Citigroup is bullish about at least one part of the economy: the emerging market consumer.
While the broader global economy is being battered by a stagnant United States, a polarized American political system and a financial crisis in Europe, the bright spot for growth in the near future is the emerging market consumer, Citigroup CEO Vikram Pandit said today in a breakfast interview hosted by Fortune.
"The emerging-market consumer is the new driver of global economic growth," he said. "The emerging-market consumer base is a real market for our companies to export to." Citi's role in all of that is to help businesses finance that trade growth.
About the broader economy, he said he is upbeat about it in the medium term and doesn't expect the U.S. to go into a recession. "It may not grow as much as we'd like it to grow, but I don't see it slipping back."
The global economic issue "front and center" is the leverage issues of countries, especially in Europe. At the heart of every crisis is "too much debt somewhere where somebody cannot honor their obligations. ... We have been thinking about leverage in banks. Now we're onto leverage with countries, which we need to address. But we also need to address leverage with consumers."
When asked what he'd say to the Occupy Wall Street protesters, should they catch him out front of his apartment building, Mr. Pandit had plenty to say.
"I'd say their sentiments are completely understandable," Mr. Pandit said. "The economic recovery isn't what we all want it to be. There are number of people who can't achieve what they're capable of achieving, and that 's not a good place to be."
He said they're right that "trust has been broken between financial institutions and citizens of U.S., and it's Wall Street 's job to reach out to Main Street and rebuild that trust." And he'd "talk about everything [Citi is ] doing to increase small-business lending substantially, admitting we can't reach everyone who needs money or loans and we're working through community organizations to reach them. We've got to make sure we deal with customer transparently and fairly, we give them lots of control and choice. And more importantly I'd talk about how they should hold Citi and financial institutions accountable for practicing responsible finance, which is about making sure you're acting in the interest of clients and system and not just moving money around but actually creating economic value, supporting growth in the economy."
Mr. Pandit, who even with his navy-and-white polka-dotted tie looked very much a banker, was upbeat about Citi's own business as he answered questions from Fortune Managing Editor Andy Serwer at the Time Life Building in midtown. The bank will report its seventh straight quarter of profit on Monday, after losing money in 2008 and 2009. Mr. Pandit said the company had gotten "back to the basics of banking."
He addressed questions about Citi's size -- at one point the biggest bank in the world, today by assets it's the No. 3 bank in the U.S. and around the 20th largest bank in the world -- and said it didn't signal an inherent weakness in either Citi or the U.S. as an economic center.
For most institutions, it's about figuring out why you're in business and what it takes to be in business, he said. "We are in 100 countries around world, we do business in 160 countries around the world. We've got an emerging market footprint that nobody else has, we connect the world. We've got retail account holders in Hong Kong who have children in college in U.S. and we know how to connect them." On the basis of that strategy, the correct question is what does it take to serve your clients. "You let the size you are and the capabilities and characteristics be driven by that ."
He continued by explaining that banking isn't only about the assets you gather on your balance sheet and if you come back to the principle of banks not speculating with their capital (which is the basis of the Volcker Rule), banks should actually manage themselves "asset light."
"The biggest services banks provide are payment services, operating accounts, moving money around the world, you need liability management, credit management. Of course we're there to provide loans as well, but it is those services and how you rank in providing those services that will determine how good you are as a bank, not the size of your balance sheet," he said.