WaMu Leads Steepest-Ever Decline in Bank Stock Index
WaMu Leads Steepest-Ever Decline in Bank Stock Index (Update1)
By David Mildenberg
July 14 (Bloomberg) -- Washington Mutual Inc., the biggest U.S. savings and loan, and National City Corp., Ohio's largest bank, led the steepest-ever decline in the two-decade history of an index of bank stocks after IndyMac Bancorp Inc.'s collapse spurred concern more lenders are vulnerable to bad home loans.
WaMu slid $1.72, or 35 percent, to $3.23 at 4:01 p.m., and National City dropped 65 cents, or 14 percent, to $3.77 in New York Stock Exchange composite trading. First Horizon National Corp., Tennessee's largest bank, declined 25 percent, while Regions Financial Corp., Alabama's biggest, fell 17 percent.
``IndyMac's failure has people worried about others,'' said Mark Fitzgibbon, a principal at Sandler O'Neill & Partners LP. ``The mindset is, `throw the baby out with the bathwater.'''
The Standard & Poor's 500 Banks Index had its worst one-day decline since its was created in 1989. WaMu, as Washington Mutual is known, said in a statement today that said it exceeds all regulator minimums for so-called well-capitalized lenders and will provide more details when it reports earnings on July 22. National City said today there hasn't been any ``unusual depositor or creditor activity'' at the bank.
Banks and mortgage companies are the worst performers in the S&P 500 this year, and Merrill Lynch & Co. strategists led by Richard Bernstein said today the stocks will continue to lag. Laszlo Birinyi, president of Birinyi Associates Inc., also told investors to avoid the group.
``Take a very low profile,'' Birinyi, who oversees more than $350 million in Westport, Connecticut, said in an interview on Bloomberg Television. ``There's an awful lot of fires that need to be put out. I'm concerned about how we get them all out.''
IndyMac
Investors are speculating about which banks may fail after the demise of Pasadena, California-based IndyMac, which once ranked as the second-biggest U.S. mortgage company. National City said in June it signed an accord with federal regulators tied to capital, risk and liquidity management. The bank says it's well-capitalized after raising $7 billion in May from investors led by Corsair Capital Management LLC.
The collapse of IndyMac and deterioration in the construction, mortgage and auto lending markets indicate that losses at U.S. regional banks will force dividend cuts and additional capital raising, said analysts at Goldman Sachs Group Inc. and CreditSights Inc.
``After IndyMac, everyone asks, 'Who's next?' but I can list several names that strike me as far more likely to fail than National City,'' said Sterne Agee & Leach Inc. analyst Sean Ryan in an e-mail. National City has ``tons of capital and a real deposit base.''
More Losses Seen
Goldman put Zions, Utah's biggest bank, on its ``conviction sell'' list. Lehman Brothers Holdings Inc. predicted $26 billion in cumulative losses for Seattle-based Washington Mutual, and M&T Bank Corp., based in Buffalo, New York, posted a 25 percent decline in second-quarter profit.
Banks may report record unrealized securities losses of $35 billion in the second quarter, up 64 percent from the previous three months, the Goldman analysts said in a report today. Zions, SunTrust Banks Inc., Regions, Comerica Inc. and Bank of America Corp. are among companies that Goldman and CreditSights said may cut their dividends to help restore depleted capital.
The Goldman analysts estimated banks will require at least $60 billion in addition to the $125 billion they've already raised to bolster capital.
IndyMac was seized after a run by depositors left the California mortgage lender short on cash last week. The government stepped in to help beleaguered home lenders Fannie Mae and Freddie Mac yesterday when Treasury Secretary Henry Paulson asked Congress for authority to buy unlimited stakes and lend to the companies to halt a collapse in confidence.
The decision to protect Fannie Mae and Freddie Mac was needed to ``stem the growing risk of credit contraction in the U.S.,'' the Goldman analysts said.
To contact the reporters on this story: David Mildenberg in Charlotte at dmildenberg@bloomberg.net.
By David Mildenberg
July 14 (Bloomberg) -- Washington Mutual Inc., the biggest U.S. savings and loan, and National City Corp., Ohio's largest bank, led the steepest-ever decline in the two-decade history of an index of bank stocks after IndyMac Bancorp Inc.'s collapse spurred concern more lenders are vulnerable to bad home loans.
WaMu slid $1.72, or 35 percent, to $3.23 at 4:01 p.m., and National City dropped 65 cents, or 14 percent, to $3.77 in New York Stock Exchange composite trading. First Horizon National Corp., Tennessee's largest bank, declined 25 percent, while Regions Financial Corp., Alabama's biggest, fell 17 percent.
``IndyMac's failure has people worried about others,'' said Mark Fitzgibbon, a principal at Sandler O'Neill & Partners LP. ``The mindset is, `throw the baby out with the bathwater.'''
The Standard & Poor's 500 Banks Index had its worst one-day decline since its was created in 1989. WaMu, as Washington Mutual is known, said in a statement today that said it exceeds all regulator minimums for so-called well-capitalized lenders and will provide more details when it reports earnings on July 22. National City said today there hasn't been any ``unusual depositor or creditor activity'' at the bank.
Banks and mortgage companies are the worst performers in the S&P 500 this year, and Merrill Lynch & Co. strategists led by Richard Bernstein said today the stocks will continue to lag. Laszlo Birinyi, president of Birinyi Associates Inc., also told investors to avoid the group.
``Take a very low profile,'' Birinyi, who oversees more than $350 million in Westport, Connecticut, said in an interview on Bloomberg Television. ``There's an awful lot of fires that need to be put out. I'm concerned about how we get them all out.''
IndyMac
Investors are speculating about which banks may fail after the demise of Pasadena, California-based IndyMac, which once ranked as the second-biggest U.S. mortgage company. National City said in June it signed an accord with federal regulators tied to capital, risk and liquidity management. The bank says it's well-capitalized after raising $7 billion in May from investors led by Corsair Capital Management LLC.
The collapse of IndyMac and deterioration in the construction, mortgage and auto lending markets indicate that losses at U.S. regional banks will force dividend cuts and additional capital raising, said analysts at Goldman Sachs Group Inc. and CreditSights Inc.
``After IndyMac, everyone asks, 'Who's next?' but I can list several names that strike me as far more likely to fail than National City,'' said Sterne Agee & Leach Inc. analyst Sean Ryan in an e-mail. National City has ``tons of capital and a real deposit base.''
More Losses Seen
Goldman put Zions, Utah's biggest bank, on its ``conviction sell'' list. Lehman Brothers Holdings Inc. predicted $26 billion in cumulative losses for Seattle-based Washington Mutual, and M&T Bank Corp., based in Buffalo, New York, posted a 25 percent decline in second-quarter profit.
Banks may report record unrealized securities losses of $35 billion in the second quarter, up 64 percent from the previous three months, the Goldman analysts said in a report today. Zions, SunTrust Banks Inc., Regions, Comerica Inc. and Bank of America Corp. are among companies that Goldman and CreditSights said may cut their dividends to help restore depleted capital.
The Goldman analysts estimated banks will require at least $60 billion in addition to the $125 billion they've already raised to bolster capital.
IndyMac was seized after a run by depositors left the California mortgage lender short on cash last week. The government stepped in to help beleaguered home lenders Fannie Mae and Freddie Mac yesterday when Treasury Secretary Henry Paulson asked Congress for authority to buy unlimited stakes and lend to the companies to halt a collapse in confidence.
The decision to protect Fannie Mae and Freddie Mac was needed to ``stem the growing risk of credit contraction in the U.S.,'' the Goldman analysts said.
To contact the reporters on this story: David Mildenberg in Charlotte at dmildenberg@bloomberg.net.
posted by The Builder at
2:21 PM
0 Comments:
Post a Comment
Subscribe to Post Comments [Atom]
<< Home