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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. It is John Dugan

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Speaker 1: in the flesh. He is the chair of City Group,

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Speaker 1: has joined the board since twenty eighteen and has really

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Speaker 1: seen a whole host of cycles after formally being the

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Speaker 1: occ chief during the financial crisis. John, thank you so

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Speaker 1: much for being with us. I want to start with

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Speaker 1: this idea that there just are so many unknowns, whether

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Speaker 1: it's regulation, whether it's trade policy, whether it's tariffs. How

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Speaker 1: much are people in the banking industry somewhat paralyzed.

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Speaker 2: I don't think so, and I'll give you a good

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Speaker 2: example our trading business. This can be a very good

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Speaker 2: time of the year because there's volatility. As people are,

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Speaker 2: there's uncertainty, and when there's volatility, that's good for our

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Speaker 2: markets business. On the other hand, there are other businesses.

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Speaker 2: If you're an investment banker these two weeks leading up

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Speaker 2: to the election, they're not likely to be active in

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Speaker 2: the deal space. But this too shall pass, and people

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Speaker 2: are navigating it and just looking ahead to see how

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Speaker 2: they will navigate it.

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Speaker 1: One of the levels of uncertainty just how bifurcated are

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Speaker 1: the scenarios depending on whether Kamala Harris wins or whether

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Speaker 1: Donald Trump wins, and if you could just bring us

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Speaker 1: into a window of city groups thinking of what the

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Speaker 1: parameters are, you know, what's the sort of base case.

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Speaker 1: In the extreme case, I Kamala Harris gets into office,

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Speaker 1: and what about with Donald Trump?

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Speaker 2: So I think if Kamala Harris gets into office, we

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Speaker 2: can expect more of a continuation of the policies that

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Speaker 2: we've seen under Joe Biden, although we could be that

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Speaker 2: it would be a little bit more business friendly because

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Speaker 2: we may have a Republican Senate and that's the conventional

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Speaker 2: wisdom now, and that means nominations in order to get

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Speaker 2: through the Senate are going to have to be a

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Speaker 2: little bit more negotiation with the Republicans and that could

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Speaker 2: change the makeup of the people who get through. So

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Speaker 2: that's a more modest change I think. On the other hand,

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Speaker 2: if Donald Trump wins the election, there will be very

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Speaker 2: significant changes to personnel and that could change the whole

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Speaker 2: nature of who our regulators are and how we operate.

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Speaker 2: And that's an unknown, but it will be very different

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Speaker 2: and it's a little difficult to plan for because we

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Speaker 2: don't know exactly what that would mean.

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Speaker 1: Typically, less regulation, a lot of people think of as

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Speaker 1: a positive for banks that allows them to be more profitable.

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Speaker 1: City is in a unique position because you are a

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Speaker 1: global bank that really does benefit from trade and from

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Speaker 1: the free flow of cash between different economies. How would

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Speaker 1: City group really rearrange if free trade is impeded, if

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Speaker 1: you do get a real restructuring with tariffs and other

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Speaker 1: protectionist measures.

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Speaker 2: Yeah, I think the way we look at it is, yes,

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Speaker 2: it is true that globalization has benefited City because we're

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Speaker 2: in one hundred countries on the ground and do business

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Speaker 2: and another fifty. But the fact of the matter is

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Speaker 2: if people change from being in a lot of countries

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Speaker 2: to being somewhat fewer countries and changing and figuring out

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Speaker 2: how to change those supply chains, we are in a

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Speaker 2: very good position to assist people as they make those

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Speaker 2: changes because we have people on then in the places

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Speaker 2: they're going to and the places they're coming from, and

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Speaker 2: so we see that as business opportunities. That's the kind

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Speaker 2: of thing we navigate all the time.

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Speaker 1: How much do you see Donald Trump really differing in

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Speaker 1: terms of regulation when it comes to any trust and

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Speaker 1: some of the banking capital oversights, especially given some of

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Speaker 1: the commentary that we've heard from his vice presidential running

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Speaker 1: mate with respect to the current FDC leadership. And I

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Speaker 1: ask this because I have to be honest. I was

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Speaker 1: with a banker when that news dropped about Capri and Tapestry,

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Speaker 1: and he was just beside himself. He couldn't believe that

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Speaker 1: this was sort of the framework with affordable luxury handbags.

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Speaker 1: I'm just wondering if that is sort of the expected

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Speaker 1: norm going forward for you.

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Speaker 2: I think the way I would put it, I think

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Speaker 2: there's an expectation that there will be more transactions and

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Speaker 2: more deals that will get done, and that's a positive

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Speaker 2: thing for our deal business, and so we would look

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Speaker 2: forward to that. If it doesn't happen that way, we

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Speaker 2: will not navigate the other side.

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Speaker 1: So ten days ago, Citygroup came out with earnings and

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Speaker 1: it showed that it was seeing strength in a lot

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Speaker 1: of the different five business lines. Is extreamlind things. It

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Speaker 1: was a beat across the board, really good shares popped

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Speaker 1: and then Jane Fraser got on the phone and with

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Speaker 1: analysts and someone asked her about a possible asset cap

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Speaker 1: about whether potentially there could be some implementation, and she hesitated,

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Speaker 1: and the shares plunged, and then she clarified, no, there

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Speaker 1: is no asset cap and there is not any plans

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Speaker 1: for any kind of asset cap, and yet the shares

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Speaker 1: still fell on a day. How frustrating was that for you?

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Speaker 2: Very frustrating because she did clarify it within minutes of

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Speaker 2: the uncertainty around it, and what she said is absolutely clear.

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Speaker 2: There is no asset cap, we don't have an expectation

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Speaker 2: for an asset cap, and our business performance was really

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Speaker 2: very strong in the third quarter or so. It's a

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Speaker 2: bit of a mystery, and yes, it was frustrating.

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Speaker 1: At a city group get out from under this regulatory

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Speaker 1: cloud that seems to be a sort of inc reasing

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Speaker 1: a lot of skepticism in investors.

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Speaker 2: We have to make progress slowly and surely every quarter

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Speaker 2: in making proof points of doing what we say we're

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Speaker 2: going to do business so I so, for example, in

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Speaker 2: the third quarter, as we had committed to our revenues

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Speaker 2: were up three percent on an next divested your basis,

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Speaker 2: Our expenses were down two percent, operating leverage increasing in

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Speaker 2: each of those five business lines. Those are the kinds

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Speaker 2: of things that we've got to keep doing to show

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Speaker 2: that we're making progress. Toward towards our medium term targets

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Speaker 2: of an eleven to twelve percent return on tangible common equity.

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Speaker 1: Where is any group in this transition to streamlining these

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Speaker 1: five businesses right now?

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Speaker 2: I think we're in a very good, very exciting place.

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Speaker 2: I think the board is quite excited about how the

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Speaker 2: company is doing as measured by those five business which,

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Speaker 2: by the way, is much more transparent now you can

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Speaker 2: see it much more. There's a less few, there's a

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Speaker 2: removal of a layer between the board and Jane and

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Speaker 2: those businesses. They're much more accountable because it's so transparent

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Speaker 2: about how they're doing. And we saw some very exciting

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Speaker 2: things in the third quarter. I don't mention three of them.

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Speaker 2: The Apollo credit deal twenty five billion dollars deal, very innovative.

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Speaker 2: We had the largest deal transaction with the Mars acquisition

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Speaker 2: of Kelenova that was announced where we were the sole advisor.

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Speaker 2: And we had a very exciting deal with MasterCard to

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Speaker 2: tap into their international debit network. And these are the

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Speaker 2: kinds of things where City really is getting on its

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Speaker 2: front foot in each of these businesses.

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Speaker 1: How much are you thinking about another deal like the

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Speaker 1: Apollo one.

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Speaker 2: Well, it's early days on Apollo. I think, as I said,

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Speaker 2: we're quite excited. We think that really gives us the

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Speaker 2: ability to offer a whole range of things to clients

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Speaker 2: that we wouldn't otherwise be able to do. And that's

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Speaker 2: the important piece. Let us see how it goes before

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Speaker 2: we go down another.

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Speaker 1: Path as a global bank. Are you still sort of

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Speaker 1: emphasizing that global reach to time where everyone's looking at

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Speaker 1: the US and saying that's pretty good.

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Speaker 2: Over there still a lot of business going on all

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Speaker 2: the world. We're there to help people in their cross

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Speaker 2: be the pre eminent bank for companies with cross border needs.

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Speaker 2: They may have different cross borders that they're using in

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Speaker 2: cross border needs, but we're there to help them for

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Speaker 2: exactly that.

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Speaker 1: John Dugan, wonderful to see you. Thank you so much

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Speaker 1: for being with us. That was John Dugan, the chair

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Speaker 1: of City Group's board, and John, I'm going to send

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Speaker 1: it back to you.