When Deryck Maughan sold Salomon Brothers to the man he called "the legendary Sandy Weill" in 1997, he could hardly have envisioned that four years later he would be in charge of Internet activities for Mr Weill at Citigroup.

Today Mr Maughan (52) is a vice-chairman at Citigroup, responsible not only for the company's Internet strategy but also for mergers, acquisitions, and business in Japan. His highest-profile roles are as chairman of the Internet Operating Group, a steering committee Mr Weill established last April, and as head of the Internet incubator e-Citi, a responsibility he took on last August.

"We believe the Internet is going to change the way we do our business," Mr Maughan said.

"This is a company that has an enormous opportunity in using new technologies to extend its reach, repackage its products, and improve its productivity."

The Internet Operating Group comprises 20 business executives from different business lines who meet at least three times a month. "The agenda is very wide-ranging," Mr Maughan said.

"It touches on all of our businesses, but we also have guest speakers from different companies and we also talk about technologies. We discuss strategic alliances. It's a place where we can pool ideas, establish priorities, and work together."

The result has been a raft of technology announcements emanating from Citigroup in the past eight months, and 54 websites, all accessible at Citigroup.com.

Mr Maughan said the first achievement of the Internet Operating Group was to outline five objectives, or ways that the Internet would permeate the organisation. The second was to delineate the functions of e-Citi, which was originally set up as a research and development arm.

Of the 1,600 people who worked at e-Citi at the start of last year, 200 remain, 1,200 have gone back into the business units (mainly in consumer and corporate banking) and 200 left the bank. "A lot of companies start off with a stand-alone unit, but as the Internet takes hold, you then empower the business line itself," Mr Maughan said. "That's what happened with e-Schwab and that is what happened with eCiti."

Last May, Citigroup created four new business units dedicated to the Internet: e-consumer, e-business, e-capital markets, and e-asset management.

That brought people from the business lines together with people from the Internet side of operations, Mr Maughan said, in what has been "a very productive relationship. People who were in e-Citi were very happy to be attached to real clients, real businesses, real revenues. I think people in the businesses are very happy to have that Internet expertise available to them."

The idea, Mr Maughan said, has been to combine resources rather than to duplicate them or make them compete. e-Citi is now focused on several endeavours: developing wireless and broadband technologies; promoting Internet alliances such as the ones announced with America Online and Oracle; and making strategic investments in technology companies, particularly those whose technologies it might use.

Today, Citigroup has 7.5 million customer accounts online, and that number is expected to grow. Michael Froman, chief of staff of the Internet Operating Group, said that the attrition rate of Internet customers is a third lower than that of nonInternet customers. "They are better customers, they stay with us longer, and their base is growing," Mr Froman said. Internet customers tend to have higher deposits, more assets and they buy more services from the bank.

Already, MyCiti.com, a site that puts a consumer's banking and brokerage accounts onto a single screen, has attracted new customers to Citigroup. Mr Maughan sees great potential in an account aggregation service like MyCiti.com and in an Internet payment system that Citigroup launched called C2it.

"These initiatives were designed to increase our penetration with our existing customer base and to expand our reach," he said.

"I think when C2it gets going, it will attract a lot of new people, almost by its viral nature.

You send money to someone, in order for him to get it, he has to sign up. It just builds. Many of these people will not have a Citibank account. We can offer a digital transaction account without a formal banking account."

Mr Maughan grew up in Durham, in northern England, and graduated from the University of London and Stanford University business school. He settled in the United States in 1983 when he joined Salomon Brothers, lived in Japan from 1986 to 1991, and in 1992 became chairman and chief executive officer of Salomon Brothers. Before Citigroup was born from the merger of Citicorp and Travelers Group, Mr Maughan was a vice-chairman and director of Travelers Group and chairman and co-chief executive officer of Salomon Smith Barney with Jamie Dimon, now chairman and chief executive officer of Bank One.

"Deryck Maughan is a businessman," said George Bicher, a bank analyst at Deutsche Banc Alex Brown. "He measures performance based on results and cost, and that makes a lot of sense."

Avivah Litan, a senior analyst at GartnerGroup, said "management is taking responsibility for IT initiatives, and this has created a healthier, and more competitive, environment internally. They're experimenting more wisely, and they're more aligned with their business objectives."

Other projects that Citigroup has launched include Cititrade, a stand-alone brokerage unit that opened in October; CitiDirect for the corporate market; and CitiConnect, which will embed Citigroup's financial services into software from Oracle, Commerce One, and SAP that handles procurement and business exchanges. Other initiatives include several wireless banking pilots taking place overseas.

Mr Maughan would not say how much Citigroup plans to spend on the Internet this year. "We spend a lot of money on technology. We have a huge technology infrastructure. At some level, we're an information company and at some level, we want to be a digital company." [Analysts say Citi's Internet spending could be flat in 2001 because much of the spending has been pushed up into the individual operating units.]

Asked which of the recent Internet initiatives introduced by Citigroup was most likely to succeed, Mr Maughan replied: "The initiatives we've launched, the portals that we're displaying, are each valid in their own right. Which one grows more quickly than the other depends on what consumers want to do and how quickly consumer behaviour adapts to the Internet - variables that we don't control. The important thing for us strategically is to be positioned in the main areas of growth."