Citi architect calls deal to create it a mistake

The $166 bln
merger that created Citigroup Inc  in
1998 was a mistake that failed to benefit the company’s investors, John Reed,
one of the deal’s masterminds, told the Financial Times.

Reed, who worked on the pact with Sandy Weill, told the
newspaper it was unclear whether the company’s model or management deserved the
greater share of the blame for its problems.

“The specific merger transaction clearly has to be seen
as a mistake,” Reed told the Financial Times.

Like many companies in the financial sector, the bank has
been battered by bad bets on risky subprime mortgages and the global credit
crisis.

In January, Citi announced plans to raise $14.5 bln, slash its dividend and
cut 4,200 jobs to shore up its balance sheet after a writedown on mortgages led
to a $9.83 bln
quarterly loss.

Representatives of the company could not immediately be
reached for comment.