After the bankruptcies of U.S. banks, Citigroup’s CEO says, “This is not a credit crisis.”
Jane Fraser, CEO of Citigroup Inc., reaffirmed assurance in American banks on Wednesday after a string of closures alarmed investors and sparked volatility in the world’s financial markets.
Fraser told the Economic Club of Washington, D.C., on Wednesday that “the banking system is incredibly reasonable” and that both large and local banks have adequate capital.
“It is not a credit crisis.” “In this instance, only a few banks are experiencing issues, so it’s best to take preventative measures,” she said.
In the previous two weeks, two American banks failed; Credit Suisse Group AG (CSGN.S) was acquired by Swiss rival UBS Group AG (UBSG.S), and America’s largest lenders agreed to deposit $30 billion in First Republic Bank (FRC.N), which was in financial trouble. Fraser’s public remarks were some of the first made by the CEO of a big bank since the uproar started.
One of the 11 big banks that gave First Republic a lifeline last week to help it buy time for reorganization was Citi, the fourth-largest lender in the United States.
Fraser stated that while Citi is not interested in purchasing First Republic, it gave the institution a $5 billion confidence boost and anticipates being reimbursed.
According to her, the decision to support First Republic represented an extraordinary display of cooperation among titans of the banking industry, who are usually ferocious rivals.
Fraser remarked, “In different agreements that we’re trying to execute, we normally try to murder each other.” Yet, since this is a situation in which we are in a good position, we want to avert a potential issue. The rescue efforts on Wednesday couldn’t stop First Republic’s stock from falling 15%.
In other news, Fraser said it was hardly surprising that rival UBS acquired struggling lender Credit Suisse on Sunday. It was really only a matter of time, Fraser said, and “I don’t believe anyone was falling out of their chair” when Credit Suisse finally arrived where it did. She cited management instability and numerous crises in saying that “it’s been a difficult institution for a long time.