Citigroup CEO Declares ‘This Is Not A Credit Crisis’ After U.S. Bank Failures

Washington
Citigroup Inc (C.N) CEO Jane Fraser on Wednesday expressed confidence in US banks after a series of closures rattled investors and fueled turmoil in global financial markets.
The banking system is pretty sound, and large and regional banks are well-capitalized. This is not a credit crisis. 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, she said.
In the past two weeks, two US banks collapsed, Credit Suisse Group AG (CSGN.S) was taken over by Swiss rival UBS Group AG (UBSG.S) and America’s biggest lenders agreed to deposit $30 billion in beleaguered First Republic Bank (FRC.N). Fraser’s public comments were among the first by a large bank CEO since the tumult began.
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 buy time for restructuring. While Citi is not interested in buying First Republic, Fraser said, it contributed $5 billion to the lender as a mark of confidence – and expects to be paid back.
The move to shore up First Republic was an unprecedented show of unity among banking behemoths that are normally fierce competitors, she said. We usually try and kill each other in different deals that we’re trying to do, Fraser said. But in this instance, this is one where we’re in a strong position, we want to stop what could have been a problem.
The rescue efforts failed to stop a 15 per cent plunge in First Republic’s shares on Wednesday.