NEW YORK
Citigroup Inc. said Monday it has filed a complaint in New York Supreme Court against Wachovia, Wells Fargo and the directors of both companies seeking more than $60 billion in damages for interfering with the bank’s planned takeover of Wachovia’s banking operations.
The complaint, brought on Saturday and filed Monday, seeks more than $20 billion in compensatory damages and more than $40 billion in punitive damages from San Francisco-based Wells Fargo & Co. for tortious interference. Citigroup also seeks relief from Wachovia for what it called its bad-faith breach of the banks’ contract.
Meanwhile, Federal Reserve officials have been in talks with Wells Fargo and Citigroup in an effort to get the parties to reach some agreement, according to a person with knowledge of the talks. The person spoke on the condition of anonymity because of the sensitive nature of the matter.
The Wall Street Journal reported Monday that the discussions could result in the two suitors carving up Wachovia Corp.’s network of 3,346 branches along geographic lines, citing people familiar with the situation.
Sheila C. Bair, chairman of the Federal Deposit Insurance Corp., in response to a question from an audience member at the National Association for Business Economists conference, said: “I think we will have [a resolution] today” that is in accord with the public interest. She did not elaborate.
Early last week, Citigroup agreed to buy Wachovia’s banking assets for $2.1 billion in a deal brokered by the FDIC.
In a surprising twist of events, Wells Fargo announced Friday that it agreed to acquire Wachovia in a deal worth $15.1 billion at the time, or $14.8 billion based on Wells Fargo’s closing price Friday of $34.56. Wells Fargo’s deal did not require any government support.
“This was always a deal Citi wanted rather than one we needed,” Citigroup said in a statement Monday. “We were and remain very excited about this transaction and how it will benefit the clients and shareholders of Citi and Wachovia, as well as help preserve the stability of the financial system.”
In an additional statement, Citigroup said it delivered an “executed copy” of its agreement with Wachovia to Wachovia’s counsel late Sunday. At the time the Wachovia-Wells Fargo deal was announced, Citigroup and Wachovia had agreed and were simply finalizing documents, Citigroup said.
A Wachovia spokeswoman said the company had not received a lawsuit. A representative from Wells Fargo was not immediately available for comment.
The litigation may be eclipsed by some sort of compromise or deal, said Carl Tobias, a professor at the University of Richmond School of Law.
All of the parties involved have stressed the urgency of resolving the battle, as a prolonged court fight could further weaken the ailing Wachovia.
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