Who is it going to be?
Citigroup Inc. (C), moving to take advantage of the turmoil that is hobbling banks throughout the U.S., is considering making a bid for Washington Mutual Inc. (WM), according to people familiar with the situation.
“People view us today as being a source of the solution, instead of part of the problem,” Gary Crittenden, Citigroup’s chief financial officer, said in an interview. He declined to comment specifically about WaMu.
Citigroup and several other banks are reviewing the Seattle thrift-holding company’s books, which are packed with shaky mortgages, people familiar with the matter said Thursday. Other interested parties include Banco Santander SA, of Spain, and Wells Fargo & Co. (WFC), of San Francisco. J.P. Morgan Chase & Co. (JPM), which was spurned by WaMu earlier this year, is biding its time on a potential bid, people close to J.P. Morgan said.
Who will be the winner? Let’s look.
JP Morgan has its hand full digesting Bear Sterns (BSC). While it does have the balance sheet to do a deal, doing so with the Bear liabilities hanging on it and then adding those of WaMu might just tax things a bit much for CEO Jamie Dimon’s comfort.
Citi. Well, if Pandit has promised to shed $400 billion or so in “non core” assets, I think the likely hood of Citi being a prime bidder would be enhance were he to do it first. Citi is much more likely to be a buyer of much smaller regional banks.
Wells Fargo. The best bet in the lot. I has no current integration issues like Morgan does and is in a infinitely stronger position that Citi. If WaMu is going to get an offer, my guess is that now Wells can unload many of the undesirable mortgages WaMu holds to Hank Paulson, the thrift becomes a bit more appealing at its current $4 a share price.
Disclosure (“none” means no position):Long C, WFC, none
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