Citigroup Inc (C.N) CEO Jane Fraser on Wednesday expressed confidence in U.S. banks after a series of closures rattled investors and fueled turmoil in global financial markets.
“The banking system is pretty sound,” and large and regional banks are well-capitalized, Fraser told the Economic Club of Washington D.C. on Wednesday.
“This is not a credit crisis. This is a situation where it’s a few banks that have some problems, and it’s better to make sure that we nip that in the bud,” she said.
Citi, the fourth-largest U.S. lender, was one of 11 major banks that threw a lifeline to First Republic last week in an effort to help it buy time for restructuring.
The move to shore up First Republic was an unprecedented show of unity among banking behemoths that are normally fierce competitors, she said.
“We usually try and kill each other in different deals that we’re trying to do,” Fraser said. “But in this instance, this is one where we’re in a strong position, we want to stop what could have been a problem.”
Citigroup CEO Jane Fraser testifies before a Senate Banking, Housing, and Urban Affairs hearing on “Annual Oversight of the Nation’s Largest Banks”, on Capitol Hill in Washington, U.S., September 22, 2022. REUTERS/Evelyn HocksteinElsewhere, the takeover of another ailing lender, Credit Suisse, by rival UBS on Sunday was not surprising, Fraser said.
“I don’t think anyone was falling off their chair that Credit Suisse ultimately ended up where it did, it was really a question of time,” Fraser said. “It’s been a troubled institution for a long time,” she said, citing management instability and various crises.
As an only child born to an accountant father, Fraser worked as a golf caddy in her youth before attending Cambridge University and Harvard Business School. Fraser started her career at Goldman Sachs Group Inc, then became a partner at McKinsey & Co and held several executive roles at Citi before taking the helm two years ago.
Fraser praised the quick action taken by U.S. regulators to stop the bank runs that toppled Silicon Valley Bank and Signature Bank earlier this month from spreading more broadly.
The Treasury, the Federal Reserve and the Federal Deposit Insurance Corporation invoked “systemic risk exceptions” that allowed them to guarantee billions of dollars of uninsured customer money.
“It’s very important to protect depositors,” Fraser said. “The banking system everywhere around the world depends on confidence, and that confidence has to be in the safety and security of deposits,” she said.
