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Last Updated: Tuesday, 22 June, 2004, 07:18 GMT 08:18 UK
US bank in $14bn takeover deal
Wachovia Online banking screen
More bank mergers are expected
The US banking industry has seen its latest round of consolidation after Wachovia agreed to buy SouthTrust for $13.7bn (7.5bn).

The deal values SouthTrust shares at $41.83 each, 20% more than Friday's closing price.

Wachovia, the US's fourth largest lender, wants to expand into the south-east of the country, particularly Texas, Florida and Georgia.

Texas is the second most populous US state and the others are fast growing.

Money pool

Wachovia's chief executive Ken Thompson said that the move "jump-starts our entry into the tremendous Texas market".

It also "gives us clear leadership in a number of attractive, high-growth states."

He added that the company may make a small acquisition during the next year and a half.

Many US banks are looking for new customers at a time when economic growth is recovering and interest rates are at their lowest for almost 50 years.

Tim Woolston, a fund manager at Boston Advisors, reckons that Wachovia's acquisition should help boost client numbers.

"From the standpoint of gaining market share and remaining competitive, it's a step in the right direction," Mr Woolston said.

Two into one

Analysts also said they were optimistic about Mr Thompson's chances of successfully merging the two companies.

The banks have said that they plan to cut more than 4,000 jobs and may shut as many as 150 branches.

According to Wachovia, "if the two companies were combined today, they would have total deposits of $267 billion.

"The company's 14 million households and businesses would be served by 98,000 employees, 3,200 banking branches and 5,300 ATMs."


SEE ALSO:
RBS grows in US with $10.5bn buy
05 May 04  |  Business
JP Morgan seals $60bn merger
15 Jan 04  |  Business


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