Salomon Smith Barney brokers like the Citicorp merger with their parent company, Travelers. The key reason: Their Traveler's stock jumped on the news.
"I made $500,000 on Monday," the day the deal was announced, says one West Coast rep at the firm. "I never question [Traveler's chief Sandy Weill] because a) he's a visionary, and b) he's worth $800 million in Travelers stock.
"I like what it did to my 401(k)," echoes another Salomon Smith Barney broker in the Midwest.
A Florida rep says the same: "We love how it's making the stock go up."
The deal is billed as another attempt to create a financial supermarket. Will it work this time? Some brokers think so.
"I see the merger expanding my access to long-term care insurance, asset management programs and banking," says a rep at the firm in Pennsylvania. "I regularly have clients approach me about needs that they never did 15 years ago. They ask if I can help get them a business loan, set up a 401(k) plan, even buy a car. When the one-stop shop was tried in the '80s, the synergies weren't yet there. Now they are."
The deal, if approved, will open up the firm's potential client base, says a Salomon Smith Barney rep in the Mid-Atlantic region. "We should have a bit more access to Citibank people," he says. But the firm will "keep the Smith Barney brokers and the Salomon investment bankers [separate], but under one company--with the Travelers umbrella."
"We're sitting back trying to understand what it all means," concedes one rep at the firm. "But we think it will give us some new customers to talk to."
One broker adds a note of caution, though, saying: "It's not as easy to see what the benefits are because the companies are so different. With Travelers, we have so many things to offer--except a safe deposit box. Maybe Citicorp can provide that," the broker jokes. "Maybe the credit card base could help us. But with American Express, they bought us, but they hated us. ... They never co-mingled."
Weill himself conceded in the press conference announcing the deal that the Shearson/American Express experiment never worked. But cross-selling has worked at Travelers and Smith Barney, he claimed, because brokers "like to sell Travelers annuities because they own Travelers stock."
The deal--the biggest in U.S. corporate history--is also gutsy from another perspective: challenging Glass Steagall, the West Coast rep notes. "Of the top 26 banking institutions in the world, not one that is dominant is from the United States because we have Glass Steagall. ... Leave it to Sandy to break it wide open."