Wachovia posts $35b loss

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NEW YORK - TROUBLED US bank Wachovia on Wednesday posted a third-quarter net loss of US$23.89 billion (S$35.81 billion), taking steep write-downs linked to its takeover by rival Wells Fargo.

The net loss included a pre-tax goodwill loss of US$18.8 billion that reflects declining market value and the terms of its acquisition by Wells Fargo, Wachovia said in a statement.

The net loss of US$23.89 compared with earnings of US$1.62 billion, or 85 cents per share in the third quarter of 2007.

Excluding exceptional items, Wachovia posted a net loss of US$4.76 billion.

The bank, hard hit by exposure to the subprime mortgage crisis, reported a third-quarter loss per share of 11.09 dollars, compared with earnings per share of 90 cents in the 2007 third quarter.

'Although this has been a challenging quarter, Wachovia's underlying businesses remain solid and our franchise exceptionally attractive. We look forward to the opportunities that lie ahead as we join forces with Wells Fargo,' Robert Steel, Wachovia chief executive and president, said in the statement.

Wells Fargo president and CEO John Stumpf said Wachovia's financial results were in line with his bank's expectations.

'We're more encouraged than ever by what we've seen in their franchise,' Mr Stumpf said in the statement.

Wells Fargo's chief financial officer Howard Atkins said the acquisition was on track to be completed as planned by year-end.

'We believe that it was prudent for Wachovia to put these losses behind them,' Mr Atkins said.

'The asset write-downs, reserve build, and other items are consistent with our acquisition assumptions. The goodwill impairment will have no impact on tangible capital or our planned capital raise.'

The Federal Reserve earlier this month approved Wells Fargo's takeover of Wachovia, a deal which would create the largest bank branch network in the United States. -- AFP

 

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US stocks plunge

NEW YORK - US stocks dived on Wednesday on growing global recession fears, with the Dow industrials plunging more than 300 points in early trade.

The Dow Jones Industrial Average dropped 323.45 points (3.58 per cent) to 8,710.21 around 9.55pm and the tech-heavy Nasdaq composite slid 34.36 points (2.03 per cent) to 1,662.32.

The broad Standard & Poor?s 500 index fell a hefty 34.70 points (3.63 per cent) to 920.35.

US stocks tumbled on Tuesday on economic worries. The Dow plunged 2.50 per cent, the Nasdaq a hefty 4.14 per cent and the S&P 500 shed 3.08 per cent.

'Global recession concerns are responsible for the negative disposition,' said Patrick O?Hare, analyst at Briefing.com.

'Oil prices below 70 dollars per barrel, an acknowledgment from Bank of England governor (Mervyn) King that a UK recession seems likely, further job cut announcements in the US, heavy losses in foreign markets, and a litany of companies sounding a cautious view on 2009 prospects have all played a role in the market?s economic concerns,' Mr O?Hare said. -- AFP

 

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Mass layoffs highest since 9/11
NEW YORK (CNNMoney.com) -- The number of layoff announcements involving at least 50 workers rose in September to the highest level since the Sept. 11 terrorist attacks seven years ago, the government said Wednesday.

There were 2,269 mass layoff actions, up 497 from August, according to statistics released by the Labor Department.

"At large firms, basically what I see is an across-the-board, shotgun approach," said Paul Sarvadi, Chairman and CEO of human resources outsourcing firm Administaff in Houston. "If they anticipate revenues going down, then they see how much they need to cut to reach operating targets, and equate that cost to a number of people."

Overall, the number of initial claims for unemployment benefits related to mass layoffs rose by 61,726 to 235,681. That was the highest level since September 2005, after Hurricane Katrina devastated the Gulf Coast.

The worst may not be over, according to some experts.

Sue Murphy, manager for National Human Resources Association in Nashua, N.H., believes that there will be an increase in layoffs as the practice of scrutinizing employee count continues.

She said companies will accelerate the trend of cutting hours, replacing jobs with technology and outsourcing labor during tough times like these, when their priorities are protecting costs and market share.

"The companies look at the nice-to-haves and the must-haves, and the employees that are not essential will be up for review," Murphy said. "A lot of quality people will be out of work."

'Global recession concerns are responsible for the negative disposition,' said Patrick O?Hare, analyst at Briefing.com.

'Oil prices below 70 dollars per barrel, an acknowledgment from Bank of England governor (Mervyn) King that a UK recession seems likely, further job cut announcements in the US, heavy losses in foreign markets, and a litany of companies sounding a cautious view on 2009 prospects have all played a role in the market?s economic concerns,' Mr O?Hare said. -- AFP[/QUOTE]

 

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CitiBank benefits once again