The new wells/wachovia securities
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the retention banter is played. we’ll know yeah or nay in a few weeks and then each of us has to choose how to proceed at that time.
the issue to consider is what will the firm look like after the age merger is done?...at the end of 2009? i'm with isg, so i'm already in the process of being airlifted to the new mothership. i have no idea what this means, but my wholesalers' west coast contacts speak favorably about wells brokerage arm. though pure speculation, it appears the silence portends to something big about to happen re: pcg. my gut says an ipo is being planned and that the retention issue will be settled via issuance of the newco common. wells would keep at least a minority interest, but divest themselves of a biz that's not core to them. pcg could then operate without much bank interference. i know it's a tough market for a financial ipo, but it's at least plausable...any thoughts?I think you are 100% correct. Wells need to pay Pru, they also need some form of retention payment for their brokers. Given that the other “financial supermarkets” are imploding, it is time to focus on the banking business. A spinoff with Wells retaining a minority interest makes sense. I think it is a good way for them to isolate themselves from the waive of investor complaints/lawsuits that are going to hit our industry.
There was a secondary possibility floated today at Wach/Wells. My gut tells me it is the remaining 10 billion wells will raise like they said they would after the legal close. They already floated 10 billion a couple of months ago. Not that this 10 billion will solve the problem, but it will re-affirm how the wells name can STILL raise common equity, while others are force to do preferred.
What would be potentially ironic is trying to explain that spin-off to clients. It would be the latest in a long list of “changes” that have all been sold to them as “Good”, “Positive” “Improvement”, etc. The irony is that this last would actually be, by far, the best news of the bunch. Does the story “The Boy Who Cried Wolf” spring to anyone else’s mind?
Problem with that is that we still have the Wachovia Securities people running the show. All they have done to date is screw things up. Bring back some AGE management and way of doing things and we can talk. I had this hope the WFC bank people would put some compentence back into the brokerage firm.