Jane Fraser Talks China Outlook, Citi's Growth in Asia

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We're very pleased, of course, to be here at the twentieth anniversary of Cities China Conference here in Shanghai, and we have none other than the chair and CEO, Jane Frasier. Thanks so much for having us.

Well, we're delighted to have Bloomberg here. Thank you very much for joining our conference.

So what do you hope to get out of this and when talking to all your guests and your clients and to understand a little bit more about the China market, which you know very well. But we're coming out of a bruising trade war. We're not even out of it yet right. Some say it's a truce, not necessarily a lasting piece. What has been your takeaway so far?

I think what's interesting this time at this conference is that it's moved away from a China for China story and instead we have had huge interests and a large number of investors and companies coming to China to understand what is happening here, as well as the Chinese companies and investors that are looking much more externally now. So that really feels like a sea change here. That's pretty exciting.

How do you serve your clients against the backdrop of two governments that are trying to de risk, if not decouple.

I think the recent truth has brought some much needed and welcome stability here. We're in a position now for both sides that wanted to have a period now where we can just we can move ahead and have a more stable relationship between both of them. Is transactional, but it's in both both sides interests. We see our client base navigating this.

Well, Yeah, what's your vision for the China as the China market as it folds into your overall restructuring plan as well? You're now chair and CEO, first time that those two rules have been joined in a couple of decades, clear mandate to carry out your vision going forward?

What does that look like?

When you did exit your consumer banking business here like you did in many markets around the world, you also sold your retail wealth management portfolio to HSBC. You got out of an investment bank JV with Orient Securities, I believe, and you have an outstanding license application for your wholly owned JD Insecurities.

So City has.

Been in China for one hundred and twenty four years. We have a landmark building here in Shanghai. And what we have done is focused our strategy and grow. We are following our international clients around the world.

We're seeing them with.

Renewed interest and focus in China as we talked about, and then we're seeing the Chinese companies innovating at pace and also looking at expanding internationally. So we've been growing rapidly here with a more focused strategy, and it is the power of clarity and renewed purpose in the firm.

Now, before this interview started, you really countered what I said is you're pulling back a little bit from China. That's not at all. You're adding headcount. How Come what are your headcount numbers? When we get headlines that your IT department maybe thirty five hundred jobs are going to be moving elsewhere and this, and that you pulled back from retail three or four years ago.

Yeah, I think you're getting the story wrong. Good.

Yeah, that's why I serious.

City is on the city is on the front foot. We are innovating, we are growing, We're helping support our clients. Our clients are both building resiliency and they are reinventing themselves with all the technological changes that is no different in China than it is in other parts of the world. So I know this is a firm with clarity, a purpose, with clarity of direction where we're headed, and we're really delivering strong progress. So I'm excited by the upside that

That here in China. It's a manufacturing powerhouse. What are we seeing?

Fifty percent of all robotic companies in the world are here in China. China is writing the next chapter of its economy around advanced manufacturing, around innovation, as well as all Chinese companies expanding internationally. And we're both serving seventy percent of a fortune five hundred that are here in China as well as serving the Chinese companies locally tap into global marketing.

So how does that equate to what the deal flow? You see, who's the head global banking who we talked to a couple of hours ago, extremely bullish on the amount of deal flows going into twenty twenty six, what kind of cross border with China do you see.

Look, I think we're seeing new corridors opening up, and the scale of ambitions not just in China but in Asia are higher than we see really in many other parts of the world. So in these new corridors, we're seeing the Middle East connecting with Asia. For the GCC, you know, they were expecting Asia to be its largest trading partner by next year. That's an entirely new set of flows. In the last five years, Brazil's connection into Asia and into China again very robust their major partners.

What will be your strategy with wealth management? You got out, as I said, the retail fortune of your health management was sold to HSBC. But you're going to be on shore here, but you're going to do a lot of it from Hong Kong and Singapore.

Rightw SO City is focused internationally on not on retail banking. We are focused on serving clients who have cross boorder needs. That is a very vibrant good segment of clients. Think of individuals that are driving the mid market, companies are growing internationally. We think of the world's billionaires and wealthy that need access to global markets, and then we obviously think of investors and corporations we're doing so there's a lot of engine of growth.

It's going to be fifty percent of all of the new high.

Network households created in the next three years will be created here in Asia. So our focus is on what is the wealth proposition for those as well as supporting the companies and the engines of growth behind them.

Of hiring is going to be needed in this part of the world, not necessarily China, but the rest of Asia. At a time when we're also seeing Corporate America as they invest heavily into AI, they've had to pull back on hiring and jobs.

Have been cut. It's a great question.

I think AI is certainly changing a lot of what we're expecting we're going to need in the world going forward. So from city's point of view, for example, we see this as an opportunity to really train our talent. How do we empower our talent to use the AI tools so they can be smarter in front of clients. They can spend more time serving clients and coming up with solutions as opposed to the more chure elements of being

There's going to be new jobs created too.

None of us quite know yet exactly how the timing will play out, and we know there's a lot of change ahead of that, but our approaches, we're going to invest in our talent. Our firm is growing and that should be able to support the needs going forward.

You mentioned the Middle East. I think you just came back from Riard. You're col chair of the US Saudi Business Council. I believe this also very bullets on India, magnificent opportunity.

There's biased might be a little bit.

Biased maybe, but again what do you hope to get from those markets as it fits into your restructing plant and the vision that you just talked about.

The growth plans that we have going forward. Because we are on the front foot, I cannot stress that enough and you can see it in ourselves. So all of our businesses we're taking share, we're growing very quickly and our return are improving. So as we're looking forward its growth. Let's take India. City is larger in India today. We are the largest foreign firm by revenues in India.

When I look at Korea, we are aware.

I was just that that's another market where we were the first foreign bank to open the doors in Korea and we have a very strong position there supporting multinationals and clients. So as I look around the world, it's becoming more focus on diversification.

There is also a focus on reinvention.

What we are doing is helping provide the strategic advice. We're helping provide the financing and structuring and arranging that, and we're also helping manage the supply chain reconfiguration. We're helping with the hedging and foreign exchange interest rates. Because volatility is a feature, it's not a bug of this system.

Through your restructuring, you had to get rid of the retail side, and there's are there other areas you would like to divest.

I know you have the wrong story. The city is about growing we're very we're very foot forward, very clear on our strategy, and we're moving onwards.

I only ask because, again, the Russia situation is a little bit different, probably than your overall strategy. We just got a word that Vladimir Putin approved the sale to Renaissance Capital of your bank in Russia, probably something that you've been wanting to do for a while but was held back.

We have been winding down, as many many companies have been, the franchise in Russia.

We were waiting for the final approval to be able to sell.

We've got a couple more to go to Renaissance, but it's a tiny it's a tiny business, so it's in the grand scheme of where city is, where we're investing, on what we're doing.

It would be good to get that done.

But it's not critical to the firm's strategy going forward.

Let's talk about the outlook in the United States right now as we head into twenty twenty six. We saw the market reaction overnight simply we're seeing that the Fed's equation the bets for possible easing coming up and now fifty to fifty hours till below that because of the aspector of inflation. What is your heltlook for FED action going into the new year and the spectrum of inflation rising.

Look, I don't think we're out of the woods yet, and there's a sensor that maybe another.

Shoe to drop.

It could be in tariff or in the labor market, could be in the asset prices that are quite high in the States. But all of that said, we're quite optimistic about twenty six. The challenge for the FED right now is with the government shutdown. You know, we all have a death of up to date data which we could do with. It's hard to make these calls of exactly what's going on whilst we're waiting for the information.

We're a couple of months out now from when we had concerns rise about I think there was one tricolor of the subprime model lender. There were failures. There was concerns about non performing loans. What does your balance sheet look like as far as that and where is your worries live.

You know, our balance sheet is pristine, but I think part of that is because it's very heavily our investment grade. On the corporate side, we're over eighty percent investment great globally, and when we look at the consumer side, it's about eighty six percent prime. So you tend to you know, we tend to see the most resilient, healthiest parts.

Of the economy on the balance sheet.

All of that said, we haven't seen a thing that is concerning us. The consumer in the States is being fiscally responsible. Companies have been building up some more cash, either for a rainy day if it proves necessary, but most of them for investment, and they're you know, they're acting.

From a position of strength.

We'll keep an eye on the labor market, will keep an eye on some of the areas of mid tier players in private credit and the like. But as far as we're concerned that second third order effects the banks, the bank's not seeing anything that we're worried about.

Are you concerned by what some say maybe bubble forming an AI? We talked about the advantages of AI, but how much of a bubble are overheating.

I'm not sure if we're just in with a lot of our tech clients and the West Coast. I don't think anyone was ready to say that it's a full on a high bubble, but one is. No one is saying that there are some real pockets of let's call it the British understatement, frothiness in the market. It's more around the edges. What I found interesting is we can see a lot of the demand for the infrastructure build that's going in AI and the energy for the next

Is for sure.

Jane Frazer, thanks so much.

Thank you.

Hope you don't mind me playing the devil's advocate. I have the story straight now. Thanks. Thanks, thank you.

Very much for having us here. Thank you CHININGA conference.

The twentieth anniversary of that conference here in Shanghai,