Mergers, Acquisitions and Takeovers Case Study

JP Morgan Chase acquires Washington Mutual: Is it a Smart Buy?

OR

Abstract:
In September 2008, JP Morgan (JPM) Chase purchased the deposit subsidiary of Washington Mutual Bank from Federal Deposit Insurance Corporation for $1.9 billion. WaMu was badly hit by the sub-prime crisis and was left with bad assets on its balance sheet. FDIC decided that WaMu was no longer in a position to safeguard depositor's money and hence auctioned it off. JPM won the bid and consequently became the second largest bank in the US after the Bank of America. The deal gave JPM, WaMu's 2,239 branches nationwide in 15 states and deposits totalling $188 billion. But the deal carried a risk element too, with regard to the management of WaMu assets and restoring investor confidence in the WaMu brand. The case highlights JP Morgan's acquisition of WaMu while giving a brief overview of the sub-prime crisis that plagued the American banking system.

Pedagogical Objectives:

• To the US banking industry
• To JP Morgan Chase's position in the American banking industry.
• To the synergy of the deal between the deposit subsidiary of WaMu and JPM.

Keywords : American banking business, Sub-prime, Mortgage, Loan, Crisis, Interest rates, Global, Financial crisis, US housing market, FDIC (Federal Deposit Insurance Corporation)

Contents : 
JP Morgan Chase
Time line of JP Morgan Chase
JPM’s Financial Performance
Banks hit by Subprime mortgage crisis
Acquisition of Washington Mutual
Expected gain for the JPM in WaMu deal
Timeline of Washington Mutual