So Citi has called off the dogs in its pursuit of Wachovia, paving the way for Wells Fargo to take over the erstwhile fourth-largest US bank by assets and join Citi, Chase, and Bank of America as the undisputed banking heavyweights in America.
(Why was this deal ever in dispute anyway? Citi was offering just over $2 billion for Wachovia’s banking business only and the FDIC was going to be on the hook for more than $200 billion of Wachovia’s debt. Wells Fargo waltzed in with a $15 billion offer for all of Wachovia, with no federal purse strings attached and at a price seven times more per share more than Citi’s offer. Yet the government made noises about wanting to block it? No wonder the stock market’s dropping around our ankles.)
As the dust settles, Wells Fargo is pulling its stagecoach into heretofore unchartered frontier: the Southeast and Mid-Atlantic regions. Conveniently, the FDIC released its survey of second-quarter deposits last week. So where will the change be felt the most?
Start with Wachovia’s hometown of Charlotte. Bank of America is based there too, but you wouldn’t know it by the FDIC’s deposit market share report. BofA is a distant second to Wachovia (19% to 69%), so Wells will almost instantly become the dominant player there and throughout the Carolinas. In Atlanta, hometown-based Sun Trust, which in giddier times was rumored to be a possible merger partner with Wells Fargo, remains on top with more than a quarter of the deposit share in the eighth-largest MSA in the US. But Wells will enter the market in second place, assuming Wachovia’s nearly 20% deposit share. Wells will also become a big player in the fourth largest MSA, Philadelphia.
The largest US markets, New York and Los Angeles, will be relatively unaffected by the Wells/Wachovia deal. Chase is king in the Big Apple and its takeover of Washington Mutual will only extend its lead there. In La-La Land, where WaMu was second, Chase will joust with Wells for the runner-up spot behind BofA.
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