Citi ends talks with Wells Fargo over Wachovia
Citigroup says it won't move to block Wells Fargo's proposed purchase of Wachovia but adds that it will seek damages for breach of contract.
NEW YORK (CNNMoney.com) -- Banking giant Citigroup said Thursday it had ended talks with Wells Fargo about reaching an agreement to acquire parts of the struggling bank Wachovia and is no longer looking to buy any of Wachovia's assets.
Citigroup also said that it would not seek to block the merger agreement between Wells Fargo and Wachovia but that it would still seek damages from the two banks for breach of contract.
Wells Fargo has submitted an application to the Federal Reserve Board seeking expedited approval of its merger with Wachovia, the company in a joint statement with Wachovia.
Citigroup, Inc. (C, Fortune 500) and Wells Fargo & Co. (WFC, Fortune 500) have been competing to purchase all or part of Wachovia (WB, Fortune 500) for the past week.
Citigroup announced on Sept. 29 that it was taking over Wachovia's banking operations for $2.2 billion with backing from the Federal Deposit Insurance Corp.
However, Wells Fargo offered just four days later to buy Wachovia outright for $15.1 billion with no federal assistance whatsoever.
Citigroup first tried to stop the Wells Fargo deal in court last weekend and subsequently decided to seek up to $60 billion in punitive and compensatory damages. Wachovia, meanwhile, also sought in court to keep Citigroup from blocking the deal with Wells Fargo.
The three banks agreed on Monday to halt any legal action until Wednesday to allow room for negotiation. On Wednesday, they extended this legal standstill until Friday.
However, Citigroup said in its statement Thursday that the two companies' acquisition plans were too different to come to a mutually acceptable agreement.
"We did not seek the Wachovia transaction; Wachovia brought it to us," said Citigroup CEO Vikram Pandit in a statement. "We will redouble the focus on our five core businesses."
After Citi said it wouldn't attempt to block the rival merger, the Federal Reserve said in a statement that it would start the regulatory approval process needed for Wells Fargo to buy Wachovia.
"We are delighted to stride ahead with Wells Fargo in creating a coast-to-coast financial institution -- one of the strongest financial firms in the world," said Wachovia Corporation President and CEO Robert K. Steel in a statement. 
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