The US Federal Reserve on Sunday approved Wells Fargo’s takeover of troubled banking rival Wachovia, a deal which would create the largest bank branch network in the US.
“The Federal Reserve Board on Sunday announced its approval of the application ... by Wells Fargo & Company, San Francisco, California, to acquire Wachovia Corporation and its subsidiary banks,” the Fed said in a statement on its Web site.
The Fed’s approval, adopted by a unanimous board decision, follows Citigroup’s decision on Thursday to end court efforts to block Wachovia’s merger with Wells Fargo, which it claimed was illegal after its own, US government-backed takeover deal forged on Sept. 28.
Wachovia, the fourth-largest US bank by assets, with headquarters in Charlotte, North Carolina, faced a near collapse of its share price and weakening confidence because of its exposure to the subprime mortgage crisis.
The planned acquisition by Wells Fargo — which traces its roots to the Wild West and the 19th century gold rush in California — would give it the biggest network of branches in the US.
In addition to the acquisition of Wachovia’s subsidiary banks, the Fed said in a statement, “Wells Fargo has requested the board’s approval ... to acquire the nonbanking subsidiaries of Wachovia, including Wachovia’s two subsidiary savings associations.”
Wells Fargo, the Fed said, “also proposes to acquire the agreement corporation and Edge Act subsidiaries and the foreign operations of Wachovia.”
The Fed said the two sides in the deal have 30 days to submit “views and recommendations” on the proposal.
Wells Fargo offered US$15.1 billion in an all-stock deal to buy all of Wachovia, and recently stressed that its proposal did not have any government involvement or taxpayer risk.
Citigroup had offered to pay US$2.16 billion in stock for Wachovia’s banking activities and some of its debts.
When the merger is complete, Wells Fargo has said, the combined bank will have US$1.42 trillion in assets, US$787 billion in deposits, 48 million customers, US$258 billion in assets under management in mutual funds and 280,000 employees.
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