Citigroup suing pair after deal unravels late

ASSOCIATED PRESS

Published: October 7, 2008

NEW YORK — Citigroup Inc. said Monday it has filed a complaint in New York Supreme Court against Wachovia, Wells Fargo and the directors of both companies seeking more than $60 billion in damages for interfering with the bank’s planned takeover of Wachovia’s banking operations.

The complaint, brought Saturday and filed Monday, seeks more than $20 billion in compensatory damages and more than $40 billion in punitive damages from Wells Fargo & Co. for tortious interference. Citigroup also seeks relief from Wachovia for what it called its bad-faith breach of contract.

"Wachovia continues to believe its agreement with Wells Fargo, which involves no government assistance, is proper and valid,” Wachovia spokeswoman Christy Phillips-Brown said in an e-mail to The Associated Press. "The agreement is in the best interests of shareholders, employees, creditors and retirees, as well as the American taxpayers, and it imposes no risk to the FDIC fund.”

A representative from Wells Fargo was not immediately available for comment.

Meanwhile, Federal Reserve officials have been in talks with Wells Fargo and Citigroup in the hope of getting the parties to come to some sort of agreement, said a person with knowledge of the talks. The person spoke on condition of anonymity because of the sensitive nature of the matter.

The Wall Street Journal reported Monday that the talks could result in the two suitors carving up Wachovia Corp.’s network of 3,346 branches along geographic lines, citing people familiar with the situation.

In an additional statement, Citigroup said it delivered an "executed copy” of its agreement with Wachovia to Wachovia’s counsel late Sunday. At the time the Wachovia-Wells Fargo deal was announced, Citigroup and Wachovia had agreed and were simply finalizing documents, Citigroup said.

The battle between Wells Fargo and Citigroup for Wachovia moved to court over the weekend.

Your thoughts!