New York Power Couple

An investment banker who didn't want to be named says it's obvious that Citigroup is preparing itself for a major acquisition sometime this year. The banker says a natural acquisition for Citigroup is a card company.

In fact, in recent months Citigroup and AmEx have been showing signs of warming up to each other.

In November, Citigroup was the only big bank AmEx didn't name as a defendant in an antitrust lawsuit that alleges that eight other banks conspired with MasterCard and Visa to engineer a boycott of American Express' charge card. AmEx filed the lawsuit after the Supreme Court refused to a hear a challenge to a lower court ruling which found that two big credit card associations had engaged in uncompetitive business practices.

A few weeks after AmEx left Citigroup out of its lawsuit, the two financial firms announced they were joining forces to issue a new credit card. The card will be issued by Citigroup, but will be accepted by merchants that are part of the American Express network.

Some contend the joint venture argues against a Citigroup/AmEx merger because the deal already expands Citigroup's reach. Skeptics also contend that Citigroup has little interest in AmEx's travel business.

But the naysayers ignore the fact that a deal with AmEx would greatly expand Citigroup's already impressive global reach.

Maybe the dream deal won't happen. Maybe that's all it is, a dream. But the rumblings on Wall Street are that Citigroup has something up its sleeve, and it may be something big.

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