Putting aside its proposed takeover by Citigroup with the government's assistance, troubled banking major Wachovia today announced a new deal entailing its merger with rival Wells Fargo in an all-stock transaction worth about $15.1 billion.

In a statement issued on Friday, Wachovia said that its amalgamation with Wells Fargo, the only AAA-rated financial institution in the US, would create an entity with the largest deposit base in the country.

• US financial crisis: Complete coverage

Wachovia's board last night approved Wells Fargo's offer, the statement said.

Under the proposal, each share of Wachovia common stock would be exchanged for 0.1991 shares of Wells Fargo common share, representing a value of seven dollar per share, based on Wells Fargo's closing price as on October 2.

Prior to the current offer, Wachovia was negotiating with India-born chief executive Vikram Pandit-led Citigroup to complete a transaction supervised by the Federal Deposit Insurance Corporation and assisted by the government.

Under the transaction, Wells Fargo would acquire all of Wachovia and all its businesses and obligations, including its preferred equity and all its banking deposits.

"Today's announcement creates one of the strongest financial firms in the world and is great for all Wachovia constituencies: our shareholders, customers, colleagues and communities.

"This deal enables us to keep Wachovia intact and preserve the value of an integrated company, without government support," Wachovia's president and chief executive Robert K Steel said.

Wachovia had assets to the tune of $812.4 billion and a market capitalisation of $33.5 billion as on June 30, 2008.