NEW YORK: In the latest byproduct of the widening global financial crisis, Citigroup Inc will acquire the banking operations of Wachovia Corp in a deal facilitated by the Federal Deposit Insurance Corp (FDIC).

Citigroup will absorb up to $42 billion of losses from Wachovia's $312 billion loan portfolio, with the FDIC covering any remaining losses, the government agency said yesterday.

The deal greatly expands Citigroup's retail outlets and secures its place among the US banking industry's Big Three, along with Bank of America and JP Morgan Chase & Co.