Acquisition by Wachovia Bank
World Savings Bank, a Savings and Loan company headquartered in Oakland, California, was acquired by Wachovia Bank in October 2006. The parent company of World Savings Bank, Golden West Financial, agreed to the acquisition, which gave Wachovia Bank an additional 285-branch network spanning 10 states, including California. The acquisition significantly expanded Wachovia Bank’s presence in California, where World Savings Bank had a substantial customer base and branch network.
Key Facts
- World Savings Bank was a Savings and Loan company headquartered in Oakland, California.
- Golden West Financial, the parent company of World Savings Bank, was acquired by Wachovia Bank.
- The acquisition of Golden West Financial and World Savings Bank by Wachovia Bank was completed in October 2006.
- The Sandlers, who had run Golden West Financial for forty-three years, agreed to the acquisition by Wachovia Bank.
- The acquisition gave Wachovia Bank an additional 285-branch network spanning 10 states, including California where World Savings Bank had a significant presence.
- The subprime mortgage crisis and the losses generated by Golden West/World Savings loans ended up crippling Wachovia Bank, resulting in its eventual purchase by Wells Fargo in 2008.
Impact of the Acquisition
The acquisition of Golden West Financial and World Savings Bank by Wachovia Bank had a significant impact on both companies. Wachovia Bank gained a large number of branches and customers, which helped to expand its reach and market share. However, the acquisition also brought with it a portfolio of subprime mortgages, which ultimately contributed to Wachovia Bank’s financial difficulties during the subprime mortgage crisis.
Subprime Mortgage Crisis and the Downfall of Wachovia Bank
The subprime mortgage crisis, which began in the mid-2000s, had a devastating impact on Wachovia Bank. The losses generated by the subprime mortgages that Golden West/World Savings had originated contributed to Wachovia Bank’s financial instability. The bank was eventually forced to sell itself to Wells Fargo in 2008 to avoid collapse.
Conclusion
The acquisition of World Savings Bank by Wachovia Bank was a significant event in the history of both companies. The acquisition gave Wachovia Bank a larger branch network and customer base, but it also brought with it a portfolio of subprime mortgages that ultimately contributed to Wachovia Bank’s downfall during the subprime mortgage crisis.
Sources
- https://localwiki.org/oakland/World_Savings_Bank
- https://en.wikipedia.org/wiki/Golden_West_Financial
- https://www.heraldtribune.com/story/news/2008/02/18/wachovia-finally-completes-its-acquisition-of-world-savings/28609582007/
FAQs
Who took over World Savings Bank?
Wachovia Bank acquired World Savings Bank in October 2006.
Why did Wachovia Bank acquire World Savings Bank?
Wachovia Bank acquired World Savings Bank to expand its branch network and customer base, particularly in California where World Savings Bank had a strong presence.
What was the impact of the acquisition on Wachovia Bank?
The acquisition initially expanded Wachovia Bank’s reach and market share. However, the portfolio of subprime mortgages that came with the acquisition ultimately contributed to Wachovia Bank’s financial difficulties during the subprime mortgage crisis.
What happened to Wachovia Bank after the acquisition?
Wachovia Bank was severely impacted by the subprime mortgage crisis and the losses generated by the subprime mortgages originated by Golden West/World Savings. The bank was eventually forced to sell itself to Wells Fargo in 2008 to avoid collapse.
Who is responsible for the downfall of Wachovia Bank?
The downfall of Wachovia Bank can be attributed to a combination of factors, including the acquisition of Golden West/World Savings and the resulting subprime mortgage portfolio, as well as the overall subprime mortgage crisis that affected the entire financial industry.
Could Wachovia Bank have avoided the downfall?
It is difficult to say definitively whether Wachovia Bank could have avoided its downfall. However, some analysts believe that the bank may have been able to mitigate the impact of the subprime mortgage crisis if it had been more cautious in its lending practices and had not acquired Golden West/World Savings.
What lessons can be learned from the Wachovia Bank and World Savings Bank acquisition?
The acquisition of World Savings Bank by Wachovia Bank highlights the importance of careful due diligence and risk assessment when acquiring another company. It also underscores the need for banks to maintain sound lending practices and to avoid excessive risk-taking.
What is the current status of World Savings Bank?
World Savings Bank no longer exists as an independent entity. It was absorbed into Wachovia Bank after the acquisition, and its branches were eventually rebranded under the Wachovia name.