Citigroup and Wells Fargo on Monday agreed a truce until Tuesday afternoon in their bitter legal battle over the takeover of Wachovia, in an effort to gain more time to agree a deal to carve up the sixth-largest US bank. The legal standstill was brokered by the Federal Reserve amid concerns that a drawn-out legal process would harm Wachovia. Observers said the truce could help Citi and Wells clinch a deal to split Wachovia’s branch network and non-banking businesses. The legal standstill came hours after Citi fired the latest legal salvo, suing Wachovia and Wells for up to $60bn in damages. Citi alleged the Wachovia/Wells deal breached its exclusivity agreement with Wachovia. Despite the legal row, Citi and Wells have been in talks about a compromise since Sunday when the Fed intervened and urged them to open negotiations. The talks continued Monday, with Citi and Wells executives talking by phone and keeping contact with Kevin Warsh, a Fed governor. One proposal is for Citi to take Wachovia’s branches in the north-east, with Wells assuming the rest, as well as the asset management and brokerage arms. But people close to the talks warned there were significant differences between the two sides and they might not find a solution by Tuesday.

This entry was posted by Gwen Robinson on Tuesday, October 7th, 2008 at 5:28 and is filed under Capital markets, M&A. Tagged with citi, wachovia, wells fargo. Edit this entry.