Citigroup and Wells Fargo seek compromise on Wachovia
source: http://www.iht.com/articles/2008/10/07/business/07bank.php
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Prodded by the Federal Reserve, Citigroup and Wells Fargo agreed to a cease-fire until Wednesday in the legal warfare over their competing bids for the Wachovia Corporation.
Citigroup and Wells Fargo are continuing talks over several principles that could pave the way for a compromise, like carving Wachovia into parts, according to a person close to the situation who did not want to jeopardize the discussions. But each bank remained adamant that the other is at fault, and the two sides did not appear close to an agreement.
A week ago Monday, Citigroup offered to pay about $1 a share, or about $2.2 billion, for Wachovia's banking operations in a deal brokered by the Federal Deposit Insurance Corporation. But last Friday, Wells Fargo announced that it planned to buy all of Wachovia for seven times the Citigroup offer, with no government assistance. The stunning bid set off a weekend of frantic litigation among all three companies.
Fearful that a protracted legal battle could threaten the financial system, Fed officials, including the chairman, Ben Bernanke, stepped in over the weekend to help mediate the negotiations. Both sides were so angry that they found it difficult to talk directly to each other. But starting late Sunday night, senior executives from both banks began meeting privately, without the help of government officials.
People involved in the talks said that they were hopeful but not optimistic that Citigroup and Wells Fargo could reach an agreement. U.S. regulators are continuing to plan for the potential market fallout if the two sides return to their separate corners.
Citigroup and Wells Fargo are continuing talks over several principles that could pave the way for a compromise, like carving Wachovia into parts, according to a person close to the situation who did not want to jeopardize the discussions. But each bank remained adamant that the other is at fault, and the two sides did not appear close to an agreement.
A week ago Monday, Citigroup offered to pay about $1 a share, or about $2.2 billion, for Wachovia's banking operations in a deal brokered by the Federal Deposit Insurance Corporation. But last Friday, Wells Fargo announced that it planned to buy all of Wachovia for seven times the Citigroup offer, with no government assistance. The stunning bid set off a weekend of frantic litigation among all three companies.
Fearful that a protracted legal battle could threaten the financial system, Fed officials, including the chairman, Ben Bernanke, stepped in over the weekend to help mediate the negotiations. Both sides were so angry that they found it difficult to talk directly to each other. But starting late Sunday night, senior executives from both banks began meeting privately, without the help of government officials.
People involved in the talks said that they were hopeful but not optimistic that Citigroup and Wells Fargo could reach an agreement. U.S. regulators are continuing to plan for the potential market fallout if the two sides return to their separate corners.
