Citigroup Agrees To Purchase Wachovia

WASHINGTON—Today the FDIC assisted the acquisition of Wachovia, a large national bank, by Citigroup, the nation's largest banking company.

As the result of the FDIC’s action, Citigroup has agreed to assume all Wachovia deposits – insured and uninsured – and all Wachovia debt. Citigroup has also agreed to acquire all Wachovia loans, and nearly all of its other assets, with no assets being assumed by the FDIC. In addition, Citigroup has agreed to assume first losses on a portfolio of assets that includes Wachovia's "payment option" mortgages. The FDIC is exposed to these losses only if Citigroup's losses on these assets exceed $42 billion plus the $12 billion in preferred stock and warrants issued to the agency – which the FDIC does not expect to occur at this time.

"By providing this assistance, the FDIC took precisely the prudent action in difficult circumstance that Congress foresaw in legislation passed in 1991," said Comptroller of the Currency and FDIC Board member John C. Dugan. "It protects all depositors, ensures smooth operations for customers, keeps banking assets in private hands, and helps maintain confidence in our banking system – all without any likely cost to the Federal Deposit Insurance Fund."