Wachovia Corp., Citigroup Inc. and Wells Fargo & Co., have called a truce in their litigation battle over who has a deal for Wachovia.

The three firms announced that, in consultation with the U.S. Federal Reserve Board, they have agree to a standstill of all formal litigation activity effective immediately.

The firms will cease any formal discovery activities and co-operate in good faith “to agree among themselves to secure orders where necessary in all applicable cases in all jurisdictions tolling any schedules for the filing of litigation papers or court appearances or any other formal litigation deadlines, with the goal of preserving the status quo during the litigation standstill period.”

The standstill agreement will terminate at noon on Wed. Oct. 8.

Earlier on Monday, Citi announced that it had filed a complaint against Wachovia, Wells Fargo & Co, and the directors of both companies seeking more than US$20 billion in compensatory damages and more than US$40 billion in punitive damages from Wells Fargo for tortious interference with Citi’s contract with Wachovia. Citi is seeking relief from Wachovia for what it alleges was its bad faith breach of that contract.

“Seven days ago, in the hours before the markets opened, Citi agreed to the government’s request to assist with a rescue of Wachovia after Wells Fargo walked away from Wachovia,” Citi commented. “This was always a deal Citi wanted rather than one we needed. We were and remain very excited about this transaction and how it will benefit the clients and shareholders of Citi and Wachovia, as well as help preserve the stability of the financial system. The Citi/Wachovia transaction would have been signed and announced on Fri. Oct. 3 if it had not been subverted by the unlawful conduct of Wachovia, Wells Fargo, and their officers and directors and outside advisors.”

Citi said it remains willing to enter into an agreement with Wachovia, which it claims would have failed without its agreement to buy the firm’s banking operations.