WaMu May Fit Best With Citi

Despite a campaign to shed assets, Citigroup's (C Quote) pursuit of Washington Mutual (WM Quote) could be just what the financial giant needs to boost its floundering U.S. retail bank.

Citi has been one of several banks, along with JPMorgan Chase (JPM Quote), Wells Fargo (WFC Quote) and several foreign institutions such as Toronto-Dominion (TD Quote), named in media reports to have been considering some sort of deal with WaMu as it struggles to remain above water.

Speculation is high regarding the fate of WaMu, once the nation's largest thrift. While federal regulators are breathing down WaMu's neck to make a deal or raise capital, a private equity investment may be becoming less likely an option.

Citi CEO Vikram Pandit has pledged to shed roughly $400 billion of the firm's less important assets. But adding WaMu's attractive retail franchise could be just want the bank needs.

"In some ways I think Citi has more to gain because they need the branch network more than JPMorgan," says Bart Narter, a senior vice president of Celent's banking group, based in San Francisco. "I would say that Citi would inherently value it more."

"Citi could really use a bigger and better branch footprint in the U.S.," Narter says. "They would see WaMu as a very attractive way to get that quickly. There is some overlap in California ... but Citi is not very big."

Pandit is trying to steady the global financial titan's ship after Citi has taken its own billions in losses