Wachovia Seeks US$7bn As Credit Crunch Bites

April 2008 | Corporate Financing Analysis

Wachovia- the fourth-largest US bank as measured by assets, and the fifth as measures by market value - is the latest financial institution to seek additional capital to shore up a beleaguered balance sheet hit hard by the credit crunch and housing bust. The bank is planning to raise around US$7bn via the sale of common stock and convertible preferred shares, and will also slash its dividend by 41% in order to provide an additional US$4bn over the next two years, but Chief Executive Ken Thomson's admission that the bank's decision to raise the capital had come as a result of fresh data suggesting that consumer defaults on mortgages and other loans would worsen going forward, does little to inspire confidence.

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