Fifth Third, Wachovia hit by losses from Citi hedge fund
By Riley McDermid, MarketWatch
Last Update: 12:25 PM ET May 20, 2008
NEW YORK (MarketWatch) - Two regional banks confirmed Tuesday that they have lost
more than $600 million from investments tied to a Citigroup hedge fund that got
clobbered during the credit crunch earlier this year.
Fifth Third Bancorp (FITB) and Wachovia Corp. (WB) said they experienced the
losses from investments in bank-owned life insurance policies, or BOLI.
Fifth Third said in a court filing in the U.S. District Court for the Southern
District of Ohio that it sank $612 million into the policies in 2004 and 2005,
and then lost $323 million after that money was reinvested in Citi’s (C) Falcon
Strategies hedge fund.
Charlotte, N.C.-based Wachovia invested as much as $1 billion in the BOLI
vehicles, the Wall Street Journal reported on Tuesday, citing estimates by
unidentified people close to the matter.
The Falcon fund had lost more than 80% of its value by the end of March after
being slammed by the turmoil in the international credit markets.
As a result, Fifth Third is suing the company from which it originally bought the
policies, Transamerica Life Insurance Corp., and its partner in the deals, Clark
Consulting Corp., both of which are subsidiaries of Hague-based Aegon NV
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