Celebration 200 years Citigroup
Ladies and Gentlemen,
It is a distinct honour for me to address you tonight and to celebrate with you 200 years Citigroup. In the bank sector , 200 years is an impressive age. In its long existence, Citigroup weathered several worldwide financial and economic crises. And we are still to recover from the last one. It is needless to say these are challenging and uncertain times. For all of us: banks, businesses and governments alike. And since the three of us are present here tonight, I think this is a good opportunity to look forward to the future of our economy. To reflect with a sanguine spirit on how we have to make the transformation we so desperately need.
It will not come as a big surprise to you that I, as a liberal politician, am an ardent supporter of capitalism. But let me be clear: I am a supporter of new capitalism, not of old capitalism. We no longer know the capitalism of the 19th century: the capitalism of the rubber barons. We do not run our companies like we did 50 or even 30 years ago. It is in its very DNA of capitalism to adapt to changing circumstances and crises. And if today’s crisis learns us anything, it is that you pay a hefty price for trying to grow beyond your natural capacity.
Banks used derivatives to artificially boost their profits. By engaging in prop trading with their clients’ money, they had cut the link between risk and responsibility. Banks also developed subprime mortgages, but this time not on their own initiative. This unholy idea was handed to them by governments. The same governments that made the economy grow not by limiting themselves to fostering private initiative but also by excessively indebting themselves and thus taxing future generations. Deteriorating credit worthiness of public entities endangered the balance sheets of banks who needed public money to stay afloat. A perilous, vicious circle was created. With the greatest of joint efforts, we managed to break the negative spiral. And now we have to rebuild.
Some think banks have to be punished for their sins. Others want governments to bleed for what they have done wrong. An eye for an eye, a tooth for a tooth. This ‘Old Testament Justice’ might give instant gratification, but it does not fix things. It does not hand a solution for the long run. It wallows in its own moral superiority, but it does not transform or rebuild anything. And let this just be, what needs to be done. We need to reconstruct, we need to rebuild, we need new paradigms that shore our economy. We need to build a new idea of capitalism. For me , central to this idea is the notion of ‘commitment’. We need more ‘commitment’ to one another. We must learn to grow with one another instead of at the expense of the other. This commitment can come in many forms. So, let me put forward three ideas of commitment.
A first type of commitment we need to reinstitute, is the commitment of businesses towards their clients and of governments towards their citizens. To make this work, we need to make the shift from maximization to optimization. Some of you will say: this is not new. And indeed, it is precisely the idea which is reflected by the motto ‘less is more’. Or more accurately, it says that we have to create more value of higher quality, not just low-quality value in greater quantity.
For the first time in corporate history, this is put into practice at a large scale. Banks all over the world are taking a step back from their day-to-day dealings and reflect on what their core mission should be. Or how a sector under siege, can become a frontrunner of positive change. Take Citigroup in Belgium for example. They decided to sell their retail activities. Before the crisis, this would most certainly be considered as a sign of weakness. It would be categorized as a loss. But this is the old way of looking at things. Selling your retail activities is not a sign of weakness. It is not a sign of impotence. On the contrary, this decision shows that Citigroup Belgium has refound focus. Has rediscovered its original mission to serve and finance corporations. And the truth is, it takes courage to be true to your original calling while not knowing what the ultimate outcome will be. This is going back to the very roots of entrepreneurship and it deserves our respect.
A second type of commitment we need to integrate in our way of doing business is the commitment to the earth. Future growth will need to be sustainable growth. And this sustainability implies we have to take into account not only our natural resources but also future generations. With emerging economies as China, Russia and Brazil, the battle for natural resources such as oil, gas and rare earths will only intensify. And if we do not transform this battle into common strategy, a strategy that goes beyond our national interest, everyone is bound to loose. And this time we will lose in proportions and at an intensity never experienced before. It is the responsibility of nations to work together on this common strategy and get away from the race to the bottom where you try to grab what you can, while you still can.
Is the race to the oil reserves under the north pole the right path to pursue? These are reserves that recently became accessible because of the melting of the ice caps caused by global warming. It is a very cynical act to drill these oil fields as fast as you can without considering the consequences. This is ‘old capitalism’. ‘New capitalism’ requires consultation between the claiming nations. It requires compensations and mitigating measures for those who are being compromised by the consequences of these new drillings. In short: it requires commitment to all the parties involved.
Thirdly and lastly, I want us to be committed to one another. And by ‘we’, I mean the banks, businesses and governments. We are in a triangular relationship defined by reciprocity. We can only succeed in the endeavour of rebuilding, transforming, reconstructing, if we do it together. We have to acknowledge we are all in the same boat. A boat that is sailing through rough and stormy waters. Governments need banks and companies as growth generators. And, banks and businesses need the government. Because it should be the objective of every government and the public sector at large to create a stable and solid framework for our economy. The private sector needs central banks who bring calmness wherever there is unrest. They need the stabilizing effect of our social security that safeguards the purchasing power of the public whenever a crisis hits our economy. They need the rules protecting them from treats arising from unfair monopolies. The list that proves we are mutually dependent, is endless, but the lesson that lies behind it, is what really matters: we need each other so we better work together.
Ladies and gentlemen,
I know I have covered some very broad topics in a short amount of time. And for sure we will not solve these issues here tonight. But important to me is that in our daily practice – while we are governing or managing our business- we have have this idea of ‘commitment’ in our mind, constantly. The simple awareness that we are not alone on this planet and that our actions affect others.
I am looking forward to working with all of you to transform our institutions, our economy and ourselves so that 21st century capitalism is forward looking and sustainable. So that we can be proud of the legacy we leave to our children and grandchildren.
Let me finish where I began. By congratulating Citigroup with their 200th anniversary. 200 years of service to its customers. 200 years of commitment to financing the economy. 200 years of contributing to wealth for the many. In good times and bad times. That is the very definition of “commitment” and you have my deepest respect for that.