When Two Titans Merge Essay

2801 Words12 Pages
When Two Titans Merge: Management, Organization, and Technology Challenges at Citigroup The financial world was shaken on April 5, 1998, when Citibank Corp. (Citicorp) and the Travelers Group announced they would merge. The size of the merger is stunning. It is the largest in history, with a market value of over $83 billion on the day it was announced. In addition, the merger is historic; it directly challenges United States laws that have governed the American financial industries since the days of the Great Depression by keeping the banking and insurance businesses separated. The new company, named Citigroup, Inc., is being characterized as a financial supermarket. The chief executives of the two companies are co chairmen and co chief executive officers of Citigroup. The merger was approved and went into effect in October 1998. The Citigroup merger reflects a late 1990s desire to increase market share through merging. The two companies bring very different financial businesses to Citigroup. It thus is strong in traditional banking, consumer finance (including home mortgages), credit cards, savings and IRA plans, investment banking, securities brokerage, asset management, and property, casualty and life insurance. A financial company embracing such a broad business spectrum is common in other parts of the world but had not existed in the United States due to regulatory restrictions dating from the 1932 Glass Steagall Act. By combining the two companies, Citigroup has a dramatically enlarged client base and extensive domestic and international distribution channels. The new company is massive. In 1997 Citicorp and Travelers had combined assets of $700 billion, net revenues of nearly $50 billion, a combined equity of more than $44 billion, and an operating income of approximately $7.5 billion. Citigroup is starting with about 150,000 employees and over 100

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