Citigroup, Wells Fargo reach truce over Wachovia
The banks struck a "standstill agreement," ceasing all "formal litigation activity" until noon on Wednesday, Citigroup and Wachovia said in press releases Monday. The accord was "in consultation with the Federal Reserve," they said.
Citigroup sued Wachovia and Wells Fargo for $60 billion earlier in the day, claiming the agreement between those two banks was in violation of Citigroup's own accord with Wachovia. San Francisco-based Wells Fargo agreed to buy the whole company for $15 billion, the banks said on Oct. 3, just four days after Citigroup had announced its deal to acquire just Wachovia's banking operations, with the help of the Federal Deposit Insurance Corp., for $2.16 billion.
Citigroup is trying to rebuild following $61 billion in losses tied to the mortgage-market collapse. Wachovia, based in Charlotte, N.C., said the Wells Fargo offer is a better deal for investors, employees and taxpayers because, unlike Citigroup, it doesn't rely on U.S. government assistance.
The complaint, filed Monday in New York State Supreme Court in Manhattan, sought more than $20 billion in compensatory damages and $40 billion in punitive damages. New York-based Citigroup sought an order barring Wachovia and Wells Fargo from continuing their merger talks and an order forcing Wachovia to negotiate with it "in good faith."
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