Globalization means vulnerability for financial stocks, industry

 

Recent reports that Iceland's Glitnir Bank has been taken over by is testimony of the fact that, with globalization, not all of it is pro-growth.

Sometimes it can mean chaos for its players. The Icelanders are now locked in bitter relations with the Gordon Brown government after the British government seemed to be moving towards freezing assets of Icelandic companies.

As that was going on, a bitter feud between Wells Fargo and Citigroup ended with Wells Fargo taking over Wachovia, a troubled industry mate.

In a row that has been running from last week, Vikram Pandit, Citigroup's boss, has been keen to make a breakthrough in acquiring branches of ailing Wachovia, giving his bank greater access to the latter's retail banking customers. That dream now seems shattered.

Despite rumours of a looming $60 billion lawsuit, it seems Citigroup will end up dropping the suit against Wachovia, considering that Citigroup's bid would have been effective only with the backing of the Federal Deposit Insurance Corporation.

With the public angry that banks are getting federal support to finance losses, Wells Fargo ability to secure the Wachovia deal seems to have been the best available option ever.  Together, Wells Fargo and Wachovia will have $1.42 trillion in assets, 48 million customers and 280,000 employees.