New York - In the acquisition scramble for Wachovia bank, Citigroup Monday sued rival Wells Fargo & Co and Wachovia for 60 billion dollars in punitive and compensatory damages, Citigroup said.

The move is the latest in the Wall Street scramble as the US financial system struggles for stability amidst a severe credit crunch. Despite Friday's passage of a 
700-billion-dollar bail-out plan by the US government, US stocks continued to plummet Monday, with the three major indices losing more than 5 per cent in trading at midday.

Wachovia, the country's fourth-largest bank, surprised Citigroup on Friday with its announcement it would go with a higher offer from Wells Fargo, which has offered 15 billion dollars in a stock-for- stock exchange.

Wachovia was changing horses after a Citigroup-government deal announced September 29, which offered 2.16 billion dollars for Wachovia, appeared to be a sealed agreement. That deal called for Citigroup to take on more than 40 billion dollars of Wachovia's losses, while the Federal Deposit Insurance Corporation would have absorbed losses beyond that amount in exchange for 12 billion dollars in preferred stocks and warrants.

In the complaint filed Monday in the New York State Supreme Court in Manhattan, Citigroup claimed the Wells Fargo deal violated its rights to buy some assets of the Charlotte, North Carolina-based lender under the previous deal.

Citigroup CEO Vikram Pandit said Saturday that "any such agreement between Wachovia and Wells Fargo is illegal. We continue to vigorously pursue Citigroup's interest and rights in completing this transaction."

The Wells Fargo arrangement is a signed and board-approved offer to buy Wachovia as an intact company in a stock-for-stock merger which can be carried out without government help.

Late Saturday, a New York state court judge granted an emergency order extending Citigroup's "exclusivity agreement" with Wachovia Corp.

The ongoing financial crisis has impacted Citigroup, whose market value has plunged 38 per cent this year to about 100 billion dollars. If it buys Wachovia, Citigroup would have the third-largest bank network in the country. (dpa)