Wachovia and suitors to halt litigation

By Dan Wilchins and Karey Wutkowski

NEW YORK/WASHINGTON (Reuters) - Wachovia Corp and suitors Wells Fargo & Co and Citigroup Inc agreed on Monday to halt all litigation until noon Wednesday in hopes of deciding the winner of the troubled North Carolina-based bank.

Wells Fargo and Citigroup have been battling over the bank since Wells Fargo announced an offer Friday that bested Citigroup's proposal a week ago.

As part of their agreement on Monday to halt all litigation, effective immediately, the three banks also said they would cease any formal discovery activities.

The increasingly bitter dispute, which flared through the weekend, has drawn in U.S. government officials in an attempt to broker a deal. Sheila Bair, chairman of the Federal Deposit Insurance Corp (FDIC), said she expected an agreement "that serves the public interest" to be reached Monday.

A person familiar with the situation said the various options discussed in the talks with the government included dividing up Wachovia between the two feuding companies. The source added that Wells Fargo would still like to buy all of Wachovia.

Citi, which announced a preliminary agreement to buy Wachovia's banking assets for $2.2 billion a week ago, was considering an offer for the entire bank, among other options, a person close to Citi said.

But the source also said Citi has no appetite to buy Wachovia's assets without some sort of government guarantee -- unlike Wells Fargo, which made a $15 billion counter bid for the entire bank on Friday.

In its latest courthouse volley against Wells Fargo, Citi said it was seeking more than $60 billion in damages from Wells Fargo. Citi said Wachovia would have collapsed on September 30 without its agreement to acquire most of its assets.