Combined Company Will Be Poised to Deliver a Full Range of Products and Services to Over 100 Million Customers in 100 Countries

Transaction Has a Value of Over $140 Billion

New York — Citicorp (NYSE:CCI) and Travelers Group (NYSE:TRV) today announced an agreement to merge, forming the global leader in financial services. The combination will bring together two organizations with core commitments to serving consumers, corporations, institutions and governments globally, through a diverse array of sales and service channels. The merged company's principal thrusts will be traditional banking, consumer finance, credit cards, investment banking, securities brokerage and asset management, and property casualty and life insurance.

          The combined company, which will be named Citigroup Inc. and use the trademark Travelers red umbrella as its logo, will serve over 100 million customers in 100 countries around the world. On a proforma basis, the company would have had assets at year-end 1997 of almost $700 billion, net revenues of nearly $50 billion, operating income of approximately $7.5 billion and equity of more than $44 billion. Its market capitalization would rank it number one among the world's financial services companies.

          Following the merger, each company's shareholders will own 50% of the combined enterprise. The agreement calls for Citicorp shareholders to exchange each of their shares for 2.5 shares of Citigroup in a tax-free exchange. Travelers shareholders will retain their existing shares, which will automatically become shares of the new company. Citicorp preferred stock will be automatically converted into preferred stock of the new company with the same terms and conditions. The combination is expected to be accounted for on a pooling of interests basis.

          Serving as Co-Chairmen and Co-Chief Executive Officers of Citigroup will be John S. Reed and Sanford I. Weill, currently Chairmen and Chief Executive Officers of Citicorp and Travelers Group, respectively. They will serve as Co-Chairmen of a 24-person Board of Directors that will also include eleven outside Directors from the current Boards of each company.

          Mr. Reed and Mr. Weill said in a statement: "Citicorp and Travelers Group bring together some of the best people in the financial services business, creating a resource for customers like no other — a diversified global consumer financial services company, a premier global bank, a leading global asset management company, a preeminent global investment banking and trading firm, and a broad-based insurance capability. Our ability to serve consumers, corporations, institutions, and government agencies, domestic and foreign, will be without parallel. This is a combination whose time has come."

          Mr. Reed commented, "With this merger, we instantaneously broaden our services to our customers around the world — consumers, corporations and investors who value our ability to help them globally. The breadth of our reach and depth of our market presence have long distinguished Citibank competitively, and now we have the opportunity to serve customers, especially in the United States, with convenient, efficient access to all the expertise and the full range of value-added products and services they need — a capability unmatched by anyone, anywhere."

          Mr. Weill added, "Because the world economy changes at an unprecedented pace today, and regions, markets, continents and businesses are more and more interdependent, consumers, corporations, institutions and governments around the globe increasingly need a financially strong and reliable source for financial advisory services and products. Serving the needs of this demanding and diverse universe requires a company with unprecedented characteristics: an extraordinary global infrastructure, formidable capital resources, unquestionable stability, and the broadest spectrum of first quality, cost effective and efficiently distributed financial products and services. Together, we will be that company."

          The combination will be effected through a merger of Citicorp into Travelers Group, which will apply to the Board of Governors of the Federal Reserve System to become a bank holding company. Under present rules, all existing businesses can be retained and operated by the combined company for a two-year period, which may be extended for three additional one-year periods by the Federal Reserve Board. At the end of that period, the combined company will evaluate its alternatives in order to comply with whatever laws then apply to bank holding companies. Citicorp and Travelers Group expect that current laws restricting bank holding companies from participating in insurance underwriting activities will change in the foreseeable future to make the U.S. more openly competitive in global markets.

          "We are committed to maintaining the unique mix of businesses this merger creates," stated Mr. Reed and Mr. Weill. "U.S. financial services companies must be able to offer customers the same array of products and services that their international competitors are now free to provide if we are to maintain our nation's leadership position around the world. This is particularly critical given the rapid pace of consolidation by global competitors.

          "We believe the ability to efficiently access a comprehensive range of quality products is of increasing importance to consumers, particularly in countries where there is an emerging and sizable middle class, as well as to corporate customers who want their financial needs met professionally and comprehensively on a local basis," they added.

          Mr. Reed and Mr. Weill also said that the companies expect to generate substantial incremental earnings from the significant cross-selling opportunities that will be created as well as cost savings that will be realized.

          The transaction is subject to a number of regulatory approvals, including the Federal Reserve Board, several state insurance commissions and various other bodies, as well as approvals by shareholders of both companies. It is expected to close sometime in the third quarter of 1998.

          Citicorp is the parent company of Citibank, which serves consumer and corporate customers from locations in nearly 100 countries around the world. Its Global Consumer Business is the world's largest issuer of credit cards with some 60 million bank cards and provides financial services through more than a thousand Citibank branches located in over 40 countries. Through its international network of offices, Citibank also provides funding and transaction services for global corporations and local growth companies in emerging markets.

          Travelers Group is a diversified, integrated financial services company engaged in investment services, asset management, life insurance and property casualty insurance and consumer lending. Its operating companies include Salomon Smith Barney, Salomon Smith Barney Asset Management, Travelers Life & Annuity, Primerica Financial Services, Travelers Property Casualty Corp. (NYSE:TAP) and Commercial Credit.

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