Wells Fargo Plans to Sell Up to $10 Billion of Stock

Wells Fargo on Wednesday said it plans to sell at least $10 billion of stock to help fund its purchase of Wachovia, which will create the fourth-largest U.S. bank by assets.

Paul Sakuma / AP

San Francisco-based Wells Fargo previously said it planned to sell up to $20 billion of securities to fund its all-stock purchase of Wachovia , which it originally valued at $15.1 billion.

That value had fallen to about $13.6 billion by Wednesday's close because Wells Fargo shares have declined.

Regulators in late September pushed Wachovia to find a buyer and avoid possible bankruptcy after the Charlotte, North Carolina-based lender faced soaring losses on a portfolio of adjustable-rate mortgages that let borrowers pay less than the interest and principal due.

Wachovia last month projected $26.1 billion of losses on the $118.7 billion portfolio, but Wells Fargo on Wednesday said the total could reach $36 billion. (See video for Karen Finerman's take on Wells Fargo's plan to sell stock.)

Wells Fargo nevertheless reduced projected losses on Wachovia's overall $482.4 billion loan portfolio to $71.4 billion from an original $74 billion.

The stock offering is expected to be priced on Thursday, and could grow.

Wells Fargo said the transaction is not dependent on the $25 billion it expects to receive under the U.S. Treasury Department's $700 billion bank bailout plan.

JPMorgan is arranging the stock offering, with Goldman Sachs, Morgan Stanley, UBS Securities and Wachovia Securities serving as joint bookrunners.

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