Fed clears Wachovia bank takeover by Wells Fargo

The decision formally makes Wells Fargo the winner in a bitter battle for one of America's largest banks.

The banking giant Citigroup had initially tried to block the merger between Wachovia and Wells Fargo.

Wachovia is the latest in a string of American banks to succumb to the global financial crisis.

Wachovia, the fourth largest US bank, had been in danger of failure after its share price fell by more than 70% earlier this year.

Citigroup stepped in with a bid of $2.2bn (£1.3bn) in stock for Wachovia's banking activities.

The offer also covered $42bn of Wachovia's $312bn losses, with the US Federal Deposit Insurance Corporation absorbing the rest.

However, Wells Fargo later made a rival bid of $15bn in an all-stock deal to buy all of Wachovia, stressing its proposal involved no government intervention or taxpayer risk.