Wells Fargo, Citgroup mull dividing Wachovia

NEW YORK - A possible compromise in the takeover battle for ailing Wachovia bank was in the making, with the two takeover rivals, Citigroup Inc. and Wells Fargo & Co. considering a deal to divide up the the bank, the Wall Street Journal reported on Monday.

By (DPA)

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Published: Mon 6 Oct 2008, 6:02 PM

Last updated: Sun 5 Apr 2015, 2:13 PM

The newspaper said the two banks, with officials of the Federal Reserve and the US Treasury Department also involved, were discussing this scenario to end their takeover battle which in turn was disrupting a federal rescue of Wachovia.

According to the Wall Street Journal, which cited people familiar with the developments, executives at Charlotte, North Carolina-based Wachovia - the fourth-biggest US bank - were excluded from the talks.

Under the scenario of a split up of Wachovia, Citigroup would get the bank's branches in the north-eastern US and mid-Atlantic regions. Wells Fargo might gain Wachovia's branches in the south-eastern US and the state fo California. Wells Fargo would also get Wachovia's asset-management and brokerage operations.

The report follows last week's roller-coaster developments in which Citigroup, the largest US banking concern, appeared on September 29 to be in line to take over Wachovia for 2.16 billion dollars, in a bid which was to be backed by help from the Federal Deposit Insurance Corp.

But then on October 3, Wells Fargo in a surprise move entered the picture, presenting Wachovia with a signed and board-approved offer to buy it as an intact company in a stock-for-stock merger that could be carried out without government help. The bid was valued at some 15 billion dollars, and Wachovia said it wanted to accept it.

But a weekend of legal fighting followed, with Citigroup filing suit to insist on its exclusive rights to negotiate a takeover of Wachovia until October 10. A New York state court ruled in the bank's favour on October 4.

But Wells Fargo appealed the ruling, taking the case to federal court, with a verdict early Monday overturning the first ruling and setting October 6 as the expiration date for Citigroup's exclusive negotiating right.

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