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By :- Heli Modi (1008)

Juhi Agrawal (1010)

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The Citicorp-Travelers Group merger occurred in

April 1998.

Citicorp Travellersgroup

Citigroup

Market capitalization = $160

billion

Assets= $700 billion

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Different backgrounds.

TravelersGrown through acquisitions.

Sandy weill, bought commercial credit

Saloman Barney, commercial credit,

premica financial services.

Weil believed in selecting a

management team carefully.

Citicorp Leading consumer bank.

Depended on organic growth.

Struggled with the few acquisitions.

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Two companies were in complementary

businesses.They were confident that the merger would

facilitate Cross-selling.

Citigroup looked at a better pace to compete with

credit card issuers, home equity lenders & mutualfunds.

Travelers had one of the strongest distribution

systems in U.S

Citi had an impressive network outside U.S

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Two companies also complemented each others

customer segment.

Citiyounger customer base.

Travelers older, more affluent individuals.

Citi could benefit with the travelers expertise in

mutual fund.Also citi could sell its private banking services more

efficiently to travelers 20 million customers.

The two companies had little to lose.

Little duplication of activities.

The main hurdle was the Bank Holding Company

Act.

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Compensation policies were very different.

Citi offered stock options to talented managers.

Weills himself owned 1.3% of travelers stock.

Another difference lay in the degree of

teamwork.

Travelers encouraged teamwork.

Citis executives were more aggressive andindividualistic.

Reed thinks that travelers have more sales

capability and intensity than citi.

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Analysts were worried that the arrangement of co-CEO

would not work out.

Differences in the management styles of reed and weill.

Reed- dislike talking to press.Weill- more outgoing and communicative.

Reed was more intellectual and weill relied on gut

instinct than briefing papers.

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merger not proceedings smoothly.

Dimon developed sharp differences with weill.

Workers gave standing ovation.

Victory of reed over weill.

Saudi prince ressed concern about deterioting

relationship.

Weill took charge of day-to-day operations,reed become responsible for internet strategy.

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Rubin joined And started acting as bridge between

reed and weill.

Reed resigned marking a final victory for weill in the

power struggle.Weill announced that a committee would be appointed

to nominate his successor.

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The key to success was cross selling.

Combines citicorp with capital, customer and

products, which fail in cross selling.

Travellers, has more products to offer and succeededin cross selling.

New company citi group will prove to be an excellent

competitor in the world market.

Competitive advantage- size of its customer base.

Changes in bundling and cross selling created by

merger will have significant advantage.

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As citicorp with capital, customer and products, which

fail in cross selling.

Travellers, has more products to offer and succeededin cross selling.

Both company has plus point since we can say that it

is an merger of equals and will prove to be an

excellent competitor in the world market.

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Management of a company information flow.

More customers a company has, the larger abase over which it can distribute its cost.

Economiesof scale

Product diversification or geographicdiversification

Prevents potentially poor results from one areaof the business from damaging the profits of theentire company.

Diversification

Pressure on lawmakers to remove the barriersbetween banking and insurance.

Positive effect for those institutions most likelyto gain from deregulation.

Regulatoryadvantage

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Diseconomies of Scale

Conflicts of Interest

Risk Bounds

Loss of current Synergies

Product bundling

Too many Chiefs

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