Salomon Brothers was an investment bank founded in 1910 by three Jewish-American brothers along with a clerk named Ben Levy, it remained a partnership until the early 1980s, when it was acquired by the commodity trading firm Phibro Corporation and became Salomon Inc. Eventually, Salomon was acquired by Travelers Group in 1998; and, following the latter’s merger with Citicorp that same year, Salomon became part of Citigroup. Although the Salomon name carried on as Salomon Smith Barney, which were the investment banking operations of Citigroup, the name was abandoned in October 2003 after a series of financial scandals that tarnished the bank’s reputation.
What is ‘Salomon Brothers’
Salomon Brothers, founded in 1910, was once one of the largest Wall Street bulge bracket financial service companies. In 1981, it was acquired by Phibro Corporation and became known as Phibro-Salomon. In 1997, the bank merged with Smith Barney, a subsidiary of Travelers Group to form Salomon Smith Barney. Immediately following, the bank merged with Citigroup, where Salomon Smith Barney served as the investment banking arm. In 2003, the Citigroup name was adopted.
Explaining ‘Salomon Brothers’
Although Salomon Brothers provided a wide range of financial services, the bank established its legacy through its fixed income trading department. Perhaps the original founding fathers of high yield bond trading, along with Drexel Burnham Lambert, the Salomon bond arbitrage group established the trading careers of John Meriwether and Myron Sholes.
Michael Lewis’ Liar’s Poker (1990) depicts the high pressure bond trading culture at Salomon Brothers.