Citigroup, Wells Fargo square off in a winner takes Wachovia duel

Wells Fargo said it would acquire all of Wachovia's businesses, preferred equity and banking deposits. "We are combining the industry's number one ranking customer service culture of Wachovia with the industry's number one sales and cross-selling culture of Wells Fargo. The best in service and the best in sales, an unbeatable combination," Kovacevich said.

"Wachovia's brokerage and asset management businesses, which would have been left behind in the prior (Citigroup) proposal, are tightly interwoven with Wachovia's core banking business - and this (Wells Fargo) agreement avoids the complexity and unavoidable loss of value in trying to separate them, which would have disrupted Wachovia's team members and customers," he added.

The FDIC, which had helped broker Citigroup's $2.16 billion offer, said it is reviewing Wells Fargo's bid, which is better than Citigroup's and would not require government financial support. Till then, Sheila Bair, FDIC chairman, said, it would stand "behind its agreement with Citigroup."

According to analysts, the Wachovia deal would have helped Citigroup firm up its presence in the US as a major retail bank.

However, analysts said, Wachovia would also strengthen Well Fargo's network presence in the East Coast.

While Citigroup had planned to sell $10 billion of common equity as part of its acquisition, Wells Fargo said it would raise up to $20 billion, mainly of common equity, to maintain its capital position. It said it expects to incur merger and integration charges of about $10 billion and over time, it expects to write the assets down by $32 billion.