Washington Mutual rises on Citigroup takeover talk Fri November 7, 2003 04:36 PM ET By Jonathan Stempel NEW YORK, Nov 7 (Reuters) - Shares of Washington Mutual Inc. (WM.N: Quote, Profile, Research) , the largest savings-and-loan, rose on Friday to an all-time high on talk that Citigroup Inc. (C.N: Quote, Profile, Research) , the largest U.S. bank, might buy it, analysts and traders said. But analysts doubted a merger would make sense, or could be in the cards. "I've been following WaMu for 14 years, and I wish I had five bucks for every time I heard the Citigroup rumor," said Jay Tejera, an analyst at Ragen MacKenzie Inc. in Seattle, where Washington Mutual is based. "I do not sense any interest at Washington Mutual to sell the company." WaMu shares closed Friday at $45.78, up 49 cents, after rising to $46.75, and are up 24 percent from their recent low on Sept. 11. Citigroup shares fell $1.14 to $47.75. Volume in WaMu "call" options, a bet that WaMu shares will rise, soared. WaMu spokesman Alan Gulick and Citigroup spokeswoman Shannon Bell declined to comment. Citigroup executives say they want to expand in U.S. retail banking, after buying Golden State Bancorp last year for $5.8 billion. But new Chief Executive Charles Prince on Tuesday declared "the era of the transformational merger ... over." He said Citigroup is "focused on growing organic revenues." Analysts said Bank of America Corp.'s (BAC.N: Quote, Profile, Research) Oct. 27 announcement that it would buy FleetBoston Financial Corp. (FBF.N: Quote, Profile, Research) for $47 billion set off a wave of bank takeover talk now engulfing WaMu. "There was an unconfirmed takeover rumor (and) then volume exploded in mostly calls," said Steven Sosnick, a risk manager with Timber Hill, the options trading arm with Interactive Brokers. "Speculative fever appears to be coming back." INTERNAL GROWTH? WaMu ended September with $164.1 billion of deposits, $286.7 billion of assets, and more than 2,700 banking offices. It is also No. 2 in U.S. mortgage lending, which analysts expect to slow if interest rates rise. Citigroup recently had more than 3,000 retail branches, but fewer than 800 in North America, excluding Mexico. Richard Bove, an analyst at Hoefer & Arnett, said Citigroup wants to add deposits, while "from Washington Mutual's side, to make its extensive branch system work it must add more products, which Citibank can do in a heartbeat." Moreover, WaMu's chairman and chief executive, Kerry Killinger, might not be ready to cede the company he built. "I asked WaMu executives last week if Kerry Killinger is still enthusiastic about the business," Bove said. "They indicated he's all charged up about the opportunity to push additional product through his branches. The strong message was that they planned to do it internally."
