Jane Fraser

with the Easy Ones Silicon Valley Bank. What went wrong there? Well, before we dive into that, I've worked in financial markets all around the world, and I have to say we're very lucky in America. This is the best financial system in the world. It is the end factivally okay, but despite it being the best, we have some problems time to time. Yeah, but they're they're isolated problems. So when you when you look at it, the financial systems is

broadest deep here as competitive. We've bought some large banks that are well capitalized and a source of strength. At the moment, we have medium sized banks, regional banks, and buy a large they are equally well capitalized, serving their communities play an important part in the banking system. This is quite isolated, okay, but people are still interested in hearing about it. So, so your bank is well capitalized.

Your bank, I should have said, as a bank with about two hundred and thirty thousand employers and about an eighty five billion dollar market capitalization. So your bank is in good shape. And your bank is the fourth biggest bank in the United States, that right, JP, Morgan Bank of America, Wells Fargo, and then City. There is a bank on the West coast called Silicon Valley Bank, or

there was a bank there not as well capitalized. I mean that the regulator is not under seeing what was going on, or are people in the banking where are people like you? Were you surprised by what happened. So you had a combination of two pieces. You've had the macro and some idiosyncratic and factors around Silicon Valley Bank, but then you also had the impact accelerated by social media of what went down and the rates curve and the increase in rates that's been most we've seen the

fastest and the steepest in forty years. So there's a bit of pain that comes from that. Secondly, you did have idiosyncratic factors I think is the polite British way of describing them in Silicon Valley Bank. So as all this played out, you saw some pretty serious holes in their balance sheet management, and they had a very concentrated client base, and that client base ended up burning cash much faster than anticipated, and they ended up wanting to

raise capital and it went down pretty quick. In the Greater Session in seven o eight or so, the US government passed TARP legislation, and under the TARP legislation, large amounts of capital were injected into banks, including City and effectively that meant that the shareholders, the creditors, and the depositors were all protected. This time around Silicon Valley Bank, was only the depositors work protected or were decision made

by the bide administration others over the weekend. Do you think that was the right decision to protect only the depositors and say goodbye to the shareholders and goodbye to the creditors. I think it's very important to protect the depositors right now. The banking system everywhere around the world depends on confidence, and that confidence has to be in the safety and security of deposits. So in terms of the most important job here they did the most important job,

which is making sure the depositors will whole. So in the old days when there were bank runs, used to see people lined up outside the street and get their money out. Now you're just on your iPhone or whatever phone you have, you can take your money out. So money moved so quickly was at a factor as well. And having the money get out of a bank so quickly on the weight and line, you can just do it over there. It is a complete game changer from

what we've seen before. David, You're absolutely right. There were a couple of tweets and then this thing went down much faster than has appened in history. And frankly, I think the regulators did a good job in responding very quickly, because normally you have longer to respond to this, so they acted with quite a lot of speak even how quickly this happened. So some people say you have a

moral hazard when you protect people. So by protecting all the depositors in Silicon Valley Bank, the implication was that if somebody else has a problem, will protect them and so forth, And so the two hundred and fifty thousand dollars limit is meaningless more or less? Or do you think the federals are and the Secretary of Treasurers saying we're not going to protect every depositor or we're going

to protect certain depositors. I don't think they need to go out right now because the banking system is pretty sound, and we're talking about a few banks. We had it from the Chairman pal today. This is not something that is spread across the entire banking system. Isn't like it was last time. 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. Not to pick on the West Coast, but there's another West Coast bank, First Republic Bank, which is around the country but based in San Francisco, and they've had some problems and they've had gigantic declining their market value and so forth. Do you expect that somebody will bail them out or buy them? Well, I'm not going to comment in depth on First Republic because they are actively working through the challenges that they're facing

right now. What you saw last week was a number of the large banks eleven of us got together to put a large capital or deposit injection into them to how by the time to make sure that they could come up with the right solution for the restructuring that's needed. So the large banks and others put in roughly thirty billion dollars of the past. So I think you put in roughly five billion or something like that. So how

did that happen? It Jamie Diamond call you up and say you have five billion dollars you don't really need and you can put it in. The first republican is that you have to go to your board to say I need to get five billion dollars somewhere. I mean, how or how do you make that decision? And was it you just say that, Jamie, I'll call you back, I'll think about it, or how does that work? So what are the great things about this? Was actually that

the banks did all come back together. Because you think of it, we're all pretty We usually try and kill each other in different deals that we're trying to do, so there's a lot of competition between us. But in this instance, this is one where yeah, we're in a strong position. We want to stop what could have been a problem. And we all know when there is a confidence crisis, the logic that takes over, isn't it necessary? Really rational? So we wanted to go and help protect

the system. It's in the interests to do so. So despite this being quite a divisive environment that we're all operating in, this is an instance of the bank's coming together and saying, okay, what can we do here to support a system that we have confidence in? And you don't put five billion dollars into the system through the generosity of your own heart. You do it because you have confidence in the system itself. You expect to get their money back eventually. Yes, okay, So Jamie Diamond is

a great banker. I think he's been the head of Japan Worker for seventeen years something like that. Jamie Diamond well regarded. But why do you think it is the case that he's calling around and doing this and not the Secretary Treasury, the Chairman of the Federal Reserved, the head of the FDIC. Why is it a non government person is doing this. I want to thought a government person would do this. David, Why do you think that Janet wasn't calling around doing it? Do you believe everything

you read in the newspapers? Tis because when people and who do something good, they usually have the press know about it. So but maybe she was going round. I'm sure she was. But Jamie seems to be getting all the credit if credit is the right word, or is that not fair to give him the credit? Oh? I Jamie played a role. I think we all played a role, and so did There was a very active discussion over that weekend. Which city consider buying First Republic or you're

not interested in No, you're not buying? Okay, another bank, but Credit Swiss. Credit Swiss seemed to dissolve very very quickly. Were you surprised at how quickly that bank kind of went away? After about one hundred years of being around. So the nice thing, we're about three or four banks out of the thousands that are here in the States and the rest of it. So let's put that in perspective. So Credit Suis. I don't think anyone was falling off

their chair. The Credit Suis ultimately ended up where it did. It was really a question of time. It's been a troubled institution for a long time. Those of you who don't know it, it's a very global bank in Swiss. It's got a very strong operation in Switzerland, good wealth management in Asia, investment bank here in the States and around the world. But it's had a lot of issues. It's had a lot of management instability, It's had a number of different crises and things that have hit it. Well.

Credit Swiss has some great private bankers and they have some great clients. Are the city bankers calling up at Credit Swiss former employees and saying you should come here now or something like that, I think they're calling us they are, okay, all right, okay, growing up? What did you say wanted to be the CEO of city when you're growing up? What did you think? I want to be a doctor when I grew up? But I was really lousy at biology, So that kind of news that one.

There's a lot of people who want to go to medical school. So okay, you grew up in Edinburgh area, yep? I did? And were your parents bankers? No, definitely not so. My father was a Scottish accountant, which meant you you're not really relying on parental generosity and extra pocket money from a scot Tish accountant as a father. So I used to earn my pocket money on the golf course at Saint Andrew's counting. You would not know it from my golf game, but I'm truth's better than mine. So

you went to Cambridge after you graduated? What did you do after I graduate? I joined Golbyn as an analyst. That's an easy job to get, an easy job when you haven't you don't work more than thirty forty hours a week. Yes, yeah, yes, So how many years did you do that? So? I worked to Goldman for a couple of years and I was I was young when I started, and everyone was I was the boring girl from Scotland. Everyone else was European, spoke multiple languages and

was a lot more exotic and interesting than me. So after I finished the Annist program, I thought I'd better make myself a bit more interesting. So I moved to Spain and speak Spanish before I didn't. So now you speak Spanish perfect amenty, Well, I know one word, maybe see or something like that. I don't ever, but I you know, my language skills are very limited, so so luckily you have other talents though, which But so you do there for a couple of years and then you

decide to go where America? All right? And where did you want to go in America? I did the same again, taught my way into Harvard Business School, and I was fascinated by the American machine. And if you've spend a bit of time in Europe and growing up in the you know, the eighties, seventies and eighties, it's fascinating to America is just something you want to try and understand in the American economy and the American entrepreneurs not someone

you ever wanted to bet again. So when you went to Harvard Business School, you entered in ninety two something like that? That's right? Did you entered ninety two? Were there are a lot of women in your class, probably about twenty four twenty five percent something like that, Yes, and enough of us to cause trouble? All right? You graduate from Harvard Business School and then you decide to go to McKenzie, Yes, I did. And why did you

want to be a consultant? Well, first of all was why didn't Why didn't I go back into banking at that time? And I've been in banking in the eighties where there weren't many women in banking, unlike the business school, they wore suits with very big shoulder pads, and they were more scary than the men um You remember that, you remember the era. And so when I looked at the consulting, particularly McKinsey, I like partnerships. I think partnerships

are great places to grow up. The apprenticeship models wonderful global institution and firm, and also it was quite strategic in what they were looking at. It was similar issues to M and A at GOUM. But I thought I would have a chance of having a family a bit more predictability met in the work schedule. So you did it for ten years, roughly ten years, and you had two children during that time. So you you go to McKinsey, you work your way up, you become a partner there

and you being a partner mckinsi's a great job. Why did you decide to leave to go to city. Yeah. I became a mum at the same time as I became a partner, and I worked part time all the

way through my partnership years. And McKinsey was fantastic about that because I was able to spend time with the kids before they went into school, but then when they got when they were then at school that I felt like, Okay, I can go back full time working again, and I you know, I honestly I felt like it was time that I could prove that I would I could do it, rather than just advice. All right, she went to city at the time. Did you think a woman could become

or would ever become the head of city? I honestly never thought about it. It mean, at that point, it's a firm that there were quite a few women around in I'd been in an environment was always very supportive around it and fantastic mele mentors and others, and it wasn't It was just never something I thought about. This was twenty years ago, so I was just enjoying the day job. So you had a series of jobs everyone you were the CEO of this division or that division

and so forth. And one time they asked you to move to Latin America to be the CEO of Latin America. Did you think that was a dead end, You're going to move to Latin America get out of the way of the succession, or did you think that was a way to get promoted. It was a big turnaround role. And it's one of those ones you say if I did a good job, then that was going to put me in good position for bigger, bigger opportunities head And if I did a bad job, then you know, so

be it. You wouldn't you weren't afraid they would forget you. You're down in Brazil or something, and you weren't afraid they would forget you and everything like that. Okay, so you did a good job, you come back and you're the head of the Global Consumer Bank. What is that Global Consumer Bank in City? So that that's retail banking. That's a credit card, which I believe you are a proud owner of a City credit card. David, I am

I have that in here. I can't. I'm getting I don't have enough frequent Flyer miles on it, though I'm trying to. You told me I'm not qualified for my frequent fire miles. But yeah, you've got the wrong card. Is it a it? Is this the best credit card you can get? So, David, you have the one with our wonderful partner of American Airlines and they yours is black. I can mind which is better. You've got to ask

for it, David. Okay, all right, Well, although I suspect you may not be flying quite as much on the commercial airlines. Currently, many CEOs are under pressure to take positions on public policy matters, So positions are on voting rights or or um climate change. So where do you think CEO should be getting in the middle of talking about those kind of things or do you try to not do that when they matter to your business model? Um,

and when they're important for progress. UM. If you're a bank, you care a little about economic growth and progress around the world, So yes, we will speak out on that. Also, if it's very important to our people the communities that we're in, it will be topics we'll talk about. We don't view that as being political, but it's about what do we stand for as a bank? Now, what about diversity, equity and inclusion. What are you doing to make sure

you have other diversity standards met in the bank? It's it's a really important part of the bank because I think because we've got people from everywhere who work at City and they want to work for an American enterprise. It's a real compelling point of the bank in attracting talent from all over the world for City. My predecessor really was very focused on making sure that we had strong diversity of all types in the bank, and we

worked out that radical transparency is very, very valuable. So we put out three year targets on representation and we disclose those every close exactly what they are. The targets we have on both recruiting and in retention and in promoting or in everybody's schoolcard. And we also have pay equity, so every single year we measure you have a third party come in and make sure that every woman is paid exactly the same as a man in the same

job performing at the same level. When did you realize for the first time I could be or you could be the CEO of the bank. I mean, you know, there are a lot of people. You have two hundred and thirty thousand employees, a lot of them want to be When did you realize for the first time you had a chance to get that when I was made president of the bank. Because up until then you just

you don't really have a sense. But that was a point when Mike and John had a conversation about being a likely successor, but no guarantees in life, and I'd better do a good job. Okay. So your predecessor was Michael Corbett. Yeah, he retired about two years ago. Succeeded him. What was the biggest challenge you had in becoming the CEO right away? It was COVID, So this was becoming CEO during COVID is not the easiest because you know, one's used to going around going to different sites, seeing

our people, seeing our clients in person. And while Zoom did an amazing job, it is not the same and so I know you have to learn how to lead in a different way. Today. City is a bank that is announced it's changing its strategy and you now want to be a consumer and institutional business bank in the United States? Is that right? Yeah, and you're getting out

of the consumer business outside of the United States. So what we've said we are rather than what we're not, is that it's a pretty extraordinary bank in its history and its presence globally. It's uniquely operate opens the door as a bank in a hundred different countries. So the City is to be the pre eminent banking partner for companies and for investors and for individuals across border needs. And that's the vision of the bank. That's the will

serve that client base as their absolutely critical partner. Hey see, you've sold a number of your international consumer businesses and you've an Now you're trying to sell your business in Mexico, the consumer business business. Who are you going to sell that too? Oh, we've been We've been fortunate to have a lot of interest there. Look, we looked at we

looked at a consumer banking and we could see that. Originally, the view had been that you would get a lot of global scale and consumer banking, and we were very strong in a number of different geographies. But the reality is you don't get as much scale globally. It's much more about local scale and those businesses. So we decided, let's focus. We want the bank to be simple. We want to be truly excellent or what we do. And that's better if you're a more focused bank around for

your business life. So that's right, that's the path we're on. So the bank stock under your predecessors and to some eccenter you hasn't really moved in ten years. Is that a concern. Well, we're transforming the bank to make sure that we're in a very different position. So we're changing the strategy of the bank because we talked about and that entails selling sixty five thousand employees. It's twenty five percent of our employee base, so we can really focus

and double down on the businesses that makes sense. Two thirty thousand you have, you're selling sixty five thousand. Yes, While yes, it's a lot, and I think it's under the belief that what where we truly excel. We will move every single day four trillion dollars of volume for five thousand multinational firms and there's no other bank in the world that can do that. That's an incredible asset

for America. It's a strategic asset for the States because you'd much rather have American companies operating on an America and banking rails and not foreign banking rails, particularly these days. So that's what we're focusing the bank around, is that client base. And it's a big transformation. David right, This

is bold. This takes some courage to do. We're making really good progress on it, and we're putting a lot of investment into modernizing the bank because we've had some regulatory orders against us as well, to make sure that we make the investments we need to and making sure the culture is there of real excellence. But also to be a human bank. We've talked about that being important

or put all of that together. That's a lot of transformations, a lot of work, but we're really we're determined around it, and we're completely convinced that that puts the bank into a different profitability, different return profile and ultimately the benefit of our shareholders. Suppose I'm listening to what you say, and I say, she's obviously urtic killer, she's committed. Maybe I'll myyer stock. You think your stocks are goodbye? Right now? Yes,

very my buy it. I can get an appreciation of some percent I can be happy with you think not as good as private equity returns, but good Right for young professionals, why should they want to work in a large commercial bank. What's the appeal of it? Why if somebody gets goes to Harvard Business School, why not go to a private equity firm, a hedge firm, one of these important organizations. And what's the how do you recruit people into place like city? What is it that you

say is so great about being a commercial banker. America's global banks are right in the center of some of the biggest challenges that are going on in the world. Geopolitically, we get pulled into the conversations we're supporting, we're playing a critical role in supporting clients and countries, and you get an opportunity to come and work and learn in a team environment, in an apprenticeship model on how to

tackle and solve some of these pieces. What do you do for relaxation and to get away from the office from time to time? You are a golf or or something. Yeah, look, I love spending time with my kids, so um, you know, being able a chance to spend some time with them. They're less enthusiastic now than they used to be, and they're little about that. But I'll take what I get. Did they tell him? They tell their friends who you are. They don't want to tell. So when I was announced

the CEO, I knew it was going to happen. I called up my duke son and I zip didn't pick up as usual, and I said, please call me um, and I get it. He didn't pick up. No, No, I didn't pick up. He send a mess about I'm busy. I said, didn't know. Please, I've got some news. Could you could you pick up? And he's like, Mum, I mean I'm on zoom calls, I'm you know, I'm really busy, and he did not pick up. Did not pick you up. I ended up having to text him the next morning,

but it was going to be announced. And then he came back to me at the end of the day and said, Mum, you were It was a text message, it wasn't a call. I said, Mummy, you know you're all lived the news today. Are you important or something? Dot dot dot dot dot. Thanks for listening to hear more of my interviews. You can subscribe and download my podcast on Spotify, Apple, or wherever you listen.