When is wachovia changing to wells fargo in pa

The failure of WaMu thus raised creditor concern about the health of Wachovia. Wachovia's stock price declined sharply and credit default swap spreads on its debt surged. The day after the failure of WaMu, Wachovia Bank depositors accelerated the withdrawal of significant amounts from their accounts.

In addition, wholesale funds providers withdrew liquidity support from Wachovia. It appeared likely that Wachovia would soon become unable to fund its operations. That week, Wachovia management, which had engaged in tentative discussions with potential merger partners earlier in the month, began discussions in earnest to sell the company.

On September 27 and 28, both Citigroup and Wells Fargo, the second and fifth largest banking organizations in the United States, respectively, conducted due diligence investigations of Wachovia. Both Citigroup and Wells Fargo also contacted federal regulators indicating that government assistance would be needed in connection with each of their proposed bids to acquire Wachovia.

The act also provides that the FDIC may take other actions or provide assistance that would not meet the least-cost test if the Secretary of the Treasury, in consultation with the President, and based on the recommendation of both the board of directors of the FDIC and the Board of Governors of the Federal Reserve each by a vote of two-thirds of its members , determine that compliance with the least-cost requirement would have adverse effects on economic conditions or financial stability and other action or assistance would avoid or mitigate those adverse effects.

The Board of Governors and the FDIC were concerned about the systemic complications of the failure of the fourth largest bank in the United States during this fragile economic period. The Board believed that a full or partial default by Wachovia and its subsidiaries on their debt would intensify liquidity pressures on other U. At the time, U.

Investors were becoming increasingly concerned about the outlook for a number of U. At the time, Wachovia was considered "well capitalized" by regulatory standards and until very recently had not generally been thought to be in danger of failure, so there were fears that the failure of Wachovia would lead investors to doubt the financial strength of other organizations in similar situations, making it harder for those institutions to raise capital and other funding.

In addition, if a least-cost resolution did not support foreign depositors, the resolution would endanger what was a significant source of funding for several other major U. Creditors would also be concerned about direct exposures of other financial firms to Wachovia or Wachovia Bank, since these firms would face losses in the event of a default. In particular, losses on debt issued by Wachovia and Wachovia Bank could lead more money market mutual funds to "break the buck," accelerating runs on these and other money funds.

The resulting liquidations of fund assets--along with the further loss of confidence in financial institutions--could lead short-term funding markets to virtually shut down; these markets were already under extreme pressure in the fall of The consequences of an insolvency and unwinding of Wachovia under the least-cost resolution test would also have disastrous effects for an already weakened economy.

Business and household confidence would be undermined by the worsening financial market turmoil, and banking organizations would be less willing to lend due to their increased funding costs and decreased liquidity.

These effects could contribute to materially weaker economic performance, higher unemployment, and reduced wealth. For these reasons, on September 28, , the Board by unanimous vote determined that compliance by the FDIC with the least-cost requirements of the FDI Act with respect to Wachovia Bank and its insured depository institution affiliates would have serious adverse effects on economic conditions and financial stability, and that action or assistance by the FDIC permitted under the systemic risk exception within the act would avoid or mitigate these adverse effects.

Similar determinations were made by the board of directors of the FDIC and the Secretary of the Treasury, in consultation with the President, which allowed the FDIC to consider measures outside the least-cost resolution requirement to resolve Wachovia, including the provision of so-called "open bank" assistance. The FDIC and the Federal Reserve each publicly announced that the Citigroup bid had been received after completion of an FDIC-supervised bidding process and that the parties would proceed to negotiate final details.

This restored some confidence in Wachovia and the liquidity pressures on Wachovia stabilized. To allow Citigroup and Wachovia to finalize their agreement in principal and complete due diligence, the two firms entered into an exclusive dealing agreement for the period from September 29 to October 6.

During this period, Citigroup filed an application with the Federal Reserve seeking expedited approval of its proposed acquisition of Wachovia. Wells Fargo's Second Proposal On October 2, during the period Citigroup and Wachovia were negotiating a final merger agreement, the board of directors of Wachovia received a communication from Wells Fargo that included an offer from Wells Fargo to acquire all of Wachovia's stock by merger.

On October 3, , Wachovia's board of directors voted to accept the Wells Fargo offer, and the parties signed a binding merger agreement.

Upon becoming aware of this, Citigroup informed Wachovia and Wells Fargo that Citigroup considered the merger agreement to be a violation of the exclusive dealing agreement between Citigroup and Wachovia. Citigroup demanded that Wachovia and Wells Fargo terminate their proposed transaction. Citigroup on the same date sent a separate letter to the Federal Reserve protesting any Wells Fargo application to the Federal Reserve to acquire Wachovia on a number of grounds.

The statement indicated that the Wells Fargo proposal had not yet been reviewed and that regulators would be working to achieve an outcome that protected all Wachovia creditors and promoted market stability.

Litigation and Standstill On October 4, Citigroup filed suit against Wachovia and Wells Fargo, seeking a temporary restraining order, preliminary and permanent injunctive relief, specific performance of the exclusivity agreement, and punitive damages.

On October 5, Wachovia filed its own motion for a temporary restraining order preventing Citigroup from taking any steps to interfere with the implementation of the Wachovia-Wells Fargo merger agreement. Due to concerns that the competing legal claims of Citigroup and Wells Fargo could themselves become a destabilizing influence on those institutions, Wachovia, and the banking system generally, representatives of the Federal Reserve attempted to facilitate negotiations among Wachovia, Citigroup, and Wells Fargo to resolve their disagreements.

To allow these discussions time to proceed, Federal Reserve officials became involved in facilitating negotiations for a cease-fire or standstill to the litigation among the three firms.

A standstill agreement was finalized on October 6, under which Wachovia, Citigroup, and Wells Fargo agreed to suspend for two days all formal litigation activity, including discovery, and to otherwise cooperate to preserve the status quo with regard to any litigation. This agreement was extended until October During this period, the three firms attempted to renegotiate a transaction that would be mutually agreeable.

The negotiations focused on a joint acquisition of Wachovia by the two bidders, with each bidder acquiring a different geographic portion of Wachovia. The parties were unable to reach an agreement on a joint acquisition of Wachovia, but did agree on October 9 not to seek injunctive relief to stop a Wachovia acquisition transaction from occurring.

Citigroup determined to proceed with its claims, but to limit those claims to seeking monetary damages. Wells Fargo announced its intention to complete its merger with Wachovia and indicated that it had submitted an application to the Federal Reserve seeking expedited approval of the transaction. Wells Fargo Application On October 12, the Board announced its approval of the application and notice under sections 3 and 4 of the BHC Act by Wells Fargo to acquire Wachovia and its banking and nonbanking subsidiaries.

In light of the emergency affecting the financial markets, and as permitted by the BHC Act and Federal Reserve regulations, the Board waived public notice of the proposal and shortened the notice period to the primary regulators of the banks and thrifts involved.

These agencies, and the Department of Justice, indicated that they had no objection to approval of the proposal. On October 21, the Board released a statement explaining in more detail the reasons for its approval.

This statement included a discussion of the various relevant factors for applications and notices under sections 3 and 4 of the BHC Act, including competitive effects, financial and managerial performance, the convenience and needs of the communities to be served, and performance under the Community Reinvestment Act.

The statement also addressed a number of comments received on the proposal, including comments from Citigroup objecting to the proposal. On January 1, , Wells Fargo announced that the merger had been completed effective December 31, Federal Reserve Assistance The Federal Reserve did not provide any emergency financial assistance in connection with the Wells Fargo-Wachovia merger, nor was any financial assistance sought from the Federal Reserve as part of the Citigroup bid or either of the Wells Fargo bids.

Hugh Long, Wells Fargo regional president for Pennsylvania and Delaware, said he was confident there would be no glitches as the bank with the most branches in the region changed colors from Wachovia's blue and green to Wells Fargo's red and gold. The standard is much higher" than merely ensuring that there are no problems with deposits being properly credited, for example, Long said. The bigger issue is: "How does the customer feel about the conversion?

In an effort to connect with its new communities, Wells Fargo, based in San Francisco, worked with local historical societies and universities to create murals that will be displayed in about a fifth of the branches, with more planned.

For example, the mural for a branch in Glassboro includes an illustration of the former Whitney Glass Works, a photo of a local fire company, and a picture of the Hollybush Mansion on what is now the campus of Rowan University.

Interspersed are images showing Wells Fargo's historical connection to Glassboro through money orders and express deliveries by horse and wagon. Winnowing down items for the murals was a challenge, said Beth Currie, who as manager of Eastern store strategic initiatives for Wells Fargo is overseeing the murals here.

Wells Fargo started including historical murals in its new branches in , completing 1, through Last year, more were done, mostly in former Wachovia branches. The first Wachovia branches that Wells Fargo converted were in markets where both companies had branches, such as Colorado and California. Those were followed by markets in the South, where only Wachovia had branches. The New Jersey-Delaware area will be the third Wachovia-only market to be converted.