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Wachovia in talks with suitors: Report

Citigroup, Wells Fargo and Banco Santander all mentioned as possible bidder, New York Times and Wall Street Journal report.

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NEW YORK (CNNMoney.com) -- Wachovia is reportedly mulling a deal with another large bank, including Citigroup and Spain's Banco Santander, according to reports published Friday afternoon.

Citing people familiar with the situation, both the New York Times and the Wall Street Journal reported that the Charlotte, N.C.-based Wachovia was in preliminary talks with Citigroup (C, Fortune 500). The two papers also mentioned Santander (STD) and West Coast banking giant Wells Fargo (WFC, Fortune 500) as other potential suitors.

Spokespeople for Citigroup, Wachovia and Wells Fargo declined to comment. A representative for Santander was not immediately available to comment.

The news, however, failed to prop up Wachovia (WB, Fortune 500) shares in after-hours trading following a particularly tough session in which shares of the Charlotte, N.C.-based bank lost nearly a third of their value.

This isn't the first time that Wachovia was mentioned entering tie-up talks either. A little over a week ago, there was rampant speculation that Morgan Stanley and Wachovia were reportedly discussing a merger.

A deal between the two firms looks increasingly unlikely though after Morgan Stanley (MS, Fortune 500) agreed to sell up to a fifth of the company to Mitsubishi UFJ Financial Group (MUFG), one of Japan's largest banks, earlier this week.

Following a string of high-profile collapse of banks in recent weeks including a bankruptcy by Lehman Brothers and Washington Mutual's (WM, Fortune 500) failure and subsequent purchase by JPMorgan Chase (JPM, Fortune 500) late Thursday, there has been increasing speculation that Wachovia could be the next one to go.

The company reported losses during the past two quarters due in large part to its exposure to U.S. mortgage market.

Some analysts have cited the company's ill-timed 2006 acquisition of the California mortgage lender Golden West Financial Corp. for its current woes.

A Wachovia representative stressed in a statement earlier Friday that it has a "strong retail franchise and large and stable deposit base," adding that it was working to strengthen both its capital and liquidity.

Were Wachovia to enter a deal, it would mark yet another big shake up of the nation's banking industry, which has undergone a dramatic transformation in the past two weeks including Lehman's demise, the acquisition of Merrill Lynch by Bank of America (BAC, Fortune 500) and the government's takeover of AIG (AIG, Fortune 500). To top of page

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