Citigroup CEO Jane Fraser Talks Turnaround Plan, Future

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I'm here with Jane Fraser, the CEO of City Group, and she is joining us, of course to speak about women, money and power in the future of finance. And for you, Jane, what is going to be the biggest ground shift in the world of finance.

Over the next five years.

I think that geopolitics is probably going to be the biggest ground shift that occurs in the world of finance.

We've seen, and I mean world.

From the global perspective, We've seen so many shifts in the lanes. I see technology flows changing, where they're going and the nature of them, particularly with AI, data centers.

Energy flows to support them.

We've seen food, We've seen the green transition, and energy flows changing. So there's an enormous amount happening anyway. Geopolitics is of the unknown, but is certainly going to be a big differentiator. And then you have technology and that will both be exciting, but it could have some risks associated to it too in an AI world.

To that end, what role is AI going to play in the future of finance.

We don't know exactly what role AI will play, but we know it's going to be a big and important one, and we're learning at the moment. We're that phase of how do we learn, how do we move fast enough with it so that we're adapting, We're seeing what it can do. It's impacting productivity largely at the moment, but I'm sure it will be affecting competitive edge, it will be affecting the configuration and the nature of some businesses.

You mentioned geopolitical rest being one of the biggest risks in the future. You ramble the most global US bank, How does that give.

You a different view than perhaps your rivals.

Oh, we operate in one hundred and sixty different countries. We're on the ground as a local bank in almost one hundred of them, many of them for a century. So we're not talking suitcase bankers here. We're talking about really seasoned individuals and a network that.

Has extraordinary flowers.

We have almost two thousand trillion dollars of flows go through our pipes every year for five thousand multinationals. What it means when you've got a network of that scale and capability is you're helping clients with growth, You're helping them navigate volatility, You're helping them be able to move different parts of their operations to different places in the.

World as these flows occur.

So it really gives us a unique opportunity here to differentiate ourselves.

Given the world is changing so quickly, where is the most promise over the next five years and what regions of the world do you see as lagging well.

I always like to about bright spots first, so I think the bright spots is America.

If you talk about a lot.

Of roads leading here, fantastic entrepreneurship, I mean, this country is incredible.

I love how Japan it's turning.

Up focused on returns, moving from savings to investment. Entrepreneurs also on the front foot there, so that's exciting most of Asium as well, really adapting and adopting a lot of new technologies. The Middle East is a different Middle East. As a woman, I find it really exciting to go there and see how quickly it has changed, and the female population is being unleashed in many of these.

Countries in a very positive way.

And I wouldn't forget Brazil and Mexico as areas where we're also seeing tremendous innovation. So I think those are you know, that's pretty broad group of winners there. Europe has a tougher time. They've got some more structural challenges. Labor market is not as flexible, they don't have the scale that the States has, and they've got some challenges in terms of competitiveness. So that would be a quick walk round the world of the highs.

While the world is changing, so too is the world of finance. Yes, in particular, you've seen for many years now the banks seed some share to the non banks. And you made a lot of news this year when you struck a partnership with Apollo, twenty five billion dollar partnership in order to provide more private credit.

To your clients. Where do you see the private markets going At.

The end of the day, when you look at a transaction and a partnershipp like the one we have with Apollo, you're looking at a win win, And as we look at it, we're marrying our string in origination and some of their power on their balance sheet in areas that we can't compete with them on and put it together in one plus one equals three for our clients because

The goal here from.

Our perspective give the client as much choice as possible. Again, what does it mean? I come back to America as a proud immigrant. What you see here is the depth and breadth of capital market. We have fifty percent of the world's capital market. We keep innovating. The scale and specialization it affords is really tremendous. You just don't see that as much in the rest of the world. And that I think it means. Why does the US keep being the winner in the global financial and capital markets?

It is because it deserves to be.

At that end, to what is the biggest risk to the industry over the next five years? Where do you have to look around the corner.

The most.

The piece that keeps me up at night is always cyber risk. And I think when we think about fraud, AI and cyber and the sort of convergence of those capabilities and the speed with which activity can be done now and that computer is going, that definitely continues to

Mean, where do you see City Group in five years will have embarked on this massive transformation.

What is your greatest ambition?

Oh, my ambition is to be a high returning, high quality earnings, modern, simpler institution that continues to play a shaping role in the global financial system. We are truly privileged to be as in as many locations as we are, with a talent base, with such a global mindset and an.

Ambition about it.

So I think about we've got the right strategy and vision we're executing with the right organization, We've got getting making sure we've got the right talent and culture in the firm, and that we're a simpler, well controlled, modern organization.

We'll have got the job done.

If you could give yourself a grade, yeah, and theer a structuring plan, what would you give yourself?

Oh, we aren't done yet, so I can't give ourselves a grade yet. I've always said that this is a multi year journey. We're going to be very disciplined about making sure that we don't take shortcuts. And the problem with grading yourself along the way is it becomes too tempting to do a quarter by quarter grade as opposed to we're just very very focused and accountable for delivering what the end product looks like.

Speaking of the end product, you've set out a goal to bring returns on tangible common equity closer to eleven to twelve percent in the medium term and beyond after so Bloomberg Consensus this year has city groups return on tangible common equity at six point eight percent. What do you say to critics that feel like you're not getting there fast enough.

Oh, that we have undertaken a multi year major transformation of an institution. We are working with ambition, with accountability, and with urgency.

So We've already divested.

All but one of our international consumer franchises and wound down those.

That we couldn't.

We've undertaken a massive reorganization of a company of two hundred and forty thousand employees in six months. Such a fifty thousand people have a different manager than had six months ago. It's been major change. We're being bold, we're ambitious. We're holding ourselves very much to account, to deliver on the outcomes we should do. And I say, look at the proof. You know we're delivering and we're determined to keep on doing so.

Now you've set out to cut twenty thousand jobs, it was a sizeable, It was a sizeable restructuring. Can you rule out the need to cut more jobs in order to meet more expensive return targets.

Look, we're transforming the organization. So as I look at the modernization agenda right now, it's really going to be focused on process simplification and efficiency. And I get back to AI as an example. We see AI as a tool that will help augment our people. And as I talk to clients across the board when they talk about their technology teams, they're not looking about shrinking them. They're looking about how can they do more with them and

We'll do what we need to on that front.

There are some areas you've also targeted for a lot of progress and as a growing part of city group wealth in particular services as well. You have said to us that people have been very excited lately to be working for the services business, even more than even some other parts. How do you see those parts of the business being a larger part of the city story.

So when they took over CEO, is very clear to me that we needed to grow our fee revenues and our fee businesses. We were underweight in that and as I looked at the full global businesses to fit together wealth, services, banking and markets, there are a lot of synergies there, but we were just underweight and underplaying what we should be doing.

On that front.

So Wealth Andy has laid out super strategy.

It's very clear it's really delivering.

We're seeing it this quarter with some major proof points that came through. The goal here is the investment revenues. We have five trillion dollars of assets under management that our clients have that they don't have with the bank. We need to be capturing our fair share of that by focusing on having a great investment platform and then making sure that our people are going out and helping our clients create wealth. I don't think of us as much as our wealth franchise for retirees as a helping

We've talked before about also a new head of investment banking and ambitions to gain more share in investment banking. Where do you see this going? How much further can you push to gain share?

I think again, Viz who joined us fairly recently and a gintier, and the team really married him well.

With our existing team.

We've been investing for a few years in technology, in healthcare in different areas that frankly, we were underweight in from our talent, and we're now really starting to see the proof coming through of those investments as that team more than gels but builds enduring relationships with our clients as trusted a vice is us and you can see it. We've had revenue share gains in all these different areas and in banking overall. Our intention is just to keep