You know when you want to tell someone something that’s going to be really, really awkward? If you’re like us, you put it off as long as possible. That’s what now seems to be happening with the plural marriage being worked out between Citigroup, Wells Fargo and Wachovia. The three banks announced that they are extending their time out until Friday morning. If this thing could be done clean, it would have been done already.
DealBook proposes the nicest possible interpretation of recent events:
“Fearful that a protracted legal battle could threaten the financial system, Fed officials, including the chairman, Ben S. Bernanke, stepped in over the weekend to help mediate the negotiations. Both sides were so angry that they found it difficult to talk directly to each other. But starting late Sunday night, senior executives from both banks began meeting privately, without the help of government officials.”
Well that certainly worked. We’ve now got more uncertainty about the outcome and this thing just keeps on protracting.
The Wall Street Journal, however, speculated that maybe, just maybe all this indicates that Citi is in some serious trouble. And, of course, Citigroup executives aren’t boosting confidence by called the Wachovia deal a “make or break” opportunity. Even their $60 billion lawsuit can be read as indicating trouble. Citi is saying they’ll take a $20 billion hit if it doesn’t get Wachovia. (The other $40 billion is meant to punish Wells Fargo for offering Wachovia shareholders 700% more for their bank.) Does Citi really want to advertise that?