Citigroup and Wells Fargo have agreed to back off from their legal tug-of-war over Wachovia until tomorrow, reports the San Francisco Chronicle. The Fed-brokered agreement comes after days of furious legal wrangling and a $60 billion lawsuit filed by Citigroup against both Wells and Wachovia yesterday. Insiders say Citigroup and Wells may reach a deal to carve up the struggling bank.
The banks may be considering divvying up Wachovia along regional lines. Wells Fargo is unlikely to be keen on a deal that gives Citigroup the northeastern branches, although the fast-growing southwestern branches may sweeten the pot for Wells. "The bigger question is, what happens to the assets and who's going to shoulder that loss potential—and is there going to be any government assistance?" noted a banking analyst.