NEW YORK – Citigroup Inc. does not have any appetite to take on Wachovia Corp.'s mortgage assets without at least a partial government guarantee, a person close to the bank said – but the bank is also disinclined to walk away from Wachovia.

Citigroup has been locked in battle with Wells Fargo & Co. over Wachovia, and the Federal Reserve is trying to broker some sort of compromise among the parties.

Citigroup said last Monday that it had reached a preliminary agreement to pay $2.2 billion for Wachovia's banking assets, in a deal that included a U.S. government guarantee of any losses beyond $42 billion on a $312 billion mortgage portfolio. But Wells Fargo said on Friday it had signed an agreement with Wachovia to buy the whole of the company for $15 billion without any government guarantees.

Citigroup is still hoping to go through with its originally announced deal, but it is looking at another options, including potentially buying the whole of Wachovia, the person said.

Citigroup does not want to walk away from its Wachovia deal because the announced deal substantially lifted Citigroup's share price, indicating shareholders saw it as offering a lot of value to Citi, the person said.