Deal or no deal? Howie Mandel and the TV “banker” can’t help out this sticky situation involving three of the nation’s largest banks. Citigroup Inc. thought it had a government-sanctioned deal to buy part of the battered Wachovia Corp.’s assets for $2.16 billion and was surprised to learn early today that Wells Fargo had agreed to buy all of Wachovia for approximately $15.1 billion. Under the agreement approved unanimously by the boards of both Wells Fargo and Wachovia, Wells Fargo would acquire all outstanding shares of Wachovia common stock in a stock-for-stock deal at $7 per share for a total value of about $15.1 billion. Wells Fargo would acquire all of Wachovia, including all its businesses and banking deposits as well as its debt. Wells Fargo said it expected to incur merger and integration costs of about $10 billion. It also expects to issue up to $20 billion in new securities, mostly common stock, to maintain its strong capital position, according to a company statement. The Wells Fargo and Wachovia merger would require no intervention from the federal government while the Citigroup bid on Monday, Sept. 29, valued the Wachovia stock at $1 per share and would have needed assistance from the Federal Deposit Insurance Corp. The Citigroup bid also left out Wachovia’s securities brokerage and mutual fund businesses, while Wells Fargo would acquire the entire company. “This agreement represents a compelling value for Wachovia shareholders. It provides superior value compared to the previous offer to acquire only the banking operations of the company and because Wachovia shareholders will have a meaningful opportunity to participate in the growth and success of a combined Wachovia-Wells Fargo that will be one of the world’s great financial services companies,” Wells Fargo chairman Dick Kovacevich said in a prepared statement this morning. Robert Steel, Wachovia’s president & CEO, noted in the same release that the deal, “enables us to keep Wachovia intact and preserve the value of an integrated company, without government support. The market presence and composition of our businesses, along with our service-oriented cultures, are extraordinarily complementary and this combination creates great potential for sustained stability and growth.” Meanwhile, CitiGroup fired off a statement claiming the Wachovia-Wells Fargo merger would be “a clear breach of an Exclusivity Agreement between Citi and Wachovia. In addition, Wells Fargo’s conduct constitutes tortious interference with the Exclusivity Agreement.” Citi said it was negotiating in good faith and had nearly completed the definitive agreements required to close the deal with Wachovia that was announced Monday. The release also stated that Citi had been providing liquidity support to Wachovia since Monday. “The Exclusivity Agreement provides, among other things, that Wachovia will not enter into any transaction with any party other than Citi, and will not participate in any discussions or negotiations with any third party,” according to the statement. Steel would not address whether or not Wachovia had an exclusivity agreement with Citigroup during a morning conference call. FDIC chairman Sheila Bair issued a statement saying the agency “stands behind its previously announced agreement with Citigroup. The FDIC will be reviewing all proposals and working with the primary regulators of all three institutions to pursue a resolution that serves the public interest.” She added that banking customers would be fully protected by the FDIC under either proposal. The Federal Reserve and the Office of the Comptroller of the Currency also jumped into the fray with a statement that noted the Citigroup proposal had “undergone extensive review” by both agencies but had not yet reviewed the new Wells Fargo proposal and the “issues it raises.” The joint release added that the regulators “will be working with the parties to achieve an outcome that protects all Wachovia creditors, including depositors, insured and uninsured, and promotes market stability.” Charlotte, N.C.-based Wachovia had assets of $812.4 billion and market capitalization of $33.5 billion as of June 30. It has 3,330 retail branches in 21 states from Connecticut to Florida and west to Texas and California as well as 40 international offices. It also has nationwide retail brokerage, mortgage lending and auto finance businesses. The Wachovia Securities retail brokerage operation managed more than $1.1 trillion in client assets in 1,500 offices. When combined with San Francisco-based Wells Fargo, the merger could create the third-largest bank in the United States, at least until another merger happens. The merger would give the combined company $1.42 trillion in assets, $787 billion in deposits and $258 billion in mutual funds under management. There would be 48 million customers; 10,761 retail branches; 12,227 ATMs and 280,000 employees. It would give Wells Fargo, mostly considered a Western U.S. company, a huge East Coast presence. Kovacevich said Charlotte would become the headquarters for the East Cost retail, commercial and corporate banking businesses and St. Louis will continue to be the headquarters for Wachovia Securities. As reported Monday by CPN, the proposed Citigroup deal would have made a combined Citigroup-Wachovia company the largest U.S. bank in terms of total deposits. Under a loss sharing agreement with the FDIC, Citigroup was prepared to absorb up to $42 billion of losses on a pre-identified $312 billion pool of loans, and the FDIC would absorb any losses after that number. There would be no FDIC backstop in the Wells Fargo-Wachovia merger which is a risky move for the normally conservative Wells Fargo. Bloomberg News reported that Wells Fargo would have to take on about $122 billion in option ARMs that Wachovia had sold, more than half of them in California, where the housing crisis is particularly deep. No matter how this particular deal plays out, there is no dispute that in just a few weeks the banking industry has changed dramatically. Today’s possible Wells Fargo-Wachovia merger deal comes just one week after Washington Mutual was acquired in a $1.9 billion fire sale by JPMorgan Chase after it had been seized by the federal Office of Thrift Supervision, according to a Sept. 26 CPN report.