just keeps adding to its own pain.
The struggling New York banking titan is now dealing with losses in one of its hedge funds that has lost some 75% in value and has several large banks, including
Fifth Third Bancorp
, reeling from losses from investments in the fund, according to the
Wall Street Journal
Both Fifth Third and Wachovia, along with an unnamed third regional bank, had put more than $1.6 billion into Citi's Falcon Strategies hedge fund through their bank-owned insurance programs. The losses may pressure the struggling New York banking titan to give some of the money back to the three banks that have lost money, the
A spokesman for Citi's alternative investments arm declined to comment on the article.
Cramer: Wachovia's Golden Brand Is Dead
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Wachovia was the most heavily exposed, with more than $1 billion invested, which represented 7% of the bank's $14.9 billion BOLI assets, according to the article.
Earlier this month, Wachovia said its first-quarter loss was 80% higher than what it originally reported in mid-April due to
related to its BOLI policies. Wachovia increased its loss to $708 million, or 36 cents a share, it said in a filing with the
Securities and Exchange Commission
on May 6.
Wachovia had concluded after a review that it would record valuation losses of $315 million on the related BOLI assets, it said.
that the writedowns were related to losses in Citi's Falcon Strategies hedge fund. A request for comment was not immediately returned to
Fifth Third invested $612 million into Falcon -- approximately one-third of the Cincinnati-based bank's BOLI asset. Fifth Third has filed a lawsuit against one insurer and brokerage firm that arranged the investment for it.
A spokeswoman for Fifth Third was not immediately available.
Shares of Citi fell 2.5%, Wachovia fell 1.9%, while Fifth Third dropped 2.7% in recent trading.