Citigroup merger produces mega-manager
October 26, 1998
The merger of the Travelers Group and Citicorp into Citigroup is expected to create one of the most powerful financial services organization in the world. Within that, Citigroup is creating what it hopes will become one of the largest money managers in the world.
Citigroup has combined Salomon Brothers', Smith Barney's and Citibank's asset management groups in a new business unit called SSBC Asset Management. This new entity could soon join a handful of the world's largest asset managers. It how has $292.3 billion in assets under management for retail, institutional and high net worth clients.
"We believe that SSBC can become one of the top five asset management organizations in the world within five years," said Thomas W. Jones, co-chairman and chief executive officer of SSBC in a statement. Peter Carman is also co-chairman and global chief investment officer.
Citigroup, however, has no plans to change the names of its investment products to reflect the SSBC name, according to Connie Kain, a spokesperson for Citibank Global Asset Management (CGAM).
"We are marketing the three investment advisory platforms" separately, Kain said. There will be no advertising done on behalf of SSBC, and SSBC has no plans to either merge funds with similar objectives or to coordinate advertising.
SSBC's efforts to increase assets under management will focus on both institutional and retail clients, Kain said. Under the new confederation, SSBC has $120 billion in assets under management for institutional clients and $122 billion in assets for retail investors. Kain said the three entities manage a total of nearly 400 funds and private accounts worldwide.
The three fund management entities in SSBC have, in their open-end mutual funds, approximately $110 billion under management, according to FundRate Market Monitor, a monthly mutual fund ranking published by Dalbar of Boston, a financial services company. According to FundRate, the new SSBC entity would rank eighth behind Fidelity, Vanguard, Capital Research, Merrill Lynch, Franklin Templeton, Putnam and Morgan Stanley Dean Witter in open-end mutual fund assets under management.
Distribution is one of Citigroup's strengths and SSBC's products will most likely benefit from its enormous sales force. It includes Salomon Smith Barney's 10,600 financial consultants, Citibank's 1,125 retail offices, Primerica Financial Services' 28,000 registered representatives, Travelers Life & Annuity's 11,800 registered sales agents and Copeland Company's 685 account executives.
"We certainly will use all of the distribution channels" available to us, Kain said. Citigroup has no plans to layoff any employees due to the creation of the SSBC unit.
"We are a growth area," Kain said. "This is certainly not about cost cutting. This is about growth." The three units have approximately 2,500 employees.