By Grant McCool
NEW YORK (Reuters) - A court hearing may be held on Monday over the rival bids of Citigroup
Citigroup has said it would seek damages from Wachovia and Wells Fargo because it had an agreement with Wachovia to acquire the North Carolina bank before San Francisco-based Wells Fargo stepped in with a higher offer last Friday.
The legal battle started over the weekend in New York State Supreme Court and in U.S. District Court in Manhattan, then the three banks halted litigation this week during negotiations over Wachovia.
On Wednesday, Judge Lewis Kaplan of U.S. District Court in Manhattan adjourned any hearings indefinitely during the legal truce, but called a telephone conference on Friday with lawyers for Wachovia and Citigroup. Citigroup announced on Thursday that it had abandoned its bid for Wachovia, which had gone to federal court at the weekend seeking to prevent Citigroup from stopping its deal with Wells Fargo.
According to a transcript of the call, Kaplan acknowledged some confusion over filings in the two courts that he wanted to have "sorted out" with more time.
"I don't see any particular reason to attempt to hold a hearing in the course of the day before I understand what the facts are," Kaplan said, according to the transcript.
"Monday is a possibility."
A hearing scheduled for Tuesday in New York State Supreme Court in Citigroup's claim against the other two banks was canceled because it had been removed to federal court, a clerk for the state judge said.
During Friday's conference call, Citigroup attorney Gregory Joseph told Kaplan: "This is now just a damages action," according to the transcript.
"They haven't even filed for approval with the federal regulators for their deal. We're not asking to block their deal."
A Wells Fargo-Wachovia marriage would resolve the fate of another troubled U.S. bank that was forced to put itself up for sale amid frozen credit markets and rising losses on mortgage-related assets.
Wachovia is among many regional banks that found themselves at the fore of the credit crisis, holding large portfolios of toxic mortgages as the value of borrowers' homes dropped and they became unable to pay their loans.
Citigroup, Wells Fargo, and the Federal Reserve had spent days negotiating over the future of Wachovia and its valuable network of branches.
Citigroup agreed last week to buy Wachovia's banking assets for about $2.2 billion, with partial government assistance, and it financially supported Wachovia while they hammered out final details.
But days later, Wells Fargo signed an agreement to buy all of Wachovia for about $15 billion at the time, including its asset management and retail brokerage arms. A slide in Wells Fargo shares puts the value closer to $12 billion, based on Thursday's closing price.
Wells shares were down 64 cents at $26.61 on Friday on the New York Stock Exchange, while Citigroup's shares were up 27 cents at $13.20 and Wachovia's shares were up $1.03 at $4.63.
(Editing by Brad Dorfman)
