Wells Fargo & Co. has the go-ahead from federal antitrust regulators to acquire Wachovia Corp. in a $12 billion deal that will create a combined company with $1.42 trillion in assets, 48 million customers, and community banks in 39 states.

Although Wachovia shareholders must still approve the deal — and a rival suitor for Wachovia, Citigroup, remains determined to pursue a $60 billion breach-of-contract suit — Wells Fargo said it plans to complete the acquisition by the end of the year.

After agreeing last month to absorb up to $42 billion in losses on loans on Wachovia’s books to acquire the Charlotte, N.C.-based company’s banking operations (see Inman News story), Citigroup was outflanked by a competing offer from Wells Fargo.

The Federal Trade Commission agreed to an early termination of its antitrust review of Wells Fargo’s plan to acquire Wachovia, the Associated Press reported.

If finalized, the deal would further consolidation of the banking industry resulting from the housing downturn and credit crisis.

JP Morgan Chase last month agreed to acquire Washington Mutual Bank, creating a mortgage-lending giant that is expected to rival the combination of Bank of America and Countrywide Financial Corp. (see story).

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