Why? Because they need the deposit money, and they need to hide their losses in bank charges via an acquisition! The story in the WSJ:
Less than a month after walking away from Wachovia Corp., Citigroup Inc. is in discussions to acquire another U.S. bank, according to people familiar with the situation.
The target's name couldn't be determined, but it is a regional bank that overlaps geographically with Citigroup's retail-banking unit, which has its highest concentration of branches in the Northeast, California and Texas. A deal could be reached later this month, the people said.
With Wachovia racing to complete its purchase by Wells Fargo & Co., any acquisition by Citigroup could feel like a consolation prize, because none of the remaining sellers among U.S. banks comes close to Wachovia in size...
Some insiders say an acquisition would pump up morale at Citigroup and ease the embarrassment of the Wachovia mess.
Beyond that, the renewed takeover efforts show that Citigroup Chief Executive Vikram Pandit is determined to secure a deeper base of deposits tied to the world's largest economy. Such deposits are relatively cheap and a reliable funding source that makes them even more attractive as turmoil continues to swirl through the capital markets.
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