Citibank buys Wachovia banking in flurry of deals

Business Materials 30 September 2008 03:33 (UTC +04:00)

Citigroup Inc set a deal to buy regional powerhouse Wachovia Corp's banking operations, one of several U.S. tie-ups triggered by the deepening financial crisis on Monday, Reuters reported.

Banks are struggling to come to grips with a crisis that has led Goldman Sachs Group Inc and Morgan Stanley to rein in their high-risk business models, forced the shotgun sales of Bear Stearns Cos and Merrill Lynch & Co and brought the bankruptcies of Lehman Brothers Holdings Inc and Washington Mutual Inc .

"It just seems that there are only going to be two types of banks in existence now: the ones that survive and get market share, or the ones that get gobbled up and have to be euthanized," said Matt McCormick, a portfolio manager at Bahl & Gaynor Investment Counsel in Cincinnati.

Citigroup's $2.16 billion (1.19 billion pound) all-stock purchase of Wachovia's assets was brokered by U.S. regulator Federal Deposit Insurance Corp. U.S. Federal Reserve Chairman Ben Bernanke said it would foster financial stability.

Also on Monday, Morgan Stanley sold a stake to Japan's Mitsubishi UFJ Financial Group Inc.