Citigroup - Citibank - Citicorp - Travelers Group merger - derivatives - stock market - shares - securities - y2k millennium bug

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Baltic Banking Group: International financial and investment services.

Citibank's merger with Travelers Group in April propelled the DJIA above 9000 but the Russell 2000 failed to make a new high (see our Report #4 of April 15, 1998). The broad market indicators were not confirming the new high in the DJIA. Do not be caught up in the euphoria of the moment. Citigroup will not be the next Microsoft. This was the mating dance of dinosaurs and not the start of a new bull market move.

When Citicorp and Travelers Group agreed to unite, Citicorp stock was up to $182 and Travelers was $73. Afterwards, both stocks went downhill, with Citicorp reaching a low of $83 ½ and Travelers dropping to $37 in September, around the time the deal was formerly approved. The latest market plunge (first week of October) sent the freshly formed union Citigroup (CCI) down to $32 7/8. The new Dow member, on its first morning of existence, warned investors that third-quarter income of the combined company likely will drop 53 percent from the same period last year, its Salomon Smith Barney trading unit will report a third-quarter net loss of about $325 million, and Citibank's corporate banking unit will lose about $130 million. The $70 billion merger deal expects to bring Citigroup Inc. a net income of $700 million. However, for the same period last year, the two predecessor companies reported pro forma net income of $1.5 billion. Excluding a 1997 restructuring charge, net income was $2.1 billion. Salomon Smith Barney blames the third-quarter loss on global arbitrage and Russia credit losses.

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