Fourth largest US bank posts losses, seeks $7-bn infusionApril 15th, 2008 - 12:57 am ICT by admin
New York, April 14 (DPA) Wachovia Corp, the fourth largest US bank, Monday reported unexpected losses due to bad California home loans and said it was seeking a $7-billion infusion from stock sales. Shares will be sold at $24 each, 14 percent less than last week’s closing price.
First quarter losses were $393 million compared with earnings of $2.3 billion in the same period last year, the North Carolina-based company said in a statement.
The drastic drop is just the latest in the roiling sub-prime mortgage credit crisis in the US that has spread through the US and abroad. The International Monetary Fund last week estimated that the total world loss from the crisis could be near $1 trillion when all is said and done.
Wachovia plans to cut 500 investment-banking jobs, and will cut dividends to preserve $2 billion in capital, according to an analyst’s report from Goldman Sachs Group Inc.
Washington Mutual Inc, the largest US savings and loan, got $7 billion last week from investors led by David Bonderman’s TPG Inc.
In all, banks and securities firms, including Citigroup Inc and Lehman Brothers Holdings Inc, have raised about $140 billion since last year after more than $245 billion of losses tied to the collapse of the sub-prime mortgage market, according to data compiled by Bloomberg financial news.
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