UPDATE 3-Wachovia bank in talks to be bought - sources
(Adds Wells Fargo appears preferred bidder in paragraph 8, 9)
By Paritosh Bansal and Megan Davies
NEW YORK, Sept 28 (Reuters) - Wachovia Corp WB.N is in talks with rivals to be taken over, sources familiar with the situation said on Sunday, after the U.S. bank's shares fell 27 percent on Friday due to concerns about its portfolio of illiquid mortgage assets.
The New York Times said the two companies were locked in a bidding war for a possible takeover of Wachovia, citing people involved in the talks. The U.S. government, led by the Federal Reserve and the Treasury Department, is also involved in the talks, the newspaper said.
A treasury department official declined to comment on any specifics of Wachovia discussions, but said "we are in regular contact with market participants."
Citigroup and Wells Fargo are unlikely to bid more than a few dollars a share for Wachovia, whose shares closed Friday at $10, the newspaper said. It is unclear whether Wachovia would be sold as a whole or be broken up, or how much Wachovia bondholders might lose in any transaction, it said.
The government is resisting guaranteeing some of Wachovia's assets, as it did for Bear Stearns when it engineered that company's sale to JPMorgan Chase & Co (JPM.N: Cotización), and is also opposed to taking over Wachovia unless its financial position deteriorates more rapidly.
Talks could go past Sunday night, the Times said. Continuación...