NEW YORK — A battle broke out for control of Wachovia Friday as Wells Fargo signed a $15.1 billion agreement to buy the Charlotte, N.C.-based bank, while Citigroup and the federal regulators backing its earlier deal insisted that Citi's takeover bid go forward.
The surprise announcement early Friday by Wachovia Corp. that it had agreed to be acquired by San Francisco-based Wells Fargo & Co. in the all-stock deal — without government assistance — upended what had appeared to be a carefully examined arrangement and caught regulators off guard.
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The Citigroup deal, announced Monday, would have been done with the help of the Federal Deposit Insurance Corp., but the Wells deal would be done without it. The head of the FDIC said the agency is standing behind the agreement it made with Citigroup Inc.
Citigroup, which demanded that Wachovia call off its deal with Wells Fargo, said its agreement with Wachovia provides that the bank will not enter into any transaction with any party other than Citi or negotiate with anyone else.
Wachovia's board approved Wells Fargo's offer late Thursday. The deal is still subject to approval by Wachovia shareholders and other regulators. Wells Fargo said it expects the deal to close by year-end.
"This deal enables us to keep Wachovia intact and preserve the value of an integrated company, without government support," Robert Steel, Wachovia's president and chief executive, said in a statement.
Federal Deposit Insurance Corp. Chairman Sheila Bair said Friday the agency "stands behind its previously announced agreement with Citigroup."
The FDIC will review all proposals and work with the regulators of Wachovia, Citigroup and Wells Fargo "to pursue a resolution that serves the public interest," Bair said.
Bair noted in her statement that "under either proposal, all banking customers of the merged institutions would be fully covered with no disruptions in service."
The Federal Reserve, which has regulatory oversight of the three big banks, said it hasn't had time to review the proposed sale of Wachovia to Wells Fargo but will work to ensure that all creditors and depositors of Wachovia are protected.