Citigroup’s 204,000 U.S. employees hope it’s not an April Fools’ joke.
In an interview with CNBC’s “Squawk on the Street,” Citigroup CEO Michael Corbat vowed not to lay off workers as the coronavirus pandemic grips the world.
“We instituted our own pledge and haven’t been laying people off,” Corbat told Jim Cramer on Wednesday (April 1). “About 75,000 of my colleagues will get a check to help with challenging times now. We’ve given paid time off to anyone who needs it, we’ve expanded benefits, and expanded Citi Foundation in our community.”
The 59-year-old executive said Citi and the nation’s eight largest banks decided to suspend buybacks as they continue to pay dividends.
“These buybacks constitute the vast majority of capital return to our shareholders,” he said. “We did that to be in sync with the challenge of the crisis and to make sure that all of us coming in with strong capital and liquidity positions could maintain that stance.”
It helps, he said, that U.S. companies pay dividends quarterly, in contrast with Europe where firms issue an annual dividend.
“U.S. banks come into this with more strength,” Corbat added.
The dividend yield for Citigroup as of March 31 was 4.63 percent, according to Macrotrends.
“From our perspective, our dividend is sound and we plan on continuing to pay it,” he said.
When asked if the market should be worried about forbearance, as loan payments are postponed while interest continues to accrue, he spoke broadly about the coronavirus pandemic.
“This is a public health crisis that has manifested itself into an economic crisis,” he said. “Testing and vaccines are core to get us back on track. From a U.S. and a global perspective, the worst thing we can have is uncertainty.”
Still, he said, the public is rising to the challenge. Corbat noted the generous acts of kindness he’s seen have been extraordinary.
On credit, Corbat said the Bank Policy Institute, a nonpartisan public policy group, reported yesterday U.S banks lent about $400 billion in the first quarter. Of that, he said, Citi has issued more than $50 billion to support our clients.
He acknowledged Citi has seen withdrawals, but it hasn’t been outside the norm.
On the question of possibly bankruptcy and customers being unable to pay their credit card bills, Corbat said it will be challenging.
“Clearly, the system will be challenged,” he said. “We will see spikes in unemployment and the responsibility of the system is to turn those spikes as quickly as possible.”