Citigroup CEO: Profitability Not a Long-Term Concern
Citigroup may have some credit worries in the near-term, but profitability is not a concern on any long-term basis, Vikram Pandit, CEO of Citigroup, told CNBC.
“We have a 12:1 leverage ratio and we have a $200 billion of liquidity on our balance sheet and $36 billion of reserves on our balance sheet and we really have worked very hard to put our capital position in very good order,” Pandit said in an interview at the World Economic Forum in Davos, Switzerland on Friday. “So from here on in, we’re completely concerned with making sure that we’re profitable as a bank.”
Citi shares have been under pressure since the government’s announcement last year that they would be taking a 36 percent equity stake in the company by converting $25 billion in emergency aid into common shares. The stake has since been reduced to 27 percent.
“When we did our equity offering to repay TARP, the government said they want to be out of the stock sometime over the next year or so, so they’re inclined to sell the stock over time and we’re going to help them as much as we can,” he said. "We have the same goals as the government in this regard."
Last week, President Barack Obama called for increased limitations on the size and capacity of banks and other financial institutions in order to limit excessive risk taking and protect taxpayers.
Pandit said Citi is “quite aligned” with the principals that Obama has set out.
“I’ve looked at the proposals quite carefully and we are quite aligned with the principals that he’s set out and we think it’s generally the right direction,” he said. "That shouldn’t be surprise, given what we’ve been doing in Citi over the last 3 years—we solved businesses proprietary trading business, we’re selling some of our hedge fund, our private equity funds—we’re 20 percent smaller in size."
“We will continue to commit capital on clients’ behalves, continue to make markets, continue to do client facilitation and continue to provide credit—none of those things change,” he added.
Pandit went on to say that he's seeing US companies doing more exporting and that he saw more credit flowing in emerging markets.