Wachovia Bank Loses $8.86 Billion; Plans To Cut 10,750 Jobs

New York, NY (AHN) -- Wachovia, the fourth largest bank in the U.S., announced Tuesday it sustained a net loss of $8.86 billion in the second quarter, and as a result is cutting 10,750 jobs.

The second quarter was loss was $3 billion more than what was earlier projected, which industry insiders have attributed to massive write-downs related to sub-prime mortgage loans. And while the thinking nationally was that major banks would not be in trouble like IndyMac, Wachovia reported that it was in red ink for the second consecutive quarter. Wachovia lost $6.1 billion in appraisal losses on subprime-related financial instruments and $5.6 billion in loan-loss reserves against possible expansion of defaults on housing loans during the second quarter. As a result, the net loss in the reporting quarter is equal to $4.20 per share.

As a result, Wachovia said it plans to lower the quarterly common stock dividend from 37.5 cents per share to 5 cents while cutting 10,750 jobs toward next year as a means of dealing with its housing loan business.

Robert K. Steel, CEO and president said in a statement that "in the short term, the entire organization is focused on protecting, preserving and generating capital, reinforcing Wachovia's strong liquidity position, and reducing risk." Steel, a former U.S. Treasury undersecretary for domestic finance, was just hired July 9.