In a twist that could affect regional bank exchange traded funds (ETFs), Wachovia (WB) has agreed to be snatched up by Wells Fargo (WFC) in a $15.1 billion all-stock deal.

But Citibank (C) is insisting that Wachovia abide by the terms of their deal, in which Citibank would buy Wachovia’s banking operations, reports Sara Lepro for the Associated Press. Part of the agreement says that Wachovia won’t enter into a transaction with any other party, so there’s likely to be a battle brewing here.

The Regional Bank HOLDRs (RKH) has 10.1% of Wachovia and 13.7% of Wells Fargo. Year-to-date, it’s down 16.3%.

Regional Bank Exchange Traded Funds (ETFs)

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