1 00:00:02,560 --> 00:00:08,119 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Well, my next guest 2 00:00:08,240 --> 00:00:10,080 Speaker 1: is a Chief Client Officer at City Group, a new 3 00:00:10,119 --> 00:00:12,720 Speaker 1: position which the bank created late last year. Under his 4 00:00:12,800 --> 00:00:16,000 Speaker 1: previous role as chief executive in EMEA, he helped the 5 00:00:16,000 --> 00:00:18,320 Speaker 1: bank to navigate the pandemic and also led the firm's 6 00:00:18,400 --> 00:00:22,919 Speaker 1: response to the Russian invasion of Ukraine and sanctions against Moscow. 7 00:00:22,920 --> 00:00:25,919 Speaker 1: Now he's a member of the company's executive management team. 8 00:00:26,079 --> 00:00:29,120 Speaker 1: As a Wall Street giant oversees its biggest restructuring in 9 00:00:29,160 --> 00:00:32,120 Speaker 1: two decades. Well, David Livingstone joins us to discuss the 10 00:00:32,159 --> 00:00:34,280 Speaker 1: UK budget and much more. David, thank you so much 11 00:00:34,479 --> 00:00:36,800 Speaker 1: for joining us. I know you've been extremely busy over 12 00:00:36,840 --> 00:00:39,839 Speaker 1: the last couple of years, frankly with the restructuring but 13 00:00:39,880 --> 00:00:43,600 Speaker 1: also with the I guess the difficulties that the financial 14 00:00:43,880 --> 00:00:46,040 Speaker 1: a lot of financial banks have found themselves in. Are 15 00:00:46,040 --> 00:00:48,559 Speaker 1: you seeing green shoots for deals and anything in the. 16 00:00:48,479 --> 00:00:51,519 Speaker 2: Pipeline, But if you're talking about that through capital markets 17 00:00:51,520 --> 00:00:53,320 Speaker 2: and M and A activity, yes we are. If you 18 00:00:53,360 --> 00:00:55,520 Speaker 2: look at the beginning of this year, it's been a 19 00:00:55,720 --> 00:00:58,360 Speaker 2: very very busy period, particularly in debt. Capital markets is 20 00:00:58,480 --> 00:01:02,160 Speaker 2: as treasurers have have taken the opportunity of a bit 21 00:01:02,160 --> 00:01:04,759 Speaker 2: more clarity on interest rates to fund and take advantage 22 00:01:04,760 --> 00:01:07,800 Speaker 2: of liquidity and m and A I think is after 23 00:01:08,120 --> 00:01:11,560 Speaker 2: ten quarters or so of muted activity, after the boom 24 00:01:11,560 --> 00:01:13,880 Speaker 2: of twenty twenty one, I think there are green shoes 25 00:01:13,880 --> 00:01:17,560 Speaker 2: because there's more confidence as corporate leaders look forward and say, 26 00:01:17,760 --> 00:01:19,959 Speaker 2: we can see a path of where inflation and where 27 00:01:20,319 --> 00:01:22,679 Speaker 2: interest rates will go and perhaps where growth will be. 28 00:01:23,200 --> 00:01:25,399 Speaker 1: Are you surprised and actually we haven't seen any more 29 00:01:25,440 --> 00:01:27,360 Speaker 1: casualties because of the higher interest rates. 30 00:01:27,840 --> 00:01:30,400 Speaker 2: Well, need to remember that interest rates are higher, but 31 00:01:30,480 --> 00:01:35,640 Speaker 2: not high, and therefore in historical terms, and therefore the 32 00:01:35,680 --> 00:01:39,120 Speaker 2: ability to manage it really rather depends on how extremely 33 00:01:39,200 --> 00:01:42,320 Speaker 2: leaviag you were going into this period of raising interest rates. 34 00:01:42,760 --> 00:01:45,199 Speaker 2: And also there's a period of being able to manage 35 00:01:45,520 --> 00:01:47,960 Speaker 2: through that, particularly taking advantage of people have a lot 36 00:01:47,960 --> 00:01:50,360 Speaker 2: of hedging in place and other things. So no, we 37 00:01:50,400 --> 00:01:53,000 Speaker 2: haven't been sort of surprised, but we've been, I suppose 38 00:01:53,560 --> 00:01:56,520 Speaker 2: positively attuned to the resilience in the market. 39 00:01:57,360 --> 00:01:59,000 Speaker 1: When you speak to clients and you travel around the 40 00:01:59,040 --> 00:02:00,720 Speaker 1: world to speak to city client and because of the 41 00:02:00,760 --> 00:02:03,320 Speaker 1: big restructuring that your chief executive and yourself have put 42 00:02:03,400 --> 00:02:06,000 Speaker 1: in place. What's the question you get asked the most. 43 00:02:06,280 --> 00:02:09,040 Speaker 2: I'll change one word. It's a reorganization, not a restructuring. 44 00:02:09,120 --> 00:02:11,639 Speaker 2: And that's important because really what Jane Fraser has led 45 00:02:12,280 --> 00:02:15,560 Speaker 2: is what we announced in September, is having our structure 46 00:02:15,600 --> 00:02:17,880 Speaker 2: catch up with our strategy. Our strategy remains the same. 47 00:02:17,919 --> 00:02:21,640 Speaker 2: We are the world's most international banking organization and that 48 00:02:21,680 --> 00:02:25,240 Speaker 2: remains absolutely the case, but our structure didn't fit the 49 00:02:25,280 --> 00:02:28,360 Speaker 2: profile of what we wanted to be now. So we've simplified, 50 00:02:28,800 --> 00:02:32,720 Speaker 2: taken out layers, and put a much greater emphasis and 51 00:02:32,800 --> 00:02:35,560 Speaker 2: hence my new role on delivery to clients. 52 00:02:35,919 --> 00:02:37,840 Speaker 1: I know last week was you know, you were at 53 00:02:37,880 --> 00:02:40,240 Speaker 1: the top of the town with the fact that you 54 00:02:40,720 --> 00:02:44,000 Speaker 1: actually have Viz joining from JP Morgan. How will that 55 00:02:44,120 --> 00:02:45,360 Speaker 1: change things at the bank. 56 00:02:45,560 --> 00:02:47,360 Speaker 2: We're very excited about Viz joining. I mean, he's an 57 00:02:47,360 --> 00:02:50,680 Speaker 2: excellent banker. I'm sure you know whom. He's very well 58 00:02:50,720 --> 00:02:54,000 Speaker 2: respected by clients and for his market insight and judgment. 59 00:02:54,520 --> 00:02:56,760 Speaker 2: Our banking business is a very significant business for us, 60 00:02:56,800 --> 00:02:59,760 Speaker 2: and Viz will be in charge of our investment banking, 61 00:02:59,800 --> 00:03:03,120 Speaker 2: call banking, commercial banking activities, and I think it is 62 00:03:03,240 --> 00:03:06,359 Speaker 2: a statement of our ambition in all of those areas 63 00:03:06,400 --> 00:03:09,960 Speaker 2: to have someone of business quality and stature. He's attracted 64 00:03:09,960 --> 00:03:13,079 Speaker 2: by the globality of city. He's attracted by the story 65 00:03:13,120 --> 00:03:14,400 Speaker 2: of what we can do and how we can do 66 00:03:14,440 --> 00:03:15,120 Speaker 2: more for clients. 67 00:03:15,440 --> 00:03:17,440 Speaker 1: Do you know where he'll be based yet and does 68 00:03:17,520 --> 00:03:19,520 Speaker 1: that give a signal? And where also city wants to 69 00:03:19,520 --> 00:03:19,960 Speaker 1: focus on. 70 00:03:20,160 --> 00:03:22,760 Speaker 2: Hopefully on an aeroplane, I think will be business mandate. 71 00:03:23,200 --> 00:03:27,280 Speaker 2: He will be very international, not only his background but 72 00:03:27,320 --> 00:03:28,160 Speaker 2: also the business need. 73 00:03:29,080 --> 00:03:31,480 Speaker 1: I know you've also thatt on Canary Wharf right as 74 00:03:31,919 --> 00:03:34,480 Speaker 1: something that will do quite well in the coming years. 75 00:03:34,800 --> 00:03:36,080 Speaker 1: Is that an attractive place to be? 76 00:03:36,680 --> 00:03:38,840 Speaker 2: I think so. I mean, I think that the Canary 77 00:03:38,880 --> 00:03:41,720 Speaker 2: Wharf Group and Showbi Kana doing an excellent job on 78 00:03:42,200 --> 00:03:45,080 Speaker 2: post pandemic recovery and Canary Wharf. It's not what it 79 00:03:45,160 --> 00:03:47,120 Speaker 2: used to be, but that's actually a good thing because 80 00:03:48,480 --> 00:03:51,320 Speaker 2: the retail and services and entertainment side are very strong, 81 00:03:51,640 --> 00:03:55,560 Speaker 2: and you're seeing a very significant increase in the life 82 00:03:55,600 --> 00:03:59,280 Speaker 2: sciences and other tenets using the Canary Wolf estate. And 83 00:03:59,600 --> 00:04:02,160 Speaker 2: for us, it's been our home for twenty five years 84 00:04:02,200 --> 00:04:03,040 Speaker 2: and it will continue to be. 85 00:04:03,080 --> 00:04:06,280 Speaker 1: So are your clients banking differently to what they were 86 00:04:06,360 --> 00:04:08,640 Speaker 1: like you know, five six years ago, because of AI, 87 00:04:08,800 --> 00:04:11,160 Speaker 1: because of some of the technology, but also I guess 88 00:04:11,440 --> 00:04:13,960 Speaker 1: because of the differentiation in some of the Wall Street banks. 89 00:04:14,760 --> 00:04:17,200 Speaker 2: They are banking differently because their business models are changing. 90 00:04:17,240 --> 00:04:19,640 Speaker 2: So if you look at the effect of digitization, even 91 00:04:19,680 --> 00:04:25,440 Speaker 2: before you get to blockchain or AI, you're seeing businesses 92 00:04:25,440 --> 00:04:28,120 Speaker 2: being able to go global much more quickly so that 93 00:04:28,160 --> 00:04:32,839 Speaker 2: they can move through their own use of e commerce 94 00:04:33,200 --> 00:04:36,960 Speaker 2: into very very global markets very quickly. So they need 95 00:04:37,120 --> 00:04:40,240 Speaker 2: a different type of banking services earlier in their development, 96 00:04:40,320 --> 00:04:43,360 Speaker 2: not only the payments, working capital management, but insight into 97 00:04:43,440 --> 00:04:46,000 Speaker 2: how to operate in markets before they build their own 98 00:04:46,080 --> 00:04:47,400 Speaker 2: capability to do so. 99 00:04:47,400 --> 00:04:49,720 Speaker 1: So what does that mean being closer to your client 100 00:04:49,920 --> 00:04:53,279 Speaker 1: in different jurisdictions? Is it actually hiring in maybe some 101 00:04:53,320 --> 00:04:55,919 Speaker 1: of the places, which is trickier for the clients to 102 00:04:55,960 --> 00:04:57,000 Speaker 1: know exactly what's going on. 103 00:04:57,279 --> 00:04:59,520 Speaker 2: But both of those because and but that's the footprint 104 00:04:59,560 --> 00:05:02,640 Speaker 2: that we already have. So if you look at the opportunities, 105 00:05:03,040 --> 00:05:05,679 Speaker 2: Release is a very good example in Africa, Latin America. 106 00:05:06,000 --> 00:05:08,760 Speaker 2: They're places where clients are extending not any of their 107 00:05:08,800 --> 00:05:11,400 Speaker 2: own businesses, but also their supply chains. And that's something 108 00:05:11,400 --> 00:05:12,679 Speaker 2: that we're set up to say. 109 00:05:13,200 --> 00:05:15,120 Speaker 1: We have a big UK budget on Wednesday, probably the 110 00:05:15,160 --> 00:05:18,560 Speaker 1: most important one for the Tories if they're not going 111 00:05:18,600 --> 00:05:21,760 Speaker 1: to lose the selection. What are you expecting in the budget? 112 00:05:22,160 --> 00:05:24,040 Speaker 2: Well, a lot of it has already been I think 113 00:05:24,080 --> 00:05:27,000 Speaker 2: sort of pre trolled because I think the Chancellor doesn't 114 00:05:27,000 --> 00:05:29,240 Speaker 2: have very significant degrees of freedom. If you look at 115 00:05:29,240 --> 00:05:33,840 Speaker 2: the UK budget is one point two trillion pounds and 116 00:05:33,920 --> 00:05:37,520 Speaker 2: the estimates are that he has eighteen twenty billion pounds 117 00:05:37,520 --> 00:05:39,880 Speaker 2: of freedom over the five year four cast period. So 118 00:05:40,279 --> 00:05:43,320 Speaker 2: that's not a great deal of flexibility. So we anticipate 119 00:05:43,360 --> 00:05:48,440 Speaker 2: there'll be some modest increase in tax take, but also 120 00:05:48,839 --> 00:05:51,640 Speaker 2: most of that being given back through some relief for 121 00:05:52,279 --> 00:05:55,120 Speaker 2: around National Insurance and also mahaps some of the lower 122 00:05:55,200 --> 00:05:58,960 Speaker 2: tax rate relief. But that's not very significant when you're 123 00:05:59,000 --> 00:06:02,000 Speaker 2: actually managing a one point two trillion pound budget, and 124 00:06:02,040 --> 00:06:04,720 Speaker 2: really it's on the spending side where most of our 125 00:06:04,720 --> 00:06:07,080 Speaker 2: clients would say, well, that's where the reform is needed, 126 00:06:07,080 --> 00:06:11,880 Speaker 2: and that's where more clarity is required by this government 127 00:06:12,240 --> 00:06:13,000 Speaker 2: or future governments. 128 00:06:13,080 --> 00:06:14,760 Speaker 1: Yeah, I was going to ask about the future government. 129 00:06:14,800 --> 00:06:16,320 Speaker 1: I mean, if you look at the polls, it's very 130 00:06:16,400 --> 00:06:20,119 Speaker 1: likely that labor get in they have you spoken to labor? 131 00:06:20,160 --> 00:06:22,080 Speaker 1: Have they come to speak to you? What do your 132 00:06:22,080 --> 00:06:24,440 Speaker 1: clients worry most about a labor government? 133 00:06:24,680 --> 00:06:27,360 Speaker 2: Our clients is always a focused on policy and policy settings. 134 00:06:27,360 --> 00:06:29,800 Speaker 2: And if you think about the UK, the issues are 135 00:06:29,800 --> 00:06:34,840 Speaker 2: around competitiveness, They're around corporate tax rate, They're about labor productivity, 136 00:06:35,760 --> 00:06:38,279 Speaker 2: and planning and infrastructure. I mean, they're the issues that 137 00:06:38,320 --> 00:06:40,640 Speaker 2: our clients in the UK are most focused about, and 138 00:06:40,680 --> 00:06:43,520 Speaker 2: that's what they engage with government, and I suppose we 139 00:06:43,560 --> 00:06:47,200 Speaker 2: do too on those on those dimensions. I mean, financial 140 00:06:47,200 --> 00:06:51,719 Speaker 2: services reform has been very, very solid under the current Chancellor, 141 00:06:52,240 --> 00:06:54,599 Speaker 2: but most you know, most of the mansion House and 142 00:06:54,640 --> 00:06:58,279 Speaker 2: other initiatives are longer term in their in their impact. 143 00:06:59,080 --> 00:07:01,880 Speaker 2: But most of our our clients are focused on what's 144 00:07:01,920 --> 00:07:04,360 Speaker 2: the continued reform agenda in the UK? 145 00:07:04,520 --> 00:07:05,440 Speaker 1: What about nondimes? 146 00:07:07,200 --> 00:07:08,120 Speaker 2: Not that relevant? 147 00:07:08,920 --> 00:07:10,840 Speaker 1: It's not something that people are talking about, or it 148 00:07:10,840 --> 00:07:14,120 Speaker 1: doesn't really make a difference to your client base. Are 149 00:07:14,120 --> 00:07:17,240 Speaker 1: you bullish overall about the UK? I mean, there's so 150 00:07:17,440 --> 00:07:21,680 Speaker 1: much dividing politics elsewhere in the world. I've heard that 151 00:07:22,080 --> 00:07:24,960 Speaker 1: the UK looks relatively stable compared to other countries, and 152 00:07:25,000 --> 00:07:26,320 Speaker 1: so does it make it attractive. 153 00:07:26,400 --> 00:07:28,440 Speaker 2: Well, you could say from a policy point of view, 154 00:07:28,520 --> 00:07:33,360 Speaker 2: there isn't a huge, necessarily huge gap between the major parties. 155 00:07:33,560 --> 00:07:37,160 Speaker 2: But the UK retains all of its attractive features a 156 00:07:37,360 --> 00:07:39,440 Speaker 2: time zone, language law or all of those things, but 157 00:07:39,720 --> 00:07:43,480 Speaker 2: it can't rely on those forever and therefore it needs 158 00:07:43,520 --> 00:07:46,400 Speaker 2: to keep up this pace of structural reform in the 159 00:07:46,440 --> 00:07:49,080 Speaker 2: economy to get growth back. And I think the distinctive 160 00:07:49,080 --> 00:07:52,440 Speaker 2: thing in the UK to worry about is labor productivity. 161 00:07:52,480 --> 00:07:54,680 Speaker 2: I think we're seeing other places in the world covering 162 00:07:54,760 --> 00:07:57,600 Speaker 2: faster post pandemic than the UK has, and that's something 163 00:07:57,800 --> 00:07:58,880 Speaker 2: that needs to be kept in eye on. 164 00:07:59,640 --> 00:08:01,160 Speaker 1: You mentioned a couple of times, you know, the fact 165 00:08:01,160 --> 00:08:05,480 Speaker 1: that City Group has a big global footprint geographically. What 166 00:08:05,600 --> 00:08:08,320 Speaker 1: are you most excited about the United States? 167 00:08:08,520 --> 00:08:12,440 Speaker 2: Actually, I think the US is remains that that flexible, 168 00:08:12,840 --> 00:08:15,840 Speaker 2: flexible economy. We've seen the level of recovery. You see 169 00:08:15,880 --> 00:08:19,440 Speaker 2: it's being translated into stock market evaluations, and I. 170 00:08:19,360 --> 00:08:21,440 Speaker 1: Think creativity and productivity. 171 00:08:21,760 --> 00:08:24,600 Speaker 2: Yeah, we'll see the jobs report this later this week, 172 00:08:24,600 --> 00:08:27,040 Speaker 2: but I think it is. I think that's a market 173 00:08:27,080 --> 00:08:29,640 Speaker 2: where you know, we still see very significant upside for 174 00:08:30,000 --> 00:08:31,080 Speaker 2: generally and also for US. 175 00:08:31,080 --> 00:08:34,040 Speaker 1: It's and this is what animal spirits coming back. Also 176 00:08:34,080 --> 00:08:38,040 Speaker 1: for deal specifically in the US. 177 00:08:36,880 --> 00:08:40,200 Speaker 2: And it's not just deals, it's that underlying economic activity 178 00:08:40,240 --> 00:08:44,319 Speaker 2: and vibrancy which needs does need financing, It needs the 179 00:08:44,600 --> 00:08:46,480 Speaker 2: support that the banking system can give it. 180 00:08:46,559 --> 00:08:48,679 Speaker 1: Yes, David, thanks so much for joining us today. You'll 181 00:08:48,679 --> 00:08:50,800 Speaker 1: have to come back really soon. A great conversation with 182 00:08:50,920 --> 00:08:54,280 Speaker 1: David Livingstone. There are the chief client officer at City Group.