Wachovia's shares fall 60 percent on asset concerns

NEW YORK Mon Sep 29, 2008 8:27am EDT

A Wachovia Bank sign is seen inside an ATM booth in New York's financial district, September 18, 2008. REUTERS/Brendan McDermid

A Wachovia Bank sign is seen inside an ATM booth in New York's financial district, September 18, 2008.

Credit: Reuters/Brendan McDermid

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NEW YORK (Reuters) - Shares of Wachovia Corp sank 60 percent in early electronic trading on Monday on concerns about its huge portfolio of illiquid assets and no deal has yet to emerge after sources said it was in talks with Citigroup Inc and Wells Fargo & Co to be taken over.

The New York Times reported that Citigroup and Wells Fargo were unlikely to bid more than a few dollars a share for the sixth-largest U.S. bank by assets.

It is unclear whether Wachovia would be sold in its entirety or be broken up, or how much Wachovia bondholders might lose in any transaction, the newspaper reported.

Wachovia's shares fell 60 percent to $4.

The government is resisting guaranteeing some of Wachovia's assets, as it did for Bear Stearns when it engineered that company's sale to JPMorgan Chase & Co, and is also opposed to taking over Wachovia unless its financial position deteriorates more rapidly.

Investor concern about Wachovia intensified on Friday after JPMorgan said it would take a $31 billion write-down on loans it acquired when it took over Washington Mutual Inc's banking unit on Thursday.

There are fears that Wachovia might have to take much larger write-downs on a $122 billion portfolio of option adjustable-rate mortgages it largely inherited when it bought California lender Golden West Financial Corp in 2006.

(Reporting by Kristina Cooke/Juan Lagorio; Editing by Kenneth Barry/Jeffrey Benkoe)

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