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C » Topics » Sources of Liquidity

These excerpts taken from the C 10-K filed Feb 27, 2009.

Sources of Liquidity

Primary sources of liquidity for Citigroup and its principal subsidiaries include:

 

•  

deposits;

•  

collateralized financing transactions;

•  

senior and subordinated debt;

•  

commercial paper;

•  

trust preferred and preferred securities; and

•  

purchased/wholesale funds.

Citigroup’s funding sources are diversified across funding types and geography, a benefit of its global franchise. Funding for Citigroup and its major operating subsidiaries includes a geographically diverse retail and corporate deposit base of $774.2 billion. These deposits are diversified across products and regions, with approximately two-thirds of them outside of the U.S. This diversification provides the Company with an important, stable and low-cost source of funding. A significant portion of these deposits has been, and is expected to be, long-term and stable, and are considered to be core.

There are qualitative as well as quantitative assessments that determine the Company’s calculation of core deposits. The first step in this process is a qualitative assessment of the deposits. For example, as a result of the Company’s qualitative analysis certain deposits with wholesale funding characteristics are excluded from consideration as core. Deposits that qualify under the Company’s qualitative assessments are then subjected to quantitative analysis.

Excluding the impact of changes in foreign exchange rates and the sale of our retail banking operations in Germany during the year ending December 31, 2008, the Company’s deposit base remained stable. On a volume basis, deposit increases were noted in Transaction Services, U.S. Retail Banking and Smith Barney. This was partially offset by the Company’s decision to reduce deposits considered wholesale funding, consistent with the Company’s de-leveraging efforts, and declines in International Consumer Banking and the Private Bank.

Citigroup and its subsidiaries have historically had a significant presence in the global capital markets. The Company’s capital markets funding activities have been primarily undertaken by two legal entities: (i) Citigroup Inc., which issues long-term debt, medium-term notes, trust preferred securities, and preferred and common stock; and (ii) Citigroup Funding Inc. (CFI), a first-tier subsidiary of Citigroup, which issues commercial paper, medium-term notes and structured equity-linked and credit-linked notes, all of which are guaranteed by Citigroup. Other significant elements of long-term debt on the Consolidated Balance Sheet include collateralized advances from the Federal Home Loan Bank system, long-term debt related to the consolidation of ICG’s Structured Investment Vehicles, asset-backed outstandings, and certain borrowings of foreign subsidiaries.

Each of Citigroup’s major operating subsidiaries finances its operations on a basis consistent with its capitalization, regulatory structure and the environment in which it operates. Particular attention is paid to those businesses that for tax, sovereign risk, or regulatory reasons cannot be freely and readily funded in the international markets.

Citigroup’s borrowings have historically been diversified by geography, investor, instrument and currency. Decisions regarding the ultimate currency and interest rate profile of liquidity generated through these borrowings can be separated from the actual issuance through the use of derivative instruments.

 

Citigroup is a provider of liquidity facilities to the commercial paper programs of the two primary Credit Card securitization trusts with which it transacts. Citigroup may also provide other types of support to the trusts. As a result of the recent economic downturn, its impact on the cashflows of the trusts, and in response to credit rating agency reviews of the trusts, the Company increased the credit enhancement in the Omni Trust, and plans to provide additional enhancement to the Master Trust (see Note 23 to Consolidated Financial Statements on page 179 for a further discussion). This support preserves investor sponsorship of our card securitization franchise, an important source of liquidity.

Sources of Liquidity

Primary sources of liquidity for Citigroup and its principal subsidiaries include:

 

•  

deposits;

•  

collateralized financing transactions;

•  

senior and subordinated debt;

•  

commercial paper;

•  

trust preferred and preferred securities; and

•  

purchased/wholesale funds.

Citigroup’s funding sources are diversified across funding types and geography, a benefit of its global franchise. Funding for Citigroup and its major operating subsidiaries includes a geographically diverse retail and corporate deposit base of $774.2 billion. These deposits are diversified across products and regions, with approximately two-thirds of them outside of the U.S. This diversification provides the Company with an important, stable and low-cost source of funding. A significant portion of these deposits has been, and is expected to be, long-term and stable, and are considered to be core.

There are qualitative as well as quantitative assessments that determine the Company’s calculation of core deposits. The first step in this process is a qualitative assessment of the deposits. For example, as a result of the Company’s qualitative analysis certain deposits with wholesale funding characteristics are excluded from consideration as core. Deposits that qualify under the Company’s qualitative assessments are then subjected to quantitative analysis.

Excluding the impact of changes in foreign exchange rates and the sale of our retail banking operations in Germany during the year ending December 31, 2008, the Company’s deposit base remained stable. On a volume basis, deposit increases were noted in Transaction Services, U.S. Retail Banking and Smith Barney. This was partially offset by the Company’s decision to reduce deposits considered wholesale funding, consistent with the Company’s de-leveraging efforts, and declines in International Consumer Banking and the Private Bank.

Citigroup and its subsidiaries have historically had a significant presence in the global capital markets. The Company’s capital markets funding activities have been primarily undertaken by two legal entities: (i) Citigroup Inc., which issues long-term debt, medium-term notes, trust preferred securities, and preferred and common stock; and (ii) Citigroup Funding Inc. (CFI), a first-tier subsidiary of Citigroup, which issues commercial paper, medium-term notes and structured equity-linked and credit-linked notes, all of which are guaranteed by Citigroup. Other significant elements of long-term debt on the Consolidated Balance Sheet include collateralized advances from the Federal Home Loan Bank system, long-term debt related to the consolidation of ICG’s Structured Investment Vehicles, asset-backed outstandings, and certain borrowings of foreign subsidiaries.

Each of Citigroup’s major operating subsidiaries finances its operations on a basis consistent with its capitalization, regulatory structure and the environment in which it operates. Particular attention is paid to those businesses that for tax, sovereign risk, or regulatory reasons cannot be freely and readily funded in the international markets.

Citigroup’s borrowings have historically been diversified by geography, investor, instrument and currency. Decisions regarding the ultimate currency and interest rate profile of liquidity generated through these borrowings can be separated from the actual issuance through the use of derivative instruments.

 

Citigroup is a provider of liquidity facilities to the commercial paper programs of the two primary Credit Card securitization trusts with which it transacts. Citigroup may also provide other types of support to the trusts. As a result of the recent economic downturn, its impact on the cashflows of the trusts, and in response to credit rating agency reviews of the trusts, the Company increased the credit enhancement in the Omni Trust, and plans to provide additional enhancement to the Master Trust (see Note 23 to Consolidated Financial Statements on page 179 for a further discussion). This support preserves investor sponsorship of our card securitization franchise, an important source of liquidity.

This excerpt taken from the C 10-K filed Feb 22, 2008.

Sources of Liquidity

Primary sources of liquidity for Citigroup and its principal subsidiaries include:

 

•  

deposits;

•  

collateralized financing transactions;

•  

senior and subordinated debt;

•  

commercial paper;

•  

trust preferred and preferred securities; and

•  

purchased/wholesale funds.

Citigroup and its principal subsidiaries also generate funds through securitizing financial assets, including credit card receivables and single-family or multi-family residences. See Note 23 to the Consolidated Financial Statements on page 156 for additional information about securitization activities. Finally, Citigroup’s net earnings provide a significant source of funding to the corporation.

Citigroup’s funding sources are well diversified across funding types and geography, a benefit of the strength of the global franchise. Funding for the parent and its major operating subsidiaries includes a large geographically diverse retail and corporate deposit base of $826.2 billion. A significant portion of these deposits has been, and is expected to be, long-term and stable and is considered core. There are qualitative as well as quantitative assessments that determine the Company’s calculation of core deposits. The first step in this process is a qualitative assessment of the deposits. For example, as a result of the Company’s qualitative analysis certain deposits with wholesale funding characteristics are excluded from consideration as core. Deposits that qualify under the Company’s qualitative assessments are then subjected to quantitative analysis.


 

80

Table of Contents

 

Citigroup and its subsidiaries have a significant presence in the global capital markets. The Company’s capital markets funding activities are primarily undertaken by two legal entities: (i) Citigroup Inc., which issues long-term debt, medium-term notes, trust preferred securities, and preferred and common stock; and (ii) Citigroup Funding Inc. (CFI), a first-tier subsidiary of Citigroup, which issues commercial paper, medium-term notes and structured equity-linked and credit-linked notes, all of which are guaranteed by Citigroup. Other significant elements of long-term debt in the Consolidated Balance Sheet include collateralized advances from the Federal Home Loan Bank system, long-term debt related to the consolidation of CAI’s Structured Investment Vehicles, asset-backed outstandings, and certain borrowings of foreign subsidiaries.

CGMHI’s consolidated balance sheet is highly liquid, with the vast majority of its assets consisting of marketable securities and collateralized short-term financing agreements arising from securities transactions. The highly liquid nature of these assets provides CGMHI with flexibility in financing and managing its business. CGMHI monitors and evaluates the adequacy of its capital and borrowing base on a daily basis to maintain liquidity, and to ensure that its capital base supports the regulatory capital requirements of its subsidiaries.

Citigroup uses its liquidity to service debt obligations, to pay dividends to its stockholders, to support organic growth, to fund acquisitions and to repurchase its shares, pursuant to Board of Directors approved plans.

Each of Citigroup’s major operating subsidiaries finances its operations on a basis consistent with its capitalization, regulatory structure and the environment in which it operates. Particular attention is paid to those businesses that for tax, sovereign risk, or regulatory reasons cannot be freely and readily funded in the international markets.

Citigroup’s borrowings are diversified by geography, investor, instrument and currency. Decisions regarding the ultimate currency and interest rate profile of liquidity generated through these borrowings can be separated from the actual issuance through the use of derivative instruments.

At December 31, 2007, long-term debt and commercial paper outstanding for Citigroup Parent Company, CGMHI, Citigroup Funding Inc. and Citigroup’s Subsidiaries were as follows:

 

In billions of dollars

   Citigroup
parent
company		    CGMHI  (2)   Citigroup
Funding
Inc.		  
 
 (2)		   Other

Citigroup
subsidiaries

  

 
 

Long-term debt

   $171.6    $31.4     $36.4     $187.7  (1)

Commercial paper

   $     —    $   —     $34.9     $   2.4  

 

(1) At December 31, 2007, approximately $86.9 billion relates to collateralized advances from the Federal Home Loan Bank and $45.9 billion related to the consolidation of the CAI Structured Investment Vehicles.
(2) Citigroup Inc. guarantees all of CFI’s debt and CGMHI’s publicly issued securities.

See Note 20 to the Consolidated Financial Statements on page 149 for further detail on long-term debt and commercial paper outstanding.

Citigroup’s ability to access the capital markets and other sources of wholesale funds, as well as the cost of these funds, is highly dependent on its credit ratings. The table below indicates the current ratings for Citigroup.

On January 15, 2008, Standard & Poor’s lowered Citigroup Inc.’s senior debt rating to “AA-” from “AA” and Citibank, N.A.’s long-term rating to “AA” from “AA+”. Standard & Poor’s changed the outlook on the ratings to “negative” and removed the “CreditWatch with negative implications” designation. On December 13, 2007, Moody’s Investors Service lowered Citigroup Inc.’s senior debt rating to “Aa3” from “Aa2” and Citibank, N.A.’s long-term rating to “Aa1” from “Aaa”. Moody’s also changed the outlook on these ratings to “stable” from “negative”. On November 5, 2007, Moody’s Investors Service downgraded the senior debt rating of Citigroup Inc. to “Aa2” from “Aa1” and changed the ratings outlook to “negative” from “stable”. On November 4, 2007, Standard & Poor’s placed the senior debt rating of Citigroup Inc. and the long-term issuer rating of Citibank, N.A. on “CreditWatch with negative implications”. Also on November 4, 2007, Fitch Ratings downgraded the long-term debt rating of Citigroup Inc. and the long-term issuer rating of Citibank, N.A. to “AA” from “AA+” and changed the ratings outlook on both entities to “negative”.

As a result of the Citigroup guarantee, changes in ratings for Citigroup Funding Inc. are the same as those of Citigroup Inc. noted above.


 

This excerpt taken from the C 10-K filed Feb 23, 2007.

Sources of Liquidity

Primary sources of liquidity for Citigroup and its principal subsidiaries include:

 

•  

deposits;

•  

collateralized financing transactions;

•  

senior and subordinated debt;

•  

commercial paper;

•  

trust preferred securities; and

•  

purchased/wholesale funds.

 

Citigroup and its principal subsidiaries also generate funds through securitizing financial assets, including credit card receivables and single-family or multi-family residences. See Note 22 to the Consolidated Financial Statements on page 143 for additional information about securitization activities. Finally, Citigroup’s net earnings provide a significant source of funding to the corporation.

Citigroup’s funding sources are well diversified across funding types and geography, a benefit of the strength of the global franchise. Funding for the parent and its major operating subsidiaries includes a large geographically diverse retail and corporate deposit base of $712.0 billion. A significant portion of these deposits has been, and is expected to be, long-term and stable and is considered core.

Citigroup and its subsidiaries have a significant presence in the global capital markets. During the 2005 second quarter, Citigroup consolidated its capital markets funding activities into two legal entities: (i) Citigroup Inc., which issues long-term debt, medium-term notes, trust preferred securities, and preferred and common stock; and (ii) Citigroup Funding Inc. (CFI), a first-tier subsidiary of Citigroup, which issues commercial paper, medium- term notes and structured equity-linked and credit-linked notes, all of which are guaranteed by Citigroup. As part of the funding consolidation, Citigroup also guaranteed and continues to guarantee various debt obligations of CGMHI as well as all of the outstanding debt obligations under CGMHI’s publicly-issued securities.

In August 2005, Citigroup merged its two intermediate bank holding companies, Citigroup Holdings Company and Citicorp, into Citigroup Inc. Coincident with this merger, Citigroup assumed all existing indebtedness and outstanding guarantees of Citicorp. As a result, Citigroup also guaranteed various debt obligations of Associates and of CitiFinancial Credit Company, each an indirect subsidiary of Citigroup. In addition, Citigroup guaranteed various debt obligations of Citigroup Finance Canada Inc. (CFCI), a wholly owned subsidiary of Associates. CFCI continues to issue debt in the Canadian market supported by a Citigroup guarantee. See Note 29 to the Consolidated Financial Statements on page 156 for further discussions. Other significant elements of long-term debt in the Consolidated Balance Sheet include collateralized advances from the Federal Home Loan Bank system, asset-backed outstandings, and certain borrowings of foreign subsidiaries.

CGMHI’s consolidated balance sheet is highly liquid, with the vast majority of its assets consisting of marketable securities and collateralized short-term financing agreements arising from securities transactions. The highly liquid nature of these assets provides CGMHI with flexibility in financing and managing its business. CGMHI monitors and evaluates the adequacy of its capital and borrowing base on a daily basis to maintain liquidity, and to ensure that its capital base supports the regulatory capital requirements of its subsidiaries.

Citigroup uses its liquidity to service debt obligations, to pay dividends to its stockholders, to support organic growth, to fund acquisitions and to repurchase its shares, pursuant to Board of Directors approved plans.

Each of Citigroup’s major operating subsidiaries finances its operations on a basis consistent with its capitalization, regulatory structure and the environment in which it operates. Particular attention is paid to those businesses that for tax, sovereign risk, or regulatory reasons cannot be freely and readily funded in the international markets.


 

* This is a forward-looking statement within the meaning of the Private Securities Litigation Reform Act. See “Forward-Looking Statements” on page 97.

 

90

Table of Contents

 

Citigroup’s borrowings are diversified by geography, investor, instrument and currency. Decisions regarding the ultimate currency and interest rate profile of liquidity generated through these borrowings can be separated from the actual issuance through the use of derivative financial products.

At December 31, 2006, long-term debt and commercial paper outstanding for Citigroup Parent Company, CGMHI, Citigroup Funding Inc. and Citigroup’s Subsidiaries were as follows:

 

In billions of dollars   Citigroup
Parent
Company		    CGMHI    Citigroup
Funding
Inc.		   

Other

Citigroup
Subsidiaries

  

Long-term debt

   $ 125.4    $ 28.7    $ 18.8    $ 115.6 (1)

Commercial paper

     —      —    $ 41.8    $ 1.9  

 

(1) At December 31, 2006, approximately $81.5 billion relates to collateralized advances from the Federal Home Loan Bank.

 

See Note 19 to the Consolidated Financial Statements on page 139 for further detail on long-term debt and commercial paper outstanding.

Citigroup’s ability to access the capital markets and other sources of wholesale funds, as well as the cost of these funds, is highly dependent on its credit ratings. The table below indicates the current ratings for Citigroup.


 

This excerpt taken from the C 10-Q filed Nov 3, 2006.

Sources of Liquidity

        Primary sources of liquidity for Citigroup and its principal subsidiaries include:

    •
    deposits;

    •
    collateralized financing transactions;

    •
    senior and subordinated debt;

    •
    issuance of commercial paper;

    •
    proceeds from issuance of trust preferred securities; and

    •
    purchased/wholesale funds.

        Citigroup and its principal subsidiaries also generate funds through securitizing financial assets, including credit card receivables and single-family or multi-family residences. See Note 14 to the Consolidated Financial Statements on page 109 for additional information about securitization activities. Finally, Citigroup's net earnings provide a significant source of funding to the corporation.

        Citigroup's funding sources are well diversified across funding types and geography, a benefit of the strength of the global franchise. Funding for the parent and its major operating subsidiaries includes a large geographically diverse retail and corporate deposit base of $669.3 billion. A significant portion of these deposits has been, and is expected to be, long-term and stable and is considered core.

        Citigroup and its subsidiaries have a significant presence in the global capital markets. During the 2005 second quarter, Citigroup consolidated its capital markets funding activities into two legal entities: (i) Citigroup Inc., which issues long-term debt, medium-term notes, trust preferred securities, and preferred and common stock; and (ii) Citigroup Funding Inc. (CFI), a first-tier subsidiary of Citigroup, which issues commercial paper, medium-term notes and structured equity-linked and credit-linked notes, all of which are guaranteed by Citigroup. As part of the funding consolidation, Citigroup also guaranteed and continues to guarantee various debt obligations of CGMHI as well as all of the outstanding debt obligations under CGMHI's publicly-issued securities.

        In August 2005, Citigroup merged its two intermediate bank holding companies, Citigroup Holdings Company and Citicorp, into Citigroup Inc. Coincident with this merger, Citigroup assumed all existing indebtedness and outstanding guarantees of Citicorp. As a result, Citigroup also guaranteed various debt obligations of Associates and of CitiFinancial Credit Company, each an indirect subsidiary of Citigroup. In addition, Citigroup guaranteed various debt obligations of Citigroup Finance Canada, Inc. (CFCI), a wholly owned subsidiary of Associates. CFCI continues to issue debt in the Canadian market supported by a Citigroup guarantee. See Note 20 to the Consolidated Financial Statements on page 122 for further discussions. Other significant elements of long-term debt in the Consolidated Balance Sheet include advances from the Federal Home Loan Bank system, asset-backed outstandings related to the purchase of Sears, and certain borrowings of foreign subsidiaries.

*
This is a forward-looking statement within the meaning of the Private Securities Litigation Reform Act. See "Forward-Looking Statements" on page 84.

79

        CGMHI's consolidated balance sheet is highly liquid, with the vast majority of its assets consisting of marketable securities and collateralized short-term financing agreements arising from securities transactions. The highly liquid nature of these assets provides CGMHI with flexibility in financing and managing its business. CGMHI monitors and evaluates the adequacy of its capital and borrowing base on a daily basis to maintain liquidity, and to ensure that its capital base supports the regulatory capital requirements of its subsidiaries.

        Citigroup's borrowings are diversified by geography, investor, instrument and currency. Decisions regarding the ultimate currency and interest rate profile of liquidity generated through these borrowings can be separated from the actual issuance through the use of derivative financial products.

        At September 30, 2006, long-term debt and commercial paper outstanding for Citigroup Parent Company, CGMHI, Citigroup Funding Inc. and Citigroup's Subsidiaries were as follows:

In billions of dollars

   Citigroup
Parent
Company
   CGMHI
   Citigroup
Funding
Inc.
   Other
Citigroup
Subsidiaries
  
Long-term debt   $ 114.3   $ 31.0   $ 15.3   $ 99.5 (1)
Commercial paper   $ —   $ —   $ 33.7   $ 0.8  
   
 
 
 
 
(1)
At September 30, 2006, approximately $66.9 billion relates to advances from the Federal Home Loan Bank.

        See Note 13 to the Consolidated Financial Statements on page 106 for further detail on long-term debt and commercial paper outstanding.

        Citigroup's ability to access the capital markets and other sources of wholesale funds, as well as the cost of these funds, is highly dependent on its credit ratings. The accompanying chart indicates the current ratings for Citigroup.

EXCERPTS ON THIS PAGE:

10-K (2 sections)
Feb 27, 2009
10-K
Feb 22, 2008
10-K
Feb 23, 2007
10-Q
Nov 3, 2006

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