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 It's mine. No, it's mine. Is this what banking has come too: a game of tug-o-war?For a moment Citigroup Inc. was set to become the largest bank again, but then Wells Fargo & Co. agreed to buy Wachovia Corp. for $15.1 billion, busting up its arranged marriage to Citigroup. Then, Citigroup released a statement demanding that Wells Fargo and Wachovia immediately terminate their merger agreement due to a "breach of an exclusivity agreement between Citi and Wachovia." So now what? Bart Narter, SVP of the Banking Group at Celent, offered Dealscape some perspective. "The ball is in Citi's court. They need to move because otherwise Wells and Wachovia will go down the wedding aisle leaving Citi to hold the flowers," Narter said.
"While the FDIC stands behind their offer
to support Citi, they are really saying we are not backing out of
the deal," Narter said. Citigroup is fighting Wells Fargo because it wants Wachovia for the same reasons: branches. If Citigroup gets Wachovia, it will add 3,341 more branches
to its 1,075 locations and be the largest bank (based on deposits) in the
U.S. again -- it lost that mantle to Bank of America Corp. a few years ago. "Citi does not have a huge branch network. The truth be told, the Citi merger would be easier because Citi would merge their branches into Wachovia," Narter explained. If Wells Fargo, which has 3,378 branches
primarily on the West coast, marries Wachovia, it will have the largest
chain of banks across the country and be able to easily expand to the
East Coast, where it has no presence. However, there is a catch, notes Narter: post-merger integration. "With the marriage of Wells and Wachovia, it would be difficult to know what to do to get everyone on the same banking systems. They all have their own homegrown systems, but for efficiency sake you have to merge one into the other," Narter said. - Maria Woehr Categories Deal Video
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