|Citigroup Is Seeking Allies In Fight to Secure Wachovia |
OCTOBER 8, 2008
By DAVID ENRICH, ROBIN SIDEL and DAN FITZPATRICK
Seeking to gain the upper hand in the fight for Wachovia Corp., Citigroup Inc. is reaching out to potential partners to join its bid for the Charlotte, N.C., bank, according to people familiar with the matter.
Citigroup's move comes as it continues to wrangle with Wells Fargo & Co. and the U.S. government over the future of Wachovia. While all sides have been trying to forge an agreement before a courtroom ceasefire expires at noon Wednesday, a quick resolution appears increasingly unlikely, these people said.
It isn't clear who Citigroup has approached or how such an alliance would be structured.
The Citigroup-Wells Fargo talks dwell on possibly splitting up Wachovia between its two suitors.
Under the most likely arrangement, Citigroup would grab Wachovia's branches in the northeast and mid-Atlantic regions, with Wells Fargo taking the rest of the company's branches as well as its asset-management and brokerage arms. In that scenario, deposits and loans that originated in a specific branch or region would likely go to the company that was buying the corresponding branches.
That would send the bulk of Wachovia's balance sheet to Wells Fargo.
But the distribution of Wachovia's deposits and loans has emerged as a key sticking point in the negotiations, according to people familiar with the matter. Citigroup and Wells Fargo both are clamoring for the greatest-possible share of Wachovia's $448 billion in low-cost deposits, as well as a relatively clean slice of the bank's assets, many of which are in the form of troubled real-estate loans.
Looking for added leverage in the talks, Citigroup on Tuesday was trying to line up other companies, including non-banks, to join its bid for Wachovia's branch network. Citigroup's goal is to win a bigger share of Wachovia's deposits, but not to take over the entire company, one person said.
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