The Wall Street Journal reports that TPG, which invested over $7 billion in the nation’s largest thrift, Washington Mutual, late last year. gave a waiver which would facilitate an investment or sale.
WaMu earlier was reported to be considering selling branches and deposits, but how viable the remaining business (credit cards, plus the mortgage assets) is an open question. Various banks have been interested in the past, but it isn’t clear who if anyone might step forward now.
From the Wall Street Journal::
Seattle-based WaMu, weighed down by a deteriorating balance sheet tied to its vast mortgage portfolio, has received interest from Wells Fargo & Co. and Citigroup Inc., these people said.
In the case of Citigroup, the bank this week preliminarily discussed a possible deal involving WaMu but isn’t likely to proceed, according to a person familiar with the matter,,,,
At this point, WaMu isn’t engaged in advanced negotiations with prospective bidders and it isn’t clear that the company will pursue an outright sale, they said.
Goldman Sachs, which has been advising WaMu for months, is now aggressively reaching out to interested parties, said one person familiar with the matter. Another potential suitor is J.P. Morgan Chase & Co., which made an unsuccessful bid for WaMu earlier this year. Other parties may also be interested….
Those efforts moved forward yesterday when private-equity firm TPG (formerly called Texas Pacific Group), which led a $7 billion capital infusion into WaMu in April, let drop a provision that provided downside protection to its investment.
The fact that Citigroup, which has been hammered by tens of billions of dollars in losses over the past year, is now considered in a position of relative strength in the banking industry underscores the dramatic upheaval taking place on Wall Street.
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Too late, you greedy TPG bastards! Your overreaching f-ed you this time. There was plenty of opportunity to raise capital before, but WM had no chance to do so because of your insanity. Rot in bankruptcy.
TPG’s downside protection clause was very likely subject to continuing regulatory approval.
Citi as a source of strength is pretty far fetched–for Wamu of for Morgan Stanley (though a Wachovia/Morgan Stanley combination also beggars the imagination).
As the price discovery process accelerates courtesy of the resolution of the AIG and Lehman situations, I suspect that C, MS and even GS will be facing some very difficult marks. If I were advising MS or GS, I’d suggest seeking shelter asap. (I have no idea who advises such organizations, I suspect they are rather like surgeons busily prepping themselves for their own apendectomies–operations which, when done by third parties are relatively safe, but when done on oneself present a professional challenge of the highest order.
I wonder who will inhabit WaMu’s HQ when this is all over? I don’t think they own it, a beautiful building dead center above the waterfront; we walked past it, Yves, but I don’t think I remembered to point it out. See-through buildings indeed, in the words of Calculated Risk. . . . The only thing transparent in their former business model.