Citigroup loses battle to buy Wachovia

In the end, Citigroup decided to give up on Wachovia entirely, even though there were signs that the Fed wanted to somehow divvy up the bank. The parties apparently could not agree on how to divide the Wachovia's most troublesome assets, including its risky mortgage-related debts. Citigroup apparently was not willing to take on more than the $42 billion in losses to which it had originally agreed, the AP reports. Wells Fargo, however, expects to take a $74 billion loss on Wachovia's $500 billion loan portfolio. The majority of losses will be charged over the next two years. You have to wonder if Citigroup could have ended up with something. Did it have to be all or nothing? In return for absorbing $42 billion in losses, it seems it could have won a portion, however small, of the retail base. Citigroup seems like the big loser, but then again, there is no guarantee that Wells Fargo can make this work. The losses might be higher than expected. Citigroup intends to "vigorously pursue" legal claims against Wachovia and Wells Fargo for interfering with its original deal.

For more:
- here's the AP article

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