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Wachovia sees $600 million write-down

By Aaron Siegel

November 9, 2007 10:48 am ET

Wachovia Corp. has joined the ranks of financial services companies facing major write-downs as a result of the credit crunch.

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The Charlotte, N.C.-based company said it is anticipating loan losses between $500 million and $600 million in the fourth-quarter, citing "anticipated loan growth and the impact of continuing credit deterioration" in its loan portfolio.

"The expected credit deterioration will likely be focused in certain geographic areas that have recently experienced dramatic declines in housing values," according to an SEC filing.

Due to the October market deterioration, Wachovia said its asset-backed collateralized debt obligations, or CDOs, fell by approximately $1.1 billion.

It had remaining exposure of $676 million to asset-backed CDOs, compared with $1.8 billion the previous month.

The company also has exposure to subprime residential-mortgage-backed securities of $2.1 billion, according to the filing.

Wachovia's write-down is the fifth to be announced within the last two weeks.

In the past two days, American International Group Inc. and Morgan Stanley announced write-downs of $1.95 billion and $3.7 billion, respectively.

Earlier this week, Citigroup Inc. announced that it will record between $8 billion and $11 billion in write-downs, while Merrill Lynch & Co. Inc. announced a $7.9 billion write-down two weeks ago.

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