US bank Wachovia reported a record quarterly loss of $8.9 billion and cut the dividend by 87 per cent.
The second-quarter loss of $4.20 a share compared with net income of $2.3 billion, or $1.23, a year earlier, the North Carolina-based company said today in a statement.
The bank hired Treasury Undersecretary Robert Steel as chief executive officer two weeks ago.
The writedown and second dividend reduction in three months reflect Mr Steel's response to the Golden West Financial acquisition, which cost former CEO Kennedy Thompson his job after eight years.
Wachovia has dropped more than 75 per cent in New York Stock Exchange composite trading since it spent $24 billion two years ago to buy Golden West just as house prices were peaking.
Wachovia rose 21 cents yesterday to $13.18 in NYSE trading. The shares have declined 65 per cent this year, the second-worst performance on the 24-member KBW Bank Index behind National City, Ohio's largest bank.
The second-quarter loss marks the first time Wachovia has posted consecutive losses in at least 20 years.
Wachovia's report follows the release of better-than-estimated quarterly results at JPMorgan Chase & Co., Bank of America Corp., Citigroup Inc. and Wells Fargo & Co.
Wachovia said July 9 that losses in the three months ended June 30th would be at least $2.6 billion, after $3.3 billion of losses on option-adjustable-rate mortgages.
The loans let borrowers skip part of their payment and add the balance to principal. The bank said last month that it stopped offering the mortgages.
Bloomberg