Ten years ago tomorrow, on April 6, 1998, Sanford I. Weill rewrote the rules of Wall Street.
That day, at 7:41 a.m., Weill unveiled the megamerger that created Citigroup Inc., the biggest financial services company the world had ever seen. The deal -- as daring and brazen as the man himself -- tore up a crucial chapter of the legal canon that had guided American banking since the Depression.
The rest is history -- but not the history that Citigroup hoped for. A decade later, Weill's watershed deal is regarded by some as one of the worst mergers of all time.
Today, the behemoth formed by the union of Citicorp and Travelers seems to lumber from one crisis to another. Bloated costs, outmoded technology and political infighting have hobbled the giant company, which employs 374,000 people in more than 100 countries. That includes about 6,000 in Maryland, the bulk of those at the Baltimore headquarters of its consumer finance division, CitiFinancial, and a credit-card processing center in Hagerstown.
Even within Citigroup, many have rejected Weill's grand vision of a globe-spanning financial supermarket, an agglomeration of investment and commercial banking, insurance and fund management that could prosper in good times and bad.
The company has even abandoned its famous Weill-era Travelers logo, the red umbrella, in favor of an emblematic red arc.
The stock market has rendered the harshest judgment of all. Citigroup's shares closed at $24.08 yesterday, nearly $10 lower than they were on that hopeful April day a decade ago. Citi, once the country's most valuable financial company, has fallen to third place, behind Bank of America and JPMorgan Chase.
"I cannot think of one positive thing that developed as a result of these two companies," said Richard X. Bove, a financial services analyst at Punk Ziegel. "The miracle of Citigroup is that it still is in the position it is in, given the massive mismanagement."
Vikram S. Pandit, the new chief executive of Citigroup, is struggling to steer the giant company through the most turbulent period in its decade-long history. Just more than 100 days into the job, he must reckon with the legacy of Weill, who retired as Citigroup's chairman in 2006, and his immediate predecessor as chief executive, Charles O. Prince III.
Pandit, like Prince before him, is shying away from Weill's strategy of providing one-stop shopping for financial services. Instead, he is focusing on businesses and markets that generate higher investment returns.
This week, Pandit announced the bank's 10th major management shake-up since 2002 and its latest reorganization, moves that underscore Citigroup's failure to integrate and invest in its operations over the past decade. Executives caution that the road ahead will be rough. For example, it might take at least five years before the company's technology systems catch up to those of its main rivals.
Don Callahan, the chief administrative officer of Citigroup, said the company's original model has evolved over time.
"Vikram Pandit is now taking the bold steps essential to ensure proper execution across all businesses and geographies, for the benefit of our clients, employees and shareholders," he said in a statement.