Walls Fargo & Co. is the new suitor for Wachovia Corp., today announcing a merger agreement worth about $15.1 billion — but Citigroup Inc., the financial services company that had planned to buy Wachovia in a deal announced Monday, is crying foul.

Wells Fargo & Co. is the new suitor for Wachovia Corp., today announcing a merger agreement worth about $15.1 billion — but Citigroup Inc., the financial services company that had planned to buy Wachovia in a deal announced Monday, is crying foul.

The Wells-Wachovia announcement is the latest in a series of power plays in the financial industry that have created a handful of mega banks — the moves were largely precipitated by the one-two punch of exposure to bad loans and the credit crunch.

Under the Wells-Wachovia agreement, Wells Fargo would acquire all outstanding shares of common stock for Wachovia in a stock-for-stock transaction and will acquire all of Wachovia’s businesses, equity, debts and banking deposits. Wells reported that the deal was unanimously approved by boards for both companies.

The deal will not require any financial assistance from the Federal Deposit Insurance Corp. or any other government agency, Wells Fargo announced.

But Citi is claiming, in a statement posted at the company’s Web site today, that Wachovia had no right to shop for another buyer.

"Wachovia’s agreement to a transaction with Wells Fargo is in clear breach of an exclusivity agreement between Citi and Wachovia," according to the announcement, which also charges that Wells Fargo is interfering with that agreement.

"The … agreement provides, among other things, that Wachovia will not enter into any transaction with any party other than Citi, and will not participate in any discussions or negotiations with any third party," according to the statement.

Citi "has demanded that Wachovia and Wells Fargo terminate and not proceed with any proposed transaction."

Last week, JP Morgan Chase announced an acquisition of Washington Mutual Bank to form a mortgage-lending powerhouse that rivals Bank of America, which has acquired Countrywide Financial Corp. (see Inman News). Bank of America and Countrywide had a combined $92.9 billion in residential mortgage originations in the second quarter, compared with $69.8 billion by JP Morgan and WaMu during that quarter. Wells Fargo had $63 billion in originations in the second quarter and Citi had $28.5 million.

Wells Fargo had assets of $609 billion and deposits of $339 billion as of June 30, and Wachovia had $812 billion in assets and $448 billion in deposits, according to the Wells Fargo announcement.

The combined company will have community banks in 39 states and in Washington, D.C., and will reportedly rank first in deposit market share in 17 of those states.

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