"That is speculation pure and simple, and we don't comment on speculation," responded Tony Mattera, a spokesman for Wachovia Securities, which is to remain under the Wachovia holding company.

Citigroup, the biggest U.S. bank by assets, said Monday that it will pay $2.16 billion in stock for Wachovia's 3,300 branches in 21 states.

Wachovia retains Wachovia Securities, the brokerage that was based in Richmond until last year, and the Evergreen investment- management business.

Citigroup will pay the equivalent of $1 share for Wachovia. Wachovia shareholders will keep the shares they already own, while the holding company gets $2.16 billion in common Citi stock.

Shares in Wachovia closed yesterday at $3.50, up $1.66. Its 52- week high was $52.25. Citi closed at $20.51, up $2.76. Its 52-week high was $48.95.

O'Connor valued Wachovia at $2 per share, according to his report.

"We think a Wachovia money-management operation could be very desirable," said Greg Donaldson, director of portfolio strategy at Donaldson Capital Management in Evansville, Ind. Wachovia Securities, the third-biggest U.S. broker behind Merrill Lynch & Co. and Citigroup's Smith Barney, "may be one of the most important brokerages in the U.S."

A Richmond analyst doubted that Wachovia Securities would be sold.

"The economic landscape is changing so dramatically," said Kent Engelke, chief economic strategist at Capitol Securities Management. "But you're not going to see acquisitions of a well-run securities firm like Wachovia Securities."

"Citigroup basically stole Wachovia," Engelke said. "JPMorgan Chase & Co. took Washington Mutual." And Bank of America rescued Merrill Lynch, all at fire sale prices, he said.

"I believe Bank of America and all are buying extremely distressed assets and eventually will make a lot of money," once the financial crisis passes, Engelke said.

"It's plainly evident that the Federal Reserve and Treasury have picked the chosen few - Bank of America, Citigroup, JPMorgan. They are saying in effect, 'here are your strongest entities.' "

The Citigroup purchase of Wachovia's banking operations will give the New York-based financial services firm a lot of clout in Virginia.

Wachovia is well-entrenched here, with the leading market share of deposits - 20 percent statewide, 25 percent in the Richmond area - and 10,500 employees in Virginia.

Charlotte, where Wachovia employs 20,000, will be the headquarters for the combined retail bank.

As with many mergers, thousands of people are likely to lose their jobs in the Citi deal with Wachovia. Citi said it expects to realize more than $3 billion in annual cost savings by reducing overlapping functions.

But the impact here is expected to be minimal, as the only overlap is in Northern Virginia, where Citibank has 11 branches. Most of the branch overlap is in the Northeast.

"The impact in Virginia should be nominal," Engelke said.

The combined organization will have 4,300 branches. Citi expects to close less than 5 percent of branches, or about 215 branches, Citi spokesman Rob Julavits said yesterday.

Citi has not worked out the details, Julavits said. Nor is it clear whether the Wachovia name will be kept. "It's too early to discuss," he said. "The integration will not occur until 2009.

"Citibank has a presence in Virginia, but it does not have branch density," Julavits said. "The combined company will help us in areas like Virginia where Wachovia will give us a big boost in our presence."

Citibank has 1,000 branches in 13 states, mostly in the Northeast. The addition of the Wachovia branches gives Citibank entry into nine states, mostly in the Southeast, where it has no operations.

Wachovia Securities, which employed 2,600 people at its peak in the Richmond area, will have 900 workers here. The brokerage is the third-largest in client assets, behind Merrill Lynch and Smith Barney.

It's unclear whether the 1,200 brokers who work in banks are part of the Citi deal or whether they will stay with the brokerage.

"No decision has been made yet," said Teresa Dougherty, spokeswoman for Wachovia Securities.

Virginia banks

Here are the percentage of deposits at financial institutions in Virginia, based on data as of June 30:

Wachovia: 20.7 percent

BB&T: 15.81

Bank of America: 13.17

SunTrust: 11.79

StellarOne: 2.03

B.F. Saul: 1.99

PNC: 1.80

Carter Bank & Trust: 1.73

United Bankshares: 1.53

TowneBank: 1.48

Metro-area banks

Here are the percentage of deposits at financial institutions in the Richmond area, based on data as of June 30:

Wachovia: 25.49 percent

Bank of America: 23.42

SunTrust: 14.14

BB&T: 13.34

First Market Bank: 3.85

Franklin Financial: 2.54

Union Bankshares: 1.82

Central Virginia Bankshares: 1.56

Village Bank: 1.55

C&F Financial: 1.50

SOURCE: SNL Financial

Times-Dispatch staff writer Carol Hazard and Bloomberg News contributed to this report.

Originally published by staff and wire reports.

(c) 2008 Richmond Times - Dispatch. Provided by ProQuest LLC. All rights Reserved.