Dow Jones – Jane Fraser’s Debut as Citi’s CEO Hits All the Right Notes
Thursday was Jane Fraser’s debut—and, all in all, the new
CEO fared pretty well. Fraser presided over her first quarterly earnings call as CEO and announced stronger-than-expected earnings, in part through the release of $3.8 billion in reserves—money put aside for bad debts early in the pandemic. And she revealed what could be the first of a number of restructuring moves: plans to exit retail banking in 13 overseas markets.
The overseas pullback is the kind of action investors have been hoping to see from her, as Barron’s suggested in February. Citi has long boasted of its global retail network. Pulling back suggests Fraser is moving on. As the 17-year veteran of the bank, said, “While the other 13 markets have excellent businesses, we don’t have the scale we need to compete. We believe our capital, investment dollars, and other resources are better deployed against higher-returning opportunities in wealth management and our institutional businesses in Asia.”
Further challenges lie ahead. While banking conditions have improved—the economy is recovering and banks have survived near-zero interest rates—Citigroup has issues. The bank was slapped with a consent order and a $400 million fine by regulators late last year for weak internal controls. Then it accidentally wired $900 million to Revlon creditors, and couldn’t get it back.
“What matters most [is] Citi’s strategic agenda with Jane Fraser at the helm,” wrote Credit Suisse analyst Susan Roth Katzke, on Monday, while hoping to get a few key details. Fraser made a start. Katzke has Citi at Outperform.
All Arrows Point Up
Consumer prices rose 2.6% in the year ending in March, retail spending jumped 9.8%, and jobless claims fell. Quarterly earnings season began, led by banks releasing pandemic-driven reserves.
saw record, mostly paper, earnings, as did
feasting on trading and deals. The “pause” in the
Johnson & Johnson
vaccine over blood clots didn’t look as if it would deter vaccinations or the market. The
Dow Jones Industrial Average
hit highs on Friday. For the week, the Dow rose 1.2%, to 34,200.67; the S&P was up 1.4%, to 4185.47; and the
advanced 1.1%, to 14,052.34.
Police and protesters clashed in a Minneapolis suburb after a Black man, Daunte Wright, was shot and killed by an officer after a traffic stop. The officer appeared to mistake her revolver for a Taser; she was charged with manslaughter. The incident came within miles of the ongoing trial of Derek Chauvin, the Minneapolis policeman charged with killing George Floyd last summer.
Crashing the Centrifuges
Iran threatened to increase uranium enrichment after a power plant explosion shut down nuclear centrifuges. Israel appeared to be behind the sabotage. The White House, which denied involvement, has just begun talks with Iran on a new nuclear accord. Separately, President Biden said that the U.S. would withdraw all troops from Afghanistan by Sept. 11, ending a 20-year war.
Reeling In Jack Ma
China’s antitrust regulator fined
Alibaba Group Holding
$2.8 billion for allegedly punishing merchants that sold goods on rival sites. Ant Group, the fintech controlled by Alibaba cofounder Jack Ma, gave into government pressures and applied to become a financial holding company overseen by the central bank. Regulators then demanded that Ant separate its original payments platform from its fast-growing credit business.
The Securities and Exchange Commission cooled off the special-purpose acquisition boom by warning companies about revenue projections and accounting. SPACs have long treated warrants as equity; the SEC is now suggesting that some should be viewed as liabilities.
Annals of Deal Making
Global, the cryptocurrency exchange, closed its market debut with an $86 billion valuation…
reached a deal to buy artificial-intelligence and speech-technology company
Price: $19 billion, with debt, a 23% premium…U.S. casino operator Bally’s agreed to merge with U.K. online gaming company
for $2.7 billion, a 40% premium …France’s
said it would acquire Suez for $15.5 billion…Asian delivery service Grab will go public in a SPAC merger… Toshiba’s CEO was pushed out after an approach by
Bain Capital then joined CVC in the bid, while
mulled an offer…Dell Technologies said it would spin off its $52 billion VMware stake.
Bernie Madoff, a former Nasdaq chairman and perpetrator of the largest Ponzi scheme in history, died in prison at 82.