Citigroup may be too big to fail, but is it big enough to close a deal? Soon after losing its bid for Wachovia to Wells Fargo, Citi turned it sights on Chevy Chase Bank, which while not as mighty as Wachovia, was at least closer to its east coast power base. This morning, Capital One Finance said it had agreed to buy the mid-Atlantic lender, right out from under Citi’s nose.
 
JP Morgan Chase had also been interested in Chevy Chase, a smallish, unlisted lender. The deal announced by Capital One was for $520 million - hardly the kind of blockbuster that makes or breaks a battered Wall Street monolith. 
 
It will be interesting to see if Citi, brimming over with TARP funds that the Treasury has all but begged it and others to spend on lending, stays on the prowl. Bank of America took its TARP money and boosted its stake in a Chinese lender, so there is some precedent for Citi to spend the funds on a deal.
    
But with Citi’s wallet stuffed with taxpayer cash, the impetus for growth may be less imperative. If it decides against bidding for the deposits of another regional bank, Citi will find itself with only financial assets to sell — in a seller’s market.
    
It agreed to sell its German retail business, which it put on the block over the summer with a price tag of around $8 billion, and at the end of November reports emerged it would try to sell its trust bank unit in Japan for more than $400 million. 
 
Deals of the day:

* Goldman Sachs said it has rejected an offer from Panasonic to buy its shares in Sanyo Electric because it believes the offer price is too low.

* Rio Tinto is in talks to sell its half of a Chinese aluminium joint venture to its partner, which is consolidating its assets to prepare for a takeover by another state-owned company, sources in the two Chinese companies said.

* Japanese insurance group T&D Holdings may bid for two Japanese life insurers put up for sale by American International Group, the Asahi newspaper reported.

* Nippon Oil, Japan’s biggest refiner, is merging with smaller Nippon Mining Holdings in a move to cut capacity and costs as a global slowdown hits demand for oil products.

* Private equity firm Apax Partners is considering an investment in Bank of Ireland as interest in Irish banks by buyout groups continues to grow, the Financial Times reported.

* Media mogul Sumner Redstone has agreed with his daughter, Shari Redstone, to sell some of National Amusements’ 1,500 cinemas rather than the entire division, the Financial Times said citing people familiar with the matter.

* Global Investment House, Kuwait’s biggest investment bank, is in talks with several local banks to get $1 billion worth of loans, while seeking a quick sale of its stake in a Bahraini lender, it said.

* Dutch dredging group Boskalis Westminster dropped its bid to buy maritime services company Smit, saying it would be difficult to take it over without management’s cooperation.

* Wm Morrison, Britain’s fourth-biggest grocer, beat third-quarter sales forecasts and said it had agreed to buy 38 stores from the Co-operative Group for 223 million pounds ($329 million).

* Aerospace parts supplier Umeco said it bought Italy-based Industria Plastica Monregalese (IPM) for 16.8 million euros ($21.3 million) as part of its plans to develop a wider global presence in the wind energy market.

* Italian energy group Enel SpA denied a media report it had offered Acciona 12 billion euros ($15.2 billion) for the Spanish builder’s 25 percent stake in Endesa.

(Photo: Reuters/Fred Prouser)