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The Federal Reserve shortened the approval process citing the turbulent markets and the weakened financial condition of Wachovia, which faced bankruptcy last month.
In a statement, the Fed said, "In light of the unusual and exigent circumstances affecting the financial markets, the weakened financial condition of Wachovia, and all other facts and circumstances, the Board has shortened to 10 days the notice period to the primary regulators of the banks and savings associations involved in, and waived public notice of, this proposal, in accordance with the provisions of the BHC Act and the Board's regulations."
In addition, the Fed said it contacted the primary federal supervisors of the insured depositary institutions and the Department of Justice, who have no objection to the approval of the proposal.
The Wells Fargo-Wachovia deal overcame a major hurdle last week after Citigroup said last week that it has terminated its talks with Wells Fargo over their fight to buy Wachovia, but had decided not to ask the Wells Fargo-Wachovia merger to be enjoined. The deal was approved by U.S. antitrust regulators on Friday. Charlotte, North Carolina-based Wachovia also got a waiver from a requirement to seek shareholder approval before issuing preferred shares.
On September 29, New York-based Citigroup agreed in principle to acquire the banking operations of Charlotte, North Carolina-based Wachovia for $2.1 billion in a deal brokered by the Federal Deposit Insurance Corp. The offer was however trumped by Wells Fargo after it said it signed a definitive agreement to buy the whole of Wachovia for about $15.1 billion in a stock-for-stock transaction.
Concerned by the after-effects of a legal battle between Citigroup and Wells Fargo on the financial markets, the Federal Reserve then pushed for a compromise between the two companies.
San Francisco-based Wells Fargo reaffirmed last Thursday that it was proceeding with its proposed acquisition of the whole of Wachovia and said the deal is on schedule for completion by the end of the current year.
Wells Fargo has been weathering the credit crises much better than most of its competitors, partly because it had less exposure to the subprime mortgages. The company has remained profitable, though its profits have declined. For the first six months of 2008, the company's net income declined to $3.752 billion or $1.13 per share from $4.523 billion or $1.33 per share in the year-ago period.
Like JPMorgan Chase & Co. (JPM | Quote | Chart | News | PowerRating), which last month acquired all deposits and assets of Washington Mutual Inc., Wells Fargo has taken advantage of the ongoing financial crisis to trap Wachovia in order to expand its geographical presence.
A Wells Fargo-Wachovia merger would result in a combined company with $1.42 trillion in assets, $787 billion in deposits, 48 million customers, $258 billion assets under management in mutual funds, 10,761 branches and 12,227 ATMs.
WFC closed Friday's regular trading session at $28.31, up $1.06 or 3.89% on a volume of 122.10 million shares. In the 52week period, the stock has been trading in a range of $20.46-$44.75.
WB closed Friday's regular trading session at $5.15, up $1.55 or 43.06% on a volume of 156.75 million shares. The stock has been trading in a range of $0.75-$51.31 in the past 52 weeks.
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