WALL STREET'S HIGHFLYER

By John Greenwald

Sanford Weill, chairman of Travelers Group, is known to keep reams of business information in his head--for instance, precisely when he stomped out as president of American Express after clashing with then-CEO James Robinson. "August 1985," he says, correcting a reporter about the time of the event. In a decade of almost nonstop dealmaking since then, Weill has not only clawed his way back but last week was being hailed as the new king of Wall Street after Travelers sealed a $9 billion deal to acquire Salomon Bros., one of the world's largest bond-trading houses. Says Weill, 64, of his odyssey: "I never thought it could be anything approaching this."

Weill's coup not only creates a global financial supermarket, but it will also impel a consolidation in which Wall Street investment companies will either get big or get run over. The merger unites Salomon, a power in bonds and a player in investment banking, with the Travelers-owned Smith Barney brokerage, which is stronger in stocks. The Travelers umbrella also includes companies that sell life insurance, property and casualty insurance, annuities, mutual funds and credit cards. Travelers Group's stock market value of $55 billion will now dwarf such giants as Merrill Lynch ($24 billion) and the newly formed Morgan Stanley, Dean Witter Discover ($33 billion). Its securities division, recast as Salomon Smith Barney Holdings, instantly joins Merrill and Morgan in the very top tier of Wall Street houses.

Weill stands apart from an industry where oversize egos often overwhelm logic. His latest deal caps years of collecting castoff companies at fire-sale prices and then trimming costs by paying close attention to detail. He started in 1986 by taking over Commercial Credit, a reject of computer-maker Control Data. It was not the job he wanted--Weill had been given the bum's rush when he offered himself as CEO of BankAmerica--but a spruced-up Commercial Credit gave Weill a springboard. And he sprang: he merged Commercial Credit with struggling Primerica in 1988, getting the Smith Barney brokerage with it. He bought Travelers insurance in two stages when that company was reeling from bad real estate investments. In 1993 Weill achieved a measure of sweet revenge over his old employer--buying back Shearson, the retail brokerage he had sold to American Express in 1981 at the time he joined that company.

Weill knew he had really arrived last March when the stock of Travelers, which has risen in value some tenfold over the past decade, became part of the blue-chip 30-stock Dow Jones industrial average. Yet he figured he still lacked global reach. "The real growth opportunities in the financial business are going to come from the privatization of government-owned companies around the world and in emerging markets," Weill says. "Salomon gives us the platform to participate in that."

That platform didn't come as cheap as most of Weill's deals, but he still figures it to be a good transaction. Salomon, with clients from Boston to Bangkok and offices in 23 countries, has earned a solid reputation for its prowess in international finance. The 87-year-old firm also has a reputation as Wall Street's version of a frat-jock house. Its swaggering, foul-mouthed and lavishly rewarded traders epitomized the masters-of-the-universe Wall Street culture of the 1980s. That swagger was staggered by a government bond-trading scandal in 1991 from which the firm never really recovered. Needing to broaden its portfolio beyond bonds to stay competitive, Salomon CEO Deryck Maughan approached Weill in August with a proposal. When Weill got the blessing of Warren Buffett, the billionaire investor who controls an 18.5% stake in Salomon that has yielded un-Buffett-like returns, the union was on.

Weill, who began his career as a Wall Street runner and is universally known as "Sandy," now faces the task of melding the freewheeling Salomon culture into the more cautious Travelers empire. Layoffs seem inevitable. Analysts estimate that as many as 2,000 overlapping jobs--mostly in "backshop" trade-clearing slots--could vanish from a total of 34,000 positions at Salomon and Smith Barney.

Weill naturally downplays any talk of culture wars or conflicts among his managers. And he says the risks inherent in Salomon's volatile trading operations (Salomon's traders reportedly blew $100 million recently betting the wrong way on the MCI-British Telecom merger) will look like "a little bit of a pimple" alongside the $30 billion in revenues that Travelers will have after the merger. That pimple could look even smaller if, as expected, Weill makes more acquisitions. Next up could be a commercial bank, which would add lending power to the Travelers portfolio. "I have never in my life said anything was the culmination of a dream," Weill observes, "because if you stop dreaming, I can't imagine what the world would be like." Which undoubtedly causes Wall Street to wonder, "What are you dreaming about now, Sandy?"

--Reported by Bernard Baumohl/New York

With reporting by Bernard Baumohl/New York