Since retiring from Citigroup Inc., banking legend John S. Reed has been reflecting on the essence of a successful deal.

His musings may eventually fuel a best-seller - imagine "The Reed Way" - but until then he revealed his main conclusion in an interview: "You should avoid lying during the courtship, if you can, because the trouble is, you have to then live through the breakdown of the lies."

That's tough talk for the reserved Mr. Reed, who, with the freewheeling Sanford I. Weill, engineered the industry's most exciting merger: the 1998 marriage of Citicorp and Travelers Group. Their plan to be co-chief executive officers of the $700 billion-asset-plus company was met with skepticism, but Mr. Reed insists that both men knew their companies' cultures would conflict and that they, too, would clash.

"Say what you want about it," he said. "Sandy and I had an idea of why we were doing this, and what it was to do. It was an idea - we didn't have to negotiate it. We both felt it.

"Now personality-wise, I don't think either Sandy or I thought we were going to work well together. But we never let that become a big problem."

Mr. Reed said that he and Mr. Weill "never felt like we were going to share power. We were equals. We agreed that each would have veto power on the other. Neither one of us thought it was a long-term solution, not because we couldn't do it but because we were going to drive the organization crazy, which we did."

Though Mr. Reed did not say lies were told as the Citigroup deal was negotiated, it is clear he was persuaded that Mr. Weill agreed with him that they both would retire not long after the deal was done.

The 61-year-old Mr. Reed, who is six years younger than Mr. Weill, said the merger would never have happened if not for the fact that both men were nearing retirement. "Given that we were both looking forward to stepping down at some point, we had a built-in solution to the fact that we had different styles of running the place," he said.

Mr. Reed said they considered putting a deadline on the co-CEO arrangement but agreed a deadline would not work.

"Neither one of us knew just when we should bring it to an end," he said. "But we both knew it would end, and we chose not to agree on anything because we felt that anything we agreed on would turn out to be a mistake and having agreed on it would create a problem . as the whole world waited for the date to arrive."

Looking back, his black Ferragamo loafers propped on his gleaming desk at Citigroup Center, Mr. Reed said he has also come to appreciate the value of strong leaders with vision and the ability to execute.

"The institutions that have really done well have been well-led," he said. "It's not where they were located. It's not the amount of capital they had. It's not their size or line of business. It's strictly leadership."

The cult of leadership is a change from banking tradition, Mr. Reed said. "In the old days I would have said it was capital, history, the name of the bank, and so forth. Garbage - it's about the guy."

He compared merging two companies to getting married - in neither case should one count on being able to change ingrained habits. He said he retired last April because Citigroup employees could no longer work for two chiefs with such differing management styles.

"The main reason why I chose to retire when I did was because Sandy and I both agreed that we were going to drive the organization up the wall because it is very hard to work for two people who are different. If the differences are pronounced, as they were in our case, it's even harder."

The contrasts have been extensively publicized, but here's how Mr. Reed described them: "I'm very much of a process, slow, deliberate guy. Sandy is very much of a personality, immediate-reaction guy. That's a big difference. I'm a builder. He's an acquirer. Just totally different."

But he said the two men managed to work together for more than two years - three quarters leading up to the merger and six quarters after it closed.

Aside from the leadership struggle, Mr. Reed is pleased with the results of the mold-breaking melding of a banking company with an insurer.

"From a business point of view, there is no question that the merger makes sense," he said. "It's better for the customers. It's a better business. I judge my own career in some degree: Did I leave the company with more opportunities than I inherited? And I think the answer is 'yes.' "

However, Mr. Reed said he is not entirely happy with Citigroup's direction. "I probably have a different vision of where the company should go than Sandy does, but it doesn't make any difference."

He is taciturn about events at Citigroup since he left. Asked whether he thinks its deal for Associates First Capital Corp. is a good idea, he said, "It depends on how it's run." Asked whether he worries about who will lead Citigroup after Mr. Weill retires, he replied: "You used the word 'worry.' Do I know that there is a succession issue there and it won't be a slam-dunk? Yes. But do I stay up nights worrying about it? No."

In fact, very little seems to worry Mr. Reed these days as he tools around in the black Volkswagen Beetle his wife gave him for his 60th birthday.

To Mr. Reed, retirement means, "there's just a whole lot of tension that goes out of your life." He was scheduled to leave for a vacation in Argentina after the interview but was unconcerned about the fog crippling New York's airports that day. "The funny thing is, I don't care if I leave tonight or not," he said. The implication was that such inconveniences were previously a very big deal.

When he is not traveling, Mr. Reed works in his Citigroup Center office on Tuesdays and Wednesdays and stays in his Manhattan apartment. The rest of the week the Reeds are at home in Princeton, N.J.

Mr. Reed is reading avidly, in part to enhance his lectures on management at the Massachusetts Institute of Technology (his alma mater) and on cross-border finance at Princeton University. He also helps friends with their business strategies and advises on such topics as how to roll out products on the Web. He and his wife are shopping for a house on an island off the coast of France.

He said he is done with the private sector and will not run another bank but that foundation work intrigues him. "I'm finding that foundations are much more interesting because they can really leverage ideas. That's a lot more interesting than driving a P-and-L to make profits. The Gates Foundation may turn out to be more important than Microsoft."

Mr. Reed and his wife have started the John and Cindy Reed Foundation, which emphasizes educational and environmental efforts.

Finally, he plans to get down on paper what he learned in 37 years at Citigroup and its predecessors. "I'm going to write it up - whether it becomes a book or whether it becomes a memo that I circulate to my old friends in the bank - because obviously there are some lessons to be learned. I did go through a fair number of ups and downs in my career, and there is some stuff that you would want to pass on, to at least some people."

Mr. Reed's separation from Citigroup was cold turkey.

"I can't tell you how quickly there is a distance," he said, "and the garbage that you don't have" to handle. "I go to board meetings, and the poor CEO is worried about quarterly earnings, and I think, 'Poor guy! Who cares if it's a penny up or a penny down?' But when you're in the job, it's part of the game."

Looking to the future, Mr. Reed said he expects consolidation will continue and technological advances will squeeze profits. "There probably will be fewer players and less profits, but individual players may do well."

He also said bankers should eschew predatory tactics. "If we don't serve the communities we work with, we're going to end up without permission to be in business," he said.

He gave the example of a bank helping a woman send money to her family in Puerto Rico. "It is neither easy nor cheap," he said. "Yet with the technology, it should be virtually free and easily done. Why does it cost so much to move money from place A to place B? The pricing suggests that there is something wrong."

For nearly two hours, Mr. Reed gave quick, insightful answers - often before the questions were completed. Yet he paused and stumbled when asked for the secret of his success.

"I stuck with it. I'm very much of a basic type of person. I just sort of worked at it."

But there is more. He is an intellectually curious person with both the disposition and the brain power to do detailed analysis. Yet for 15 years a passage from David Halberstam's "The Best and the Brightest" has sat on his desk as a reminder that judgment is more important than facts.

Titled "The Fallacy," the passage reads: "The first step is to measure whatever can be easily measured. This is O.K. as far as it goes. The second step is to disregard that which can't be measured or give it an arbitrary quantitative value. This is artificial and misleading. The third step is to presume that what can't be measured easily really isn't very important. This is blindness. The fourth step is to say that what can't be easily measured really doesn't exist. This is suicide."

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