Wells Fargo to sell a few Wachovia branches in California, Colorado
Wells Fargo told the Federal Reserve it would sell a handful of Wachovia branches in order to reduce “adverse effects on competition,” according to a statement released late Tuesday by the regulator.
Five of the branches are in California, and have about $1.33 billion of deposits. One branch is in Colorado, and has about $127 million in deposits. San Francisco-based Wells and Charlotte-based Wachovia overlap in those states, but have virtually no overlap on the East Coast.
The Wells/Wachovia combination, which has already received the Federal Reserve's approval, may still run into problems with the federal deposit cap.
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A bank cannot own more than 10 percent of total U.S. deposits through acquisitions.
According to estimates based on June 30 data, the combined company would have controlled about 10.1 percent of all deposits, or $728 billion.
In its application to purchase Wachovia, Wells said it would take the necessary steps to slip below the limit by the time the merger closes, but it did not provide details.
However, that problem may have taken care of itself.
The Federal Reserve is still compiling the latest deposit data from the nation's banks, and won't know until next month whether the Wells/Wachovia combination will actually exceed the 10 percent cap.
According to Sept. 30 data, the combined company would control about $731 billion. (Though Wachovia has been losing deposits, Wells has been gaining them.) But that could amount to less than 10 percent because the total of U.S. deposits has been increasing as consumers seek safer vehicles for their money than the stock market.
The Wells/Wachovia combination will have more U.S. deposits than any other bank, and also more branches.
When Charlotte's Bank of America bought Countrywide Financial this year, the Fed cleared the deal even though it created at the time a bank with 10.9 percent of U.S. deposits.
The Fed said the 10 percent cap didn't apply because Countrywide operated as a savings and loan, not a bank.