really, really worth it to have access to your bank (ATMs and branches) in more than one town.
That said, if I should ever look to own property, I don’t think I’d be wanting a mortgage with my current bank. But still — I’ve genuinely benefited from having a bank that I can find everywhere I am. And I may not be the rule but I’m not that much of an exception, either.
@EtoilePB: Big deal. When you visit family it costs 2 bucks at the most to withdraw money from any nearby ATM. The benefits you get from a CU are overriding that small fee in my opinion.
@EtoilePB:
[www.cuservicecenter.com]
I have yet to find a bank that has locations everywhere I travel, (Louisiana especially, because of their different legal system) but my local credit union has 3,500 shared branches where I can make free withdrawals, deposits, loan payments, get money orders, etc, etc.
So apparently, if you live in the South, BB&T is the way to go…
@12-Inch Idongivafuck Sandwich: BB&T is pretty awesome. Then again, I’m a simple person. I don’t require much from them aside from online banking, and their customer service reps have always been very helpful.
@12-Inch Idongivafuck Sandwich: Here here to that. I’ve had no complaints with those guys and wound up cycling back to them after idiotically putting my faith that FSG Bank could intelligently and decently service their customer base.
The week before WaMu failed, I was telling those I knew who don’t follow this sort of thing that it was likely to fail, based on stuff I read here. This week, I prophesied the collapse of Wachovia. Curse you, Citigroup, for making them false. Yes, yes, I suppose it’s good for Wachovia’s customers.
Speaking of, this might just be the bump I need to move my money to my university’s credit union…
“Soon, we will all be Chase or Citibank customers.”
Not me! My credit union is doing better than ever!
Looks like the pool of major, multi-branch banks are shrinking.
I’m starting to like credit unions more and more.
Or Bank of America. If my memory is correct Chase and Citi both grew from the East westward, while BOA grew from the West eastward.
I understand why this sale was engineered and the potential disaster it avoided. But, aren’t we setting ourselves up for greater future disasters by making these companies so big? If companies like Wachovia were too big to fail … what about Citi + Wachoiva?
@captadam: Wachovia wasn’t too big to fail. It just escaped failure because its banking division was very desirable. Under a different situation, it would have probably been allowed to fail. CITI + WB, however, I don’t know about that.
Does anyone currently have their mortgage through Citi? I have/had mine with WB and you could not pay your monthly bill electronically. I’m wondering if this option is in place with Citi, now that my monthly bill will be paid to them.
it is going to be a confluence of two horrible banks.
I am now REALLY glad I switched banks a few weeks ago. Wachovia sucked, but now it’s going to suck so much more. Not that the bank I switched to is any better. I think I would have better luck with a check cashing store and the envelope system.
BTW, what does this mean if you have a ultra crappy private student loan from Wachovia?
Don’t forget about Bank of America – the largest in the country before this morning, maybe still. need to see how the citi buy shakes out.
City, BOA, and Chase are the big 3 and some of the only ones that seem capable of rolling with this crisis. they will survive and create a new paradigm withing the US banking world
And what does it mean if you (and by you I mean I) have a HELOC from Wachovia?
This reminds me of the late 80′s, early 90′s, when every bank I ever had an account with ended up getting assimilated into the NationsBank (now BoA) borg.
“NationsBank, I wish I could quit you.”
I suppose it’s just a matter of time until National City is assimilated into the collective.
Another thought… I find it pretty scary that the institutions that I grew up putting my faith and money into really aren’t any better at managing my money than my mattress would have been.
I guess it’s just a matter of time before National City gets assimilated into the collective.
Makes me wonder if banks are really any better at managing my money than my mattress would be.
i’m now incredibly excited that i moved banks from wachovia to a local one.
I wonder if this means I’ll have to memorize another reassigned account number? mine got arbitrarily changed when Wachovia bought my original bank which was Southtrust I think…
@crazyasianman: When Citibank bought EAB–this was maybe 10 years ago?–my EAB account # stayed the same even though it was turned into a Citi acct.
um yeah. If the revised Bailout bill isn’t approved on Thursday, all bets are off if Citi will go thru with this deal.
Citi was going to be able to make money off the bad option arms due to terminology in the bill.
(cnn money has text of bill that failed today, it gave provisions for mergers to still make money off crap debt)
And, the Rockefellers end up with Wachovia, too.