Bloomberg Audio Studios, podcasts, radio news. It is John Dugan in the flesh. He is the chair of City Group, has joined the board since twenty eighteen and has really seen a whole host of cycles after formally being the occ chief during the financial crisis. John, thank you so much for being with us. I want to start with this idea that there just are so many unknowns, whether
it's regulation, whether it's trade policy, whether it's tariffs. How much are people in the banking industry somewhat paralyzed.
I don't think so, and I'll give you a good example our trading business. This can be a very good time of the year because there's volatility. As people are, there's uncertainty, and when there's volatility, that's good for our markets business. On the other hand, there are other businesses. If you're an investment banker these two weeks leading up to the election, they're not likely to be active in
the deal space. But this too shall pass, and people are navigating it and just looking ahead to see how they will navigate it.
One of the levels of uncertainty just how bifurcated are the scenarios depending on whether Kamala Harris wins or whether Donald Trump wins, and if you could just bring us into a window of city groups thinking of what the parameters are, you know, what's the sort of base case. In the extreme case, I Kamala Harris gets into office, and what about with Donald Trump?
So I think if Kamala Harris gets into office, we can expect more of a continuation of the policies that we've seen under Joe Biden, although we could be that it would be a little bit more business friendly because we may have a Republican Senate and that's the conventional wisdom now, and that means nominations in order to get through the Senate are going to have to be a little bit more negotiation with the Republicans and that could change the makeup of the people who get through. So
that's a more modest change I think. On the other hand, if Donald Trump wins the election, there will be very significant changes to personnel and that could change the whole nature of who our regulators are and how we operate. And that's an unknown, but it will be very different and it's a little difficult to plan for because we don't know exactly what that would mean.
Typically, less regulation, a lot of people think of as a positive for banks that allows them to be more profitable. City is in a unique position because you are a global bank that really does benefit from trade and from the free flow of cash between different economies. How would City group really rearrange if free trade is impeded, if you do get a real restructuring with tariffs and other protectionist measures.
Yeah, I think the way we look at it is, yes, it is true that globalization has benefited City because we're in one hundred countries on the ground and do business
and another fifty. But the fact of the matter is if people change from being in a lot of countries to being somewhat fewer countries and changing and figuring out how to change those supply chains, we are in a very good position to assist people as they make those changes because we have people on then in the places they're going to and the places they're coming from, and so we see that as business opportunities. That's the kind of thing we navigate all the time.
How much do you see Donald Trump really differing in terms of regulation when it comes to any trust and some of the banking capital oversights, especially given some of the commentary that we've heard from his vice presidential running mate with respect to the current FDC leadership. And I ask this because I have to be honest. I was with a banker when that news dropped about Capri and Tapestry,
and he was just beside himself. He couldn't believe that this was sort of the framework with affordable luxury handbags. I'm just wondering if that is sort of the expected norm going forward for you.
I think the way I would put it, I think there's an expectation that there will be more transactions and more deals that will get done, and that's a positive thing for our deal business, and so we would look forward to that. If it doesn't happen that way, we will not navigate the other side.
So ten days ago, Citygroup came out with earnings and it showed that it was seeing strength in a lot
of the different five business lines. Is extreamlind things. It was a beat across the board, really good shares popped and then Jane Fraser got on the phone and with analysts and someone asked her about a possible asset cap about whether potentially there could be some implementation, and she hesitated, and the shares plunged, and then she clarified, no, there is no asset cap and there is not any plans for any kind of asset cap, and yet the shares
still fell on a day. How frustrating was that for you?
Very frustrating because she did clarify it within minutes of the uncertainty around it, and what she said is absolutely clear. There is no asset cap, we don't have an expectation for an asset cap, and our business performance was really very strong in the third quarter or so. It's a bit of a mystery, and yes, it was frustrating.
At a city group get out from under this regulatory cloud that seems to be a sort of inc reasing a lot of skepticism in investors.
We have to make progress slowly and surely every quarter in making proof points of doing what we say we're going to do business so I so, for example, in the third quarter, as we had committed to our revenues were up three percent on an next divested your basis, Our expenses were down two percent, operating leverage increasing in each of those five business lines. Those are the kinds of things that we've got to keep doing to show
that we're making progress. Toward towards our medium term targets of an eleven to twelve percent return on tangible common equity.
Where is any group in this transition to streamlining these five businesses right now?
I think we're in a very good, very exciting place. I think the board is quite excited about how the company is doing as measured by those five business which, by the way, is much more transparent now you can see it much more. There's a less few, there's a removal of a layer between the board and Jane and those businesses. They're much more accountable because it's so transparent about how they're doing. And we saw some very exciting things in the third quarter. I don't mention three of them.
The Apollo credit deal twenty five billion dollars deal, very innovative. We had the largest deal transaction with the Mars acquisition of Kelenova that was announced where we were the sole advisor. And we had a very exciting deal with MasterCard to tap into their international debit network. And these are the kinds of things where City really is getting on its front foot in each of these businesses.
How much are you thinking about another deal like the Apollo one.
Well, it's early days on Apollo. I think, as I said, we're quite excited. We think that really gives us the ability to offer a whole range of things to clients that we wouldn't otherwise be able to do. And that's the important piece. Let us see how it goes before we go down another.
Path as a global bank. Are you still sort of emphasizing that global reach to time where everyone's looking at the US and saying that's pretty good.
Over there still a lot of business going on all the world. We're there to help people in their cross be the pre eminent bank for companies with cross border needs. They may have different cross borders that they're using in cross border needs, but we're there to help them for exactly that.
John Dugan, wonderful to see you. Thank you so much for being with us. That was John Dugan, the chair of City Group's board, and John, I'm going to send it back to you.