Wachovia Corp. is paying the price for the purchase of real estate lender Golden West Corp. in 2006, which held a porfolio of subprime mortgages and other real estate holdings. The Charlotte, N.C.- based bank is trying to recoup some of the loses through the sale of one-tenth of the land and construction loans it inherited.
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The buyer is a joint venture headed by LandCap Partners, run by real estate veteran Jeffrey Gault. The deal brings in a paltry $40 million of the total $350 million Wachovia intended to sell. Both figures are a drop in the bucket for the nation's fourth-largest bank, which is reeling from rising delinquencies in its massive loan portfolio.
But Wachovia is desperate for capital and has done everything from layoffs to the reduction of its dividend twice, as well as raise $7 billion from a common stock offering earlier this year. Despite all these measures, Wachovia still has a giant daunting hole of $24 billion in outstanding loans, 9% of which are delinquent, according to The Wall Street Journal.
For now, however, Wachovia will obviously take what it can get, but it certainly has to do more to get back to profitability. - Gerald Magpily
See TheStreet.com article
See TheDeal.com: Wachovia adjusts losses, layoffs
