The initial reaction in the financial press and on Wall Street to the stunning announcement in April 1998 of the impending merger between Citicorp and Travelers Group was to ask, ‘How did they do that?’ At the time, Citicorp was the third largest commercial banking organization in the US, with over one thousand branches and offices in the US and overseas; its flagship bank was New York-based Citibank, one of the best known banking names in the world. Travelers, a major US insurance firm engaged in both insurance underwriting and agency, had already diversified into a variety of financial businesses, including real estate management and investment, commodities trading and mutual fund distribution. It owned two securities companies, Salomon Smith Barney Inc., one of the largest securities brokerage firms in the US, and The Robinson-Humphrey Company, LLC. The combination of Travelers, with consolidated assets of $420 billion, with the $331 billion Citicorp would create the largest financial services company in the world.1
KeywordsFederal Reserve Financial Regulation Insurance Business Regulatory Competition Level Playing Field
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Notes and References
- This argument, as well as other objections to interagency competition, have been made by, among others, John C. Coffee, Jr. (1995), ‘Competition Versus Consolidation: The Significance of Organizational Structure in Financial and Securities Regulation’, The Business Lawyer, vol. 50, pp. 447–84.Google Scholar