Chapter 5.2.1. Returns on Equity (RoE)
Before the merger in 1996 and 1997 Travelers had strong RoE, quite high for the banking industry, which can be explained by the fact that Travelers’s core business was insurance, not retail banking. However, after the merger with Citibank, the situation changed, followed by recovery in 1999 and then further in 2000, see the following Exhibit:
Exhibit 1. Returns on invested capital
Bank of America constantly chases Citigroup starting from 2001. Other rivals are catching up making Citigroup less attractive for investors.