Wachovia Hires Goldman Sachs for Loan Portfolio Advice

Embattled consumer bank Wachovia has hired investment bank Goldman Sachs to help it evaluate its consumer loan portfolio, according to a report from the Associated Press.

A Wachovia spokesperson told the AP that Goldman will help it analyze the portfolio and “evaluate various alternatives.”

Charlotte, N.C.-based Wachovia (NYSE: WB) has seen the price of its stock cut in half since the beginning of May. The bank lost $708 million in the first quarter of 2008 compared to a profit of more than $2 billion in the same quarter a year ago (“Wachovia Cuts in Line, Sets Dour Mood for Banks’ Quarterlies,” April 14).

The quarterly loss was due primarily to soaring credit loss provisions, which topped out at $2.83 billion in the first quarter of this year compared to $177 million a year ago.

The losses led to the ouster of CEO Ken Thompson earlier this month (“WaMu, Wachovia Make Changes at the Top,” June 2). Chairman Lanty Smith has taken over as interim CEO while a search is in progress to find a replacement.

CNBC reported last week that JPMorgan Chase & Co. may be gearing up to make a bid for Wachovia, the fourth largest banking chain in the U.S. based on total assets. The rumor has been circulated on financial and M&A blogs, but is unsubstantiated. TheDeal.com noted Friday that CNBC had reported earlier that JPMorgan was looking at a possible takeover of SunTrust before it reported the Wachovia rumor.