Remarks by Citi CEO Michael Corbat Greater Omaha Chamber of Commerce Annual Meeting

Good afternoon and thank you for having me.

It's nice to be here in sunny Omaha. Otherwise I would be in freezing New York, although the storm seemed to spare the City from most of its wrath. I caution you that, in terms of any predictions I make about the economy today, that God invented economists to make weathermen look good.

It's a pleasure to be here in Omaha. Citi is proud to serve the who's-who of Nebraska's corporate stalwarts, including Union Pacific, Berkshire Hathaway, TD Ameritrade, and Tenaska.

We also maintain a thriving Private Bank practice here, which — in addition to being a very strong business for us — also keeps us in close touch with some of the world's most prominent investors and decision-makers. These relationships are invaluable to us — as are our partnerships with so many of our public sector clients here in this state.

In a moment, I'll speak more directly to Citi's links to Omaha and to Nebraska. But first I'd like to speak more broadly about the financial sector's role in the larger economy — and more specifically, how Wall Street and Main Street work together, need each other, and could not function without each other.

This is the Chamber of Commerce, so by definition you're business-people — and successful leaders not just in this community but in your industries. For the most part, those in business appreciate the crucial role that finance plays in our industries, communities and the economy at large. Unfortunately, many people do not. And, worse, some even misunderstand our role and twist it into something sinister.

To some extent, that's to be expected. Rightly or wrongly — and I believe the truth is a little bit of both — people blame banks for the lion's share of what led to the financial crisis.

The crisis remains a fresh memory and many of its after-effects are still with us — from settlements of legacy issues that keep banks in the headlines with negative news, to the prolonged, uneven recovery from the Great Recession.

The economy — and in particular, the housing and employment markets — have taken far longer to improve than they have from past recessions. In fact, a recent poll found that more than 60 percent of Americans still believe the country is in a recession, even though our economy has been expanding over the last several years.

So it is no surprise that, more than six years since the financial crisis, banks still face heavy scrutiny. When I go to Washington, it seems like distrust of banks is one area where many politicians on both side of the aisle agree. It is heartwarming to see our ability to help bring our leaders together.

And with a Presidential election cycle underway, I don't expect the climate to change over the next two years. You are going to continue to hear a lot of one-sided criticism of our industry and our business models. And I would like to talk about what is at risk and what is at stake.

That's why I thought it was important to come here, 1,250 miles away from New York City, and talk about how Wall Street and Main Street are not as far apart as some would try to make it seem.

I want you to hear the other side of the argument and I ask you to help us make the case for how we support the business community and the greater economy.

I hope that you will take away from this talk three key points. First, Citi is a much different company than it was before the crisis. Second, our firm isn't big for the sake of being big — we are "scaled to serve" our clients. And third, in an era of globalization, America needs banks such as Citi to help our multi-national companies grow, expand and remain competitive in a rapidly changing world.

As an industry and as a company, we've taken responsibility for our actions — and it was right and necessary for us to do so. Several firms have restructured and changed their business models. Citi, for instance, is a different company than it was less than a decade ago — simpler, smaller, safer and stronger.

In many ways, we've gone back to our roots, focusing on providing banking services to consumers and institutions. We've shed more than $700 billion in non-core assets and 60 non-core businesses around the world. We no longer have insurance businesses, hedge funds, private equity funds and we aren't an asset manager.

We have completely rebuilt our capital base and liquidity — not just back to, but far above, pre-crisis levels. We've also lowered our leverage by more than half and overhauled our risk management.

Yet little of this is known to much of the public. More significant, those of us in finance have not done enough to explain just what it is that banks do. Without the trust of the people and communities we serve, we simply can't do our jobs. Clearly, explaining ourselves is something we're going to have to be better at in order to fulfill our mission.

And that mission is, in very simple terms, to enable progress. Harvard historian Niall Ferguson has said, "The evolution of credit and debt was as important as any technological innovation in the rise of civilization.… Without the foundation of borrowing and lending, the economic history of our world would scarcely have gotten off the ground."

He's exactly right. Basic banking — taking deposits and lending — traces back to loans of grain and other commodities at least 4,000 years ago. And to some extent finance's current unpopularity is nothing new. The industry's reputation always suffers during and after financial panics and crises such as the Great Depression.

But despite this volatility in the court of public opinion, banking is essential to growth and innovation. In fact, if you look at a very long-term growth chart — one going back centuries — what you'll see is a line that is mostly flat and very low until about 1700, which was more or less when the modern finance system took the first outlines of its present shape. From that point on, the line shoots upward.

Even so, banks are often on the defensive. Now, nearly all people intuitively know that, in their personal lives, they need a bank. We all need a place to safeguard our money, deposit our paycheck, and from which to pay our bills. Beyond these daily necessities, however, few think about what banks do — and what banks do specifically for them.

For instance, borrowing and lending enable the building, buying, selling and improvement of homes. And, as all of us who bear the responsibility of meeting a payroll know, the creation and funding of jobs depend decisively on bank lending. I don't need to tell a room of Nebraskans that even the food on our tables wouldn't get there without finance — or, if it did, we'd have to grow it ourselves.

That covers the big three for most of us — our homes, our jobs, and our daily necessities. But the impact of the financial system hardly ends there. In reality, there is virtually no aspect of modern life that finance does not touch and help improve.

From schools to roads and airports, to financial instruments such as life insurance, to the innovations that help make life exciting — none of it would be possible in scope, extent, or quality without a modern financial system. Even governments at every level — local, state and federal — depend on the banking system to meet its payrolls, finance its operations, build infrastructure, and so much more.

Lending is the core activity of banking. And, while it's not quite the fuel that drives the global economy — that would be human talent and initiative — it's the oil that keeps the machinery running smoothly.

But there's more to it than that. The global economy is big, sprawling, complex, and multi-faceted. It takes financial products and services well beyond just lending to service it properly. And it takes banks of all shapes, sizes, scale and scope.

Now — let us be clear—the louder critics of the banking industry do not aim their arguments at banking itself, but rather at certain banks … the so-called "big banks."

A little context first. This argument is most heated here in the U.S., despite the fact that the world's largest banks are overwhelmingly in Europe and Asia. In fact, only one of the world's top ten largest banks is American. The U.S. banking system is also far less concentrated than its peers overseas, where big banks hold a much higher percentage of the total assets in those financial systems.

That said, there's no denying that some banks — including the one I lead — are large. But we are large for very defined and specific reasons. Put simply, we are scaled to serve our clients and customers. Our size and scope reflect the expectations and needs of those clients.

Citi's competitive advantage over our domestic and international peers is a network that spans 100 countries. In some of these nations, our presence dates back more than a century. For a client looking to break into a new market or expand in an existing one, Citi's long-established, on-the-ground expertise is invaluable.

This advantage is a consequence of our history. Citi came into being as a trade finance bank more than 200 years ago, when the charter of the First Bank of the United States expired and merchants banded together to pool capital and export goods.

That activity is still at the heart of our mission. Every day, we — and other big banks — are helping American firms compete on the world stage, create American jobs and sell their products in markets around the world.

In fact, last year alone, Citi facilitated some $600 billion in trade flows for our clients, about half of that for U.S.-domiciled firms or their overseas subsidiaries. When Apple opens a store in South Africa, or Caterpillar ships a tractor to Thailand, you can be sure there's an American global bank supporting them.

So our bread and butter is to serve multinationals — we bank almost all of the Fortune 500, for instance — large institutions, and governments that tend to do business in many — sometimes dozens — of countries every single day. They like our scale because they need our scale.

From the perspective of, say, Coca-Cola or General Electric, having to navigate 20 or more different banks on a daily basis, handling thousands or even millions of transactions per day, would be a nightmare — and not merely from an expense point of view, but from a regulatory and control perspective as well. The more banks a company is forced to use, the more complexity and risk it assumes. Corporations therefore want and appreciate the services of a "one-stop shop."

If they can't get it from an American bank, there are plenty of overseas banks that would be happy to step in — or try. Policymakers who want to eliminate large banks — but only the American ones — should understand that even if we were to disappear, the demand for our services wouldn't. Far from it: those services would simply be outsourced to banks in other countries.

The benefits of globalization have been hotly debated, not just in the U.S., but even more so overseas. But whatever one thinks of its pros and cons, one thing is clear: globalization isn't a fad. In my view, it's a macro trend that's here to stay.

Any number of metrics bear this out. For instance, since at least 1990, global GDP has been shifting from the developed to the emerging markets. In that year, North America accounted for almost a third of the world's economic output. By 2050, our researchers forecast that share will be barely 10 percent. In 1990, what we call "emerging Asia" — dominated by China — produced just over 5 percent global GDP. By mid-century, that level will be almost half.

We've already seen this dynamic at work. Today, China alone is nearly 12 percent of the global economy. And from 2008 to 2012, half of all global growth was generated by that country.

In other words, globalization has transformed the competitive landscape since I joined Citi 31 years ago. It would be naïve to think that American companies wouldn't be harmed if we undermined their ability to sell their goods and services internationally.

Global banks help them do exactly that. We provide more than geographic diversity — we also deliver a range of products and services. We help clients meet payroll, help finance the supply chain, manage their cash, exchange currencies, and so much else — in addition, of course, to the core lending that we do across a range of timeframes and terms. Simply put, banks like Citi support companies that drive job and economic growth.

And it's not just established companies and multi-nationals that need these services. For today's start-ups hoping to become tomorrow's giants, sources of early support vary widely — from angel investors to venture capital.

But all require, in the end, the capital markets — facilitated by big banks — to redeem those investments through initial public offerings and the liquidity provided by the securities market. Individuals also benefit from the capital markets to fund and grow pensions, retirement accounts, college savings plans, and many other vehicles for meeting their financial aspirations.

It goes without saying that there is a vital place for small and mid-size regional and community banks. The same way we at Citi know our overseas markets owing to our history on the ground, they thoroughly know the situations in their communities. They are ideally positioned to lend to local businesses, support local economies, help people buy homes, and much else.

They're not as well positioned to serve the needs of America's global companies … or finance national infrastructure projects … or help the U.S. military supply our troops and pay its vendors … all of which we do at Citi.

Regional and community banks are not our competitors — in fact many are Citi clients. And if banks such as Citi went away, the jobs of our smaller peers would be harder, not easier. The American economy needs banks of all sizes to meet the differing needs of different clients. This is clear to America's business leaders, who overwhelmingly report that they appreciate the service that big banks offer their firms. It's not as clear to the general public or to some political leaders — which means we have to work harder to make our case.

Sometimes trends work in your favor. Banks have increased lending to American businesses by $230 billion over the last two years, helping fuel a recovery that is finally gaining steam.

As for the economy's near- and medium-term prospects, Citi's researchers are forecasting 3.5 percent overall growth for 2015 for the U.S., slightly above our historic average since the Second World War, though a rate our country hasn't seen for a full year since before the Great Recession. America had a sluggish start to 2014, owing in large part to an extreme and disruptive winter.

But then the economy surged, especially in the third quarter, and closed the year strongly. We're now riding that momentum into 2015, partly on low oil prices — bad if you own stock in the energy sector, but great for consumers and all the businesses for which energy is a major cost.

We project that the global economy will do slightly better than last year, fueled by a resurgent U.S., further monetary stimulus from the European Central Bank and Bank of Japan, and by growth in the emerging markets. Overall, our hope is that the American — and world — economies are finally turning a corner.

But I caution you that many times last year, our initially hopeful forecasts had to be later downgraded. There are many reasons to believe that won't happen this year — and personally, having looked at the data, I'm very optimistic — but in the end, these trends are beyond anyone's control.

Financial institutions are playing — and will continue to play — a major role in the recovery. Right now, it's estimated that outstanding loans to American small businesses — the backbone of our economy and job market — stand at about $660 billion. Citi is committed to supporting small businesses and helping create jobs, so four years ago we made a pledge to substantially increase our lending to U.S. small businesses. $24 billion over three years represented a major increase in our small business lending — and not only did we surpass that goal, we have sustained those levels and not looked back. Today I'm, proud to announce that in 2014, we lent another $9.2 billion to American small businesses — more than double the amount from five years ago.

Of these loans, $76 million went to small businesses right here in Nebraska. That's not including a $92 million loan we made to Biz Capital, a small business loan fund that has re-lent $11 million of that to seven Nebraska businesses.

We're active here in Nebraska in many other ways as well. In addition to serving the companies I mentioned earlier, we also do significant work with the public sector, including issuing bonds for the Municipal Energy Agency of Nebraska and the Omaha Public Power District.

That's but a small part of what we do nationally for state and local governments. Overall last year, we underwrote more than $100 billion for projects ranging from schools to water mains to highways.

One project in particular stands out. As you all know, Detroit has been going through very difficult times. Municipal bankruptcy put even greater strain on the city government's ability to deliver essential services. Among those services that frayed was lighting the streets. At one point 40 percent, or 32,000, of the city's 80,000 street lights didn't work.

In late 2013, we used our own balance sheet to purchase $60 million worth of lighting authority bonds for Detroit and the State of Michigan Finance Authority, to raise what eventually became a total of $185 million underwritten to repair the Detroit's street lighting system and turn the lights back on. 26,000 lights were fixed in six months and repairs are underway for the remainder of the system. This is helping improve public safety and quality of life for Detroit's residents and businesses — and we are proud to play a role in this important effort.

We're also committed to the communities we serve beyond our business activities. We cannot be indifferent to the challenges facing our country. And there are few issues more pressing than the widening wealth gap. It's simply unhealthy for any society to fracture this way. So we're doing our part to help young people find jobs and be able to participate in the economic growth our country is experiencing.

Last year, we launched Pathways to Progress, a three-year $50 million commitment designed to jump-start the career readiness of 100,000 low-income youth in ten target cities. The program is helping young adults set educational and career goals, develop the necessary skills for a 21st century economy, and contribute to the future economic competitiveness of our cities and our country.

It may not seem obvious at first glance how this fits into finance and banking. But the link is undeniable. Finance is a demanding career in what is increasingly a knowledge economy. Even those who don't choose it as a career need to grasp the basics in order to build assets and realize their aspirations. We try to put our expertise to work to help make that happen.

Education — especially financial education — is a field in which we have a clear comparative advantage, and we strive to leverage our relevant assets to teach the essentials about money to the future leaders of our communities and country.

We have, if I may say so, been fairly successful at that — though the work never ends. But that brings me back to an earlier point.

Citi employs nearly 80,000 people in all 50 states — the vast majority of them not on Wall Street, but in branches and operations centers, servicing loans and mortgages — in short, helping customers and strengthening communities. That's not counting another 130,000 overseas. It's important that we in positions of leadership in finance continue to inform people about what they do, and the value they provide.

I hope that you, as business leaders who understand what we banks do for your companies, will add your voices to the chorus.

Thank you very much.