Wachovia Could Sell Retail Brokerage: Analysts
After a posting record $8.9 billion quarterly loss in the second quarter, Wachovia could sell its mutual fund business, securities brokerage or its Northeast and Texas branches, according to analysts. But Wachovia says the brokerage isn’t for sale.
Bloomberg reports that Brad Hintz of Sanford C. Bernstein & Co. and Gerard Cassidy of RBC Capital Markets Inc. suggest in research that Wachovia’s new CEO Robert Steel, who has pledged to sell “non-core assets,” may decide that Wachovia Securities, which includes the A.G. Edwards brokerage acquired last October, and Evergreen mutual funds, qualifies as non-core.
Meanwhile, Anton Schutz, president of Mendon Capital Advisors Corp. in Rochester, New York, said the bank is more likely to sell off retail bank branches such as New York and Texas, where Wachovia doesn't have strong market share.
CEO Steel, who took the helm of the brokerage firm on July 9 after former CEO Kennedy Thompson was ousted, made the “non-core” remarks on July 21. At that time, he didn’t define which assets are non-core, instead saying he would review the bank’s units in the coming months.
But Wachovia spokeswoman Christy Phillips Brown told Bloomberg,“Wachovia is firmly committed to our retail brokerage strategy and has no plans to sell it.” The securities unit “has been and continues to be one of Wachovia Corp.'s best-performing businesses. It is a core business for Wachovia and integral to our long-term strategy,” she said.
When it reported second quarter results, Wachovia said it expects $9 billion in additional mortgage losses over the next 18 months, though Morgan Keegan Inc. analyst Robert Patten projected that number could exceed $15 billion.
Analysts have been speculating about what the sale of various business units for many troubled Wall Street brokerages and investment banks.
blog comments powered by Disqus
