Although Citigroup failed with its bid to buy Wachovia Corp after Wells Fargo got the deal, but has now got its sights set on buying a regional bank, according to reports in the Wall Street journal on Monday.

The report said that Citigroup is on the prowl to acquire less than a month after it walked away from the Wachovia deal a regional bank that overlaps the geography of its retail operations. However representatives from Citigroup declined to comment on the report.

Citigroup tried to buy Wachovia with the help from the Federal Government Deposit Insurance Corp, although Wells Fargo & Co made a far better offer that also did not need any government backing. Citigroup withdrew its bid after lawsuits were filed over who was the rightful buyer of Wachovia.

It was expected by many analysts that Citigroup would be on the prowl to try and take advantage of the market opportunities with the $25 billion investment from the US government.

Analysts predict that Citigroup has its eye on one of the following regional banks: Zion’s Bancorp, Comerica Inc, BB&T Corp, Regions Financial Corp or SunTrust Banks Incs.

Source: iht

Treasury Secretary Henry Paulson has released a statement talking about his friend Steel, who he has known for more than 30 years. In the statement, Paulson has said that Robert Steel “has served the president and the public with ingenuity and dedication during extraordinary times in our financial markets,” I know he will excel in his future endeavors.”

There are now just four months to go until the U.S. Presidential Election, so as a result, Steel will not be replaced, instead his portfolio will be shared among other Treasury officials.

Like most of the other banks in the U.S., Wachovia has seen their profits squeezed as a result of the current housing market slump, which in turn has seen huge mortgage –related losses.

Wachovia Corp’s earning started to fall late last year, they have since reported first-quarter loses in 2008 of $393 million, this is compared to $2.3 billion profit for the same period last year.

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