NEW YORK/PHILADELPHIA (Reuters) - Struggling savings and loan Washington Mutual Inc (WM.N) is still talking to buyers about selling itself, but first needs to hammer out whether it or the buyer would get government support.

Banks still circling all of WaMu include Citigroup Inc (C.N), JPMorgan Chase & Co (JPM.N), HSBC Holdings Plc (HSBA.L) and Wells Fargo & Co (WFC.N), while Toronto-Dominion Bank (TD.TO) is looking at pieces, according to sources familiar with the situation.

There is also private-equity interest from Blackstone Group LP (BX.N) and Carlyle Group (CYL.UL), which could team up with Texas billionaire and bank investor Gerald J. Ford, a source said.

Spain's Banco Santander SA (SAN.MC) has withdrawn as a suitor, one of the sources said.

Sources previously had told Reuters that regulators are eager for the giant savings and loan to forge a deal, but no deadline or requirement has been placed on the bank to accept a takeover offer or split itself among several suitors.

The main auction has been slowed as the government talks to potential suitors about possible financial support for a deal.

However, the pressure is on to strike a deal for the troubled Seattle-based thrift amid continued uncertainty in the financial sector.

WaMu's shares were 47 cents or 20.8 percent lower at $1.79 on Thursday afternoon.

WaMu came under further pressure on Wednesday when Standard & Poor's slashed its credit rating deep into "junk" territory.

The thrift replaced its chief executive this month after suffering losses totaling $6.3 billion over the previous three quarters.

It has projected $19 billion in mortgage-related losses through 2011, but analysts have said credit losses could reach $30 billion.

Complicating the sale process is what to do with the thrift's $227 billion book of real estate loans, more than half of which consists of home equity loans, option adjustable-rate mortgages, and subprime mortgages.

It was not immediately clear how much of WaMu's troubled loans might be eligible for Washington's $700 billion financial industry bailout program.

WaMu has a significant presence in California and Florida, two of the states hardest hit by the nation's housing crisis. But its 2,239-branch network could appeal to many lenders looking to expand in retail banking, especially in the western United States and the New York City area.

WaMu ended August with $143 billion in retail deposits -- roughly triple the size of the entire Federal Deposit Insurance Corp fund that backs customer deposits. It has also said it expects to end the quarter with a "well-capitalized" status well in excess of federal minimums.

WaMu, Toronto-Dominion Bank, JPMorgan, Wells Fargo and could not immediately be reached for comment. Blackstone and Carlyle declined comment.

(Additional reporting by Jonathan Stempel in New York, Paritosh Bansal in New York, John Poirier in Washington and Savio D'Souza in Bangalore, editing by Gerald E. McCormick)

  Add comment

Name:
E-Mail:
Comment:
Enter code: