Citigroup CEO says there is no credit crisis despite the failure of US banks

The CEO of Citigroup, Jane Fraser, has said that she is confident with the US banking system. Her remarks come after several bank closures in the United States and the crisis at Credit Suisse lowered confidence in the global banking sector.

Citigroup CEO expresses confidence in US banks

Fraser said that the current situation did not constitute a credit crisis. She also noted that only a few banks had problems. Her statements at the Economic Club of Washington come after the collapse of two US banks: Signature Bank and Silicon Valley Bank.

The issues with Credit Suisse also triggered concerns. Credit Suisse was recently acquired by its Swiss rival, UBS Group AG, which eased market fears. On the other hand, some of the largest banks in the US agreed to deposit $30 billion to troubled First Republic Bank, whose shares have plummeted by almost 90% since the crisis with SVB started.

Citi was among the 11 leading banks in the US that added support for First Republic Bank. The $30 billion support for the bank gave it time to avert closure as it explored restructuring options. Citi contributed $5 billion to the recovery of First Republic.

The support given to First Republic by some of the largest banks in the US was aimed at shoring up confidence in the US banking sector. The support came despite these banks being competitors. Fraser noted that the support was to prevent a problem. Despite the rescue effort, the First Republic Bank stock has continued to plummet, dropping by 15% yesterday.

Fraser added that UBS’s takeover of Credit Suisse was not surprising. She added that the crisis at Credit Suisse was unsurprising because it was a long way coming. She noted that it was a troubled institution because of multiple scandals and management instability.

Fraser noted that US regulators had taken swift action to ensure that the bank runs that triggered the collapse of Silicon Valley Bank and Signature Bank were mitigated and did not spread across the banking sector.

Some US regulatory bodies that jumped in to mitigate the crisis include the Federal Reserve, US Treasury, and the Federal Deposit Insurance Corporation. These institutions worked together to guarantee billions of dollars to secure uninsured customer deposits.

She noted that in such situations, depositors needed to be protected. “The banking system everywhere around the world depends on confidence, and that confidence has to be in the safety and security of deposits,” she added.

Fraser is a top name in banking

Fraser has an extensive career in the banking industry. During her recent address, she reminisced about her career in the financial industry, and she is the first female figure that spearheaded one of the largest banks on Wall Street.

Her educational background involves the Harvard Business School and Cambridge University. Her career in banking started at Goldman Sachs, and she later became a partner at McKinsey & Co. She has also held multiple executive positions at Citigroup before taking over as the CEO of the bank two years ago.