Welcome to the podcast In Good Company, where I speak with influential figures in the world of finance and business. I'm your host, Niol Tangan, and today I'm thrilled to be joined by Jane Fraser, the CEO of Citigroup. Jane is one of the most powerful women in global finance and the first CEO of a major US bank. We own almost 1% of Citigroup, which is equivalent to 6 billion Norwegian Krone or $600 million.
I had the pleasure of sitting down with Jane in New York to discuss the current state of the world, the economy, and the banking industry. As a global fund, we rely on a global custodian to take care of our shares, and Citigroup has been our trusted partner in this regard. So, thank you, Jane, for looking after us.
Jane, when you look at the world today, what do you see?
Jane Fraser: It's a challenging place at the moment. I think we see a very desynchronized picture when you look at different parts of the world. I've recently returned from Asia, the Middle East, and the west coast, and you really get a sense of different parts of the world being in very different places from a macro perspective. That said, I think the overriding theme for everyone at the moment is one of building resilience.
From a corporate sector perspective, we see the sector in pretty good health globally. Balance sheets are strong, and companies are looking at big transformations due to the digital and AI world. They're also reexamining business models, supply chains, and global lanes and flows. There's a lot of change happening, and companies are focusing on building resilience in this new environment.
When you look at the economy, what are the indicators you look at particularly? What are the numbers you follow?
Jane Fraser: Right now, it would be rates. Just given the high inflation we're seeing everywhere, looking at rates, where they're being brought down, what's happening to the curve, and what's happening with inflation is something we're closely watching.
Central banks have been criticized for their handling of inflation in recent years. What grade would you give them for their work?
Jane Fraser: In retrospect, we would all say that they were late to recognize how much inflation was going up. It's much easier to see in the business sector, where we were seeing it on all fronts. However, there were other considerations, such as nervousness about coming out of Covid and making sure that jobs were prioritized over inflation. In retrospect, we overstimulated a well-performing economy, but I'm sure central banks will change the type of data they look at moving forward.
Some argue that we don't need banks anymore, given the rise of decentralized finance (DeFi) and other alternatives. What's your take on this?
Jane Fraser: I strongly believe in the role banks play. If we don't have a well-regulated system with the right investor protections, regulatory frameworks, and consumer protections, we end up with a lose-lose situation. Banks play a critical role in supporting clients and the financial system, especially during times of stress.
Citigroup's competitive advantage lies in being the preeminent banking partner for any institution with cross-border needs. We operate in 160 countries, have banking licenses in almost 100, and move $4 trillion in cash management, foreign exchange, and supply chains for the world's 5,000 most important multinationals. Our scale, flows, connectivity, and risk management capabilities provide unparalleled value to our clients.
Given the deglobalization and fragmentation of the world, is being global still as important as it once was?
Jane Fraser: I would argue that globalization is changing, but it's not deglobalizing. We're seeing lanes change materially, and people are reconfiguring their supply chains, financing capabilities, and energy flows. This knowledge started during the pandemic, and companies are now focusing on resiliency by adding more capabilities and redundancy, moving away from just-in-time models.
When you look at the most successful banks in the market, such as JPMorgan, what do you think they've done differently from Citigroup?
Jane Fraser: Some firms coming out of the financial crisis were in a stronger position than Citigroup and fully capitalized on it. We're now making significant investments in modern data and infrastructure across our business to support scale and agility. This is an area where we underinvested in the last 10 years, and we're intent on leapfrogging others.
You've recently announced a restructuring plan called the "Bora Bora" project. Can you tell us more about it?
Jane Fraser: Our goal is to align our organizational structure with our strategy, which focuses on a far fewer set of businesses that are all connected, serving a singular client base with cross-border needs. This means a simpler management structure, eliminating co-heads, flattening the organization, and reducing layers. We're also focusing on clients and freeing up people's time for execution, not bureaucracy and complexity that isn't adding value.
Restructuring can be a drawn-out process. How long do you expect this to take, and how many fewer people will you have in the bank when you're done?
Jane Fraser: We don't know yet how many fewer people we'll have in the bank when we're done. We have a couple of big regulatory consent orders that are focusing us on improving risk control and operational capabilities, which is nicely aligned with what our shareholders want to see. Our language has been crisper lately, and we're focused on being direct and clear with our people, ensuring everyone is focused on delivering to our clients and getting what we need executed.
Thank you, Jane, for sharing your insights with us today. It's been a pleasure speaking with you.
Jane Fraser: Thank you, Niol. It's been great being here.