New York  - In the takeover battle over the United States' fourth-largest bank Wachovia, Citigroup and Wells Fargo on Thursday halted mutual lawsuits for another day.

The rivals, which have offered competing bids for the ailing banking giant, accepted a compromise brokered by the US Federal Reserve to delay legal action until Friday.

However, the talks also brought to light even higher risks than expected in the possible takeover of the bank, the Wall Street Journal reported.

Citigroup and Wells Fargo had been surprised "by the concentration of assets they regard as low quality," the newspaper reported.

The bidders for Wachovia were concerned they could take on even bigger losses than originally expected in even a partial acquisition of Wachovia, according to the report.

The US Federal Reserve is pressing for a swift solution in the takeover battle, fearing massive problems for Wachovia which is already suffering from the fallout of the global financial crisis.

With the takeover of Wachovia, both rivals hope to become top players in the US private banking business.

On Wednesday, media reports indicated a possible division of Wachovia, with Wells Fargo receiving the bulk of Wachovia's 3,300 branches and Citigroup receiving about a quarter of the branches in the North East of the United States.

However, talks were stalled between the parties, which also disagreed about the use of Wachovia's computer systems.

Last week, Citigroup had announced a 2.2-billion-dollar deal to take over large parts of Wachovia, but was then stumped as Wells Fargo and Wachovia announced they had agreed on a higher offer of 15 billion dollars in a stock-for-stock exchange.

The move prompted Citigroup to launch a lawsuit against Wells Fargo and Wachovia, claiming 60 billion dollars in punitive and compensatory damages. (dpa)