JPMorgan to take over Washington Mutual deposits: report

WASHINGTON: US bank JPMorgan Chase is to take over the deposits and the bulk of the operations of its struggling competitor Washington Mutual at the request of US officials, media reported Thursday. Washington Mutual - the second largest savings and loan institution in the United States - had reportedly approached certain private equity firms as possible candidates to take it over.

The Wall Street Journal said a deal could be reached late Thursday "in a deal that would mark the end of independence for what once was the largest US thrift." The New York Times, citing people briefed on the deal, added the government had arranged for the bank, known as WaMu, to sell its deposits and some branches to JPMorgan Chase.

Shares of the Seattle, Washington-based Washington Mutual have lost 80 percent of their value since the beginning of 2008.

Earlier this month, the ratings agencies Standard & Poor's and Fitch lowered their ratings of the bank's holding company, after Moody's Investors Service downgraded its debt to non-investment or "junk" status, further complicating plans to raise fresh capital.

The US government "needed to find a buyer for WaMu because a takeover by the Federal Deposit Insurance Corporation (FDIC) would have dealt a crushing blow to the government's deposit insurance fund," the Times reported. The FDIC - created in 1933 during the Great Depression following a raft of bank failures - guarantees the safety of up to 100,000 dollars of individual money deposited in member banks.

If confirmed, the sale would give JPMorgan branches in places like California, where it is not currently present. However the buyer "will also inherit a big loan portfolio of troubled mortgages and commercial real estate," according to the Times.

Several bidders expressed interest in purchasing WaMu, including Citigroup, Wells Fargo, Spain's Banco Santander, HSBC of Britain, and TD Dominion of Canada, media reported.