Monday, September 29, 2008

Charlotte and the financial world are buzzing this morning over the announcement that Citigroup will acquire Wachovia's banking operations. The breaking news, which started in the wee hours of the morning, created a long list of questions for the future of the Charlotte-based bank. A press release sent out this morning does a great job of addressing them.

Particularly of note is the paragraph at the end that states where the operations will be headquartered. If you live in Charlotte, you likely have friends and/or relatives (or you yourself) who work for Wachovia. I have friends and colleagues who do, and my sister works for Wachovia in Columbia. I hope all of their jobs are safe.

CHARLOTTE, N.C. – Wachovia today announced intentions to sell its retail bank, corporate and investment bank and wealth management businesses to Citigroup. Wachovia Corporation will remain a public company with two main operating subsidiaries: Wachovia Securities, the nation’s third largest brokerage firm, and Evergreen Asset Management, a leading provider of asset management services.

“During recent weeks, the financial landscape has changed significantly and presented us with unprecedented challenges,” said Robert K. Steel, CEO and President of Wachovia. “Today’s announcement is the best alternative for the company, enabling a resolution on the Golden West portfolio.”

Under terms of the transaction, Citigroup will pay $2.1 billion to Wachovia and assume the senior and subordinated debt of Wachovia Corporation.

The transaction is expected to close before year-end. It has been approved by directors of both companies and is subject to shareholder approval of Wachovia and the appropriate regulatory approvals.

Customers of both companies should continue banking as usual, and feel confident that their deposits are secure. Also, employees and vendors should continue to operate business as usual.

At this time, there are no changes to Wachovia’s board of directors and two Wachovia directors will join Citigroup’s board.

Wachovia Corp. will remain headquartered in Charlotte, N.C. Wachovia Securities will continue to be headquartered in St. Louis, MO. Citigroup will headquarter the retail bank in Charlotte and the investment bank in New York. Wachovia’s investment bankers were Goldman Sachs, Perella Weinberg Partners and Wachovia Securities, and its legal advisors are Sullivan & Cromwell and Simpson Thacher & Bartlett.


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