Chapter 1: What is the main topic discussed in this episode?
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We're very pleased, of course, to be here at the 20th anniversary of Citi's China Conference here in Shanghai. And we have none other than the chair and CEO, Jane Frazier. Thanks so much for having us.
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Chapter 2: What insights does Jane Fraser provide about Citi's growth in China?
And I see it here on the ground in China. We move away from some of the headwinds that we all know about on consumer spending and on the property market and look behind that here in China. it's a manufacturing powerhouse. What are we seeing? 50% of all robotic companies in the world are here in China.
China is writing the next chapter of its economy around advanced manufacturing, around innovation, as well as more Chinese companies expanding internationally. And we're both serving 70% of the Fortune 500 that are here in China, as well as serving the Chinese companies locally, tap into global markets.
So how does that equate to what the deal flow you see? This, who's the head of global banking, who we talked to a couple of hours ago, extremely bullish on the amount of deal flows going into 2026. What kind of cross-border with China do you see?
Yeah. Look, I think we're seeing new corridors opening up and the scale of ambitions, not just in China, but in Asia are higher than we see really in many other parts of the world. So in these new corridors, we're seeing the Middle East connecting with Asia. For the GCC, they were expecting Asia to be its largest trading partner. by next year.
That's an entirely new set of flows in the last five years.
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Chapter 3: How does the recent US-China trade situation affect business strategies?
Brazil's connection into Asia and into China, again, very robust. They're major partners. So the world is changing rapidly. It's adding new corridors. It's adding new flows. It's adding new wealth. And scale is the name of the game.
What will be your strategy with wealth management? You got out, as I said, the retail portion of your wealth management was sold to HSBC, but you're going to be onshore here. But you're going to do a lot of it from Hong Kong and Singapore, right?
So Citi is focused internationally, not on retail banking. We are focused on serving clients who have cross-border needs. That is a very vibrant strategy. segment of clients. Think of individuals that are driving mid-market companies that are growing internationally. We think of the world's billionaires and wealthy that need access to global markets.
And then we obviously think of investors and corporations that are doing so. There's a lot of engine of growth It's going to be 50% of all of the new high net worth households created in the next three years will be created here in Asia. So our focus is on what is the wealth proposition for those, as well as supporting the companies and the engines of growth behind them.
So what kind of hiring is going to be needed in this part of the world? Not necessarily China, but the rest of Asia at a time when we're also seeing corporate America as they invest heavily into AI, they've had to pull back on hiring and jobs have been cut.
It's a great question. I think AI is certainly changing a lot of what we're expecting we're going to need in the world going forward. So from Cidi's point of view, for example, we see this as an opportunity to really train up our talent.
How do we empower our talent to use the AI tools so they can be smarter in front of clients, they can spend more time serving clients and coming up with solutions as opposed to the more chore elements. of being a banker. We don't know how quickly it's going to change, Steve. So there'll be certainly a lot of shift in coding jobs. We've seen that already.
Our productivity is up 9% year over year for our coding teams. But there's going to be new jobs created too. None of us quite know yet exactly how the timing will play out. We know there's a lot of change ahead of that. But our approach is we're going to invest in our talent. Our firm is growing and that should be able to support the needs going forward.
You mentioned the Middle East. I think you just came back from Riyadh. You're co-chair of the U.S.-Saudi Business Council, I believe. This also very bullish on India. Magnificent opportunity there. He's biased. Might be a little bit biased, maybe. But again, what do you hope to get from those markets as it fits into your restructuring plan and the vision that you just talked about?
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Chapter 4: What is Jane Fraser's vision for Citi's restructuring in China?
companies leaning in to innovation, investing in AI, there is some, I think the doomsdayers will be proven wrong.
We're a couple months out now from when we had concerns rise about, I think there was one at Tricolor, the subprime auto lender, there were failures, there was concerns about non-performing loans. What does your balance sheet look like as far as that and where is your worries lie?
Our balance sheet is pristine, but I think part of that is because it's very heavily investment grade on the corporate side. We're over 80% investment grade globally. And when we look at the consumer side, it's about 86% prime. So we tend to see the most resilient, healthiest parts of the economy on the balance sheet. All of that said, we haven't seen a thing that is concerning us.
The consumer in the States is being fiscally responsible. Companies have been building up some more cash, either for a rainy day if it proves necessary, but most of them for investment. And they're acting from a position of strength. We'll keep an eye on the labor market. We'll keep an eye on some of the areas of mid-tier players in private credit and the like.
But as far as we're concerned, that second, third order affects. The bank's not saying anything that we're worried about.
Are you concerned by what some say maybe bubble forming in AI? We talked about the advantages of AI, but how much of a bubble or overheating?
I'm not sure if we're just in with a lot of our tech clients on the West Coast. I don't think anyone was ready to say that it's a full-on AI bubble, but no one is saying that there are some real pockets of, let's call it the British understatement, frothiness in the market. It's more around the edges.
What I found interesting is we can see a lot of the demand for the infrastructure build that's going in in AI and the energy for the next couple of years. Where you saw some opinions diverge was in the three to five year period, could we be in danger of overbuilding? But no one's feeling that for the big investments that are going on at the moment for the next couple of years.
So I think on that one, certainly some pockets of frothiness there on the valuations. But the core infrastructure investments are important. And as we're seeing in our own bank, and I think many companies are, we'll start getting some of the productivity benefits coming through. But the scale and the pace of investment is unprecedented. That is for sure.
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