Citigroup ( symbol) is in discussions to acquire a U.S. bank after walking away from a deal last month to buy Wachovia ( WB), the Wall Street Journal reports.

The target's name couldn't be determined, but it is a regional bank that overlaps geographically with Citigroup's retail-banking unit, which has its highest concentration of branches in the Northeast, California and Texas, according to the newspaper. A deal could be reached later this month, people familiar with the situation said.

Citigroup lost a battle last month with Wells Fargo ( WFC) to acquire Wachovia. Wells' deal to buy Wachovia for $15 billion is expected to be completed soon.

The fallout from that deal has added to tensions between Citigroup executives and directors, the Journal reports. Some insiders say an acquisition would pump up morale at Citigroup and ease the embarrassment of the Wachovia mess.

This article was written by a staff member of TheStreet.com.

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