Citi to buy Wachovia assets

Source: Exec Digital USA

Date :9/29/2008 9:43:34 AM

Citigroup Inc is set to buy the banking operations of Wachovia Corp, as Federal Deposit Insurance Corp (FDIC) lends support.

The deal, struck in consultation with the Federal Reserve, the Treasury and President George W Bush, means depositors will be fully protected.

“Wachovia did not fail; rather, it is to be acquired by Citigroup on an open bank basis with assistance from the FDIC,” a statement on the FDIC’s website said.

Shares of Wachovia tumbled more than 80 percent in pre-market trading to below US$2 per share. Citibank shares were up about three percent to US$20.54.

Citigroup will buy the bulk of Wachovia, including five depository institutions, and assume its senior and subordinated debt. Wachovia will retain ownership of its retail brokerage unit, AG Edwards, and its assets-management division, Evergreen.

The FDIC said it would share losses with Citi on a pre-identified pool of Wachovia loans.

No cost to the Deposit Insurance Fund is expected.