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Speaker 1: Bloomberg Audio Studios, podcasts, Radio News.

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Speaker 2: Bloomberg News Global finance correspondent Stionali basic sitting down right

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Speaker 2: now with City CEO Jane Fraser for an exclusive interview

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Speaker 2: from City headquarters in New York City.

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Speaker 3: Shanali, Thank you so much. Tim.

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Speaker 4: Yes, I'm standing by now with CEO of City Group,

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Speaker 4: Jane Fraser, and we are just one week out from

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Speaker 4: Donald Trump's presidential victory. As the CEO of one of

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Speaker 4: the country's largest banks, what's the most significant change you're

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Speaker 4: expecting with the Trump administration.

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Speaker 5: Well, first of all, Sanali, thank you so much for

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Speaker 5: joining us here at Cities headquarters in New York.

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Speaker 1: It is lovely to see you again. Thank you.

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Speaker 5: So I view this not just from the perspective of

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Speaker 5: our own operations, but from that broader perspective from our

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Speaker 5: clients around the world.

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Speaker 1: And I think they'd say fourties.

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Speaker 5: The first one is the tempering of regular second would

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Speaker 5: be taxes, third would be tariffs, and the final one

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Speaker 5: would be tightening immigration. And as we look across the board,

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Speaker 5: I would put that in the perspective of a largely

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Speaker 5: pro growth agenda.

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Speaker 4: Well, you're also the most global bank in the country.

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Speaker 4: How are you preparing for the world of global finance

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Speaker 4: to potentially be shaken up by some of these policies.

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Speaker 4: The tariff policy in particular, it's something that Trump has

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Speaker 4: made clear it's a key policy that he'll be implement

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Speaker 4: in So when.

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Speaker 5: We look at trade, you're right that there's going to

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Speaker 5: be changes, but it's not Trade is not going away.

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Speaker 1: So as we look.

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Speaker 5: At this around the world, I think we've already seen

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Speaker 5: major changes in the global lanes in the last three years,

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Speaker 5: driven by geopolitics and technology transformation. If you speak food, energy, technology, security,

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Speaker 5: cyber finance, green all of these different lanes are changing

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Speaker 5: around the world. This just puts one more into the mix.

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Speaker 5: So it will take a bit of time from trade

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Speaker 5: and the tariffs to see what goes from the rhetoric

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Speaker 5: to the actual agreements and the policies, and then into execution.

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Speaker 1: We'll have some time to work out what that mix is.

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Speaker 4: Another major reason I bring up trade first is because

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Speaker 4: a lot of prominent economists have brought up the idea

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Speaker 4: of inflation that could be brought on on the heels

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Speaker 4: of tariffs. How concerned are you about inflation? You are

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Speaker 4: kind of very early here to catch it.

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Speaker 3: In the first place.

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Speaker 5: Certainly there are elements of this that could be inflationary.

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Speaker 5: At the same time, we've also seen, particularly here in

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Speaker 5: the States, an ability to have productivity improvements and driving

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Speaker 5: changes through. So I would say we've got to wait

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Speaker 5: and see people decide policy and determine policy. Let's see

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Speaker 5: what the policies are, and then we can work out

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Speaker 5: what's the what's the response to it.

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Speaker 4: Well, the other interesting thing here is that the interest

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Speaker 4: rate expectation has changed really meaningfully, and that's given concerns

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Speaker 4: around fiscal deficits. How concerned are you about the deficit

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Speaker 4: in particular heading into next year and even beyond that.

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Speaker 5: It's certainly a consideration for me for the medium and

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Speaker 5: longer term. There's both a numerator and a denominator to

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Speaker 5: this equation. The numerator is growth and the denominator is

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Speaker 5: obviously the fiscal disciplines. And I think one of the

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Speaker 5: benefits here in the States compared to many geographies is

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Speaker 5: that we've got the growth part of the numerator, which

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Speaker 5: is helpful. This is clearly going to come into play

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Speaker 5: on the denominator, and we're going to need to see

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Speaker 5: the fiscal discipline. I don't think it's going to be

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Speaker 5: such an equation globally for the next couple of years,

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Speaker 5: because I think a lot of roads lead to the.

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Speaker 1: US in terms of investments.

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Speaker 4: In the meantime, it's interesting the bond market reaction you

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Speaker 4: saw last week alone, and as of this morning you

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Speaker 4: were flirting again with four point four percent on the

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Speaker 4: ten year the seeover bank, how much do you worry

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Speaker 4: about their long and the curve tailing off?

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Speaker 3: And is it a good thing in some degree for you?

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Speaker 5: What I think we're seeing in terms of the long

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Speaker 5: end is something everyone is going to be keeping a very.

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Speaker 1: Close eye on.

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Speaker 5: But I take the step back and look at what

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Speaker 5: actually is happening at the moment. We are seeing the

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Speaker 5: big unlock we've been waiting to see on the M

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Speaker 5: and A side. When is it the clients can be

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Speaker 5: more active in the one to three billion dollar acquisition

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Speaker 5: range the sponsors have been waiting to see and unlocking

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Speaker 5: for them to participate more. We're seeing that right now beginning.

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Speaker 5: Same for the IPO market growth of lev finn So

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Speaker 5: I think most of the attention is actually going to

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Speaker 5: pivot to the primary issuance and the activity that's driving

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Speaker 5: behind it, and that will be the story for the

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Speaker 5: next while.

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Speaker 4: I'm glad you brought that up. I will take you there.

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Speaker 4: It seems like you want to go to murder as

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Speaker 4: an acquisition. City Group, of course, is the advisor on

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Speaker 4: the largest deal of the year so far, the thirty

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Speaker 4: five billion dollar Mars deal to buy Calenova. There's an

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Speaker 4: expectation by investors out there that you could see bigger

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Speaker 4: and bigger deals. When you talk to clients, how excited

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Speaker 4: are they to push the button? How willing are they

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Speaker 4: to push the button on deals that are even larger

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Speaker 4: than thirty five billion dollars.

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Speaker 5: I think there's been a there's a lot of pent

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Speaker 5: up demand. But at the same time, I see, particularly

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Speaker 5: in the States, which is the majority of the M

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Speaker 5: and A activity at the moment, and it's likely to

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Speaker 5: be that way. It is game on the clients are

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Speaker 5: on the front foot in the States that they're looking

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Speaker 5: at driving transformation of their businesses. It is a scale

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Speaker 5: game at the moment in industry after industry and technology

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Speaker 5: is changing so quickly. It's very exciting, but it means

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Speaker 5: that clients who are not necessarily in technology, somebody discover

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Speaker 5: they better be, and they're going to be buying expertise

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Speaker 5: in that area.

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Speaker 1: So it's going to be pretty active from.

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Speaker 5: The strategics as well as from the sponsor space, partly

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Speaker 5: pent up but also the new possibilities.

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Speaker 4: Do you think that means that this is a series

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Speaker 4: of smaller deals that will start to make the deal

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Speaker 4: market come back in mass or is that inclination for

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Speaker 4: mega deals still there? There's a little bit of a

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Speaker 4: question out there and still how much those deals will

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Speaker 4: get through.

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Speaker 3: Even in Trump anti trust authority.

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Speaker 5: Certainly there are questions, but I think it's an and

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Speaker 5: not in all. We had our technology conference last week.

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Speaker 5: We had over one hundred and ten or so CEOs

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Speaker 5: from around the world, all wanting to be very focused

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Speaker 5: on the States. We kind of bring the world to

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Speaker 5: Silicon Valley, and the dialogue was around all of the

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Speaker 5: above at the moment.

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Speaker 1: So the ambition is there.

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Speaker 5: As always with M and A, there's a difference between

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Speaker 5: announced and completed, and that's where I certainly our people

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Speaker 5: are ready to help.

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Speaker 3: You've got a new investment banking chief.

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Speaker 4: In part of the idea is to go after more

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Speaker 4: private equity client. There's also an expectation of private equity

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Speaker 4: deals to come back. But if interest rates remain higher,

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Speaker 4: how possible is that deal flow to come to the surface.

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Speaker 5: Obviously, lower rates is helpful, and we've got a long

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Speaker 5: way to go in bringing the rates down. I mean,

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Speaker 5: there is a lot of cushion there at the moment,

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Speaker 5: as everyone knows, so we would expect them to come

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Speaker 5: down from where they are. How high, how far down

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Speaker 5: they go to be determined. But certainly what we are

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Speaker 5: seeing is, you know, there's a lot of reason for

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Speaker 5: people to be participating.

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Speaker 1: You also have private asset market.

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Speaker 5: You know, we're very happy with our new relationship and

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Speaker 5: partnership effort with Apollo twenty five billion dollars of fire

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Speaker 5: power to provide into non investment grade clients to help

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Speaker 5: getting deals done. So those are important parts of the equation,

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Speaker 5: and there are innovations out there to help clients responsibly grow, expand,

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Speaker 5: and acquire.

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Speaker 4: I'm glad you brought up the Apollo deal. Wondering more

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Speaker 4: on how it's going. Have you done your first set

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Speaker 4: of deals yet, how far along are you and how

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Speaker 4: many more conversations are you having just like it?

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Speaker 5: Well in the States, is the overwhelming portion at the

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Speaker 5: moment is roughly seventy percent to the private asset market.

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Speaker 5: So you've certainly got garnered a lot of attention by

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Speaker 5: the scale of this because I think it provides for

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Speaker 5: our clients more alternatives when they come to us when

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Speaker 5: we're originating and working with them, so they have more

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Speaker 5: alternatives and they have a lot of deal certainty. We've

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Speaker 5: worked a lot with Apollo over the last couple of

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Speaker 5: years on similar types of efforts, so we know each

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Speaker 5: other well, they know our origination, and that deal certainty

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Speaker 5: is very helpful for any of our clients.

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Speaker 1: I would expect us to.

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Speaker 5: Continue looking at how we can expand and bring in

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Speaker 5: other partners.

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Speaker 3: You know, it's interesting.

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Speaker 4: I've asked you about interest rates as it pertains to

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Speaker 4: your clients, also interested in how it pertains to your

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Speaker 4: net interestingcome do you think because rates might not fall

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Speaker 4: as much as initially expected, there's room for more NII

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Speaker 4: expansion here through this year and next.

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Speaker 1: Year when you look at the larger banks and look

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Speaker 1: at us.

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Speaker 5: We've got the benefit of a diversified business model. So

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Speaker 5: you ideally are looking at something where you know something

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Speaker 5: changes in the macro geopolitical environment. You've gone the ability

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Speaker 5: to move things around and adapt accordingly. So if we

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Speaker 5: end up with lower for longer or a higher for

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Speaker 5: longer environment, then we'll be the NII would benefit equally.

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Speaker 5: We had double digit nil growth last quarter. We've had

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Speaker 5: a strong focus on fees. We have banking franchise, our

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Speaker 5: wealth franchise, our services franchise, all growing very nicely taking share,

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Speaker 5: and you know that provides us additional cushion there.

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Speaker 4: A lot of investors are also very excited about the

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Speaker 4: financial sector right now because of this anticipation of an.

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Speaker 3: New regulatory regime.

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Speaker 4: Do you think that the BUZL three proposals will actually

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Speaker 4: be rolled back even further than that revised nine percent

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Speaker 4: increase in capital that has.

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Speaker 3: Been put forward.

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Speaker 5: When I look at BUZZLE three, we've had very constructive

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Speaker 5: discussions as a sector with the FED in terms of

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Speaker 5: looking at what are the unintended consequences of BUZZLE three,

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Speaker 5: because we need access to credit for small businesses, for consumers,

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Speaker 5: for farmers, for smaller banks and institutions, and this trickles down.

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Speaker 5: So I think the main goal here is to make

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Speaker 5: sure that there are no unintended ill consequences to access

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Speaker 5: to credit, to the competitiveness of the American banking system

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Speaker 5: that is the best in the world, and I say

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Speaker 5: that proudly, and also to market structure and making sure

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Speaker 5: that balance gets right. So I'm sure those dialogues will

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Speaker 5: continue to be constructive. We have to see what the

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Speaker 5: next proposal is though, I'm sure be another comment period

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Speaker 5: and then we shall.

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Speaker 1: Wait and see.

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Speaker 4: Should you face a more relaxed regulatory environment here, what

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Speaker 4: does that free you up more to do?

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Speaker 5: We have said a vision for our bank, we put

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Speaker 5: a strategy behind it, and we have an execution plan

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Speaker 5: that we are just systematically going through each different step

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Speaker 5: along the way. So for us, what this means is

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Speaker 5: our strategy is working. You could see that in our

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Speaker 5: third quarter results. Revenues up in every business, positive operating leverage,

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Speaker 5: gaining share, growing fees. We still have more work to

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Speaker 5: do and focus on the day job and getting that

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Speaker 5: job done properly, getting through the transformation work we need

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Speaker 5: to modernizing sit and simplifying city and improving our returns.

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Speaker 4: When you think about your returns, investors are asking so

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Speaker 4: much about cost discipline. What's the toughest part for you

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Speaker 4: to cut costs in order to get to the targets

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Speaker 4: that you've set out for yourself.

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Speaker 5: We're making sure that we both get the bank to

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Speaker 5: be more efficient and get it to be more simple,

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Speaker 5: so that modernization and simplification agenda is very important.

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Speaker 1: That also means investing.

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Speaker 5: The transformation that we're doing is both addressing some of

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Speaker 5: the regulatory issues that were raised, but they're also in

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Speaker 5: the benefit of shareholders because ultimately they drive to a

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Speaker 5: more efficient, modern organization. We also need to be investing

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Speaker 5: in our businesses, so it's driving forward on critical investments

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Speaker 5: and platforms that will help support our competitive advantage. And

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Speaker 5: it's simplifying the bank. We've successfully reorganized the institution. We've

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Speaker 5: realized benefits from it. We've realized benefits from the cost

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Speaker 5: takeouts we've done from divesting.

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Speaker 1: For me, it's about getting it right.

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Speaker 5: I don't want to take short term fixes and shortcuts

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Speaker 5: at the expense of making sure that this bank has

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Speaker 5: run well properly in the benefit of all stakeholders.

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Speaker 4: What a more relaxed regulatory environment also potentially lead to

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Speaker 4: less expenses.

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Speaker 5: It ultimately our transformation will lead to less expenses. I

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Speaker 5: look at it not just from the banking perspective. I

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Speaker 5: look at it from all of our clients.

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Speaker 1: And I think that's.

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Speaker 5: Why we see this big unlock, because over a regulation

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Speaker 5: can result for a client in being slower, it can

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Speaker 5: adding costs where it doesn't need to, it can affect

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Speaker 5: competitive advantage, and I think it's how do you get

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Speaker 5: the pendulum in the right place. A tapering of regulation

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Speaker 5: will certainly help multiple industries make sure that we get

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Speaker 5: that balance into a good place.

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Speaker 4: When you're talking about balance as well, how do you

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Speaker 4: think about the ability to keep investing while you're keeping

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Speaker 4: an eye on expenses your investment bank in particular. We've

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Speaker 4: talked about it a lot. How do you think about

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Speaker 4: the trade off on bringing on new deal makers? You

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Speaker 4: have one very prize position still open potentially with the

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Speaker 4: new head of M and A.

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Speaker 5: Well, I think about bringing talent in and very carefully.

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Speaker 5: Because we've got some very strong talent in our own

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Speaker 5: organization whom we're very proud and they're doing a very

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Speaker 5: good job. We want to make sure it's not only

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Speaker 5: that they are strong players in of themselves, but that

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Speaker 5: they fit the culture the right way, that they understand

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Speaker 5: the power of the franchise. They're excited about the potential

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Speaker 5: that we have ahead and that they're going to play

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Speaker 5: on the team.

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Speaker 1: To try and drive that forward.

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Speaker 5: We haven't found it to be a problem to attract

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Speaker 5: great talent to City.

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Speaker 4: So very importantly here we're about a year since you

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Speaker 4: announced a very massive reorganization. Where do you stand now,

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Speaker 4: do you feel like you're almost done? And what does

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Speaker 4: City group the new City group? Well like under a

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Speaker 4: Jane phraser as you think about the path ahead after

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Speaker 4: this first phase.

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Speaker 5: So I always said this year is going to be

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Speaker 5: a pivotal year for our strategy, and again the third quarter,

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Speaker 5: and indeed the results through the year have shown that

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Speaker 5: the strategy is delivering. We did the reorganization, as you said,

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Speaker 5: announced it six months ago. We got it completed six

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Speaker 5: months later, which is pretty good time. We've managed to

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Speaker 5: get some layers taken out of the organization for in total,

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Speaker 5: which is a lot. We reorganized our different businesses so

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Speaker 5: that they were in the best position to compete looking

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Speaker 5: forward and the right configuration around it. We took out

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Speaker 5: a lot of complexity of different activities and bureaucracy that

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Speaker 5: weren't necessary. We've still been tweaking some things here and there.

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Speaker 5: You don't get it right first shot, I'm in one

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Speaker 5: hundred percent of the way.

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Speaker 1: I'm very happy where we got to.

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Speaker 5: Now, we're focused on driving the performance of the business,

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Speaker 5: and we're focused around making sure that we get our

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Speaker 5: transformation done properly, the right way and deliver the results

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Speaker 5: that we need to a lot of urgency around here,

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Speaker 5: a lot of focus and accountability.

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Speaker 3: Jane, We thank you so much for joining us.

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Speaker 4: That is Jane Fraser, of course, the CEO of City

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Speaker 4: Group down at City Groups New York headquarters, and of

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Speaker 4: course a.

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Speaker 2: Big thank you too. A Bloomberg News financial correspondent Ushanali

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Speaker 2: bask sitting down with City CEO Jane Fraser, just now

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Speaker 2: in Lower Manhattan