Wachovia ponders sale of assets

Wachovia Corp. may sell its mutual funds, the securities brokerage or Northeast and Texas branches as Chief Executive Officer Robert Steel copes with fallout from a record $8.9 billion quarterly loss, according to analysts.

Businesses that Steel may decide aren’t essential to the fourth-largest U.S. bank could include Wachovia Securities, comprised of the A.G. Edwards brokerage acquired last October, and the Evergreen mutual funds, according to analysts Brad Hintz of Sanford C. Bernstein & Co. Inc. and Gerard Cassidy of RBC Capital Markets Inc.

Wachovia said the brokerage isn’t for sale.

Steve Marascia, a research analyst at investment firm Anderson & Strudwick Inc. in Richmond, did not discount the possibility of a sale of the brokerage business.

“They brought on a new CEO and new CFO, and it would not be unlikely for them to look at the entire business model . . . and perhaps sell off certain assets to shore up the balance sheet,“ he said.

Steel pledged to sell “non-core assets” on July 21 after disclosing the worst loss in Wachovia’s history. He didn’t define what he considers “core” at the Charlotte, N.C.-based bank, instead promising a review that will be completed in several months. The ex-Treasury Department official joined Wachovia on July 9 after the ouster of CEO Kennedy Thompson.

Selling assets may be necessary as widening losses from the option adjustable-rate mortgages issued by Wachovia’s mortgage business deplete capital. The company predicts that $9 billion of its $122 billion in option ARMs will prove uncollectible over the next 18 months. Morgan Keegan Inc. analyst Robert Patten calls that view optimistic and projects that potential costs may exceed $15 billion.