Wells Fargo agrees to buy Wachovia, Citi says no way

It's a clash of the big bankers in what could become a harsh and potentially dangerous feud. Wells Fargo, Wachovia and Citi seem to be in a terrible business triangle which is making national news as the financial fallout causes unease in the banking world.

This morning, news erupted that Wachovia agreed to be acquired by San Francisco-based Wells Fargo & Co. in a $15.1 billion all-stock deal. Wells Fargo is the second largest employer and the biggest financial institution in the state.

But Citigroup now is telling Wachovia to stick with the terms of its earlier deal to buy Charlotte, N.C.- based Wachovia's banking operations.

According to the Associated Press:

The Citigroup deal would have been done with the help of the Federal Deposit Insurance Corp., but the Wells deal would be done without it. The head of the FDIC said the agency is standing behind the agreement it made with Citigroup.

Citigroup says its agreement with Wachovia provides that Wachovia will not enter into any transaction with any party other than Citi or negotiate with anyone else.

The deal between Wells Fargo and Wachovia has been talked about in the banking world for some time, even dating back to the 1990s, but nothing came of it until this week.

According to the Star Tribune's story last month:

Wells Fargo was on the brink of closing a deal to acquire Wachovia Corp., the nation's fourth-largest bank, according to news reports, in a deal that would have created a nationwide banking franchise that would compete with Bank of America and J.P. Morgan Chase.

Instead, Charlotte, N.C.-based Wachovia landed in the arms of Citigroup, joining two banks that have struggled with billions of dollars in mortgage-related losses and declining investor confidence. The marriage between Wachovia and Citigroup creates a national behemoth with 4,300 retail branches in the United States and $600 billion in assets.

We will keep you updated as news breaks today.

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