Meredith Whitney cut her estimates on Wachovia (WB) and also downgraded the bank from Perform to Underperform, citing valuations on mortgage-related assets that were still “too high.”
Whitney sees losses for Wachovia all the way through 2009 and expects WB’s total loan loss provision to grow to $9.5 billion in Q2.
Whitney thinks that Wachovia, The fourth largest in the U.S. has reduced its portfolio by as much as $50 billion in the second quarter in a desperate attempt to prevent “capital erosion.” However, she is sceptical that this effort will be successful:
We are hard pressed to find examples of financial companies that have successfully shrunk their businesses.
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