Chuck Prince, the Citigroup chief executive, said his company was “still dancing” as the buyout band plays on, according to the UK newspaper Financial Times.
Prince argued the liquidity in the market meant private equity would not be stopped by difficulties in the US subprime mortgage sector although he conceded the good times would eventually end.
“When the music stops in terms of liquidity things will be complicated. But as long as the music is playing you’ve got to get up and dance. We’re still dancing,” he said.
Prince has good reason to be bullish. The group’s banking arm Citi has received $618 million (€454 million) in fees from buyout firms in the first six months of the year, according to data provider Dealogic’s first half results. This equates to a market share of 6.4 percent and makes it the fifth largest recipient of fees of all the banks globally.
“The depth of the pools of liquidity is so much larger than it used to be that a disruptive event now needs to be much more disruptive than it used to be,” Prince added. But he conceded that at some point an event would be sufficiently disruptive for liquidity to stop “filling in” the market and instead it would “go the other way.”
Prince said such filling in was demonstrated by large hedge funds and Wall Street banks buying up troubled subprime mortgage lenders.
He also said he was bullish about Japan on the back of its economic performance, Asia’s growth and his own group’s position in the Japanese market.