It's tough keeping up with Sanford I. Weill.
As commercial banks rush to buy brokerages, as investment banks push into lending, and as insurers look to hire top-notch bankers, Mr. Weill can say with confidence: Been there, done that.
Over the past 10 years, he has pulled off enough cross-industry deals to create one of the biggest, most broadly diversified financial companies in America-the Travelers Group. Under its distinctive red umbrella, Travelers has amassed leading businesses in insurance, consumer lending, brokerage, investment banking, and asset management.
And Mr. Weill isn't resting. After snapping up Salomon Brothers this year, for $9 billion, Mr. Weill is starting to look overseas. His goal, he says, is to make Travelers "one of the best financial services companies in the world."
These bold moves make Mr. Weill American Banker's Pacesetter of 1997. Amid a historic wave of mergers throughout financial services, the 64-year- old Brooklyn native is pointing the way, offering a compelling, here-and- now vision of tomorrow's giant financial services supermarket.
"Travelers is one of the few examples of how it is going to work," said Lewis Coleman, vice chairman of NationsBanc Montgomery Securities and a former vice chairman of BankAmerica Corp. "There is no clear model. The people who are doing it now-we are pioneers."
In naming Mr. Weill the Pacesetter of 1997, American Banker is refraining, at least this time around, from naming a Banker of the Year, a distinction bestowed on a commercial banker every year since 1991.
The decision reflects a fundamental shift in financial services. Far more than in the past, bankers and others in the field are looking beyond their own particular corners to the industry at large and the world at large.
Indeed, many ventured overseas this year. Travelers, for its part, established a foreign presence with the Salomon deal-just in time to experience the Asian turmoil.
"It's been a very good education," Mr. Weill said in a wide-ranging interview at Travelers' New York headquarters. "Now, I don't go to bed without turning on Bloomberg and seeing what happens in Tokyo and Hong Kong."
Several big banking companies, meanwhile, snapped up investment banks after an easing of restrictions by the Federal Reserve Board. Wall Street firms, for their part, pushed heavily into corporate lending, and insurance companies turned to banks as new sales outlets. Some hired seasoned bankers to oversee their entire operations.
Mr. Weill, though not a banker, stood as a powerful symbol of the times, a man who has staked his career on financial services diversification.
He began back in the 1960s by building a brokerage. When he sold that firm-then known as Shearson Loeb Rhodes-to American Express in 1981, Mr. Weill became a major participant in one of the first attempts to piece together a diversified financial services giant.
Though some of today's leading financial companies are thriving on specialization-be it in credit cards, mortgages, or other products-Mr. Weill is a staunch defender of supermarkets.
"If one segment of a financial industry is being temporarily squeezed or going through a down cycle, there are other things that might not be subject to the exact same cycle," he said.
When its deal for Salomon closed last month, Travelers Group claimed assets of more than $350 billion-a whisker behind the $367 billion of the nation's largest banking company, Chase Manhattan Corp.
The company's market capitalization of about $58 billion is greater than that of all but two other U.S. financial companies, American International Group (recently $77 billion) and Citicorp ($63 billion).
Basically, the Travelers empire consists of five loosely related entities. There's the newly named Salomon Smith Barney; Travelers Property Casualty; Primerica Financial Services; Travelers Life and Annuity; and Commercial Credit. In all, Travelers produces and sells everything from secured loans to mutual funds to IPOs, and its customers range from Joe Six-pack to the Fortune 500.
"We do a lot of things where one business manufactures a product that can be distributed through another part of the company that has an efficient distribution system to that marketplace," Mr. Weill said. In other words, he is hoping to cross-sell annuities produced by Travelers Life to Smith Barney's private clients or hawk Travelers Bank's debit and credit cards to people who buy term life insurance from Primerica.
Of course, many financial giants are trying to do the same. It is why white-shoe Morgan Stanley bought mass-market Dean Witter; why BankAmerica took out Robertson Stephens; and why Fleet Financial Group snapped up Quick & Reilly. But Travelers spans more businesses than the others. And unlike its rivals, some of which shelled out as much as five times their targets' book value, Travelers does its deals on the cheap. It paid around two times book for Salomon.
Even bankers who don't compete with Travelers admire the financial conglomerate that Mr. Weill has built.
"He wants to develop, as we do, a company that spans all aspects of the business," said Richard M. Kovacevich, chairman and chief executive officer of Norwest Corp., Minneapolis. "He's definitely on the right track."
"He developed that business by prudently buying companies, and he pays fair prices-not ridiculously high prices," Mr. Kovacevich added.
Mr. Weill acknowledged that most diversified financial firms are being built around commercial banks, but he said he doesn't see that as a requirement.
"We haven't been bank-based yet, and it hasn't been a problem," he said.
But Mr. Weill has not steered entirely clear of banks. In 1986, he made a run at BankAmerica Corp. And this year, just before the Salomon deal, Travelers was rumored to be in merger talks with Bankers Trust New York Corp. He declined to comment on those reports.
"If we were interested in a bank," he said, "I think that bank would be something that had a lot of service income. Like it did things that generated fees rather than just bank loans." He mentioned three banking companies that would fill the bill: Mellon Bank Corp., State Street Corp., and U.S. Trust Corp.
One aspect of banking that clearly appeals to Mr. Weill is the trust business. To better compete in that field, Travelers recently picked up a thrift charter. But he said he sees little need to break into the deposit- taking business, given that assets in money market funds are now topping $1 trillion.
As for banks' moves this year to buy investment banks, he is largely unimpressed.
"Most of the banks' foray into investment banking was really buying small boutiques for a limited investment," he said. "We'll see what happens."
Mr. Weill, for his part, is increasingly looking overseas. While Salomon expanded Travelers' reach in Latin America and brought it a bit more space in Europe, the company remains, for the most part, domestic.
"We live in a global economy. We live in a period where trade will increase and savings and investments are increasing. The middle class is growing around the world. From the point of view of the securities business, it is very important to be global because people are going to invest a lot of money."
Closer to home, Mr. Weill has his work cut out for him in melding Travelers into a cohesive whole. Wall Street and Main Street are littered with the remains of failed attempts to build financial services supermarkets. From his experience as president of American Express in the early 1980s, Mr. Weill is no stranger to the pitfalls of the everything- for-everyone strategy. American Express' efforts foundered amid intense internal squabbling.
But Travelers is different, Mr. Weill and his admirers insisted. For one thing, it is truly Mr. Weill's creation. Rather than running a piece of someone else's vision, he is uncontestedly Travelers' chief architect and master builder. For another, Mr. Weill is intent on letting his companies retain their cultures and identities while working closely together under the Travelers umbrella.
"American Express was much, much more decentralized," he explained. "The encouragement was to go and do something as it related to just" a particular unit of the company. At Travelers, managers are rewarded for working with other parts of the company. And about once a month, Mr. Weill gathers about 18 of Travelers' top executives for a full day and evening of sharing ideas.
"There's a lot of bonding and working together," Mr. Weill said.
Another departure is Travelers' compensation plan. About 75% of the company's employees now own $9 billion worth of Travelers stock-not options but actual shares of the company. Mr. Weill said he expects employee share ownership to soar to 100% under "WealthBuilder," a program that lets everyone who works for the company earn extra compensation in the form of stock options.
All of this has produced stellar results. Travelers' operating earnings have grown steadily for 10 years, going from 50 cents a share in 1986 to $3.35 in 1996. At the same time, its stock, which went public at $5 per share, has been trading at an average of $47 for the past six months. The company officially went blue-chip in March when it became one of the 30 stocks in the Dow Jones industrial average.
Ultimately, many observers said, Travelers' most formidable asset may be its simplest one: the red umbrella. As the company jostles with global giants in the year ahead, expanding into new fields and new countries, it will bring with it one of the most recognizable logos anywhere. That is the kind of "brand identity" that many a rival only dreams of.
Said Mr. Weill: "It's our intent to promote that brand more and more."