NEW YORK (Reuters) - Citigroup Inc (nyse: C - news - people ) and Wells Fargo & (nyse: WFC - news - people )amp; Co agreed to hold off on litigation for two more days as they fight over the acquisition of Wachovia Corp (nyse: WB - news - people ) .
Citigroup, Wells Fargo, and the Federal Reserve are negotiating over the future of Wachovia Corp, a bank hobbled by the credit crisis but with a valuable network of branches.
Citigroup preliminarily agreed at the beginning of last week to buy Wachovia's banking assets with partial government assistance, and supported Wachovia last week while they hammered out final details.
Wells Fargo Friday said it had signed an agreement to buy the whole of Wachovia, including its asset management and retail brokerage arms.
Wells and Citigroup fought in court this weekend, but on Monday agreed to suspend litigation, a suspension that had been due to expire Wednesday at noon (1600 GMT).
In a statement, the banks said the deadline has been extended in consultation with the Federal Reserve to Friday, Oct. 10, at 8 a.m. (1200 GMT).
A person familiar with the matter said Tuesday that Citigroup and Wells Fargo were leaning toward a geographical division of Wachovia's branches, with Citigroup taking Northeastern and Mid-Atlantic branches, and Wachovia taking Western and Southeastern branches.
Wells Fargo would end up with about 75 to 80 percent of Wachovia's deposits, while Citi would end up with about 20 to 25 percent. But the situation was in flux and still subject to change, the person said.
The Wall Street Journal reported Wednesday that Citigroup was looking at receiving help from outside partners to take a higher proportion of the deposits.
Two judges Wednesday postponed court hearings as the parties extended the legal truce and continued to negotiate.
New York State Supreme Court Justice Charles Ramos postponed a hearing to Oct. 14 from Friday on Citigroup's action to stop Wachovia and Wells Fargo merging, the judge's clerk said.
U.S. District Court Judge Lewis Kaplan postponed a hearing indefinitely into Wachovia's attempt in federal court to prevent Citigroup from stopping Wells Fargo, according to court documents. The hearing had been scheduled for Wednesday afternoon.
Wells Fargo, the No. 7 U.S. bank by assets, has managed to remain profitable during the credit crunch while Citi is looking to turn around its ailing business after posting about $60 billion in write-downs and losses during the year. (Additional reporting by Elinor Comlay and Grant McCool; Editing by Tim Dobbyn)
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