Citigroup Acquires Banking Operations Of Wachovia

Citigroup Inc. will acquire the banking operations of Wachovia Corp., based in Charlotte, N.C., in a transaction facilitated by the Federal Deposit Insurance Corp. (FDIC) and concurred with by the Board of Governors of the Federal Reserve and the Secretary of the Treasury in consultation with the president. All depositors are fully protected, and it is expected there will be no cost to the Deposit Insurance Fund.

Wachovia did not fail, the FDIC points out. Rather, it is to be acquired by Citigroup Inc. on an open bank basis with assistance from the FDIC.

Citigroup Inc. will acquire the bulk of Wachovia's assets and liabilities, including five depository institutions and assume senior and subordinated debt of Wachovia Corp. Wachovia Corp. will continue to own AG Edwards and Evergreen. The FDIC has entered into a loss-sharing arrangement on a pre-identified pool of loans.

Under the agreement, Citigroup Inc. will absorb up to $42 billion of losses on a $312 billion pool of loans. The FDIC will absorb losses beyond that. Citigroup has granted the FDIC $12 billion in preferred stock and warrants to compensate the FDIC for bearing this risk.

Source: FDIC


Please enter your comment!
Please enter your name here