Wachovia, a major US banking group, has warned investors it could post a second quarter loss as large as $2.8 billion as loan and property-related losses continue to hit its finances. The North Carolina-based bank is due to announce its second quarter earnings on July 22.
The bank blamed its expected losses on writeoffs it was having to take on certain loan portfolios as a widespread credit crunch sweeps the banking sector. It also said it expected to take a charge of $280m relating to its commercial real estate exposure.
Wachovia endured a first quarter loss of $393m. Like other US banks, Wachovia has seen its profits squeezed dramatically by the housing market slump and mortgage-related losses.
Such losses have roiled domestic banks and big foreign banks that snapped up US mortgage securities during the housing boom.
Analysts say that other big banks are also likely to post continued losses in coming weeks as major corporations unveil their latest earnings.
Wachovia also announced that it had hired a high-ranking Treasury official, Robert Steel, to be its new chief executive and president. Steel, who resigned as a Treasury under secretary yesterday, takes the helm after Wachovia ousted its previous CEO following hefty mortgage-related losses.