It looks like the bank that was Washington Mutual is no more in what is being called the largest U.S. bank failure. Now, through a transaction facilitated by the FDIC, JPMorgan Chase owns WaMu's banking operations. According to a release by the agency, "JPMorgan Chase acquired the assets, assumed the qualified financial contracts and made a payment of $1.9 billion. Claims by equity, subordinated and senior debt holders were not acquired." Due to the nature of the transaction, there was no cost incurred to the Deposit Insurance Fund.According to JPMorgan, the acquisition creates the largest depository financial institution with over $900 billion of customer deposits. The acquisition will also expand Chase's consumer branch network into California, Florida and Washington State and creates the nation's second-largest branch network with locations reaching 42 percent of the U.S. population, said a statement from the bank. "The combined 5,400 branches in 23 states will also serve as an excellent base to extend the reach of the business banking, commercial banking, credit card, consumer lending and wealth management businesses. The acquisition also extends Chase's retail branch network to additional states, including Georgia, Idaho, Nevada and Oregon."
Chase plans to convert WaMu's technology platform and banking, home lending and credit card business to the Chase brand. The combination will also bring the Chase ATM network to 14,000 machines.
"This acquisition makes us more convenient and valuable to our customers and meets our strategic goal of broadening our footprint to serve our current and future customers better," said Charlie Scharf, head of Chase's retail business, in a release.
Definitely an attractive deal for Chase and for WaMu's customers, who apparently can resume "banking as usual," according to Chase. They will also benefit from greater physical presence of the bank as well. Says Bart Narter, SVP of Celent's banking group, "This acquisition puts JPMorgan neck and neck with Bank of America in terms of total number of branches, with about 5,400 to BofA's 5,785. If there had been any doubt that JPMorgan was serious about retail branch banking, it has entirely disappeared."
We all knew this was coming (although it was initially thought Citi was going to be the buyer). However, I can't help but think what a shame this is. WaMu was just making headway in the New York area, creating a greater presence and brand recognition. But now, due to some bad risks, it is no more and has squandered the opportunity to become a significant player in a major retail banking market.
So, does anyone care to take any guesses as to what surprises await us next week in the ongoing saga of "As the Banking World Turns?"