Wachovia says capital OK, eyes asset sales: Sandler
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NEW YORK (Reuters) - Wachovia Corp <WB.N> should not need to raise dilutive capital and sales of non-core assets will likely total hundreds of millions of dollars, not billions, Chief Executive Robert Steel told an analyst.
In a report dated Friday, Sandler O'Neill & Partners LP analyst Kevin Fitzsimmons said Steel made his comments in a meeting a day earlier at Wachovia's headquarters in Charlotte, North Carolina.
Steel, a former U.S. Treasury undersecretary and Goldman Sachs Group Inc <GS.N> vice chairman, became chief executive in July, replacing the ousted Ken Thompson.
Wachovia had a record $9.11 billion loss in the second quarter and earlier this year raised $8.05 billion of capital. Steel is cutting 6,950 jobs and trying to sell $20 billion of loans and securities this year, as losses mount from a troubled $122 billion portfolio of adjustable-rate mortgages.
According to the Sandler report, Steel said "a dilutive capital capital raise is not in the plan and should not be necessary given what he knows now and added that he is even more confident about the levers available within the company."
Steel said he considers retail and commercial banking, corporate and investment banking, and brokerage operations to be core businesses.
He also added that Wachovia has a "long-term ambition" for asset management, which Fitzsimmons said seems to indicate that the bank might keep its Evergreen Investments unit.
"The company didn't seem to rule out such an option with the insurance business, though," the analyst wrote.
Wachovia also indicated it is still comfortable with expectations for losses of 12 percent in the $122 billion "Pick-a-Pay" mortgage portfolio, largely inherited when it bought Golden West Financial Corp for $24.2 billion in 2006.
The bank is treating the portfolio as distressed, but Steel downplayed the possibility of creating a "good bank/bad bank" structure to segregate it from core businesses, Fitzsimmons wrote.
Fitzsimmons rates Wachovia "hold," with a $17 price target, saying medium-term prospects for the stock are tied largely to a still-declining U.S. housing market.
In morning trading, Wachovia shares were down 40 cents, or 2.5 percent, at $15.59 on the New York Stock Exchange. They began the year at $38.03.
(Reporting by Jonathan Stempel)
