SAN FRANCISCO -- In a move to cut its losses, Ford Motor Co. has put up for sale its San Francisco-based thrift subsidiary, First Nationwide Financial Corp., according to investment banking sources.
The giant automaker recently hired J.P. Morgan Securities as investment banker to test buyer interest in $16.7 billion-asset First Nationwide, the sources said. The unit is parent of First Nationwide Bank, the nation's fifth-largest thrift.
Asked about the decision to sell First Nationwide, which was reported in Business Week's current edition, a spokesman for Michigan-based Ford Financial Services said: "We re not in a position to talk about it at all."
Series of Losses
Ford's move to unload First Nationwide marks an embarrassing retreat from the company's goal of building a coast-to-coast banking empire. But after paying $493 million for the thrift eight years ago, Ford investment has produced a series of losses, including $42 million of red ink so far this year.
First Nationwide accumulated more than $1 billion in nonperforming loans, many for apartments in the New York City area. In the recent quarter, losses have reflected writedowns on securities bought as interest rate hedges.
Investment bankers said they didn't know what price First Nationwide would fetch, but noted that it could be difficult to find a buyer. The nation's largest thrift. Irwindale, Calif-based H.F. Ahmanson, has already been contacted by Morgan, the sources said.
First Nationwide's problem is that its 182 branches are spread thinly over eight states, the investment bankers noted.
"It has no critical mass, no market share anywhere," one merger specialist said. "The only thing it's got going for it is assets, at a time when the industry is starved for assets."