Citigroup Inc. yesterday said it had sued Wachovia Corp., Wells Fargo & Co., and both companies' directors, seeking more than $60 billion as Citigroup continues to fight against the proposed acquisition by Wells Fargo that trumped an agreement it had to purchase Wachovia's banking operations earlier in the week.
The parties later announced they had agreed to a litigation standstill until Wednesday at noon in consultation with the Federal Reserve.
Filed yesterday in New York State court, Citigroup's lawsuit seeks $20 billion in compensatory damages and $40 billion in punitive damages from Wells Fargo for tortious interference, and unspecified relief from Wachovia for bad faith breach of contract.
Citigroup complained Friday - after Wachovia and Wells Fargo agreed to a deal - that it signed an exclusivity agreement with Wachovia just days earlier when Citigroup had reached an agreement in principle to buy Wachovia's banking operations with backing from the federal government. Citigroup yesterday said the two sides were just finalizing the documents when Wachovia and Wells Fargo agreed to a separate deal. Although a judge extended the exclusivity period on Saturday, an appeals court overturned the decision.
The battle has led the Federal Reserve to encourage the banks to work out a compromise, including dividing the bank along geographical lines, according the Wall Street Journal.