Good morning from the Financial Times.
Today is Thursday, January 9th, and this is your FT News Briefing.
Europe is trying to stop Donald Trump from getting all territorial.
And the boss at Citigroup is running out of time to turn things around.
Plus, China is giving out ID cards to Taiwanese nationals.
The worry from Taipei is that they might end up with growing numbers of Taiwanese who are also full Chinese citizens.
I'm Kasia Broussalyan and here's the news you need to start your day.
European leaders are telling Donald Trump to back off in trying to buy Greenland.
Officials from Germany and France told the U .S.
president -elect not to meddle with Europe's sovereignty.
The stark warning comes after Trump announced he was still interested in the Danish territory earlier this week.
He said the same thing back in 2019, claiming that the U .S.
needs Greenland for national security purposes.
This time, he's refused to rule out using force to take it.
Denmark's prime minister has since needed to remind the world that Greenland is, in fact, not for sale.
Citigroup's CEO is in trouble.
Pressure is mounting on Jane Frazier to prove she can get the bank back on track.
It's struggled to find its footing since the 2008 financial crisis.
And now, Wall Street analysts are betting that the bank will soon miss a crucial target.
The FT Stephen Gandell has been following the situation closely, and he joins me now.
Hey, Stephen. Thanks for having me.
Thanks for coming on.
So, Steve, can you first tell me about Frazier's tenure at Citi?
What kind of goals did she come in with?
She came with the goals to simplify the bank, turn it around, lower expenses, make a strategy.
And she has. She's redefined what Siti's goal is.
They're not going to serve everyone.
She's exited consumer banking in a bunch of different markets, including China and India.
And she said, we are going to focus on being the bank to the largest multinational companies and the wealthiest people in the world.
The problem is that hasn't really translated into financial results.
So pretty ambitious goals.
But now explain the target that's causing so much concern.
What exactly is it and how far is Frazier off the mark?
So this was something she set herself in mid -2022.
This target, it's called return on tangible common equity.
And the reform she was supposed to make, simplifying the bank, focusing its business strategy, it was supposed to make it more profitable, move these returns towards 12%.
And they haven't really moved towards it.
This quarter coming up, they're going to be around five.
And it matters because what this figure is, return on equity, the equity is the money that investors put into a bank.
And theoretically, a bank's cost of capital, what they have to return based on the risk to attract investors is about 10%.
And so if you can't return at least 10%, then in effect, you're destroying value for your bank.
All right. So what exactly went wrong then?
I mean, why isn't Citi kind of reaching this goal?
It's not Jane's fault totally.
She had a tough job coming in.
The city was put together through acquisition after acquisition after acquisition.
And the idea was that city was going to be the supermarket, provide all the services, the financial supermarket for everyone everywhere.
And what happened after the financial crisis, because they had such a problem with mortgages, they had to get out of that business.
And mortgages kind of a staple of being a bank.
And so you imagine now they have this big supermarket where they can't sell their staples.
It's like a supermarket without butter or without milk.
And yet they never went through the process of cutting back the costs.
And that's what Jane's been trying to do.
Now, her roadblock is that this big, sprawling thing she has, it's hard to manage and it's hard to get the regulatory issues right.
So essentially there's this big, sprawling grocery store, like you mentioned, but it's not selling the goods that it needs to sell in order to maintain that footprint.
Right. Exactly. And Citi's kind of said, since we don't have these shelves, we're going to get rid of the staffers that would normally stock these shelves.
But those staffers also mined the rest of the bank.
And the Fed's saying, wait a second, you can't cut so deeply that the people who are watching those other shelves that you still have stocked are taken away.
I'm loving this metaphor, Steve.
So now this is all coming to a head next week when Citi and other banks report earnings.
What's the fallout for both Frazier and Citi if they don't seem to be making any progress?
Yeah, I think she has to be able to inspire or convince the market that she's going to make her goals, and especially into the double digits where she's earning back the cost of her capital.
And so I think analysts are starting to say she may be running out of time.
She's entering into her fourth year at Citi, and the market doesn't really give you that much more time than that.
It's time to produce or get out.
Stephen Gandow is the U .S.
banking correspondent for the FT.
Thanks, Steve. Thank you.
Apple still won't be allowed to sell its iPhone 16 in Indonesia.
It comes after the tech giant said it would invest a billion dollars in the country.
Indonesia banned the sale of the latest model back in October.
There's a regulation there that requires 40 percent of phones and tablets to be made locally.
Apple hoped to overturn the ban by offering to set up a manufacturing plant.
But President Prabowo Sobianto wants more than that.
It all goes to show how the world's fourth most populous country is using its consumer market as bait for more foreign investment.
China is pushing Taiwanese visitors to sign up for local ID cards and is setting off alarm bells in Taipei.
Government officials in Taiwan say that Beijing is trying to undermine its jurisdiction.
Here to explain is the FT's Catherine Hiller.
Hey, Catherine. Hello.
So tell me a bit more about these ID cards.
What do Taiwanese visitors get, exactly?
Right. So we've seen an uptick or an increase in Beijing's efforts to sign Taiwanese people up to what they call Taiwan resident cards for people who are not per se Chinese citizens or who are not residents of mainland China.
So these enable you to pay with mobile payment systems or you can get loans.
And if you don't have that, daily life in China is very difficult.
So that's the first step.
And then, of course, in the second step, growing numbers of Taiwanese are encouraged to sign up to Chinese identity cards, which is the document every Chinese citizen has.
So that's a step further.
Okay, so this sounds pretty concerning.
What are Taiwanese officials saying about it?
Well, Taiwanese officials are concerned about Taiwan citizens being sucked into becoming Chinese citizens.
So the worry from Taipei is that they might end up with growing numbers of Taiwanese who are also full Chinese citizens, and because China is a one -party dictatorship, you could actually say that any citizen has lots of duties to cooperate with the state on national security issues, and that may include
spying on their own home country when they come back to Taiwan.
Yeah, and I'm curious about this strategy.
Has something like it been used before?
Well, you could argue that this resembles what Russia has done at several points in modern history.
For example, in 2008, there was a rather short but very consequential Russia -Georgia war.
It was over two breakaway territories in Georgia.
And before Russia became involved in that war and attacked Georgian territory, it issued passports to all residents of these two breakaway territories.
So in the next step, Russia then argued that it had to protect its citizens, Russian citizens, against aggression from Georgia.
Now, Catherine, at the end of the day, how does this all play into China's ambitions for Taiwan?
Well, this, of course, all happens against the backdrop of China's claim of sovereignty over Taiwan.
So China says and believes that Taiwan is a part of its territory and must eventually come under its control.
And the Chinese Communist Party threatens to use military force to achieve that goal if Taiwan refuses unification indefinitely.
So what the Taiwanese government is worried about is that if China convinces large numbers of Taiwanese to sign up as Chinese citizens, that in fact would undermine the Taiwanese government's jurisdiction on its own territory.
So what are officials in Taiwan doing about China's practice?
Well, it's certainly still only a tiny fraction of the population.
But the Taiwanese government has, over the past week or 10 days, has warned its citizens of signing up for any of these documents, saying that there are risks to their personal security, but also longer term and in a broader political context, if they become Chinese citizens, And the president himself
has come out and said freedom cannot be exchanged for cash, meaning that people should think twice before they trade in their freedoms as citizens of a democratic country.
Catherine Hilla is the FT's Greater China Correspondent.
Thanks, Catherine. Thank you.
And finally, Greenland wasn't the only region on Trump's radar this week.
His plans also include apparently renaming a body of water.
We're going to be changing the name of the Gulf of Mexico to the Gulf of America.
This even inspired Mexico's president, Claudia Sheinbaum, to get creative.
She suggested renaming some parts of the U .S.
Mexican America during her morning news conference yesterday.
Shane Bomb pointed to a map of U .S.
territory that was once part of Mexico and told reporters, quote, sounds nice, doesn't it?
You can read more on all of these stories for free when you click the links in our show notes.
This has been your daily FT News briefing.
Check back tomorrow for the latest business news.
