It's my pleasure to welcome into our Washington Post space Jane Fraser, who's the chief executive of Citigroup. She's worked at Citigroup for 22 years. I asked what's something special I should mention about you, and she said immediately, 'Well, I was a working mother.' She raised two children while she was making her rise to run one of the world's biggest banks.
And I worked part-time for five of those years, for any of the women in the audience. So you can balance things.
So it's great to have you here. As everybody knows, this is the week in Davos when you just have to talk about Greenland, right? And so I'm going to start with the big question for you: Does Citibank have a branch in Nuuk?
Yes. It's one of the few countries in the world where we don't have a branch, although I think several of us have flown over it many times.
Well, I trust that you know that may change one way or the other. There's going to be a lot of business being done there. So this week, the Greenland shock has rippled through every conversation. Today, if you listen to French President Macron, he was really very emphatic, aggressive in his reaction. And he said something, Jane, that I mentioned to you, which made me think that in the aftermath of this, there's going to be some decoupling unless there's a quick resolution between the US and Europe. Certainly, that was Macron's theme. And I want to begin by asking you: What does that kind of world, where there's just more distance between the US and Europe than there was, what does that mean for your banking operations, the way you look at your portfolio of customers and assets?
Yeah, as you'll tell from the accent, I'm not a native of the US, but I'm a strong proponent of it. I think that's wishful thinking if people think they can decouple from the US. There aren't many alternatives to the scale, the innovation, the American consumer, the great American entrepreneur who you should never bet against, the breadth and depth of the capital markets. If you want to fund a business, you tend to come to America to do so. So, I think places would prefer to decouple more. They'd like to diversify a bit more. And I think diversification is a good strategy. It's just you can't do that in a hurry, because the US is just too important and plays too big a role, and other countries haven't got their acts together to provide a viable alternative. So I think there's an inevitability to more diversification over time as the world evolves. But don't underestimate America.
One thing that analysts have noted is that there seems to be some movement out of dollars and dollar-denominated assets. Certainly, this was a roaring year last year for international equities, returns that were just extraordinary. Do you see that at Citibank? Do you see any pressure on the dollar? Do you think that's going to increase in this world that we're living in? And do you see a movement away from dollar assets just to diversify?
So, a little bit on Citi. We operate in 180 countries around the world. We operate as a bank in almost a hundred of them. Bad English is the common language amongst the management team of Citi. We come from everywhere. And I think when you actually look at the facts and the data, there's definitely a sentiment towards less concentration into US assets. But we've watched people when it comes down to it, where do they want to invest? There isn't the breadth and depth of the savings market in Europe. So we see a lot of Europeans still investing in US equities, US fixed income, private equity, private credit. We see the same in India. I'd have the same conversation throughout Asia. So I think the reality of what people are doing versus where the emotions are, there's still quite a big difference between the two. And the data on the dollar, the dollar's really not traded in that much of a different band over the past 12 months. So, I think there's been a lot more talk and a desire than the reality of where the dollar is, because you'd expect if there was a big move out of the dollar, you'd see an enormous movement. And when I lived in the UK, I remember it suddenly went from $1.80 to $1.30 overnight a couple of times in my life there when the sterling collapsed. We've just not seen that here. And I think that again comes down to not necessarily because the US is doing everything right, but there are fewer alternatives elsewhere.
Part of what any banker, any investor does is estimate and price risk. And people always say that businesses, banks, maybe high among them, like predictability just because it's easier to plan. So I'm curious how you price or factor in the Trump risk. Trump announces every day his desire to be unpredictable. That's the whole message. And which is fine, arguably, but doesn't make life easy for you and your business. How do you deal with the, I'll call it the Trump risk, but it's just the unpredictability?
I'll talk more about what do our clients do, because as a bank, we are in the service of others. We're seeing a lot more hedging. So instead of selling the dollar, we saw more hedging by companies to make sure that they weren't being exposed to real downside risk there. We saw the same with interest rates back when the regional banking crisis happened. We saw the same with commodities when the war began in Ukraine and continued. So one, you know, you do see people looking at how do they navigate through volatility? They use a lot of the tools. They're not in denial, but it's there. But there are quite useful capabilities that the companies around the world deploy. Other things they do is they'll say, okay, I'm going to start expanding the number of supply chains I have and not just rely on one. Now we all remember when we all ran out of toilet paper back in the day and I need to have some more diversified supply of it. You see some of the same things going on. No one likes to have single sources of dependency anymore. So we grew the number of suppliers that we were onboarding to provide financing to for the multinationals we serve increased by several thousand this year. So companies and individuals react not necessarily by dumping things but by diversification, adding more resiliency, hedging, and doing things that are sensible so that they're not giving up on options of the future in case this too shall change.
So, I want to ask you about the US economy and how it looks to you. I interviewed Scott Bessent, our Treasury Secretary, this morning. That was off the record. But he gave a session for journalists traveling with him that was on the record before that. And during that session, he was extraordinarily bullish about growth prospects for this year and said he thinks it's possible that the US will have 5% real growth, which would mean 7% nominal growth maybe.
Yeah, no kidding. But you know, that's Chinese-level growth. I mean, we haven't grown much better than China. Probably, I mean, the numbers, you have to be sure the numbers are not spiked. But so do you have a similar sense? Your data is as good as anybody's. What do you see for the year ahead in terms of growth?
Yeah, look, I think the US economy is doing just fine. It's got consumer spending has been strong through the holiday season, but not worryingly so. Clearly acknowledging that there's a group of consumers in the US where it's tough. The affordability issue is a real one for many people. But overall spending has been good. The tax bill, the big beautiful bill, will deliver some pretty significant checks into many people that will be very welcome in the spring. We are seeing the benefits of deregulation and more in terms of it's encouraging more investment into future growth and into the drivers of capital expenditure and of the economy for the medium and longer term, which is a good thing. So you've got a number of factors. And you also, American companies are more on the front foot in multiple different industries. We have the benefit of scale. We have the benefit of the capital markets we were talking about, which no other economy does. And even our affluent and the middle class in the states has the benefit of being able to invest savings and get a return on it in a way that used to be the case in the UK where I'm from. But we've lost that equity culture. You don't have the same capital markets across Europe with options as to where to invest pensions. A lot of it's just sitting there in cash and deposits in banks. So, I don't pretend for a minute that there aren't risks out there. There could be another shoe to drop with tariffs. We're all keeping a close eye on the labor market. And, you know, we look at valuations and other pieces and appreciate they're high, but I do think there's more reason to be optimistic about continued growth in the US. And I think you've heard that not just, well, you've heard it from across the other bank CEOs, and whereas before we've been more cautious, I think we're cautiously optimistic.
And what about inflation risk? An economy where people are getting these nice checks and they're spending and suddenly people spend more. Companies may think, well, okay, you know, we'll accede to the wage demands this year because, you know, we're going to grow. What's your concern about inflation risk in this scenario?
It's tempered and part of that sentiment. So, when we look at, there's a big difference between some of the hard and soft data that's out there. The hard data is stronger, the sentiment has been weaker. And I think as a result, what we've seen is more mindfulness from consumers. They're spending, but they're not going crazy. We've seen it in terms of, say, the delinquencies, credit losses are lower this year than they were last year, and we weren't worried about them last year. Because people are being fiscally responsible. They want to make sure they're not splurging in ways that they shouldn't. So I think that balance gives me some comfort around that overexuberance that sometimes you can see in the states when things go well and companies are in good shape. The balance sheets are strong. So I think generally right now it feels reasonable. There are clearly affordability issues for some folk, like the prices have gone up a lot. Some of the tariff effects come through. So we don't want to underestimate the potential for some more pressure, but so far, pretty reasonable.
