to acquire Wachovia's banking operations
New York, September 29, 2008 (IANS)
yet another fallout of the ongoing financial crisis, US banking
giant Citigroup is buying the banking operations of Wachovia Corp.
in a deal facilitated by the US government, the Federal Deposit
Insurance Corp. (FDIC) has said. Citigroup, headed by India-born
Vikram Pandit, Monday agreed to acquire Wachovia's banking operations
for $2.1 billion in stock and will assume another $53 billion in
also in takeover talks with Wells Fargo, a diversified financial
services company, and FDIC said all its depositors are protected
and there will be no cost to the Deposit Insurance Fund. Based in
Charlotte, North Carolina, Wachovia was the fourth largest banking
chain in the US based on total assets.
regulators pushed the Wachovia-Citigroup deal by agreeing to share
a portion of future losses that Wachovia's failing mortgage portfolio
could generate, Wall Street Journal said online. "The FDIC
has agreed to provide loss protection in connection with approximately
$312 billion of mortgage-related and other Wachovia assets,"
Citigroup said in a statement.
Reserve and Treasury Department were also part of the effort to
save Wachovia. "This is another sign of how proactive the government
has been in preventing ailing financial firms from failing and instead
pushing for stronger firms to acquire some assets of the weaker
companies," the Journal commented.
fell more than 90 percent in premarket trading Monday, and the New
York Stock Exchange did not open the shares for trading. Citigroup
was off 1 percent at $19.95 shortly after the market opened.
it is a rapid transformation from one of Wall Street's biggest losers
to a "pillar of strength," as top executives began calling
the company earlier this month, and a sign of the turmoil sweeping
the banking sector, the Journal said.
posted more than $40 billion in write-downs over the past year and
other losses stemming from the mortgage meltdown. Its stock price
has shrivelled to less than $20, compared to more than $50 over
a year ago.