Stocks to Watch: Wachovia. Wachovia to Raise Loan Loss Allocation to $500 Million to $600 Million in 4Q; World’s Biggest Banks Have Written Down $40 Billion of Assets.
Wachovia Sees Higher Loan Losses – Bank Says CDO Portfolio Lost More Than $1 bln During October
Wachovia became the latest banking giant to warn that it sees bigger losses as a result of the continued deterioration in the mortgage market.
Wachovia stated in a filing to the Securities and Exchange Commission that it’s anticipating loan losses between $500 million and $600 million in the fourth quarter, citing anticipated loan growth and the impact of continuing credit deterioration in its loan portfolio.
“The expected credit deterioration will likely be focused in certain geographic areas that have recently experienced dramatic declines in housing values,” according to the filing.
Wachovia shares were off nearly 4% in premarket trading Friday morning. Due to the October market deterioration, its asset-backed collateralized debt obligations, or CDOs, experienced further declines in value in the month of October 2007 by an amount it currently estimates to be approximately $1.1 billion pre-tax.
Tags: Collateralized Debt Obligation (CDO), Credit, Credit Deterioration, Mortgage Backed Securities, Subprime Implosion, Subprime Mortgage Industry, Wachovia
