Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2: I'm here with Jane Fraser, the CEO of City Group,
Speaker 2: and she is joining us, of course to speak about women,
Speaker 2: money and power in the future of finance. And for you, Jane,
Speaker 2: what is going to be the biggest ground shift in
Speaker 2: the world of finance.
Speaker 1: Over the next five years.
Speaker 3: I think that geopolitics is probably going to be the
Speaker 3: biggest ground shift that occurs in the world of finance.
Speaker 1: We've seen, and I mean world.
Speaker 3: From the global perspective, We've seen so many shifts in
Speaker 3: the lanes. I see technology flows changing, where they're going
Speaker 3: and the nature of them, particularly with AI, data centers.
Speaker 1: Energy flows to support them.
Speaker 3: We've seen food, We've seen the green transition, and energy
Speaker 3: flows changing. So there's an enormous amount happening anyway. Geopolitics
Speaker 3: is of the unknown, but is certainly going to be
Speaker 3: a big differentiator. And then you have technology and that
Speaker 3: will both be exciting, but it could have some risks
Speaker 3: associated to it too in an AI world.
Speaker 2: To that end, what role is AI going to play
Speaker 2: in the future of finance.
Speaker 3: We don't know exactly what role AI will play, but
Speaker 3: we know it's going to be a big and important one,
Speaker 3: and we're learning at the moment. We're that phase of
Speaker 3: how do we learn, how do we move fast enough
Speaker 3: with it so that we're adapting, We're seeing what it
Speaker 3: can do. It's impacting productivity largely at the moment, but
Speaker 3: I'm sure it will be affecting competitive edge, it will
Speaker 3: be affecting the configuration and the nature of some businesses.
Speaker 3: You also don't want to go too fast because you
Speaker 3: want to make sure that you've got the right risk
Speaker 3: mitigance in place, because there are risks associated with this
Speaker 3: for consumers, for investors, for ourselves. So it's a fine
Speaker 3: balance and we're all learning how to do it, but
Speaker 3: it is exciting.
Speaker 2: You mentioned geopolitical rest being one of the biggest risks
Speaker 2: in the future. You ramble the most global US bank,
Speaker 2: How does that give.
Speaker 1: You a different view than perhaps your rivals.
Speaker 3: Oh, we operate in one hundred and sixty different countries.
Speaker 3: We're on the ground as a local bank in almost
Speaker 3: one hundred of them, many of them for a century.
Speaker 3: So we're not talking suitcase bankers here. We're talking about
Speaker 3: really seasoned individuals and a network that.
Speaker 1: Has extraordinary flowers.
Speaker 3: We have almost two thousand trillion dollars of flows go
Speaker 3: through our pipes every year for five thousand multinationals. What
Speaker 3: it means when you've got a network of that scale
Speaker 3: and capability is you're helping clients with growth, You're helping
Speaker 3: them navigate volatility, You're helping them be able to move
Speaker 3: different parts of their operations to different places in the.
Speaker 1: World as these flows occur.
Speaker 3: So it really gives us a unique opportunity here to
Speaker 3: differentiate ourselves.
Speaker 2: Given the world is changing so quickly, where is the
Speaker 2: most promise over the next five years and what regions
Speaker 2: of the world do you see as lagging well.
Speaker 3: I always like to about bright spots first, so I
Speaker 3: think the bright spots is America.
Speaker 1: If you talk about a lot.
Speaker 3: Of roads leading here, fantastic entrepreneurship, I mean, this country
Speaker 3: is incredible.
Speaker 1: I love how Japan it's turning.
Speaker 3: Up focused on returns, moving from savings to investment. Entrepreneurs
Speaker 3: also on the front foot there, so that's exciting most
Speaker 3: of Asium as well, really adapting and adopting a lot
Speaker 3: of new technologies. The Middle East is a different Middle East.
Speaker 3: As a woman, I find it really exciting to go
Speaker 3: there and see how quickly it has changed, and the
Speaker 3: female population is being unleashed in many of these.
Speaker 1: Countries in a very positive way.
Speaker 3: And I wouldn't forget Brazil and Mexico as areas where
Speaker 3: we're also seeing tremendous innovation. So I think those are
Speaker 3: you know, that's pretty broad group of winners there. Europe
Speaker 3: has a tougher time. They've got some more structural challenges.
Speaker 3: Labor market is not as flexible, they don't have the
Speaker 3: scale that the States has, and they've got some challenges
Speaker 3: in terms of competitiveness. So that would be a quick
Speaker 3: walk round the world of the highs.
Speaker 2: While the world is changing, so too is the world
Speaker 2: of finance. Yes, in particular, you've seen for many years
Speaker 2: now the banks seed some share to the non banks.
Speaker 2: And you made a lot of news this year when
Speaker 2: you struck a partnership with Apollo, twenty five billion dollar
Speaker 2: partnership in order to provide more private credit.
Speaker 1: To your clients. Where do you see the private markets
Speaker 1: going At.
Speaker 3: The end of the day, when you look at a
Speaker 3: transaction and a partnershipp like the one we have with Apollo,
Speaker 3: you're looking at a win win, And as we look
Speaker 3: at it, we're marrying our string in origination and some
Speaker 3: of their power on their balance sheet in areas that
Speaker 3: we can't compete with them on and put it together
Speaker 3: in one plus one equals three for our clients because
Speaker 3: we're still giving our clients choice. And I think that's
Speaker 3: what we see the private market as in non investment
Speaker 3: grade clients in particular companies, is giving them an additional
Speaker 3: market to tap into some points, the private and public market,
Speaker 3: there's no arbitration between the two. Last couple of years
Speaker 3: you saw the private market advantaged.
Speaker 1: The goal here from.
Speaker 3: Our perspective give the client as much choice as possible. Again,
Speaker 3: what does it mean? I come back to America as
Speaker 3: a proud immigrant. What you see here is the depth
Speaker 3: and breadth of capital market. We have fifty percent of
Speaker 3: the world's capital market. We keep innovating. The scale and
Speaker 3: specialization it affords is really tremendous. You just don't see
Speaker 3: that as much in the rest of the world. And
Speaker 3: that I think it means. Why does the US keep
Speaker 3: being the winner in the global financial and capital markets?
Speaker 1: It is because it deserves to be.
Speaker 2: At that end, to what is the biggest risk to
Speaker 2: the industry over the next five years? Where do you
Speaker 2: have to look around the corner.
Speaker 1: The most.
Speaker 3: The piece that keeps me up at night is always
Speaker 3: cyber risk. And I think when we think about fraud,
Speaker 3: AI and cyber and the sort of convergence of those
Speaker 3: capabilities and the speed with which activity can be done
Speaker 3: now and that computer is going, that definitely continues to
Speaker 3: keep me awake at night the most. I think that
Speaker 3: is the larger threat the end of the day, This
Speaker 3: industry is about trust, and so I think all of
Speaker 3: the larger institutions are putting a lot of resources to
Speaker 3: make sure that we can protect our institutions and our clients.
Speaker 2: Mean, where do you see City Group in five years
Speaker 2: will have embarked on this massive transformation.
Speaker 1: What is your greatest ambition?
Speaker 3: Oh, my ambition is to be a high returning, high
Speaker 3: quality earnings, modern, simpler institution that continues to play a
Speaker 3: shaping role in the global financial system. We are truly
Speaker 3: privileged to be as in as many locations as we are,
Speaker 3: with a talent base, with such a global mindset and an.
Speaker 1: Ambition about it.
Speaker 3: So I think about we've got the right strategy and
Speaker 3: vision we're executing with the right organization, We've got getting
Speaker 3: making sure we've got the right talent and culture in
Speaker 3: the firm, and that we're a simpler, well controlled, modern organization.
Speaker 1: We'll have got the job done.
Speaker 2: If you could give yourself a grade, yeah, and theer
Speaker 2: a structuring plan, what would you give yourself?
Speaker 3: Oh, we aren't done yet, so I can't give ourselves
Speaker 3: a grade yet. I've always said that this is a
Speaker 3: multi year journey. We're going to be very disciplined about
Speaker 3: making sure that we don't take shortcuts. And the problem
Speaker 3: with grading yourself along the way is it becomes too
Speaker 3: tempting to do a quarter by quarter grade as opposed
Speaker 3: to we're just very very focused and accountable for delivering
Speaker 3: what the end product looks like.
Speaker 2: Speaking of the end product, you've set out a goal
Speaker 2: to bring returns on tangible common equity closer to eleven
Speaker 2: to twelve percent in the medium term and beyond after
Speaker 2: so Bloomberg Consensus this year has city groups return on
Speaker 2: tangible common equity at six point eight percent. What do
Speaker 2: you say to critics that feel like you're not getting
Speaker 2: there fast enough.
Speaker 3: Oh, that we have undertaken a multi year major transformation
Speaker 3: of an institution. We are working with ambition, with accountability,
Speaker 3: and with urgency.
Speaker 1: So We've already divested.
Speaker 3: All but one of our international consumer franchises and wound
Speaker 3: down those.
Speaker 1: That we couldn't.
Speaker 3: We've undertaken a massive reorganization of a company of two
Speaker 3: hundred and forty thousand employees in six months. Such a
Speaker 3: fifty thousand people have a different manager than had six
Speaker 3: months ago. It's been major change. We're being bold, we're ambitious.
Speaker 3: We're holding ourselves very much to account, to deliver on
Speaker 3: the outcomes we should do. And I say, look at
Speaker 3: the proof. You know we're delivering and we're determined to
Speaker 3: keep on doing so.
Speaker 2: Now you've set out to cut twenty thousand jobs, it
Speaker 2: was a sizeable, It was a sizeable restructuring. Can you
Speaker 2: rule out the need to cut more jobs in order
Speaker 2: to meet more expensive return targets.
Speaker 3: Look, we're transforming the organization. So as I look at
Speaker 3: the modernization agenda right now, it's really going to be
Speaker 3: focused on process simplification and efficiency. And I get back
Speaker 3: to AI as an example. We see AI as a
Speaker 3: tool that will help augment our people. And as I
Speaker 3: talk to clients across the board when they talk about
Speaker 3: their technology teams, they're not looking about shrinking them. They're
Speaker 3: looking about how can they do more with them and
Speaker 3: help support them. So really, for me, the main transformation
Speaker 3: on our people from is going to be how do
Speaker 3: we make sure that we're giving them jobs that they
Speaker 3: feel are rewarding, increasing their productivity and their effectiveness, and
Speaker 3: trying to get rid of other areas of bureaucracy or clutter.
Speaker 3: Whilst we improve the risk and controls and modernize the
Speaker 3: infrastructure of the bank.
Speaker 1: We'll do what we need to on that front.
Speaker 2: There are some areas you've also targeted for a lot
Speaker 2: of progress and as a growing part of city group
Speaker 2: wealth in particular services as well. You have said to
Speaker 2: us that people have been very excited lately to be
Speaker 2: working for the services business, even more than even some
Speaker 2: other parts. How do you see those parts of the
Speaker 2: business being a larger part of the city story.
Speaker 3: So when they took over CEO, is very clear to
Speaker 3: me that we needed to grow our fee revenues and
Speaker 3: our fee businesses. We were underweight in that and as
Speaker 3: I looked at the full global businesses to fit together wealth, services,
Speaker 3: banking and markets, there are a lot of synergies there,
Speaker 3: but we were just underweight and underplaying what we should
Speaker 3: be doing.
Speaker 1: On that front.
Speaker 3: So Wealth Andy has laid out super strategy.
Speaker 1: It's very clear it's really delivering.
Speaker 3: We're seeing it this quarter with some major proof points
Speaker 3: that came through. The goal here is the investment revenues.
Speaker 3: We have five trillion dollars of assets under management that
Speaker 3: our clients have that they don't have with the bank.
Speaker 3: We need to be capturing our fair share of that
Speaker 3: by focusing on having a great investment platform and then
Speaker 3: making sure that our people are going out and helping
Speaker 3: our clients create wealth. I don't think of us as
Speaker 3: much as our wealth franchise for retirees as a helping
Speaker 3: the world's wealth creators outside the States. In doing that
Speaker 3: be at our commercial bank, our wealth franchise, our banking franchise.
Speaker 3: So those are the areas that we really see exciting
Speaker 3: promise and that Andy and the team are really delivering on.
Speaker 3: I'm pleased with them, but we've got more to go.
Speaker 2: We've talked before about also a new head of investment
Speaker 2: banking and ambitions to gain more share in investment banking.
Speaker 2: Where do you see this going? How much further can
Speaker 2: you push to gain share?
Speaker 3: I think again, Viz who joined us fairly recently and
Speaker 3: a gintier, and the team really married him well.
Speaker 1: With our existing team.
Speaker 3: We've been investing for a few years in technology, in
Speaker 3: healthcare in different areas that frankly, we were underweight in
Speaker 3: from our talent, and we're now really starting to see
Speaker 3: the proof coming through of those investments as that team
Speaker 3: more than gels but builds enduring relationships with our clients
Speaker 3: as trusted a vice is us and you can see it.
Speaker 3: We've had revenue share gains in all these different areas
Speaker 3: and in banking overall. Our intention is just to keep
Speaker 3: going and building that through. I don't expect wallet will
Speaker 3: grow enormously over the cycle. We will certainly see it
Speaker 3: in the short term, so we're not hanging our hats
Speaker 3: on an enormous wallet expansion over the long term, but
Speaker 3: we are going to hang the hats on the market
Speaker 3: share and wallet share gains that we are and will
Speaker 3: continue delivering