New York Power Couple

Updated from Feb. 1

With Citigroup(C Quote) selling its life insurance business and American Express(AXP Quote) to spin off its financial advisory unit, the talk on Wall Street is about the death of the much-hyped financial supermarket.

The other side of that conversation is of a more speculative variety. It involves Sandy Weill's past, Wall Street's present fixation with mergers and acquisitions, and the future of Citigroup -- as an acquirer.

Indeed, some believe interest in a Citigroup-American Express marriage is one reason shares of the charge-card company surged $3.46, or 6.5%, to $56.81 Tuesday. They wonder, was the decision to ditch a financial planning arm really enough to justify such a spike?

"Citi is clearly setting themselves up to make some kind of deal," says Tim Ghriskey, chief investment officer of Solaris Asset Management, a Bedford Hills, N.Y., fund that owns both Citigroup and AmEx. "That's what may be driving the speculation."

An American Express spokesman declined to comment. Representatives of Citigroup, which closed Tuesday at $49.48, couldn't be reached for comment. No source spoken to for this article said negotiaitons had occurred.

For years, Wall Street has dreamed of a deal between Citigroup and AmEx. Investment bankers and corporate lawyers have salivated over the fat fees it would bring. Analysts have mulled the possibility of the pairing of a retail and commercial banking giant with a brand name so loved by the wealthy and business elite.

Then there's Weill's ego. It was 20 years ago that the Citigroup chairman quit as American Express president, chafing under the authority of then-Chairman Jim Robinson. Weill immediately began the acquisition binge that culminated in the formation of Citigroup in 1998. Could a return to the American Express executive office be the final jewel in his crown?

Any way you look at, a combined Citigroup/AmEx would be a financial juggernaut, light years ahead of its competitors in terms of scale. A merger would put distance between the company and its two closest competitors in terms of size: J.P. Morgan Chase(JPM Quote) and Bank of America(BAC Quote), both of which have pulled off megadeals of their own in the last 15 months.