Wachovia Talks Snag Over Division of Its Assets

[MadrasT]

Source: Wall Street Journal, October 9, 2008
http://online.wsj.com/article/SB122352039504018167.html

Talks between Citigroup Inc., Wells Fargo & Co. and the U.S. government over a way to divide Wachovia Corp. between its two suitors were hung up on several key issues Wednesday, according to people familiar with the situation.

The discussions, which began Sunday, have been snagged over the intricacies of carving up the Charlotte, N.C., bank, ranging from deposits to loans to securities. After burrowing deeper into Wachovia's books, Citigroup and Wells Fargo have been surprised by the concentration of assets they regard as low-quality, these people said.

As a result, both banks are worried that buying even part of Wachovia could saddle them with steeper losses than previously expected.

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Also adding jitters to the Wachovia talks were Bank of America Corp.'s struggles on Tuesday to sell $10 billion in stock. Citigroup and Wells Fargo have said they plan to sell stock as part of their competing takeover offers for Wachovia, but that could be more difficult than they previously thought.

People close to the discussions said they remain hopeful that a deal can be reached. But the slow progress risks creating more turmoil for Wachovia, which was in danger of being seized by federal regulators less than a week ago, Wachovia Chief Executive Robert Steel has said in a court filing.

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