CITI and Wells call legal hiatus over Wachovia
Losses & Lawsuits
NEW YORK, SAN FRANSISCO, CA & CHARLOTTE, NC - The two rival bidders for Wachovia have called a temporary ceasefire in their legal struggle, after Wells Fargo announced it had won the competition for the troubled US bank. Citigroup had been reported as the preferred bidder and gained approval from the Federal Deposit Insurance Corporation (FDIC) until the surprise $15.1 billion deal between Wells and Wachovia.
Citi has promised legal action against the other two banks involved.
The FDIC-approved deal with Citi was for Wachovia's banking business but excluded the bank's securities brokerage and mutual funds units.
It is understood the deal with Wells was favoured by Wachovia because it covered all operations, allowing the bank's structure to remain intact.
Ongoing talks with the Federal Reserve have since resulted in separate statements from both Wells and Citi claiming a "litigation standstill" over the future of Wachovia's assets.
Wells has said it expects to incur merger integration costs of $10 billion with Wachovia, which has itself reported a $23.9 billion Q3 loss. The legal ceasefire agreement seems confirmation of a necessary compromise deal between the two rivals.
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