WaMu still weighing sale, capital raising: sources

PHILADELPHIA/NEW YORK Thu Sep 18, 2008 7:20pm EDT

1 of 2. A Washington Mutual (WaMu) bank employee arrives for work at a branch office in Glendale, California September 18, 2008.

Credit: Reuters/Fred Prouser

PHILADELPHIA/NEW YORK (Reuters) - Washington Mutual Inc, the large U.S. savings and loan beleaguered by mortgage losses, continues to explore all options, such as talking to potential buyers or raising capital, sources familiar with the situation said on Thursday.

Washington Mutual has yet to secure a quick takeover bid, although sources cautioned it was early in the auction process.

Potential suitors such as JP Morgan Chase & Co and Wells Fargo & Co have yet to submit formal offers, although negotiations are continuing with several parties that have expressed interest, sources said.

In addition to JP Morgan and Wells Fargo, the possible suitors include HSBC Holdings Plc and Citigroup Inc, a source familiar with the situation previously told Reuters.

Seattle-based Washington Mutual had hired Goldman Sachs & Co and Morgan Stanley to run an auction. A sale is neither imminent nor guaranteed and the thrift is exploring other options, a source previously told Reuters.

Washington Mutual and JP Morgan declined to comment. Citi, Wells Fargo and HSBC could not immediately be reached for comment.

Washington Mutual is just one of several banks to hold merger talks amid the recent global financial crisis.

On Monday, Bank of America Corp agreed to pay $50 billion for Merrill Lynch & Co Inc, which has lost $19.2 billion in the last four quarters.

Investment bank Lehman Brothers Holdings Inc declared bankruptcy earlier this week and sold its main U.S. business to British bank Barclays Plc's.

Morgan Stanley is in talks to sell a larger equity stake to China Investment Corp, while also holding merger talks with Wachovia Corp and other banks, two people familiar with its plans said on Thursday.

Washington Mutual shares jumped 98 cents, or 49 percent, to close at $2.99 on the New York Stock Exchange amid hopes it would find a buyer. The stock eased 11 percent in after hours trading on concerns the interest of some suitors may be fading.

(Reporting by Jessica Hall in Philadelphia and Paritosh Bansal in New York; Editing by Gary Hill and Andre Grenon)

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