CHARLOTTE, N.C. -- Talks over Wachovia's fate continued Tuesday, and carving up the bank between its two suitors remains a leading option. That has left some experts fearing a messy break they say could kill jobs and diminish Charlotte's status as a banking center.

The next chapter in the battle for Wachovia could come today. An agreement among Wachovia and its two potential buyers, Citigroup and Wells Fargo, to set aside the legal battle for the Charlotte bank is to end at noon.

The Wall Street Journal reported late Tuesday that a quick negotiated solution appeared unlikely and that Citigroup had begun seeking partners – including non-banks – to join its bid for Wachovia. An unnamed source told the Journal that Citigroup's goal in finding other backers is to gain leverage in the talks with hopes of winning a bigger share of Wachovia's deposits – not to buy the entire company.

Earlier Tuesday, Bloomberg News reported that regulators increasingly favored the idea of splitting Wachovia between Wells and Citigroup. Reuters said Wells was likely to get 75 percent to 80 percent of Wachovia's deposits. All three banks declined to comment.

Experts are divided about what exactly a split-up would mean for Charlotte.

“It's extremely complicated,” said analyst Nancy Bush of NAB Research in New Jersey. “It's entirely worse than Citi and clearly worse than Wells. … Unfortunately, there are not too many ways you can paint this where there's not going to be some pain felt in Charlotte.”

Wachovia, Citigroup and Wells Fargo agreed Monday to the legal cease-fire after a weekend of wrangling in multiple courts and just hours after Citi's announcement that it had sued Wachovia and Wells Fargo, seeking more than $60billion in damages from Wells for interfering with Citi's deal with Wachovia.

A previously reported plan had Citi getting branches in the Northeast and mid-Atlantic and Wells getting branches in the Southeast and California, as well as the asset management and brokerage businesses.

Federal Reserve Governor Kevin Warsh was leading efforts to resolve the dispute over Wachovia, which erupted after Citigroup bid $2.16billion for its banking operations and Wells offered $15 billion for the whole company, Bloomberg reported.

A split-up isn't the only arrangement under consideration: Some say Wells could try to stick with its original plan to buy Wachovia and compensate Citi another way. Another option is to extend today's deadline – or let it pass and resume litigation.

At stake for the Charlotte area are about 20,000 Wachovia jobs that have helped make Charlotte the nation's No. 2 banking center. While any acquisition will almost certainly mean fewer jobs, many employees and local leaders, largely in favor of a Wells-only acquisition, fear carving up Wachovia could yield bigger losses.

“Pray for Wells Fargo,” bank employee Rosemary Williams, 61, said Monday.

“Citi's being bratty,” said another employee, who declined to give her name. “They're throwing a tantrum, and they need to get over it.”

Difficult split

Wachovia could be difficult to carve up. For one thing, the bank has worked in recent years to increase cooperation between divisions, encouraging referrals between bankers and brokers, for example. Customers can also monitor all of their banking and brokerage accounts on one Web site.

Bush, the analyst, said it will be tough to break up Wachovia because it's on a single technology platform, among other issues. In addition, it could turn off customers who like the fact that they can find Wachovia branches anywhere on the East Coast, she said.

With a split, “you remove one of the major reasons to bank with Wachovia,” Bush said.

Carving up Wachovia's retail banking operations could also diminish the franchise's value, not to mention create brand identity problems, said Tony Plath, a finance professor at UNC Charlotte.

“We have just one heck of a mess on our hands,” he said.

What's more: If the bank is split, there might be no need for Wachovia's infrastructure in Charlotte, Plath said.

Wells, which had planned to make Charlotte the headquarters for its East Coast retail, commercial and corporate banking business, might be able to run its East Coast presence from existing operations centers, he said. The same is true for Citi, which said it would keep its combined retail bank based in Charlotte.

“The most amicable settlement you could reach here is to ask Citi how much it will take to go away,” Plath said.

Citi deserves compensation, he said, largely for keeping Wachovia afloat since it made its initial offer Sept. 29 – but that would be something to the tune of “a couple hundred million,” rather than the $60 billion Citi's lawsuit seeks, he said.

Other experts say a split won't be as gloomy for Charlotte as some fear.

“I don't think it's going to be a terrible thing for a lot of people,” said Judson Murchie, an analyst at Aite Group, a Boston research and advisory firm. “Overall, I would think this is going to be a relatively straightforward and clean process for Charlotte.”

He said it will be easy to split up the branches, because neither Citi nor Wells Fargo has a strong presence in the Charlotte area.

Acquisition agreements often involve keeping a presence in the city whose bank is being acquired, he said. Local lawmakers could have some sway, and they might try harder to keep jobs because it's an election year, Murchie said.

Splitting Wachovia could be more favorable for Charlotte than Citi's original deal, Murchie said. Citi is often criticized for having more employees than other banks of its size, and because of that, it might feel more pressure to cut jobs if it acquires part of Wachovia, he said.

Unfortunately, there's no precedent on which to base predictions, said Charles Geisst, a Wall Street historian and professor at Manhattan College.

“I can't think of any large bank” that has been split and sold to others, he said. “I think that that would be a first, it's safe to say, within the last 30 years.”

Staff writer Christina Rexrode contributed.

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