Emerging Markets 'Not Immune' to Europe's Woes: Pandit
CitigroupCEO Vikram Pandit said his company's exposure to Europe is "extremely manageable."
Pandit's remarks came on the heels of the Greek electionthat isseen to be keeping Greece in the euro zone for now.
"The election is certainly positive for keeping the euro together," Pandit said in a brief interview on CNBC's "Squawk on the Street" on the floor of the New York Stock Exchange. Pandit was there to ring the opening bell to commemorate the bank's 200th anniversary.
"We've long thought that its important for Europe to have one strong currency. Having said that, we've got to be ready for every eventuality as a back up," Pandit added.
Over the last 18 months, Pandit says Citi is preparing by "very tightly managing" exposure to financial institutions in Europe. In percentage terms, Citi's holdings have been scaled down to 10 percent from 40 percent during the tumult of the European debt crisis.
"The risk we have is extremely manageable, particularly given our capital and our liquidity," says Pandit.
In an ever-interconnected world, ripples of economic slowdown are extremely difficult to avoid. About half Citigroup's business is in the emerging markets, which Pandit concedes is a more challenging landscape than it has been.
"The biggest thing that's growing is trade," he said. "Trade between the emerging markets and the developed markets, and trade in between the emerging markets. We're there, trying to help our clients navigate that."
"I know they're growing a little bit slower than they were a few quarters ago. Emerging markets are not immune to the impact of Europe. We feel it here," he added.
That said, U.S. financials are coming off of a difficult first quarter, hit by a drop in investing volume. Citigroup itself reported a 2 percent drop in net income last quarter.
"Capital markets today have lower volumes, reflecting uncertainties in Europe. I don't see that letting up any time soon," Pandit conceded.
Pandit did not delve into the details of how Citigroup plans to boost capital market activity going forward, except to say that Citi is in a good position to handle hurdles given its high capital cushion. (It has a 12.5 percent Tier 1 capital ratio under Basel I rules, and approximately $500 billion in cash and securities — about 26 percent of the balance sheet.)
"We're so much more liquid now than we were three years ago," he concluded.
Pandit also sees a stronger U.S. consumer and a housing market that is gaining strength.
According to Pandit, consumers have had little appetite to borrow. Instead, they have focused on paying down debt. This has helped shrink losses from credit-card delinquencies, and that is helping the banks to recover.