Monday, September 29, 2008
citi consumes wachovia; bank failures go global
Citigroup will absorb as much as $42 billion of losses on Wachovia's $312 billion pool of loans, the Federal Deposit Insurance Corp. said today in a statement. The FDIC will take on losses beyond that amount in exchange for $12 billion in preferred stock and warrants.
``For Wachovia's customers, today's action will ensure seamless continuity of service from their bank and full protection for all of their deposits,'' FDIC Chairman Sheila C. Bair said in the statement. ``There will be no interruption in services and bank customers should expect business as usual.''
in global news -- belgian banking giant fortis was nationalized by a consortium of low country governments, large german mortgage bank hypo was rescued from failure by the german government, and english bank bradford and bingley followed northern rock into the arms of the british government. iceland further nationalized its third-largest bank, and continental lender dexia will attempt to raise capital.
``The precarious global environment means the weakest links in Europe are now falling,'' said Mamoun Tazi, an analyst at MF Global Securities Ltd. in London. ``If banks continue not to lend to each other we'll see more failures.''