Giddyup! Wells Fargo Rides In And Steals Wachovia From Citibank!

Attention Wachovia customers: Wells Fargo just rode on on that stagecoach thing of theirs and stole your bank from Citibank, says the NYT. Rather than pick apart the pieces of Wachovia, Wells Fargo is going to buy the whole darn thing.

The announcement came just four days after Citigroup had agreed to buy Wachovia’s banking operations of Wachovia for $2.2 billion of about $1 a share. But Wachovia, which is based in Charlotte, N.C., has now rejected that deal in favor of one where the entire company would be acquired. How Citigroup will respond to the news remained a question Friday morning.

In a statement, Wells Fargo, which is based in San Francisco, said that the deal required no assistance from the Federal Deposit Insurance Corporation or any other government agency.

Under the old deal, the FDIC agreed to guarantee losses above $42 billion in exchange for stock and warrants worth about $12 billion, says the NYT.

As far as the mortgage meltdown goes, Wells Fargo didn’t take the risks that many other banks did, and are therefore in a good position to acquire Wachovia. It also did not have a big investment bank, so was spared the recent investment banking bloodbath.

Wells Fargo in a Deal to Buy All of Wachovia [NYT]
(Photo: So Cal Metro )

Comments

Edit Your Comment

  1. I call “Shotgun”!

  2. TPK says:

    I’m not sure how $15.1 Billion is less than $2.2 Billion.

    Is this the new “bailout math”?

  3. chauncy that billups says:

    From the WSJ: “Citigroup says Wachovia’s agreement to a transaction with Wells Fargo “is in clear breach of an exclusivity agreement between Citi and Wachovia.” Citi says “Wells Fargo’s
    conduct constitutes tortious interference with the Exclusivity Agreement.”

    Anyone with financial background that can parse the possible issues here? Bottom line: are Wachovia customers safe?

    • bpclay says:

      billups -

      here’s the translation – when two companies come to an “agreement” or even begin serious negotiations, there is usually a legal document signed that provides confidentiality in the negotations, non-disclosure of any information that is exchanged (especially if the deal falls apart), and grants/guarantees that the company being acquired (or that is the merger target) will not enter into negotiations with another company.

      based on that, citi is asserting a claim that wachovia and wells breached that clause. since the wells deal is significantly different that the citi deal, i’m not sure how it will shake out….but you can expect that it will probably end up in court (similar to the first union – wachovia – suntrust fiasco a few years back)

    • GTI2.0 says:

      @bilups:

      Why wouldn’t they be? Wachovia isn’t insolvent.

      • chauncy that billups says:

        @GTI2.0: dunno…investors see this dragging out into a mess, get scared, and start selling…wachovia shares tank…bank run starts…wachovia fails…wells fargo pulls out due to this…FDIC steps in and takes over.

  4. bmwloco says:

    I bank at Wachovia (also known locally as “Walk all over you”.

    This is going to be fun. Only fun ’cause I don’t have much money and it just doesn’t matter.

    Let the games begin.

    • johnmc says:

      @bmwloco: Banking with Wells Fargo is never fun, especially if you don’t have a lot of money in there. Get thee to a credit union, stat! Wells Fargo sent me crying back to mine, who gave me a big hug and made it all better.

    • aristan says:

      @bmwloco: Oh, Bmwloco, wasn’t it fun when Walk-All-Ova-ya merged with F.U. National bank (First Union)? Good Times.

    • dweebster says:

      @bmwloco: “Wachovia (also known locally as “Walk all over you”.” – Seems like the marriage to Wells Fargo is certainly appropriate. Of course, Shittybank would have been able to keep up that standard, too.

  5. Shadowman615 says:

    Don’t we already have an article about this?

    [consumerist.com]

  6. mbz32190 says:

    Welchovia?

    Well it looks like this gives Wells Fargo almost a nationwide presence with every little overlap..

    Which is good because where I live there are a zillion Wachovias (my favorite being a shopping center with TWO Wachovia branches less than 200 feet apart), but tons of new Citibank branches going up. At least there shouldn’t be any empty branches.

    Wells Fargo should do something with their logo though..the typeface and colors are blah.

    • chauncy that billups says:

      @mbz32190: You aren’t talking about Eastgate shopping center in Chapel Hill, NC are you?

      • mbz32190 says:

        @bilups:

        Nope..theres a shopping center in the suburbs of PA here with two branches as well.
        They both started out as Corestates (I believe), which then became First Union..then Wachovia..but through each merger, they never closed one of them!

        1.1 Miles WARMINSTER EAST FINANCIAL CENTER
        732 W STREET RD,
        WARMINSTER, PA 18974

        1.16 miles WARMINSTER WEST FINANCIAL CENTER
        836 W STREET RD,
        WARMINSTER, PA 18974

    • @mbz32190: Here in charlotte, there are 3 banks on the edge of the Arboretum shopping center. 2 Wachovia branchess with a Bank of America in between (one used to be a First Union before the merger/takeover)
      A few miles away (highway 51 near 485), there’s 2 Wachovia branches, on the same side of the street, right next to each other (once again, one used to be a First Union)

  7. chiieddy says:

    The deal for the stockholders actually works out better for WB holders than at what each stock is currently priced as. Thank goodness.

  8. econobiker says:

    I added financial information that was probably left out of the blurb above:

    “As far as the mortgage meltdown goes, Wells Fargo didn’t take the risks that many other banks did, and are therefore in a good position to acquire Wachovia. It also did not have a big investment bank, so was spared the recent investment banking bloodbath.” Wells Fargo also has an increasingly profitable and growing market in money transfers for desperate US citizens sending money to Nigerian 419 scammers.

  9. starrion says:

    It so cute when they fight over the carcass like that!

  10. sockrockinbeats says:

    I bank at Wachovia, is my money safe? I only have like $200 to my name, but when you live paycheck-to-paycheck that’s a lot of money.

    I really need to switch banks anyway, Wachovia has horrible hours (only open 9am – 3pm M – Th at the location closest to me–who the heck is able to make it to the bank in those hours?!) and there just aren’t many of them around (in New Castle County, Delaware, there are only 5 branches).

    I’d love to switch to a credit union, but the closest one is a bit of a ride. Time to start bank-shopping

    • Snarkysnake says:

      @sockrockinbeats:

      Relax, your money’s safe. The FDIC will run a shuttle from the Bureau Of Engraving And Printing if need be and PRINT the money to pay you. (What it will be worth is anybody’s guess)

      Otherwise, Wells is just trying to steal Wachovia for a little higher bargain price than the fire sale price that Citi offered. Whomever gets the damn thing will get a steal based on the number of branches,national reach,deposit base etc… It would cost MANY TIMES the amount that either would be aquirer pays to build such a franchise from scratch. Indeed,that money has already beeen paid and pissed away by the soon to be outgoing management. The shareholders will soon be crying in their beer over having lost most of their investment to the assclowns that ran it into the ditch. But while the fun was stil being had,how many voted against management proposals that would eventually wreck this company ? How many said that we need to be a bank and not a casino ? Why are boards of directors more likeley to die than be voted out of office?

      Pretty good lesson for other investors…

  11. james says:

    Wells Fargo is a horrible bank from the customer perspective. If you have Wachovia, I would consider changing banks. HSBC is a good bank.

  12. billbillbillbill says:

    I hate Wells Fargo. They bought First Security Bank in Utah and that was when I was introduced to fee banking. Everything had a fee attached. I jumped ship to a Credit Union and have never looked back. Good luck!

  13. foodporncess says:

    I used to bank with Wells Fargo and they were HORRIBLE. I switched to Wachovia as soon as they came to Texas (I had been with them in NC). Now this. Good thing I have an account with a credit union because if this goes through, I’m moving to that. Wells Fargo can suck it :)

  14. craptastico says:

    everyone should be excited about this if for no other reason than the government isnt insuring the deal like they were Citigroup’s offer. let the free market work it out

    • tsume says:

      @craptastico: I agree!

      I love Wells Fargo. Recently, I switched to WaMu because I’m moving to Florida and there’s no Wells Fargo there … now that my bank has been acquired by Chase … and Wells is buying Wachovia who has a big presence where I am moving … looks like I’ll have to switch back!

  15. cf27 says:

    The banks problems have very little to do with being tied to an investment bank. Wachovia’s problems, for example, came from its acquisition of a west-coast mortgage company that had been making high-risk “pick-a-payment” loans. On top of that, they had a “silent” bank run as many of their depositors started taking out everything over $100,000 to stay under the FDIC cap.

    In general, the “integrated” commercial banks/investment banks are doing better than the standalone entities in this crisis. Lots of people like to complain about the repeal of Glass-Steagall, which made these combinations possible, but the repeal seems to have had a mildly positive effect on the crisis, not a negative one.

  16. Xerloq says:

    I bank at both exWaMu and Well Fargo. Glad to see one of the banks I picked isn’t failing.

    I think I’m one of the small percentage who has never had a problem with Well Fargo. They treat me right, and I’ve never seen a fee. That and they’re everywhere.

    • TheFlamingoKing says:

      @Xerloq: I second this. Wells Fargo has been nothing but good to me for 10 years now. The one time I got hit with a fee I thought was unfair I complained and had the fee waived within minutes. They’ve been more than happy to comply with strange requests (like cutting a $17,000 cashiers check for me at 3 minutes till closing when I bought my car). Don’t have much reference, though, as the only other bank I ever used was a credit union when I was in high school, which had many hoops to jump through, if I recall, to do relatively simple things sometimes.

  17. ChapinMonart says:

    I have info! if anyone is interested. The deal with wachovia and citigroup was still teetering on shareholder voting that was due at the end of the month. Let me ask you this, if you are a big shareholder, are you going to take 90 cents per share, or 7 dollars per share? Citibank is just butt hurt that they are losing a deal that was flawed to begin with. Shareholders won’t let their stock go for 90 cents a share, that’s just common sense there. Now that it’s 7 dollars a share for the entirety, wachovia wins, and so does wells-fargo, and so does the economy.

    • redclear55 says:

      @ChapinMonart: we need some education about the Citi-Wachovia deal vs. Wells-Wachovia. First, Citi was only buying the commmercial banking assets and not the other parts of the company. Wells was offering to buy the entire company. Thus your example above is not apples-to-apples. Also, the offer from Citi was over the market price when the deal was made aka “good will”.

  18. eakwave1 says:

    I’m with Xerloq. I’ve been with Wells Fargo for years in Northern California and have been treated very well no matter how little money I’ve had at some points. I can’t speak for other branches in other states but if you’re in CA Wells Fargo is a great place to bank.

    • howie_in_az says:

      @eakwave1: Likewise for Arizona. A friend tells me they don’t use ChexSystems, so people that have done Very Bad Things at other banks can open accounts at WF branches with minimal fuss.

      I’ve got my primary checking account and a safe deposit box at Wells Fargo with our savings at HSBC. I’ve had to dispute a handful of charges over the past 3 years and WF has always been on top of things.

    • dweebster says:

      @eakwave1: Southern California Wells Fargos were sticking it to people with fees, fees, fees in the early ’90s – don’t know if that settled down over the years but I guess enough people stuck around to pay the fees that the bank can pickup the wretched stinking corpse of Wachovia with the booty.

  19. ckaught78 says:

    Having had worked for Wells Fargo for over 10 years and banked with them almost 15 I am glad to see this happen. I recently moved to PA and opened a Wachovia account. I did so because they had branches in California where I loved and visit often. I must say that in terms of day-to-day banking Wells Fargo is far superior than Wachovia. I think Wachovia customers will agree in the long run and at the end of the day be very happy once/if everything transitions.

    Just in terms of online banking, Wells is the leader of the pack.

    • TheFlamingoKing says:

      @ckaught78: This too! Wells Fargo’s online banking is so good, I’ve gotten really lazy about doing anything but online banking. Since many of my family members have Wells Fargo accounts, it’s trivial to transfer money between those accounts as well.

  20. TheFlamingoKing says:

    I am curious if anyone knows about Wachovia’s investment group. They bought A.G. Edwards a few months back, the firm I had invested with since childhood. Does anyone know if that’s a separate entity or included with the sale? I’d actually benefit greatly if they did merge and I could keep my current investment broker while increasing my ability to directly transfer money between accounts with Wells Fargo.

    • TheFlamingoKing says:

      @TheFlamingoKing: Maybe this answers my own question:

      From the Wachovia & Wells Fargo Press Release
      [www.wachovia.com]

      “Wachovia’s brokerage and asset management businesses, which would have been left behind in the prior proposal, are tightly interwoven with Wachovia’s core banking business – and this agreement avoids the complexity and unavoidable loss of value in trying to separate them, which would have disrupted Wachovia’s team members and customers.”

    • redclear55 says:

      @TheFlamingoKing: if the Wells offer is accepted (barring legal issues from breaking contract with Citi), they will buy everything under the WB moniker, including AGE. It would remain to be seen if Wells decides to integrate the company in its entirety or sell parts (ex. AGE or Wachovia Securities) to someone else after the take-over.

      If the Citi deal does go through, AGE would be left out of the purchase. Then the question becomes, do they find a new parent company to buy them up? or do they go the route of Goldman Sachs and Morgan Stanley and build up their own commercial banking sleeve.

      Keep in mind that Wachovia Securities and AG Edwards are still working through their integration process. It appears after trying to locate http://www.agedwards.com that the WB Securities was going to be the single brand going forward. Specifically to the AGE advisers, my sources are telling me that they’re sitting in a good position. They have a good deal if they stay (be it under WB or Wells). If that doesn’t go through, then they can shop themselves to another firm. AGE advisers are more highly prized than the wachovia advisers. Anyone who has an AGE adviser has nothing to worry about.

  21. johnnya2 says:

    Let me get this straight. Company A (Wachovia) sells itself to Company B (Citi) and sells itself again to Company C (WF) Wachovia has a deal in place. You can not back out of that contract. Fairly simple contract law at work. It would be like you selling your car to your neighbor for $1000 and then selling it to another guy for $3000 and telling the first guy too bad. No wonder Wachovia is such a cluster fuck, they cant even sell themselves properly.

    • sir_eccles says:

      @johnnya2: I think the Citi deal hadn’t got past the Wachovia shareholder vote yet. So it wasn’t a done deal. I think Citi were complaining they had an agreement not to talk to anyone else in the meantime.

      The likelihood is the Wachovia shareholders would favor the Wells Fargo deal and vote accordingly.

    • cf27 says:

      @johnnya2: You can’t back out of the contract, unless the contract SAYS you can back out. And, nearly every acquisition agreement has that sort of provision, called a “fiduciary-out” clause.

      Basically, this means that once Wachovia was for sale, its directors had a fiduciary duty to their stockholders to get the best deal they could. One of the things this means is that you can’t just lock yourself in to the first suitor to come along.

  22. Wells Fargo is coming to the East Coast. Hide your wallets, yankees!

  23. Morac says:

    I bank at Wachovia Securities and I think this is actually better. Under the deal with Citi, Citi would get all the bank branches, but my accounts would stay with Wachovia Securities. This meant I had no physical bank to go to.

    Under the new deal, everything goes to Wells Fargo, so theoretically other than a name change nothing has to change.

  24. silver-bolt says:

    So First Federal -> First Union -> Wachovia -> Wells Fargo….

    My bank still gets around, that whore.

  25. allstarecho says:

    Talk about full circle. My car loan was with Wells Fargo. I refinanced with Wachovia. Now Wells Fargo buys Wachovia. Durrrrrrrr

  26. redclear55 says:
  27. StoneKitten says:

    FDIC is required to press for the deal that will cost the least taxpayer money.
    WF wins.

  28. chartrule says:

    the crappiest loan company here where i live was taken over by wells fargo – and they got even crappier.

    i had a loan there when i was younger – made triple the amount payments – rather than put the excess to the principal they would put it towards your next payment

    that was 15 years ago (thank gawd i don’t have to deal with them any more )

  29. YarkonaFergasun says:

    Now, the big banks are fighting each other in a break neck race to consolidate which is being done for business survival rather than business gain. Sadly, the bailout will not help them much. They are hurting and when they hurt, we all suffer. Everyone should start looking for ways to protect their money. This basically comes down to either taking your money out of the market and cutting discretionary spending or diversifying and investing some overseas. I personally use offshore bank accounts and they have helped me with diversification and asset protection. If you want to read more on why offshore investing is smarter, feel free to visit my website.

    Best,
    Frank Miller
    http://www.theoffshorebankaccount.com