On March 13, 2023, there is a sign outside a Citigroup Citibank branch in Torrance, California. PHOTO AFP Citigroup Inc CEO Jane Fraser expressed confidence in the US banks after a series of closings rattled investors and caused turmoil in global financial markets.
Fraser told the Economic Club of Washington DC on Wednesday that the banking system is pretty sound, and large and regional banks are well-capitalized.
She said that it's a situation in which there are a few banks that have some problems and it's better to make sure that we nip that in the bud.
Two US banks collapsed in the past two weeks, and Credit Suisse Group AG was taken over by Swiss rival UBS Group AG and America's biggest lenders agreed to deposit $30 billion in the beleaguered First Republic Bank. Fraser's public comments were among the first by a large bank CEO since the tumult began.
ALSO READ: HK regulators welcome UBS' acquisition of Credit Suisse
Citi, the fourth-largest US lender, was one of 11 major banks that threw a lifeline to First Republic last week in an effort to help it get time for its restructuring.
Fraser said that it contributed $5 billion to the lender as a mark of confidence and expects to be paid back, even though Citi is not interested in buying First Republic.
She said that the move to shore up the First Republic was an unprecedented show of unity among banking behemoths that are normally fierce competitors.
Fraser said that we usually try and kill each other in different ways that we're trying to do. This is a case where we want to stop what could have been a problem, and that is where we are in a strong position. The rescue efforts didn't stop a 15 percent plunge in First Republic shares on Wednesday.
Fraser said that the taking over of another ailing lender, Credit Suisse, by rival UBS on Sunday was not surprising.
I don't think anyone was falling off of their chair that Credit Suisse ended up where it ended up, it was really a question of time, Fraser said. She said it has been a troubled institution for a long time, citing management instability and various crises.
Fraser, who is Scottish-born, spoke about her life and career in a wide-ranging interview with Carlyle Group Inc Co-Founder David Rubenstein. She is the first woman to lead a major Wall Street bank, a travel buff with two college-age children.
Fraser, who was the only child to be born to an accountant father, worked as a golf caddy in her youth before attending Cambridge University and Harvard Business School. Fraser started her career at Goldman Sachs Group Inc., then became a partner at McKinsey Co and held several executive positions at Citi before taking over the helm two years ago.
ALSO READ: Financial or price stability? Fraser praised the quick action taken by US regulators to stop bank runs that toppled Silicon Valley Bank and Signature Bank earlier this month from spreading more broadly.
The Federal Reserve, the Federal Deposit Insurance Corporation and the Treasury invoked systemic risk exceptions that allowed them to guarantee billions of dollars of uninsured customer money.
It's very important to protect depositors, Fraser said. She said that the banking system in all parts of the world depends on confidence, and that confidence has to be in the safety and security of deposits.