U.S. bank Wachovia cuts 6,350 jobs, and dividend

Wachovia Corp. said Tuesday it lost $8.86 billion US in the second quarter, slashed its dividend and announced 6,350 job cuts after losses tied to mortgages soared.

Even excluding one-time items, the results substantially missed Wall Street estimates, and shares sank to mid-1991 levels in premarket trading.

"These bottom-line results are disappointing and unacceptable," chairman Lanty Smith said in a statement. "While to some degree they reflect industry headwinds and weaker macroeconomic conditions, they also reflect performance for which we at Wachovia accept responsibility."

The fourth-largest bank by assets in the United States says it lost the equivalent of $4.20 per share in the April-June period. In the same time last year, the bank earned $2.34 billion, or $1.22 per share.

Excluding a goodwill impairment of $6.1 billion and merger-related and restructuring charges of $128 million, Wachovia lost $2.67 billion, or $1.27 per share. Second quarter results include the bank's October acquisition of A.G. Edwards Inc.

Analysts on average expected a loss of 78 cents per share on revenue of almost $8.4 billion.

The bank, based in Charlotte, N.C., cut its quarterly dividend to five cents a share from 37.5 cents, which will save approximately $700 million per quarter.

Late Monday, Wachovia announced plans to leave the wholesale mortgage lending business.

Predicted smaller loss

On July 9, Wachovia had projected a $2.6-billion to $2.8-billion quarterly loss, equal to $1.23 to $1.33 per share, excluding goodwill items.

The same day, it named former Treasury undersecretary and Goldman Sachs Group Inc. executive Robert Steel as chief executive, replacing the ousted Ken Thompson. Within a week of being on the job, the bank's shares tumbled to a 17-year low.

On the New York Stock Exchange, shares of Wachovia jumped more than 27 per cent. It rose $3.61 US to close at $16.79.