Wachovia Corp ended days of negotiations with potential buyers by reaching a 2.16 billion deal with Citigroup Inc, the biggest bank in the United States by assets.

According to the terms of the all-stock deal, Citigroup Inc will acquire the banking operations of Wachovia Corp for $2.16 billion and will pay $1 for each share of Wachovia. However the Federal Deposit Insurance Corp has assured that all depositors will be protected. The New York-based Citigroup plans to slash its own dividends by half and raise around $10 billion in capital so as to take on the senior and subordinated debt of Wachovia. The acquisition will land Citigroup with an extensive network of Wachovia branches and offices totalling 3300 in 21 states. However, Wachovia will keep its control of the A.G. Edwards Inc brokerage and the Evergreen mutual-fund family.

Charlotte-based Wachovia Corp is the sixth largest US bank by assets but owing to overdue mortgages, the bank experienced massive collapse of its shares and was thus compelled to look for a buyer. The acquisition of Wachovia Corp is the latest development in the country’s finance sector which has been rocked by the failure of major institutions like Lehman Brothers and Washington Mutual as well as by the takeovers of Merrill Lynch and Bear Stearns Co.