Among the possible scenarios reported, the San Francisco-based Wells Fargo could agree to take 75 percent to 80 percent of Wachovia's US$488 billion in deposits along with the bank's Southeast and California branches, leaving Citigroup the remaining deposits and branches in the Northeast and Mid-Atlantic region, said the report.

Or Wells Fargo could try to hold out for the whole of Wachovia, including its retail brokerage and asset management business, in accordance with the 15.1-billion-dollar agreement that upended Citigroup's earlier deal on Friday, according to the report.

Citigroup had planned to buy Wachovia's banking assets in a 2.2- billion-dollar transaction backed by the government.

In any scenario, Wells probably will take on Wachovia's most distressed assets, its high-risk mortgages, the report said.

Wells said it intends to acquire the entire Wachovia. "Wells Fargo will continue working toward the completion of its firm, binding merger agreement with Wachovia Corp.," the company said in a statement.

While Wells Fargo appears to be in the strongest financial and legal position, analysts say it might have to settle for less to avoid the rancor of the government and the possible deterioration of Wachovia while it lingers in limbo, said the paper.

The banks were caught in a legal tug-of-war over the weekend and through Monday. After Citigroup filed a lawsuit Monday against Wells and Wachovia for 60 billion dollars, the banks agreed to temporarily halt legal action. That agreement ends at 9 am yesterday.

It's unclear how quickly the parties can come to some sort of agreement, but the Federal Deposit Insurance Corp. (FDIC) seemed eager to resolve the issue. FDIC Chairwoman Sheila Bair said Monday that banks and regulators are "working together to reach an outcome that serves the public interest."