Wachovia To Cut 6,350 Jobs Announces $8.9 Billion Loss

Wachovia Corp., the U.S. bank that hired Treasury Undersecretary Robert Steel as chief executive officer two weeks ago, reported a record quarterly loss of $8.9 billion, slashed the dividend and announced 6,350 job cuts. The stock slumped as much as 10 percent in New York trading.

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Wachovia shares have declined 65 percent this year, the second-worst performance on the 24-company KBW Bank Index behind National City Corp., Ohio's largest bank. The stock fell $1.18, or 9 percent, to $12 at 9:55 a.m. The cost of protecting the bank's debt rose 10 basis points to 315, according to broker Phoenix Partners Group. Fitch Ratings cut Wachovia one level to A+ from AA-, citing its mortgage business, and Moody's downgraded the bank to A1 from Aa3.

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Wachovia, whose job cuts amount to about 5 percent of the bank's workforce, lowered the dividend to 5 cents a share from 37.5 cents and will leave 4,440 positions open, according to a presentation to analysts today. Steel, 56, also said the company is moving to ``sell selected non-core assets'' and reduce the number of business customers who only use the bank for loans rather than other services. Wachovia expects to cut expenses during the second half of this year by $490 million and then reduce 2009 spending by $1.5 billion.