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Citigroup Sues Wachovia, Wells Fargo

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The Associated Press

The Tampa Tribune

Published: October 7, 2008

NEW YORK - Citigroup Inc. said Monday it has filed a complaint in New York Supreme Court against Wachovia, Wells Fargo and the directors of both companies seeking more than $60 billion in damages for interfering with its planned takeover of Wachovia's banking operations.

The complaint seeks more than $20 billion in compensatory damages and more than $40 billion in punitive damages from San Francisco-based Wells Fargo & Co. for tortious interference. Citigroup also seeks relief from Wachovia for what it called its bad-faith breach of the banks' contract.

"Wachovia continues to believe its agreement with Wells Fargo, which involves no government assistance, is proper and valid," said Wachovia spokeswoman Christy Phillips-Brown in an e-mail to The Associated Press.

"The agreement is in the best interests of shareholders, employees, creditors and retirees as well as the American taxpayers, and it imposes no risk to the FDIC fund."

A representative from Wells Fargo was not immediately available for comment.

Meanwhile, Federal Reserve officials have been in talks with Wells Fargo and Citigroup in the hope of getting the parties to come to some sort of agreement, according to a person with knowledge of the talks. The person spoke on condition of anonymity because of the nature of the matter.

The Wall Street Journal reported Monday that the discussions could result in the two suitors carving up Wachovia Corp.'s network of 3,346 branches along geographic lines, citing people familiar with the situation.

Sheila Bair, chairwoman of the Federal Deposit Insurance Corp., said: "I think we will have one resolution today" that is in accord with the public interest. She did not elaborate.

Early last week, Citigroup agreed to buy Wachovia's banking assets for $2.1 billion in a deal brokered by the FDIC. In a surprising twist of events, Wells Fargo announced Friday that it agreed to acquire Wachovia in a deal worth $15.1 billion at the time, or $14.8 billion based on Wells Fargo's closing price Friday of $34.56. Wells Fargo's deal did not require government aid.
Wachovia shares dropped 43 cents, or 6.9 percent, to $5.78 Monday. Citigroup shares fell 94 cents to $17.41, while Wells Fargo shares slipped 92 cents to $$33.64.

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