00:00Now, post-UK budget, have you started to see any confidence actually returning amongst clients now that that uncertainty has passed?
00:07Absolutely. When I sort of think about the deal pipeline, really, for 2026, it's the strongest that we've seen now for quite a number of years.
00:16And actually, when you think about some of the tailwinds that we've seen and certainly the conversations that we're having in the boardrooms,
00:23there's a real desire to do business and, most importantly, to deliver growth for shareholders.
00:28So if companies can't deliver growth for shareholders organically, then they're going to need to do it inorganically.
00:34So that obviously means that the pipeline for U.K. M&A certainly looks much better than it's done versus previous years.
00:41And, Ian, why do you think that? Is it because they've been holding off for too long because valuations have come down or they just see a changing world and they want to be part of it?
00:49Number one, it's absolutely a changing world. But also, actually, if you think about just some of the tailwinds that we've been experiencing with the U.K. economy,
00:57actually, number one, U.K. PLC's balance sheets are robust, so primed for growth.
01:04Second of all, we've obviously got an easy monetary policy, which is coming down another couple of interest rate cuts this year.
01:10Inflation's moving to that sort of 2% target probably by the end of this year.
01:14And at the same time, what that means is that it does give actually a positive tailwind in order to actually do business.
01:21And don't forget, a lot of U.K. PLC are multinationals.
01:24So what that means is how do you drive those trade corridors, not just in places like North America, which is impossible to ignore,
01:32but also in other jurisdictions, whether that be China on the back of the forthcoming U.K.-India trade deal or, indeed, in the Middle East.
01:40I mean, it's quite difficult to get numbers of either people having left the U.K. after budget or tax reasons
01:46and people coming in to the U.K. from maybe the U.S. because they want to get away from some of the policies.
01:51I mean, what's your feeling on how that's going?
01:53Look, the ultra-high net worth sector is always globally mobile.
01:59So what that means is for Citi, of course, we have locations all the way around the world.
02:04So, yes, we have seen some high net worth individuals leave.
02:07But to your point, we've also seen some come, you know, particularly from the U.S.
02:11With the dollar, you know, tanking and possibly dollar assets becoming less attractive, are you seeing more demand for sterling assets?
02:20Well, actually, what I would say is there's still demand for U.S. dollar assets.
02:24So that will continue, and we believe that that will continue throughout 2026.
02:30You know, where we've seen companies really begin to think about, you know, their supply chains, for example,
02:37you know, how do you de-risk supply chains in what is a bit more of an uncertain world,
02:41whether that's through friend-shoring or dual-shoring, you know, that really is the way in which U.K. PLC
02:47is sort of thinking over the medium term rather than just responding and meeting on a day-to-day basis to the news flow.
02:53When you look at, for example, some of the funding for M&A, I mean, does that change?
02:57Is it still in dollar assets or could it be, you know, sterling buyout debt?
03:02It can be both.
03:03I mean, when we think about the amount of dry powder that private equity has, you know,
03:08we estimate it's something like $2.5 to $3 trillion ready to be put to work.
03:13So there is actually a lot of liquidity in the market, not only for U.S. dollar assets, but for assets more broadly.
03:20What does the pipeline look like for Citi this year in terms of M&A?
03:23It's looking really good, actually.
03:25Again, off the back of what has been a tremendous capital markets issuance calendar.
03:32The volumes have been off the charts.
03:33But what that does is it just means that markets are open for business.
03:37We've got credit spreads at all-time tights.
03:39And it means that the appetite for investors in terms of really looking at these types of opportunities is really great.
03:46So, you know, it's all about finding the right opportunities for U.K. PLC.
03:51But boardrooms are definitely focused on this topic.
03:54Do you think we just need a big IPO to kind of, you know, help the story along?
03:59Yeah.
03:59They're coming.
04:00They're coming.
04:01Is there something there?
04:01So when one thinks about what happened last year, I mean, we saw in the U.K. about £2 billion worth of IPOs.
04:10That was up about two times, two and a half times from the prior year.
04:14And actually this year we do see, for example, you know, whether it's private equity looking to IPOs, some of their companies that they've held for seven or ten years.
04:23But there's absolutely a pipeline of IPOs coming down the pipe.
04:26It's going to be an exciting year.
04:27And any particular sectors that you're most excited about?
04:30Tech, health care, consumer, fintech.
04:36You know, I mean, there's a lot of sectors.
04:37So when we think about growth and we think about the pipeline, I think what's quite unique is that actually that growth is coming cross sector.
04:46Is AI impacting your lending strategy at all?
04:50Lending strategy?
04:51Or actually your operations, because we're trying to figure out how banks are looking at this.
04:56That's right.
04:57So look, AI is at the heart of cities modernization, but it really cuts across everything.
05:02So when we think about how we're embedding AI into how we serve our clients, how we empower our people and also how we improve processes.
05:11So the most important thing is the human in the loop.
05:14So it doesn't mean that we do not need humans.
05:18And what we strongly believe is that when we think about ideas and we think about creativity for our clients, that value is being brought by our people.
05:26You know, AI at the end of the day is a tool.
05:28It's an incredible tool, but it is just a tool.
05:31And will that change with years or is that, I mean, you know, I guess there's a lot of people that are worried about their jobs in the future.
05:37Is this something that your conscience and over-communicate about?
05:42We're absolutely talking about it.
05:44It's not just AI, however.
05:46So, you know, of course there are going to be jobs that go, but we're also going to be creating jobs that do not exist today.
05:54You know, so we're actually equipping our people to use these AI tools.
05:58I mean, about 70% of our colleagues now, we've got over 200,000 people at Citi, now have access to Citi AI tools.
06:08You know, so it really is all about empowering our people to say, number one, how can you use AI to do your job better?
06:14But also if there are other opportunities within the organization to be able to be ready to take on those different roles.
06:21Will it be harder for graduates to learn on the job?
06:25We're not seeing that.
06:26So, don't forget that a lot of graduates were doing, shall we say, a lot of data processing, input models.
06:33You know, what we're spending a lot of time on thinking is how do we provide that value-add training to our graduates
06:39to enable them to really hit the ground running when they join Citi.
06:43So, you know, we're continuing to hire graduates.
06:46There hasn't been really a drop-off in terms of numbers.
06:48You know, and we're always needing to replenish with new talent.
06:51Tina, when you look at UK politics, do you have many clients asking about, you know, the future of this government,
06:58also what happens in a couple of years when we have elections, and does that worry them?
07:04Not at the moment.
07:05Probably the next sort of data point is around the May by elections.
07:10But at this point, I think the government's given themselves a little bit of breathing room.
07:14You know, there's a significant sort of fiscal headroom, which means obviously the gilt market has performed very well versus sort of global bond markets.
07:22You know, so I think there's a bit of breathing room here.
07:24And at the same time, if we do start to see, you know, just some of the economic indicators improve,
07:30what we're looking at, of course, is unemployment.
07:33You know, if we start to see unemployment tick up, what does that mean?
07:36But ultimately, I think markets are expecting that that could mean, you know, an easing of monetary policy
07:41further than maybe the one or two rate cuts that are expected later on in the year.
07:45So I think in terms of politics, of course, I think investors have a watching brief in terms of what happens.
07:52But at the same time, I think, you know, the macroeconomics also is very important.
07:58Does reform have more of a presence in the city of London?
08:02I would say intermittently.
08:04You know, I think certainly from from city's point of view, you know, we're politically agnostic.
08:09Whilst at the same time, you know, of course, we engage with political parties to advocate for public policy that drives economic growth and encourages investment.
08:17So so, you know, in that sense, I think reform is going to be, you know, quite an interesting area and will continue to be a key area of focus for our investors.
08:27So something quite exciting, your Canary Wharf, you know, skyscraper renovation.
08:32Yes, it's going really well.
08:34We're really excited about moving in this year.
08:37So you must come visit. And, you know, but I think what's really quite important about the one and a half billion dollars that we've spent on that is we've really been mindful over how can we spend as much of that here in the UK.
08:50So whether that's suppliers, whether that's labor.
08:53So, you know, about 60 percent of that spent has been spent here in the UK on goods, on services and providing employment for over 6,000 people.
09:02So, you know, we're really pleased with how the project's gone.
09:04I remember reading the announcement and thinking this is quite a vote of confidence in the UK.
09:09It is in the UK, in London as a financial center.
09:12You know, it's going to give us another 30 years here at Canary Wharf.
Comments