Citicorp*

            


Details

Case Code : CLBS015
Publication date : 2004
Subject : Business Strategy
Industry : Financial Services
Length : 04 Pages
Price : Rs. 50

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Key words:

Compensation, cross-selling, merger, synergies


* This caselet is intended for use only in class discussions.
** More comprehensive case studies are priced at Rs.200 to Rs.700 (US $5 to US $16) per copy.

 


Abstract: ICMR India ICMR India ICMR India ICMR India RSS Feed

The caselet gives an overview of the merger between Citicorp and Travelers, two large US based financial institutions. It focuses on the various problems faced by the merged entity, Citigroup, because of the two distinct styles of leadership of Co-CEOs.

Issues:

 » It gives an overview of the merger between Citicorp and Travelers, two large US based financial institutions.

 » The case focuses on the various problems faced by the merged entity, Citigroup, because of the two distinct styles of leadership of Co-CEOs.

Introduction

In April 1998, the financial services giants Travelers Group and Citicorp agreed to the largest merger in corporate history. The $166 billion merger created the world’s biggest company, Citigroup, with $700 billion in assets and a market value of nearly $160 billion.


The new entity was expected to have 162,600 employees and 3,200 offices, and offer some 100 million customers in 10 countries a range of financial services. Citigroup was likely to have a 24-member board, with an equal number of members from each merging entity. John S. Reed and Sandy Weill, the CEOs of Citicorp and Travelers, respectively, would serve as Co-CEOs and Co-Chairmen of the Board of Directors....

Questions for Discussion:

1. The Citicorp-Travelers merger was expected to be a perfect fit as the merger would facilitate cross-selling of each other’s products in each other’s territories. However, many hurdles hindered the realization of the synergies identified prior to the merger. According to you, what were the major hurdles that prevented the realization of synergies after the merger?

2. Citigroup’s Co-CEO structure did not work well and one of the CEOs had to step down. Explain why the Co-CEO structure failed to function efficiently. What are the problems associated with such a structure?