Citigroup deal makers disagree on outcomes

April 4, 2008 at 10:10 AM
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NEW YORK, April 4 (UPI) -- The $166 billion merger of Citicorp and Travelers Group 10 years ago "has to be seen to have been a mistake," said John Reed, who set up the deal.

Reed said the landmark merger that created Citigroup hasn't benefited stockholders or employees "and I don't think the customers have benefited because our franchises are weaker than they have been," the Financial Times reported Friday.

Citigroup shares have lost half their value during a subprime mortgage crisis that began last summer. But Reed also said, "There has been a general weakening of the management fabric" at Citigroup.

Reed left the company in 2007 and Sandy Weill, who headed Travelers insurance, remained.

Weill rebuffed Reed's assertions that the merger was a mistake, telling the Financial Times the business model "worked very well for customers, employees and shareholders."

"What didn't work was that we had very poor management … over the past couple of years," Weill said.

Weill pointed to the good years, noting share price increases of 160 percent from 1998-2003, Financial Times reported.

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