Citigroup sues Wachovia for 60 billion dollars
US banking giant Citigroup Inc. announced Monday it is suing Wachovia Corp. for 60 billion dollars in damages and punitive fees after the latter pulled out of a takeover deal, dpa reported.
Citigroup's announcement was the latest twist after a frenzied weekend of legal developments surrounding the battle for the takeover of Wachovia.
After an apparent agreement with Citigroup last week for a 2.16 billion dollar takeover, Wachovia on October 3 suddenly pulled out of the deal, announcing that instead it would favour a 15-billion-dollar merger offer by Wells Fargo & Co.
Under a ruling by US District Court justice John G. Koeltl, a hearing on whether Wachovia and Wells Fargo can go ahead and negotiate their merger agreement was postponed until Tuesday.
Earlier Monday, Wall Street Journal, citing people familiar with the situation, reported that a possible compromise in the takeover battle was in the making, with Citigroup Inc. and Wells Fargo & Co. considering a deal to divide up the the bank.
The newspaper said the two banks, with officials of the Federal Reserve and the US Treasury Department also involved, were discussing this scenario to end their takeover battle which in turn was disrupting a federal rescue of Wachovia.
Under the scenario of a split up of Wachovia, Citigroup would get the bank's branches in the north-eastern US and mid-Atlantic regions. Wells Fargo might gain Wachovia's branches in the south-eastern US and the state fo California. Wells Fargo would also get Wachovia's asset-management and brokerage operations.
Citigroup is the largest US bank in terms of assets, while Charlotte, North Carolina-based Wachovia is the fourth-largest.