Financials
Citigroup will take over Wachovia
Monday, 29 September 2008 13:38US authorities have facilitated a takeover of Wachovia's banking business by rival Citigroup in a deal that gives the US government a stake in Citi.
Citigroup will assume up to $42 billion of losses on a $312 billion pool of loans held by Wachovia, the Federal Deposit Insurance Corporation said. Wachovia is the sixth-biggest US bank.
Under the agreement, the FDIC will absorb losses beyond that and take a stake in Citigroup for essentially guaranteeing the losses Citigroup absorbs.
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Citigroup has granted the FDIC $12 billion in preferred stock and warrants to compensate the FDIC for bearing this risk.
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