Border Lines

Citigroup has agreed to purchase Wachovia. Under terms of the transaction, Citigroup will pay $2.1 billion to Wachovia and assume the senior and subordinated debt of Wachovia Corporation. The transaction is expected to close before year-end. It has been approved by directors of both companies and is subject to shareholder approval of Wachovia and the appropriate regulatory approvals.

The FDIC has assisted the acquisition of Wachovia by Citigroup, the United States’ largest banking company.

As the result of the FDIC’s action, Citigroup has agreed to assume all Wachovia deposits and all of Wachovia’s debt. Citigroup has agreed to acquire all Wachovia loans, and just about all of Wachovia’s other assets.

What is important to note is that no assets are being assumed by the FDIC.

Citigroup has agreed to “assume first losses on a portfolio of assets that includes Wachovia’s “payment option” mortgages. The FDIC is exposed to these losses only if Citigroup’s losses on these assets exceed $42 billion plus the $12 billion in preferred stock and warrants issued to the agency — which the FDIC does not expect to occur at this time.”

The Office of the Comptroller of the Currency was created by Congress to charter national banks, to oversee a nationwide system of banking institutions, and to assure that national banks are safe and sound, competitive and profitable, and capable of serving the banking needs of their customers in the best possible manner.

Wachovia Corporation will remain a public company with two main operating subsidiaries: Wachovia Securities and Evergreen Asset Management.

Wachovia Corp. will remain headquartered in Charlotte, North Carolina. Wachovia Securities will continue to be headquartered in St. Louis, Missouri. Citigroup will headquarter the retail bank in Charlotte and the investment bank in New York.

Wachovia’s investment bankers were Goldman Sachs, Perella Weinberg Partners and Wachovia Securities, and its legal advisors are Sullivan & Cromwell and Simpson Thacher & Bartlett.

Wachovia Corporation (NYSE:WB) is one of the nation’s largest diversified financial services companies, with assets of $812.4 billion and market capitalization of $33.5 billion at June 30, 2008. Wachovia provides a broad range of retail banking and brokerage, asset and wealth management, and corporate and investment banking products and services to customers through 3,300 retail financial centers in 21 states from Connecticut to Florida and west to Texas and California, and nationwide retail brokerage, mortgage lending and auto finance businesses. Globally, clients are served in selected corporate and institutional sectors and through more than 40 international offices. Our retail brokerage operations under the Wachovia Securities brand name manage more than $1.1 trillion in client assets through 14,600 financial advisors in 1,500 offices nationwide. Online banking is available at wachovia.com; online brokerage products and services at wachoviasec.com; and investment products and services at evergreeninvestments.com.

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