Citi’s Fraser warns that mobile money is a “game changer” for bank runs

(Bloomberg) — Citigroup Inc. chief executive officer Jane Fraser said mobile apps and consumers’ ability to move millions of dollars with a few clicks of a button is a game-changer for bankers’ management and response by regulators on the risk of bank runs mean.

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Fraser said Silicon Valley Bank’s rapid demise also made it harder for banks to evaluate and prepare bids for its assets. Just two weeks after the California-based lender collapsed under the weight of tens of billions in withdrawals from its venture capital clients, Fraser said her firm hopes a buyer will emerge in the coming days.

“It’s a complete turning point from what we’ve seen so far,” Fraser said Wednesday in an interview with David Rubenstein, co-founder of Carlyle Group Inc., at an Economic Club of Washington event. “There were a few tweets and then this thing went down a lot faster than it historically happened. And honestly, I think the regulators did a good job reacting very quickly because you usually have longer to react to that.”

In just 11 days, four banks collapsed this month, including three US regional lenders and Swiss financial giant Credit Suisse Group AG. A fifth company — First Republic Bank — is faltering. Amid the turmoil in global financial markets, stocks have soared wildly and investors have lost billions of dollars.

Citigroup was among 11 banks that joined forces last week to provide $30 billion in deposits to First Republic to prop up the San Francisco-based lender plagued by customer withdrawals and credit rating downgrades . Wall Street executives and US officials are looking into a bailout plan and exploring the possibility of government support to make the company more attractive to investors or buyers.

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Citigroup isn’t interested in bidding for First Republic, Fraser said. She declined to comment on the current state of the lender, but said the company is “actively working on the challenges they are currently facing.”

Fraser emphasized that the string of bank failures is isolated, noting that the largest US banks remain well capitalized.

“We’re talking about a few banks here,” Fraser said. “It’s not something that’s spread across the entire banking system. This isn’t like last time. This is not a credit crunch. This is a situation where some banks are struggling and it’s better to make sure we nip it in the bud.”

Fraser’s conversation will appear March 29 on The David Rubenstein Show: Peer-to-Peer Conversations.

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