Transcript: Bruce Van Saun

 

 

The transcript from this week’s MiB: Bruce Van Saun, Citizens Financial, is below.

You can stream/download the full conversation, including the podcast extras on Apple iTunesOvercastSpotifyGoogleBloomberg, and Stitcher. All of our earlier podcasts on your favorite pod hosts can be found here.

 

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VOICE-OVER: This is Masters in Business with Barry Ritholtz on Bloomberg Radio.

RITHOLTZ: This week on the podcast I have an extra special guest. His name is Bruce Van Saun. He is the Chairman and CEO of Citizens Financial Group. They are $165 billion bank, the 12th in the United States.

If you are at all interested in banking, financing, middle market, private equity, just a whole run of different aspects of the financial services world, you’re going to find this conversation to be quite interesting. Bruce is really a very knowledgeable and articulate spokesman on not only behalf of his bank, but the banking industry in general. He has a really good insight as to what’s going on in both the industry and the economy. So I — I found this conversation to be fascinating and I think you will also.

With no further ado, my interview with Bruce Van Saun.

VOICE-OVER: This is Masters in Business with Barry Ritholtz on Bloomberg Radio.

RITHOLTZ: My special guest this week is Bruce Van Saun. He is the Chairman and Chief Executive Officer of Citizens Financial Group. They were spun out from RBS back in 2014 where Van Saun led a successful initial public offering.

Previously, he had been Executive Director on the RBS board for the prior four to five years. Before that he was Vice Chairman and CFO at the Bank of New York Mellon. His previous career stints include Deutsche Bank, Wasserstein Perella Group and Kidder Peabody.

Bruce Van Saun, welcome to Bloomberg.

VAN SAUN: Thanks my pleasure to be here, Barry.

RITHOLTZ: Let’s start at the Bank of New York and Bank of New York Mellon. You — where were you during the financial crisis? Which — what was the name at the time?

VAN SAUN: Well, I had left by then so I joined Bank of New York in 1997. The biggest crisis I experienced there was when 9/11 hit and we were …

RITHOLTZ: Sure.

VAN SAUN: … basically out of business there for a few days and we had to scramble to get the bank back on its feet. But …

RITHOLTZ: Were you downtown?

VAN SAUN: Yeah, we’re right downtown.

RITHOLTZ: You’re right in Wall Street, right?

VAN SAUN: So One Wall Street was the headquarters building and then Barclays was — was the operations center.

RITHOLTZ: Right.

VAN SAUN: And so we were kind of straddling the World Trade Center buildings. And when you couldn’t have access to downtown, we had to work out of other offices that we scrambled to secure and then we had to stand up a new datacenter with IBM’s help in Sterling Forest. So that was a exciting period.

RITHOLTZ: How long did it take for you guys to get back up and running after the attack?

VAN SAUN: Well, it was – it was a couple of days and then we had a lot of pressure to basically start moving money, and move securities, and clear out the backlog that held up for a couple of days.

RITHOLTZ: Sure, You had backup facilities. . .  You weren’t just — that wasn’t the sole location.

VAN SAUN: Yeah.

RITHOLTZ: It was relatively easy to turn around.

VAN SAUN: But we didn’t have the same kind of resiliency that banks have today. So in the wake of that, Bank of New York went out and built a brand new banking datacenter out in Tennessee, and so we’re constantly ready to flip over but we weren’t at that level of resiliency at that time.

RITHOLTZ: The — the cloud has changed everything for banks and financial institutions. Is that there …

VAN SAUN: Yeah, I think the cloud is part of that.

RITHOLTZ: Yeah.

VAN SAUN: So part of it was just making the investment and recognizing the need for a higher level of resiliency. But now moving things to the cloud and running your infrastructure in the cloud, I think, offers some great promise to lower costs and also increase security.

RITHOLTZ: And you were at RBS then in ’08, ’09, is that right?

VAN SAUN: Yeah. So — so the reason I missed the crisis we had merged with Mellon and I stayed through the transition. We had appointed a new CEO, so I wanted to go do something else. And I was out by July of ’08. The crisis was in the fall of ’08 …

RITHOLTZ: Right.

VAN SAUN: … so it was nice not to be in the hot seat during that.

I was working in private equity for about a year trying to put deals together and then RBS came a calling. They had — wanted to put a new management team in place to help right the ship after RBS took a tumble in the crisis and needed a government bailout. So I joined Stephen Hester there. I was the CFO, and we had a lot of surgery do in terms of shrinking the bank and getting it back to safety.

RITHOLTZ: So you mentioned private equities, Citizens Financial is sort of — I kind of called cold in the middleware sort of bank, does a lot of work with not the giant entities out there, but a lot of very other large entities that I think are a little below the radar of the public. Is that a …

(Crosstalk)

VAN SAUN: Yeah. So here’s a — you know, the — the kind of (inaudible) the land in terms of our commercial business. So we focus on middle market companies, which are maybe $25 million to $500 million in revenues and then also the mid corporate segment, which is $500 million to about $3 billion in revenues.

Overtime, since I’ve joined Citizens, we’ve taken the middle market customer account from about 2,000 up to about 3,000, and mid corporates we’ve taken from about 500 up to about 1,000. So we’ve grown faster at the bigger company. And — and what you need there to be competitive is you need bankers with industry expertise, so we had to go out and recruit in some bankers for technology or healthcare or energy so they could really serve those customers well and they could bring previous relationships from their last bank over to Citizens. And so we’ve had some — some really nice growth, but we’re not focusing on the household name, Fortune 500 companies.

RITHOLTZ: Right.

VAN SAUN: We’re staying a little bit below that radar. And we can compete very effectively against the mega banks as oftentimes we’re leading deals and we’ll have J.P. Morgan or BofA underwriter. We’re winning a swap transaction against the mega banks, so we have really good capabilities but we stay focused on an area that — that we know and we can compete effectively.

RITHOLTZ: So I’ve noticed on Wall Street hedge funds and venture capital seems to be going through a bit of a rough patch, but private equity just is a house of fire. It just expands rapidly …

VAN SAUN: Yeah.

VAN SAUN: Well, private equity is — is a good customer segment for us in the commercial bank. And we have focused over time on say 50 to 60 sponsors that we know well that we think they’re good operators. They invest wisely and they’re good to their banks. And — and when they need to put equity back into a deal to right the ship if something is a little stressed, they do that. So that’s where we’ve stayed focused. We haven’t tried to move and compete for all the business that’s taking place there, and I think client selection has been really critical.

So those firms know us well. They give us the swings at the bat. They let us lead transactions and then also provide more services to their investing company, so that’s been a really good strategy for us.

I would say, similarly with commercial real estate, the developers we focus on we’ve known for a long time, we think they’re good operators. And so again, we build those strong relationships and we get good swings at the bat when they’re doing things and like to include us in the deals that they do, and then they give us a chance to get more of their wallet because they know we have the capabilities.

RITHOLTZ: That sounds quite, quite interesting.

VAN SAUN: Yeah.

RITHOLTZ: So let’s start with a really broad topic. Since the crisis ended in ’09, there have been just enormous changes in banking and regulation even the entire economy. How has the role of a CEO running bank changed over this period? How was banking changed over this period?

VAN SAUN: Yeah, it’s a very broad question. I’ll break that down. So, you know, after the crisis it was clear that there needed to be some reforms first around, I’d say, the prudential regulation about how banks — do they have enough capital, do they have the right funding and liquidity structures, and so whether they’re managing risk the right way. So we had a whole framework that was put in place that was agreed globally basically around capital liquidity funding, running stress tests. And I think that was really positive, so we learned a lot from the crisis. We put those lessons to use. So a big part of our efforts early days was to make sure that we were keeping up with those increasing demands around the prudent regulation.

The second element of regulation was around really conduct and culture, and so banks, I think, weren’t always that transparent with their fees, and sometimes they were working against their customer instead of working for their customers. And so …

 

VAN SAUN: … there needed to be change there as well. And so that whole agenda came in — in the second wave after the prudential agenda. And I think that’s also been very positive in terms of creating the right mindset and culture inside banks in terms of, you know, we have to be the trusted advisor. We have to be working for the benefit of our customers, giving them good advice, being simple, being transparent on our fees.

RITHOLTZ: Have we come full circle when — when …

VAN SAUN: I think we’ve come a long way. You know, the one kind of bump in the road, unfortunately, was the Wells Fargo selling scandal, which kind of made folks think, well, maybe there hasn’t been any change here in banks when, in fact, I think most of the banks that come through and made the appropriate changes. So that was …

RITHOLTZ: They’re the outlier ….

(Crosstalk)

VAN SAUN: Yeah, I think that was — that was a black eye for the industry and they’re paying the Piper for that.

RITHOLTZ: Yeah.

VAN SAUN: They now have a new CEO and they’re working hard on the regulatory equation, and it’s been a great bank for generations and will continue to be. I think they’ll get back on track, but that was — that was unfortunate for the industry, I think. So the regulatory agenda was a big thing to keep up with.

The second thing that’s changed a lot is, you know, technology has moved in warp speed to kind of dimensions nobody thought possible. So moving the infrastructure to the cloud, new ways of development around an agile framework, which speeds things up going to digital first business models, using data to personalize offers to your customers so they don’t waste their time, you know, you see what’s happening in other industries and customer expectations for change and for a level of service have really increased given what they see elsewhere. And so banks …

RITHOLTZ: Sure.

VAN SAUN: … have had to make the investments and go through a significant change in the business model to — to — to meet those expectations. So it’s really kept it very interesting to — to keep up with all the change that we’ve had to over — over the last few years.

RITHOLTZ: You know, when the new CEO of Vanguard came in the — his answer to a question I found most fascinating, what — what keeps you up at night? His answer was security and hackers. How big a deal is that? And is technology helping us in this space or — or making it worse?

VAN SAUN: Well, I …

(Crosstalk)

VAN SAUN: … I think it is a — a big deal, and I think most CEOs of financial institutions trusted with keeping customers’ assets and data safe have to have that as the top issue on the priority list, top risk that we face. Fortunately, there are advances in technology and new tools to actually help protect all of those — those assets and that data. And, you know, I think it also requires hiring top talent.

We feel really good at Citizens. We’ve hired a leading expert in cybersecurity who’s had some big jobs elsewhere who, I think, knows what good looks like and has moved us into the future very, very quickly, has good followership, has brought additional good people into the organization. And then we’ve prioritized the tools that she needs to really keep the bank safe. So that kind of goes right to the top of the capital expenditure list, and I think that’ll continue to be the case because there’s a lot of bad guys out there. They don’t come into branches with a stocking over their head and have water pistol and pass a note to the teller anymore.

RITHOLTZ: Right.

VAN SAUN: That’s less and less the way that they …

RITHOLTZ: The good old days.

VAN SAUN: Yeah.

(LAUGHTER)

It’s — it’s, you know, much more sophisticated now. They’re sitting in a, you know, in a cafe hacking away, buying, you know, data off the black market and trying to figure out ways to — to steal people’s assets.

RITHOLTZ: Unbelievable. So you led the IPO in 2014. What was that process like going public? And — and how happy are you that you’re not, you know, a tech unicorn having to face what companies like Uber and WeWork …

VAN SAUN: Yeah, look, I — I think Citizens had that great foundation serving a good part of the country because of the troubles of the parent there was a lot of work to do, so the balance sheet had shrunk dramatically and hadn’t kept pace in some ways investing in technology and in our fee-based businesses, and so there was work to do.

When we had the deadline in terms of taking it public, the best I could do really was assemble a strong team on board, put together a really good plan and have a vision where we could take the company, but it was — you know, we had to do it within a year, and so we were still operating it relatively poor profitability levels and we still had a lot of gaps, but we had a good story to tell. So actually just getting the deal done and getting investors to kind of buy the promise and buy our experience and our vision felt really good. So that was — that was important to get that done and launch that.

I would say, you know, the experience of going public really help facilitate our turnaround because usually divestitures banks get sold. They don’t get IPOed …

RITHOLTZ: Right.

VAN SAUN: … and so this was an opportunity for me to assemble a management team and say, look, we’re in a unique situation where we get the keys to the car and we have the steering wheel, and we can take this bank where we want to so we can build a great bank over time and you’re going to be a key player in doing that. So that allowed us to, I think, attract the levels of talent that had Citizens stayed apart of RBS we would not have been able to do. And ultimately, in any organization, you win with great people and you win with talent. So that was — that was really positive.

I think the other thing also is that it kind of shook up the culture at Citizens with — as a sub of a foreign entity that has its own troubles. You could get comfortable and a bit complacent.

RITHOLTZ: Right.

VAN SAUN: So now we had public shareholders who wanted to hear about the long-term vision, but they wanted to see good execution in the near-term to towards that path, and so we had a higher-level accountability that we embedded into the culture, so we’re accountable to shareholders and we’re countable to others to serve our customers better and to run the bank better.

RITHOLTZ: So you sit on the Federal Reserve Bank of Boston board representing other banks. What is — what is that experience like?

VAN SAUN: That’s great. So if you — if you flash back to the last two years, I was on the Federal Advisory Council so I was representing the — the Boston Fed district in meeting with the Fed Board of Governors and talking about issues and making — you know, giving color on economic conditions and offering advice on certain financial matters, so that was good. And then I rolled on to the — to the Boston Fed, and so we talk about the economic conditions in the New England region. We talk about the macroeconomic dynamics and where interest rates are and where they — where they should go because, you know, the Boston Fed president gets a vote in terms of what to do with interest rates. So …

RITHOLTZ: So you’re an influencer of him but not a voting member obviously?

VAN SAUN: Yeah, obviously, yeah. So …

RITHOLTZ: Quite, quite interesting. And you’re on the board of Moody’s for a couple of years also.

VAN SAUN: That’s right, right.

RITHOLTZ: This is post crisis. What is that experience like?

VAN SAUN: Well, you know …

RITHOLTZ: You missed all the fun.

VAN SAUN: Well, what’s interesting is, you know, most CEOs can have one outside board slot. And even when I was a CFO for many years, I always had an outside board slot. When I was in the U.K., I was on Lloyds of London’s board.

RITHOLTZ: Oh, really? That’s quite an entity.

VAN SAUN: Yeah. And I found that, you know, it would complement what I was doing as an executive because they’re specialists in risk management. That’s our principal responsibility –  to make sure we’re running a safe and sound institution.

And so when I came back from the U.K. and came into the U.S., I was looking for a job that would also be complementary where I could continue to stay in tune with the — the — the latest developments in risk management and kind of seeing the lay of the land about how Moody’s thought about global risks. And so that was just a natural thing to — for me to go from Lloyds of London to go on to the board of Moody’s.

RITHOLTZ: So I’ve been a critic over the years of the rating agencies, primarily S&P. When you look at the fines post-crisis, I think Moody has paid $1 million fine; S&P paid billions and billions in fine.

VAN SAUN: Yeah. No, it wasn’t quite that much of a spread. I think S&P settlement with the — with the DOJ was about $1.3 billion and Moody’s was about $800,000.

RITHOLTZ: Oh, is that — there was that close?

VAN SAUN: Yeah, so they were — they were ultimately, yeah.

RITHOLTZ: But they — but they pretty much seem to have gotten much less blame in the popular press than S&P. I don’t know why that is, but this pre-dated your tenure…

VAN SAUN: Yeah, I mean, we had the — we — that we settled while I was there on the board, so …

RITHOLTZ: Oh, you did, OK.

VAN SAUN: … we got involved and looking at the facts and looking at the allegations. But I do think Moody’s fact pattern generally was — was in pretty good shape, but still there’s some — some culpable — you weren’t going to escape without some culpability.

RITHOLTZ: And I don’t know you very well, but I suspect from everything I’ve learned about you in preparing for this, I suspect you’re the sort of guy who comes in and says let’s get this resolved, let’s move on, we have a business to run. This happened before. It pre-dates my involvement. Let’s write that check and — and get on with our …

VAN SAUN: Well, I’m just — I’m just one board member, but yeah, we had those types of conversation that the market is really focused on the future. They don’t like to have these overhangs …

RITHOLTZ: I can imagine.

VAN SAUN: … on the past, and so you just got to put them behind you.

RITHOLTZ: Let’s talk a little bit about Apple. You know, when — when I first started reading about Citizens Financial, my initial response was, what is the name so familiar? And I just punched it into the search of my computer. It’s like, oh, they finance our — our iPhones.

Tell us a little about how did that come about. What — I — I know it’s a relatively minor thing in the overall revenues of the bank, but it’s kind of interesting because it is a name brand and you guys are …

VAN SAUN: Sure.

RITHOLTZ: … are very public with that.

VAN SAUN: Yeah, to be — to be a partner for the most iconic company on the planet, in my view, really is a lot of credibility for us …

RITHOLTZ: For sure.

VAN SAUN: … so — so we’re quite pleased that we hold that position.

You know, we had worked with Apple early days when we were building up our student loan business potentially with a notion that we could help them finance the purchases of their equipment and student bookstores in college. And that program didn’t really fulfill its potential, but I think we got to know them well and they liked our focus on the customer and really obsession around the customer experience because that really defines Apple.

So when they were thinking about the upgrade program and how to sell more phones through their stores, we helped to work with them on that program and design the financing for that program. And I think we built a very effective platform to process those transaction, so there’s a very small window of time that, as you know, since you (have been in it), you’ve — you’ve …

RITHOLTZ: Twelve 12 months, new phone.

VAN SAUN: … well, but you go into the store, you pick your phone and then you — we have a little window to make a decision do we want to finance you in the program or not and without getting a lot of information, so we built a very good credit decisioning model and then a very good processing capability behind the scenes that leads to a very good customer experience, a very highly rated NPS within the Apple store experience.

So anyways …

RITHOLTZ: It’s pretty instantaneous.

VAN SAUN: Yeah, it’s — it’s gone exceptionally well on — on the days when they launch a new phone. We get massive volume that we have to process and they always been able to flawlessly execute all that volume. So — so I think it’s a been a good partnership.

And the nice thing is the technology platform that we built for Apple, we can move and offer it to other merchants and adapt it to — to the needs of other merchants. And so today, we also have ADT and Vivint, two smart alarm companies, are running similar programs. And we have a number of other big household names in the queue, and so I kind of tease investors. I say stay tuned to watch this space because we’re going to announce a rollout to some other very highly regarded companies.

RITHOLTZ: So I’m — I’m curious as to how this works because when the first time we went to an Apple store to — and I’m always complaining I’m a power user of phones and after a year, the battery life starts to die, the last phone I replaced the battery at Month 14 and I said, “Wait, 12 months, new phone? Where do I sign up for that?”

VAN SAUN: Yeah.

RITHOLTZ: It was a pretty surprisingly — you punch a bunch of things in.

VAN SAUN: Yeah.

RITHOLTZ: Date of birth, social security, name, address, and it’s like eight seconds later you get approval …

VAN SAUN: Yeah.

RITHOLTZ: … I assume you’re looking at things like credit score, payment history, et cetera.

VAN SAUN: Yeah.

RITHOLTZ: What — what — how many data points go into that that it could be done so quickly?

VAN SAUN: Yeah, it’s a number of data points. We don’t want to give away the full secret sauce …

RITHOLTZ: No secret sauce.

VAN SAUN: … Barry, but, you know, I think we feel quite confident of our ability to make good decisions. And I think we now have been at the program now for a number of years, and so we’ve seen the performance of all the different vintages. And they’ve performed to — at or above expectations.

RITHOLTZ: Do you tweak this on an ongoing basis?

VAN SAUN: Yeah, sure.

RITHOLTZ: It’s always having …

VAN SAUN: Yeah.

RITHOLTZ: … make a little better and a little — that — that — that’s kind of interesting. So I have to think this new iPhone 11, the week it comes out, what is that like? Is this just …

VAN SAUN: Well, it’s …

RITHOLTZ: … a giant fire hose of data or …

VAN SAUN: Yeah. There’s — there’s a big swell of volume, and it’s great for Apple. I think they’re pleased with how the 11 is being received in the marketplace and — and …

RITHOLTZ: It’s gotten great reviews.

VAN SAUN: Yeah. And …

RITHOLTZ: Despite the price, it’s pretty expensive.

VAN SAUN: Well, they had — they had …

RITHOLTZ: It’s good for …

VAN SAUN: … a two-tier pricing.

RITHOLTZ: Right.

VAN SAUN: So I think they …

RITHOLTZ: And you could get the 8 for a — a very cheap price.

VAN SAUN: Right.

RITHOLTZ: They’ve now covered the full spectrum of prices …

VAN SAUN: Yeah.

RITHOLTZ: … as opposed to just being high-end.

VAN SAUN: That’s right, right. So I think they thought it through terms of features and pricing and alternatives. And it’s meeting a good reception, which is good for us. That means there’s going to be good demand for the phone. People continue to participate in the upgrade program, and so we continue to grow the balances under the program.

RITHOLTZ: I’m an ideal client for you guys. We walk in, what’s the biggest phone, what’s the top of the line. Give me extra storage.

VAN SAUN: Right.

RITHOLTZ: Wait, it’s 50 bucks a month? OK, great, we’ll take two.

VAN SAUN: Yeah.

RITHOLTZ: It really is a very simple thing. And the only problem is you want to upgrade after a year and sometimes you’re waiting a couple of months for new phone, so you end up holding onto a phone than the 12 …

VAN SAUN: Yeah, but — but you’re never really obsolete, you’re always getting the latest and brightest …

RITHOLTZ: Right.

VAN SAUN: … which — that’s the very appealing.

RITHOLTZ: Well, some people don’t care. Other people want whatever the most buzz …

VAN SAUN: Yeah.

RITHOLTZ: … worthy thing is. I am an early adopter even though it — it can occasionally be painful …

VAN SAUN: Yeah.

RITHOLTZ: … when you buy things before they’re really ready for prime time. Thankfully I passed on the Google Glass, but anytime I have an opportunity to upgrade the phone, I’m — I’m there right away.

VAN SAUN: Good.

RITHOLTZ: I have to think that where you sit in the economy, looking at consumers, looking at other businesses and entrepreneurs, you have to get a really early read on any changes in the economy. Is that a fair statement or am I …

VAN SAUN: Yeah.

RITHOLTZ: … overstating it?

VAN SAUN: Yeah. No, look, we’re kind of covered three regions of the country, so we have new England, Mid-Atlantic and Upper Midwest within our footprint.

RITHOLTZ: Three very different economies to be fair.

VAN SAUN: That’s it, the fair economies.

RITHOLTZ: Yeah.

VAN SAUN: And we cover, as I said earlier, the mid — mid corporate, middle market, all the way down to small business. And then we have a very big consumer business, so the, you know, balance of our business is roughly 50/50 between corporate and then also consumer. So we get a — we get quite a good read on, you know, both data in terms of, you know, or how — how our borrowing patterns, our charge card usage, et cetera. And then also anecdotes, just what are we hearing from customers, what’s the businessman doing? Are they buying that next piece of capital equipment? Are they holding back because of the trade tension? So I think we — we get a well-informed view of what’s likely to come up in the economy.

RITHOLTZ: If there’s a recession somewhere out on the horizon, where would you see it first? Is it in spending patterns? Is it in payment patterns? Where does the — what line of business is most sensitive?

VAN SAUN: Yeah. So I — you know, I think the thing that you really want to keep your eye on is credit deterioration so …

RITHOLTZ: Meaning late payments, delayed …

(Crosstalk)

VAN SAUN: Yeah, yeah. So on the consumer side, are you seeing migrations into delinquency buckets that people are starting to stretch and have difficulty keeping up with obligations? Same thing on the corporate side, are there particular segments of the economy that are starting to stress a little bit? And so to me, that’s a key early warning sign.

RITHOLTZ: Are you seeing any of that today?

VAN SAUN: Yeah, we’re not, we’re not.

RITHOLTZ: Not yet.

VAN SAUN: So — so …

RITHOLTZ: There was a Wall Street Journal article about middle class consumers moving towards a seven-year versus the old five-year loan for automobiles, and that could be a sign of — of something …

(Crosstalk)

VAN SAUN: No, I don’t — I — I think people maybe are holding their cars longer that’s a little more affordable to stretch the payment out over a longer time so …

RITHOLTZ: And these scars now last pretty much forever.

VAN SAUN: Yeah, they do, they do.

RITHOLTZ: So you’re not seeing a lot of people have been nervous about ISM, and they’ve been nervous about residential sales and, you know, the recession (inaudible) have been forecasting a recession next year for the past five years …

VAN SAUN: Yeah, right.

RITHOLTZ: … they — you know, eventually they’ll be right, but it doesn’t mean …

VAN SAUN: Yeah, we don’t — we don’t see it. You know, I’d say there’s some recent data that manufacturing sector is a little soft, but you have to remember in the context of the U.S. economy, economies powered 70 percent by consumers and consumers are in great times, unemployment is low, people can find jobs …

RITHOLTZ: Right.

VAN SAUN: … real wage growth, so you’ve got wages growing …

(Crosstalk)

RITHOLTZ: Sure.

VAN SAUN: … at 3.2 percent, inflation is down at 1.5 so people are having expanding net pay over inflation, which is great. So I think the consumer is watching some of the current events. They’re watching the trade and they’re watching the impeachment proceedings, but I think they’re almost inured to — to that. It’s been around for a long time.

RITHOLTZ: Little fatigue for almost …

VAN SAUN: And it hasn’t really caused anything, and so people are aware of it but it’s not holding folks back.

Where it is holding people back a little bit is the kind of middle market companies sitting there saying how is the trade tension and the tariffs going to impact me, and it’s going to impact — impact different sectors differently. Again, the service economy is not that impacted by it, but the manufacturing sector is. And fortunately for us, the service sector dominates our economy.

RITHOLTZ: Right.

VAN SAUN: So …

RITHOLTZ: But you guys have — have offices in the Midwest.

VAN SAUN: Oh, sure.

RITHOLTZ: You’re seeing …

VAN SAUN: Sure.

RITHOLTZ: … stresses starting to form on …

VAN SAUN: Yeah.

RITHOLTZ: … at least on a small basis there?

VAN SAUN: I think — I think a lot of companies are thinking about their supply chains and how to adjust their supply chains to try to minimize the impact from the tariffs. And, you know, what it forces everybody to do, including the banks, is how do you get more efficient if you’re going to have these costs that come in from external from some of the administration policies, then how do we protect our growth and our earnings et cetera. And so deploying artificial intelligence, deploying robotics, finding ways to keep streamlining how business gets done becomes an imperative.

RITHOLTZ: When we think of traditional banks, we tend to think of the yield curve as being a determiner of their profitability. When the yield curve is steep, hey, there’s a lot of spread to be captured …

VAN SAUN: Yeah.

RITHOLTZ: … and they make money. When it’s flat or as we’ve seen the past quarter inverted, very challenging for those banks. How does that affect the middle market bank like yourselves?

VAN SAUN: Yeah. Well, it’s certainly move something that’s been a tailwind for the last two years. As rates were going up, most banks are what’s referred to as asset sensitive, so their loans are re-pricing faster than deposits and spreads are widening. When you have the flip and rates start to move down, then your loans are re-pricing downward faster than you can re-price your deposit. So it puts a little pressure on your net interest margin. Certainly, you try to hedge that to some extent, but you are going to have an impact and then will be contracting somewhat.

How do you combat that? I mentioned earlier the — the expenses focused on expenses. We had launched a very big transformational cost program. We kind of saw the — the tea leaves about the Fed going to either pause or maybe start to cut rates, and so we got on this back in December and we launched a big program in July.

We’re also — over the time, we’ve been investing in our fee-based businesses and we’ve done a couple of very smart fee-based acquisitions.

RITHOLTZ: What are those fee-based businesses?

VAN SAUN: Well, in the commercial side, we — we purchased two M&A boutiques to broaden out what we can do for our customers, and there’s still been good flow of M&A opportunities occurring in the middle market. We bought a mortgage business, which timing was great on that, because as rates go down as the Fed is cutting rates and maybe crimps your NIM a little bit, but …

RITHOLTZ: NIM standing for?

VAN SAUN: Net interest margin, the spread that you’re making on your balance sheet.

RITHOLTZ: Right.

VAN SAUN: But there’s a refi boom like we haven’t seen in years taking place …

RITHOLTZ: REITs have …

VAN SAUN: Have you refinanced your mortgage, Barry?

RITHOLTZ: I literally was there Friday …

VAN SAUN: Yeah.

RITHOLTZ: … doing paperwork, and the numbers are just …

VAN SAUN: Yeah.

RITHOLTZ: … insane.

VAN SAUN: Yeah. So — so …

RITHOLTZ: 2.8 on a 10.1 mortgage, and I’ll have my mortgage paid off …

VAN SAUN: Yeah.

RITHOLTZ: … in 10 years, 2.8 percent.

VAN SAUN: Yeah.

RITHOLTZ: I don’t ever have — I know — I can’t recall having heard of rates that low. I — I want to say a 30-year fixed was 3.5 or 3.6 …

VAN SAUN: Yeah, about 3.5.

RITHOLTZ: Yeah, these are just — these are great.

VAN SAUN: These are — these are — these are opportunities for consumers to put more money in their pocket and lock in lower carrying costs on their debt, and so we make the fees when that happens. So, fortunately, this quarter, we’re going to have a really strong third quarter on the fee side, which will offset any of the leakage that we see on the balance sheet income side.

And then the last acquisition that we did was we bought a high-end wealth advisor because what we found is, in the corporate side, the business owner, the fourth generation family that …

RITHOLTZ: Right.

VAN SAUN: … is very wealthy and occasionally takes out large dividends from their company and puts debt back on the company, we weren’t getting the swings at the bat to manage those assets or to do …

RITHOLTZ: Right.

VAN SAUN:… the estate planning for the company. So the — the folks thought of us as their bank, but they would take that business elsewhere. And so we said, look, we should be doing that for those customers. We went out and bought a company called Clarfeld Asset Management, which is a highly respected wealth advisor in — based in Tarrytown, New York. And so we’re now able to offer those services. So really not trying to do anything too big, but just hitting the sweet spots with kind of rifle shot acquisition program, which has really been positive.

RITHOLTZ: So it sounds like your business lines are pretty diversified.

VAN SAUN: Yes, yes.

RITHOLTZ: So that’s a good thing.

VAN SAUN: It is.

RITHOLTZ: So you — you mentioned the Fed pausing and starting to reverse itself. Obviously, mortgages rates make a big difference. How — how did Q.E. affect the rest of your business? And — and how does all the noise, which seems to have faded along with the summer about the President and the Fed doing battle, how does that impact with what you guys do?

VAN SAUN: Well, obviously, the — the actions the Fed takes as a direct influence on the economy and on the money supply and the cost of funding, and so it’s going to impact banks in a material way. Quantitative easing, I think, was a stimulative measure, which basically the Fed was building up their balance sheets, so taking on securities …

RITHOLTZ: Right.

VAN SAUN: … and buying those with cash and putting cash back into the system so it helped promote liquidity and deposit growth and promote lending. Rates came down as they were buying those — the — the long end securities.

So, you know, we just have to be in tune for where the Fed is going. And when we do our forecasting, we do our business planning, we run a bunch of different scenarios as — you know, what happens if this is happening in the economy then what is the Fed likely to do? But in any case, we — we just need to be flexible and adapt to the circumstances that we see.

RITHOLTZ: So I mentioned diversification and — and you mentioned you’re in the southeast, northeast and Midwest, so Boston, Philly, Pittsburgh, Providence, Detroit, any thoughts about expanding elsewhere? Are you eventually going to be national?

VAN SAUN: Well, there’s a couple things. So on the — on the corporate side, as we move to the mid corporate space, which are slightly bigger companies, $500,000 to $3 billion, we need to be national in those industry verticals. And so we’ve planted a flag down in Atlanta, so we have about 25 folks …

RITHOLTZ: Sure.

VAN SAUN: … down there at this point, brought a guy out of SunTrust and he’s built a nice team down there. We’ve expanded now into Texas, which is another big state economy. We always had an energy practice in Houston, but we put some more commercial bankers in Dallas and in Houston. We just hired a fella to pull together our team out in California, so he’s going to be based in L.A. And so, you know, we’ll be on — from a corporate bank standpoint more of a national player, and I think you’re seeing that as a trend for all of the super-regional banks.

On the consumer side, we’ve attacked that our consumer lending operations are national, but in really direct interaction with consumers around deposits, we were the first super-regional bank last year to launch a — a national digital bank called Citizens Access.

RITHOLTZ: Online only.

VAN SAUN: Online only, focused on savings products. After a year, we now have $5.5 billion of deposits, and so it’s been highly successful. And so what we’re thinking about now is we’ve gotten good at that. If you say that’s a deposit mining operation …

RITHOLTZ: Sure.

VAN SAUN: … where we track deposits, but what else can we do for those customers and what else can we do for many of the customers we’ve now assembled through our lending products who might be thin relationship customers. They may know us like you may know us because your Apple loan is with us, but could I come to you, Barry, digitally and offer some things in a bundle to say, hey, that mortgage refinancing do it with us or other needs that you might have, you know, how to — how to manage your — your wealth portfolio. We have digital tools that would allow you to do that and be pretty true how you do it. So that’s kind of the next phase for us is we probably don’t want to have branches outside of our traditional footprint, but we can, I think, attack the national market digitally.

What you’re saying that’s very interesting, there’s a lot of experimentation going on, so the mega banks like J.P. Morgan and BofA are saying we’re going into all these new cities. They’re actually not increasing their branch count, they’re thinning branches where they’re thick …

RITHOLTZ: Right.

VAN SAUN: … and they’re putting them if Chase has a big customer base around their Sapphire card in a city, OK, we should have branches there, too, so we can do more with those customers.

You’ve seen some super-regional competitors like P&C. They now have a digital bank up and running, and they’re putting thin offices. They got three in Kansas City. They’re putting 10 or 12 in Dallas. And so everybody is attacking this a little differently.

We want to get our brand out there. We want to be more national in scope. Do we need the branches or do we not need the branches? That’s one of the key questions that’ll kind of in the Petri dish right now. We’ll see how it plays out.

RITHOLTZ: You mentioned super-regionals. We seem to go through these cycles where suddenly the majors are acquiring super-regionals left and right, and then we enter a low for a couple of years. What do you see — I know I obviously can’t ask you about your bank, but in general looking at the industry, what do you see for the M&A landscape for the mega banks and the super-regionals? Are we done …

VAN SAUN: Yeah.

RITHOLTZ: … with rolling up for now or how does that change in the future?

VAN SAUN: Well, I think — I think the mega banks most of them are at the deposit cap, the national deposit cap so they’re really not players, they can’t play. You did see in the super-regional space a merger of equal between BB&T and SunTrust, which I think was fairly unique. It created a southeast champion. And I don’t think the other super regionals feel compelled to act in the wake of that.

I think right now there’s so much change taking place in kind of moving your technology ecosystem to the future that …

RITHOLTZ: Right.

VAN SAUN: … a merger could be a distraction. So if we can be flexible and nimble and good and make the right decisions, I think we can still compete effectively at our size. So I’m not sure you’ll see much more in the super-regional space this year, but I think the smaller banks who really have to contend with all of the cost of that new technology and some of the cost of regulation, even though the regulators are trying to give him a — cut him a little slack, I think there’s an impetus to see the smaller end of the market continue to consolidate.

RITHOLTZ: We — we had an issue post-crisis or at least compared to pre-crisis a lot more mega banks, a lot less competition, more of the national assets held by fewer banks. Is that an attempt to sort of resolve that issue or — or am I reaching too much here?

VAN SAUN: Yeah, I think you’re reaching a bit. I — I think if you just look at the trend 20 years ago there were 14,000 depository institutions in the U.S.

RITHOLTZ: Right.

VAN SAUN: Five years ago it was seven. Today it’s like five, and so you’re just seeing that inevitable consolidation because we still have, I think, a much more fractured banking landscape than any other country.

RITHOLTZ: We have been speaking with Bruce Van Saun. He is CEO of Citizens Financial Group. If you enjoyed this conversation, well, be sure and come back for the podcast extras where we keep the tape rolling and continue discussing all things banking-related. You can find that wherever you’re finer podcasts are sold — iTunes, Google, Stitcher, Spotify.

We love your comments, feedback and suggestions. Write to us at mibpodcast@bloomberg.net. Give us a review on Apple iTunes. Be sure to check out my weekly column on bloomberg.com. Sign up for my daily reads at ritholtz.com.

I’m Barry Ritholtz. You’re listening to Masters in Business on Bloomberg Radio.

Welcome to the podcast. Bruce, thank you so much for doing this. I — it’s always funny when I see different names. I have this pet theory that there are thousands and thousands and thousands of people working who have a giant impact on everybody’s day-to-day life and nobody knows who they are. Everybody knows who Steve Jobs was, not everybody knows who Bruce Van Saun is. And yet you’re impacting what — what people do. So I was — I was looking forward to this.

There were a couple of questions I did not get to that I’m going to try and run through now and then we’ll — we’ll do our favorite questions, and we’ll get you over to TV on time.

So you guys went public in 2014. I’ve — I’ve — we have all heard lots of folks complain about the IPO process and how difficult it is being a public company. How does that square up with your experiences running a private company and then taking it public?

VAN SAUN: Yeah. So, you know, I actually think it’s been very positive for Citizens. Part of it is where we came from, we had to turn around the bank, and so having an interested investor community and 22 sell-side analysts focused on us and prodding on our long-term strategy and putting estimates as to how fast we could turn around the bank, it certainly raised the level of accountability and, I think, our ability to execute improved.

You know, when I — when I think about the trade-offs people say, well, private companies can — can, quote-unquote, “go long.” They can think long-term and make the investments for the long-term and they’re not kind of hemmed in by the need to deliver quarterly results.

I actually think that if you communicate effectively, what you’re trying to do for the long-term and you say I’m going to need to invest some money in this and this is why I’m doing it, and this is how fast I think I’ll get the pay back, there are long-term investors out there who — who appreciate that, who want to invest with the growth story where the management team is trying to grow the franchise and not just really focus on cost cut and the delivering for the next quarter and buying back shares. And so we’ve tried to balance that. We’ve tried to make sure that we’re executing well and putting points on the board and showing a good trajectory in the short-term, but we’re also doing significant reinvesting and trying to grow the bank so that we make it stronger five years from now and 10 years from now.

RITHOLTZ: So all the complaints about how onerous being a public company is and the threats from activist investors, is — is that all overstated or what do you think…

(Crosstalk)

VAN SAUN: Like if you — if you run the company well and you actually think through an activist agenda like what am I missing in terms of — of my own plans, are there — if an activist was involved in this company, what would they do? Will they take capital away from these lending portfolios and move it to this lending portfolio? Actually, you can proactively anticipate where they would — where they would make suggestions and just get ahead of it. And — and, you know, it’s helpful to — to kind of keep that mindset.

RITHOLTZ: It — it insulates you from attack if you’re beating them to the punch.

VAN SAUN: Yeah.

RITHOLTZ: Interesting. I — I mentioned you’re on the Federal Reserve Bank of — of Boston as well as the Board of Directors at Moody’s. There were two other things I wanted to mention because I think they’re both interesting. You’re a board member for the Bank Policy Institute. What does the Bank Policy Institute do? What do you — what is your involvement? Tell us a little bit about that institution.

VAN SAUN: Yeah, sure. So the Bank Policy Institute is a relatively new creation with a — a long history and legacy organization before it, which was originally the Bankers Roundtable, which became the Financial Services Roundtable. I think …

RITHOLTZ: What’s the correlation between this and the Financial Services?

VAN SAUN: And so — so now, BPI has effectively succeeded the Financial Services Roundtable.

RITHOLTZ: Gotcha.

VAN SAUN: And I think there was a desire at one point to put different industry groups in financial institutions under one roof. So when it was the Bankers Roundtable, it was just bankers then it was financial services, and so asset managers and insurers all got together and we would have meetings and interact, you know, on policy and talk to folks down on the Hill. A lot of the meetings would be in Washington.

But, you know, over time I think the agendas of the different sub sectors were different. So under Brian Moynihan’s leadership who runs BofA, it was determined that the banks should split off and keep a kind of larger bank profile. Minimum asset size $25 billion would throw in to this Bank Policy Institute and effectively work on policy matters and things that impact the economy and have an ability to, you know, effectively operate like a think tank, put out papers and monitor what the Fed is doing and respond to a request for proposals from the regulatory agencies and have ongoing dialogue with members of Congress so they were informed on financial issues that impact the real economy.

RITHOLTZ: Quite interesting.

VAN SAUN: Yeah.

RITHOLTZ: And then you are also a board member of the Partnership for Rhode Island and Jobs for Massachusetts.

VAN SAUN: Yeah.

RITHOLTZ: What are these two groups do?

VAN SAUN: Well, those are efforts to stimulate the local economy and get business people to work together to help the governors of those states, you know, drive pro business and — and pro growth and pro jobs agendas. And so the — the one that we’ve had some really good traction, in particular, with partnership for Rhode Island where we focused on education and — and also business attraction and transportation, which are important to improving the Rhode Island economy.

One thing we did recently is we funded the Johns Hopkins Review of the Providence School System, which I don’t know if you’ve seen that. It caught a lot of national press, but basically it was pretty damning of the state of the school system. And now like the …

RITHOLTZ: Could you say that in pretty much any school system in United States?

VAN SAUN: Well, yeah, but …

RITHOLTZ: Some are better, some are worse.

VAN SAUN: … this — this was — this was really kind of pretty low down the totem pole, and there needs to be change and so the state is going to take over the administration of that school district and, I think, make the changes that’ll make sure those kids in that community really have a chance to prosper when they come of age and are entering the job market. So those things feel good, you know, working in collaboration with governors and with the government to — to, you know, bring business influence and money behind things that are going to improve local economies.

One of the things I’ve noticed with some of the business development groups has been a sort of — and we saw a little bit of this with the Amazon headquarter bake-off, but we’ve seen this sort of tendency to give the store away in order to attract specific companies …

VAN SAUN: Yeah.

RITHOLTZ: … as opposed to just creating an environment that is helpful and easy to operate in for businesses. What do you think of those? It’s almost like a race to the bottom as the …

VAN SAUN: Yeah.

(CROSSTALK)

I am not a big proponent of that. And, you know, we had an opportunity a — a couple of years ago. We had a fork in the road. We had a very large leased facility in the greater Providence area and a couple other smaller leases that meant 3,200 people were, you know, kind of going to roll off their current occupancy and we can either renew or do something different. We decided to break ground and build our own campus in a town called Johnston, Rhode Island, which is a little west of Providence. We’ve got 3,200 people there, 420,000 square feet.

RITHOLTZ: That’s a big building.

VAN SAUN: … beautiful — beautiful campus with sports feels that we share with the local community, walking trails through the woods. And we didn’t take any funding. We didn’t try to hold up Rhode Island and say, “I want you to compete against Massachusetts.” We just said, “This is where we want to be. This is where our history has had us and we have a great colleague base here.”

And so, you know, the — I think the government was helpful in getting things we needed like an …

RITHOLTZ: That was my next question.

VAN SAUN: … an exit ramp off of the highway into our campus, for example, so there were …

RITHOLTZ: Isn’t that what the state or the local city is supposed to be doing …

VAN SAUN: Yeah.

RITHOLTZ: … as opposed to tax giveaways?

VAN SAUN: Right, so that we — we split the cost with the state, so we paid half and they paid half for that exit ramp, for example. And, you know, some of the local …

RITHOLTZ: That seems fair.

VAN SAUN:… some of the local authorities put sewer lines in on an expedited basis, so we could get the campus up and running. So yeah, I think it was — it was the right thing to do and we didn’t have our hand up.

RITHOLTZ: I — I have some NFL team owners I’d like to introduce you to. Maybe you convince them to stop being socialist …

VAN SAUN: Yeah,

RITHOLTZ: … and actually embraced capitalism. You own a football team, build your own damn stadium.

VAN SAUN: Yeah.

RITHOLTZ: I know that doesn’t win me any friends, but it just seems like a reasonable thing to do. I just was reading the Cleveland Cavaliers, their stadium needs an upgrade and they’re asking the taxpayers to pay a couple hundred million dolllars.

You’re a billionaire, fixed your own stadium, leave us out of it. It — I can’t — obviously, I’m not going to talk about anything in Boston sports as a New Yorker. I — I — I just don’t even want to go there.

Let’s see. If there’s any other questions I missed that I want to get to, we talked about that, we talked about that.

All right. So let’s jump to our favorite questions that we ask our guests. These are the 10 questions that are supposed to be revealing of who you are and how you got that way. Tell us the first car you ever own, year, make and model.

VAN SAUN: Ford Mustang 2.

RITHOLTZ: Really?

VAN SAUN: 1974.

RITHOLTZ: Oh, OK, sorry.

VAN SAUN: I was still a year away from my license, but I had worked summer jobs and my dad said, “I’ll pay $2,000 to any card. You got to come up with the difference.”

RITHOLTZ: Right.

VAN SAUN: We paid $3,200 for that car. And so when I got my license I was driving a brand new car.

RITHOLTZ: So wait you bought that car before you had …

VAN SAUN: Yeah, yeah.

RITHOLTZ: … actually had a license.

VAN SAUN: It was the — it was the model year it was letting out or something so my father thought …

RITHOLTZ: Right.

VAN SAUN:… . he could get a deal on it. So — but I …

RITHOLTZ: Pick it up at the end of the year.

VAN SAUN: … I had the $1,200 from working summer jobs, so I put up my share.

RITHOLTZ: That’s great. What’s the most important thing people don’t know about Bruce Van Saun?

VAN SAUN: I — I — you know, one of my early jobs was as a landscaper, summer jobs to make that money for the car. And I still love to garden to this day, so I take great pride in designing a nice landscape and then maintaining it.

RITHOLTZ: Tell us about your early mentors. Who helped guide your career?

VAN SAUN: Well, I — I always mention my parents because I think they gave me a great foundation and moral compass. But, you know, as you — as you grow up, it’s your teachers and favorite sports coaches, and so that all goes into making you who you are. And then I had some great people that I worked for.

I had a fellow at General Mills, my first job out of college, who was tall, lanky, athletic guy like me but really smart, had worked at General Motors, learned a lot from him. He was very decisive. Worked for Bruce Wasserstein, one of the smartest …

RITHOLTZ: Oh, sure.

VAN SAUN: … guys on the planet. He had — there were a lot of Bruce-isms that I picked up and a lot of wisdom, and so I always found that if you want to, you know, move ahead in a career that you’re — you should look for great people to work for that you can learn from, so when they’re interviewing you, you should also be interviewing them to make sure that these are people that really are going to have an impact on you.

RITHOLTZ: What about bankers that influenced the way you look at the business of banking? Who — who affected your approach?

VAN SAUN: I think the two bankers that I would call out Tom Renney was my boss at the Bank of New York for many years, and I think Tom had a — had a just great stoicism to — to hand be in flappable under all kinds of scenarios and kind of it’s never — it’s always darkest just before the dawn. That kind of mentality, it’s not good as you think it is when it’s — when it’s going really well and just kind of keep that even keel.

And then the second one was Stephen Hester when I worked over at RBS who was under immense pressure to get RBS righted, but just was so unflappable under all that pressure, and again keeping that even keel and just super, super smart, really good thoughts about how to go about that turnaround, which some of those things I’ve — I’ve applied to Citizens on a smaller scale obviously than RBS.

RITHOLTZ: What about books? Tell us about your favorite books. What do you enjoy to read?

VAN SAUN: I read a wide range of books. I read a lot of business books. I read, you know, Tom Clancy, Harlan Coben, those kind of books. Probably, the — the book that’s had the biggest impact to me and my whole life was “The Power of Positive Thinking” by Norman Vincent Peale.

RITHOLTZ: Sure, that’s a giant.

VAN SAUN: That really positive attitude which I read probably when I was in my early 20’s, so I totally enjoyed reading. Unfortunately, I have — I have so much reading to do for work and such extensive 24/7. I have work agenda that I don’t read as much as I could, but I still probably read a dozen Bucks a year, I would say.

RITHOLTZ: Give — give us another title one other that you really enjoyed.

VAN SAUN: I would — you know, I just — I just read a very interesting book. I can’t — I don’t remember the title, but it was about an — an elephant trainer who basically led these elephants in World War II in a kind of Burmese jungle, which to me was really fascinating.

RITHOLTZ: Let’s see if I can find — how Burmese elephants helped defeat Japanese in World War II.

VAN SAUN: Yes.

RITHOLTZ: Elephant Company.

VAN SAUN: There it is.

RITHOLTZ: Is that — was that the name of it?

VAN SAUN: That was it. That was the name.

RITHOLTZ: Let me get — let me see if I can read the exact name. That’s wild, by Vicki Croke, “Elephant Company: The Inspiring Story of an Unlikely Hero and the Animals Who Helped Save Him Lives in World War II.”

VAN SAUN: Yeah.

RITHOLTZ: Wow, that’s quite, quite fascinating.

VAN SAUN: Yeah.

RITHOLTZ: Tell us about a time you failed and what you learned from the experience. By the way, 1,092 reviews, five stars, that’s pretty — that’s pretty impressive.

VAN SAUN: Yeah, that was a good book so you might want to put that one on your list.

RITHOLTZ: Yeah, I definitely will. Tell us about a time you failed and what you learned from the experience.

VAN SAUN: You know, I’d — I’d say getting cut from a sports team was kind of a — a big moment for me. I was a tall guy.

RITHOLTZ: What sport did you play, basketball or …

VAN SAUN: I — I played baseball basketball and a little bit of football for a couple of years, but I got cut from the varsity team as a sophomore in high school, and I really was angry. You went through all the emotions that go with that …

RITHOLTZ: Right.

VAN SAUN:… but I picked myself up and we went — a bunch of us went enjoying to travel basketball team. And we played — you know, we had so much fun and then we got to play the high school team in a kind of just a braggadocio game that you were better than you and we beat the high school team when we got …

(Crosstalk)

RITHOLTZ: That’s great, that’s great revenge.

VAN SAUN: So that was good revenge.

RITHOLTZ: That’s a little bit of a Michael Jordan …

VAN SAUN: Yeah.

RITHOLTZ: … didn’t make — he was a freshman that (inaudible).

VAN SAUN: Yeah, he got caught, you know, so …

RITHOLTZ: And he used it as motivation as well.

VAN SAUN: Yeah.

RITHOLTZ: What do you do for fun? What do you — are you still playing hoops or no more?

VAN SAUN: No, it’s a little risky at this age. But, you know, I still enjoy sports, so golf, tennis, swimming. I like to go to the beach.

RITHOLTZ: You’re making your sail?

VAN SAUN: Yeah, I was the Commodore at our — at our sailing club, so love the water and, you know, like good dining, going out to having a good time with the family and friends.

RITHOLTZ: Well, you got plenty of choices for restaurants — restaurants here.

VAN SAUN: Yeah.

RITHOLTZ: So in the banking industry today, what are you most optimistic about and what do you most pessimistic about?

VAN SAUN: Well, I’d say, you know, when I look at — at this country, the U.S., that — that we serve, that Citizens serves, I think it’s the greatest country on the planet. And, you know, we have our troubles, we have our challenges, we’re not perfect. But over time we’ve continued just to I think get it right and we’re — we have an innovative society. We’ve got the big tech companies. We’re trying to improve people’s lives, and so I just think about how the quality of life in the country is so much better than it was in 1950, 1975, 2000, just think where it’s going to be going forward so I’m optimistic about that.

I’d say the things that I’m disappointed in or pessimistic about is that people don’t feel good about it. So the flip side of that is we have so much to be thankful for and so much to — to count our blessings for, but everybody seems to be grumpy and angry and not step back and say gosh, look, what we have so anyway? So anyway, I think we’ve lost our soul little bit, we’ve lost our spirituality which I’d love to see that rejuvenate at some point.

RITHOLTZ: It — it does seem that people are a — a little more divided, a little more angry. It’s — it’s — some of it is social media, but some of it is just, you know, the — the post crisis state of affairs.

VAN SAUN: Yeah.

RITHOLTZ: People never really fully recovered their optimism …

VAN SAUN: Yeah.

RITHOLTZ: … after that. It took a long time after the Great Depression before that and — and a World War before people seem to …

VAN SAUN: Yeah.

RITHOLTZ: … resurrect that can do American spirit.

VAN SAUN: Yeah, yeah.

RITHOLTZ: So a millennial or I’m going to say that again, because I have to drop millennial because they’re too old now. So a recent college grad comes to you and says they’re interested in banking, what sort of career advice would you give them?

VAN SAUN: I’d tell them it’s a great career. And, you know, what I — I love about it, I think it’s a noble profession so I tell people, look, you get to positively impact people, individuals, communities, local economies by what you do in your day job working as a banker. But then we also have a platform that you can volunteer off that platform and further that impact on local communities. And so, for example, Citizens Bank when I joined six years ago, we were volunteering about 50,000 hours. We really had a focus on upping that.

And today, this year, we’re going to hit about 150,000 volunteer hours. We have 700 people serving on local boards around our footprint. And so if you want to have a career where you can learn, be challenged, constantly evolving landscape that you have to contend with, but importantly you can positively benefit the — the — the people that you live with at the local communities and economies that you live in. Banking is a great career.

RITHOLTZ: So normally I don’t ask follow-up questions in this segment, but you just made me think of something. Not too long ago, the business Roundtable changed their perspective on the end goal of the corporation is maximizing shareholder profits. They now look at it as there are many different constituencies …

VAN SAUN: Stakeholders, yeah.

RITHOLTZ: And that seems to have been a pretty large sea change. What did you think of what it sounds like you’ve already adopted that.

VAN SAUN: Yeah.

RITHOLTZ: What did you think of this shift?

VAN SAUN: Well, we — we — I think it’s been a little controversial because ultimately you’re working for your shareholders. You know, management is an agent for the shareholders of the bank.

I think all those different stakeholders work together, and so you’re trying to deliver for customers, for communities, for your colleagues the three Cs. If you’re regulated, you got to run a business the right way for the regulators.

RITHOLTZ: Right.

VAN SAUN: You got to deliver for the shareholders. You want to get that flywheel working, but to me it comes back to the shareholder. If you’re running the bank well, you’ll have the resources to keep investing in all of the — the deliverables for those other stakeholders. So I’m — you know, I like the concept of broadening it out and making sure that people are thinking. It’s not all about the bottom line, but still I think the shareholder is the one that you have to please first and foremost.

RITHOLTZ: They’re the ones with the axe if you’re not bleeding …

VAN SAUN: Yeah, right.

RITHOLTZ: … to say the least.

VAN SAUN: You can’t go pursue your own agenda and make the other stuff more important and then see the stock not perform well and the bottom line not perform well. It — it should work together.

RITHOLTZ: And our final question, what is it that you know about the world of banking today that you wish you might have known 30 years ago?

VAN SAUN: I — I — I think it’s just a cumulative process where — where you go through life and you learn things. I don’t — I don’t have any a-ha moments, I just have gained a lot of wisdom by working in different companies. And I think, you know, just that — that — that banks have a big role to play in the economy, they have to be run well in a safe and sound fashion. They have to be focused on delivering for customers.

And, you know, I think you’ve — you’ve come to that knowledge over time. I don’t — I don’t know if there’s an a-ha thing that I said, “God, I would have run my career differently if I knew it back then.” I think I’ve just, you know, evolved with the changes in the industry, and I think I have a pretty good concept of what banking is all about at this point.

RITHOLTZ: Fair enough. Bruce, thank you so much for being so generous with your time.

We have been speaking with Bruce Van Saun. He is the Chairman and CEO of Citizens Financial Group.

If you enjoyed this conversation, well, look up an inch or down an inch on Apple iTunes and you could see any of the previous 275 or so such conversations that we’ve had over the past 5-1/2 years. We love your comments, feedback and suggestions. Write to us at mibpodcast@bloomberg.net. Be sure and give us a lovely review on Apple iTunes.

I would be remiss if I do not mention the crack staff that helps put together these conversations each week. Madena Parwana is my producer/audio engineer. Our bookers are Taylor Riggs and Michael Boyle. Atika Valbrun is our Project Manager. Michael Batnick is our Head of Research.

We love your comments feedback and suggestions write to us at M I B podcast at Bloomberg.net be sure and give us a lovely review on Apple I tunes I would be remiss if I did not mention the cracks staff that helps put together these conversations each week. Karolyn O’Brien is my audio engineer. Michael Boyle is my Producer/Booker. Michael Batnick is my Head of Research.

I’m Barry Ritholtz. You’ve been listening to Masters in Business on Bloomberg Radio.

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