Tags: Citigroup | CEO | Bank | Investors

Citigroup CEO: Bank Investors Should Expect Steadier, Lower Returns

Monday, 29 September 2014 08:53 PM

Banks will probably produce more reliable profits, though not at the high levels preceding the financial crisis, as firms adapt to new rules and pressure to curb risks, Citigroup Inc. Chief Executive Officer Michael Corbat said.

“Investors’ expectations today should be lower volatility of earnings and steadier returns, albeit probably at lower levels than we’ve seen in history,” Corbat said Monday at an event at the New York University Stern School of Business. The Dodd-Frank Act, which sought to overhaul U.S. regulation of the industry after the financial crisis, has reduced the chance that a large bank will fail or need taxpayer support, he said.

Stiffer regulation means some lending and other services will shift toward the so-called shadow-banking system, in which hedge funds and private-equity firms operate with less oversight, he said. The growth of that industry may erode consumer standards and spur loans to borrowers with lower creditworthiness, he said.

Such shifts don’t mean that New York-based Citigroup will lose an excessive number of employees to investment firms, which have limited capacity to expand their workforce, he said.

Regulation can benefit banks that already are large by making it harder for smaller competitors to expand, especially internationally, said Corbat, whose firm operates in more than 100 countries. Government oversight of banks also makes it more difficult for activist investors to pressure the firms for swift changes, he said.

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Banks will probably produce more reliable profits, though not at the high levels preceding the financial crisis, as firms adapt to new rules and pressure to curb risks, Citigroup Inc. Chief Executive Officer Michael Corbat said.
Citigroup, CEO, Bank, Investors
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2014-53-29
Monday, 29 September 2014 08:53 PM
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