Wachovia (formerly the ticker symbol NYSE WB ) is a diversified financial services company based in Charlotte, North Carolina. Before being acquired by Wells Fargo and Company in 2008, Wachovia is the fourth largest bank holding company in the United States, based on total assets. Wachovia provides a wide range of banking, asset management, wealth management, as well as corporate and investment banking products and services. At its peak, it is one of the largest financial services providers in the United States, operates financial centers in 21 states and Washington, D.C., with locations from Connecticut to Florida and west to California. Wachovia provides global services through more than 40 offices worldwide.
The acquisition of Wachovia by Wells Fargo was completed on December 31, 2008 after a sale forced by the government to avoid Wachovia's failure. The Wachovia brand was absorbed into the Wells Fargo brand in a three-year process: on October 15, 2011, the last Wachovia branch in North Carolina was converted to Wells Fargo.
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Business line
Wachovia is a 2001 merger product between the original Wachovia Corporation, based in Winston-Salem, North Carolina; and Charlotte-based First Union Corporation.
The company is divided into four divisions: General Bank (retail, small business, and commercial customers), Wealth Management, Capital Management (asset management, retirement, and retail brokerage services); Corporations and Investment Banks (capital markets, investment banking, and financial advisers).
It caters to retail brokerage clients under the national name Wachovia Securities as well as in six Latin American countries, and investment banking clients in certain national industries. In 2009, Wachovia Securities was the first Wachovia business to be converted into Wells Fargo brand, when its business became Wells Fargo Advisors. Caliber is an independent consultant hired by Wachovia for the Family Wealth Group for research managers. The group no longer uses Caliber.
The corporate and institutional capital markets of investment banking and group companies operate under the Wachovia Securities brand, while its asset management group operates under the Evergreen Investments brand until 2010, when the Evergreen fund family is joining Wells Fargo Advantage Funds, and the institutional and external network of products joins Wells Capital Management and its affiliates.
Wachovia private equity hands are operated as Wachovia Capital Partners. In addition, asset-based lending groups operate as Wachovia Capital Finance.
Origin of company name
Wachovia ( wah- KOH -vee -? ) has its origins in the Latin Form of the Austrian name Wachau . When the Moravian settlers arrived in Bethabara, North Carolina, in 1753, they gave this name to the land they acquired, because it resembled the Wachau valley along the Danube River. The area formerly known as Wachovia is now a large part of Forsyth County, and the largest city now is Winston-Salem.
First Union
First Union was founded as Union National Bank on June 2, 1908, a small banking desk in the lobby of a Charlotte hotel by H.M. Winner.
The Bank joined the First National Bank and Trust Company of Asheville, North Carolina, in 1958 to become the First Union National Bank of North Carolina. First Union Corporation was established in 1967.
In the 1990s, it has grown into a regional South locomotive in a strategy that reflects old rivals at Tryon Street in Charlotte, NCNB (later NationsBank and now Bank of America). However, in 1995, he acquired First Fidelity Bancorporation of Newark, New Jersey; as well as being a major player in the Northeast. Its northeastern footprint grew even larger in 1998, when it acquired CoreStates Financial Corporation of Philadelphia. One of the predecessors of CoreStates, Bank of North America, has become the first bank proposed, leased and established in America on December 31, 1781. A former branch of the Bank of North America in Philadelphia remains in operation today as Wells Fargo
Wachovia
Wachovia Corporation began on June 16, 1879 in Winston-Salem, North Carolina as Wachovia National Bank. The bank was co-founded by James Alexander Gray and William Lemly. In 1911, the bank joined the Wachovia Loan and Trust Company, "the largest trust company between Baltimore and New Orleans", which was established on June 15, 1893. Wachovia grew into one of the largest banks in the southeast part in part on the strength of its account from RJ Reynolds Tobacco Company, which is also headquartered in Winston-Salem. On December 12, 1986, Wachovia bought the First Atlanta. Founded as the Atlanta National Bank on September 14, 1865, and later renamed First National Bank of Atlanta, it is the oldest national bank in Atlanta. This purchase made Wachovia one of several companies with multiple headquarters: one in Winston-Salem and one in Atlanta. In 1991, Wachovia entered the South Carolina market by acquiring the South Carolina National Corporation, established as Bank of Charleston in 1834. In 1998, Wachovia acquired two Virginia-based banks, Jefferson National Bank and Central Fidelity Bank. In 1997, Wachovia acquired both United Bancorp and American Bankshares Inc., giving her first entry to Florida. In 2000, Wachovia made her last purchase, Republic Security Bank.
Merger First Union and Wachovia
On April 16, 2001, First Union announced it would acquire Wachovia, through an exchange of approximately $ 13.4 billion in First Union shares. First Union offers two shares for every outstanding share of Wachovia. The announcement was made by chairman Wachovia L.M. "Bud" Baker Jr. and chairman of First Union Ken Thompson, Chairman of First Union. Baker will become chairman of the joint bank, while Thompson will become president and CEO. First Union is a nominal survivor, and this joint bank is based in Charlotte and adopts the corporate structure of First Union and maintains the history of the stock price of pre-2001 First Union. However, as an important part of the merger, the merged banks take the name Wachovia and stock symbols.
This merger was viewed with great surprise by the financial press and security analysts. While Wachovia has been seen as an acquisition candidate after experiencing problems with earnings and credit quality in 2000, applicants surprised analysts as many speculated that Wachovia would be sold to SunTrust based in Atlanta.
The deal met with skepticism and criticism. Analysts, given the issue with the acquisition of CoreStates, are concerned about the ability of First Union to join other large companies. Winston-Salem residents and politicians suffer a blow to the pride of their citizens because the companies that join will be based in Charlotte. The town of Winston-Salem is concerned both by the loss of work and the loss of stature from losing the company's headquarters. First Union worried about the potential decline in deposits and loss of customers in the city. First Union responded to this concern by placing wealth management and regional headquarters Carolinas in Winston-Salem.
On May 14, 2001, SunTrust announced a competitive takeover bid for Wachovia, the first non-friendly acquisition attempt in the banking sector for years. In an effort to make a consensus deal with investors, SunTrust believes that it will provide a smoother transition from First Union and offer higher cash prices for Wachovia stocks than First Union.
The board of directors of Wachovia rejected SunTrust's offer and supported the merger with First Union. SunTrust continues its hostile takeover attempt, which led to a fierce summer battle between SunTrust and First Union. The two banks increased their offer for Wachovia, picked up newspaper ads, sent letters to shareholders, and started court battles to challenge their respective takeover bids. On August 3, 2001, Wachovia shareholders approved the First Union agreement, rejected SunTrust's attempt to elect a new board of directors for Wachovia and end the hostile takeover attempt of SunTrust.
Another issue concerns the credit card division of each bank. In April 2001, Wachovia agreed to sell her $ 8 billion credit card portfolio to Bank One. The cards, which will still be labeled as Wachovia, will be issued through First Bank First Bank division. First Union had sold its credit card portfolio to MBNA in August 2000. Upon entering the negotiations, Wachovia just agreed to buy back its portfolio from Bank One in September 2001 and resell it to MBNA. Wachovia paid Bank One a termination fee of $ 350 million.
On September 4, 2001, First Union and Wachovia officially joined. To prevent a recurrence of the CoreStates problem, Wachovia just took the time to convert Wachovia's legacy computer system to the First Union system. The company first began to change the system in the southeastern United States (where the two banks had branches), before moving to the First Union branch in the Northeast, which only had to change their sign to reflect the new company name and logo. This process ended on August 18, 2003, almost 2 years after the merger took place.
Compared to CoreStates purchases, First Union and Wachovia mergers are billed as a success by analysts. The company's deliberate conversion rate seems to have prevented any large-scale customer friction. In fact, Wachovia ranks number one in customer satisfaction among major banks by the University of Michigan Annual Customer Satisfaction Index for each year after the merger.
When Wachovia and First Union join, the One, Two and Three First Union Charlotte buildings are One, Two, and Three Wachovia Centers (respectively), and the 55-storey First Union Finance Center in downtown Miami becomes the Wachovia Financial Center. The merger also affects the names of indoor indoor sports arenas in Philadelphia and Wilkes-Barre, Pennsylvania. Formerly known as First Union Center and First Union Spectrum (both Philadelphia) and First Union Arena (Wilkes-Barre), they were renamed Wachovia Center (now known as Wells Fargo Center), Wachovia Spectrum, and Wachovia Arena in Casey Plaza (now known as the Mohegan Sun Arena in Casey Plaza), respectively.
Merger and acquisition history
The following is an illustration of major mergers and acquisitions of companies and historical predecessors (until the merger of Wachovia and First Union in 2001). The list is not comprehensive.
Acquisitions
Between 2001 and 2006, Wachovia purchased several other financial services companies in an effort to become a national bank and a comprehensive financial services company.
Prudential Securities
Wachovia Securities and Prudential Securities Division Prudential Financial, Inc. joined to form Wachovia Securities LLC on July 1, 2003. Wachovia has a controlling stake of 62%, while Prudential Financial retains the remaining 38%. At that time, the new company had a client assets of $ 532.1 billion, making it the country's largest full-service retail brokerage firm by assets.
Metropolitan West Securities
On October 22, 2003, Wachovia announced it would acquire Metropolitan West Securities, an affiliate of Metropolitan West Financial. The acquisition adds a portfolio of more than $ 50 billion of securities lent to the division of Wecovia Global Securities Lending.
SouthTrust
On November 1, 2004, Wachovia completed the acquisition of Birmingham, Alabama-based SouthTrust Corporation, a $ 14.3 billion deal. This merger creates the largest bank in the southeastern United States, the fourth largest bank in terms of ownership, and the second largest in terms of number of branches. Integration was completed by the end of 2005.
MBNA Purchase Failed
In June 2005, Wachovia negotiated to buy MBNA's monoline credit card company. However, the deal failed when Wachovia balked at the purchase price of MBNA. Within a week after the deal collapsed, MBNA signed an agreement to be bought by Wachovia's main rival, Bank of America. Wachovia received $ 100 million from this deal, a result of her predecessor's agreement Wachovia First Union made in 2000 when she sold her credit card portfolio to MBNA. This agreement requires that MBNA pay this amount if it was ever sold to a competitor. At the end of 2005 Wachovia announced that it would end its relationship with MBNA and start its own credit card division so the bank could issue its own Visa card.
Westcorp
Westcorp, the holding company of Western Financial Bank, WFS Financial Inc. and Wachovia announced the proposed acquisition by Wachovia in September 2005. The shareholders of Westcorp and WFS Financial Inc. approved the acquisition on January 6, 2006 and on March 1, 2006, the merger was completed. The acquisition makes Wachovia the ninth largest financial lender in the competitive US auto finance market and provides Wachovia with the presence of small retail and commercial banking in Southern California. On February 12, 2007, the former 19 branches of the Western Financial Bank opened under the name Wachovia. These branches became a launching point for Wachovia's much larger presence in California with the acquisition and integration of the World Savings Bank in 2007.
Golden West Financial
Wachovia agreed to buy Golden West Financial for a little under $ 25.5 billion on May 7, 2006. The acquisition gave Wachovia a network of 285 additional branches covering 10 states. Wachovia greatly raised her profile in California, where Golden West saved $ 32 billion in deposits and operated 123 branches.
Golden West, which operates branches under the name of the World Savings Bank, is the second largest savings account and loan in the United States. The business was a small savings and loan in the San Francisco Bay area when it was purchased in 1963 for $ 4 million by Herbert and Marion Sandler. Golden West is specialized in ARM loan options, marketed under the name "Pick-A-Pay." This loan gives the borrower a choice of payment plan, including the option to defer payment of a portion of the interest payable, which is then added to the loan balance. In 2006, Golden West Financial was named the "Most Admired Company" in the mortgage services business by Fortune magazine. By the time Wachovia announced the acquisition, Golden West had more than $ 125 billion in assets and 11,600 employees. On October 2, 2006, Wachovia has closed the acquisition of Golden West Financial Corporation. The Sandlers agreed to stay on board at Wachovia.
The Sandlers sell their companies at the top of the market, saying they are getting older and want to devote themselves to philanthropy. A year earlier, in 2005, World Savings loans have begun to slow, after more than quadrupling since 1998. Several Wachovia officials today and earlier said that the merger has been approved within a few days and it is impossible to conduct a thorough examination of the World Savings. 'Loans. They noted that creditworthiness of World Savings borrowers dropped from 2004 to 2006, while Pick-A-Pay borrowers had a credit score well below the industry average for traditional loans. The volume of World Savings loans fell again in 2006 as soon as the sale to Wachovia began. In 2007, after the merger, World Savings, now known as Wachovia Mortgage began attracting more borrowers by taking steps that some regulators began to pout, and which previous World Savings management has been resisting for years: it allows borrowers to make payments monthly based on the annual interest rate of only 1 percent. While Wachovia Mortgage continues to examine the borrower's ability to manage increasing payments, the move to the lowest level encourages customers whose financial reliability is more difficult to verify. Over 70% of Pick-A-Pay loans are made in California, Florida and Arizona, where house prices are falling sharply. New York Times reporter Floyd Norris calls the World Savings a "time bomb" that creates "zombie house owners".
While Chairman and CEO Wachovia G. Kennedy "Ken" Thompson has described the Golden West as a "crown jewel", investors have not reacted positively to the deal at the time. Analysts have since said that Wachovia bought the Golden West at the height of the US housing boom. Problems related to the mortgage Wachovia Mortgage caused Wachovia to suffer losses and losses that far exceed the price paid in the acquisition, ending with the sale of fire Wachovia to Wells Fargo.
A. G. Edwards
On May 31, 2007, Wachovia announced plans to buy A. G. Edwards for $ 6.8 billion to create the second largest retail brokerage firm in the United States. The acquisition closes on October 1, 2007. In early March 2008, Wachovia began stopping AG Capture in favor of a united Wachovia Securities.
Maps Wachovia
Historical data (2000-2008)
Wachovia, excluding subsidiaries, is the fourth largest bank by the end of 2008.
financial crisis 2007-2009
Affected by risky loans, such as adjustable rate mortgages acquired during the acquisition of Golden West Financial in 2006, Wachovia began to experience substantial losses in its loan portfolio during the subprime mortgage crisis.
In the first quarter of 2007, Wachovia reported revenues of $ 2.3 billion, including acquisitions and divestments. However, in the second quarter of 2008, Wachovia reported a much larger loss than estimated at 8.9 billion US dollars.
On June 2, 2008, Wachovia chief executive officer Ken Thompson was forced to retire. He had been the head of Wachovia since 2000, when it was still known as First Union. The Council replaced it temporarily with Chairman Lanty Smith. Smith had replaced Thompson as chairman a month earlier.
On July 9, 2008, Wachovia hired Treasury Undersecretary Bob Steel as chief executive in the hope that his experience will lead the company out of trouble.
Government intervention
After Steel took over, he insisted that Wachovia would remain independent. However, its share price plunged 27 percent on Sept. 26 because of Washington Mutual's race the previous night. On the same day, some businesses and institutional depositors withdraw money from their accounts to lower their $ 100,000 balance insured by Federal Deposit Insurance Corporation (FDIC) - an event known to banks as a "silent run". Eventually, Wachovia lost a total of $ 5 billion in deposits that day - about one percent of total bank deposits. The large flow of deposits attracted the attention of the Office of the Supervisory Currency, which regulates national banks. The federal regulator pressed Wachovia to sell it at the weekend. If Wachovia fails, it will drain FDIC insurance fund due to its size (it operates one of the largest branch networks on the East Coast).
When business was suspended for the weekend, Wachovia was in FDIC-brokered talks with Citigroup and Wells Fargo. Wells Fargo initially emerged as a pioneer to acquire ailing Wachovia banking operations, but retreated due to concerns over Wachovia's commercial loans. In the absence of an agreement on September 28, regulators fear that Wachovia will not have enough short-term funds to open a business the next day. To get enough liquidity to do business, banks usually rely on short-term loans with each other. However, the market has been badly hit by the credit crunch linked to a housing bubble that left banks hesitant to make the loan. Under the circumstances, regulators fear that if customers are attracting more money, Wachovia will not have enough liquidity to meet its obligations. This will result in a failure that discourages WaMu.
When FDIC Chairman Sheila Bair learned of Wachovia's situation, she initially decided to handle a situation like she handled WaMu the day before. Under this scenario, the Currency Finance Supervisor will confiscate the banking assets of Wachovia (Wachovia Bank, N.A. and Wachovia Bank of Delaware, N.A.) and place it under the FDIC curator. The FDIC will then sell the banking assets to the highest bidder. Bair called Steel on September 28 and told him that the FDIC would auction off Wachovia's banking assets. Bair felt it would be better to protect the small banks. However, some Federal regulators, led by New York Fed President Tim Geithner, feel that such a course will be politically unjustified as soon after the WaMu seizure.
After a round of mediation between Geithner and Bair, the FDIC stated that Wachovia is "systemically important" to economic health, and thus can not be allowed to fail. This is the first time the FDIC has made such a determination since the enactment of the 1991 law allowing the FDIC to handle large bank failures in a short period of time. Later that night, in an FDIC-brokered deal, Citigroup agreed to buy Wachovia's retail banking operations in the transfer of "open bank" ownership. The transaction will be facilitated by the FDIC, with the approval of the Federal Reserve Board of Governors and the Minister of Finance in consultation with the President. FDIC's open bank assistance procedures usually require FDICs to find the cheapest way to rescue failed banks. However, when the bank is considered "systemically important," the FDIC is allowed to pass this requirement. Steel had little choice but to agree, and a decision was announced on the morning of September 29, approximately 45 minutes before the market opened. From this point on, Citigroup becomes a source of liquidity that allows Wachovia to continue operating until the acquisition is complete.
In its announcement, the FDIC emphasized that Wachovia did not fail and was not placed into the curator. In addition, the FDIC said that the agency would absorb Citigroup losses above $ 42 billion; Wachovia's loan portfolio worth $ 312 billion. In exchange for taking this risk, the FDIC will receive $ 12 billion of preferred shares and warrants from Citigroup. The transaction will be a transfer of all shares, with shareholder Wachovia Corporation having received shares from Citigroup, valuing Wachovia shares about one dollar per share with a total transaction value of approximately $ 2.16 billion. Citigroup will also assume Wachovia's senior and subordinated debt. Citigroup intends to sell ten billion dollars of new shares on the open market to recapitalize its purchased banking operations. The proposed closing date for the purchase of Wachovia is at the end of the year, 2008.
Wachovia is expected to continue as a public company, retaining her retail broker arm, Wachovia Securities and Evergreen mutual funds. At the time, Wachovia Securities had 14,600 financial advisors and managed over $ 1 trillion, third in the US after Merrill Lynch and Citigroup's Smith Barney.
The announcement drew some criticism from Wachovia shareholders who felt the dollar price per share was too cheap. Some of them plan to try to beat the deal when it comes to shareholder approval. However, institutional investors such as mutual funds and pension funds control 73 percent of Wachovia's shares; Individual shareholders must collect a large amount of support from institutional shareholders to derail sales. Also, some experts in the company's deal told The Charlotte Observer that such a strategy is very risky because federal regulators help broker the deal. A financier told Observer that if Wachovia shareholders terminated the agreement, OCC could easily arrest Wachovia and put it into the FDIC curator, who would then sell it to Citigroup. If this were to happen, Wachovia shareholders risked complete destruction.
Acquisition by Wells Fargo
Although Citigroup provides liquidity that allows Wachovia to continue operating, Wells Fargo and Wachovia announced on October 3, 2008, that they have agreed to join in all share transactions that do not require government involvement. Wells Fargo announced it had agreed to acquire all Wachovia for $ 15.1 billion. Wachovia prefers the Wells Fargo deal because it will be more valuable than the Citigroup deal and keep all its business intact. Also, there is much less overlap between banks, as Wells Fargo is dominant in the West and Midwest compared to the excessive traces of Wachovia and Citibank along the East Coast. Both councils unanimously approved the merger on the night of October 2.
Citigroup explored its legal options and demanded that Wachovia and Wells Fargo stop discussing, claiming that Wells Fargo was involved in an "excruciating torture" with the exclusivity agreement between Citigroup and Wachovia. The agreement states that until October 6, 2008, "Wachovia shall not, and shall not permit any of its subsidiaries or any of its officers, directors, [...] to [...] take any action for facilitate or encourage the submission of an Acquisition Proposal. "
Citigroup convinced Judge Charles E. Ramos of the New York State Supreme Court to give the preliminary injunction while blocking Wells Fargo's deal. This ruling was later canceled by Judge James M. McGuire of the Supreme Court of the State of New York, Appellate Division, First Department, in part because he believes Ramos has no right to rule over the case in Connecticut.
On October 9, 2008, Citigroup abandoned its attempt to buy Wachovia's banking assets, allowing the Wachovia-Wells Fargo merger to pass. However, Citigroup pursued $ 60 billion in claims, $ 20 billion in compensation and $ 40 billion in damages, against Wachovia and Wells Fargo for alleged violations of the exclusivity agreement. Wells Fargo resolved this dispute with Citigroup Inc. worth $ 100 Million on November 19, 2010. Citigroup may have been pressured by the regulator to step down from the deal; Bair supports Wells Fargo's offer for removing the FDIC from the image. Geithner was furious, claiming that an FDIC reversal would undermine the government's ability to quickly rescue failed banks. However, Geithner's counterparts at the Fed do not want to be responsible for the sale of Wachovia.
The Federal Reserve unanimously approved the merger with Wells Fargo on October 12, 2008.
The combined company retains the name of Wells Fargo, and is based in San Francisco. However, Charlotte remains as a headquarters for the joint East Coast banking operations, and Wachovia Securities remains in Charlotte. Three Wachovia board members joined the board of Wells Fargo. Mergers created the largest branch network in the United States.
In a filing made two days before the merger agreement in New York federal court, Citigroup argued that his own agreement was better for US taxpayers and Wachovia shareholders. It is said that it has exposed itself to "substantial economic risk" by declaring its intention to save Wachovia after less than 72 hours of due diligence. Citigroup has secured an exclusive deal to protect itself. Wachovia suffered a loss of $ 23.9 billion in the third quarter.
In September 2008, the Internal Revenue Service issued a notice that provided tax breaks to companies that obtained problem banks. According to analysts, this tax break is worth billions of dollars for Wells Fargo. Vice Chairman Bill Thomas of the Financial Crisis Investigation Commission indicated that this tax cut might be a factor in Wells Fargo's decision to buy Wachovia.
Wells Fargo's purchase of Wachovia closed on December 31, 2008. By the time Wells Fargo completed the acquisition of Wachovia, the "A Wells Fargo company" byline was added to the logo.
Controversy
Negligence of identity theft
The May 2007 article New York Times describes Wachovia's negligence in screening and taking action against companies related to identity theft. With a stolen identity, the company uses an unsigned check to remove funds from a private Wachovia bank account. In total, Wachovia received $ 142 million in unsigned checks from "companies making unauthorized withdrawals from thousands of accounts", earning millions of dollars in fees from them. According to Pat Meehan, a US lawyer for the Eastern District of Pennsylvania, Wachovia received "thousands of warnings that he was processing a fake check, but ignoring it".
On April 25, 2008, Wachovia agreed to pay up to $ 144 million to end the investigation without admitting her guilt. The investigation found that Wachovia failed to perform the appropriate due diligence, and it would find theft if it had followed the normal procedure. Punishment is one of the largest ever requested by the Office of Financial Supervisory.
Mexican drug laundering
In April 2008, the Wall Street Journal reported that federal prosecutors had begun an investigation into Wachovia and other US banks to assist money laundering by Mexican and Colombian money transfer firms, also known as casas de cambio . These companies help Mexican immigrants in the United States send remittances back to families in Mexico, but it is widely known that they also present significant money laundering risks. However, not only is it a "profitable industry" capable of charging high fees, but Wachovia also sees it as a way to gain a foothold in the Hispanic banking market.
In March 2010, Wachovia admitted a "serious and systemic" violation of the Bank Secrecy Act allowing Mexico and Colombian drug cartels to launder $ 378.4 billion between 2004 and 2007, "the biggest violation of Bank Secrecy". This negotiates a deferred prosecution agreement with the Department of Justice to resolve criminal charges for deliberately failing to administer an effective anti-money laundering program. They agreed to lose $ 110 million and pay a $ 50 million fine for US Treasury.
The report at Bloomberg Businessweek in June 2010 and The Observer in April 2011 explains how far Wachovia went to turn a blind eye, including by ignoring warnings and suspicious activity. reports (SARs) from the London-based anti-money laundering director.
Chief executive officer
- G. Kennedy Thompson 2001-2008
- Robert K. Steel 2008
See also
- Bank of Baltimore
References
External links
- Official website (Archive)
- Yahoo! - Company Profile Wachovia Corporation
Source of the article : Wikipedia
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