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Citigroup will become US largest retail bank as a result of the $2.2bn takeover of Wachovia, accounting for more than $600bn in deposits and more than 4,300 branches. Under the terms of the deal concluded between the bank and the government, Citigroup would take up to $42bn losses on Wachovia's $312bn portfolio of mortgage assets, with the Federal Deposit Insurance Corp (FDIC - an independent government agency that insures bank deposits) picking up the rest. In return, the bank will give the FDIC a $12bn stake, making it one of Citi's largest shareholders.



Finance unions warned on 16 September that "one of the by-products of the crisis is a merger rush by smaller or threatened institutions - creating more financial giants that will be too big or important to fail in the next crisis." The view of UNI Finance is that the financial crisis must not lead to to further concentration in financial markets and oligopolic structures. UNI Finance favours a financial system that comprises small, medium and large companies; that comprises not only private institutions geared towards maximising profits but also public and cooperative ones. Such a pluralistic structure provides extra stability and must be nurtured by governments and regulators.



In Germany, the government bailed out Hypo Real Estate, a mortgage lender, for €35bn. In Iceland, the government took control of the third largest bank, Glitnir.



This follows the bailouts of Bradford & Bingley's by the British authorities as well as the rescue of Fortis by the Belgium, Dutch and Luxembourg governments.



UNI Finance reiterates that bailouts must come with a price tag. Governments and financial authorities must use public help for private failures to enforce the necessary changes to the industry.



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