Merging with Travelers Group would make Citicorp a major league team in the brokerage business.
The new Citigroup would combine the heft of Travelers' Salomon Smith Barney retail brokerage unit, which has 10,300 brokers in the United States, with the global reach of Citicorp.
Citicorp's brokerage unit, Citicorp Investment Services, has only about 750 brokers.
Citigroup's challenge would be to present itself to customers who like to conduct their brokerage business with a commercial bank as well as to those who prefer a Wall Street broker-dealer, like Salomon Smith Barney.
"What will the consumer think of it? Is it still a bank?" asked Bill Leeds, head of Bill Leeds & Associates, a New York firm that conducts mystery shopping surveys for banks.
Richard Smiley, president of Union Bank of California's brokerage unit, said today's consumer is sophisticated enough to handle the concept of a Citigroup.
"When you're talking about the upper end of financial services, there's a high level of awareness," he said. "It's going to be a challenge for us, because the competition has really geared up to really cover the service spectrum."
Customers who have aligned themselves with a bank or a brokerage for specific reasons may also have other financial services needs, said Mr. Smiley, whose company is mostly owned by Bank of Tokyo-Mitsubishi Ltd.
Mr. Leeds said he thinks Citigroup could succeed in mining Travelers and Citicorp customer relationships.
"The key is the people on the front line," he said. "Can they be trained to sell and refer other services?"
He said he believes they could. Some traditional banks, he noted, already give incentives for employees to refer customers to other departments, such as trust or investment services.
Though the new company's name would be based on Citicorp's, observers said the brokerage unit would probably retain the Salmon Smith Barney monicker.
"It would be silly to dispose of it" and call the unit Citi Investment Products, said Diana P. Yates, an equity analyst with A.G. Edwards & Sons, Minneapolis.
Indeed, Mr. Leeds speculated that Citigroup might well open Smith Barney outposts in many of what are now Citicorp offices. Citigroup would have 3,200 office sites in 100 countries.
Citicorp Investment Services has been marketing itself as an aggressive brokerage.
Electronic trading fees were cut in February to compete with the discount firms Charles Schwab & Co. and Fidelity Brokerage.
