Vikram Pandit, the CEO of Citigroup, advocated against the break-up of America’s largest banks this week, adding that U.S. regulators should not have the authority to decide which products banks can offer to clients.
Sanford “Sandy” Weill, a former chairman for Citigroup, said last month that investment and commercial banking should be separate and that banks should be broken up. American regulators are currently working on the Volcker Rule, a provision of the 2010 Dodd-Frank Act that would prohibit banks from engaging in proprietary trading—or risky investments with client funds, SFGate reports.
Pandit expressed support for the measure but said that splitting up Citigroup, America’s third-largest bank, would be an “artificial separation.”
“Safety and soundness is really important—let’s get the regulations in place,” Pandit said, according to SFGate. “But, we’ve got to stop telling banks which products they should sell. I don’t know why that is safe for the economy, and I’m certainly clear that it’s not good for our clients.”
More than half of Citigroup’s revenue in the first six months of the year was derived from its global consumer banking unit, which offers products like Mexican personal loans and Chinese credit cards.
Pandit said that while banks should not be too-big-to-fail, helping clients to access capital markets rather than forcing them to rely on loans from the bank allows the company to retain control of its balance sheet and reduce risk.
“We have to be in both parts of the business,” Pandit said, SFGate reports. “Some loans and some funds come from us, from our balance sheet, others come from the capital markets.”
Citigroup, which ranks as one of the five largest investment banks in the U.S., nearly collapsed during the 2008 financial crisis following losses related to the housing market bust. Following the crisis, the bank took a $45 billion bailout and disposed of other business assets.