Wachovia Informs of Plans to Increase Capital

April 19, 2008

Today the banking giant Wachovia told the public of its plans to increase its base capital and operational capacities. In a press release, Wachovia reported its statistics for the first quarter of 2008, and explained the steps that it would take to adapt to the lean economic situation in the U.S. right now. In this way, the company would be able to better respond to predicted alterations in its patrons’ financial habits for the coming year.

First, Wachovia intends to increase the amount of its capital by publicly selling more shares of its stock, including both convertible preferred stock and common stock .

Second, Wachovia plans to save capital – to be precise, about $2 billion worth of capital every year – by decreasing the quarterly common stock dividend. Starting on May 20, 2008, Wachovia plans to start yielding a dividend of $0.375 per quarter per share. The first of these new, lowered dividends will be paid to stockholders on June 16, 2008. According to Wachovia’s board of directors, this new dividend is better suited to fulfilling the bank’s financial needs and growth potential.

Third, Wachovia anticipates increasing its provision for credit losses from what it was during the first quarter of this year. This change in the operation of the company’s credit reserves is a response to economic predictions about the bank’s customers’ likely future financial habits in light of the economic recession and credit crisis America is undergoing. Furthermore, Wachovia states that it has raised the amount of information available in credit disclosures.

Perhaps dismal first-quarter statistics were what inspired Wachovia to make these changes to its policy. The bank suffered a loss of $350 million, and common stockholders of Wachovia lost a total of $393 million, during the first quarter of 2008. One share of common Wachovia stock is now worth approximately $1.00 – compared to a value of $1.20 per share in January 2007.

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