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Wednesday, October 8, 2008

Citigroup acquires Wachovia's banking operations

October 7, 2008
Federal Deposit Insurance Corporation confirmed on September 29 2008 that Citigroup Inc. will acquire the banking operations of Wachovia Corporation; Charlotte, North Carolina.

The transaction was facilitated by the Federal Deposit Insurance Corporation and concurred with by the Board of Governors of the Federal Reserve and the Secretary of the Treasury in consultation with the President. All depositors are fully protected .There will be no interruption in services and bank customers should expect business as usual, said FDIC Chairman Sheila C. Bair.

Citigroup Inc. will acquire the bulk of Wachovia's assets and liabilities, including five depository institutions and assume senior and subordinated debt of Wachovia Corp. Wachovia Corporation will continue to own Wachovia Securities, AG Edwards and Evergreen. The FDIC has entered into a loss sharing arrangement on a pre-identified pool of loans. Under the agreement, Citigroup Inc. will absorb up to $42 billion of losses on a $312 billion pool of loans. The FDIC will absorb losses beyond that. Citigroup has granted the FDIC $12 billion in preferred stock and warrants to compensate the FDIC for bearing this risk.

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