When Citigroup scooped up ailing banking giant Wachovia on Monday, watchers of Wells Fargo bemoaned a lost opportunity to stretch the iconic western financial brand all the way to the eastern seaboard.

Wells Fargo apparently had nonbuyer's remorse: It swiftly moved to snatch Wachovia from Citibank's clutches in a deal that rewrites the balance of banking power in Colorado.

The two banks announced a deal Friday in which Wells Fargo will buy the entirety of Wachovia for $15.1 billion. The deal is designed to pre-empt a sale arranged last weekend by federal regulators in which Citigroup was to pay $2.1 billion for just Wachovia's banking operations, leaving behind the company's A.G. Edwards securities business and a mutual-fund subsidiary.

San Francisco-based Wells Fargo already controlled 17 percent of Colorado's $81 billion in deposits, according to federal data that dates to June 2007. World Savings Bank, which Wachovia acquired in 2006 to make its Colorado debut, had nearly 7 percent.

A combined Wells Fargo-Wachovia will have roughly one-quarter of the Colorado market and 185 offices, prior to expected branch closures. In the Denver-Aurora area, the bank's share will push 28 percent, with more than 90 offices as of today.

Colorado's banking market has historically been fragmented, and local bankers can't recall a time one bank has controlled that much share.

"I consider Wells a stronger competitor, and with Wells taking over Wachovia, that gives them dominance in terms of deposit market share," said Dave Baker, chief operating officer of Lakewood-based FirstBank. FirstBank and Minneapolis-based US Bank are competing closely as the No. 2 and No. 3 banks, with shares of roughly 9 percent in the state and 11 percent in the metro area, respectively.

Colorado bankers, surprised by the turn of events, said they may prefer Friday's outcome. They're already used to competing with Wells Fargo, and the Wachovia branch network likely will lose a few offices as Wells Fargo closes nearby locations. Citibank, as a gigantic new entrant, is less familiar and might have decided to build on the 34 Wachovia offices with a significant branch expansion.

Wells Fargo Chairman Dick Kovacevich said, "We are combining the industry's No. 1 ranking customer service culture of Wachovia with the industry's No. 1 sales and cross-selling culture of Wells Fargo. The best in service and the best in sales - an unbeatable combination."

Last month, Kovacevich told a business group "I feel like a kid in a candy store" when faced with the buying opportunities amidst the financial-service wreckage. However, Wells Fargo has not done any large deals since the Norwest-Wells Fargo merger 10 years ago, preferring instead small, strategic deals primarily in its existing markets.

What's next is unclear. Citigroup threatened to sue to block the deal, saying its agreement with Wachovia provides that it will not enter into any other transaction or negotiate with anyone else, and that Wells Fargo's actions constituted "tortious interference."

In its planned takeover of Wachovia, Citigroup said it would assume $53 billion worth of debt and agreed to absorb up to $42 billion of losses from Wachovia's $312 billion loan portfolio. The Federal Deposit Insurance Corp. agreed to cover any remaining losses in exchange for $12 billion in Citigroup preferred stock and warrants.

The Wall Street Journal reported Monday that Wells Fargo had negotiated to buy Wachovia last weekend. The company declined comment on the report, but FDIC Chairman Sheila Bair confirmed Friday that Wells Fargo lost out the first time around.

"Since the close of our bidding process, Wells has apparently reassessed its position and come forth with this new offer that does not require FDIC assistance," she said. "The FDIC stands behind its previously announced agreement with Citigroup. The FDIC will be reviewing all proposals and working with the primary regulators of all three institutions to pursue a resolution that serves the public interest."

Roger Cominsky, a partner in law firm Hiscock & Barclay's financial institutions and lending practice, said the FDIC is required to find the least-costly resolution for taxpayers.

Wells Fargo plans to issue up to $20 billion of stock to maintain its capital.

Charlotte, N.C., will be the headquarters for the combined company's East Coast retail and commercial banking business. St. Louis will remain the headquarters of Wachovia Securities.

The combined company will have total deposits of $713 billion and more than 6,500 locations - more than any other bank in the U.S. While there is some overlap in states like California and Texas, the deal essentially opens up the entire East Coast to Wells Fargo, giving it a footprint in new markets such as New York and Miami.

In terms of total assets, a combined Wells Fargo-Wachovia would have an estimated $1.37 trillion in assets. As of June 30, Bank of America had $2.72 trillion in assets including those of Merrill Lynch & Co., which it is acquiring. Citigroup had $2.10 trillion and JPMorgan Chase & Co. had about $1.78 trillion, including Washington Mutual, which it agreed last week to buy.

Wells Fargo-Wachovia "is the transaction that we thought should have been done and makes sense," wrote Deutsche Bank analyst Mike Mayo in a note to clients.

News wire services contributed. Finance Editor David Milstead can be reached at milstead@RockyMountainNews.com or 303-954-2648.