Seattle, WA (MarketsBlog) – Ailing financial firm, Washington Mutual has raised $7 billion after cutting its dividend to $0.01/share; the measure is designed to revive the struggling company amid the credit market crisis that has roiled financial firms since last August.
Analysts say that the step will help WaMu to stay aflloat despite huge losses emanating from write-downs and also give rise to some restructuring and rethinking in its strategy, reports The Associated Press.
The new capital will be provided by an investment group linked to private equity group, TPG, say published reports.
WaMu will also exit the wholesale lending business and downsize its workforce by 3,000 workers.
According to one report, Victoria Wagner, a credit analyst at S&P, said the TPG-led investment is sufficient to keep WaMu going into 2009. Nonetheless, she pointed out that the company holds a high concentration of mortgages in California, where the housing markets have been hit the hardest.
"I suspect the company is going to be smaller a year from now, maybe dramatically smaller," said Jim Bradshaw, analyst at D.A.Davidson & Co., reports AP.