FDIC helps in Citigroup’s purchase of Wachovia Bank

By Nicole Lucht

Monday, Sept. 29, 2008 | 8:29 a.m.

Citigroup Inc. has bought Wachovia Bank with the help of the Federal Deposit Insurance Corp., an FDIC news release said.

The bank did not fail, the FDIC said.

Citi bought the bank today for $2.1 billion, a Wachovia news release said.

"During recent weeks, the financial landscape has changed significantly and presented us with unprecedented challenges," said Robert Steel, Wachovia's chief executive and president in a statement. "Today's announcement is the best alternative for the company, enabling a resolution on the Golden West portfolio."

The sale is expected to be completed by the end of the year.

Wachovia had five branches in the Las Vegas area. It entered the local market through an acquisition of World Savings Bank in May 2006.

"For Wachovia customers, today's action will ensure seamless continuity of service from their bank and full protection for all of their deposits," FDIC Chairwoman Sheila C. Bair said in a statement. "There will be no interruption in services and bank customers should expect business as usual."

Citi is buying most of Wachovia's assets and liabilities; there is expected to be no cost to the FDIC fund. Through the acquisition, Citi is taking on $42 billion of losses from a $312 billion pool of loans. The FDIC is expected to absorb the rest. In return, Citi has granted the FDIC $12 billion in preferred stock and warrants.

Wachovia's parent company, Wachovia Corp., will continue to own Wachovia Securities and Evergreen Asset Management.

Wachovia customers with questions should call their bank or visit wachovia.com. The FDIC's consumer hotline is (877)275-3342 or visit www.fdic.gov.