Fed OKs Citicorp-Travelers Merger

Federal regulators cleared the merger of Citicorp and Travelers Group Inc., creating the nation’s largest financial services firm, Citigroup Inc. The deal offers consumers the promise of one-stop shopping for everything from credit cards and checking to insurance and investing. The Federal Reserve Board voted 5 to 0 in favor of the merger. Fed Gov. Roger Ferguson abstained. The Fed did require that the new firm give customers the chance to opt out of any marketing barrage that could be touched off by the purchase of even one of their many products. The Justice Department said it also approved the merger after “a thorough investigation.” The deal was valued at $70 billion when it was announced in April, but in the wake of the market slowdown this summer, it is now valued at about $48.73 billion. Under the deal, Citicorp and Travelers stockholders will exchange their shares to split 50% ownership of the combined enterprise. On the New York Stock Exchange, Travelers shares jumped $3.56, or 9%, to close at $42.93; Citicorp soared $10.38, or 11%, to $105.50.