(8 October 2008 – USA) Both Citigroup and Wells Fargo have made recent announcements to rescue ailing bank, Wachovia, with the issue now before the courts.On the 29th of September 2008, Citigroup announced that it would acquire Wachovia, after the US government approached Citigroup to help rescue Wachovia.
The purchase price was set at US$2.16 billion (A$2.8 billion) to acquire just the banking subsidiaries of Wachovia, however included an agreement with the Federal Deposit Insurance Corporation (FDIC) to provide loss protection.
On the 3rd of October 2008, however, Wells Fargo, with Wachovia, announced that the two companies would merge in a whole company transaction.
The Wells Fargo deal, at US$15 billion is valued much higher than the original Citigroup deal.
The transaction would also require no financial assistance from the FDIC or any other government agency.
As a result of the Wells Fargo deal, Citigroup has filed a complaint and is seeking more than US$60 billion in damages from Wells Fargo.
Citigroup is trying to uphold the agreement that forbade Wachovia from entering sale negotiations with other parties until after October 6.
In consultation with the Federal Reserve, Citigroup, Wachovia, and Wells Fargo have agreed to a litigation standstill effective until the 8th of October 2008.