A decade ago, Seattle-based Washington Mutual Inc. burst onto the Los Angeles scene from nowhere as it swallowed up two huge local thrifts. Now, the beleaguered savings and loan and its nearly 200 L.A. branches could disappear just as quickly.
Weighed down by billions of dollars in losses stemming from bad mortgage loans and unable to raise capital amid the crisis gripping Wall Street, Washington Mutual has put itself on the block.
WaMu had 10.9 percent of all deposits in L.A. County last year, more than any other institution save Bank of America, which had 18.6 percent, according to Federal Deposit Insurance Corp. figures.
Federal regulators last week were said to be trying to broker a deal, fearful that a collapse of the giant thrift with its $143 billion in insured deposits could swamp the capacity of the FDIC's $50 billion insurance fund.
The decision to explore a sale is a dramatic role reversal for Washington Mutual and longtime Chief Executive Kerry Killinger, who was ousted on Sept. 7.
Killinger led the thrift to prominence in the 1990s through a string of bold acquisitions that transformed the banking landscape in Los Angeles and throughout the western United States.
Washington Mutual first emerged on the L.A. banking scene in 1997 when it made a $43 billion "friendly offer" to buy Chatsworth-based Great Western Financial Corp. That offer drew a rival bid from Irwindale thrift giant HF Ahmanson parent of Home Savings & Loan and the two huge institutions duked it out for months.
In the end, Washington Mutual prevailed and bought Great Western in the summer of 1997, gaining its first major foothold in the lucrative Southern California market.
The dust had barely settled when Killinger negotiated a $10 billion deal to buy HF Ahmanson in early 1998. The deal stunned the area banking industry and instantly turned Washington Mutual into a major local player. Within the space of a year, it had gone from zero to more than 150 branches in L.A. County, and that was after closing some 65 "overlapping" offices.
In the years since, Washington Mutual has made some comparatively minor local acquisitions, including Irvine-based Commercial Capital Bancorp Inc., which primarily made loans to apartment building owners and had 30 area branches.
Today, Washington Mutual has about 195 branches in the county and more than $25 billion in deposits in the county.
Now, the fate of those branches is up in the air. Among the institutions rumored as potential bidders are San Francisco-based Wells Fargo & Co., New York-based JP Morgan Chase & Co. and HSBC Holdings of London.
If Wells Fargo were to emerge as the buyer, that would mean major branch closings in L.A. County, since many of Washington Mutual's offices are near Wells Fargo's 200-plus branches.
Since the other rumored bidders do not have such an extensive presence in the Los Angeles area, there would likely be fewer closings should they prevail.
Whatever the case, "there will be some shutting down of branches and people losing their jobs," said Jim Barth, senior fellow with the Milken Institute.
Barth added that with one less major institution, it could also become more difficult for local businesses to obtain capital.
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