ft.com/alphaville

Wells Fargo looked set Thursday night to acquire Wachovia in a $11.7bn all-share deal after Citigroup pulled out of the bitter battle for the sixth-largest US bank because it did not want to buy the lender’s bad assets portfolio without government help. The acquisition of Wachovia will transform Wells, which has to raise $20bn to fund the deal, from a West Coast-focused lender into a national retail banking powerhouse with $1,420bn in assets and 12,200 branches. However, Citi vowed “vigorously” to pursue its claim for up to $60bn in damages against Wells and Wachovia in a legal tussle that could last for years. Citi has accused Wells and Wachovia of breaching an agreement that gave it the exclusive right to negotiate with Wachovia. Citi’s decision to end talks with Wells - led by John Stumpf, chief executive, and Richard Kovacevich, chairman - after four days of fruitless talks overseen by the Fed is a setback for Citi. The Fed on Thursday night said it would “immediately” start considering the regulatory approval of the Wachovia takeover by Wells.