Citigroup Inc. Chief Executive Officer Jane Fraser stated the U.S. banking system stays in strong form regardless of the demise of Silicon Valley Bank and Signature Bank of New York up to now two weeks and a subsequent swoon in financial institution shares.
“This is not a credit crisis,” Fraser stated on 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 present scenario to the worldwide monetary disaster that adopted the collapse of Lehman Brothers in 2008.
contributed $5 billion as considered one of 11 banks to deposit a complete of $30 billion into First Republic Bank
final week after a flight of deposits from the corporate.
Bank shares have swooned this month as hypothesis mounted a few potential blowup of one other financial institution after Silicon Valley Bank and Signature Bank failed, in addition to on news of the compelled merger between UBS Group
and Credit Suisse Group
“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 stated. “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 stated Silicon Valley Bank confronted a fast rise in rates of interest, a stability sheet that had some “holes” in it and a “very concentrated” consumer base of venture-capital companies that “ended up burning more cash much faster than anticipated.”
The scenario accelerated “very quickly” and was amplified by social media, she stated.
“There were a couple of tweets, and then this thing went down much faster than has happened in history,” Fraser stated. “Frankly, I think the regulators did a good job in responding very quickly, because normally you have longer to respond to this.”
Fraser, the primary feminine CEO within the historical past of Citigroup, took the job in 2021 after working as president of Citi and CEO of Citi’s Global Consumer Bank.
She was considered one of a number of megabank CEOs to look earlier than the House and Senate final fall to subject questions on the U.S. banking enterprise.
Citigroup’s inventory rose 1.5% Thursday as financial institution shares recovered from losses within the earlier session.
Also learn: Citigroup’s Jane Fraser is ok with distant work — so long as workers keep productive
Source web site: www.marketwatch.com