In the biggest bank failure in US history, JPMorgan Chase will acquire deposits and some branches of Washington Mutual for $1.9bn after US regulators took over the sixth biggest US bank on Thursday night, reports the FT. The move came after WaMu’s shares plunged further, having lost nearly all their value in recent months amid efforts to auction off the bank to a competitor. Under the government take-over, the value of WaMu’s common equity and preferred shares would be wiped out. It was unclear what would happen to WaMu’s troubled mortgage portfolio. JPMorgan has long coveted WaMu’s US south-east and west coast branch networks. It trumped Wells Fargo, which was also interested in WaMu’s deposits and branches and is still trying to obtain some of its branches. Bids for WaMu were due Wednesday as part of an auction being conducted by Goldman Sachs. But there was little buyer enthusiasm without government support to back what could be tens of billions of dollars in losses on WaMu’s mortgage and credit card assets. WaMu’s share price on Thursday fell 57 cents to $1.69, for a market value of about $2.9bn – or about 15% of its tangible book equity of $18.8bn in Q2 2008. The WSJ examines details of the deal.
