The turmoil on the global markets took their toll on corporate and investment bank, which includes corporate lending, investment banking, and treasury and international trade finance, as a segment loss of $77 million was realized owing $1.6 billion in net valuation losses.

Of the market valuation losses, $339 million was in subprime residential asset-backed collateralized debt obligations and other related exposures compared with $818 million in the previous quarter, while the decline in the value of mortgage structured products was $521 million from $600 million in the fourth quarter in 2007.

In addition, $251 million was in consumer mortgage structured products compared with $123 million in the previous quarter and $144 million in non-subprime collateralized debt obligations and other structured products from a $59 million net gain in fourth quarter 2007.

On the overall, Wachovia made a provision of $197 million as a result of residential-related commercial real estate losses.

Capital management

Earnings in the retail brokerage services and asset management were $381 million on 42% revenue growth that was driven by the acquisition of A.G. Edwards. The non-interest expense rose 50% as a result of the transaction.

However assets under management declined to $258.7 billion at the end of the first quarter of 2008, down 6% from the end of the previous quarter due to a decline in market valuations.

Wachovia seeks fresh capital

Wachovia announced that the company plans to raise capital through a public offering of common stock and perpetual convertible preferred stock and lowered its quarterly common stock dividend to preserve $2 billion of capital annually.

The bank is expected to raise between $6.5 billion and $7 billion through convertible offering.

The financial institution also updated its credit reserve modeling to adapt to the obtaining credit market tremors, a development that ultimately increased provisions for credit losses in the first quarter of 2008.


Wachovia (WB: chart) shares decreased $2.96, or more than 10% to $24.85. The stock has declined nearly 58% from its peak near $60 two years ago and is trading near a seven-year low.