Citigroup Merger Raises Concerns Over Dual Leadership

Industry insiders are questioning the viability of dual leadership in the newly formed Citigroup, citing concerns over power struggles and conflicts between co-chairmen and co-chief executives Sanford Weill and John Reed. Despite the two men's attempts to allay concerns, analysts and bankers are skeptical about the success of this unconventional management structure. The merger, valued at over $80 billion, also raises questions about the fate of other top executives, including Salomon Smith Barney co-chief executive Jamie Dimon.

Key Takeaways:

• Co-chairmen and co-chief executives Sanford Weill and John Reed acknowledged the difficulties of sharing the top job, but attempted to reassure the public that they have known each other for many years and will make decisions together.
• Industry experts expressed skepticism about the success of dual leadership, with one investment banker stating that "someone's always the boss or decisions don't get taken."
• A Wall Street analyst predicted that the organization will not work well with two heads making decisions, and that there may be a behind-the-scenes power struggle post-merger.
• Some industry observers wondered how the trading and investment banking culture of Salomon Smith Barney will blend with the commercial banking culture of Citicorp.
• Despite concerns, Rocco Maggiotto, head of the financial service industry practice at Coopers & Lybrand, expressed confidence that the two men will "find a way to work together successfully."

Statistics:

• The merger is valued at over $80 billion based on Monday's stock-price gains.
• Sanford Weill is 65 years old, while John Reed is about six years younger.
• Salomon Smith Barney co-chief executive Jamie Dimon is often viewed as a surrogate son to Weill.
• The trading and investment banking culture of Salomon Smith Barney and the commercial banking culture of Citicorp will need to be integrated.
• Citigroup's newly created company accounts for more than $80 billion in assets.

Sources:

• Industry sources
• Sanford "Sandy" Weill, chief executive of Travelers
• John Reed, chief executive of Citicorp
• Investment banker (anonymous)
• Wall Street analyst (anonymous)
• Rocco Maggiotto, head of the financial service industry practice at Coopers & Lybrand