Citigroup (C) and Wells Fargo (WFC) were locked in a bidding war on Sunday over a possible takeover of Wachovia (WB), according to the New York Times. 

The newspaper is also reporting the Federal Reserve and Treasury Department have been involved in the talks, but are resisting guaranteeing a part of the distressed bank's assets. 

It is unclear whether the potential deals put the entire bank up for sale or whether it will be broken up.   

Shares of the Charlotte, N.C.-based bank tumbled 27% Friday -- the day after Washington Mutual was purchased by JPMorgan (JPM). After watching the company's stock take a beating, Wachovia executives turned to the potential suitors, according to reports.

Wachovia has $400 billion in deposits and is the nation's sixth-largest U.S. bank by assets. The housing crisis has hit the bank hard and has left it with a $122 billion portfolio of option adjustable-rate mortgages.

Following Lehman Brothers’ bankruptcy filing earlier this month, Wachovia was reportedly in merger talks with Morgan Stanley (MS), but people familiar with the matter say those talks have ended.

After posting a bigger-than-expected first-quarter loss of $393 million in April, Wachovia reduced its dividend and said it would raise about $7 billion through the sale of common and convertible preferred stock.