Here is a letter from the CEO of Citi re the aquisition----------
From:
vikrampandit@citi.com [mailto:
vikrampandit@citi.com]
Sent: Monday, September 29, 2008 10:37 AM
To:
vikrampandit@citi.com
Subject: Wachovia
Dear Colleagues,
Today, Citi took another bold step to expand our capabilities to serve
clients in the U.S. and strengthen our overall capital and liquidity
positions. We reached an historic agreement-in-principle to acquire the
banking operations of Wachovia Corporation (NYSE: WB) for approximately
$2.16 billion in stock.
Included in the transaction are all of Wachovia bank branches and
deposits, the corporate and investment bank, and private bank.
Wachovia's retail brokerage and asset management business are not part
of the transaction.
The addition of Wachovia immediately establishes Citi as a leading U.S.
retail bank, with deposits totaling $600 billion and a U.S. deposit
market share of 9.8%. After closing, our total deposit base of $1.3
trillion will exceed that of our nearest U.S. competitor by $350
billion.
Wachovia's very attractive retail bank footprint is highly complementary
with that of Citi, with just 31% of Wachovia branches located in
existing Citi markets and a strong, attractive customer base. In fact,
the transaction propels Citi to a top three ranking in seven
metropolitan statistical areas (MSAs): New York, Miami, Atlanta,
Washington D.C., Las Vegas, Charlotte, and San Francisco. When the
transaction closes at the end of December, Citi will have about 4,300
branches and 28,000 fee-free ATMs in the U.S.
The transaction also brings a strong, highly complementary U.S. cash
management platform to Citi's leading Global Transaction Services
business; a strong U.S. mid-market corporate banking franchise; and a
small yet successful and competitively significant U.S. private bank
that Citi intends to integrate into its existing Global Wealth
Management business.
The acquisition of Wachovia is consistent with our ongoing efforts to
"get fit" as an organization by greatly enhancing our U.S. banking
capabilities and adding a team of exceptional managers and employees to
our ranks. Our press release provides additional details about the
overall transaction and I encourage you to read it
(
http://www.citigroup.com/citi/press/2008/080929a.htm).
Specifically, I want to highlight that this transaction provides Citi
with important downside loss protection through the FDIC from Wachovia's
loan portfolio and caps credit losses well below Wachovia's earnings
power. In addition, we look to achieve substantial expense savings and
ongoing efficiencies for Citi through integration and building on
Wachovia's best-in-class retail technology platform.
To maintain our strong capital position, we will be raising additional
capital and our Board has decided to reduce the quarterly dividend to a
level more in line with our leading competitors. These are prudent steps
given the ongoing volatility in the markets and the challenging economic
environment around the globe.
As I said before, the unprecedented changes in the financial services
industry provide unique opportunities for strong companies such as Citi.
Today's agreement will transform our U.S. banking operations and we look
forward to integrating these two leading banking franchises to better
serve clients.
Vikram