Moving to reignite enthusiasm for the Travelers-Citicorp merger, Travelers' two top executives last week said the broad business mix of the proposed Citigroup would enable the new company to weather market storms.
James Dimon, president of Travelers and co-chief executive of its Salomon Smith Barney unit, told employees Friday that the company is "committed to the Citibank merger" even as share prices of the merger partners tumble.
"I know how the stocks are trading," he said in a speech carried on Salomon's internal phone system. "The mark of a great company is how well we deal with adversity."
His remarks came after similar statements by Sanford I. Weill, chairman and chief executive officer of Travelers. Speaking in Tokyo Tuesday, Mr. Weill said the diverse product lines of the proposed Citigroup would help it thrive in a downturn.
"While the financial business is a great growth business, it doesn't go up in a straight line," he said. "If you have businesses that return recurring and predictable earnings, it is much easier for you to manage your whole company through those ups and downs."
Both Travelers and Citicorp, like other financial services companies, have seen their stocks decline steeply in recent weeks due to losses in Russia and in other emerging markets. Shares of Travelers have dropped 36% since the beginning of July; Citicorp's, 38%.
As a result, the companies' proposed merger, valued at $70 billion when announced in April, was worth $50 billion Friday. This decline, coupled with the fact that the Federal Reserve Board has yet to sign off on the deal, has prompted speculation that the transaction would be scrapped.
But both companies have repeatedly denied even the suggestion that they would not merge. And many on Wall Street believe them.
"The deal was structured to take into account that markets may move sharply," said Lawrence Cohn, an analyst at Ryan, Beck & Co.
Mr. Dimon told employees that he expected the Fed to approve the deal "this month or next month."
The two companies had hoped for Fed approval in the third quarter, which ends in two weeks. But analysts now say the Fed would wait for Congress to act on financial reform legislation before making a final decision.
In his speech to a global finance symposium sponsored by Nihon Keizai Shimbun Inc. and the Financial Times, Mr. Weill emphasized that he is building a company with diverse sources of income. "We do not believe that a financial company should be a financial supermarket," he said, however.
"We don't try to be all things to all people in one place," he added.
Analysts said the remark shed light on the emerging Citigroup, which would probably maintain distinct operating subsidiaries and clear separations between product and marketing groups.
The company would be a "series of boutiques rather than a supermarket," said Diane B. Glossman, an analyst at Lehman Brothers.
"They want to be a global bulge-bracket investment bank, and they want to be a retail company with a diverse array of consumer businesses that would benefit from being under the same umbrella," said David Berry, an analyst at Keefe, Bruyette & Woods Inc. "But you notice they are making no effort to put everything under one name or one unit."
Considered one of Wall Street's best turnaround artists, Mr. Weill acknowledged that recent volatility in world markets had surprised Travelers, which entered Europe, Japan, Southeast Asia, and Latin America through its 1997 acquisition of Salomon Brothers.
"We were very happy ... for about two weeks," Mr. Weill said in his speech. "All of a sudden, Thailand was going down the tubes, Indonesia was going down the tubes, Korea was going down the tubes. And we were global, and we didn't know really what it meant. We were really worried."