It’s all over but the $60-billion lawsuit: Citigroup gave up its battle royale for Wachovia’s bank branches last week, but kept its $60-billion lawsuit against winner Wells Fargo and the Charlotte, NC, institution. “The dramatic differences in the parties’ transaction structures and their views of the risks involved made it impossible to reach a mutually acceptable agreement,” Citi conceded in a statement.

Citi took credit for preventing Wachovia’s collapse by stepping in with its original offer. “Without our willingness to engage in this transaction, hundreds of billions of dollars of value would have been seriously threatened. We stood by while others walked away. Now, our shareholders have been unjustly and illegally deprived of the opportunity the transaction created.” And so the lawsuit continues.

The Federal Trade Commission quickly okayed the deal, well before the expiration of its typical 30-day antitrust review. Wells gets all Wachovia in the all-stock transaction—branches, brokerage, Evergreen, and all that debt. Under Citi’s deal, the FDIC would have taken on all but $42 billion of Wachovia’s $312 billion in debt.

“Overall, Wells Fargo still makes the most sense as the acquirer of Wachovia, despite Citi’s anger at their perceived mistreatment,” says Aite Group senior analyst Nancy Atkinson. Splitting up the teetering bank’s branches would have led to a “less than satisfactory outcome for all of the participants,” leaving neither Citi nor Wells with a “larger geographic footprint.” Both banks were prowling “for cheap deposits,” Atkinson adds. 

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