Citibank announced has appointed Jerome Byers as Regional President of Consumer Banking for its Central Region to implement Citi’s service and sales strategy for all Citibank branches from Illinois to Texas. Byers previously served as Atlanta Regional President for Wells Fargo where he was responsible overseeing 200 banking locations and 5,000 team members. Byers played a major role in the largest bank merger in U.S. history, successfully leading the Atlanta area through Wachovia’s transition to Wells Fargo. Byers has served on the Atlanta Chamber of Commerce and is a past Chairman of the Board for Teach for America.
PayPal has tapped John McCabe, previously with Wachovia, as its SVP, worldwide operations, Ed Eger, previously with Citigroup, as its SVP of transaction management and Renier Lemmens, previously with Barclay Bank will lead PayPalâs business in Europe. McCabe was executive vice president of Wachovia Direct Access. In this position, he led Wachoviaâs contact centers in 15 domestic and global locations, serving 20 lines of business and approximately 15 million customers. A financial services and technology professional with more than 33 years of global experience, McCabe brings vast knowledge and expertise in customer service transformation and retail banking operations. Eger served as CEO at Citigroup’s international consumer credit card business. In that role, he was responsible for an organization that spans 50 countries and serves more than 40 million customers worldwide. In his 25-year career, Eger has run a range of financial service businesses in North America, Asia, Latin America and Europe. Lemmens served as chief operating officer of the International Retail and Commercial Banking Division at Barclays Bank PLC, covering all functional areas across 23 markets globally. A native of The Netherlands, Lemmens has extensive international business experience having worked in the Benelux region, France, Germany, Switzerland, the UK, Hungary, India and North America.
Wells Fargo reported that second quarter charge-offs soared to 11.60% from 10.13% in 1Q/09, driven by higher bankruptcy filings. However, delinquency (30+ days) edged down from 6.49% in the prior quarter to 6.02% for 2Q/09. Credit card outstandings also nudged up by 1% to $23.1 billion due to lower payments. Wells says it is offering fewer balance transfers and approving fewer balance increases as a result of the weak credit environment. Card fees grew 33% annualized from first quarter on higher volumes, not increased cardholder fees. Linked quarter purchase volume on credit cards was up 26%. Some of
this growth was seasonal, but also reflects increased customer usage and new customer growth, including new private label dealers at Wells Fargo Financialâs retail sales finance business. While credit losses on credit cards remain elevated, the business remains profitable due to its relationship based approach. Currently 15% of Wachovia retail bank customers have a credit card with Wells, compared with 36% penetration at legacy Wells Fargo. For complete details on Wells Fargo latest performance visit CardData (www.carddata.com).
WELLS FARGO CARD LOANS
Source: CardData (www.carddata.com)
Driven by its recent Wachovia acquisition, Wells Fargo credit card outstandings rose 26% to $23.56 billion, compared to the year ago quarter. Wells Fargo also reports that credit card charge-offs increased $90 million in the fourth quarter to $451 million. Card fees income was flat year-on-year at $589 million and down from Q3’s $601 million. Fourth quarter credit card charge-offs, as a percentage of average credit card loans card, hit 8.69%, compared to 7.20% for 4Q/07. Delinquency (90+days), based on average credit card loans, rose to 3.3% for 4Q/08, compared to 2.5% in the prior quarter and 2.3% for 4Q/07. Wells says the increases in delinquency and loss levels in the consumer unsecured loan portfolios were directly impacted by employment levels. At the end of the fourth quarter outstandings were $23.56 billion, compared to $20.36 billion in the third quarter and $18.76 billion in the year ago fourth quarter. For complete details on Wells Fargo’s latest performance visit CardData [www.carddata.com](http://www.carddata.com).
WELLS FARGO CARD LOANS
Source: CardData (www.carddata.com)
Wells Fargo and Wachovia have completed their merger,
creating North Americaâs most extensive distribution
system for financial services with 11,000 stores, 12,260 ATMs,
wellsfargo.com and “Wells Fargo PhoneBank”. Wells Fargo for the first
time has a Community Banking
presence in Alabama, Connecticut, Delaware, Florida, Georgia, Kansas,
Maryland, Mississippi, New Jersey, New York, North Carolina,
Pennsylvania, South Carolina, Tennessee, Virginia and Washington D.C with
community banks in 39 states and is #1 in deposit market share in 18 of
those states plus
the District of Columbia. It also is #1 in the U.S. in community
banking presence (6,650 stores), small business lending, middle market
commercial banking, agriculture lending, commercial real estate lending,
commercial real estate brokerage, and bank-owned insurance brokerage. It
is #2 in banking deposits in the U.S., home mortgage originations and
servicing, retail brokerage (number of financial advisors), and debit
card. Wells Fargo serves 48 million banking households and is one of
Americaâs largest private employers with 276,000 team members.
At closing, Wells Fargo acquired all outstanding shares of common stock
of Wachovia in a stock-for-stock transaction. Wachovia shareholders
received 0.1991 shares of Wells Fargo common stock in exchange for each
share of Wachovia common stock they owned. Shares of each outstanding
series of Wachovia preferred stock were converted into shares (or
fractional shares) of a corresponding series Wells Fargo preferred stock
having substantially the same rights and preferences. As a result of the
transaction, Wells Fargo acquired all of Wachovia Corporation and its
businesses and obligations, including all of its banking deposits.
Wells Fargo and Citigroup have terminated discussions
concerning a possible sale of certain banking assets of Wachovia
Corporation. Wells Fargo reaffirmed that it is proceeding with its
merger with Wachovia Corporation as a whole company transaction with all
of Wachoviaâs banking and other operations, requiring no financial
assistance from the Federal Deposit Insurance Corporation (FDIC) or any
other government agency. The combined company will have $1.42 trillion in assets, $787 billion in
deposits, 48 million customers, $258 billion assets under management in
mutual funds, 10,761 stores, 12,227 ATMs and 280,000 team members. The
merger will create the nationâs premier coast-to-coast community banking
presence with community banks in 39 states and the District of Columbia.
Citi has not reached an agreement with Wells Fargo in the acquisition of Wachovia. The differences in the partiesâ
transaction structures and their views of the risks involved made it
impossible to reach a mutually acceptable agreement. Citiâs transaction, which it remains willing to complete, protected
Wachoviaâs holding company debt and its subsidiary banks, while limiting
the risk to Citigroup and generating value for its shareholders. The
transaction also preserved substantial value for Wachoviaâs shareholders
and other holding company stakeholders without exposing Citigroup to
Wachovia holding company liabilities it declined to assume. Finally,
Citigroup agreed to pay $12 billion to the FDIC, and to incur up to $42
billion of losses, in exchange for the contingent loss protection the
FDIC agreed to provide. Citi believes that it has strong legal claims against Wachovia, Wells Fargo and their officers, directors, advisors and others for breach of contract and for tortious interference with contract. Citigroup plans to
pursue these damage claims vigorously on behalf of its shareholders.
However, Citigroup has decided not to ask that the Wells Fargo-Wachovia
merger be enjoined.
According to a new study by Consumer Reports, the top three spend and save programs have minimal benefits. In its latest report, the Consumer Reports Money Lab took a look at
three of the more well-known spend and save programs: Bank of America’s
Keep the Change, Wachovia’s Way2Save and American Express One.
Bank of America’s “Keep the Change” program rounds every debit card
transaction up to the nearest dollar and transfers the amount to a linked savings or money market account. Assuming the average transaction is $.50, consumers would have to make
1,728 debit purchases in the first year to get the maximum $250. But in year two, the amount matched drops, and they would have to make 10,000 transactions to get the $250. Wachovia’s “Way2Save” sets up linked savings and checking accounts and moves $1 from checking to savings for every debit purchase or paying a bill online. The bank pays 5% interest on the savings account for the first year and a 5% bonus on the savings balance at the end of the year. At the start of year two, it drops to 2% interest and a 2% bonus. Additional deposits into the account are limited to $100 a month. To get the maximum $300 bonus, you’d have to deposit $1,200 and make 4,800 transactions in the first year. The American Express “One” credit card pays 1% cash back on
purchases and a $50 bonus after the first purchase. The cash goes into a
savings account, which recently paid 2.75%. There’s no limit on the
rewards consumers can earn. And the card doesn’t charge interest on new
purchases, only on the previous month’s balance. But a $35 annual fee kicks in after the first year, so you’d have to charge $3,500 to break even.
Citi, Wachovia, and Wells Fargo have consulted with the Federal Reserve and agreed to table litigation proceedings until noon, October 8. The three have agreed to a standstill of litigious activities and cooperate in good faith to resolve the issues surrounding the purchase and transfer of Wachovia’s assets.
Wells Fargo will merge with Wachovia and acquire all outstanding shares of common stock of Wachovia in a stock-for-stock transaction. Under terms of the agreement, which has been approved unanimously by the
boards of both companies, Wachovia shareholders will receive 0.1991
shares of Wells Fargo common stock in exchange for each share of
Wachovia common stock. The transaction, based on Wells Fargo’s closing
stock price of $35.16 on October 2, 2008, is valued at $7.00 per
Wachovia common share for a total transaction value of approximately
$15.1 billion. Wachovia has almost 2.2 billion common shares
outstanding. The agreement requires the approval of Wachovia
shareholders and customary approvals of regulators. Wells Fargo will record Wachovia’s credit-impaired assets at fair value.
The acquisition is expected to exceed Wells Fargo’s internal rate of
return goal and add to Wells Fargo’s earnings per share in the first
year of operations, excluding integration costs, write-downs,
transaction charges, and credit reserve build. Wells Fargo expects to
incur merger and integration charges of approximately $10 billion. To
maintain its strong capital position, Wells Fargo intends to issue up to
$20 billion of new Wells Fargo securities, primarily common stock.
New research from TowerGroup finds that the weeks and months to come
will bring more mergers and restructuring for the U.S. banking industry,
even as the drive for greater regulation, transparency, and cooperation
continues to be debated. At the same time, financial institutions will
return to a focus on more traditional banking activities, as credit
terms become tighter, capital is withheld from the market, and economic
growth is further stifled. While most other developed banking markets
are consolidated into the hands of five or so top players, the U.S.
market has been more fragmented. TowerGroup says the consolidation cycle
will create another two to three national banks
alongside Bank of America and the new Chase. While many thousands of
community banks, credit unions, and mid-tier institutions will continue
to find success in their markets, the top-tier banking echelon will be
far smaller than it is today.
While not FDIC seized like WaMu, Wachovia sold its retail bank, corporate and investment bank and wealth management businesses to Citi. Despite the window dressing, this is the second major U.S. bank failure in less than a week. Citi agreed to pay $2.1 billion to Wachovia and assume its senior and subordinated debt. At this time, there are no changes to Wachovia’s board of directors and two Wachovia directors will join Citigroup’s board. Wachovia will remain headquartered in Charlotte, N.C. Wachovia says that during recent weeks, the financial landscape has changed significantly and presented unprecedented challenges.