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00:00We have none other than the chair and CEO, Jane Frazier. Thanks so much for having us.
00:05Well, we're delighted to have Bloomberg here. Thank you very much for joining our conference.
00:09So what do you hope to get out of this? And when talking to all your guests and your clients
00:13and to understand a little bit more about the China market, which you know very well,
00:19but we're coming out of a bruising trade war. We're not even out of it yet, right? Some say
00:23it's a truce, not necessarily a lasting piece. What have been your takeaways so far?
00:28I think what's interesting this time at this conference is that it's moved away from a China
00:35for China story. And instead, we have had huge interests and a large number of investors and
00:42companies coming to China to understand what is happening here, as well as the Chinese companies
00:48and investors that are looking much more externally now. So that really feels like a sea change here
00:55that's pretty exciting. How do you serve your clients against the backdrop of two governments
01:00that are trying to de-risk, if not decouple? I think the recent truce has brought some much
01:09needed and welcome stability here. We're in a position now for both sides that wanted to have
01:16a period now where we can move ahead and have a more stable relationship between both of them.
01:25It's transactional, but it's in both sides' interests. And we see our client base navigating
01:33this well. Yeah. What's your vision for the China market as it folds into your overall restructuring
01:42plan as well? You're now chair and CEO. First time that those two roles have been joined in a couple
01:48of decades. Clear mandate to carry out your vision going forward. What does that look like when you
01:53did exit your consumer banking business here, like you did in many markets around the world? You also
01:59sold your retail wealth management portfolio to HSBC. You got out of an investment bank, JV,
02:06with Orient Securities, I believe. And you have an outstanding license application for your wholly
02:11owned JV in securities. So Citi has been in China for 124 years. We have a landmark building here in
02:22Shanghai. And what we have done is focused our strategy and grow. We are following our international
02:31clients around the world. We're seeing them with renewed interest and focus in China, as we talked
02:37about. And then we're seeing the Chinese companies innovating at pace and also looking at expanding
02:45internationally. So we've been growing rapidly here with a more focused strategy. And it is the power
02:52of clarity and renewed purpose in the firm. Now, before this interview started, you really countered what
02:59I said is you're pulling back a little bit from China. That's not at all. You're adding headcount.
03:03How come? What are your headcount numbers? When we get headlines that your IT department,
03:09maybe 3,500 jobs are going to be moving elsewhere and this and that. You pulled back
03:13from retail three or four years ago. Yeah, I think you're getting the story wrong.
03:17Good. That's why you're here. Citi is on the front foot. We are innovating. We are growing.
03:25We're helping support our clients. Our clients are both building resiliency and they are reinventing
03:31themselves with all the technological changes. That is no different in China than it is in other
03:37parts of the world. So this is a firm with clarity of purpose, with clarity of direction. We know where
03:46we're headed and we're really delivering strong progress. So I'm excited by the upside that we have.
03:53I'm excited about the progress we're making. And I see it here on the ground in China. We think we
03:59move away from some of the headwinds that we all know about on consumer spending and on the property
04:06market. You look behind that here in China. It's a manufacturing powerhouse. What are we seeing?
04:1350% of all robotic companies in the world are here in China. China is writing the next chapter of its
04:22economy around advanced manufacturing, around innovation, as well as more Chinese companies
04:28expanding internationally. And we're both serving 70% of the Fortune 500 that are here in China,
04:37as well as serving the Chinese companies locally tap into global markets.
04:42So how does that equate to what the deal flow you see? Viss, who's the head of global banking,
04:47who we talked to a couple of hours ago, extremely bullish on the amount of deal flows going into
04:512026. What kind of cross border with China do you see? Look, I think we're seeing new corridors opening
04:57up. And the scale of ambitions, not just in China, but in Asia, are higher than we see really in many
05:04other parts of the world. So in these new corridors, we're seeing the Middle East connecting with Asia.
05:10For the GCC, they were expecting Asia to be its largest trading partner by next year. That's an
05:19entirely new set of flows in the last five years. Brazil's connection into Asia and into China, again,
05:26very robust. They're major partners. So the world is changing rapidly. It's adding new corridors. It's
05:34adding new flows. It's adding new wealth. And scale is the name of the game.
05:40What will be your strategy with wealth management? You got out, as I said, the retail portion of your
05:45wealth management was sold to HSBC, but you're going to be on shore here. But you're going to do
05:50a lot of it from Hong Kong and Singapore, right?
05:53So Citi is focused internationally, not on retail banking. We are focused on serving clients who have
06:01cross-border needs. That is a very vibrant segment of clients. Think of individuals that are driving
06:11mid-market companies that are growing internationally. We think of the world's
06:15billionaires and wealthy that need access to global markets. And then we obviously think of investors
06:22and corporations that are doing so. And there's a lot of engine of growth.
06:28It's going to be 50% of all of the new high net worth households created in the next three years
06:33will be created here in Asia. So our focus is on what is the wealth proposition for those,
06:40as well as supporting the companies and the engines of growth behind them.
06:45So what kind of hiring is going to be needed in this part of the world?
06:48Not necessarily China, but the rest of Asia. At a time when we're also seeing corporate America,
06:53as they invest heavily into AI, they've had to pull back on hiring and jobs have been cut.
07:00It's a great question. I think AI is certainly changing a lot of what we're expecting,
07:05we're going to need in the world going forward. So from Citi's point of view, for example,
07:10we see this as an opportunity to really train up our talent. How do we empower our talent to use
07:16the AI tools so they can be smarter in front of clients, they can spend more time serving clients
07:24and coming up with solutions as opposed to the more chore elements of being a banker?
07:31We don't know how quickly it's going to change, Steve. So there'll be certainly a lot of shift in
07:37coding jobs. We've seen that already. Our productivity is up 9% year over year for our coding teams.
07:45But there's going to be new jobs created too. None of us quite know yet exactly how the timing will
07:52play out. We know there's a lot of change ahead of that. But our approach is we're going to invest
07:58in our talent. Our firm is growing and that should be able to support the needs going forward.
08:04You mentioned the Middle East. I think you just came back from Riyadh, your co-chair of the U.S.
08:09Saudi Business Council, I believe. This also very bullish on India. Magnificent opportunity there.
08:16He's biased.
08:16Might be a little bit biased, maybe. But again, what do you hope to get from those markets as it fits
08:25into your restructuring plan and the vision that you just talked about?
08:28No, the growth plans that we have going forward, because we are on the front foot. I cannot stress
08:35that enough. And you can see it in our results. So all of our businesses, we're taking share. We're
08:41growing very quickly and our returns are improving. So as we're looking forward, it's growth. Let's take
08:50India. Citi is larger in India today. We are the largest foreign firm by revenues in India. When I
08:58look at Korea, where I was just at, that's another market where we were the first foreign bank to open
09:05the doors in Korea. And we have a very strong position there, supporting multinationals and
09:11clients. So as I look around the world, it's becoming more focused on diversification. There's
09:19also a focus on reinvention. What we are doing is helping provide the strategic advice. We're helping
09:26provide the financing and structuring and arranging that. And we're also helping manage the supply chain
09:32reconfiguration. We're helping with the hedging and foreign exchange interest rates,
09:37because volatility is a feature. It's not a bug of the system.
09:41Through your restructuring, you had to get rid of the retail side. And there's,
09:44are there other areas that you would like to divest? I know.
09:49You have the wrong story. Citi is about growing. We're very, we're very clear on our strategy
09:56and we're moving onwards. I only ask because again, the Russia situation is a little bit different
10:01probably than your overall strategy. We just got word that Vladimir Putin approved the sale
10:06to Renaissance capital of your bank in Russia, probably something that you've been wanting
10:10to do for a while, but it was held back. We have been winding down as many, many companies have been
10:17the franchise in Russia. We were waiting for the final approval to be able to sell. We've got a couple
10:23more to go to Renaissance, but it's, it's a tiny, it's a tiny business. So it's in the grand scheme
10:30of where Citi is, where we're investing and what we're doing. It would be good to get that done,
10:36but it's not, it's not critical to the firm's strategy going forward.
10:42Let's talk about the outlook in the United States right now. As we head into 2026, we saw the market
10:47reaction overnight. Simply, we're seeing that the Fed's equation, the bets for possible easing coming
10:54up and now 50-50 or is still below that because of the specter of inflation. What is your outlook
10:59for Fed action going into the new year and the specter of inflation rising? Look, I don't think
11:05we're out of the woods yet. And there's a sense that there may be another shoe to drop. It could be in
11:10tariffs or in the labor market. It could be in the asset prices that are quite high in the States.
11:16But all of that said, we're quite optimistic about 26. The challenge for the Fed right now is with
11:24the government shutdown. You know, we all have a daft of up-to-date data, which we could do with.
11:29It's hard to make these calls of exactly what's going on whilst we're waiting for the information.
11:35But as we look further out into next year, I think the resiliency of the corporate balance sheets,
11:42the strength companies are leaning in to innovation, investing in AI. You know, there is some,
11:49I think the doomsdayers will be proven wrong. We're a couple months out now from when we had
11:56concerns rise about, I think there was one of the TriColor, the auto, subprime auto lender. There were
12:02failures. There was concerns about non-performing loans. What does your balance sheet look like
12:08as far as that and where is your worries lie? You know, our balance sheet is pristine.
12:14But I think part of that is because it's very heavily investment grade on the corporate side.
12:22We're over 80% investment grade globally. And when we look at the consumer side, it's about 86% prime.
12:30So you tend to, you know, we tend to see the most resilient, healthiest parts of the economy on the
12:36balance sheet. All of that said, we haven't seen a thing that is concerning us. The consumer in the
12:43States is being fiscally responsible. Companies have been building up some more cash, either for
12:50a rainy day if it proves necessary, but most of them for investment. And they're, you know,
12:56they're acting from a position of strength. We'll keep an eye on the labor market. We'll keep an eye
13:03on some of the areas of mid-tier players in private credit and the like. But as far as we're concerned,
13:10that second, third order effects, the bank's not seeing anything that we're worried about.
13:18Are you concerned by what some say, maybe bubble forming in AI? We talked about the advantages of AI,
13:24but how much of a bubble or overheating? I'm not sure if we were just in with a lot of our tech
13:30clients on the West Coast. I don't think anyone was ready to say that it's a full-on AI bubble,
13:35but no one is saying that there are some real pockets of, let's call it the British understatement,
13:42frothiness in the market. It's more around the edges. What I found interesting is we can see a lot of
13:51the demand for the infrastructure bill that's going in in AI and the energy for the next couple of
13:57years. You know, where you saw some opinions diverge was in the three to five-year period,
14:03could we be in danger of overbuilding? But no one's feeling that for the big investments that are going
14:09on at the moment for the next couple of years. So I think on that one, certainly some pockets of
14:16frothiness there on the valuations, but the core infrastructure investments are important. And as
14:25we're seeing in our own bank, and I think many companies are, we'll start getting some of the
14:29productivity benefits coming through. But the scale and the pace of investment is unprecedented,
14:37that is for sure. Jane Fraser, thanks so much. Thank you. I hope you don't mind me
14:41playing the devil's advocate. I have the story straight now. Thanks so much for having us here.
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