JPMorgan acquires Washington Mutual as credit squeeze bites

Friday 26th September 2008

JPMorgan Chase acquired the banking assets of Washington Mutual, gaining a branch network after the Office of Thrift Supervision deemed it in an "unsafe and unsound condition to transact business."

The deal will immediately lift earnings for JPMorgan, it said in a statement on its website. The Park Avenue, New York-based firm will pay US$1.9 billion for the banking assets of Washington Mutual and in return become the biggest bank, with over US$900 billion of customer deposits.

The transaction comes as U.S. lawmakers stall talks on approving a US$700 billion rescue package to soak up toxic debts from financial institutions and help restore liquidity in credit markets. Stock, bonds, currencies and commodities have whiplashed the past two weeks on the variable progress of the proposal.

Washington Mutual has 2,239 retail branch offices in 15 states. Wall Street's remaining investment banks are looking to add retail banking and deposits to strengthen their business model.

The transaction won't impact WMB's depositors or other customers and the bank plans to open Friday in the U.S. as usual, the Office of Thrift Settlement said.

By Jonathan Underhill

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