July 14, 2024
Citi CEO Jane Fraser sees no banking crisis afoot

Citi CEO Jane Fraser sees no banking crisis afoot

Citigroup Inc. Chief Executive Officer Jane Fraser said the U.S. banking system remains in solid shape despite the demise of Silicon Valley Bank and Signature Bank of New York in the past two weeks and a subsequent swoon in bank stocks.

“This is not a credit crisis,” Fraser said at the Economic Club of Washington, D.C., on Wednesday, as reported in a Reuters video. “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.”

Fraser downplayed any comparisons of the current situation to the global financial crisis that followed the collapse of Lehman Brothers in 2008.

Citigroup Inc. C, -0.59% contributed $5 billion as one of 11 banks to deposit a total of $30 billion into First Republic Bank FRC, -6.00% last week after a flight of deposits from the company.

Bank stocks have swooned this month as speculation mounted about a potential blowup of another bank after Silicon Valley Bank and Signature Bank failed, as well as on news of the forced merger between UBS Group UBS, -6.03% and Credit Suisse Group CS, -4.71%.

“So one of the great things about this was actually that the banks did all come back together, because we usually try and kill each other in different deals that we’re trying to do,” Fraser said. “You don’t want someone else to win a pitch over yourselves. There’s a lot of competition between us. But in this instance, this is one where we’re in a strong position, we want to stop what could have been a problem.”

Fraser said Silicon Valley Bank faced a quick rise in interest rates, a balance sheet that had some “holes” in it and a “very concentrated” client base of venture-capital firms that “ended up burning more cash much faster than anticipated.”

The situation accelerated “very quickly” and was amplified by social media, she said.

“There were a couple of tweets, and then this thing went down much faster than has happened in history,” Fraser said. “Frankly, I think the regulators did a good job in responding very quickly, because normally you have longer to respond to this.”

Fraser, the first female CEO in the history of Citigroup, took the job in 2021 after working as president of Citi and CEO of Citi’s Global Consumer Bank.

She was one of several megabank CEOs to appear before the House and Senate last fall to field questions on the U.S. banking business.

Citigroup’s stock rose 1.5% Thursday as bank stocks recovered from losses in the previous session.

Also read: Citigroup’s Jane Fraser is fine with remote work — as long as employees stay productive

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