0:02

This is Masters in Business with

0:04

Barry Ridholts on Bloomberg Radio.

0:07

This week on the podcast, I have an extra

0:09

special guest. His name is Bruce van

0:11

so On. He is the chairman and CEO

0:13

of Citizens Financial Group. They

0:16

are a hundred and sixty five billion

0:18

dollar bank, the twelfth largest

0:20

in the United States. If you

0:22

are at all interested in banking,

0:25

financing, middle market, private

0:27

equity, just a whole run of

0:30

different um aspects

0:32

of the financial services world, you're

0:34

going to find this conversation to be

0:37

quite interesting. Uh. Bruce is

0:39

really a very knowledgeable

0:41

and articulate UM spokesman

0:43

on not only behalf of his

0:46

bank, but the banking industry in

0:48

general. He has a really good

0:50

insight as to what's going on in both

0:52

the industry and the economy.

0:55

So I I found this conversation to

0:57

be fascinating and I think you will

0:59

also. With no further ado,

1:01

my interview with Bruce van Soon. This

1:06

is Masters in Business with Barry

1:08

Ridholts on Bloomberg Radio. My

1:11

special guest this week is Bruce van

1:13

Soon. He is the chairman and chief

1:15

executive officer of Citizens Financial

1:18

Group. UH. They were spun out from

1:20

RBS back in where

1:24

Van so On led a successful

1:26

initial public offering. Previously, he

1:29

had been executive director on the

1:31

RBS board for the prior four

1:34

or five years. Before that, he was

1:36

vice chairman and CFO at the Bank

1:38

of New York Nellan. His

1:40

previous career stints include

1:43

Deutsche Bank, Washerstein, Perella,

1:45

and Kidder Peabody. Bruce

1:47

van Son, Welcome to Bloomberg.

1:49

Thanks my pleasure to be here, Barry. Let's

1:52

start at the Bank of New York and Bank

1:54

of New York Mellon. Where were you

1:56

during the financial crisis, which what

1:58

was the name at the time. Well, I had

2:01

left by then, so I joined Bank in New

2:03

York. In the

2:05

biggest crisis I experienced there

2:08

was when eleven hit and we were basically

2:11

out of business there for a few days, and we

2:13

had to scramble to get the bank back on its feet.

2:15

But how you downtown

2:20

One Wall Street was the headquarters building and

2:22

the Barclays was Street was the

2:24

operations center, and so

2:26

we were kind of straddling the World

2:28

Trade Center buildings, and when you couldn't

2:30

have access to downtown, we

2:33

had to work out of other offices

2:35

that we scrambled to secure, and then

2:37

we had to stand up a new data center with IBM's

2:39

help in Sterling Forest, So that

2:41

was an exciting period. How long did

2:44

it take for you guys to get

2:46

back up and running, Well, it

2:48

was it was a couple of days, uh, and

2:50

then we had a lot of pressure

2:53

to basically start moving money and move securities

2:55

and clear out the backlog that had piled up for a

2:58

couple of days. So you had

3:00

backup facilities you weren't just that

3:02

wasn't the sole location. It was relatively easy

3:04

to turn but we didn't have the same kind of resiliency

3:06

that banks have today. So after in the

3:09

wake of that, Bank in York went out and

3:11

built a brand new spanking data

3:13

center out in Tennessee, UM and

3:15

so we're constantly ready

3:17

to flip over, but we weren't at that level

3:20

of resiliency at that time. The cloud

3:22

has changed everything for banks

3:25

and financial instation. I think the cloud is part

3:27

of that. So part of it was just making

3:29

the investment and recognizing the need

3:31

for a higher level of resiliency. But

3:33

now moving things to

3:35

the cloud and running your infrastructure

3:37

in the cloud I think offers some great promise

3:40

to lower costs and also increased security

3:43

and you were at RBS then in

3:45

o eight oh nine is the yes, so so

3:48

uh the reason I missed the crisis we had

3:50

merged with Melon and

3:51

uh I stayed through the transition.

3:54

We had appointed a new CEO, so I wanted to

3:56

go do something else, and

3:59

I was out by July of oh eight. The crisis

4:01

was in the fall of oh eight, so it

4:03

was nice not to be in the hot seat during that. I

4:06

was working in private equity for about a year trying

4:08

to put deals together, and then RBS came a

4:10

calling. They had wanted to put a new

4:12

management team in place to help right

4:15

the ship after RBS took

4:17

a tumble in the crisis and needed a government bailout,

4:19

so I joined Stephen Hester. There I was the

4:22

CFO, and uh we had a lot

4:24

of surgery do in terms of shrinking the bank

4:26

and getting it back to safety. So you

4:28

mentioned private equity. Citizens Financial

4:31

is sort of a can I call them a middleware

4:34

sort of bank does a lot of work

4:36

with um not the giant

4:38

entities out there, but a lot of very other large entities

4:41

that I think are a little below the reader

4:43

of the public. Is that A yeah, So here's the

4:46

you know, the kind of Laya

4:48

the land in terms of our commercial business,

4:50

so h, we focus on middle

4:52

market companies, which are maybe twenty

4:54

five million to five million in revenues,

4:57

and then also the mid corporate segment, which

4:59

is five hundred million to about three billion

5:01

in revenues. Over time

5:04

since I've joined Citizens, we've taken

5:06

the middle market customer

5:08

a count from about two thousand up to about

5:10

three thousand, and mid corporates

5:13

we've taken from about five hundred up to

5:15

about a thousand. So uh,

5:17

we've grown faster at the bigger company

5:20

end. Uh. And what you need

5:22

there to be competitive is you need bankers

5:24

with industry expertise. So we had to go out

5:26

and recruit in some bankers for

5:28

technology or healthcare, energy, uh,

5:31

so they could really serve those customers well, and

5:33

they could bring previous relationships

5:36

from their last bank over to Citizens.

5:38

And so we've had some some really nice

5:40

growth. Uh. But we're

5:42

not focusing on the household

5:44

name. Fortune five companies were staying

5:46

a little bit below that radar, and we can compete

5:49

very effectively against the mega banks.

5:51

There's oftentimes we're leading deals and we'll

5:53

have jp more going to be of a on our right or we're

5:56

winning a swap transaction against the megabanks.

5:58

So we have really good cape abilities, but we

6:00

stay focused on an area that

6:02

that we know and we can compete effectively. So

6:05

I've noticed on Wall Street UM,

6:07

hedge funds and venture capital

6:09

seems to be going through a bit of a rough

6:11

batch. But private equity

6:14

just is a house of fire. It just

6:16

expands rapidly. How does

6:18

that? Well, private equity is is

6:20

a good customer segment for us in the commercial

6:22

bank, and we have focused

6:25

over time on say fifty

6:28

to sixty sponsors that we know well,

6:31

uh, that we think they're good operators. Uh.

6:33

They invest wisely, uh,

6:36

and they're good to their banks and when they

6:38

need to put equity back into a deal to right

6:41

the ship if something is a little stressed,

6:43

uh, they do that. So uh,

6:45

that's where we've stayed focused. We haven't

6:47

tried to move and compete for all

6:49

the business that's taking place there. And I think clients

6:52

selection has been really critical. So

6:55

those firms know us well, they

6:57

give us the swings at the bat, they let us lead

6:59

trans actions and then also provide more

7:01

services to their investee companies.

7:03

So that's been a really good strategy for

7:06

us, I would say, Uh, similarly

7:09

with commercial real estate, Uh, the developers

7:12

we focus on, we've known for a long

7:14

time. We think they're good operators, and so

7:16

again we build those strong relationships

7:19

and we get good swings at the bat when

7:21

they're doing things, and I like to include

7:23

us in the deals that they do, and then they give us a chance

7:26

to get more of their wallet because they

7:28

know we have the capabilities. That sounds quite

7:30

quite interesting. So let's

7:32

start with a really broad topic. Since

7:35

the crisis ended in O nine, there

7:37

have been just enormous changes

7:40

in banking and regulation even the

7:42

entire economy. How

7:44

has the role of a CEO

7:47

running a bank changed over

7:49

this period? How has banking changed over

7:51

the period. It's a very broad question, U.

7:53

I'll break that down. So, you

7:56

know, after the crisis, it was

7:58

clear that there

8:00

needed to be some reforms first around,

8:03

i'd say the prudential regulation

8:05

about how banks, uh, did they

8:07

have enough capital, did they have the right funding

8:10

and liquidity structures and so um,

8:13

where they're managing risk the right way. So

8:15

we had a whole framework

8:17

that was put in place that was agreed globally

8:20

basically around capital, liquidity,

8:22

funding, running stress tests, uh

8:24

and I think that was really positive.

8:27

So we learned a lot from the crisis

8:29

and we put those lessons to use. Uh

8:32

So a big part of our efforts

8:34

early days was to make sure that we were

8:37

keeping up with those increasing demands

8:39

around the prudent regulation. The

8:41

second element of regulation was around

8:44

really conducting culture, and so

8:46

banks I think weren't always that transparent

8:49

with their fees, and sometimes they were working against

8:51

their customers that are working for their customers,

8:53

so they're needed to be changed there as well.

8:56

And so that whole agenda came in

8:58

in the second wave after the credential

9:00

agenda, and I think that's

9:02

also been very positive in

9:05

terms of creating the right mindset and

9:07

culture inside banks, in terms

9:09

of, you know, we have to be the trusted advisor. We

9:11

have to be working for the benefit of

9:13

our customers, giving them good advice, being

9:15

simple, being transparent on our fees. Have

9:18

we come full circles when we come a long

9:20

way, you know. The one kind of bump

9:22

in the road, unfortunately, was the

9:25

Wells Fargo selling scandal,

9:27

which kind of made folks think, well, maybe

9:29

there hasn't been any change here in banks, when in

9:31

fact, I think most of the banks had come through

9:33

and made the appropriate changes, so that yeah,

9:37

I think that was it. That was a black eye for the industry,

9:39

and they're paying the piper for that. They now

9:41

have a new CEO and they're working hard

9:43

on their regulatory equation and it's been a great bank

9:46

for deck generations and will continue

9:48

to be. I think they'll get back on track. But that was

9:50

that was unfortunate for the industry, I think.

9:53

Uh, so the regulatory agenda was

9:55

a big thing to keep up with. The

9:57

second thing that's changed a lot is uh.

10:00

You know, technology has moved

10:02

in warp speed to kind of dimensions

10:04

nobody thought possible. So moving

10:07

infrastructure to the cloud, UH,

10:09

new ways of development around

10:11

an agile framework which speeds

10:14

things up. UH. Going

10:16

to digital first business models, UH,

10:18

using data to personalize offers

10:22

to your customers so they don't waste their time.

10:24

Uh. You know, you see what's happening in other industries,

10:27

and customer expectations

10:29

for change and for a level of service

10:31

have really increased given

10:34

what they see elsewhere, and so banks have had

10:36

to make the investments and go

10:38

through significant change

10:40

in the business model to to to meet those

10:42

expectations. So it's really

10:45

kept it very interesting to to

10:47

keep up with all the change that we've had to over

10:49

over the last few years. You know, when the new

10:52

CEO of Vanguard came in the

10:54

his answer to a question I found

10:56

most fascinating, what

10:59

what keeps you up? In his answer was

11:01

security and hackers? How

11:03

big a deal is that? And is

11:05

technology helping us in this space or

11:07

or making it worse? Well, um,

11:10

to be in arms. I think it is a big

11:12

deal. And I think most CEOs of

11:16

financial institutions trusted with

11:18

keeping customers assets and data

11:20

safe have to have that as

11:23

the top issue on the priority

11:25

list, top risk that we face. Uh.

11:28

Fortunately, UM, there are advances

11:30

in technology and new tools

11:33

to actually help protect all

11:36

of those those assets and that data.

11:38

Uh. And you know, I think it also requires

11:42

hiring top talent. UM. We

11:44

feel really good at Citizens. We've hired a

11:47

leading expert in cybersecurity,

11:49

has had some big jobs elsewhere, who

11:52

um, I think, knows what good looks like and

11:54

has moved us into the future very

11:57

very quickly, has good followership,

11:59

has brought a aditional good people into the organization,

12:02

and then we've prioritized the tools

12:04

that she needs to really keep the banks

12:06

safe. So that kind of goes right to

12:08

the top of the capital expenditure list,

12:11

and I think that will continue to be the case because

12:13

there's a lot of bad guys out there. They

12:15

don't come into branches with a stocking

12:18

over their head and a water pistol and pass

12:20

a note to the teller anymore. That's less

12:22

and less the way that Yeah,

12:25

it's it's you know, much more sophisticated.

12:28

Now they're sitting in a you know, in a cafe,

12:30

hacking away, buying you know, data

12:32

off the black market, and trying to figure out

12:35

ways to to steal people's assets.

12:37

Unbelievable. So you lead the I p

12:39

O in what

12:41

was that process like going

12:43

public? And how happy are you that

12:46

you're not, you know, a tech unicorn

12:48

having to face what companies like Uber

12:50

and well, look, I think citizens

12:53

had that great foundation

12:56

serving a good part of the country. Because

12:58

of the troubles of the parents, there was a lot of work to

13:00

do. So the balance sheet

13:03

had shrunk dramatically and hadn't

13:05

kept pace in some ways investing

13:07

in technology and in our fee based businesses,

13:10

and so there was work to do when

13:12

we had the deadline in terms of taking

13:14

in public. The best I could do

13:17

really was assemble a strong team and board,

13:19

uh, put together a really good plan and

13:21

have a vision where we could take the company.

13:23

But it was you know, we had to do

13:26

it within a year, and so we were still operating

13:28

at relatively poor profitability

13:31

levels and we still had a lot of gaps, but we had a

13:33

good story to tell. So actually just

13:35

getting the deal done and getting investors

13:37

to kind of buy the promise. Uh,

13:40

and by our experience and our vision

13:42

felt really good. So that was that was important

13:45

to get that done and launch that.

13:48

UM. I would say, you know the experience of

13:50

going public really helped facilitate

13:52

our turnaround because uh,

13:55

usually UH divestitures

13:57

banks get sold, they don't get I p oed.

13:59

So this was opportunity for me to

14:01

assemble a management team and say, look, we're

14:03

in a unique situation where we get the keys

14:06

to the car and we have the steering wheel and we can take

14:08

this bank where we want to. So we can

14:10

build a great bank over time, and you're

14:12

gonna be a key player in doing that. So

14:15

that allowed us to I think attract

14:17

the levels of talent that had

14:20

citizens stayed a part of our BS we

14:22

would not have been able to do. And

14:24

ultimately, in any organization, you win

14:26

with great people when you win with talent. Uh

14:28

So that was that was really positive. I

14:30

think the other thing also is that it

14:33

kind of shook up the culture at

14:35

citizens that as a sub of a foreign

14:38

entity that has its own troubles, you could get

14:41

comfortable and a bit complacent. And so now

14:43

we had public shareholders who wanted

14:46

to hear about the long term vision, but they wanted

14:48

to see good execution in the

14:50

near term to towards that path. Uh

14:52

And so we had a higher level accountability

14:55

that we embedded into the culture. Uh

14:57

So we're accountable to shareholders and we're accountable

15:00

others to serve our customers better and

15:02

to run the bank better. So you sit

15:04

on the Federal Reserve Bank of Boston

15:07

board representing other banks, what is

15:09

what is that experience? Like? Oh, that's great?

15:11

Uh So? Uh if you if

15:13

you flash back to the last two years,

15:16

I was on the Federal Advisory Council.

15:18

So I was representing the the

15:20

Boston Fed District in

15:22

meeting with the FED Board of Governors

15:24

and talking about issues and making

15:27

uh you know, giving color on economic

15:29

conditions and offering advice on certain

15:31

financial matters. So that was good.

15:33

And then I rolled onto the to the

15:35

Boston Fed and so we

15:38

talked about the economic conditions in the New

15:40

England region. Uh, we talk

15:42

about the macro economic dynamics

15:45

and where interest rates are

15:47

and where they where they should go because

15:50

uh, you know, the Boston Fed president

15:52

gets a vote in terms of what to do with

15:54

interest rates, so you're an influencer

15:57

of him, but not a voting member obviously,

15:59

yeah, obviously. Yeah. So quite

16:01

interesting. And you're on the board of Moodies

16:03

for a couple of years. This is post

16:06

crisis. Yeah, what is that experience?

16:08

Well, you know, you missed all the fun. Well

16:10

what's interesting is, uh, you know, most

16:13

ceo s can have one

16:15

outside board slot. Um and even

16:17

when I was a CFO for many years, I always had

16:19

an outside board slot. When I was in the UK, I

16:22

was on Lloyd's of London's board.

16:25

That's quite the entity. And I found

16:27

that, uh, you know, would complement

16:29

what I was doing as an executive because

16:31

their specialists and risk management, that's our

16:34

principal responsibilities to make sure we're

16:36

running a safe and sound institution. And

16:38

so when I came back from the UK and

16:40

came into the US. I was looking for a

16:43

job that would also be complementary

16:45

where I could continue to uh stay

16:47

in tune with the latest

16:50

developments in risk management and kind

16:52

of seeing the lay of the land about how Moodies

16:54

thought about global risks. And so that

16:57

was just a natural thing to for me to go from

16:59

Lloyd's of London go onto the board of Moodies.

17:01

So I've been a critic over the years

17:03

of the rating agencies, primarily

17:06

S and P. When you look at the fines post

17:09

crisis, I think Moody's paid

17:11

a million dollar fine. SMP paid

17:13

billions and billions in finals, and it wasn't

17:15

quite that much of a spread. I think SMP billion

17:19

settlement with the with the d J was about

17:21

a billion three and Moodies was about eight.

17:25

That they were ultimately but they

17:27

but they pretty much seemed to have gotten

17:30

much less blame in the popular press

17:32

than SMPA. I I don't know

17:34

why that is, but uh, you're you're this

17:37

predated you by yeah. I mean we had

17:39

that we that we settled while

17:41

I was there on the board, so we

17:43

got involved in looking at the facts and looking

17:46

at the allegations, but I do think Moody's

17:48

fact pattern generally was was in pretty

17:50

good shape. But still there was some

17:52

some culpability. Weren't going to escape without some

17:55

culpability. And I don't know you very

17:57

well, but I suspect from everything I've

17:59

learned about you preparing for this, I

18:01

suspect you're the sort of guy who comes in and says,

18:04

let's get this resolved, let's move on.

18:06

We have a business to run. This happened

18:08

before, it predates

18:10

my involvement. Let's write that check

18:12

and get on with all. Well, I'm just I'm just

18:15

one board member. But yeah, we had

18:17

those types of conversations. I can imagine

18:19

that the market is really focused on the future.

18:21

They don't like to have these overhangs on

18:24

the past, and so you just gotta put them

18:26

behind you. Let's talk a little bit

18:28

about Apple. You know, when

18:30

when I first started um

18:32

reading about citizens Financial,

18:34

my initial response was why is that name

18:37

so familiar? And I just punched

18:39

it into the search of my computer. It's like, oh,

18:41

they finance are our iPhones?

18:43

UM, tell us a little

18:45

bit about how did that come about? What?

18:48

How I know that's a relatively

18:51

minor UM thing in the overall

18:53

revenues of the bank. But it's kind of interesting

18:55

because it is a name brand,

18:57

and you guys are pretty much very public

18:59

with To be to be a partner for

19:02

the most iconic company on the planet, in

19:04

my view, really is a

19:06

lot of credibility for us. So we're

19:09

quite pleased that we hold that position. Uh.

19:11

You know, we had worked

19:14

with Apple early days when

19:16

we were building up our student

19:18

loan business, uh, potentially

19:21

with a notion that we could help them finance

19:24

the purchases of their equipment in student

19:26

book stores in college, and that

19:28

program didn't really fulfill

19:31

its potential. Um, But I

19:33

think we got to know them well and

19:36

they liked our focus on the customer

19:38

and really obsession around the customer

19:40

experience because that's really defines

19:42

Apple. So when they were thinking about

19:45

the upgrade program and how to sell

19:48

more phones through their stores, we

19:50

helped work with them on that program and

19:53

design the financing for that program.

19:56

Uh. And I think we built a very

19:58

effective platform

20:01

to process those transactions. So there's

20:03

a very small window of time that

20:05

as you know, since you've in it twelve

20:07

months, well, but you go into the

20:09

store, you pick your phone, and then you, we have

20:12

a little window to make a decision

20:14

do we want to finance you in

20:16

the program or not, and without getting

20:18

a lot of information. So we've built a very

20:20

good credit decision ing model and then a very

20:23

good processing capability

20:25

behind the scenes that leads

20:27

to a very good customer experience,

20:29

a very highly rated NPS

20:32

within the Apple store experience. So,

20:35

uh, anyways, pretty instantaneous. Yeah, it's

20:37

it's gone exceptionally well. On

20:39

on the days when they launch a new

20:42

uh phone. Uh, we get

20:44

massive volume that we have to process,

20:46

and we've always been able to flawlessly execute

20:49

all that volume. So so I think it's

20:51

been a good partnership. And Uh, the

20:53

nice thing is the technology platform

20:55

that we built for Apple, we can move

20:58

and offer it to other merchants and

21:00

adapted to to the needs of other merchants.

21:02

And so today we also have a d

21:04

T and vivin to smart alarm. Companies

21:07

are running similar programs,

21:09

and we have a number of other big

21:12

household names in the queue.

21:14

And so I kind of tease investors, I say,

21:16

stay tuned, watched this space, because

21:18

we're gonna announce a rollout to

21:21

some other very highly regarded

21:23

companies. So I'm curious

21:25

as to how this works because

21:28

when the first time we went to an Apple

21:30

store too, and I'm always complaining

21:33

I'm a power user phones and after a year

21:36

the battery life starts to die. The last

21:38

phone, I replaced the battery at month

21:40

fourteen, and I said, wait, twelve

21:42

months, new phone? What do I sign up for that?

21:45

It was a pretty surprisingly

21:47

quit. You punch a bunch of things in data

21:49

birth so, security, name, address, and

21:51

it's like eight seconds later you get approval.

21:54

I assume you're looking at things like

21:57

credit score, payment history, etcetera.

22:00

What what how many data points

22:02

go into that that it could be that's a number of data

22:04

points. We don't want to give away the full

22:06

secret, Sauceberry, but you

22:08

know, I think we feel quite confident

22:11

of our ability to make good

22:13

decisions. And I think we now have been

22:15

at the program now for a number of years, and

22:17

so we've seen the performance of all

22:19

the different vintages, uh, and

22:21

they've performed at or above

22:24

expectations. Do you tweak this on an

22:26

ongoing basis? It's always how do we make it a

22:28

little better and a little that's that's

22:30

that's kind of interesting. So I have

22:32

to think this new iPhone eleven the

22:34

week it comes out, what is that like?

22:36

Is this just a giant fire hose of data

22:39

or there's there's a big swell

22:41

of volume. Uh and uh.

22:43

It's great for Apple. I think they're pleased with

22:45

how the eleven is being received in the marketplace,

22:48

and it's gotten great reviews. And

22:50

despite the price, it's pretty expensive.

22:52

Well, they've had had a two tier price,

22:55

so I think, and you could get the eight for

22:58

a very cheap. They've

23:00

now covered the full spectrum of prices as

23:02

opposed to just being right. So I think they've

23:05

thought it through in terms of features and pricing

23:07

and alternatives. And it's meeting a

23:09

good reception, which is good for us. That means there's gonna

23:12

be good demand for the phone. People

23:14

continue to participate in the upgrade

23:16

program, and so we continue to grow the balances

23:19

onto the program. I'm an ideal client for you,

23:21

guys. We walk in, what's the biggest phone,

23:23

what's the top of line? Give me extra

23:25

storage? Wait it's fifty bucks

23:27

a month, Okay, great, we'll take two. It

23:30

really is a very simple

23:32

thing, and the only problem is you want

23:34

to upgrade after a year,

23:36

and sometimes you're waiting a couple of months for new

23:38

phone, so you end up holding onto it.

23:40

But then but you're never really obsoletely, you're

23:42

always getting the latest and greatest, which after

23:45

the very appealing. Well, some people

23:47

don't care, other people want whatever.

23:50

The most buzzworthy thing is I

23:52

am an early adopter, even though it can

23:54

occasionally be painful when you

23:56

buy things before they're really ready for prime

23:58

time. UM, thankfully

24:00

I passed on the Google Glass. But any

24:03

time I have an opportunity to upgrade the phone, I'm I'm,

24:06

I'm there right away. Good. I have

24:08

to think that where you sit

24:10

in the economy, looking

24:12

at consumers, looking at

24:14

other um businesses and entrepreneurs,

24:18

you have to get a really early read

24:21

on any changes in the economy.

24:24

Is that a fair statement or am I overstating it? Yeah?

24:26

No, Look, we're kind

24:28

of cover three regions of the country.

24:31

So we have New England, mid Atlantic and

24:33

Upper Midwest within our footprint,

24:36

three very different economies economies,

24:39

and we cover, as I

24:41

said earlier, the mid mid corporate middle

24:43

market all the way down to small business, and

24:45

then we have a very big consumer business. So the

24:48

balance of our businesses is roughly fifty

24:50

fifty between uh corporate

24:52

and and also uh the consumer.

24:54

Uh so we get it. We got quite a good read

24:57

on uh, you know, both data

25:00

in terms of, you know how how

25:02

are borrowing patterns, how our charge

25:04

card usage, etcetera. Uh,

25:06

and then also anecdotes just what are

25:09

we hearing from customers? What's

25:11

the businessman doing? Are they buying

25:13

that next piece of capital equipment? Are

25:15

they holding back because of the trade

25:17

tension? Uh? So, I think

25:19

we get a well informed view of what's

25:22

likely to come up in the economy. If

25:24

there's a recession somewhere out on the

25:26

horizon, where would you see it first?

25:28

Is it in spending patterns? Is it in payment

25:31

patterns? Where? Where does the what

25:34

line of business is most sensitive? Yeah?

25:36

So, I you know, I think the thing that

25:38

you really want to keep your eye on is

25:41

credit deterioration. So in

25:45

the consumer side, are you seeing migrations

25:48

into delinquency buckets that people

25:50

are starting to stretch and have difficulty

25:52

keeping up with obligations. Same

25:54

thing on the corporate side of their particular segments

25:58

of the economy that are starting to dress

26:00

a little bit. And so to me, that's a key

26:02

early warning sign. Are you seeing any of that

26:04

today, We're not. So.

26:07

There was a Wall Street Journal article about

26:09

middle class consumers moving

26:12

towards a seven year versus the old

26:15

five year UH loan

26:17

for automobiles, and that could be a sign of

26:19

of something I don't. I think

26:21

people maybe you're holding their cars longer.

26:23

That's a little more affordable to stretch the payment out

26:26

over a longer time. So and these cars now

26:28

less pretty much, they do, they do, so

26:31

you're not seeing a lot of people have been nervous

26:33

about I s M and I've been

26:35

nervous about residential sales. And

26:39

you know, the recession easts have been forecasting

26:41

a recession next year for the past five

26:43

years. They you know, eventually they'll be

26:46

right. But it doesn't mean we don't.

26:48

We don't see it. Uh, you know, I I'd

26:50

say, uh, there's some recent

26:52

data that UH manufacturing

26:54

sector is a little soft. But you have to remember

26:56

in the context of the US economy, economy's

26:59

power s by consumers,

27:01

and consumers are in great times.

27:03

Unemployments low, people can find jobs,

27:06

real wage growth, So you've got UH

27:08

wages growing at three point two, inflations

27:10

down at one and a half. So people are having expanding

27:13

uh net pay over inflation,

27:15

which is great. So that I think

27:17

the consumer is watching some of

27:19

the current events. They're watching the trade

27:22

and they're watching the impeachment

27:24

proceedings, but I think they're almost inured

27:26

to to that. It's been around for a long time and

27:29

it hasn't really caused anything, and so people

27:32

are aware of it, but it's not holding folks

27:34

back. Where it is holding people

27:36

back a little bit is the

27:38

kind of middle market companies sitting

27:41

there saying, how is the trade

27:43

tension and the tariffs going to impact me?

27:45

And it's going to impect impact different

27:48

sectors differently. Again, the service economy

27:51

is not that impacted by it, but the manufacturing

27:54

sector is. And fortunately

27:56

for us, the service sector

27:59

dominates our to me so, but you guys

28:01

have have offices in the Midwest. You're

28:03

seeing stresses starting to perform

28:05

on at least on a small basis. I think. I think a

28:07

lot of companies are thinking about their supply

28:10

chains and how to adjust

28:13

their supply chains to try to

28:15

minimize the impact from the tariffs.

28:17

And you know what it forces everybody

28:19

to do, including the banks, is how do you get more

28:22

efficient if you're going to have these

28:24

costs that come in from external

28:26

from uh some of the administration

28:28

policies. Then how do we protect

28:31

our growth and our earnings, etcetera. And

28:33

so deploying artificial intelligence,

28:36

deploying robotics, finding ways to keep

28:38

streamlining how business gets done

28:41

becomes an imperative. When we think

28:43

of traditional banks, we tend to think

28:45

of the yield curve as

28:48

being a determiner of their profitability.

28:50

When the yield curve is steep, hey, there's a

28:52

lot of spread to be captured, and they make money.

28:54

When it's flat or as we've seen the past

28:57

quarter, inverted, very challenging

28:59

for those banks. How does that

29:01

affect a middle market bank like yourselves.

29:03

Yeah, well, it's uh, certainly

29:06

move something that's been a tailwind for the last

29:08

two years. Its rates were going up. Most banks

29:11

are what's referred to as assets sensitive,

29:13

so their loans are repricing faster than deposits

29:16

and spreads are widening. When you

29:18

have the flip and rates start to move down,

29:21

then your loans are repricing downward

29:23

faster than you can reprice your deposits. So

29:26

it puts a little pressure on your net interest

29:28

margin. Uh. Certainly, you try

29:30

to hedge that to

29:32

some extent, but you are going

29:34

to have an impact, uh, and NIM

29:37

will be contracting somewhat.

29:40

How do you combat that? I mentioned earlier

29:42

the expenses focused on expenses,

29:44

we had launched a very big transformational

29:47

cost program. We kind of saw

29:49

the the tea leaves about

29:52

the FED going to either pause or

29:54

maybe start to cut rates, and so we got

29:56

on this back in December and we launched

29:58

a big program in July. We're

30:00

also over the time, we've been investing

30:02

in our fee based businesses and we've done a couple

30:05

of very smart fee

30:07

based acquisitions. What are those fee

30:09

based businesses? Well, in the commercial side,

30:11

we we've purchased two M and

30:13

A boutiques to broaden out what we can do

30:15

for our customers, and there's still been

30:17

a good flow of M and A opportunities occurring

30:20

in the middle market. We bought

30:22

a mortgage business, which

30:25

timing was great on that because

30:28

as rates go down, as the FEDS cutting rates,

30:30

it maybe crimps your NIM a little bit. But

30:32

NIM standing for that interest margin, the

30:35

spread that you're making on your balance sheet. But

30:38

there's a refi boom like we haven't

30:40

seen in years, taking places

30:42

have you re financial mortgage. I literally

30:45

was there Friday doing the paperwork

30:47

and the numbers are just insane.

30:50

So so to eight on a

30:52

ten one mortgage and I'll have my mortgage

30:54

paid off in ten years. I

30:58

don't ever have I know, I can't recall having

31:00

heard of rates that low.

31:02

I I want to say, a thirty year fixed was three

31:05

five or three three and a half. Yeah, these

31:08

are just these are These are great

31:10

opportunities for consumers to

31:12

put more money in their pocket and lock in lower

31:15

carrying costs on their debt, and so

31:17

we make fees when that happens.

31:19

So fortunately this quarter

31:22

we're going to have a really strong third quarter

31:25

UH on the feet side, which

31:27

will offset any of the leakage

31:29

that we see on the balance sheet income

31:31

side. UM. And then the last

31:34

acquisition that we did was we bought a high

31:36

end wealth advisor because

31:38

what we found is in the corporate

31:41

side, the business owner the fourth

31:43

generation UH family that

31:46

is very wealthy and occasionally

31:48

takes out large dividends from their company

31:51

and puts that back on the company. We

31:53

weren't getting the swings at the bat to manage

31:55

those assets or to do the estate planning

31:57

for the company, So the folks out

32:00

of US as their bank, but they would take that

32:02

business elsewhere, and so we said, look,

32:04

we should be doing that for those customers.

32:07

We went out and bought a company called Clarfeld

32:09

Asset Management, which is a highly respected

32:11

wealth advisor and based in Terrytown,

32:14

New York. And so we're now able

32:16

to offer those services. So, uh,

32:18

really not trying to do anything too

32:21

big, but just hitting the sweet spots

32:23

with kind of rifle shot acquisition program

32:25

which has really been positive. So it sounds

32:28

like your business lines are pretty diversified,

32:30

yes, so that that that's a

32:33

good thing, is um? So

32:35

you you mentioned the FED pausing

32:37

and starting to reverse itself.

32:40

Obviously mortgages rates make it

32:42

a big difference. How

32:44

how did Quewie affect the rest of your

32:46

business and and how does all the

32:48

noise which seems to

32:50

have faded along with the summer

32:53

about the President and the FED doing

32:55

battle, how does that impact what

32:58

you guys do? Well? Um,

33:00

Obviously the actions the

33:02

Fed takes has a direct influence on the

33:04

economy and on the money supply and

33:06

the cost of funding, and so it's

33:09

going to impact banks in a material way.

33:11

Uh. Quantitative easing I

33:14

think was a stimulative

33:16

measure which basically the FED

33:18

was building up their balance sheets, so taking on

33:20

securities and buying

33:23

those with cash and putting cash back into the

33:25

system. So it helped promote liquidity

33:27

and deposit growth and promote

33:29

lending. Rates came down as they were

33:31

buying those, uh, the long end securities.

33:34

UH. So you know, we just have to be in tune

33:37

for where the FED is going. Uh. And

33:39

when we do our forecasting, we do our business

33:41

planning, we run a bunch

33:43

of different scenarios. Is that you know what

33:45

happens. If this is happening in

33:47

the economy, then what is the FED likely to do?

33:50

Uh? But uh, in any case, we

33:52

we just need to be flexible and adapt to

33:55

the circumstances that we see. So

33:57

I mentioned diversification, and you

33:59

mentioned are in the southeast, Northeast, and midwest,

34:02

so Boston, Philly, Pittsburgh,

34:04

Providence, Detroit. Um

34:06

any thoughts about expanding elsewhere

34:09

are you eventually gonna Well, there's a couple of things.

34:11

So on the on the corporate side, Uh,

34:14

as we moved to the mid corporate space,

34:16

which are slightly bigger companies five undred

34:19

three billion, we need to be national

34:21

in those industry verticals, and so we've

34:23

planted a flag down in Atlanta, so

34:26

we have about twenty five folks down there at

34:28

this point. Brought a guy out of sun Trust

34:30

and he's built a nice team down there. We've

34:33

expanded now into Texas, which is another

34:35

big state economy. We always had an energy

34:37

practice in Houston, but we put some more commercial

34:39

bankers in Dallas and in Houston. We

34:41

just hired a fellow to UH pull

34:44

together our team out in California,

34:46

So he's going to be based in l A. And so

34:49

UH, you know, we'll be on from

34:51

a corporate bank standpoint more of a

34:53

national player. And I think you're seeing that as a

34:55

trend for all of the super regional banks.

34:59

On the conser sumer side, we've

35:01

attacked that our consumer

35:03

lending operations are national, but

35:06

UH in really direct interaction

35:08

with consumers around deposits. We

35:11

were the first super regional bank last year

35:13

to launch a national

35:15

digital bank called Citizens Access

35:19

Online online only focused

35:21

on savings products. After

35:24

a year, we now have five and a half billion

35:26

of deposits UH and so it's been highly

35:29

successful. And so what we're thinking

35:31

about now is we've gotten good

35:33

at that. If you say that's a deposit mining

35:35

operation, we're abul tract deposits.

35:37

But what else can we do for those customers? And

35:39

what else can we do for many of the

35:42

customers we've now assembled through our lending

35:44

products who might be thin relationship

35:46

customers. They may know us like you may know us

35:48

because your Apple loan is with us. But

35:51

could I come to you very digitally

35:53

and offer some things in a bundle to

35:55

say, hey, that mortgage refinancing do

35:58

it with us? Or uh, other

36:00

needs that you might have, how to how to

36:02

manage your your wealth portfolio.

36:05

We have digital tools that would allow you to do

36:07

that and be pretty true to how you do it.

36:09

So uh, that's kind of the next phase

36:12

for us is we probably don't want

36:14

to have branches outside of our traditional

36:16

footprint, but we can I

36:18

think attack the national market digitally.

36:21

What you're seeing that's very interesting. There's a lot of experimentation

36:24

going on. So the megabanks like

36:26

JP, Morgan and ba A are saying we're going into

36:28

all these new cities. They're actually not

36:31

increasing their branch count, their thinning branches

36:33

where they're thick and they're putting them

36:36

if Chase has a big customer base

36:38

around their Sapphire card in a city. Okay,

36:40

we should have branches there too, so we can do more

36:42

with those customers. You've seen some super

36:45

regional competitors like PNC. They now

36:47

have a digital bank up and running, and they're putting

36:49

thin offices. They've got three in Kansas

36:51

City, they're putting ten or twelve in Dallas, and

36:54

so everybody's attacking this a little

36:56

differently. We want to get our brand

36:58

out there. We want to be more national in

37:00

scope. Do we need the branches or do we

37:02

not need the branches. That's one of the key questions

37:05

that will kind of in the peatree dish right

37:07

now, we'll see how it plays out. You mentioned

37:09

super regionals. We seem to

37:11

go through these cycles where suddenly

37:14

the majors are acquiring super regionals

37:17

left and right, and then we enter a lull

37:19

for a couple of years. What do you

37:21

see? I know, I obviously can ask you about

37:23

your bank, but in

37:26

general, looking at the industry, what do you see

37:28

for the m and a um landscape

37:31

for the mega banks and the superregionals.

37:33

Are we done with rolling up for now

37:35

or how does that change? I think I think

37:38

the mega banks, most of them are at the deposit

37:40

cap, the national deposit cap, so they're really

37:42

not players that can't play. You

37:44

did see in the superregional space murder

37:47

of equal between bb and T and

37:49

sun Trust, which I think was fairly

37:51

unique. It created a Southeast champion

37:54

uh and I don't think the other

37:56

superregionals feel compelled to

37:59

act in the wake of that. I think right now there's

38:01

so much change taking place in kind

38:03

of moving your technology ecosystem

38:05

to the future, that a merger could

38:07

be a distraction. So if we can be flexible

38:10

and nimble and good and make the right decisions,

38:12

I think we can still compete effectively at

38:14

our size. So I'm not sure you'll see

38:16

much more in the super regional space this year.

38:19

But I think the smaller banks, who

38:22

really have to contend with all of the

38:24

cost of that new technology and some of

38:26

the costs of regulation, even though the regulators are

38:29

trying to give them cut them a little slack. I

38:31

think there's an impetus to see the smaller

38:33

end of the market continue to consolidate.

38:36

We had an issue post crisis,

38:39

or at least compared to pre crisis, a

38:42

lot more mega banks a

38:44

lot less competition, more

38:46

of the national assets held by

38:48

fewer banks. Is that an attempt

38:50

to sort of resolve that issue?

38:52

Or or am I reaching too

38:54

much here? Yeah? I think you're reaching a bit. I think

38:57

if you just look at the trend. Twenty years

38:59

ago, there were fourteen hous and depository institutions

39:01

in the US. Five years ago it was seven.

39:03

Today it's like five, and so

39:06

you're just seeing that inevitable

39:08

consolidation because we still have, I

39:11

think, much more fractured banking

39:14

landscape than any other country. We

39:16

have been speaking with Bruce van Son.

39:18

He is CEO of Citizens Financial

39:20

Group. If you enjoyed this conversation,

39:23

we'll be sure and come back for the podcast extras,

39:25

where we keep the tape rolling and continue

39:28

discussing all things banking related.

39:31

You can find that wherever your

39:33

finer podcasts are sold iTunes,

39:35

Google, Stitcher, Spotify. We

39:38

love your comments, feedback in suggestions

39:40

right to us at m IB podcast

39:43

at Bloomberg dot net. Give us a review

39:45

on Apple iTunes. Be sure to

39:47

check out my weekly column on Bloomberg

39:49

dot com. Sign up for my daily reads

39:51

at Ridholts dot com. I'm

39:54

Barry Ridholts you're listening to Masters

39:56

in Business on Bloomberg Radio. Welcome

40:00

to the podcast. Bruce, Thank you so much

40:02

for doing this. I um, it's always

40:04

funny when I see different names.

40:07

I have this pet theory that there are thousands

40:10

and thousands and thousands of people working

40:13

who have a giant impact on everybody's

40:16

day to day life, and nobody knows who

40:19

they are. Everybody knows who Steve Jobs was

40:22

not, everybody knows who Bruce van so On is.

40:24

And yet you're impacting what

40:26

what people do. So I was

40:29

I was looking forward to this. There were a

40:31

couple of questions I did

40:33

not get to that. I'm

40:35

going to try and run through now and then we'll we'll do

40:38

our favorite questions and we'll get you

40:40

over to TV on time. UM.

40:42

Oh, so you guys went public in I've,

40:47

I've. We have all heard lots of

40:49

folks complain about the I P O

40:51

process and how difficult it is being

40:54

a public company. How

40:56

does that square up with your experiences running

40:58

a private company and then taking

41:01

it public. Yeah, so you know, I

41:03

actually, um,

41:05

I think it's been very positive for

41:07

citizens. Part of it is where

41:10

we came from. Uh, we had to turn around

41:12

the bank and so having

41:14

UH an interested investor

41:16

community and twenty two

41:18

cell side analysts focused

41:21

on us and prodding on our long term

41:23

strategy and putting estimates as to how

41:25

fast we could turn around the bank. UH. It's

41:28

certainly raised the level of accountability

41:30

and I think our ability to execute

41:33

improved. UM. You know, when

41:36

I when I think about the trade

41:38

offs, people say, well, private

41:40

companies can can quote unquote

41:42

go long they can think long term and make

41:44

the investments for the long term, and they're not kind

41:47

of hemmed in by the need to deliver

41:49

quarterly results. UM.

41:51

I actually think that if you communicate

41:54

effectively what you're trying to

41:56

do for the long term, and you

41:58

say I'm gonna need to invest some money

42:01

in this and this is why I'm doing it, and this

42:03

is how fast I think I'll get the payback, there

42:05

are long term investors out there

42:07

who who appreciate that, who

42:10

want to invest with a growth story with

42:12

the management team that's trying to grow the franchise

42:15

and not just really focus on

42:17

cost cut and the delivering for

42:19

the next quarter and buying back shares.

42:22

And so we've tried to balance that. We've tried to

42:24

make sure that we're executing well and putting

42:27

points on the board and showing a good trajectory

42:29

in the short term. But we're also doing

42:31

significant reinvesting UH

42:34

and trying to grow the bank so that we make it

42:36

stronger five years from now and ten years

42:38

from now. So all

42:40

the complaints about how um

42:43

onerous being a public company is

42:45

and the threats from activist

42:47

investors, is that all overstated?

42:50

Or what do you think? Look if you if you run

42:52

the company well and you actually

42:55

think through an activist agenda,

42:58

Like what am I missing in terms of my

43:00

own plans? Are there? If an

43:02

activist was involved in this company,

43:05

what would they do? Would they take capital away

43:07

from these lending portfolios and move

43:09

it to this lending portfolio? Actually, you

43:11

can proactively anticipate

43:14

where they would where they would make suggestions,

43:17

and just get ahead of it. And and you know,

43:19

it's helpful to to kind of keep that mindset.

43:22

It insulates you from

43:24

attack if you're beating them to the punch.

43:27

Yeah. Interesting, I mentioned

43:30

you're on the Federal Reserve Bank of

43:32

Boston as well as the

43:35

board of directors at Moody's. There were two

43:37

other things I want to mention because I

43:39

think they're both interesting. You're a

43:41

board member for the Bank Policy Institute.

43:44

What does the bank policies to do? What

43:46

are you? What is your involvement? Uh, tell

43:48

us a little bit about that institution. So the

43:51

Bank Policy Institute is a

43:53

relatively new creation

43:55

with a long history and legacy

43:58

organization before it, which was

44:00

originally the Banker's Round Table, which became

44:02

the Financial Services Round Table. I

44:05

think, Uh, what's the correlation

44:07

between this and the fincial. So

44:09

now bp I has

44:11

effectively succeeded the

44:14

Financial Services Round Table, And

44:16

I think there was a desire at

44:18

one point to put different

44:20

industry groups in financial institutions

44:23

under one roof. So when it was the Banker's Roundtable,

44:25

it was just bankers. Then it was financial

44:27

services and so asset managers and insurers

44:30

all got together and we would have meetings and

44:32

interact, you know, on policy

44:34

and talk to folks down on the hill. A lot

44:36

of the meetings would be in Washington. But

44:39

you know, over time, I think the agendas

44:42

of the different subsectors were different.

44:44

So under Brian moynihan's

44:46

leadership, who runs b of A, was determined

44:49

that the banks should split off and

44:51

keep a kind of larger bank profile

44:54

minimums asset size twenty five billion

44:56

would throw into this Bank Policy

44:58

Institute H and effectively

45:01

work on policy matters and things that

45:03

impact the economy and have an ability

45:05

to you know, effectively operate like

45:07

a think tank, put out papers and

45:09

monitor what the FETE is doing, and respond to

45:12

request for proposals from the regulatory

45:15

agencies, and have an ongoing dialogue

45:17

with members of Congress. So they were informed on

45:19

financial issues that impact the real economy.

45:22

Quite interesting. And then you are

45:25

also a board member of the Partnership

45:27

for Rhode Island and Jobs from Massachusetts.

45:29

What are these two groups do well? Those are

45:32

efforts to stimulate the

45:34

local economy and get

45:36

business people to work together to

45:39

help the governors of those

45:42

uh states. UH, you know drive

45:44

pro business and and pro growth

45:46

and pro jobs agendas. UH.

45:48

And so the one that uh

45:51

uh we've had some really good traction,

45:54

in particular with Partnership for Rhode Island,

45:56

where we've focused on education

46:00

UH and and uh also

46:02

business attraction and transportation,

46:05

which are important to improving

46:08

the Rhode Island economy. UH. One

46:10

thing we did recently is we funded the

46:12

Johns Hopkins Review of the Providence

46:15

school system, which I don't know if you've

46:17

seen that. It caught a lot of national press, but

46:19

basically was pretty damning of

46:22

the state of the school system. And uh,

46:24

now can you say that in pretty much any

46:26

school system, but some are

46:29

better. This was this was really

46:31

kind of pretty low down the totem

46:34

pole and there needs to be changed. And so the

46:36

state's going to take over the administration of

46:38

that school district and I think make

46:40

the changes that will make sure those

46:43

kids in that community really have a chance

46:45

to prosper when they come of age

46:47

and are entering the job market. So,

46:50

uh, those things feel good. Um,

46:52

you know, working in collaboration with governors

46:54

and with the government to to you know,

46:56

bring business, uh influence

46:58

and money behind things that are going to improve

47:01

local economies. One of the

47:03

things I've noticed

47:05

with some of the business development groups

47:08

has been a sort of and

47:11

we saw a little bit of this with the Amazon headquarter

47:14

bake off, but we've seen this

47:16

sort of tendency

47:18

to give the store away in

47:20

order to attract specific companies

47:23

as opposed to just creating an environment

47:26

that is helpful

47:28

and easy to operate in for businesses.

47:30

What do you think of those It's

47:33

almost like a race to the bottom. Ester a

47:36

big proponent of that. And uh,

47:38

you know, we had an opportunity.

47:42

Um. A couple of years ago, we

47:44

had a fork in the road. We had a very large least

47:46

facility in the Greater

47:48

Providence area and

47:51

a couple other smaller leases. That meant

47:54

people were uh

47:56

you know, kind of going to roll off their current

47:58

occupancy and we can either renew or

48:01

do something different. We

48:03

decided to break ground and build our

48:05

own campus in a town called Johnston, Rhode

48:07

Island, which is a little west of Providence. We've

48:10

got people there, four square

48:13

feet uh beautiful

48:15

campus with sports fields that we

48:17

share with the local community, walking trails

48:19

through the woods. Uh. And we didn't

48:21

take any funding. We didn't try

48:23

to hold up Rhode Island and say I want

48:25

you to compete against Massachusetts. We just

48:27

said, this is where we want to be, this

48:30

is where our history has had us,

48:32

and we have a great uh colleague base

48:34

here. Uh. And so you know

48:36

that I think the government was helpful

48:39

in getting things we needed, like an exit

48:42

ramp off of the highway into our

48:44

campus, for example. So the work isn't that

48:46

what the state or the local city is supposed

48:48

to be doing as opposed to tax give away right,

48:51

so that we we split the cost with

48:53

the state, so we paid half and they paid half

48:55

for that exit ramp for example. And you

48:57

know some of the some of the locals

48:59

are alreadis put sewer lines in and on an expedited

49:02

basis so we could get the campus up and running.

49:04

So uh yeah, I think it was it

49:06

was the right thing to do, and we didn't have our hand

49:09

out. I have some NFL

49:11

team owners I'd like to introduce you to.

49:13

Maybe you convince them to stop

49:15

being socialists and actually embrace capitalism.

49:18

You own a football team, build your own

49:20

damn stadium. I know that doesn't win me any

49:22

friends, but it just seems

49:24

like a reasonable thing to do.

49:27

Um. I just was reading, uh

49:29

the Cleveland Cavaliers. Their stadium

49:31

needs an upgrade, and they're

49:34

asking the taxpayers to pay a couple hundred

49:36

million dollars. You're a billionaire,

49:38

fix your own stadium. Leave us out of it it.

49:41

Uh. I can't. Obviously,

49:43

I'm not going to talk about anything in Boston sports

49:45

as a New Yorker. I I just don't even

49:48

want to go there. Um.

49:50

Let's see if there's any other questions I missed

49:53

that I wanted to get to. We talked about that.

49:55

We talked about that, all

49:58

right, So let's jump to our favorite

50:00

questions that we ask our

50:03

guests. These are the ten questions that are supposed

50:06

to be revealing of who you are and

50:08

how you got that way. Tell us the first

50:10

car you ever own, year making model uh

50:14

Ford Mustang to four.

50:19

I was still a year away from

50:21

my license, but I had worked summer

50:24

jobs and my dad said, I'll pay

50:26

two thousand dollars to any car. You've got

50:28

to come up with a difference. We paid

50:31

for that car, and so when I got my license,

50:33

I was driving a brand new car. So wait, you

50:35

bought that car before you actually

50:38

had it was the model year was letting

50:40

out or something, so my father thought he could get

50:42

a deal on it. So but I pick it up at

50:44

the end of the year, had from working

50:46

summer jobs, so I put up my share that

50:48

that's great. Um,

50:51

what's the most important thing people don't

50:53

know about? Bruce Van so on? Um,

50:58

I you know, one of my early

51:00

jobs was as a landscaper,

51:03

summer jobs to make that money for the car.

51:06

Uh and I still love to garden to

51:08

this day. So I take

51:11

great pride in designing

51:13

a nice landscape and then maintaining it. Uh.

51:16

Tell us about your early mentors who helped

51:18

guide your career well?

51:21

Um, I I always mentioned my

51:23

parents because I think they gave me a great foundation

51:25

and moral compass. But

51:28

uh, you know, as you as you

51:30

grow up, it's your teachers and favorite

51:33

sports coaches and so that all goes into

51:35

making you who you are. Uh. And

51:37

then I had some great people that I worked for. UM.

51:40

I had a fellow at General Mills,

51:42

my first job out of college, who was

51:45

tall, lanky, athletic guy like me,

51:47

but really smart. Had worked at General Motors,

51:50

learned a lot from him. He was very decisive,

51:53

worked for Bruce Wasserstein, one of the smartest shows

51:55

on the planet. Uh. He

51:57

had There were a lot of Bruce is ms that I picked

51:59

up in a out of wisdom. And so I always

52:02

found that if you want to you

52:05

know, move ahead in a career that your

52:07

you should look for great people to work for that

52:09

you can learn from. So when they're interviewing you,

52:11

you should also be interviewing them to make sure

52:13

that these are people that really are going to have

52:16

an impact on you what about bankers

52:18

that influence the way you look

52:21

at the business of banking? Who who affected

52:24

your uh to bankers

52:27

that I would call out? Tom Rennie

52:29

was my boss at the bank in New

52:31

York for many years, and I think

52:34

Tom had a had a just

52:36

great stoicism to to hand

52:39

be inflappable under all kinds

52:41

of scenarios. Um and uh

52:43

kind of it's never it's always

52:46

darkest just before the dawn, that kind of mentality,

52:48

it's not as good as you think it is when it's when it's

52:50

going really well, and just kind of keep that even

52:53

keel. And then the second

52:55

one was Stephen Hester when I worked over at RBS

52:58

UM who was under a mense

53:00

pressure to get RBS

53:03

righted, but uh just was

53:05

so unflappable under all that pressure.

53:08

Um and again keeping that even keel,

53:11

um and uh just super super

53:13

smart, really good thoughts about

53:15

how to go about that turnaround, which some

53:17

of those things I've I've applied to citizens on

53:19

a smaller scale obviously than URBS. What

53:22

about books? Tell us about your favorite books.

53:24

What do you enjoy to read? I read a

53:27

wide uh range of books,

53:29

read a lot of business books. Uh, I read

53:32

uh you know, Tom Clancy, Harlan Coben,

53:34

those kind of books. Probably the

53:37

the book that's had the biggest impact me my

53:39

whole life was The Power Positive Thinking by Norman

53:41

Vincent Peale. Uh So, I was

53:43

a giant that really positive attitude,

53:46

which I read probably when I was in my early twenties.

53:48

Uh So. I totally enjoy

53:51

reading. Unfortunately, I have I

53:53

have so much reading to do for work in such

53:55

an extensive seven have

53:58

work agenda that I don't read as much

54:00

as I could. But I've still probably read a dozen

54:02

books a year. I would say, give give us another

54:04

title, one other that you really enjoyed. I

54:06

would, you know, I just I just read

54:09

a very interesting book. Um,

54:12

I can't I don't remember the title, but it was about

54:15

an elephant trainer

54:18

who basically lead these elephants

54:21

in World War two and the kind of

54:23

Burmese jungle, which to me was

54:25

really fascinating. Let's see if I can find

54:28

how Burmese elephants helped defeat Japanese

54:30

in World War two. Elephant Company

54:32

there is let

54:35

me get let me see if I can read the exact

54:38

name. That's

54:41

wild by Vicky Croake. Elephant

54:43

Company the inspiring story of an unlikely

54:46

hero in the animals who helped save him

54:48

lives in World War two. Wow, that's

54:50

quite quite fascinating. Tell us about

54:52

a time you failed and what you learned

54:54

from the experience. But

54:57

by the way, a thousand

54:59

nine views, five stars,

55:01

that's pretty that's pretty impressive. That was a good

55:03

book. So you might want to put that one on your

55:05

list. Yeah, I definitely will um tell us about

55:07

a time you failed and what you learned

55:09

from the experience. Uh, you know, I

55:12

I'd say getting cut from a sports

55:14

team was kind of a big moment

55:16

for me. I was a tall sport. Did you play basketball?

55:19

I played baseball, basketball, and a little bit of football

55:21

for a couple of years. But I got cut

55:23

from the varsity team as a sophomore

55:25

in high school. Uh, and I

55:28

really I was angry. You went through

55:30

all the emotions that go with that. But

55:32

I picked myself up and we went A bunch

55:34

of us went and joined a travel basketball team

55:37

and we played. You

55:39

know, we had so much fun. And then we got

55:41

to play the high school team in a kind

55:43

of just a braggadocio

55:46

game. I'll bet you were better than you and we beat the high

55:48

school team when we got that's great

55:50

revenge. That's a little bit of Michael Jordan's

55:53

didn't make He was a freshman, he got

55:55

cut h and he used it as motivation

55:57

as well. What do you do for fun? What are

56:00

you still playing hoops or no more? Nah,

56:02

It's it's a little risky at this stage.

56:04

But you know I still enjoy sports, so

56:06

golf, tennis, swimming. Uh. Like

56:09

to go to the beach. Uh. You

56:11

mentioned your sail Yeah. I was

56:13

a commodore at our at our sailing club, so

56:16

I love the water. Um.

56:19

And you know, like good dining,

56:21

going out, having a good time

56:23

with the family and friends. Um,

56:26

well you got plenty of choices for restaurants

56:28

restaurants here. Yeah. So in

56:31

the banking industry today,

56:33

what are you most optimistic about and

56:35

what are you most pessimistic about? Well,

56:38

I'd say, um, you

56:41

know, when I look at at this country,

56:43

the US, that that we serve, that

56:45

citizens serves, I think it's the

56:47

greatest country on the planet. Um.

56:49

And uh, you know, we have our troubles,

56:52

we have our challenges, were not perfect, but

56:55

over time we've continued just to I

56:57

think get it right. Uh. And we're

57:00

we have an innovative society. We've got the big

57:02

tech companies. We're trying to improve people's

57:04

lives, and so I just think about how

57:06

the quality of life in the country

57:08

is so much better than it was in nineteen

57:11

fifty nine thousand. Just

57:13

think where it's going to be going forward.

57:15

So I'm optimistic about that. Um,

57:18

I'd say the things that I'm disappointed

57:20

in are pessimistic about, is that

57:22

people don't feel good about it. So the

57:25

flip side of that is, we have so much to be thankful

57:27

for and so much to to count our blessings

57:30

for, but everybody seems to be grumpy

57:32

and angry and not step back and say, gosh,

57:34

look look what we have. Uh

57:36

So, anyway, I think we've lost our soul

57:39

a little bit. We've lost our spirituality, which

57:41

I'd love to see that rejuvenate at some

57:43

point. It does seem that people are

57:45

a little more divided,

57:48

a little more angry. It's it's some

57:50

of its social media, but some of it is just

57:53

you know, this the post crisis state

57:55

of affairs. People never really

57:57

fully recovered their optimism after

58:00

that. It took a long time after the Great Depression

58:02

before that and A and a world war

58:04

before people seem to resurrect

58:06

that can do American spirit. Um

58:10

So a millennial or I'm gonna say that again

58:13

because I have to drop millennial because they're too

58:15

old now. Ah

58:17

So, a recent college grad comes to

58:19

you and says they're interested in banking.

58:22

What sort of career advice would you give that. I

58:24

tell them it's a great career, and uh,

58:26

you know what I love about

58:29

it? I think it's a noble profession. So I

58:31

tell people, Look, you get to positively

58:34

impact people, individuals,

58:38

uh, communities, local

58:40

economies by what you do in

58:42

your day job working as a banker. But

58:45

then we also have a platform

58:47

that you can volunteer off

58:49

that platform and further that impact

58:52

on local communities. And so for

58:54

example, Citizens Bank, when I joined

58:57

six years ago, we were volunteering about

58:59

fifty ours. We

59:01

really had to focus on upping that and today

59:03

this year we're gonna hit about a hundred and fifty

59:06

thou volunteer hours. We

59:08

have seven people serving on local

59:10

boards around our footprint. And

59:13

so, uh, if you want to

59:15

have a career where you can learn

59:18

be challenged constantly evolving

59:20

landscape that you have to contend with, but Importantly,

59:24

you can positively benefit the

59:28

people that you live with and the

59:30

local communities and economies that you

59:32

live in. Banking is a great career.

59:35

So normally I don't ask

59:37

follow up questions in this segment, but

59:39

you just made me think of something. Not

59:42

too long ago, the Business Round Table

59:45

change their perspective on UM.

59:49

The end goal of the corporation is maximizing

59:52

shareholder profits. They now look

59:54

at it as there are many different

59:56

constituencs UM

59:58

and that that' seems to have been a pretty

1:00:01

large sea change. What did you

1:00:03

think of what? It sounds like you've already adopted

1:00:05

that. What did you think of this? Well, if

1:00:08

we we, I think it's been a little controversial

1:00:10

because ultimately you're working

1:00:12

for your shareholders. You know, management

1:00:15

is an agent for the shareholders of the bank.

1:00:17

I think all those uh different

1:00:20

stakeholders work together, UM.

1:00:22

And so you're trying to deliver for

1:00:24

customers, for communities, uh,

1:00:27

for your colleagues, the three c's. If

1:00:29

you're regulated, you gotta run a business

1:00:31

the right way for the regulators. You've got to deliver

1:00:34

for the shareholders. You want to get that

1:00:36

flywheel working. But to me, it comes

1:00:38

back to the shareholder. If you're running the bank well,

1:00:41

you'll have the resources to keep investing

1:00:43

in all the deliverables

1:00:45

for those other stakeholders. So

1:00:48

I'm you know, I like the concept

1:00:50

of broadening it out and making sure that

1:00:52

people are thinking it's not all about the bottom

1:00:54

line. But still I think the shareholder

1:00:56

is the one that you have to please first

1:00:59

and foremost. They're the ones with the acts.

1:01:01

If if you're not pleasing, you

1:01:03

can't go pursue your own agenda and

1:01:05

make the other stuff more important and then see

1:01:08

the stock not performed well, in the bottom line not

1:01:10

performed well. It should

1:01:12

work together. And our final question,

1:01:15

what is it that you know about the world of banking

1:01:17

today that you wish you might have known

1:01:19

thirty years ago? Um

1:01:26

I. I think it's just a cumulative

1:01:28

process where you go through life

1:01:30

and you learn things. UM

1:01:32

I don't. I don't have any ah ha moments.

1:01:34

I just have gained a lot

1:01:37

of wisdom by working in different companies.

1:01:39

And I think you know just

1:01:42

that that that banks have

1:01:44

a big role to play in the economy. They have

1:01:47

to be run well in a safe

1:01:49

and sound fashion. They have to be focused

1:01:51

on delivering for customers. Um

1:01:54

and you know. I think you've you've come to

1:01:56

that knowledge over time. I don't. I don't

1:01:59

know if there's an aha thing that I said, God,

1:02:01

I would have run my career differently

1:02:03

if I knew it back then. I think I've just,

1:02:05

you know, evolved with the changes

1:02:07

in the industry, and I think I have a pretty good

1:02:10

concept of what banking is all about at this point.

1:02:13

Fair enough, Bruce, thank you so much for

1:02:15

being so generous with your time. We have been

1:02:17

speaking with Bruce van so On.

1:02:20

He is the chairman and CEO

1:02:22

of Citizens Financial Group. If you

1:02:24

enjoyed this conversation, well look up

1:02:26

an intri down an inch on Apple iTunes

1:02:28

and you could see any of the previous

1:02:31

two hundred and seventy five or so such

1:02:33

conversations that we've had over the past five

1:02:35

and a half years. We love

1:02:37

your comments, feedback and suggestions

1:02:40

right to us at m IB podcast

1:02:43

at Bloomberg dot net. Be sure and give

1:02:45

us a lovely review on Apple iTunes.

1:02:48

I would be remiss if I did not mention the crack

1:02:50

staff that helps put together these conversations

1:02:53

each week. Karen O'Brien is

1:02:55

my audio engineer. Michael

1:02:58

Boyle is my produce your slash

1:03:00

booker. Michael Batnick is my head of research.

1:03:03

I'm Barry Retolts. You've been listening

1:03:05

to Masters in Business on Bloomberg

1:03:07

Radio. H