6 April 1998: Citicorp and Travelers announce the merger that made Citigroup
On April 6, 1998 Citicorp and Sandy Weill's Travelers Group announced a roughly $70 billion merger, then the biggest ever. It combined banking, insurance and brokerage under one roof, which the Glass-Steagall Act technically forbade. Rather than the deal bending to the law, the law bent: Congress repealed the relevant parts in 1999. A decade later Citigroup needed one of the largest government rescues of the financial crisis.
The lesson: Size and synergy look great in a press release; complexity tends to send its bill much later.
What it meant for investors
$1,000 in Citigroup at the start of 2000 → $213 today, vs $4,626 in the S&P 500.
We start the clock at the start of 2000, the first year in our price data after the event. That is a loss of $787, while a plain index fund over the same years made $3,626.
What Citigroup teaches: When a stock falls more than 90 percent, it must rise more than tenfold just to get back to even; some losses are effectively permanent.
| Bought in | Price then | Worth today | S&P 500 would be |
|---|---|---|---|
| 2000 | $470 | $213 | $4,626 |
| 2003 | $350 | $286 | $7,727 |
| 2005 | $480 | $208 | $5,763 |
green = beat the S&P 500 · red = lost money
What if you bought Citigroup? Every starting year and the full story →
More Citigroup history
- 4 November 2007: Citigroup's Chuck Prince steps down
- 12 November 1999: Glass-Steagall's wall comes down
- 23 November 2008: The government throws Citigroup a lifeline
Could you have called it at the time? The wheel picks the year, you pick the position, ten seconds a pick.
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