Citigroup Takes Over Wachovia’s Commercial Retail Operation
Following much speculation over the weekend about the fate of the nation's fourth-largest bank, Citigroup will acquire the banking operations of Wachovia for $2.2 billion in an all-stock deal.
Citigroup, the nation's largest bank based on assets, also announced it would raise $10 billion through a sale of common stock and that it would slash its quarterly dividend yet again, cutting it in half to 16 cents a share to preserve capital.
As part of the deal, Citigroup will acquire Wachovia's massive deposit network, about $53 billion in the company's debt, as well as more than $300 billion of Wachovia's loan portfolio.
Following completion of the acquisition, Citigroup will have more than $600 billion in deposits in the U.S., about a 9.8% market share. Total deposits worldwide will be $1.3 trillion.
Citigroup said it will absorb up to $42 billion of losses on those loans, while the Federal Deposit Insurance Corporation will be on the hook for anything beyond that.
Published on September 29, 2008
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