Implicit in Citigroup Inc.'s attempt to acquire Wachovia Corp. was an acknowledgement of something many on Wall Street had long said: Citi's relatively undersized U.S. deposit business was a shortcoming that needed to be addressed.

Now that Citi has ceded Wachovia to Wells Fargo & Co.'s rival bid, the deposit question remains open, and one that is front and center for many who wonder what comes next for the New York company.

A Citi insider said last week that without Wachovia — which would have tripled Citi's U.S. deposit base — the company might need to pursue another deal this year to bolster its funding and to stay in the same league as retail giants Wells, Bank of America Corp., and JPMorgan Chase & Co. It remains open to domestic deals but at this point will return its focus to international expansion, the insider said.

Since Oct. 3, when Wells made its offer for Wachovia, Citi's shares have dropped more than 50%. Of course, this is due in no small part to the markets' overall swoon this month. But analysts say some part probably indicates Citi-specific concerns.

Citi and Wells executives declined interview requests for this story. But in a press release, Vikram Pandit, Citi's CEO, said: "Our focus remains on capitalizing on our global strengths. We will continue to apply the same discipline we employed in this and other recent transactions to future acquisition opportunities."

Citi also said last week that it would continue with a plan to cut its dividend to conserve capital.

But with no obvious seller left on the current deal landscape with anywhere near the reach and $400 billion in deposits that Wachovia possessed, analysts said, more questions remain than answers about Citi's next move.

"Citi lost the chance to be a true national player," Ken Thomas, the president of Miami-based Branchlocation.com, said in an interview last week. With about 1,100 branches, mostly on the East Coast, Citi trails far behind B of A, Wells, and JPMorgan Chase — all three of which have more than 5,000 branches spread across the country, he said.

"There was for Citi a huge opportunity to get up there with the Big Three, but Wachovia's gone now, and there is no other way in the short term Citi is going to get there," Mr. Thomas said. "Anything they do, they'll have to do piecemeal."

At the same time, he said, Citi now faces another major competitor "in its own backyard" because of Wells' move into the Northeast with the Wachovia takeover.

Jeffrey Harte, an analyst at Sandler O'Neill & Partners LP, said in an interview last week that Citi finds itself in the "mid-tier" of retail banking, a place that does not make sense for a company its size.

"They have the appetite to buy branches and deposits on the cheap," Mr. Harte said. "It is tough to say what Citigroup would do next, but I would expect them to keep looking. … There are parts of the country that are wide open for them. Unlike JPMorgan Chase, they don't have much of the country covered, so the list of potential acquisitions is likely pretty long."

A second source familiar with Citi's talks with Wells and Wachovia last week said that one hang-up for Citi as it tried to divvy up Wachovia's branches was the mid-Atlantic region. Wells was willing to forgo the Northeast, but the San Francisco company wanted all the rest of Wachovia's branches, including those in Washington, D.C., and northern Virginia. Citi, the source said, did not want to give up the mid-Atlantic branches because they might give it a launching pad for expansion into the Southeast.

Mr. Harte said this might indicate that Citi would look for opportunities in the Southeast, particularly a bank with branches in Florida. However, he said, "answering 'who's next' isn't based on what is or isn't in their footprint. It is more about what becomes available."

At the moment, the only large regional bank thought to be actively seeking a buyer is National City Corp. in Cleveland, which has operations in Florida. Though Nat City is concentrated in slow-growth Midwest markets and is burdened with problem mortgages, it would give Citi nearly $100 billion in deposits and help it instantly grow in a region where it has only a small presence. Nat City declined to comment.

David Trone, an analyst at Fox-Pitt Kelton Cochran Caronia Waller, noting the plummeting home prices that have hurt several Florida cities, said Citi would need to tread carefully in the Southeast. "I could see [Citi] do something in the Midwest since that could be the next area where the challenged bank comes from," he said. "Less so out west." Added Mr. Trone: "The mid-Atlantic is on the wish list, but I don't know if it would yield a troubled bank of size."

Citi, which has said it expects to report its fourth-straight quarterly loss this week, did not appear ready to get into a bidding war with Wells over Wachovia's bank branches. Analysts said they were not surprised that Wells' all-stock, $15.1 billion deal trumped Citi's $2.1 billion, government-assisted offer last week.

A person involved in the Citi-Wachovia-Wells negotiations said Citi ultimately backed out because it could not ensure the financial backing of the Federal Deposit Insurance Corp. Citi made the first offer for Wachovia, and the bid included paying the FDIC $12 billion to limit losses on Wachovia's mortgage loans. The source said Citi could not afford to take on Wachovia's battered mortgages and certain capital markets assets without "that very significant risk being capped."

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