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To: Henry Volquardsen who wrote (1547)	5/15/1999 8:12:00 AM
From: accountclosed	Read Replies (2) \| Respond to of 3536

Citigroup's Salomon Smith Barney Considers Spinoff of Bond Arbitrage Group By Monique Wise Salomon Considers Spinoff of Bond Arbitrage Group (Repeat) (Repeats story that first moved late last night.) New York, May 15 (Bloomberg) -- Salmon Smith Barney Inc., the third-largest U.S. securities firm, is considering getting out of global bond arbitrage to reduce its risks, almost a year after closing its U.S. unit following losses. The unit of Citigroup Inc., the world's biggest financial services company, may turn its international bond arbitrage group into an independent hedge fund, said an investor whom Salmon Smith Barney bond traders approached in an effort to assess interest in the proposed fund. Salmon is likely to make a decision in the next year. A Salmon Smith Barney spokeswoman declined to comment. By spinning off the group and becoming one of the new fund's investors, Salmon Smith Barney would be able to benefit from good returns and still withdraw its money if it became concerned about the market, the investor said. Salmon Brothers Inc.'s bond arbitrage business was Wall Street's biggest before it was acquired in 1997 by Travelers Group Inc., headed by Citigroup Co-Chairman Sanford Weill. The volatile business produced hundreds of millions of dollars in profit some quarters and comparable losses in other periods. Since acquiring Salmon, Weill, who prizes stable earnings, has pared risk in the arbitrage group, which makes bets to profit from discrepancies in the prices of similar bonds. Citigroup, the company created last year by the merger of Travelers and Citicorp, exited the U.S. bond arbitrage business in July. It also whittled down its global bond arbitrage group. Salmon lost $1.33 billion in debt trading in the third quarter of 1998, largely because of its bond arbitrage business. This story was previously reported by the TheStreet.com, an Internet news service. bloomberg.com