Citigroup's strategic acquisition of Wachovia will make Citi the largest U.S. bank by total deposits. But what will it do for Wachovia customers and shareholders?
Wachovia plans to sell its retail bank, corporate and investment bank, and wealth management businesses to Citigroup. The transition for customers should be seamless, the company said in a press release: "Customers of both companies should continue banking as usual and feel confident that their deposits are secure." The FDIC also assured continuity of service. It's unclear whether Wachovia will operate under its own name or the Citigroup name, the Atlanta Journal Constitution points out.
Shareholders of Wachovia's stock won't be wiped out in this deal, unlike shareholders caught up in the Washington Mutual buyout. Wachovia will remain a public company with two main businesses: the AG Edwards brokerage and Evergreen Asset Management (which includes Evergreen mutual funds). The company will remain headquartered in Charlotte, N.C.
Wachovia shareholders aren't in a good spot, however. The company's stock (symbol WB), which closed at $10 on Friday, was halted on the New York Stock Exchange this morning after it plunged more than 90 percent in premarket trading.
The deal is expected to close before the end of the year, pending approval by shareholders and regulators.