Wachovia Corp increased its previously reported second-quarter loss to US$9.11 billion to cover costs to settle a probe of auction-rate securities sales, and said it will cut more jobs as the housing market deteriorates.
The fourth-largest US bank is now reporting a loss of US$4.31 per share, up from the US$8.86 billion, or US$4.20 a share, it reported on July 22, according to its quarterly report filed on Monday with the US Securities and Exchange Commission (SEC).
According to the filing, the bank now expects to eliminate 11,350 positions, including 6,950 active employees and 4,400 open positions. The additional cuts will come from mortgage operations, spokeswoman Christy Phillips-Brown said. The cuts affect about 5.8 percent of Wachovia’s 120,000-person workforce.
Separately, Wachovia said the SEC may recommend civil charges against its main banking unit in connection with municipal derivatives transactions.
It also said various state attorneys general have issued subpoenas over that matter. The bank said it was cooperating with the probes. Bank of America Corp reported receiving its own subpoenas last week.
The quarter marks the second in a row when Charlotte, North Carolina-based Wachovia revised results to increase the size of its reported loss. Wachovia increased its first-quarter loss to US$708 million from an original US$393 million because of a write-down tied to life insurance policies.
Auction-rate debt has interest rates that reset through periodic auctions, typically held every seven, 28 or 35 days. Once thought safe, much of the market has been frozen since brokerages in February stopped supporting the debt.
Wachovia said it added US$500 million to legal reserves to cover a possible settlement. It is in talks with regulators to resolve matters related to auction-rate debt, after regulatory settlements last week by Citigroup Inc and UBS AG. Missouri is leading the multi-state probe. Wachovia’s brokerage unit, Wachovia Securities, is based in St Louis.
The bank has been among the lenders hardest hit by the US housing crisis, following its US$24.2 billion purchase of California mortgage specialist Golden West Financial Corp in October 2006, just as the mortgage market was peaking.
Wachovia expects US$525 million to US$650 million in restructuring costs for the job cuts.
Chief executive officer Robert Steel, a former US Treasury Department official, is trying to cut US$2 billion in expenses by the end of next year.
The bank decided last week to close its mortgage lending offices in 16 US states where it has no retail branches, and in three other states where it has few branches, spokesman Don Vecchiarello said.
Wachonia still has mortgage lending offices in 18 US states, and offers home loan services by phone, Internet and direct mail, he said.
Shares of Wachovia closed on Monday up US$0.28 at US$18.21 on the New York Stock Exchange. They have fallen 52 percent since the beginning of the year.
CRITICAL MOVE: TSMC’s plan to invest another US$100 billion in US chipmaking would boost Taiwan’s competitive edge in the global market, the premier said The government would ensure that the most advanced chipmaking technology stays in Taiwan while assisting Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) in investing overseas, the Presidential Office said yesterday. The statement follows a joint announcement by the world’s largest contract chipmaker and US President Donald Trump on Monday that TSMC would invest an additional US$100 billion over the next four years to expand its semiconductor manufacturing operations in the US, which would include construction of three new chip fabrication plants, two advanced packaging facilities, and a research and development center. The government knew about the deal in advance and would assist, Presidential
‘DANGEROUS GAME’: Legislative Yuan budget cuts have already become a point of discussion for Democrats and Republicans in Washington, Elbridge Colby said Taiwan’s fall to China “would be a disaster for American interests” and Taipei must raise defense spending to deter Beijing, US President Donald Trump’s pick to lead Pentagon policy, Elbridge Colby, said on Tuesday during his US Senate confirmation hearing. The nominee for US undersecretary of defense for policy told the Armed Services Committee that Washington needs to motivate Taiwan to avoid a conflict with China and that he is “profoundly disturbed” about its perceived reluctance to raise defense spending closer to 10 percent of GDP. Colby, a China hawk who also served in the Pentagon in Trump’s first team,
SEPARATE: The MAC rebutted Beijing’s claim that Taiwan is China’s province, asserting that UN Resolution 2758 neither mentions Taiwan nor grants the PRC authority over it The “status quo” of democratic Taiwan and autocratic China not belonging to each other has long been recognized by the international community, the Mainland Affairs Council (MAC) said yesterday in its rebuttal of Beijing’s claim that Taiwan can only be represented in the UN as “Taiwan, Province of China.” Chinese Minister of Foreign Affairs Wang Yi (王毅) yesterday at a news conference of the third session at the 14th National People’s Congress said that Taiwan can only be referred to as “Taiwan, Province of China” at the UN. Taiwan is an inseparable part of Chinese territory, which is not only history but
INVESTMENT WATCH: The US activity would not affect the firm’s investment in Taiwan, where 11 production lines would likely be completed this year, C.C. Wei said Investments by Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) in the US should not be a cause for concern, but rather seen as the moment that the company and Taiwan stepped into the global spotlight, President William Lai (賴清德) told a news conference at the Presidential Office in Taipei yesterday alongside TSMC chairman and chief executive officer C.C. Wei (魏哲家). Wei and US President Donald Trump in Washington on Monday announced plans to invest US$100 billion in the US to build three advanced foundries, two packaging plants, and a research and development center, after Trump threatened to slap tariffs on chips made
RSS