Two financial services giants headed into the deal arena once again with two small acquisitions.

Citigroup ( C) is buying U.K.-based Internet bank Egg for $1.13 billion. Merrill Lynch ( MER) plans to acquire First Republic Bank ( FRC), a wealth management and private banking firm, in a cash and stock deal worth $1.8 billion.

Citi is buying Egg from British insurer Prudential, which has no relation to the U.S.-based Prudential Financial ( PRU). The Egg acquisition, which will be housed in Citi's U.K. consumer operations, adds 3 million online customers and services including online payment and account aggregation. Citi's U.K. credit card customer accounts will quadruple to around 3 million, it says.

Reports had surfaced in December that the $1.8 trillion-asset Citi was in discussions to acquire the money-losing Egg, but that Prudential had rejected an offer.

Investors seemed to frown on the deal. Citi shares fell 11 cents, to $54.56.

The acquisition does not move the nation's No. 1 bank any closer to kick starting its fledgling U.S. retail banking operations, one of several items that analysts and investors have criticized CEO Chuck Prince for of late. Some observers have even said that Citi should do a large U.S. deal to improve the U.S. retail operations.

But Dick Bove, an analyst at Punk Ziegel, says that Citi's strategy to invest in international operations is the correct one.

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