Jobs go at Wachovia after losses
Wachovia, the fourth-largest bank in the US, is to cut its dividend and raise $7 billion in a share sale after announcing a first-quarter loss yesterday of $393 million.
The bank said its problems were due to the severe deterioration in the US property market and the ongoing credit squeeze.
Furthermore, the bank said it will cut jobs at its trading and investment banking division, the second time it has trimmed staff since early last year.
Chief Executive Ken Thompson told analysts he was deeply disappointed with the first quarter results and added I know these actions aren’t without cost. I wish they weren’t necessary, but they are.
Wachovia is the latest in a number of Wall Street banks to suffer hefty losses and write-down the value of their mortgage-backed investments.
Merrill Lynch and Citigroup have written off over $43 billion while Swiss bank UBS has been the biggest casualty of the credit squeeze having to absorb a loss of $37 billion.
Moody’s, the credit ratings firm, said Wachovia was facing a challenging environment. However, the company said that the bank’s strong retail deposit base meant that it did not face any liquidity problems.