Salomon Brothers chief executive Deryck Maughan placed a call to Travelers chairman Sanford Weill and packed his bags for two weeks' holiday in Hawaii. The call was a bombshell - a suggested merger with Travelers' huge US brokerage arm Smith Barney.
With a market capitalization of $55 billion, such a combination would dwarf other recent deals like Morgan Stanley-Dean Witter or even banks like Chase Manhattan and Deutsche. In theory, at least, it could change the top tier of the bulge bracket to the "big four", one of Maughan's mantras.
Weill was intrigued by Maughan's call. "It was propitious as we had already been talking among ourselves for months about what we should be doing to expand in the global marketplace," he recalls. Smith Barney's bankers had identified Salomon as potentially a good partner, so Weill suggested a meeting before Maughan took off on holiday. On August 14 the two dined at New York City's renowned restaurant of deals, the Four Seasons, and talked about the tumultuous changes in the financial industry and their place in it. "Think about it," Maughan said as he left for his beach holiday.