Citi Banker Sees Nations Targeting Rich to Pay Virus Costs
Citi Banker Sees Nations Targeting Wealthy to Recoup Virus Costs
(Bloomberg) -- From the Black Monday market crash to the bursting of the dot-com bubble to the collapse of Lehman Brothers, Citigroup Inc.’s Luigi Pigorini has lived through plenty of economic crises.
Still, he hasn’t seen a downturn as rapid as the one spawned by the novel coronavirus. And as nations seek to recoup the cost of the pandemic, the result will likely be that some of the world’s biggest fortunes end up in the crosshairs, he said.
“Wealth will become much more significant to any country’s economic and policy solutions,” said Pigorini, the London-based region head for Europe, the Middle East and Africa at Citigroup’s private bank. “It could be by taxation. It could be by coordination with the people who have the wealth. And it could be by expropriation.”
The pandemic, which is heightening concerns over inequality, has prompted Wall Street titans to predict tax hikes, as well. Central banks are pumping money into their economies as stimulus, repeating their response to the 2008 financial crisis that helped the rich become even richer.
In an interview with Bloomberg, Pigorini, 58, spoke about his outlook for the wealthy, his career at Citigroup and the secret to securing new clients. Comments have been edited and condensed.
What’s your take on the pandemic?
I’ve been through at least five or six important recessions, and I think we’re just entering this one. It’s a different challenge than past recessions, mostly because it’s caused by a non-financial factor. I suspect we’re going to enter a period of very strong geopolitical tensions between superpowers -- China and the U.S., for example, or even southern Europe versus the European Union.
How are clients reacting to the virus crisis?
Human nature is a little unpredictable, especially when you’re dealing with private clients and families. Very few -- a handful -- sold down their equity positions in March, while a few increased their positions and have obviously done well.
After that initial frenzy, clients are now are reallocating and reassessing, and not just their financial portfolio. Death is suddenly now a lot more visible. People -- especially very wealthy, perhaps elderly -- do realize that they’re not immortal and how they’d better do something about their succession, inheritance and distribution of family assets. As a result, there’s a lot of conversations happening about the unexpected.
Are you looking for more clients right now?
When a family becomes a client of the private bank, they tend to do a lot with us, so we don’t need to grow a huge amount, though we would still like to grow. For us, it’s much more important about the type of client than the number.
We usually bring in clients by word of mouth. At the moment, the ability to attract new prospects is essentially limited. If you’ve never spoken to someone before, you’re not going to call them up now, so it’s about revisiting past leads and focusing on clients that maybe haven’t had that much of a chance to increase their position with us. We call them underpenetrated clients.
Obviously, you have to be able to add value and provide solutions, but it’s all about persistence, and most successful teams in the private-banking industry have that. It sounds simple, but not everybody has it.
What’s the outlook for the super-wealthy?
Individual wealth and family wealth will become much more of a part of any country’s economic policy going forward. Whether this is right, I really don’t know, but clients are aware now more than ever of the fact they are extremely privileged and perhaps how their wealth can help other people. They’re also talking more about responsible capitalism, and they’re also worried about social tensions.
How is the pandemic affecting your events?
We’ve canceled all physical events, and we’re substituting some with virtual ones. For example, we’re currently working on our Family Office Leadership Program. Some of it will be pre-prepared, with us recording speakers before, and some of it will be live.
A virtual event allows more clients to attend, and it’s a lot cheaper. But you might lose out on a certain connectivity you’ve built up over, say, a drink in the evening. In-person conferences are often great because the debate shifts from the podium to the audience, and clients discuss their views among themselves. But who knows? Maybe a virtual conference is actually better.
How did you end up at Citi?
After university, I went to do an MBA at Columbia University. In the summer between the two years, I had an internship at Citi and it had a training program in New York with subsequent postings in countries abroad. I was really young, and I had these romantic thoughts of going to Africa. Citi said: “Train with us in New York and we’ll send you to one of our branches in Africa.”
And so I signed up for the program, but then I realized that I wanted to stay in New York. I was there for six years, and I’ve spent time since then in London, Milan, Madrid and London again. This is all across 35 years. I’ve had roles in the investment bank, corporate bank and private bank, and I’m not unique. A lot of people at Citi have spent their entire careers here.
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