Wachovia Corp. has warned investors it could post a second-quarter loss as large as $2.8 billion as loan and property-related losses continue to roil its finances. The Charlotte, N.C.-based bank, due to announce its second-quarter earnings on July 22, warned of swelling losses in a statement late Wednesday.
"Wachovia expects to report an after-tax loss available to common stockholders of 2.6 to 2.8 billion dollars," the bank said.
The bank blamed its expected losses on write-offs on certain loan portfolios as a widespread U.S. economic credit crunch sweeps the banking sector. Bank officials also expect to take a charge of $280 million related to its commercial real estate exposure. Wachovia endured a first-quarter loss of $393 million.
Like other U.S. banks, Wachovia has seen its profits squeezed dramatically by the housing market slump and mortgage-related losses. Such losses have roiled domestic banks and large foreign banks that snapped up mortgage securities during the housing boom. Analysts say that other large banks also are likely to post continued losses in coming weeks as major corporations unveil their latest earnings.
Wachovia also announced that it has hired a high-ranking U.S. Treasury official, Robert Steel, to be its new chief executive and president. Steel, who resigned as under-secretary of the U.S. Treasury on Wednesday, takes the helm after Wachovia ousted its previous CEO following hefty mortgage-related losses.