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Speaker 1: I am delighted to be joined by the chair of

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Speaker 1: City Group. He's John Dugan. Thank you for joining us.

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Speaker 1: It seems like the world is fractured geopolitics, economically, it's

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Speaker 1: very difficult for leaders to almost get on the same page,

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Speaker 1: to get along and find a solution. After the horrific

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Speaker 1: weekend that we've had and the five days of fighting.

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Speaker 1: What does all this mean for a big global bank

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Speaker 1: like City Group.

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Speaker 2: Well, first of all, it means we focus most on

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Speaker 2: our people in the ground in Israel. This senseless act

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Speaker 2: of violence by the terrorists, and our hearts go out

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Speaker 2: to our people, and we stand by our people. Thankfully

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Speaker 2: they're all safe right now. But that is our biggest,

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Speaker 2: most important focus, And of course we're monitoring and continuing

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Speaker 2: to serve our clients, but it's our people on the

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Speaker 2: ground that are first and foremost.

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Speaker 1: Could it change actually the world economy as we see

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Speaker 1: this potentially.

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Speaker 2: Escalating, Well, we certainly hope not chain closely, and of

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Speaker 2: course it's already affected oil prices and commodity prices. But

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Speaker 2: I think we're all just going to have to see

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Speaker 2: how much this expands or not over time. We are

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Speaker 2: in the ground in the region and other places in

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Speaker 2: the world, and so far it is pretty contained to

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Speaker 2: where the conflict has been and that's certainly what we

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Speaker 2: hope continues.

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Speaker 1: Jena. When you look at what your CEO has been

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Speaker 1: putting in place, structuring the kind of the big changes

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Speaker 1: that City Group is going through, where do you end

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Speaker 1: up in one two years in terms of the bank.

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Speaker 2: So this is something that Jane has been very thoughtful

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Speaker 2: about and decisive since her very first time on the job.

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Speaker 2: We had our investor day very soon after she started

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Speaker 2: and really laid out this vision for simplifying the bank.

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Speaker 2: It had already been on a path like that, but

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Speaker 2: to really much more simplify the banking to do starting

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Speaker 2: out with divestitures of our non US consumer businesses, which

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Speaker 2: we had all the world, particularly in Asian that's well

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Speaker 2: along now, and then secondly in spending a good bit

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Speaker 2: of time transforming our risk and controls and the operations

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Speaker 2: in technology supporting them and really getting that underway. And

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Speaker 2: this is what I would describe as the third leg

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Speaker 2: of that stool of change to simplify the company, and

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Speaker 2: it follows from the other two. So for example, by

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Speaker 2: getting rid of and having divesting all these non US

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Speaker 2: consumer businesses, we don't need the same significant geographic managerial

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Speaker 2: layers that otherwise we're there. So it's getting rid of

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Speaker 2: those and likewise bringing the core businesses closer to Jane.

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Speaker 2: So in two years, and I am getting to the

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Speaker 2: answer to your question. In a couple of years, I

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Speaker 2: think we believe it'll be a much simpler bank. Our

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Speaker 2: expenses will go down, our revenues will go up as

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Speaker 2: a result of being simp simpler, and I think you'll really,

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Speaker 2: despite this great investment in what we're doing in the transfer,

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Speaker 2: those costs will begin starting to come down at the

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Speaker 2: end of next year.

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Speaker 1: Is there a little bit of a bumpy road? I

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Speaker 1: mean you've also, for example, put you sold a big

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Speaker 1: chunk of China unit to HISPC. Does that impact your

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Speaker 1: ability to service clients in the shorter term, No, not

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Speaker 1: at all.

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Speaker 2: In fact, that's a very smooth transition that we're going through.

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Speaker 2: And with these we've had now coming on nine closings

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Speaker 2: of non US consumer businesses, I'm pleased to say those

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Speaker 2: have all gone very smoothly, and we've gotten good premiums

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Speaker 2: for the ones that have closed, and then in some

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Speaker 2: other cases we've had to engage in wind downs of

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Speaker 2: the business. China is one of them. But this marks

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Speaker 2: the ability to smoothly sell a chunk of the business.

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Speaker 2: So I'd say all of that's going very well, and

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Speaker 2: our business that remains behind, which is our core institutional

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Speaker 2: business that we have all over the world, that's operating

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Speaker 2: very smoothly, and this is not in fact, it's making

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Speaker 2: it easier rather than more difficult.

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Speaker 1: Changes infrastructuring, you have a final number of job cuts?

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Speaker 2: No, no, we don't. I think one of the interesting

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Speaker 2: things about Jane is she's quite decisive about the direction

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Speaker 2: she wants to go, but she's also very specific about

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Speaker 2: doing it in the right sequence. This is not about

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Speaker 2: hitting a number. It's about making sure we get the

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Speaker 2: roles right to simplify the company, to get the most

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Speaker 2: efficient business that we can get out of this. Those

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Speaker 2: numbers will come over time, but we're not targeting a

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Speaker 2: particular number at this time.

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Speaker 1: So because of changing US regulation, BOZL again, what are

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Speaker 1: some of the changes that you will have to go through.

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Speaker 2: Well, the most significant thing with Basil and what's going

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Speaker 2: on in the United States is a proposal to significantly

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Speaker 2: increase capital requirements for the largest banks that I will say,

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Speaker 2: somewhat bizarrely is a response to problems that happen with

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Speaker 2: regional banks in March. We believe that it is an

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Speaker 2: unwarranted proposed increase, and not only because it causes us

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Speaker 2: to have to hold more capital, but we believe it

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Speaker 2: really will have a material impact on the amount of

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Speaker 2: lending that US companies can do generally, which is not

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Speaker 2: a good thing when the economy is in more or

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Speaker 2: less a precarious position, even though remarkably resilient. And it

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Speaker 2: also pushes more activity lending in financial intermediation out of

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Speaker 2: the banking system and into non banks, and we don't

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Speaker 2: think that's a good thing. We don't think it's a

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Speaker 2: necessary thing. Our banks, our largest banks, including City, are

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Speaker 2: very strong from a safety and soundness perspective in terms

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Speaker 2: of capital levels, liquidity levels, and this is just unwarranted

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Speaker 2: to have this huge excess amount of capital.

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Speaker 1: What are sitting groups on relationships with regulators? Of course,

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Speaker 1: given what's happened a couple of years ago with some of.

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Speaker 2: The consent orders, you know, look, I think we spend

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Speaker 2: a lot of time trying to maintain a very constructive

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Speaker 2: relationship with our regulators and I think think I can't

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Speaker 2: put words into their mouths, but I think they believe

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Speaker 2: we are doing our utmost to comply with the rules

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Speaker 2: and the consent orders that we're operating under. But ultimately

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Speaker 2: what they want to see and what we must deliver

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Speaker 2: our results execution results. We believe we are and people

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Speaker 2: will see that over time. But that's really what the

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Speaker 2: core of the relationship is about.

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Speaker 1: You see a lot of volatile markets. You see the

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Speaker 1: cost of credit going up. There's worries about financial conditions

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Speaker 1: getting even tighter. Is there anything that you see as

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Speaker 1: odd in terms of market behavior right now or something

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Speaker 1: that you worry about?

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Speaker 2: You know? From our position, I think we feel pretty

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Speaker 2: good about our risk profile and the amount of capital

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Speaker 2: and the quidity we have on the one hand, and

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Speaker 2: the risks that we choose to take, which are really

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Speaker 2: pretty prudent. At this point. We're not heavily exposed to

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Speaker 2: the commercial real estate business. We did not have interest

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Speaker 2: rate sensitivity that caused us to lose a lot of

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Speaker 2: money when rates went up significantly. So I think we

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Speaker 2: as a banker position really quite well. But of course

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Speaker 2: we're always watching markets. We see what's going on in

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Speaker 2: the ten year, treasury going up to at significant levels,

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Speaker 2: and we watch our credit card portfolio which is enormous

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Speaker 2: for signs of what will happen to the consumer. We're

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Speaker 2: seeing some cracks in the spending levels and yet still

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Speaker 2: very robust spending levels, so I wouldn't say there's anything

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Speaker 2: extraordinary at the moment, but we of course are watching.

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Speaker 1: John, thank you so much for your time today. That

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Speaker 1: was of course John A. Dugan, the chair of City

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Speaker 1: Group