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Wells Fargo + Wachovia = Two Banks (Update)

On Tuesday, I posted about Wells Fargo's blog that will chart the course of their merger with Wachovia.

On Friday, Matt Wadley posted on the blog the following comment:

"It seems there's still some confusion out there about exactly what has changed to your accounts with either Wells Fargo Bank or Wachovia Bank.

"And for now, the answer is: 'Nothing.'

"While we are now one parent company as far as the legal types are concerned, right now we're still operating as two separate banks, and the work of integrating our two companies is just beginning."

The Augusta Chronicle, of all places, elaborates today in a piece entitled, "Wachovia, Wells Fargo move slowly". 

There's a lot of interesting stuff in the article, saying that only the top management positions have been agreed so far, with systems integration next:

"The systems will be integrated before any of the signs (brands) change … for example, customers will not be able to link a Wachovia savings
account as overdraft protection for a Wells Fargo checking account
until after integration."

Systems integration may well take-up two years of a three year cycle of change, with merger completion unlikely till 2011 or after.  This will be a long haul therefore, according to Matt and Richard.

Yep.

MERGER TIMELINE SO FAR:

2008

SEPTEMBER 29: CitiGroup announces that it will buy the banking division of Wachovia for $2.1 billion.

OCTOBER 3: Wells Fargo announces that it has an agreement to buy all of Wachovia for $15.1 billion.

OCTOBER 6: Citi files a $60 billion lawsuit against Wells Fargo, claiming interference (still pending).

DECEMBER 23: Wachovia shareholders approve a takeover by Wells Fargo.

DECEMBER 31: Merger with Wells Fargo is announced as complete.

On the Citi lawsuit, interesting analysis from Kevin Dobbs at the American Banker

This article implies that Citi is only pursuing the case to get some cash, and improve the view with their shareholders and the public, many of whom believe that they could not have merged with Wachovia anyway as they weren't prepared or ready.

There is also an interesting comment that "the deal would have given Citi a massive new funding source. Wachovia,
though faltering on mortgage losses, still had more than $400 billion
in deposits, a sum that would have tripled Citi's domestic deposit base."

All in all, it doesn't look like Citi has a strong case for legal proceedings and is unlikely to win. 

Nothing like a public fall-out to create some stimulating debate though, is there?

About Chris M Skinner

Chris M Skinner

Chris Skinner is best known as an independent commentator on the financial markets through his blog, the Finanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here…

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