Fed OKs Travelers/Citicorp Merger

The merger of Travelers Group Inc. and Citicorp into a combined company to be called Citigroup Inc. has received conditional approval from the Federal Reserve Board.Following the Fed announcement, the companies said current plans call for completing the merger on Oct. 8 after a mandatory post-approval 15-day waiting period. Under the transaction, Travelers will become a bank holding company -- and the largest financial services company in the world -- by acquiring Citicorp and retaining certain nonbanking subsidiaries such as Salomon Smith Barney Inc., the nation's largest underwriter of mortgage-backed securities. The Fed said the approval is subject to the condition that Travelers and the combined company, Citigroup, conform the activities and investments of Travelers and its subsidiaries to the requirements of the Bank Holding Company Act. This includes the divestiture as necessary, within two years of the merger, of nonconforming activities by Travelers so that such activities would represent less than 15% of Citigroup's total assets and less than 20% of its revenues, the Fed said. The companies said Citigroup shares will trade on the New York and Pacific stock exchanges under the symbol CCI. Citicorp shares will be converted at the ratio of 2.5 Citigroup shares for each Citicorp share, while Travelers shares will be converted on a one-for-one basis, they said. The Fed's website address is http://www.federalreserve.com.