After days of unquestionably heated talks, Citigroup Inc. has decided to relinquish its bid to buy Wachovia Corp.’s banking operations. This paves the way for Wells Fargo & Co. to follow through with its proposed $15.1 billion acquisition of the troubled financial institution. Citi announced yesterday that it had ceased negotiations with Wachovia, citing a vast disparity in the planned transaction structures and assessments of potential risks. However, the battle between Citi and Wachovia is not quite over, as Citi also revealed it would continue to seek legal action against Wells Fargo.What a difference a week makes. On September 29, the Federal Deposit Insurance Corp. announced–with the blessing of the Federal Reserve and the U.S. Department of the Treasury–that it had brokered a deal for New York City-based Citi to acquire the majority of Charlotte, N.C.-headquartered Wachovia’s assets and liabilities. Citi would have assumed $42 billion of losses on a pool of loans totaling $312 billion in a loss sharing agreement in which the FDIC would undertake responsibility for losses beyond the $42 billion.But on October 3, news emerged indicating that what appeared to be a done deal, had fallen apart at the seams, courtesy of San Francisco-based Wells Fargo’s announcement that it had signed a definitive agreement to merge with Wachovia in a stock-for-stock transaction that valued Wachovia shares at $7.00. Citi then followed the news with a statement denouncing Wells Fargo’s arrangement to merge with Wachovia as a breach of an Exclusivity Agreement and tortious interference with its contract. Citi, since announcing its sanctioned acquisition of Wachovia, had been providing the company with liquidity support.So the drama continues. Citi plans to move forward with damage claims against Wachovia. In the meantime, the Federal Reserve, acknowledging the failure of negotiations between Citi and Wells Fargo, has announced that it will commence with the consideration of Wells Fargo’s filings for authorization to purchase Wachovia. Wachovia brings to the table 3,325 banks in 21 states and Washington, D.C. The majority of the stores, 712, are located in Florida. If all goes as planned, after the merger, Wells Fargo will have an aggregate $1.42 billion in assets, $787 billion in deposits and 10,761 stores in 39 states and Washington, D.C., under its umbrella.