Citigroup to buy Wachovia at $1 per share

NEW YORK, Sept. 29 (UPI) -- Citigroup Inc. will purchase North Carolina's Wachovia Corp, for $2.2 billion or $1 per share, U.S. regulators said Monday morning.

The deal includes federal help. The Federal Deposit Insurance Corp. said it would absorb about $42 billion in Wachovia's losses in exchange for $12 billion in preferred stock and warrants from Citigroup, The New York Times reported.

The deal puts Citigroup on control of $400 billion in Wachovia deposits but not its AG Edwards brokerage or the Evergreen business, which Wachovia will retain, the Times said.

By absorbing Wachovia, Citigroup becomes one of the three largest banks in the country, joining Bank of America, which purchased Merrill Lynch recently, and JP Morgan Chase, which bought Washington Mutual last week.

With the purchase, Citigroup controls more than 30 percent of the country's banks deposits, the Times reported.

F.D.I.C. chairwoman Sheila Bair said, "there will be no interruption in services and bank customers should expect business as usual."

"This morning's decision was made under extraordinary circumstances with significant consultation among the regulators and Treasury," she said. "This action was necessary to maintain confidence in the banking industry given current financial market conditions."