In Sudden Turn, Wells to Buy Wachovia

This morning, in a surprise announcement, Wells Fargo (San Francisco) announced it will be acquiring Charlotte-based Wachovia in a $15 billion stock swap, throwing a monkey wrench in Citi's aspirations to buy the financial institution, as was announced last week .

The combined entity will have over $1.4 trillion in assets and will be the country's biggest depositary institution. It will keep all units of Wachovia—investment and retail banking, etc.—together, as Citi's proposal would not have done, according to early reports. Wells Fargo was the fourth largest bank by assets ($575 billion) before buying $812.4 billion-asset Charlotte, N.C.-based Wachovia. Like many banks it had overextended itself in subprime lending.

Under the original Citi deal, the FDIC would have capped the acquirer's exposure to Wachovia's heavy subprime losses at $42 billion. There is no such agreement now.

"We are combining the industry's number one ranking customer service culture of Wachovia with the industry's number one sales and cross-selling culture of Wells Fargo," said Wells Fargo chairman Dick Kovacevich in a release. "The best in service and the best in sales, an unbeatable combination."

Stayed tuned to BS&T for continuing coverage of the story as it unfolds.