Table	of	Contents

# CITIGROUP'S	2008	ANNUAL	REPORT	ON	FORM	10-K

| Events	in	2007 | 15 |
| :--- | :--- |
| SIGNIFICANT\tACCOUNTING\tPOLICIES\tAND\tSIGNIFICANT |  |
| ESTIMATES | \t18 |
| SEGMENT\tAND\tREGIONAL—NET\tINCOME\t(LOSS)\tAND |  |
| REVENUES | \t25 |
| Citigroup\tNet\tIncome\t(Loss)—Segment\tView | \t25 |
| Citigroup\tNet\tIncome\t(Loss)—Regional\tView | \t26 |
| Citigroup\tRevenues—Segment\tView | \t27 |
| Citigroup\tRevenues—Regional\tView | \t28 |
| GLOBAL\tCARDS | \t29 |
| Global\tCards\tOutlook | \t30 |
| CONSUMER\tBANKING | \t31 |
| Consumer\tBanking\tOutlook | \t33 |
| INSTITUTIONAL\tCLIENTS\tGROUP\t(ICG) | \t34 |
| Institutional\tClients\tGroup\tOutlook | \t35 |
| GLOBAL\tWEALTH\tMANAGEMENT | \t36 |
| Global\tWealth\tManagement\tOutlook | \t37 |
| CORPORATE/OTHER | \t38 |
| REGIONAL\tDISCUSSIONS | \t39 |
| North\tAmerica | \t39 |
| EMEA | \t40 |
| Latin\tAmerica | \t41 |
| Asia | \t42 |
| TARP\tAND\tOTHER\tREGULATORY\tPROGRAMS | \t44 |
| RISK\tFACTORS | \t47 |
| MANAGING\tGLOBAL\tRISK | \t51 |
| Risk\tManagement | \t51 |
| Risk\tAggregation\tand\tStress\tTesting | \t51 |
| Risk\tCapital | \t52 |
| Credit\tRisk\tManagement\tProcess | \t52 |
| Loans\tOutstanding | \t53 |
| Details\tof\tCredit\tLoss\tExperience | \t54 |
| Non-Performing\tAssets | \t55 |
| Renegotiated\tLoans | \t56 |
| Foregone\tInterest\tRevenue\ton\tLoans | \t56 |
| Loan\tMaturities\tand\tFixed/Variable\tPricing | \t57 |
| Consumer\tCredit\tRisk | \t57 |
| Consumer\tPortfolio\tReview | \t57 |
| Corporate\tCredit\tRisk | \t65 |
| Global\tCorporate\tPortfolio\tReview | \t67 |
| Exposure\tto\tU.S.\tReal\tEstate\tin\tSecurities\tand\tBanking | \t68 |
| Market\tRisk\tManagement\tProcess | \t72 |
| Operational\tRisk\tManagement\tProcess | \t76 |
| Country\tand\tFFIEC\tCross-Border\tRisk\tManagement\tProcess | \t77 |

| BALANCE	SHEET	REVIEW | 78 |
| :--- | :--- |
| Segment\tBalance\tSheet\tat\tDecember\t31,\t2008 | 81 |
| Average\tBalances\tand\tInterest\tRates—Assets | 83 |
| Average\tBalances\tand\tInterest\tRates—Liabilities\tand\tEquity,\tand |  |
| Net\tInterest\tRevenue | 84 |
| Analysis\tof\tChanges\tin\tInterest\tRevenue | 85 |
| Analysis\tof\tChanges\tin\tInterest\tExpense\tand\tNet\tInterest\tRevenue | 86 |
| Reclassification\tof\tFinancial\tAssets | 87 |
| DERIVATIVES | 90 |
| CAPITAL\tRESOURCES\tAND\tLIQUIDITY | 94 |
| Capital\tResources | 94 |
| Funding | 98 |
| Liquidity | \t101 |
| Off-Balance-Sheet\tArrangements | \t104 |
| Pension\tand\tPostretirement\tPlans | \t106 |
| FAIR\tVALUATION | \t107 |
| CORPORATE\tGOVERNANCE\tAND\tCONTROLS\tAND |  |
| PROCEDURES | \t108 |
| FORWARD-LOOKING\tSTATEMENTS | \t108 |
| GLOSSARY\tOF\tTERMS | \t109 |
| MANAGEMENT'S\tREPORT\tON\tINTERNAL\tCONTROL\tOVER |  |
| FINANCIAL\tREPORTING | \t112 |
| REPORT\tOF\tINDEPENDENT\tREGISTERED\tPUBLIC |  |
| ACCOUNTING\tFIRM—INTERNAL\tCONTROL\tOVER |  |
| FINANCIAL\tREPORTING | \t113 |
| REPORT\tOF\tINDEPENDENT\tREGISTERED\tPUBLIC |  |
| ACCOUNTING\tFIRM—CONSOLIDATED\tFINANCIAL |  |
| STATEMENTS | \t114 |
| FINANCIAL\tSTATEMENTS\tAND\tNOTES\tTABLE\tOF\tCONTENTS | \t115 |
| CONSOLIDATED\tFINANCIAL\tSTATEMENTS | \t116 |
| NOTES\tTO\tCONSOLIDATED\tFINANCIAL |  |
| STATEMENTS | \t122 |
| FINANCIAL\tDATA\tSUPPLEMENT\t(Unaudited) | \t226 |
| Ratios | \t226 |
| Average\tDeposit\tLiabilities\tin\tOffices\tOutside\tthe\tU.S. | \t226 |
| Maturity\tProfile\tof\tTime\tDeposits\t($100,000\tor\tmore)\tin\tU.S.\tOffices | \t226 |
| Short-Term\tand\tOther\tBorrowings | \t226 |
| LEGAL\tAND\tREGULATORY\tREQUIREMENTS | \t227 |
| Securities\tRegulation | \t228 |
| Capital\tRequirements | 228 |
| General\tBusiness\tFactors | \t229 |
| Properties | \t229 |
| Legal\tProceedings | \t229 |
| Unregistered\tSales\tof\tEquity\tSecurities\tand\tUse\tof\tProceeds | \t236 |
| 10-K\tCROSS-REFERENCE\tINDEX | \t239 |
| CORPORATE\tINFORMATION | \t240 |
| Exhibits\tand\tFinancial\tStatement\tSchedules | \t240 |
| CITIGROUP\tBOARD\tOF\tDIRECTORS | \t242 |

# THE	COMPANY

Citigroup	Inc.	(Citigroup	and,	together	with	its	subsidiaries,	the	Company,	Citi or	Citigroup)	is	a	global	diversified	financial	services	holding	company	whose businesses	provide	a	broad	range	of	financial	services	to	consumer	and	corporate customers.	Citigroup	has	more	than	200	million	customer	accounts	and	does business	in	more	than	100	countries.	Citigroup	was	incorporated	in	1988	under the	laws	of	the	State	of	Delaware.

The	Company	is	a	bank	holding	company	within	the	meaning	of	the	U.S.	Bank Holding	Company	Act	of	1956	registered	with,	and	subject	to	examination	by, the	Board	of	Governors	of	the	Federal	Reserve	System	(FRB).	Some	of	the Company's	subsidiaries	are	subject	to	supervision	and	examination	by	their respective	federal	and	state	authorities.	At	December	31,	2008,	the	Company	had approximately	134,400	full-time	and	4,100	part-time	employees	in	the	United States	and	approximately	188,400	full-time	employees	outside	the	United	States. During	2008,	the	Company	benefited	from	substantial	U.S.	government financial	involvement,	including	(i)	raising	an	aggregate	of	$45	billion	through the	sale	of	Citigroup	non-voting	perpetual,	cumulative	preferred	stock	and warrants	to	purchase	common	stock	to	the	U.S.	Department	of	the	Treasury, (ii)	entering	into	a	loss-sharing	agreement	with	various	U.S.	government	entities covering	$301	billion	of	Company	assets,	and	(iii)	issuing	$5.75	billion	of	senior unsecured	debt	guaranteed	by	the	Federal	Deposit	Insurance	Corporation	(FDIC) (in	addition	to	$26.0	billion	of	commercial	paper	and	interbank	deposits	of Citigroup's	subsidiaries	guaranteed	by	the	FDIC	outstanding	at	the	end	of	2008). In	connection	with	these	programs	and	agreements,	Citigroup	is	required	to	pay consideration	to	the	U.S.	government,	including	in	the	form	of	dividends	on	the preferred	stock	and	other	fees.	In	addition,	Citigroup	has	agreed	not	to	pay common	stock	dividends	in	excess	of	$0.01	per	share	per	quarter	for	three	years (beginning	in	2009)	or	to	repurchase	its	common	stock	without	the	consent	of U.S.	government	entities.	For	additional	information	on	the	above,	see	"TARP and	Other	Regulatory	Programs"	on	page	44.

On	January	16,	2009,	the	Company	announced	a	realignment,	for	management and	reporting	purposes,	into	two	businesses:	Citicorp,	primarily	comprised	of	the Company's	Global	Institutional	Bank	and	the	Company's	international	regional consumer	banks;	and	Citi	Holdings,	primarily	comprised	of	the	Company's brokerage	and	asset	management	business,	local	consumer	finance	business,	and a	special	asset	pool.	Citigroup	believes	that	the	realignment	will	optimize	the Company's	global	businesses	for	future	profitable	growth	and	opportunities	and will	assist	in	the	Company's	ongoing	efforts	to	reduce	its	balance	sheet	and simplify	its	organization.	See	"Outlook	for	2009—Changes	to	Citi's Organizational	Structure"	on	page	7.

On	February	27,	2009,	the	Company	announced	an	exchange	offer	of	its common	stock	for	up	to	$27.5	billion	of	its	existing	preferred	securities	and	trust preferred	securities	at	a	conversion	price	of	$3.25	per	share.	The	U.S. government	will	match	this	exchange	up	to	a	maximum	of	$25	billion	of	its preferred	stock	at	the	same	conversion	price.	These	transactions	are	intended	to increase	the	Company's	tangible	common	equity	(TCE)	and	will	require	no additional	U.S.	government	investment	in	Citigroup.	See	"Outlook	for	2009"	on page	7.

The	principal	executive	offices	of	the	Company	are	located	at	399	Park Avenue,	New	York,	New	York	10022,	telephone	number	212	559	1000. Additional	information	about	Citigroup	is	available	on	the	Company's	Web	site at	www.citigroup.com.	Citigroup's	recent	annual	reports	on	Form	10-K, quarterly	reports	on	Form	10-Q,	current	reports	on	Form	8-K,	as	well	as	the Company's	other	filings	with	the	Securities	and	Exchange	Commission	(SEC) are	available	free	of	charge	through	the	Company's	Web	site	by	clicking	on	the "Investors"	page	and	selecting	"All	SEC	Filings."	The	SEC	Web	site	contains reports,	proxy	and	information	statements,	and	other	information	regarding	the Company	at	www.sec.gov.

At	December	31,	2008,	Citigroup	was	managed	along	the	following	segment	and	product	lines	(as	noted	above,	on	January	16,	2009,	Citigroup	announced	a realignment	of	its	businesses	to	be	effective,	for	reporting	purposes,	in	the	second	quarter	of	2009):

# The	following	are	the	four	regions	in	which	Citigroup	operates.	The	regional	results	are	fully	reflected	in	the	segment	results.

# FIVE-YEAR	SUMMARY	OF	SELECTED	FINANCIAL	DATA

# Citigroup	Inc.	and	Subsidiaries

| In	millions	of	dollars,	except	per	share	amounts	and	ratios | 2008^	(1) | 2007 | 2006 | 2005 | 2004 |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Revenues,\tnet\tof\tinterest\texpense | $52,793 | $78,495 | $86,327 | $80,077 | $76,223 |
| Operating\texpenses | 71,134 | 59,802 | 50,301 | 43,549 | 48,149 |
| Provisions\tfor\tcredit\tlosses\tand\tfor\tbenefits\tand\tclaims | 34,714 | 17,917 | 7,537 | 7,971 | 6,658 |
| Income\t(loss)\tfrom\tcontinuing\toperations\tbefore\ttaxes,\tminority |  |  |  |  |  |
| interest,\tand\tcumulative\teffect\tof\taccounting\tchange | $(53,055) | $776 | $28,489 | $28,557 | $21,416 |
| Provision\t(benefits)\tfor\tincome\ttaxes | (20,612) | (2,498) | 7,749 | 8,787 | 6,130 |
| Minority\tinterest,\tnet\tof\ttaxes | (349) | 285 | 289 | 549 | 218 |
| Income\t(loss)\tfrom\tcontinuing\toperations\tbefore\tcumulative\teffect\tof |  |  |  |  |  |
| accounting\tchange | $(32,094) | $2,989 | $20,451 | $19,221 | $15,068 |
| Income\tfrom\tdiscontinued\toperations,\tnet\tof\ttaxes\t^(2) | 4,410 | 628 | 1,087 | 5,417 | 1,978 |
| Cumulative\teffect\tof\taccounting\tchange,\tnet\tof\ttaxes\t^(3) | — | — | — | (49) | — |
| Net\tincome\t(loss) | $(27,684) | $3,617 | $21,538 | $24,589 | $17,046 |
| Earnings\tper\tshare |  |  |  |  |  |
| Basic: |  |  |  |  |  |
| Income\t(loss)\tfrom\tcontinuing\toperations | $(6.42) | $0.60 | $4.17 | $3.78 | $2.94 |
| Net\tincome | (5.59) | 0.73 | 4.39 | 4.84 | 3.32 |
| Diluted: |  |  |  |  |  |
| Income\t(loss)\tfrom\tcontinuing\toperations | (6.42) | 0.59 | 4.09 | 3.71 | 2.88 |
| Net\tincome | (5.59) | 0.72 | 4.31 | 4.75 | 3.26 |
| Dividends\tdeclared\tper\tcommon\tshare | $1.12 | $2.16 | $1.96 | $1.76 | $1.60 |
| At\tDecember\t31 |  |  |  |  |  |
| Total\tassets | $1,938,470 | $2,187,480 | $1,884,167 | $1,493,886 | $1,483,950 |
| Total\tdeposits | 774,185 | 826,230 | 712,041 | 591,828 | 561,513 |
| Long-term\tdebt | 359,593 | 427,112 | 288,494 | 217,499 | 207,910 |
| Mandatorily\tredeemable\tsecurities\tof\tsubsidiary\ttrusts\t^(4) | 23,899 | 23,594 | 9,579 | 6,264 | 6,209 |
| Common\tstockholders'\tequity | 70,966 | 113,447 | 118,632 | 111,261 | 108,015 |
| Total\tstockholders'\tequity | 141,630 | 113,447 | 119,632 | 112,386 | 109,140 |
| Direct\tstaff\t(in\tthousands) | 323 | 375 | 327 | 296 | 283 |
| Ratios: |  |  |  |  |  |
| Return\ton\tcommon\tstockholders'\tequity\t^(5) | (28.8)% | 2.9% | 18.8% | 22.4% | 17.0% |
| Return\ton\ttotal\tstockholders'\tequity\t^(5) | (20.9) | 3.0 | 18.7 | 22.2 | 16.9 |
| Tier\t1\tCapital | 11.92% | 7.12% | 8.59% | 8.79% | 8.74% |
| Total\tCapital | 15.70 | 10.70 | 11.65 | 12.02 | 11.85 |
| Leverage\t^(6) | 6.08 | 4.03 | 5.16 | 5.35 | 5.20 |
| Common\tstockholders'\tequity\tto\tassets | 3.66% | 5.19% | 6.30% | 7.45% | 7.28% |
| Total\tstockholders'\tequity\tto\tassets | 7.31 | 5.19 | 6.35 | 7.52 | 7.35 |
| Dividend\tpayout\tratio\t^(7) |  |  |  |  |  |
|  | NM | 300.0 | 45.5 | 37.1 | 49.1 |
| Book\tvalue\tper\tcommon\tshare | $13.02 | $22.71 | $24.15 | $22.34 | $20.79 |
| Ratio\tof\tearnings\tto\tfixed\tcharges\tand\tpreferred\tstock\tdividends | NM | 1.01x | 1.50x | 1.79x | 1.99x |

(1) As	announced	in	its	fourth	quarter	2008	earnings	press	release	(January	16,	2009),	Citigroup	continued	to	review	its	goodwill	to	determine	whether	a	goodwill	impairment	had	occurred	as	of December	31,	2008.	Based	on	the	results	of	this	review	and	testing,	the	Company	recorded	a	pretax	charge	of	$9.568	billion	($8.727	billion	after-tax)	in	the	fourth	quarter	of	2008.	The	goodwill impairment	charge	was	recorded	in	North	America	Consumer	Banking,	Latin	America	Consumer	Banking,	and	EMEA	Consumer	Banking,	and	resulted	in	a	write-off	of	the	entire	amount	of goodwill	allocated	to	those	reporting	units.	The	charge	does	not	result	in	a	cash	outflow	or	negatively	affect	the	Tier	1	or	Total	Regulatory	Capital	ratios,	Tangible	Equity	or	the	Company's	liquidity position	as	of	December	31,	2008.	In	addition,	Citi	recorded	a	$374	million	pretax	charge	($242	million	after-tax)	to	reflect	further	impairment	evident	in	the	intangible	asset	related	to	Nikko	Asset Management	at	December	31,	2008.

As	disclosed	in	the	table	above,	giving	effect	to	these	charges,	Net	Income	(Loss)	from	Continuing	Operations	for	2008	was	$(32.094)	billion	and	Net	Income	(Loss)	was	$(27.684)	billion,	resulting in	Diluted	Earnings	per	Share	of	$(6.42)	and	$(5.59)	respectively.	The	primary	cause	for	the	goodwill	impairment	in	the	reporting	units	mentioned	above,	and	the	additional	intangible	asset impairment	in	Nikko	Asset	Management,	was	the	rapid	deterioration	in	the	financial	markets,	as	well	as	in	the	general	global	economic	outlook,	particularly	during	the	period	beginning	mid- November	2008	through	December	31,	2008.	This	deterioration	further	weakened	the	near	term	prospects	for	the	financial	services	industry.	See	"Significant	Accounting	Policies	and	Significant Estimates"	on	page	18,	and	Note	19	to	the	Consolidated	Financial	Statements	on	page	166	for	further	discussion.

(2) Discontinued	operations	for	2004	to	2008	reflect	the	sale	of	Citigroup's	German	Retail	Banking	Operations	to	Credit	Mutuel,	and	the	Company's	sale	of	CitiCapital's	equipment	finance	unit	to General	Electric.	In	addition,	discontinued	operations	for	2004	to	2006	include	the	operations	and	associated	gain	on	sale	of	substantially	all	of	Citigroup's	Asset	Management	business,	the majority	of	which	closed	on	December	1,	2005.	Discontinued	operations	from	2004	to	2006	also	include	the	operations	and	associated	gain	on	sale	of	Citigroup's	Travelers	Life	&	Annuity, substantially	all	of	Citigroup's	international	insurance	business	and	Citigroup's	Argentine	pension	business	to	MetLife	Inc.	The	sale	closed	on	July	1,	2005.	See	Note	3	to	the	Consolidated Financial	Statements	on	page	135.

(3) Accounting	change	of	$(49)	million	in	2005	represents	the	adoption	of	Financial	Accounting	Standards	Board	(FASB)	Interpretation	No.	47,	 Accounting	for	Conditional	Asset	Retirement Obligations,	an	interpretation	of	SFAS	No.	143,	(FIN	47).

(4) During	2004,	the	Company	deconsolidated	the	subsidiary	issuer	trusts	in	accordance	with	FIN	46(R).	For	regulatory	capital	purposes,	these	trust	securities	remain	a	component	of	Tier	1	Capital.

(5) The	return	on	average	common	stockholders'	equity	is	calculated	using	net	income	less	preferred	stock	dividends	divided	by	average	common	stockholders'	equity.	The	return	on	total stockholders'	equity	is	calculated	using	net	income	divided	by	average	stockholders'	equity.

(6) Tier	1	Capital	divided	by	each	year's	fourth	quarter	adjusted	average	assets	(hereinafter	as	adjusted	average	assets).

(7) Dividends	declared	per	common	share	as	a	percentage	of	net	income	per	diluted	share.

NM	Not	Meaningful

Certain	reclassifications	have	been	made	to	the	prior	periods'	financial statements	to	conform	to	the	current	period's	presentation.

Certain	statements	in	this	Form	10-K,	including,	but	not	limited	to,	statements made	in	"Management's	Discussion	and	Analysis,"	particularly	in	the	"Outlook" discussions,	are	"Forward-Looking	Statements"	within	the	meaning	of	the Private	Securities	Litigation	Reform	Act	of	1995.	These	statements	are	based	on management's	current	expectations	and	are	subject	to	uncertainty	and	changes	in circumstances.	Actual	results	may	differ	materially	from	those	included	in	these statements	due	to	a	variety	of	factors	including,	but	not	limited	to,	those described	under	"Risk	Factors"	beginning	on	page	47.

# MANAGEMENT'S	DISCUSSION	AND	ANALYSIS

Citigroup	reported	a	$32.1	billion	loss	from	continuing	operations	($6.42	per share)	for	2008.	The	results	were	impacted	by	continued	losses	related	to	the disruption	in	the	fixed	income	markets,	higher	consumer	credit	costs,	and	a deepening	of	the	global	economic	slowdown.

The	net	loss	of	$27.7	billion	($5.59	per	share)	in	2008	includes	the	results	and sales	of	the	Company's	German	retail	banking	operations	and	CitiCapital	(which were	reflected	as	discontinued	operations),	as	well	as	a	$9.568	billion	Goodwill impairment	charge	based	on	the	results	of	its	fourth	quarter	of	2008	goodwill impairment	testing.	The	goodwill	impairment	charge	was	recorded	in	North America	Consumer	Banking,	Latin	America	Consumer	Banking	and	EMEA Consumer	Banking.

During	2008,	the	Company	benefited	from	substantial	U.S.	government financial	involvement,	including	(i)	raising	an	aggregate	$45	billion	in	capital through	the	sale	of	Citigroup	non-voting	perpetual,	cumulative	preferred	stock and	warrants	to	purchase	common	stock	to	the	U.S.	Department	of	the	Treasury (UST),	(ii)	entering	into	a	loss-sharing	agreement	with	various	U.S.	government entities	covering	$301	billion	of	Company	assets,	and	(iii)	issuing	$5.75	billion of	senior	unsecured	debt	guaranteed	by	the	Federal	Deposit	Insurance Corporation	(FDIC)	(in	addition	to	$26.0	billion	of	commercial	paper	and interbank	deposits	of	Citigroup's	subsidiaries	guaranteed	by	the	FDIC outstanding	as	of	December	31,	2008).	In	connection	with	these	programs	and agreements,	Citigroup	is	required	to	pay	consideration	to	the	U.S.	government, including	in	the	form	of	dividends	on	the	preferred	stock	and	other	fees.	In addition,	Citigroup	has	agreed	not	to	pay	common	stock	dividends	in	excess	of $0.01	per	share	per	quarter	for	three	years	(beginning	in	2009)	or	to	repurchase its	common	stock	without	the	consent	of	U.S.	government	entities.	For	additional information	on	the	above,	see	"TARP	and	Other	Regulatory	Programs"	on	page 44.

In	addition	to	the	equity	issuances	to	the	UST	under	TARP,	Citigroup	raised $32	billion	of	capital	in	private	and	public	offerings	during	2008.

In	addition,	on	January	16,	2009,	the	Company	announced	a	realignment,	for management	and	reporting	purposes,	into	two	businesses:	Citicorp,	primarily comprised	of	the	Company's	Global	Institutional	Bank	and	the	Company's regional	consumer	banks;	and	Citi	Holdings,	primarily	comprised	of	the Company's	brokerage	and	asset	management	business,	local	consumer	finance business,	and	a	special	asset	pool.	Citigroup	believes	that	the	realignment	will optimize	the	Company's	global	businesses	for	future	profitable	growth	and opportunities	and	will	assist	in	the	Company's	ongoing	efforts	to	reduce	its balance	sheet	and	simplify	its	organization.	See	"Outlook	for	2009"	on	page	7. On	February	27,	2009,	the	Company	announced	an	exchange	offer	of	its common	stock	for	up	to	$27.5	billion	of	its	existing	preferred	securities	and	trust preferred	securities	at	a	conversion	price	of	$3.25	per	share.	The	U.S. government	will	match	this	exchange	up	to	a	maximum	of	$25	billion	of	its preferred	stock	at	the	same	conversion	price.	These	transactions	are	intended	to increase	the	Company's	tangible	common	equity	(TCE)	and	will	require	no additional	U.S.	government	investment	in	Citigroup.	See	"Outlook	for	2009"	on page	7.

During	2008,	the	Company	also	completed	19	strategic	divestitures	which	were designed	to	strengthen	our	franchises.

Revenues	of	$52.8	billion	decreased	33%	from	2007,	primarily	driven	by significantly	lower	revenues	in	ICG	due	to	write-downs	related	to	subprime

CDOs	and	leveraged	lending	and	other	fixed	income	exposures.	Revenues outside	of	ICG	declined	6%.	The	Company's	revenues	outside	North	America declined	4%	from	2007.

Net	interest	revenue	grew	18%	from	2007,	reflecting	the	lower	cost	of	funds,	as well	as	lower	rates	outside	the	U.S.	The	lower	cost	of	funds	more	than	offset	the decrease	in	the	asset	yields	during	the	year.	Net	interest	margin	in	2008	was 3.06%,	up	65	basis	points	from	2007	(see	the	discussion	of	net	interest	margin	on page	82).	Non-interest	revenue	decreased	$34	billion	from	2007,	primarily reflecting	subprime	and	fixed	income	write-downs.

Although	the	Company	made	significant	progress	in	reducing	its	expense	base during	the	year,	operating	expenses	increased	19%	from	the	previous	year	with lower	operating	expenses	being	offset	by	a	$9.568	billion	goodwill	impairment charge,	higher	restructuring/	repositioning	charges	and	the	impact	of acquisitions.	Excluding	the	goodwill	impairment	charge,	expenses	have	declined for	four	consecutive	quarters,	due	to	lower	incentive	compensation	accruals	and continued	benefits	from	re-engineering	efforts.	Headcount	was	down	52,000 from	December	31,	2007.

The	Company's	equity	capital	base	and	trust	preferred	securities	were	$165.5 billion	at	December	31,	2008.	Stockholders'	equity	increased	by	$28.2	billion during	2008	to	$141.6	billion,	which	was	affected	by	capital	issuances	discussed above,	and	the	distribution	of	$7.6	billion	in	dividends	to	common	and	preferred shareholders.	Citigroup	maintained	its	"well-capitalized"	position	with	a	Tier	1 Capital	Ratio	of	11.92%	at	December	31,	2008.

Total	credit	costs	of	$33.3	billion	included	NCLs	of	$19.0	billion,	up	from	$9.9 billion	in	2007,	and	a	net	build	of	$14.3	billion	to	credit	reserves.	The	build consisted	of	$10.8	billion	in	Consumer	($8.2	billion	in	North	America	and	$2.6 billion	in	regions	outside	North	America),	$3.3	billion	in	ICG	and	$249	million in	GWM	(see	"Credit	Reserves"	on	page	11	for	further	discussion).	The Consumer	loan	loss	rate	was	3.75%,	a	149	basis-point	increase	from	the	fourth quarter	of	2007.	Corporate	cash-basis	loans	were	$9.6	billion	at	December	31, 2008,	an	increase	of	$7.8	billion	from	year-ago	levels.	This	increase	is	primarily attributable	to	the	transfer	of	non-accrual	loans	from	the	held-for-sale	portfolio to	the	held-for-investment	portfolio	during	the	fourth	quarter	of	2008.	The allowance	for	loan	losses	totaled	$29.6	billion	at	December	31,	2008,	a	coverage ratio	of	4.27%	of	total	loans.

The	effective	tax	rate	(benefit)	of	(39)%	in	2008	primarily	resulted	from	the pretax	losses	in	the	Company's	Securities	and	Banking	business	taxed	in	the	U.S. (the	U.S.	is	a	higher	tax-rate	jurisdiction).	In	addition,	the	tax	benefits	of permanent	differences,	including	the	tax	benefit	for	not	providing	U.S.	income taxes	on	the	earnings	of	certain	foreign	subsidiaries	that	are	indefinitely invested,	favorably	affected	the	Company's	effective	tax	rate.

At	December	31,	2008,	the	Company	had	increased	its	structural	liquidity (equity,	long-term	debt	and	deposits)	as	a	percentage	of	assets	from	62%	at December	31,	2007	to	approximately	66%	at	December	31,	2008.	Citigroup	has continued	its	deleveraging,	reducing	total	assets	from	$2,187	billion	at December	31,	2007	to	$1,938	billion	at	December	31,	2008.

At	December	31,	2008,	the	maturity	profile	of	Citigroup's	senior	long-term unsecured	borrowings	had	a	weighted	average	maturity	of	seven	years.	Citigroup also	reduced	its	commercial	paper	program	from	$35	billion	at	December	31, 2007	to	$29	billion	at	December	31,	2008.

Recently,	Robert	Rubin,	Sir	Win	Bischoff	and	Roberto	Hernández	Ramirez announced	they	would	not	stand	for	re-election	at	Citigroup's	2009	Annual Meeting	of	Stockholders.	On	February	23,	2009,	Richard	Parsons	became	the Chairman	of	the	Company.

We	enter	the	challenging	environment	of	2009	after	a	difficult	and	disappointing 2008.	While	numerous	risks	remain,	the	Company	has	made	progress	in decreasing	the	risks	arising	from	its	balance	sheet	and	building	capital	to generate	future	earnings.	As	examples,	and	as	more	fully	disclosed	throughout this	MD&A:

•	Our	total	allowance	for	loan	losses	was	$29.6	billion	at	December	31,	2008; •	As	part	of	the	decreasing	of	risks,	we	completed	the	loss-sharing	agreement with	various	U.S.	government	entities,	which	provides	significant	downside protection	against	losses	on	$301	billion	of	assets;	and •	We	have	reclassified	certain	assets	from	mark-to-market	classification	to	held- to-maturity	which	could	provide	some	reduction	in	earnings	volatility.

# Changes	to	Citi's	Organizational	Structure

On	January	16,	2009,	given	the	economic	and	market	environment,	Citi announced	the	acceleration	of	the	implementation	of	its	strategy	to	focus	on	its core	businesses.	As	a	result	of	its	proposed	realignment,	Citigroup	will	be comprised	of	two	businesses,	Citicorp	and	Citi	Holdings.	Citigroup	believes	that the	realignment	will	optimize	the	Company's	global	businesses	for	future profitable	growth	and	opportunities	and	will	assist	in	the	Company's	ongoing efforts	to	reduce	its	balance	sheet	and	simplify	its	organization.	Citigroup's	plan is	to	transition	to	this	structure	as	quickly	as	possible,	taking	into	account	the interests	of	all	stakeholders,	including	customers	and	clients,	debt	holders, preferred	and	common	stockholders,	employees,	and	the	communities	it	serves. The	Company	recognizes	that	major	legal	vehicle	restructuring	changes	such	as the	realignment	will	require	regulatory	approvals	and	the	resolution	of	tax	and other	issues.	Citigroup	has,	however,	managed	the	Company	consistent	with	this structure	since	February	2009	and	management	reporting	will	reflect	this structure	starting	with	the	second	quarter	of	2009.

# Citicorp

Citicorp,	a	global	bank	for	businesses	and	consumers,	will	have	two	primary underlying	businesses:	the	Global	Institutional	Bank	serving	corporate, institutional,	public	sector	and	private	banking	clients;	and	Citigroup's	regional consumer	banks	which	provide	traditional	banking	services,	including	branded cards	as	well	as	small	and	middle	market	commercial	banking.	It	is	anticipated that	Citicorp	will	focus	on	its	unique	competitive	advantage	of	having	a	strong presence	in	the	fastest-growing	areas	of	the	world.

# Citi	Holdings

Citi	Holdings	will	have	three	primary	segments:	brokerage	and	asset management,	local	consumer	finance	and	a	special	asset	pool.	Citigroup continues	to	believe	that	many	of	Citi	Holdings'	businesses	are	attractive	long- term	businesses	with	strong	market	positions,	but	they	do	not	sufficiently enhance	the	capabilities	of	Citigroup's	core	businesses.	Citi	Holdings	will continue	to	focus	on	risk	management	and	credit	quality	as	it	seeks	to	build	value in	these	businesses.

# Exchange	Offer	and	U.S.	Government	Exchange

On	February	27,	2009,	Citigroup	announced	an	exchange	offer	of	its	common stock	for	up	to	$27.5	billion	of	its	existing	preferred	securities	and	trust	preferred securities	at	a	conversion	price	of	$3.25	per	share.	The	U.S.	government	will match	this	exchange	up	to	a	maximum	of	$25	billion	of	its	preferred	stock	at	the same	conversion	price.	As	announced,	the	transactions	will	increase	the Company's	tangible	common	equity	(TCE).	The	transactions	will	require	no additional	U.S.	government	investment	in	Citigroup	and	will	not	change	the Company's	overall	strategy	or	operations.	In	addition,	the	transactions	will	not change	the	Company's	Tier	1	Capital	Ratio	of	11.9%	as	of	December	31,	2008. In	connection	with	the	transactions,	Citigroup	will	suspend	dividends	on	its preferred	securities	(other	than	its	trust	preferred	securities)	and,	as	a	result,	on its	common	stock.	Full	implementation	of	the	proposed	exchange	offer	is	subject to	approval	of	Citigroup's	shareholders	and	participation	by	holders	of Citigroup's	preferred	stock	and	trust	preferred	securities,	which	cannot	be guaranteed.	See	also	"Risk	Factors"	on	page	47.

•	Returning	to	profitability

•	Risk	reduction	and	mitigation

•	Implementation	and	management	of	TARP	and	TARP	funds

•	Expense	reduction

•	Headcount	reduction

•	Asset	reduction

•	Implementing	organizational	changes/management	realignment

# Economic	Environment

Citigroup's	financial	results	are	closely	tied	to	the	global	economic	environment. The	global	markets	are	experiencing	the	impact	of	a	significant	U.S.	and international	economic	downturn.	This	is	restricting	the	Company's	growth opportunities	both	domestically	and	internationally.	Should	economic	conditions not	improve	or	further	deteriorate,	the	Company	could	experience	continued revenue	pressure	across	its	businesses	and	increased	costs	of	credit.	In	addition, continuing	deterioration	of	the	U.S.	or	global	real	estate	markets	could	adversely impact	the	Company's	revenues,	including	additional	losses	on	subprime	and other	exposures,	additional	losses	on	leveraged	loan	commitments	and	cost	of credit,	including	increased	credit	losses	in	mortgage-related	and	other	activities. Further	adverse	rating	actions	by	credit	rating	agencies	in	respect	of	structured credit	products	or	other	credit-related	exposures,	or	of	monoline	insurers,	could result	in	revenue	reductions	in	those	or	similar	securities.	See	"Risk	Factors"	on page	47	for	a	further	discussion	of	these	risks.

# Credit	Costs

We	believe	that	credit	costs	are	expected	to	increase	during	2009.

•	 As	we	go	into	the	first	half	of	2009,	we	expect	NCLs	for	our	consumer	portfolios	could	be	$1	billion	to	$2	billion	higher	each	quarter	when	compared	to	the	NCLs	in the	third	quarter	of	2008.	At	this	time	we	believe	that	we	will	be	at	the	higher	end	of	this	range.

•	 Our	assumption	on	unemployment	is	that	it	could	peak	as	late	as	the	first	half	of	2010.	This	implies	that	we	will	most	likely	continue	to	add	to	our	Consumer	reserves until	the	end	of	2009.

•	 Corporate	credit	is	inherently	difficult	to	predict	given	the	economic	environment.	It	is	expected	that	corporate	loan	default	rates	will	increase.	As	such,	we	expect	to continue	to	add	to	reserves	and	will	likely	see	higher	Corporate	NCLs.

A	detailed	review	and	outlook	for	each	of	our	business	segments,	as	of	December	31,	2008,	are	included	in	the	discussions	that	follow,	and	the	risks	are	more	fully discussed	on	pages	29	to	38.

Certain	significant	events	during	2008	had,	or	could	have,	an	effect	on Citigroup's	current	and	future	financial	condition,	results	of	operations,	liquidity and	capital	resources.	These	events	are	summarized	below	and	discussed	in	more detail	throughout	this	MD&A.

# TARP	AND	OTHER	REGULATORY	PROGRAMS

# Issuance	of	$25	Billion	of	Perpetual	Preferred	Stock	and	a	Warrant	to Purchase	Common	Stock	under	TARP

On	October	28,	2008,	Citigroup	raised	$25	billion	through	the	sale	of	non-voting perpetual,	cumulative	preferred	stock	and	a	warrant	to	purchase	common	stock to	the	UST	as	part	of	the	UST	Troubled	Asset	Relief	Program	(TARP)	Capital Purchase	Program.	All	of	the	proceeds	were	treated	as	Tier	1	Capital	for regulatory	purposes.

# Additional	Issuance	of	$20	Billion	of	Perpetual	Preferred	Stock	and	a	Warrant to	Purchase	Common	Stock	under	TARP

On	December	31,	2008,	related	to	the	U.S.	Government	Loss-Sharing Agreement	described	below,	Citigroup	raised	an	additional	$20	billion	through the	sale	of	non-voting	perpetual,	cumulative	preferred	stock	and	a	warrant	to purchase	common	stock	to	the	UST	as	part	of	TARP.	All	of	the	proceeds	were treated	as	Tier	1	Capital	for	regulatory	purposes.

# U.S.	Government	Loss-Sharing	Agreement

On	January	15,	2009,	Citigroup	entered	into	a	definitive	agreement	providing	for loss	sharing	by	the	UST,	FDIC	and	the	Federal	Reserve	Bank	of	New	York	on	a $301	billion	portfolio	of	Citigroup	assets	(valued	as	of	November	21,	2008).	In consideration	for	this	loss-sharing	agreement,	Citigroup	issued	$7.3	billion	of non-voting	perpetual,	cumulative	preferred	stock	and	a	warrant	to	purchase common	stock	to	the	UST	and	the	FDIC.	Of	the	issuance,	$3.5	billion	will	be treated	as	Tier	1	Capital	for	regulatory	purposes.

# Use	of	TARP	Proceeds

Citigroup	has	established	a	formal	process	for	its	use	of	the	TARP	proceeds which	is	directed	by	senior	executives	and	emphasizes	expanding	the	flow	of credit	and	strengthening	the	financial	system	in	the	United	States,	consistent with	the	objectives	of	TARP.	Citigroup's	first	quarterly	progress	report	regarding its	implementation	and	management	of	TARP	was	issued	on	February	3,	2009. See	"TARP	and	Other	Regulatory	Programs"	on	page	44.

# FDIC's	Temporary	Liquidity	Guarantee	Program

Under	the	terms	of	the	FDIC's	guarantee	program,	the	FDIC	will	guarantee,	until the	earlier	of	its	maturity	or	June	30,	2012,	certain	qualifying	senior	unsecured debt	issued	by	certain	Citigroup	entities	between	October	14,	2008	and	June	30, 2009	(proposed	to	be	extended	to	October	30,	2009),	in	amounts	up	to	125%	of the	qualifying	debt	for	each	qualifying	entity.	The	FDIC	will	charge	Citigroup	a fee	ranging	from	50	to	100	basis	points	in	accordance	with	a	prescribed	fee schedule	for	any	new	qualifying	debt	issued	with	the	FDIC	guarantee.	At December	31,	2008,	Citigroup	had	issued	$5.75	billion	of	long-term	debt	that	is covered	under	the	FDIC	guarantee,	with	$1.25	billion	maturing	in	2010	and	$4.5 billion	maturing	in	2011.	In	January	and	February	2009,	Citigroup	and	its affiliates	issued	an	additional	$14.9	billion	in	senior	unsecured	debt	under	this program.

In	addition,	Citigroup,	through	its	subsidiaries,	also	had	$26.0	billion	in commercial	paper	and	interbank	deposits	backed	by	the	FDIC	outstanding	as	of December	31,	2008.	FDIC	guarantees	of	commercial	paper	(and	interbank deposits)	cease	to	be	available	after	June	30,	2009	(proposed	to	be	extended	to October	30,	2009),	and	the	FDIC	charges	a	fee	ranging	from	50	to	100	basis points	in	connection	with	the	issuance	of	those	instruments.

# Lowering	of	Quarterly	Dividend	to	$0.01	Per	Share

In	accordance	with	various	TARP	programs,	commencing	in	2009,	Citigroup has	agreed	not	to	pay	common	stock	dividends	in	excess	of	$0.01	per	share	per quarter	for	three	years	without	the	consent	of	the	UST,	FDIC	and	the	Federal Reserve	Bank	of	New	York.

On	January	20,	2009,	Citigroup	declared	a	$0.01	quarterly	dividend	on	the Company's	common	stock.	This	dividend	was	paid	on	February	22,	2009	to stockholders	of	record	on	February	2,	2009.

For	additional	details	on	each	of	these	programs,	see	"TARP	and	Other Regulatory	Programs"	beginning	on	page	44	for	further	discussion.

# PRIVATE	AND	PUBLIC	ISSUANCES	OF	PREFERRED	AND	COMMON STOCK

During	the	first	quarter	of	2008,	Citigroup	issued	$12.5	billion	of	7% convertible	preferred	stock	in	a	private	offering,	$3.2	billion	of	6.5%	convertible preferred	stock	in	public	offerings,	and	$3.715	billion	of	8.125%	non-convertible preferred	stock	in	public	offerings.

In	the	second	quarter	of	2008,	Citigroup	raised	$8.0	billion	of	capital	through public	offerings	of	non-convertible	preferred	stock	and	issued	approximately $4.9	billion	of	common	stock.

In	total,	the	Company	raised	$32.3	billion	in	capital	in	private	and	public offerings	during	2008,	excluding	issuances	to	the	UST	under	TARP.	See	Note 21	on	page	172	for	further	information.

# ITEMS	IMPACTING	THE	SECURITIES	AND	BANKING	BUSINESS

# Securities	and	Banking	Significant	Revenue	Items	and	Risk	Exposure

|  | Pretax	Revenue | Pretax	Revenue |  |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  | (in\tmillions) | Marks |  |  | Risk\tExposure\n(in\tbillions) |
|  | 2008 | 2007^\t(1) | Dec.\t31,\n2008 | Dec.\t31,\n2007 | %\tChange |
| Sub-prime\trelated\tdirect\texposures^\t(2) | $(14,283) | $(18,312) | $14.1 | $37.3 | (62)% |
| Monoline\tinsurers\tCredit\tValuation\tAdjustment\t(CVA) | (5,736) | (967) | N/A | N/A | — |
| Highly\tleveraged\tloans\tand\tfinancing\tcommitments^\t(3) | (4,892) | (1,487) | 10.0 | 43.2 | (77) |
| Alt-A\tmortgage\tsecurities^\t(4) | (3,812) | — | 12.6 | 22.0 | (43) |
| Auction\tRate\tSecurities\t(ARS)^\t(5) | (1,733) | — | 8.8 | 8.0 | 10 |
| Commercial\tReal\tEstate\t(CRE)^\t(6) | (2,627) | — | 37.5 | 53.7 | (30) |
| Structured\tInvestment\tVehicles\t(SIVs) | (3,269) | — | 16.6 | 46.4 | (63) |
| CVA\ton\tCiti\tliabilities\tat\tfair\tvalue\toption | 4,558 | 888 | N/A | N/A | — |
| Total\tsignificant\trevenue\titems | $(31,794) | $(19,878) |  |  |  |

(1) Represents	the	third	and	fourth	quarters	of	2007,	reflecting	revenue	marks	since	the	commencement	of	the	current	credit	crisis.

(2) Net	of	impact	from	hedges	against	direct	subprime	asset-backed	securities	collateralized	debt	obligation	super	senior	positions.

(3) Net	of	underwriting	fees.

(5) Excludes	losses	of	$306	million	and	$87	million	in	the	third	and	fourth	quarters	of	2008,	respectively,	arising	from	the	ARS	legal	settlement.

(6) Excludes	CRE	positions	that	are	included	in	the	SIV	portfolio.

# Subprime-Related	Direct	Exposures

In	2008,	Securities	and	Banking	(S&B)	recorded	losses	of	$14.3	billion	pretax, net	of	hedges,	on	its	subprime-related	direct	exposures.	The	Company's remaining	$14.1	billion	in	U.S.	subprime	net	direct	exposure	in	S&B	at December	31,	2008	consisted	of	(i)	approximately	$12.0	billion	of	net	exposures to	the	super	senior	tranches	of	CDOs,	which	are	collateralized	by	asset-backed securities,	derivatives	on	asset-backed	securities	or	both,	and	(ii)	approximately $2.1	billion	of	subprime-related	exposures	in	its	lending	and	structuring business.	In	2007,	Citigroup	recorded	losses	of	$18.3	billion	pretax,	net	of hedges,	on	subprime-related	direct	exposures.	See	"Exposure	to	U.S.	Real Estate"	on	page	68	for	a	further	discussion	of	such	exposures	and	the	associated losses	recorded.

# Monoline	Insurers	Credit	Valuation	Adjustment	(CVA)

During	2008,	Citigroup	recorded	a	pretax	loss	on	CVA	of	$5.736	billion	on	its exposure	to	monoline	insurers.	CVA	is	calculated	by	applying	forward	default probabilities,	which	are	derived	using	the	counterparty's	current	credit	spread,	to the	expected	exposure	profile.	In	2007,	the	Company	recorded	pretax	losses	of $967	million.	The	majority	of	the	exposure	relates	to	hedges	on	super	senior positions	that	were	executed	with	various	monoline	insurance	companies.	See "Direct	Exposure	to	Monolines"	on	page	70	for	a	further	discussion.

# Highly	Leveraged	Loans	and	Financing	Commitments

Due	to	the	continued	dislocation	of	the	credit	markets	and	reduced	market interest	in	higher	risk/higher	yield	instruments	that	began	during	the	second	half of	2007,	liquidity	in	the	market	for	highly	leveraged	financings	has	been	very limited.	This	resulted	in	the	Company's	recording	pretax	losses	of	$4.892	billion on	funded	and	unfunded	highly	leveraged	finance	exposures	in	2008	and	$1.487 billion	in	2007.

Citigroup's	exposure	to	highly	leveraged	financings	totaled	$10.0	billion	at December	31,	2008	($9.1	billion	in	funded	and	$0.9	billion	in	unfunded commitments),	reflecting	a	decrease	of	$33.2	billion	from	December	31,	2007. See	"Highly	Leveraged	Financing	Commitments"	on	page	71	for	further discussion.

# Alt-A	Mortgage	Securities

In	2008,	Citigroup	recorded	pretax	losses	of	approximately	$3.812	billion,	net	of hedges,	on	Alt-A	mortgage	securities	held	in	S&B.	For	these	purposes,	Alt-A mortgage	securities	are	non-agency	residential	mortgage-backed	securities (RMBS)	where	(i)	the	underlying	collateral	has	weighted	average	FICO	scores between	680	and	720	or	(ii)	for	instances	where	FICO	scores	are	greater	than 720,	RMBS	have	30%	or	less	of	the	underlying	collateral	composed	of	full documentation	loans.

The	Company	had	$12.6	billion	in	Alt-A	mortgage	securities	at	December	31, 2008,	which	decreased	from	$22.0	billion	at	December	31,	2007.	Of	the	$12.6 billion,	$1.1	billion	was	classified	as	Trading	account	assets,	on	which	$2.201 billion	of	fair	value	losses,	net	of	hedging,	was	recorded	in	earnings,	and	$11.5 billion	was	classified	as	HTM	investments,	on	which	$1.611	billion	of	losses were	recorded	in	earnings	due	to	other-than-temporary	impairments.

# Auction	Rate	Securities	(ARS)

In	2008,	Citigroup	recorded	pretax	losses	of	approximately	$1.733	billion	on Auction	Rate	Securities	(ARS).	At	December	31,	2008,	the	Company's	exposure to	ARS	totaled	$8.8	billion	including	both	legacy	positions	and	ARS	purchased under	the	ARS	settlement	agreement	with	the	federal	and	state	regulators	(see "Other	Items"	on	page	13).	Of	the	$8.8	billion,	$5.5	billion	is	classified	as	held to	maturity	and	$3.3	billion	as	available	for	sale	(AFS).	The	$8.8	billion comprises	$3.7	billion	of	student	loan	ARS,	$3.2	billion	of	preference	share ARS	backed	by	municipal	or	other	taxable	securities,	$1.4	billion	of	municipal ARS,	and	$0.5	billion	of	ARS	backed	by	other	ABS.

# Commercial	Real	Estate

S&B's	commercial	real	estate	exposure	is	split	into	three	categories:	assets	held at	fair	value;	held	to	maturity/held	for	investment;	and	equity.	During	2008, pretax	losses	of	$2.6	billion	net	of	hedges	were	booked	on	exposures	recorded	at fair	value.	See	"Exposure	to	Commercial	Real	Estate"	on	page	69	for	a	further discussion.

# Structured	Investment	Vehicles	(SIVs)

On	December	13,	2007,	Citigroup	announced	a	commitment	to	provide	support facilities	to	its	Citi-advised	SIVs	for	the	purpose	of	resolving	the	uncertainty regarding	the	SIVs'	senior	debt	ratings.	As	a	result	of	this	commitment,	the Company	consolidated	the	SIVs'	assets	and	liabilities	onto	Citigroup's Consolidated	Balance	Sheet	as	of	December	2007.	This	resulted	in	an	increase of	assets	of	$59	billion.

On	February	12,	2008,	Citigroup	finalized	the	terms	of	these	support	facilities, which	took	the	form	of	a	commitment	to	provide	$3.5	billion	of	mezzanine capital	to	the	SIVs.	The	mezzanine	capital	facility	was	increased	by	$1.0	billion to	$4.5	billion,	with	the	additional	commitment	funded	during	the	fourth	quarter of	2008.	During	the	period	to	November	18,	2008,	Citigroup	recorded	$3.3 billion	of	trading	account	losses	on	SIV	assets.

To	complete	the	wind-down	of	the	SIVs,	Citigroup	committed	to	purchase	all remaining	assets	out	of	the	SIV	legal	vehicles	at	fair	value,	with	a	trade	date	of November	18,	2008.	Citigroup	funded	the	purchase	of	the	assets	by	assuming	the obligation	to	pay	amounts	due	under	the	medium-term	notes	issued	by	the	SIVs as	the	notes	mature.	The	assets	purchased	from	the	SIVs	and	the	liabilities assumed	by	the	Company	were	previously	recognized	at	fair	value	on	the Company's	balance	sheet	due	to	the	consolidation	of	the	SIV	legal	vehicles	in December	2007.

The	net	cash	funding	provided	by	Citigroup	for	the	asset	purchase	was	$0.3 billion.	As	of	December	31,	2008,	the	balance	for	these	repurchased	SIV	assets totaled	$16.6	billion,	of	which	$16.5	billion	is	classified	as	held	to	maturity.	See "Structured	Investment	Vehicles"	on	page	15	for	a	further	discussion.

# Credit	Valuation	Adjustment	on	Citi's	Liabilities	for	Which	Citi	Has Elected	the	Fair	Value	Option

Under	SFAS	157,	the	Company	is	required	to	use	its	own-credit	spreads	in determining	the	current	value	for	its	derivative	liabilities	and	all	other	liabilities for	which	it	has	elected	the	fair	value	option.	When	Citi's	credit	spreads	widen (deteriorate),	Citi	recognizes	a	gain	on	these	liabilities	because	the	value	of	the liabilities	has	decreased.	When	Citi's	credit	spreads	narrow	(improve),	Citi recognizes	a	loss	on	these	liabilities	because	the	value	of	the	liabilities	has increased.

During	2008,	the	Company	recorded	a	gain	of	approximately	$4.6	billion	on	its fair	value	option	liabilities	due	to	the	widening	of	the	Company's	credit	spreads. $2.49	billion	of	this	gain	was	due	to	a	change	in	methodology	for	estimating	the credit	valuation	adjustment	implemented	in	the	fourth	quarter.	As	of December	31,	2008,	the	Company	estimates	the	market	value	of	the	liabilities	by incorporating	the	Company's	credit	spreads	observed	in	the	bond	market	(cash spreads).	Prior	to	that	date,	the	Company	incorporated	the	Company's	credit default	swaps	spreads	in	the	valuation	of	these	liabilities.	For	further	discussion regarding	this	change,	see	"Significant	Accounting	Policies	and	Significant Estimates"	on	page	18.

# CREDIT	RESERVES

During	2008,	the	Company	recorded	a	net	build	of	$14.3	billion	to	its	credit reserves.	The	build	consisted	of	$10.8	billion	in	Consumer	($8.2	billion	in	North America	and	$2.6	billion	in	regions	outside	of	North	America),	$3.3	billion	in ICG	and	$249	million	in	GWM.

The	$8.2	billion	build	in	North	America	Consumer	included	additional	reserves for	the	increased	number	of	loan	modification	adjustments	to	customer	loans across	all	product	lines.	The	higher	credit	costs	primarily	reflected	a	weakening of	leading	credit	indicators,	including	higher	delinquencies	on	first	and	second mortgages,	unsecured	personal	loans,	credit	cards	and	auto	loans.	Reserves	also increased	due	to	trends	in	the	U.S.	macroeconomic	environment,	including	the housing	market	downturn	and	rising	unemployment	rates.

The	$2.6	billion	build	in	regions	outside	of	North	America	was	primarily	driven by	deterioration	in	Mexico,	Brazil,	the	U.K.,	Spain,	Greece	and	India. The	build	of	$3.3	billion	in	ICG	primarily	reflects	a	weakening	in	overall portfolio	credit	quality,	as	well	as	loan	loss	reserves	for	specific	counterparties. As	the	environment	for	consumer	credit	continues	to	deteriorate,	the	Company has	taken	additional	actions	to	manage	risks,	such	as	tightening	underwriting criteria	and	selectively	reducing	credit	lines.	However,	credit	losses	are	expected to	rise	through	2009	and	it	is	likely	that	the	Company's	loss	rates	may	exceed their	historical	peaks.

The	total	allowance	for	loan	losses	and	unfunded	lending	commitments	totaled $30.5	billion	at	December	31,	2008.

# GOODWILL

Based	on	the	results	of	goodwill	impairment	testing	as	of	December	31,	2008, Citigroup	recorded	a	pretax	charge	of	approximately	$9.6	billion	($8.7	billion after	tax)	in	the	fourth	quarter	of	2008	for	goodwill	impairments	related	to	its North	America	Consumer	Banking,	Latin	America	Consumer	Banking	and EMEA	Consumer	Banking	reporting	units.	This	charge	resulted	in	the	write-off of	the	entire	amount	of	goodwill	allocated	to	those	reporting	units.	However,	this charge	did	not	result	in	a	cash	outflow	or	negatively	affect	Tier	1	and	Total Regulatory	Capital	Ratios,	Tangible	Capital	or	the	Company's	liquidity	position. The	primary	cause	for	the	goodwill	impairment	in	the	above	reporting	units	was the	rapid	deterioration	in	the	financial	markets	as	well	as	in	the	global	economic outlook	particularly	during	the	period	beginning	mid-November	and	through year	end	December	2008.	This	deterioration	further	weakened	the	near-term prospects	for	the	financial	services	industry.	These	and	other	factors,	including the	increased	possibility	of	further	government	intervention,	also	resulted	in	the decline	in	the	Company's	market	capitalization	from	approximately	$90	billion at	July	1,	2008	and	approximately	$74	billion	at	October	31,	2008	to approximately	$36	billion	at	December	31,	2008.	See	"Significant	Accounting Policies	and	Significant	Estimates"	on	page	18	for	a	further	discussion	of goodwill.

# COST	REDUCTION	INITIATIVES

During	the	past	two	years,	Citigroup	has	undergone	several	cost	reduction initiatives.

# 2008	Re-Engineering	Projects

In	the	fourth	quarter	of	2008,	the	Company	recorded	restructuring	charges	of $1.797	billion	pretax	related	to	the	implementation	of	a	company-wide	re- engineering	plan.	This	initiative	will	generate	a	reduction	in	headcount	of approximately	20,600.	These	charges	are	reported	in	the	Restructuring	line	on the	Company's	Consolidated	Statement	of	Income,	and	are	recorded	in	each segment.

In	addition,	during	2008,	several	businesses	initiated	their	own	re-engineering projects	to	reduce	expenses.	A	total	expense	of	$1.732	billion	was	incurred generating	a	reduction	in	headcount	of	16,807.	These	repositioning	charges	are reported	in	the	lines	Compensation	and	benefits	and	Premises	and	equipment	on the	Company's	Consolidated	Statement	of	Income.	These	charges	were	recorded in	the	individual	segments.

# Structural	Expense	Review

In	2007,	the	Company	completed	a	review	of	its	structural	expense	base	in	a company-wide	effort	to	create	a	more	streamlined	organization,	reduce	expense growth,	and	provide	investment	funds	for	future	growth	initiatives.	As	a	result	of this	review,	a	pretax	restructuring	charge	of	$1.4	billion	was	recorded	in Corporate/Other	during	the	first	quarter	of	2007.	Additional	charges	of	$151 million	(net	of	changes	in	estimates)	were	recognized	in	subsequent	quarters throughout	2007	and	a	net	release	of	$31	million	was	recorded	in	2008	due	to	a change	in	estimates.	These	charges	are	reported	in	the	Restructuring	line	on	the Company's	Consolidated	Statement	of	Income.

Separate	from	these	restructuring	charges	were	additional	repositioning expenditures	of	$539	million	incurred	for	re-engineering	initiatives	taken	on	by several	businesses	to	further	reduce	expenses	beyond	the	company-wide initiatives.	These	repositioning	charges	are	included	in	the	lines	Compensation and	benefits	and	Premises	and	equipment	on	the	Company's	Consolidated Statement	of	Income.	These	charges	were	recorded	in	the	individual	segments.

# DIVESTITURES

# Sale	of	Citigroup's	German	Retail	Banking	Operations

On	December	5,	2008,	Citigroup	sold	its	German	retail	banking	operations	to Credit	Mutuel	for	Euro	5.2	billion	in	cash.	The	German	retail	bank's	operating net	earnings	accrued	in	2008	through	the	closing.	The	sale	resulted	in	an	after-tax gain	of	approximately	$3.9	billion,	including	the	after-tax	gain	on	the	foreign currency	hedge	of	$383	million	recognized	during	the	fourth	quarter	of	2008, and	was	recorded	in	Discontinued	Operations.	In	addition,	a	foreign	currency hedge	gain	of	$211	million	was	recorded	in	the	third	quarter	of	2008.

The	sale	does	not	include	the	corporate	and	investment	banking	business	or	the Germany-based	European	data	center.

See	Note	3	on	page	136	for	further	discussion	regarding	this	sale.

# Sale	of	CitiCapital

On	July	31,	2008,	Citigroup	sold	substantially	all	of	CitiCapital,	the	equipment finance	unit	in	North	America,	to	GE	Capital.	An	after-tax	net	loss	of	$305 million	($506	million	pretax)	was	recorded	in	2008	in	Discontinued	Operations on	the	Company's	Consolidated	Statement	of	Income.

# Sale	of	Upromise	Cards	Portfolio

During	2008,	Global	Cards	sold	substantially	all	of	the	Upromise	Cards portfolio	to	Bank	of	America	for	an	after-tax	gain	of	$127	million	($201	million pretax).	The	portfolio	sold	had	balances	of	approximately	$1.2	billion	of	credit card	receivables.

# Divestiture	of	Diners	Club	International

On	June	30,	2008,	Citigroup	completed	the	sale	of	Diners	Club	International (DCI)	to	Discover	Financial	Services,	resulting	in	an	after-tax	gain	of approximately	$56	million	($111	million	pretax).

Citigroup	will	continue	to	issue	Diners	Club	cards	and	support	its	brand	and products	through	ownership	of	its	many	Diners	Club	card	issuers	around	the world.

# Sale	of	CitiStreet

On	July	1,	2008,	Citigroup	and	State	Street	Corporation	completed	the	sale	of CitiStreet,	a	benefits	servicing	business,	to	ING	Group	in	an	all-cash	transaction valued	at	$900	million.	CitiStreet	is	a	joint	venture	formed	in	2000	which,	prior to	the	sale,	was	owned	50%	each	by	Citigroup	and	State	Street.	The	transaction closed	on	July	1,	2008	and	generated	an	after-tax	gain	of	$222	million	($347 million	pretax).

# Sale	of	Citigroup	Global	Services	Limited

In	2008,	Citigroup	sold	all	of	its	interest	in	Citigroup	Global	Services	Limited (CGSL)	to	Tata	Consultancy	Services	Limited	(TCS)	for	all-cash	consideration of	approximately	$515	million,	resulting	in	an	after-tax	gain	of	$192	million ($263	million	pretax).	CGSL	was	the	Citigroup	captive	provider	of	business process	outsourcing	services	solely	within	the	Banking	and	Financial	Services sector.

In	addition	to	the	sale,	Citigroup	signed	an	agreement	with	TCS	for	TCS	to provide,	through	CGSL,	process	outsourcing	services	to	Citigroup	and	its affiliates	in	an	aggregate	amount	of	$2.5	billion	over	a	period	of	9.5	years.

# Sale	of	Citigroup	Technology	Services	Limited

On	December	23,	2008,	Citigroup	announced	an	agreement	with	Wipro	Limited to	sell	all	of	Citigroup's	interest	in	Citi	Technology	Services	Ltd.,	Citigroup's India-based	captive	provider	of	technology	infrastructure	support	and	application development,	for	all-cash	consideration	of	approximately	$127	million.	A substantial	portion	of	the	proceeds	from	this	sale	will	be	recognized	over	the period	in	which	Citi	has	a	service	contract	with	Wipro	Limited.	This	transaction closed	on	January	20,	2009	and	a	loss	of	approximately	$7	million	was	booked	at that	time.

# Sale	of	Citi's	Nikko	Citi	Trust	and	Banking	Corporation

Citigroup	has	executed	a	definitive	agreement	to	sell	all	of	the	shares	of	Nikko Citi	Trust	and	Banking	Corporation	to	Mitsubishi	UFJ	Trust	and	Banking Corporation	(MUTB).	At	the	closing,	MUTB	will	pay	all-cash	consideration	of 25	billion	yen,	subject	to	certain	purchase	price	adjustments.	The	sale	is	expected to	close	on	or	around	April	1,	2009,	pending	regulatory	approvals	and	other closing	conditions,	and	result	in	an	estimated	after-tax	gain	of	$53	million	($89 million	pretax).

# OTHER	ITEMS

# Auction	Rate	Securities	Settlement

On	August	7,	2008,	Citigroup	announced	an	agreement	in	principle	with	state and	federal	regulators	under	which	it	agreed	to	offer	to	purchase	the	failed	ARS of	its	retail	clients	for	par	value.	This	agreement	resulted	in	a	$926	million	loss being	recorded	in	2008.

The	loss	comprises:	(1)	fines	of	$100	million	($50	million	to	the	State	of	New York	and	$50	million	to	the	other	state	regulatory	agencies);	(2)	losses	of	$425 million,	recorded	at	the	time	of	the	announcement,	reflecting	the	estimated difference	between	the	fair	value	and	par	value	of	the	securities	to	be	purchased; and	(3)	an	incremental	loss	of	$401	million	due	to	the	decline	in	value	of	these ARS	since	the	time	of	announcement.	The	securities	purchased	by	Citigroup under	this	agreement	have	a	notional	value	of	$6.1	billion.	The	purchase commitment	for	the	remaining	undelivered	securities	is	estimated	to	be approximately	$1.0	billion	as	of	December	31,	2008.	The	pretax	losses	of	$926 million	have	been	divided	equally	between	S&B	and	GWM,	both	in	North America.

# Income	Taxes

The	Company	recorded	an	income	tax	benefit	for	2008.	The	Company's effective	tax	rate	(benefit)	on	continuing	operations	was	(38.9)%	in	2008.	The 2008	effective	tax	rate	is	higher	than	35%	because	of	the	impact	of	indefinitely invested	international	earnings	and	other	permanent	differences	on	the	pretax loss.	The	2008	tax	rate	included	a	$994	million	tax	benefit	related	to	the restructuring	of	the	legal	vehicles	in	Japan.

# Sale	of	Redecard	Shares

In	the	first	quarter	of	2008,	Citigroup	sold	approximately	46.8	million	Redecard shares,	which	decreased	Citigroup's	ownership	in	Redecard	from	approximately 23.9%	to	approximately	17%.	An	after-tax	gain	of	$426	million	($661	million pretax)	was	recorded	in	the	Global	Cards	business	in	Latin	America.

# Lehman	Brothers	Holding,	Inc.	Bankruptcy	and	Related	Matters

On	September	15,	2008,	Lehman	Brothers	Holding,	Inc.	("LBHI"	and,	together with	its	subsidiaries,	"Lehman")	filed	for	Chapter	11	bankruptcy	in	U.S.	Federal Court.	A	number	of	LBHI	subsidiaries	have	subsequently	filed	bankruptcy	or similar	insolvency	proceedings	in	the	U.S.	and	other	jurisdictions.	Lehman's bankruptcy	caused	Citigroup	to	terminate	cash	management	and	foreign exchange	clearance	arrangements,	close	out	approximately	40,000	Lehman foreign	exchange,	derivative	and	other	transactions	and	quantify	other exposures.	Citigroup	expects	to	file	claims	in	the	relevant	Lehman	bankruptcy proceedings,	as	appropriate.

# Visa	Restructuring	and	Litigation	Matters

During	2008,	Citigroup	recorded	a	$723	million	increase	to	pretax	income resulting	from	events	surrounding	Visa.	These	events	included:	(i)	a	$359 million	gain	on	the	redemption	of	Visa	shares	primarily	recorded	in	U.S. Consumer;	(ii)	a	$108	million	gain	from	an	adjustment	of	the	regional	share allocation	related	to	the	fourth	quarter	2007	Visa	reorganization,	primarily recorded	in	International	Consumer;	(iii)	a	$157	million	reduction	of	litigation reserves	that	were	originally	booked	in	the	fourth	quarter	of	2007	primarily	in U.S.	Consumer;	and	(iv)	a	gain	on	the	sale	of	Visa	shares	of	$99	million.

# Write-Down	of	Intangible	Asset	Related	to	Old	Lane

As	a	result	of	Old	Lane	Partners,	L.P.	and	Old	Lane	Partners	GP,	LLC	notifying their	investors	that	they	would	have	the	opportunity	to	redeem	their	investments in	the	hedge	fund,	without	restriction	effective	July	31,	2008,	ICG	recorded	a pretax	write-down	of	$202	million	on	intangible	assets	related	to	this	multi- strategy	hedge	fund	during	the	first	quarter	of	2008.	By	April	2008,	substantially all	unaffiliated	investors	had	notified	Old	Lane	of	their	intention	to	redeem	their investments.	See	Note	19	on	page	166	for	additional	information.

# Write-Down	of	Intangible	Asset	Related	to	Nikko	Asset	Management

During	the	fourth	quarter	of	2008,	Citigroup	performed	an	impairment	analysis of	Japan's	Nikko	Asset	Management	fund	contracts	which	represent	the	rights	to manage	and	collect	fees	on	investor	assets	and	are	accounted	for	as	indefinite- lived	intangible	assets.	As	a	result,	an	impairment	loss	of	$937	million	pretax ($607	million	after-tax)	was	recorded	in	ICG.

# Nikko	Cordial

Citigroup	began	consolidating	Nikko	Cordial's	financial	results	and	the	related minority	interest	on	May	9,	2007,	when	Nikko	Cordial	became	a	61%-owned subsidiary.	Later	in	2007,	Citigroup	increased	its	ownership	stake	in	Nikko Cordial	to	approximately	68%.	Nikko	Cordial	results	are	included	in	Citigroup's Securities	and	Banking	and	Global	Wealth	Management	businesses. On	January	29,	2008,	Citigroup	completed	the	acquisition	of	the	remaining Nikko	Cordial	shares	that	it	did	not	already	own	by	issuing	175	million Citigroup	common	shares	(approximately	$4.4	billion	based	on	the	exchange terms)	in	exchange	for	those	remaining	Nikko	Cordial	shares.	The	share exchange	was	completed	following	the	listing	of	Citigroup's	common	shares	on the	Tokyo	Stock	Exchange	on	November	5,	2007.

# Transaction	with	Banco	de	Chile

In	2007,	Citigroup	and	Quiñenco	entered	into	a	definitive	agreement	to	establish a	strategic	partnership	that	combines	Citigroup	operations	in	Chile	with	Banco de	Chile's	local	banking	franchise	to	create	a	banking	and	financial	services institution	with	approximately	20%	market	share	of	the	Chilean	banking industry.	The	transaction	closed	on	January	1,	2008.

Under	the	agreement,	Citigroup	sold	its	Chilean	operations	and	other	assets	in exchange	for	an	approximate	32.96%	stake	in	LQIF,	a	wholly	owned	subsidiary of	Quiñenco	that	controls	Banco	de	Chile.	This	investment	is	accounted	for under	the	equity	method	of	accounting.	As	part	of	the	overall	transaction, Citigroup	also	acquired	the	U.S.	branches	of	Banco	de	Chile	for	approximately $130	million.	The	new	partnership	calls	for	active	participation	by	Citigroup	in the	management	of	Banco	de	Chile	including	board	representation	at	both	LQIF and	Banco	de	Chile.	In	addition,	as	part	of	the	definitive	agreement,	Citigroup and	Quiñenco	agreed	on	certain	transactions	that	could	increase	Citigroup's stake	in	LQIF	to	approximately	50%.	Specifically,	Quiñenco	has	a	put	that would	require	Citigroup	to	buy	an	additional	approximately	8.5%	stake	in	LQIF. Citigroup	has	a	call	on,	or	the	option	to	buy,	this	increased	ownership	percentage as	well.	Further,

Citigroup	has	an	option	to	buy	an	additional	approximately	8.5%	in	LQIF, resulting	in	a	potential	50%	ownership	stake	in	LQIF.	Each	of	these	potential additional	acquisitions	will	be	exercisable	in	2010.

# SUBSEQUENT	EVENT

# Joint	Venture	with	Morgan	Stanley

On	January	13,	2009,	Citigroup	reached	a	definitive	agreement	to	sell	its	Smith Barney	business,	which	includes	Smith	Barney	in	the	U.S.,	Smith	Barney	in Australia	and	Quilter	in	the	U.K.,	to	a	joint	venture	to	be	formed	with	Morgan Stanley	in	exchange	for	a	49%	stake	in	the	joint	venture	and	an	upfront	cash payment	of	$2.7	billion	from	Morgan	Stanley.	The	joint	venture,	to	be	called Morgan	Stanley	Smith	Barney,	will	combine	the	sold	businesses	with	Morgan Stanley's	Global	Wealth	Management	Group.	It	will	not	include	Citi	Private Bank,	Nikko	Cordial	Securities	or	Citigroup's	bank	branch-based	financial advisors.

The	joint	venture's	combined	businesses	have	more	than	20,000	financial advisors,	1,000	offices,	$1.7	trillion	in	client	assets	at	December	31,	2008,	$14.9 billion	in	2008	pro	forma	combined	revenues,	and	$2.8	billion	in	2008	pro	forma combined	pretax	profit.

Upon	closing,	and	following	the	cash	payment	of	$2.7	billion	from	Morgan Stanley	to	Citigroup,	Morgan	Stanley	will	own	51%	and	Citi	will	own	49%	of the	joint	venture.	Morgan	Stanley	and	Citi	will	have	various	purchase	and	sale rights	for	the	joint	venture,	but	Citi	is	expected	to	retain	the	full	amount	of	its stake	at	least	through	year	three	and	to	continue	to	own	a	significant	stake	in	the joint	venture	at	least	through	year	five.

The	transaction,	which	is	subject	to	and	contingent	upon	regulatory	approvals and	other	customary	closing	conditions,	is	expected	to	close	in	the	third	quarter of	2009.	At	closing,	and	based	on	current	estimates	of	the	fair	value	of	the	joint venture,	the	Company	estimates	that	it	will	recognize	a	pretax	gain	of approximately	$9.5	billion	(approximately	$5.8	billion	after	tax)	and	will generate	approximately	$6.5	billion	of	tangible	common	equity.

During	2007,	the	Company	recorded	a	net	build	of	$6.9	billion	to	its	credit reserves.	The	build	consisted	of	$6.2	billion	in	Consumer	($5.0	billion	in	North America	Consumer	and	$1.2	billion	in	regions	outside	North	America),	$562 million	in	ICG	and	$100	million	in	GWM.

The	$5.0	billion	build	in	North	America	Consumer	reflected	a	weakening	of leading	credit	indicators	including	delinquencies	on	first	and	second	mortgages and	deterioration	in	the	housing	market	(approximately	$3.0	billion),	a	downturn in	other	economic	trends	including	unemployment	and	GDP,	as	well	as	the impact	of	housing	market	deterioration,	affecting	all	other	portfolios	($1.3 billion),	and	a	change	in	the	estimate	of	loan	losses	inherent	in	the	portfolio,	but not	yet	visible	in	delinquency	statistics	(approximately	$700	million).

The	$1.2	billion	build	in	regions	outside	North	America	included	a	change	in estimate	of	loan	losses	inherent	in	the	portfolio	but	not	yet	visible	in	delinquency statistics	(approximately	$600	million),	along	with	volume	growth	and	credit deterioration	in	certain	countries.	With	the	exception	of	Mexico,	Japan	and	India, the	international	consumer	credit	environment	remained	generally	stable. The	build	of	$562	million	in	ICG	primarily	reflected	a	slight	weakening	in overall	portfolio	credit	quality,	as	well	as	loan	loss	reserves	for	specific counterparties.	The	loan	loss	reserves	for	specific	counterparties	include	$327 million	for	subprime-related	direct	exposures.

The	Company	recorded	an	income	tax	benefit	for	2007.	The	effective	tax	rate	of (321.9)%	primarily	resulted	from	the	pretax	losses	in	the	Company's	S&B	and North	America	Consumer	Banking	businesses	(the	U.S.	is	a	higher	tax jurisdiction).	In	addition,	the	tax	benefits	of	permanent	differences,	including	the tax	benefit	for	not	providing	U.S.	income	taxes	on	the	earnings	of	certain	foreign subsidiaries	that	are	indefinitely	invested,	favorably	affected	the	Company's effective	tax	rate.

On	December	13,	2007,	Citigroup	announced	its	decision	to	commit	to	provide	a support	facility	that	would	resolve	uncertainties	regarding	senior	debt	repayment facing	the	Citi-advised	Structured	Investment	Vehicles	(SIVs).	As	a	result	of	the Company's	commitment,	which	was	not	legally	required,	Citigroup	consolidated the	assets	and	liabilities	of	the	SIVs	as	of	December	31,	2007.	This	resulted	in	an increase	of	assets	of	$59	billion.

# ACQUISITIONS

# North	America

# Acquisition	of	ABN	AMRO	Mortgage	Group

In	2007,	Citigroup	acquired	ABN	AMRO	Mortgage	Group	(AAMG),	a subsidiary	of	LaSalle	Bank	Corporation	and	ABN	AMRO	Bank	N.V.	AAMG	is a	national	originator	and	servicer	of	prime	residential	mortgage	loans.	As	part	of this	acquisition,	Citigroup	purchased	approximately	$12	billion	in	assets, including	$3	billion	of	mortgage	servicing	rights,	which	resulted	in	the	addition of	approximately	1.5	million	servicing	customers.	Results	for	AAMG	are included	in	Citigroup's	North	America	Consumer	Banking	business	from March	1,	2007	forward.

# Acquisition	of	Old	Lane	Partners,	L.P.

In	2007,	the	Company	completed	the	acquisition	of	Old	Lane	Partners,	L.P.	and Old	Lane	Partners,	GP,	LLC	(Old	Lane).	Old	Lane	was	the	manager	of	a	global, multi-strategy	hedge	fund	and	a	private	equity	fund	with	total	assets	under management	and	private	equity	commitments	of	approximately	$4.5	billion. Results	for	Old	Lane	are	included	within	ICG	from	July	2,	2007	forward.

# Acquisition	of	BISYS

In	2007,	the	Company	completed	its	acquisition	of	BISYS	Group,	Inc.	(BISYS) for	$1.47	billion	in	cash.	Citigroup	completed	the	sale	of	the	Retirement	and Insurance	Services	Divisions	of	BISYS,	making	the	net	cost	of	the	transaction	to Citigroup	approximately	$800	million.	Citigroup	retained	the	Fund	Services	and Alternative	Investment	services	businesses	of	BISYS,	which	provides administrative	services	for	hedge	funds,	mutual	funds	and	private	equity	funds. Results	for	BISYS	are	included	in	Citigroup's	Transaction	Services	business from	August	1,	2007	forward.

# Acquisition	of	Automated	Trading	Desk

In	2007,	Citigroup	completed	its	acquisition	of	Automated	Trading	Desk	(ATD), a	leader	in	electronic	market	making	and	proprietary	trading,	for	approximately $680	million	($102.6	million	in	cash	and	approximately	11.17	million	shares	of Citigroup	common	stock).	Results	for	ATD	are	included	in	Citigroup's	Securities and	Banking	business	from	October	3,	2007	forward.

# Latin	America

# Acquisition	of	Grupo	Financiero	Uno

In	2007,	Citigroup	completed	its	acquisition	of	Grupo	Financiero	Uno	(GFU), the	largest	credit	card	issuer	in	Central	America,	and	its	affiliates,	with	$2.2 billion	in	assets.	The	results	for	GFU	are	included	in	Citigroup's	Global	Cards and	Latin	America	Consumer	Banking	businesses	from	March	5,	2007	forward.

# Acquisition	of	Grupo	Cuscatlán

In	2007,	Citigroup	completed	the	acquisition	of	the	subsidiaries	of	Grupo Cuscatlán	for	$1.51	billion	($755	million	in	cash	and	14.2	million	shares	of Citigroup	common	stock)	from	Corporacion	UBC	Internacional	S.A.	Grupo.	The results	of	Grupo	Cuscatlán	are	included	from	May	11,	2007	forward	and	are recorded	in	Latin	America	Consumer	Banking.

# Acquisition	of	Bank	of	Overseas	Chinese

In	2007,	Citigroup	completed	its	acquisition	of	Bank	of	Overseas	Chinese (BOOC)	in	Taiwan	for	approximately	$427	million.	Results	for	BOOC	are included	in	Citigroup's	Asia	Consumer	Banking,	Global	Cards	and	Securities and	Banking	businesses	from	December	1,	2007	forward.

# Acquisition	of	Quilter

In	2007,	the	Company	completed	the	acquisition	of	Quilter,	a	U.K.	wealth advisory	firm,	from	Morgan	Stanley.	Quilter's	results	are	included	in	Citigroup's Smith	Barney	business	from	March	1,	2007	forward.	Quilter	is	being	disposed	of as	part	of	the	sale	of	Smith	Barney	to	Morgan	Stanley	described	in	Subsequent Events.

# Acquisition	of	Egg

In	2007,	Citigroup	completed	its	acquisition	of	Egg	Banking	plc	(Egg),	a	U.K. online	financial	services	provider,	from	Prudential	PLC	for	approximately	$1.39 billion.	Results	for	Egg	are	included	in	Citigroup's	Global	Cards	and	EMEA Consumer	Banking	businesses	from	May	1,	2007	forward.

# Purchase	of	20%	Equity	Interest	in	Akbank

In	2007,	Citigroup	completed	its	purchase	of	a	20%	equity	interest	in	Akbank, the	second-largest	privately	owned	bank	by	assets	in	Turkey	for	approximately $3.1	billion.	This	investment	is	accounted	for	using	the	equity	method	of accounting.

Sabanci	Holding,	a	34%	owner	of	Akbank	shares,	and	its	subsidiaries	have granted	Citigroup	a	right	of	first	refusal	or	first	offer	over	the	sale	of	any	of	their Akbank	shares	in	the	future.	Subject	to	certain	exceptions,	including	purchases from	Sabanci	Holding	and	its	subsidiaries,	Citigroup	has	otherwise	agreed	not	to increase	its	percentage	ownership	in	Akbank.

# Sale	of	MasterCard	Shares

In	2007,	the	Company	recorded	a	$367	million	after-tax	gain	($581	million pretax)	on	the	sale	of	approximately	4.9	million	MasterCard	Class	B	shares	that had	been	received	by	Citigroup	as	a	part	of	the	MasterCard	initial	public	offering completed	in	June	2006.	The	gain	was	recorded	in	the	following	businesses:

|  |  | 2007 |  | 2006 |
| :--- | :--- | :--- | :--- | :--- |
|  | 2007 | After- | 2006 | After- |
|  | Pretax | tax | Pretax | tax |
| In\tmillions\tof\tdollars | total | total | total | total |
| Global\tCards | $466 | $296 | $94 | $59 |
| Consumer\tBanking | 96 | 59 | 27 | 18 |
| ICG | 19 | 12 | 2 | 1 |
| Total | $581 | $367 | $123 | $78 |

# Redecard	IPO

In	2007,	Citigroup	(a	31.9%	shareholder	in	Redecard	S.A.,	the	only	merchant acquiring	company	for	MasterCard	in	Brazil)	sold	approximately	48.8	million Redecard	shares	in	connection	with	Redecard's	initial	public	offering	in	Brazil. Following	the	sale	of	these	shares,	Citigroup	retained	approximately	23.9% ownership	in	Redecard.	An	after-tax	gain	of	approximately	$469	million	($729 million	pretax)	was	recorded	in	Citigroup's	2007	financial	results	in	the	Global Cards	business.

In	2007,	Visa	USA,	Visa	International	and	Visa	Canada	were	merged	into	Visa Inc.	(Visa).	As	a	result	of	that	reorganization,	Citigroup	recorded	a	$534	million (pretax)	gain	on	its	holdings	of	Visa	International	shares	primarily	recognized	in the	Consumer	Banking	business.	The	shares	were	then	carried	on	Citigroup's balance	sheet	at	the	new	cost	basis.	In	addition,	Citigroup	recorded	a	$306 million	(pretax)	charge	related	to	certain	of	Visa	USA's	litigation	matters primarily	recognized	in	the	North	America	Consumer	Banking	business.

# ACCOUNTING	CHANGES

# Adoption	of	SFAS	157—Fair	Value	Measurements

The	Company	elected	to	adopt	SFAS	No.	157,	Fair	Value	Measurements	(SFAS 157),	as	of	January	1,	2007.	SFAS	157	does	not	determine	or	affect	the circumstances	under	which	fair	value	measurements	are	used,	but	defines	fair value,	expands	disclosure	requirements	around	fair	value	and	specifies	a hierarchy	of	valuation	techniques	based	on	whether	the	inputs	to	those	valuation techniques	are	observable	or	unobservable.	Observable	inputs	reflect	market	data obtained	from	independent	sources,	while	unobservable	inputs	reflect	the Company's	market	assumptions.	These	two	types	of	inputs	create	the	following fair	value	hierarchy:

•	Level	1–Quoted	prices	for	identical	instruments	in	active	markets. •	Level	2–Quoted	prices	for	similar	instruments	in	active	markets;	quoted	prices for	identical	or	similar	instruments	in	markets	that	are	not	active;	and	model- derived	valuations	in	which	all	significant	inputs	and	significant	value	drivers are	observable	in	active	markets.

•	Level	3–Valuations	derived	from	valuation	techniques	in	which	one	or	more significant	inputs	or	significant	value	drivers	are	unobservable.

This	hierarchy	requires	the	Company	to	use	observable	market	data,	when available,	and	to	minimize	the	use	of	unobservable	inputs	when	determining	fair value.

For	some	products	or	in	certain	market	conditions,	observable	inputs	may	not be	available.	For	example,	during	the	market	dislocations	that	occurred	in	the second	half	of	2007,	and	continued	throughout	2008,	certain	markets	became illiquid,	and	some	key	inputs	used	in	valuing	certain	exposures	were unobservable.	When	and	if	these	markets	are	liquid,	the	valuation	of	these exposures	will	use	the	related	observable	inputs	available	at	that	time	from	these markets.

Under	SFAS	157,	Citigroup	is	required	to	take	into	account	its	own	credit	risk when	measuring	the	fair	value	of	derivative	positions	as	well	as	other	liabilities for	which	it	has	elected	fair	value	accounting	under	SFAS	155	Accounting	for Certain	Hybrid	Financial	Instruments	(SFAS	155)	and	SFAS	159,	The	Fair Value	Option	for	Financial	Assets	and	Financial	Liabilities	(SFAS	159),	after taking	into	consideration	the	effects	of	credit-risk	mitigants.	The	adoption	of SFAS	157	has	also	resulted	in	some	other	changes	to	the	valuation	techniques used	by	Citigroup	when	determining	the	fair	value	of	derivatives,	most	notably changes	to	the	way	that	the	probability	of	default	of	a	counterparty	is	factored	in, and	the	elimination	of	a	derivative	valuation	adjustment	which	is	no	longer necessary	under	SFAS	157.	The	cumulative	effect	at	January	1,	2007	of	making these	changes	was	a	gain	of	$250	million	after	tax	($402	million	pretax),	or $0.05	per	diluted	share,	which	was	recorded	in	the	2007	first	quarter	earnings within	the	S&B	business.

SFAS	157	also	precludes	the	use	of	block	discounts	for	instruments	traded	in an	active	market,	which	were	previously	applied	to	large	holdings	of	publicly traded	equity	securities,	and	requires	the	recognition	of	trade-date	gains	related to	certain	derivative	trades	that	use	unobservable	inputs	in	determining	their	fair value.	Previous	accounting	guidance	allowed	the	use	of	block	discounts	in certain	circumstances	and	prohibited	the	recognition	of	day-one	gains	on	certain derivative	trades	when	determining	the	fair	value	of	instruments	not	traded	in	an active	market.	The	cumulative	effect	of	these	changes	resulted	in	an	increase	to January	1,	2007	Retained	earnings	of	$75	million.

# Adoption	of	SFAS	159—Fair	Value	Option

In	conjunction	with	the	adoption	of	SFAS	157,	the	Company	also	adopted	SFAS 159,	as	of	January	1,	2007.	SFAS	159	provides	for	an	election	by	the	Company, on	an	instrument-by-instrument	basis	for	most	financial	assets	and	liabilities	to be	reported	at	fair	value	with	changes	in	fair	value	reported	in	earnings.	After	the initial	adoption,	the	election	is	made	at	the	time	of	the	acquisition	of	a	financial asset,	financial	liability	or	a	firm	commitment,	and	it	may	not	be	revoked.	SFAS 159	provides	an	opportunity	to	mitigate	volatility	in	reported	earnings	that resulted	prior	to	its	adoption	from	being	required	to	apply	fair	value	accounting to	certain	economic	hedges	(e.g.,	derivatives)	while	having	to	measure	the	assets and	liabilities	being	economically	hedged	using	an	accounting	method	other	than fair	value.

Under	the	SFAS	159	transition	provisions,	the	Company	elected	to	apply	fair value	accounting	to	certain	financial	instruments	held	at	January	1,	2007	with future	changes	in	value	reported	in	earnings.	The	adoption	of	SFAS	159	resulted in	an	after-tax	decrease	to	January	1,	2007	retained	earnings	of	$99	million ($157	million	pretax).	See	Note	27	to	the	Consolidated	Financial	Statements	on page	202	for	additional	information.

# SIGNIFICANT	ACCOUNTING	POLICIES	AND	SIGNIFICANT	ESTIMATES

Note	1	to	the	Consolidated	Financial	Statements	on	page	122	contains	a summary	of	the	Company's	significant	accounting	policies,	including	a discussion	of	recently	issued	accounting	pronouncements.	These	policies,	as	well as	estimates	made	by	management,	are	integral	to	the	presentation	of	the Company's	financial	condition.	While	all	of	these	policies	require	a	certain	level of	management	judgment	and	estimates,	this	section	highlights	and	discusses	the significant	accounting	policies	that	require	management	to	make	highly	difficult, complex	or	subjective	judgments	and	estimates,	at	times	regarding	matters	that are	inherently	uncertain	and	susceptible	to	change.	Management	has	discussed each	of	these	significant	accounting	policies,	the	related	estimates	and	its judgments	with	the	Audit	and	Risk	Management	Committee	of	the	Board	of Directors.	Additional	information	about	these	policies	can	be	found	in	Note	1	to the	Consolidated	Financial	Statements	on	page	122.

# VALUATIONS	OF	FINANCIAL	INSTRUMENTS

The	Company	holds	fixed	income	and	equity	securities,	derivatives,	retained interests	in	securitizations,	investments	in	private	equity	and	other	financial instruments.	In	addition,	the	Company	purchases	securities	under	agreements	to resell	and	sells	securities	under	agreements	to	repurchase.	The	Company	holds its	investments,	trading	assets	and	liabilities,	and	resale	and	repurchase agreements	on	the	balance	sheet	to	meet	customer	needs,	to	manage	liquidity needs	and	interest	rate	risks,	and	for	proprietary	trading	and	private	equity investing.

Substantially	all	of	these	assets	and	liabilities	are	reflected	at	fair	value	on	the Company's	balance	sheet.	In	addition,	certain	loans,	short-term	borrowings, long-term	debt	and	deposits	as	well	as	certain	securities	borrowed	and	loaned positions	that	are	collateralized	with	cash	are	carried	at	fair	value.	In	total, approximately	33.2%	and	38.9%	of	assets,	and	19.9%	and	23.1%	of	liabilities, are	accounted	for	at	fair	value	as	of	December	31,	2008	and	2007,	respectively. When	available,	the	Company	generally	uses	quoted	market	prices	to determine	fair	value,	and	classifies	such	items	within	Level	1	of	the	fair	value hierarchy	established	under	SFAS	157	(see	"Events	in	2007—Accounting Changes"	above).	If	quoted	market	prices	are	not	available,	fair	value	is	based upon	internally	developed	valuation	models	that	use,	where	possible,	current market-based	or	independently	sourced	market	parameters,	such	as	interest	rates, currency	rates,	option	volatilities,	etc.	Where	a	model	is	internally	developed	and used	to	price	a	significant	product,	it	is	subject	to	validation	and	testing	by independent	personnel.	Such	models	are	often	based	on	a	discounted	cash	flow analysis.

Items	valued	using	such	internally	generated	valuation	techniques	are	classified according	to	the	lowest	level	input	or	value	driver	that	is	significant	to	the valuation.	Thus,	an	item	may	be	classified	in	Level	3	even	though	some	readily observable	inputs	are	used	in	the	valuation.

As	seen	during	the	second	half	of	2007,	the	credit	crisis	has	caused	some markets	to	become	illiquid,	thus	reducing	the	availability	of	certain	observable data	used	by	the	Company's	valuation	techniques.	This	illiquidity	continued through	2008.	When	or	if	liquidity	returns	to	these	markets,	the	valuations	will revert	to	using	the	related	observable	inputs	in	verifying	internally	calculated values.	For	additional	information	on	Citigroup's	fair	value	analysis,	see "Managing	Global	Risk"	and	"Balance	Sheet	Review"	on	page	78.

# Recognition	of	Changes	in	Fair	Value

Changes	in	the	valuation	of	the	trading	assets	and	liabilities,	as	well	as	all	other assets	(excluding	available-for-sale	securities)	and	liabilities	carried	at	fair	value are	recorded	in	the	Consolidated	Statement	of	Income.	Changes	in	the	valuation of	available-for-sale	securities,	other	than	write-offs,	generally	are	recorded	in Accumulated	other	comprehensive	income	(loss),	which	is	a	component	of Stockholders'	equity	on	the	Consolidated	Balance	Sheet.	A	full	description	of	the Company's	related	policies	and	procedures	can	be	found	in	Notes	1,	26,	27	and 28	to	the	Consolidated	Financial	Statements	on	pages	122,	192,	202	and	205, respectively.

# Evaluation	of	Other-than-Temporary	Impairment

The	Company	conducts	periodic	reviews	to	identify	and	evaluate	each investment	that	has	an	unrealized	loss,	in	accordance	with	FASB	Staff	Position No.	115-1,	The	Meaning	of	Other-Than	Temporary	Impairment	and	Its Application	to	Certain	Investments	(FSP	FAS	115-1).	An	unrealized	loss	exists when	the	current	fair	value	of	an	individual	security	is	less	than	its	amortized cost	basis.	Unrealized	losses	that	are	determined	to	be	temporary	in	nature	are recorded,	net	of	tax,	in	Accumulated	other	comprehensive	income	(AOCI)	for available-for-sale	securities,	while	such	losses	related	to	held-to-maturity securities	are	not	recorded,	as	these	investments	are	carried	at	their	amortized cost	(less	any	permanent	impairment).	For	securities	transferred	to	held-to- maturity	from	Trading	account	assets,	amortized	cost	is	defined	as	the	fair-value amount	of	the	securities	at	the	date	of	transfer.	For	securities	transferred	to	held- to-maturity	from	available-for-sale,	amortized	cost	is	defined	as	the	original purchase	cost,	plus	or	minus	any	accretion	or	amortization	of	interest,	less	any impairment	recognized	in	earnings.

Regardless	of	the	classification	of	the	securities	as	available-for-sale	or	held-to- maturity,	the	Company	has	assessed	each	position	for	credit	impairment.

For	a	further	discussion,	see	Note	16	to	the	Consolidated	Financial	Statements on	page	158.

# Key	Controls	over	Fair-Value	Measurement

The	Company's	processes	include	a	number	of	key	controls	that	are	designed	to ensure	that	fair	value	is	measured	appropriately,	particularly	where	a	fair-value model	is	internally	developed	and	used	to	price	a	significant	product.	Such controls	include	a	model	validation	policy	requiring	that	valuation	models	be validated	by	qualified	personnel	independent	from	those	who	created	the	models and	escalation	procedures	to	ensure	that	valuations	using	unverifiable	inputs	are identified	and	monitored	on	a	regular	basis	by	senior	management.

# CVA	Methodology

SFAS	157	requires	that	Citi's	own	credit	risk	be	considered	in	determining	the market	value	of	any	Citi	liability	carried	at	fair	value.	These	liabilities	include derivative	instruments	as	well	as	debt	and	other	liabilities	for	which	the	fair- value	option	was	elected.	The	credit	valuation	adjustment	(CVA)	is	recognized on	the	balance	sheet	as	a	reduction	in	the	associated	liability	to	arrive	at	the	fair value	(carrying	value)	of	the	liability.

Citi	has	historically	used	its	credit	spreads	observed	in	the	credit	default	swap (CDS)	market	to	estimate	the	market	value	of	these	liabilities.	Beginning	in September	2008,	Citi's	CDS	spread	and	credit	spreads	observed	in	the	bond market	(cash	spreads)	diverged	from	each	other	and	from	their	historical relationship.	For	example,	the	three-year	CDS	spread	narrowed	from	315	basis points	(bps)	on	September	30,	2008,	to	202	bps	on	December	31,	2008,	while	the three-year	cash	spread	widened	from	430	bps	to	490	bps	over	the	same	time period.	Due	to	the	persistence	and	significance	of	this	divergence	during	the fourth	quarter,	management	determined	that	such	a	pattern	may	not	be temporary	and	that	using	cash	spreads	would	be	more	relevant	to	the	valuation	of debt	instruments	(whether	issued	as	liabilities	or	purchased	as	assets).	Therefore, Citi	changed	its	method	of	estimating	the	market	value	of	liabilities	for	which	the fair-value	option	was	elected	to	incorporate	Citi's	cash	spreads.	(CDS	spreads continue	to	be	used	to	calculate	the	CVA	for	derivative	positions,	as	described	on page	92.)	This	change	in	estimation	methodology	resulted	in	a	$2.5	billion	pretax gain	recognized	in	earnings	in	the	fourth	quarter	of	2008.

The	CVA	recognized	on	fair-value	option	debt	instruments	was	$5,446	million and	$888	million	as	of	December	31,	2008	and	2007,	respectively.	The	pretax gain	recognized	due	to	changes	in	the	CVA	balance	was	$4,558	million	and	$888 million	for	2008	and	2007,	respectively.

The	table	below	summarizes	the	CVA	for	fair-value	option	debt	instruments, determined	under	each	methodology	as	of	December	31,	2008	and	2007,	and	the pretax	gain	that	would	have	been	recognized	in	the	year	then	ended	had	each methodology	been	used	consistently	during	2008	and	2007	(in	millions	of dollars).

| dollars). |  |  |
| :--- | :--- | :--- |
| In\tmillions\tof\tdollars | 2008 | 2007 |
| Year-end\tCVA\treserve\tbalance\tas\tcalculated\tusing: |  |  |
| CDS\tspreads | $2,953 | $888 |
| Cash\tspreads | \t 5,446 | \t 1,359 |
| Difference\t^(1) | $2,493 | $471 |
| Year-to-date\tpretax\tgain\tfrom\tthe\tchange\tin\tCVA\treserve\tthat\twould |  |  |
| have\tbeen\trecorded\tin\tthe\tincome\tstatement\tas\tcalculated\tusing: |  |  |
| CDS\tspreads | $2,065 | $888 |
| Cash\tspreads | \t 4,087 | \t 1,359 |

(1)In	changing	the	methodology	for	calculating	the	CVA	reserve,	the	Company	recorded	the 2008	cumulative	difference	of	$2.493	billion	in	December	2008,	resulting	in	a	year-to-date pretax	gain	of	$4.558	billion	recorded	in	the	Company's	Consolidated	Statement	of	Income.

# ALLOWANCE	FOR	CREDIT	LOSSES

Management	provides	reserves	for	an	estimate	of	probable	losses	inherent	in	the funded	loan	portfolio	on	the	balance	sheet	in	the	form	of	an	allowance	for	loan losses.	In	addition,	management	has	established	and	maintains	reserves	for	the potential	credit	losses	related	to	the	Company's	off-balance-	sheet	exposures	of unfunded	lending	commitments,	including	standby	letters	of	credit	and guarantees.	These	reserves	are	established	in	accordance	with	Citigroup's	Loan Loss	Reserve	Policies,	as	approved	by	the	Audit	and	Risk	Management Committee	of	the	Company's	Board	of	Directors.	The	Company's	Chief	Risk Officer	and	Chief	Financial	Officer	review	the	adequacy	of	the	credit	loss reserves	each	quarter	with	representatives	from	the	Risk	and	Finance	staffs	for each	applicable	business	area.

During	these	reviews,	the	above-mentioned	representatives	covering	the business	area	having	classifiably	managed	portfolios	(that	is,	portfolios

where	internal	credit-risk	ratings	are	assigned,	which	are	primarily	ICG,	the commercial	lending	businesses	of	Consumer	Banking	and	Global	Wealth Management)	and	modified	consumer	loans	where	a	concession	was	granted	due to	the	borrowers'	financial	difficulties,	and	present	recommended	reserve balances	for	their	funded	and	unfunded	lending	portfolios	along	with	supporting quantitative	and	qualitative	data.	The	quantitative	data	include:

•	Estimated	probable	losses	for	non-performing,	non-homogeneous	exposures within	a	business	line's	classifiably	managed	portfolio	and	impaired	smaller- balance	homogenous	loans	whose	terms	have	been	modified	due	to	the borrowers'	financial	difficulties,	and	it	was	determined	that	a	concession	was granted	to	the	borrower.	Consideration	is	given	to	all	available	evidence	when determining	this	estimate	including,	as	appropriate:	(i)	the	present	value	of expected	future	cash	flows	discounted	at	the	loan's	contractual	effective	rate; (ii)	the	borrower's	overall	financial	condition,	resources	and	payment	record; and	(iii)	the	prospects	for	support	from	financially	responsible	guarantors	or the	realizable	value	of	any	collateral.

•	Statistically	calculated	losses	inherent	in	the	classifiably	managed	portfolio	for performing	and	de	minimis	non-performing	exposures.	The	calculation	is	based upon:	(i)	Citigroup's	internal	system	of	credit-risk	ratings,	which	are	analogous to	the	risk	ratings	of	the	major	rating	agencies;	(ii)	the	Corporate	portfolio database;	and	(iii)	historical	default	and	loss	data,	including	rating-agency information	regarding	default	rates	from	1983	to	2007,	and	internal	data	dating to	the	early	1970s	on	severity	of	losses	in	the	event	of	default. •	Additional	adjustments	include:	(i)	statistically	calculated	estimates	to	cover the	historical	fluctuation	of	the	default	rates	over	the	credit	cycle,	the	historical variability	of	loss	severity	among	defaulted	loans,	and	the	degree	to	which there	are	large	obligor	concentrations	in	the	global	portfolio;	and (ii)	adjustments	made	for	specifically	known	items,	such	as	current environmental	factors	and	credit	trends.

In	addition,	representatives	from	both	the	Risk	Management	and	Finance	staffs that	cover	business	areas	that	have	delinquency-managed	portfolios	containing smaller	homogeneous	loans	(primarily	the	non-commercial	lending	areas	of Consumer	Banking)	present	their	recommended	reserve	balances	based	upon leading	credit	indicators	including	delinquencies	on	first	and	second	mortgages and	deterioration	in	the	housing	market,	a	downturn	in	other	economic	trends including	unemployment	and	GDP,	changes	in	the	portfolio	size,	and	a	change	in the	estimated	loan	losses	inherent	in	the	portfolio	but	not	yet	visible	in	the delinquencies	(change	in	estimate	of	loan	losses).	This	methodology	is	applied separately	for	each	individual	product	within	each	different	geographic	region	in which	these	portfolios	exist.

This	evaluation	process	is	subject	to	numerous	estimates	and	judgments.	The frequency	of	default,	risk	ratings,	loss	recovery	rates,	the	size	and	diversity	of individual	large	credits,	and	the	ability	of	borrowers	with	foreign	currency obligations	to	obtain	the	foreign	currency	necessary	for	orderly	debt	servicing, among	other	things,	are	all	taken	into	account	during	this	review.	Changes	in these	estimates	could	have	a	direct	impact	on	the	credit	costs	in	any	quarter	and could	result	in	a	change	in	the	allowance.	Changes	to	the	reserve	flow	through the	Consolidated	Statement	of	Income	on	the	lines	Provision	for	loan	losses	and Provision	for	unfunded	lending

commitments.	For	a	further	description	of	the	loan	loss	reserve	and	related accounts,	see	"Managing	Global	Risk"	and	Notes	1	and	18	to	the	Consolidated Financial	Statements	on	pages	51,	122	and	165,	respectively.

# SECURITIZATIONS

The	Company	securitizes	a	number	of	different	asset	classes	as	a	means	of strengthening	its	balance	sheet	and	accessing	competitive	financing	rates	in	the market.	Under	these	securitization	programs,	assets	are	sold	into	a	trust	and	used as	collateral	by	the	trust	to	obtain	financing.	The	cash	flows	from	assets	in	the trust	service	the	corresponding	trust	securities.	If	the	structure	of	the	trust	meets certain	accounting	guidelines,	trust	assets	are	treated	as	sold	and	are	no	longer reflected	as	assets	of	the	Company.	If	these	guidelines	are	not	met,	the	assets continue	to	be	recorded	as	the	Company's	assets,	with	the	financing	activity recorded	as	liabilities	on	Citigroup's	balance	sheet.

Citigroup	also	assists	its	clients	in	securitizing	their	financial	assets	and packages	and	securitizes	financial	assets	purchased	in	the	financial	markets.	The Company	may	also	provide	administrative,	asset	management,	underwriting, liquidity	facilities	and/or	other	services	to	the	resulting	securitization	entities	and may	continue	to	service	some	of	these	financial	assets.

# Elimination	of	QSPEs	and	Changes	in	the	FIN	46(R)	Consolidation Model

The	FASB	has	issued	an	exposure	draft	of	a	proposed	standard	that	would eliminate	Qualifying	Special	Purpose	Entities	(QSPEs)	from	the	guidance	in FASB	Statement	No.	140,	Accounting	for	Transfers	and	Servicing	of	Financial Assets	and	Extinguishments	of	Liabilities	(SFAS	140).	While	the	proposed standard	has	not	been	finalized,	if	it	is	issued	in	its	current	form	it	will	have	a significant	impact	on	Citigroup's	Consolidated	Financial	Statements	as	the Company	will	lose	sales	treatment	for	certain	assets	previously	sold	to	a	QSPE, as	well	as	for	certain	future	sales,	and	for	certain	transfers	of	portions	of	assets that	do	not	meet	the	proposed	definition	of	"participating	interests."	This proposed	revision	could	become	effective	on	January	1,	2010.

In	connection	with	the	proposed	changes	to	SFAS	140,	the	FASB	has	also issued	a	separate	exposure	draft	of	a	proposed	standard	that	proposes	three	key changes	to	the	consolidation	model	in	FASB	Interpretation	No.	46	(revised December	2003),	"Consolidation	of	Variable	Interest	Entities"	(FIN	46(R)). First,	the	revised	standard	would	include	former	QSPEs	in	the	scope	of	FIN 46(R).	In	addition,	FIN	46(R)	would	be	amended	to	change	the	method	of analyzing	which	party	to	a	variable	interest	entity	(VIE)	should	consolidate	the VIE	(such	consolidating	entity	is	referred	to	as	the	"primary	beneficiary")	to	a qualitative	determination	of	power	combined	with	benefits	or	losses	instead	of the	current	risks	and	rewards	model.	Finally,	the	proposed	standard	would require	that	the	analysis	of	primary	beneficiaries	be	re-evaluated	whenever circumstances	change.	The	existing	standard	requires	reconsideration	only	when specified	reconsideration	events	occur.

The	FASB	is	currently	deliberating	these	proposed	standards,	and	they	are, accordingly,	still	subject	to	change.	Since	QSPEs	will	likely	be	eliminated	from SFAS	140	and	thus	become	subject	to	FIN	46(R)	consolidation	guidance	and because	the	FIN	46(R)	method	of	determining	which	party	must	consolidate	a VIE	will	likely	change	should	this	proposed	standard	become	effective,	the Company	expects	to	consolidate	certain	of	the	currently	unconsolidated	VIEs and	QSPEs	with	which	Citigroup	was	involved	as	of	December	31,	2008.

The	Company's	estimate	of	the	incremental	impact	of	adopting	these	changes on	Citigroup's	Consolidated	Balance	Sheets	and	risk-weighted	assets,	based	on December	31,	2008	balances,	our	understanding	of	the	proposed	changes	to	the standards	and	a	proposed	January	1,	2010	effective	date,	is	presented	below.	The actual	impact	of	adopting	the	amended	standards	as	of	January	1,	2010	could materially	differ.

The	pro	forma	impact	of	the	proposed	changes	on	GAAP	assets	and	risk- weighted	assets,	assuming	application	of	existing	risk-based	capital	rules,	at January	1,	2010	(based	on	the	balances	at	December	31,	2008)	would	result	in the	consolidation	of	incremental	assets	as	follows:

|  |  | Risk- |
| :--- | :--- | :--- |
| In\tbillions\tof\tdollars | GAAP\nassets | weighted\nassets |
| Credit\tcards | $\t\t91.9 | $88.9 |
| Commercial\tpaper\tconduits | 59.6 | — |
| Private\tlabel\tconsumer\tmortgages | 4.4 | 2.1 |
| Student\tloans | 14.4 | 3.5 |
| Muni\tbonds | 6.2 | 1.9 |
| Mutual\tfund\tdeferred\tsales\tcommission\tsecuritization | 0.8 | 0.8 |
| Investment\tfunds | 1.7 | 1.7 |
| Total | $179.0 | $98.9 |

The	table	reflects	(i)	the	estimated	portion	of	the	assets	of	QSPEs	to	which Citigroup,	acting	as	principal,	has	transferred	assets	and	received	sales	treatment as	of	December	31,	2008	(totaling	approximately	$822.1	billion),	and	(ii)	the estimated	assets	of	significant	unconsolidated	VIEs	as	of	December	31,	2008 with	which	Citigroup	is	involved	(totaling	approximately	$288.0	billion)	that would	be	consolidated	under	the	proposal.	Due	to	the	variety	of	transaction structures	and	level	of	the	Company's	involvement	in	individual	QSPEs	and VIEs,	only	a	subset	of	the	QSPEs	and	VIEs	with	which	the	Company	is	involved are	expected	to	be	consolidated	under	the	proposed	change.

A	complete	description	of	the	Company's	accounting	for	securitized	assets	can be	found	in	Note	1	to	the	Consolidated	Financial	Statements	on	page	122.

Citigroup	has	recorded	on	its	Consolidated	Balance	Sheet	Goodwill	of	$27.1 billion	(approximately	1.4%	of	assets)	and	$41.1	billion	(approximately	1.9%	of assets)	at	December	31,	2008	and	December	31,	2007,	respectively.	The December	31,	2008	balance	is	net	of	a	$9.6	billion	goodwill	impairment	charge recorded	as	a	result	of	testing	performed	as	of	December	31,	2008.	The impairment	is	composed	of	$5.1	billion	pretax	charge	($4.5	billion	after	tax) related	to	North	America	Consumer	Banking,	$4.3	billion	pretax	charge	($4.1 billion	after	tax)	related	to	Latin	America	Consumer	Banking,	and	$0.2	billion pre-tax	charge	($0.1	billion	after	tax)	related	to	EMEA	Consumer	Banking. The	primary	cause	for	the	goodwill	impairment	in	the	above	reporting	units	was the	rapid	deterioration	in	the	financial	markets	as	well	as	in	the	global	economic outlook	particularly	during	the	period	beginning	mid-November	through	year end	2008.	This	deterioration	further	weakened	the	near-term	prospects	for	the financial	services	industry.	These	and	other	factors,	including	the	increased possibility	of	further	government	intervention,	also	resulted	in	the	decline	in	the Company's	market	capitalization	from	approximately	$90	billion	at	July	1,	2008 and	approximately	$74	billion	at	October	31,	2008	to	approximately	$36	billion at	December	31,	2008.

The	following	summary	describes	Citigroup's	process	for	accounting	for goodwill	and	testing	for	impairment.

Goodwill	is	allocated	to	the	reporting	units	at	the	date	the	goodwill	is	initially recorded.	Once	goodwill	has	been	allocated	to	the	reporting	units,	it	generally	no longer	retains	its	identification	with	a	particular	acquisition,	but	instead	becomes identified	with	the	reporting	unit	as	a	whole.	As	a	result,	all	of	the	fair	value	of each	reporting	unit	is	available	to	support	the	value	of	goodwill	allocated	to	the unit.	As	of	December	31,	2008,	the	Company	operated	in	four	core	business segments	as	discussed	on	page	138.	Goodwill	impairment	testing	is	performed	at the	reporting	unit	level,	one	level	below	the	business	segment.

The	changes	in	the	management	structure	during	2008	resulted	in	the	creation of	new	business	segments.	As	a	result,	commencing	with	the	third	quarter	of 2008,	the	Company	identified	new	reporting	units	as	required	under	SFAS No.	142,	Goodwill	and	Other	Intangible	Assets	(SFAS	142).	Goodwill	affected by	the	change	was	reallocated	from	the	previous	seven	reporting	units	to	ten	new reporting	units,	using	a	relative	fair	value	approach.	The	ten	new	reporting	units, which	remain	unchanged	at	December	31,	2008,	are	Securities	and	Banking, Global	Transaction	Services,	International	Wealth	Management,	N.A.	Wealth Management,	North	America	Consumer	Banking,	N.A.	Cards,	EMEA	Consumer Banking,	Latin	America	Consumer	Banking,	Asia	Consumer	Banking	and International	Cards.

Under	SFAS	142,	the	goodwill	impairment	analysis	is	done	in	two	steps.	The first	step	requires	a	comparison	of	the	fair	value	of	the	individual	reporting	unit to	its	carrying	value	including	goodwill.	If	the	fair	value	of	the	reporting	unit	is in	excess	of	the	carrying	value,	the	related	goodwill	is	considered	not	to	be impaired	and	no	further	analysis	is	necessary.	If	the	carrying	value	of	the reporting	unit	exceeds	the	fair	value,	there	is	an	indication	of	potential impairment	and	a	second	step	of	testing	is	performed	to	measure	the	amount	of impairment,	if	any,	for	that	reporting	unit.

When	required,	the	second	step	of	testing	involves	calculating	the	implied	fair value	of	goodwill	for	each	of	the	affected	reporting	units.	The	implied	fair	value of	goodwill	is	determined	in	the	same	manner	as	the	amount	of	goodwill recognized	in	a	business	combination,	which	is	the	excess	of	the	fair	value	of	the reporting	unit	determined	in	step	one	over	the	fair	value	of	the	net	assets	and identifiable	intangibles	as	if	the	reporting	unit	were	being	acquired.	If	the	amount of	the	goodwill	allocated	to	the	reporting	unit	exceeds	the	implied	fair	value	of the	goodwill	in	the	pro	forma	purchase	price	allocation,	an	impairment	charge	is recorded	for	the	excess.	An	impairment	charge	recognized	cannot	exceed	the amount	of	goodwill	allocated	to	a	reporting	unit	and	cannot	be	reversed subsequently	even	if	the	fair	value	of	the	reporting	unit	recovers.

Goodwill	impairment	testing	involves	management	judgment,	requiring	an assessment	of	whether	the	carrying	value	of	the	reporting	unit	can	be	supported by	the	fair	value	of	the	individual	reporting	unit	using	widely	accepted	valuation techniques,	such	as	the	market	approach	(earnings	multiples	and/or	transaction multiples)	and/or	discounted	cash	flow	methods	(DCF).	In	applying	these methodologies	the	Company	utilizes	a	number	of	factors,	including	actual operating	results,	future	business	plans,	economic	projections	and	market	data.	A combination	of	methodologies	is	used	and	weighted	appropriately	for	reporting units	with	significant	adverse	changes	in	business	climate.	Management	may engage	an	independent	valuation	specialist	to	assist	in	the	Company's	valuation process.

Prior	to	2008,	the	Company	primarily	employed	the	market	approach	for estimating	fair	value	of	the	reporting	units.	As	a	result	of	significant	adverse changes	during	2008	in	certain	of	the	Company's	reporting	units	and	the increase	in	financial	sector	volatility	primarily	in	the	U.S.,	the	Company engaged	the	services	of	an	independent	valuation	specialist	to	assist	in	the Company's	valuation	of	the	following	reporting	units—Securities	and	Banking, North	America	Consumer	Banking,	Latin	America	Consumer	Banking	and	N.A. Cards.	The	DCF	method	was	incorporated	to	ensure	reliability	of	results.	The Company	believes	that	the	DCF	method,	using	management	projections	for	the selected	reporting	units	and	an	appropriate	risk-adjusted	discount	rate	is	most reflective	of	a	market	participant's	view	of	fair	values	given	current	market conditions.	For	the	reporting	units	where	both	methods	were	utilized	in	2008,	the resulting	fair	values	were	relatively	consistent	and	appropriate	weighting	was given	to	outputs	from	both	methods.

The	DCF	method	used	at	the	time	of	each	impairment	test	used	discount	rates that	the	Company	believes	adequately	reflected	the	risk	and	uncertainty	in	the financial	markets	generally	and	specifically	in	the	internally	generated	cash	flow projections.	The	DCF	method	employs	a	capital	asset	pricing	model	in estimating	the	discount	rate.	The	Company	continues	to	value	the	remaining reporting	units	where	it	believes	the	risk	of	impairment	to	be	low	using	primarily the	market	approach.

The	Company	prepares	formal	three-year	Strategic	Plans	for	its	businesses	and presents	the	plans	to	the	Board	of	Directors.	The	Company	used	the	2008 Strategic	Plan	as	a	basis	for	its	annual	goodwill	impairment	test	performed	as	of July	1,	2008.	These	projections	incorporated	certain	external	economic projections	developed	at	the	point	in	time	the	Strategic	Plan	was	developed.	The financial	forecasts	were	updated	for	the	interim	impairment	tests	as	of October	31,	2008	and	December	31,	2008	(as	discussed	below)	to	reflect	current economic	conditions.	For	those	interim	impairment	tests,	the	Company	utilized revised	economic	projections	incorporating	the	rapidly	deteriorating	market outlook.

As	discussed	above,	management	tests	goodwill	for	impairment	annually	as	of July	1.	The	Company	is	also	required	to	test	goodwill	for	impairment	whenever events	or	circumstances	make	it	more	likely	than	not	that	impairment	may	have occurred,	such	as	a	significant	adverse	change	in	the	business	climate,	a	decision to	sell	or	dispose	of	all	or	a	significant	portion	of	a	reporting	unit	or	a	significant decline	in	the	Company's	stock	price.	The	results	of	the	July	1,	2008	test validated	that	the	fair	values	exceeded	the	carrying	values	for	all	reporting	units. Based	on	negative	macro-economic	and	Citigroup-specific	events,	Citigroup performed	two	goodwill	impairment	tests	during	the	fourth	quarter	of	2008.	The first	test,	performed	as	of	October	31,	2008,	validated	that	the	fair	value	of	all reporting	units	was	in	excess	of	the	associated	carrying	values	and,	therefore, that	there	was	no	indication	of	goodwill	impairment.	In	mid-January, management	determined	that	another	goodwill	impairment	test	was	needed	using data	as	of	December	31,	2008,	due	to	the	rapid	deterioration	in	the	financial markets	as	well	as	in	the	global	economic	outlook	particularly	during	the	period beginning	mid-November	and	through	year	end	December	2008.

Based	on	the	updated	goodwill	impairment	test	performed	using	data	as	of December	31,	2008,	there	was	an	indication	of	impairment	principally	due	to	the decline	in	fair	value	of	the	Company's	North	America	Consumer	Banking,	Latin America	Consumer	Banking	and	EMEA	Consumer	Banking	reporting	units.	The primary	cause	for	the	decline	in	the	fair	values	in	the	above	reporting	units	was the	rapid	deterioration	in	the	financial	markets	as	well	as	in	the	global	economic outlook	particularly	during	the	period	beginning	mid-November	through	year end	2008.	Accordingly,	the	second	step	of	testing	was	performed	for	those reporting	units.	Based	on	the	results	of	the	second	step,	the	Company	recorded	a $9.6	billion	pretax	($8.7	billion	after	tax)	goodwill	impairment	charge	in	the fourth	quarter	of	2008.	This	charge	resulted	in	the	write-off	of	the	entire	amount of	goodwill	allocated	to	those	reporting	units.

The	testing	for	goodwill	impairment	is	conducted	at	a	reporting	unit	level. Since	none	of	the	Company's	reporting	units	are	publicly	traded,	individual reporting	unit	fair	value	determinations	cannot	be	directly	correlated	to	the Company's	stock	price.	The	sum	of	the	fair	values	of	the	reporting	units significantly	exceeds	the	overall	market	capitalization	of	the	Company. However,	the	Company	believes	that	it	is	not	meaningful	to	reconcile	the	sum	of the	fair	values	of	the	Company's	reporting	units	to	its	market	capitalization	due to	several	factors.	These	factors,	which	do	not	directly	impact	the	individual reporting	unit	fair	values,	include	the	increased	possibility	of	further	government intervention,	unprecedented	levels	of	volatility	in	stock	price	and	short-selling. In	addition,	the	market	capitalization	of	Citigroup	reflects	the	execution	risk	in	a transaction	involving	Citigroup	due	to	its	size.	However,	the	individual	reporting unit's

fair	values	are	not	subject	to	the	same	level	of	execution	risk	or	a	business	model which	is	perceived	to	be	complex.

While	no	impairment	was	noted	in	step	one	of	our	Securities	and	Banking reporting	unit	impairment	test	at	October	31,	2008	and	December	31,	2008, goodwill	present	in	that	reporting	unit	may	be	particularly	sensitive	to	further deterioration	in	economic	conditions.	Under	the	market	approach	for	valuing	this reporting	unit,	the	earnings	multiples	and	transaction	multiples	were	selected from	multiples	obtained	using	data	from	guideline	companies	and	acquisitions. The	selection	of	the	actual	multiple	considers	operating	performance	and financial	condition	such	as	return	on	equity	and	net	income	growth	of	Securities and	Banking	as	compared	to	the	guideline	companies	and	acquisitions.	For	the valuation	under	the	income	approach,	the	Company	utilized	a	discount	rate which	it	believes	reflects	the	risk	and	uncertainty	related	to	the	projected	cash flows,	and	selected	2013	as	the	terminal	year.	In	2013,	the	value	was	derived assuming	a	return	to	historical	levels	of	core-business	profitability	for	the reporting	unit,	despite	the	significant	losses	experienced	in	2008.	This assumption	is	based	on	management's	view	that	this	recovery	will	occur	based upon	various	macro-economic	factors	such	as	the	recent	U.S.	government stimulus	actions,	restoring	marketplace	confidence	and	improved	risk- management	practices	on	an	industry-wide	basis.	Furthermore,	Company- specific	actions	such	as	its	recently	announced	realignment	of	its	businesses	to optimize	its	global	businesses	for	future	profitable	growth,	will	also	be	a	factor in	returning	the	Company's	core	Securities	and	Banking	business	to	historical levels.

Small	deterioration	in	the	assumptions	used	in	the	valuations,	in	particular	the discount	rate	and	growth	rate	assumptions	used	in	the	net	income	projections, could	significantly	affect	the	Company's	impairment	evaluation	and,	hence, results.	If	the	future	were	to	differ	adversely	from	management's	best	estimate	of key	economic	assumptions	and	associated	cash	flows	were	to	decrease	by	a	small margin,	the	Company	could	potentially	experience	future	material	impairment charges	with	respect	to	the	goodwill	remaining	in	our	Securities	and	Banking reporting	unit.	Any	such	charges	by	themselves	would	not	negatively	affect	the Company's	Tier	1	and	Total	Regulatory	Capital	Ratios,	Tangible	Capital	or	the Company's	liquidity	position.

The	goodwill	allocated	to	this	reporting	unit	was	approximately	$9.8	billion	as of	December	31,	2008.

The	Company	is	subject	to	the	income	tax	laws	of	the	U.S.,	its	states	and municipalities	and	the	foreign	jurisdictions	in	which	the	Company	operates. These	tax	laws	are	complex	and	subject	to	different	interpretations	by	the taxpayer	and	the	relevant	governmental	taxing	authorities.	In	establishing	a provision	for	income	tax	expense,	the	Company	must	make	judgments	and interpretations	about	the	application	of	these	inherently	complex	tax	laws.	The Company	must	also	make	estimates	about	when	in	the	future	certain	items	will affect	taxable	income	in	the	various	tax	jurisdictions,	both	domestic	and	foreign. Disputes	over	interpretations	of	the	tax	laws	may	be	subject	to review/adjudication	by	the	court	systems	of	the	various	tax	jurisdictions	or	may be	settled	with	the	taxing	authority	upon	examination	or	audit.

The	Company	treats	interest	and	penalties	on	income	taxes	as	a	component	of income	tax	expense.

Deferred	taxes	are	recorded	for	the	future	consequences	of	events	that	have been	recognized	in	the	financial	statements	or	tax	returns,	based	upon	enacted tax	laws	and	rates.	Deferred	tax	assets	(DTAs)	are	recognized	subject	to management's	judgment	that	realization	is	more	likely	than	not.

Although	realization	is	not	assured,	the	Company	believes	that	the	realization of	the	recognized	net	deferred	tax	asset	of	$44.5	billion	is	more	likely	than	not based	on	expectations	as	to	future	taxable	income	in	the	jurisdictions	in	which	it operates	and	available	tax	planning	strategies,	as	defined	in	SFAS	109,	that could	be	implemented	if	necessary	to	prevent	a	carryforward	from	expiring.	The Company's	net	deferred	tax	asset	(DTA)	of	$44.5	billion	consists	of approximately	$36.5	billion	of	net	U.S.	Federal	DTAs,	$4	billion	of	net	state DTAs	and	$4	billion	of	net	foreign	DTAs.	Included	in	the	net	federal	DTA	of $36.5	billion	are	deferred	tax	liabilities	of	$4	billion	that	will	reverse	in	the relevant	carryforward	period	and	may	be	used	to	support	the	DTA.	The	major components	of	the	U.S.	Federal	DTA	are	$10.5	billion	in	foreign	tax	credit carryforwards,	$4.6	billion	in	a	net	operating	loss	carryforward,	$0.6	billion	in	a general	business	credit	carryforward,	$19.9	billion	in	net	deductions	which	have not	yet	been	taken	on	a	tax	return,	and	$0.9	billion	in	compensation	deductions which	reduced	additional	paid-in	capital	in	January,	2009	and	for	which	SFAS 123(R)	did	not	permit	any	adjustment	to	such	DTA	at	December	31,	2008 because	the	related	stock	compensation	was	not	yet	deductible	to	the	Company. In	general,	the	Company	would	need	to	generate	approximately	$85	billion	of taxable	income	during	the	respective	carryforward	periods	to	fully	realize	its federal,	state	and	local	DTAs.

As	a	result	of	the	losses	incurred	in	2008,	the	Company	is	in	a	three-year cumulative	pretax	loss	position	at	December	31,	2008.	A	cumulative	loss position	is	considered	significant	negative	evidence	in	assessing	the	realizability of	a	DTA.	The	Company	has	concluded	that	there	is	sufficient	positive	evidence to	overcome	this	negative	evidence.	The	positive	evidence	includes	two	means by	which	the	Company	is	able	to	fully	realize	its	DTA.	First,	the	Company forecasts	sufficient	taxable	income	in	the	carryforward	period,	exclusive	of	tax planning	strategies,	even	under	stressed	scenarios.	Secondly,	the	Company	has sufficient	tax	planning	strategies,	including	potential	sales	of	businesses	and assets	that	could	realize	the	excess	of	appreciated	value	over	the	tax	basis	of	its assets,	in	an	amount	sufficient	to	fully	realize	its	DTA.	The	amount	of	the deferred	tax	asset	considered

realizable,	however,	could	be	significantly	reduced	in	the	near	term	if	estimates of	future	taxable	income	during	the	carryforward	period	are	significantly	lower than	forecasted	due	to	further	decreases	in	market	conditions.

Based	upon	the	foregoing	discussion,	as	well	as	tax	planning	opportunities	and other	factors	discussed	below,	the	U.S.	and	New	York	State	and	City	net operating	loss	carryforward	period	of	20	years	provides	enough	time	to	utilize the	DTAs	pertaining	to	the	existing	net	operating	loss	carryforwards	and	any NOL	that	would	be	created	by	the	reversal	of	the	future	net	deductions	which have	not	yet	been	taken	on	a	tax	return.

The	U.S.	foreign	tax	credit	carryforward	period	is	10	years.	In	addition, utilization	of	foreign	tax	credits	is	restricted	to	35%	of	foreign	source	taxable income	in	that	year.	Due	to	the	passage	of	the	American	Jobs	Creation	Act	of 2004,	overall	domestic	losses	that	the	Company	has	incurred	of	approximately $35	billion	are	allowed	to	be	reclassified	as	foreign	source	income	to	the	extent of	50%	of	domestic	source	income	produced	in	subsequent	years	and	are	in	fact sufficient	to	cover	the	foreign	tax	credits	being	carried	forward.	As	such,	the foreign	source	taxable	income	limitation	will	not	be	an	impediment	to	the foreign	tax	credit	carryforward	usage	as	long	as	the	Company	can	generate sufficient	domestic	taxable	income	within	the	10-year	carryforward	period. Regarding	the	estimate	of	future	taxable	income,	the	Company	has	projected	its pretax	earnings	based	upon	the	"core"	businesses	that	the	Company	intends	to conduct	going	forward,	as	well	as	Smith	Barney	and	Primerica	Financial Services.	These	"core"	businesses	have	produced	steady	and	strong	earnings	in the	past.

The	Company	has	taken	steps	to	ring-fence	certain	legacy	assets	to	minimize any	losses	from	the	legacy	assets	going	forward.	During	2008,	the	"core" businesses	have	been	negatively	affected	by	the	large	increase	in	consumer credit	losses	during	this	sharp	economic	downturn	cycle.	The	Company	has already	taken	steps	to	reduce	its	cost	structure.	In	addition,	its	funding	structure has	been	changed	by	the	issuance	of	preferred	stock,	which	is	funded	by	non-tax deductible	dividends,	as	opposed	to	debt	type	securities,	which	are	funded	by	tax deductible	interest	payments.	Taking	these	items	into	account,	the	Company	is projecting	that	it	will	generate	sufficient	pretax	earnings	within	the	10-year carryforward	period	alluded	to	above	to	be	able	to	fully	utilize	the	foreign	tax credit	carryforward,	in	addition	to	any	foreign	tax	credits	produced	in	such period.

The	Company	has	also	examined	tax	planning	strategies	available	to	it	in accordance	with	SFAS	109	which	would	be	employed,	if	necessary,	to	prevent	a carryforward	from	expiring.	These	strategies	include	repatriating	low	taxed foreign	earnings	for	which	an	APB	23	assertion	has	not	been	made,	accelerating taxable	income	into	or	deferring	deductions	out	of	the	latter	years	of	the carryforward	period	with	reversals	to	occur	after	the	carryforward	period	(e.g., selling	appreciated	intangible	assets	and	electing	straight-line	depreciation), holding	onto	AFS	debt	securities	with	losses	until	they	mature	and	selling	certain assets	which	produce	tax	exempt	income,	while	purchasing	assets	which	produce fully	taxable	income.	In	addition,	the	sale	or	restructuring	of	certain	businesses, such	as	the	announced	Smith	Barney	joint	venture	with	Morgan	Stanley	with	an estimated	pretax	gain	of	$9.5	billion,	can	produce	significant	taxable	income within	the	relevant	carryforward	periods.

See	Note	11	to	the	Consolidated	Financial	Statements	on	page	152	for	a	further description	of	the	Company's	tax	provision	and	related	income	tax	assets	and liabilities.

# LEGAL	RESERVES

The	Company	is	subject	to	legal,	regulatory	and	other	proceedings	and	claims	arising	from	conduct	in	the	ordinary	course	of	business.	These	proceedings	include	actions brought	against	the	Company	in	its	various	roles,	including	acting	as	a	lender,	underwriter,	broker-dealer,	investment	advisor	or	reporting	company.	Reserves	are established	for	legal	and	regulatory	claims	in	accordance	with	applicable	accounting	requirements	based	upon	the	probability	and	estimability	of	losses.	The	Company reviews	outstanding	claims	with	internal	counsel,	as	well	as	external	counsel	when	appropriate,	to	assess	probability	and	estimates	of	loss.	The	risk	of	loss	is	reassessed as	new	information	becomes	available,	and	reserves	are	adjusted	as	appropriate.	The	actual	cost	of	resolving	a	claim	may	be	substantially	higher,	or	lower,	than	the amount	of	the	recorded	reserve.	See	Note	30	to	the	Consolidated	Financial	Statements	on	page	214	and	the	discussion	under	"Legal	Proceedings"	beginning	on	page 227.

# ACCOUNTING	CHANGES	AND	FUTURE	APPLICATION	OF	ACCOUNTING	STANDARDS

See	Note	1	to	the	Consolidated	Financial	Statements	on	page	122	for	a	discussion	of	"Accounting	Changes"	and	the	"Future	Application	of	Accounting	Standards."

# SEGMENT	AND	REGIONAL—NET	INCOME	(LOSS)	AND	REVENUES

The	following	tables	present	net	income	(loss)	and	revenues	for	Citigroup's	businesses	on	a	segment	view	and	on	a	regional	view	for	the	respective	periods:

# CITIGROUP	NET	INCOME	(LOSS)—SEGMENT	VIEW

|  |  |  |  | %	Change | %	Change |
| :--- | :--- | :--- | :--- | :--- | :--- |
| In\tmillions\tof\tdollars | 2008 | 2007 | 2006 | 2008\tvs.\t2007 | 2007\tvs.\t2006 |
| Global\tCards |  |  |  |  |  |
| North\tAmerica | $(529) | $ 2,713 | $3,887 | NM | (30)% |
| EMEA | (117) | 232 | 121 | NM | 92 |
| Latin\tAmerica | 491 | 1,233 | 652 | (60)% | 89 |
| Asia | 321 | 496 | 318 | (35) | 56 |
| Total\tGlobal\tCards | $166 | $ 4,674 | $4,978 | (96)% | (6)% |
| Consumer\tBanking |  |  |  |  |  |
| North\tAmerica | $(9,003) | $780 | $4,002 | NM | (81)% |
| EMEA | (606) | (122) | 5 | NM | NM |
| Latin\tAmerica | (3,822) | 660 | 1,003 | NM | (34) |
| Asia | 1,151 | 839 | 1,063 | 37% | (21) |
| Total\tConsumer\tBanking | $(12,280) | $ 2,157 | $6,073 | NM | (64)% |
| Institutional\tClients\tGroup\t(ICG) |  |  |  |  |  |
| North\tAmerica | $(20,471) | $(6,733) | $3,533 | NM | NM |
| EMEA | (1,102) | (1,900) | 2,010 | 42% | NM |
| Latin\tAmerica | 1,292 | 1,630 | 1,112 | (21) | 47% |
| Asia | 164 | 2,848 | 1,956 | (94) | 46 |
| Total\tICG | $(20,117) | $(4,155) | $8,611 | NM | NM |
| Global\tWealth\tManagement\t(GWM) |  |  |  |  |  |
| North\tAmerica | $968 | $ 1,415 | $1,209 | (32)% | 17% |
| EMEA | 84 | 77 | 23 | 9 | NM |
| Latin\tAmerica | 56 | 72 | 48 | (22) | 50 |
| Asia | (17) | 410 | 163 | NM | NM |
| Total\tGWM | $1,091 | $ 1,974 | $1,443 | (45)% | 37% |
| Corporate/Other | $(954) | $(1,661) | $(654) | 43% | NM |
| Income\t(loss)\tfrom\tcontinuing |  |  |  |  |  |
| operations | $(32,094) | $ 2,989 | $20,451 | NM | (85)% |
| Income\tfrom\tdiscontinued\toperations | 4,410 | 628 | 1,087 | NM | (42) |
| Net\tincome\t(loss) | $(27,684) | $ 3,617 | $21,538 | NM | (83)% |

# CITIGROUP	NET	INCOME	(LOSS)—REGIONAL	VIEW

|  |  |  |  | %	Change | %	Change |
| :--- | :--- | :--- | :--- | :--- | :--- |
| In\tmillions\tof\tdollars | 2008 | 2007 | 2006 | 2008\tvs.\t2007 | 2007\tvs.\t2006 |
| North\tAmerica |  |  |  |  |  |
| Global\tCards | $(529) | $ 2,713 | $3,887 | NM | (30)% |
| Consumer\tBanking | (9,003) | 780 | 4,002 | NM | (81) |
| ICG | (20,471) | (6,733) | 3,533 | NM | NM |
| Securities\tand\tBanking | (20,759) | (6,929) | 3,434 | NM | NM |
| Transaction\tServices | 288 | 196 | 99 | 47% | 98 |
| GWM | 968 | 1,415 | 1,209 | (32) | 17 |
| Total\tNorth\tAmerica | $(29,035) | $(1,825) | $12,631 | NM | NM |
| EMEA |  |  |  |  |  |
| Global\tCards | $(117) | $232 | $121 | NM | 92% |
| Consumer\tBanking | (606) | (122) | 5 | NM | NM |
| ICG | (1,102) | (1,900) | 2,010 | 42% | NM |
| Securities\tand\tBanking | (2,106) | (2,573) | 1,547 | 18 | NM |
| Transaction\tServices | 1,004 | 673 | 463 | 49 | 45 |
| GWM | 84 | 77 | 23 | 9 | NM |
| Total\tEMEA | $(1,741) | $(1,713) | $2,159 | (2)% | NM |
| Latin\tAmerica |  |  |  |  |  |
| Global\tCards | $491 | $ 1,233 | $652 | (60)% | 89% |
| Consumer\tBanking | (3,822) | 660 | 1,003 | NM | (34) |
| ICG | 1,292 | 1,630 | 1,112 | (21) | 47 |
| Securities\tand\tBanking | 765 | 1,221 | 854 | (37) | 43 |
| Transaction\tServices | 527 | 409 | 258 | 29 | 59 |
| GWM | 56 | 72 | 48 | (22) | 50 |
| Total\tLatin\tAmerica | $(1,983) | $ 3,595 | $2,815 | NM | 28% |
| Asia |  |  |  |  |  |
| Global\tCards | $321 | $496 | $318 | (35)% | 56% |
| Consumer\tBanking | 1,151 | 839 | 1,063 | 37 | (21) |
| ICG | 164 | 2,848 | 1,956 | (94) | 46 |
| Securities\tand\tBanking | (988) | 1,904 | 1,345 | NM | 42 |
| Transaction\tServices | 1,152 | 944 | 611 | 22 | 55 |
| GWM | (17) | 410 | 163 | NM | NM |
| Total\tAsia | $1,619 | $ 4,593 | $3,500 | (65)% | 31% |
| Corporate/Other | $(954) | $(1,661) | $(654) | 43% | NM |
| Income\t(loss)\tfrom\tcontinuing\toperations | $(32,094) | $ 2,989 | $20,451 | NM | (85)% |
| Income\tfrom\tdiscontinued\toperations | 4,410 | 628 | 1,087 | NM | (42) |
| Net\tincome\t(loss) | $(27,684) | $ 3,617 | $21,538 | NM | (83)% |

# CITIGROUP	REVENUES—SEGMENT	VIEW

|  |  |  |  | %	Change | %	Change |
| :--- | :--- | :--- | :--- | :--- | :--- |
| In\tmillions\tof\tdollars | 2008 | 2007 | 2006 | 2008\tvs.\t2007 | 2007\tvs.\t2006 |
| Global\tCards |  |  |  |  |  |
| North\tAmerica | $ 10,299 | $13,893 | $13,905 | (26)% | — |
| EMEA | 2,326 | 1,955 | 1,205 | 19 | 62% |
| Latin\tAmerica | 5,017 | 4,803 | 2,726 | 4 | 76 |
| Asia | 2,565 | 2,400 | 1,976 | 7 | 21 |
| Total\tGlobal\tCards | $ 20,207 | $23,051 | $19,812 | (12)% | 16% |
| Consumer\tBanking |  |  |  |  |  |
| North\tAmerica | $ 16,627 | $16,991 | $15,526 | (2)% | 9% |
| EMEA | 2,596 | 2,485 | 2,059 | 4 | 21 |
| Latin\tAmerica | 3,959 | 4,185 | 3,740 | (5) | 12 |
| Asia | 5,470 | 5,797 | 5,310 | (6) | 9 |
| Total\tConsumer\tBanking | $ 28,652 | $29,458 | $26,635 | (3)% | 11% |
| ICG |  |  |  |  |  |
| North\tAmerica | $(22,477) | $ (3,040) | $13,032 | NM | NM |
| EMEA | 5,592 | 4,235 | 8,758 | 32% | (52)% |
| Latin\tAmerica | 3,812 | 4,206 | 3,091 | (9) | 36 |
| Asia | 5,256 | 8,339 | 5,766 | (37) | 45 |
| Total\tICG | $(7,817) | $13,740 | $30,647 | NM | (55)% |
| GWM |  |  |  |  |  |
| North\tAmerica | $9,295 | $9,790 | $8,790 | (5)% | 11% |
| EMEA | 604 | 543 | 331 | 11 | 64 |
| Latin\tAmerica | 357 | 373 | 318 | (4) | 17 |
| Asia | 2,345 | 2,292 | 738 | 2 | NM |
| Total\tGWM | $ 12,601 | $12,998 | $10,177 | (3)% | 28% |
| Corporate/Other | $(850) | $(752) | $(944) | (13)% | 20% |
| Total\tnet\trevenues | $ 52,793 | $78,495 | $86,327 | (33)% | (9)% |

# CITIGROUP	REVENUES—REGIONAL	VIEW

|  |  |  |  | %	Change | %	Change |
| :--- | :--- | :--- | :--- | :--- | :--- |
| In\tmillions\tof\tdollars | 2008 | 2007 | 2006 | 2008\tvs.\t2007 | 2007\tvs.\t2006 |
| North\tAmerica |  |  |  |  |  |
| Global\tCards | $ 10,299 | $13,893 | $13,905 | (26)% | — |
| Consumer\tBanking | 16,627 | \t 16,991 | \t 15,526 | (2) | 9% |
| ICG | (22,477) | (3,040) | \t 13,032 | NM | NM |
| Securities\tand\tBanking | (24,585) | (4,663) | \t 11,742 | NM | NM |
| Transaction\tServices | 2,108 | 1,623 | 1,290 | 30 | 26 |
| GWM | 9,295 | 9,790 | 8,790 | (5) | 11 |
| Total\tNorth\tAmerica | $ 13,744 | $37,634 | $51,253 | (63)% | (27)% |
| EMEA |  |  |  |  |  |
| Global\tCards | $2,326 | $1,955 | $1,205 | 19% | 62% |
| Consumer\tBanking | 2,596 | 2,485 | 2,059 | 4 | 21 |
| ICG | 5,592 | 4,235 | 8,758 | 32 | (52) |
| Securities\tand\tBanking | 2,222 | 1,454 | 6,611 | 53 | (78) |
| Transaction\tServices | 3,370 | 2,781 | 2,147 | 21 | 30 |
| GWM | 604 | 543 | 331 | 11 | 64 |
| Total\tEMEA | $ 11,118 | $9,218 | $12,353 | 21% | (25)% |
| Latin\tAmerica |  |  |  |  |  |
| Global\tCards | $5,017 | $4,803 | $2,726 | 4% | 76% |
| Consumer\tBanking | 3,959 | 4,185 | 3,740 | (5) | 12 |
| ICG | 3,812 | 4,206 | 3,091 | (9) | 36 |
| Securities\tand\tBanking | 2,411 | 3,078 | 2,251 | (22) | 37 |
| Transaction\tServices | 1,401 | 1,128 | 840 | 24 | 34 |
| GWM | 357 | 373 | 318 | (4) | 17 |
| Total\tLatin\tAmerica | $ 13,145 | $13,567 | $9,875 | (3)% | 37% |
| Asia |  |  |  |  |  |
| Global\tCards | $2,565 | $2,400 | $1,976 | 7% | 21% |
| Consumer\tBanking | 5,470 | 5,797 | 5,310 | (6) | 9 |
| ICG | 5,256 | 8,339 | 5,766 | (37) | 45 |
| Securities\tand\tBanking | 2,515 | 6,006 | 4,047 | (58) | 48 |
| Transaction\tServices | 2,741 | 2,333 | 1,719 | 17 | 36 |
| GWM | 2,345 | 2,292 | 738 | 2 | NM |
| Total\tAsia | $ 15,636 | $18,828 | $13,790 | (17)% | 37% |
| Corporate/Other | $(850) | $(752) | $(944) | (13)% | 20% |
| Total\tnet\trevenue | $ 52,793 | $78,495 | $86,327 | (33)% | (9)% |

# GLOBAL	CARDS

|  |  |  |  | %	Change | %	Change |
| :--- | :--- | :--- | :--- | :--- | :--- |
| In\tmillions\tof\tdollars | 2008 | 2007 | 2006 | 2008\tvs.\t2007 | 2007\tvs.\t2006 |
| Net\tinterest\trevenue | $11,267 | $10,682 | $8,725 | 5% | 22% |
| Non-interest\trevenue | 8,940 | \t 12,369 | \t 11,087 | (28) | 12 |
| Revenues,\tnet\tof\tinterest\texpense | $20,207 | $23,051 | $19,812 | (12)% | 16% |
| Operating\texpenses | \t 10,556 | \t 10,571 | 9,324 | — | 13 |
| Provisions\tfor\tloan\tlosses\tand\tfor\tbenefits\tand\tclaims | 9,556 | 5,517 | 3,152 | 73 | 75 |
| Income\tbefore\ttaxes\tand\tminority\tinterest | $95 | $6,963 | $7,336 | (99)% | (5)% |
| Income\ttaxes | (84) | 2,278 | 2,355 | NM | (3) |
| Minority\tinterest,\tnet\tof\ttaxes | 13 | 11 | 3 | 18 | NM |
| Net\tincome | $166 | $4,674 | $4,978 | (96)% | (6)% |
| Revenues,\tnet\tof\tinterest\texpense,\tby\tregion: |  |  |  |  |  |
| North\tAmerica | $10,299 | $13,893 | $13,905 | (26)% | — |
| EMEA | 2,326 | 1,955 | 1,205 | 19 | 62% |
| Latin\tAmerica | 5,017 | 4,803 | 2,726 | 4 | 76 |
| Asia | 2,565 | 2,400 | 1,976 | 7 | 21 |
| Total\trevenues | $20,207 | $23,051 | $19,812 | (12)% | 16% |
| Net\tincome\t(loss)\tby\tregion: |  |  |  |  |  |
| North\tAmerica | $(529) | $2,713 | $3,887 | NM | (30)% |
| EMEA | (117) | 232 | 121 | NM | 92 |
| Latin\tAmerica | 491 | 1,233 | 652 | (60)% | 89 |
| Asia | 321 | 496 | 318 | (35) | 56 |
| Total\tnet\tincome | $166 | $4,674 | $4,978 | (96)% | (6)% |
| Average\tassets\t(in\tbillions\tof\tdollars) | $119 | $112 | $98 | 6% | 14% |
| Return\ton\tassets | 0.14% | 4.17% | 5.08% |  |  |
| Key\tindicators\t(in\tbillions\tof\tdollars) |  |  |  |  |  |
| Average\tloans | $90.0 | $82.3 | $73.6 | 9 | 12 |
| Purchase\tsales | 436.0 | 434.9 | 389.0 | — | 12 |
| Open\taccounts | 175.5 | 188.6 | 186.1 | (7) | 1 |

Global	Cards	revenue	decreased	12%.	Net	interest	revenue	was	5%	higher	than the	prior	year	primarily	driven	by	growth	in	average	loans	of	9%.	Purchase	sales were	flat.	Non-interest	revenue	decreased	by	28%	primarily	due	to	lower securitization	results	in	North	America.	Results	were	also	impacted	by	the following	pretax	gains:	sale	of	MasterCard	shares	of	$466	million	(2007),	sales of	Redecard	shares	of	$729	million	(2007)	and	$663	million	(2008), reorganization,	initial	public	offering	and	subsequent	sales	of	Visa	shares	of $447	million	(2007)	and	$523	million	(2008),	Upromise	Cards	portfolio	sale	of $201	million	(2008)	and	DCI	sale	of	$111	million	(2008).

In	North	America,	a	26%	revenue	decline	was	driven	by	lower	securitization revenues,	which	reflected	the	impact	of	higher	credit	losses	in	the	securitization trusts.	Lower	securitization	revenue	was	also	driven	by	a	write-down	of	$1.6 billion	in	the	residual	interest	in	securitized	balances.	The	residual	interest	was primarily	affected	by	deterioration	in	the	projected	credit	loss	assumption	used	to value	the	asset.	The	change	in	revenue	was	also	impacted	by	the	absence	of	a $393	million	prior-year	gain	on	the	sale	of	MasterCard	shares,	which	was	more than	partially	offset	by	a	current	period	gain	from	the	initial	public	offering	of Visa	shares,	the	Upromise	Cards	portfolio	sale,	and	the	DCI	sale	resulting	in	pre- tax	gains	of	$349	million,	$201	million	and	$29	million,	respectively.	Average loans	were	lower	by	1%	due	to	lower	purchase	sales	(4%)	and	balance	transfers, partially	offset	by	a	decline	in	payment	rates	across	all	portfolios.

Outside	of	North	America,	revenues	increased	by	19%,	4%	and	7%	in	EMEA, Latin	America	and	Asia,	respectively.	These	increases	were	driven	by	double- digit	growth	in	purchase	sales	and	average	loans	in	all	regions.	The	pretax	gain on	the	sale	of	DCI	in	2008	impacted	EMEA,	Latin	America	and	Asia	by	$34 million,	$17	million	and	$31	million,	respectively.	Current-year	revenues	were also	impacted	by	a	lower	pretax	gain	on	the	sale	of	Visa	shares:	EMEA	was favorably	impacted	by	$18	million,	while	Latin	America	and	Asia	were unfavorably	impacted	by	$147	million	and	$103	million,	respectively.	Current- year	revenues	were	also	unfavorably	impacted	by	a	$66	million	pretax	lower gain	on	sales	of	Redecard	shares	in	Latin	America	and	the	absence	of	the	prior- year	pretax	gain	on	the	sale	of	MasterCard	shares	of	$7	million,	$37	million	and $21	million	for	EMEA,	Latin	America	and	Asia,	respectively.	Results	include	the impact	of	foreign	currency	translation	gains	related	to	the	strengthening	of	local currencies	(generally	referred	to	hereinafter	as	"FX	translation"),	as	well	as	the acquisitions	of	Egg,	Grupo	Financiero	Uno,	Grupo	Cuscatlán,	and	Bank	of Overseas	Chinese.

Operating	expenses	were	flat	as	the	impact	of	higher	credit	management	costs, acquisitions,	repositioning/restructuring	charges	of	$184	million	and	FX translation	were	offset	by	a	$292	million	pretax	Visa	litigation-related	charge	in 2007,	a	$159	million	pretax	Visa	litigation-related	release	and	a	$36	million pretax	legal	vehicle	restructuring	in	Mexico	in	2008.

Provisions	for	credit	losses	and	for	benefits	and	claims	increased	$4.0	billion reflecting	an	increase	of	$2.0	billion	in	net	credit	losses	and	$2.0	billion	in	loan loss	reserve	builds.	In	North	America,	credit	costs	increased	$1.9	billion,	driven by	higher	net	credit	losses,	up	$916	million	or	44%,	and	a	higher	loan	loss reserve	build,	up	$936	million.	Higher	credit	costs	reflected	a	weakening	of leading	credit	indicators,	trends	in	the	macro-economic	environment,	including the	housing	market	downturn,	rising	unemployment	trends,	higher	bankruptcy filings,	and	the	continued	acceleration	in	the	rate	at	which	delinquent	customers advanced	to	write-off.	A	net	charge	to	increase	loan	loss	reserves	related to	an	increase	in	reported	receivables	as	maturing	securitizations	resulted	in	on- balance	sheet	funding,	and	also	higher	business	volumes.

Outside	of	North	America,	credit	costs	increased	by	$605	million,	$1,240 million	and	$322	million	in	EMEA,	Latin	America	and	Asia,	respectively.	These increases	were	driven	by	higher	net	credit	losses,	which	were	up	$324	million, $657	million	and	$144	million	in	EMEA,	Latin	America	and	Asia,	respectively. Higher	net	credit	losses	were	driven	by	Mexico,	Brazil	and	India,	as	well	as	the impact	of	acquisitions.	Also	contributing	to	the	increase	were	higher	loan	loss reserve	builds,	which	were	up	$281	million,	$583	million	and	$178	million	in EMEA,	Latin	America	and	Asia,	respectively,	and	higher	business	volumes.

Total	Global	Cards	revenue	increased	16%.	Net	interest	revenue	was	22%	higher than	the	prior	year	primarily	driven	by	growth	of	12%	in	both	average	loans	and purchase	sales.	Non-interest	revenue	increased	by	12%	primarily	due	to	a	$729 million	pretax	gain	on	Redecard	shares,	a	pretax	gain	on	the	sale	of	Visa International	Inc.	shares	of	$447	million	and	a	pretax	gain	on	the	sale	of MasterCard	shares	of	$458	million	in	2007.	This	increase	was	partially	offset	by lower	securitization	revenues	primarily	reflecting	the	net	impact	of	higher funding	costs	and	higher	credit	losses	in	the	securitization	trusts.

In	North	America,	revenues	were	flat	reflecting	a	pretax	gain	on	the	sale	of MasterCard	shares	of	$393	million	in	2007,	offset	by	lower	securitization revenues.	Purchase	sales	were	up	6%	and	average	loans	were	down	7%. Outside	of	North	America,	revenues	increased	by	62%,	76%	and	21%	in	EMEA, Latin	America	and	Asia,	respectively.	These	increases	include	the	impact	of pretax	gains	of	$729	million	on	the	sale	of	Redecard	shares,	$447	million	on	the sale	of	Visa	International	Inc.	shares	and	$65	million	on	the	sale	of	MasterCard shares.	Purchase	sales	and	average	loans	were	up	33%	and	46%,	respectively. Results	also	include	the	impact	of	FX	translation	and	acquisitions. Operating	expenses	were	up	13%	driven	by	a	Visa	litigation-related	pretax charge	of	$292	million,	higher	business	volumes,	credit	management	costs,	the impact	of	acquisitions,	the	integration	of	the	CrediCard	portfolio,	and repositioning	charges.	Expense	growth	in	2007	was	favorably	impacted	by	the absence	of	the	charge	related	to	the	initial	adoption	of	SFAS	123(R)	in	2006. Results	also	include	the	impact	of	FX	translation.

Provisions	for	credit	losses	and	for	benefits	and	claims	increased	$2.4	billion reflecting	an	increase	of	$0.7	billion	in	net	credit	losses	and	$1.7	billion	in	loan loss	reserve	builds	primarily	reflecting	a	weakening	of	leading	credit	indicators, a	downturn	in	other	economic	trends	including	unemployment	and	GDP affecting	all	other	portfolios,	and	a	change	in

estimate	of	loan	losses	inherent	in	the	portfolio	but	not	yet	visible	in	delinquency statistics.	In	North	America,	credit	costs	increased	$1.4	billion,	driven	by	a	higher loan	loss	reserve	build,	up	$1.3	billion,	and	higher	net	credit	losses,	up	$0.1 billion.	The	increase	in	provision	for	loan	losses	also	reflects	the	absence	of	loan loss	reserve	releases	recorded	in	the	prior	year,	as	well	as	an	increase	in bankruptcy	filings	in	2007	versus	unusually	low	filing	levels	experienced	in 2006.

Outside	of	North	America,	credit	costs	increased	by	$203	million,	$616	million and	$121	million	in	EMEA,	Latin	America	and	Asia,	respectively.	These increases	were	driven	by	higher	business	volumes,	as	well	as	higher	net	credit losses,	which	were	up	$34	million,	$473	million	and	$32	million	in	EMEA,	Latin America	and	Asia,	respectively.	Also	contributing	to	the	increase	were	higher loan	loss	reserve	builds,	which	were	up	$168	million,	$143	million	and	$89 million	in	EMEA,	Latin	America	and	Asia,	respectively.	Provisions	for	loan losses	and	for	benefits	and	claims	increased	substantially,	including	a	change	in estimate	of	loan	losses	inherent	in	the	loan	portfolio	but	not	yet	visible	in delinquency	statistics,	along	with	volume	growth	and	credit	deterioration	in certain	countries.	Higher	past-due	accounts	in	Mexico	cards	and	the	integration of	the	CrediCard	portfolio	also	contributed	to	the	increase.

Net	income	was	also	affected	by	the	absence	of	a	prior-year	$153	million	tax benefit	resulting	from	the	resolution	of	a	federal	tax	audit.

During	2009,	Citigroup's	credit	card	businesses	are	expected	to	experience continued	challenging	economic	and	credit	conditions.	The	weak	global economy,	coupled	with	higher	unemployment	and	bankruptcy	filings,	is expected	to	have	an	adverse	effect	on	credit	quality	with	increases	expected	in both	delinquencies	and	credit	losses.	See	"Outlook	for	2009"	on	page	7	and "Risk	Factors"	on	page	47.

During	2009,	Citigroup	intends	to	continue	to	focus	on	offering	credit	and payment	solutions	to	consumers	and	small	businesses	globally	by	leveraging	its global	distribution	network	locally.	Citigroup	is	also	taking	appropriate	repricing actions	that	reflect	the	changing	credit	situation.	In	addition,	Citigroup's management	and	reporting	realignment	will	result	in	the	restructuring	of	these businesses,	effective	for	reporting	purposes	in	the	second	quarter	of	2009,	to enable	the	Company	to	focus	on	driving	the	performance	of	its	core	cards business	(branded	cards)	and	realize	value	from	the	non-core	cards	businesses (private	label	cards).

The	Company	also	anticipates	deploying	TARP	funds	received	from	the	U.S. government	to	offer	special	credit	card	programs	that	include	expanded eligibility	for	balance-consolidation	offers,	targeted	increases	in	credit	lines	and targeted	new	account	originations.	See	"TARP	and	Other	Regulatory	Programs –	Implementation	and	Management	of	TARP	Programs"	on	page	44.

# CONSUMER	BANKING

|  |  |  |  | %	Change | %	Change |
| :--- | :--- | :--- | :--- | :--- | :--- |
| In\tmillions\tof\tdollars | 2008 | 2007 | 2006 | 2008\tvs.\t2007 | 2007\tvs.\t2006 |
| Net\tinterest\trevenue | $ 21,932 | $20,741 | $18,986 | 6% | 9% |
| Non-interest\trevenue | 6,720 | 8,717 | 7,649 | (23) | 14 |
| Revenues,\tnet\tof\tinterest\texpense | $ 28,652 | $29,458 | $26,635 | (3)% | 11% |
| Operating\texpenses | 26,653 | \t 16,316 | \t 14,540 | 63 | 12 |
| Provisions\tfor\tloan\tlosses\tand\tfor\tbenefits\tand\tclaims | 19,622 | \t 10,761 | 3,825 | 82 | NM |
| Income\t(loss)\tbefore\ttaxes\tand\tminority\tinterest | $(17,623) | $2,381 | $8,270 | NM | (71)% |
| Income\ttaxes | (5,354) | 181 | 2,136 | NM | (92) |
| Minority\tinterest,\tnet\tof\ttaxes | 11 | 43 | 61 | (74)% | (30) |
| Net\tincome\t(loss) | $(12,280) | $2,157 | $6,073 | NM | (64)% |
| Revenues,\tnet\tof\tinterest\texpense,\tby\tregion: |  |  |  |  |  |
| North\tAmerica | $ 16,627 | $16,991 | $15,526 | (2)% | 9% |
| EMEA | 2,596 | 2,485 | 2,059 | 4 | 21 |
| Latin\tAmerica | 3,959 | 4,185 | 3,740 | (5) | 12 |
| Asia | 5,470 | 5,797 | 5,310 | (6) | 9 |
| Total\trevenues | $ 28,652 | $29,458 | $26,635 | (3)% | 11% |
| Net\tincome\t(loss)\tby\tregion: |  |  |  |  |  |
| North\tAmerica | $(9,003) | $780 | $4,002 | NM | (81)% |
| EMEA | (606) | (122) | 5 | NM | NM |
| Latin\tAmerica | (3,822) | 660 | 1,003 | NM | (34) |
| Asia | 1,151 | 839 | 1,063 | 37% | (21) |
| Total\tnet\tincome\t(loss) | $(12,280) | $2,157 | $6,073 | NM | (64)% |
| Consumer\tFinance\tJapan\t(CFJ)—NIR | $726 | $1,135 | $1,566 | (36)% | (28)% |
| Consumer\tBanking,\texcluding\tCFJ—NIR | 21,206 | \t 19,606 | \t 17,420 | 8 | 13 |
| CFJ—operating\texpenses | $371 | $576 | $713 | (36)% | (19)% |
| Consumer\tBanking,\texcluding\tCFJ—operating\texpenses | 26,282 | \t 15,740 | \t 13,827 | 67 | 14 |
| CFJ—provision\tfor\tloan\tlosses\tand\tfor\tbenefits\tand\tclaims | $1,336 | $1,421 | $1,118 | (6)% | 27% |
| Consumer\tBanking,\texcluding\tCFJ— |  |  |  |  |  |
| \t\t\t\tprovision\tfor\tloan\tlosses\tand\tfor\tbenefits\tand\tclaims | 18,286 | 9,340 | 2,707 | 96 | NM |
| CFJ—net\tincome\t(loss) | $146 | $(520) | $(133) | NM | NM |
| Consumer\tBanking,\texcluding\tCFJ—net\tincome\t(loss) | (12,426) | 2,677 | 6,206 | NM | (57)% |
| Average\tassets\t(in\tbillions\tof\tdollars) | $547 | $572 | $467 | (4)% | 22% |
| Return\ton\tassets | (2.24)% | 0.38% | 1.30% |  |  |
| Key\tindicators\t(in\tbillions\tof\tdollars) |  |  |  |  |  |
| Average\tloans | $395.3 | $380.0 | $330.1 | 4 | 15 |
| Average\tdeposits | $287.7 | $276.4 | $236.7 | 4 | 17 |
| Accounts\t(in\tmillions) | 78.5 | 79.5 | 69.7 | (1) | 14 |
| Branches | 7,730 | 8,247 | 7,826 | (6) | 5 |

Consumer	Banking	revenue	declined	3%.	Net	interest	revenue	was	6%	higher than	the	prior	year,	as	growth	of	4%	in	average	loans	and	4%	in	deposits	was partially	offset	by	a	Net	interest	revenue	decline	in	Japan	Consumer	Finance (CFJ).	Non-interest	revenue	declined	23%,	primarily	due	to	a	27%	decline	in investment	sales	and	a	loss	from	the	mark-to-market	on	the	MSR	asset	and related	hedge	in	North	America.

In	North	America,	total	revenues	decreased	2%.	Net	interest	revenue	was	9% higher	than	the	prior	year,	primarily	due	to	increased	average	loans	and	deposits, up	3%	and	2%,	respectively,	and	a	shift	towards	higher	yielding	products.	Non- interest	revenue	declined	29%,	mainly	due	to	lower	mortgage	servicing	revenue. Excluding	the	impact	from	the	mortgage	servicing	revenue,	total	revenues increased	4%.	Revenues	in	EMEA	increased	by	4%,	driven	by	growth	in	average loans	and	deposits,	improved	net	interest	margin	and	the	impact	of	the	Egg acquisition.	Revenues	in	Latin	America

were	down	5%,	mainly	due	to	spread	compression	and	lower	revenues	from	the Chile	divestiture	not	being	fully	offset	by	average	loan	and	deposit	growth	of 14%	and	4%,	respectively.	Asia	revenues	decreased	6%,	as	growth	in	average loans	and	deposits	of	5%	and	4%,	respectively,	was	offset	by	a	36%	total revenue	decline	in	CFJ	and	lower	investment	product	sales.	Excluding	CFJ, revenues	increased	2%.

Operating	expenses	growth	of	63%	was	primarily	driven	by	a	$9.568	billion goodwill	impairment	charge,	higher	business	volumes,	increased	credit management	costs,	an	$877	million	repositioning/restructuring	charge	and	prior- year	acquisitions,	partially	offset	by	a	$221	million	benefit	related	to	a	legal vehicle	repositioning	in	Mexico,	lower	incentive	compensation	expenses	and	the absence	of	a	prior-year	write-down	of	customer	intangibles	and	fixed	assets	in CFJ.

Expenses	were	up	70%	in	North	America,	primarily	driven	by	a	$5.107	billion goodwill	impairment	charge,	a	$530	million	repositioning/restructuring	charge, higher	collection	and	credit-related	expenses	and	acquisitions.	Excluding	the goodwill	impairment	charge	and	the	repositioning/restructuring	charge,	expenses increased	1%.	EMEA	expenses	were	up	21%	primarily	due	to	the	impact	of	a $203	million	goodwill	impairment	charge,	repositioning/restructuring	charges	in 2008,	partially	offset	by	a	decline	in	incentive	compensation	and	the	benefits from	re-engineering	efforts.	Expenses	increased	$4.166	billion	in	Latin	America primarily	driven	by	a	$4.258	billion	goodwill	impairment	charge,	prior-year acquisitions,	volume	growth	and	repositioning/restructuring	charges	in	2008. Partially	offsetting	the	increase	was	a	$221	million	benefit	related	to	a	legal vehicle	repositioning	in	Mexico.	The	1%	growth	in	Asia	was	primarily	driven	by the	acquisition	of	the	Bank	of	Overseas	Chinese	and	higher	volumes,	partially offset	by	lower	expenses	in	CFJ.

Provisions	for	credit	losses	and	for	benefits	and	claims	increased	$8.9	billion, reflecting	significantly	higher	net	credit	losses	in	North	America,	Mexico	and India,	as	well	as	a	$2.6	billion	incremental	pretax	charge	to	increase	loan	loss reserves,	primarily	in	North	America.	The	growth	of	the	loan	portfolio	also contributed	to	the	increase	in	credit	costs.

Credit	costs	in	North	America	increased	by	$7.3	billion,	due	to	a	$5.1	billion increase	in	net	credit	losses	and	a	$2.2	billion	increase	in	loan	loss	reserve	builds across	all	portfolios.	Higher	credit	costs	reflected	a	weakening	of	leading	credit indicators,	including	higher	delinquencies	in	first	and	second	mortgages,	auto and	unsecured	personal	loans,	as	well	as	trends	in	the	macro-economic environment,	including	the	housing	market	downturn.	The	net	credit	loss	ratio increased	168	bps	to	2.72%.	EMEA	credit	costs	increased	33%	reflecting deterioration	in	Western	European	countries	as	well	as	net	credit	losses	from	the Egg	acquisition.	The	net	credit	loss	ratio	increased	57	bps	to	2.93%.	In	Latin America,	credit	costs	increased	$394	million,	primarily	due	to	higher	net	credit losses	in	Mexico.	Credit	costs	in	Asia	increased	27%	primarily	driven	by	a	$234 million	incremental	pretax	charge	to	increase	loan	loss	reserves,	increased	credit costs	especially	in	India,	and	portfolio	growth.

Asia	results	include	a	tax	benefit	of	$850	million	in	the	fourth	quarter	of	2008, mainly	due	to	the	restructuring	of	legal	vehicles	in	Japan.

Net	interest	revenue	was	9%	higher	than	the	prior	year	as	growth	in	average loans	and	deposits	of	15%	and	17%	respectively,	as	well	as	the	impact	of acquisitions,	was	partially	offset	by	a	decrease	in	net	interest	margin.	Non- interest	revenue	increased	14%,	primarily	due	to	a	17%	increase	in	investment product	sales	and	the	impact	of	foreign	currency	translation.

In	North	America,	total	revenues	increased	9%.	Net	interest	revenue	was	9% higher	than	the	prior	year,	as	growth	in	average	loans	and	deposits,	up	14%	and 16%,	respectively,	was	partially	offset	by	a	decrease	in	net	interest	margin.	Net interest	margin	declined	mainly	due	to	an	increase	in	the	cost	of	funding	driven by	a	shift	to	higher	cost	Direct	Bank	and	time	deposits.	Non-interest	revenue increased	10%,	mainly	due	to	the	impact	of	the	acquisition	of	ABN	AMRO	in the	first	quarter	of	2007,	higher	gains	on	sales	of	mortgage	loans	and	growth	in net	servicing	revenues.	This	increase	was	partially	offset	by	the	absence	of	$163 million	pretax	gain	from	the	sale	of	upstate	New	York	branches	in	the	prior-year period.	In	EMEA,	revenues	increased	by	21%	to	$2.5	billion,	driven	by	strong growth	in	average	loans	and	deposits	and	improved	net	interest	margin	and	the impact	of	the	Egg

acquisition.	Revenues	in	Latin	America	increased	12%	versus	the	prior	year driven	by	growth	in	average	loans	and	deposits	of	29%	and	14%,	respectively, partially	offset	by	the	absence	of	a	prior-year	gain	on	the	sale	of	Avantel	of	$234 million.	Asia	revenues	increased	9%,	as	growth	in	average	loans	and	deposits	of 13%	and	8%,	respectively,	and	higher	investment	product	sales	were	offset	by	a 27%	total	revenue	decline	in	CFJ.	Results	in	2007	include	a	$261	million	pretax charge	in	CFJ	to	increase	reserves	for	estimated	losses	due	to	customer settlements.

Consumer	Banking	Operating	expenses	increased	12%,	reflecting	the	impact	of acquisitions,	volume	growth	across	all	regions,	and	increased	investment spending	due	to	new	branch	openings.	During	2007,	712	Retail	Banking	and Consumer	Finance	branches	were	opened	or	acquired.	Expenses	also	included	a $152	million	write-down	of	customer	intangibles	and	fixed	assets	in	CFJ recorded	in	the	third	quarter	of	2007.	The	increase	in	expenses	was	partially offset	by	savings	from	the	structural	expense	initiatives	announced	in	April	2007 and	the	absence	of	the	charge	related	to	the	initial	adoption	of	SFAS	123(R)	in the	first	quarter	of	2006.

North	America	expenses	were	up	12%,	primarily	driven	by	the	ABN	AMRO integration,	higher	collection	costs,	higher	volume-related	expenses,	and increased	investment	spending	due	to	202	new	branch	openings	in	2007	(110	in CitiFinancial	and	92	in	Citibank,	N.A.).	Expense	growth	in	2007	was	favorably affected	by	the	absence	of	the	charge	related	to	the	initial	adoption	of	SFAS 123(R)	in	the	prior-year	period.	EMEA	expenses	were	up	20%	primarily	due	to business	growth,	acquisitions	and	FX	translation.	Expenses	in	Latin	America increased	11%,	primarily	driven	by	higher	business	volumes	and	the	impact	of acquisitions.	Asia	expenses	increased	9%,	primarily	due	to	increased	investment spending	including	expansion	of	the	branch	network,	partially	offset	by	savings from	the	structural	expense	initiatives.

Provisions	for	credit	losses	and	for	benefits	and	claims	increased	$6.9	billion reflecting	a	$5.1	billion	incremental	pretax	charge	to	increase	loan	loss	reserves, primarily	in	North	America,	and	significantly	higher	net	credit	losses	of	$1.8 billion.	The	increase	in	loan	loss	reserves	reflects	a	change	in	estimate	of	loan losses	inherent	in	the	loan	portfolio	but	not	yet	visible	in	delinquency	statistics. Credit	costs	in	North	America	increased	by	$5.6	billion,	due	to	$1.2	billion higher	net	credit	losses	and	$4.4	billion	higher	loan	loss	reserve	build.	Higher credit	costs	reflected	a	weakening	of	leading	credit	indicators	including delinquencies	in	first	and	second	mortgages	and	deterioration	in	the	housing market,	a	downturn	in	other	economic	trends	including	unemployment	and	GDP affecting	all	other	portfolios	and	a	change	in	estimate	of	loan	losses	inherent	in the	portfolio	but	not	yet	visible	in	delinquency	statistics.	The	increase	in Provision	for	loan	losses	also	reflects	the	absence	of	loan	loss	reserve	releases recorded	in	the	prior	year.	The	net	credit	loss	ratio	increased	32	bps	to	1.04%. Higher	credit	costs	in	EMEA	were	due	to	an	increase	in	net	credit	losses,	up 56%,	and	an	$174	million	incremental	net	charge	to	increase	loan	loss	reserves. The	net	credit	loss	ratio	increased	28	bps	to	2.36%.	Credit	costs	in	Latin	America increased	substantially	driven	by	a	$151	million	incremental	net	charge	to increase	loan	loss	reserves	and	higher	net	credit	losses.	The	net	credit	loss	ratio increased	46	bps	to	1.90%.	Credit	costs	in	Asia	increased	55%	primarily	driven by	higher	net	credit	losses,	primarily	in	CFJ,	and	a	$317	million	incremental pretax	charge	to	increase	loan	loss	reserves,	as	well	as	increased	credit	costs especially	in	India.

During	2009,	Citigroup's	global	consumer	business	is	expected	to	operate	in	a continued	challenging	economic	and	credit	environment.	Revenues	will	likely continue	to	be	negatively	affected	by	the	significant	U.S.	and	global	economic downturn	that	has	impacted	customer	demand	and	credit	performance.	See "Outlook	for	2009"	on	page	7	and	"Risk	Factors"	on	page	47. In	North	America,	the	continuing	deterioration	in	the	U.S.	housing	market could	continue	to	adversely	impact	the	cost	of	credit	in	the	first	mortgage	and second	mortgage	portfolios.	With	higher	levels	of	unemployment	and bankruptcy	filings	in	2009,	net	credit	losses,	delinquencies	and	defaults	are expected	to	continue	to	increase.	In	EMEA,	loan	volumes	are	expected	to	decline as	is	consistent	with	tighter	origination	standards	in	view	of	the	weak	credit environment	and	exits	in	specific	consumer	finance	businesses.	Investment	sales and	assets	under	management	are	expected	to	be	lower	due	to	weak	capital markets	and	lower	client	confidence.	In	Latin	America,	revenues,	credit	costs and	business	drivers	are	expected	to	be	affected	by	global	economic	conditions, including	the	impact	of	foreign	currency	translation,	unemployment	rates	and political	and	regulatory	developments	in	the	region.	In	Japan,	the	Company	will continue	to	actively	monitor	developments	in	customer	refund	claims	and defaults,	political	developments	and	the	way	courts	view	grey	zone	claims, refunds	and	defaults,	the	outcome	of	which	cannot	be	predicted. Citigroup's	management	and	reporting	realignment	will	result	in	the restructuring	of	these	businesses,	effective	for	reporting	purposes	in	the	second quarter	of	2009,	resulting	in	a	focus	on	the	Company's	core	assets	within	the regional	consumer	and	commercial	banking	businesses.	The	realignment	will also	allow	the	Company	to	seek	to	realize	value	from	its	other	local	consumer finance	businesses.	The	Company	also	anticipates	deploying	TARP	funds received	from	the	U.S.	government	by	making	mortgage	loans	directly	to homebuyers	and	supporting	the	housing	market	through	the	purchase	of	prime residential	mortgages	and	mortgage-backed	securities	in	the	secondary	market, and	providing	loans	to	consumers	and	businesses	facing	liquidity	problems.	See "TARP	and	Other	Regulatory	Programs	–	Implementation	and	Management	of TARP	Programs"	on	page	44.

# INSTITUTIONAL	CLIENTS	GROUP	(ICG)

|  |  |  |  | %	Change | %	Change |
| :--- | :--- | :--- | :--- | :--- | :--- |
| In\tmillions\tof\tdollars | 2008 | 2007 | 2006 | 2008\tvs.\t2007 | 2007\tvs.\t2006 |
| Net\tinterest\trevenue | $ 19,159 | $12,242 | $9,653 | 57% | 27% |
| Non-interest\trevenue | (26,976) | 1,498 | \t 20,994 | NM | (93) |
| Revenues,\tnet\tof\tinterest\texpense | $(7,817) | $13,740 | $30,647 | NM | (55)% |
| Operating\texpenses | 22,851 | \t 21,236 | \t 18,229 | 8% | 16 |
| Provision\tfor\tcredit\tlosses\tand\tbenefits\tand\tclaims | 5,234 | 1,540 | 532 | NM | NM |
| Income\t(loss)\tbefore\ttaxes\tand\tminority\tinterest | $(35,902) | $ (9,036) | $11,886 | NM | NM |
| Income\ttaxes\t(benefits) | (15,405) | (5,054) | 3,052 | NM | NM |
| Minority\tinterest,\tnet\tof\ttaxes | (380) | 173 | 223 | NM | (22)% |
| Net\tincome\t(loss) | $(20,117) | $ (4,155) | $8,611 | NM | NM |
| Revenues,\tnet\tof\tinterest\texpense,\tby\tregion: |  |  |  |  |  |
| North\tAmerica | $(22,477) | $ (3,040) | $13,032 | NM | NM |
| EMEA | 5,592 | 4,235 | 8,758 | 32% | (52)% |
| Latin\tAmerica | 3,812 | 4,206 | 3,091 | (9) | 36 |
| Asia | 5,256 | 8,339 | 5,766 | (37) | 45 |
| Total\trevenues | $(7,817) | $13,740 | $30,647 | NM | (55)% |
| Total\trevenues,\tnet\tof\tinterest\texpense\tby\tproduct: |  |  |  |  |  |
| Securities\tand\tBanking | $(17,437) | $5,875 | $24,651 | NM | (76)% |
| Transaction\tServices | 9,620 | 7,865 | 5,996 | 22% | 31 |
| Total\trevenues | $(7,817) | $13,740 | $30,647 | NM | (55)% |
| Net\tincome\t(loss)\tby\tregion: |  |  |  |  |  |
| North\tAmerica | $(20,471) | $ (6,733) | $3,533 | NM | NM |
| EMEA | (1,102) | (1,900) | 2,010 | 42% | NM |
| Latin\tAmerica | 1,292 | 1,630 | 1,112 | (21) | 47% |
| Asia | 164 | 2,848 | 1,956 | (94) | 46 |
| Total\tnet\tincome\t(loss) | $(20,117) | $ (4,155) | $8,611 | NM | NM |
| Net\tincome\t(loss)\tby\tproduct: |  |  |  |  |  |
| Securities\tand\tBanking | $(23,088) | $ (6,377) | $7,180 | NM | NM |
| Transaction\tServices | 2,971 | 2,222 | 1,431 | 34% | 55% |
| Total\tnet\tincome\t(loss) | $(20,117) | $ (4,155) | $8,611 | NM | NM |

Revenues,	net	of	interest	expense	were	negative	due	to	substantial	losses	related to	the	fixed	income	and	credit	markets.	Securities	and	Banking	revenues included	$14.3	billion	of	write-downs	on	subprime-related	direct	exposure,	$5.7 billion	of	downward	credit	market	value	adjustments	related	to	exposure	to Monoline	insurers,	$4.9	billion	of	write-downs	(net	of	underwriting	fees)	on funded	and	unfunded	highly	leveraged	finance	commitments,	$4.4	billion	of downward	credit	valuation	adjustments	on	derivative	positions,	excluding Monolines,	$3.8	billion	of	write-downs	on	Alt-A	mortgage	securities,	net	of hedges,	$3.3	billion	of	write-downs	on	SIV	assets,	$2.6	billion	of	write-downs	on commercial	real	estate	positions,	$2.5	billion	of	losses	in	private	equity	and equity	investments	in	the	fourth	quarter,	$1.7	billion	of	write-downs	on	ARS inventory,	due	to	failed	auctions	predominately	in	the	first	quarter	of	2008	and deterioration	in	the	credit	markets,	and	write-downs	of	$413	million	related	to the	ARS	settlement.

Negative	Fixed	Income	Markets	revenues	were	partially	offset	by	a	$4.6	billion gain	related	to	the	inclusion	of	Citi's	credit	spreads	in	the	determination	of	the market	value	of	those	liabilities	for	which	the	fair-	value	option	was	elected. Equity	Markets	also	suffered	a	decrease	in	revenues,	particularly	in	derivatives and	convertibles,	driven	by	the	volatility	and	sharp	declines	in	the	global	equity indices.	Offsetting	the	negative	revenues	in	Fixed	Income	and	decline	in	Equities is	the	increase	in	Lending	revenues	of	$1.6	billion	to	$4.1	billion,	primarily driven	by	gains	on	CDS	hedges.	Transaction	Services	revenues	grew	22%	driven by	new	business	wins	and	implementations,	growth	in	customer	liability balances,	increased	transaction	volumes	and	the	impact	of	acquisitions.

Operating	expenses	increased	4%	in	Securities	and	Banking	reflecting	$1,242 million	of	repositioning/restructuring	charges,	a	$937	million	Nikko	Asset Management	intangible	asset	impairment	charge,	and	an	Old	Lane	intangible asset	impairment	charge	of	$202	million,	whereas	2007	expenses

included	$370	million	of	repositioning/restructuring	charges,	partially	offset	by	a $300	million	release	of	litigation	reserves.	Expenses	increased	11%	in Transaction	Services	due	to	higher	expenses	driven	by	organic	business	growth, higher	variable	expenses	related	to	sales	and	revenue	growth,	and	the	Bisys Group	acquisition.

Provisions	for	credit	losses	and	for	benefits	and	claims	in	Securities	and Banking	increased,	primarily	from	an	incremental	net	charge	to	increase	loan loss	reserves	of	$2.5	billion,	reflecting	loan	loss	reserves	for	specific counterparties,	as	well	as	a	weakening	in	credit	quality	in	the	corporate	credit environment	and	a	$1.1	billion	increase	in	net	credit	losses	mainly	associated with	loan	sales.	Transaction	Services	credit	costs	increased,	primarily	due	to	a charge	to	increase	loan	loss	reserves,	mainly	from	the	commercial	banking portfolio	in	the	emerging	markets.

Revenues,	net	of	interest	expense	decreased	55%	driven	by	$20.7	billion	of pretax	write-downs	and	losses	related	to	deterioration	in	the	mortgage-backed and	credit	markets.	The	losses	consisted	primarily	of	approximately	$18.3 billion	related	to	direct	subprime-related	exposures	and	write-downs	of approximately	$1.5	billion	pretax,	net	of	underwriting	fees,	on	funded	and unfunded	highly	leveraged	finance	commitments.	Of	this	amount,	approximately $1.3	billion	of	impairment	was	recognized	for	transactions	that	had	been	funded as	of	December	31,	2007,	and	$0.2	billion	of	impairment	was	recognized	on transactions	that	were	unfunded	as	of	December	31,	2007.	Securities	and Banking's	remaining	$37.3	billion	in	U.S.	subprime	net	direct	exposure	as	of December	31,	2007	consisted	of	(a)	approximately	$8.0	billion	of	subprime- related	exposures	in	its	lending	and	structuring	business	and	(b)	approximately $29.3	billion	of	net	exposures	to	the	super	senior	tranches	of	CDOs	which	are collateralized	by	asset-backed	securities,	derivatives	on	asset-backed	securities, or	both.	The	decreases	were	offset	partially	by	increased	revenues	in	Equity Markets	from	cash	trading	and	strong	growth	in	equity	finance,	in	Advisory from	strong	deal	volumes,	in	Equity	Underwriting	and	in	Lending.	Transaction Services	revenues	increased	31%	reflecting	growth	in	liability	balances, transaction	volumes	and	assets	under	custody	mainly	in	Cash	Management	and Securities	and	Funds	Services.	Average	liability	balances	grew	30%	to	$247 billion	in	2007	as	compared	to	2006	due	to	growth	across	all	regions,	reflecting positive	flow	from	new	and	existing	customers.

Operating	expenses	increased	16%	due	to	higher	business	volumes,	higher	non- incentive	compensation	staff	expenses	and	increased	costs	driven	by	the	Bisys Group,	Nikko	Cordial,	Grupo	Cuscatlán,	Old	Lane	and	ATD	acquisitions. Operating	expenses	also	increased	driven	by	the	implementation	of	a	headcount reduction	plan	to	reduce	ongoing	expenses.	This	resulted	in	a	$438	million pretax	charge	to	compensation	and	benefits	in	connection	with	headcount reductions.	Expense	growth	in	2007	was	favorably	affected	by	the	absence	of	a $354	million	charge	related	to	the	initial	adoption	of	SFAS	123(R)	in	2006	and	a $300	million	pretax	release	of	litigation	reserves	in	2007.

Provisions	for	credit	losses	and	for	benefits	and	claims	increased approximately	$1.0	billion,	driven	by	higher	net	credit	losses,	mainly	from	loans with	subprime-related	direct	exposure,	and	a	higher	net	charge	to	increase	loan loss	and	unfunded	lending	commitment	reserves	reflecting	a	slight	weakening	in overall	portfolio	credit	quality,	as	well	as	loan	loss	reserves	for	specific counterparties.	Subprime-related	loans	accounted	for

approximately	$860	million	of	credit	costs	in	2007,	of	which	$704	million	was recorded	in	the	fourth	quarter.

During	2009,	the	Company's	Securities	and	Banking	businesses	will	continue	to be	significantly	affected	by	the	levels	of	and	volatility	in	the	global	capital markets	and	economic	and	political	developments,	in	the	U.S.	and	globally. Default	rates	are	expected	to	be	at	historic	highs	by	the	end	of	2009	and	could negatively	impact	the	cost	of	credit.	Growth	in	the	transaction	services	business could	be	offset	by	lower	interest	rates	and	continued	potential	pressure	on	asset values.	See	"Outlook	for	2009"	on	page	7	and	"Risk	Factors"	on	page	47. The	Company	intends	to	continue	to	manage	down	legacy	positions	that	have proven	illiquid	to	reduce	future	losses.	The	Company's	global	Transaction Services	business	will	continue	to	focus	on	generating	earnings	growth, leveraging	its	strong	global	platform	and	its	ability	to	innovatively	serve	large multinational	clients	seeking	to	optimize	their	working	capital.

In	addition,	Citigroup's	management	and	reporting	realignment	will	result	in the	restructuring	of	the	Securities	and	Banking	businesses,	effective	for	reporting purposes	in	the	second	quarter	of	2009,	resulting	in	a	focus	on	the	Company's core	assets,	such	as	its	global	Transaction	Services	and	investment	banking business,	and	managing	and	maximizing	the	value	of	its	other	legacy	assets.

# GLOBAL	WEALTH	MANAGEMENT

|  |  |  |  | %	Change | %	Change |
| :--- | :--- | :--- | :--- | :--- | :--- |
| In\tmillions\tof\tdollars | 2008 | 2007 | 2006 | 2008\tvs.\t2007 | 2007\tvs.\t2006 |
| Net\tinterest\trevenue | $2,622 | $2,174 | $1,922 | 21% | 13% |
| Non-interest\trevenue | 9,979 | \t 10,824 | 8,255 | (8) | 31 |
| Revenues,\tnet\tof\tinterest\texpense | $12,601 | $12,998 | $10,177 | (3)% | 28% |
| Operating\texpenses | \t 10,548 | 9,849 | 8,006 | 7 | 23 |
| Provision\tfor\tloan\tlosses | 301 | 101 | 24 | NM | NM |
| Income\tbefore\ttaxes\tand\tminority\tinterest | $1,752 | $3,048 | $2,147 | (43)% | 42% |
| Income\ttaxes | 652 | 1,019 | 703 | (36) | 45 |
| Minority\tinterest,\tnet\tof\ttaxes | 9 | 55 | — | (84) | — |
| Net\tincome | $1,091 | $1,974 | $1,444 | (45)% | 37% |
| Revenues,\tnet\tof\tinterest\texpense\tby\tregion: |  |  |  |  |  |
| North\tAmerica | $9,295 | $9,790 | $8,790 | (5)% | 11% |
| EMEA | 604 | 543 | 331 | 11 | 64 |
| Latin\tAmerica | 357 | 373 | 318 | (4) | 17 |
| Asia | 2,345 | 2,292 | 738 | 2 | NM |
| Total\trevenues | $12,601 | $12,998 | $10,177 | (3)% | 28% |
| Net\tincome\t(loss)\tby\tregion: |  |  |  |  |  |
| North\tAmerica | $968 | $1,415 | $1,209 | (32)% | 17% |
| EMEA | 84 | 77 | 23 | 9 | NM |
| Latin\tAmerica | 56 | 72 | 48 | (22) | 50 |
| Asia | (17) | 410 | 163 | NM | NM |
| Total\tnet\tincome | $1,091 | $1,974 | $1,443 | (45)% | 37% |
| Key\tindicators:\t(in\tbillions\tof\tdollars) |  |  |  |  |  |
| Total\tassets\tunder\tfee-based\tmanagement | $332 | $507 | $399 | (35)% | 27% |
| Total\tclient\tassets | 1,320 | 1,784 | 1,438 | (26) | 24 |
| Net\tclient\tasset\tflows | (25) | 15 | 14 | NM | 7 |
| Financial\tadvisors\t(FA)\t/\tbankers\t(actual\tnumber) | \t 13,765 | \t 15,454 | \t 13,694 | (11) | 13 |
| Annualized\trevenue\tper\tFA\t/\tbanker\t(in\tthousands\tof\tdollars) | 849 | 880 | 740 | (4) | 19 |
| Average\tdeposits\tand\tother\tcustomer\tliability\tbalances | 126 | 117 | 107 | 8 | 9 |
| Average\tloans | 63 | 54 | 42 | 17 | 29 |

Revenues,	net	of	interest	expense	decreased	3%	primarily	due	to	the	fall	in investment	revenues	across	regions	and	lower	capital	markets	revenue	in	Asia and	North	America,	partially	offset	by	the	impact	of	the	Nikko	Cordial acquisition,	an	increase	in	lending	revenues	across	all	regions	and	an	increase	in banking	revenues	in	North	America	and	EMEA.	The	consolidated	revenue	also includes	the	gain	on	sale	of	CitiStreet	and	charges	related	to	the	ARS	settlement. Total	client	assets,	including	assets	under	fee-based	management,	decreased $464	billion,	or	26%,	mainly	reflecting	the	impact	of	market	declines	over	the past	year.	Net	flows	were	$(25)	billion.	GWM	had	13,765	financial advisors/bankers	as	of	December	31,	2008,	compared	with	15,454	as	of December	31,	2007,	driven	by	attrition	in	North	America	and	Asia,	as	well	as	the elimination	of	low	performing	bankers	and	advisors.

Operating	expenses	increased	7%	primarily	due	to	higher repositioning/restructuring	charges	of	$298	million,	the	impact	of	acquisitions,	a reserve	of	$250	million	in	the	first	quarter	of	2008	related	to	an	offer	to	facilitate the	liquidation	of	investments	in	a	Citi-managed	fund	for	its	clients,	and	GWM's share	of	the	ARS	settlement	penalty	of	$50	million	in	the	third

quarter.	These	increases	were	partially	offset	by	the	impact	of	lower compensation	costs	and	continued	expense	management.

Provision	for	loan	losses	increased	by	$200	million,	reflecting	higher	reserve builds	of	$149	million	and	increased	write-downs	of	$51	million.	The	reserve builds	and	write-offs	in	2008	reflect	the	impact	on	clients	of	deteriorating financial	and	real	estate	markets.	Loans	were	downgraded,	classified	and written-down	as	clients	experienced	liquidity	depletion	from	failed	markets	and financial	institutions.	The	increase	in	reserve	builds	was	primarily	in	North America,	while	the	increase	in	write-offs	were	evenly	split	between	North America	and	Asia.

Revenues,	net	of	interest	expense	increased	28%	primarily	due	to	the	impact	of acquisitions,	an	increase	in	fee-based	revenues	in	line	with	the	growth	in	fee- based	assets,	an	increase	in	international	revenues	driven	by	strong	capital markets	activity	in	Asia	and	growth	in	investment	revenue	in	EMEA,	as	well	as strong	U.S.	branch	transactional	revenue	and	syndicate	sales.

Total	client	assets,	including	assets	under	fee-based	management,	increased	$346	billion,	or	24%,	reflecting	the	inclusion	of	client	assets	from	the	Nikko	Cordial	and Quilter	acquisitions,	as	well	as	organic	growth.	Net	flows	increased	slightly	compared	to	the	prior	year.	Global	Wealth	Management	had	15,454	financial advisors/bankers	as	of	December	31,	2007,	compared	with	13,694	as	of	December	31,	2006,	driven	by	the	Nikko	Cordial	and	Quilter	acquisitions,	as	well	as	hiring	in	the Private	Bank.

Operating	expenses	increased	23%	primarily	due	to	the	impact	of	acquisitions,	higher	variable	compensation	associated	with	the	increase	in	revenues,	increased customer	activity	and	charges	related	to	headcount	reductions.	Expense	growth	in	2007	was	favorably	affected	by	the	absence	of	the	charge	related	to	the	initial	adoption of	SFAS	123(R)	in	the	first	quarter	of	2006.

Provision	for	loan	losses	increased	$77	million	in	2007,	primarily	driven	by	portfolio	growth	and	a	reserve	for	specific	non-performing	loans	in	the	Private	Bank. Net	income	growth	also	reflected	a	$65	million	APB	23	benefit	in	the	Private	Bank	in	2007	and	the	absence	of	a	$47	million	tax	benefit	resulting	from	the	resolution of	2006	Tax	Audits.

During	2009,	Citigroup's	businesses	will	continue	to	be	negatively	affected	by	the	levels	of	and	volatility	in	the	capital	markets,	the	disruption	in	the	economic environment	generally	and	credit	costs,	including	the	level	of	interest	rates,	the	credit	environment	and	unemployment	rates.	See	"Outlook	for	2009"	on	page	7	and "Risk	Factors"	on	page	47.

As	previously	announced,	the	completion	of	the	Morgan	Stanley	Smith	Barney	joint	venture	is	anticipated	to	occur	in	the	third	quarter	of	2009.	After	the	expected completion	of	the	joint	venture	transaction,	which	is	subject	to	and	contingent	upon	regulatory	approvals,	a	significant	portion	of	the	earnings	in	the	joint	venture,	of which	Citigroup	will	share	49%,	will	be	derived	from	the	profitability	of	the	joint	venture.	Joint	venture	profitability	will	be	impacted	by	the	ability	of	Smith	Barney	and Morgan	Stanley	to	execute	the	planned	integration,	as	well	as	the	overall	market	and	economic	conditions,	including	further	declines	in	client	asset	values.

In	addition,	Citigroup's	management	and	reporting	realignment	will	result	in	the	restructuring	of	these	businesses,	effective	for	reporting	purposes	in	the	second quarter	of	2009,	resulting	in	a	focus	on	the	Company's	core	assets	within	the	businesses,	such	as	the	Private	Bank,	and	continued	efforts	to	maximize	the	value	of	other assets,	including	Citi's	49%	stake	in	the	Morgan	Stanley	Smith	Barney	Joint	Venture	and	the	Company's	Nikko	Asset	Management	business.

# CORPORATE/OTHER

Corporate/Other	includes	Treasury	results,	unallocated	corporate	expenses, offsets	to	certain	line-item	reclassifications	reported	in	the	business	segments (inter-segment	eliminations),	the	results	of	discontinued	operations	and unallocated	taxes.

| In	millions	of	dollars | 2008 | 2007 | 2006 |
| :--- | :--- | :--- | :--- |
| Net\tinterest\trevenue | $(1,288) | $(461) | $(345) |
| Non-interest\trevenue | 438 | (291) | (599) |
| Revenues,\tnet\tof\tinterest\texpense | $(850) | $(752) | $(944) |
| Operating\texpenses | 526 | 1,830 | 202 |
| Provisions\tfor\tloan\tlosses\tand\tfor\tbenefits\tand\tclaims | 1 | (2) | 4 |
| Loss\tfrom\tcontinuing\toperations\tbefore\ttaxes\tand |  |  |  |
| minority\tinterest | $(1,377) | $(2,580) | $(1,150) |
| Income\ttax\tbenefits | (421) | (922) | (498) |
| Minority\tinterest,\tnet\tof\ttaxes | (2) | 3 | 2 |
| Loss\tfrom\tcontinuing\toperations | $(954) | $(1,661) | $(654) |
| Income\tfrom\tdiscontinued\toperations | 4,410 | 628 | 1,087 |
| Net\tincome\t(loss) | $ 3,456 | $(1,033) | $433 |

Revenues,	net	of	interest	expense	declined	primarily	due	to	the	gain	in	2007	on the	sale	of	certain	corporate-owned	assets	and	higher	inter-segment	eliminations partially	offset	by	improved	Treasury	hedging	activities.

Operating	expenses	declined	primarily	due	to	lower	restructuring	charges	in	the current	year	as	well	as	reductions	in	incentive	compensation	and	benefits expense.

Discontinued	operations	represent	the	sale	of	Citigroup's	German	Retail Banking	Operations	and	CitiCapital.	See	Note	3	to	the	Consolidated	Financial Statements	on	page	136	for	a	more	detailed	discussion.

Revenues,	net	of	interest	expense	improved	primarily	due	to	improved	Treasury results	and	a	gain	on	the	sale	of	certain	corporate-owned	assets,	partially	offset by	higher	inter-segment	eliminations.

Operating	expenses	increased	primarily	due	to	restructuring	charges,	increased staffing,	technology	and	other	unallocated	expenses,	partially	offset	by	higher inter-segment	eliminations.

Income	tax	benefits	increased	due	to	a	higher	pretax	loss	in	2007,	offset	by	a prior-year	tax	reserve	release	of	$69	million	relating	to	the	resolution	of	the	2006 Tax	Audits.

Discontinued	operations	represent	the	operations	in	the	Sale	of	the	Asset Management	Business	and	the	Sale	of	the	Life	Insurance	and	Annuities Business.	For	2006,	Income	from	discontinued	operations	included	gains	and	tax benefits	relating	to	the	final	settlement	of	the	Life	Insurance	and	Annuities	and Asset	Management	Sale	Transactions	and	a	gain	from	the	Sale	of	the	Asset Management	Business	in	Poland,	as	well	as	a	tax	reserve	release	of	$76	million relating	to	the	resolution	of	the	2006	Tax	Audits.

# REGIONAL	DISCUSSIONS

The	following	are	the	four	regions	in	which	Citigroup	operates.	The	regional	results	are	fully	reflected	in	the	previous	segment	discussions.

|  |  |  |  | %	Change | %	Change |
| :--- | :--- | :--- | :--- | :--- | :--- |
| In\tmillions\tof\tdollars | 2008 | 2007 | 2006 | 2008\tvs.\t2007 | 2007\tvs.\t2006 |
| Net\tinterest\trevenue | $ 28,713 | $23,333 | $20,557 | 23% | 14% |
| Non-interest\trevenue | (14,969) | \t 14,301 | \t 30,696 | NM | (53) |
| Revenues,\tnet\tof\tinterest\texpense | $ 13,744 | $37,634 | $51,253 | (63)% | (27)% |
| Operating\texpenses | 36,407 | \t 30,186 | \t 28,380 | 21 | 6 |
| Provisions\tfor\tloan\tlosses\tand\tfor\tbenefits\tand\tclaims | 23,842 | \t 11,838 | 4,080 | NM | NM |
| Income\t(loss)\tbefore\ttaxes\tand\tminority\tinterest | $(46,505) | $ (4,390) | $18,793 | NM | NM |
| Income\ttaxes | (17,046) | (2,667) | 5,920 | NM | NM |
| Minority\tinterest,\tnet\tof\ttaxes | (424) | 102 | 242 | NM | (58)% |
| Net\tincome\t(loss) | $(29,035) | $ (1,825) | $12,631 | NM | NM |
| Average\tassets\t(in\tbillions\tof\tdollars) | $1,188 | $1,222 | $971 | (3)% | 26% |
| Return\ton\tassets | (2.44)% | (0.15)% | 1.30% |  |  |
| Key\tindicators\t(in\tbillions\tof\tdollars,\texcept\tin\tbranches) |  |  |  |  |  |
| Average\tloans | $429.7 | $405.2 | $363.1 | 6% | 12% |
| Average\tConsumer\tBanking\tloans | 298.2 | 289.8 | 255.0 | 3 | 14 |
| Average\tdeposits\t(and\tother\tconsumer\tliability\tbalances) | 261.6 | 245.1 | 218.1 | 7 | 12 |
| Branches/offices | 3,989 | 4,227 | 4,084 | (6) | 4 |

Revenues,	net	of	interest	expense	declined	63%	from	2007,	driven	by significantly	higher	losses	related	to	fixed	income	and	credit	markets	in	S&B, which	are	more	fully	described	on	page	10.	These	losses	resulted	in	a	decline	in S&B	revenue	of	$19.9	billion	from	2007.	Cards	revenue	declined	26%,	due	to lower	securitization	revenues,	reflecting	the	impact	of	higher	funding	costs	and higher	credit	losses	in	the	securitization	trusts,	and	the	write-down	of	$1.6	billion in	the	residual	interest	in	securitized	balances.	Cards	results	also	include	higher gains	on	portfolio	sales,	which	in	aggregate	added	$548	million	to	2008	revenue vs.	$393	million	in	2007.	Consumer	Banking	revenue	decreased	2%,	as	higher interest	revenue	was	more	than	offset	by	lower	mortgage	servicing.	Global Wealth	Management	revenue	declined	5%	reflecting	lower	investment	revenues and	the	ARS	settlement,	which	were	partially	offset	by	the	gain	on	the	sale	of CitiStreet	and	higher	lending	revenues.

Operating	expenses	increased	21%,	with	increases	in	ICG	and	Consumer Banking,	reflecting	a	$5.107	billion	goodwill	impairment	charge,	higher restructuring	and	repositioning	charges,	partially	offset	by	a	reduction	in	Cards. Global	Wealth	Management	expenses	were	flat	year	over	year.	Total restructuring/repositioning	charges	were	approximately	$2.0	billion	for	the	full year.

Provisions	for	loan	losses	and	for	benefits	and	claims	increased	$12.0	billion. Consumer	Banking	credit	costs	increased	$7.3	billion,	due	to	a	$5.1	billion increase	in	net	credit	losses	and	a	$2.2	billion	increase	in	loan	loss	reserve	builds (see	page	11	and	32	for	further	discussion).	Cards	credit	costs	increased	$1.9 billion,	due	to	an	increase	of	$916	million	in	net	credit	losses	and	an	increase	in reserve	builds	of	$936	million	(see	page	11	and	30	for	further	discussion).	ICG increased	$2.2	billion,	reflecting	loan	losses	reserves	for	specific	counterparties, a	weakening	in	credit	quality	in	the	corporate	credit	environment	and	an	increase in	net	credit	losses	associated	with	loan	sales.

Revenues,	net	of	interest	expense	declined	27%	from	2006,	primarily	driven	by pretax	write-downs	and	losses	related	to	deterioration	in	the	mortgage-backed and	credit	markets	in	S&B,	which	are	more	fully	described	on	page	34.	These losses	resulted	in	a	decline	in	S&B	revenue	of	$16.4	billion	from	2007.	In Global	Cards,	revenues	were	flat,	reflecting	a	pretax	gain	on	the	sale	of MasterCard	shares	of	$393	million	in	2007,	offset	by	lower	securitization revenues.	Purchase	sales	were	up	6%	and	average	loans	were	down	7%.	In Consumer	Banking,	total	revenues	increased	9%.	Net	interest	revenue	was	9% higher	than	the	prior	year,	as	growth	in	average	loans	and	deposits,	up	14%	and 16%,	respectively,	was	partially	offset	by	a	decrease	in	net	interest	margin.	Net interest	margin	declined	mainly	due	to	an	increase	in	the	cost	of	funding	driven by	a	shift	to	higher	cost	Direct	Bank	and	time	deposits.	Non-interest	revenue increased	10%,	mainly	due	to	the	impact	of	the	acquisition	of	ABN	AMRO	in the	first	quarter	of	2007,	higher	gains	on	sales	of	mortgage	loans	and	growth	in net	servicing	revenues.	This	increase	was	partially	offset	by	the	absence	of	$163 million	pretax	gain	from	the	sale	of	upstate	New	York	branches	in	the	prior-year period.

Operating	expenses	growth	of	6%	was	primarily	driven	by	the	VISA litigation-related	pretax	charge	of	$292	million,	the	ABN	AMRO	integration, higher	collection	costs,	higher	volume-related	expenses,	and	increased investment	spending	due	to	202	new	branch	openings	in	2007	(110	in CitiFinancial	and	92	in	Citibank).	Additionally,	expenses	increased	due	to	higher non-incentive	compensation	staff	expenses	and	acquisitions.	Expense	growth	in 2007	was	favorably	affected	by	the	absence	of	the	charge	related	to	the	initial adoption	of	SFAS	123(R)	in	the	first	quarter	of	2006.

Provisions	for	loan	losses	and	for	benefits	and	claims	increased	$7.8	billion. Credit	costs	in	Consumer	Banking	increased	by	$5.6	billion,	due	to	$1.2	billion higher	net	credit	losses	and	$4.4	billion	higher	loan	loss	reserve	build	(see	page 32	for	further	discussion).	In	Global	Cards,	credit	costs	increased	$1.4	billion, driven	by	a	higher	loan	loss	reserve	build,	up	$1.3	billion,	and	higher	net	credit losses,	up	$0.1	billion	(see	page	30	for	further	discussion).	In	ICG	credit	costs increased	$940	million	(see	page	35	for	further	discussion).

Net	income	in	2007	also	reflected	the	absence	of	a	$229	million	tax	benefit resulting	from	the	resolution	of	the	2006	Tax	Audits.

|  |  |  |  | %	Change | %	Change |
| :--- | :--- | :--- | :--- | :--- | :--- |
| In\tmillions\tof\tdollars | 2008 | 2007 | 2006 | 2008\tvs.\t2007 | 2007\tvs.\t2006 |
| Net\tinterest\trevenue | $8,618 | $7,067 | $5,222 | 22% | 35% |
| Non-interest\trevenue | 2,500 | 2,151 | 7,131 | 16 | (70) |
| Revenues,\tnet\tof\tinterest\texpense | $11,118 | $9,218 | $12,353 | 21% | (25)% |
| Operating\texpenses | \t 11,051 | \t 10,864 | 8,778 | 2 | 24 |
| Provisions\tfor\tloan\tlosses\tand\tfor\tbenefits\tand\tclaims | 3,572 | 1,818 | 770 | 96 | NM |
| Income\t(loss)\tbefore\ttaxes\tand\tminority\tinterest | $ (3,505) | $ (3,464) | $2,805 | (1)% | NM |
| Income\ttaxes | (1,847) | (1,836) | 604 | (1) | NM |
| Minority\tinterest,\tnet\tof\ttaxes | 83 | 85 | 42 | (2) | NM |
| Net\tincome\t(loss) | $ (1,741) | $ (1,713) | $2,159 | (2)% | NM |
| Average\tassets\t(in\tbillions\tof\tdollars) | $373 | $406 | $290 | (8)% | 40% |
| Return\ton\tassets | (0.47)% | (0.42)% | 0.74% | NM | NM |
| Key\tindicators\t(in\tbillions\tof\tdollars,\texcept\tin\tbranches) |  |  |  |  |  |
| Average\tloans | $115.5 | $117.5 | $87.2 | (2)% | 35% |
| Average\tConsumer\tBanking\tloans | 24.5 | 22.2 | 16.1 | 10 | 38 |
| Average\tdeposits\t(and\tother\tconsumer\tliability\tbalances) | 159.0 | 140.3 | 99.6 | 13 | 41 |
| Branches/offices | 778 | 801 | 800 | (3) | — |

Revenues	increased	21%	largely	driven	by	Securities	and	Banking	and Transaction	Services.	In	Global	Cards,	revenues	increased	by	19%	to	$2.3 billion,	driven	by	higher	purchase	sales	and	average	loans.	Consumer	Banking revenues	were	up	4%	to	$2.6	billion	as	growth	in	average	loans	was	partially offset	by	impairment	of	the	U.K.	held-for-sale	loan	portfolio	and	softening wealth	management	revenues	due	to	market	volatility.	Current	and	historical Germany	retail	banking	financials	have	been	reclassified	as	discontinued operations	and	are	excluded	from	Global	Cards	and	Consumer	Banking	results. In	ICG,	S&B	revenues	were	up	53%	from	2007	mainly	due	to	write-downs	on subprime-related	direct	exposures	included	in	2009.	Subprime-related	direct exposures	are	now	managed	primarily	in	North	America	and	have	been transferred	from	EMEA	to	North	America	with	effect	from	the	second	quarter	of 2008.	2008	also	included	write-downs	on	subprime-related	exposures	in	the	first quarter	of	2008	and	in	commercial	real	estate	positions	and	highly	leveraged finance	commitments.	Revenues	also	reflected	strong	results	in	local	markets sales	and	trading	and	G10	Rates	and	Currencies.	Transaction	Services	revenues increased	21%	to	$3.4	billion	with	continued	growth	in	customer	liability balances	and	deposits.	Revenues	in	GWM	grew	by	11%	to	$0.6	billion	primarily driven	by	an	increase	in	Banking,	Capital	Markets	and	Lending	products.

Operating	expenses	were	up	2%	due	to	a	$203	million	goodwill	impairment charge	and	the	impact	of	further	repositioning	and	restructuring	charges	in	2008. Partially	offsetting	the	increase	was	a	decline	in	incentive	compensation	and	the benefits	of	reengineering	efforts.

Provisions	for	loan	losses	and	for	benefits	and	claims	increased	96%.	The increase	was	primarily	driven	by	the	deterioration	in	the	Consumer	and Corporate	credit	environment,	higher	loan	loss	reserve	builds	and	losses associated	with	Corporate	loan	sales.

Revenues	were	down	25%	due	to	write-downs	in	Securities	and	Banking, partially	offset	by	double-digit	growth	across	all	other	segments.

Global	Cards	revenues	increased	by	62%	to	$2.0	billion,	driven	by	double- digit	growth	in	purchase	sales	and	average	loans	and	the	impact	of	the	Egg acquisition.	Revenues	in	Consumer	Banking	increased	by	21%	to	$2.5	billion, driven	by	strong	growth	in	average	loans	and	deposits	and	improved	net	interest margin	and	the	impact	of	the	Egg	acquisition.

S&B	revenue	of	$1.5	billion	was	down	from	the	prior	year	due	to	write-downs on	subprime-related	direct	exposures	and	in	funded	and	unfunded	highly- leveraged	loan	commitments	in	the	second	half	of	2007.	Revenues	in	S&B	also included	a	strong	performance	in	Equities,	Advisory	and	local	markets	sales	and trading.	Transaction	Services	revenues	increased	by	30%	to	$2.8	billion	driven by	increased	customer	volumes	and	deposit	growth.	Revenues	in	GWM	grew	by 64%	to	$0.5	billion	primarily	driven	by	an	increase	in	annuity	revenues	and	the impact	of	the	acquisition	of	Quilter.

Operating	expenses	were	up	24%	due	to	the	impact	of	business	growth, acquisitions,	FX	translation	and	organizational	and	repositioning	charges	in 2007.

Provisions	for	loan	losses	and	for	benefits	and	claims	increased	$1.0	billion primarily	due	to	an	increase	in	net	credit	losses	and	an	incremental	net	charge	to loan	loss	reserves.

|  |  |  |  | %	Change | %	Change |
| :--- | :--- | :--- | :--- | :--- | :--- |
| In\tmillions\tof\tdollars | 2008 | 2007 | 2006 | 2008\tvs.\t2007 | 2007\tvs.\t2006 |
| Net\tinterest\trevenue | $8,001 | $7,151 | $5,053 | 12% | 42% |
| Non-interest\trevenue | 5,144 | 6,416 | \t 4,822 | (20) | 33 |
| Revenues,\tnet\tof\tinterest\texpense | $13,145 | $13,567 | $9,875 | (3)% | 37% |
| Operating\texpenses | \t 11,103 | 6,777 | \t 5,513 | 64 | 23 |
| Provisions\tfor\tloan\tlosses\tand\tfor\tbenefits\tand\tclaims | 3,670 | 1,867 | \t 1,043 | 97 | 79 |
| Income\tbefore\ttaxes\tand\tminority\tinterest | $ (1,628) | $4,923 | $3,319 | NM | 48% |
| Income\ttaxes | 351 | 1,326 | 503 | (74)% | NM |
| Minority\tinterest,\tnet\tof\ttaxes | 4 | 2 | 1 | 100 | 100 |
| Net\tincome\t(loss) | $ (1,983) | $3,595 | $2,815 | NM | 28% |
| Average\tassets\t(in\tbillions\tof\tdollars) | $153 | $145 | $116 | 6% | 25% |
| Return\ton\tassets | (1.30)% | 2.48% | 2.43% |  |  |
| Key\tindicators\t(in\tbillions\tof\tdollars,\texcept\tin\tbranches) |  |  |  |  |  |
| Average\tloans | $59.0 | $55.5 | $40.8 | 6% | 36% |
| Average\tConsumer\tBanking\tloans | 15.1 | 13.2 | 10.3 | 14 | 28 |
| Average\tdeposits\t(and\tother\tconsumer\tliability\tbalances) | 67.0 | 62.2 | 49.3 | 8 | 26 |
| Branches/offices | 2,571 | 2,747 | \t 2,404 | (6) | 14 |

Revenues,	net	of	interest	expense	were	3%	lower	than	the	prior	year,	as	growth of	6%	in	average	loans	and	8%	in	total	customer	deposits	was	more	than	offset by	FX	translation.	Global	Cards	grew	4%	on	higher	volumes	and	a	$661	million gain	on	Redecard	shares.	Consumer	Banking	decreased	5%	mainly	due	to	FX translation	and	the	divestiture	of	the	Chile	consumer	banking	operation	in January	2008.	S&B	revenue	decreased	22%	due	to	write-downs	and	losses related	to	fixed	income	and	equities.	Transaction	Services	revenues	increased 24%,	mainly	from	the	custody	business	as	average	deposits	grew	rapidly	in	the second	half	of	2007	and	have	remained	at	those	levels.

Operating	expenses	growth	of	64%	was	primarily	driven	by	a	$4.258	billion goodwill	impairment	charge,	acquisitions	and	volume	growth,	higher	collection costs,	legal	costs	and	reserves,	and	repositioning	charges,	partially	offset	by	a $282	million	benefit	related	to	a	legal	vehicle	repositioning	in	Mexico	in	the	first quarter	of	2008.	Certain	poorly	performing	branches	were	closed,	mainly	in Brazil	and	Mexico,	partially	offset	by	openings	in	Mexico,	due	to	repositioning and	realignment	in	both	retail	and	consumer	finance.

Provisions	for	loan	losses	and	for	benefits	and	claims	increased	97%	as	the credit	environment,	mainly	in	Mexico,	Brazil	and	Colombia,	worsened, primarily	reflected	by	a	$1.2	billion	increase	in	net	credit	losses	and	an	increase in	loan	loss	reserve	builds.

Revenues,	net	of	interest	expense	were	37%	higher	than	the	prior	year,	associated with	higher	volumes,	the	Cuscatlan	and	GFU	acquisitions,	the	integration	of CrediCard	in	Brazil,	as	well	as	gains	on	non-core	assets	including	a	$729	million pretax	gain	on	Redecard	shares,	a	$235	million	pretax	gain	on	Visa	shares	and	a pretax	gain	of	$78	million	from	the	MasterCard	initial	public	offering.	These gains	were	partially	offset	by	the	gain	on	sale	of	Avantel	of	$234	million	in 2006.

Operating	expenses	growth	of	23%	was	primarily	driven	by	the	Cuscatlan	and GFU	acquisitions	and	the	Brazil	expansion	strategy.

Provisions	for	loan	losses	and	for	benefits	and	claims	increased	79% primarily	reflecting	market	conditions	and	portfolio	growth	(mainly	Global Cards),	as	well	as	the	impact	of	acquisitions.

|  |  |  |  | %	Change | %	Change |
| :--- | :--- | :--- | :--- | :--- | :--- |
| In\tmillions\tof\tdollars | 2008 | 2007 | 2006 | 2008\tvs.\t2007 | 2007\tvs.\t2006 |
| Net\tinterest\trevenue | $9,648 | $8,290 | $7,441 | 16% | 11% |
| Non-interest\trevenue | 5,988 | \t 10,538 | 6,349 | (43) | 66 |
| Revenues,\tnet\tof\tinterest\texpense | $15,636 | $18,828 | $13,790 | (17)% | 37% |
| Operating\texpenses | \t 12,047 | \t 10,145 | 7,428 | 19 | 37 |
| Provisions\tfor\tloan\tlosses\tand\tfor\tbenefits\tand\tclaims | 3,627 | 2,396 | 1,640 | 51 | 46 |
| Income\tbefore\ttaxes\tand\tminority\tinterest | $(38) | $6,287 | $4,722 | (101)% | 33% |
| Income\ttaxes | (1,646) | 1,601 | 1,220 | NM | 31 |
| Minority\tinterest,\tnet\tof\ttaxes | (11) | 93 | 2 | NM | NM |
| Net\tincome | $1,619 | $4,593 | $3,500 | (65)% | 31% |
| Average\tassets\t(in\tbillions\tof\tdollars) | $354 | $321 | $227 | 10% | 41% |
| Return\ton\tassets | 0.46% | 1.43% | 1.54% |  |  |
| Consumer\tFinance\tJapan\t(CFJ)—NIR | $726 | $1,135 | $1,566 | (36)% | (28)% |
| Asia\texcluding\tCFJ—NIR | 8,922 | 7,155 | 5,875 | 25 | 22 |
| CFJ—operating\texpenses | $371 | $576 | $713 | (36)% | (19)% |
| Asia\texcluding\tCFJ—operating\texpenses | \t 11,676 | 9,596 | 6,715 | 22 | 43 |
| CFJ—provision\tfor\tloan\tlosses\tand\tfor\tbenefits\tand\tclaims | $1,336 | $1,421 | $1,118 | (6)% | 27% |
| Asia\texcluding\tCFJ—provision\tfor\tloan\tlosses\tand\tfor\tbenefits\tand\tclaims | 2,291 | 975 | 522 | NM | 87 |
| CFJ—net\tincome\t(loss) | $146 | $(520) | $(133) | NM | NM |
| Asia\texcluding\tCFJ—net\tincome | 1,473 | 5,113 | 3,633 | (71)% | 41% |
| Key\tindicators\t(in\tbillions\tof\tdollars,\texcept\tin\tbranches) |  |  |  |  |  |
| Average\tloans | $128.7 | $125.8 | $108.4 | 2% | 16% |
| Average\tConsumer\tBanking\tloans |  |  |  |  |  |
| (excluding\tCFJ) | 49.2 | 46.2 | 38.9 | 6 | 19 |
| Average\tdeposits\t(and\tother\tconsumer\tliability\tbalances) | 207.2 | 193.4 | 167.7 | 7 | 15 |
| Branches/offices | 1,192 | 1,333 | 1,235 | (11) | 8 |

Net	interest	revenue	increased	16%.	Global	Cards	growth	of	13%	was	driven	by 12%	growth	in	purchase	sales	and	18%	growth	in	average	loans.	Consumer Banking,	excluding	Consumer	Finance	Japan	(CFJ),	grew	by	10%,	driven	by growth	of	6%	in	average	loans	and	4%	growth	in	deposits.	Transaction	Services exhibited	strong	growth	across	all	products	resulting	in	19%	growth.	S&B	grew 90%,	or	$966	million,	reflecting	better	spreads	during	the	year	and	higher dividend	revenue.	Growth	was	also	positively	impacted	by	FX	translation, acquisitions	and	portfolio	purchases.

Non-interest	revenue	decreased	43%	as	S&B	continued	to	be	impacted	by market	volatility	and	declining	valuations.	Outside	of	S&B,	non-interest	revenue decreased	2%	due	to	the	absence	of	gain	on	Visa	shares	compared	to	the	prior year,	in	Transaction	Services	and	Global	Cards.	Excluding	this,	revenue	was	flat with	strong	growth	in	Global	Cards,	Transaction	Services	and	GWM,	offset	by lower	Investment	Sales	in	Consumer	Banking	and	GWM.	Results	included	a	$31 million	gain	on	the	sale	of	DCI,	partially	offset	by	a	$21	million	gain	on	the	sale of	MasterCard	shares	in	the	prior	year.	Growth	was	also	negatively	impacted	by foreign	exchange,	acquisitions	and	portfolio	purchases.

Operating	expenses	increased	19%	reflecting	the	impact	of	acquisitions,	a $937	million	Nikko	Asset	Management	intangible	impairment	charge,	the

impact	of	the	strengthening	of	local	currencies	and	restructuring/	repositioning charges,	partially	offset	by	the	benefits	of	reengineering	efforts.

Provisions	for	loan	losses	and	for	benefits	and	claims	increased	51% primarily	driven	by	a	$574	million	incremental	pretax	charge	to	increase	loan loss	reserves,	increased	credit	costs	in	India,	acquisitions	and	portfolio	growth. Taxes	included	a	$994	million	tax	benefit	related	to	the	legal	vehicle restructuring	of	the	CFJ	operations.

# Asia	Excluding	CFJ

As	disclosed	in	the	table	above,	NIR	excluding	CFJ	increased	25%	during	2008. Operating	expenses	excluding	CFJ	increased	22%	during	2008	and	Net	Income excluding	CFJ	decreased	71%.

Net	interest	revenue	increased	11%.	Global	Cards	growth	of	24%	was	driven	by 12%	growth	in	purchase	sales	and	19%	growth	in	average	loans.	Consumer Banking	excluding	CFJ	grew	by	20%,	driven	by	growth	of	19%	in	average	loans and	8%	growth	in	deposits.	Transaction	Services	exhibited

strong	growth	across	all	products	resulting	in	35%	growth.	S&B	grew	17%

driven	by	19%	growth	in	loans.	Growth	was	also	negatively	impacted	by	foreign exchange,	acquisitions	and	portfolio	purchases.

Non-interest	revenue	increased	66%	as	S&B	benefited	from	favorable	market conditions.	Outside	of	S&B,	non-interest	revenue	increased	69%	due	to	the	$245 million	gain	on	Visa	shares	in	2007	and	Investment	Sales	in	Consumer	Banking and	GWM.	Growth	was	also	positively	impacted	by	foreign	exchange, acquisitions	and	portfolio	purchases.

Operating	expenses	increased	37%	primarily	driven	by	the	impact	of acquisitions,	strengthening	local	currencies	and	repositioning	charges,	partially offset	by	the	benefits	of	reengineering.

Provisions	for	loan	losses	and	for	benefits	and	claims	increased	46%	primarily driven	by	a	$410	million	incremental	pretax	charge	to	increase	loan	loss	reserves including	a	change	in	estimate	of	loan	losses	inherent	in	the	loan	portfolio	but not	yet	visible	in	delinquency	statistics,	along	with	portfolio	growth,	increased credit	costs	in	India,	acquisitions,	and	the	increase	in	net	credit	losses	in	CFJ	due to	the	adverse	operating	environment	and	the	impact	of	Japan	consumer	lending laws	passed	in	the	fourth	quarter	of	2006.

On	October	28,	2008,	Citigroup	raised	$25	billion	through	the	sale	of	non-voting perpetual,	cumulative	preferred	stock	and	a	warrant	to	purchase	common	stock to	the	U.S.	Department	of	the	Treasury	(UST)	as	part	of	the	UST's	Troubled Asset	Relief	Program	(TARP)	Capital	Purchase	Program.	All	of	the	proceeds were	treated	as	Tier	1	Capital	for	regulatory	capital	purposes.	Proceeds	from	the sale	were	allocated	to	the	preferred	stock	and	warrant	on	a	relative	fair	value basis.

The	preferred	stock	has	an	aggregate	liquidation	preference	of	$25	billion	and an	annual	dividend	rate	of	5%	for	the	first	five	years	and	9%	thereafter. Dividends	are	cumulative	and	payable	quarterly	in	cash.	Of	the	$25	billion	in cash	proceeds,	$23.7	billion	was	allocated	to	preferred	stock	and	$1.3	billion	to the	warrant	on	a	relative	fair	value	basis.	The	discount	on	the	preferred	stock	will be	accreted	and	recognized	as	a	preferred	dividend	(reduction	of	Retained earnings)	over	a	period	of	five	years.	The	warrant	has	a	term	of	ten	years,	an exercise	price	of	$17.85	per	share	and	is	exercisable	for	approximately 210.1	million	shares	of	common	stock,	which	would	be	reduced	by	one-half	if Citigroup	raises	an	additional	$25	billion	through	the	issuance	of	Tier	1- qualifying	perpetual	preferred	or	common	stock	by	December	31,	2009.	The value	ascribed	to	the	warrant	will	be	recorded	in	our	stockholders	equity	and result	in	an	increase	in	additional	paid	in	capital.

On	December	31,	2008,	Citigroup	raised	an	additional	$20	billion	through	the sale	of	non-voting	perpetual,	cumulative	preferred	stock	and	a	warrant	to purchase	common	stock	to	the	UST	as	part	of	TARP.	All	of	the	proceeds	were treated	as	Tier	1	Capital	for	regulatory	capital	purposes.	Proceeds	from	the	sale were	allocated	to	the	preferred	stock	and	warrant	on	a	relative	fair	value	basis. The	preferred	stock	has	an	aggregate	liquidation	preference	of	$20	billion	and an	annual	dividend	rate	of	8.0%.	Dividends	are	cumulative	and	payable quarterly	in	cash.	Of	the	$20	billion	in	cash	proceeds,	$19.5	billion	was	allocated to	preferred	stock	and	$0.5	billion	to	the	warrant	on	a	relative	value	basis.	The discount	on	the	preferred	stock	will	not	be	accreted	and	will	only	be	recognized as	a	preferred	dividend	(reduction	of	Retained	earnings)	at	the	time	of redemption.	The	warrant	has	a	term	of	10	years,	an	exercise	price	of	$10.61	per share	and	is	exercisable	for	approximately	188.5	million	common	shares.	The value	ascribed	to	the	warrant	will	be	recorded	in	our	stockholders'	equity	and will	result	in	an	increase	in	additional	paid	in	capital.

The	issuance	of	the	warrants	in	October	and	December	2008,	as	well	as	other common	stock	issuances,	resulted	in	a	conversion	price	reset	of	the	$12.5	billion of	7%	convertible	preferred	stock	sold	in	private	offerings	in	January	2008.	See "Events	in	2008"	on	page	9,	"Capital	Resources"	beginning	on	page	94	and	Note 21	to	the	Consolidated	Financial	Statements	on	page	172	for	a	further discussion.

Under	the	terms	of	the	FDIC's	Temporary	Liquidity	Guarantee	Program (TLGP),	the	FDIC	will	guarantee,	until	the	earlier	of	its	maturity	or	June	30, 2012,	certain	qualifying	senior	unsecured	debt	issued	by	certain	Citigroup entities	between	October	14,	2008	and	June	30,	2009	(proposed	to	be	extended to	October	30,	2009),	in	amounts	up	to	125%	of	the	qualifying	debt	for	each qualifying	entity.	The	FDIC	will	charge	Citigroup	a	fee	ranging	from	50	to	100 basis	points	in	accordance	with	a	prescribed	fee	schedule	for	any	new	qualifying debt	issued	with	the	FDIC	guarantee.	At	December	31,	2008,	Citigroup	had issued	$5.75	billion	of	long-term	debt	that	is	covered	under	the	FDIC	guarantee, with	$1.25	billion	maturing	in	2010	and	$4.5	billion	maturing	in	2011.	In January	and	February	2009,	Citigroup	and	its	affiliates	issued	an	additional $14.9	billion	in	senior	unsecured	debt	under	this	program.

# FDIC	Increased	Deposit	Insurance

On	October	4,	2008,	as	a	part	of	TARP,	the	FDIC	increased	the	insurance	it provides	on	U.S.	deposits	in	most	banks	and	savings	associations	located	in	the United	States,	including	Citibank,	N.A.,	from	$100,000	to	$250,000	per depositor,	per	insured	bank.

On	January	15,	2009,	Citigroup	entered	into	a	definitive	agreement	with	the UST,	FDIC	and	the	Federal	Reserve	Bank	of	New	York	(collectively,	the	USG) on	losses	arising	on	a	$301	billion	portfolio	of	Citigroup	assets	(valued	as	of November	21,	2008).	As	consideration	for	the	loss-sharing	agreement,	Citigroup issued	non-voting	perpetual,	cumulative	preferred	stock	and	a	warrant	to	the UST	and	FDIC.

The	preferred	stock	issued	to	the	UST	and	FDIC	has	an	aggregate	liquidation preference	of	$7.3	billion	and	an	annual	dividend	rate	of	8%.	The	warrant	has	a term	of	10	years,	an	exercise	price	of	$10.61	per	share	and	is	exercisable	for approximately	66.5	million	common	shares.	Citigroup	received	no	additional cash	proceeds	for	their	issuance.	Of	the	issuance,	$3.5	billion	of	the consideration	for	the	preferred	stock,	representing	the	fair	value	of	the	issued shares	and	warrant,	will	be	treated	as	Tier	1	Capital	for	regulatory	purposes,	and it	is	expected	to	add	approximately	30	basis	points	to	the	Tier	1	Capital	ratio,	on a	pro	forma	basis,	during	the	first	quarter	of	2009.	The	value	of	the	premium ($3.5	billion)	will	be	amortized	and	recognized	as	an	expense	over	the	life	of	the loss-sharing	agreement.

The	loss-sharing	program	extends	for	10	years	for	residential	assets	and	five years	for	non-residential	assets.	Under	the	agreement,	a	"loss"	on	a	portfolio asset	is	defined	to	include	a	charge-off	or	a	realized	loss	upon	collection,	through a	permitted	disposition	or	exchange,	or	upon	a	foreclosure	or	short-sale	loss,	but not	through	a	change	in	Citigroup's	mark-to-market	accounting	for	the	asset	or the	creation	or	increase	of	a

related	loss	reserve.	Once	a	loss	is	recognized	under	the	agreement,	the aggregate	amount	of	qualifying	losses	across	the	portfolio	in	a	particular	period is	netted	against	all	recoveries	and	gains	across	the	portfolio,	all	on	a	pretax basis.	The	resulting	net	loss	amount	on	the	portfolio	is	the	basis	of	the	loss- sharing	arrangements	between	Citigroup	and	the	USG.	Citigroup	will	bear	the first	$39.5	billion	of	such	net	losses,	which	amount	was	determined	using	(i)	an agreed-upon	$29	billion	of	first	losses,	(ii)	Citigroup's	then-existing	reserve	with respect	to	the	portfolio	of	approximately	$9.5	billion,	and	(iii)	an	additional	$1.0 billion	as	an	agreed-upon	amount	in	exchange	for	excluding	the	effects	of	certain hedge	positions	from	the	portfolio.	Net	losses,	if	any,	on	the	portfolio	after Citigroup's	first-loss	position	will	be	borne	90%	by	the	USG	and	10%	by Citigroup	in	the	following	manner:

•	first,	until	the	UST	has	paid	$5	billion	in	aggregate,	90%	by	the	UST	and	10%   by	Citigroup;

•	second,	until	the	FDIC	has	paid	$10	billion	in	aggregate,	90%	by	the	FDIC	and   10%	by	Citigroup;	and

•	third,	by	the	Federal	Reserve	Bank	of	New	York.

 The	Company	recognized	approximately	$900	million	of	qualifying	losses related	to	the	portfolio	(excluding	replacement	assets,	as	discussed	in	the	note	to the	table	below)	from	November	21,	2008	through	December	31,	2008.	These losses	will	count	towards	Citi's	$39.5	billion	first-loss	position.

 The	Federal	Reserve	Bank	of	New	York	will	implement	its	loss-sharing obligations	under	the	agreement	by	making	a	loan,	after	Citigroup's	first-loss position	and	the	obligations	of	the	UST	and	FDIC	have	been	exhausted,	in	an amount	equal	to	the	then	aggregate	value	of	the	remaining	covered	asset	pool (after	reductions	for	charge-offs,	pay-downs	and	realized	losses)	as	determined	in accordance	with	the	agreement.	Following	the	loan,	as	losses	are	incurred	on	the remaining	covered	asset	pool,	Citigroup	will	be	required	to	immediately	repay 10%	of	such	losses	to	the	Federal	Reserve	Bank	of	New	York.	The	loan	is	non- recourse	to	Citigroup,	other	than	with	respect	to	the	repayment	obligation	in	the preceding	sentence	and	interest	on	the	loan.	The	loan	is	recourse	only	to	the remaining	covered	asset	pool,	which	is	the	sole	collateral	to	secure	the	loan.	The loan	will	bear	interest	at	the	overnight	index	swap	rate	plus	300	basis	points. The	covered	asset	pool	includes	U.S.-based	exposures	and	transactions	that were	originated	prior	to	March	14,	2008.	Pursuant	to	the	terms	of	the	agreement, the	composition	of	the	covered	asset	pool,	amount	of	Citigroup's	first-loss position	and	premium	paid	for	loss	coverage	are	subject	to	final	confirmation	by the	USG	of,	among	other	things,	the	qualification	of	assets	under	the	asset eligibility	criteria,	expected	losses	and	reserves.	This	confirmation	process	is	to be	completed	no	later	than	April	15,	2009.

The	agreement	includes	guidelines	for	governance	and	asset	management	with respect	to	the	covered	asset	pool,	including	reporting	requirements	and	notice and	approval	rights	of	the	USG	at	certain	thresholds.	If	covered	losses	exceed $27	billion,	the	USG	has	the	right	to	change	the	asset	manager	for	the	covered asset	pool.

The	covered	assets	are	risk-weighted	at	20%	for	purposes	of	calculating	the Tier	1	Capital	ratio	at	December	31,	2008.	This	lower	risk	weighting	added approximately	150	basis	points	to	Citigroup's	Tier	1	Capital	ratio	at December	31,	2008.

The	following	table	summarizes	the	assets	that	were	part	of	the	covered	asset pool	agreed	to	between	Citigroup	and	the	USG	as	of	January	15,	2009,	with	their values	as	of	November	21,	2008:

(1)As	a	result	of	the	initial	confirmation	process	(conducted	between	November	21,	2008	and January	15,	2009),	the	covered	asset	pool	includes	approximately	$96	billion	of	assets considered	"replacement"	assets	(assets	that	were	added	to	the	pool	to	replace	assets	that were	in	the	pool	as	of	November	21,	2008	but	were	later	determined	not	to	qualify).	Loss- sharing	on	qualifying	losses	incurred	on	these	replacement	assets	was	effective	beginning January	15,	2009,	instead	of	November	21,	2008.

On	February	27,	2009,	the	Company	announced	an	exchange	offer	of	its common	stock	for	up	to	$27.5	billion	of	its	existing	preferred	securities	and	trust preferred	securities	at	a	conversion	price	of	$3.25	per	share.	The	U.S. government	will	match	this	exchange	up	to	a	maximum	of	$25	billion	of	its preferred	stock	at	the	same	conversion	price.	See	"Outlook	for	2009"	on	page	7.

# Implementation	and	Management	of	TARP	Programs

After	Citigroup	received	the	TARP	capital,	it	established	a	Special	TARP Committee	composed	of	senior	executives	to	approve,	monitor	and	track	how	the funds	are	utilized.	The	TARP	securities	purchase	agreements	stipulate	that	Citi will	adhere	to	the	following	objectives	as	a	condition	of	the	UST's	capital investment:

•	Expand	the	flow	of	credit	to	U.S.	consumers	and	businesses	on	competitive terms	to	promote	the	sustained	growth	and	vitality	of	the	U.S.	economy. •	Work	diligently,	under	existing	programs,	to	modify	the	terms	of	residential mortgages	as	appropriate	to	strengthen	the	health	of	the	U.S.	housing	market.

The	Committee	has	established	specific	guidelines,	which	are	consistent	with the	objectives	and	spirit	of	the	program.	Pursuant	to	these	guidelines,	Citi	will use	TARP	capital	only	for	those	purposes	expressly	approved	by	the	Committee. TARP	capital	will	not	be	used	for	compensation	and	bonuses,	dividend payments,	lobbying	or	government	relations	activities,	or	any	activities	related	to marketing,	advertising	and	corporate	sponsorship.	TARP	capital	will	be	used exclusively	to	support	assets	and	not	for	expenses.

Committee	approval	is	the	final	stage	in	a	four-step	review	process	to	evaluate proposals	from	Citi	businesses	for	the	use	of	TARP	capital,	risk	and	the	potential financial	impact	and	returns.

On	February	3,	2009	Citi	published	a	public	report	summarizing	its	TARP spending	initiatives	for	the	2008	fourth	quarter	and	made	this	report	available	at www.	citigroup.com.	The	report	indicated	that	the	Committee	had	authorized $36.5	billion	in	initiatives	backed	by	TARP	capital,	spanning	five	major	areas,	as follows:

•	U.S.	residential	mortgage	activities—$25.7	billion –	Citigroup	is	making	mortgage	loans	directly	to	homebuyers	and	supporting the	housing	market	through	the	purchase	of	prime	residential	mortgages	and mortgage-backed	securities	in	the	secondary	market.

•	Personal	and	business	loans—$2.5	billion

–	This	includes	$1.5	billion	of	consumer	lending	and	$1.0	billion	for	tailored

loans	to	people	and	businesses	facing	liquidity	problems.

•	Student	loans—$1	billion

–	Citigroup	is	originating	student	loans	through	the	Federal	Family	Education Loan	Program.

•	Credit	card	lending—$5.8	billion

–	Citigroup	is	offering	special	credit	card	programs	that	include	expanded eligibility	for	balance-consolidation	offers,	targeted	increases	in	credit	lines and	targeted	new	account	originations.

•	Corporate	loan	activity—$1.5	billion

–	The	Company	is	investing	$1.5	billion	in	commercial	loan	securitizations, which	will	inject	liquidity	into	the	U.S.	corporate	loan	market.

Separately	from	the	Company's	initiatives	under	TARP,	the	report	also describes	Citigroup's	other	efforts	to	help	U.S.	homeowners	remain	in	their homes,	assist	distressed	borrowers	and	support	U.S	consumers	and	businesses.

Citi	will	update	this	TARP	report	each	quarter	following	its	quarterly	earnings announcement	and	will	make	the	report	publicly	available.	In	addition,	Citi	is committed	to	meeting	all	reporting	requirements	associated	with	TARP.

# RISK	FACTORS

# Disruptions	in	the	global	financial	markets	have	affected,	and	may	continue	to adversely	affect,	Citigroup's	business	and	results	of	operations.

Dramatic	declines	in	the	housing	market	during	2008,	with	falling	home	prices and	increasing	foreclosures	and	unemployment,	have	resulted	in	significant write-downs	of	asset	values	by	financial	institutions,	including	government- sponsored	entities	and	major	commercial	and	investment	banks.	These	write- downs,	initially	of	mortgage-backed	securities	but	spreading	to	credit	default swaps	and	other	derivatives,	have	caused	many	financial	institutions	to	seek additional	capital	and	to	merge	with	other	financial	institutions.	Disruptions	in the	global	financial	markets	have	also	adversely	affected	the	corporate	bond markets,	debt	and	equity	underwriting	and	other	elements	of	the	financial markets.

Reflecting	concern	about	the	stability	of	the	financial	markets	generally	and	the strength	of	counterparties,	some	lenders	and	institutional	investors	have	reduced and,	in	some	cases,	ceased	to	provide	funding	to	certain	borrowers,	including other	financial	institutions.	The	impact	on	available	credit	(even	where	Citigroup and	other	TARP	participants	are	making	credit	available),	increased	volatility	in the	financial	markets	and	reduced	business	activity	has	adversely	affected,	and may	continue	to	adversely	affect,	Citigroup's	businesses,	capital,	liquidity	or other	financial	condition	and	results	of	operations,	access	to	credit	and	the trading	price	of	Citigroup	common	stock,	preferred	stock	or	debt	securities.

# Market	disruptions	may	increase	the	risk	of	customer	or	counterparty delinquency	or	default.

The	current	market	and	economic	disruptions	have	affected,	and	may	continue	to affect,	consumer	confidence	levels,	consumer	spending,	personal	bankruptcy rates	and	home	prices,	among	other	factors,	which	provide	a	greater	likelihood that	more	of	Citigroup's	customers	or	counterparties	could	use	credit	cards	less frequently	or	become	delinquent	in	their	loans	or	other	obligations	to	Citigroup. This,	in	turn,	could	result	in	a	higher	level	of	charge-offs	and	provision	for	credit losses,	all	of	which	could	adversely	affect	Citigroup's	earnings.	Policies	of	the Federal	Reserve	Board	or	other	governmental	institutions	can	also	adversely affect	Citigroup's	customers	or	counterparties,	potentially	increasing	the	risk that	they	may	fail	to	repay	their	loans.	Additionally,	Citigroup	may	incur significant	credit	risk	exposure	which	may	arise,	for	example,	from	entering	into swap	or	other	derivative	contracts	under	which	counterparties	have	long-term obligations	to	make	payments	to	the	Company.	Recent	market	conditions, including	decreased	liquidity	and	pricing	transparency	along	with	increased market	volatility,	have	negatively	impacted	Citigroup's	credit	risk	exposure. Although	Citigroup	regularly	reviews	its	credit	exposures,	default	risk	may	arise from	events	or	circumstances	that	are	difficult	to	detect	or	foresee.

# Citigroup	may	experience	further	write-downs	of	its	financial	instruments	and other	losses	related	to	volatile	and	illiquid	market	conditions.

Market	volatility,	illiquid	market	conditions	and	disruptions	in	the	credit	markets have	made	it	extremely	difficult	to	value	certain	of	Citigroup's	assets. Subsequent	valuations,	in	light	of	factors	then	prevailing,	may	result	in significant	changes	in	the	values	of	these	assets	in	future	periods.	In	addition,	at the	time	of	any	sales	of	these	assets,	the	price	Citigroup	ultimately	realizes	will depend	on	the	demand	and	liquidity	in	the	market	at	that	time	and	may	be materially	lower	than	their	current	fair	value.	Any	of

these	factors	could	require	Citigroup	to	take	further	write-downs	in	respect	of these	assets,	which	may	have	an	adverse	effect	on	the	Company's	results	of operations	and	financial	condition	in	future	periods.

In	addition,	Citigroup	finances	and	acquires	principal	positions	in	a	number	of real	estate	and	real	estate-related	products	for	its	own	account,	for	investment vehicles	managed	by	affiliates	in	which	it	also	may	have	a	significant investment,	for	separate	accounts	managed	by	affiliates	and	for	major participants	in	the	commercial	and	residential	real	estate	markets,	and	originates loans	secured	by	commercial	and	residential	properties.	Citigroup	also securitizes	and	trades	in	a	wide	range	of	commercial	and	residential	real	estate and	real	estate-related	whole	loans,	mortgages	and	other	real	estate	and commercial	assets	and	products,	including	residential	and	commercial	mortgage- backed	securities.	These	businesses	have	been,	and	may	continue	to	be, adversely	affected	by	the	downturn	in	the	real	estate	sector.

Furthermore,	in	the	past,	Citigroup	has	provided	financial	support	to	certain	of its	investment	products	and	vehicles	in	difficult	market	conditions	and,	Citigroup may	decide	to	do	so	again	in	the	future	for	contractual	reasons	or,	at	its discretion,	for	reputational	or	business	reasons,	including	through	equity investments	or	cash	infusions.

# Liquidity	is	essential	to	Citigroup's	businesses,	and	Citigroup	relies	on external	sources,	including	governmental	agencies,	to	finance	a	significant portion	of	its	operations.

Adequate	liquidity	is	essential	to	Citigroup's	businesses.	The	Company's liquidity	could	be	materially	adversely	affected	by	factors	Citigroup	cannot control,	such	as	the	continued	general	disruption	of	the	financial	markets	or negative	views	about	the	financial	services	industry	in	general.	In	addition, Citigroup's	ability	to	raise	funding	could	be	impaired	if	lenders	develop	a negative	perception	of	the	Company's	short-term	or	long-term	financial prospects,	or	a	perception	that	the	Company	is	experiencing	greater	liquidity risk.	Recent	regulatory	measures,	such	as	the	FDIC's	temporary	guarantee	of	the newly	issued	senior	debt	as	well	as	deposits	in	non-interest	bearing	deposit transaction	accounts,	and	the	commercial	paper	funding	facility	of	the	Federal Reserve	Board,	are	designed	to	stabilize	the	financial	markets	and	the	liquidity position	of	financial	institutions	such	as	Citigroup.	While	much	of	Citigroup's recent	long-term	unsecured	funding	has	been	issued	pursuant	to	these government-sponsored	funding	programs	implemented,	it	is	unclear	whether,	or for	how	long,	these	facilities	will	be	extended	and	what	impact	termination	of any	of	these	facilities	could	have	on	Citigroup's	ability	to	access	funding	in	the future.	It	is	also	unclear	when	Citigroup	will	be	able	to	regain	access	to	the public	long-term	unsecured	debt	markets	on	historically	customary	terms. Further,	Citigroup's	cost	of	obtaining	long-term	unsecured	funding	is	directly related	to	its	credit	spreads	in	both	the	cash	bond	and	derivatives	markets. Increases	in	Citigroup's	credit	qualifying	spreads	can	significantly	increase	the cost	of	this	funding.	Credit	spreads	are	influenced	by	market	perceptions	of Citigroup's	creditworthiness	and	may	be	influenced	by	movements	in	the	costs to	purchasers	of	credit	default	swaps	referenced	to	Citigroup's	long-term	debt. Citigroup's	credit	ratings	are	also	important	to	its	liquidity.	A	reduction	in Citigroup's	credit	ratings	could	adversely	affect	its	liquidity,	widen	its	credit spreads	or	otherwise	increase	its	borrowing	costs,	limit	its	access	to	the

capital	markets	or	trigger	obligations	under	certain	bilateral	provisions	in	some of	the	Company's	trading	and	collateralized	financing	contracts.	In	addition, under	these	provisions,	counterparties	could	be	permitted	to	terminate	certain contracts	with	Citigroup	or	require	the	Company	to	post	additional	collateral. Termination	of	the	Company's	trading	and	collateralized	financing	contracts could	cause	Citigroup	to	sustain	losses	and	impair	its	liquidity	by	requiring Citigroup	to	find	other	sources	of	financing	or	to	make	significant	cash	payments or	securities	transfers.

# Recently	enacted	legislation	authorizing	the	U.S.	government	to	take	direct action	within	the	financial	services	industry,	and	other	legislation	and regulation	currently	under	consideration,	may	not	stabilize	the	U.S.	financial system	in	the	near	term.

On	October	3,	2008,	the	Emergency	Economic	Stabilization	Act	of	2008	(EESA) was	signed	into	law.	In	addition,	on	February	17,	2009,	the	American	Recovery and	Reinvestment	Act	of	2009	(ARRA)	was	signed	by	President	Obama.	The purpose	of	these	U.S.	government	actions	is	to	stabilize	and	provide	liquidity	to the	U.S.	financial	markets	and	jumpstart	the	U.S.	economy.	The	U.S.	government is	currently	considering,	and	may	consider	in	the	future,	additional	legislation and	regulations	with	similar	purposes.	The	EESA,	ARRA	and	other governmental	programs	may	not	have	their	intended	impact	of	stabilizing, providing	liquidity	to	or	restoring	confidence	in	the	financial	markets.	Further, the	discontinuation	and/or	expiration	of	these	or	other	governmental	programs could	result	in	a	worsening	of	current	market	conditions.

# Citigroup	may	fail	to	realize	all	of	the	anticipated	benefits	of	the	proposed realignment	of	its	businesses.

On	January	16,	2009,	Citigroup	announced	that	it	would	realign	into	two businesses,	Citicorp	and	Citi	Holdings,	for	management	and	reporting	purposes, effective	second	quarter	of	2009.	The	realignment	is	part	of	Citigroup's	strategy to	focus	on	its	core	businesses,	reduce	its	balance	sheet	and	simplify	its	assets. Citigroup	believes	this	structure	will	allow	it	to	enhance	the	capabilities	and performance	of	Citigroup's	core	assets,	through	Citicorp,	as	well	as	realize	value from	its	non-core	assets,	through	Citi	Holdings.	Citi	Holdings	will	also	include Citigroup's	49%	interest	in	the	recently	announced	Morgan	Stanley	Smith Barney	joint	venture,	a	transaction	which	is	also	intended	to	simplify	and streamline	the	Company	on	a	going-forward	basis.	Despite	these	efforts,	given the	rapidly	changing	and	uncertain	financial	environment,	there	can	be	no assurance	that	the	realignment	of	Citigroup's	businesses	will	achieve	the Company's	desired	objectives	or	benefits.

# Future	issuance	of	Citigroup	common	stock	and	preferred	stock	may	reduce any	earnings	available	to	common	stockholders	and	the	return	on	the Company's	equity.

During	2008,	Citigroup	raised	a	total	of	approximately	$77.3	billion	in	private and	public	offerings	of	preferred	and	common	stock	and	warrants	to	purchase common	stock,	including	issuances	to	the	U.S.	government	under	TARP.	While this	additional	capital	provides	further	funding	to	Citigroup's	businesses	and	has improved	the	Company's	financial	position,	it	has	increased	the	Company's equity	and	the	number	of	actual	and	diluted	shares	of	Citigroup	common	stock. On	February	27,	2009,	Citigroup	announced	an	exchange	offer	of	its	common stock	for	up	to	$27.5	billion	of	its	existing	preferred	securities	and	trust	preferred securities.	The	U.S.	government	will

match	this	exchange	up	to	a	maximum	of	$25	billion	of	its	preferred	stock. These	transactions	will	significantly	dilute	the	existing	common	stockholders	of the	Company.	In	addition,	such	increases	in	the	outstanding	shares	of	common stock	reduce	the	Company's	earnings	per	share	and	the	return	on	the	Company's equity,	unless	the	Company's	earnings	increase	correspondingly.	Further,	any additional	future	U.S.	governmental	requirements	or	programs	could	result	in	or require	additional	equity	issuances,	which	further	dilute	the	existing	common stockholders	and	any	earnings	available	to	the	common	stockholders.

# The	elimination	of	QSPEs	from	the	guidance	in	SFAS	140	and	changes	in FIN	46(R)	may	significantly	impact

# Citigroup's	consolidated	financial	statements.

The	FASB	has	issued	an	Exposure	Draft	of	a	proposed	standard	that	would eliminate	qualified	SPEs	(QSPEs)	from	the	guidance	in	SFAS	140,	Accounting for	Transfers	and	Servicing	of	Financial	Assets	and	Extinguishments	of

Liabilities,	and	a	separate	Exposure	Draft	of	a	proposed	standard	that	proposes three	key	changes	to	the	consolidation	model	in	FIN	46(R).	Such	changes include	the	following:	(i)	former	QSPEs	would	be	included	in	the	scope	of	FIN 46(R);	(ii)	FIN	46(R)	would	be	amended	to	change	the	method	of	analyzing which	party	to	a	variable	interest	entity	(VIE)	should	consolidate	the	VIE	to	a qualitative	determination	of	power	combined	with	benefits	and	losses;	and (iii)	the	analysis	of	primary	beneficiaries	would	have	to	be	reevaluated	whenever circumstances	change.

While	these	proposed	standards	have	not	been	finalized,	they	may	have	a significant	impact	on	Citigroup's	consolidated	financial	statements	as	the Company	may	lose	sales	treatment	for	assets	previously	sold	to	a	QSPE,	as	well as	for	future	sales,	and	for	transfers	of	a	portion	of	an	asset,	and	the	Company will	be	required	to	bring	a	portion	of	assets	that	are	not	currently	on	its	balance sheet	onto	its	balance	sheet.	For	a	further	discussion	on	SFAS	140,	see "Significant	Accounting	Policies	and	Significant	Estimates"	on	page	18	and "Capital	Resources	and	Liquidity—Off-Balance	Sheet	Arrangements— Elimination	of	QSPEs	and	Changes	in	the	FIN	46(R)	Consolidation	Model"	on page	104.

# Citigroup's	financial	statements	are	based	in	part	on	assumptions	and estimates,	which,	if	wrong,	could	cause	unexpected	losses	in	the	future.

Pursuant	to	U.S.	GAAP,	Citigroup	is	required	to	use	certain	assumptions	and estimates	in	preparing	its	financial	statements,	including	in	determining	credit loss	reserves,	reserves	related	to	litigations	and	the	fair	value	of	certain	assets and	liabilities,	among	other	items.	If	assumptions	or	estimates	underlying Citigroup's	financial	statements	are	incorrect,	Citigroup	may	experience material	losses.	For	example,	Citigroup	makes	judgments	in	connection	with	its consolidation	analysis	of	its	SPEs.	If	it	is	later	determined	that	non-consolidated SPEs	should	be	consolidated,	this	could	adversely	affect	Citigroup's consolidated	balance	sheet,	related	funding	requirements	and	capital	ratios,	and, if	the	SPE	assets	include	unrealized	losses,	could	require	Citigroup	to	recognize those	losses	see	"Significant	Accounting	Policies	and	Significant	Estimates"	on page	18.

# Changes	in	accounting	standards	can	be	difficult	to	predict	and	can	materially impact	how	Citigroup	records	and	reports	its	financial	condition	and	results	of operations.

Citigroup's	accounting	policies	and	methods	are	fundamental	to	how	it	records and	reports	its	financial	condition	and	results	of	operations.	From

time	to	time,	the	FASB	changes	the	financial	accounting	and	reporting	standards that	govern	the	preparation	of	the	Company's	financial	statements	(e.g.,	see	for example	"The	elimination	of	QSPEs	from	the	guidance	in	SFAS	140	and changes	in	FIN	46(R)	may	significantly	impact	Citigroup's	Consolidated Financial	Statements"	on	page	48).	These	changes	can	be	hard	to	predict	and	can materially	impact	how	Citigroup	records	and	reports	its	financial	condition	and results	of	operations.

# Defaults	by	another	large	financial	institution	could	adversely	affect	Citigroup and	the	financial	markets	generally.

The	commercial	soundness	of	many	financial	institutions	may	be	closely interrelated	as	a	result	of	credit,	trading,	clearing	or	other	relationships	between institutions.	As	a	result,	concerns	about,	or	a	default	or	threatened	default	by,	one institution	could	lead	to	significant	market-wide	liquidity	and	credit	problems, losses	or	defaults	by	other	institutions.	This	is	sometimes	referred	to	as	"systemic risk"	and	may	adversely	affect	financial	intermediaries,	such	as	clearing agencies,	clearing	houses,	banks,	securities	firms	and	exchanges	with	which Citigroup	interacts	on	a	daily	basis	and,	therefore,	could	adversely	affect	the Company.

# Citigroup	may	incur	significant	losses	as	a	result	of	ineffective	risk management	processes	and	strategies	and	concentration	of	risk	increases	the potential	for	such	losses.

Citigroup	seeks	to	monitor	and	control	its	risk	exposure	through	a	risk	and control	framework	encompassing	a	variety	of	separate	but	complementary financial,	credit,	operational,	compliance	and	legal	reporting	systems,	internal controls,	management	review	processes	and	other	mechanisms.	While	Citigroup employs	a	broad	and	diversified	set	of	risk	monitoring	and	risk	mitigation techniques	(see	"Managing	Global	Risk"	on	page	51),	those	techniques	and	the judgments	that	accompany	their	application	cannot	anticipate	every	economic and	financial	outcome	in	all	market	environments	or	the	specifics	and	timing	of such	outcomes.	Recent	market	conditions,	particularly	during	the	latter	part	of 2007	and	2008,	have	involved	unprecedented	dislocations	and	highlight	the limitations	inherent	in	using	historical	data	to	manage	risk.

These	market	movements	can,	and	have,	limited	the	effectiveness	of Citigroup's	hedging	strategies	and	have	caused	the	Company	to	incur	significant losses,	and	they	may	do	so	again	in	the	future.	In	addition,	concentration	of	risk increases	the	potential	for	significant	losses	in	certain	of	Citigroup's	businesses. For	example,	Citigroup	extends	large	commitments	as	part	of	its	credit origination	activities.	Citigroup's	inability	to	reduce	its	credit	risk	by	selling, syndicating	or	securitizing	these	positions,	including	during	periods	of	market dislocation,	could	negatively	affect	its	results	of	operations	due	to	a	decrease	in the	fair	value	of	the	positions,	as	well	as	the	loss	of	revenues	associated	with selling	such	securities	or	loans.

In	addition,	the	Company	routinely	executes	a	high	volume	of	transactions	with counterparties	in	the	financial	services	industry,	including	brokers	and	dealers, commercial	banks	and	investment	funds.	This	has	resulted	in	significant	credit concentration	with	respect	to	this	industry.

# Citigroup's	businesses	are	subject	to	extensive	and	pervasive	regulation around	the	world.

As	a	participant	in	the	financial	services	industry,	Citigroup	is	subject	to extensive	regulation,	including	fiscal	and	monetary	policies,	in	jurisdictions

around	the	world.	For	example,	the	actions	of	the	Federal	Reserve	Board	and international	central	banking	authorities	directly	impact	Citigroup's	cost	of	funds for	lending,	capital	raising	and	investment	activities	and	may	impact	the	value	of financial	instruments	the	Company	holds.	This	level	of	regulation	is	expected	to increase	significantly	in	all	jurisdictions	in	which	the	Company	conducts business	in	response	to	the	current	financial	crisis.	Among	other	things, Citigroup	could	be	fined,	prohibited	from	engaging	in	some	of	its	business activities	or	subject	to	limitations	or	conditions	on	its	business	activities, including	increased	capital	or	liquidity	requirements,	each	of	which	could	lead	to reputational	harm.

# The	financial	services	industry	faces	substantial	legal	liability	and	regulatory risks,	and	Citigroup	may	face	damage	to	its	reputation	and	legal	liability.

Citigroup	faces	significant	legal	risks	in	its	businesses,	and	the	volume	of claims	and	amount	of	damages	and	penalties	claimed	in	litigation	and	regulatory proceedings	against	financial	institutions	remain	high.	Citigroup's	experience has	been	that	legal	claims	by	customers	and	clients	increase	in	a	market downturn.	In	addition,	employment-related	claims	typically	increase	in	periods when	Citigroup	has	reduced	the	total	number	of	employees,	such	as	during	the last	fiscal	year.

In	addition,	there	have	been	a	number	of	highly	publicized	cases	involving fraud	or	other	misconduct	by	employees	in	the	financial	services	industry	in recent	years,	and	Citigroup	runs	the	risk	that	employee	misconduct	could	occur. It	is	not	always	possible	to	deter	or	prevent	employee	misconduct	and	the extensive	precautions	Citigroup	takes	to	prevent	and	detect	this	activity	may	not be	effective	in	all	cases.

# Citigroup's	businesses	may	be	materially	adversely	affected	if	it	is	unable	to hire	and	retain	qualified	employees.

Citigroup's	performance	is	largely	dependent	on	the	talents	and	efforts	of	highly skilled	individuals.	The	Company's	continued	ability	to	compete	effectively	in its	businesses,	to	manage	its	businesses	effectively	and	to	expand	into	new businesses	and	geographic	regions	depends	on	the	Company's	ability	to	attract new	employees	and	to	retain	and	motivate	its	existing	employees.	Competition from	within	the	financial	services	industry	and	from	businesses	outside	of	the financial	services	industry	for	qualified	employees	has	often	been	intense.	This	is particularly	the	case	in	emerging	markets,	where	Citigroup	is	often	competing for	qualified	employees	with	entities	that	have	a	significantly	greater	presence	or more	extensive	experience	in	the	region.	In	addition,	in	2008	the	market	price	of Citigroup	common	stock	declined	significantly	during	the	year.	A	substantial portion	of	the	Company's	annual	bonus	compensation	paid	to	its	senior employees	has	been	paid	in	the	form	of	equity,	meaning	that	such	awards	are	not as	valuable	from	a	compensatory	or	retention	perspective.

Moreover,	Citigroup	is	subject	to	certain	significant	compensation	restrictions applicable	to	a	broad	group	of	its	senior	management	as	a	result	of	its	receipt	of TARP	funding	in	December	2008	as	well	as	other	recently-adopted governmental	programs	and	legislation.	Such	restrictions	include	restricted executive	incentives,	deferral	of	some	executive	compensation,	equity	awards with	performance-vesting	features,	"clawback"	provisions	and	elimination	or restriction	of	severance	pay	to	senior	executives.

These	restrictions,	alone	or	in	combination	with	the	other	factors	described above,	could	adversely	affect	Citigroup's	ability	to	hire	and	retain	qualified employees.

# A	failure	in	Citigroup's	operational	systems	or	infrastructure,	or	those	of	third parties,	could	impair	the	Company's	liquidity,	disrupt	its	businesses,	result	in the	disclosure	of	confidential	information,	damage	Citigroup's	reputation	and cause	losses.

Citigroup's	businesses	are	highly	dependent	on	its	ability	to	process	and	monitor, on	a	daily	basis,	a	very	large	number	of	transactions,	many	of	which	are	highly complex,	across	numerous	and	diverse	markets	in	many	currencies.	These transactions,	as	well	as	the	information	technology	services	Citigroup	provides to	clients,	often	must	adhere	to	client-specific	guidelines,	as	well	as	legal	and regulatory	standards.	Due	to	the	breadth	of	Citigroup's	client	base	and	its geographical	reach,	developing	and	maintaining	the	Company's	operational systems	and	infrastructure	has	become	increasingly	challenging.	Citigroup's financial,	account,	data	processing	or	other	operating	systems	and	facilities	may fail	to	operate	properly	or	become	disabled	as	a	result	of	events	that	are	wholly or	partially	beyond	the	Company's	control,	such	as	a	spike	in	transaction	volume or	unforeseen	catastrophic	events,	adversely	affecting	the	Company's	ability	to process	these	transactions	or	provide	these	services.

Citigroup	also	faces	the	risk	of	operational	failure,	termination	or	capacity constraints	of	any	of	the	clearing	agents,	exchanges,	clearing	houses	or	other financial	intermediaries	Citigroup	uses	to	facilitate	its	transactions,	and	as Citigroup's	interconnectivity	with	its	clients	grows,	the	Company	increasingly faces	the	risk	of	operational	failure	with	respect	to	its	clients'	systems. Implementation	of	the	Morgan	Stanley	Smith	Barney	joint	venture	may,	at	least temporarily,	exacerbate	these	risks	insofar	as	the	activities	of	the	joint	venture are	concerned.

In	addition,	Citigroup's	operations	rely	on	the	secure	processing,	storage	and transmission	of	confidential	and	other	information	in	its	computer	systems	and networks.	Although	Citigroup	takes	protective	measures	and	endeavors	to modify	them	as	circumstances	warrant,	its	computer	systems,	software	and networks	may	be	vulnerable	to	unauthorized	access,	computer	viruses	or	other malicious	code,	and	other	events	that	could	have	a	security	impact.	Given	the high	volume	of	transactions	at	Citigroup,	certain	errors	may	be	repeated	or compounded	before	they	are	discovered	and	rectified.	If	one	or	more	of	such events	occurs,	this	could	potentially	jeopardize	Citigroup's,	its	clients', counterparties'	or	third	parties'	confidential	and	other	information	processed	and stored	in,	and	transmitted	through,	the	Company's	computer	systems	and networks,	or	otherwise	cause	interruptions	or	malfunctions	in	Citigroup's,	its clients',	its	counterparties'	or	third	parties'	operations,	which	could	result	in significant	losses	or	reputational	damage.

# MANAGING	GLOBAL	RISK

# RISK	MANAGEMENT

The	Company	believes	that	effective	risk	management	is	of	primary	importance to	its	success.	Accordingly,	the	Company	has	a	comprehensive	risk	management process	to	monitor,	evaluate	and	manage	the	principal	risks	it	assumes	in conducting	its	activities.	These	risks	include	credit,	market	liquidity	and operational,	including	legal	and	reputational	exposures.

Citigroup's	risk	management	framework	is	designed	to	balance	corporate oversight	with	well-defined	independent	risk	management	functions.

Enhancements	were	made	to	the	risk	management	framework	throughout	2008 based	on	guiding	principles	established	by	the	Chief	Risk	Officer:

•	a	common	Risk	Capital	model	to	evaluate	risks;

•	a	defined	risk	appetite,	aligned	with	business	strategy; •	accountability	through	a	common	framework	to	manage	risks; •	risk	decisions	based	on	transparent,	accurate	and	rigorous	analytics; •	expertise,	stature,	authority	and	independence	of	Risk	Managers;	and •	empowering	Risk	Managers	to	make	decisions	and	escalate	issues.

Significant	focus	has	been	placed	on	fostering	a	risk	culture	based	on	a	policy of	"Taking	Intelligent	Risk	with	Shared	Responsibility,	without	forsaking Individual	Accountability."

•	"Taking	intelligent	risk"	means	that	Citi	must	carefully	identify,	measure	and aggregate	risks,	and	must	fully	understand	downside	risks.

•	"Shared	responsibility"	means	that	individuals	own	and	influence	business outcomes,	including	risk	controls.

•	"Individual	accountability"	means	individuals	held	ourselves	accountable	to actively	manage	risk.

The	Chief	Risk	Officer,	working	closely	with	the	Citi	CEO,	established management	committees,	Citi's	Audit	and	Risk	Management	Committee	and Citi's	Board	of	Directors,	is	responsible	for:

•	establishing	core	standards	for	the	management,	measurement	and	reporting	of risk;

•	identifying,	assessing,	communicating	and	monitoring	risks	on	a	company- wide	basis;

•	engaging	with	senior	management	and	the	Board	of	Directors	on	a	frequent

basis	on	material	matters	with	respect	to	risk-taking	activities	in	the	businesses

and	related	risk	management	processes;	and

•	ensuring	that	the	risk	function	has	adequate	independence,	authority,	expertise, staffing,	technology	and	resources.

Changes	were	made	to	the	risk	management	organization	in	2008	to	facilitate the	management	of	risk	across	three	dimensions:	businesses,	regions	and	critical products.

Each	of	the	major	business	groups	has	a	Business	Chief	Risk	Officer	who	is the	focal	point	for	risk	decisions	(such	as	setting	risk	limits	or	approving transactions)	in	the	business.

There	are	also	Regional	Chief	Risk	Officers,	accountable	for	the	risks	in	their geographic	area,	and	who	are	the	primary	risk	contact	for	the	regional	business heads	and	local	regulators.

In	addition,	the	position	of	Product	Chief	Risk	Officers	was	created	for	those areas	of	critical	importance	to	Citigroup	such	as	real	estate,	structured	credit products	and	fundamental	credit.	The	Product	Risk	Officers	are	accountable	for the	risks	within	their	specialty	and	they	focus	on	problem	areas	across	businesses and	regions.	The	Product	Risk	Officers	serve	as	a	resource	to	the	Chief	Risk Officer,	as	well	as	to	the	Business	and	Regional	Chief	Risk	Officers,	to	better enable	the	Business	and	Regional	Chief	Risk	Officers	to	focus	on	the	day-to-day management	of	risks	and	responsiveness	to	business	flow.

In	addition	to	changing	the	risk	management	organization	to	facilitate	the management	of	risk	across	these	three	dimensions,	the	risk	organization	also includes	the	newly-created	Business	Management	team	to	ensure	that	the	risk organization	has	the	appropriate	infrastructure,	processes	and	management reporting.	This	team	includes:

•	the	risk	capital	group,	which	continues	to	enhance	the	risk	capital	model	and ensure	that	it	is	consistent	across	all	our	business	activities;

•	the	risk	architecture	group,	which	ensures	we	have	integrated	systems	and common	metrics,	and	thereby	allows	us	to	aggregate	and	stress	test	exposures across	the	institution;

•	the	infrastructure	risk	group,	which	focuses	on	improving	our	operational processes	across	businesses	and	regions;	and

•	the	office	of	the	Chief	Administrative	Officer,	which	focuses	on	re-engineering risk	communications	and	relationships,	including	our	critical	regulatory relationships.

# RISK	AGGREGATION	AND	STRESS	TESTING

While	the	major	risk	areas	are	described	individually	on	the	following	pages, these	risks	often	need	to	be	reviewed	and	managed	in	conjunction	with	one another	and	across	the	various	businesses.

The	Chief	Risk	Officer,	as	noted	above,	monitors	and	controls	major	risk exposures	and	concentrations	across	the	organization.	This	means	aggregating risks,	within	and	across	businesses,	as	well	as	subjecting	those	risks	to alternative	stress	scenarios	in	order	to	assess	the	potential	economic	impact	they may	have	on	the	Company.

During	2008,	comprehensive	stress	tests	were	implemented	across	Citi	for mark-to-market,	available-for-sale,	and	accrual	portfolios.	These	firm-wide	stress reports	measure	the	potential	impact	to	the	Company	and	its	component businesses	of	very	large	changes	in	various	types	of	key	risk	factors	(e.g., interest	rates,	credit	spreads),	as	well	as	the	potential	impact	of	a	number	of historical	and	hypothetical	forward-looking	systemic	stress	scenarios. Supplementing	the	stress	testing	described	above,	Risk	Management,	working with	input	from	the	businesses	and	Finance,	provides	enhanced	periodic	updates to	senior	management	and	the	Board	of	Directors	on	significant	potential exposures	across	Citigroup	arising	from	risk	concentrations	(e.g.,	residential	real estate),	financial	market	participants

(e.g.,	monoline	insurers),	and	other	systemic	issues	(e.g.,	commercial	paper markets).	These	risk	assessments	are	forward-looking	exercises,	intended	to inform	senior	management	and	the	Board	of	Directors	about	the	potential economic	impacts	to	Citi	that	may	occur,	directly	or	indirectly,	as	a	result	of hypothetical	scenarios,	based	on	judgmental	analysis	from	independent	risk managers.

The	stress	testing	and	risk	assessment	exercises	are	a	supplement	to	the standard	limit-setting	and	risk	capital	exercises	described	later	in	this	section,	as these	processes	incorporate	events	in	the	marketplace	and	within	Citi	that	impact our	outlook	on	the	form,	magnitude,	correlation	and	timing	of	identified	risks that	may	arise.	In	addition	to	enhancing	awareness	and	understanding	of potential	exposures,	the	results	of	these	processes	then	serve	as	the	starting	point for	developing	risk	management	and	mitigation	strategies.

# RISK	CAPITAL

Risk	capital	is	defined	as	the	amount	of	capital	required	to	absorb	potential unexpected	economic	losses,	resulting	from	extremely	severe	events	over	a	one- year	time	period.

•	"Economic	losses"	include	losses	that	appear	on	the	income	statement	and	fair value	adjustments	to	the	financial	statements,	as	well	as	any	further	declines	in value	not	captured	on	the	income	statement.

•	"Unexpected	losses"	are	the	difference	between	potential	extremely	severe losses	and	Citigroup's	expected	(average)	loss	over	a	one-year	time	period. •	"Extremely	severe"	is	defined	as	potential	loss	at	a	99.97%	confidence	level, based	on	the	distribution	of	observed	events	and	scenario	analysis.

The	drivers	of	"economic	losses"	are	risks,	which	can	be	broadly	categorized as	credit	risk	(including	cross-border	risk),	market	risk	(including	liquidity)	and operational	risk	(including	legal	and	regulatory):

•	Credit	risk	losses	primarily	result	from	a	borrower's	or	counterparty's	inability to	meet	its	obligations.

•	Market	risk	losses	arise	from	fluctuations	in	the	market	value	of	trading	and non-trading	positions,	including	the	treatment	changes	in	value	resulting	from fluctuations	in	rates.

•	Operational	risk	losses	result	from	inadequate	or	failed	internal	processes, systems	or	human	factors	or	from	external	events.

These	risks	are	measured	and	aggregated	within	businesses	and	across Citigroup	to	facilitate	the	understanding	of	our	exposure	to	extreme	downside events.

In	light	of	market	developments,	the	risk	capital	framework	is	being	reviewed and	enhanced.	Certain	enhancements	were	introduced	in	January	2009,	including the	treatment	of	operational	risk	and	proprietary	investments.	Other enhancements	are	scheduled	to	be	completed	over	the	course	of	the	year, primarily	focused	on	market	risk.

# CREDIT	RISK	MANAGEMENT	PROCESS

Credit	risk	is	the	potential	for	financial	loss	resulting	from	the	failure	of	a borrower	or	counterparty	to	honor	its	financial	or	contractual	obligations.	Credit risk	arises	in	many	of	Citigroup's	business	activities,	including:

•	lending;

•	sales	and	trading;

•	derivatives;

•	securities	transactions;

•	settlement;	and

•	when	Citigroup	acts	as	an	intermediary	on	behalf	of	its	clients	and	other	third parties.

# LOANS	OUTSTANDING

| In	millions	of	dollars	at	year	end | 2008 | 2007^	(2) | 2006^	(2) | 2005^	(2) | 2004^	(2) |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Consumer\tloans |  |  |  |  |  |
| In\tU.S.\toffices:\nMortgage\tand\treal\testate\t^(1) | $229,565 | $251,927 | $225,900 | $192,045 | $161,755 |
| Installment,\trevolving\tcredit,\tand\tother | \t 130,826 | \t 140,797 | \t 131,008 | \t 127,432 | \t 134,128 |
| Lease\tfinancing | 31 | 3,151 | 4,743 | 5,095 | 6,030 |
|  | $360,422 | $395,875 | $361,651 | $324,572 | $301,913 |
| In\toffices\toutside\tthe\tU.S.: |  |  |  |  |  |
| Mortgage\tand\treal\testate\t^(1) | $48,277 | $55,152 | $44,457 | $39,619 | $39,601 |
| Installment,\trevolving\tcredit,\tand\tother | \t 109,932 | \t 139,369 | \t 105,393 | 89,559 | 92,647 |
| Lease\tfinancing | 304 | 1,124 | 960 | 866 | 1,619 |
|  | $158,513 | $195,645 | $150,810 | $130,044 | $133,867 |
|  | $518,935 | $591,520 | $512,461 | $454,616 | $435,780 |
| Unearned\tincome | 738 | 787 | 460 | 4 | (554) |
| Consumer\tloans—net | $519,673 | $592,307 | $512,921 | $454,620 | $435,226 |
| Corporate\tloans |  |  |  |  |  |
| In\tU.S.\toffices: |  |  |  |  |  |
| Commercial\tand\tindustrial | $33,450 | $30,092 | $23,311 | $20,846 | $13,821 |
| Loans\tto\tfinancial\tinstitutions | 10,200 | 8,778 | 4,126 | 1,235 | 616 |
| Lease\tfinancing | 1,476 | 1,630 | 2,101 | 1,952 | 1,879 |
| Mortgage\tand\treal\testate\t^(1) | 6,560 | 2,220 | 168 | 29 | 100 |
|  | $51,686 | $42,720 | $29,706 | $24,062 | $16,416 |
| In\toffices\toutside\tthe\tU.S.: |  |  |  |  |  |
| Commercial\tand\tindustrial | $99,389 | $116,145 | $105,872 | $80,116 | $77,052 |
| Mortgage\tand\treal\testate\t^(1) | 7,480 | 4,156 | 5,334 | 5,206 | 3,928 |
| Loans\tto\tfinancial\tinstitutions | 18,413 | 20,467 | 21,827 | 16,889 | 12,921 |
| Lease\tfinancing | 1,850 | 2,292 | 2,024 | 2,082 | 2,485 |
| Governments\tand\tofficial\tinstitutions | 385 | 442 | 1,857 | 882 | 1,100 |
|  | $127,517 | $143,502 | $136,914 | $105,175 | $97,486 |
|  | $179,203 | $186,222 | $166,620 | $129,237 | $113,902 |
| Unearned\tincome | (4,660) | (536) | (349) | (354) | (299) |
| Corporate\tloans—net | $174,543 | $185,686 | $166,271 | $128,883 | $113,603 |
| Total\tloans—net\tof\tunearned\tincome | $694,216 | $777,993 | $679,192 | $583,503 | $548,829 |
| Allowance\tfor\tloan\tlosses—on\tdrawn\texposures | (29,616) | (16,117) | (8,940) | (9,782) | (11,269) |
| Total\tloans—net\tof\tunearned\tincome\tand\tallowance\tfor\tcredit\tlosses | $664,600 | $761,876 | $670,252 | $573,721 | $537,560 |
| Allowance\tfor\tloan\tlosses\tas\ta\tpercentage\tof\ttotal\tloans—net\tof\tunearned\tincome | 4.27% | 2.07% | 1.32% | 1.68% | 2.05% |

(1) Loans	secured	primarily	by	real	estate.

(2) Reclassified	to	conform	to	current	year's	presentation.

# DETAILS	OF	CREDIT	LOSS	EXPERIENCE

| In	millions	of	dollars	at	year	end | 2008 | 2007 | 2006 | 2005 | 2004 |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Allowance\tfor\tloan\tlosses\tat\tbeginning\tof\tyear | $16,117 | $8,940 | $9,782 | $11,269 | $12,643 |
| Provision\tfor\tloan\tlosses |  |  |  |  |  |
| Consumer | $28,282 | $15,599 | $6,224 | $7,149 | $7,205 |
| Corporate | 5,392 | 1,233 | 96 | (295) | (972) |
|  | $33,674 | $16,832 | $6,320 | $6,854 | $6,233 |
| Gross\tcredit\tlosses |  |  |  |  |  |
| Consumer\t^(1) |  |  |  |  |  |
| In\tU.S.\toffices | $11,676 | $5,766 | $4,413 | $5,829 | $6,937 |
| In\toffices\toutside\tthe\tU.S. | 7,172 | 5,150 | 3,915 | 2,964 | 3,304 |
| Corporate |  |  |  |  |  |
| Mortgage\tand\treal\testate |  |  |  |  |  |
| In\tU.S.\toffices | 4 | — | — | — | — |
| In\toffices\toutside\tthe\tU.S. | 37 | 3 | 1 | — | 6 |
| Governments\tand\tofficial\tinstitutions\toutside\tthe\tU.S. | 3 | — | — | — | — |
| Loans\tto\tfinancial\tinstitutions |  |  |  |  |  |
| In\tU.S.\toffices | — | — | — | — | — |
| In\toffices\toutside\tthe\tU.S. | 463 | 69 | 6 | 10 | 3 |
| Commercial\tand\tindustrial |  |  |  |  |  |
| In\tU.S.\toffices | 637 | 635 | 85 | 78 | 52 |
| In\toffices\toutside\tthe\tU.S. | 778 | 241 | 220 | 287 | 571 |
|  | $20,770 | $11,864 | $8,640 | $9,168 | $10,873 |
| Credit\trecoveries |  |  |  |  |  |
| Consumer\t^(1) |  |  |  |  |  |
| In\tU.S.\toffices | $585 | $695 | $650 | $1,007 | $1,079 |
| In\toffices\toutside\tthe\tU.S. | 1,015 | 966 | 897 | 693 | 691 |
| Corporate |  |  |  |  |  |
| Mortgage\tand\treal\testate |  |  |  |  |  |
| In\tU.S.\toffices | — | 3 | 1 | — | — |
| In\toffices\toutside\tthe\tU.S. | 1 | — | 18 | 5 | 3 |
| Governments\tand\tofficial\tinstitutions\toutside\tthe\tU.S. | — | 4 | 7 | 55 | 1 |
| Loans\tto\tfinancial\tinstitutions |  |  |  |  |  |
| In\tU.S.\toffices | — | — | — | — | 6 |
| In\toffices\toutside\tthe\tU.S. | 2 | 1 | 4 | 15 | 35 |
| Commercial\tand\tindustrial |  |  |  |  |  |
| In\tU.S.\toffices | 6 | 49 | 20 | 104 | 100 |
| In\toffices\toutside\tthe\tU.S. | 140 | 220 | 182 | 473 | 357 |
|  | $1,749 | $1,938 | $1,779 | $2,352 | $2,272 |
| Net\tcredit\tlosses |  |  |  |  |  |
| In\tU.S.\toffices | $11,726 | $5,654 | $3,827 | $4,796 | $5,804 |
| In\toffices\toutside\tthe\tU.S. | 7,295 | 4,272 | 3,034 | 2,020 | 2,797 |
| Total | $19,021 | $9,926 | $6,861 | $6,816 | $8,601 |
| Other—net\t^(2) | $ (1,154) | $271 | $(301) | $ (1,525) | $994 |
| Allowance\tfor\tloan\tlosses\tat\tend\tof\tyear | $29,616 | $16,117 | $8,940 | $9,782 | $11,269 |
| Allowance\tfor\tunfunded\tlending\tcommitments\t^(3) | $887 | $1,250 | $1,100 | $850 | $600 |
| Total\tallowance\tfor\tloans,\tleases\tand\tunfunded\tlending\tcommitments | $30,503 | $17,367 | $10,040 | $10,632 | $11,869 |
| Net\tconsumer\tcredit\tlosses | $17,248 | $9,255 | $6,781 | $7,093 | $8,471 |
| As\ta\tpercentage\tof\taverage\tconsumer\tloans | 3.13% | 1.79% | 1.52% | 1.76% | 2.13% |
| Net\tcorporate\tcredit\tlosses/(recoveries) | $1,773 | $671 | $80 | $(277) | $130 |
| As\ta\tpercentage\tof\taverage\tcorporate\tloans | 0.96% | 0.36% | 0.05% | NM | 0.11% |

(1) Consumer	credit	losses	primarily	relate	to	U.S.	mortgages,	revolving	credit	and	installment	loans.	Recoveries	primarily	relate	to	revolving	credit	and	installment	loans.

(2) 2008	primarily	includes	reductions	to	the	loan	loss	reserve	of	approximately	$800	million	related	to	FX	translation,	$102	million	related	to	securitizations,	$244	million	for	the	sale	of	the	German retail	banking	operation,	$156	million	for	the	sale	of	CitiCapital,	partially	offset	by	additions	of	$106	million	related	to	the	Cuscatlán	and	Bank	of	the	Overseas	Chinese	acquisitions.	2007	primarily includes	reductions	to	the	loan	loss	reserve	of	$475	million	related	to	securitizations	and	transfers	to	loans	held-for-sale,	and	reductions	of	$83	million	related	to	the	transfer	of	the	U.K. CitiFinancial	portfolio	to	held-for-sale,	offset	by	additions	of	$610	million	related	to	the	acquisitions	of	Egg,	Nikko	Cordial,	Grupo	Cuscatlán	and	Grupo	Financiero	Uno.	2006	primarily	includes reductions	to	the	loan-loss	reserve	of	$429	million	related	to	securitizations	and	portfolio	sales	and	the	addition	of	$84	million	related	to	the	acquisition	of	the	CrediCard	portfolio.	2005	primarily includes	reductions	to	the	loan-loss	reserve	of	$584	million	related	to	securitizations	and	portfolio	sales,	a	reduction	of	$110	million	related	to	purchase	accounting	adjustments	from	the	KorAm acquisition,	and	a	reduction	of	$90	million	from	the	sale	of	CitiCapital's	transportation	portfolio.	2004	primarily	includes	the	addition	of	$715	million	of	loan-loss	reserves	related	to	the	acquisition	of KorAm	and	the	addition	of	$148	million	of	loan-loss	reserves	related	to	the	acquisition	of	Washington	Mutual	Finance	Corporation.

(3) Represents	additional	credit-loss	reserves	for	unfunded	corporate	lending	commitments	and	letters	of	credit	recorded	with	 Other	liabilities	on	the	Consolidated	Balance	Sheet.

# NON-PERFORMING	ASSETS	(NON-ACCRUAL	LOANS,	OTHER	REAL	ESTATE	OWNED	AND	OTHER	REPOSSESSED	ASSETS)

The	table	below	summarizes	the	Company's	non-accrual	loans.	These	are	loans in	which	the	borrower	has	fallen	behind	in	interest	payments	and	are	now considered	impaired.	In	situations	where	the	Company	reasonably

expects	that	only	a	portion	of	the	principal	and	interest	owed	will	ultimately	be collected,	all	payments	received	are	reflected	as	a	reduction	of	principal	and	not as	interest	income.

The	table	below	summarizes	the	Company's	other	real	estate	owned	(OREO) assets.	This	represents	the	carrying	value	of	all	property	acquired	by

foreclosure	or	other	legal	proceedings	when	the	Company	has	taken	possession of	the	collateral.

(2) For	further	discussion	of	Corporate	non-accrual	loans,	please	see	page	67.

(3) Includes	the	impact	of	the	deterioration	in	the	U.S.	consumer	real	estate	market.

(4) Primarily	transportation	equipment,	carried	at	lower	of	cost	or	fair	value,	less	costs	to	sell.

There	is	no	industry-wide	definition	of	non-performing	assets.	As	such,	analysis against	the	industry	is	not	always	comparable.	The	table	below	represents	the Company's	view	of	non-performing	assets.	As	a	general	rule,	consumer	loans are	charged	off	at	120	days	past	due	and	credit	card	loans	are	charged	off	at	180 days	contractually	past	due.	Consumer	loans	secured	with	non-real-estate collateral	are	written	down	to	the	estimated	value	of

the	collateral,	less	costs	to	sell,	at	120	days	past	due.	Consumer	real-estate secured	loans	are	written	down	to	the	estimated	value	of	the	property,	less	costs to	sell,	when	they	are	180	days	contractually	past	due.	Impaired	corporate	loans and	leases	are	written	down	to	the	extent	that	principal	is	judged	to	be uncollectible.

| Non-performing	assets | 2008 | 2007 | 2006 | 2005 | 2004 |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Corporate\tnon-accrual\tloans | $9,569 | $1,758 | $535 | $1,004 | $1,906 |
| Consumer\tnon-accrual\tloans | \t 12,728 | 7,210 | \t 4,512 | \t 4,020 | \t 5,463 |
| Non-accrual\tloans\t(NAL) | $22,297 | $8,968 | $5,047 | $5,024 | $7,369 |
| OREO | $1,433 | $1,228 | $701 | $429 | $446 |
| Other\trepossessed\tassets | 78 | 99 | 75 | 62 | 93 |
| Non-performing\tassets\t(NPA) | $23,808 | $10,295 | $5,823 | $5,515 | $7,908 |
| NAL\tas\ta\t%\tof\ttotal\tloans | 3.21% | 1.15% | 0.74% | 0.86% | 1.34% |
| NPA\tas\ta\t%\tof\ttotal\tassets | 1.22% | 0.47% | 0.31% | 0.37% | 0.53% |
| Allowance\tfor\tloan\tlosses\tas\ta\t%\tof\tNAL^(1) | 133% | 180% | 177% | 195% | 153% |

(1) The	$6.403	billion	of	non-accrual	loans	transferred	from	the	held-for-sale	portfolio	to	the	held-for-investment	portfolio	during	the	fourth	quarter	of	2008	were	marked-to-market	at	the	transfer	date and	therefore	no	allowance	was	necessary	at	the	time	of	the	transfer.	$2.426	billion	of	the	par	value	of	the	loans	reclassified	was	written	off	prior	to	transfer.

# RENEGOTIATED	LOANS

(1) Smaller-balance,	homogeneous	renegotiated	loans	were	derived	from	our	risk	management	systems.

(2) Also	includes	Corporate	and	Commercial	Business	loans.

# FOREGONE	INTEREST	REVENUE	ON	LOANS	(1)

|  |  | In	non- |  |
| :--- | :--- | :--- | :--- |
|  | In\tU.S. | U.S. | 2008 |
| In\tmillions\tof\tdollars | offices | offices | total |
| Interest\trevenue\tthat\twould\thave\tbeen\taccrued\tat\toriginal |  |  |  |
| contractual\trates\t^(2) | $1,245 | $827 | $2,072 |
| Amount\trecognized\tas\tinterest\trevenue\t^(2) | 295 | 258 | 553 |
| Foregone\tinterest\trevenue | $950 | $569 | $1,519 |

(1)Relates	to	corporate	non-accrual,	renegotiated	loans	and	consumer	loans	on	which	accrual of	interest	had	been	suspended.

(2)Interest	revenue	in	offices	outside	the	U.S.	may	reflect	prevailing	local	interest	rates,

including	the	effects	of	inflation	and	monetary	correction	in	certain	countries.

# LOAN	MATURITIES	AND	FIXED/VARIABLE	PRICING

(1)Based	on	contractual	terms.	Repricing	characteristics	may	effectively	be	modified	from	time to	time	using	derivative	contracts.	See	Note	24	to	the	Consolidated	Financial	Statements	on page	188.

# CONSUMER	CREDIT	RISK

Within	Global	Cards	and	Consumer	Banking,	credit	risk	management	is responsible	for	establishing	the	Global	Cards	and	Consumer	Banking	Credit Policy,	approving	business-specific	policies	and	procedures,	monitoring	business risk	management	performance,	providing	ongoing	assessment	of	portfolio	credit risk,	ensuring	the	appropriate	level	of	loan	loss	reserves,	and	approving	new products	and	new	risks.

Approval	policies	for	a	product	or	business	are	tailored	to	internal	profitability and	credit	risk	portfolio	performance.

# CONSUMER	PORTFOLIO	REVIEW

Citigroup's	consumer	loan	portfolio	is	comparatively	diversified	by	both	product and	location.

In	the	Consumer	portfolio,	credit	loss	experience	is	often	expressed	in	terms of	annualized	net	credit	losses	as	a	percentage	of	average	loans.	Consumer	loans are	generally	written	off	no	later	than	a	predetermined	number	of	days	past	due on	a	contractual	basis,	or	earlier	in	the	event	of	bankruptcy.

The	following	table	summarizes	delinquency	and	net	credit	loss	experience	in both	the	managed	and	on-balance-sheet	consumer	loan	portfolios.	The	managed loan	portfolio	includes	held-for-sale	and	securitized	credit	card	receivables.	Only North	America	Cards	from	a	product	view,	and	North	America	from	a	regional view,	are	impacted.	Although	a	managed	basis	presentation	is	not	in	conformity with	GAAP,	the	Company	believes	managed	credit	statistics	provide	a representation	of	performance	and	key	indicators	of	the	credit	card	business	that are	consistent	with	the	way	management	reviews	operating	performance	and allocates	resources.	For	example,	the	North	America	Cards	business	considers both	on-balance-sheet	and	securitized	balances	(together,	its	managed	portfolio) when	determining	capital	allocation	and	general	management	decisions	and compensation.	Furthermore,	investors	use	information	about	the	credit	quality	of the	entire	managed	portfolio,	as	the	results	of	both	the	on-balance-sheet	and securitized	portfolios	impact	the	overall	performance	of	the	North	America Cards	business.	For	a	further	discussion	of	managed-basis	reporting,	see	Note	23 to	the	Consolidated	Financial	Statements	on	page	174.

# Consumer	Loan	Delinquency	Amounts,	Net	Credit	Losses,	and	Ratios

|  | Total |  |  |  | Average |  |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| In\tmillions\tof\tdollars,\texcept\ttotal\tand\taverage\tloan\tamounts\tin\tbillions | loans | 90\tdays\tor\tmore\tpast\tdue\t^(1) | 90\tdays\tor\tmore\tpast\tdue\t^(1) | 90\tdays\tor\tmore\tpast\tdue\t^(1) | loans | Net\tcredit\tlosses\t^(1) | Net\tcredit\tlosses\t^(1) | Net\tcredit\tlosses\t^(1) |
| Product\tView: | 2008 | 2008 | 2007 | 2006 | 2008 | 2008 | 2007 | 2006 |
| Global\tCards |  |  |  |  |  |  |  |  |
| North\tAmerica | $45.2 | $1,298 | $896 | $798 | $43.6 | $2,970 | $2,054 | $1,928 |
| Ratio |  | 2.87% | 1.88% | 1.60% |  | 6.81% | 4.69% | 4.09% |
| EMEA | 14.2 | 369 | 233 | 114 | 15.6 | 664 | 340 | 303 |
| Ratio |  | 2.60% | 1.53% | 1.60% |  | 4.23% | 2.80% | 4.94% |
| Latin\tAmerica | 11.5 | 561 | 551 | 380 | 13.8 | 1,682 | 1,025 | 552 |
| Ratio |  | 4.86% | 3.92% | 3.84% |  | 12.17% | 8.60% | 6.91% |
| Asia | 16.6 | 262 | 249 | 207 | 17.0 | 602 | 458 | 425 |
| Ratio |  | 1.57% | 1.50% | 1.54% |  | 3.53% | 3.15% | 3.48% |
| Consumer\tBanking |  |  |  |  |  |  |  |  |
| North\tAmerica | \t 284.4 | \t 11,271 | 6,453 | \t 3,655 | 298.2 | 8,098 | 3,015 | 1,834 |
| Ratio |  | 3.96% | 2.13% | 1.34% |  | 2.71% | 1.04% | 0.72% |
| EMEA | 21.6 | 547 | 322 | 373 | 24.5 | 718 | 524 | 336 |
| Ratio |  | 2.54% | 1.32% | 2.12% |  | 2.92% | 2.36% | 2.09% |
| Latin\tAmerica | 14.0 | 422 | 457 | 364 | 15.1 | 621 | 251 | 147 |
| Ratio |  | 3.01% | 3.07% | 3.30% |  | 4.10% | 1.90% | 1.44% |
| Asia | 52.7 | 522 | 457 | 459 | 57.5 | 1,841 | 1,587 | 1,257 |
| Ratio |  | 0.99% | 0.77% | 0.89% |  | 3.19% | 2.90% | 2.59% |
| GWM | 55.5 | 289 | 30 | 21 | 63.5 | 52 | 1 | (4) |
| Ratio |  | 0.52% | 0.05% | 0.05% |  | 0.08% | 0.00% | (0.01)% |
| On-balance-sheet\tloans\t^(2) | $515.7 | $15,541 | $9,648 | $6,371 | $548.8 | $17,248 | $9,255 | $6,778 |
| Ratio |  | 3.01% | 1.73% | 1.33% |  | 3.13% | 1.79% | 1.52% |
| Securitized\treceivables\t(all\tin\tNA\tCards) | $105.9 | $2,655 | $1,864 | $1,616 | $106.9 | $7,407 | $4,728 | $3,986 |
| Credit\tcard\treceivables\theld-for-sale\t^(3) | — | — | 15 | — | 0.5 | — | — | 5 |
| Managed\tloans\t^(4) | $621.6 | $18,196 | $11,527 | $7,987 | $656.2 | $24,655 | $13,983 | $10,769 |
| Ratio |  | 2.92% | 1.73% | 1.38% |  | 3.75% | 2.26% | 1.98% |
| Regional\tview: |  |  |  |  |  |  |  |  |
| North\tAmerica | $365.7 | $12,815 | $7,376 | $4,465 | $380.5 | $11,092 | $5,072 | $3,761 |
| Ratio |  | 3.50% | 1.89% | 1.27% |  | 2.91% | 1.38% | 1.14% |
| EMEA | 42.7 | 922 | 555 | 488 | 49.6 | 1,385 | 862 | 640 |
| Ratio |  | 2.16% | 1.14% | 1.65% |  | 2.79% | 2.06% | 2.44% |
| Latin\tAmerica | 27.9 | 983 | 1,008 | 744 | 31.7 | 2,303 | 1,277 | 700 |
| Ratio |  | 3.51% | 3.21% | 3.23% |  | 7.25% | 4.63% | 3.43% |
| Asia | 79.4 | 821 | 709 | 674 | 87.0 | 2,468 | 2,044 | 1,677 |
| Ratio |  | 0.97% | 0.81% | 0.92% |  | 2.83% | 2.58% | 2.44% |
| On-balance-sheet\tloans\t^(2) | $515.7 | $15,541 | $9,648 | $6,371 | $548.8 | $17,248 | $9,255 | $6,788 |
| Ratio |  | 3.01% | 1.73% | 1.33% |  | 3.13% | 1.79% | 1.52% |
| Securitized\treceivables\t(all\tin\tNA\tCards) | $105.9 | $2,655 | $1,864 | $1,616 | $106.9 | $7,407 | $4,728 | $3,986 |
| Credit\tcard\treceivables\theld-for-sale\t^(3) | — | — | 15 | — | 0.5 | — | — | 5 |
| Managed\tloans\t^(4) | $621.6 | $18,196 | $11,527 | $7,987 | $656.2 | $24,655 | $13,983 | $10,769 |
| Ratio |  | 2.92% | 1.73% | 1.38% |  | 3.75% | 2.26% | 1.98% |

(1) The	ratios	of	90	days	or	more	past	due	and	net	credit	losses	are	calculated	based	on	end-of-period	and	average	loans,	respectively,	both	net	of	unearned	income.

(2) Total	loans	and	total	average	loans	exclude	certain	interest	and	fees	on	credit	cards	of	approximately	$3	billion	and	$2	billion,	respectively,	which	are	included	in Consumer	loans	on	the Consolidated	Balance	Sheet.

(3) Included	in	Other	assets	on	the	Consolidated	Balance	Sheet.

(4) This	table	presents	credit	information	on	a	held	basis	and	shows	the	impact	of	securitizations	to	reconcile	to	a	managed	basis.	Only North	America	Cards	from	a	product	view,	and	 North	America from	a	regional	view,	are	affected.	Managed-basis	reporting	is	a	non-GAAP	measure.	Held-basis	reporting	is	the	related	GAAP	measure.	See	a	discussion	of	managed-basis	reporting	on	page	57.

# Consumer	Loan	Balances,	Net	of	Unearned	Income

|  |  | End	of	period | End	of	period | Average | Average | Average |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| In\tbillions\tof\tdollars | 2008 | 2007 | 2006 | 2008 | 2007 | 2006 |
| On-balance-sheet\t^(1) | $515.7 | $557.8 | $478.2 | $548.8 | $516.4 | $446.2 |
| Securitized\treceivables\t(all\tin\tNA\tCards) | \t 105.9 | \t 108.1 | 99.6 | \t 106.9 | 98.9 | 96.4 |
| Credit\tcard\treceivables\theld-for-sale\t^(2) | — | 1.0 | — | 0.5 | 3.0 | 0.3 |
| Total\tmanaged\t^(3) | $621.6 | $666.9 | $577.8 | $656.2 | $618.3 | $542.9 |

(1) Total	loans	and	total	average	loans	exclude	certain	interest	and	fees	on	credit	cards	of	approximately	$3	billion	and	$2	billion,	respectively,	for	2008,	$3	billion	and	$2	billion,	respectively,	for	2007, and	$2	billion	and	$3	billion,	respectively,	for	2006,	which	are	included	in	Consumer	loans	on	the	Consolidated	Balance	Sheet.

(3) This	table	presents	loan	information	on	a	held	basis	and	shows	the	impact	of	securitization	to	reconcile	to	a	managed	basis.	Managed-basis	reporting	is	a	non-GAAP	measure.	Held-basis	reporting is	the	related	GAAP	measure.	See	a	discussion	of	managed-basis	reporting	on	page	178	and	108.

Citigroup's	total	allowance	for	loans,	leases	and	unfunded	lending	commitments of	$30.503	billion	is	available	to	absorb	probable	credit	losses	inherent	in	the entire	portfolio.	For	analytical	purposes	only,	the	portion	of	Citigroup's allowance	for	loan	losses	attributed	to	the	Consumer	portfolio	was	$22.366 billion	at	December	31,	2008,	$12.393	billion	at	December	31,	2007	and	$6.006 billion	at	December	31,	2006.	The	increase	in	the	allowance	for	loan	losses	from December	31,	2007	of	$9.973	billion	included	net	builds	of	$11.034	billion. The	builds	consisted	of	$10.785	billion	in	Global	Cards	and	Consumer Banking	($8.216	billion	in	North	America	and	$2.569	billion	in	regions	outside North	America),	and	$249	million	in	Global	Wealth	Management.

The	build	of	$8.216	billion	in	North	America	primarily	reflected	an	increase	in the	estimate	of	losses	across	all	portfolios	based	on	weakening	leading	credit indicators,	including	increased	delinquencies	on	first	and	second	mortgages, unsecured	personal	loans,	credit	cards	and	auto	loans.	The	build	also	reflected trends	in	the	U.S.	macroeconomic	environment,	including	the	housing	market downturn,	rising	unemployment	and	portfolio	growth.	The	build	of	$2.569 billion	in	regions	outside	North	America	primarily	reflected	portfolio	growth	the impact	of	recent	acquisitions,	and	credit	deterioration	in	Mexico,	Brazil,	the U.K.,	Spain,	Greece,	India	and	Colombia.

On-balance-sheet	consumer	loans	of	$515.7	billion	decreased	$42.1	billion,	or 8%,	from	December	31,	2007,	primarily	driven	by	a	decrease	in	residential	real estate	lending	in	North	America	Consumer	Banking	as	well	as	the	impact	of foreign	currency	translation	across	Global	Cards,	Consumer	Banking	and	GWM.

# Citigroup	Mortgage	Foreclosure	Moratoriums

On	February	13,	2009,	Citigroup	announced	the	initiation	of	a	foreclosure moratorium	on	all	Citigroup-owned	first	mortgage	loans	that	are	the	principal residence	of	the	owner	as	well	as	all	loans	serviced	by	the	Company	where	the Company	has	reached	an	understanding	with	the	owner.	The	moratorium	was effective	February	12,	2009,	and	will	extend	until	the	earlier	of	the	U.S. government's	loan	modification	program	(described	below)	or	March	12,	2009. The	Company	will	not	initiate	or	complete	any	new	foreclosures	on	eligible owners	during	this	time.

The	above	foreclosure	moratorium	expands	on	the	Company's	current foreclosure	moratorium	pursuant	to	which	Citigroup	will	not	initiate	or	complete a	foreclosure	sale	on	any	eligible	owner	where	Citigroup	owns	the	mortgage	and the	owner	is	seeking	to	stay	in	the	home	(which	is	the	owner's	primary residence),	is	working	in	good	faith	with	the	Company	and	has	sufficient	income for	affordable	mortgage	payments.	Since	the	start	of

the	housing	crisis	in	2007,	Citigroup	has	worked	successfully	with

approximately	440,000	homeowners	to	avoid	potential	foreclosure	on	combined mortgages	totaling	approximately	$43	billion.

# Proposed	U.S.	Mortgage	Modification	Legislation

In	January	2009,	both	the	U.S.	Senate	and	House	of	Representatives	introduced legislation	(the	Legislation)	that	would	give	bankruptcy	courts	the	authority	to modify	mortgage	loans	originated	on	borrowers'	principal	residences	in Chapter	13	bankruptcy.	Support	for	some	version	of	this	Legislation	has	been endorsed	by	the	Obama	Administration.	The	modification	provisions	of	the Legislation	require	that	the	mortgage	loan	to	be	modified	be	originated	prior	to the	effective	date	of	the	Legislation,	and	that	the	debtor	receive	a	notice	of foreclosure	and	attempt	to	contact	the	mortgage	lender/servicer	regarding modification	of	the	loan.

It	is	difficult	to	project	the	impact	the	Legislation	may	have	on	the	Company's consumer	secured	and	unsecured	lending	portfolio	and	capital	market	positions. Any	impact	will	be	dependent	on	numerous	factors,	including	the	final	form	of the	Legislation,	the	implementation	guidelines	for	the	Administration's	housing plan,	the	number	of	borrowers	who	file	for	bankruptcy	after	enactment	of	the Legislation	and	the	response	of	the	markets	and	credit	rating	agencies.

# Consumer	Credit	Outlook

Consumer	credit	losses	in	2009	are	expected	to	increase	from	prior-year	levels due	to	the	following:

•	Continued	deterioration	in	the	U.S.	housing	and	labor	markets	and	higher levels	of	bankruptcy	filings	are	expected	to	drive	higher	losses	in	both	the secured	and	unsecured	portfolios.

•	Negative	economic	outlook	around	the	globe,	most	notably	in	EMEA,	will continue	to	lead	to	higher	credit	costs	in	Global	Cards	and	Consumer Banking.

# Interest	Rate	Risk	Associated	with	Consumer	Mortgage	Lending Activity

Citigroup	originates	and	funds	mortgage	loans.	As	with	all	other	lending	activity, this	exposes	Citigroup	to	several	risks,	including	credit,	liquidity	and	interest	rate risks.	To	manage	credit	and	liquidity	risk,	Citigroup	sells	most	of	the	mortgage loans	it	originates,	but	retains	the	servicing	rights.	These	sale	transactions	create an	intangible	asset	referred	to	as	mortgage	servicing	rights	(MSRs).	The	fair value	of	this	asset	is	primarily	affected	by	changes	in	prepayments	that	result from	shifts	in	mortgage	interest	rates.	Thus,	by	retaining	the	servicing	rights	of sold	mortgage	loans,	Citigroup	is	still	exposed	to	interest	rate	risk.

In	managing	this	risk,	Citigroup	hedges	a	significant	portion	of	the	value	of	its MSRs	through	the	use	of	interest	rate	derivative	contracts,	forward	purchase commitments	of	mortgage-backed	securities,	and	purchased	securities	classified as	trading	(primarily	mortgage-backed	securities	including	principal-only	strips). Since	the	change	in	the	value	of	these	hedging	instruments	does	not	perfectly match	the	change	in	the	value	of	the	MSRs,	Citigroup	is	still	exposed	to	what	is commonly	referred	to	as	"basis	risk."	Citigroup	manages	this	risk	by	reviewing the	mix	of	the	various	hedging	instruments	referred	to	above	on	a	daily	basis. Citigroup's	MSRs	totaled	$5.567	billion	and	$8.380	billion	at	December	31, 2008	and	2007,	respectively.	For	additional	information	about	the	Company's MSRs,	see	Note	19	to	the	Consolidated	Financial	Statements	on	page	165. As	part	of	the	mortgage	lending	activity,	Citigroup	commonly	enters	into purchase	commitments	to	fund	residential	mortgage	loans	at	specific	interest rates	within	a	given	period	of	time,	generally	up	to	60	days	after	the	rate	has been	set.	If	the	resulting	loans	from	these	commitments	will	be	classified	as loans	held-for-sale,	Citigroup	accounts	for	the	commitments	as	derivatives	under SFAS	133.	Accordingly,	changes	in	the	fair	value	of	these	commitments,	which are	driven	by	changes	in	mortgage	interest	rates,	are	recognized	in	current earnings	after	taking	into	consideration	the	likelihood	that	the	commitment	will be	funded.	However,	a	value	is	not	assigned	to	the	MSRs	until	after	the	loans have	been	funded	and	sold.

Citigroup	hedges	its	exposure	to	the	change	in	the	value	of	these	commitments by	utilizing	hedging	instruments	similar	to	those	referred	to	above. The	Company	has	risk-sharing	agreements	with	various	Mortgage	Insurance (MI)	companies	through	company-owned	captive	reinsurance	entities.	Under these	arrangements,	the	Company	shares	in	MI	premium	revenue	and participates	in	losses	above	a	predetermined	level	(floor),	limited	by	a predetermined	loss	amount	(ceiling),	at	which	time	additional	losses	revert	back to	the	MI	companies.	The	agreements	currently	support	a	total	of	$28.1	billion	of loans	with	$7.1	billion	of	MI	coverage,	principally	on	loans	sold	to	government agencies.	During	2008,	projections	by	the	MI	companies	indicated	that	losses	for some	books	of	business	were	likely	to	exceed	the	floor	and	the	Company recorded	$67	million	in	reserves.	Total	maximum	exposure	under	these	captive reinsurance	agreements	is	$1.3	billion.

# U.S.	Consumer	Mortgage	Lending	Portfolio

The	Company's	U.S.	Consumer	mortgage	portfolio	consists	of	both	first	and second	mortgages,	originated	primarily	by	the	N.A.	Consumer	Banking business.	As	of	December	31,	2008,	the	first	mortgage	portfolio	totaled approximately	$134	billion	while	the	second	mortgage	portfolio	was approximately	$59	billion.

In	some	cases,	some	specific	portfolios	have	been	excluded	from	or	added	to the	information	presented	below,	generally	due	to	differences	in	methodology	or variations	in	the	manner	in	which	information	is	captured.	We	have	noted	such exclusions	or	additions	in	instances	where	the	Company	believes	they	could	be material	to	reconcile	the	information	presented.	North	America	Residential	Real Estate	lending	disclosure	excludes	approximately	$19	billion	of	consumer mortgage	loans	in	Global	Wealth	Management	(GWM).	The	GWM	loans	are primarily	in	the	U.S.	business	and	typically	have	better	aggregate	risk characteristics	than	those	in	the	U.S.	Consumer	portfolio.

Approximately	83%	of	the	first	mortgage	portfolio	had	FICO	(Fair	Isaac Corporation)	credit	scores	of	at	least	620	at	origination;	the	remainder	was originated	with	FICO	scores	of	less	than	620.	As	a	consequence	of	the	difficult economic	environment	and	the	decrease	in	housing	prices,	loan-to-value	(LTV) ratios	and	FICO	scores	have	deteriorated	since	origination	as	depicted	in	the table	below.	On	a	refreshed	basis,	approximately	26%	of	first	mortgages	had	a FICO	score	below	620,	compared	to	around	17%	at	origination.

# Balances:	December	31,	2008—First	Mortgages

Note:	First	mortgage	table	excludes	Canada	and	Puerto	Rico	($2.0	billion)	and	First	Collateral Services	($0.1	billion	commercial	loans	portfolio).	Refreshed	FICO	scores	based	on	updated credit	scores	obtained	from	Fair	Isaac	Corporation.	Refreshed	LTV	ratios	are	derived	from	data at	origination	updated	using	mainly	the	S&P/Case-Shiller	Home	Price	Index	or	the	Office	of Federal	Housing	Enterprise	Oversight	Housing	Price	Index.	Tables	exclude	$2.6	billion	from	At Origination	balances	and	$9.9	billion	from	Refreshed	balances	for	which	FICO	and	LTV	data was	unavailable.	90+	DPD	delinquency	rate	for	the	excluded	mortgages	is	4.69%	and	4.06% respectively,	vs.	5.66%	for	total	portfolio.	Excluding	Government	insured	loans	(described below),	the	90+DPD	delinquency	rate	for	the	first	mortgage	portfolio	is	5.13%.

The	Company's	first	mortgage	portfolio	includes	$3.3	billion	of	loans	with Federal	Housing	Administration	or	Veterans	Administration	guarantees.	These portfolios	consist	of	loans	originated	to	low-to-moderate-income	borrowers	with lower	FICO	scores	and	generally	have	higher	LTVs.	These	loans	have	high delinquency	rates	(approximately	35%	90+DPD)	but,	given	the	government insurance,	the	Company	has	experienced	negligible	credit	losses	on	these	loans. The	first	mortgage	portfolio	also	includes	$2.0	billion	of	loans	with	LTVs	above 80%	which	have	insurance	through	private	mortgage	insurance	companies	and $4.7	billion	of	loans	subject	to	Long-Term	Standby	Commitments1	with Government	Sponsored	Enterprises	(GSE),	for	which	the	Company	has	limited exposure	to	credit	losses.

In	the	second	mortgage	portfolio,	the	majority	of	loans	are	in	the	higher	FICO categories.	However,	the	challenging	economic	conditions	have	created	a migration	towards	lower	FICO	scores	and	higher	LTV	ratios.	Approximately 43%	of	that	portfolio	had	refreshed	loan-to-value	ratios	of	90%	or	more, compared	to	about	30%	at	origination.

1 A	Long-Term	Standby	Commitment	(LTSC)	is	a	structured	transaction	in	which	the	Company transfers	the	credit	risk	of	certain	eligible	loans	to	an	investor	in	exchange	for	a	fee.	These loans	remain	on	balance	sheet	unless	they	reach	a	certain	delinquency	level	(between	120 and	180	days),	in	which	case	the	LTSC	investor	is	required	to	buy	the	loan	at	par.

# Balances:	December	31,	2008—Second	Mortgages

Note:	Refreshed	FICO	scores	based	on	updated	credit	scores	obtained	from	Fair	Isaac Corporation.	Refreshed	LTV	ratios	are	derived	from	data	at	origination	updated	using	mainly the	S&P/Case-Shiller	Home	Price	Index	or	the	Office	of	Federal	Housing	Enterprise	Oversight Housing	Price	Index.	Tables	exclude	$0.7	billion	from	At	Origination	balances	and	$0.1	billion from	Refreshed	balances	for	which	FICO	and	LTV	data	was	unavailable.	90+	DPD	delinquency rate	for	the	excluded	mortgages	is	1.72%	and	2.10%	respectively,	vs.	2.39%	for	total	portfolio.

The	second	mortgage	portfolio	includes	$2.9	billion	of	insured	loans	with LTVs	above	90%	and	$2.6	billion	of	loans	subject	to	Long-Term	Standby Commitments	with	GSE,	for	which	the	Company	has	limited	exposure	to	credit losses.

The	following	tables	provide	delinquency	statistics	for	loans	90	or	more	days past	due	(90+DPD)	in	both	the	first	and	second	mortgage	portfolios.	Loans	with FICO	scores	of	less	than	620	exhibit	significantly	higher	delinquencies	than	in any	other	FICO	band,	particularly	on	a	refreshed	basis.	This	difference	is	most noticeable	for	loans	with	refreshed	FICOs	of	less	than	620	and	LTVs	of	at	least 90%:	first	mortgages	had	a	90+DPD	of	25.4%,	while	second	mortgages	were	at 24.5%.

# Delinquencies:	90+DPD—First	Mortgages

# Note:	90+DPD	are	based	on	balances	referenced	in	the	tables	above.

# Delinquencies:	90+DPD—Second	Mortgages

Note:	90+DPD	are	based	on	balances	referenced	in	the	tables	above.	Second	mortgages	with FICOs	below	620	at	origination	are	less	than	1%	of	the	total,	and	the	Company	provides 90+DPD	delinquency	rates	as	a	measure	of	their	performance.

In	light	of	increased	delinquencies	in	the	U.S.	Consumer	mortgage	portfolios, during	2008	the	Company	expanded	its	allowance	for	loan	losses	related	to	these portfolios	by	approximately	$4.5	billion.	As	of	the	end	of	2008,	the	coincident reserve	coverage	ratio	for	the	first	and	second	mortgage	portfolios	was	at	15.7 months	and	13.8	months,	respectively.

The	following	charts	detail	the	quarterly	trends	in	delinquencies	for	the Company's	first	and	second	U.S.	Consumer	mortgage	portfolios. As	set	forth	in	the	chart,	delinquencies	have	increased	substantially:

•	The	first	mortgage	delinquency	trend	shows	that	year-end	delinquency	levels have	more	than	doubled	2003	levels.	A	further	breakout	of	the	FICO	below 620	segment	indicates	that	delinquencies	in	this	segment	are	two	times	higher than	in	the	overall	first	mortgage	portfolio.

•	Delinquency	rates	in	the	second	mortgage	portfolio	are	at	historically	high levels,	particularly	in	the	90%	or	higher	LTV	segment.	This	segment	has	a year-end	delinquency	rate	almost	twice	as	high	as	the	rate	for	the	overall second	mortgage	portfolio.

Net	credit	losses	have	also	increased	significantly.	First	mortgages'	net	credit losses	as	a	percentage	of	average	loans	increased	by	close	to	4.5	times	since	the end	of	2007,	while	that	of	second	mortgages	tripled.

First	mortgage	net	credit	losses	as	a	percentage	of	average	loans	are	nearly half	the	level	of	those	in	the	second	mortgage	portfolio,	despite	much	higher delinquencies	in	the	first	mortgage	portfolio.	Two	major	factors	explain	this relationship:

•	First	mortgages	include	government-guaranteed	loans. •	Second	mortgages	are	much	more	likely	to	go	directly	from	delinquency	to charge-off	without	going	into	foreclosure.

During	2008,	the	Company	increased	its	efforts	to	contain	the	rise	in delinquencies	and	mitigate	losses.	The	Company	continues	to	tighten	credit requirements	through	higher	FICOs,	lower	LTVs,	increased	documentation	and verifications.	This	shift	has	resulted	in	loans	originated	in	2008	having	higher FICO	scores	and	lower	LTVs,	on	average,	than	those	originated	in	2007.

Note:	comprised	of	the	Citibank	first	mortgage	portfolios	and	the	CitiFinancial	Real	Estate	portfolio.	It	includes	deferred	fees/costs	and	loans	held	for	sale.	90+DPD	based	on	end	of	period	balances	of $137.5	billion.

Note:	comprised	of	the	Citibank	Home	Equity	portfolios;	90+DPD	rate	calculated	by	combined	MBA/OTS	methodology.	90+DPD	based	on	end	of	period	balances	of	$59.6	billion.

Second,	the	Company	continues	to	evaluate	each	of	its	portfolios	to	identify those	customers	who	might	be	eligible	to	refinance	or	modify	their	mortgages and	stay	in	their	homes,	offering	them	different	solutions.	The	Citi	Homeowner Assistance	program	is	an	example	of	such	efforts,	preemptively	reaching	out	to homeowners	not	currently	behind	on	their	mortgage	payments,	but	that	may require	help	to	remain	current	on	their	mortgages.	These	efforts	focus particularly	on	borrowers	in	geographies	facing	extreme	economic	distress. Third,	the	Company	has	initiated	various	mortgage	foreclosure	moratoriums. See	"Citigroup	Mortgage	Foreclosure	Moratoriums"	on	page	59. The	following	tables	detail	the	Company's	first	and	second	U.S.	Consumer mortgage	portfolio	by	origination	channels,	geographic	distribution	and origination	vintage.

# By	Origination	Channel

The	Company's	U.S.	Consumer	mortgage	portfolio	was	originated	from	three main	channels:	retail,	broker	and	correspondent.

•	Retail:	loans	originated	through	a	direct	relationship	with	the	borrower. •	Broker:	loans	originated	through	a	mortgage	broker,	where	the	Company underwrites	the	loan	directly	with	the	borrower.

•	Correspondent:	loans	originated	and	funded	by	a	third	party,	where	the Company	purchases	the	closed	loans	after	the	correspondent	has	funded	the loan.	Includes	loans	acquired	in	large	bulk	purchases	from	other	mortgage originators.	These	types	of	purchases,	used	primarily	in	2006	and	2007,	mainly focused	on	non-prime	and	second-lien	loans	to	be	held	on	Citigroup's	balance sheet.	This	method	of	acquisition	was	discontinued	in	2007,	and	the	current correspondent	channel	focuses	on	acquisition	of	loans	eligible	for	sale	to	the GSEs.

Note:	Data	at	origination.	$134	billion	portfolio	excludes	Canada	and	Puerto	Rico,	First Collateral	Services	(commercial	portfolio),	deferred	fees/costs,	loans	held-for-sale	and	loans sold	with	recourse.	Excluding	Government	insured	loans,	90+DPD	for	the	first	mortgage portfolio	is	5.13%.

As	of	December	31,	2008,	approximately	43%	of	the	first	mortgage	portfolio was	originated	through	the	correspondent	channel,	a	reduction	from approximately	47%	as	of	the	end	of	2007.	Given	that	loans	originated	through correspondents	have	exhibited	higher	90+DPD	delinquency	rates	than	retail originated	mortgages,	the	Company	terminated	business	with	a	number	of correspondent	sellers	in	2007	and	2008.	During	2008,	over	96%	of	the	loans originated	through	this	channel	were	eligible	to	be	sold	to	the	GSEs.	During 2008,	the	Company	has	severed	relationships	with	a	number	of	brokers,	only maintaining	those	who	have	produced	strong,	high-quality	and	profitable volume.

# Second	Mortgages:	December	31,	2008

# Note:	Data	at	origination.	Second	mortgage	90+DPD	rate	calculated	by	OTS	methodology.

For	second	mortgages,	approximately	54%	of	the	loans	were	originated through	third-party	channels.	As	these	mortgages	have	demonstrated	a	higher incidence	of	delinquencies,	the	Company	no	longer	originates	second	mortgages through	third-party	channels,	which	represented	59%	of	the	portfolio	as	of	the end	of	2007.

# By	State

Approximately	half	of	the	Company's	U.S.	Consumer	mortgage	portfolio remains	concentrated	in	five	states:	California,	New	York,	Florida,	Illinois,	and Texas.	Those	states	represent	49%	of	first	mortgages	and	57%	of	second mortgages.

During	2008,	unemployment	was	the	key	driver	of	delinquencies:	despite	sharp differences	in	the	quality	of	their	portfolio,	California	and	Florida	experienced above	average	rises	in	90+DPD.	California,	which	has	only	3%	of	its	first mortgage	portfolio	originated	in	the	FICO<620	band,	experienced	a	2.7	times rise	in	delinquencies,	to	4.13%.	Florida,	which	has	21%	of	its	loans	in	that	FICO band,	also	suffered	a	similar	rise	in	delinquencies,	albeit	to	a	much	higher	rate	of 12.24%.	Texas,	despite	having	34%	of	its	portfolio	originated	with	FICO<620, experienced	a	relatively	mild	rise	in	delinquencies,	a	consequence	of	its	below average	increase	in	unemployment	rate.

In	the	second	mortgage	portfolio,	Florida	and	California	maintained	above- average	delinquencies,	with	approximately	18%	and	22%	of	their	loans originated	in	the	LTV	³90%	band.

# By	Vintage

Approximately	half	of	the	Company's	U.S.	Consumer	mortgage	portfolio consisted	of	2006	and	2007	vintages,	which	demonstrated	above	average delinquencies.	In	first	mortgages,	approximately	45%	of	the	portfolio	is	of	2006 and	2007	vintages,	which	on	aggregate	have	a	90+DPD	of	8.15%,	well	above the	5.66%	of	the	overall	portfolio.	Approximately	43%	is	pre-2005	vintage,	with an	aggregated	delinquency	of	4.28%.	In	second	mortgages,	slightly	over	61%	of the	portfolio	is	of	2006	and	2007	vintages	and	approximately	33%	is	pre-2005 vintage.

# CORPORATE	CREDIT	RISK

For	corporate	clients	and	investment	banking	activities	across	Citigroup,	the credit	process	is	grounded	in	a	series	of	fundamental	policies,	including:

•	joint	business	and	independent	risk	management	responsibility	for	managing credit	risks;

•	a	single	center	of	control	for	each	credit	relationship	that	coordinates	credit activities	with	that	client;

•	portfolio	limits	to	ensure	diversification	and	maintain	risk/capital	alignment;

•	a	minimum	of	two	authorized-credit-officer	signatures	required	on	extensions of	credit,	one	of	which	must	be	from	a	credit	officer	in	credit	risk management;

•	risk	rating	standards,	applicable	to	every	obligor	and	facility;	and •	consistent	standards	for	credit	origination	documentation	and	remedial management.

The	following	table	represents	the	corporate	credit	portfolio,	before consideration	of	collateral,	by	maturity	at	December	31,	2008.	The	corporate portfolio	is	broken	out	by	direct	outstandings	which	include	drawn	loans, overdrafts,	interbank	placements,	bankers'	acceptances,	certain	investment securities	and	leases	and	unfunded	commitments	which	include	unused commitments	to	lend,	letters	of	credit	and	financial	guarantees.

# Corporate	Credit	Portfolio

|  |  | Greater |  |  |
| :--- | :--- | :--- | :--- | :--- |
|  | Due | than\t1\tyear | Greater |  |
|  | within | but\twithin | than | Total |
| In\tbillions\tof\tdollars | 1\tyear | 5\tyears | 5\tyears | exposure |
| Direct\toutstandings | $161 | $100 | $9 | $270 |
| Unfunded\tlending\tcommitments | 206 | 141 | 12 | 359 |
| Total | $367 | $241 | $21 | $629 |

|  |  | Greater |  |  |
| :--- | :--- | :--- | :--- | :--- |
|  | Due | than\t1\tyear | Greater |  |
|  | within | but\twithin | than | Total |
| In\tbillions\tof\tdollars | 1\tyear | 5\tyears | 5\tyears | exposure |
| Direct\toutstandings | $190 | $97 | $12 | $299 |
| Unfunded\tlending\tcommitments | 277 | 183 | 11 | 471 |
| Total | $467 | $280 | $23 | $770 |

# Portfolio	Mix

The	corporate	credit	portfolio	is	diverse	across	counterparty,	industry	and geography.	The	following	table	shows	direct	outstandings	and	unfunded commitments	by	region:

|  | December	31, | December	31, |
| :--- | :--- | :--- |
|  | 2008 | 2007 |
| North\tAmerica | 48% | 48% |
| Asia | 13 | 14 |
| Latin\tAmerica | 8 | 8 |
| EMEA | 31 | 30 |
| Total | 100% | 100% |

The	maintenance	of	accurate	and	consistent	risk	ratings	across	the	corporate credit	portfolio	facilitates	the	comparison	of	credit	exposure	across	all	lines	of business,	geographic	regions	and	products.

Obligor	risk	ratings	reflect	an	estimated	probability	of	default	for	an	obligor and	are	derived	primarily	through	the	use	of	statistical	models	(which	are validated	periodically),	external	rating	agencies	(under	defined	circumstances)	or approved	scoring	methodologies.	Facility	risk	ratings	are	assigned,	using	the obligor	risk	rating,	and	then	factors	that	affect	the	loss-given	default	of	the facility,	such	as	support	or	collateral,	are	taken	into	account.

Internal	obligor	ratings	equivalent	to	BBB	and	above	are	considered	investment grade.	Ratings	below	the	equivalent	of	the	BBB	category	are	considered	non- investment	grade.

The	following	table	presents	the	corporate	credit	portfolio	by	facility	risk rating	at	December	31,	2008	and	2007,	as	a	percentage	of	the	total	portfolio:

|  | 2008 | 2007 |
| :--- | :--- | :--- |
| AAA/AA/A | 57% | 53% |
| BBB | 24 | 24 |
| BB/B | 13 | 20 |
| CCC\tor\tbelow | 6 | 2 |
| Unrated | — | 1 |
| Total | 100% | 100% |

The	corporate	credit	portfolio	is	diversified	by	industry,	with	a	concentration only	in	the	financial	sector,	including	banks,	other	financial	institutions, insurance	companies,	investment	banks	and	government	and	central	banks.	The following	table	shows	the	allocation	of	direct	outstandings	and	unfunded commitments	to	industries	as	a	percentage	of	the	total	corporate	portfolio:

|  | 2008 | 2007 |
| :--- | :--- | :--- |
| Government\tand\tcentral\tbanks | 12% | 8% |
| Investment\tbanks | 7 | 8 |
| Banks | 7 | 7 |
| Other\tfinancial\tinstitutions | 5 | 4 |
| Utilities | 5 | 4 |
| Insurance | 4 | 4 |
| Petroleum | 4 | 4 |
| Agriculture\tand\tfood\tpreparation | 4 | 4 |
| Telephone\tand\tcable | 3 | 6 |
| Industrial\tmachinery\tand\tequipment | 3 | 3 |
| Global\tinformation\ttechnology | 3 | 3 |
| Chemicals | 3 | 3 |
| Autos | 2 | 2 |
| Metals | 2 | 3 |
| Other\tindustries\t^(1) | 36 | 37 |
| Total | 100% | 100% |

(1)Includes	all	other	industries,	none	of	which	exceeds	2%	of	total	outstandings.

# Credit	Risk	Mitigation

As	part	of	its	overall	risk	management	activities,	the	Company	uses	credit derivatives	and	other	risk	mitigants	to	hedge	portions	of	the	credit	risk	in	its portfolio,	in	addition	to	outright	asset	sales.	The	purpose	of	these	transactions	is to	transfer	credit	risk	to	third	parties.	The	results	of	the	mark-to-market	and	any realized	gains	or	losses	on	credit	derivatives	are	reflected	in	the	Principal transactions	line	on	the	Consolidated	Statement	of	Income.	At	December	31, 2008	and	2007,	$95.5	billion	and	$123.7	billion,	respectively,	of	credit	risk exposure	were	economically	hedged.	Citigroup's	expected	loss	model	used	in	the calculation	of	its	loan	loss	reserve	does	not	include	the	favorable	impact	of credit	derivatives	and	other	risk	mitigants.	The	reported	amounts	of	direct outstandings	and	unfunded	commitments	in	this	report	do	not	reflect	the	impact of	these	hedging	transactions.	At	December	31,	2008	and	2007,	the	credit protection	was	economically	hedging	underlying	credit	exposure	with	the following	risk	rating	distribution:

# Rating	of	Hedged	Exposure

|  | 2008 | 2007 |
| :--- | :--- | :--- |
| AAA/AA/A | 54% | 53% |
| BBB | 32 | 34 |
| BB/B | 9 | 11 |
| CCC\tor\tbelow | 5 | 2 |
| Total | 100% | 100% |

At	December	31,	2008	and	2007,	the	credit	protection	was	economically hedging	underlying	credit	exposure	with	the	following	industry	distribution:

# Industry	of	Hedged	Exposure

|  | 2008 | 2007 |
| :--- | :--- | :--- |
| Utilities | 10% | 9% |
| Telephone\tand\tcable | 9 | 11 |
| Agriculture\tand\tfood\tpreparation | 7 | 6 |
| Petroleum | 7 | 7 |
| Industrial\tmachinery\tand\tequipment | 6 | 5 |
| Insurance | 5 | 5 |
| Chemicals | 5 | 4 |
| Retail | 5 | 5 |
| Other\tfinancial\tinstitutions | 4 | 5 |
| Autos | 4 | 5 |
| Pharmaceuticals | 4 | 4 |
| Natural\tgas\tdistribution | 4 | 3 |
| Global\tinformation\ttechnology | 4 | 3 |
| Metals | 3 | 3 |
| Investment\tbanks | 2 | 3 |
| Other\tindustries\t^(1) | 21 | 22 |
| Total | 100% | 100% |

(1)Includes	all	other	industries,	none	of	which	is	greater	than	2%	of	the	total	hedged	amount.

For	further	discussion	regarding	credit	derivatives	see	Note	29	on	page	208.

# GLOBAL	CORPORATE	PORTFOLIO	REVIEW

Corporate	loans	are	identified	as	impaired	and	placed	on	a	non-accrual	basis (cash	basis)	when	it	is	determined	that	the	payment	of	interest	or	principal	is doubtful	or	when	interest	or	principal	is	past	due	for	90	days	or	more;	the exception	is	when	the	loan	is	well	secured	and	in	the	process	of	collection. Impaired	corporate	loans	are	written	down	to	the	extent	that	the	principal	is judged	to	be	uncollectible.	Impaired	collateral-dependent	loans	are	written	down to	the	lower	of	cost	or	collateral	value,	less	disposal	costs.

See	"Non-Accrual	Loans"	on	page	55	for	details	on	the	corporate	non-accrual portfolio.

There	is	no	industry-wide	definition	of	non-performing	assets.	As	such, analysis	against	the	industry	is	not	always	comparable.	The	following	table summarizes	corporate	non-accrual	loans,	which	are	a	part	of	the	Company's	non- performing	assets,	and	net	credit	losses.

| In	millions	of	dollars | 2008 | 2007 | 2006 |
| :--- | :--- | :--- | :--- |
| Corporate\tnon-accrual\tloans |  |  |  |
| North\tAmerica | $2,160 | $290 | $59 |
| EMEA | \t 6,630 | \t 1,173 | 186 |
| Latin\tAmerica | 238 | 127 | 173 |
| Asia | 541 | 168 | 117 |
| Total\tcorporate\tnon-accrual\tloans\t^(1) | $9,569 | $1,758 | $535 |
| Net\tcredit\tlosses\t(recoveries) |  |  |  |
| Securities\tand\tBanking | $1,711 | $649 | $49 |
| Transaction\tServices | 62 | 24 | 27 |
| Corporate/Other | — | (2) | 6 |
| Total\tnet\tcredit\tlosses\t(recoveries) | $1,773 | $671 | $82 |
| Corporate\tallowance\tfor\tloan\tlosses | $7,250 | $3,724 | $2,934 |
| Corporate\tallowance\tfor\tcredit\tlosses\ton\tunfunded |  |  |  |
| lending\tcommitments\t^(2) | 887 | \t 1,250 | \t 1,100 |
| Total\tcorporate\tallowance\tfor\tloans,\tleases\tand |  |  |  |
| unfunded\tlending\tcommitments | $8,137 | $4,974 | $4,034 |
| As\ta\tpercentage\tof\ttotal\tcorporate\tloans\t^(3) | 4.15% | 2.01% | 1.76% |

(1)Excludes	purchased	distressed	loans	as	they	are	accreting	interest	in	accordance	with	SOP 03-3.	The	carrying	value	of	these	loans	was	$1,510	million	at	December	31,	2008,	$2,373

(2)Represents	additional	reserves	recorded	in	Other	liabilities	on	the	Consolidated	Balance Sheet.

(3)Does	not	include	the	allowance	for	unfunded	lending	commitments.

Cash-basis	loans	on	December	31,	2008	increased	$7.811	billion	from	2007,	of which	$5.457	billion	was	in	EMEA	and	$1.870	billion	was	in	North	America. This	increase	is	primarily	attributable	to	the	transfer	of	non-accrual	loans	from the	held-for-sale	portfolio	to	the	held-for-investment	portfolio	during	the	fourth quarter	of	2008.	These	loans	were	previously	accounted	for	on	a	LOCOM	basis and	were	transferred	at	their	carrying	value,	which	was	net	of	any	write-downs previously	recorded.	If,	instead	of	recording	direct	markdowns,	the	loans	were included	in	the	loan	balance	at	par	and	the	markdowns	were	included	in	reserves, the	ratio	of	corporate	allowance	for	loan	losses	to	non-accrual	loans	would	have been	approximately	100%.

Cash-basis	loans	on	December	31,	2007	increased	$1.223	billion	from	2006 primarily	due	to	the	impact	of	subprime	activity	in	the	U.K.	and	U.S.	markets. Total	corporate	loans	outstanding	at	December	31,	2008	were	$175	billion compared	to	$186	billion	at	December	31,	2007.

Total	NCL	of	$1.773	billion	in	2008	increased	$1.102	billion	from	2007, primarily	due	to	significant	write-downs	reflecting	the	continued	weakening

of	the	economy.	Total	corporate	net	credit	losses	of	$671	million	in	2007 increased	$589	million	from	2006,	primarily	related	to	the	$535	million	in	write- offs	on	loans	with	subprime-related	direct	exposure.

Citigroup's	total	allowance	for	loans,	leases	and	unfunded	lending commitments	of	$30.503	billion	is	available	to	absorb	probable	credit	losses inherent	in	the	entire	portfolio.	For	analytical	purposes	only,	the	portion	of Citigroup's	allowance	for	credit	losses	attributed	to	the	corporate	portfolio	was $8.137	billion	at	December	31,	2008,	$4.974	billion	at	December	31,	2007	and $4.034	billion	at	December	31,	2006.	The	$3.163	billion	increase	in	the corporate	allowance	at	December	31,	2008	from	December	31,	2007	primarily reflects	a	weakening	in	overall	portfolio	credit	quality,	as	well	as	loan-loss reserves	for	specific	counterparties.	The	$940	million	increase	in	the	corporate allowance	at	December	31,	2007	from	December	31,	2006	primarily	reflects	a weakening	in	overall	portfolio	credit	quality,	as	well	as	loan-loss	reserves	for specific	counterparties.	The	loan-loss	reserves	for	specific	counterparties	include $327	million	for	subprime-related	direct	exposures.	Losses	on	corporate	lending activities	and	the	level	of	cash-basis	loans	can	vary	widely	with	respect	to	timing and	amount,	particularly	within	any	narrowly	defined	business	or	loan	type.

# EXPOSURE	TO	U.S.	REAL	ESTATE	IN	SECURITIES	AND	BANKING

# Subprime-Related	Exposure	in	Securities	and	Banking

The	following	table	summarizes	Citigroup's	U.S.	subprime-related	direct	exposures	in	Securities	and	Banking	(S&B)	at	December	31,	2007	and	2008:

|  |  | 2008 | 2008 |  |
| :--- | :--- | :--- | :--- | :--- |
| In\tbillions\tof\tdollars | December\t31,\t2007\nexposures | write-\ndowns^\t(1) | sales/\ntransfers^\t(2) | December\t31,\t2008\nexposures |
| Direct\tABS\tCDO\tsuper\tsenior\texposures: |  |  |  |  |
| Gross\tABS\tCDO\tsuper\tsenior\texposures\t(A) | $39.8 |  |  | $18.9 |
| Hedged\texposures\t(B) | 10.5 |  |  | 6.9 |
| Net\tABS\tCDO\tsuper\tsenior\texposures:\nABCP/CDO\t^(3) | 20.6 | $(9.0) | $(1.7) | 9.9 |
| High\tgrade | 4.9 | (2.5)^\t(4) | (1.6) | 0.8 |
| Mezzanine | 3.6 | (1.4)^\t(4) | (1.0) | 1.3 |
| ABS\tCDO-squared | 0.2 | (0.2) | 0.0 | 0.0 |
| Total\tnet\tABS\tCDO\tsuper\tsenior\texposures\t(A-B=C) | $29.3 | $(13.1) | $(4.2)^\t(5) | $12.0 |
| Lending\tand\tstructuring\texposures: |  |  |  |  |
| CDO\twarehousing/unsold\ttranches\tof\tABS\tCDOs | $0.2 | $(0.1) | $0.0 | $0.1 |
| Subprime\tloans\tpurchased\tfor\tsale\tor\tsecuritization | 4.0 | (1.3) | (1.4) | 1.3 |
| Financing\ttransactions\tsecured\tby\tsubprime | 3.8 | (0.4)^\t(4) | (2.6) | 0.7 |
| Total\tlending\tand\tstructuring\texposures\t(D) | $8.0 | $(1.8) | $(4.0) | $2.0 |
| Total\tnet\texposures\tC+D^\t(6) | $37.3 | $(14.9) | $(8.3) | $14.1 |
| Credit\tadjustment\ton\thedged\tcounterparty\texposures\t(E)^\t(7) |  | $(5.7) |  |  |
| Total\tnet\twrite-downs\t(C+D+E) |  | $(20.7) |  |  |

Note:Table	may	not	foot	or	cross-foot	due	to	roundings.

(1) Includes	net	profits	and	losses	associated	with	liquidations	and	amounts	recorded	on	credit	cash.

(2) Reflects	sales,	transfers	and	repayment	or	liquidations	of	principal.

(3) Consists	of	older-vintage,	high-grade	ABS	CDOs.

(4) Includes	$579	million	recorded	in	credit	costs.

(5) A	portion	of	the	underlying	securities	was	purchased	in	liquidations	of	CDOs	and	reported	as Trading	account	assets.	As	of	December	31,	2008,	$227	million	relating	to	deals	liquidated	was	held in	the	trading	books.

(6) Composed	of	net	CDO	super-senior	exposures	and	gross	lending	and	structuring	exposures.

(7) SFAS	157	adjustment	related	to	counterparty	credit	risk.

# Subprime-Related	Direct	Exposure	in	Securities	and	Banking

The	Company	had	approximately	$14.1	billion	in	net	U.S.	subprime-related direct	exposures	in	its	S&B	business	at	December	31,	2008.

The	exposure	consisted	of	(a)	approximately	$12.0	billion	of	net	exposures	in the	super	senior	tranches	(i.e.,	the	most	senior	tranches)	of	CDOs,	which	are collateralized	by	asset-backed	securities,	derivatives	on	asset-backed	securities, or	both	(ABS	CDOs),	and	(b)	approximately	$2.1	billion	of	exposures	in	its lending	and	structuring	business.

# Direct	ABS	CDO	Super	Senior	Exposures

The	net	$12.0	billion	in	ABS	CDO	super	senior	exposures	as	of	December	31, 2008	is	collateralized	primarily	by	subprime	residential	mortgage-backed securities	(RMBS),	derivatives	on	RMBS,	or	both.	These	exposures	include	$9.9 billion	in	the	super	senior	tranches	of	ABS	CDOs	initially	issued	as	commercial paper	(ABCP)	and	approximately	$2.1	billion	of	other	super	senior	tranches	of ABS	CDOs.

Citigroup's	CDO	super	senior	subprime	direct	exposures	are	Level	3	assets and	are	subject	to	valuation	based	on	significant	unobservable	inputs.	Fair	value of	these	exposures	(other	than	high	grade	and	mezzanine	as	described	below)	is based	on	estimates	of	future	cash	flows	from	the

mortgage	loans	underlying	the	assets	of	the	ABS	CDOs.	To	determine	the performance	of	the	underlying	mortgage	loan	portfolios,	the	Company	estimates the	prepayments,	defaults	and	loss	severities	based	on	a	number	of macroeconomic	factors,	including	housing	price	changes,	unemployment	rates, interest	rates,	and	borrower	and	loan	attributes,	such	as	age,	credit	scores, documentation	status,	loan-to-value	(LTV)	ratios	and	debt-to-income	(DTI) ratios.	The	model	is	calibrated	using	available	mortgage	loan	information including	historical	loan	performance.	In	addition,	the	methodology	estimates the	impact	of	geographic	concentration	of	mortgages	and	the	impact	of	reported fraud	in	the	origination	of	subprime	mortgages.	An	appropriate	discount	rate	is then	applied	to	the	cash	flows	generated	for	each	ABCP-	and	CDO-squared tranche,	in	order	to	estimate	its	current	fair	value.	See	"Significant	Accounting Policies	and	Significant	Estimates"	on	page	18.

When	necessary,	the	valuation	methodology	used	by	Citigroup	is	refined	and the	inputs	used	for	purposes	of	estimation	are	modified,	in	part,	to	reflect ongoing	market	developments.	More	specifically,	the	inputs	of	home	price appreciation	(HPA)	assumptions	and	delinquency	data	were	updated	throughout the	year	along	with	discount	rates	that	are	based	upon	a	weighted	average combination	of	implied	spreads	from	single-name	ABS	bond	prices	and	ABX indices,	as	well	as	CLO	spreads.

The	2008	fourth	quarter	housing-price	changes	were	estimated	using	a	forward- looking	projection.	In	the	second	half	of	2008,	this	projection	incorporated	the Loan	Performance	Index,	whereas	in	the	first	half	of	2008,	it	incorporated	the S&P	Case	Shiller	Index.	This	change	was	made	because	the	Loan	Performance Index	provided	more	comprehensive	geographic	data.	In	addition,	the Company's	mortgage	default	model	also	uses	recent	mortgage	performance	data, a	period	of	sharp	home	price	declines	and	high	levels	of	mortgage	foreclosures. The	valuation	as	of	December	31,	2008,	assumes	a	cumulative	decline	in	U.S. housing	prices	from	peak	to	trough	of	33%.	This	rate	assumes	declines	of	16% and	13%	in	2008	and	2009,	respectively,	the	remainder	of	the	33%	decline having	already	occurred	before	the	end	of	2007.

In	addition,	during	the	last	three	quarters	of	2008,	the	discount	rates	were	based on	a	weighted	average	combination	of	the	implied	spreads	from	single-name ABS	bond	prices,	ABX	indices	and	CLO	spreads,	depending	on	vintage	and asset	types.	To	determine	the	discount	margin,	the	Company	applies	the mortgage	default	model	to	the	bonds	underlying	the	ABX	indices	and	other referenced	cash	bonds	and	solves	for	the	discount	margin	that	produces	the market	prices	of	those	instruments.

In	the	third	quarter	of	2008,	the	valuation	of	the	high-grade	and	mezzanine ABS	CDO	positions	was	changed	from	model	valuation	to	trader	prices	based on	the	underlying	assets	of	each	high-grade	and	mezzanine	ABS	CDO.	Unlike the	ABCP-	and	CDO-squared	positions,	the	high-grade	and	mezzanine	positions are	now	largely	hedged	through	the	ABX	and	bond	short	positions,	which	are,	by necessity,	trader	priced.	Thus,	this	change	brings	closer	symmetry	in	the	way these	long	and	short	positions	are	valued	by	the	Company.	Additionally,	there were	a	number	of	liquidations	of	high-grade	and	mezzanine	positions	during	the third	quarter.	These	were	at	prices	close	to	the	value	of	trader	prices.	The liquidation	proceeds	in	total	were	also	above	the	June	30,	2008	carrying	amount of	the	positions	liquidated.	Citigroup	intends	to	use	trader	marks	to	value	this portion	of	the	portfolio	going	forward	so	long	as	it	remains	largely	hedged. The	primary	drivers	that	currently	impact	the	model	valuations	are	the	discount rates	used	to	calculate	the	present	value	of	projected	cash	flows	and	projected mortgage	loan	performance.	In	valuing	its	direct	ABCP-	and	CDO-squared	super senior	exposures,	the	Company	has	made	its	best	estimate	of	the	key	inputs	that should	be	used	in	its	valuation	methodology.	However,	the	size	and	nature	of these	positions	as	well	as	current	market	conditions	are	such	that	changes	in inputs	such	as	the	discount	rates	used	to	calculate	the	present	value	of	the	cash flows	can	have	a	significant	impact	on	the	reported	value	of	these	exposures.	For instance,	each	10	basis	point	change	in	the	discount	rate	used	generally	results	in an	approximate	$32	million	change	in	the	fair	value	of	the	Company's	direct ABCP-	and	CDO-squared	super	senior	exposures	as	of	December	31,	2008.	This applies	to	both	decreases	in	the	discount	rate	(which	would	increase	the	value	of these	assets	and	decrease	reported	write-downs)	and	increases	in	the	discount rate	(which	would	decrease	the	value	of	these	assets	and	increase	reported	write- downs).

Estimates	of	the	fair	value	of	the	CDO	super	senior	exposures	depend	on market	conditions	and	are	subject	to	further	change	over	time.	In	addition,	while Citigroup	believes	that	the	methodology	used	to	value	these	exposures	is reasonable,	the	methodology	is	subject	to	continuing	refinement,	including	those made	as	a	result	of	market	developments.	Further,	any	observable	transactions	in respect	of	some	or	all	of	these	exposures	could	be

employed	in	the	fair	valuation	process	in	accordance	with	and	in	the	manner called	for	by	SFAS	157.

# Lending	and	Structuring	Exposures

The	$2.1	billion	of	subprime-related	exposures	includes	approximately	$0.1 billion	of	CDO	warehouse	inventory	and	unsold	tranches	of	ABS	CDOs, approximately	$1.3	billion	of	actively	managed	subprime	loans	purchased	for resale	or	securitization	at	a	discount	to	par	during	2007	and	approximately	$1.3 billion	of	financing	transactions	with	customers	secured	by	subprime	collateral. These	amounts	represent	the	fair	value	as	determined	using	observable	inputs and	other	market	data.	The	majority	of	the	change	from	the	December	31,	2007 balances	reflects	sales,	transfers	and	liquidations.

S&B	also	has	trading	positions,	both	long	and	short,	in	U.S.	subprime	RMBS and	related	products,	including	ABS	CDOs,	which	are	not	included	in	the	figures above.	The	exposure	from	these	positions	is	actively	managed	and	hedged, although	the	effectiveness	of	the	hedging	products	used	may	vary	with	material changes	in	market	conditions.

# Exposure	to	Commercial	Real	Estate

The	Company,	through	its	business	activities	and	as	a	capital	markets participant,	incurs	exposures	that	are	directly	or	indirectly	tied	to	the	global commercial	real	estate	market.	These	exposures	are	represented	primarily	by	the following	three	categories:

(1)	Assets	held	at	fair	value	include:	$5.8	billion,	of	which	approximately	$3.5 billion	are	securities,	loans	and	other	items	linked	to	commercial	real	estate	that are	carried	at	fair	value	as	trading	account	assets,	and	approximately	$2.3	billion of	which	are	securities	backed	by	commercial	real	estate	carried	at	fair	value	as available-for-sale	investments.	Changes	in	fair	value	for	these	trading	account assets	are	reported	in	current	earnings,	while	changes	in	fair	value	for	these available-for-sale	investments	are	reported	in	OCI	with	other-than-temporary impairments	reported	in	current	earnings.

The	majority	of	these	exposures	are	classified	as	Level	3	in	the	fair-value hierarchy.	Weakening	activity	in	the	trading	markets	for	some	of	these instruments	resulted	in	reduced	liquidity,	thereby	decreasing	the	observable inputs	for	such	valuations,	and	could	have	an	adverse	impact	on	how	these instruments	are	valued	in	the	future	if	such	conditions	persist.

During	the	fourth	quarter	of	2008,	approximately	$3.3	billion	of	commercial real	estate	loans	and	loan	commitments	that	had	been	included	in	this	category, because	they	were	classified	as	held-for-sale	and	measured	at	the	lower-of-cost- or-market	(LOCOM),	were	reclassified	to	assets	held	at	amortized	cost	since management's	intent	for	these	exposures	changed	to	held	for	investment. (2)	Assets	held	at	amortized	cost	include	approximately	$2.0	billion	of securities	classified	as	held-to-maturity	and	$24.9	billion	of	loans	and commitments.	The	held-to-maturity	securities	were	classified	as	such	during	the fourth	quarter	of	2008	and	were	previously	classified	as	either	trading	or available	for	sale.	They	are	accounted	for	at	amortized	cost,	subject	to	other- than-temporary	impairment.	Loans	and	commitments	are	recorded	at	amortized cost,	less	loan	loss	reserves.	The	impact	from	changes	in	credit	is	reflected	in	the calculation	of	the	allowance	for	loan	losses	and	in	net	credit	losses. (3)	Equity	and	other	investments	include	approximately	$4.7	billion	of	equity and	other	investments	such	as	limited	partner	fund	investments	which	are accounted	for	under	the	equity	method.

# Direct	Exposure	to	Monolines

In	its	Securities	and	Banking	business,	the	Company	has	exposure	to	various monoline	bond	insurers	(Monolines),	listed	in	the	table	below,	from	hedges	on certain	investments	and	from	trading	positions.	The	hedges	are	composed	of credit	default	swaps	and	other	hedge	instruments.	During	2007,	the	Company established	a	$967	million	credit	valuation	adjustment	(CVA)	reserve	on	the fair-value	exposures	related	to	these	Monolines.	In	2008,	the	Company	added $5.7	billion	to	this	reserve	and	recorded

utilizations	of	$2.4	billion,	bringing	the	December	31,	2008	balance	to	$4.3 billion.

The	following	table	summarizes	the	market	value	of	the	Company's	direct exposures	to	and	the	corresponding	notional	amounts	of	transactions	with	the various	Monolines	as	well	as	the	aggregate	credit	valuation	adjustment associated	with	these	exposures	as	of	December	31,	2008	and	2007	in	S&B:

|  | December	31,	2008 | December	31,	2008 |  | December	31,	2007 |
| :--- | :--- | :--- | :--- | :--- |
|  |  | Notional |  | Notional |
|  | Fair- | amount | Fair- | amount |
|  | value | of | value | of |
| In\tmillions\tof\tdollars | exposure | transactions | exposure | transactions |
| Direct\tsubprime\tABS\tCDO\tsuper\tsenior: |  |  |  |  |
| Ambac | $\t\t4,461 | $5,357 | $1,815 | $5,485 |
| FGIC | — | — | 909 | 1,460 |
| ACA | — | — | 438 | 600 |
| Radian | — | — | 100 | 100 |
| Subtotal\tdirect\tsubprime\tABS\tCDO\tsuper\tsenior | $\t\t4,461 | $5,357 | $3,262 | $7,645 |
| Trading\tassets—subprime: |  |  |  |  |
| Ambac | — | — | $1,150 | $1,400 |
| Trading\tassets—subprime | — | — | $1,150 | $1,400 |
| Trading\tassets—non-subprime: |  |  |  |  |
| MBIA | $\t\t1,924 | $4,040 | $395 | $5,620 |
| FSA | 204 | 1,126 | 121 | 1,126 |
| ACA | — | — | 50 | 1,925 |
| Assured | 141 | 465 | 7 | 340 |
| Radian | 58 | 150 | 5 | 350 |
| Ambac | 21 | 1,106 | — | 1,971 |
| Trading\tassets—non-subprime | $\t\t2,348 | $6,887 | $578 | $11,332 |
| Subtotal\ttrading\tassets | $\t\t2,348 | $6,887 | $1,728 | $12,732 |
| Total\tgross\tfair-value\tdirect\texposure | $\t\t6,809 |  | $4,990 |  |
| Credit\tvaluation\tadjustment | $(4,279) |  | $(967) |  |
| Total\tnet\tfair-value\tdirect\texposure | $\t\t2,530 |  | $4,023 |  |

The	fair-value	exposure,	net	of	payable	and	receivable	positions,	represents the	market	value	of	the	contract	as	of	December	31,	2008	and	2007,	excluding the	credit	valuation	adjustment.	The	notional	amount	of	the	transactions, including	both	long	and	short	positions,	is	used	as	a	reference	value	to	calculate payments.	The	credit	valuation	adjustment	is	a	downward	adjustment	to	the	fair- value	exposure	to	a	counterparty	to	reflect	the	counterparty's	creditworthiness	in respect	of	the	obligations	in	question.

Credit	market	valuation	adjustments	are	based	on	credit	spreads	and	on estimates	of	the	terms	and	timing	of	the	payment	obligations	of	the	Monolines. Timing	in	turn	depends	on	estimates	of	the	performance	of	the	transactions	to which	the	Company's	exposure	relates,	estimates	of	whether	and	when liquidation	of	such	transactions	may	occur	and	other	factors,	each	considered	in the	context	of	the	terms	of	the	Monolines'	obligations.

As	of	December	31,	2008	and	2007,	the	Company	had	$6.9	billion	and	$10.5 billion,	respectively,	in	notional	amount	of	hedges	against	its	direct	subprime ABS	CDO	super	senior	positions.	Of	those	amounts,	$5.3	billion

and	$7.5	billion,	respectively,	were	purchased	from	Monolines	and	are	included in	the	notional	amount	of	transactions	in	the	table	above.	The	fair	value	of	the hedges	provided	by	the	Monolines	against	the	Company's	direct	subprime	ABS CDO	super	senior	positions	was	$4.5	billion	as	of	December	31,	2008,	and	$3.3 billion	as	of	December	31,	2007.	There	was	$0.9	billion	net	fair-value	exposure related	to	direct	subprime	ABS	CDO	super	senior	positions	with	a	notional amount	of	$1.5	billion	as	of	December	31,	2007,	which	was	settled	during	the fourth	quarter	of	2008.

With	respect	to	Citi's	trading	assets,	there	were	$2.3	billion	and	$1.7	billion	of fair-value	exposure	to	Monolines	as	of	December	31,	2008	and	2007, respectively.	Trading	assets	include	trading	positions,	both	long	and	short,	in U.S.	subprime	RMBS	and	related	products,	including	ABS	CDOs.	There	was $1.2	billion	net	fair-value	exposure	related	to	subprime	trading	positions	with	a notional	amount	of	$1.4	billion	as	of	December	31,	2007,	which	was	settled during	the	third	quarter	of	2008.

The	notional	amount	of	transactions	related	to	the	remaining	non-subprime trading	assets	as	of	December	31,	2008,	was	$6.9	billion	with	a	corresponding fair	value	exposure	of	$2.3	billion.	The	$6.9	billion	notional	amount	of transactions	comprised	$1.8	billion	primarily	in	interest-rate	swaps	with	a corresponding	fair	value	exposure	of	$3.9	million.	The	remaining	notional amount	of	$5.1	billion	was	in	the	form	of	credit	default	swaps	and	total	return swaps	with	a	fair	value	exposure	of	$2.3	billion.

The	notional	amount	of	transactions	related	to	the	remaining	non-subprime trading	assets	at	December	31,	2007,	was	$11.3	billion	with	a	corresponding	fair value	exposure	of	$578	million.	The	$11.3	billion	notional	amount	of transactions	comprised	$4.1	billion	primarily	in	interest-rate	swaps	with	a	fair value	exposure	of	$34	million.	The	remaining	notional	amount	of	$7.2	billion was	in	the	form	of	credit	default	swaps	and	total	return	swaps	with	a	fair	value	of $544	million.

The	Company	has	purchased	mortgage	insurance	from	various	monoline mortgage	insurers	on	first	mortgage	loans.	The	notional	amount	of	this	insurance protection	was	approximately	$400	million	and	$600	million	as	of	December	31, 2008	and	2007,	respectively,	with	nominal	pending	claims	against	this	notional amount.

In	addition,	Citigroup	has	indirect	exposure	to	Monolines	in	various	other	parts of	its	businesses.	Indirect	exposure	includes	circumstances	in	which	the Company	is	not	a	contractual	counterparty	to	the	Monolines,	but	instead	owns securities	which	may	benefit	from	embedded	credit	enhancements	provided	by	a Monoline.	For	example,	corporate	or	municipal	bonds	in	the	trading	business may	be	insured	by	the	Monolines.	The	previous	table	does	not	capture	this	type of	indirect	exposure	to	the	Monolines.

# Highly	Leveraged	Financing	Transactions

Highly	leveraged	financing	commitments	are	agreements	that	provide	funding	to a	borrower	with	higher	levels	of	debt	(measured	by	the	ratio	of	debt	capital	to equity	capital	of	the	borrower)	than	is	generally	the	case	for	other	companies.	In recent	years	through	mid-2008,	highly	leveraged	financing	had	been	commonly employed	in	corporate	acquisitions,	management	buy-outs	and	similar transactions.

In	these	financings,	debt	service	(that	is,	principal	and	interest	payments) absorbs	a	significant	portion	of	the	cash	flows	generated	by	the	borrower's business.	Consequently,	the	risk	that	the	borrower	may	not	be	able	to	meet	its debt	obligations	is	greater.	Due	to	this	risk,	the	interest	rates	and	fees	charged	for this	type	of	financing	are	generally	higher	than	for	other	types	of	financing. Prior	to	funding,	highly	leveraged	financing	commitments	are	assessed	for impairment	in	accordance	with	SFAS	5,	and	losses	are	recorded	when	they	are probable	and	reasonably	estimable.	For	the	portion	of	loan	commitments	that relates	to	loans	that	will	be	held	for	investment,	loss	estimates	are	made	based	on the	borrower's	ability	to	repay	the	facility	according	to	its	contractual	terms.	For the	portion	of	loan	commitments	that	relates	to	loans	that	will	be	held	for	sale, loss	estimates	are	made	in	reference	to	current	conditions	in	the	resale	market (both	interest	rate	risk	and	credit	risk	are	considered	in	the	estimate).	Loan origination,	commitment,	underwriting	and	other	fees	are	netted	against	any recorded	losses.

Citigroup	generally	manages	the	risk	associated	with	highly	leveraged financings	it	has	entered	into	by	seeking	to	sell	a	majority	of	its	exposures	to	the market	prior	to	or	shortly	after	funding.	In	certain	cases,	all	or	a	portion

of	a	highly	leveraged	financing	to	be	retained	is	hedged	with	credit	derivatives	or other	hedging	instruments.	Thus,	when	a	highly	leveraged	financing	is	funded, Citigroup	records	the	resulting	loan	as	follows:

•	the	portion	that	Citigroup	will	seek	to	sell	is	recorded	as	a	loan	held-for-sale	in Other	assets	on	the	Consolidated	Balance	Sheet,	and	measured	at	the	lower	of cost	or	market	(LOCOM);	and

•	the	portion	that	will	be	retained	is	recorded	as	a	loan	held-for-investment	in Loans	and	measured	at	amortized	cost	less	a	reserve	for	loan	losses.

Due	to	the	dislocation	of	the	credit	markets	and	the	reduced	market	interest	in higher-risk/higher-yield	instruments	since	the	latter	half	of	2007,	liquidity	in	the market	for	highly	leveraged	financings	has	been	limited.	This	has	resulted	in	the Company's	recording	pretax	write-downs	on	funded	and	unfunded	highly leveraged	finance	exposures	of	$4.9	billion	in	2008	and	$1.5	billion	in	2007. Citigroup's	exposures	for	highly	leveraged	financing	commitments	totaled $10.0	billion	at	December	31,	2008	($9.1	billion	funded	and	$0.9	billion	in unfunded	commitments),	reflecting	a	decrease	of	$33.2	billion	from December	31,	2007.	During	the	fourth	quarter	of	2008,	Citigroup	reclassified $3.3	billion	of	funded	highly	leveraged	financings	from	held	for	sale	to	held	for investment	as	the	Company	revised	the	holding	periods	for	these	loans.	For further	discussion	regarding	this	reclassification,	see	"Reclassification	of Financial	Assets"	on	page	87.

In	April	2008,	the	Company	completed	the	transfer	of	approximately	$12 billion	of	loans	to	third	parties,	of	which	$8.5	billion	relates	to	highly	leveraged loans	and	commitments.	In	these	transactions,	the	third	parties	purchased subordinate	interests	backed	by	the	transferred	loans.	These	subordinate	interests absorb	first	loss	on	the	transferred	loans	and	provide	the	third	parties	with control	of	the	loans.	The	Company	retained	senior	debt	securities	backed	by	the transferred	loans.	These	transactions	were	accounted	for	as	sales	of	the transferred	loans.	The	loans	were	removed	from	the	balance	sheet	and	the retained	securities	are	classified	as	Available-for-sale	securities	on	the Company's	Consolidated	Balance	Sheet.	The	Company's	sole	remaining exposure	to	the	transferred	loans	are	the	senior	debt	securities	and	the receivables	under	the	TRS,	which	have	an	aggregate	carrying	value	of	$8.1 billion	as	of	December	31,	2008.	The	Company	purchased	protection	on	these retained	senior	positions	from	the	third-party	subordinate	interest	holders	via total	return	swaps.	The	credit	risk	in	the	total	return	swap	is	protected	through margin	arrangements	that	provide	for	both	initial	margin	and	additional	margin at	specified	triggers.	Due	to	the	initial	cash	margin	received	and	the	existing margin	requirements	on	the	total	return	swaps	and	the	substantive	subordinate investments	made	by	third	parties,	the	Company	believes	that	the	transactions largely	mitigate	the	Company's	risk	related	to	these	transferred	loans.

# MARKET	RISK	MANAGEMENT	PROCESS

Market	risk	encompasses	liquidity	risk	and	price	risk,	both	of	which	arise	in	the normal	course	of	business	of	a	global	financial	intermediary.	Liquidity	risk	is	the risk	that	an	entity	may	be	unable	to	meet	a	financial	commitment	to	a	customer, creditor,	or	investor	when	due.	Liquidity	risk	is	discussed	in	the	"Capital Resources	and	Liquidity"	section	on	page	94.	Price	risk	is	the	earnings	risk	from changes	in	interest	rates,	foreign	exchange	rates,	and	equity	and	commodity prices,	and	in	their	implied	volatilities.	Price	risk	arises	in	non-trading	portfolios, as	well	as	in	trading	portfolios.

Market	risks	are	measured	in	accordance	with	established	standards	to	ensure consistency	across	businesses	and	the	ability	to	aggregate	risk.	Each	business	is required	to	establish,	with	approval	from	independent	market	risk	management, a	market	risk	limit	framework	for	identified	risk	factors	that	clearly	defines approved	risk	profiles	and	is	within	the	parameters	of	Citigroup's	overall	risk appetite.

In	all	cases,	the	businesses	are	ultimately	responsible	for	the	market	risks	they take	and	for	remaining	within	their	defined	limits.

# NON-TRADING	PORTFOLIOS

# INTEREST	RATE	RISK

One	of	Citigroup's	primary	business	functions	is	providing	financial	products that	meet	the	needs	of	its	customers.	Loans	and	deposits	are	tailored	to	the customers'	requirements	with	regard	to	tenor,	index,	and	rate	type.	Net	interest revenue	(NIR)	is	the	difference	between	the	yield	earned	on	the	non-trading portfolio	assets	(including	customer	loans)	and	the	rate	paid	on	the	liabilities (including	customer	deposits	or	company	borrowings).	NIR	is	affected	by changes	in	the	level	of	interest	rates.	For	example:

•	At	any	given	time,	there	may	be	an	unequal	amount	of	assets	and	liabilities which	are	subject	to	market	rates	due	to	maturation	or	repricing.	Whenever	the amount	of	liabilities	subject	to	repricing	exceeds	the	amount	of	assets	subject to	repricing,	a	company	is	considered	"liability	sensitive."	In	this	case,	a company's	NIR	will	deteriorate	in	a	rising	rate	environment. •	The	assets	and	liabilities	of	a	company	may	reprice	at	different	speeds	or mature	at	different	times,	subjecting	both	"liability-sensitive"	and	"asset- sensitive"	companies	to	NIR	sensitivity	from	changing	interest	rates.	For example,	a	company	may	have	a	large	amount	of	loans	that	are	subject	to repricing	this	period,	but	the	majority	of	deposits	are	not	scheduled	for repricing	until	the	following	period.	That	company	would	suffer	from	NIR deterioration	if	interest	rates	were	to	fall.

NIR	in	the	current	period	is	the	result	of	customer	transactions	and	the	related contractual	rates	originated	in	prior	periods	as	well	as	new	transactions	in	the current	period;	those	prior-period	transactions	will	be	impacted	by	changes	in rates	on	floating-rate	assets	and	liabilities	in	the	current	period.

Due	to	the	long-term	nature	of	the	portfolios,	NIR	will	vary	from	quarter	to quarter	even	assuming	no	change	in	the	shape	or	level	of	the	yield	curve	as	the assets	and	liabilities	reprice.	These	repricings	are	a	function	of	implied	forward interest	rates,	which	represent	the	overall	market's	unbiased	estimate	of	future interest	rates	and	incorporate	possible	changes	in	the	Federal	Funds	rate	as	well as	the	shape	of	the	yield	curve.

# INTEREST	RATE	RISK	GOVERNANCE

The	risks	in	Citigroup's	non-traded	portfolios	are	estimated	using	a	common	set of	standards	that	define,	measure,	limit	and	report	the	market	risk.	Each	business is	required	to	establish,	with	approval	from	independent	market	risk management,	a	market	risk	limit	framework	that	clearly	defines	approved	risk profiles	and	is	within	the	parameters	of	Citigroup's	overall	risk	appetite.	In	all cases,	the	businesses	are	ultimately	responsible	for	the	market	risks	they	take	and for	remaining	within	their	defined	limits.	These	limits	are	monitored	by independent	market	risk,	country	and	business	Asset	and	Liability	Committees (ALCOs)	and	the	Global	Finance	and	Asset	and	Liability	Committee (FinALCO).

# INTEREST	RATE	RISK	MEASUREMENT

Citigroup's	principal	measure	of	risk	to	NIR	is	interest	rate	exposure	(IRE).	IRE measures	the	change	in	expected	NIR	in	each	currency	resulting	solely	from unanticipated	changes	in	forward	interest	rates.	Factors	such	as	changes	in volumes,	spreads,	margins	and	the	impact	of	prior-period	pricing	decisions	are not	captured	by	IRE.	IRE	assumes	that	businesses	make	no	additional	changes	in pricing	or	balances	in	response	to	the	unanticipated	rate	changes.

IRE	tests	the	impact	on	NIR	resulting	from	unanticipated	changes	in	forward interest	rates.	For	example,	if	the	current	90-day	LIBOR	rate	is	3%	and	the	one- year-forward	rate	is	5%	(i.e.,	the	estimated	90-day	LIBOR	rate	in	one	year),	the +100	bps	IRE	scenario	measures	the	impact	on	the	company's	NIR	of	a	100	bps instantaneous	change	in	the	90-day	LIBOR	to	6%	in	one	year.

The	impact	of	changing	prepayment	rates	on	loan	portfolios	is	incorporated into	the	results.	For	example,	in	the	declining	interest	rate	scenarios,	it	is assumed	that	mortgage	portfolios	prepay	faster	and	income	is	reduced.	In addition,	in	a	rising	interest	rate	scenario,	portions	of	the	deposit	portfolio	are assumed	to	experience	rate	increases	that	may	be	less	than	the	change	in	market interest	rates.

# MITIGATION	AND	HEDGING	OF	RISK

All	financial	institutions'	financial	performances	are	subject	to	some	degree	of risk	due	to	changes	in	interest	rates.	In	order	to	manage	these	risks	effectively, Citigroup	may	modify	pricing	on	new	customer	loans	and	deposits,	enter	into transactions	with	other	institutions	or	enter	into	off-balance-sheet	derivative transactions	that	have	the	opposite	risk	exposures.	Therefore,	Citigroup	regularly assesses	the	viability	of	strategies	to	reduce	unacceptable	risks	to	earnings	and implements	such	strategies	when	the	Company	believes	those	actions	are prudent.	As	information	becomes	available,	Citigroup	formulates	strategies aimed	at	protecting	earnings	from	the	potential	negative	effects	of	changes	in interest	rates.

Citigroup	employs	additional	measurements,	including	stress	testing	the	impact of	non-linear	interest	rate	movements	on	the	value	of	the	balance	sheet;	the analysis	of	portfolio	duration	and	volatility,	particularly	as	they	relate	to mortgage	loans	and	mortgage-backed	securities;	and	the	potential	impact	of	the change	in	the	spread	between	different	market	indices.

The	exposures	in	the	following	table	represent	the	approximate	annualized	risk	to	NIR	assuming	an	unanticipated	parallel	instantaneous	100	bps	change,	as	well	as	a more	gradual	100	bps	(25	bps	per	quarter)	parallel	change	in	rates	compared	with	the	market	forward	interest	rates	in	selected	currencies.

|  |  | December	31,	2008 | December	31,	2007 | December	31,	2007 |
| :--- | :--- | :--- | :--- | :--- |
| In\tmillions\tof\tdollars | Increase | Decrease | Increase | Decrease |
| U.S.\tdollar |  |  |  |  |
| Instantaneous\tchange | $(801) | $391 | $(940) | $837 |
| Gradual\tchange | $(456) | $81 | $(527) | $540 |
| Mexican\tpeso |  |  |  |  |
| Instantaneous\tchange | $(18) | $18 | $(25) | $25 |
| Gradual\tchange | $(14) | $14 | $(17) | $17 |
| Euro |  |  |  |  |
| Instantaneous\tchange | $(56) | $57 | $(63) | $63 |
| Gradual\tchange | $(43) | $43 | $(32) | $32 |
| Japanese\tyen |  |  |  |  |
| Instantaneous\tchange | $172 | NM | $67 | NM |
| Gradual\tchange | $51 | NM | $43 | NM |
| Pound\tsterling |  |  |  |  |
| Instantaneous\tchange | $(1) | $1 | $(16) | $16 |
| Gradual\tchange | $— | $— | $(4) | $4 |

NM Not	meaningful.	A	100	bps	decrease	in	interest	rates	would	imply	negative	rates	for	the	Japanese	yen	yield	curve.

The	changes	in	the	U.S.	dollar	IRE	from	the	prior	year	reflect	changes	in	the	customer-related	asset	and	liability	mix,	2008	capital	changes,	and	Citigroup's	view	of prevailing	interest	rates.

The	following	table	shows	the	risk	to	NIR	from	six	different	changes	in	the	implied	forward	rates.	Each	scenario	assumes	that	the	rate	change	will	occur	on	a	gradual basis	every	three	months	over	the	course	of	one	year.

|  | Scenario	1 | Scenario	2 | Scenario	3 | Scenario	4 | Scenario	5 | Scenario	6 |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Overnight\trate\tchange\t(bps) | — | 100 | 200 | (200) | (100) | — |
| 10-year\trate\tchange\t(bps) | (100) | — | 100 | (100) | — | 100 |
| Impact\tto\tnet\tinterest\trevenue\t(in\tmillions\tof\tdollars) | $(424) | $(435) | $(576) | $(333) | $28 | $30 |

# Trading	Portfolios

Price	risk	in	trading	portfolios	is	monitored	using	a	series	of	measures, including:

•	factor	sensitivities;

•	Value-at-Risk	(VAR);	and •	Stress	testing.

Factor	sensitivities	are	expressed	as	the	change	in	the	value	of	a	position	for	a defined	change	in	a	market	risk	factor,	such	as	a	change	in	the	value	of	a Treasury	bill	for	a	one-basis-point	change	in	interest	rates.	Citigroup's independent	market	risk	management	ensures	that	factor	sensitivities	are calculated,	monitored	and,	in	most	cases,	limited,	for	all	relevant	risks	taken	in	a trading	portfolio.

VAR	estimates	the	potential	decline	in	the	value	of	a	position	or	a	portfolio under	normal	market	conditions.	The	VAR	method	incorporates	the	factor

sensitivities	of	the	trading	portfolio	with	the	volatilities	and	correlations	of	those factors	and	is	expressed	as	the	risk	to	the	Company	over	a	one-day	holding period,	at	a	99%	confidence	level.	Citigroup's	VAR	is	based	on	the	volatilities	of and	correlations	among	a	multitude	of	market	risk	factors	as	well	as	factors	that track	the	specific	issuer	risk	in	debt	and	equity	securities.

Stress	testing	is	performed	on	trading	portfolios	on	a	regular	basis	to	estimate the	impact	of	extreme	market	movements.	It	is	performed	on	both	individual trading	portfolios,	and	on	aggregations	of	portfolios	and	businesses.	Independent market	risk	management,	in	conjunction	with	the	businesses,	develops	stress scenarios,	reviews	the	output	of	periodic	stress	testing	exercises,	and	uses	the information	to	make	judgments	as	to	the	ongoing	appropriateness	of	exposure levels	and	limits.

Each	trading	portfolio	has	its	own	market	risk	limit	framework	encompassing these	measures	and	other	controls,	including	permitted	product	lists	and	a	new product	approval	process	for	complex	products.

Total	revenues	of	the	trading	business	consist	of:

•	customer	revenue,	which	includes	spreads	from	customer	flow	and	positions taken	to	facilitate	customer	orders;

•	proprietary	trading	activities	in	both	cash	and	derivative	transactions;	and •	net	interest	revenue.

All	trading	positions	are	marked	to	market,	with	the	result	reflected	in earnings.	In	2008,	negative	trading-related	revenue	(net	losses)	was	recorded	for 109	of	260	trading	days.	Of	the	109	days	on	which	negative	revenue	(net	losses) was	recorded,	21	were	greater	than	$400	million.	The	following	histogram	of total	daily	revenue	or	loss	captures	trading	volatility	and	shows	the	number	of days	in	which	the	Company's	trading-related	revenues	fell	within	particular ranges.

Citigroup	periodically	performs	extensive	back-testing	of	many	hypothetical	test portfolios	as	one	check	of	the	accuracy	of	its	VAR.	Back-testing	is	the	process	in which	the	daily	VAR	of	a	portfolio	is	compared	to	the	actual	daily	change	in	the market	value	of	its	transactions.	Back-testing	is	conducted	to	confirm	that	the daily	market	value	losses	in	excess	of	a	99%	confidence	level	occur,	on	average, only	1%	of	the	time.	The	VAR	calculation	for	the	hypothetical	test	portfolios, with	different	degrees	of	risk	concentration,	meets	this	statistical	criteria. The	level	of	price	risk	exposure	at	any	given	point	in	time	depends	on	the market	environment	and	expectations	of	future	price	and	market	movements,	and will	vary	from	period	to	period.

For	Citigroup's	major	trading	centers,	the	aggregate	pretax	VAR	in	the	trading portfolios	was	$319	million	at	December	31,	2008	and	$191	million	at December	31,	2007.	Daily	exposures	averaged	$292	million	in	2008	and	ranged from	$220	million	to	$393	million.

The	Subprime	Group	(SPG)	exposures	became	fully	integrated	into	VAR during	the	first	quarter	of	2008.	As	a	result,	December	31,	2008	VAR	and	2008 average	VAR	increased	by	approximately	$29	million	and	$111	million, respectively.

The	following	table	summarizes	VAR	to	Citigroup	in	the	trading	portfolios	as of	December	31,	2008	and	2007,	including	the	total	VAR,	the	specific	risk-only component	of	VAR,	and	total—general	market	factors	only,	along	with	the yearly	averages:

|  | Dec.	31, | 2008 | Dec.	31, | 2007 |
| :--- | :--- | :--- | :--- | :--- |
| In\tmillions\tof\tdollars | 2008 | average | 2007 | average |
| Interest\trate | $320 | $280 | $89 | $98 |
| Foreign\texchange | 118 | 54 | 28 | 29 |
| Equity | 84 | 99 | 150 | 96 |
| Commodity | 15 | 34 | 45 | 35 |
| Covariance\tadjustment | (218) | (175) | (121) | (116) |
| Total—all\tmarket |  |  |  |  |
| \t\t\t\trisk\tfactors, |  |  |  |  |
| \t\t\t\tincluding\tgeneral |  |  |  |  |
| \t\t\t\tand\tspecific\trisk | $319 | $292 | $191 | $142 |
| Specific\trisk-only\n\t\t\t\tcomponent | $8 | $21 | $28 | $19 |
| Total—general\n\t\t\t\tmarket\tfactors\tonly | $311 | $271 | $163 | $123 |

The	specific	risk-only	component	represents	the	level	of	equity	and	debt issuer-specific	risk	embedded	in	VAR.

The	table	below	provides	the	range	of	VAR	in	each	type	of	trading	portfolio that	was	experienced	during	2008	and	2007:

|  |  | 2008 | 2007 | 2007 |
| :--- | :--- | :--- | :--- | :--- |
| In\tmillions\tof\tdollars | Low | High | Low | High |
| Interest\trate | $227 | $339 | $71 | $128 |
| Foreign\texchange | 23 | \t 130 | 21 | 37 |
| Equity | 58 | \t 235 | 55 | \t 164 |
| Commodity | 12 | 60 | 17 | 56 |

# OPERATIONAL	RISK	MANAGEMENT	PROCESS

Operational	risk	is	the	risk	of	loss	resulting	from	inadequate	or	failed	internal processes,	systems	or	human	factors,	or	from	external	events.	It	includes	the reputation	and	franchise	risk	associated	with	business	practices	or	market conduct	in	which	the	Company	is	involved.	Operational	risk	is	inherent	in Citigroup's	global	business	activities	and,	as	with	other	risk	types,	is	managed through	an	overall	framework	designed	to	balance	strong	corporate	oversight with	well-defined	independent	risk	management.	This	framework	includes:

•	recognized	ownership	of	the	risk	by	the	businesses; •	oversight	by	independent	risk	management;	and •	independent	review	by	Audit	and	Risk	Review	(ARR).

The	goal	is	to	keep	operational	risk	at	appropriate	levels	relative	to	the characteristics	of	our	businesses,	the	markets	in	which	we	operate,	our	capital and	liquidity,	and	the	competitive,	economic	and	regulatory	environment. Notwithstanding	these	controls,	Citigroup	incurs	operational	losses.

# Framework

To	monitor,	mitigate	and	control	operational	risk,	Citigroup	maintains	a	system of	comprehensive	policies	and	has	established	a	consistent,	value-added framework	for	assessing	and	communicating	operational	risk	and	the	overall effectiveness	of	the	internal	control	environment	across	Citigroup.	An Operational	Risk	Council	has	been	established	to	provide	oversight	for operational	risk	across	Citigroup.	The	Council's	membership	includes	senior members	of	the	Chief	Risk	Officer's	organization	covering	multiple	dimensions of	risk	management	with	representatives	of	the	Business	and	Regional	Chief Risk	Officers'	organizations	and	the	Business	Management	Group.	The Council's	focus	is	on	further	advancing	operational	risk	management	at Citigroup	with	focus	on	proactive	identification	and	mitigation	of	operational risk	and	related	incidents.	The	Council	works	with	the	business	segments	and	the control	functions	to	help	ensure	a	transparent,	consistent	and	comprehensive framework	for	managing	operational	risk	globally.

Each	major	business	segment	must	implement	an	operational	risk	process consistent	with	the	requirements	of	this	framework.	The	process	for	operational risk	management	includes	the	following	steps:

•	identify	and	assess	key	operational	risks; •	establish	key	risk	indicators;

•	produce	a	comprehensive	operational	risk	report;	and •	prioritize	and	assure	adequate	resources	to	actively	improve	the	operational risk	environment	and	mitigate	emerging	risks.

The	operational	risk	standards	facilitate	the	effective	communication	and mitigation	of	operational	risk	both	within	and	across	businesses.	As	new products	and	business	activities	are	developed,	processes	are	designed,	modified or	sourced	through	alternative	means	and	operational	risks	are	considered. Information	about	the	businesses'	operational	risk,	historical	losses,	and	the control	environment	is	reported	by	each	major	business	segment	and	functional area,	and	summarized	for	Senior	Management	and	the	Citigroup	Board	of Directors.

# Measurement	and	Basel	II

To	support	advanced	capital	modeling	and	management,	the	businesses	are required	to	capture	relevant	operational	risk	capital	information.	An	enhanced version	of	the	risk	capital	model	for	operational	risk	has	been	developed	and implemented	across	the	major	business	segments	as	a	step	toward	readiness	for Basel	II	capital	calculations.	The	risk	capital	calculation	is	designed	to	qualify	as an	"Advanced	Measurement	Approach"	(AMA)	under	Basel	II.	It	uses	a combination	of	internal	and	external	loss	data	to	support	statistical	modeling	of capital	requirement	estimates,	which	are	then	adjusted	to	reflect	qualitative	data regarding	the	operational	risk	and	control	environment.

# Information	Security	and	Continuity	of	Business

Information	security	and	the	protection	of	confidential	and	sensitive	customer data	are	a	priority	of	Citigroup.	The	Company	has	implemented	an	Information Security	Program	that	complies	with	the	Gramm-Leach-Bliley	Act	and	other regulatory	guidance.	The	Information	Security	Program	is	reviewed	and enhanced	periodically	to	address	emerging	threats	to	customers'	information. The	Corporate	Office	of	Business	Continuity,	with	the	support	of	Senior Management,	continues	to	coordinate	global	preparedness	and	mitigate	business continuity	risks	by	reviewing	and	testing	recovery	procedures.

# COUNTRY	AND	FFIEC	CROSS-BORDER	RISK	MANAGEMENT PROCESS

# Country	Risk

Country	risk	is	the	risk	that	an	event	in	a	foreign	country	will	impair	the	value	of Citigroup	assets	or	will	adversely	affect	the	ability	of	obligors	within	that country	to	honor	their	obligations	to	Citigroup.	Country	risk	events	may	include sovereign	defaults,	banking	or	currency	crises,	social	instability,	and	changes	in governmental	policies	(for	example,	expropriation,	nationalization,	confiscation of	assets	and	other	changes	in	legislation	relating	to	international	ownership). Country	risk	includes	local	franchise	risk,	credit	risk,	market	risk,	operational risk	and	cross-border	risk.

The	country	risk	management	framework	at	Citigroup	includes	a	number	of tools	and	management	processes	designed	to	facilitate	the	ongoing	analysis	of individual	countries	and	their	risks.	These	include	country	risk	rating	models, scenario	planning	and	stress	testing,	internal	watch	lists,	and	the	Country	Risk Committee	process.

The	Citigroup	Country	Risk	Committee	is	the	senior	forum	to	evaluate	the Company's	total	business	footprint	within	a	specific	country	franchise	with emphasis	on	responses	to	current	potential	country	risk	events.	The	Committee	is chaired	by	the	Head	of	Global	Country	Risk	Management	and	includes	as	its members	senior	risk	management	officers,	senior	regional	business	heads,	and senior	product	heads.	The	Committee	regularly	reviews	all	risk	exposures	within a	country,	makes	recommendations	as	to	actions,	and	follows	up	to	ensure appropriate	accountability.

# Cross-Border	Risk

Cross-border	risk	is	the	risk	that	actions	taken	by	a	non-U.S.	government	may prevent	the	conversion	of	local	currency	into	non-local	currency	and/or	the transfer	of	funds	outside	the	country,	thereby	impacting	the	ability	of	the Company	and	its	customers	to	transact	business	across	borders.

Examples	of	cross-border	risk	include	actions	taken	by	foreign	governments such	as	exchange	controls,	debt	moratoria,	or	restrictions	on	the	remittance	of funds.	These	actions	might	restrict	the	transfer	of	funds	or	the	ability	of	the Company	to	obtain	payment	from	customers	on	their	contractual	obligations. Management	oversight	of	cross-border	risk	is	performed	through	a	formal review	process	that	includes	annual	setting	of	cross-border	limits,	ongoing monitoring	of	cross-border	exposures,	as	well	as	monitoring	of	economic conditions	globally	and	the	establishment	of	internal	cross-border	risk management	policies.

Under	Federal	Financial	Institutions	Examination	Council	(FFIEC)	regulatory guidelines,	total	reported	cross-border	outstandings	include	cross-border	claims on	third	parties,	as	well	as	investments	in	and	funding	of	local	franchises.	Cross- border	claims	on	third	parties	(trade	and	short-,	medium-	and	long-term	claims) include	cross-border	loans,	securities,	deposits	with	banks,	investments	in affiliates,	and	other	monetary	assets,	as	well	as	net	revaluation	gains	on	foreign exchange	and	derivative	products.

Cross-border	outstandings	are	reported	based	on	the	country	of	the	obligor	or guarantor.	Outstandings	backed	by	cash	collateral	are	assigned	to	the	country	in which	the	collateral	is	held.	For	securities	received	as	collateral,	cross-border outstandings	are	reported	in	the	domicile	of	the	issuer	of	the	securities.	Cross- border	resale	agreements	are	presented	based	on	the	domicile	of	the	counterparty in	accordance	with	FFIEC	guidelines.

Investments	in	and	funding	of	local	franchises	represent	the	excess	of	local country	assets	over	local	country	liabilities.	Local	country	assets	are	claims	on local	residents	recorded	by	branches	and	majority-owned	subsidiaries	of Citigroup	domiciled	in	the	country,	adjusted	for	externally	guaranteed	claims	and certain	collateral.	Local	country	liabilities	are	obligations	of	non-U.S.	branches and	majority-owned	subsidiaries	of	Citigroup	for	which	no	cross-border guarantee	has	been	issued	by	another	Citigroup	office.

The	table	below	shows	all	countries	in	which	total	FFIEC	cross-border	outstandings	exceed	0.75%	of	total	Citigroup	assets:

(1) Included	in	total	cross-border	claims	on	third	parties.

(2) Commitments	(not	included	in	total	cross-border	outstandings)	include	legally	binding	cross-border	letters	of	credit	and	other	commitments	and	contingencies	as	defined	by	the	FFIEC.	Effective March	31,	2006,	the	FFIEC	revised	the	definition	of	commitments	to	include	commitments	to	local	residents	to	be	funded	with	local	currency	local	liabilities.

# BALANCE	SHEET	REVIEW

|  | December	31, | December	31, | Increase | % |
| :--- | :--- | :--- | :--- | :--- |
| In\tbillions\tof\tdollars | 2008 | 2007 | (decrease) | Change |
| Assets |  |  |  |  |
| Loans,\tnet\tof\tunearned\tincome\tand\tallowance\tfor\tloan\tlosses | $665 | $762 | $(97) | (13)% |
| Trading\taccount\tassets | 378 | 539 | (161) | (30) |
| Federal\tfunds\tsold\tand\tsecurities\tborrowed\tor\tpurchased\tunder\tagreements\tto\tresell | 184 | 274 | (90) | (33) |
| Investments | 256 | 215 | 41 | 19 |
| Other\tassets | 455 | 397 | 58 | 15 |
| Total\tassets | $1,938 | $2,187 | $(249) | (11)% |
| Liabilities |  |  |  |  |
| Deposits | $774 | $826 | $(52) | (6)% |
| Federal\tfunds\tpurchased\tand\tsecurities\tloaned\tor\tsold\tunder\tagreements\tto\trepurchase | 205 | 304 | (99) | (33) |
| Short-term\tborrowings\tand\tlong-term\tdebt | 486 | 574 | (88) | (15) |
| Trading\taccount\tliabilities | 167 | 182 | (15) | (8) |
| Other\tliabilities | 164 | 188 | (24) | (13) |
| Total\tliabilities | $1,796 | $2,074 | $(278) | (13)% |
| Stockholders'\tequity | $142 | $113 | $29 | 26% |
| Total\tliabilities\tand\tstockholders'\tequity | $1,938 | $2,187 | $(249) | (11)% |

# Loans

Loans	are	an	extension	of	credit	to	individuals,	corporations,	or	government institutions.	Loans	vary	across	regions	and	industries	and	primarily	include credit	cards,	mortgages,	other	real	estate	lending,	personal	loans,	auto	loans, student	loans,	and	corporate	loans.	The	majority	of	loans	are	carried	at	cost	with a	minimal	amount	recorded	at	fair	value	in	accordance	with	SFAS	155	and SFAS	159.

Consumer	and	corporate	loans	comprised	75%	and	25%,	respectively,	of	total loans	(net	of	unearned	income	and	before	the	allowance	for	loan	losses). During	2008	consumer	loans	decreased	by	$83	billion,	or	14%,	primarily	due to:

•	$39	billion,	or	14%,	decrease	in	installment	and	revolving	credit;	and •	$29	billion,	or	10%,	decrease	in	mortgage	and	real	estate	loans.

These	decreases	were	partially	driven	by	the	sales	of	CitiCapital	and	the German	retail	banking	units.	Foreign	exchange	translation	also	factored	into	the decrease	in	loans,	as	a	number	of	currencies	weakened	against	the	dollar. During	2008	corporate	loans	decreased	$15	billion,	or	8%,	primarily	driven	by a	decrease	of	$10	billion,	or	7%,	in	commercial	and	industrial	loans. During	2008,	average	consumer	loans	(net	of	unearned	income)	of $551	billion	yielded	an	average	rate	of	8.6%,	compared	to	$523	billion	and	9.0% in	the	prior	year.	Average	corporate	loans	of	$184	billion	yielded	an	average	rate of	8.2%	in	2008,	compared	to	$188	billion	and	8.5%	in	the	prior	year.

For	further	information,	see	"Loans	Outstanding"	on	page	53	and	Note	17	to the	Consolidated	Financial	Statements	on	page	162.

# Trading	Account	Assets	(Liabilities)

Trading	account	assets	include	debt	and	marketable	equity	securities,	derivatives in	a	receivable	position,	residual	interests	in	securitizations,	and	physical commodities	inventory.	In	addition,	certain	assets	that	Citigroup	has	elected	to carry	at	fair	value	under	SFAS	155	and	SFAS	159,	such	as	certain	loans	and purchase	guarantees,	are	also	included	in	trading	account	assets.	Trading	account liabilities	include	securities	sold,	not	yet	purchased	(short	positions)	and derivatives	in	a	net	payable	position	as	well	as	certain	liabilities	that	Citigroup has	elected	to	carry	at	fair	value	under	SFAS	155	and	SFAS	159.

All	trading	account	assets	and	liabilities	are	reported	at	their	fair	value,	except for	physical	commodities	inventory	which	is	carried	at	the	lower	of	cost	or market,	with	unrealized	gains	and	losses	recognized	in	current	income. During	2008	trading	account	assets	decreased	by	$161	billion,	or	30%,	due	to:

•	$127	billion,	or	70%,	decrease	in	corporate	and	other	debt	securities,	driven by	a	decrease	in	the	SIV	assets,	a	decrease	in	commercial	paper	trading	assets and	the	transfer	of	trading	assets	to	investments	held-to-maturity	and available-for-sale	(see	"Reclassification	of	Financial	Assets"	on	page	87);

•	$58	billion,	or	55%,	decrease	in	equity	securities;

•	$35	billion,	or	62%,	decrease	in	mortgage	loans	and	collateralized	mortgage securities	(CMOs);	and

•	$9	billion,	or	49%,	decrease	in	state	and	municipal	securities;

offset	by:

•	$38	billion,	or	50%,	increase	in	revaluation	gains	primarily	consisting	of increases	from	interest	rates,	foreign	exchange	and	credit	derivative	contracts, offset	by	an	increase	in	netting	permitted	under	master	netting	agreements;

•	$12	billion,	or	38%,	increase	in	U.S.	Treasury	and	federal	agency	securities; •	$5	billion,	or	10%,	increase	in	foreign	government	securities;	and •	$13	billion,	or	85%,	net	increase	in	other	trading	securities.

Total	average	trading	account	assets	were	$381	billion	in	2008,	compared	to $441	billion	in	2007,	yielding	average	rates	of	4.6%	and	4.2%,	respectively. During	2008	trading	account	liabilities	decreased	by	$15	billion,	or	8%,	due	to:

•	$13	billion,	or	13%,	increase	in	revaluation	losses	primarily	consisting	of increases	from	interest	rates,	foreign	exchange	and	credit	derivative	contracts, offset	by	an	increase	in	netting	permitted	under	master	netting	agreements;	and •	$28	billion,	or	35%,	decrease	in	securities	sold,	not	yet	purchased,	comprising a	$28	billion	decrease	in	debt	securities,	while	U.S.	Treasury	securities remained	flat.

In	2008,	average	trading	account	liabilities	were	$76	billion,	yielding	an average	rate	of	1.7%,	compared	to	$105	billion	and	1.4%	in	the	prior	year. For	further	discussion	regarding	trading	account	assets	and	liabilities,	see	Note 15	to	the	Consolidated	Financial	Statements	on	page	156.

# Federal	Funds	Sold	(Purchased)	and	Securities	Borrowed	(Loaned) or	Purchased	(Sold)	Under	Agreements	to	Resell	(Repurchase)

Federal	funds	sold	and	federal	funds	purchased	consist	of	unsecured	advances	of excess	balances	in	reserve	accounts	held	at	Federal	Reserve	banks.	When	the Company	advances	federal	funds	to	a	third	party,	it	is	selling	its	excess	reserves. Similarly,	when	the	Company	receives	federal	funds,	the	Company	is	purchasing reserves	from	a	third	party.	These	interest-bearing	transactions	typically	have	an original	maturity	of	one	business	day.

Securities	borrowed	and	securities	loaned	are	recorded	at	the	amount	of	cash advanced	or	received,	with	a	minimal	amount	adjusted	for	fair	value	in accordance	with	SFAS	159.	With	respect	to	securities	borrowed,	the	Company pays	cash	collateral	in	an	amount	in	excess	of	the	market	value	of	securities borrowed,	and	receives	excess	in	the	case	of	securities	loaned.	The	Company monitors	the	market	value	of	securities	borrowed	and	loaned	on	a	daily	basis with	additional	collateral	advanced	or	obtained	as	necessary.	Interest	received	or paid	for	these	transactions	is	recorded	in	interest	income	or	interest	expense. Securities	purchased	under	agreements	to	resell	and	securities	sold	under agreements	to	repurchase	are	treated	as	collateralized	financing	transactions	and are	primarily	carried	at	fair	value	in	accordance	with	SFAS	159	since	January	1, 2007.	In	prior	periods,	these	agreements	were	carried	at	cost.	The	Company's policy	is	to	take	possession	of	securities	purchased	under	agreements	to	resell. The	market	value	of	securities	to	be	repurchased	and	resold	is	monitored,	and additional	collateral	is	obtained	where	appropriate	to	protect	against	credit exposure.

During	2008	the	decrease	of	$90	billion,	or	33%,	in	federal	funds	sold	and securities	borrowed	or	purchased	under	agreements	to	resell,	and	the	decrease	of $99	billion,	or	33%,	in	federal	funds	purchased	and	securities	loaned	or	sold under	agreements	to	repurchase	were	primarily	driven	by	balance	sheet management.

For	further	information	regarding	these	balance	sheet	categories,	see	Note	13 to	the	Consolidated	Financial	Statements	on	page	155.

# Investments

Investments	consist	of	debt	and	equity	securities	that	are	available-for-sale,	debt securities	that	are	held-to-maturity,	non-marketable	equity	securities	that	are carried	at	fair	value,	and	non-marketable	equity	securities	carried	at	cost.	Debt securities	include	bonds,	notes	and	redeemable	preferred	stock,	as	well	as	loan- backed	securities	(such	as	mortgage-backed	securities)	and	other	structured notes.	Marketable	and	non-marketable	equity	securities	carried	at	fair	value include	common	and	nonredeemable	preferred	stocks.	These	instruments provide	the	Company	with	long-term	investment	opportunities	while	in	most cases	remaining	relatively	liquid.

Non-marketable	equity	securities	carried	at	cost	primarily	include	equity shares	issued	by	the	Federal	Reserve	Bank	and	the	Federal	Home	Loan	Bank that	the	Company	is	required	to	hold.

Investment	securities	classified	as	available-for-sale	are	primarily	carried	at	fair value	with	the	changes	in	fair	value	generally	recognized	in	stockholders'	equity (accumulated	other	comprehensive	income).	Declines	in	fair	value	that	are deemed	other-than-temporary,	as	well	as	gains	and	losses	from	the	sale	of	these investment	securities,	are	recognized	in	current	earnings.	Certain	investments	in non-marketable	equity	securities	and	certain	investments	that	would	otherwise be	accounted	for	using	the	equity	method	are	carried	at	fair	value	in	accordance with	SFAS	159.	Changes	in	fair	value	of	such	investments	are	recorded	in earnings.	Debt	securities	classified	as	held-to-maturity	are	carried	at	cost	unless	a decline	in	fair	value	below	cost	is	deemed	other-than-temporary,	in	which	case such	a	decline	is	recorded	in	current	earnings.

During	2008,	investments	increased	by	$41	billion,	or	19%,	principally	due	to the	transfer	of	debt	securities	from	Trading	assets	to	Investments	as	discussed	in the	section	"Reclassification	of	Financial	Assets"	on	page	87.

For	further	information	regarding	investments,	see	Note	16	to	the	Consolidated Financial	Statements	on	page	157.

# Other	Assets

Other	assets	are	composed	of	cash	and	due	from	banks,	deposits	with	banks, brokerage	receivables,	goodwill,	intangibles,	and	various	other	assets.

During	2008,	other	assets	increased	$58	billion,	or	15%,	due	to	the	$101	billion increase	in	deposits	with	banks	and	the	$31	billion	increase	in	the	deferred	tax asset.	These	increases	were	offset	by	the	following	decreases:

•	$41	billion	related	to	loans	held-for-sale	as	they	were	reclassed	to	loans	held- for-investment	(for	further	discussion,	see	"Reclassification	of	Financial Assets"	on	page	87);

•	$17	billion	in	goodwill	and	intangibles,	driven	by	the	impairment	of	goodwill and	intangibles,	foreign	exchange	translation	and	the	decrease	in	the	fair	value of	the	MSR;

•	$13	billion	in	brokerage	receivables;	and

•	$3	billion	in	various	other	assets.

For	further	information	regarding	goodwill	and	intangibles,	see	Note	19	to	the Consolidated	Financial	Statements	on	page	165.	For	further	discussion	on brokerage	receivables,	see	Note	14	to	the	Consolidated	Financial	Statements	on page	156.

# Deposits

Deposits	represent	customer	funds	that	are	payable	on	demand	or	upon	maturity. The	majority	of	deposits	are	carried	at	cost,	with	a	minimal	amount	recorded	at fair	value	in	accordance	with	SFAS	155	and	SFAS	159.

Deposits	can	be	interest-bearing	or	non-interest-bearing.	Interest-bearing deposits	payable	by	foreign	and	U.S.	domestic	banking	subsidiaries	of	the Company	comprise	58%	and	29%	of	total	deposits,	respectively,	while	non- interest-bearing	deposits	comprise	5%	and	8%	of	total	deposits,	respectively. During	2008	total	deposits	decreased	by	$52	billion,	or	6%,	primarily	due	to:

•	the	sale	of	the	German	retail	banking	units;	and •	lower	international	deposits,	mostly	driven	by	FX	and	the	higher	funding costs	which	led	to	customers	using	their	excess	cash	reserves	deposited	with Citi.

Average	deposits	increased	$5	billion	to	$695	billion	in	2008,	yielding	an average	rate	of	2.9%,	compared	to	4.1%	in	the	prior	year.

For	more	information	on	deposits,	see	"Capital	Resources	and	Liquidity"	on page	94.

Debt	is	composed	of	both	short-term	and	long-term	borrowings.	It	includes commercial	paper,	borrowings	from	unaffiliated	banks,	senior	notes	(including collateralized	advances	from	the	Federal	Home	Loan	Bank),	subordinated	notes and	trust	preferred	securities.	The	majority	of	debt	is

carried	at	cost,	with	approximately	$45	billion	recorded	at	fair	value	in accordance	with	SFAS	155	and	SFAS	159.

During	2008,	total	debt	decreased	by	$88	billion,	or	15%,	with	short-term borrowings	decreasing	by	$20	billion,	or	14%,	and	long-term	debt	decreasing	by $68	billion,	or	16%.

The	decrease	in	short-term	borrowings	was	due	to	a	decline	of	$12	billion	in other	funds	borrowed	and	$8	billion	in	commercial	paper	primarily	due	to illiquid	credit	markets.

Average	commercial	paper	outstanding	in	2008	was	$34	billion	and	yielded	an average	rate	of	3.1%,	compared	to	$45	billion	and	5.2%	in	2007.	Average	other funds	borrowed	in	2008	were	$87	billion,	yielding	an	average	rate	of	1.7%, compared	to	$95	billion	and	2.8%	in	the	prior	year.

The	decrease	in	long-	and	short-term	debt	is	driven	by	decreased	funding needs,	as	well	as	the	issuance	of	preferred	stock	during	the	year.	As	the	balance sheet	has	decreased	in	size,	the	funding	needs	of	the	Company	have	decreased. Average	long-term	debt	outstanding	during	2008	was	$348	billion,	compared	to $303	billion	in	2007,	yielding	an	average	rate	of	4.6%	and	5.3%,	respectively. For	more	information	on	debt,	see	Note	20	to	the	Consolidated	Financial Statements	on	page	168	and	"Capital	Resources	and	Liquidity"	on	page	94.

# SEGMENT	BALANCE	SHEET	AT	DECEMBER	31,	2008

|  |  |  |  | Global | Corporate/Other |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | Global | Consumer |  | Wealth | &amp;\tConsolidating | Total\tCitigroup |
| In\tmillions\tof\tdollars | Cards | Banking | ICG | Management | Eliminations | Consolidated |
| Assets: |  |  |  |  |  |  |
| Cash\tand\tdue\tfrom\tbanks | $1,136 | $8,683 | $17,599 | $1,103 | $732 | $29,253 |
| Deposits\twith\tbanks | 535 | 12,030 | 34,250 | 2,016 | 121,500 | 170,331 |
| Federal\tfunds\tsold\tand\tsecurities\tborrowed\tor\tpurchased\tunder\tagreements\tto\tresell | — | 719 | 178,759 | 4,655 | — | 184,133 |
| Brokerage\treceivables | — | 2 | 30,613 | 13,663 | — | 44,278 |
| Trading\taccount\tassets | 8,737 | 11,780 | 344,609 | 10,755 | 1,754 | 377,635 |
| Investments | 450 | 46,984 | 144,413 | 244 | 63,929 | 256,020 |
| Loans,\tnet\tof\tunearned\tincome |  |  |  |  |  |  |
| Consumer | 90,562 | 373,542 | — | 55,545 | 24 | 519,673 |
| Corporate | — | — | 174,455 | — | 88 | 174,543 |
| Loans,\tnet\tof\tunearned\tincome | $90,562 | $373,542 | $174,455 | $55,545 | $112 | $694,216 |
| Allowance\tfor\tloan\tlosses | (6,932) | (14,950) | (7,250) | (484) | — | (29,616) |
| Total\tloans,\tnet | $83,630 | $358,592 | $167,205 | $55,061 | $112 | $664,600 |
| Goodwill | 10,832 | 3,106 | 11,344 | 1,850 | — | 27,132 |
| Intangible\tassets | 6,696 | 7,085 | 2,730 | 3,299 | 6 | 19,816 |
| Other\tassets | 1,797 | 47,572 | 71,506 | 6,801 | 37,596 | 165,272 |
| Total\tassets | $113,813 | $496,553 | $1,003,028 | $99,447 | $225,629 | $1,938,470 |
| Liabilities\tand\tequity: |  |  |  |  |  |  |
| Total\tdeposits | $1,133 | $281,774 | $368,421 | $104,398 | $18,459 | $774,185 |
| Federal\tfunds\tpurchased\tand\tsecurities\tloaned\tor\tsold\tunder\tagreements\tto\trepurchase | — | 4,515 | 195,406 | 5,025 | 347 | 205,293 |
| Brokerage\tpayables | — | — | 63,446 | 7,470 | — | 70,916 |
| Trading\taccount\tliabilities | — | 127 | 162,636 | 3,737 | 978 | 167,478 |
| Short-term\tborrowings | — | 1,435 | 59,386 | 14,540 | 51,330 | 126,691 |
| Long-term\tdebt | 242 | 15,320 | 76,130 | 1,051 | 266,850 | 359,593 |
| Other\tliabilities | 28,751 | 83,998 | 101,766 | 36,815 | (158,646) | 92,684 |
| Net\tinter-segment\tfunding\t(lending) | 83,687 | 109,384 | (24,163) | (73,589) | (95,319) | — |
| Stockholders'\tequity | — | — | — | — | 141,630 | 141,630 |
| Total\tliabilities\tand\tstockholders'\tequity | $113,813 | $496,553 | $1,003,028 | $99,447 | $225,629 | $1,938,470 |

The	above	supplemental	information	reflects	the	Company's	consolidated GAAP	balance	sheet	by	reporting	segment	as	of	December	31,	2008.	The respective	segment	information	closely	depicts	the	assets	and	liabilities	managed by	each	segment	as	of	such	date.	While	this	presentation	is	not	defined	by GAAP,	the	Company	believes	that	these	non-GAAP	financial	measures	enhance investors'	understanding	of	the	balance	sheet

components	managed	by	the	underlying	business	segments	as	well	as	the beneficial	interrelationship	of	the	asset	and	liability	dynamics	of	the	balance sheet	components	among	the	Company's	business	segments.	The	Company believes	that	investors	may	find	it	useful	to	see	these	non-GAAP	financial measures	to	analyze	financial	performance.

# Interest	Revenue/Expense	and	Yields

|  |  |  |  | %	Change | %	Change |
| :--- | :--- | :--- | :--- | :--- | :--- |
| In\tmillions\tof\tdollars | 2008 | 2007^\t(1) | 2006^\t(1) | 2008\tvs.\t2007 | 2007\tvs.\t2006 |
| Interest\trevenue\t^(2) | $106,655 | $121,429 | $93,611 | (12)% | 30% |
| Interest\texpense\t^(3) | 52,963 | 76,051 | \t 55,683 | (30) | 37 |
| Net\tinterest\trevenue\t^(2)\t(3) | $53,692 | $45,378 | $37,928 | 18% | 20% |
| Interest\trevenue—average\trate | 6.09% | 6.44% | 6.43% | (35)bps | 1bps |
| Interest\texpense—average\trate | 3.28% | 4.44% | 4.28% | (116)bps | 16bps |
| Net\tinterest\tmargin | 3.06% | 2.41% | 2.60% | 65bps | (19)bps |
| Interest-rate\tbenchmarks: |  |  |  |  |  |
| Federal\tFunds\trate—end\tof\tperiod | 0.00– |  |  |  |  |
|  | 0.25% | 4.25% | 5.25% | (400+)bps | (100)bps |
| Federal\tFunds\trate—average\trate | 2.08% | 5.05% | 4.96% | (297)bps | 9bps |
| 2-year\tU.S.\tTreasury\tnote—average\trate | 2.01% | 4.36% | 4.81% | (235)bps | (45)bps |
| 10-year\tU.S.\tTreasury\tnote—average\trate | 3.66% | 4.63% | 4.79% | (97)bps | (16)bps |
| 10-year\tvs.\t2-year\tspread | 165bps | 27bps | (2)bps |  |  |

(1) Reclassified	to	conform	to	the	current	period's	presentation	and	to	exclude	discontinued	operations.

(3) Excludes	expenses	associated	with	hybrid	financial	instruments	and	beneficial	interest	in	consolidated	VIEs.	These	obligations	are	classified	as	 Long-term	debt	and	accounted	for	at	fair	value	with changes	recorded	in	Principal	transactions.	In	addition,	the	majority	of	the	funding	provided	by	Treasury	to	CitiCapital	operations	is	excluded	from	this	line.

A	significant	portion	of	the	Company's	business	activities	is	based	upon gathering	deposits	and	borrowing	money	and	then	lending	or	investing	those funds.	Net	interest	margin	is	calculated	by	dividing	gross	interest	revenue	less gross	interest	expense	by	average	interest	earning	assets.

Net	interest	margin	improved	during	2008,	mainly	due	to	the	lower	cost	of funds,	reflecting	the	decreases	in	the	Fed	Funds	rate	as	well	as	lower	rates outside	the	U.S.	The	lower	cost	of	funds	more	than	offset	the	decrease	in	the asset	yields,	resulting	in	an	18%	increase	in	net	interest	revenue	in	2008	when compared	to	2007.	The	Company's	deleveraging	actions	had	a	positive

impact	by	reducing	the	amount	of	lower	yielding	assets	on	the	Company's balance	sheet.

On	the	asset	side,	the	average	yield	primarily	reflects	a	decline	in	the	yields	on the	loan	portfolio,	Investments	and	Fed	Funds	sold.	On	the	liability	side,	the yields	on	deposits	decreased	domestically,	as	well	as	internationally.	The	lower yields	on	short-term	borrowing	and	Fed	Funds	purchased	further	contributed	to the	downward	movement	of	the	yield	on	interest-bearing	liabilities.	The widening	between	short-term	and	long-term	spreads	also	contributed	to	the upward	movement	of	the	net	interest	margin.

# AVERAGE	BALANCES	AND	INTEREST	RATES—ASSETS	(1)(2)(3)(4)

|  |  | Average	volume | Average	volume | Interest	revenue | Interest	revenue | Interest	revenue | %	Average	rate | %	Average	rate | %	Average	rate |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| In\tmillions\tof\tdollars\nAssets\nDeposits\twith\tbanks\t^(5) | 2008\n$78,788\t\t $ | 2007\n54,840\t\t $ | 2006\n35,770 | 2008\n$3,119\t\t $ | 2007\n3,113\t\t $ | 2006\n2,240 | 2008\n3.96% | 2007\n5.68% | 2006\n6.26% |
| Federal\tfunds\tsold\tand\tsecurities\tborrowed\tor\tpurchased\tunder\tagreements\tto\tresell\t^(6) |  |  |  |  |  |  |  |  |  |
| In\tU.S.\toffices | $164,732\t\t $ | 192,824\t\t $ | 166,202 | $5,071\t\t $ | 11,728\t\t $10,258 | 11,728\t\t $10,258 | 3.08% | 6.08% | 6.17% |
| In\toffices\toutside\tthe\tU.S.\t^(5) | 77,324 | 131,766 | 85,200 | 4,104 | 6,626 | 3,941 | 5.31 | 5.03 | 4.63 |
| Total | $242,056\t\t $ | 324,590\t\t $ | 251,402 | $9,175\t\t $ | 18,354\t\t $14,199 | 18,354\t\t $14,199 | 3.79% | 5.65% | 5.65% |
| Trading\taccount\tassets\t^(7)\t(8) |  |  |  |  |  |  |  |  |  |
| In\tU.S.\toffices | $221,455\t\t $ | 263,922\t\t $ | 188,985 | $12,331\t\t $ | 13,557\t\t $ | 8,537 | 5.57% | 5.14% | 4.52% |
| In\toffices\toutside\tthe\tU.S.\t^(5) | 159,194 | 176,803 | 100,634 | 5,158 | 4,950 | 3,328 | 3.24 | 2.80 | 3.31 |
| Total | $380,649\t\t $ | 440,725\t\t $ | 289,619 | $17,489\t\t $ | 18,507\t\t $11,865 | 18,507\t\t $11,865 | 4.59% | 4.20% | 4.10% |
| Investments |  |  |  |  |  |  |  |  |  |
| In\tU.S.\toffices |  |  |  |  |  |  |  |  |  |
| Taxable | $112,071\t\t $ | 136,482\t\t $ | 106,136 | $4,846\t\t $ | 6,840\t\t $ | 4,799 | 4.32% | 5.01% | 4.52% |
| Exempt\tfrom\tU.S.\tincome\ttax\t^(1) | 13,584 | 17,796 | 14,023 | 613 | 909 | 661 | 4.51 | 5.11 | 4.71 |
| In\toffices\toutside\tthe\tU.S.\t^(5) | 95,308 | 108,875 | 96,757 | 5,259 | 5,674 | 4,880 | 5.52 | 5.21 | 5.04 |
| Total | $220,963\t\t $ | 263,153\t\t $ | 216,916 | $10,718\t\t $ | 13,423\t\t $10,340 | 13,423\t\t $10,340 | 4.85% | 5.10% | 4.77% |
| Loans\t(net\tof\tunearned\tincome)\t^(9) |  |  |  |  |  |  |  |  |  |
| Consumer\tloans |  |  |  |  |  |  |  |  |  |
| In\tU.S.\toffices | $373,095\t\t $ | 364,220\t\t $ | 328,311 | $28,657\t\t $ | 30,491\t\t $27,499 | 30,491\t\t $27,499 | 7.68% | 8.37% | 8.38% |
| In\toffices\toutside\tthe\tU.S.\t^(5) | 177,461 | 159,004 | 124,120 | 18,633 | 16,782 | \t 13,034\t\t 10.50 | \t 13,034\t\t 10.50 | 10.55 | 10.50 |
| Total\tconsumer\tloans | $550,556\t\t $ | 523,224\t\t $ | 452,431 | $47,290\t\t $ | 47,273\t\t $40,533 | 47,273\t\t $40,533 | 8.59% | 9.03% | 8.96% |
| Corporate\tloans |  |  |  |  |  |  |  |  |  |
| In\tU.S.\toffices | $43,773\t\t $ | 34,843\t\t $ | 28,113 | $2,281\t\t $ | 2,398\t\t $ | 1,717 | 5.21% | 6.88% | 6.11% |
| In\toffices\toutside\tthe\tU.S.\t^(5) | 140,196 | 152,840 | 124,462 | 12,765 | 13,530 | 9,836 | 9.11 | 8.85 | 7.90 |
| Total\tcorporate\tloans | $183,969\t\t $ | 187,683\t\t $ | 152,575 | $15,046\t\t $ | 15,928\t\t $11,553 | 15,928\t\t $11,553 | 8.18% | 8.49% | 7.57% |
| Total\tloans | $734,525\t\t $ | 710,907\t\t $ | 605,006 | $62,336\t\t $ | 63,201\t\t $52,086 | 63,201\t\t $52,086 | 8.49% | 8.89% | 8.61% |
| Other\tinterest-earning\tassets | $95,253\t\t $ | 90,707\t\t $ | 57,470 | $3,818\t\t $ | 4,831\t\t $ | 2,881 | 4.01% | 5.33% | 5.01% |
| Total\tinterest-earning\tassets | $1,752,234\t\t $1,884,922\t\t $1,456,183 | $1,752,234\t\t $1,884,922\t\t $1,456,183 | $1,752,234\t\t $1,884,922\t\t $1,456,183 | $106,655\t\t $121,429\t\t $93,611 | $106,655\t\t $121,429\t\t $93,611 | $106,655\t\t $121,429\t\t $93,611 | 6.09% | 6.44% | 6.43% |

(1) Interest	revenue	excludes	the	taxable	equivalent	adjustments	(based	on	the	U.S.	federal	statutory	tax	rate	of	35%)	of	$323	million,	$125	million,	and	$98	million	for	2008,	2007,	and	2006, respectively.

(2) Interest	rates	and	amounts	include	the	effects	of	risk	management	activities	associated	with	the	respective	asset	and	liability	categories.	See	Note	24	to	the	Consolidated	Financial	Statements	on page	188.

(3) Monthly	or	quarterly	averages	have	been	used	by	certain	subsidiaries	where	daily	averages	are	unavailable.

(4) Detailed	average	volume,	interest	revenue	and	interest	expense	exclude	discontinued	operations.	See	Note	3	to	the	Consolidated	Financial	Statements	on	page	135.

(5) Average	rates	reflect	prevailing	local	interest	rates,	including	inflationary	effects	and	monetary	corrections	in	certain	countries.

(6) Average	volumes	of	securities	borrowed	or	purchased	under	agreements	to	resell	are	reported	net	pursuant	to	FASB	Interpretation	No.	41,	"Offsetting	of	Amounts	Related	to	Certain	Repurchase and	Reverse	Repurchase	Agreements"	(FIN	41),	and	interest	revenue	excludes	the	impact	of	FIN	41.

(7) The	fair	value	carrying	amounts	of	derivative	and	foreign	exchange	contracts	are	reported	in	non-interest-earning	assets	and	other	non-interest-bearing	liabilities.

(8) Interest	expense	on	Trading	account	liabilities	of	ICG	is	reported	as	a	reduction	of	interest	revenue.	Interest	revenue	and	interest	expense	on	cash	collateral	positions	are	reported	in Trading account	assets	and	Trading	account	liabilities,	respectively.

(9) Includes	cash-basis	loans.

Reclassified	to	conform	to	the	current	period's	presentation.

# AVERAGE	BALANCES	AND	INTEREST	RATES—LIABILITIES	AND	EQUITY,

|  |  | Average	volume | Average	volume | Interest	expense | Interest	expense | Interest	expense | %	Average	rate | %	Average	rate | %	Average	rate |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| In\tmillions\tof\tdollars | 2008 | 2007 | 2006 | 2008 | 2007 | 2006\t\t 2008 | 2006\t\t 2008 | 2007 | 2006 |
| Liabilities |  |  |  |  |  |  |  |  |  |
| Deposits |  |  |  |  |  |  |  |  |  |
| In\tU.S.\toffices |  |  |  |  |  |  |  |  |  |
| Savings\tdeposits\t^(5) | $162,060\t\t $ | 149,304\t\t $ | 134,760 | $2,921\t\t $ | 4,772\t\t $ | 4,056 | 1.80% | 3.20% | 3.01% |
| Other\ttime\tdeposits | 58,998 | 58,808 | 48,558 | 2,604 | 3,358 | 2,471 | 4.41 | 5.71 | 5.09 |
| In\toffices\toutside\tthe\tU.S.\t^(6) | 473,451 | 481,874 | 389,430 | \t 14,746 | \t 20,272 | \t 14,809 | 3.11 | 4.21 | 3.80 |
| Total | $694,509\t\t $ | 689,986\t\t $ | 572,748 | $20,271\t\t $28,402\t\t $21,336 | $20,271\t\t $28,402\t\t $21,336 | $20,271\t\t $28,402\t\t $21,336 | 2.92% | 4.12% | 3.73% |
| Federal\tfunds\tpurchased\tand\tsecurities\tloaned\tor\tsold\tunder\tagreements\tto\trepurchase\t^(7) |  |  |  |  |  |  |  |  |  |
| In\tU.S.\toffices | $185,621\t\t $ | 244,258\t\t $ | 194,726 | $5,066\t\t $14,339\t\t $11,857 | $5,066\t\t $14,339\t\t $11,857 | $5,066\t\t $14,339\t\t $11,857 | 2.73% | 5.87% | 6.09% |
| In\toffices\toutside\tthe\tU.S.\t^(6) | 98,846 | 142,370 | 95,937 | 6,264 | 8,689 | 5,591 | 6.34 | 6.10 | 5.83 |
| Total | $284,467\t\t $ | 386,628\t\t $ | 290,663 | $11,330\t\t $23,028\t\t $17,448 | $11,330\t\t $23,028\t\t $17,448 | $11,330\t\t $23,028\t\t $17,448 | 3.98% | 5.96% | 6.00% |
| Trading\taccount\tliabilities\t^(8)\t(9) |  |  |  |  |  |  |  |  |  |
| In\tU.S.\toffices | $31,984\t\t $ | 46,383\t\t $ | 36,983 | $1,107\t\t $ | 1,142\t\t $ | 891 | 3.46% | 2.46% | 2.41% |
| In\toffices\toutside\tthe\tU.S.\t^(6) | 43,991 | 58,228 | 37,802 | 170 | 298 | 228 | 0.39 | 0.51 | 0.60 |
| Total | $75,975\t\t $ | 104,611\t\t $ | 74,785 | $1,277\t\t $ | 1,440\t\t $ | 1,119 | 1.68% | 1.38% | 1.50% |
| Short-term\tborrowings |  |  |  |  |  |  |  |  |  |
| In\tU.S.\toffices | $154,190\t\t $ | 169,457\t\t $ | 120,123 | $3,241\t\t $ | 6,234\t\t $ | 4,195 | 2.10% | 3.68% | 3.49% |
| In\toffices\toutside\tthe\tU.S.\t^(6) | 57,406 | 61,274 | 24,485 | 798 | 837 | 437 | 1.39 | 1.37 | 1.78 |
| Total | $211,596\t\t $ | 230,731\t\t $ | 144,608 | $4,039\t\t $ | 7,071\t\t $ | 4,632 | 1.91% | 3.06% | 3.20% |
| Long-term\tdebt\t^(10) |  |  |  |  |  |  |  |  |  |
| In\tU.S.\toffices | $311,439\t\t $ | 266,968\t\t $ | 194,979 | $14,305\t\t $14,245\t\t $ | $14,305\t\t $14,245\t\t $ | 9,917 | 4.59% | 5.34% | 5.09% |
| In\toffices\toutside\tthe\tU.S.\t^(6) | 37,048 | 35,803 | 22,694 | 1,741 | 1,865 | 1,231 | 4.70 | 5.21 | 5.42 |
| Total | $348,487\t\t $ | 302,771\t\t $ | 217,673 | $16,046\t\t $16,110\t\t $11,148 | $16,046\t\t $16,110\t\t $11,148 | $16,046\t\t $16,110\t\t $11,148 | 4.60% | 5.32% | 5.12% |
| Total\tinterest-bearing\tliabilities | $1,615,034\t\t $1,714,727\t\t $1,300,477 | $1,615,034\t\t $1,714,727\t\t $1,300,477 | $1,615,034\t\t $1,714,727\t\t $1,300,477 | $52,963\t\t $76,051\t\t $55,683 | $52,963\t\t $76,051\t\t $55,683 | $52,963\t\t $76,051\t\t $55,683 | 3.28% | 4.44% | 4.28% |
| Demand\tdeposits\tin\tU.S.\toffices | 13,757 | 12,436 | 10,994 |  |  |  |  |  |  |
| Other\tnon-interest-bearing\tliabilities\t^(8) | 388,873 | 303,375 | 236,733 |  |  |  |  |  |  |
| Total\tliabilities\tfrom\tdiscontinued\toperations | 17,106 | 18,171 | 15,775 |  |  |  |  |  |  |
| Total\tliabilities | $2,034,770\t\t $2,048,709\t\t $1,563,979 | $2,034,770\t\t $2,048,709\t\t $1,563,979 | $2,034,770\t\t $2,048,709\t\t $1,563,979 |  |  |  |  |  |  |
| Total\tstockholders'\tequity\t^(11) | $132,708\t\t $ | 122,823\t\t $ | 115,415 |  |  |  |  |  |  |
| Total\tliabilities\tand\tstockholders'\tequity | $2,167,478\t\t $2,171,532\t\t $1,679,394 | $2,167,478\t\t $2,171,532\t\t $1,679,394 | $2,167,478\t\t $2,171,532\t\t $1,679,394 |  |  |  |  |  |  |
| Net\tinterest\trevenue\tas\ta\tpercentage\tof\taverage |  |  |  |  |  |  |  |  |  |
| interest-earning\tassets\t^(12) |  |  |  |  |  |  |  |  |  |
| In\tU.S.\toffices | $1,005,414\t\t $1,079,565\t\t $ | $1,005,414\t\t $1,079,565\t\t $ | 880,874 | $25,892\t\t $22,069\t\t $19,097 | $25,892\t\t $22,069\t\t $19,097 | $25,892\t\t $22,069\t\t $19,097 | 2.58% | 2.04% | 2.17% |
| In\toffices\toutside\tthe\tU.S.\t^(6) | 746,820 | 805,357 | 575,309 | \t 27,800 | \t 23,309 | \t 18,831 | 3.72 | 2.89 | 3.27 |
| Total | $1,752,234\t\t $1,884,922\t\t $1,456,183 | $1,752,234\t\t $1,884,922\t\t $1,456,183 | $1,752,234\t\t $1,884,922\t\t $1,456,183 | $53,692\t\t $45,378\t\t $37,928 | $53,692\t\t $45,378\t\t $37,928 | $53,692\t\t $45,378\t\t $37,928 | 3.06% | 2.41% | 2.60% |

(5) Savings	deposits	consist	of	Insured	Money	Market	accounts,	NOW	accounts,	and	other	savings	deposits.

(7) Average	volumes	of	securities	loaned	or	sold	under	agreements	to	repurchase	are	reported	net	pursuant	to	FIN	41	and	interest	expense	excludes	the	impact	of	FIN	41.

(10)Excludes	hybrid	financial	instruments	and	beneficial	interests	in	consolidated	VIEs	that	are	classified	as	 Long-term	debt,	as	these	obligations	are	accounted	for	at	fair	value	with	changes	recorded in	Principal	transactions.	In	addition,	the	majority	of	the	funding	provided	by	Treasury	to	CitiCapital	operations	is	excluded	from	this	line.

(11)Includes	stockholders'	equity	from	discontinued	operations.

(12)Includes	allocations	for	capital	and	funding	costs	based	on	the	location	of	the	asset.

# ANALYSIS	OF	CHANGES	IN	INTEREST	REVENUE	^(1)	(2)	(3)

|  | 2008	vs.	2007 | 2008	vs.	2007 | 2008	vs.	2007 | 2007	vs.	2006 | 2007	vs.	2006 | 2007	vs.	2006 |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | Increase\t(decrease) | Increase\t(decrease) |  | Increase\t(decrease) | Increase\t(decrease) |  |
|  | due\tto\tchange\tin: | due\tto\tchange\tin: |  | due\tto\tchange\tin: | due\tto\tchange\tin: |  |
|  | Average | Average | Net | Average | Average | Net |
| In\tmillions\tof\tdollars | volume | rate | change | volume | rate | change |
| Deposits\twith\tbanks\t^(4) | $1,116 | $(1,110) | $6 | $1,099 | $(226) | $873 |
| Federal\tfunds\tsold\tand\tsecurities\tborrowed\tor |  |  |  |  |  |  |
| purchased\tunder\tagreements\tto\tresell |  |  |  |  |  |  |
| In\tU.S.\toffices | $(1,516) | $(5,141) | $(6,657) | $1,621 | $(151) | $1,470 |
| In\toffices\toutside\tthe\tU.S.\t^(4) | (2,872) | 350 | (2,522) | 2,316 | 369 | 2,685 |
| Total | $(4,388) | $(4,791) | $(9,179) | $3,937 | $218 | $4,155 |
| Trading\taccount\tassets\t^(5) |  |  |  |  |  |  |
| In\tU.S.\toffices | $(2,302) | $1,076 | $(1,226) | $3,730 | $1,290 | $5,020 |
| In\toffices\toutside\tthe\tU.S.\t^(4) | (523) | 731 | 208 | 2,198 | (576) | 1,622 |
| Total | $(2,825) | $1,807 | $(1,018) | $5,928 | $714 | $6,642 |
| Investments^\t(1) |  |  |  |  |  |  |
| In\tU.S.\toffices | $(1,325) | $(965) | $(2,290) | $1,670 | $619 | $2,289 |
| In\toffices\toutside\tthe\tU.S.\t^(4) | (735) | 320 | (415) | 627 | 167 | 794 |
| Total | $(2,060) | $(645) | $(2,705) | $2,297 | $786 | $3,083 |
| Loans—consumer |  |  |  |  |  |  |
| In\tU.S.\toffices | $729 | $(2,563) | $(1,834) | $3,006 | $(14) | $2,992 |
| In\toffices\toutside\tthe\tU.S.\t^(4) | 1,938 | (87) | 1,851 | 3,682 | 66 | 3,748 |
| Total | $2,667 | $(2,650) | $17 | $6,688 | $52 | $6,740 |
| Loans—corporate |  |  |  |  |  |  |
| In\tU.S.\toffices | $538 | $(655) | $(117) | $445 | $236 | $681 |
| In\toffices\toutside\tthe\tU.S.\t^(4) | (1,143) | 378 | (765) | 2,419 | 1,275 | 3,694 |
| Total | $(605) | $(277) | $(882) | $2,864 | $1,511 | $4,375 |
| Total\tloans | $2,062 | $(2,927) | $(865) | $9,552 | $1,563 | $11,115 |
| Other\tinterest-earning\tassets | $232 | $(1,245) | $(1,013) | $1,760 | $190 | $1,950 |
| Total\tinterest\trevenue | $(5,863) | $(8,911) | $(14,774) | $24,573 | $3,245 | $27,818 |

(1) The	taxable	equivalent	adjustment	is	based	on	the	U.S.	federal	statutory	tax	rate	of	35%	and	is	excluded	from	this	presentation.

(2) Rate/volume	variance	is	allocated	based	on	the	percentage	relationship	of	changes	in	volume	and	changes	in	rate	to	the	total	net	change.

(4) Changes	in	average	rates	reflect	changes	in	prevailing	local	interest	rates,	including	inflationary	effects	and	monetary	corrections	in	certain	countries.

# ANALYSIS	OF	CHANGES	IN	INTEREST	EXPENSE	AND	NET	INTEREST	REVENUE

|  | 2008	vs.	2007 | 2008	vs.	2007 | 2008	vs.	2007 | 2007	vs.	2006 | 2007	vs.	2006 | 2007	vs.	2006 |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | Increase\t(decrease) | Increase\t(decrease) |  | Increase\t(decrease) | Increase\t(decrease) |  |
|  | due\tto\tchange\tin: | due\tto\tchange\tin: |  | due\tto\tchange\tin: | due\tto\tchange\tin: |  |
|  | Average | Average | Net | Average | Average | Net |
| In\tmillions\tof\tdollars | volume | rate | change | volume | rate | change |
| Deposits |  |  |  |  |  |  |
| In\tU.S.\toffices | $479 | $(3,084) | $(2,605) | $933 | $670 | $1,603 |
| In\toffices\toutside\tthe\tU.S.\t^(4) | (349) | (5,177) | (5,526) | 3,773 | 1,690 | 5,463 |
| Total | $130 | $(8,261) | $(8,131) | $4,706 | $2,360 | $7,066 |
| Federal\tfunds\tpurchased\tand\tsecurities\tloaned |  |  |  |  |  |  |
| or\tsold\tunder\tagreements\tto\trepurchase |  |  |  |  |  |  |
| In\tU.S.\toffices | $(2,871) | $(6,402) | $(9,273) | $2,921 | $(439) | $2,482 |
| In\toffices\toutside\tthe\tU.S.\t^(4) | (2,747) | 322 | (2,425) | 2,823 | 275 | 3,098 |
| Total | $(5,618) | $(6,080) | $(11,698) | $5,744 | $(164) | $5,580 |
| Trading\taccount\tliabilities\t^(5) |  |  |  |  |  |  |
| In\tU.S.\toffices | $(417) | $382 | $(35) | $231 | $20 | $251 |
| In\toffices\toutside\tthe\tU.S.\t^(4) | (64) | (64) | (128) | 109 | (39) | 70 |
| Total | $(481) | $318 | $(163) | $340 | $(19) | $321 |
| Short-term\tborrowings |  |  |  |  |  |  |
| In\tU.S.\toffices | $(520) | $(2,473) | $(2,993) | $1,804 | $235 | $2,039 |
| In\toffices\toutside\tthe\tU.S.\t^(4) | (54) | 15 | (39) | 523 | (123) | 400 |
| Total | $(574) | $(2,458) | $(3,032) | $2,327 | $112 | $2,439 |
| Long-term\tdebt |  |  |  |  |  |  |
| In\tU.S.\toffices | $2,193 | $(2,133) | $60 | $3,820 | $508 | $4,328 |
| In\toffices\toutside\tthe\tU.S.\t^(4) | 63 | (187) | (124) | 685 | (51) | 634 |
| Total | $2,256 | $(2,320) | $(64) | $4,505 | $457 | $4,962 |
| Total\tinterest\texpense | $(4,287) | $(18,801) | $(23,088) | $17,622 | $2,746 | $20,368 |
| Net\tinterest\trevenue | $(1,576) | $9,890 | $8,314 | $6,951 | $499 | $7,450 |

# RECLASSIFICATION	OF	FINANCIAL	ASSETS

The	Company	reviewed	portfolios	of	debt	securities	and	loans	throughout	the fourth	quarter	of	2008	and	identified	positions	where	there	has	been	a	change	of intent	to	hold	the	debt	securities	or	loans	for	periods	of	time	much	longer	than those	originally	anticipated.	The	Company	believes	that	the	expected	cash	flows to	be	generated	from	holding	the	assets	significantly	exceed	their	current	fair value	which	has	been	significantly	adversely	impacted	by	the	reduced	liquidity in	the	global	financial	markets.	As	such,	the	Company	anticipates	returns	on these	assets	will	be	optimized	by	holding	them	for	extended	periods	or	until maturity,	rather	than	through	an	exit	strategy	in	the	short	term.	During	the	fourth quarter	of	2008,	the	Company	reclassified	certain	debt	securities	and	loans	into accounting	categories	with	measurement	based	on	amortized	cost	to	align	the accounting	treatment	with	the	revised	asset	holding	periods.

# Debt	Securities	Reclassified	to	Available	for	Sale	and	Held	to Maturity

FASB	Statement	No.	115,	Accounting	for	Certain	Investments	in	Debt	and Equity	Securities	(SFAS	115),	requires	that,	at	acquisition,	an	enterprise	classify debt	securities	into	one	of	three	categories:	trading,	available	for	sale	(AFS)	or held	to	maturity	(HTM).	Trading	securities	are	carried	at	fair	value	on	the balance	sheet	with	unrealized	holding	gains	and	losses	recognized	in	earnings currently.	AFS	securities	are	carried	at	fair	value	on	the	balance	sheet,	and unrealized	holding	gains	and	losses	are	excluded	from	earnings	and	recognized as	a	separate	component	of	equity	in	Accumulated	other	comprehensive	income (AOCI).	HTM	debt	securities	are	measured	at	amortized	cost.	Both	AFS	and HTM	are	subject	to	review	for	other-than-temporary	impairment	(see	discussion on	page	128).

SFAS	115	states	that	transfers	of	securities	out	of	the	trading	category	are expected	to	be	rare.	During	the	fourth	quarter	of	2008,	Citigroup	made	a	number of	transfers	out	of	the	trading	category	in	order	to	better	reflect	the	revised intentions	of	the	Company	in	response	to	the	significant	deterioration	in	market conditions,	which	was	especially	acute	during	the	fourth	quarter.	These	market conditions	were	not	foreseen	at	the	initial	purchase	date	of	the	securities.	Most	of the	debt	securities	previously	classified	as	trading	were	bought	and	held principally	for	the	purpose	of	selling	them	in	the	short	term,	many	in	the	context of	Citigroup's	acting	as	a	market	maker.	At	the	date	of	acquisition,	most	of	these positions	were	liquid	and	the	Company	expected	active	and	frequent	buying	and selling	with	the	objective	of	generating	profits	on	short-term	differences	in	price. However,	subsequent	declines	in	value	of	these	securities	are	primarily	related	to the	ongoing	widening	of	market	credit	spreads	reflecting	increased	risk	and liquidity	premiums	that	buyers	are	currently	demanding.	As	market	liquidity	has decreased,	the	primary	buyers	for	these	securities	have	typically	demanded	a return	on	investment	that	is	significantly	higher	than	previously	experienced. Despite	depressed	market	prices,	the	Company	determined	through	credit analysis	that	the	cash	recovery	levels	of	these	securities	is	expected	to	be significantly	higher	than	current	market	prices	might	indicate.

Reclassifications	of	debt	securities	were	made	at	fair	value	on	the	date	of	transfer.	The	impact	of	the	transfers	executed	during	the	fourth	quarter	of	2008	is	detailed	in	the following	table	followed	by	a,	summarized	by	type	of	securities:

|  |  | Carrying	value	at | Fair	value	at |
| :--- | :--- | :--- | :--- |
|  |  | December\t31, | December\t31, |
| In\tmillions\tof\tdollars | Amortized\tcost^(1) | 2008^(2) | 2008^(2) |
| Debt\tsecurities\treclassified\tto\theld-to-maturity\tinvestments |  |  |  |
| Mortgage-backed\tsecurities | $37,719 | $30,738 | $27,751 |
| State\tand\tmunicipal | 4,898 | 4,548 | 4,327 |
| Other\tdebt\tsecurities | 25,665 | 24,977 | 24,432 |
| Total\tdebt\tsecurities\treclassified\tto\theld-to-maturity\tinvestments | $68,282 | $60,263 | $56,510 |
| Debt\tand\tequity\tsecurities\treclassified\tto\tavailable-for-sale\tinvestments |  |  |  |
| Mortgage-backed\tsecurities | $109 | $72 | $72 |
| State\tand\tmunicipal | 2,235 | 2,111 | 2,111 |
| Other\tdebt\tand\tequity\tsecurities | 2,368 | 2,471 | 2,471 |
| Total\tdebt\tand\tequity\tsecurities\treclassified\tto\tavailable-for-sale\tinvestments | $4,712 | $4,654 | $4,654 |

(1) For	securities	transferred	to	held-to-maturity	from	Trading	account	assets,	amortized	cost	is	defined	as	the	fair	value	amount	of	the	securities	at	the	date	of	transfer.	For	securities	transferred	to held-to-maturity	from	available-for-sale,	amortized	cost	is	defined	as	the	original	purchase	cost,	plus	or	minus	any	accretion	or	amortization	of	interest,	less	any	impairment	previously	recognized in	earnings.

(2) The	difference	between	the	carrying	value	and	fair	value	at	December	31,	2008	for	those	securities	reclassified	to	HTM	is	not	recognized	in	the	Company's	financial	statements,	while	the difference	for	securities	reclassified	from	Trading	account	assets	to	AFS	is	recognized	with	the	change	recorded	in	AOCI.

(3) Excluded	from	these	tables	is	$4.2	billion	of	HTM	securities	that	were	purchased	during	the	fourth	quarter	of	2008,	in	accordance	with	prior	commitments.	These	purchases	consisted	of	$1.3	billion of	auction-rate	securities	and	$2.9	billion	of	auto	note	securities.

The	net	unrealized	losses	arising	prior	to	the	reclassification	date	and classified	in	AOCI	of	$8.0	billion	as	of	December	31,	2008,	for	debt	securities reclassified	from	AFS	investments	to	HTM	investments	have	been	segregated within	AOCI.	This	balance	will	be	amortized	over	the	remaining	life	of	the related	securities	as	an	adjustment	of	yield	in	a	manner	consistent	with	the

accretion	of	discount	on	the	same	transferred	debt	securities.	This	will	have	no impact	on	the	Company's	net	income	because	the	amortization	of	the	unrealized holding	loss	reported	in	equity	will	offset	the	effect	on	the	interest	income	of	the accretion	of	the	discount	on	these	securities.

# Loans	Reclassified	to	Held	for	Investment

FASB	Statement	No.	65,	Accounting	for	Certain	Mortgage	Banking	Activities (SFAS	65),	and	AICPA	Statement	of	Position	01-6,	"Accounting	by	Certain Entities	(Including	Entities	with	Trade	Receivables)	That	Lend	to	or	Finance	the Activities	of	Others"	(SOP	01-6),	require	that	the	accounting	for	a	loan	be	based upon	the	Company's	intent	and	ability	to	hold	the	loan	for	the	foreseeable	future or	until	maturity.	Loans	that	the	Company	has	the	intent	and	ability	to	hold	for the	foreseeable	future,	or	until	maturity	or	payoff,	should	be	classified	as	held	for investment	(HFI)	and	reported	in	the

balance	sheet	at	the	amortized	cost	of	the	loan,	adjusted	by	the	allowance	for loan	losses.	Loans	that	the	Company	intends	to	sell	should	be	classified	as	held for	sale	(HFS)	and	reported	at	the	lower	of	cost	or	fair	value.

During	the	fourth	quarter	of	2008,	Citigroup	made	a	number	of	transfers	from the	HFS	category	to	the	HFI	category	to	better	reflect	prevailing	intentions	of	the Company.	Reclassifications	of	loans	were	made	at	fair	value	on	the	date	of transfer.	The	impact	of	the	transfers	executed	during	the	fourth	quarter	of	2008	is detailed	in	the	following	table,	summarized	by	type	of	loan:

|  | at	date<br>of	transfer | Carrying	value	at<br>December	31,	2008 | Fair	value	at<br>December	31,	2008 |
| :--- | :--- | :--- | :--- |
| Loans\treclassified\tto\theld\tfor\tinvestment |  |  |  |
| Highly\tleveraged\tloans | $3,318 | $3,350 | $1,650 |
| Commercial\treal\testate\tloans | 7,150 | 7,049 | 7,110 |
| Other\tloans | 5,241 | 5,492 | 5,523 |
| Total\tloans | $15,709 | $15,891 | $14,283 |

Loan	balances	reclassified	relate	to	funded	positions	that	were	originated	as part	of	a	strategy	to	distribute.	Prior	to	the	recent	dislocation	in	the	credit markets,	Citigroup	managed	the	risk	associated	with	these	loans	by	seeking	to sell	a	majority	of	its	exposure	to	the	market	prior	to,	or	shortly	after,	funding.	For the	reasons	discussed	under	"Debt	Securities	Reclassified	to	Available-for-Sale and	Held-to-Maturity"	on	page	87,	the	Company	believes	that	the	best	value	can now	be	obtained	through	a	hold	strategy.	It	is	now	the	Company's	intention	to hold	these	positions	for	the	foreseeable	future,	which	is	considered	to	be	such time	as	the	loan	period	expires,	or	sufficient	liquidity

returns	to	the	market	place,	such	that	the	loans	can	be	sold	for	a	value	which	the Company	believes	is	representative	of	the	implicit	credit	risk	of	the	position. Due	to	the	severity	and	duration	of	current	unfavorable	market	conditions,	the Company	does	not	anticipate	such	liquidity	returning	in	the	foreseeable	future, which	for	these	loans	the	Company	generally	defines	to	be	within	the	next	year. The	loans	reclassified	to	HFI	are	assessed	for	intention	to	hold	on	an	individual loan	basis.	After	transfer,	HFI	loans	are	now	subject	to	the	Company's	allowance for	loan	loss	review	process.

Presented	below	are	the	notional	and	the	mark-to-market	receivables	and	payables	for	Citigroup's	derivative	exposures	as	of	December	31,	2008	and	2007:

# Notionals	(1)

|  |  | Trading |  | Non-trading |
| :--- | :--- | :--- | :--- | :--- |
| In\tmillions\tof\tdollars | derivatives\t^(2) | derivatives\t^(2) | derivatives\t^(5) | derivatives\t^(5) |
| As\tof\tDecember\t31 | 2008 | 2007 | 2008 | 2007 |
| Interest\trate\tcontracts |  |  |  |  |
| Swaps | $15,096,293\t\t $ | 16,433,117\t\t $ | 763,630\t\t $ | 521,783 |
| Futures\tand\tforwards | 2,619,952 | 1,811,599 | 118,440 | 176,146 |
| Written\toptions | 2,963,280 | 3,479,071 | 25,255 | 16,741 |
| Purchased\toptions | 3,067,443 | 3,639,075 | 38,344 | 167,080 |
| Total\tinterest\trate\tcontract\tnotionals | $23,746,968\t\t $ | 25,362,862\t\t $ | 945,669\t\t $ | 881,750 |
| Foreign\texchange\tcontracts |  |  |  |  |
| Swaps | $882,327\t\t $ | 1,062,267\t\t $ | 62,491\t\t $ | 75,622 |
| Futures\tand\tforwards | 2,165,377 | 2,795,180 | 40,694 | 46,732 |
| Written\toptions | 483,036 | 653,535 | 3,286 | 292 |
| Purchased\toptions | 539,164 | 644,744 | 676 | 686 |
| Total\tforeign\texchange\tcontract\tnotionals | $4,069,904\t\t $ | 5,155,726\t\t $ | 107,147\t\t $ | 123,332 |
| Equity\tcontracts |  |  |  |  |
| Swaps | $98,315\t\t $ | 140,256\t\t $ | —\t\t $ | — |
| Futures\tand\tforwards | 17,390 | 29,233 | — | — |
| Written\toptions | 507,327 | 625,157 | — | — |
| Purchased\toptions | 471,532 | 567,030 | — | — |
| Total\tequity\tcontract\tnotionals | $1,094,564\t\t $ | 1,361,676\t\t $ | —\t\t $ | — |
| Commodity\tand\tother\tcontracts |  |  |  |  |
| Swaps | $44,020\t\t $ | 29,415\t\t $ | —\t\t $ | — |
| Futures\tand\tforwards | 60,625 | 66,860 | — | — |
| Written\toptions | 31,395 | 27,087 | — | — |
| Purchased\toptions | 32,892 | 30,168 | — | — |
| Total\tcommodity\tand\tother\tcontract\tnotionals | $168,932\t\t $ | 153,530\t\t $ | —\t\t $ | — |
| Credit\tderivatives\t^(4) |  |  |  |  |
| Citigroup\tas\tthe\tGuarantor: |  |  |  |  |
| Credit\tdefault\tswaps | $1,441,117\t\t $ | 1,755,440\t\t $ | —\t\t $ | — |
| Total\treturn\tswaps | 1,905 | 12,121 | — | — |
| Credit\tdefault\toptions | 258 | 276 | — | — |
| Citigroup\tas\tthe\tBeneficiary: |  |  | — |  |
| Credit\tdefault\tswaps | 1,560,087 | 1,890,611 | — | — |
| Total\treturn\tswaps | 29,990 | 15,895 | — | — |
| Credit\tdefault\toptions | 135 | 450 | — | — |
| Total\tcredit\tderivatives | $3,033,492\t\t $ | 3,674,793 |  |  |
| Total\tderivative\tnotionals | $32,113,860\t\t $ | 35,708,587\t\t $ | 1,052,816\t\t $ | 1,005,082 |

Seethe	following	page	for	footnotes.

# Mark-to-Market	(MTM)	Receivables/Payables

|  |  | Derivatives |  | Derivatives |
| :--- | :--- | :--- | :--- | :--- |
| In\tmillions\tof\tdollars | receivables—MTM | receivables—MTM | payables—MTM | payables—MTM |
| As\tof\tDecember\t31 | 2008 | 2007^\t(6) | 2008 | 2007^\t(6) |
| Trading\tderivatives\t^(2) |  |  |  |  |
| Interest\trate\tcontracts | $667,597 | $ 237,711 | $654,178 | $ 237,903 |
| Foreign\texchange\tcontracts | 153,197 | 77,937 | 160,628 | 71,980 |
| Equity\tcontracts | 35,717 | 27,381 | 57,292 | 66,916 |
| Commodity\tand\tother\tcontracts | 23,924 | 8,540 | 22,473 | 8,887 |
| Credit\tderivatives:\t^(4) |  |  |  |  |
| Citigroup\tas\tthe\tGuarantor | 5,890 | 4,967 | 198,233 | 73,103 |
| Citigroup\tas\tthe\tBeneficiary | 222,461 | 78,426 | 5,476 | 11,191 |
| Cash\tcollateral\tpaid/received\t^(3) | 63,866 | 32,247 | 65,010 | 19,437 |
| Total | $1,172,652 | $ 467,209 | $1,163,290 | $ 489,417 |
| Less:\tNetting\tagreements\tand\tmarket\tvalue\tadjustments | (1,057,363) | (390,328) | (1,046,505) | (385,876) |
| Net\treceivables/payables | $115,289 | $76,881 | $116,785 | $ 103,541 |
| Non-trading\tderivatives^\t(5) |  |  |  |  |
| Interest\trate\tcontracts | $14,755 | $8,529 | $7,742 | $7,176 |
| Foreign\texchange\tcontracts | 2,408 | 1,634 | 3,746 | 972 |
| Total | $17,163 | $10,163 | $11,488 | $8,148 |

(1) Includes	the	notional	amounts	for	long	and	short	derivative	positions.

(2) Trading	derivatives	include	proprietary	positions,	as	well	as	certain	hedging	derivatives	instruments	that	qualify	for	hedge	accounting	in	accordance	with	SFAS	No.	133, Accounting	for	Derivative Instruments	and	Hedging	Activities	(SFAS	133).

(3) In	addition	to	the	cash	collateral	paid	or	received,	as	of	December	31,	2008	the	Company	has	provided	$7.9	billion	and	received	$6.8	billion	of	marketable	securities	as	collateral	under	derivative contracts.

(4) Credit	derivatives	are	arrangements	designed	to	allow	one	party	(the	"beneficiary")	to	transfer	the	credit	risk	of	a	"reference	asset"	to	another	party	(the	"guarantor").	These	arrangements	allow	a guarantor	to	assume	the	credit	risk	associated	with	the	reference	asset	without	directly	purchasing	it.	The	Company	has	entered	into	credit	derivatives	positions	for	purposes	such	as	risk management,	yield	enhancement,	reduction	of	credit	concentrations	and	diversification	of	overall	risk.

(5) Non-trading	derivatives	include	only	those	end-user	derivative	instruments	where	the	changes	in	market	value	are	recorded	in

# Derivative	Obligor	Information

The	following	table	presents	the	global	derivatives	portfolio	by	internal	obligor credit	rating	at	December	31,	2008	and	2007,	as	a	percentage	of	credit	exposure:

|  | December	31, | December	31, |
| :--- | :--- | :--- |
|  | 2008 | 2007 |
| AAA/AA/A | 68% | 80% |
| BBB | 20 | 11 |
| BB/B | 7 | 7 |
| CCC\tor\tbelow | 5 | 1 |
| Unrated | — | 1 |
| Total | 100% | 100% |

The	following	table	presents	the	global	derivatives	portfolio	by	industry	of	the obligor	as	a	percentage	of	credit	exposure:

|  | 2008 | 2007 |
| :--- | :--- | :--- |
| Financial\tinstitutions | 73% | 75% |
| Governments | 7 | 6 |
| Corporations | 20 | 19 |
| Total | 100% | 100% |

Other	assets	or	Other	liabilities.

# Fair	Valuation	Adjustments	for	Derivatives

The	fair	value	adjustments	applied	by	the	Company	to	its	derivative	carrying values	consist	of	the	following	items:

•	Liquidity	adjustments	are	applied	to	items	in	Level	2	or	Level	3	of	the	fair- value	hierarchy	(see	Note	26	on	page	191	for	more	details)	to	ensure	that	the fair	value	reflects	the	price	at	which	the	entire	position	could	be	liquidated. The	liquidity	reserve	is	based	on	the	bid/offer	spread	for	an	instrument, adjusted	to	take	into	account	the	size	of	the	position.

•	Credit	valuation	adjustments	(CVA)	are	applied	to	over-the-counter derivative	instruments,	in	which	the	base	valuation	generally	discounts expected	cash	flows	using	LIBOR	interest	rate	curves.	Because	not	all counterparties	have	the	same	credit	risk	as	that	implied	by	the	relevant LIBOR	curve,	a	CVA	is	necessary	to	incorporate	the	market	view	of	both counterparty	credit	risk	and	the	Company's	own	credit	risk	in	the	valuation.

The	Company's	CVA	methodology	comprises	two	steps.	First,	the	exposure profile	for	each	counterparty	is	determined	using	the	terms	of	all	individual derivative	positions	and	a	Monte	Carlo	simulation	or	other	quantitative	analysis to	generate	a	series	of	expected	cash	flows	at	future	points	in	time.	The calculation	of	this	exposure	profile	considers	the	effect	of	credit	risk	mitigants, including	pledged	cash	or	other	collateral	and	any	legal	right	of	offset	that	exists with	a	counterparty	through	arrangements	such	as	netting	agreements.	Individual derivative	contracts	that	are	subject	to	an	enforceable	master	netting	agreement with	a	counterparty	are	aggregated	for	this	purpose,	since	it	is	those	aggregate net	cash	flows	that	are	subject	to	nonperformance	risk.	This	process	identifies specific,	point	in	time	future	cash	flows	that	are	subject	to	nonperformance	risk, rather	than	using	the	current	recognized	net	asset	or	liability	as	a	basis	to measure	the	CVA.	Second,	market-based	views	of	default	probabilities	derived from	observed	credit	spreads	in	the	credit	default	swap	market,	are	applied	to	the expected

future	cash	flows	determined	in	step	one.	Own-credit	CVA	is	determined	using Citi-specific	CDS	spreads	for	the	relevant	tenor.	Generally,	counterparty	CVA	is determined	using	CDS	spread	indices	for	each	credit	rating	and	tenor.	For	certain identified	facilities	where	individual	analysis	is	practicable	(for	example, exposures	to	monoline	counterparties)	counterparty-specific	CDS	spreads	are used.

The	CVA	adjustment	is	designed	to	incorporate	a	market	view	of	the	credit	risk inherent	in	the	derivative	portfolio	as	required	by	SFAS	157.	However,	most derivative	instruments	are	negotiated	bilateral	contracts	and	are	not	commonly transferred	to	third	parties.	Derivative	instruments	are	normally	settled contractually,	or	if	terminated	early,	are	terminated	at	a	value	negotiated bilaterally	between	the	counterparties.	Therefore,	the	CVA	(both	counterparty and	own-credit)	may	not	be	realized	upon	a	settlement	or	termination	in	the normal	course	of	business.	In	addition,	all	or	a	portion	of	the	credit	valuation adjustments	may	be	reversed	or	otherwise	adjusted	in	future	periods	in	the	event of	changes	in	the	credit	risk	of	Citi	or	its	counterparties,	or	changes	in	the	credit mitigants	(collateral	and	netting	agreements)	associated	with	the	derivative instruments.	Historically,	Citigroup's	credit	spreads	have	moved	in	tandem	with general	counterparty	credit	spreads,	thus	providing	offsetting	CVAs	affecting revenue.	However,	in	the	fourth	quarter	of	2008,	Citigroup's	credit	spreads generally	narrowed	and	counterparty	credit	spreads	widened,	each	of	which negatively	affected	revenues.	The	table	below	summarizes	the	CVA	applied	to the	fair	value	of	derivative	instruments	as	of	December	31,	2008	and	2007.

|  | December	31, | December	31, |
| :--- | :--- | :--- |
| In\tmillions\tof\tdollars | 2008 | 2007 |
| Non-monoline\tcounterparties | $(8,266) | $(1,613) |
| Citigroup\t(own) | 3,611 | 1,329 |
| Net\tnon-monoline\tCVA | (4,655) | (284) |
| Monoline\tcounterparties^\t(1) | (4,279) | (967) |
| Total\tCVA—derivative\tinstruments | $(8,934) | $(1,251) |

(1)Certain	derivatives	with	monoline	counterparties	were	terminated	during	2008.

The	table	below	summarizes	pre-tax	gains	(losses)	related	to	changes	in	credit valuation	adjustments	on	derivative	instruments	for	the	years	ended December	31,	2008	and	2007:

|  | Credit	valuation | Credit	valuation |
| :--- | :--- | :--- |
|  | adjustment\tgain | adjustment\tgain |
|  |  | (loss) |
| In\tmillions\tof\tdollars | 2008 | 2007 |
| Non-monoline\tcounterparties | $(6,653) | $(1,301) |
| Citigroup\t(own) | 2,282 | 1,329 |
| Net\tnon-monoline\tCVA | (4,371) | 28 |
| Monoline\tcounterparties | (5,736) | (967) |
| Total\tCVA—derivative\tinstruments | $(10,107) | $(939) |

The	credit	valuation	adjustment	amounts	shown	above	relate	solely	to	the derivative	portfolio,	and	do	not	include:

•	Own-credit	adjustments	for	non-derivative	liabilities	measured	at	fair	value under	the	fair-value	option.	See	Note	26	on	page	191	for	further	information.

•	The	effect	of	counterparty	credit	risk	embedded	in	non-derivative	instruments. During	2008,	general	spread	widening	has	negatively	affected	the	market	value of	a	range	of	financial	instruments.	Losses	on	non-derivative	instruments,	such as	bonds	and	loans,	related	to	counterparty	credit	risk	are	not	included	in	the table	above.

# Credit	Derivatives

Like	all	other	derivative	types,	the	Company	makes	markets	in	and	trades	a	range of	credit	derivatives,	both	on	behalf	of	clients	as	well	as	for	its	own	account. Through	these	contracts	the	Company	either	purchases	or	writes	protection	on either	a	single-name	or	portfolio	basis.	The	Company	uses	credit	derivatives	to help	mitigate	credit	risk	in	its	corporate	loan	portfolio	and	other	cash	positions, to	take	proprietary	trading	positions,	and	to	facilitate	client	transactions. Credit	derivatives	generally	require	that	the	seller	of	credit	protection	make payments	to	the	buyer	upon	the	occurrence	of	predefined	events	(settlement triggers).	These	settlement	triggers,	which	are	defined	by	the	form	of	the derivative	and	the	referenced	credit,	are	generally	limited	to	the	market	standard of	failure	to	pay	on	indebtedness	and	bankruptcy	of	the	reference	credit	and,	in	a more	limited	range	of	transactions,	debt	restructuring.	Credit	derivative transactions	referring	to	emerging	market	reference	credits	will	also	typically include	additional	settlement	triggers	to	cover	the	acceleration	of	indebtedness and	the	risk	of	repudiation	or	a	payment	moratorium.	In	certain	transactions	on	a portfolio	of	referenced	credits	or	asset-backed	securities,	the	seller	of	protection may	not	be	required	to	make	payment	until	a	specified	amount	of	losses	have occurred	with	respect	to	the	portfolio	and/or	may	only	be	required	to	pay	for losses	up	to	a	specified	amount.

The	following	tables	summarize	the	key	characteristics	of	the	Company's	credit	derivative	portfolio	by	activity,	counterparty	and	derivative	form	as	of	December	31, 2008	and	December	31,	2007:

| 2008: |  | Fair	values | Notionals | Notionals |
| :--- | :--- | :--- | :--- | :--- |
| In\tmillions\tof\tdollars | Receivable | Payable | Beneficiary | Guarantor |
| By\tActivity: |  |  |  |  |
| Credit\tportfolio | $3,257 | $15 | $71,131 | $— |
| Dealer/client | 225,094 | \t 203,694 | 1,519,081 | \t 1,443,280 |
| Total\tby\tActivity | $228,351 | $203,709 | $1,590,212 | $1,443,280 |
| By\tIndustry/Counterparty: |  |  |  |  |
| Bank | $128,042 | $121,811 | $996,248 | $943,949 |
| Broker-dealer | 59,321 | 56,858 | 403,501 | 365,664 |
| Monoline | 6,886 | 91 | 9,973 | 139 |
| Non-financial | 4,874 | 2,561 | 5,608 | 7,540 |
| Insurance\tand\tother\tfinancial\tinstitutions | 29,228 | 22,388 | 174,882 | 125,988 |
| Total\tby\tIndustry/Counterparty | $228,351 | $203,709 | $1,590,212 | $1,443,280 |
| By\tInstrument: |  |  |  |  |
| Credit\tdefault\tswaps\tand\toptions | $221,159 | $203,220 | $1,560,223 | $1,441,375 |
| Total\treturn\tswaps\tand\tother | 7,192 | 489 | 29,989 | 1,905 |
| Total\tby\tInstrument | $228,351 | $203,709 | $1,590,212 | $1,443,280 |

| 2007: |  | Fair	values | Notionals | Notionals |
| :--- | :--- | :--- | :--- | :--- |
| In\tmillions\tof\tdollars | Receivable | Payable | Beneficiary | Guarantor |
| By\tActivity: |  |  |  |  |
| Credit\tportfolio | $626 | $129 | $91,228 | $— |
| Dealer/client | 82,767 | 84,165 | 1,815,728 | \t 1,767,837 |
| Total\tby\tActivity | $83,393 | $84,294 | $1,906,956 | $1,767,837 |
| By\tIndustry/Counterparty: |  |  |  |  |
| Bank | $28,571 | $34,425 | $1,035,217 | $970,831 |
| Broker-dealer | 28,183 | 31,519 | 633,745 | 585,549 |
| Monoline | 5,044 | 88 | 15,064 | 1,243 |
| Non-financial | 220 | 331 | 3,682 | 4,253 |
| Insurance\tand\tother\tfinancial\tinstitutions | 21,375 | 17,931 | 219,248 | 205,961 |
| Total\tby\tIndustry/Counterparty | $83,393 | $84,294 | $1,906,956 | $1,767,837 |
| By\tInstrument: |  |  |  |  |
| Credit\tdefault\tswaps\tand\toptions | $82,752 | $83,015 | $1,891,061 | $1,755,716 |
| Total\treturn\tswaps\tand\tother | 641 | 1,279 | 15,895 | 12,121 |
| Total\tby\tInstrument | $83,393 | $84,294 | $1,906,956 | $1,767,837 |

The	fair	values	shown	are	prior	to	the	application	of	any	netting	agreements, cash	collateral,	and	market	or	credit	value	adjustments.

The	Company	actively	participates	in	trading	a	variety	of	credit	derivatives products	as	both	an	active	two-way	market-maker	for	clients	and	to	manage credit	risk.	During	2008,	Citigroup	decreased	its	trading	volumes.	The	volatility and	liquidity	challenges	in	the	credit	markets	during	2008	drove	derivatives trading	values	higher,	especially	for	the	credit	derivatives.	The	majority	of	this activity	was	transacted	with	other	financial	intermediaries,	including	both	banks and	broker-dealers.	The	total	notional	amount	of	protection	purchased	and	sold as	of	December	31,	2008	compared	to	December	31,	2007	decreased	$317	billion and	$325	billion,	respectively,	and	to	various	market	participants.	However,	the total	fair	value	as	of	December	31,	2008	compared	to	December	31,	2007 increased	by	$145	billion	for	protection	purchased	and	$119	billion	for protection	sold.	These	fair	value	increases	were	due	to	general	credit	spreads widening	in	the	credit	derivative	market.

The	Company	generally	has	a	mismatch	between	the	total	notional	amounts	of protection	purchased	and	sold	and	it	may	hold	the	reference	assets	directly, rather	than	entering	into	offsetting	credit	derivative	contracts	as	and	when desired.	The	open	risk	exposures	from	credit	derivative	contracts	are	largely matched	after	certain	cash	positions	in	reference	assets	are	considered	and	after notional	amounts	are	adjusted,	either	to	a	duration-based	equivalent	basis	or	to reflect	the	level	of	subordination	in	tranched	structures.

The	Company	actively	monitors	its	counterparty	credit	risk	in	credit	derivative contracts.	Approximately	88%	of	the	gross	receivables	as	of	December	31,	2008 are	from	counterparties	with	which	the	Company	maintains	collateral agreements.	A	majority	of	the	Company's	top	15	counterparties	(by	receivable balance	owed	to	the	Company)	are	banks,	financial	institutions	or	other	dealers. Contracts	with	these	counterparties	do	not	include	ratings-based	termination events.	However,	counterparty	rating	downgrades	may	have	an	incremental effect	by	lowering	the	threshold	at	which	the	Company	may	call	for	additional collateral.	A	number	of	the	remaining	significant	counterparties	are	monolines.

# CAPITAL	RESOURCES	AND	LIQUIDITY

# CAPITAL	RESOURCES

# Overview

Capital	is	generally	generated	via	earnings	from	operating	businesses.	This	is augmented	through	issuance	of	common	stock,	convertible	preferred	stock, preferred	stock,	subordinated	debt,	and	equity	issued	through	awards	under employee	benefit	plans.	Capital	is	used	primarily	to	support	assets	in	the Company's	businesses	and	to	absorb	unexpected	market,	credit	or	operational losses.	The	Company's	uses	of	capital,	particularly	to	pay	dividends	and repurchase	common	stock,	became	severely	restricted	during	the	latter	half	of 2008.	See	"The	Company,"	"Management's	Discussion	and	Analysis	–	Events	in 2008,"	"TARP	and	Other	Regulatory	Programs,"	"Risk	Factors"	and	"Common Equity"	on	pages	2,	9,	44,47	and	95,	respectively.

Citigroup's	capital	management	framework	is	designed	to	ensure	that	Citigroup and	its	principal	subsidiaries	maintain	sufficient	capital	consistent	with	the Company's	risk	profile,	all	applicable	regulatory	standards	and	guidelines,	and external	rating	agency	considerations.	The	capital	management	process	is centrally	overseen	by	senior	management	and	is	reviewed	at	the	consolidated, legal	entity,	and	country	level.

Senior	management	oversees	the	capital	management	process	of	Citigroup	and its	principal	subsidiaries	mainly	through	Citigroup's	Finance	and	Asset	and Liability	Committee	(FinALCO).	The	Committee	is	composed	of	the	senior- most	management	of	Citigroup	for	the	purpose	of	engaging	management	in decision-making	and	related	discussions	on	capital	and	liquidity	items.	Among other	things,	the	Committee's	responsibilities	include:	determining	the	financial structure	of	Citigroup	and	its	principal	subsidiaries;	ensuring	that	Citigroup	and its	regulated	entities	are	adequately	capitalized;	determining	appropriate	asset levels	and	return	hurdles	for	Citigroup	and	individual	businesses;	reviewing	the funding	and	capital	markets	plan	for	Citigroup;	and	monitoring	interest-rate	risk, corporate	and	bank	liquidity,	the	impact	of	currency	translation	on	non-U.S. earnings	and	capital.	The	FinALCO	has	established	capital	targets	for	Citigroup and	for	significant	subsidiaries.	At	December	31,	2008,	these	targets	exceeded the	regulatory	standards.

# Common	and	Preferred	Stock	Issuances

As	discussed	under	"Events	in	2008"	on	page	9,	during	2008,	the	Company issued	$45	billion	in	preferred	stock	and	warrants	under	TARP,	$12.5	billion	of convertible	preferred	stock	in	a	private	offering,	$11.7	billion	of	non-convertible preferred	stock	in	public	offerings,	$3.2	billion	of	convertible	preferred	stock	in public	offerings,	and	$4.9	billion	of	common	stock	in	public	offerings. On	January	23,	2009,	pursuant	to	our	prior	agreement	with	the	purchasers	of the	$12.5	billion	convertible	preferred	stock	issued	in	the	private	offering,	the conversion	price	was	reset	from	$31.62	per	share	to	$26.35	per	share.	The	reset will	result	in	Citigroup's	issuing	approximately	79	million	additional	common shares	if	converted.	There	will	be	no	impact	to	net	income,	total	stockholders' equity	or	capital	ratios	due	to	the	reset.	However,	the	reset	will	result	in	a reclassification	from	Retained	earnings	to	Additional	paid-in	capital	of	$1.2 billion	to	reflect	the	benefit	of	the	reset	to	the	preferred	stockholders.

# Capital	Ratios

Citigroup	is	subject	to	risk-based	capital	ratio	guidelines	issued	by	the	Federal Reserve	Board	(FRB).	Capital	adequacy	is	measured	via	two	risk-based	ratios, Tier	1	and	Total	Capital	(Tier	1	+	Tier	2	Capital).	Tier	1	Capital	is	considered core	capital	while	Total	Capital	also	includes	other	items	such	as	subordinated debt	and	loan	loss	reserves.	Both	measures	of	capital	are	stated	as	a	percentage of	risk-weighted	assets.	Risk-weighted	assets	are	measured	primarily	on	their perceived	credit	risk	and	include	certain	off-balance-sheet	exposures,	such	as unfunded	loan	commitments	and	letters	of	credit,	and	the	notional	amounts	of derivative	and	foreign-exchange	contracts.	Citigroup	is	also	subject	to	the Leverage	Ratio	requirement,	a	non-risk-based	asset	ratio,	which	is	defined	as Tier	1	Capital	as	a	percentage	of	adjusted	average	assets.

To	be	"well	capitalized"	under	federal	bank	regulatory	agency	definitions,	a bank	holding	company	must	have	a	Tier	1	Capital	Ratio	of	at	least	6%,	a	Total Capital	Ratio	of	at	least	10%,	and	a	Leverage	Ratio	of	at	least	3%,	and	not	be subject	to	an	FRB	directive	to	maintain	higher	capital	levels.

As	noted	in	the	following	table,	Citigroup	maintained	a	"well	capitalized" position	during	both	2008	and	2007.

# Citigroup	Regulatory	Capital	Ratios

(1)Tier	1	Capital	divided	by	adjusted	average	assets.

Events	occurring	during	2008,	including	the	transactions	with	the	U.S. government,	affected	Citigroup's	capital	ratios,	and	any	additional	U.S. government	financial	involvement	with	the	Company	could	further	impact	the Company's	capital	ratios.	In	addition,	future	operations	will	affect	capital	levels, and	changes	that	the	FASB	has	proposed	regarding	off-balance-sheet	assets, consolidation	and	sale	treatment	could	also	have	an	impact	on	capital	ratios.	See also	Note	23	to	the	Consolidated	Financial	Statements	on	page	174,	including "Funding	Liquidity	Facilities	and	Subordinate	Interests."

# Components	of	Capital	Under	Regulatory	Guidelines

| In	millions	of	dollars	at	year	end | 2008 | 2007^	(1) |
| :--- | :--- | :--- |
| Tier\t1\tCapital |  |  |
| Common\tstockholders'\tequity^\t(2) | $70,966 | $113,447 |
| Qualifying\tperpetual\tpreferred\tstock | 70,664 | — |
| Qualifying\tmandatorily\tredeemable\tsecurities\tof\tsubsidiary |  |  |
| trusts | 23,899 | 23,594 |
| Minority\tinterest | 1,268 | 4,077 |
| Less:\tNet\tunrealized\tgains\t(losses)\ton\tsecurities\tavailable-for- |  |  |
| sale,\tnet\tof\ttax\t^(3) | (9,647) | 471 |
| Less:\tAccumulated\tnet\tlosses\ton\tcash\tflow\thedges,\tnet\tof\ttax | (5,189) | (3,163) |
| Less:\tPension\tliability\tadjustment,\tnet\tof\ttax\t^(4) | (2,615) | (1,196) |
| Less:\tCumulative\teffect\tincluded\tin\tfair\tvalue\tof\tfinancial |  |  |
| liabilities\tattributable\tto\tcredit\tworthiness,\tnet\tof\ttax\t^(5) | 3,391 | 1,352 |
| Less:\tRestricted\tcore\tcapital\telements\t^(6) | — | 1,364 |
| Less:\tDisallowed\tdeferred\ttax\tassets^\t(7) | 23,520 | — |
| Less:\tIntangible\tassets: |  |  |
| Goodwill | 27,132 | 41,053 |
| Other\tdisallowed\tintangible\tassets | 10,607 | 10,511 |
| Other | (840) | (1,500) |
| Total\tTier\t1\tCapital | $118,758 | $89,226 |
| Tier\t2\tCapital |  |  |
| Allowance\tfor\tcredit\tlosses\t^(8) | $12,806 | $15,778 |
| Qualifying\tdebt\t^(9) | 24,791 | 26,690 |
| Unrealized\tmarketable\tequity\tsecurities\tgains\t^(3) | 43 | 1,063 |
| Restricted\tcore\tcapital\telements\t^(6) | — | 1,364 |
| Total\tTier\t2\tCapital | $37,640 | $44,895 |
| Total\tCapital\t(Tier\t1\tand\tTier\t2) | $156,398 | $134,121 |
| Risk-weighted\tassets\t^(10) | $996,247 | $1,253,321 |

(1)Reclassified	to	conform	to	the	current	period's	presentation. (2)Reflects	prior	period	adjustment	to	opening	retained	earnings	as	presented	in	the Consolidated	Statement	of	Changes	in	Stockholders'	Equity	on	page	117. (3)Tier	1	Capital	excludes	unrealized	gains	and	losses	on	debt	securities	available-for-sale	in accordance	with	regulatory	risk-based	capital	guidelines.	Institutions	are	required	to	deduct from	Tier	1	Capital	net	unrealized	holding	gains	on	available-for-sale	equity	securities	with readily	determinable	fair	values,	net	of	tax.	The	federal	bank	regulatory	agencies	permit institutions	to	include	in	Tier	2	Capital	up	to	45%	of	pretax	net	unrealized	holding	gains	on available-for-sale	equity	securities	with	readily	determinable	fair	values,	net	of	tax. (4)The	FRB	granted	interim	capital	relief	for	the	impact	of	adopting	SFAS	158. (5)The	impact	of	including	Citigroup's	own	credit	rating	in	valuing	liabilities	for	which	the	fair value	option	has	been	selected	is	excluded	from	Tier	1	Capital,	in	accordance	with regulatory	risk-based	capital	guidelines.

(6)Represents	the	excess	of	allowable	restricted	core	capital	in	Tier	1	Capital.	Restricted	core capital	is	limited	to	25%	of	all	core	capital	elements,	net	of	goodwill. (7)Of	the	Company's	$44	billion	of	net	deferred	tax	assets	at	December	31,	2008,	$14	billion were	includable	without	limitation	in	regulatory	capital	pursuant	to	the	risk-based	capital guidelines,	while	$24	billion	exceeds	the	limitation	imposed	by	these	guidelines	and	as "disallowed	deferred	tax	assets"	were	deducted	in	arriving	at	Tier	1	Capital.	The	Company's other	$6	billion	of	net	deferred	tax	assets	at	December	31,	2008,	primarily	represented	the deferred	tax	effects	of	unrealized	gains	and	losses	on	available-for-sale	debt	securities, which	are	permitted	to	be	excluded	prior	to	deriving	the	amount	of	net	deferred	tax	assets subject	to	limitation	under	the	guidelines.	The	Company	had	no	disallowed	deferred	tax assets	at	December	31,	2007.

(8)Can	include	up	to	1.25%	of	risk-weighted	assets.	Any	excess	allowance	is	deducted	from risk-weighted	assets.

(9)Includes	qualifying	subordinated	debt	in	an	amount	not	exceeding	50%	of	Tier	1	Capital. (10)Includes	risk-weighted	credit	equivalent	amounts,	net	of	applicable	bilateral	netting agreements,	of	$102.9	billion	for	interest	rate,	commodity	and	equity	derivative	contracts, foreign-exchange	contracts	and	credit	derivatives	as	of	December	31,	2008,	compared	with $91.3	billion	as	of	December	31,	2007.	Market-risk-equivalent	assets	included	in	risk- weighted	assets	amounted	to	$101.8	billion	at	December	31,	2008	and	$109.0	billion	at December	31,	2007.	Risk-weighted	assets	also	include	the	effect	of	other	off-balance-sheet exposures,	such	as	unused	loan	commitments	and	letters	of	credit,	and	reflect	deductions for	certain	intangible	assets	and	any	excess	allowance	for	credit	losses.

# Common	Equity

The	table	below	summarizes	the	change	in	common	stockholders'	equity	during 2008:

| In	billions	of	dollars |  |
| :--- | :--- |
| Common\tequity,\tDecember\t31,\t2007 | $113.4 |
| Net\tloss | (27.7) |
| Employee\tbenefit\tplans\tand\tother\tactivities | 4.1 |
| Dividends | (7.6) |
| Issuance\tof\tshares\tfor\tNikko\tCordial\tacquisition | 4.4 |
| Issuance\tof\tcommon\tstock | 4.9 |
| Net\tchange\tin\tAccumulated\tother\tcomprehensive\tincome\t(loss),\tnet\tof\ttax | (20.5) |
| Common\tequity,\tDecember\t31,\t2008 | $71.0 |

As	of	December	31,	2008,	$6.7	billion	of	stock	repurchases	remained	under authorized	repurchase	programs	after	no	material	repurchases	were	made	in	2008 and	$0.7	billion	of	repurchases	were	made	in	2007.	Under	TARP,	the	Company is	restricted	from	repurchasing	common	stock,	subject	to	certain	exceptions, including	in	the	ordinary	course	of	business	as	part	of	employee	benefit programs.	In	addition,	in	accordance	with	various	TARP	programs,	Citigroup has	agreed	not	to	pay	a	quarterly	common	stock	dividend	exceeding	$0.01	per share	per	quarter	for	three	years	(beginning	in	2009)	without	the	consent	of	the U.S.	Treasury.	See	"TARP	and	Other	Regulatory	Programs"	on	page	44. The	Company	is	currently	in	ongoing	discussions	with	the	Federal	Reserve Board	regarding	an	increase	to	the	Company's	risk-weighted	assets	resulting from	certain	liquidity-facility	transactions	relating	to	the	Company's	primary credit	card	securitization	trusts.	This	increase	in	risk-weighted	assets	will	affect the	calculation	of	the	Company's	risk-based	capital	ratios.	However,	the	timing and	extent	of	the	increase	is	not	yet	certain,	pending	completion	of	discussions with	the	Federal	Reserve	Board.	See	Note	23	to	the	Consolidated	Financial Statements	on	page	174.

# Tangible	Common	Equity	(TCE)

The	Company	and	its	bank	regulators	view	the	Tier	1	Capital	Ratio	as	being	the most	important	measure	of	risk	capital	for	bank	holding	companies.	Citigroup's Tier	1	Capital	Ratio	was	11.92%	at	December	31,	2008	compared	to	7.12%	at December	31,	2007.

Tangible	common	equity	(TCE)	represents	Common	equity	less	Goodwill	and Intangible	assets	(excluding	MSRs).	TCE	was	$29.7	billion	at	December	31, 2008,	compared	to	$58.1	billion	at	December	31,	2007.	The	TCE	Ratio	(TCE divided	by	risk-weighted	assets)	was	3.0%	at	December	31,	2008	compared	to 4.6%	at	December	31,	2007.	The	primary	drivers	of	the	decline	in	TCE	during the	year	were	the	2008	net	loss	of	$27.7	billion,	and	an	increase	in	negative Accumulated	other	comprehensive	income	(AOCI)	of	$21	billion.

On	February	27,	2009,	the	Company	announced	an	exchange	offer	of	its common	stock	for	up	to	$27.5	billion	of	its	existing	preferred	securities	and	trust preferred	securities.	The	U.S.	government	will	match	this	exchange	up	to	a maximum	of	$25	billion	of	its	preferred.	These	transactions	are	intended	to increase	the	Company's	TCE.	See	"Outlook	for	2009"	on	page	7.

# Mandatorily	Redeemable	Securities	of	Subsidiary	Trusts

Total	mandatorily	redeemable	securities	of	subsidiary	trusts	(trust	preferred securities),	which	qualify	as	Tier	1	Capital,	were	$23.899	billion	at December	31,	2008,	as	compared	to	$23.594	billion	at	December	31,	2007.	In 2008,	Citigroup	did	not	issue	any	new	enhanced	trust	preferred	securities.

  The	FRB	issued	a	final	rule,	with	an	effective	date	of	April	11,	2005,	which retains	trust	preferred	securities	in	Tier	1	Capital	of	bank	holding	companies,	but with	stricter	quantitative	limits	and	clearer	qualitative	standards.	Under	the	rule, after	a	five-year	transition	period,	the	aggregate	amount	of	trust	preferred securities	and	certain	other	restricted	core	capital	elements	included	in	Tier	1 Capital	of	internationally	active	banking	organizations,	such	as	Citigroup,	would be	limited	to	15%	of	total	core	capital	elements,	net	of	goodwill,	less	any associated	deferred	tax	liability.	The	amount	of	trust	preferred	securities	and certain	other	elements	in	excess	of	the	limit	could	be	included	in	Tier	2	Capital, subject	to	restrictions.	At	December	31,	2008,	Citigroup	had	approximately 11.8%	against	the	limit.	The	Company	expects	to	be	within	restricted	core capital	limits	prior	to	the	implementation	date	of	March	31,	2009.

The	FRB	permits	additional	securities,	such	as	the	equity	units	sold	to	ADIA, to	be	included	in	Tier	1	Capital	up	to	25%	(including	the	restricted	core	capital elements	in	the	15%	limit)	of	total	core	capital	elements,	net	of	goodwill	less	any associated	deferred	tax	liability.	At	December	31,	2008,	Citigroup	had approximately	16.1%	against	the	limit.

The	FRB	granted	interim	capital	relief	for	the	impact	of	adopting	SFAS	158	at December	31,	2008	and	December	31,	2007.

The	FRB	and	the	FFIEC	may	propose	amendments	to,	and	issue	interpretations of,	risk-based	capital	guidelines	and	reporting	instructions.	These	may	affect reported	capital	ratios	and	net	risk-weighted	assets.

# Capital	Resources	of	Citigroup's	Depository	Institutions

Citigroup's	subsidiary	depository	institutions	in	the	United	States	are	subject	to risk-based	capital	guidelines	issued	by	their	respective	primary	federal	bank regulatory	agencies,	which	are	similar	to	the	FRB's	guidelines.	To	be	"well capitalized"	under	federal	bank	regulatory	agency	definitions,	Citigroup's depository	institutions	must	have	a	Tier	1	Capital	Ratio	of	at	least	6%,	a	Total Capital	(Tier	1	+	Tier	2	Capital)	Ratio	of	at	least	10%	and	a	Leverage	Ratio	of	at least	5%,	and	not	be	subject	to	a	regulatory	directive	to	meet	and	maintain higher	capital	levels.

At	December	31,	2008,	all	of	Citigroup's	subsidiary	depository	institutions were	"well	capitalized"	under	the	federal	regulatory	agencies'	definitions, including	Citigroup's	primary	depository	institution,	Citibank,	N.A.,	as	noted	in the	following	table:

# Citibank,	N.A.	Components	of	Capital	and	Ratios	Under	Regulatory Guidelines

During	2008,	Citibank,	N.A.	received	contributions	from	its	parent	company of	$6.1	billion.	Citibank,	N.A.	did	not	issue	any	additional	subordinated	notes	in 2008.	Total	subordinated	notes	issued	to	Citicorp	Holdings	Inc.	that	were outstanding	at	December	31,	2008	and	December	31,	2007	and	included	in Citibank,	N.A.'s	Tier	2	Capital,	amounted	to	$28.2	billion.	Citibank,	N.A. received	an	additional	$14.3	billion	in	capital	contribution	from	its	parent company	in	January	2009.	The	impact	of	this	contribution	is	not	reflected	in	the table	above.	The	substantial	events	in	2008	impacting	the	capital	of	Citigroup, and	the	potential	future	events	discussed	on	page	94	under	"Citigroup Regulatory	Capital	Ratios,"	also	affected,	or	could	affect,	Citibank,	N.A.

The	following	table	presents	the	estimated	sensitivity	of	Citigroup's	and Citibank,	N.A.'s	Capital	Ratios	to	changes	of	$100	million	of	Tier	1	or	Total Capital	(numerator),	or	changes	of	$1	billion	in	risk-weighted	assets	or	adjusted average	assets	(denominator)	based	on	financial	information	as	of	December	31, 2008.	This	information	is	provided	solely	for	the	purpose	of	analyzing	the	impact that	a	change	in	the	Company's	financial	position	or

results	of	operations	could	have	on	these	ratios.	These	sensitivities	only	consider a	single	change	to	either	a	component	of	Capital,	risk-weighted	assets	or adjusted	average	assets.	Accordingly,	an	event	that	affects	more	than	one	factor may	have	a	larger	basis-point	impact	than	is	reflected	in	this	table.

|  | Tier	1	Capital	Ratio | Tier	1	Capital	Ratio | Total	Capital	Ratio | Total	Capital	Ratio | Leverage	Ratio | Leverage	Ratio |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | Impact\nof\t$100\nmillion\nchange\nin\nTier\t1\nCapital | Impact\nof\t$1\nbillion\nchange\nin\nrisk-\nweighted\nassets | Impact\nof\t$100\nmillion\nchange\nin\ttotal\ncapital | Impact\nof\t$1\nbillion\nchange\nin\nrisk-\nweighted\nassets | Impact\nof\t$100\nmillion\nchange\nin\tTier\n1\nCapital | Impact\nof\t$1\nbillion\nchange\nin\nadjusted\naverage\nassets |
| Citigroup | 1.0\tbps | 1.2\tbps | 1.0\tbps | 1.6\tbps | 0.5\tbps | 0.3\tbps |
| Citibank,\tN.A. | 1.4\tbps | 1.4\tbps | 1.4\tbps | 2.1\tbps | 0.8\tbps | 0.5\tbps |

# Broker-Dealer	Subsidiaries

The	Company's	broker-dealer	subsidiaries—including	Citigroup	Global	Markets Inc.	(CGMI),	an	indirect	wholly	owned	subsidiary	of	Citigroup	Global	Markets Holdings	Inc.	(CGMHI)—are	subject	to	various	securities	and	commodities regulations	and	capital	adequacy	requirements	of	the	regulatory	and	exchange authorities	of	the	countries	in	which	they	operate.	Specifically,	the	Company's U.S.-registered	broker-dealer	subsidiaries,	including	CGMI,	are	subject	to	the Securities	and	Exchange	Commission's	Net	Capital	Rule,	Rule	15c3-1	(the	Net Capital	Rule)	under	the	Exchange	Act	and	related	NYSE	regulations. Under	the	Net	Capital	Rule,	CGMI	is	required	to	maintain	minimum	net capital	equal	to	2%	of	aggregate	debit	items,	as	defined.	Under	NYSE regulations,	CGMI	may	be	required	to	reduce	its	business	if	its	net	capital	is	less than	4%	of	aggregate	debit	items	and	may	also	be	prohibited	from	expanding	its business	or	paying	cash	dividends	if	resulting	net	capital	would	be	less	than	5% of	aggregate	debit	items.	Furthermore,	the	Net	Capital	Rule	does	not	permit withdrawal	of	equity	or	subordinated	capital	if	the	resulting	net	capital	would	be less	than	5%	of	aggregate	debit	items.

CGMI	computes	net	capital	in	accordance	with	the	provisions	of	Appendix	E of	the	Net	Capital	Rule.	This	methodology	allows	CGMI	to	compute	market	risk capital	charges	using	internal	value-at-risk	models.	Under	Appendix	E,	CGMI	is also	required	to	hold	tentative	net	capital	in	excess	of	$1	billion	and	net	capital	in excess	of	$500	million.	CGMI	is	also	required	to	notify	the	SEC	in	the	event	that its	tentative	net	capital	is	less	than	$5	billion.	As	of	December	31,	2008,	CGMI had	tentative	net	capital	in	excess	of	both	the	minimum	and	the	notification requirements.

Compliance	with	the	Net	Capital	Rule	could	limit	those	operations	of	CGMI that	require	the	intensive	use	of	capital,	such	as	underwriting	and	trading activities	and	the	financing	of	customer	account	balances,	and	also	restrict CGMHI's	ability	to	withdraw	capital	from	its	broker-dealer	subsidiaries,	which in	turn	could	limit	CGMHI's	ability	to	pay	dividends	and	make	payments	on	its debt.

At	December	31,	2008,	CGMI	had	net	capital,	computed	in	accordance	with the	Net	Capital	Rule,	of	$2.5	billion,	which	exceeded	the	minimum	requirement by	$1.6	billion.

In	addition,	certain	of	the	Company's	broker-dealer	subsidiaries	are	subject	to regulation	in	the	other	countries	in	which	they	do	business,	including requirements	to	maintain	specified	levels	of	net	capital	or	its	equivalent.	The Company's	broker-dealer	subsidiaries	were	in	compliance	with	their	capital requirements	at	December	31,	2008.	See	further	discussions	on	"Capital Requirements"	on	page	228.

# Regulatory	Capital	Standards	Developments

Citigroup	supports	the	move	to	a	new	set	of	risk-based	regulatory	capital standards,	published	on	June	26,	2004	(and	subsequently	amended	in	November 2005)	by	the	Basel	Committee	on	Banking	Supervision,	consisting	of	central banks	and	bank	supervisors	from	13	countries.	The	international	version	of	the Basel	II	framework	will	allow	Citigroup	to	leverage	internal	risk	models	used	to measure	credit,	operational,	and	market	risk	exposures	to	drive	regulatory	capital calculations.

On	December	7,	2007,	the	U.S.	banking	regulators	published	the	rules	for large	banks	to	comply	with	Basel	II	in	the	U.S.	These	rules	require	Citigroup,	as a	large	and	internationally	active	bank,	to	comply	with	the	most	advanced	Basel II	approaches	for	calculating	credit	and	operational	risk	capital	requirements. The	U.S.	implementation	timetable	consists	of	a	parallel	calculation	period	under the	current	regulatory	capital	regime	(Basel	I)	and	Basel	II,	starting	anytime between	April	1,	2008,	and	April	1,	2010	followed	by	a	three-year	transition period,	typically	starting	12	months	after	the	beginning	of	parallel	reporting.	The U.S.	regulators	have	reserved	the	right	to	change	how	Basel	II	is	applied	in	the U.S.	following	a	review	at	the	end	of	the	second	year	of	the	transitional	period, and	to	retain	the	existing	prompt	corrective	action	and	leverage	capital requirements	applicable	to	banking	organizations	in	the	U.S.

The	Company	intends	to	implement	Basel	II	within	the	timeframe	required	by the	final	rules.

# FUNDING

Because	Citigroup	is	a	bank	holding	company,	substantially	all	of	its	net earnings	are	generated	within	its	operating	subsidiaries.	These	subsidiaries	make funds	available	to	Citigroup,	primarily	in	the	form	of	dividends.	Certain subsidiaries'	dividend-paying	abilities	may	be	limited	by	covenant	restrictions	in credit	agreements,	regulatory	requirements	and/or	rating-agency	requirements that	also	impact	their	capitalization	levels.

Global	financial	markets	faced	unprecedented	disruption	in	the	latter	part	of 2008.	Citigroup	and	other	U.S.	financial	services	firms	are	currently	benefiting from	numerous	government	programs	that	are	improving	markets	and	supporting their	current	liquidity	positions.	These	programs	provide	Citigroup	with significant	current	funding	capacity	and	significant	liquidity	support.	These include:

•	In	October	2008,	the	FDIC	established	the	Temporary	Liquidity	Guarantee Program	(TLGP).	The	TLGP	provides	a	guarantee	of	certain	newly	issued senior	unsecured	long-term	debt	of	banks,	thrifts	and	certain	holding companies,	and	by	providing	full	coverage	of	non-interest-bearing	deposit transaction	accounts,	regardless	of	dollar	amount.	The	TLGP	guarantees coverage	of	qualifying	senior	unsecured	debt	issued	with	a	maturity	prior	to July	1,	2012.	A	significant	portion	of	Citigroup's	existing	commercial	paper	is guaranteed	under	this	program.	In	addition,	in	December	2008,	Citigroup issued	approximately	$5.75	billion	of	senior	unsecured	debt	under	this program.	In	January	and	February	2009,	Citigroup	and	its	affiliates	issued	an additional	$14.9	billion	in	senior	unsecured	debt	under	the	program.	It	has been	proposed	that	the	TLGP	be	extended	from	its	current	expiration	date	of June	30,	2009	to	October	30,	2009.

•	In	March	2008,	the	Federal	Reserve	Board	authorized	the	Federal	Reserve Bank	of	New	York	to	establish	the	Primary	Dealer	Credit	Facility	to	provide overnight	financing	to	primary	dealers	in	exchange	for	a	broad	range	of collateral.	Citigroup	utilizes	this	program	to	supplement	its	secured	financing capabilities.	On	December	31,	2008,	Citigroup	had	funded	$13.8	billion	on	a secured	basis	under	this	program.

•	In	October	2008,	the	Federal	Reserve	Board	established	the	Commercial	Paper Funding	Facility	(CPFF)	to	provide	a	liquidity	backstop	to	U.S.	issuers	of commercial	paper.	Under	the	CPFF,	the	Federal	Reserve	Bank	of	New	York finances	purchases	of	unsecured	highly	rated	three-month	U.S.	dollar- denominated	commercial	paper	of	eligible	issuers	through	primary	dealers.	On December	31,	2008,	Citigroup	had	$9.0	billion	Commercial	Paper	and	$3.3 billion	Credit	Card	Asset-Backed	Commercial	Paper	outstanding	under	the program.

•	In	March	2008,	the	Federal	Reserve	Board	expanded	its	securities	lending program	to	promote	liquidity	in	the	financing	markets	for	Treasury	securities and	other	collateral	and	thus	foster	the	functioning	of	financial	markets	more generally.	Under	the	Term	Securities	Lending	Facility	(TSLF),	the	Federal Reserve	lends	up	to	$200	billion	of	Treasury	securities	to	primary	dealers secured	for	a	term	of	28	days	by	a	pledge	of	other	securities,	including	federal agency	debt,	federal	agency	residential-mortgage-backed	securities	(MBS)	and non-agency	AAA/Aaa-rated	private-label	residential	MBS.	The	securities	are made	available	through	a	weekly	auction	process.	Citigroup	uses	the	TSLF	to facilitate	secured	funding	transactions	for	its	inventory	as	well	as	that	of	its customers.

It	has	been	proposed	that	the	CPFF,	PDCF	and	the	TSLF	be	extended	from	their current	expiration	dates	of	June	30,	2009	to	October	30,	2009.

•	In	November	2008,	the	Federal	Reserve	Board	announced	the	creation	of	the Term	Asset-Backed	Securities	Loan	Facility	(TALF),	a	facility	designed	to support	the	issuance	of	asset-backed	securities	(ABS)	collateralized	by	student loans,	auto	loans,	credit	card	loans	and	loans	guaranteed	by	the	Small	Business Administration	(SBA).	An	expansion	of	this	program,	announced	in	February 2009,	could	broaden	the	eligible	collateral	to	encompass	other	types	of	newly issued	AAA-rated	asset-backed	securities,	such	as	commercial	mortgage- backed	securities,	private-label	residential	mortgage-backed	securities	and other	asset-backed	securities.	Details	of	this	program,	including	its commencement	date,	have	not	yet	been	announced.	The	TALF	is	currently scheduled	to	expire	on	December	31,	2009.

•	The	U.S.	Department	of	Education	(DOE)	has	been	working	to	ensure uninterrupted	and	timely	access	to	Federal	student	loans	by	taking	steps	to maintain	stability	in	student	lending.	The	Ensuring	Continued	Access	to Student	Loans	Act	of	2008	(ECASLA)	enacted	by	Congress	in	May	2008 allows	the	DOE	to	purchase	qualifying	Stafford	and	PLUS	Loans	originated during	the	2003-2009	academic	years.	Legislation	passed	in	October	2008 provides	for	a	one	year	extension	of	authority	for	the	DOE	to	purchase	certain guaranteed	student	loans	as	defined	under	ECASLA	through	the	2009-2010 academic	year.	On	July	3,	2008,	the	Company	filed	a	required	Notice	of	Intent to	Participate	with	the	Department	under	a	program	limited	to	qualifying	loans originated	during	the	2008-2009	academic	year.	The	Company	received	its initial	funding	through	the	Participation	Program	on	December	5,	2008.	In addition,	on	November	8,	2008,	the	DOE	announced	that	it	would	provide liquidity	support	to	one	or	more	conforming	Asset-Based	Commercial	Paper (ABCP)	conduit(s).	While	details	of	this	conduit	are	forthcoming,	it	is	intended that	all	fully-disbursed	non-consolidation	Federal	Family	Education	Loan Program	(FFELP)	loans	awarded	between	October	1,	2003	and	July	1,	2009 will	be	eligible	for	inclusion.	On	November	20,	2008	the	DOE	announced	that it	will	take	the	additional	step	of	using	existing	authority	to	purchase	certain 2007-2008	academic	year	FFELP	loans.

In	addition	to	the	above	programs,	during	the	second	half	of	2007	and	the	full year	of	2008,	the	Company	took	a	series	of	actions	to	reduce	potential	funding risks	related	to	short-term	market	dislocations.	The	amount	of	commercial	paper outstanding	was	reduced	and	the	weighted-average	maturity	was	extended,	the parent	company	liquidity	portfolio	(a	portfolio	of	cash	and	highly	liquid securities)	and	broker-dealer	"cash	box"	(unencumbered	cash	deposits)	were increased	substantially	and	the	amount	of	unsecured	overnight	bank	borrowings was	reduced.	For	each	of	the	past	eight	months	in	the	period	ending December	31,	2008,	the	Company	was,	on	average,	a	net	lender	of	funds	in	the interbank	market	or	had	excess	cash	placed	in	its	account	at	the	Federal	Reserve Bank	of	New	York.	As	of	December	31,	2008,	the	parent	company	liquidity portfolio	and	broker-dealer	"cash	box"	totaled	$66.8	billion	as	compared	with $24.2	billion	at	December	31,	2007.

These	actions	to	reduce	funding	risks,	the	reduction	of	the	balance	sheet	and the	substantial	support	provided	by	U.S.	government	programs	have	allowed	the combined	parent	and	broker-dealer	entities	to	maintain	sufficient	liquidity	to meet	all	maturing	unsecured	debt	obligations	due	within	a	one-year	time	horizon, without	accessing	the	unsecured	markets.

# Sources	of	Liquidity

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

•	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.

# Banking	Subsidiaries

There	are	various	legal	limitations	on	the	ability	of	Citigroup's	subsidiary depository	institutions	to	extend	credit,	pay	dividends	or	otherwise	supply	funds to	Citigroup	and	its	non-bank	subsidiaries.	The	approval	of	the	Office	of	the Comptroller	of	the	Currency,	in	the	case	of	national	banks,	or	the	Office	of Thrift	Supervision,	in	the	case	of	federal	savings	banks,	is	required	if	total dividends	declared	in	any	calendar	year	exceed	amounts	specified	by	the applicable	agency's	regulations.	State-chartered	depository	institutions	are subject	to	dividend	limitations	imposed	by	applicable	state	law.

In	determining	the	declaration	of	dividends,	each	depository	institution	must also	consider	its	effect	on	applicable	risk-based	capital	and	leverage	ratio requirements,	as	well	as	policy	statements	of	the	federal	regulatory	agencies	that indicate	that	banking	organizations	should	generally	pay	dividends	out	of	current operating	earnings.

# Non-Banking	Subsidiaries

Citigroup	also	receives	dividends	from	its	non-bank	subsidiaries.	These	non- bank	subsidiaries	are	generally	not	subject	to	regulatory	restrictions	on dividends.	However,	as	discussed	in	"Capital	Resources	and	Liquidity"	on	page 94,	the	ability	of	CGMHI	to	declare	dividends	can	be	restricted	by	capital considerations	of	its	broker-dealer	subsidiaries.

CGMHI's	consolidated	balance	sheet	is	liquid,	with	the	vast	majority	of	its assets	consisting	of	marketable	securities	and	collateralized	short-term	financing agreements	arising	from	securities	transactions.	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.

Some	of	Citigroup's	non-bank	subsidiaries,	including	CGMHI,	have	credit facilities	with	Citigroup's	subsidiary	depository	institutions,	including	Citibank, N.A.	Borrowings	under	these	facilities	must	be	secured	in	accordance	with Section	23A	of	the	Federal	Reserve	Act.	There	are	various	legal	restrictions	on the	extent	to	which	a	bank	holding	company	and	certain	of	its	non-bank subsidiaries	can	borrow	or	obtain	credit	from	Citigroup's	subsidiary	depository institutions	or	engage	in	certain	other	transactions	with	them.	In	general,	these restrictions	require	that	transactions	be	on	arm's	length	terms	and	be	secured	by designated	amounts	of	specified	collateral.	See	Note	20	to	the	Consolidated Financial	Statements	on	page	168.

At	December	31,	2008,	long-term	debt	and	commercial	paper	outstanding	for Citigroup,	CGMHI,	CFI	and	Citigroup's	subsidiaries	were	as	follows:

|  | Citigroup |  | Citigroup | Other |
| :--- | :--- | :--- | :--- | :--- |
|  | parent |  | Funding | Citigroup |
|  |  | (2) | (2) |  |
| In\tbillions\tof\tdollars | company | CGMHI | Inc. | subsidiaries |
| Long-term\tdebt | $192.3 | $20.6 | $37.4 | $109.3\t(1) |
| Commercial\tpaper | $— | $— | $28.6 | $0.5 |

(1)At	December	31,	2008,	approximately	$67.4	billion	relates	to	collateralized	advances	from the	Federal	Home	Loan	Bank.

(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	168	for	further	detail	on	long-term	debt	and	commercial	paper	outstanding.

# Credit	Ratings

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

On	November	24,	2008,	Fitch	Ratings	lowered	Citigroup	Inc.'s	and	Citibank,	N.A.'s	senior	debt	rating	to	"A+"	from	"AA-."	In	doing	so,	Fitch	removed	the	rating from	"Watch	Negative"	and	applied	a	"Stable	Outlook."	On	December	18,	2008,	Moody's	Investors	Service	lowered	Citigroup	Inc.'s	senior	debt	rating	to	"A2"	from "Aa3"	and	Citibank,	N.A.'s	long-term	rating	to	"Aa3"	from	"Aa1."	In	doing	so,	Moody's	removed	the	rating	from	"Under	Review	for	possible	downgrade"	and	applied a	"Stable	Outlook."	On	January	16,	2009,	Moody's	placed	the	ratings	outlook	of	Citigroup	Inc.	and	its	subsidiaries	on	"Under	Review	for	possible	downgrade"	from "Stable	Outlook,"	while	maintaining	the	"Stable	Outlook"	for	Citibank	N.A.'s	short-term	obligations.	On	February	27,	2009,	Moody's	Investors	Service	lowered Citigroup	Inc.'s	senior	debt	ratings	to	"A3"	from	"A2"	and	Citibank,	N.A.'s	long	term	rating	to	"A1"	from	"Aa3."	In	doing	so,	Moody's	removed	the	ratings	from "Under	Review	for	possible	downgrade"	and	applied	a	"Stable	Outlook."	On	December	19,	2008,	Standard	&	Poor's	lowered	Citigroup	Inc.'s	senior	debt	rating	to	"A" from	"AA-"	and	Citibank,	N.A.'s	long-term	rating	to	"A+"	from	"AA."	In	doing	so,	Standard	&	Poor's	removed	the	rating	from	"CreditWatch	Negative"	and	applied	a "Stable	Outlook."	On	December	19,	2008,	Standard	&	Poor's	also	lowered	the	short-term	and	commercial	paper	ratings	of	Citigroup	and	Citibank,	N.A.	to	"A-1"	from "A-1+".	On	February	27,	2009,	Standard	&	Poor's	placed	the	ratings	of	Citigroup	Inc.	and	its	subsidiaries	on	"Negative	Outlook".

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

# Citigroup's	Debt	Ratings	as	of	December	31,	2008

|  | Citigroup	Inc. | Citigroup	Inc. | Citigroup	Funding	Inc. | Citigroup	Funding	Inc. | Citibank,	N.A. | Citibank,	N.A. |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | Senior | Commercial | Senior | Commercial | Long- | Short- |
|  | debt | paper | debt | paper | term | term |
| Fitch\tRatings | A+ | F1+ | A+ | F1+ | A+ | F1+ |
| Moody's\tInvestors\tService | A2 | P-1 | A2 | P-1 | Aa3 | P-1 |
| Standard\t&amp;\tPoor's | A | A-1 | A | A-1 | A+ | A-1 |

Ratings	downgrades	by	Fitch	Ratings,	Moody's	Investors	Service	or Standard	&	Poor's	have	had	and	could	have	impacts	on	funding	and	liquidity, and	could	also	have	further	explicit	impact	on	liquidity	due	to	collateral	triggers and	other	cash	requirements.	Because	of	the	current	credit	ratings	of	Citigroup Inc.,	a	one-notch	downgrade	of	its	senior	debt/long-term	rating	would	likely impact	Citigroup	Inc.'s	commercial	paper/short-term	rating.	As	of	January	31, 2009,	a	one-notch	downgrade	of	the	senior	debt/long-term	rating	of	Citigroup Inc.	accompanied	by	a	one-notch	downgrade

of	Citigroup	Inc.'s	commercial	paper/short-term	rating	would	result	in	an approximately	$11.0	billion	funding	requirement	in	the	form	of	collateral	and cash	obligations.	Further,	as	of	January	31,	2009,	a	one-notch	downgrade	of	the senior	debt/long-term	ratings	of	Citibank,	N.A.	would	result	in	an	approximately $7.0	billion	funding	requirement	in	the	form	of	collateral	and	cash	obligations. Because	of	the	credit	ratings	of	Citibank,	N.A.,	a	one-notch	downgrade	of	its senior	debt/long-term	rating	is	unlikely	to	have	any	impact	on	its	commercial paper/short-term	rating.

# LIQUIDITY

Citigroup's	liquidity	management	is	structured	to	ensure	the	availability	of	funds and	to	optimize	the	free	flow	of	funds	through	the	Company's	legal	and regulatory	structure.	Principal	constraints	relate	to	legal	and	regulatory limitations,	sovereign	risk	and	tax	considerations.	Consistent	with	these constraints	and	the	consolidated	funding	activities	described	in	the	"Funding" section	on	page	98,	Citigroup's	primary	objectives	for	liquidity	management	are established	by	entity	and	in	aggregate	across	three	main	operating	entities	as follows:

•	Holding	Company	(Parent);

•	Broker-Dealer	(CGMHI);	and

•	Bank	Entities.

# Management	of	Liquidity

Management	of	liquidity	at	Citigroup	is	the	responsibility	of	the	Treasurer.	A uniform	liquidity	risk	management	policy	exists	for	Citigroup	and	its	major operating	subsidiaries.	Under	this	policy,	there	is	a	single	set	of	standards	for	the measurement	of	liquidity	risk	in	order	to	ensure	consistency	across	businesses, stability	in	methodologies	and	transparency	of	risk.	Management	of	liquidity	at each	operating	subsidiary	and/or	country	is	performed	on	a	daily	basis	and	is monitored	by	Corporate	Treasury	and	independent	risk	management. The	basis	of	Citigroup's	liquidity	management	is	strong	decentralized	liquidity management	at	each	of	its	principal	operating	subsidiaries	and	in	each	of	its countries,	combined	with	an	active	corporate	oversight	function.	As	discussed	in "Capital	Resources"	on	page	94,	Citigroup's	FinALCO	undertakes	this	oversight responsibility	along	with	the	Treasurer.	One	of	the	objectives	of	the	FinALCO	is to	monitor	and	review	the	overall	liquidity	and	balance	sheet	positions	of Citigroup	and	its	principal	subsidiaries.	Similarly,	Asset	and	Liability Committees	are	also	established	for	each	country	and/or	major	line	of	business.

# Monitoring	Liquidity

Each	principal	operating	subsidiary	and/or	country	must	prepare	an	annual funding	and	liquidity	plan	for	review	by	the	Treasurer	and	approval	by independent	risk	management.	The	funding	and	liquidity	plan	includes	analysis of	the	balance	sheet,	as	well	as	the	economic	and	business	conditions	impacting the	liquidity	of	the	major	operating	subsidiary	and/or	country.	As	part	of	the funding	and	liquidity	plan,	liquidity	limits,	liquidity	ratios,	market	triggers,	and assumptions	for	periodic	stress	tests	are	established	and	approved.	At	a minimum,	these	parameters	are	reviewed	on	an	annual	basis.

# Liquidity	Limits

Liquidity	limits	establish	boundaries	for	market	access	in	business-as-usual conditions	and	are	monitored	against	the	liquidity	position	on	a	daily	basis. These	limits	are	established	based	on	the	size	of	the	balance	sheet,	depth	of	the market,	experience	level	of	local	management,	stability	of	the	liabilities	and liquidity	of	the	assets.	Finally,	the	limits	are	subject	to	the	evaluation	of	the entities'	stress	test	results.	Generally,	limits	are	established	such	that	in	stress scenarios,	entities	are	self-funded	or	net	providers	of	liquidity.	Thus,	the	risk tolerance	of	the	liquidity	position	is	limited	based	on	the	capacity	to	cover	the position	in	a	stressed	environment.	These	limits	are	the	key	daily	risk- management	tool	for	the	Parent	and	Bank	Entities.

Within	this	construct,	there	is	a	funding	framework	for	the	Company's activities.	The	primary	benchmark	for	the	Parent	and	Broker-Dealer	is	that,	on	a combined	basis,	Citigroup	maintains	sufficient	liquidity	to	meet	all	maturing unsecured	debt	obligations	due	within	one	year	without	accessing	the	unsecured markets.	The	resulting	"short-term	ratio"	is	monitored	on	a	daily	basis.	The short-term	ratio	consists	of	the	following	significant	components:

# Liquidity	Sources

# •	Cash	and	Liquid	Securities	Portfolio

The	Company	maintains	cash	and	a	portfolio	of	highly	liquid/highly-rated securities	that	could	be	sold	or	financed	on	a	secured	basis.	The	cash	balances are	available	for	same-day	settlement.

# •	Unencumbered	Securities	of	the	Broker-Dealer

CGMHI	has	unencumbered	securities	that	are	available	for	sale	or	can	be financed	on	a	secured	basis.	The	liquidity	assumptions	are	reviewed periodically	to	assess	liquidation	horizons	and	required	margins	in	line	with market	conditions.

As	discussed	further	in	the	"Funding"	section	beginning	on	page	98,	some	of Citigroup's	non-bank	subsidiaries,	including	CGMHI,	have	credit	facilities with	Citigroup's	subsidiary	depository	institutions,	including	Citibank,	N.A. Borrowings	under	these	facilities	must	be	secured	in	accordance	with Section	23A	of	the	Federal	Reserve	Act.

# Liquidity	Obligations

Maturing	commercial	paper	issued	by	CFI.	See	Note	20	to	the	Consolidated Financial	Statements	on	page	168	for	further	information.

# •	LT	Debt	Maturing	Within	12	Months

This	includes	debt	maturing	within	the	next	12	months	of	Citigroup,	CFI	and CGMHI.

# •	Guaranteed	Money	Market	Notes

Represents	a	portion	of	notes	issued	through	Citi's	Private	Bank	via	a	non- bank	subsidiary	that	is	an	element	of	Parent	Company	funding.

# •	Maturing	Bank	Loans

As	further	described	in	Note	20	to	the	Consolidated	Financial	Statements	on page	168,	CGMHI	has	a	series	of	committed	and	uncommitted	third-party bank	facilities	that	it	uses	in	the	ordinary	course	of	business.

# •	Interest	and	Preferred	Dividends

Represents	interest	on	the	Company's	debt	and	dividends	on	its	preferred stock.

# •	Other

At	December	31,	2008,	this	category	included	miscellaneous	payables	and potential	payments	under	letters	of	credit,	legal	settlements	and	structured notes.

In	addition,	a	series	of	funding	and	risk-management	benchmarks	and monitoring	tools	are	established	for	the	parent,	broker-dealer	and	bank	entities, as	further	described	in	the	following	sections	below.

# Liquidity	Ratios

A	series	of	standard	corporate-wide	liquidity	ratios	has	been	established	to monitor	the	structural	elements	of	Citigroup's	liquidity.	As	discussed	on	page 101,	for	the	Parent	and	CGMHI,	ratios	are	established	for	liquid	assets	against short-term	obligations.	For	bank	entities,	key	liquidity	ratios	include	cash	capital (defined	as	core	deposits,	long-term	debt,	and	capital	compared	with	illiquid assets),	liquid	assets	against	liquidity	gaps,	core	deposits	to	loans,	and	deposits to	loans.	Several	measures	exist	to	review	potential	concentrations	of	funding	by individual	name,	product,	industry,	or	geography.	Triggers	for	management discussion,	which	may	result	in	other	actions,	have	been	established	against these	ratios.	In	addition,	each	individual	major	operating	subsidiary	or	country establishes	targets	against	these	ratios	and	may	monitor	other	ratios	as	approved in	its	funding	and	liquidity	plan.

For	CGMHI	and	Bank	Entities,	one	of	the	key	structural	liquidity	measures	is the	cash	capital	ratio.	Cash	capital	is	a	broader	measure	of	the	ability	to	fund	the structurally	illiquid	portion	of	the	Company's	balance	sheet	than	traditional measures	such	as	deposits	to	loans	or	core	deposits	to	loans.	The	ratio	measures the	ability	to	fund	illiquid	assets	with	structurally	long-term	funding	over	one year.	At	December	31,	2008,	both	CGMHI	and	the	aggregate	Bank	Entities	had an	excess	of	structural	long-term	funding	as	compared	with	their	illiquid	assets.

# Market	Triggers

Market	triggers	are	internal	or	external	market	or	economic	factors	that	may imply	a	change	to	market	liquidity	or	Citigroup's	access	to	the	markets. Citigroup	market	triggers	are	monitored	on	a	weekly	basis	by	the	Treasurer	and the	head	of	Risk	Architecture	and	are	presented	to	the	FinALCO.	Appropriate market	triggers	are	also	established	and	monitored	for	each	major	operating subsidiary	and/or	country	as	part	of	the	funding	and	liquidity	plans.	Local triggers	are	reviewed	with	the	local	country	or	business	ALCO	and	independent risk	management.

# Stress	Testing

Simulated	liquidity	stress	testing	is	periodically	performed	for	each	major operating	subsidiary	and/or	country.	A	variety	of	firm-specific	and	market- related	scenarios	are	used	at	the	consolidated	level	and	in	individual	countries. These	scenarios	include	assumptions	about	significant	changes	in	key	funding sources,	credit	ratings,	contingent	uses	of	funding,	and	political	and	economic conditions	in	certain	countries.	The	results	of	stress	tests	of	individual	countries and	operating	subsidiaries	are	reviewed	to	ensure	that	each	individual	major operating	subsidiary	or	country	is	either	a	self-funded	or	net	provider	of liquidity.	In	addition,	a	Contingency	Funding	Plan	is	prepared	on	a	periodic basis	for	Citigroup.	The	plan	includes	detailed	policies,	procedures,	roles	and responsibilities,	and	the	results	of	corporate	stress	tests.	The	product	of	these stress	tests	is	a	series	of	alternatives	that	can	be	used	by	the	Treasurer	in	a liquidity	event.

During	2008,	Citigroup	increased	the	frequency,	duration,	and	severity	of certain	stress	testing,	particularly	related	to	the	interconnection	of	idiosyncratic and	systemic	risk.	In	addition,	in	conformity	with	recommendations	made	by	the Credit	Risk	Management	Policy	Group	III,	Citigroup	instituted	a	30-day maximum	cash	flow	for	some	of	its	key	operating	entities.

CGMHI	monitors	liquidity	by	tracking	asset	levels,	collateral	and	funding availability	to	maintain	flexibility	to	meet	its	financial	commitments.	As	a policy,	CGMHI	attempts	to	maintain	sufficient	capital	and	funding	sources	in order	to	have	the	capacity	to	finance	itself	on	a	fully	collateralized	basis	in	the event	that	its	access	to	uncollateralized	financing	is	temporarily	impaired.	This	is documented	in	CGMHI's	Contingency	Funding	Plan.	This	plan	is	reviewed periodically	to	keep	the	funding	options	current	and	in	line	with	market conditions.	The	management	of	this	plan	includes	an	analysis	used	to	determine CGMHI's	ability	to	withstand	varying	levels	of	stress,	including	rating downgrades,	which	could	impact	its	liquidation	horizons	and	required	margins. CGMHI	maintains	liquidity	reserves	of	cash	and	available	loan	value	of unencumbered	securities	in	excess	of	its	outstanding	short-term	uncollateralized liabilities.	This	is	monitored	on	a	daily	basis.	CGMHI	also	ensures	that	long- term	illiquid	assets	are	funded	with	long-term	liabilities.

# OFF-BALANCE-SHEET	ARRANGEMENTS

Citigroup	and	its	subsidiaries	are	involved	with	several	types	of	off-balance sheet	arrangements,	including	special	purpose	entities	(SPEs),	primarily	in connection	with	securitization	activities	in	the	Consumer	Banking	and Institutional	Clients	Group.	Citigroup	and	its	subsidiaries	use	SPEs	principally to	obtain	liquidity	and	favorable	capital	treatment	by	securitizing	certain	of Citigroup's	financial	assets,	assisting	clients	in	securitizing	their	financial	assets and	creating	investment	products	for	clients.	For	further

# Citi-Administered	Asset-Backed

# Commercial	Paper	Conduits

information	about	the	Company's	securitization	activities	and	involvement	in SPEs,	see	Note	23	to	Notes	to	Consolidated	Financial	Statements	on	page	174 and	"Significant	Accounting	Policies	and	Significant	Estimates— Securitizations"	on	page	18.

The	following	tables	describe	certain	characteristics	of	assets	owned	by	certain identified	significant	unconsolidated	VIEs	as	of	December	31,	2008.	These	VIEs and	the	Company's	exposure	to	the	VIEs	are	described	in	Note	23	to	the Consolidated	Financial	Statements	on	page	174.

|  |  |  |  | Credit	rating	distribution | Credit	rating	distribution |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Total | Weighted |  |  |  |  |
| assets | average |  |  |  |  |
| (in\tbillions) | life | AAA | AA | A | BBB/BBB+ |
| $59.6 | 4.2\tyears | 41% | 45% | 10% | 4% |

|  | %	of	total |
| :--- | :--- |
| Asset\tclass | portfolio |
| Student\tloans | 24% |
| Trade\treceivables | 13% |
| Credit\tcards\tand\tconsumer\tloans | 10% |
| Portfolio\tfinance | 12% |
| Commercial\tloans\tand\tcorporate\tcredit | 17% |
| Export\tfinance | 13% |
| Auto | 8% |
| Residential\tmortgage | 3% |
| Total | 100% |

# Credit	Commitments	and	Lines	of	Credit

The	table	below	summarizes	Citigroup's	credit	commitments	as	of	December	31,	2008	and	December	31,	2007:

|  |  | Outside | December	31, | December	31, |
| :--- | :--- | :--- | :--- | :--- |
| In\tmillions\tof\tdollars | U.S. | of\tU.S. | 2008 | 2007 |
| Financial\tstandby\tletters\tof\tcredit\tand\tforeign\toffice\tguarantees | $68,100 | $26,136 | $94,236 | $87,066 |
| Performance\tstandby\tletters\tof\tcredit\tand\tforeign\toffice\tguarantees | 5,809 | 10,487 | 16,296 | 18,055 |
| Commercial\tand\tsimilar\tletters\tof\tcredit | 2,187 | 6,028 | 8,215 | 9,175 |
| One-\tto\tfour-family\tresidential\tmortgages | 628 | 309 | 937 | 4,587 |
| Revolving\topen-end\tloans\tsecured\tby\tone-\tto\tfour-family |  |  |  |  |
| residential\tproperties | 22,591 | 2,621 | 25,212 | 35,187 |
| Commercial\treal\testate,\tconstruction\tand\tland\tdevelopment | 2,084 | 618 | 2,702 | 4,834 |
| Credit\tcard\tlines\t^(1) | 867,261 | \t 135,176 | 1,002,437 | 1,103,535 |
| Commercial\tand\tother\tconsumer\tloan\tcommitments\t^(2) | 217,818 | 92,179 | 309,997 | 473,631 |
| Total | $1,186,478 | $273,554 | $1,460,032 | $1,736,070 |

(1) Credit	card	lines	are	unconditionally	cancelable	by	the	issuer.

(2) Includes	commercial	commitments	to	make	or	purchase	loans,	to	purchase	third-party	receivables,	and	to	provide	note	issuance	or	revolving	underwriting	facilities.	Amounts	include	$140	billion and	$259	billion	with	original	maturity	of	less	than	one	year	at	December	31,	2008	and	December	31,	2007,	respectively.

See	Note	29	to	the	Consolidated	Financial	Statements	on	page	206	for	additional	information	on	credit	commitments	and	lines	of	credit.

# Contractual	Obligations

The	following	table	includes	aggregated	information	about	Citigroup's contractual	obligations	that	impact	its	short-	and	long-term	liquidity	and	capital needs.	The	table	includes	information	about	payments	due	under	specified contractual	obligations,	aggregated	by	type	of	contractual	obligation.	It	includes the	maturity	profile	of	the	Company's	consolidated	long-term	debt,	operating leases	and	other	long-term	liabilities.	The	Company's	capital	lease	obligations are	included	in	purchase	obligations	in	the	table.

Citigroup's	contractual	obligations	include	purchase	obligations	that	are enforceable	and	legally	binding	for	the	Company.	For	the	purposes	of	the	table below,	purchase	obligations	are	included	through	the	termination	date	of	the respective	agreements,	even	if	the	contract	is	renewable.	Many	of	the	purchase agreements	for	goods	or	services	include	clauses	that	would	allow	the	Company to	cancel	the	agreement	with	specified	notice;	however,	that	impact	is	not included	in	the	table	(unless	Citigroup	has	already	notified	the	counterparty	of its	intention	to	terminate	the	agreement).

Other	liabilities	reflected	on	the	Company's	Consolidated	Balance	Sheet include	obligations	for	goods	and	services	that	have	already	been	received, litigation	settlements,	uncertain	tax	positions,	as	well	as	other	long-term liabilities	that	have	been	incurred	and	will	ultimately	be	paid	in	cash.

Excluded	from	the	following	table	are	obligations	that	are	generally	short	term in	nature,	including	deposit	liabilities	and	securities	sold	under	agreements	to repurchase.	The	table	also	excludes	certain	insurance	and	investment	contracts subject	to	mortality	and	morbidity	risks	or	without	defined	maturities,	such	that the	timing	of	payments	and	withdrawals	is	uncertain.	The	liabilities	related	to these	insurance	and	investment	contracts	are	included	on	the	Consolidated Balance	Sheet	as	Insurance	Policy	and	Claims	Reserves,	Contractholder	Funds, and	Separate	and	Variable	Accounts.

Citigroup's	funding	policy	for	pension	plans	is	generally	to	fund	to	the minimum	amounts	required	by	the	applicable	laws	and	regulations.	At December	31,	2008,	there	were	no	minimum	required	contributions,	and	no contributions	are	currently	planned	for	the	U.S.	pension	plans.	Accordingly,	no amounts	have	been	included	in	the	table	below	for	future	contributions	to	the U.S.	pension	plans.	For	the	non-U.S.	plans,	discretionary	contributions	in	2009 are	anticipated	to	be	approximately	$167	million	and	this	amount	has	been included	in	purchase	obligations	in	the	table	below.	The	estimated	pension	plan contributions	are	subject	to	change,	since	contribution	decisions	are	affected	by various	factors,	such	as	market	performance,	regulatory	and	legal	requirements, and	management's	ability	to	change	funding	policy.	For	additional	information regarding	the	Company's	retirement	benefit	obligations,	see	Note	9	to	the Consolidated	Financial	Statements	on	page	143.

| In	millions	of	dollars	at	year	end | 2009 | 2010 | 2011 | 2012 | 2013 | Thereafter |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Long-term\tdebt\tobligations\t^(1) | $88,472 | $41,431 | $42,112 | $27,999 | $25,955 | $133,624 |
| Operating\tlease\tobligations | 1,470 | 1,328 | 1,134 | 1,010 | 922 | 3,415 |
| Purchase\tobligations | 2,214 | 750 | 700 | 444 | 395 | 1,316 |
| Other\tliabilities\treflected\ton\tthe\tCompany's\tConsolidated\tBalance\tSheet\t^(2) | 38,221 | 792 | 35 | 36 | 38 | 3,193 |
| Total | $130,377 | $44,301 | $43,981 | $29,489 | $27,310 | $141,548 |

(1) For	additional	information	about	long-term	debt	and	trust	preferred	securities,	see	Note	20	to	the	Consolidated	Financial	Statements	on	page	168.

(2) Relates	primarily	to	accounts	payable	and	accrued	expenses	included	in	 Other	liabilities	in	the	Company's	Consolidated	Balance	Sheet.	Also	included	are	various	litigation	settlements.

# PENSION	AND	POSTRETIREMENT	PLANS

The	Company	has	several	non-contributory	defined	benefit	pension	plans covering	substantially	all	U.S.	employees	and	has	various	defined	benefit pension	and	termination	indemnity	plans	covering	employees	outside	the	United States.	The	U.S.	defined	benefit	plan	provides	benefits	under	a	cash	balance formula.	Employees	satisfying	certain	age	and	service	requirements	remain covered	by	a	prior	final	pay	formula.	The	Company	also	offers	postretirement health	care	and	life	insurance	benefits	to	certain	eligible	U.S.	retired	employees, as	well	as	to	certain	eligible	employees	outside	the	United	States.

The	following	table	shows	the	pension	(benefit)	expense	and	contributions	for Citigroup's	plans:

|  |  |  | U.S.	plans | Non-U.S.	plans | Non-U.S.	plans | Non-U.S.	plans |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| In\tmillions\tof\tdollars | 2008 | 2007 | 2006 | 2008 | 2007 | 2006 |
| Pension\t(benefit)\texpense\t^(1)(2) | $(160) | $179 | $182 | $205 | $123 | $115 |
| Company |  |  |  |  |  |  |
| contributions\t^(3) | — | — | — | \t 286 | \t 223 | \t 382 |

(1)The	2008	expense	includes	a	$23	million	curtailment	loss	for	the	U.S.	plans	and	$22	million for	the	non-U.S.	plans	recognized	in	the	fourth	quarter	relating	to	the	Company's restructuring	actions.

(2)The	2006	expense	for	the	U.S.	plans	includes	an	$80	million	curtailment	gain	recognized	as of	September	30,	2006	relating	to	the	Company's	decision	to	freeze	benefit	accruals	for	all cash-balance	participants	after	2007.

(3)In	addition,	the	Company	absorbed	$13	million,	$15	million	and	$20	million	during	2008, 2007	and	2006,	respectively,	relating	to	certain	investment	management	fees	and administration	costs	for	the	U.S.	plans,	which	are	excluded	from	this	table.

The	following	table	shows	the	combined	postretirement	expense	and contributions	for	Citigroup's	U.S.	and	foreign	plans:

|  | U.S.	and	non-U.S.	plans | U.S.	and	non-U.S.	plans | U.S.	and	non-U.S.	plans |
| :--- | :--- | :--- | :--- |
| In\tmillions\tof\tdollars | 2008 | 2007 | 2006 |
| Postretirement\texpense^\t(1) | $115 | $69 | $71 |
| Company\tcontributions | \t 103 | 72 | \t 260 |

(1)The	2008	expense	includes	a	$6	million	curtailment	loss	related	to	the	Company's	fourth- quarter	restructuring	actions.

# Expected	Rate	of	Return

Citigroup	determines	its	assumptions	for	the	expected	rate	of	return	on	plan assets	for	its	U.S.	pension	and	postretirement	plans	using	a	"building	block" approach,	which	focuses	on	ranges	of	anticipated	rates	of	return	for	each	asset class.	A	weighted	range	of	nominal	rates	is	then	determined	based	on	target allocations	to	each	asset	class.	Citigroup	considers	the	expected	rate	of	return	to be	a	long-term	assessment	of	return	expectations	and	does	not	anticipate changing	this	assumption	annually	unless	there	are	significant	changes	in investment	strategy	or	economic	conditions.	This	contrasts	with	the	selection	of the	discount	rate,	future	compensation	increase	rate,	and	certain	other assumptions,	which	are	reconsidered	annually	in	accordance	with	generally accepted	accounting	principles.

The	expected	rate	of	return	for	the	U.S.	pension	and	post-retirement	plans	was 7.75%	at	December	31,	2008	and	8.0%	at	December	31,	2007	and	2006, reflecting	the	performance	of	the	global	capital	markets.	Actual	returns	in	2008 were	less	than	the	expected	returns,	while	actual	returns	in	2007	and	2006	were more	than	the	expected	returns.	This	expected	amount	reflects	the	expected annual	appreciation	of	the	plan	assets	and	reduces	the	annual	pension	expense	of the	Company.	It	is	deducted	from	the	sum	of	service	cost,	interest	and	other components	of	pension	expense	to	arrive	at	the	net	pension	(benefit)	expense. Net	pension	(benefit)	expense	for	the	U.S.	pension	plans	for	2008,	2007	and 2006	reflects	deductions	of	$949,	$889	million	and	$845	million	of	expected returns,	respectively.

# FAIR	VALUATION

The	following	table	shows	the	expected	versus	actual	rate	of	return	on	plan assets	for	the	U.S.	pension	and	postretirement	plans:

For	a	discussion	of	fair	value	of	assets	and	liabilities,	see	"Significant Accounting	Policies	and	Significant	Estimates"	on	page	18	and	Notes	26,	27	and 28	to	the	Consolidated	Financial	Statements	on	pages	191,	200	and	205.

For	the	foreign	plans,	pension	expense	for	2008	was	reduced	by	the	expected return	of	$487	million,	compared	with	the	actual	return	of	$(883)	million. Pension	expense	for	2007	and	2006	was	reduced	by	expected	returns	of	$477 million	and	$384	million,	respectively.	Actual	returns	were	higher	in	2007	and 2006	than	the	expected	returns	in	those	years.

# Discount	Rate

The	2008	and	2007	discount	rates	for	the	U.S.	pension	and	postretirement	plans were	selected	by	reference	to	a	Citigroup-specific	analysis	using	each	plan's specific	cash	flows	and	compared	with	the	Moody's	Aa	Long-Term	Corporate Bond	Yield	for	reasonableness.	Citigroup's	policy	is	to	round	to	the	nearest	tenth of	a	percent.	Accordingly,	at	December	31,	2008,	the	discount	rate	was	set	at 6.1%	for	the	pension	plans	and	at	6.0%	for	the	postretirement	welfare	plans. At	December	31,	2007,	the	discount	rate	was	set	at	6.2%	for	the	pension	plans and	6.0%	for	the	postretirement	plans,	referencing	a	Citigroup-specific	cash	flow analysis.

As	of	September	30,	2006,	the	U.S.	pension	plan	was	remeasured	to	reflect	the freeze	of	benefits	accruals	for	all	non-grandfathered	participants,	effective January	1,	2008.	Under	the	September	30,	2006	remeasurement	and	year-end analysis,	the	resulting	plan-specific	discount	rate	for	the	pension	plan	was 5.86%,	which	was	rounded	to	5.9%.

The	discount	rates	for	the	foreign	pension	and	postretirement	plans	are	selected by	reference	to	high-quality	corporate	bond	rates	in	countries	that	have developed	corporate	bond	markets.	However,	where	developed	corporate	bond markets	do	not	exist,	the	discount	rates	are	selected	by	reference	to	local government	bond	rates	with	a	premium	added	to	reflect	the	additional	risk	for corporate	bonds.

For	additional	information	on	the	pension	and	postretirement	plans,	and	on discount	rates	used	in	determining	pension	and	postretirement	benefit	obligations and	net	benefit	expense	for	the	Company's	plans,	as	well	as	the	effects	of	a	one percentage-point	change	in	the	expected	rates	of	return	and	the	discount	rates, see	Note	9	to	the	Company's	Consolidated	Financial	Statements	on	page	143.

# Adoption	of	SFAS	158

Upon	the	adoption	of	SFAS	No.	158,	Employer's	Accounting	for	Defined	Benefit Pensions	and	Other	Postretirement	Benefits	(SFAS	158),	at	December	31,	2006, the	Company	recorded	an	after-tax	charge	to	equity	of	$1.6	billion,	which corresponds	to	the	plans'	net	pension	and	postretirement	liabilities	and	the	write- off	of	the	existing	prepaid	asset,	which	relates	to	unamortized	actuarial	gains	and losses,	prior	service	costs/benefits	and	transition	assets/liabilities.

# CORPORATE	GOVERNANCE	AND	CONTROLS	AND PROCEDURES

# Corporate	Governance

Citigroup	has	a	Code	of	Conduct	that	maintains	the	Company's	commitment	to the	highest	standards	of	conduct.	The	Company	has	established	an	ethics	hotline for	employees.	The	Code	of	Conduct	is	supplemented	by	a	Code	of	Ethics	for Financial	Professionals	(including	finance,	accounting,	treasury,	tax	and	investor relations	professionals)	that	applies	worldwide.

Both	the	Code	of	Conduct	and	the	Code	of	Ethics	for	Financial	Professionals can	be	found	on	the	Citigroup	Web	site,	www.citigroup.com.	The	Code	of Conduct	can	be	found	by	clicking	on	"About	Citi,"	and	the	Code	of	Ethics	for Financial	Professionals	can	be	found	by	further	clicking	on	"Corporate Governance."	The	Company's	Corporate	Governance	Guidelines	and	the charters	for	the	Audit	and	Risk	Management	Committee,	the	Nomination	and Governance	Committee,	the	Personnel	and	Compensation	Committee,	and	the Public	Affairs	Committee	of	the	Board	are	also	available	under	the	"Corporate Governance"	page,	or	by	writing	to	Citigroup	Inc.,	Corporate	Governance, 425	Park	Avenue,	2nd	Floor,	New	York,	New	York	10043.

# Controls	and	Procedures

# Disclosure

The	Company's	disclosure	controls	and	procedures	are	designed	to	ensure	that information	required	to	be	disclosed	under	the	Exchange	Act	is	accumulated	and communicated	to	management,	including	the	Chief	Executive	Officer	(CEO)	and Chief	Financial	Officer	(CFO),	to	allow	for	timely	decisions	regarding	required disclosure	and	appropriate	SEC	filings.

The	Company's	Disclosure	Committee	is	responsible	for	ensuring	that	there	is an	adequate	and	effective	process	for	establishing,	maintaining	and	evaluating disclosure	controls	and	procedures	for	the	Company's	external	disclosures. The	Company's	management,	with	the	participation	of	the	Company's	CEO and	CFO,	has	evaluated	the	effectiveness	of	the	Company's	disclosure	controls and	procedures	(as	defined	in	Rule	13a-15(e)	under	the	Exchange	Act)	as	of December	31,	2008	and,	based	on	that	evaluation,	the	CEO	and	CFO	have concluded	that	at	that	date	the	Company's	disclosure	controls	and	procedures were	effective.

# Financial	Reporting

There	were	no	changes	in	the	Company's	internal	control	over	financial reporting	(as	defined	in	Rule	13a-15(f)	under	the	Exchange	Act)	during	the	fiscal quarter	ended	December	31,	2008	that	materially	affected,	or	are	reasonably likely	to	materially	affect,	the	Company's	internal	control	over	financial reporting.

# FORWARD-LOOKING	STATEMENTS

When	describing	future	business	conditions	in	this	Annual	Report	on	Form	10- K,	including,	but	not	limited	to,	descriptions	in	the	section	titled	"Management's Discussion	and	Analysis,"	particularly	in	the	"Outlook"	sections,	the	Company makes	certain	statements	that	are	"forward-looking	statements"	within	the meaning	of	the	Private	Securities	Litigation	Reform	Act	of	1995.	The Company's	actual	results	may	differ	materially	from	those	included	in	the forward-looking	statements,	which	are	indicated	by	words	such	as	"believe," "expect,"	"anticipate,"	"intend,"	"estimate,"	"may	increase,"	"may	fluctuate," and	similar	expressions,	or	future	or	conditional	verbs	such	as	"will,"	"should," "would,"	and	"could."

These	forward-looking	statements	are	based	on	management's	current expectations	and	involve	external	risks	and	uncertainties	including,	but	not limited	to,	those	described	under	"Risk	Factors"	beginning	on	page	47.	Other risks	and	uncertainties	disclosed	herein	include,	but	are	not	limited	to:

•	levels	of	activity	and	volatility	in	the	capital	markets;

•	global	economic	conditions,	including	the	level	of	interest	rates,	the	credit environment,	unemployment	rates,	and	political	and	regulatory	developments in	the	U.S.	and	around	the	world;

•	the	impact	the	elimination	of	QSPEs	from	the	guidance	on	SFAS	140	may have	on	Citigroup's	consolidated	financial	statements;

•	the	difficult	environment	surrounding	the	Japan	Consumer	Finance	business and	the	way	courts	will	view	grey	zone	claims;

•	the	effect	continued	deterioration	in	the	U.S.	housing	market	could	have	on	the Consumer	Banking	business'	cost	of	credit	in	the	first	mortgage	and	second mortgage	portfolios;

•	the	effect	of	default	rates	on	the	cost	of	credit;

•	the	dividending	capabilities	of	Citigroup's	subsidiaries;

•	the	effect	that	possible	amendments	to,	and	interpretations	of,	risk-based capital	guidelines	and	reporting	instructions	might	have	on	Citigroup's reported	capital	ratios	and	net	risk-weighted	assets;

•	the	possibility	of	further	adverse	rating	actions	by	credit	rating	agencies	in respect	of	structured	credit	products	or	other	credit-related	exposures	or	of monoline	insurers;

•	the	effectiveness	of	the	hedging	products	used	in	connection	with	Securities and	Banking's	trading	positions	in	U.S.	subprime	RMBS	and	related	products, including	ABS	CDOs,	in	the	event	of	material	changes	in	market	conditions; and

•	the	outcome	of	legal,	regulatory	and	other	proceedings.

# GLOSSARY	OF	TERMS

# Accumulated	Benefit	Obligation	(ABO)—The	actuarial	present	value	of

benefits	(vested	and	unvested)	attributed	to	employee	services	rendered	up	to	the calculation	date.

Adjusted	Average	Assets—Each	year's	fourth	quarter	adjusted	average	of total	GAAP	assets	(net	of	allowance	for	loan	losses)	less	goodwill;	certain	other intangible	assets;	certain	credit-enhancing	interest-only	strips;	investments	in subsidiaries	or	associated	companies	that	the	Federal	Reserve	determines	should be	deducted	from	Tier	1	Capital;	deferred	tax	assets	that	are	dependent	upon future	taxable	income;	and	certain	equity	investments	that	are	subject	to	a deduction	from	Tier	1	Capital.

APB	23	Benefit—In	accordance	with	paragraph	31(a)	of	SFAS	No.	109, "Accounting	for	Income	Taxes"	(SFAS	109),	a	deferred	tax	liability	is	not recognized	for	the	excess	of	the	amount	for	financial	reporting	over	the	tax	basis of	an	investment	in	a	foreign	subsidiary	unless	it	becomes	apparent	that	the temporary	difference	will	reverse	in	the	foreseeable	future.

# Assets	Under	Management	(AUMs)—Assets	held	by	Citigroup	in	a

fiduciary	capacity	for	clients.	These	assets	are	not	included	on	Citigroup's balance	sheet.

Basel	II	—A	new	set	of	risk-based	regulatory	capital	standards	for internationally	active	banking	organizations,	published	June	26,	2004 (subsequently	amended	in	November	2005)	by	the	Basel	Committee	on	Banking Supervision,	which	consists	of	central	banks	and	bank	supervisors	from	13 countries	and	is	organized	under	the	auspices	of	the	Bank	for	International Settlements	("BIS").

Cash-Basis	Formula—A	formula,	within	a	defined	benefit	plan,	that	defines the	ultimate	benefit	as	a	hypothetical	account	balance	based	on	annual	benefit credits	and	interest	earnings.

Cash-Basis	Loans—Loans	in	which	the	borrower	has	fallen	behind	in interest	payments	are	considered	impaired	and	are	classified	as	non-performing or	non-accrual	assets.	In	situations	where	the	lender	reasonably	expects	that	only a	portion	of	the	principal	and	interest	owed	ultimately	will	be	collected,	all payments	are	credited	directly	to	the	outstanding	principal.

Collateralized	Debt	Obligations	(CDOs)—security	issued	by	a	trust,	which is	backed	by	a	pool	of	bonds,	loans,	or	other	assets,	including	residential	or commercial	mortgage-backed	securities	and	other	asset-backed	securities.

Credit	Default	Swap—An	agreement	between	two	parties	whereby	one	party pays	the	other	a	fixed	coupon	over	a	specified	term.	The	other	party	makes	no payment	unless	a	specified	credit	event	such	as	a	default	occurs,	at	which	time	a payment	is	made	and	the	swap	terminates.

Deferred	Tax	Asset—An	asset	attributable	to	deductible	temporary differences	and	carryforwards.	A	deferred	tax	asset	is	measured	using	the applicable	enacted	tax	rate	and	provisions	of	the	enacted	tax	law.

Deferred	Tax	Liability—A	liability	attributable	to	taxable	temporary differences.	A	deferred	tax	liability	is	measured	using	the	applicable	enacted	tax rate	and	provisions	of	the	enacted	tax	law.

Defined	Benefit	Plan—A	retirement	plan	under	which	the	benefits	paid	are based	on	a	specific	formula.	The	formula	is	usually	a	function	of	age,	service and	compensation.	A	non-contributory	plan	does	not	require	employee contributions.

Defined	Contribution	Plan—A	retirement	plan	that	provides	an	individual account	for	each	participant	and	specifies	how	contributions	to	that	account	are to	be	determined,	instead	of	specifying	the	amount	of	benefits	the	participant	will receive.	The	benefits	a	participant	will	receive	depend	solely	on	the	amount contributed	to	the	participant's	account,	the	return	on	investments	of	those contributions,	and	forfeitures	of	other	participants'	benefits	that	may	be	allocated to	such	participant's	account.

Derivative—A	contract	or	agreement	whose	value	is	derived	from	changes	in interest	rates,	foreign	exchange	rates,	prices	of	securities	or	commodities,	or financial	or	commodity	indices.

Federal	Funds—Non-interest-bearing	deposits	held	by	member	banks	at	the Federal	Reserve	Bank.

Foregone	Interest—Interest	on	cash-basis	loans	that	would	have	been	earned at	the	original	contractual	rate	if	the	loans	were	on	accrual	status.

# Generally	Accepted	Accounting	Principles	(GAAP)—Accounting	rules

and	conventions	defining	acceptable	practices	in	preparing	financial	statements in	the	United	States	of	America.	The	Financial	Accounting	Standards	Board (FASB),	an	independent,	self-regulatory	organization,	is	the	primary	source	of accounting	rules.

Interest-Only	(or	IO)	Strip—A	residual	interest	in	securitization	trusts representing	the	remaining	value	of	expected	net	cash	flows	to	the	Company after	payments	to	third-party	investors	and	net	credit	losses.

Leverage	Ratio—The	Leverage	Ratio	is	calculated	by	dividing	Tier	1	Capital by	leverage	assets.	Leverage	assets	are	defined	as	each	year's	fourth	quarter adjusted	average	of	total	assets,	net	of	goodwill,	intangibles	and	certain	other items	as	required	by	the	Federal	Reserve.

Managed	Average	Yield—Gross	managed	interest	revenue	earned,	divided by	average	managed	loans.

Managed	Basis—Managed	basis	presentation	includes	results	from	both	on- balance-sheet	loans	and	off-balance-sheet	loans,	and	excludes	the	impact	of	card securitization	activity.	Managed	basis	disclosures	assume	that	securitized	loans have	not	been	sold	and	present	the	result	of	the	securitized	loans	in	the	same manner	as	the	Company's	owned	loans.

Managed	Loans—Includes	loans	classified	as	Loans	on	the	balance	sheet	plus loans	held-for-sale	that	are	included	in	other	assets	plus	securitized	receivables. These	are	primarily	credit	card	receivables.

Managed	Net	Credit	Losses—Net	credit	losses	adjusted	for	the	effect	of credit	card	securitizations.	See	Managed	Loans.

Market-Related	Value	of	Plan	Assets—A	balance	used	to	calculate	the expected	return	on	pension-plan	assets.	Market-related	value	can	be	either	fair value	or	a	calculated	value	that	recognizes	changes	in	fair	value	in	a	systematic and	rational	manner	over	not	more	than	five	years.

Minority	Interest—When	a	parent	owns	a	majority	(but	less	than	100%)	of	a subsidiary's	stock,	the	Consolidated	Financial	Statements	must	reflect	the minority's	interest	in	the	subsidiary.	The	minority	interest	as	shown	in	the Consolidated	Statement	of	Income	is	equal	to	the	minority's	proportionate	share of	the	subsidiary's	net	income	and,	as	included	in	Other	Liabilities	on	the Consolidated	Balance	Sheet,	is	equal	to	the	minority's	proportionate	share	of	the subsidiary's	net	assets.

Mortgage	Servicing	Rights	(MSRs)—An	intangible	asset	representing servicing	rights	retained	in	the	securitization	of	mortgage	loans.

Net	Credit	Losses—Gross	credit	losses	(write-offs)	less	gross	credit recoveries.

Net	Credit	Loss	Ratio—Annualized	net	credit	losses	divided	by	average loans	outstanding.

Net	Credit	Margin—Revenues	less	net	credit	losses.

Net	Excess	Spread	Revenue—Net	cash	flows	from	our	credit	card securitization	activities	that	are	returned	to	the	Company,	less	the	amortization of	previously	recorded	revenue	(i.e.,	residual	interest)	related	to	prior	periods' securitizations.	The	net	cash	flows	include	collections	of	interest	income	and	fee revenue	in	excess	of	the	interest	paid	to	securitization	trust	investors,	reduced	by net	credit	losses,	servicing	fees,	and	other	costs	related	to	the	securitized receivables.

Net	Interest	Revenue	(NIR)—Interest	revenue	less	interest	expense.

Net	Interest	Margin—Interest	revenue	less	interest	expense	divided	by average	interest-earning	assets.

Non-Qualified	Plan—A	retirement	plan	that	is	not	subject	to	certain	Internal Revenue	Code	requirements	and	subsequent	regulations.	Contributions	to	non- qualified	plans	do	not	receive	tax-favored	treatment;	the	employer's	tax deduction	is	taken	when	the	benefits	are	paid	to	participants.

Notional	Amount—The	principal	balance	of	a	derivative	contract	used	as	a reference	to	calculate	the	amount	of	interest	or	other	payments.

On-Balance-Sheet	Loans—Loans	originated	or	purchased	by	the	Company that	reside	on	the	balance	sheet	at	the	date	of	the	balance	sheet.

Other	Real	Estate	Owned	(OREO)—The	carrying	value	of	all	property acquired	by	foreclosure	or	other	legal	proceedings	when	the	Company	has	taken possession	of	the	collateral.

Projected	Benefit	Obligation	(PBO)—The	actuarial	present	value	of	all pension	benefits	accrued	for	employee	service	rendered	prior	to	the	calculation date,	including	an	allowance	for	future	salary	increases	if	the	pension	benefit	is based	on	future	compensation	levels.

Purchase	Sales—Customers'	credit	card	purchase	sales	plus	cash	advances.

Qualified	Plan—A	retirement	plan	that	satisfies	certain	requirements	of	the Internal	Revenue	Code	and	provides	benefits	on	a	tax-deferred	basis. Contributions	to	qualified	plans	are	tax	deductible.

Qualifying	SPE	(QSPE)—A	Special	Purpose	Entity	that	is	very	limited	in	its activities	and	in	the	types	of	assets	it	can	hold.	It	is	a	passive	entity	and	may	not engage	in	active	decision	making.	QSPE	status	allows	the	seller	to	remove	assets transferred	to	the	QSPE	from	its	books,	achieving	sale	accounting.	QSPEs	are not	consolidated	by	the	seller	or	the	investors	in	the	QSPE.

Return	on	Assets—Annualized	income	divided	by	average	assets.

Return	on	Common	Equity—Annualized	income	less	preferred	stock dividends,	divided	by	average	common	equity.

# Securities	Purchased	Under	Agreements	to	Resell	(Reverse	Repo

Agreements)—An	agreement	between	a	seller	and	a	buyer,	generally	of government	or	agency	securities,	whereby	the	buyer	agrees	to	purchase	the securities	and	the	seller	agrees	to	repurchase	them	at	an	agreed-upon	price	at	a future	date.

# Securities	Sold	Under	Agreements	to	Repurchase	(Repurchase

Agreements)—An	agreement	between	a	seller	and	a	buyer,	generally	of government	or	agency	securities,	whereby	the	seller	agrees	to	repurchase	the securities	at	an	agreed-upon	price	at	a	future	date.

Securitizations—A	process	by	which	a	legal	entity	issues	to	investors	certain securities	which	pay	a	return	based	on	the	principal	and	interest	cash	flows	from a	pool	of	loans	or	other	financial	assets.

Significant	Unconsolidated	VIE—An	entity	where	the	Company	has	any variable	interest,	including	those	where	the	likelihood	of	loss,	or	the	notional amount	of	exposure,	is	small.	Variable	interests	are	ownership	interests,	debt securities,	contractual	arrangements	or	other	pecuniary	interests	in	an	entity	that absorbs	the	VIE's	expected	losses	and/or	returns.

Special	Purpose	Entity	(SPE)—An	entity	in	the	form	of	a	trust	or	other legal	vehicle,	designed	to	fulfill	a	specific	limited	need	of	the	company	that organized	it	(such	as	a	transfer	of	risk	or	desired	tax	treatment).

Standby	Letter	of	Credit—An	obligation	issued	by	a	bank	on	behalf	of	a bank	customer	to	a	third	party	where	the	bank	promises	to	pay	the	third	party, contingent	upon	the	failure	by	the	bank's	customer	to	perform	under	the	terms	of the	underlying	contract	with	the	beneficiary,	or	it	obligates	the	bank	to	guarantee or	stand	as	a	surety	for	the	benefit	of	the	third	party	to	the	extent	permitted	by law	or	regulation.

TARP—Troubled	Asset	Relief	Program	established	by	the	Emergency Economic	Stabilization	Act	of	2008,	under	which	broad	authority	was	conferred upon	the	U.S.	Department	of	the	Treasury	to	undertake	various	programs	and initiatives	to	aid	in	the	restoration	of	stability	and	liquidity	to	U.S.	financial markets	and	strengthen	U.S.	financial	institutions.	Among	the	mechanisms employed	under	the	Troubled	Asset	Relief	Program	to	enhance	the	capital	of U.S.	financial	institutions	are	the	Capital	Purchase	Program	and	the	Targeted Investment	Program.

Tier	1	and	Tier	2	Capital—Tier	1	Capital	includes	common	stockholders' equity	(excluding	certain	components	of	accumulated	other	comprehensive income),	qualifying	perpetual	preferred	stock,	qualifying	mandatorily redeemable	securities	of	subsidiary	trusts,	and	minority	interests	that	are	held	by others,	less	certain	intangible	assets.	Tier	2	Capital	includes,	among	other	items, perpetual	preferred	stock	to	the	extent	that	it	does	not	qualify	for	Tier	1, qualifying	senior	and	subordinated	debt,	limited-life	preferred	stock,	and	the allowance	for	credit	losses,	subject	to	certain	limitations.

Unearned	Compensation—The	unamortized	portion	of	a	grant	to	employees of	restricted	or	deferred	stock	measured	at	the	market	value	on	the	date	of	grant. Unearned	compensation	is	displayed	as	a	reduction	of	stockholders'	equity	in	the Consolidated	Balance	Sheet.

Unfunded	Commitments—Legally	binding	agreements	to	provide	financing at	a	future	date.

Variable	Interest	Entity	(VIE)—An	entity	that	does	not	have	enough	equity to	finance	its	activities	without	additional	subordinated	financial	support	from third	parties.	VIEs	may	include	entities	with	equity	investors	that	cannot	make significant	decisions	about	the	entity's	operations.	A	VIE	must	be	consolidated by	its	primary	beneficiary,	if	any,	which	is	the	party	that	has	the	majority	of	the expected	losses	or	residual	returns	of	the	VIE	or	both.

# MANAGEMENT'S	REPORT	ON	INTERNAL	CONTROL	OVER	FINANCIAL	REPORTING

The	management	of	Citigroup	is	responsible	for	establishing	and	maintaining adequate	internal	control	over	financial	reporting	(as	defined	in	Rule	13a-15(f) under	the	Exchange	Act).	Citigroup's	internal	control	system	was	designed	to provide	reasonable	assurance	to	the	Company's	management	and	Board	of Directors	regarding	the	preparation	and	fair	presentation	of	published	financial statements	in	accordance	with	U.S.	generally	accepted	accounting	principles.	All internal	control	systems,	no	matter	how	well	designed,	have	inherent	limitations. Therefore,	even	those	systems	determined	to	be	effective	can	provide	only reasonable	assurance	with	respect	to	financial	statement	preparation	and presentation.

Management	maintains	a	comprehensive	system	of	controls	intended	to	ensure that	transactions	are	executed	in	accordance	with	management's	authorization, assets	are	safeguarded,	and	financial	records	are	reliable.	Management	also	takes steps	to	ensure	that	information	and	communication	flows	are	effective	and	to monitor	performance,	including	performance	of	internal	control	procedures. Citigroup	management	assessed	the	effectiveness	of	the	Company's	internal control	over	financial	reporting	as	of	December	31,	2008	based	on	the	criteria	set forth	by	the	Committee	of	Sponsoring	Organizations	of	the	Treadway Commission	(COSO)	in	Internal	Control-Integrated	Framework.	Based	on	this assessment,	management	believes	that,	as	of	December	31,	2008,	the	Company's internal	control	over	financial	reporting	is	effective.

The	effectiveness	of	the	Company's	internal	control	over	financial	reporting	as of	December	31,	2008	has	been	audited	by	KPMG	LLP,	the	Company's independent	registered	public	accounting	firm,	as	stated	in	their	report	appearing on	page	112,	which	expressed	an	unqualified	opinion	on	the	effectiveness	of	the Company's	internal	control	over	financial	reporting	as	of	December	31,	2008.

# REPORT	OF	INDEPENDENT	REGISTERED	PUBLIC	ACCOUNTING	FIRM—	INTERNAL	CONTROL	OVER	FINANCIAL

# REPORTING

# The	Board	of	Directors	and	Stockholders

# Citigroup	Inc.:

We	have	audited	Citigroup	Inc.	and	subsidiaries'	(the	"Company"	or "Citigroup")	internal	control	over	financial	reporting	as	of	December	31,	2008, based	on	criteria	established	in	Internal	Control—Integrated	Framework	issued by	the	Committee	of	Sponsoring	Organizations	of	the	Treadway	Commission (COSO).	The	Company's	management	is	responsible	for	maintaining	effective internal	control	over	financial	reporting	and	for	its	assessment	of	the effectiveness	of	internal	control	over	financial	reporting,	included	in	the accompanying	management's	report	on	internal	control	over	financial	reporting. Our	responsibility	is	to	express	an	opinion	on	the	Company's	internal	control over	financial	reporting	based	on	our	audit.

We	conducted	our	audit	in	accordance	with	the	standards	of	the	Public Company	Accounting	Oversight	Board	(United	States).	Those	standards	require that	we	plan	and	perform	the	audit	to	obtain	reasonable	assurance	about	whether effective	internal	control	over	financial	reporting	was	maintained	in	all	material respects.	Our	audit	included	obtaining	an	understanding	of	internal	control	over financial	reporting,	assessing	the	risk	that	a	material	weakness	exists,	and	testing and	evaluating	the	design	and	operating	effectiveness	of	internal	control	based on	the	assessed	risk.	Our	audit	also	included	performing	such	other	procedures	as we	considered	necessary	in	the	circumstances.	We	believe	that	our	audit provides	a	reasonable	basis	for	our	opinion.

A	company's	internal	control	over	financial	reporting	is	a	process	designed	to provide	reasonable	assurance	regarding	the	reliability	of	financial	reporting	and the	preparation	of	financial	statements	for	external	purposes	in	accordance	with generally	accepted	accounting	principles.	A	company's	internal	control	over financial	reporting	includes	those	policies	and	procedures	that	(1)	pertain	to	the maintenance	of	records	that,	in	reasonable	detail,	accurately	and	fairly	reflect	the transactions	and	dispositions	of	the	assets	of	the	company;	(2)	provide reasonable	assurance	that	transactions	are	recorded	as	necessary	to	permit preparation	of	financial	statements	in	accordance	with	generally	accepted accounting	principles,	and	that	receipts	and	expenditures	of	the	company	are being	made	only	in	accordance	with	authorizations	of	management	and	directors of	the	company;	and	(3)	provide	reasonable	assurance	regarding	prevention	or timely	detection	of	unauthorized	acquisition,	use,	or	disposition	of	the company's	assets	that	could	have	a	material	effect	on	the	financial	statements. Because	of	its	inherent	limitations,	internal	control	over	financial	reporting may	not	prevent	or	detect	misstatements.	Also,	projections	of	any	evaluation	of effectiveness	to	future	periods	are	subject	to	the	risk	that	controls	may	become inadequate	because	of	changes	in	conditions,	or	that	the	degree	of	compliance with	the	policies	or	procedures	may	deteriorate.

In	our	opinion,	Citigroup	maintained,	in	all	material	respects,	effective	internal control	over	financial	reporting	as	of	December	31,	2008,	based	on	criteria established	in	Internal	Control—Integrated	Framework	issued	by	the	Committee of	Sponsoring	Organizations	of	the	Treadway	Commission.

We	also	have	audited,	in	accordance	with	the	standards	of	the	Public	Company Accounting	Oversight	Board	(United	States),	the	consolidated	balance	sheets	of Citigroup	as	of	December	31,	2008	and	2007,	and	the	related	consolidated statements	of	income,	changes	in	stockholders'	equity	and	cash	flows	for	each	of the	years	in	the	three-year	period	ended	December	31,	2008,	and	our	report	dated February	27,	2009	expressed	an	unqualified	opinion	on	those	consolidated financial	statements.

# REPORT	OF	INDEPENDENT	REGISTERED	PUBLIC	ACCOUNTING	FIRM—	CONSOLIDATED	FINANCIAL

# STATEMENTS

We	have	audited	the	accompanying	consolidated	balance	sheets	of	Citigroup Inc.	and	subsidiaries	(the	"Company"	or	"Citigroup")	as	of	December	31,	2008 and	2007,	and	the	related	consolidated	statements	of	income,	changes	in stockholders'	equity	and	cash	flows	for	each	of	the	years	in	the	three-year	period ended	December	31,	2008,	and	the	related	consolidated	balance	sheets	of Citibank,	N.A.	and	subsidiaries	as	of	December	31,	2008	and	2007.	These consolidated	financial	statements	are	the	responsibility	of	the	Company's management.	Our	responsibility	is	to	express	an	opinion	on	these	consolidated financial	statements	based	on	our	audits.

We	conducted	our	audits	in	accordance	with	the	standards	of	the	Public Company	Accounting	Oversight	Board	(United	States).	Those	standards	require that	we	plan	and	perform	the	audit	to	obtain	reasonable	assurance	about	whether the	financial	statements	are	free	of	material	misstatement.	An	audit	includes examining,	on	a	test	basis,	evidence	supporting	the	amounts	and	disclosures	in the	financial	statements.	An	audit	also	includes	assessing	the	accounting principles	used	and	significant	estimates	made	by	management,	as	well	as evaluating	the	overall	financial	statement	presentation.	We	believe	that	our audits	provide	a	reasonable	basis	for	our	opinion.

In	our	opinion,	the	consolidated	financial	statements	referred	to	above	present fairly,	in	all	material	respects,	the	financial	position	of	Citigroup	as	of December	31,	2008	and	2007,	the	results	of	its	operations	and	its	cash	flows	for each	of	the	years	in	the	three-year	period	ended	December	31,	2008,	and	the financial	position	of	Citibank,	N.A.	and	subsidiaries	as	of	December	31,	2008 and	2007,	in	conformity	with	U.S.	generally	accepted	accounting	principles. As	discussed	in	Note	1	to	the	consolidated	financial	statements,	in	2007	the Company	changed	its	methods	of	accounting	for	fair	value	measurements,	the fair	value	option	for	financial	assets	and	financial	liabilities,	uncertainty	in income	taxes	and	cash	flows	relating	to	income	taxes	generated	by	a	leverage lease	transaction.

We	also	have	audited,	in	accordance	with	the	standards	of	the	Public	Company Accounting	Oversight	Board	(United	States),	Citigroup's	internal	control	over financial	reporting	as	of	December	31,	2008,	based	on	criteria	established	in Internal	Control—Integrated	Framework	issued	by	the	Committee	of	Sponsoring Organizations	of	the	Treadway	Commission	(COSO),	and	our	report	dated February	27,	2009	expressed	an	unqualified	opinion	on	the	effectiveness	of	the Company's	internal	control	over	financial	reporting.

# FINANCIAL	STATEMENTS	AND	NOTES	TABLE	OF	CONTENTS

# CONSOLIDATED	FINANCIAL	STATEMENTS

# CONSOLIDATED	STATEMENT	OF	INCOME

(1) Diluted	shares	used	in	the	diluted	EPS	calculation	represent	basic	shares	for	2008	due	to	the	net	loss.	Using	actual	diluted	shares	would	result	in	anti-dilution.

See	Notes	to	the	Consolidated	Financial	Statements.

# CONSOLIDATED	BALANCE	SHEET

| CONSOLIDATED	BALANCE	SHEET | Citigroup	Inc.	and	Subsidiaries | Citigroup	Inc.	and	Subsidiaries |
| :--- | :--- | :--- |
|  |  | December\t31 |
| In\tmillions\tof\tdollars,\texcept\tshares | 2008 | 2007 |
| Assets |  |  |
| Cash\tand\tdue\tfrom\tbanks\t(including\tsegregated\tcash\tand\tother\tdeposits) | $29,253 | $38,206 |
| Deposits\twith\tbanks | 170,331 | 69,366 |
| Federal\tfunds\tsold\tand\tsecurities\tborrowed\tor\tpurchased\tunder\tagreements\tto\tresell\t(including\t$70,305\tand\t$84,305\tas\tof\tDecember\t31,\t2008\tand\tDecember\t31,\t2007, |  |  |
| respectively,\tat\tfair\tvalue) | 184,133 | 274,066 |
| Brokerage\treceivables | 44,278 | 57,359 |
| Trading\taccount\tassets\t(including\t$148,703\tand\t$157,221\tpledged\tto\tcreditors\tat\tDecember\t31,\t2008\tand\tDecember\t31,\t2007,\trespectively) | 377,635 | 538,984 |
| Investments\t(including\t$14,875\tand\t$21,449\tpledged\tto\tcreditors\tat\tDecember\t31,\t2008\tand\tDecember\t31,\t2007,\trespectively) | 256,020 | 215,008 |
| Loans,\tnet\tof\tunearned\tincome |  |  |
| Consumer\t(including\t$36\tat\tfair\tvalue\tas\tof\tDecember\t31,\t2008) | 519,673 | 592,307 |
| Corporate\t(including\t$2,696\tand\t$3,727\tat\tDecember\t31,\t2008\tand\tDecember\t31,\t2007,\trespectively,\tat\tfair\tvalue) | 174,543 | 185,686 |
| Loans,\tnet\tof\tunearned\tincome | $694,216 | $777,993 |
| Allowance\tfor\tloan\tlosses | (29,616) | (16,117) |
| Total\tloans,\tnet | $664,600 | $761,876 |
| Goodwill | 27,132 | 41,053 |
| Intangible\tassets\t(other\tthan\tMSRs) | 14,159 | 14,307 |
| Mortgage\tservicing\trights\t(MSRs)\t(including\t$5,657\tand\t$8,380\tat\tDecember\t31,\t2008\tand\tDecember\t31,\t2007,\trespectively,\tat\tfair\tvalue) | 5,657 | 8,380 |
| Other\tassets\t(including\t$5,722\tand\t$9,802\tas\tof\tDecember\t31,\t2008\tand\tDecember\t31,\t2007\trespectively,\tat\tfair\tvalue) | 165,272 | 168,875 |
| Total\tassets | $1,938,470 | $2,187,480 |
| Liabilities |  |  |
| Non-interest-bearing\tdeposits\tin\tU.S.\toffices | $60,070 | $40,859 |
| Interest-bearing\tdeposits\tin\tU.S.\toffices\t(including\t$1,335\tand\t$1,337\tat\tDecember\t31,\t2008\tand\tDecember\t31,\t2007,\trespectively,\tat\tfair\tvalue) | 229,906 | 225,198 |
| Non-interest-bearing\tdeposits\tin\toffices\toutside\tthe\tU.S. | 37,412 | 43,335 |
| Interest-bearing\tdeposits\tin\toffices\toutside\tthe\tU.S.\t(including\t$1,271\tand\t$2,261\tat\tDecember\t31,\t2008\tand\tDecember\t31,\t2007,\trespectively,\tat\tfair\tvalue) | 446,797 | 516,838 |
| Total\tdeposits | $774,185 | $826,230 |
| Federal\tfunds\tpurchased\tand\tsecurities\tloaned\tor\tsold\tunder\tagreements\tto\trepurchase\t(including\t$138,866\tand\t$199,854\tas\tof\tDecember\t31,\t2008\tand\tDecember\t31, |  |  |
| 2007,\trespectively,\tat\tfair\tvalue) | 205,293 | 304,243 |
| Brokerage\tpayables | 70,916 | 84,951 |
| Trading\taccount\tliabilities | 167,478 | 182,082 |
| Short-term\tborrowings\t(including\t$17,607\tand\t$13,487\tat\tDecember\t31,\t2008\tand\tDecember\t31,\t2007,\trespectively,\tat\tfair\tvalue) | 126,691 | 146,488 |
| Long-term\tdebt\t(including\t$27,263\tand\t$79,312\tat\tDecember\t31,\t2008\tand\tDecember\t31,\t2007,\trespectively,\tat\tfair\tvalue) | 359,593 | 427,112 |
| Other\tliabilities\t(including\t$3,696\tand\t$1,568\tas\tof\tDecember\t31,\t2008\tand\tDecember\t31,\t2007,\trespectively,\tat\tfair\tvalue) | 92,684 | 102,927 |
| Total\tliabilities | $1,796,840 | $2,074,033 |
| Stockholders'\tequity |  |  |
| Preferred\tstock\t($1.00\tpar\tvalue;\tauthorized\tshares:\t30\tmillion),\tissued\tshares:\t 828,573\tat\tDecember\t31,\t2008,\tat\taggregate\tliquidation\tvalue | $70,664 | $— |
| Common\tstock\t($0.01\tpar\tvalue;\tauthorized\tshares:\t15\tbillion),\tissued\tshares:\t 5,671,743,807\tat\tDecember\t31,\t2008\tand\t5,477,416,086\tat\tDecember\t31,\t2007 | 57 | 55 |
| Additional\tpaid-in\tcapital | 19,165 | 18,007 |
| Retained\tearnings^\t(1) | 86,521 | 121,769 |
| Treasury\tstock,\tat\tcost:\t2008—221,675,719\tshares\tand\t2007—482,834,568\tshares | (9,582) | (21,724) |
| Accumulated\tother\tcomprehensive\tincome\t(loss) | (25,195) | (4,660) |
| Total\tstockholders'\tequity | $141,630 | $113,447 |
| Total\tliabilities\tand\tstockholders'\tequity | $1,938,470 | $2,187,480 |

(1) Citigroup's	opening	Retained	earnings	balance	has	been	reduced	by	$151	million	to	reflect	a	prior	period	adjustment	to	 Goodwill.	This	reduction	adjusts	Goodwill	to	reflect	a	portion	of	the	losses incurred	in	January	2002,	related	to	the	sale	of	an	Argentinean	subsidiary	of	Banamex,	Bansud,	that	was	recorded	as	an	adjustment	to	the	purchase	price	of	Banamex.	There	is	no	tax	benefit	and there	is	no	income	statement	impact	from	this	adjustment.

# CONSOLIDATED	STATEMENT	OF	CHANGES	IN	STOCKHOLDERS'	EQUITY

|  |  |  |  | Year	ended	December	31 | Year	ended	December	31 | Year	ended	December	31 |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  |  | Amounts |  |  | Shares |
| In\tmillions\tof\tdollars,\texcept\tshares\tin\tthousands | 2008 | 2007 | 2006 | 2008 | 2007 | 2006 |
| Preferred\tstock\tat\taggregate\tliquidation\tvalue |  |  |  |  |  |  |
| Balance,\tbeginning\tof\tyear | $— | $1,000\t\t\t $ | 1,125 | — | 4,000 | 4,250 |
| Redemption\tor\tretirement\tof\tpreferred\tstock | — | (1,000) | (125) | — | (4,000) | (250) |
| Issuance\tof\tnew\tpreferred\tstock | 70,664 | — | — | 829 | — | — |
| Balance,\tend\tof\tyear | $70,664 | $—\t\t\t $ | 1,000 | 829 | — | 4,000 |
| Common\tstock\tand\tadditional\tpaid-in\tcapital |  |  |  |  |  |  |
| Balance,\tbeginning\tof\tyear | $18,062 | $18,308\t\t\t $ | 17,538 | 5,477,416 | 5,477,416 | 5,477,416 |
| Employee\tbenefit\tplans | (1,921) | 455 | 769 | — | — | — |
| Issuance\tof\tnew\tcommon\tstock | 4,911 | — | — | 194,328 | — | — |
| Issuance\tof\tshares\tfor\tNikko\tacquisition | (3,500) | — | — | — | — | — |
| Issuance\tof\tTARP\tI\t&amp;\tII\twarrants | 1,797 | — | — | — | — | — |
| Issuance\tof\tshares\tfor\tGrupo\tCuscatlán\tacquisition | — | 118 | — | — | — | — |
| Issuance\tof\tshares\tfor\tATD\tacquisition | — | 74 | — | — | — | — |
| Present\tvalue\tof\tstock\tpurchase\tcontract\tpayments | — | (888) | — | — | — | — |
| Other | (127) | (5) | 1 | — | — | — |
| Balance,\tend\tof\tyear | $19,222 | $18,062\t\t\t $ | 18,308 | 5,671,744 | 5,477,416 | 5,477,416 |
| Retained\tearnings |  |  |  |  |  |  |
| Balance,\tbeginning\tof\tyear^\t(1) | $ 121,769 | $ 129,116\t\t\t $ 117,404 | $ 129,116\t\t\t $ 117,404 |  |  |  |
| Adjustment\tto\topening\tbalance,\tnet\tof\ttaxes\t^(2) | — | (186) | — |  |  |  |
| Adjusted\tbalance,\tbeginning\tof\tperiod | $ 121,769 | $ 128,930\t\t\t $ 117,404 | $ 128,930\t\t\t $ 117,404 |  |  |  |
| Net\tincome\t(loss) | (27,684) | 3,617 | 21,538 |  |  |  |
| Common\tdividends\t^(3) | (6,050) | (10,733) | (9,761) |  |  |  |
| Preferred\tdividends | (1,514) | (45) | (65) |  |  |  |
| Balance,\tend\tof\tyear | $86,521 | $ 121,769\t\t\t $ 129,116 | $ 121,769\t\t\t $ 129,116 |  |  |  |
| Treasury\tstock,\tat\tcost |  |  |  |  |  |  |
| Balance,\tbeginning\tof\tyear | $(21,724) | $(25,092)\t\t $ | (21,149) | (482,835) | (565,422) | (497,192) |
| Issuance\tof\tshares\tpursuant\tto\temployee\tbenefit\tplans | 4,270 | 2,853 | 3,051 | 84,724 | 68,839 | 75,631 |
| Treasury\tstock\tacquired\t^(4) | (7) | (663) | (7,000) | (343) | (12,463) | (144,033) |
| Issuance\tof\tshares\tfor\tNikko\tacquisition | 7,858 | — | — | 174,653 | — | — |
| Issuance\tof\tshares\tfor\tGrupo\tCuscatlán\tacquisition | — | 637 | — | — | 14,192 | — |
| Issuance\tof\tshares\tfor\tATD\tacquisition | — | 503 | — | — | 11,172 | — |
| Other | 21 | 38 | 6 | 2,125 | 847 | 172 |
| Balance,\tend\tof\tyear | $(9,582) | $(21,724)\t\t $ | (25,092) | (221,676) | (482,835) | (565,422) |

# (Statement	continues	on	next	page)

# CONSOLIDATED	STATEMENT	OF	CHANGES	IN	STOCKHOLDERS'	EQUITY (Continued)

| . | Year	ended	December	31 | Year	ended	December	31 | Year	ended	December	31 | Year	ended	December	31 | Year	ended	December	31 | Year	ended	December	31 |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  |  | Amounts | Shares | Shares | Shares |
| In\tmillions\tof\tdollars,\texcept\tshares\tin\tthousands | 2008 | 2007 | 2006 | 2008 | 2007 | 2006 |
| Accumulated\tother\tcomprehensive\tincome\t(loss) |  |  |  |  |  |  |
| Balance,\tbeginning\tof\tyear | $(4,660) | $(3,700)\t\t $ | (2,532) |  |  |  |
| Adjustment\tto\topening\tbalance,\tnet\tof\ttaxes\t^(5) | — | 149 | — |  |  |  |
| Adjusted\tbalance,\tbeginning\tof\tperiod | $(4,660) | $(3,551)\t\t $ | (2,532) |  |  |  |
| Net\tchange\tin\tunrealized\tgains\tand\tlosses\ton\tinvestment\tsecurities,\tnet\tof\ttaxes | (10,118) | (621) | (141) |  |  |  |
| Net\tchange\tin\tcash\tflow\thedges,\tnet\tof\ttaxes | (2,026) | (3,102) | (673) |  |  |  |
| Net\tchange\tin\tforeign\tcurrency\ttranslation\tadjustment,\tnet\tof\ttaxes | (6,972) | 2,024 | 1,294 |  |  |  |
| Pension\tliability\tadjustment,\tnet\tof\ttaxes\t^(6) | (1,419) | 590 | (1) |  |  |  |
| Adjustments\tto\tinitially\tapply\tSFAS\t158,\tnet\tof\ttaxes | — | — | (1,647) |  |  |  |
| Net\tchange\tin\tAccumulated\tother\tcomprehensive\tincome\t(loss) | $(20,535) | $(1,109)\t\t $ | (1,168) |  |  |  |
| Balance,\tend\tof\tyear | $(25,195) | $(4,660)\t\t $ | (3,700) |  |  |  |
| Total\tcommon\tstockholders'\tequity\tand\tcommon\tshares\toutstanding | $70,966 | $113,447\t\t\t $ | 118,632 | 5,450,068 | 4,994,581 | 4,911,994 |
| Total\tstockholders'\tequity | $141,630 | $113,447\t\t\t $ | 119,632 |  |  |  |
| Comprehensive\tincome\t(loss) |  |  |  |  |  |  |
| Net\tincome\t(loss) | $(27,684) | $3,617\t\t\t $ | 21,538 |  |  |  |
| Net\tchange\tin\tAccumulated\tother\tcomprehensive\tincome\t(loss) | (20,535) | (1,109) | (1,168) |  |  |  |
| Comprehensive\tincome\t(loss) | $(48,219) | $2,508\t\t\t $ | 20,370 |  |  |  |

(2) The	adjustment	to	the	opening	balance	of	Retained	earnings	represents	the	total	of	the	after-tax	gain	(loss)	amounts	for	the	adoption	of	the	following	accounting	pronouncements: •SFAS	157	for	$75	million,

See	Notes	1,	26	and	27	to	the	Consolidated	Financial	Statements	on	pages	121,	191	and	200,	respectively.

(3) Common	dividends	declared	were	as	follows:	$0.32	per	share	in	the	first,	second	and	third	quarters	of	2008,	$0.16	in	the	fourth	quarter	of	2008;	$0.54	per	share	in	the	first,	second,	third	and fourth	quarters	of	2007;	$0.49	per	share	in	the	first,	second,	third	and	fourth	quarters	of	2006.

(4) All	open	market	repurchases	were	transacted	under	an	existing	authorized	share	repurchase	plan.	On	April	14,	2005,	the	Board	of	Directors	authorized	up	to	an	additional	$15	billion	in	share repurchases.	Additionally,	on	April	17,	2006,	the	Board	of	Directors	authorized	up	to	an	additional	$10	billion	in	share	repurchases.

(5) The	after-tax	adjustment	to	the	opening	balance	of	Accumulated	other	comprehensive	income	(loss)	represents	the	reclassification	of	the	unrealized	gains	(losses)	related	to	the	Legg	Mason securities	as	well	as	several	miscellaneous	items	previously	reported	in	accordance	with	SFAS	No.	115,	Accounting	for	Certain	Investments	in	Debt	and	Equity	Securities 	(SFAS	115).	The	related unrealized	gains	and	losses	were	reclassified	to	Retained	earnings	upon	the	adoption	of	the	fair	value	option	in	accordance	with	SFAS	157	and	SFAS	159.	See	Notes	1,	26	and	27	to	the Consolidated	Financial	Statements	on	pages	121,	191	and	200	for	further	discussion.

(6) In	2008,	reflects	decreased	fair	value	of	plan	assets	and	a	lower	discount	rate,	which	increased	the	PBO	(Projected	Benefit	Obligation).	In	2007,	reflects	changes	in	the	funded	status	of	the Company's	pension	and	postretirement	plans,	as	required	by	SFAS	158.	In	2006,	reflects	additional	minimum	liability,	as	required	by	SFAS	No.	87,	Employers'	Accounting	for	Pensions	(SFAS	87), related	to	unfunded	or	book	reserve	plans,	such	as	the	U.S.	nonqualified	pension	plans	and	certain	foreign	plans.

# CONSOLIDATED	STATEMENT	OF	CASH	FLOWS

| In	millions	of	dollars | 2008 | 2007^	(1) | 2006	^(1) |
| :--- | :--- | :--- | :--- |
| Cash\tflows\tfrom\toperating\tactivities\tof\tcontinuing\toperations |  |  |  |
| Net\tincome\t(loss) | $(27,684) | $3,617 | $21,538 |
| Income\tfrom\tdiscontinued\toperations,\tnet\tof\ttaxes | 1,478 | 628 | 948 |
| Gain\ton\tsale,\tnet\tof\ttaxes | 2,932 | — | 139 |
| Income\t(loss)\tfrom\tcontinuing\toperations | $(32,094) | $2,989 | $20,451 |
| Adjustments\tto\treconcile\tnet\tincome\tto\tnet\tcash\tprovided\tby\t(used\tin)\toperating\tactivities\tof\tcontinuing\toperations |  |  |  |
| Amortization\tof\tdeferred\tpolicy\tacquisition\tcosts\tand\tpresent\tvalue\tof\tfuture\tprofits | $206 | $369 | $287 |
| Additions\tto\tdeferred\tpolicy\tacquisition\tcosts | (397) | (482) | (381) |
| Depreciation\tand\tamortization | 2,466 | 2,421 | 2,503 |
| Deferred\ttax\t(benefit)\tprovision | (21,027) | (3,928) | 102 |
| Provision\tfor\tcredit\tlosses | 33,311 | 17,574 | 6,988 |
| Change\tin\ttrading\taccount\tassets | 123,845 | (62,798) | (98,105) |
| Change\tin\ttrading\taccount\tliabilities | (14,604) | 20,893 | 24,779 |
| Change\tin\tfederal\tfunds\tsold\tand\tsecurities\tborrowed\tor\tpurchased\tunder\tagreements\tto\tresell | 89,933 | 38,143 | (65,353) |
| Change\tin\tfederal\tfunds\tpurchased\tand\tsecurities\tloaned\tor\tsold\tunder\tagreements\tto\trepurchase | (98,950) | (56,983) | 106,843 |
| Change\tin\tbrokerage\treceivables\tnet\tof\tbrokerage\tpayables | (954) | (15,529) | 12,503 |
| Realized\tlosses\t(gains)\tfrom\tsales\tof\tinvestments | 2,061 | (1,168) | (1,791) |
| Change\tin\tloans\theld-for-sale | 29,009 | (30,649) | (1,282) |
| Other,\tnet | (16,265) | 17,611 | (7,709) |
| Total\tadjustments | $ 128,634 | $(74,526) | $(20,616) |
| Net\tcash\tprovided\tby\t(used\tin)\toperating\tactivities\tof\tcontinuing\toperations | $96,540 | $(71,537) | $(165) |
| Cash\tflows\tfrom\tinvesting\tactivities\tof\tcontinuing\toperations |  |  |  |
| Change\tin\tdeposits\twith\tbanks | $(100,965) | $(17,216) | $(10,877) |
| Change\tin\tloans | $(270,521) | (361,934) | (356,062) |
| Proceeds\tfrom\tsales\tand\tsecuritizations\tof\tloans | 313,808 | 273,464 | 253,176 |
| Purchases\tof\tinvestments | (344,336) | (274,426) | (296,124) |
| Proceeds\tfrom\tsales\tof\tinvestments | 93,666 | 211,753 | 86,999 |
| Proceeds\tfrom\tmaturities\tof\tinvestments | 209,312 | 121,346 | 121,111 |
| Capital\texpenditures\ton\tpremises\tand\tequipment | (2,541) | (4,003) | (4,035) |
| Proceeds\tfrom\tsales\tof\tpremises\tand\tequipment,\tsubsidiaries\tand\taffiliates,\tand\trepossessed\tassets | 23,966 | 4,253 | 1,606 |
| Business\tacquisitions | — | (15,614) | — |
| Net\tcash\tused\tin\tinvesting\tactivities\tof\tcontinuing\toperations | $(77,611) | $(62,377) | $(204,206) |
| Cash\tflows\tfrom\tfinancing\tactivities\tof\tcontinuing\toperations |  |  |  |
| Dividends\tpaid | $(7,526) | $(10,778) | $(9,826) |
| Issuance\tof\tcommon\tstock | 6,864 | 1,060 | 1,798 |
| Issuances\t(Redemptions)\tof\tpreferred\tstock,\tnet | 70,626 | (1,000) | (125) |
| Treasury\tstock\tacquired | (7) | (663) | (7,000) |
| Stock\ttendered\tfor\tpayment\tof\twithholding\ttaxes | (400) | (951) | (685) |
| Issuance\tof\tlong-term\tdebt | 90,414 | 118,496 | 113,687 |
| Payments\tand\tredemptions\tof\tlong-term\tdebt | (132,901) | (65,517) | (46,468) |
| Change\tin\tdeposits | (37,811) | 93,422 | 121,203 |
| Change\tin\tshort-term\tborrowings | (13,796) | 10,425 | 33,903 |
| Net\tcash\t(used\tin)\tprovided\tby\tfinancing\tactivities\tof\tcontinuing\toperations | $(24,537) | $ 144,494 | $ 206,487 |
| Effect\tof\texchange\trate\tchanges\ton\tcash\tand\tcash\tequivalents | $(2,948) | $1,005 | $645 |
| Discontinued\toperations |  |  |  |
| Net\tcash\t(used\tin)\tprovided\tby\tdiscontinued\toperations | $(397) | $107 | $121 |
| Change\tin\tcash\tand\tdue\tfrom\tbanks | $(8,953) | $11,692 | $2,882 |
| Cash\tand\tdue\tfrom\tbanks\tat\tbeginning\tof\tperiod | $38,206 | $26,514 | $23,632 |
| Cash\tand\tdue\tfrom\tbanks\tat\tend\tof\tperiod | $29,253 | $38,206 | $26,514 |
| Supplemental\tdisclosure\tof\tcash\tflow\tinformation\tfor\tcontinuing\toperations |  |  |  |
| Cash\tpaid\tduring\tthe\tyear\tfor\tincome\ttaxes | $3,170 | $5,923 | $9,230 |
| Cash\tpaid\tduring\tthe\tyear\tfor\tinterest | $55,678 | 72,732 | 51,472 |
| Non-cash\tinvesting\tactivities |  |  |  |
| Transfers\tto\trepossessed\tassets | $3,439 | $2,287 | $1,414 |
| Transfers\tto\tinvestments\t(held-to-maturity)\tfrom\ttrading\taccount\tassets | 33,258 | — | — |
| Transfers\tto\tinvestments\t(available-for-sale)\tfrom\ttrading\taccount\tassets | 4,654 | — | — |
| Transfers\tto\tloans\theld\tfor\tinvestment\t(loans)\tfrom\tloans\theld-for-sale | 15,891 | — | — |

Citibank,	N.A.	and	Subsidiaries

|  |  | December	31 |
| :--- | :--- | :--- |
| In\tmillions\tof\tdollars,\texcept\tshares | 2008 | 2007 |
| Assets |  |  |
| Cash\tand\tdue\tfrom\tbanks | \t\t $22,107 | $28,966 |
| Deposits\twith\tbanks | 156,774 | 57,216 |
| Federal\tfunds\tsold\tand\tsecurities\tpurchased\tunder\tagreements\tto\tresell | 41,613 | 23,563 |
| Trading\taccount\tassets\t(including\t$12,092\tand\t$22,716\tpledged\tto\tcreditors\tat\tDecember\t31,\t2008\tand\tDecember\t31,\t2007,\trespectively) | 197,052 | 215,454 |
| Investments\t(including\t$3,028\tand\t$3,099\tpledged\tto\tcreditors\tat\tDecember\t31,\t2008\tand\tDecember\t31,\t2007,\trespectively) | 165,914 | 150,058 |
| Loans,\tnet\tof\tunearned\tincome | 555,198 | 644,597 |
| Allowance\tfor\tloan\tlosses | (18,273) | (10,659) |
| Total\tloans,\tnet | \t\t $536,925 | $633,938 |
| Goodwill | 10,148 | 19,294 |
| Intangible\tassets | 7,689 | 11,007 |
| Premises\tand\tequipment,\tnet | 5,331 | 8,191 |
| Interest\tand\tfees\treceivable | 7,171 | 8,958 |
| Other\tassets | 76,316 | 95,070 |
| Total\tassets | \t\t $ 1,227,040 | $1,251,715 |
| Liabilities |  |  |
| Non-interest-bearing\tdeposits\tin\tU.S.\toffices | \t\t $59,808 | $41,032 |
| Interest-bearing\tdeposits\tin\tU.S.\toffices | 180,737 | 186,080 |
| Non-interest-bearing\tdeposits\tin\toffices\toutside\tthe\tU.S. | 33,769 | 38,775 |
| Interest-bearing\tdeposits\tin\toffices\toutside\tthe\tU.S. | 480,984 | 516,517 |
| Total\tdeposits | \t\t $755,298 | $782,404 |
| Trading\taccount\tliabilities | 110,599 | 59,472 |
| Purchased\tfunds\tand\tother\tborrowings | 116,333 | 74,112 |
| Accrued\ttaxes\tand\tother\texpenses | 8,192 | 12,752 |
| Long-term\tdebt\tand\tsubordinated\tnotes | 113,381 | 184,317 |
| Other\tliabilities | 41,879 | 39,352 |
| Total\tliabilities | \t\t $ 1,145,682 | $1,152,409 |
| Stockholder's\tequity |  |  |
| Capital\tstock\t($20\tpar\tvalue)\toutstanding\tshares:\t37,534,553\tin\teach\tperiod | \t\t $751 | $751 |
| Surplus | 74,767 | 69,135 |
| Retained\tearnings | 21,735 | 31,915 |
| Accumulated\tother\tcomprehensive\tincome\t(loss)\t^(1) | (15,895) | (2,495) |
| Total\tstockholder's\tequity | \t\t $81,358 | $99,306 |
| Total\tliabilities\tand\tstockholder's\tequity | \t\t $ 1,227,040 | $1,251,715 |

(1) Amounts	at	December	31,	2008	and	December	31,	2007	include	the	after-tax	amounts	for	net	unrealized	gains	(losses)	on	investment	securities	of	($8.008)	billion	and	($1.262)	billion,	respectively, for	foreign	currency	translation	of	($3.964)	billion	and	$1.687	billion,	respectively,	for	cash	flow	hedges	of	($3,247)	billion	and	($2.085)	billion,	respectively,	and	for	pension	liability	adjustments	of ($676)	million	and	($835)	million,	respectively.

# NOTES	TO	CONSOLIDATED	FINANCIAL	STATEMENTS

# 1.	SUMMARY	OF	SIGNIFICANT	ACCOUNTING	POLICIES

# Principles	of	Consolidation

The	Consolidated	Financial	Statements	include	the	accounts	of	Citigroup	and	its subsidiaries	(the	Company).	The	Company	consolidates	subsidiaries	in	which	it holds,	directly	or	indirectly,	more	than	50%	of	the	voting	rights	or	where	it exercises	control.	Entities	where	the	Company	holds	20%	to	50%	of	the	voting rights	and/or	has	the	ability	to	exercise	significant	influence,	other	than investments	of	designated	venture	capital	subsidiaries,	or	investments	accounted for	at	fair	value	under	the	fair	value	option,	are	accounted	for	under	the	equity method,	and	the	pro	rata	share	of	their	income	(loss)	is	included	in	Other revenue.	Income	from	investments	in	less	than	20%-owned	companies	is recognized	when	dividends	are	received.	As	discussed	below,	Citigroup consolidates	entities	deemed	to	be	variable	interest	entities	when	Citigroup	is determined	to	be	the	primary	beneficiary.	Gains	and	losses	on	the	disposition	of branches,	subsidiaries,	affiliates,	buildings,	and	other	investments	and	charges for	management's	estimate	of	impairment	in	their	value	that	is	other	than temporary,	such	that	recovery	of	the	carrying	amount	is	deemed	unlikely,	are included	in	Other	revenue.

Certain	reclassifications	have	been	made	to	the	prior-period's	financial statements	and	notes	to	conform	to	the	current	period's	presentation.

# Citibank,	N.A.

Citibank,	N.A.	is	a	commercial	bank	and	wholly	owned	subsidiary	of	Citigroup Inc.	Citibank's	principal	offerings	include	consumer	finance,	mortgage	lending, and	retail	banking	products	and	services;	investment	banking,	commercial banking,	cash	management,	trade	finance	and	e-commerce	products	and	services; and	private	banking	products	and	services.

The	Company	includes	a	balance	sheet	and	statement	of	changes	in stockholder's	equity	for	Citibank,	N.A.	to	provide	information	about	this	entity to	shareholders	and	international	regulatory	agencies.	(See	Note	31	to	the Consolidated	Financial	Statements	on	page	212.)

# Variable	Interest	Entities

An	entity	is	referred	to	as	a	variable	interest	entity	(VIE)	if	it	meets	the	criteria outlined	in	FASB	Interpretation	No.	46(R),	Consolidation	of	Variable	Interest Entities	(revised	December	2003)	FIN	46(R),	which	are:	(1)	the	entity	has equity	that	is	insufficient	to	permit	the	entity	to	finance	its	activities	without additional	subordinated	financial	support	from	other	parties,	or	(2)	the	entity	has equity	investors	that	cannot	make	significant	decisions	about	the	entity's operations	or	that	do	not	absorb	their	proportionate	share	of	the	expected	losses or	receive	the	expected	returns	of	the	entity.

In	addition,	as	specified	in	FIN	46(R),	a	VIE	must	be	consolidated	by	the Company	if	it	is	deemed	to	be	the	primary	beneficiary	of	the	VIE,	which	is	the party	involved	with	the	VIE	that	has	a	majority	of	the	expected	losses	or	a majority	of	the	expected	residual	returns	or	both.

Along	with	the	VIEs	that	are	consolidated	in	accordance	with	these	guidelines, the	Company	has	significant	variable	interests	in	other	VIEs	that

are	not	consolidated	because	the	Company	is	not	the	primary	beneficiary.	These include	multi-seller	finance	companies,	certain	collateralized	debt	obligations (CDOs),	many	structured	finance	transactions,	and	various	investment	funds. However,	these	VIEs	as	well	as	all	other	unconsolidated	VIEs	are	regularly monitored	by	the	Company	to	determine	if	any	reconsideration	events	have occurred	that	could	cause	its	primary	beneficiary	status	to	change.	These	events include:

•	additional	purchases	or	sales	of	variable	interests	by	Citigroup	or	an	unrelated third	party,	which	cause	Citigroup's	overall	variable	interest	ownership	to change;

•	changes	in	contractual	arrangements	in	a	manner	that	reallocates	expected losses	and	residual	returns	among	the	variable	interest	holders;	and •	providing	support	to	an	entity	that	results	in	an	implicit	variable	interest.

All	other	entities	not	deemed	to	be	VIEs	with	which	the	Company	has involvement	are	evaluated	for	consolidation	under	Accounting	Research	Bulletin (ARB)	No.	51,	Consolidated	Financial	Statements,	SFAS	No.	94,	Consolidation

of	All	Majority-Owned	Subsidiaries	(SFAS	94),	and	"EITF	Issue	No.	04-5."

# Foreign	Currency	Translation

Assets	and	liabilities	denominated	in	foreign	currencies	are	translated	into	U.S. dollars	using	year-end	spot	foreign	exchange	rates.	Revenues	and	expenses	are translated	monthly	at	amounts	that	approximate	weighted	average	exchange rates,	with	resulting	gains	and	losses	included	in	income.	The	effects	of translating	net	assets	with	a	functional	currency	other	than	the	U.S.	dollar	are included	in	a	separate	component	of	stockholders'	equity	along	with	related hedge	and	tax	effects.	The	effects	of	translating	income	with	the	U.S.	dollar	as the	functional	currency,	including	those	in	highly	inflationary	environments,	are primarily	included	in	Other	revenue	along	with	the	related	hedge	effects.	Hedges of	foreign	currency	exposures	include	forward	foreign	currency,	option	and swap	contracts	and	designated	issues	of	non-U.S.	dollar	debt.

# Investment	Securities

Investments	include	fixed	income	and	equity	securities.	Fixed	income instruments	include	bonds,	notes	and	redeemable	preferred	stocks,	as	well	as certain	loan-backed	and	structured	securities	that	are	subject	to	prepayment	risk. Equity	securities	include	common	and	nonredeemable	preferred	stocks. Investment	securities	are	classified	and	accounted	for	as	follows:

•	Fixed	income	securities	classified	as	"held	to	maturity"	represent	securities	that the	Company	has	both	the	ability	and	the	intent	to	hold	until	maturity,	and	are carried	at	amortized	cost.	Interest	income	on	such	securities	is	included	in Interest	revenue.

•	Fixed	income	securities	and	marketable	equity	securities	classified	as "available-for-sale"	are	carried	at	fair	value	with	changes	in	fair	value	reported in	a	separate	component	of	Stockholders'	equity,	net	of	applicable	income taxes.	As	set	out	in	Note	16	on	page	157,	declines	in

fair	value	that	are	determined	to	be	other	than	temporary	are	recorded	in earnings	immediately.	Realized	gains	and	losses	on	sales	are	included	in income	primarily	on	a	specific	identification	cost	basis,	and	interest	and dividend	income	on	such	securities	is	included	in	Interest	revenue. •	Venture	capital	investments	held	by	Citigroup's	private	equity	subsidiaries	that are	considered	investment	companies	are	carried	at	fair	value	with	changes	in fair	value	reported	in	Other	revenue.	These	subsidiaries	include	entities registered	as	Small	Business	Investment	Companies	and	engage	exclusively	in venture	capital	activities.

•	Certain	investments	in	non-marketable	equity	securities	and	certain investments	that	would	otherwise	have	been	accounted	for	using	the	equity method	are	carried	at	fair	value,	since	the	Company	has	elected	to	apply	fair value	accounting	in	accordance	with	SFAS	159,	The	Fair	Value	Option	for Financial	Assets	and	Financial	Liabilities	(SFAS	159).	Changes	in	fair	value of	such	investments	are	recorded	in	earnings.

•	Certain	non-marketable	equity	securities	are	carried	at	cost	and	periodically assessed	for	other-than-temporary	impairment,	as	set	out	in	Note	16	on page	157.

For	investments	in	fixed-income	securities	classified	as	held-to-maturity	or available-for-sale,	accrual	of	interest	income	is	suspended	for	investments	that are	in	default	or	on	which	it	is	likely	that	future	interest	payments	will	not	be made	as	scheduled.

The	Company	uses	a	number	of	valuation	techniques	for	investments	carried	at fair	value,	which	are	described	in	Note	27	on	page	200.

# Trading	Account	Assets	and	Liabilities

Trading	account	assets	include	debt	and	marketable	equity	securities, derivatives	in	a	receivable	position,	residual	interests	in	securitizations	and physical	commodities	inventory.	In	addition	(as	set	out	in	Note	27	on	page	200), certain	assets	that	Citigroup	has	elected	to	carry	at	fair	value	under	SFAS	159, such	as	loans	and	purchased	guarantees,	are	also	included	in	Trading	account assets.

Trading	account	liabilities	include	securities	sold,	not	yet	purchased	(short positions),	and	derivatives	in	a	net	payable	position,	as	well	as	certain	liabilities that	Citigroup	has	elected	to	carry	at	fair	value	under	SFAS	159	or	SFAS	155, Accounting	for	Certain	Hybrid	Financial	Instruments	(SFAS	155)	as	set	out	in Note	27	on	page	200.

Other	than	physical	commodities	inventory,	all	trading	account	assets	and liabilities	are	carried	at	fair	value.	Revenues	generated	from	trading	assets	and trading	liabilities	are	generally	reported	in	Principal	transactions	and	include realized	gains	and	losses	as	well	as	unrealized	gains	and	losses	resulting	from changes	in	the	fair	value	of	such	instruments.	Interest	income	on	trading	assets	is recorded	in	Interest	revenue	reduced	by	interest	expense	on	trading	liabilities. Physical	commodities	inventory	is	carried	at	the	lower	of	cost	or	market (LOCOM)	with	related	gains	or	losses	reported	in	Principal	transactions. Realized	gains	and	losses	on	sales	of	commodities	inventory	are	included	in Principal	transactions	on	a	"first	in,	first	out"	basis.

Derivatives	used	for	trading	purposes	include	interest	rate,	currency,	equity, credit,	and	commodity	swap	agreements,	options,	caps	and	floors,	warrants,	and financial	and	commodity	futures	and	forward	contracts.	Derivative	asset	and liability	positions	are	presented	net	by	counterparty	on	the	Consolidated	Balance Sheet	when	a	valid	master	netting	agreement	exists	and	the	other	conditions	set out	in	FASB	Interpretation	No.	39,	"Offsetting	of	Amounts	Related	to	Certain Contracts"	(FIN	39)	are	met.

The	Company	uses	a	number	of	techniques	to	determine	the	fair	value	of trading	assets	and	liabilities,	all	of	which	are	described	in	Note	26	on	page	191.

# Securities	Borrowed	and	Securities	Loaned

Securities	borrowing	and	lending	transactions	generally	do	not	constitute	a	sale of	the	underlying	securities	for	accounting	purposes,	and	so	are	treated	as collateralized	financing	transactions	when	the	transaction	involves	the	exchange of	cash.	Such	transactions	are	recorded	at	the	amount	of	cash	advanced	or received	plus	accrued	interest.	As	set	out	in	Note	27	on	page	200,	the	Company has	elected	under	SFAS	159	to	apply	fair	value	accounting	to	a	number	of securities	borrowing	and	lending	transactions.	Irrespective	of	whether	the Company	has	elected	fair-value	accounting,	fees	paid	or	received	for	all securities	lending	and	borrowing	transactions	are	recorded	in	Interest	expense	or Interest	revenue	at	the	contractually	specified	rate.

Where	the	conditions	of	FIN	39	are	met,	amounts	recognized	in	respect	of securities	borrowed	and	securities	loaned	are	presented	net	on	the	Consolidated Balance	Sheet.

With	respect	to	securities	borrowed	or	loaned,	the	Company	pays	or	receives cash	collateral	in	an	amount	in	excess	of	the	market	value	of	securities	borrowed or	loaned.	The	Company	monitors	the	market	value	of	securities	borrowed	and loaned	on	a	daily	basis	with	additional	collateral	received	or	paid	as	necessary. As	described	in	Note	26	on	page	191,	the	Company	uses	a	discounted	cash- flow	technique	to	determine	the	fair	value	of	securities	lending	and	borrowing transactions.

# Repurchase	and	Resale	Agreements

Securities	sold	under	agreements	to	repurchase	(repos)	and	securities	purchased under	agreements	to	resell	(reverse	repos)	generally	do	not	constitute	a	sale	for accounting	purposes	of	the	underlying	securities,	and	so	are	treated	as collateralized	financing	transactions.	As	set	out	in	Note	27	on	page	200,	the Company	has	elected	to	apply	fair-value	accounting	to	a	majority	of	such transactions,	with	changes	in	fair-value	reported	in	earnings.	Any	transactions for	which	fair-value	accounting	has	not	been	elected	are	recorded	at	the	amount of	cash	advanced	or	received	plus	accrued	interest.	Irrespective	of	whether	the Company	has	elected	fair-value	accounting,	interest	paid	or	received	on	all	repo and	reverse	repo	transactions	is	recorded	in	Interest	expense	or	Interest	revenue at	the	contractually	specified	rate.

Where	the	conditions	of	FASB	Interpretation	No.	41,	"Offsetting	of	Amounts Related	to	Certain	Repurchase	and	Reverse	Repurchase	Agreements"	(FIN	41), are	met,	repos	and	reverse	repos	are	presented	net	on	the	Consolidated	Balance Sheet.

The	Company's	policy	is	to	take	possession	of	securities	purchased	under agreements	to	resell.	The	market	value	of	securities	to	be	repurchased	and	resold is	monitored,	and	additional	collateral	is	obtained	where	appropriate	to	protect against	credit	exposure.

As	described	in	Note	26	on	page	191,	the	Company	uses	a	discounted	cash flow	technique	to	determine	the	fair	value	of	repo	and	reverse	repo	transactions.

Loans	are	reported	at	their	outstanding	principal	balances	net	of	any	unearned income	and	unamortized	deferred	fees	and	costs.	Loan	origination

fees	and	certain	direct	origination	costs	are	generally	deferred	and	recognized	as adjustments	to	income	over	the	lives	of	the	related	loans.

As	set	out	in	Note	27	on	page	200,	the	Company	has	elected	fair	value accounting	under	SFAS	159	and	SFAS	155	for	certain	loans.	Such	loans	are carried	at	fair	value	with	changes	in	fair	value	reported	in	earnings.	Interest income	on	such	loans	is	recorded	in	Interest	revenue	at	the	contractually specified	rate.

Loans	for	which	the	fair	value	option	has	not	been	elected	under	SFAS	159	or SFAS	155	are	classified	upon	origination	or	acquisition	as	either	held-for- investment	or	held-for-sale.	This	classification	is	based	on	management's	intent and	ability	with	regard	to	those	loans.

Substantially	all	of	the	consumer	loans	sold	or	securitized	by	Citigroup	are U.S.	prime	mortgage	loans	or	U.S.	credit	card	receivables.	The	practice	of	the U.S.	prime	mortgage	business	has	been	to	sell	all	of	its	loans	except	for nonconforming	adjustable	rate	loans.	U.S.	prime	mortgage	conforming	loans	are classified	as	held-for-sale	at	the	time	of	origination.	The	related	cash	flows	are classified	in	the	Consolidated	Statement	of	Cash	Flows	in	the	cash	flows	from operating	activities	category	on	the	line	Change	in	loans	held-for-sale. U.S.	credit	card	receivables	are	classified	at	origination	as	loans-held-for	sale to	the	extent	that	management	does	not	have	the	intent	to	hold	the	receivables	for the	foreseeable	future	or	until	maturity.	The	U.S.	credit	card	securitization forecast	for	the	three	months	following	the	latest	balance	sheet	date	is	the	basis for	the	amount	of	such	loans	classified	as	held-for-sale.	Cash	flows	related	to U.S.	credit	card	loans	classified	as	held-for-sale	at	origination	or	acquisition	are reported	in	the	cash	flows	from	operating	activities	category	on	the	line	Change in	loans	held-for-sale.

Loans	that	are	held-for-investment	are	classified	as	Loans,	net	of	unearned income	on	the	Consolidated	Balance	Sheet,	and	the	related	cash	flows	are included	within	the	cash	flows	from	investing	activities	category	in	the Consolidated	Statement	of	Cash	Flows	on	the	line	Changes	in	loans.	However, when	the	initial	intent	for	holding	a	loan	has	changed	from	held-for-investment to	held-for-sale,	the	loan	is	reclassified	to	held-for-sale,	but	the	related	cash	flows continue	to	be	reported	in	cash	flows	from	investing	activities	in	the Consolidated	Statement	of	Cash	Flows	on	the	line	Proceeds	from	sales	and securitizations	of	loans.

# Consumer	Loans

Consumer	loans	represent	loans	and	leases	managed	by	the	Global	Cards	and Consumer	Banking	businesses	and	GWM.	As	a	general	rule,	interest	accrual ceases	for	open-end	revolving	and	closed-end	installment	and	real	estate	loans when	payments	are	90	days	contractually	past	due.	For	credit	cards,	however,	the Company	accrues	interest	until	payments	are	180	days	past	due.

As	a	general	rule,	unsecured	closed-end	installment	loans	are	charged	off	at 120	days	past	due	and	unsecured	open-end	(revolving)	loans	are	charged	off	at 180	days	contractually	past	due.	Loans	secured	with	non-real-estate	collateral are	written	down	to	the	estimated	value	of	the	collateral,	less	costs	to	sell,	at	120 days	past	due.	Real-estate	secured	loans	(both	open-	and	closed-end)	are	written down	to	the	estimated	value	of	the	property,	less	costs	to	sell,	at	180	days contractually	past	due.

In	certain	consumer	businesses	in	the	U.S.,	secured	real	estate	loans	are	written down	to	the	estimated	value	of	the	property,	less	costs	to	sell,	at	the	earlier	of	the receipt	of	title	or	12	months	in	foreclosure	(a	process	that	must	commence	when payments	are	120	days	contractually	past	due).	Closed-end

loans	secured	by	non-real-estate	collateral	are	written	down	to	the	estimated value	of	the	collateral,	less	costs	to	sell,	at	180	days	contractually	past	due. Unsecured	loans	(both	open-	and	closed-end)	are	charged	off	at	180	days contractually	past	due	and	180	days	from	the	last	payment,	but	in	no	event	can these	loans	exceed	360	days	contractually	past	due.

Unsecured	loans	in	bankruptcy	are	charged	off	within	30	days	of	notification	of filing	by	the	bankruptcy	court	or	within	the	contractual	write-off	periods, whichever	occurs	earlier.	In	CitiFinancial,	unsecured	loans	in	bankruptcy	are charged	off	when	they	are	30	days	contractually	past	due.

# Corporate	Loans

Corporate	loans	represent	loans	and	leases	managed	by	ICG.	Corporate	loans	are identified	as	impaired	and	placed	on	a	cash	(non-accrual)	basis	when	it	is determined	that	the	payment	of	interest	or	principal	is	doubtful	or	when	interest or	principal	is	90	days	past	due,	except	when	the	loan	is	well	collateralized	and in	the	process	of	collection.	Any	interest	accrued	on	impaired	corporate	loans and	leases	is	reversed	at	90	days	and	charged	against	current	earnings,	and interest	is	thereafter	included	in	earnings	only	to	the	extent	actually	received	in cash.	When	there	is	doubt	regarding	the	ultimate	collectibility	of	principal,	all cash	receipts	are	thereafter	applied	to	reduce	the	recorded	investment	in	the	loan. Impaired	corporate	loans	and	leases	are	written	down	to	the	extent	that	principal is	judged	to	be	uncollectible.	Impaired	collateral-dependent	loans	and	leases, where	repayment	is	expected	to	be	provided	solely	by	the	sale	of	the	underlying collateral	and	there	are	no	other	available	and	reliable	sources	of	repayment,	are written	down	to	the	lower	of	cost	or	collateral	value.	Cash-basis	loans	are returned	to	an	accrual	status	when	all	contractual	principal	and	interest	amounts are	reasonably	assured	of	repayment	and	there	is	a	sustained	period	of	repayment performance	in	accordance	with	the	contractual	terms.

# Lease	Financing	Transactions

Loans	include	the	Company's	share	of	aggregate	rentals	on	lease	financing transactions	and	residual	values	net	of	related	unearned	income.	Lease	financing transactions	represent	direct	financing	leases	and	also	include	leveraged	leases. Unearned	income	is	amortized	under	a	method	that	results	in	an	approximate level	rate	of	return	when	related	to	the	unrecovered	lease	investment.	Gains	and losses	from	sales	of	residual	values	of	leased	equipment	are	included	in	Other revenue.

# Loans	Held-for-Sale

Corporate	and	consumer	loans	that	have	been	identified	for	sale	are	classified	as loans	held-for-sale	included	in	Other	assets.	With	the	exception	of	certain mortgage	loans	for	which	the	fair-value	option	has	been	elected	under	SFAS 159,	these	loans	are	accounted	for	at	the	lower	of	cost	or	market	value,	with	any write-downs	or	subsequent	recoveries	charged	to	Other	revenue.

# Allowance	for	Loan	Losses

Allowance	for	loan	losses	represents	management's	estimate	of	probable	losses inherent	in	the	portfolio.	Attribution	of	the	allowance	is	made	for	analytical purposes	only,	and	the	entire	allowance	is	available	to	absorb	probable	credit losses	inherent	in	the	overall	portfolio.	Additions	to	the	allowance	are	made through	the	provision	for	credit	losses.	Credit	losses	are	deducted	from	the allowance,	and	subsequent	recoveries	are	added.	Securities	received	in	exchange for	loan	claims	in	debt	restructurings	are	initially	recorded	at	fair	value,	with	any gain	or	loss	reflected	as	a	recovery	or

charge-off	to	the	allowance,	and	are	subsequently	accounted	for	as	securities available-for-sale.

In	the	Corporate	portfolios,	larger-balance,	non-homogeneous	exposures representing	significant	individual	credit	exposures	are	evaluated	based	upon	the borrower's	overall	financial	condition,	resources,	and	payment	record,	the prospects	for	support	from	any	financially	responsible	guarantors	and,	if appropriate,	the	realizable	value	of	any	collateral.	Reserves	are	established	for these	loans	based	upon	an	estimate	of	probable	losses	for	the	individual	loans deemed	to	be	impaired.	This	estimate	considers	all	available	evidence	including, as	appropriate,	the	present	value	of	the	expected	future	cash	flows	discounted	at the	loan's	contractual	effective	rate,	the	secondary	market	value	of	the	loan	and the	fair	value	of	collateral	less	disposal	costs.	The	allowance	for	credit	losses attributed	to	the	remaining	portfolio	is	established	via	a	process	that	estimates the	probable	loss	inherent	in	the	portfolio	based	upon	various	analyses.	These analyses	consider	historical	and	project	default	rates	and	loss	severities,	internal risk	ratings,	and	geographic,	industry,	and	other	environmental	factors. Management	also	considers	overall	portfolio	indicators,	including	trends	in internally	risk-rated	exposures,	classified	exposures,	cash-basis	loans,	historical and	forecasted	write-offs,	and	a	review	of	industry,	geographic,	and	portfolio concentrations,	including	current	developments	within	those	segments.	In addition,	management	considers	the	current	business	strategy	and	credit	process, including	credit	limit	setting	and	compliance,	credit	approvals,	loan	underwriting criteria,	and	loan	workout	procedures.

For	Consumer	loans,	each	portfolio	of	smaller-balance,	homogeneous	loans— including	consumer	mortgage,	installment,	revolving	credit,	and	most	other consumer	loans—is	collectively	evaluated	for	impairment.	The	allowance	for loan	losses	attributed	to	these	loans	is	established	via	a	process	that	estimates	the probable	losses	inherent	in	the	portfolio	based	upon	various	analyses.	These include	migration	analysis,	in	which	historical	delinquency	and	credit	loss experience	is	applied	to	the	current	aging	of	the	portfolio,	together	with	analyses that	reflect	current	trends	and	conditions.	Management	also	considers	overall portfolio	indicators,	including	historical	credit	losses,	delinquent,	non- performing,	and	classified	loans,	trends	in	volumes	and	terms	of	loans,	an evaluation	of	overall	credit	quality,	the	credit	process,	including	lending	policies and	procedures,	and	economic,	geographical,	product	and	other	environmental factors.

In	addition,	valuation	allowances	are	determined	for	impaired	smaller-balance homogenous	loans	whose	terms	have	been	modified	due	to	the	borrowers' financial	difficulties	and	it	was	determined	that	a	concession	was	granted	to	the borrower.	Such	modifications	may	include	interest	rate	reductions,	principal forgiveness	and/or	term	extensions.	These	allowances	are	determined	by comparing	estimated	cash	flows	of	the	loans	discounted	at	the	loans'	original contractual	interest	rates	to	the	carrying	value	of	the	loans.

# Allowance	for	Unfunded	Lending	Commitments

A	similar	approach	to	the	allowance	for	loan	losses	is	used	for	calculating	a reserve	for	the	expected	losses	related	to	unfunded	loan	commitments	and standby	letters	of	credit.	This	reserve	is	classified	on	the	balance	sheet	in	Other liabilities.

# Mortgage	Servicing	Rights	(MSRs)

Mortgage	servicing	rights	(MSRs),	which	are	included	in	Intangible	assets	in	the Consolidated	Balance	Sheet,	are	recognized	as	assets	when	purchased

or	when	the	Company	sells	or	securitizes	loans	acquired	through	purchase	or origination	and	retains	the	right	to	service	the	loans.

With	the	Company's	electing	to	early-adopt	SFAS	156,	Accounting	for Servicing	of	Financial	Assets,	as	of	January	1,	2006,	MSRs	in	the	U.S.	mortgage and	student	loan	classes	of	servicing	rights	are	accounted	for	at	fair	value,	with changes	in	value	recorded	in	current	earnings.	Upon	electing	the	fair-value method	of	accounting	for	its	MSRs,	the	Company	discontinued	the	application of	SFAS	133	fair-value	hedge	accounting,	the	calculation	of	amortization	and the	assessment	of	impairment	for	the	MSRs.	The	MSR	valuation	allowance	at the	date	of	adoption	of	SFAS	156	was	written	off	against	the	recorded	value	of the	MSRs.

Prior	to	2006,	only	the	portion	of	the	MSR	portfolio	that	was	hedged	with instruments	qualifying	for	hedge	accounting	under	SFAS	133	was	recorded	at fair	value.	The	remaining	portion,	which	was	hedged	with	instruments	that	did not	qualify	for	hedge	accounting	under	SFAS	133,	was	accounted	for	at	the lower	of	cost	or	market.	Servicing	rights	retained	in	the	securitization	of mortgage	loans	were	measured	by	allocating	the	carrying	value	of	the	loans between	the	assets	sold	and	the	interests	retained,	based	on	the	relative	fair values	at	the	date	of	securitization.	MSRs	were	amortized	using	a	proportionate cash	flow	method	over	the	period	of	the	related	net	positive	servicing	income	to be	generated	from	the	various	portfolios	purchased	or	loans	originated.

Impairment	of	MSRs	was	evaluated	on	a	disaggregated	basis	by	type	(i.e.,	fixed rate	or	adjustable	rate)	and	by	interest-rate	band,	which	were	believed	to	be	the predominant	risk	characteristics	of	the	Company's	servicing	portfolio.	Any excess	of	the	carrying	value	of	the	capitalized	servicing	rights	over	the	fair	value by	stratum	was	recognized	through	a	valuation	allowance	for	each	stratum	and charged	to	the	provision	for	impairment	on	MSRs.

Additional	information	on	the	Company's	MSRs	can	be	found	in	Note	23	to the	Consolidated	Financial	Statements	on	page	174.

Goodwill	represents	an	acquired	company's	acquisition	cost	over	the	fair	value of	net	tangible	and	intangible	assets	acquired.	Goodwill	is	subject	to	annual impairment	tests,	whereby	Goodwill	is	allocated	to	the	Company's	reporting units	and	an	impairment	is	deemed	to	exist	if	the	carrying	value	of	a	reporting unit	exceeds	its	estimated	fair	value.	Furthermore,	on	any	business	dispositions, Goodwill	is	allocated	to	the	business	disposed	of	based	on	the	ratio	of	the	fair value	of	the	business	disposed	of	to	the	fair	value	of	the	reporting	unit.

# Intangible	Assets

Intangible	assets—including	core	deposit	intangibles,	present	value	of	future profits,	purchased	credit	card	relationships,	other	customer	relationships,	and other	intangible	assets,	but	excluding	MSRs—are	amortized	over	their	estimated useful	lives.	Intangible	assets	deemed	to	have	indefinite	useful	lives,	primarily certain	asset	management	contracts	and	trade	names,	are	not	amortized	and	are subject	to	annual	impairment	tests.	An	impairment	exists	if	the	carrying	value	of the	indefinite-lived	intangible	asset	exceeds	its	fair	value.	For	other	Intangible assets	subject	to	amortization,	an	impairment	is	recognized	if	the	carrying amount	is	not	recoverable	and	exceeds	the	fair	value	of	the	Intangible	asset.

# Other	Assets	and	Other	Liabilities

Other	assets	includes,	among	other	items,	loans	held-for-sale,	deferred	tax assets,	equity-method	investments,	interest	and	fees	receivable,	premises	and

equipment,	end-user	derivatives	in	a	net	receivable	position,	repossessed	assets, and	other	receivables.

Other	liabilities	includes,	among	other	items,	accrued	expenses	and	other payables,	deferred	tax	liabilities,	minority	interest,	end-user	derivatives	in	a	net payable	position,	and	reserves	for	legal,	taxes,	restructuring,	unfunded	lending commitments,	and	other	matters.

# Repossessed	Assets

Upon	repossession,	loans	are	adjusted,	if	necessary,	to	the	estimated	fair	value	of the	underlying	collateral	and	transferred	to	repossessed	assets.	This	is	reported in	Other	assets,	net	of	a	valuation	allowance	for	selling	costs	and	net	declines	in value	as	appropriate.

The	Company	primarily	securitizes	credit	card	receivables	and	mortgages.	Other types	of	securitized	assets	include	corporate	debt	instruments	(in	cash	and synthetic	form)	and	student	loans.

There	are	two	key	accounting	determinations	that	must	be	made	relating	to securitizations.	First,	in	the	case	where	Citigroup	originated	or	owned	the financial	assets	transferred	to	the	securitization	entity,	a	decision	must	be	made as	to	whether	that	transfer	is	considered	a	sale	under	U.S.	Generally	Accepted Accounting	Principles	(GAAP).	If	it	is	a	sale,	the	transferred	assets	are	removed from	the	Company's	Consolidated	Balance	Sheet	with	a	gain	or	loss	recognized. Alternatively,	when	the	transfer	would	be	considered	to	be	a	financing	rather than	a	sale,	the	assets	will	remain	on	the	Company's	Consolidated	Balance	Sheet with	an	offsetting	liability	recognized	in	the	amount	of	proceeds	received. Second,	a	determination	must	be	made	as	to	whether	the	securitization	entity would	be	included	in	the	Company's	Consolidated	Financial	Statements.	For each	securitization	entity	with	which	it	is	involved,	the	Company	makes	a determination	of	whether	the	entity	should	be	considered	a	subsidiary	of	the Company	and	be	included	in	its	Consolidated	Financial	Statements	or	whether the	entity	is	sufficiently	independent	that	it	does	not	need	to	be	consolidated.	If the	securitization	entity's	activities	are	sufficiently	restricted	to	meet	accounting requirements	to	be	a	qualifying	special	purpose	entity	(QSPE),	the	securitization entity	is	not	consolidated	by	the	seller	of	the	transferred	assets.	If	the securitization	entity	is	determined	to	be	a	VIE,	the	Company	consolidates	the VIE	if	it	is	the	primary	beneficiary.

For	all	other	securitization	entities	determined	not	to	be	VIEs	in	which Citigroup	participates,	a	consolidation	decision	is	made	by	evaluating	several factors,	including	how	much	of	the	entity's	ownership	is	in	the	hands	of	third- party	investors,	who	controls	the	securitization	entity,	and	who	reaps	the	rewards and	bears	the	risks	of	the	entity.	Only	securitization	entities	controlled	by Citigroup	are	consolidated.

Interests	in	the	securitized	and	sold	assets	may	be	retained	in	the	form	of subordinated	interest-only	strips,	subordinated	tranches,	spread	accounts,	and servicing	rights.	In	credit	card	securitizations,	the	Company	retains	a	seller's interest	in	the	credit	card	receivables	transferred	to	the	trusts,	which	is	not	in securitized	form.	Accordingly,	the	seller's	interest	is	carried	on	a	historical	cost basis	and	classified	as	Consumer	loans.	Retained	interests	in	securitized mortgage	loans	and	student	loans	are	classified	as	Trading	account	assets,	as	is	a majority	of	the	retained	interests	in	securitized	credit	card	receivables.	Certain other	retained	interests	are	recorded	as	available-for-sale	investments,	but servicing	rights	are	included	in	Intangible	assets.	However,	since	January	1, 2006,	servicing	rights	are

initially	recorded	at	fair	value.	Gains	or	losses	on	securitization	and	sale	depend in	part	on	the	previous	carrying	amount	of	the	loans	involved	in	the	transfer	and, prior	to	January	1,	2006,	were	allocated	between	the	loans	sold	and	the	retained interests	based	on	their	relative	fair	values	at	the	date	of	sale.	Gains	are recognized	at	the	time	of	securitization	and	are	reported	in	Other	revenue.

The	Company	values	its	securitized	retained	interests	at	fair	value	using	quoted market	prices,	if	such	positions	are	actively	traded,	or	financial	models	that incorporate	observable	and	unobservable	inputs.	More	specifically,	these	models estimate	the	fair	value	of	these	retained	interests	by	determining	the	present value	of	expected	future	cash	flows,	using	modeling	techniques	that	incorporate management's	best	estimates	of	key	assumptions,	including	prepayment	speeds, credit	losses	and	discount	rates,	when	observable	inputs	are	not	available.	In addition,	internally	calculated	fair	values	of	retained	interests	are	compared	to recent	sales	of	similar	assets,	if	available.

Additional	information	on	the	Company's	securitization	activities	can	be	found in	Note	23	to	the	Consolidated	Financial	Statements	on	page	174.

# Transfers	of	Financial	Assets

For	a	transfer	of	financial	assets	to	be	considered	a	sale,	the	assets	must	have been	isolated	from	the	Company,	even	in	bankruptcy	or	other	receivership;	the purchaser	must	have	the	right	to	sell	the	assets	transferred	or	the	purchaser	must be	a	QSPE;	and	the	Company	may	not	have	an	option	or	any	obligation	to reacquire	the	assets.	If	these	sale	requirements	are	met,	the	assets	are	removed from	the	Company's	Consolidated	Balance	Sheet.	If	the	conditions	for	sale	are not	met,	the	transfer	is	considered	to	be	a	secured	borrowing,	the	assets	remain on	the	Consolidated	Balance	Sheet,	and	the	sale	proceeds	are	recognized	as	the Company's	liability.	A	legal	opinion	on	a	sale	is	generally	obtained	for	complex transactions	or	where	the	Company	has	continuing	involvement	with	assets transferred	or	with	the	securitization	entity.	For	a	transfer	to	be	eligible	for	sale accounting,	those	opinions	must	state	that	the	asset	transfer	is	considered	a	sale and	that	the	assets	transferred	would	not	be	consolidated	with	the	Company's other	assets	in	the	event	of	the	Company's	insolvency.

See	Note	23	to	the	Consolidated	Financial	Statements	on	page	174.

# Risk	Management	Activities—Derivatives	Used	for	Non-Trading Purposes

The	Company	manages	its	exposures	to	market	rate	movements	outside	its trading	activities	by	modifying	the	asset	and	liability	mix,	either	directly	or through	the	use	of	derivative	financial	products,	including	interest	rate	swaps, futures,	forwards,	and	purchased	option	positions,	as	well	as	foreign-exchange contracts.	These	end-user	derivatives	are	carried	at	fair	value	in	Other	assets	or Other	liabilities.

To	qualify	as	a	hedge,	a	derivative	must	be	highly	effective	in	offsetting	the risk	designated	as	being	hedged.	The	hedge	relationship	must	be	formally documented	at	inception,	detailing	the	particular	risk	management	objective	and strategy	for	the	hedge,	which	includes	the	item	and	risk	that	is	being	hedged	and the	derivative	that	is	being	used,	as	well	as	how	effectiveness	will	be	assessed and	ineffectiveness	measured.	The	effectiveness	of	these	hedging	relationships	is evaluated	on	a	retrospective	and	prospective	basis,	typically	using	quantitative measures	of	correlation	with	hedge	ineffectiveness	measured	and	recorded	in current	earnings.	If	a	hedge	relationship	is	found	to	be	ineffective,	it	no	longer qualifies	as	a	hedge	and

any	gains	or	losses	attributable	to	the	derivatives,	as	well	as	subsequent	changes in	fair	value,	are	recognized	in	Other	revenue.

The	foregoing	criteria	are	applied	on	a	decentralized	basis,	consistent	with	the level	at	which	market	risk	is	managed,	but	are	subject	to	various	limits	and controls.	The	underlying	asset,	liability	or	forecasted	transaction	may	be	an individual	item	or	a	portfolio	of	similar	items.

For	fair	value	hedges,	in	which	derivatives	hedge	the	fair	value	of	assets	or liabilities,	changes	in	the	fair	value	of	derivatives	are	reflected	in	Other	revenue, together	with	changes	in	the	fair	value	of	the	related	hedged	item.	These	are expected	to,	and	generally	do,	offset	each	other.	Any	net	amount,	representing hedge	ineffectiveness,	is	reflected	in	current	earnings.	Citigroup's	fair	value hedges	are	primarily	hedges	of	fixed-rate	long-term	debt,	and	available-for-sale securities.

For	cash	flow	hedges,	in	which	derivatives	hedge	the	variability	of	cash	flows related	to	floating-	and	fixed-rate	assets,	liabilities	or	forecasted	transactions,	the accounting	treatment	depends	on	the	effectiveness	of	the	hedge.	To	the	extent these	derivatives	are	effective	in	offsetting	the	variability	of	the	hedged	cash flows,	the	effective	portion	of	the	changes	in	the	derivatives'	fair	values	will	not be	included	in	current	earnings,	but	are	reported	in	Accumulated	other comprehensive	income	(loss).	These	changes	in	fair	value	will	be	included	in earnings	of	future	periods	when	the	hedged	cash	flows	come	into	earnings.	To the	extent	these	derivatives	are	not	effective,	changes	in	their	fair	values	are immediately	included	in	Other	revenue.	Citigroup's	cash	flow	hedges	primarily include	hedges	of	floating	and	fixed	rate	debt,	as	well	as	rollovers	of	short-term fixed	rate	liabilities	and	floating-rate	liabilities.

For	net	investment	hedges	in	which	derivatives	hedge	the	foreign	currency exposure	of	a	net	investment	in	a	foreign	operation,	the	accounting	treatment	will similarly	depend	on	the	effectiveness	of	the	hedge.	The	effective	portion	of	the change	in	fair	value	of	the	derivative,	including	any	forward	premium	or discount,	is	reflected	in	Accumulated	other	comprehensive	income	(loss)	as	part of	the	foreign	currency	translation	adjustment.

End-user	derivatives	that	are	economic	hedges,	rather	than	qualifying	for SFAS	133	hedge	accounting,	are	also	carried	at	fair	value,	with	changes	in	value included	in	Principal	transactions	or	Other	revenue.	Citigroup	often	uses economic	hedges	when	qualifying	for	hedge	accounting	would	be	too	complex or	operationally	burdensome;	examples	are	hedges	of	the	credit	risk	component of	commercial	loans	and	loan	commitments.	Citigroup	periodically	evaluates	its hedging	strategies	in	other	areas	and	may	designate	either	a	qualifying	hedge	or an	economic	hedge,	after	considering	the	relative	cost	and	benefits.	Economic hedges	are	also	employed	when	the	hedged	item	itself	is	marked	to	market through	current	earnings,	such	as	hedges	of	commitments	to	originate	one-to- four-family	mortgage	loans	to	be	held-for-sale	and	mortgage	servicing	rights (MSRs).

For	those	hedge	relationships	that	are	terminated	or	when	hedge	designations are	removed,	the	hedge	accounting	treatment	described	in	the	paragraphs	above is	no	longer	applied.	Instead,	the	end-user	derivative	is	terminated	or	transferred to	the	trading	account.	For	fair-value	hedges,	any	changes	in	the	fair	value	of	the hedged	item	remain	as	part	of	the	basis	of	the	asset	or	liability	and	are	ultimately reflected	as	an	element	of	the	yield.	For	cash-flow	hedges,	any	changes	in	fair- value	of	the	end-user	derivative	remain	in	Accumulated	other	comprehensive income	(loss)	and	are	included	in	earnings	of	future	periods	when	the	hedged cash	flows	impact

earnings.	However,	if	the	hedged	forecasted	transaction	is	no	longer	likely	to occur,	any	changes	in	fair	value	of	the	end-user	derivative	are	immediately reflected	in	Other	revenue.

# Employee	Benefits	Expense

Employee	benefits	expense	includes	current	service	costs	of	pension	and	other postretirement	benefit	plans,	which	are	accrued	on	a	current	basis,	contributions and	unrestricted	awards	under	other	employee	plans,	the	amortization	of restricted	stock	awards	and	costs	of	other	employee	benefits.

# Stock-Based	Compensation

Under	SFAS	No.	123,	Accounting	for	Stock-Based	Compensation	(SFAS	123), the	Company	recognizes	compensation	expense	over	the	related	service	period based	on	the	grant	date	fair	value	of	the	stock	award.

The	Company	is	subject	to	the	income	tax	laws	of	the	U.S.,	its	states	and municipalities	and	those	of	the	foreign	jurisdictions	in	which	the	Company operates.	These	tax	laws	are	complex	and	subject	to	different	interpretations	by the	taxpayer	and	the	relevant	governmental	taxing	authorities.	In	establishing	a provision	for	income	tax	expense,	the	Company	must	make	judgments	and interpretations	about	the	application	of	these	inherently	complex	tax	laws.	The Company	must	also	make	estimates	about	when	in	the	future	certain	items	will affect	taxable	income	in	the	various	tax	jurisdictions,	both	domestic	and	foreign. Disputes	over	interpretations	of	the	tax	laws	may	be	subject	to review/adjudication	by	the	court	systems	of	the	various	tax	jurisdictions	or	may be	settled	with	the	taxing	authority	upon	examination	or	audit.

The	Company	implemented	FASB	Interpretation	No.	48,	"Accounting	for Uncertainty	in	Income	Taxes"	(FIN	48),	on	January	1,	2007,	which	sets	out	a consistent	framework	to	determine	the	appropriate	level	of	tax	reserves	to maintain	for	uncertain	tax	positions.	See	"Accounting	Changes"	on	page	128. The	Company	treats	interest	and	penalties	on	income	taxes	as	a	component	of Income	tax	expense.

Deferred	taxes	are	recorded	for	the	future	consequences	of	events	that	have been	recognized	for	financial	statements	or	tax	returns,	based	upon	enacted	tax laws	and	rates.	Deferred	tax	assets	are	recognized	subject	to	management's judgment	that	realization	is	more	likely	than	not.

See	Note	11	to	the	Consolidated	Financial	Statements	on	page	151	for	a	further description	of	the	Company's	provision	and	related	income	tax	assets	and liabilities.

# Commissions,	Underwriting	and	Principal	Transactions

Commissions,	underwriting	and	principal	transactions	revenues	and	related expenses	are	recognized	in	income	on	a	trade-date	basis.

# Earnings	per	Share

Earnings	per	share	is	computed	after	recognition	of	preferred	stock	dividend requirements.	Basic	earnings	per	share	is	computed	by	dividing	income available	to	common	stockholders	by	the	weighted	average	number	of	common shares	outstanding	for	the	period,	excluding	restricted	stock.	Diluted	earnings per	share	reflects	the	potential	dilution	that	could	occur	if	securities	or	other contracts	to	issue	common	stock	were	exercised.	It	is

computed	after	giving	consideration	to	the	weighted	average	dilutive	effect	of the	Company's	stock	options	and	the	shares	issued	under	the	Company's	Capital Accumulation	Program	and	other	restricted	stock	plans.

# Use	of	Estimates

Management	must	make	estimates	and	assumptions	that	affect	the	Consolidated Financial	Statements	and	the	related	footnote	disclosures.	Such	estimates	are used	in	connection	with	certain	fair	value	measurements.	See	Note	26	on	page 191	for	further	discussions	on	estimates	used	in	the	determination	of	fair	value. The	Company	also	uses	estimates	in	determining	consolidation	decisions	for special	purpose	entities	as	discussed	in	Note	23	on	page	174.	Moreover, estimates	are	significant	in	determining	the	amounts	of	other-than-temporary impairments,	impairments	of	goodwill	and	other	intangible	assets,	provisions	for potential	losses	that	may	arise	from	credit-related	exposures	and	probable	and estimable	losses	related	to	litigation	and	regulatory	proceedings	in	accordance with	SFAS	No.	5,	Accounting	for	Contingencies,	and	tax	reserves	in	accordance with	SFAS	No.	109,	Accounting	for	Income	Taxes,	and	FIN	48,	"Accounting	for Uncertainty	in	Income	Taxes,"	and	SFAS	114,	Accounting	by	Creditors	for Impairment	of	a	Loan.	While	management	makes	its	best	judgment,	actual amounts	or	results	could	differ	from	those	estimates.	Current	market	conditions increase	the	risk	and	complexity	of	the	judgments	in	these	estimates.

# Cash	Flows

Cash	equivalents	are	defined	as	those	amounts	included	in	cash	and	due	from banks.	Cash	flows	from	risk	management	activities	are	classified	in	the	same category	as	the	related	assets	and	liabilities.

# Related	Party	Transactions

The	Company	has	related	party	transactions	with	certain	of	its	subsidiaries	and affiliates.	These	transactions,	which	are	primarily	short-term	in	nature,	include cash	accounts,	collateralized	financing	transactions,	margin	accounts,	derivative trading,	charges	for	operational	support	and	the	borrowing	and	lending	of	funds and	are	entered	into	in	the	ordinary	course	of	business.

# Sale	with	Repurchase	Financing	Agreements

In	February	2008,	the	FASB	issued	FASB	Staff	Position	(FSP)	FAS	140-3,

# Accounting	for	Transfers	of	Financial	Assets	and	Repurchase	Financing

Transactions.	This	FSP	provides	implementation	guidance	on	whether	a	security transfer	with	a	contemporaneous	repurchase	financing	involving	the	transferred financial	asset	must	be	evaluated	as	one	linked	transaction	or	two	separate	de- linked	transactions.

The	FSP	requires	the	recognition	of	the	transfer	and	the	repurchase	agreement as	one	linked	transaction,	unless	all	of	the	following	criteria	are	met:	(1)	the initial	transfer	and	the	repurchase	financing	are	not	contractually	contingent	on one	another;	(2)	the	initial	transferor	has	full	recourse	upon	default,	and	the repurchase	agreement's	price	is	fixed	and	not	at	fair	value;	(3)	the	financial	asset is	readily	obtainable	in	the	marketplace	and	the	transfer	and	repurchase	financing are	executed	at	market	rates;	and	(4)	the	maturity	of	the	repurchase	financing	is before	the	maturity	of	the	financial	asset.	The	scope	of	this	FSP	is	limited	to transfers	and	subsequent	repurchase	financings	that	are	entered	into contemporaneously	or	in	contemplation	of	one	another.

The	FSP	becomes	effective	for	Citigroup	on	January	1,	2009.	The	impact	of adopting	this	FSP	is	not	expected	to	be	material.

# Enhanced	Disclosures	of	Credit	Derivative	Instruments	and Guarantees

In	September	2008,	the	FASB	issued	FSP	FAS	133-1	and	FIN	45-4, "Disclosures	about	Credit	Derivatives	and	Certain	Guarantees:	An	Amendment of	FASB	Statement	No.	133	and	FASB	Interpretation	No.	45,	and	Clarification of	the	Effective	Date	of	FASB	Statement	No.	161,"	which	requires	additional disclosures	for	sellers	of	credit	derivative	instruments	and	certain	guarantees. This	FSP	requires	the	disclosure	of	the	maximum	potential	amount	of	future payments,	the	related	fair	value,	and	the	current	status	of	the payment/performance	risk	for	certain	guarantees	and	credit	derivatives	sold.

# Determining	Fair	Value	in	Inactive	Markets

In	October	2008,	the	FASB	issued	FSP	FAS	157-3,	"Determining	Fair	Value	of Financial	Assets	When	the	Market	for	That	Asset	is	Not	Active."	The	FSP clarifies	that	companies	can	use	internal	assumptions	to	determine	the	fair	value of	a	financial	asset	when	markets	are	inactive,	and	do	not	necessarily	have	to	rely on	broker	quotes.	The	FSP	confirms	a	joint	statement	by	the	FASB	and	the	SEC in	which	they	stated	that	companies	can	use	internal	assumptions	when	relevant market	information	does	not	exist	and	provides	an	example	of	how	to	determine the	fair	value	for	a	financial	asset	in	a	non-active	market.	The	FASB	emphasized that	the	FSP	is	not	new	guidance,	but	rather	clarifies	the	principles	in	SFAS	157. Revisions	resulting	from	a	change	in	the	valuation	technique	or	its	application should	be	accounted	for	prospectively	as	a	change	in	accounting	estimate. The	FSP	was	effective	upon	issuance	and	did	not	have	a	material	impact.

# Measurement	of	Impairment	for	Certain	Securities

In	January	2009,	the	FASB	issued	FSP	EITF	99-20-1,	"Amendments	to	the Impairment	Guidance	of	EITF	Issue	99-20,"	to	achieve	more	consistent determination	of	whether	other-than-temporary	impairments	of	available-for-sale or	held-to-maturity	debt	securities	have	occurred.

This	FSP	aligns	the	impairment	model	of	Issue	No.	99-20	with	that	of	FASB Statement	115,	Accounting	for	Certain	Investments	in	Debt	and	Equity

Securities.	SFAS	115	requires	entities	to	assess	whether	it	is	probable	that	the holder	will	be	unable	to	collect	all	amounts	due	according	to	the	contractual terms.	The	FSP	eliminates	the	requirement	to	consider	market	participants' views	of	cash	flows	of	a	security	in	determining	whether	or	not	impairment	has occurred.

The	FSP	is	effective	for	interim	and	annual	reporting	periods	ending	after December	15,	2008	and	applied	prospectively.	The	impact	of	adopting	this	FSP was	not	material.

# SEC	Staff	Guidance	on	Loan	Commitments	Recorded	at	Fair	Value through	Earnings

On	January	1,	2008,	the	Company	adopted	Staff	Accounting	Bulletin	No.	109 (SAB	109),	which	requires	that	the	fair	value	of	a	written	loan	commitment	that is	marked-to-market	through	earnings	should	include	the	future	cash	flows related	to	the	loan's	servicing	rights.	However,	the	fair	value	measurement	of	a written	loan	commitment	still	must	exclude	the	expected	net	cash	flows	related to	internally-developed	intangible	assets	(such	as	customer	relationship intangible	assets).	SAB	109	applies	to	two	types	of	loan	commitments: (1)	written	mortgage	loan	commitments	for	loans	that	will	be	held-for-sale	when funded	that	are	marked	to	market	as	derivatives	under	SFAS	133	(derivative	loan commitments);	and	(2)	other	written	loan	commitments	that	are	accounted	for	at fair	value	through	earnings	under	SFAS	159's	fair-value	election.	SAB	109 supersedes	SAB	105,	which	applied	only	to	derivative	loan	commitments	and allowed	the	expected	future	cash	flows	related	to	the	associated	servicing	of	the loan	to	be	recognized	only	after	the	servicing	asset	had	been	contractually separated	from	the	underlying	loan	by	sale	or	securitization	of	the	loan	with servicing	retained.	SAB	109	was	applied	prospectively	to	loan	commitments issued	or	modified	in	fiscal	quarters	beginning	after	December	15,	2007.	The impact	of	adopting	this	SAB	was	not	material.

# Netting	of	Cash	Collateral	against	Derivative	Exposures

During	April	2007,	the	FASB	issued	FSP	FIN	39-1,	"Amendment	of	FASB Interpretation	No.	39"	(FSP	FIN	39-1)	modifying	certain	provisions	of	FIN	39, "Offsetting	of	Amounts	Related	to	Certain	Contracts."	This	amendment	clarified the	acceptability	of	the	existing	market	practice	of	offsetting	the	amounts recorded	for	cash	collateral	receivables	or	payables	against	the	fair	value amounts	recognized	for	net	derivative	positions	executed	with	the	same counterparty	under	the	same	master	netting	agreement,	which	was	the Company's	prior	accounting	practice.	Thus,	this	amendment	did	not	affect	the Company's	consolidated	financial	statements.

The	Company	elected	to	early-adopt	SFAS	No.	157,	Fair	Value	Measurements (SFAS	157),	as	of	January	1,	2007.	SFAS	157	defines	fair	value,	expands disclosure	requirements	around	fair	value	and	specifies	a	hierarchy	of	valuation techniques	based	on	whether	the	inputs	to	those	valuation	techniques	are observable	or	unobservable.	Observable	inputs	reflect	market	data	obtained	from independent	sources,	while	unobservable	inputs	reflect	the	Company's	market assumptions.	These	two	types	of	inputs	create	the	following	fair	value	hierarchy:

This	hierarchy	requires	the	Company	to	use	observable	market	data,	when available,	and	to	minimize	the	use	of	unobservable	inputs	when	determining	fair value.	For	some	products	or	in	certain	market	conditions,	observable	inputs	may not	always	be	available.	For	example,	during	the	market	dislocations	that	started in	the	second	half	of	2007,	certain	markets	became	illiquid,	and	some	key observable	inputs	used	in	valuing	certain	exposures	were	unavailable.	When	and if	these	markets	become	liquid,	the	valuation	of	these	exposures	will	use	the related	observable	inputs	available	at	that	time	from	these	markets.

Under	SFAS	157,	Citigroup	is	required	to	take	into	account	its	own	credit	risk when	measuring	the	fair	value	of	derivative	positions	as	well	as	the	other liabilities	for	which	fair	value	accounting	has	been	elected	under	SFAS	155, Accounting	for	Certain	Hybrid	Financial	Instruments	and	SFAS	159,	The	Fair Value	Option	for	Financial	Assets	and	Financial	Liabilities.	The	adoption	of SFAS	157	has	also	resulted	in	some	other	changes	to	the	valuation	techniques used	by	Citigroup	when	determining	fair	value,	most	notably	the	changes	to	the way	that	the	probability	of	default	of	a	counterparty	is	factored	in	and	the elimination	of	a	derivative	valuation	adjustment	which	is	no	longer	necessary under	SFAS	157.	The	cumulative	effect	at	January	1,	2007	of	making	these changes	was	a	gain	of	$250	million	after-tax	($402	million	pretax),	or	$0.05	per diluted	share,	which	was	recorded	in	the	first	quarter	of	2007	earnings	within	the S&B	business.

SFAS	157	also	precludes	the	use	of	block	discounts	for	instruments	traded	in an	active	market,	which	were	previously	applied	to	large	holdings	of	publicly traded	equity	securities,	and	requires	the	recognition	of	trade-date	gains	after consideration	of	all	appropriate	valuation	adjustments	related	to	certain derivative	trades	that	use	unobservable	inputs	in	determining	their	fair	value. Previous	accounting	guidance	allowed	the	use	of	block	discounts	in	certain circumstances	and	prohibited	the	recognition	of	day-one	gains	on	certain derivative	trades	when	determining	the	fair	value	of	instruments	not	traded	in	an active	market.	The	cumulative	effect	of	these	changes	resulted	in	an	increase	to January	1,	2007	retained	earnings	of	$75	million.

# Fair	Value	Option	(SFAS	159)

In	conjunction	with	the	adoption	of	SFAS	157,	the	Company	early-adopted SFAS	159,	The	Fair	Value	Option	for	Financial	Assets	and	Financial	Liabilities (SFAS	159),	as	of	January	1,	2007.	SFAS	159	provides	an	option	on	an instrument-by-instrument	basis	for	most	financial	assets	and	liabilities	to	be reported	at	fair	value	with	changes	in	fair	value	reported	in	earnings.	After	the initial	adoption,	the	election	is	made	at	the	acquisition	of	a	financial	asset,	a financial	liability,	or	a	firm	commitment	and	it	may	not	be	revoked.	SFAS	159 provides	an	opportunity	to	mitigate	volatility	in	reported	earnings	that	resulted prior	to	its	adoption	from	being	required	to	apply	fair	value	accounting	to	certain economic	hedges	(e.g.,	derivatives)	while	having	to	measure	the	assets	and liabilities	being	economically	hedged	using	an	accounting	method	other	than	fair value.

Under	the	SFAS	159	transition	provisions,	the	Company	elected	to	apply	fair value	accounting	to	certain	financial	instruments	held	at	January	1,	2007	with future	changes	in	value	reported	in	earnings.	The	adoption	of	SFAS	159	resulted in	a	decrease	to	January	1,	2007	retained	earnings	of	$99	million.

# Leveraged	Leases

On	January	1,	2007,	the	Company	adopted	FSP	FAS	13-2,	"Accounting	for	a Change	or	Projected	Change	in	the	Timing	of	Cash	Flows	Relating	to	Income Taxes	Generated	by	a	Leverage	Lease	Transaction"	(FSP	13-2),	which	provides guidance	regarding	changes	or	projected	changes	in	the	timing	of	cash	flows relating	to	income	taxes	generated	by	a	leveraged	lease	transaction.

Leveraged	leases	can	provide	significant	tax	benefits	to	the	lessor,	primarily	as a	result	of	the	timing	of	tax	payments.	Since	changes	in	the	timing	and/or	amount of	these	tax	benefits	may	have	a	significant	effect	on	the	cash	flows	of	a	lease transaction,	a	lessor,	in	accordance	with	FSP	13-2,	will	be	required	to	perform	a recalculation	of	a	leveraged	lease	when	there	is	a	change	or	projected	change	in the	timing	of	the	realization	of	tax	benefits	generated	by	that	lease.	Previously, Citigroup	did	not	recalculate	the	tax	benefits	if	only	the	timing	of	cash	flows	had changed.

The	adoption	of	FSP	13-2	resulted	in	a	decrease	to	January	1,	2007	retained earnings	of	$148	million.	This	decrease	to	retained	earnings	will	be	recognized	in earnings	over	the	remaining	lives	of	the	leases	as	tax	benefits	are	realized.

# Accounting	for	Defined	Benefit	Pensions	and	Other	Postretirement Benefits

As	of	December	31,	2006,	the	Company	adopted	SFAS	No.	158,	Employer's Accounting	for	Defined	Benefit	Pensions	and	Other	Postretirement	Benefits (SFAS	158).	In	accordance	with	this	standard,	Citigroup	recorded	the	funded status	of	each	of	its	defined	benefit	pension	and	postretirement	plans	as	an	asset or	liability	on	its	Consolidated	Balance	Sheet	with	a	corresponding	offset,	net	of

taxes,	recorded	in	Accumulated	other	comprehensive	income	(loss)	within

Stockholders'	equity,	resulting	in	an	after-tax	decrease	in	equity	of	$1.647 billion.	See	Note	9	on	page	143.

The	following	table	shows	the	effects	of	adopting	SFAS	158	at	December	31, 2006	on	individual	line	items	in	the	Consolidated	Balance	Sheet	at	December	31, 2006:

|  | Before |  | After |
| :--- | :--- | :--- | :--- |
|  | application |  | application |
|  | of |  | of |
| In\tmillions\tof\tdollars | SFAS\t158 | Adjustments | SFAS\t158 |
| Other\tassets |  |  |  |
| Prepaid\tbenefit\tcost | $2,620 | $(534) | $2,086 |
| Other\tliabilities |  |  |  |
| Accrued\tbenefit\tliability | $— | $2,147 | $2,147 |
| Deferred\ttaxes,\tnet | $3,653 | $1,034 | $4,687 |
| Accumulated\tother |  |  |  |
| comprehensive\tincome |  |  |  |
| (loss) | $(2,053) | $(1,647)^\t(1) | $(3,700) |
| Total\tstockholders'\tequity | $121,430 | $(1,647)^\t(1) | $119,783 |

(1)Adjustment	to	initially	apply	SFAS	158,	net	of	taxes.

On	January	1,	2006,	the	Company	adopted	SFAS	No.	123	(revised	2004),	Share- Based	Payment	(SFAS	123(R)),	which	replaced	the	existing	SFAS	123	and	APB 25,	Accounting	for	Stock	Issued	to	Employees.	SFAS	123(R)	requires	companies to	measure	compensation	expense	for	stock	options	and	other	share-based payments	based	on	the	instruments'	grant	date	fair	value,	and	to	record	expense based	on	that	fair	value	reduced	by	expected	forfeitures.

The	Company	adopted	this	standard	by	using	the	modified	prospective approach.	Beginning	January	1,	2006,	Citigroup	recorded	incremental	expense for	stock	options	granted	prior	to	January	1,	2003	(the	date	the	Company adopted	SFAS	123).	That	expense	equaled	the	remaining	unvested	portion	of	the grant	date	fair	value	of	those	stock	options,	reduced	by	forfeitures. The	Company	maintains	a	number	of	incentive	programs	in	which	equity awards	are	granted	to	eligible	employees.	The	most	significant	is	the	Capital Accumulation	Program	(CAP).	Under	CAP,	the	Company	grants	deferred	and restricted	shares	to	eligible	employees.	The	program	provides	that	employees who	meet	certain	age	plus	years-of-service	requirements	(retirement-eligible employees)	may	terminate	active	employment	and	continue	vesting	in	their awards	provided	they	comply	with	specified	non-compete	provisions.	For awards	granted	to	retirement-eligible	employees	prior	to	the	adoption	of SFAS	123(R),	the	Company	has	been	and	will	continue	to	amortize	the compensation	cost	of	these	awards	over	the	full	vesting	periods.	Awards	granted to	retirement-eligible	employees	after	the	adoption	of	SFAS	123(R)	must	be either	expensed	on	the	grant	date	or	accrued	in	the	year	prior	to	the	grant	date. The	impact	to	2006	was	a	charge	of	$648	million	($398	million	after	tax)	for the	immediate	expensing	of	awards	granted	to	retirement-eligible	employees	in January	2006,	and	$824	million	($526	million	after	tax)	for	the	accrual	of	the awards	that	were	granted	in	January	2007.	The	impact	to	2007	was	$467	million ($290	million	after	tax)	for	awards	granted	in	January	2008.	The	impact	to	2008 was	$110	million	($68	million	after	tax)	for	awards	granted	in	January	2009. In	adopting	SFAS	123(R),	the	Company	began	to	recognize	compensation expense	for	restricted	or	deferred	stock	awards	net	of	estimated	forfeitures. Previously,	the	effects	of	forfeitures	were	recorded	as	they	occurred. SFAS	123(R)	requires	that	compensation	cost	for	all	stock	awards	be calculated	and	recognized	over	the	employees'	service	period	(which	is	generally equal	to	the	vesting	period).	For	stock	options,	the	compensation	cost	is determined	using	option	pricing	models	intended	to	estimate	the	fair	value	of	the awards	at	the	grant	date.	Under	SFAS	123(R),	an	offsetting	increase	to stockholders'	equity	is	recorded	equal	to	the	amount	of	compensation	expense. Earnings	per	share	dilution	is	recognized	as	well.

The	Company	has	made	changes	to	various	stock-based	compensation	plan provisions	for	future	awards.	For	example,	in	January	2005,	the	Company largely	moved	from	granting	stock	options	to	granting	restricted	and	deferred stock	awards,	unless	participants	elect	to	receive	all	or	a	portion	of	their	award	in the	form	of	stock	options.	Thus,	the	majority	of	management	options	granted since	2005	were	due	to	stock	option	elections	and	carried	the	same	vesting	period as	the	restricted	or	deferred	stock	awards	in	lieu	of	which	they	were	granted (ratably,	over	four	years).	Stock	options	granted	since	January	1,	2003,	generally have	three-	or	four-year	vesting	periods	and	six-year	terms.	In	addition,	the	sale of	underlying	shares

acquired	upon	the	exercise	of	options	granted	since	January	1,	2003	is	restricted for	a	two-year	period.	Pursuant	to	a	stock	ownership	commitment,	senior executives	are	generally	required	to	retain	75%	of	the	shares	they	own	and acquire	from	the	Company	over	the	term	of	their	employment.	Options	granted in	2003	and	thereafter	do	not	have	a	reload	feature;	however,	reload	options received	upon	the	exercise	of	options	granted	prior	to	January	1,	2003	(and subsequent	reload	options	stemming	from	such	grants)	retain	a	reload	feature. See	Note	8	to	the	Company's	Consolidated	Financial	Statements	on	page	139.

# Accounting	for	Certain	Hybrid	Financial	Instruments

On	January	1,	2006,	the	Company	elected	to	early-adopt,	primarily	on	a prospective	basis,	SFAS	No.	155,	Accounting	for	Certain	Hybrid	Financial Instruments	(SFAS	155).	In	accordance	with	this	standard,	hybrid	financial instruments—such	as	structured	notes	containing	embedded	derivatives	that otherwise	would	require	bifurcation,	as	well	as	certain	interest-only	instruments —may	be	accounted	for	at	fair	value	if	the	Company	makes	an	irrevocable election	to	do	so	on	an	instrument-by-instrument	basis.	The	changes	in	fair	value are	recorded	in	current	earnings.	The	impact	of	adopting	this	standard	was	not material.

# Accounting	for	Servicing	of	Financial	Assets

On	January	1,	2006,	the	Company	elected	to	early-adopt	SFAS	No.	156, Accounting	for	Servicing	of	Financial	Assets	(SFAS	156).	This	pronouncement requires	all	servicing	rights	to	be	initially	recognized	at	fair	value.	Subsequent	to initial	recognition,	it	permits	a	one-time	irrevocable	election	to	remeasure	each class	of	servicing	rights	at	fair	value,	with	the	changes	in	fair	value	being recorded	in	current	earnings.	The	classes	of	servicing	rights	are	identified	based on	the	availability	of	market	inputs	used	in	determining	their	fair	values	and	the methods	for	managing	their	risks.	The	Company	has	elected	fair	value accounting	for	its	mortgage	and	student	loan	classes	of	servicing	rights.	The impact	of	adopting	this	standard	was	not	material.

# FUTURE	APPLICATION	OF	ACCOUNTING	STANDARDS

# Business	Combinations

In	December	2007,	the	FASB	issued	Statement	No.	141(revised),	Business Combinations	(SFAS	141(R)),	which	is	designed	to	improve	the	relevance, representational	faithfulness,	and	comparability	of	the	information	that	a reporting	entity	provides	in	its	financial	reports	about	a	business	combination and	its	effects.	This	Statement	replaces	SFAS	141,	Business	Combinations. SFAS	141(R)	retains	the	fundamental	requirements	in	Statement	141	that	the acquisition	method	of	accounting	(which	Statement	141	called	the	purchase method)	be	used	for	all	business	combinations	and	for	an	acquirer	to	be identified	for	each	business	combination.	SFAS	141(R)	also	retains	the	guidance in	SFAS	141	for	identifying	and	recognizing	intangible	assets	separately	from goodwill.	The	most	significant	changes	in	SFAS	141(R)	are:	(1)	acquisition	costs and	restructuring	costs	will	now	be	expensed;	(2)	stock	consideration	will	be measured	based	on	the	quoted	market	price	as	of	the	acquisition	date	instead	of the	date	the	deal	is	announced;	(3)	contingent	consideration	arising	from contractual	and	noncontractual	contingencies	that	meet	the	more-likely-than-not recognition	threshold	will	be	measured	and	recognized	as	an	asset	or	liability	at fair	value	at	the	acquisition	date	using	a	probability-weighted	discounted	cash flows	model,	with	subsequent	changes	in	fair	value	reflected	in	earnings; noncontractual	contingencies	that	do	not	meet	the	more-likely-	than-not	criteria will	continue	to	be	recognized	when	they	are	probable	and	reasonably	estimable; and	(4)	acquirer	will	record	a	100%	step-up	to	fair	value	for	all	assets	and liabilities,	including	the	minority	interest	portion,	and	goodwill	is	recorded	as	if	a 100%	interest	was	acquired.

SFAS	141(R)	is	effective	for	Citigroup	on	January	1,	2009,	and	is	applied prospectively.

# Noncontrolling	Interests	in	Subsidiaries

In	December	2007,	the	FASB	issued	Statement	No.	160,	Noncontrolling Interests	in	Consolidated	Financial	Statements	(SFAS	160),	which	establishes standards	for	the	accounting	and	reporting	of	noncontrolling	interests	in subsidiaries	(previously	called	minority	interests)	in	consolidated	financial statements	and	for	the	loss	of	control	of	subsidiaries.	Upon	adoption,	SFAS	160 requires	that	the	equity	interest	of	noncontrolling	shareholders,	partners,	or	other equity	holders	in	subsidiaries	be	presented	as	a	separate	item	in	stockholders' equity,	rather	than	as	a	liability.	After	the	initial	adoption,	when	a	subsidiary	is deconsolidated,	any	retained	noncontrolling	equity	investment	in	the	former subsidiary	must	be	measured	at	fair	value	at	the	date	of	deconsolidation. The	gain	or	loss	on	the	deconsolidation	of	the	subsidiary	is	measured	using	the fair	value	of	the	remaining	investment,	rather	than	the	previous	carrying	amount of	that	retained	investment.

SFAS	160	is	effective	for	Citigroup	on	January	1,	2009.	Early	application	is not	allowed.	As	of	January	1,	2009,	$2.392	billion	of	noncontrolling	interests will	be	reclassified	from	Other	liabilities	to	Stockholders'	equity.

# Revisions	to	the	Earnings	per	Share	Calculation

In	June	2008,	the	FASB	issued	FSP	EITF	03-6-1,	"Determining	Whether Instruments	Granted	in	Share-Based	Payment	Transactions	Are	Participating Securities."	Under	the	FSP,	unvested	share-based	payment	awards	that	contain nonforfeitable	rights	to	dividends	will	be	considered	to	be	a	separate

class	of	common	stock	and	will	be	included	in	the	basic	EPS	calculation	using the	"two-class	method."	The	FSP	will	be	effective	for	the	Company	on January	1,	2009	and	will	require	restatement	of	all	prior	periods	presented. In	August	2008,	the	FASB	also	issued	a	revised	Exposure	Draft	of	a	proposed amendment	to	FASB	Statement	No.	128,	Earnings	per	Share.	This	proposed amendment	seeks	to	simplify	the	method	of	calculating	EPS,	while	promoting the	international	convergence	of	accounting	standards.	This	proposed amendment	reaffirms	the	requirements	of	FSP	EITF	03-6-1	for	basic	EPS	and also	changes	the	calculation	of	diluted	EPS.	The	Exposure	Draft	does	not	contain an	effective	date.

The	Company	is	currently	evaluating	the	impact	of	these	changes.

# Fair	Value	Disclosures	about	Pension	Plan	Assets

In	December	2008,	the	FASB	issued	FSP	FAS	132(R)-1,	"Employers' Disclosures	about	Postretirement	Benefit	Plan	Assets."	This	FSP	requires	that information	about	plan	assets	be	disclosed,	on	an	annual	basis,	based	on	the	fair value	disclosure	requirements	of	SFAS	157.	Citigroup	would	be	required	to separate	plan	assets	into	the	three	fair	value	hierarchy	levels	and	provide	a rollforward	of	the	changes	in	fair	value	of	plan	assets	classified	as	Level	3. The	disclosures	about	plan	assets	required	by	this	FSP	are	effective	for	fiscal years	ending	after	December	15,	2009,	but	would	have	no	effect	on	the Consolidated	Balance	Sheet	or	Statement	of	Income.

# Additional	Disclosures	for	Derivative	Instruments

In	March	2008,	the	FASB	issued	SFAS	No.	161,	Disclosures	about	Derivative Instruments	and	Hedging	Activities,	an	amendment	to	SFAS	133	(SFAS	161). The	standard	requires	enhanced	disclosures	about	derivative	instruments	and hedged	items	that	are	accounted	for	under	SFAS	133	and	related	interpretations. The	standard	will	be	effective	for	all	of	the	Company's	interim	and	annual financial	statements	beginning	with	the	first	quarter	of	2009.	The	standard expands	the	disclosure	requirements	for	derivatives	and	hedged	items	and	has	no impact	on	how	Citigroup	accounts	for	these	instruments.

# Loss-Contingency	Disclosures

In	June	2008,	the	FASB	issued	an	exposure	draft	proposing	expanded disclosures	regarding	loss	contingencies	accounted	for	under	FASB	Statement No.	5,	Accounting	for	Contingencies,	and	SFAS	141(R).	This	proposal	increases the	number	of	loss	contingencies	subject	to	disclosure	and	requires	substantial quantitative	and	qualitative	information	to	be	provided	about	those	loss contingencies.	The	proposed	effective	date	is	December	31,	2009.

The	FASB	has	issued	an	exposure	draft	of	a	proposed	standard	that	would eliminate	Qualifying	Special	Purpose	Entities	(QSPEs)	from	the	guidance	in SFAS	140,	Accounting	for	Transfers	and	Servicing	of	Financial	Assets	and Extinguishments	of	Liabilities.	While	the	proposed	standard	has	not	been finalized,	if	it	is	issued	in	its	current	form,	this	change	may	have	a	significant impact	on	Citigroup's	consolidated	financial	statements	as	the	Company	may lose	sales	treatment	for	certain	assets	previously	sold	to	a	QSPE,	as	well	as	for certain	future	sales,	and	for	certain	transfers	of	portions

of	assets	that	do	not	meet	the	proposed	definition	of	participating	interests.	This proposed	revision	could	become	effective	in	January	2010	and	should	this	occur these	QSPEs	will	then	become	subject	to	review	under	FIN	46(R).	As	of December	31,	2008,	the	total	assets	of	QSPEs	to	which	Citigroup,	acting	as principal,	has	transferred	assets	and	received	sales	treatment	were	approximately $822.1	billion.

In	connection	with	the	proposed	changes	to	SFAS	140,	the	FASB	has	also issued	a	separate	exposure	draft	of	a	proposed	standard	that	details	three	key changes	to	the	consolidation	model	in	FASB	Interpretation	No.	46	(Revised December	2003),	"Consolidation	of	Variable	Interest	Entities"	[FIN	46(R)]. First,	the	Board	will	now	include	former	QSPEs	in	the	scope	of	FIN	46(R).	In addition,	the	FASB	supports	amending	FIN	46(R)	to	change	the	method	of analyzing	which	party	to	a	variable	interest	entity	(VIE)	should	consolidate	the VIE	(the	primary	beneficiary)	to	that	of	a	qualitative	determination	of	power combined	with	benefits	and	losses	instead	of	the	current	risks	and	rewards model.	Finally,	the	proposed	standard	requires	that	the	analysis	of	primary beneficiaries	be	reevaluated	whenever	circumstances	change.	The	existing	rules require	reconsideration	only	when	specified	reconsideration	events	occur.	As	of December	31,	2008,	the	total	assets	of	significant	unconsolidated	VIEs	with which	Citigroup	is	involved	were	approximately	$288.0	billion.

FASB	is	currently	redeliberating	these	proposed	standards;	therefore,	they	are still	subject	to	change.	Since	QSPEs	will	likely	be	eliminated	from	SFAS	140 and	thus	become	subject	to	FIN	46(R)	consolidation	guidance	and	since	FIN 46(R)'s	method	of	determining	which	party	must	consolidate	a	VIE	will	likely change,	we	expect	to	consolidate	only	certain	of	the	VIEs	and	QSPEs,	with which	Citigroup	is	involved.

The	Company	is	currently	evaluating	the	impact	of	these	changes	on Citigroup's	Consolidated	Financial	Statements.

# Investment	Company	Audit	Guide	(SOP	07-1)

In	July	2007,	the	AICPA	issued	Statement	of	Position	07-1,	"Clarification	of	the Scope	of	the	Audit	and	Accounting	Guide	for	Investment	Companies	and Accounting	by	Parent	Companies	and	Equity	Method	Investors	for	Investments in	Investment	Companies"	(SOP	07-1),	which	was	expected	to	be	effective	for fiscal	years	beginning	on	or	after	December	15,	2007.	However,	in	February 2008,	the	FASB	delayed	the	effective	date	indefinitely	by	issuing	an	FSP	SOP 07-1-1,	"Effective	Date	of	AICPA	Statement	of	Position	07-1."	SOP	07-1	sets forth	more	stringent	criteria	for	qualifying	as	an	investment	company	than	does the	predecessor	Audit	Guide.	In	addition,	SOP	07-1	establishes	new	criteria	for	a parent	company	or	equity	method	investor	to	retain	investment	company accounting	in	their	consolidated	financial	statements.	Investment	companies record	all	their	investments	at	fair	value	with	changes	in	value	reflected	in earnings.	The	Company	is	currently	evaluating	the	potential	impact	of	adopting SOP	07-1.

# Determining	Whether	an	Instrument	(or	Embedded	Feature)	Is

# Indexed	to	an	Entity's	Own	Stock

Derivative	contracts	on	a	company's	own	stock	may	be	accounted	for	as	equity instruments,	rather	than	as	assets	and	liabilities,	only	if	they	are	both	indexed solely	to	the	company's	stock	and	settleable	in	shares.

In	June	2008,	the	FASB	ratified	the	consensus	reached	by	the	EITF	on	Issue 07-5,	"Determining	Whether	an	Instrument	(or	Embedded	Feature)	Is	Indexed	to an	Entity's	Own	Stock"	(Issue	07-5).	Under	Issue	07-5,	an	instrument	(or embedded	feature)	would	not	be	considered	indexed	to	an

entity's	own	stock	if	its	settlement	amount	is	affected	by	variables	other	than those	used	to	determine	the	fair	value	of	a	"plain	vanilla"	option	or	forward contract	on	equity	shares,	or	if	the	instrument	contains	a	feature	(such	as	a leverage	factor)	that	increases	exposure	to	those	variables.	An	equity-linked financial	instrument	(or	embedded	feature)	would	not	be	considered	indexed	to the	entity's	own	stock	if	the	strike	price	is	denominated	in	a	currency	other	than the	issuer's	functional	currency.

Issue	07-5	is	effective	for	Citigroup	on	January	1,	2009,	and	is	not	expected	to have	a	material	impact.

# Transition	Guidance	for	Conforming	Changes	to	Issue	No.	98-5

In	June	2008,	the	FASB	ratified	the	consensus	reached	by	the	EITF	on	Issue	08- 4,	"Transition	Guidance	for	Conforming	Changes	to	Issue	No.	98-5"	(Issue	08- 4).	Because	of	Issue	00-27,	"Application	of	Issue	No.	98-5	to	Certain Convertible	Instruments,"	and	SFAS	150,	Accounting	for	Certain	Financial Instruments	with	Characteristics	of	both	Liabilities	and	Equity,	conforming changes	were	made	to	Issue	98-5,	"Accounting	for	Convertible	Securities	with Beneficial	Conversion	Features	or	Contingently	Adjustable	Conversion	Ratios." Issue	08-4	provides	transition	guidance	for	those	conforming	changes	and	is effective	for	Citigroup's	financial	statements	issued	after	January	1,	2009.	Issue 08-4	is	not	expected	to	have	a	material	impact.

# Equity	Method	Investment	Accounting	Considerations

In	November	2008,	the	FASB	ratified	the	consensus	reached	by	the	EITF	on Issue	08-6,	"Equity	Method	Investment	Accounting	Considerations"	(Issue	08- 6).	Under	Issue	08-6,	an	entity	shall	measure	its	equity	method	investment initially	at	cost	in	accordance	with	SFAS	141(R).	Any	other-than-temporary impairment	of	an	equity	method	investment	should	be	recognized	in	accordance with	Opinion	18.	An	equity	method	investor	shall	not	separately	test	an investee's	underlying	assets	for	impairment.	Share	issuance	by	an	investee	shall be	accounted	for	as	if	the	equity	method	investor	had	sold	a	proportionate	share of	its	investment,	with	gain	or	loss	recognized	in	earnings.

# Accounting	for	Defensive	Intangible	Assets

In	November	2008,	the	FASB	ratified	the	consensus	reached	by	the	EITF	on Issue	08-7,	"Accounting	for	Defensive	Intangible	Assets"	(Issue	08-7). According	to	Issue	08-7,	an	acquired	defensive	asset	shall	be	accounted	for	as	a separate	unit	of	accounting	(i.e.,	an	asset	separate	from	other	assets	of	the acquirer).	The	useful	life	assigned	to	an	acquired	defensive	asset	shall	be	based on	the	period	during	which	the	asset	would	diminish	in	value.	Issue	08-7	states that	it	would	be	rare	for	a	defensive	intangible	asset	to	have	an	indefinite	life. Issue	08-7	is	effective	for	Citigroup	on	January	1,	2009,	and	is	not	expected	to have	a	material	impact.

# 2.	BUSINESS	DEVELOPMENTS

# STRATEGIC	ACQUISITIONS

In	2007,	Citigroup	acquired	ABN	AMRO	Mortgage	Group	(AAMG),	a subsidiary	of	LaSalle	Bank	Corporation	and	ABN	AMRO	Bank	N.V.	AAMG	is a	national	originator	and	servicer	of	prime	residential	mortgage	loans.	As	part	of this	acquisition,	Citigroup	purchased	approximately	$12	billion	in	assets, including	$3	billion	of	mortgage	servicing	rights,	which	resulted	in	the	addition of	approximately	1.5	million	servicing	customers.	Results	for	AAMG	are included	within	Citigroup's	North	America	Consumer	Banking	business	from March	1,	2007	forward.

In	2007,	the	Company	completed	the	acquisition	of	Old	Lane	Partners,	L.P.	and Old	Lane	Partners,	GP,	LLC	(Old	Lane).	Old	Lane	is	the	manager	of	a	global, multi-strategy	hedge	fund	and	a	private	equity	fund.	Results	for	Old	Lane	are included	within	ICG,	from	July	2,	2007	forward.

On	June	12,	2008,	Citigroup	announced	the	restructuring	of	Old	Lane	and	its multi-strategy	hedge	fund	(the	"Fund")	in	anticipation	of	redemptions	by	all unaffiliated,	non-Citigroup	employee	investors.	To	accomplish	this	restructuring, Citigroup	purchased	substantially	all	of	the	assets	of	the	Fund	at	fair	value	on June	30,	2008.	The	fair	value	of	assets	purchased	from	the	Fund	was approximately	$6	billion	at	June	30,	2008.

In	2007,	the	Company	completed	its	acquisition	of	BISYS	Group,	Inc.	(BISYS) for	$1.47	billion	in	cash.	In	addition,	BISYS'	shareholders	received	$18.2 million	in	the	form	of	a	special	dividend	paid	by	BISYS	simultaneously. Citigroup	completed	the	sale	of	the	Retirement	and	Insurance	Services	Divisions of	BISYS	to	affiliates	of	J.C.	Flowers	&	Co.	LLC,	making	the	net	cost	of	the transaction	to	Citigroup	approximately	$800	million.	Citigroup	retained	the	Fund Services	and	Alternative	Investment	services	businesses	of	BISYS,	which provides	administrative	services	for	hedge	funds,	mutual	funds	and	private equity	funds.	Results	for	BISYS	are	included	within	Citigroup's	Transaction Services	business	from	August	1,	2007	forward.

In	2007,	Citigroup	completed	its	acquisition	of	Automated	Trading	Desk	(ATD), a	leader	in	electronic	market	making	and	proprietary	trading,	for	approximately $680	million	($102.6	million	in	cash	and	approximately	11.17	million	shares	of Citigroup	common	stock).	ATD	operates	as	a	unit	of	Citigroup's	Global	Equities business,	adding	a	network	of	broker-dealer	customers	to	Citigroup's	diverse base	of	institutional,	broker-dealer	and	retail	customers.	Results	for	ATD	are included	within	Citigroup's	Securities	and	Banking	business	from	October	3, 2007	forward.

# Japan

Citigroup	began	consolidating	Nikko	Cordial's	financial	results	and	the	related minority	interest	on	May	9,	2007,	when	Nikko	Cordial	became	a	61%-owned subsidiary.	Citigroup	later	increased	its	ownership	stake	in	Nikko	Cordial	to approximately	68%.	Nikko	Cordial	results	are	included	within

Citigroup's	Securities	and	Banking,	and	Global	Wealth	Management	businesses. On	January	29,	2008,	Citigroup	completed	the	acquisition	of	the	remaining Nikko	Cordial	shares	that	it	did	not	already	own	by	issuing	175	million Citigroup	common	shares	(approximately	$4.4	billion	based	on	the	exchange terms)	in	exchange	for	those	Nikko	Cordial	shares.	The	share	exchange	was completed	following	the	listing	of	Citigroup's	common	shares	on	the	Tokyo Stock	Exchange	on	November	5,	2007.

In	2007,	Citigroup	completed	its	acquisition	of	Grupo	Financiero	Uno	(GFU), the	largest	credit	card	issuer	in	Central	America,	and	its	affiliates.

The	acquisition	of	GFU,	with	$2.2	billion	in	assets,	expands	the	presence	of Citigroup's	Latin	America	Consumer	Banking	franchise,	enhances	its	credit	card business	in	the	region	and	establishes	a	platform	for	regional	growth	in Consumer	Finance	and	Retail	Banking.	GFU	has	more	than	one	million	retail clients	and	operates	a	distribution	network	of	75	branches	and	more	than	100 mini-branches	and	points	of	sale.	The	results	for	GFU	are	included	within Citigroup's	Global	Cards	and	Latin	America	Consumer	Banking	businesses from	March	5,	2007	forward.

In	2007,	Citigroup	completed	the	acquisition	of	the	subsidiaries	of	Grupo Cuscatlán	for	$1.51	billion	($755	million	in	cash	and	14.2	million	shares	of Citigroup	common	stock)	from	Corporacion	UBC	Internacional	S.A.	Grupo Cuscatlán	is	one	of	the	leading	financial	groups	in	Central	America,	with	assets of	$5.4	billion,	loans	of	$3.5	billion,	and	deposits	of	$3.4	billion.	Grupo Cuscatlán	has	operations	in	El	Salvador,	Guatemala,	Costa	Rica,	Honduras	and Panama.	The	results	of	Grupo	Cuscatlán	are	included	from	May	11,	2007, forward	and	are	recorded	in	Latin	America	Consumer	Banking.

# Agreement	to	Establish	Partnership	with	Quiñenco—Banco	de	Chile

Under	the	agreement,	Citigroup	sold	Citigroup's	Chilean	operations	and	other assets	in	exchange	for	an	approximate	32.96%	stake	in	LQIF,	a	wholly	owned subsidiary	of	Quiñenco	that	controls	Banco	de	Chile,	and	is	accounted	for	under the	equity	method	of	accounting.	As	part	of	the	overall	transaction,	Citigroup also	acquired	the	U.S.	branches	of	Banco	de	Chile	for	approximately	$130 million.	Citigroup	has	entered	into	an	agreement	to	acquire	an	additional	17.04% stake	in	LQIF	for	approximately	$1	billion	within	three	years.	The	new partnership	calls	for	active	participation	by	Citigroup	in	the	management	of Banco	de	Chile	including	board	representation	at	both	LQIF	and	Banco	de	Chile.

In	2007,	Citigroup	completed	its	acquisition	of	Bank	of	Overseas	Chinese (BOOC)	in	Taiwan	for	approximately	$427	million.	BOOC	offers	a	broad

suite	of	corporate	banking,	consumer	and	wealth	management	products	and services	to	more	than	one	million	clients	through	55	branches	in	Taiwan.	This transaction	will	strengthen	Citigroup's	presence	in	Asia,	making	it	the	largest international	bank	and	13th	largest	by	total	assets	among	all	domestic	Taiwan banks.	Results	for	BOOC	are	included	in	Citigroup's	Asia	Consumer	Banking, Global	Cards	and	Securities	and	Banking	businesses	from	December	1,	2007 forward.

In	2007,	the	Company	completed	the	acquisition	of	Quilter,	a	U.K.	wealth advisory	firm	with	over	$10.9	billion	of	assets	under	management,	from	Morgan Stanley.	Quilter	has	more	than	18,000	clients	and	300	staff	located	in	10	offices throughout	the	U.K.,	Ireland	and	the	Channel	Islands.	Quilter's	results	are included	in	Citigroup's	Global	Wealth	Management	business	from	March	1, 2007	forward.

In	2007,	Citigroup	completed	its	acquisition	of	Egg	Banking	plc	(Egg),	one	of the	U.K.'s	leading	online	financial	services	providers,	from	Prudential	PLC	for approximately	$1.39	billion.	Egg	offers	various	financial	products	and	services including	online	payment	and	account	aggregation	services,	credit	cards, personal	loans,	savings	accounts,	mortgages,	insurance	and	investments.	Results for	Egg	are	included	in	Citigroup's	Global	Cards	and	EMEA	Consumer	Banking businesses	from	May	1,	2007	forward.

In	2007,	Citigroup	completed	its	purchase	of	a	20%	equity	interest	in	Akbank	for approximately	$3.1	billion,	accounted	for	under	the	equity	method	of accounting.	Akbank,	the	second-largest	privately	owned	bank	by	assets	in Turkey,	is	a	premier,	full-service	retail,	commercial,	corporate	and	private	bank. Sabanci	Holding,	a	34%	owner	of	Akbank	shares,	and	its	subsidiaries	have granted	Citigroup	a	right	of	first	refusal	or	first	offer	over	the	sale	of	any	of	their Akbank	shares	in	the	future.	Subject	to	certain	exceptions,	including	purchases from	Sabanci	Holding	and	its	subsidiaries,	Citigroup	has	otherwise	agreed	not	to increase	its	percentage	ownership	in	Akbank.

# Consolidation	of	Brazil's	CrediCard

In	2006,	Citigroup	and	Banco	Itau	dissolved	their	joint	venture	in	CrediCard,	a Brazilian	consumer	credit	card	business.	In	accordance	with	the	dissolution agreement,	Banco	Itau	received	half	of	CrediCard's	assets	and	customer accounts	in	exchange	for	its	50%	ownership,	leaving	Citigroup	as	the	sole	owner of	CrediCard.

# STRATEGIC	DIVESTITURES

The	following	divestitures	occurred	in	2008	and	do	not	qualify	as	Discontinued operations:

On	July	1,	2008,	Citigroup	and	State	Street	Corporation	completed	the	sale	of CitiStreet,	a	benefits	servicing	business,	to	ING	Group	in	an	all-cash	transaction valued	at	$900	million.	CitiStreet	is	a	joint	venture	formed	in	2000	which,	prior to	the	sale,	was	owned	50	percent	each	by	Citigroup	and	State	Street.	The transaction	closed	on	July	1,	2008,	and	generated	an	after-tax	gain	of	$222 million	($347	million	pretax).

On	December	23,	2008,	Citigroup	announced	an	agreement	with	Wipro	Limited to	sell	all	of	Citigroup's	interest	in	Citi	Technology	Services	Ltd.	(CTS), Citigroup's	India-based	captive	provider	of	Technology	Infrastructure	support and	Application	Development,	for	all-cash	consideration	of	approximately	$127 million.	A	substantial	portion	of	the	proceeds	from	this	sale	will	be	recognized over	the	period	in	which	Citigroup	has	a	service	contract	with	Wipro	Limited. This	transaction	closed	on	January	20,	2009	and	a	loss	of	approximately	$7 million	was	booked	at	that	time.

Citigroup	has	executed	a	definitive	agreement	to	sell	all	of	the	shares	of	Nikko Citi	Trust	and	Banking	Corporation	to	Mitsubishi	UFJ	Trust	and	Banking Corporation	(MUTB).	At	the	closing,	MUTB	will	pay	an	all-cash	consideration of	25	billion	yen,	subject	to	certain	purchase	price	adjustments.	The	sale	is expected	to	close	on	or	around	April	1,	2009,	pending	regulatory	approvals	and other	closing	conditions,	and	result	in	an	estimated	after-tax	gain	of	$53	million ($89	million	pretax).

# 3.	DISCONTINUED	OPERATIONS

On	December	5,	2008,	Citigroup	sold	its	German	retail	banking	operations	to Credit	Mutuel	for	Euro	5.2	billion,	in	cash	plus	the	German	retail	bank's operating	net	earnings	accrued	in	2008	through	the	closing.	The	sale	resulted	in an	after-tax	gain	of	approximately	$3.9	billion	including	the	after-tax	gain	on	the foreign	currency	hedge	of	$383	million	recognized	during	the	fourth	quarter	of 2008.

The	German	retail	banking	operations	had	total	assets	and	total	liabilities	as	of November	30,	2008,	of	$15.6	billion	and	$11.8	billion,	respectively. Results	for	all	of	the	German	retail	banking	businesses	sold,	as	well	as	the	net gain	recognized	in	2008	from	this	sale,	are	reported	as	Discontinued	operations for	all	periods	presented.

Summarized	financial	information	for	Discontinued	operations,	including	cash flows,	related	to	the	sale	of	the	German	retail	banking	operations	is	as	follows:

# CitiCapital

On	July	31,	2008,	Citigroup	sold	substantially	all	of	CitiCapital,	the	equipment finance	unit	in	North	America.	The	total	proceeds	from	the	transaction	were approximately	$12.5	billion	and	resulted	in	an	after-tax	loss	to	Citigroup	of	$305 million.	This	loss	is	included	in	Income	from	discontinued	operations	on	the Company's	Consolidated	Statement	of	Income	for	the	second	quarter	of	2008. The	assets	and	liabilities	for	CitiCapital	totaled	approximately	$12.9	billion	and $0.5	billion,	respectively,	at	June	30,	2008.

This	transaction	encompassed	seven	CitiCapital	equipment	finance	business lines,	including	Healthcare	Finance,	Private	Label	Equipment	Finance,	Material Handling	Finance,	Franchise	Finance,	Construction	Equipment	Finance,	Bankers Leasing,	and	CitiCapital	Canada.	CitiCapital's	Tax	Exempt	Finance	business	was not	part	of	the	transaction	and	was	retained	by	Citigroup.

CitiCapital	had	approximately	1,400	employees	and	160,000	customers throughout	North	America.

Results	for	all	of	the	CitiCapital	businesses	sold,	as	well	as	the	net	loss recognized	in	2008	from	this	sale,	are	reported	as	Discontinued	operations	for	all periods	presented.

Summarized	financial	information	for	Discontinued	operations,	including	cash flows,	related	to	the	sale	of	CitiCapital	is	as	follows:

# Sale	of	the	Asset	Management	Business

On	December	1,	2005,	the	Company	completed	the	sale	of	substantially	all	of	its Asset	Management	business	to	Legg	Mason,	Inc.	(Legg	Mason). On	January	31,	2006,	the	Company	completed	the	sale	of	its	Asset Management	business	within	Bank	Handlowy	(an	indirect	banking	subsidiary	of Citigroup	located	in	Poland)	to	Legg	Mason.	This	transaction,	which	was originally	part	of	the	overall	Asset	Management	business	sold	to	Legg	Mason	on December	1,	2005,	was	postponed	due	to	delays	in	obtaining	local	regulatory approval.	A	gain	from	this	sale	of	$18	million	after-tax	and	minority	interest ($31	million	pretax	and	minority	interest)	was	recognized	in	the	first	quarter	of 2006	in	Discontinued	operations.

During	March	2006,	the	Company	sold	10.3	million	shares	of	Legg	Mason stock	through	an	underwritten	public	offering.	The	net	sale	proceeds	of	$1.258 billion	resulted	in	a	pretax	gain	of	$24	million	in	ICG.

In	September	2006,	the	Company	received	from	Legg	Mason	the	final	closing adjustment	payment	related	to	this	sale.	This	payment	resulted	in	an	additional after-tax	gain	of	$51	million	($83	million	pretax),	recorded	in	Discontinued operations.

# Sale	of	the	Life	Insurance	and	Annuities	Business

On	July	1,	2005,	the	Company	completed	the	sale	of	Citigroup's	Travelers Life	&	Annuity	and	substantially	all	of	Citigroup's	international	insurance businesses	to	MetLife,	Inc.	(MetLife).

During	the	first	quarter	of	2006,	$15	million	of	the	total	$657	million	federal tax	contingency	reserve	release	was	reported	in	Discontinued	operations	as	it related	to	the	Life	Insurance	and	Annuities	business	sold	to	MetLife.

In	July	2006,	Citigroup	recognized	an	$85	million	after-tax	gain	from	the	sale of	MetLife	shares.	This	gain	was	reported	in	income	from	continuing	operations in	ICG.

In	July	2006,	the	Company	received	the	final	closing	adjustment	payment related	to	this	sale,	resulting	in	an	after-tax	gain	of	$75	million	($115	million pretax),	which	was	recorded	in	Discontinued	operations.

In	addition,	during	the	third	quarter	of	2006,	a	release	of	$42	million	of deferred	tax	liabilities	was	reported	in	Discontinued	operations	as	it	related	to the	Life	Insurance	&	Annuities	business	sold	to	MetLife.

In	December	2008,	the	Company	fulfilled	its	previously	agreed	upon obligations	with	regard	to	its	remaining	10%	economic	interest	in	the	long-term care	business	that	it	had	sold	to	the	predecessor	of	Genworth	Financial	in	2000. Under	the	terms	of	the	2005	sales	agreement	of	Citi's	Life	Insurance	and Annuities	business	to	MetLife,	Citi	agreed	to	reimburse	MetLife	for	certain liabilities	related	to	the	sale	of	the	long-term-care	business	to	Genworth's predecessor.	The	assumption	of	the	final	10%	block	by	Genworth	at December	31,	2008,	resulted	in	a	pretax	loss	of	$50	million	($33	million	after- tax),	which	has	been	reported	in	Discontinued	operations.

# Combined	Results	for	Discontinued	Operations

The	following	is	summarized	financial	information	for	the	German	retail banking	operations,	CitiCapital,	Life	Insurance	and	Annuities	business,	Asset Management	business,	and	TPC:

# 4.	BUSINESS	SEGMENTS

Citigroup	is	a	diversified	bank	holding	company	whose	businesses	provide	a broad	range	of	financial	services	to	consumer	and	corporate	customers	around the	world.	The	Company's	activities	are	conducted	through	the	Global	Cards, Consumer	Banking,	Institutional	Clients	Group	(ICG),	Global	Wealth Management	(GWM)	and	Corporate/Other	business	segments.

The	Global	Cards	segment	is	a	global	issuer	of	credit	cards	through	the MasterCard,	Visa,	Diners	Club,	Private	Label	and	American	Express	platforms. The	Consumer	Banking	segment	includes	a	global,	full-service	consumer franchise	delivering	a	wide	array	of	banking,	lending,	insurance	and	investment services	through	a	network	of	local	branches,	offices	and	electronic	delivery systems.

The	businesses	included	in	the	Company's	ICG	segment	provide	corporations, governments,	institutions	and	investors	in	approximately	100	countries	with	a broad	range	of	banking	and	financial	products	and	services.

The	Global	Wealth	Management	segment	is	composed	of	the	Smith	Barney Private	Client	businesses	and	Citigroup	Private	Bank.	Smith	Barney	provides investment	advice,	financial	planning	and	brokerage	services	to	affluent individuals,	companies	and	non-profits.	Private	Bank	provides	personalized wealth	management	services	for	high-net-worth	clients.

Corporate/Other	includes	net	treasury	results,	unallocated	corporate	expenses, offsets	to	certain	line-item	reclassifications	(eliminations),	the	results	of discontinued	operations	and	unallocated	taxes.

The	accounting	policies	of	these	reportable	segments	are	the	same	as	those disclosed	in	Note	1	to	the	Consolidated	Financial	Statements	on	page	121

The	following	table	presents	certain	information	regarding	the	Company's	continuing	operations	by	segment:

| identifiable	assets	in	billions | 2008 | 2007 | 2006 | 2008 | 2007 | 2006 | 2008 | 2007 | 2006 | 2008 | 2007 |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Global\tCards | $20,207 | $23,051 | $19,812\t\t\t $ | (84) | $ 2,278 | $2,355 | $166 | $ 4,674 | $4,978 | $114 | $127 |
| Consumer\tBanking | \t 28,652 | \t 29,458 | \t 26,635 | (5,354) | 181 | \t 2,136 | (12,280) | 2,157 | 6,073 | 496 | 563 |
| Institutional\tClients\tGroup | (7,817) | \t 13,740 | \t 30,647 | (15,405) | (5,054) | \t 3,052 | (20,117) | (4,155) | 8,611 | \t 1,003 | \t 1,317 |
| Global\tWealth\tManagement | \t 12,601 | \t 12,998 | \t 10,177 | 652 | 1,019 | 704 | 1,091 | 1,974 | 1,443 | 99 | 104 |
| Corporate/Other\t^(4) | (850) | (752) | (944) | (421) | (922) | (498) | (954) | (1,661) | (654) | 226 | 76 |
| Total | $52,793 | $78,495 | $86,327\t\t\t $(20,612) | $86,327\t\t\t $(20,612) | $(2,498) | $7,749 | $(32,094) | $ 2,989 | $20,451 | $1,938 | $2,187 |

(2) The	effective	tax	rates	for	2006	reflect	the	impact	of	the	resolution	of	the	Federal	Tax	Audit	and	the	New	York	Tax	Audits.

(3) Includes	pretax	provisions	(credits)	for	credit	losses	and	for	benefits	and	claims	in	the	 Global	Cards	results	of	$9.6	billion,	$5.5	billion	and	$3.2	billion;	in	the	Consumer	Banking	results	of	$19.6 billion,	$10.8	billion	and	$3.8	billion;	in	the	ICG	results	of	$5.2	billion,	$1.5	billion	and	$532	million;	and	in	the	 Global	Wealth	Management	results	of	$301	million,	$101	million	and	$24	million	for 2008,	2007	and	2006,	respectively.	Corporate/Other	recorded	a	pretax	credit	of	$1	million	and	a	provision	of	$(2)	million	for	2008	and	2007,	respectively.

(4) Corporate/Other	reflects	the	restructuring	charge,	net	of	changes	in	estimates,	of	$1.8	billion	for	2007.	Of	this	total	charge,	$119	million	is	attributable	to	 Global	Cards;	$382	million	to	Consumer Banking;	$608	million	to	ICG;	$305	million	to	GWM;	and	$383	million	to	Corporate/Other.	See	Note	10	on	page	149	for	further	discussion.

# 5.	INTEREST	REVENUE	AND	EXPENSE

For	the	years	ended	December	31,	2008,	2007	and	2006,	respectively,	interest revenue	and	expense	consisted	of	the	following:

| In	millions	of	dollars | 2008 | 2007 | 2006 |
| :--- | :--- | :--- | :--- |
| Interest\trevenue |  |  |  |
| Loan\tinterest,\tincluding\tfees | $62,336 | $63,201 | $52,086 |
| Deposits\twith\tbanks | 3,119 | 3,113 | 2,240 |
| Federal\tfunds\tsold\tand\tsecurities |  |  |  |
| \t\t\t\tpurchased\tunder\tagreements\tto\tresell | 9,175 | 18,354 | \t 14,199 |
| Investments,\tincluding\tdividends | 10,718 | 13,423 | \t 10,340 |
| Trading\taccount\tassets\t^(1) | 17,489 | 18,507 | \t 11,865 |
| Other\tinterest | 3,818 | 4,831 | 2,881 |
| Total\tinterest\trevenue | $106,655 | $121,429 | $93,611 |
| Interest\texpense |  |  |  |
| Deposits | $20,271 | $28,402 | $21,336 |
| Federal\tfunds\tpurchased\tand\tsecurities\tloaned\tor |  |  |  |
| sold\tunder\tagreements\tto\trepurchase | 11,330 | 23,028 | \t 17,448 |
| Trading\taccount\tliabilities\t^(1) | 1,277 | 1,440 | 1,119 |
| Short-term\tborrowings | 4,039 | 7,071 | 4,632 |
| Long-term\tdebt | 16,046 | 16,110 | \t 11,148 |
| Total\tinterest\texpense | $52,963 | $76,051 | $55,683 |
| Net\tinterest\trevenue | $53,692 | $45,378 | $37,928 |
| Provision\tfor\tloan\tlosses | 33,674 | $16,832 | $6,320 |
| Net\tinterest\trevenue\tafter\tprovision\tfor\tloan |  |  |  |
| losses | $20,018 | $28,546 | $31,608 |

(1)Interest	expense	on	Trading	account	liabilities	of	ICG	is	reported	as	a	reduction	of	interest revenue	from	Trading	account	assets.

# 6.	COMMISSIONS	AND	FEES

Commissions	and	fees	revenue	includes	charges	to	customers	for	credit	and	bank cards,	including	transaction-processing	fees	and	annual	fees;	advisory	and	equity and	debt	underwriting	services;	lending	and	deposit-related	transactions,	such	as loan	commitments,	standby	letters	of	credit	and	other	deposit	and	loan	servicing activities;	investment	management-related	fees,	including	brokerage	services	and custody	and	trust	services;	and	insurance	fees	and	commissions.

The	following	table	presents	commissions	and	fees	revenue	for	the	years	ended December	31:

| In	millions	of	dollars | 2008 | 2007 | 2006 |
| :--- | :--- | :--- | :--- |
| Investment\tbanking | $2,284 | $5,228 | $4,093 |
| Credit\tcards\tand\tbank\tcards | 4,517 | 5,036 | 5,191 |
| Smith\tBarney | 2,836 | 3,265 | 2,958 |
| ICG\ttrading-related | 2,322 | 2,706 | 2,464 |
| Checking-related | 1,134 | 1,108 | 911 |
| Transaction\tServices | 1,423 | 1,166 | 859 |
| Other\tConsumer | 1,211 | 649 | 279 |
| Nikko\tCordial-related\t^(1) | 1,086 | 834 | — |
| Loan\tservicing\t^(2) | (1,731) | 560 | 660 |
| Primerica | 415 | 455 | 399 |
| Other\tICG | 747 | 295 | 243 |
| Other | (141) | 71 | 58 |
| Corporate\tfinance\t^(3) | (4,876) | (667) | 735 |
| Total\tcommissions\tand\tfees | $11,227 | $20,706 | $18,850 |

(1)Commissions	and	fees	for	Nikko	Cordial	have	not	been	detailed	due	to	unavailability	of	the information.

(2)Includes	fair	value	adjustments	on	mortgage	servicing	assets.	The	mark-to-market	on	the underlying	economic	hedges	of	the	MSRs	is	included	in	Other	revenue.

(3)Includes	write-downs	of	approximately	$4.9	billion	in	2008	and	$1.5	billion	in	2007,	net	of underwriting	fees,	on	funded	and	unfunded	highly	leveraged	finance	commitments,	recorded at	fair	value	and	reported	as	loans	held	for	sale	in	Other	assets.	Write-downs	were	recorded on	all	highly	leveraged	finance	commitments	where	there	was	value	impairment,	regardless of	funding	date.

# 7.	PRINCIPAL	TRANSACTIONS

Principal	transactions	revenue	consists	of	realized	and	unrealized	gains	and losses	from	trading	activities.	Not	included	in	the	table	below	is	the	impact	of net	interest	revenue	related	to	trading	activities,	which	is	an	integral	part	of trading	activities'	profitability.	The	following	table	presents	principal transactions	revenue	for	the	years	ended	December	31:

| In	millions	of	dollars | 2008 | 2007 | 2006^	(1) |
| :--- | :--- | :--- | :--- |
| Institutional\tClients\tGroup |  |  |  |
| Fixed\tincome\t^(2) | $(6,455) | $4,053 | $ 5,593 |
| Credit\tproducts\t^(3) | (21,614) | (21,805) | (744) |
| Equities\t^(4) | (394) | 682 | 866 |
| Foreign\texchange\t^(5) | 2,316 | 1,222 | 693 |
| Commodities\t^(6) | 667 | 686 | 487 |
| Total\tICG | $(25,480) | $(15,162) | $ 6,895 |
| Consumer\tBanking/Global\tCards\t^(7) | 1,616 | 1,364 | 504 |
| Global\tWealth\tManagement\t^(7) | 836 | 1,315 | 680 |
| Corporate/Other | 840 | 397 | (89) |
| Total\tprincipal\ttransactions\trevenue | $(22,188) | $(12,086) | $ 7,990 |

(1)Reclassified	to	conform	to	the	current	period's	presentation. (2)Includes	revenues	from	government	securities	and	corporate	debt,	municipal	securities, preferred	stock,	mortgage	securities,	and	other	debt	instruments.	Also	includes	spot	and forward	trading	of	currencies	and	exchange-traded	and	over-the-counter	(OTC)	currency options,	options	on	fixed	income	securities,	interest	rate	swaps,	currency	swaps,	swap options,	caps	and	floors,	financial	futures,	OTC	options,	and	forward	contracts	on	fixed income	securities.	Losses	in	2008	reflect	the	volatility	and	dislocation	in	the	credit	and trading	markets.

(3)Includes	revenues	from	structured	credit	products	such	as	North	America	and	Europe collateralized	debt	obligations.	In	2007	and	2008,	losses	recorded	were	related	to	subprime- related	exposures	in	ICG's	lending	and	structuring	business	and	exposures	to	super	senior CDOs.

(4)Includes	revenues	from	common,	preferred	and	convertible	preferred	stock,	convertible corporate	debt,	equity-linked	notes,	and	exchange-traded	and	OTC	equity	options	and warrants.

(5)Includes	revenues	from	foreign	exchange	spot,	forward,	option	and	swap	contracts,	as	well as	translation	gains	and	losses.

(6)Primarily	includes	the	results	of	Phibro	LLC,	which	trades	crude	oil,	refined	oil	products, natural	gas,	and	other	commodities.

(7)Includes	revenues	from	various	fixed	income,	equities	and	foreign	exchange	transactions.

# 8.	INCENTIVE	PLANS

The	Company	has	adopted	a	number	of	equity	compensation	plans	under	which it	administers	stock	options,	restricted	or	deferred	stock	and	stock	purchase programs.	The	award	programs	are	used	to	attract,	retain	and	motivate	officers, employees	and	non-employee	directors,	to	compensate	them	for	their contributions	to	the	Company,	and	to	encourage	employee	stock	ownership.	The plans	are	administered	by	the	Personnel	and	Compensation	Committee	of	the Citigroup	Board	of	Directors,	which	is	composed	entirely	of	independent	non- employee	directors.	At	December	31,	2008,	approximately	142	million	shares were	authorized	and	available	for	grant	under	Citigroup's	stock	incentive	and stock	purchase	plans.	In	accordance	with	Citigroup	practice,	shares	would	be issued	out	of	Treasury	stock	upon	exercise	or	vesting.

The	following	table	shows	components	of	compensation	expense	relating	to	the Company's	stock-based	compensation	programs	as	recorded	during	2008,	2007 and	2006:

| In	millions	of	dollars | 2008 | 2007 | 2006 |
| :--- | :--- | :--- | :--- |
| SFAS\t123(R)\tcharges\tfor\tJanuary\t2006\tawards\tto |  |  |  |
| retirement-eligible\temployees | $— | $— | $648 |
| SFAS\t123(R)\tcharges\tfor\testimated\tawards\tto\tretirement- |  |  |  |
| eligible\temployees | 110 | 467 | 824 |
| Option\texpense | 29 | 86 | 129 |
| Amortization\tof\tMC\tLTIP\tawards^\t(1) | 18 | 18 | — |
| Amortization\tof\trestricted\tand\tdeferred\tstock\tawards |  |  |  |
| (excluding\tMC\tLTIP)\t^(2) | \t 3,133 | \t 2,728 | \t 1,565 |
| Total | $3,290 | $3,299 | $3,166 |

(1)Management	Committee	Long-Term	Incentive	Plan	(MC	LTIP)	was	created	in	2007.

(2)Represents	amortization	of	expense	over	the	remaining	life	of	all	unvested	restricted	and deferred	stock	awards	granted	to	all	employees	prior	to	2006.	The	2008,	2007	and	2006 periods	also	include	amortization	expense	for	all	unvested	awards	to	non-retirement-eligible employees	on	or	after	January	1,	2006.	Amortization	includes	estimated	forfeitures	of awards.

# STOCK	AWARD	PROGRAMS

The	Company,	primarily	through	its	Capital	Accumulation	Program	(CAP), issues	shares	of	Citigroup	common	stock	in	the	form	of	restricted	or	deferred stock	to	participating	officers	and	employees.	For	all	stock	award	programs, during	the	applicable	vesting	period,	the	shares	awarded	cannot	be	sold	or transferred	by	the	participant,	and	some	or	all	of	the	shares	awarded	are	subject to	cancellation	if	the	participant's	employment	is	terminated.	After	the	award vests,	the	shares	become	freely	transferable	(subject	to	the	stock	ownership commitment	of	senior	executives).	From	the	date	of	the	award,	the	recipient	of	a restricted	stock	award	can	direct	the	vote	of	the	shares	and	receive	dividend equivalents.	Recipients	of	deferred	stock	awards	receive	dividend	equivalents, but	cannot	vote	shares	until	they	have	vested.

Stock	awards	granted	in	January	2008,	2007,	2006	and	2005	generally	vest 25%	per	year	over	four	years,	except	for	awards	to	certain	employees	at	Smith Barney	that	vest	after	two	years	and	July	2007	Management	Committee	Long- Term	Incentive	Plan	awards	(further	described	below)	that	vest	in	January	2010. Stock	awards	granted	in	2003	and	2004	generally	vested	after	a	two-	or	three- year	vesting	period.	CAP	participants	in	2008,	2007,	2006	and	2005	could	elect to	receive	all	or	part	of	their	award	in	stock	options.	The	figures	presented	in	the stock	option	program	tables	include	options	granted	under	CAP.	Unearned compensation	expense	associated	with	the	stock	awards	represents	the	market value	of	Citigroup	common	stock	at	the	date	of	grant	and	is	recognized	as	a charge	to	income	ratably	over	the	full	vesting	period,	except	for	those	awards granted	to	retirement-eligible

employees.	As	explained	below,	pursuant	to	SFAS	123(R),	the	charge	to	income for	awards	made	to	retirement-eligible	employees	is	accelerated	based	on	the dates	the	retirement	rules	are	met.

CAP	and	certain	other	awards	provide	that	participants	who	meet	certain	age and	years	of	service	conditions	may	continue	to	vest	in	all	or	a	portion	of	the award	without	remaining	employed	by	the	Company	during	the	entire	vesting period,	so	long	as	they	do	not	compete	with	Citigroup	during	that	time. Beginning	in	2006,	awards	to	these	retirement-eligible	employees	are	recognized in	the	year	prior	to	the	grant	in	the	same	manner	as	cash	incentive	compensation is	accrued.	However,	awards	granted	in	January	2006	were	required	to	be expensed	in	their	entirety	at	the	date	of	grant.	Prior	to	2006,	all	awards	were recognized	ratably	over	the	stated	vesting	period.	See	Note	1	to	the	Consolidated Financial	Statements	on	page	121	for	the	impact	of	adopting	SFAS	123(R). From	2003	to	2007,	Citigroup	granted	restricted	or	deferred	shares	annually under	the	Citigroup	Ownership	Program	(COP)	to	eligible	employees.	This program	replaced	the	WealthBuilder,	CitiBuilder	and	Citigroup	Ownership	stock option	programs.	Under	COP,	eligible	employees	received	either	restricted	or deferred	shares	of	Citigroup	common	stock	that	vest	after	three	years.	The	last award	under	this	program	was	in	2007.	Unearned	compensation	expense associated	with	the	stock	grants	represents	the	market	value	of	Citigroup common	stock	at	the	date	of	grant	and	is	recognized	as	a	charge	to	income ratably	over	the	vesting	period,	except	for	those	awards	granted	to	retirement- eligible	employees.	The	charge	to	income	for	awards	made	to	retirement-eligible employees	is	accelerated	based	on	the	dates	the	retirement	rules	are	met.

On	July	17,	2007,	the	Personnel	and	Compensation	Committee	of	Citigroup's Board	of	Directors	approved	the	Management	Committee	Long-Term	Incentive Plan	(MC	LTIP),	under	the	terms	of	the	shareholder-approved	1999	Stock Incentive	Plan.	The	MC	LTIP	provides	members	of	the	Citigroup	Management Committee,	including	the	CEO,	CFO	and	the	named	executive	officers	in	the Citigroup	Proxy	Statement,	an	opportunity	to	earn	stock	awards	based	on Citigroup's	performance.	Each	participant	received	an	equity	award	that	will	be earned	based	on	Citigroup's	performance	for	the	period	from	July	1,	2007	to December	31,	2009.	Three	periods	will	be	measured	for	performance	(July	1, 2007	to	December	31,	2007,	full	year	2008	and	full	year	2009).	The	ultimate value	of	the	award	will	be	based	on	Citigroup's	performance	in	each	of	these periods	with	respect	to	(1)	total	shareholder	return	versus	Citigroup's	current	key competitors	and	(2)	publicly	stated	return	on	equity	(ROE)	targets	measured	at the	end	of	each	calendar	year.	If,	in	any	of	the	three	performance	periods, Citigroup's

total	shareholder	return	does	not	exceed	the	median	performance	of	the	peer group,	the	participants	will	not	receive	award	shares	for	that	period.	The	awards will	generally	vest	after	30	months.	In	order	to	receive	the	shares,	a	participant generally	must	be	a	Citigroup	employee	on	January	5,	2010.	The	final	expense for	each	of	the	three	calendar	years	will	be	adjusted	based	on	the	results	of	the ROE	tests.	No	awards	were	earned	for	2008	or	2007	because	performance	targets were	not	met.	No	new	awards	were	made	under	the	MC	LTIP	since	the	initial award	in	July	2007.

On	January	22,	2008,	special	retention	stock	awards	were	made	to	key	senior executive	officers	and	certain	other	members	of	senior	management.	The	awards vest	ratably	over	two-	or	four-year	periods.	Executives	must	remain	employed through	the	vesting	dates	to	receive	the	shares	awarded,	except	in	cases	of	death, disability,	or	involuntary	termination	other	than	for	gross	misconduct.	Unlike CAP,	post-employment	vesting	is	not	provided	for	participants	who	meet specified	age	and	years	of	service	conditions.	Shares	subject	to	some	of	the awards	are	exempted	from	the	stock	ownership	commitment.

A	summary	of	the	status	of	Citigroup's	unvested	stock	awards	as	of December	31,	2008,	and	changes	during	the	12	months	ended	December	31, 2008,	is	presented	below:

| Unvested	stock	awards | Shares | fair	value |
| :--- | :--- | :--- |
| Unvested\tat\tJanuary\t1,\t2008 | 153,207,132 | $50.70 |
| Awards | 149,140,314 | $26.04 |
| Cancellations | (20,945,018) | $42.92 |
| Deletions | (1,968,824) | $25.94 |
| Vestings\t^(1) | (53,222,745) | $47.06 |
| Unvested\tat\tDecember\t31,\t2008 | 226,210,859 | $36.23 |

(1)The	weighted	average	market	value	of	the	vestings	during	2008	was	approximately	$22.31 per	share.

As	of	December	31,	2008,	there	was	$3.3	billion	of	total	unrecognized compensation	cost	related	to	unvested	stock	awards	net	of	the	forfeiture provision.	That	cost	is	expected	to	be	recognized	over	a	weighted-average	period of	2.6	years.

# Stock	Option	Programs

The	Company	has	a	number	of	stock	option	programs	for	its	non-employee directors,	officers	and	employees.	Generally,	in	2008,	2007,	2006	and	2005, stock	options	were	granted	only	to	CAP	participants	who	elected	to	receive	stock options	in	lieu	of	restricted	or	deferred	stock	awards,	and	to	non-employee directors	who	elected	to	receive	their	compensation	in	the	form	of	a	stock	option grant.	Occasionally,	stock	options	also	may	be	granted	as	sign-on	awards.	All stock	options	are	granted	on	Citigroup	common	stock	with	exercise	prices	that are	no	less	than	the	fair	market	value	at	the	time	of	grant.	Generally,	options granted	from	2003	through	2008	have	six-year	terms,	but	there	have	been	grants with	terms	of	up	to	10	years.	Options	granted	from	January	2003	through	2008 typically	vest	ratably	over	three-	or	four-year	periods;	however,	directors' options	cliff	vest	after	two	years,	and	vesting	schedules	for	sign-on	grants	may vary.	Options	granted	in	2004	and	2003	typically	vest	in	thirds	each	year	over three	years	(with	the	first	vesting	date	occurring	17	months	after	the	grant	date), and	had	10-year	terms.	The	sale	of	shares	acquired	through	the	exercise	of employee	stock	options	granted	since	January	2003	is	restricted	for	a	two-year period	(and	may	be	subject	to	the	stock	ownership	commitment	of	senior executives	thereafter).	Prior	to	2003,	Citigroup	options,	including	options granted	since	the	date	of	the	merger	of	Citicorp	and	Travelers	Group,	Inc., generally	vested	at	a	rate	of	20%	per	year	over	five	years	(with	the	first	vesting date	occurring	12	to	18	months	following	the	grant	date)	and	had	10-year	terms. Certain	options,	mostly	granted	prior	to	January	1,	2003,	permit	an	employee exercising	an	option	under	certain	conditions	to	be	granted	new	options	(reload options)

in	an	amount	equal	to	the	number	of	common	shares	used	to	satisfy	the	exercise price	and	the	withholding	taxes	due	upon	exercise.	The	reload	options	are granted	for	the	remaining	term	of	the	related	original	option	and	vest	after	six months.	Reload	options	may	in	turn	be	exercised	using	the	reload	method,	given certain	conditions.	An	option	may	not	be	exercised	using	the	reload	method unless	the	market	price	on	the	date	of	exercise	is	at	least	20%	greater	than	the option	exercise	price.

To	further	encourage	employee	stock	ownership,	the	Company's	eligible employees	participated	in	WealthBuilder,	CitiBuilder,	or	the	Citigroup Ownership	Program.	Options	granted	under	the	WealthBuilder	and	the	Citigroup Ownership	programs	vest	over	a	five-year	period,	and	options	granted	under	the CitiBuilder	program	vest	after	five	years.	These	options	did	not	have	a	reload feature.	Options	have	not	been	granted	under	these	programs	since	2002.

On	January	22,	2008,	Vikram	Pandit,	CEO,	was	awarded	stock	options	to purchase	three	million	shares	of	common	stock.	The	options	vest	25%	per	year beginning	on	the	first	anniversary	of	the	grant	date	and	expire	on	the	tenth anniversary	of	the	grant	date.	One-third	of	the	options	have	an	exercise	price equal	to	the	NYSE	closing	price	of	Citigroup	stock	on	the	grant	date	($24.40), one-third	have	an	exercise	price	equal	to	a	25%	premium	over	the	grant	date closing	price	($30.50),	and	one-third	have	an	exercise	price	equal	to	a	50% premium	over	the	grant	date	closing	price	($36.60).	The	first	installment	of	these options	vested	on	January	22,	2009.	These	options	do	not	have	a	reload	feature.

Information	with	respect	to	stock	option	activity	under	Citigroup	stock	option	plans	for	the	years	ended	December	31,	2008,	2007	and	2006	is	as	follows:

|  | 2008 | 2008 | 2008 | 2007 | 2007 | 2007 | 2006 | 2006 | 2006 |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | Weighted |  |  | Weighted |  |  | Weighted |  |
|  |  | average | Intrinsic |  | average | Intrinsic |  | average | Intrinsic |
|  |  | exercise | value |  | exercise | value |  | exercise | value |
|  | Options | price | per\tshare | Options | price | per\tshare | Options | price | per\tshare |
| Outstanding,\tbeginning\tof\tperiod | 172,767,122 | $43.08 | $— | 212,067,917 | $41.87 | $13.83 | 277,255,935 | $40.27 | $8.26 |
| Granted—original | 18,140,448 | $24.70 | — | 2,178,136 | $54.21 | — | 3,259,547 | $48.87 | — |
| Granted—reload | 15,984 | $28.05 | — | 3,093,370 | $52.66 | — | 12,530,318 | $52.30 | — |
| Forfeited\tor\texchanged | (24,080,659) | $42.19 | — | (8,796,402) | $46.26 | 1.52 | (14,123,110) | $45.57 | 3.36 |
| Expired | (20,441,584) | $38.88 | — | (843,256) | $43.40 | 4.38 | (2,021,955) | $44.87 | 4.06 |
| Exercised | (2,540,654) | $22.36 | — | (34,932,643) | $36.62 | 11.16 | (64,832,818) | $36.37 | 12.56 |
| Outstanding,\tend\tof\tperiod | 143,860,657 | $41.84 | $\t\t\t\t— | 172,767,122 | $43.08 | $— | 212,067,917 | $41.87 | $13.83 |
| Exercisable\tat\tend\tof\tperiod | 123,654,795 |  |  | 165,024,814 |  |  | 179,424,900 |  |  |

The	following	table	summarizes	the	information	about	stock	options	outstanding	under	Citigroup	stock	option	plans	at	December	31,	2008:

|  | Options	outstanding | Options	outstanding | Options	outstanding | Options	exercisable | Options	exercisable |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | Weighted\taverage |  |  |  |
|  | Number | contractual\tlife | Weighted\taverage | Number | Weighted\taverage |
| Range\tof\texercise\tprices | outstanding | remaining | exercise\tprice | exercisable | exercise\tprice |
| $7.77–$9.99 | 1,627 | 2.6\tyears | $7.77 | 1,627 | $7.77 |
| $10.00–$19.99 | 2,263,074 | 7.0\tyears | $17.54 | 97,985 | $14.27 |
| $20.00–$29.99 | 13,592,346 | 5.2\tyears | $24.61 | 1,006,628 | $25.48 |
| $30.00–$39.99 | 27,325,170 | 1.6\tyears | $33.11 | 25,200,815 | $33.07 |
| $40.00–$49.99 | 86,577,676 | 2.0\tyears | $46.26 | 84,779,475 | $46.22 |
| $50.00–$56.83 | 14,100,764 | 2.2\tyears | $52.59 | 12,568,265 | $52.38 |
|  | 143,860,657 | 2.3\tyears | $41.84 | 123,654,795 | $43.97 |

As	of	December	31,	2008,	there	was	$45.8	million	of	total	unrecognized	compensation	cost	related	to	stock	options;	this	cost	is	expected	to	be	recognized	over	a weighted	average	period	of	1.9	years.

# Fair	Value	Assumptions

SFAS	123(R)	requires	that	reload	options	be	treated	as	separate	grants	from	the related	original	grants.	Pursuant	to	the	terms	of	currently	outstanding	reloadable options,	upon	exercise	of	an	option,	if	employees	use	previously	owned	shares to	pay	the	exercise	price	and	surrender	shares	otherwise	to	be	received	for related	tax	withholding,	they	will	receive	a	reload	option	covering	the	same number	of	shares	used	for	such	purposes,	but	only	if	the	market	price	on	the	date of	exercise	is	at	least	20%	greater	than	the	option	exercise	price.	Reload	options vest	after	six	months	and	carry	the	same	expiration	date	as	the	option	that	gave rise	to	the	reload	grant.	The	exercise	price	of	a	reload	grant	is	the	fair	market value	of	Citigroup	common	stock	on	the	date	the	underlying	option	is	exercised. Reload	options	are	intended	to	encourage	employees	to	exercise	options	at	an earlier	date	and	to	retain	the	shares	acquired.	The	result	of	this	program	is	that employees	generally	will	exercise	options	as	soon	as	they	are	able	and, therefore,	these	options	have	shorter	expected	lives.	Shorter	option	lives	result	in lower	valuations.	However,	such	values	are	expensed	more	quickly	due	to	the shorter	vesting

period	of	reload	options.	In	addition,	since	reload	options	are	treated	as	separate grants,	the	existence	of	the	reload	feature	results	in	a	greater	number	of	options being	valued.	Shares	received	through	option	exercises	under	the	reload program,	as	well	as	certain	other	options,	are	subject	to	restrictions	on	sale. Additional	valuation	and	related	assumption	information	for	Citigroup	option plans	is	presented	below.	Citigroup	uses	a	lattice-type	model	to	value	stock options.

# 9.	RETIREMENT	BENEFITS

The	Company	has	several	non-contributory	defined	benefit	pension	plans covering	substantially	all	U.S.	employees	in	2008	and	has	various	defined benefit	pension	and	termination	indemnity	plans	covering	employees	outside	the United	States.	The	U.S.	qualified	defined	benefit	plan	provides	benefits	under	a cash	balance	formula.	However,	employees	satisfying	certain	age	and	service requirements	remain	covered	by	a	prior	final	average	pay	formula	under	that plan.	Effective	January	1,	2008,	the	U.S.	qualified	pension	plan	was	frozen. Accordingly,	no	additional	compensation-based	contributions	were	credited	to the	cash	balance	plan	for	existing	plan	participants.	However,	employees	still covered	under	the

prior	final	pay	plan	will	continue	to	accrue	benefits.	The	Company	also	offers postretirement	health	care	and	life	insurance	benefits	to	certain	eligible	U.S. retired	employees,	as	well	as	to	certain	eligible	employees	outside	the	United States.

The	following	tables	summarize	the	components	of	net	(benefit)	expense recognized	in	the	Consolidated	Statement	of	Income	and	the	funded	status	and amounts	recognized	in	the	Consolidated	Balance	Sheet	for	the	Company's	U.S. qualified	pension	plan,	postretirement	plans	and	plans	outside	the	United	States. The	Company	uses	a	December	31	measurement	date	for	the	U.S.	plans	as	well as	the	plans	outside	the	United	States.

# Net	(Benefit)	Expense

|  |  |  |  |  | Pension	plans | Pension	plans |  |  | Postretirement	benefit	plans | Postretirement	benefit	plans | Postretirement	benefit	plans | Postretirement	benefit	plans |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | U.S.\tplans\t^(1) | U.S.\tplans\t^(1) | U.S.\tplans\t^(1) |  | Non-U.S.\tplans | Non-U.S.\tplans |  | U.S.\tplans | U.S.\tplans |  | Non-U.S.\tplans | Non-U.S.\tplans |
| In\tmillions\tof\tdollars | 2008 | 2007 | 2006 | 2008 | 2007 | 2006 | 2008 | 2007 | 2006 | 2008 | 2007 | 2006 |
| Benefits\tearned\tduring\tthe\tyear | $23 | $ 301 | $ 260 | $ 201 | $ 202 | $ 164 | $1 | $1 | $2 | $36 | $27 | $21 |
| Interest\tcost\ton\tbenefit\tobligation | 674 | 641 | 630 | 354 | 318 | 274 | 62 | 59 | 61 | 96 | 75 | 65 |
| Expected\treturn\ton\tplan\tassets | (949) | (889) | (845) | (487) | (477) | (384) | (12) | (12) | (13) | (109) | (103) | (78) |
| Amortization\tof\tunrecognized: |  |  |  |  |  |  |  |  |  |  |  |  |
| Net\ttransition\tobligation | — | — | — | 1 | 2 | 2 | — | — | — | — | — | — |
| Prior\tservice\tcost\t(benefit) | (2) | (3) | (19) | 4 | 3 | 1 | — | (3) | (4) | — | — | 1 |
| Net\tactuarial\tloss | — | 84 | 185 | 24 | 39 | 51 | 4 | 3 | 8 | 21 | 13 | 8 |
| Curtailment\t(gain)\tloss\t^(2)(3) | 56 | — | (80) | 108 | 36 | 7 | 16 | 9 | — | — | — | — |
| Net\t(benefit)\texpense | $(198) | $ 134 | $ 131 | $ 205 | $ 123 | $ 115 | $71 | $ \t57 | $54 | $44 | $12 | $17 |

(2) In	2008,	the	Company	recognized	a	net	curtailment	loss	resulting	from	accelerated	expected	payment	of	benefits	following	restructuring	actions.	Restructuring	charges	for	the	pension	plans include	$23	million	for	the	U.S.	plans	and	$22	million	for	the	non-U.S.	plans.	Restructuring	charges	for	the	postretirement	plans	include	$6	million	for	U.S.	plans.	In	2007,	the	Company	recognized a	net	curtailment	loss	primarily	resulting	from	accelerated	vesting	of	benefits	under	reorganization	actions	outside	the	U.S.	In	2006,	the	Company	recognized	a	curtailment	gain	resulting	from	the January	1,	2008	freeze	of	the	U.S.	qualified	pension	plan.

(3) The	2008	curtailment	loss	in	the	non-U.S	pension	plans	includes	$71	million	reported	under Discontinued	operations	reflecting	the	sale	of	Citigroup's	German	retail	banking	operations	to	Credit Mutuel.

The	estimated	net	actuarial	loss,	prior	service	cost	and	net	transition	obligation that	will	be	amortized	from	Accumulated	other	comprehensive	income	(loss)	into net	expense	in	2009	are	approximately	$68	million,	$2

million	and	$(1)	million,	respectively,	for	defined	benefit	pension	plans.	For postretirement	plans,	the	estimated	2009	net	actuarial	loss	and	service	cost	are approximately	$21	million	and	$(1)	million,	respectively.

# Net	Amount	Recognized

|  |  |  | Pension	plans | Pension	plans |  | Postretirement	benefit	plans | Postretirement	benefit	plans | Postretirement	benefit	plans |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | U.S.\tplans\t^(1) | U.S.\tplans\t^(1) | Non-U.S.\tplans | Non-U.S.\tplans |  | U.S.\tplans | Non-U.S.\tplans | Non-U.S.\tplans |
| In\tmillions\tof\tdollars | 2008 | 2007 | 2008 | 2007 | 2008 | 2007 | 2008 | 2007 |
| Change\tin\tprojected\tbenefit\tobligation |  |  |  |  |  |  |  |  |
| Projected\tbenefit\tobligation\tat\tbeginning\tof\tyear | $11,029 | $11,109 | $6,007 | $5,363 | $1,042 | $1,101 | $1,193 | $825 |
| Benefits\tearned\tduring\tthe\tyear | 23 | 301 | 201 | 202 | 1 | 1 | 36 | 27 |
| Interest\tcost\ton\tbenefit\tobligation | 674 | 641 | 354 | 318 | 62 | 59 | 96 | 75 |
| Plan\tamendments | — | — | 2 | 12 | — | 3 |  | — |
| Actuarial\tloss\t(gain) | (167) | (439) | (625) | (28) | 1 | (67) | (79) | 296 |
| Benefits\tpaid | (607) | (583) | (282) | (269) | (72) | (75) | (41) | (39) |
| Expected\tMedicare\tPart\tD\tsubsidy | — | — | — | — | 11 | 11 | — | — |
| Acquisitions^\t(2) | — | — | 206 | 156 | — | — | — | — |
| Divestitures | — | — | (380) | — | — | — | — | — |
| Settlements | — | — | (65) | (21) | — | — | — | — |
| Curtailments\t^(3) | 58 | — | 3 | 25 | 17 | 9 | (2) | — |
| Foreign\texchange\timpact | — | — | (858) | 249 | — | — | (266) | 9 |
| Projected\tbenefit\tobligation\tat\tyear\tend | $11,010 | $11,029 | $4,563 | $6,007 | \t 1,062 | $1,042 | $937 | $1,193 |
| Change\tin\tplan\tassets |  |  |  |  |  |  |  |  |
| Plan\tassets\tat\tfair\tvalue\tat\tbeginning\tof\tyear | $12,840 | $11,932 | $6,629 | $5,906 | $191 | $175 | $1,008 | $984 |
| Actual\treturn\ton\tplan\tassets | (730) | 1,476 | (883) | 432 | (7) | 22 | (182) | 66 |
| Company\tcontributions\t^(4) | 13 | 15 | 286 | 223 | 31 | 69 | 72 | 3 |
| Employee\tcontributions | — | — | 6 | 8 | — | — |  | — |
| Acquisitions^\t(5) | — | — | 165 | 90 | — | — |  | — |
| Divestitures | — | — | (380) | — | — | — |  | — |
| Settlements | — | — | (57) | (21) | — | — |  | — |
| Benefits\tpaid | (607) | (583) | (282) | (269) | (72) | (75) | (42) | (39) |
| Foreign\texchange\timpact | — | — | (948) | 260 | — | — | (185) | (6) |
| Plan\tassets\tat\tfair\tvalue\tat\tyear\tend | $11,516 | $12,840 | $4,536 | $6,629 | $143 | $191 | $671 | $1,008 |
| Funded\tstatus\tof\tthe\tplan\tat\tyear\tend | $506 | $1,811 | $(27) | $622 | $(919) | $(851) | $(266) | $(185) |
| Net\tamount\trecognized |  |  |  |  |  |  |  |  |
| Benefit\tasset | $506 | $1,811 | $511 | $1,061 | $— | $— | $— | $34 |
| Benefit\tliability | — | — | (538) | (439) | (919) | (851) | (266) | (219) |
| Net\tamount\trecognized\ton\tthe\tbalance\tsheet | $506 | $1,811 | $(27) | $622 | $(919) | $(851) | $(266) | $(185) |
| Amounts\trecognized\tin\tAccumulated\tother\tcomprehensive\tincome\t(loss): |  |  |  |  |  |  |  |  |
| Net\ttransition\tobligation | $— | $— | $(5) | $8 | $— | $— | $1 | $2 |
| Prior\tservice\tcost\t(benefit) | (4) | (7) | 29 | 30 | (10) | (11) | (1) | (1) |
| Net\tactuarial\tloss | 1,978 | 467 | \t 1,219 | 786 | 41 | 23 | 442 | 374 |
| Net\tamount\trecognized\tin\tequity—pretax | 1,974 | $460 | $1,243 | $824 | $31 | $12 | $442 | $375 |
| Accumulated\tbenefit\tobligation\tat\tyear\tend | $10,937 | $10,960 | $4,145 | $5,403 | $1,062 | $1,042 | $937 | $1,193 |

(1) The	U.S.	plans	exclude	nonqualified	pension	plans,	for	which	the	aggregate	projected	benefit	obligation	was	$586	million	and	$611	million	and	the	aggregate	accumulated	benefit	obligation	was $580	million	and	$604	million	at	December	31,	2008	and	2007,	respectively.	These	plans	are	unfunded.	As	such,	the	funded	status	of	these	plans	is	$(586)	million	and	$(611)	million	at December	31,	2008	and	2007,	respectively.	Accumulated	other	comprehensive	income	(loss)	reflects	pretax	charges	of	$72	million	and	$85	million	at	December	31,	2008	and	2007,	respectively, that	primarily	relate	to	net	actuarial	loss.

(2) Acquisitions	in	the	non-U.S	pension	plans	include	$29	million	of	projected	benefit	obligations	from	newly	material	plans.

(3) Changes	in	projected	benefit	obligation	due	to	curtailments	in	the	non-U.S.	pension	plans	in	2008	include	$(9)	million	in	curtailment	gains	and	$12	million	in	special	termination	costs.

(4) Company	contributions	to	the	U.S.	pension	plan	include	$13	million	and	$15	million	during	2008	and	2007,	respectively,	relating	to	certain	investment	advisory	fees	and	administrative	costs	that were	absorbed	by	the	Company.	Company	contributions	to	the	non-U.S.	pension	plans	include	$55	million	and	$47	million	of	benefits	directly	paid	by	the	Company	during	2008	and	2007, respectively.

(5) Acquisitions	in	the	non-U.S	pension	plans	include	$10	million	of	plan	assets	from	newly	material	plans.

The	following	table	shows	the	change	in	Accumulated	other	comprehensive	income	(loss)	for	the	years	ended	December	31,	2008	and	2007:

| In	millions	of	dollars | 2008 | 2007 | Change |
| :--- | :--- | :--- | :--- |
| Other\tassets |  |  |  |
| Prepaid\tbenefit\tcost | $1,017 | $2,906 | $(1,889) |
| Other\tliabilities |  |  |  |
| Accrued\tbenefit\tliability | 2,309 | 2,120 | 189 |
| Funded\tstatus | $(1,292) | $786 | $(2,078) |
| Deferred\ttaxes,\tnet | 5,179 | 4,261 | 918 |
| Amortization\tand\tother |  |  | (259) |
| Change\tin\tAccumulated\tother\tcomprehensive\tincome\t(loss)^\t(1) |  |  | $(1,419) |

(1) Primarily	related	to	changes	in	net	actuarial	gain/loss	of	the	Company's	pension	and	postretirement	plans.

At	the	end	of	2008	and	2007,	for	both	qualified	and	nonqualified	plans	and	for both	funded	and	unfunded	plans,	the	aggregate	projected	benefit	obligation (PBO),	the	aggregate	accumulated	benefit	obligation	(ABO),	and

the	aggregate	fair	value	of	plan	assets	for	pension	plans	with	a	projected	benefit obligation	in	excess	of	plan	assets,	and	pension	plans	with	an	accumulated benefit	obligation	in	excess	of	plan	assets,	were	as	follows:

|  | assets | assets | assets | assets |  |  |  | assets |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | U.S.\tplans | U.S.\tplans | Non-U.S.\tplans | Non-U.S.\tplans | U.S.\tplans | U.S.\tplans | Non-U.S.\tplans | Non-U.S.\tplans |
| In\tmillions\tof\tdollars | 2008 | 2007 | 2008 | 2007 | 2008 | 2007 | 2008 | 2007 |
| Projected\tbenefit\tobligation | $586 | $611 | $1,866 | $944 | $ 586 | $611 | $1,374 | $804 |
| Accumulated\tbenefit\tobligation | 580 | 604 | 1,640 | 749 | 580 | 604 | 1,231 | 668 |
| Fair\tvalue\tof\tplan\tassets | — | — | 1,328 | 505 | — | — | 875 | 396 |

Combined	plan	assets	for	the	U.S.	and	non-U.S.	pension	plans,	excluding	U.S.	nonqualified	plans,	exceeded	the	accumulated	benefit	obligations	by	$1.0	billion	and $3.1	billion	at	December	31,	2008	and	December	31,	2007,	respectively.

# Assumptions

The	discount	rate	and	future	rate	of	compensation	assumptions	used	in determining	pension	and	postretirement	benefit	obligations	and	net	benefit expense	for	the	Company's	plans	are	shown	in	the	following	table:

(1)Weighted	average	rates	for	the	U.S.	plans	equal	the	stated	rates.

(2)At	December	31,	2008,	the	range	includes	plans	in	countries	that	were	not	reported	earlier

due	to	immateriality.	Discount	rates	for	the	same	group	of	countries	as	of	December	31,

(3)Effective	January	1,	2008,	the	U.S.	qualified	pension	plan	was	frozen.	Only	the	future

compensation	increases	for	the	grandfathered	employees	will	affect	future	pension	expense and	obligations.	Future	compensation	increase	rates	for	small	groups	of	employees	were 4.0%	or	6.0%.

(4)Future	compensation	increase	rate	for	the	non-U.S	plans	differs	from	the	year	end	2007 rates	due	to	inclusion	of	newly	material	plans	in	2008.

A	one-percentage-point	change	in	the	discount	rates	would	have	the	following	effects	on	pension	expense:

|  |  | One-percentage- | One-percentage- |  | One-percentage- | One-percentage- |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | point\tincrease | point\tincrease | point\tdecrease | point\tdecrease | point\tdecrease |
| In\tmillions\tof\tdollars | 2008 | 2007 | 2006 | 2008 | 2007 | 2006 |
| Effect\ton\tpension\texpense\tfor\tU.S.\tplans\t^(1) | $36 | $25 | $(100) | $ (24) | $(5) | $120 |
| Effect\ton\tpension\texpense\tfor\tnon-U.S.\tplans | (58) | (59) | (52) | 94 | 80 | 72 |

(1) Due	to	the	freeze	of	the	U.S.	qualified	pension	plan	commencing	January	1,	2008,	the	majority	of	the	prospective	service	cost	has	been	eliminated	and	the	gain/loss	amortization	period	was changed	to	the	life	expectancy	for	inactive	participants.	As	a	result,	pension	expense	for	the	U.S.	qualified	pension	plan	is	driven	more	by	interest	costs	than	service	costs,	and	an	increase	in	the discount	rate	would	increase	pension	expense,	while	a	decrease	in	the	discount	rate	would	decrease	pension	expense.

Assumed	health	care	cost	trend	rates	were	as	follows:

|  | 2008 | 2007 |
| :--- | :--- | :--- |
| Health\tcare\tcost\tincrease\trate–U.S.\tplans |  |  |
| Following\tyear | 7.5% | 8.0% |
| Ultimate\trate\tto\twhich\tcost\tincrease\tis\tassumed\tto\tdecline | 5.0% | 5.0% |
| Year\tin\twhich\tthe\tultimate\trate\tis\treached | 2014 | 2014 |

A	one-percentage-point	change	in	assumed	health	care	cost	trend	rates	would	have	the	following	effects:

|  |  | One-percentage- |  | One-percentage- |
| :--- | :--- | :--- | :--- | :--- |
|  |  | point\tincrease |  | point\tdecrease |
| In\tmillions\tof\tdollars | 2008 | 2007 | 2008 | 2007 |
| Effect\ton\tbenefits\tearned\tand\tinterest\tcost\tfor\tU.S.\tplans | $3 | $3 | $(2) | $(3) |
| Effect\ton\taccumulated\tpostretirement\tbenefit\tobligation\tfor\tU.S.\tplans | 47 | 50 | (41) | (44) |

Citigroup	considers	the	expected	rate	of	return	to	be	a	longer-term	assessment	of	return	expectations,	based	on	each	plan's	expected	asset	allocation,	and	does	not anticipate	changing	this	assumption	annually	unless	there	are	significant	changes	in	economic	conditions	or	portfolio	composition.	Market	performance	over	a	number of	earlier	years	is	evaluated	covering	a	wide	range	of	economic	conditions	to	determine	whether	there	are	sound	reasons	for	projecting	forward	any	past	trends.

The	expected	long-term	rates	of	return	on	assets	used	in	determining	the	Company's	pension	expense	are	shown	below:

(1)Weighted	average	rates	for	the	U.S.	plans	equal	the	stated	rates.	As	of	December	31,	2008,	the	Company	lowered	its	expected	rate	of	return	to	7.75%.

A	one-percentage-point	change	in	the	expected	rates	of	return	would	have	the	following	effects	on	pension	expense:

|  |  | One-percentage- | One-percentage- |  | One-percentage- | One-percentage- |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | point\tincrease | point\tincrease | point\tdecrease | point\tdecrease | point\tdecrease |
| In\tmillions\tof\tdollars | 2008 | 2007 | 2006 | 2008 | 2007 | 2006 |
| Effect\ton\tpension\texpense\tfor\tU.S.\tplans | $(118) | $(118) | $(110) | $118 | $118 | $110 |
| Effect\ton\tpension\texpense\tfor\tnon-U.S.\tplans | (66) | (59) | (61) | 66 | 59 | 61 |

# Plan	Assets

Citigroup's	pension	and	postretirement	plans'	asset	allocations	for	the	U.S.	plans	at	the	end	of	2008	and	2007,	and	the	target	allocations	for	2009	by	asset	category	based on	asset	fair	values,	are	as	follows:

|  | Target	asset | U.S.	pension	assets | U.S.	pension	assets | U.S.	postretirement	assets | U.S.	postretirement	assets |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  | allocation | at\tDecember\t31 | at\tDecember\t31 | at\tDecember\t31 | at\tDecember\t31 |
| Asset\tcategory | 2009 | 2008 | 2007 | 2008 | 2007 |
| Equity\tsecurities\t^(1) | 3\tto\t38% | 6% | 27% | 6% | 27% |
| Debt\tsecurities | 25\tto\t62 | 42 | 17 | 42 | 17 |
| Real\testate | 3\tto\t8 | 6 | 6 | 6 | 6 |
| Private\tequity | 0\tto\t15 | 17 | 15 | 17 | 15 |
| Other\tinvestments | 12\tto\t32 | 29 | 35 | 29 | 35 |
| Total |  | 100% | 100% | 100% | 100% |

(1) Equity	securities	in	the	U.S.	pension	plans	include	no	Citigroup	common	stock	at	the	end	of	2008.	In	January	2007,	the	U.S.	pension	plans	sold	all	the	Citigroup	common	stock	it	held (approximately	$137.2	million)	to	the	Company	at	its	fair	value.

Third-party	investment	managers	and	affiliated	advisors	provide	their respective	services	to	Citigroup's	U.S.	pension	plans.	Assets	are	rebalanced	as the	plan	investment	committee	deems	appropriate.	Citigroup's	investment strategy	with	respect	to	its	pension	assets	is	to	maintain	a	globally	diversified investment	portfolio	across	several	asset	classes	targeting	an	annual	rate	of return	of	7.75%	that,	when	combined	with	Citigroup's	contributions	to	the

plans,	will	maintain	the	plans'	ability	to	meet	all	required	benefit	obligations. Citigroup's	pension	and	postretirement	plans'	weighted	average	asset allocations	for	the	non-U.S.	plans	and	the	actual	ranges	at	the	end	of	2008	and 2007,	and	the	weighted	average	target	allocations	for	2009	by	asset	category based	on	asset	fair	values,	are	as	follows:

|  | Weighted |  |  |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  | average |  | Actual\trange | Weighted\taverage | Weighted\taverage |
|  | Target\tasset |  |  |  |  |
|  | allocation |  | at\tDecember\t31 | at\tDecember\t31 | at\tDecember\t31 |
| Asset\tcategory | 2009 | 2008 | 2007 | 2008 | 2007 |
| Equity\tsecurities | 37.61% | 0.0\tto\t56.8% | 0.0\tto\t75.1% | 34.4% | 56.2% |
| Debt\tsecurities | 53.95 | 0.0\tto\t85.5 | 0.0\tto\t100 | 55.4 | 37.8 |
| Real\testate | 0.75 | 0.0\tto\t40.1 | 0.0\tto\t35.9 | 0.6 | 0.5 |
| Other\tinvestments | 7.69 | 0.0\tto\t100 | 0.0\tto\t100 | 9.6 | 5.5 |
| Total | 100% |  |  | 100% | 100% |

|  | Weighted |  |  |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  | average |  | Actual\trange | Weighted\taverage | Weighted\taverage |
|  | Target\tasset |  |  |  |  |
|  | allocation |  | at\tDecember\t31 | at\tDecember\t31 | at\tDecember\t31 |
| Asset\tcategory | 2009 | 2008 | 2007 | 2008 | 2007 |
| Equity\tsecurities | 39.34% | 0.0\tto\t53.18% | 0.0\tto\t58.4% | 52.26% | 57.4% |
| Debt\tsecurities | 36.13 | 36.11\tto\t100 | 41.6\tto\t100 | 37.21 | 42.6 |
| Real\testate | — | — | — | — | — |
| Other\tinvestments | 24.53 | 0.0\tto\t10.71 | — | 10.53 | — |
| Total | 100% |  |  | 100% | 100% |

Citigroup's	global	pension	and	postretirement	funds'	investment	strategies	are to	invest	in	a	prudent	manner	for	the	exclusive	purpose	of	providing	benefits	to participants.	The	investment	strategies	are	targeted	to	produce	a	total	return	that, when	combined	with	Citigroup's	contributions	to	the	funds,	will	maintain	the funds'	ability	to	meet	all	required	benefit	obligations.	Risk	is	controlled	through diversification	of	asset	types	and	investments	in	domestic	and	international equities,	fixed	income	securities	and	cash.	The	target	asset	allocation	in	most locations	outside	the	U.S.	is	to

have	the	majority	of	the	assets	in	either	equity	or	debt	securities.	These allocations	may	vary	by	geographic	region	and	country	depending	on	the	nature of	applicable	obligations	and	various	other	regional	considerations.	The	wide variation	in	the	actual	range	of	plan	asset	allocations	for	the	funded	non-U.S. plans	is	a	result	of	differing	local	statutory	requirements	and	economic conditions.	For	example,	in	certain	countries	local	law	requires	that	all	pension plan	assets	must	be	invested	in	fixed	income	investments,	government	funds,	or local	country	securities.

# Contributions

Citigroup's	pension	funding	policy	for	U.S.	plans	and	non-U.S.	plans	is generally	to	fund	to	applicable	minimum	funding	requirements	rather	than	to	the amounts	of	accumulated	benefit	obligations.	For	the	U.S.	plans,	the	Company may	increase	its	contributions	above	the	minimum	required	contribution	under ERISA,	if	appropriate	to	its	tax	and	cash	position	and	the	plans'	funded	position. For	the	U.S.	pension	plans,	at	December	31,	2008,	there	were	no	minimum required	cash	contributions	and	no	discretionary	or	non-cash	contributions	are currently	planned.	For	the	non-U.S.	pension	plans,	discretionary	cash contributions	in	2009	are	anticipated	to	be	approximately	$167	million.	In addition,	the	Company	expects	to	contribute	$27	million	of	benefits	to	be directly	paid	by	the	Company	for	its	unfunded	non-U.S.	pension	and postretirement	plans.	For	the	U.S.	postretirement	benefit	plans,	there	are	no expected	or	required	contributions	for	2009.	For	the	non-U.S.	postretirement benefit	plans,	expected	cash	contributions	for	2009	are	$91	million	including	$3 million	of	benefits	to	be	directly	paid	by	the	Company.	These	estimates	are subject	to	change,	since	contribution	decisions	are	affected	by	various	factors, such	as	market	performance	and	regulatory	requirements;	in	addition, management	has	the	ability	to	change	funding	policy.

# Estimated	Future	Benefit	Payments

The	Company	expects	to	pay	the	following	estimated	benefit	payments	in	future years:

|  | U.S.	plans | Non-U.S.	plans | Non-U.S.	plans |
| :--- | :--- | :--- | :--- |
|  | Pension | Pension | Postretirement |
| In\tmillions\tof\tdollars | benefits | benefits | benefits |
| 2009 | $\t\t\t740 | $\t\t\t276 | $\t\t37 |
| 2010 | 745 | 258 | 39 |
| 2011 | 752 | 275 | 41 |
| 2012 | 769 | 284 | 44 |
| 2013 | 789 | 288 | 47 |
| 2014–2018 | 4,148 | 1,680 | 291 |

# Prescription	Drugs

In	December	2003,	the	Medicare	Prescription	Drug,	Improvement	and Modernization	Act	of	2003	(the	"Act	of	2003")	was	enacted.	The	Act	of	2003 established	a	prescription	drug	benefit	under	Medicare	known	as	"Medicare	Part D,"	and	a	federal	subsidy	to	sponsors	of	U.S.	retiree	health	care	benefit	plans	that provide	a	benefit	that	is	at	least	actuarially	equivalent	to	Medicare	Part	D.	The benefits	provided	to	certain	participants	are	at	least	actuarially	equivalent	to Medicare	Part	D	and,	accordingly,	the	Company	is	entitled	to	a	subsidy. The	expected	subsidy	reduced	the	accumulated	postretirement	benefit obligation	(APBO)	by	approximately	$142	million	and	$141	million	as	of January	1,	2008	and	2007,	respectively,	and	the	2008	and	2007	postretirement expense	by	approximately	$17	million	and	$18	million,	respectively,	for	all	of the	U.S.	postretirement	welfare	plans	for	2008	and	2007.

The	following	table	shows	the	estimated	future	benefit	payments	without	the effect	of	the	subsidy	and	the	amounts	of	the	expected	subsidy	in	future	years:

|  | postretirement	benefit	payments | postretirement	benefit	payments |
| :--- | :--- | :--- |
|  | Before\tMedicare | Medicare |
| In\tmillions\tof\tdollars | Part\tD\tsubsidy | Part\tD\tsubsidy |
| 2009 | $105 | $11 |
| 2010 | 107 | 12 |
| 2011 | 107 | 12 |
| 2012 | 107 | 13 |
| 2013 | 105 | 13 |
| 2014–2018 | 490 | 68 |

Under	the	Citigroup	401(k)	plan,	a	defined	contribution	plan,	eligible	U.S. employees	receive	matching	contributions	up	to	6%	of	their	compensation, subject	to	statutory	limits.	The	matching	contribution	is	invested	according	to participants'	individual	elections.	Additionally,	for	eligible	employees	whose compensation	is	$100,000	or	less,	a	fixed	contribution	of	up	to	2%	of compensation	is	provided.	This	fixed	contribution	is	invested	initially	in	the Citigroup	common	stock	fund.	Employees	are	free	to	transfer	to	alternative	plan investments	immediately.

The	pretax	expense	associated	with	this	plan	amounted	to	approximately	$580 million	in	2008,	$81	million	in	2007,	and	$77	million	in	2006.	The	increase	in expense	from	2007	to	2008	reflects	the	redesign	of	retirement	programs	effective January	1,	2008.	The	redesign	provides	for	a	significantly	enhanced	401(k) company	contribution	offset	by	the	elimination	of	future	accruals	under	the Citigroup	U.S.	Pension	Plan.

# 10.	RESTRUCTURING

In	the	fourth	quarter	of	2008,	Citigroup	recorded	a	pretax	restructuring	expense of	$1.797	billion	pre-tax	related	to	the	implementation	of	a	Company-wide	re- engineering	plan.	This	initiative	will	generate	headcount	reductions	of approximately	20,600.	The	charges	related	to	the	2008	Re-engineering	Projects Restructuring	Initiative	are	reported	in	the	Restructuring	line	on	the	Company's Consolidated	Statement	of	Income	and	are	recorded	in	each	segment.

In	2007,	the	Company	completed	a	review	of	its	structural	expense	base	in	a Company-wide	effort	to	create	a	more	streamlined	organization,	reduce	expense growth,	and	provide	investment	funds	for	future	growth	initiatives.	As	a	result	of this	review,	a	pretax	restructuring	charge	of	$1.4	billion	was	recorded	in Corporate/Other	during	the	first	quarter	of	2007.	Additional	net	charges	of	$151 million	were	recognized	in	subsequent	quarters	throughout	2007	and	a	net release	of	$31	million	in	2008	due	to	a	change	in	estimates.	The	charges	related to	the	2007	Structural	Expense	Review	Restructuring	Initiative	are	reported	in the	Restructuring	line	on	the	Company's	Consolidated	Statement	of	Income.

The	primary	goals	of	the	2007	Structural	Expense	Review	and	Restructuring, and	the	2008	Re-engineering	Projects	and	Restructuring	Initiatives	were:

•	eliminate	layers	of	management/improve	workforce	management;

•	consolidate	certain	back-office,	middle-office	and	corporate	functions;

•	increase	the	use	of	shared	services;

•	expand	centralized	procurement;	and

•	continue	to	rationalize	operational	spending	on	technology.

The	implementation	of	these	restructuring	initiatives	also	caused	certain related	premises	and	equipment	assets	to	become	redundant.	The	remaining depreciable	lives	of	these	assets	were	shortened,	and	accelerated	depreciation charges	began	in	the	second	quarter	of	2007	and	fourth	quarter	of	2008	for	the 2007	and	2008	initiatives,	respectively,	in	addition	to	normal	scheduled depreciation.

The	following	tables	detail	the	Company's	restructuring	reserves.

# 2008	Re-engineering	Projects	Restructuring	Charges

|  |  |  | Contract | Asset | Employee |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  |  | termination | write- | termination | Total |
| In\tmillions\tof\tdollars | SFAS\t112^\t(1) | SFAS\t146^\t(2) | costs | downs\t^(3) | cost | Citigroup^\t(4) |
| Total\tCitigroup\t(pretax)\nOriginal\trestructuring\tcharge | $1,254 | $295 | $55 | $123 | $19 | $1,746 |
| Utilization | (114) | (3) | (2) | (100) | — | (219) |
| Balance\tat\tDecember\t31,\t2008 | $1,140 | $292 | $53 | $23 | $19 | $1,527 |

# 2007	Structural	Expense	Review	Restructuring	Charges

|  |  |  | Contract | Asset | Employee |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  |  | termination | write- | termination | Total |
| In\tmillions\tof\tdollars | SFAS\t112\t^(1) | SFAS\t146\t^(2) | costs | downs\t^(3) | cost | Citigroup |
| Total\tCitigroup\t(pretax)\nOriginal\trestructuring\tcharge | $\t950 | $11 | $25 | $352 | $39 | $1,377 |
| Additional\tcharge | $42 | $96 | $29 | $27 | $11 | $205 |
| Foreign\texchange | 19 | — | 2 | — | — | 21 |
| Utilization | (547) | (75) | (28) | (363) | (33) | (1,046) |
| Changes\tin\testimates | (39) | — | (6) | (1) | (8) | (54) |
| Balance\tat\tDecember\t31,\t2007 | $425 | $32 | $22 | $\t\t15 | $9 | $503 |
| Additional\tcharge | $10 | $14 | $43 | $6 | $— | $73 |
| Foreign\texchange | (11) | — | (4) | — | — | (15) |
| Utilization | (288) | (34) | (22) | (7) | (6) | (357) |
| Changes\tin\testimates | (93) | (2) | (2) | (4) | (3) | (104) |
| Balance\tat\tDecember\t31,\t2008 | $\t\t43 | $10 | $37 | $\t\t10 | $— | $100 |

(1) Accounted	for	in	accordance	with	SFAS	No.	112,	 Employer's	Accounting	for	Post	Employment	Benefits	(SFAS	112).

(2) Accounted	for	in	accordance	with	SFAS	No.	146,	 Accounting	for	Costs	Associated	with	Exit	or	Disposal	Activities 	(SFAS	146).

(3) Accounted	for	in	accordance	with	SFAS	No.	144, 	Accounting	for	the	Impairment	or	Disposal	of	Long-Lived	Assets 	(SFAS	144).

(4) Total	Citigroup	charge	in	the	table	above	does	not	include	a	$51	million	one-time	pension	curtailment	charge	related	to	this	restructuring	initiative,	which	is	recorded	as	part	of	the	Company's Restructuring	charge	in	the	Consolidated	Statement	of	Income.

The	total	balance	as	of	December	31,	2008,	the	gross	restructuring	charges	for the	year	then	ended	and	the	cumulative	net	restructuring	expense	incurred	to date	for	the	2007	restructuring	initiative	are	presented

below	by	business	segment.	These	net	charges	were	included	in	the Corporate/Other	segment	because	this	company-wide	restructuring	was	a corporate	initiative.

# 2007	Structural	Expense	Review

|  | Total | restructuring |  |
| :--- | :--- | :--- | :--- |
|  | restructuring | charges\tfor | Total |
|  | reserve | the\tyear | restructuring |
|  | balance\tas\tof | ended | charges |
|  | December\t31, | December\t31, | since |
| In\tmillions\tof\tdollars | 2008 | 2008 | inception^\t(1) |
| Consumer\tBanking | $27 | $23 | $815 |
| Global\tCards | 5 | 1 | 142 |
| Institutional\tClients\tGroup | 2 | 3 | 286 |
| Global\tWealth\tManagement | 17 | 4 | 98 |
| Corporate/Other | 49 | 42 | 156 |
| Total\tCitigroup\t(pretax) | $100 | $73 | $1,497 |

(1) Amounts	shown	net	of	$158	million	related	to	changes	in	estimates	recorded	during	the	fourth	quarter	of	2007	and	second,	third,	and	fourth	quarters	of	2008.

The	total	restructuring	reserve	balance	and	total	charges	as	of	December	31,	2008	related	to	the	2008	Re-engineering	Projects	Restructuring	Initiatives	are	presented below	by	business	segment	in	the	following	table.	These	charges	are	reported	in	the	Restructuring	line	on	the	Company's	Consolidated	Statement	of	Income	and	are recorded	in	each	segment.

|  | Total | Total |  |  |
| :--- | :--- | :--- | :--- | :--- |
|  | restructuring | restructuring |  |  |
|  | reserve | charges, |  |  |
|  | balance\tas\tof | excluding | Pension | Total |
|  | December\t31, | pension | curtailment | restructuring |
| In\tmillions\tof\tdollars | 2008 | curtailment | charges | charges\t^(1) |
| Consumer\tBanking | $265 | $356 | $26 | $382 |
| Global\tCards | 111 | 118 | 1 | 119 |
| Institutional\tClients\tGroup | 515 | 594 | 14 | 608 |
| Global\tWealth\tManagement | 293 | 300 | 5 | 305 |
| Corporate/Other | 343 | 378 | 5 | 383 |
| Total\tCitigroup\t(pretax) | $1,527 | $1,746 | $51 | $1,797 |

(1) Represents	the	total	charges	incurred	since	inception.

| In	millions	of	dollars | 2008 | 2007 | 2006 |
| :--- | :--- | :--- | :--- |
| Current |  |  |  |
| Federal | $(4,582) | $(2,260) | $ 3,703 |
| Foreign | 4,968 | 3,615 | 3,766 |
| State | 29 | 75 | 178 |
| Total\tcurrent\tincome\ttaxes | $415 | $ 1,430 | $ 7,647 |
| Deferred |  |  |  |
| Federal | $(16,585) | $(2,113) | $(552) |
| Foreign | (2,284) | (1,039) | 490 |
| State | (2,158) | (776) | 164 |
| Total\tdeferred\tincome\ttaxes | $(21,027) | $(3,928) | $102 |
| Provision\t(benefit)\tfor\tincome\ttax\ton\tcontinuing |  |  |  |
| operations\tbefore\tminority\tinterest^\t(1) | $(20,612) | $(2,498) | $ 7,749 |
| Provision\t(benefit)\tfor\tincome\ttaxes\ton\tdiscontinued |  |  |  |
| operations | 207 | 297 | 306 |
| Provision\t(benefit)\tfor\tincome\ttaxes\ton\tcumulative |  |  |  |
| effect\tof\taccounting\tchanges | — | (109) | — |
| Income\ttax\texpense\t(benefit)\treported\tin |  |  |  |
| stockholders'\tequity\trelated\tto: |  |  |  |
| Foreign\tcurrency\ttranslation | (2,116) | 565 | 52 |
| Securities\tavailable-for-sale | (5,468) | (759) | 271 |
| Employee\tstock\tplans | 449 | (410) | (607) |
| Cash\tflow\thedges | (1,354) | (1,705) | (406) |
| Pension\tliability\tadjustments | (918) | 426 | (1,033) |
| Income\ttaxes\tbefore\tminority\tinterest | $(29,812) | $(4,193) | $ 6,332 |

The	reconciliation	of	the	federal	statutory	income	tax	rate	to	the	Company's effective	income	tax	rate	applicable	to	income	from	continuing	operations (before	minority	interest	and	the	cumulative	effect	of	accounting	changes)	for	the years	ended	December	31	was	as	follows:

|  | 2008 | 2007 | 2006 |
| :--- | :--- | :--- | :--- |
| Federal\tstatutory\trate | 35.0% | 35.0% | 35.0% |
| State\tincome\ttaxes,\tnet\tof\tfederal\tbenefit | 2.6 | (58.6) | 1.6 |
| Foreign\tincome\ttax\trate\tdifferential | 1.2 | (180.8) | (4.3) |
| Audit\tsettlements\t^(1) | — | — | (2.9) |
| Goodwill | (2.2) | 0.5 | — |
| Tax\tadvantaged\tinvestments | 1.7 | (84.0) | (1.8) |
| Other,\tnet | 0.6 | (34.0) | (0.4) |
| Effective\tincome\ttax\trate\t^(2) | 38.9% | (321.9)% | 27.2% |

(1)For	2006,	relates	to	the	resolution	of	the	Federal	and	New	York	tax	audits.

(2)The	Company	recorded	an	income	tax	benefit	for	2007.	The	effective	tax	rate	(benefit)	of (322)%	primarily	resulted	from	pretax	losses	in	the	Company's	ICG	and	N.A.	and	Consumer Banking	businesses	(the	U.S.	is	a	higher	tax	rate	jurisdiction).	In	addition,	the	tax	benefits	of permanent	differences,	including	the	tax	benefit	for	not	providing	U.S.	income	taxes	on	the earnings	of	certain	foreign	subsidiaries	that	are	indefinitely	invested,	favorably	impacted	the Company's	effective	tax	rate.

# Deferred	income	taxes	at	December	31	related	to	the	following:

| In	millions	of	dollars | 2008 | 2007 |
| :--- | :--- | :--- |
| Deferred\ttax\tassets |  |  |
| Credit\tloss\tdeduction | $11,242 | $5,977 |
| Deferred\tcompensation\tand\temployee\tbenefits | 4,367 | 2,686 |
| Restructuring\tand\tsettlement\treserves | 1,134 | 2,388 |
| Unremitted\tforeign\tearnings | 4,371 | 2,833 |
| Investments | 5,312 | — |
| Cash\tflow\thedges | 3,071 | 1,717 |
| Tax\tcredit\tand\tnet\toperating\tloss\tcarryforwards | \t 18,424 | 4,644 |
| Other\tdeferred\ttax\tassets | 4,158 | 2,404 |
| Gross\tdeferred\ttax\tassets | $52,079 | $22,649 |
| Valuation\tallowance | — | — |
| Deferred\ttax\tassets\tafter\tvaluation\tallowance | $52,079 | $22,649 |
| Deferred\ttax\tliabilities |  |  |
| Investments | — | (1,023) |
| Deferred\tpolicy\tacquisition\tcosts |  |  |
| and\tvalue\tof\tinsurance\tin\tforce | $(805) | (761) |
| Leases | (1,255) | (1,865) |
| Fixed\tassets | (954) | (765) |
| Intangibles | (2,365) | (2,361) |
| Credit\tvaluation\tadjustment\ton\tCompany-issued\tdebt | (1,473) | (222) |
| Other\tdeferred\ttax\tliabilities | (758) | (2,075) |
| Gross\tdeferred\ttax\tliabilities | $ (7,610) | $ (9,072) |
| Net\tdeferred\ttax\tasset | $44,469 | $13,577 |

The	following	is	a	roll-forward	of	the	Company's	FIN	48	unrecognized	tax benefits	from	January	1,	2008	to	December	31,	2008.

Total	amount	of	unrecognized	tax	benefits	at	December	31,	2008	that,	if recognized,	would	affect	the	effective	tax	rate	is	$2.4	billion.	The	remainder	of the	uncertain	tax	positions	have	offsetting	amounts	in	other	jurisdictions	or	are temporary	differences.

Interest	and	penalties	(not	included	in	the	"unrecognized	tax	benefits"	above) are	a	component	of	the	Provision	for	income	taxes.

| In	millions	of	dollars | Pretax | Net	of	tax |
| :--- | :--- | :--- |
| Total\tinterest\tand\tpenalties\tin\tthe |  |  |
| balance\tsheet\tat\tJanuary\t1,\t2008 | $618 | $389 |
| Total\tinterest\tand\tpenalties\tin\tthe\t2008 |  |  |
| statement\tof\toperations | $114 | $81 |
| Total\tinterest\tand\tpenalties\tin\tthe |  |  |
| balance\tsheet\tat\tDecember\t31,\t2008^(1) | $663 | $420 |

(1)Includes	$9	million	for	foreign	penalties.

The	Company	is	currently	under	audit	by	the	Internal	Revenue	Service	and other	major	taxing	jurisdictions	around	the	world.	It	is	thus	reasonably	possible that	significant	changes	in	the	gross	balance	of	unrecognized	tax	benefits	may occur	within	the	next	12	months,	but	the	Company	does	not	expect	such	audits	to result	in	amounts	that	would	cause	a	significant	change	to	its	effective	tax	rate, other	than	the	following	items.	The	Company	is	currently	at	IRS	Appeals	for	the years	1999–2002.	One	of	the	issues	relates	to	the	timing	of	the	inclusion	of interchange	fees	received	by	the	Company	relating	to	credit	card	purchases	by	its cardholders.	It	is	reasonably	possible	that	within	the	next	12	months	the Company	can	either	reach	agreement	on	this	issue	at	Appeals	or	decide	to	litigate the	issue.	This	issue	is	presently	being	litigated	by	another	company	in	a	United States	Tax	Court	case.	The	gross	uncertain	tax	position	for	this	item	at December	31,	2008	is	$542	million.	Since	this	is	a	temporary	difference,	the only	effect	to	the	Company's	effective	tax	rate	would	be	due	to	net	interest	and state	tax	rate	differentials.	If	the	reserve	were	to	be	released,	the	tax	benefit	could be	as	much	as	$168	million.	In	addition,	the	Company	expects	to	conclude	the IRS	audit	of	its	U.S.	federal	consolidated	income	tax	returns	for	the	years	2003– 2005	within	the	next	12	months.	The	gross	uncertain	tax	position	at December	31,	2008	for	the	items	expected	to	be	resolved	is	approximately	$350 million	plus	gross	interest	of	$70	million.	The	potential	net	tax	benefit	to continuing	operations	could	be	approximately	$325	million.

The	following	are	the	major	tax	jurisdictions	in	which	the	Company	and	its affiliates	operate	and	the	earliest	tax	year	subject	to	examination:

Foreign	pretax	earnings	approximated	$10.3	billion	in	2008,	$9.1	billion	in 2007,	and	$13.6	billion	in	2006	($5.1	billion,	$0.7	billion	and	$0.9	billion	of which,	respectively,	are	in	discontinued	operations).	As	a	U.S.	corporation, Citigroup	and	its	U.S.	subsidiaries	are	subject	to	U.S.	taxation	currently	on	all foreign	pretax	earnings	earned	by	a	foreign	branch.	Pretax	earnings	of	a	foreign subsidiary	or	affiliate	are	subject	to	U.S.	taxation	when	effectively	repatriated. The	Company	provides	income	taxes	on	the	undistributed	earnings	of	non-U.S. subsidiaries	except	to	the	extent	that	such	earnings	are	indefinitely	invested outside	the	United	States.	At	December	31,	2008,	$22.8	billion	of	accumulated undistributed	earnings	of	non-U.S.	subsidiaries	were	indefinitely	invested.	At	the existing	U.S.	federal	income	tax	rate,	additional	taxes	(net	of	U.S.	foreign	tax credits)	of	$6.1	billion	would	have	to	be	provided	if	such	earnings	were	remitted currently.	The	current	year's	effect	on	the	income	tax	expense	from	continuing operations	is	included	in	the	Foreign	income	tax	rate	differential	line	in	the reconciliation	of	the	federal	statutory	rate	to	the	Company's	effective	income	tax rate	on	the	previous	page.

Income	taxes	are	not	provided	for	on	the	Company's	savings	bank	base	year bad	debt	reserves	that	arose	before	1988	because	under	current	U.S.	tax	rules such	taxes	will	become	payable	only	to	the	extent	such	amounts	are	distributed in	excess	of	limits	prescribed	by	federal	law.	At	December	31,	2008,	the	amount of	the	base	year	reserves	totaled	approximately	$358	million	(subject	to	a	tax	of $125	million).

The	Company	has	no	valuation	allowance	on	deferred	tax	assets	at December	31,	2008	and	December	31,	2007.

At	December	31,	2008,	the	Company	had	a	U.S.	foreign	tax-credit carryforward	of	$10.5	billion,	$0.4	billion	whose	expiry	date	is	2016,	$5.3 billion	whose	expiry	date	is	2017	and	$4.8	billion	whose	expiry	date	is	2018.	The Company	has	a	U.S	federal	consolidated	net	operating	loss	(NOL)	carryforward of	approximately	$13	billion	whose	expiration	date	is	2028.	The	Company	also has	a	general	business	credit	carryforward	of	$0.6	billion	whose	expiration	dates are	2027-2028.	The	Company	has	state	and	local	net	operating	loss carryforwards	of	$16.2	billion	and	$4.9	billion	in	New	York	State	and	New	York City,	respectively.	This	consists	of	$2.4	billion	and	$1.2	billion,	whose	expiration date	is	2027	and	$13.8	billion	and	$3.7	billion	whose	expiration	date	is	2028	and for	which	the	Company	has	recorded	a	deferred-tax	asset	of	$1.2	billion,	along with	less	significant	net	operating	losses	in	various	other	states	for	which	the Company	has	recorded	a	deferred-tax	asset	of	$399	million	and	which	expire between	2012	and	2028.	In	addition,	the	Company	has	recorded	deferred-tax assets	in	APB	23	subsidiaries	for	foreign	net	operating	loss	carryforwards	of $130	million	(which	expires	in	2018)	and	$101	million	(with	no	expiration). Although	realization	is	not	assured,	the	Company	believes	that	the	realization of	the	recognized	net	deferred	tax	asset	of	$44.5	billion	is	more	likely	than	not based	on	expectations	as	to	future	taxable	income	in	the	jurisdictions	in	which	it operates	and	available	tax	planning	strategies,	as	defined	in	SFAS	109,	that could	be	implemented	if	necessary	to	prevent	a	carryforward	from	expiring.	The Company's	net	deferred	tax	asset	(DTA)	of	$44.5	billion	consists	of approximately	$36.5	billion	of	net	U.S.	federal	DTAs,	$4	billion	of	net	state DTAs	and	$4	billion	of	net	foreign	DTAs.	Included	in	the	net	federal	DTA	of $36.5	billion	are	deferred	tax	liabilities	of	$4	billion	that	will	reverse	in	the relevant	carryforward	period	and	may	be	used	to	support	the	DTA.	The	major components	of	the	U.S.	federal	DTA	are	$10.5	billion	in	foreign	tax-credit carryforwards,	$4.6	billion	in	a	net-operating-loss	carryforward,	$0.6	billion	in	a general-business-credit	carryforward,	$19.9	billion	in	net	deductions	that	have not	yet	been	taken	on	a	tax	return,	and	$0.9	billion	in	compensation	deductions, which	reduced	Additional	paid-in	capital	in	January	2009	and	for	which	SFAS 123(R)	did	not	permit	any	adjustment	to	such	DTA	at	December	31,	2008 because	the	related	stock	compensation	was	not	yet	deductible	to	the	Company. In	general,	Citigroup	would	need	to	generate	approximately	$85	billion	of taxable	income	during	the	respective	carryforward	periods	to	fully	realize	its federal,	state	and	local	DTAs.

As	a	result	of	the	losses	incurred	in	2008,	the	Company	is	in	a	three-year cumulative	pretax	loss	position	at	December	31,	2008.	A	cumulative	loss position	is	considered	significant	negative	evidence	in	assessing	the	realizability of	a	DTA.	The	Company	has	concluded	that	there	is	sufficient	positive	evidence to	overcome	this	negative	evidence.	The	positive	evidence	includes	two	means by	which	the	Company	is	able	to	fully	realize	its	DTA.	First,	the	Company forecasts	sufficient	taxable	income	in	the	carryforward	period,	exclusive	of	tax planning	strategies,	even	under	stressed	scenarios.	Secondly,	the	Company	has sufficient	tax	planning	strategies,	including	potential	sales	of	businesses	and assets	that	could	realize	the	excess	of	appreciated	value	over	the	tax	basis	of	its assets,	in	an	amount	sufficient	to	fully	realize	its	DTA.	The	amount	of	the deferred	tax	asset	considered	realizable,	however,	could	be	significantly	reduced in	the	near	term	if	estimates	of	future	taxable	income	during	the	carryforward period	are	significantly	lower	than	forecasted	due	to	further	decreases	in	market conditions.

The	U.S.	foreign	tax-credit	carryforward	period	is	10	years.	In	addition, utilization	of	foreign	tax	credits	is	restricted	to	35%	of	foreign	source	taxable income	in	that	year.	Due	to	the	passage	of	the	American	Jobs	Creation	Act	of 2004,	overall	domestic	losses	that	the	Company	has	incurred	of	approximately $35	billion	are	allowed	to	be	reclassified	as	foreign	source	income	to	the	extent of	50%	of	domestic	source	income	produced	in	subsequent	years	and	are	in	fact sufficient	to	cover	the	foreign	tax	credits	being	carried	forward.	As	such,	the foreign	source	taxable	income	limitation	will	not	be	an	impediment	to	the foreign	tax	credit	carryforward	usage	as	long	as	the	Company	can	generate sufficient	domestic	taxable	income	within	the	10-year	carryforward	period. Regarding	the	estimate	of	future	taxable	income,	the	Company	has	projected	its pretax	earnings	based	upon	the	"core"	businesses	that	the	Company	intends	to conduct	going	forward,	as	well	as	Smith	Barney	and	Primerica	Financial Services.	These	businesses	have	produced	steady	and	strong	earnings	in	the	past.

The	following	is	a	reconciliation	of	the	income	and	share	data	used	in	the	basic	and	diluted	earnings	per	share	computations	for	the	years	ended	December	31:

| In	millions,	except	per	share	amounts | 2008 | 2007 | 2006 |
| :--- | :--- | :--- | :--- |
| Income\t(loss)\tfrom\tcontinuing\toperations | $(32,094) | $2,989 | $ 20,451 |
| Discontinued\toperations | 4,410 | 628 | 1,087 |
| Preferred\tdividends | (1,732) | (36) | (64) |
| Income\t(loss)\tavailable\tto\tcommon\tstockholders\tfor\tbasic\tEPS | (29,416) | 3,581 | 21,474 |
| Effect\tof\tdilutive\tsecurities | 877 | — | — |
| Income\t(loss)\tavailable\tto\tcommon\tstockholders\tfor\tdiluted\tEPS^\t(1) | $(28,539) | $3,581 | $ 21,474 |
| Weighted\taverage\tcommon\tshares\toutstanding\tapplicable\tto\tbasic\tEPS | 5,265.4 | \t 4,905.8 | \t 4,887.3 |
| Effect\tof\tdilutive\tsecurities: |  |  |  |
| Options | 0.3 | 18.2 | 27.2 |
| Restricted\tand\tdeferred\tstock | 26.2 | 71.3 | 71.6 |
| Preferred\tstock | 503.2 | — | — |
| Adjusted\tweighted\taverage\tcommon\tshares\toutstanding\tapplicable\tto\tdiluted\tEPS | 5,795.1 | \t 4,995.3 | \t 4,986.1 |
| Basic\tearnings\tper\tshare^\t(2) |  |  |  |
| Income\t(loss)\tfrom\tcontinuing\toperations | $(6.42) | $0.60 | $4.17 |
| Discontinued\toperations | 0.83 | 0.13 | 0.22 |
| Net\tincome\t(loss) | $(5.59) | $0.73 | $4.39 |
| Diluted\tearnings\tper\tshare^\t(1)(2) |  |  |  |
| Income\t(loss)\tfrom\tcontinuing\toperations | $(6.42) | $0.59 | $4.09 |
| Discontinued\toperations | 0.83 | 0.13 | 0.22 |
| Net\tincome\t(loss) | $(5.59) | $0.72 | $4.31 |

(1) Due	to	the	net	loss	in	2008,	income	(loss)	available	to	common	stockholders	for	basic	EPS	was	used	to	calculate	diluted	earnings	per	share.	Adding	back	the	effect	of	dilutive	securities	would result	in	anti-dilution.

excluded	from	the	computation	of	diluted	EPS	because	the	options'	exercise prices	were	greater	than	the	average	market	price	of	the	Company's	common stock.

# 13.	FEDERAL	FUNDS,	SECURITIES	BORROWED,	LOANED,	AND SUBJECT	TO	REPURCHASE	AGREEMENTS

Federal	funds	sold	and	securities	borrowed	or	purchased	under	agreements	to resell,	at	their	respective	fair	values,	consisted	of	the	following	at	December	31:

| In	millions	of	dollars	at	year	end | 2008 | 2007 |
| :--- | :--- | :--- |
| Federal\tfunds\tsold | $— | $196 |
| Securities\tpurchased\tunder\tagreements\tto\tresell | 78,701 | 98,258 |
| Deposits\tpaid\tfor\tsecurities\tborrowed | \t 105,432 | \t 175,612 |
| Total | $184,133 | $274,066 |

Federal	funds	purchased	and	securities	loaned	or	sold	under	agreements	to repurchase,	at	their	respective	fair	values,	consisted	of	the	following	at December	31:

| In	millions	of	dollars	at	year	end | 2008 | 2007 |
| :--- | :--- | :--- |
| Federal\tfunds\tpurchased | $5,755 | $6,279 |
| Securities\tsold\tunder\tagreements\tto\trepurchase | \t 177,585 | \t 230,880 |
| Deposits\treceived\tfor\tsecurities\tloaned | 21,953 | 67,084 |
| Total | $205,293 | $304,243 |

The	resale	and	repurchase	agreements	represent	collateralized	financing transactions	used	to	generate	net	interest	income	and	facilitate	trading	activity. These	instruments	are	collateralized	principally	by	government	and	government agency	securities	and	generally	have	terms	ranging	from	overnight	to	up	to	a year.

It	is	the	Company's	policy	to	take	possession	of	the	underlying	collateral, monitor	its	market	value	relative	to	the	amounts	due	under	the	agreements	and, when	necessary,	require	prompt	transfer	of	additional	collateral	or	reduction	in the	balance	in	order	to	maintain	contractual	margin	protection.	In	the	event	of counterparty	default,	the	financing	agreement	provides	the	Company	with	the right	to	liquidate	the	collateral	held.	As	disclosed	in	Note	27	on	page	200, effective	January	1,	2007,	the	Company	elected	fair	value	option	accounting	in accordance	with	SFAS	159	for	the	majority	of	the	resale	and	repurchase agreements.	The	remaining	portion	is	carried	at	the	amount	of	cash	initially advanced	or	received,	plus	accrued	interest,	as	specified	in	the	respective agreements.	Resale	agreements	and	repurchase	agreements	are	reported	net	by counterparty,	when	applicable,	pursuant	to	FIN	41.	Excluding	the	impact	of	FIN 41,	resale	agreements	totaled	$114.0	billion	and	$151.0	billion	at	December	31, 2008	and	2007,	respectively.

A	majority	of	the	deposits	paid	for	securities	borrowed	and	deposits	received for	securities	loaned	are	recorded	at	the	amount	of	cash	advanced	or	received	and are	collateralized	principally	by	government	and	government	agency	securities and	corporate	debt	and	equity	securities.	The	remaining	portion	is	recorded	at fair	value	as	the	Company	elected	fair	value	option	for	certain	securities borrowed	and	loaned	portfolios	in	accordance	with	SFAS	159.	This	election	was made	effective	in	the	second	quarter	of	2007.	Securities	borrowed	transactions require	the	Company	to	deposit	cash	with	the	lender.	With	respect	to	securities loaned,	the	Company	receives	cash	collateral	in	an	amount	generally	in	excess	of the	market	value	of	securities	loaned.	The	Company	monitors	the	market	value	of securities	borrowed	and	securities	loaned	daily,	and	additional	collateral	is obtained	as	necessary.	Securities	borrowed	and	securities	loaned	are	reported	net by	counterparty,	when	applicable,	pursuant	to	FIN	39.

# 14.	BROKERAGE	RECEIVABLES	AND	BROKERAGE	PAYABLES

The	Company	has	receivables	and	payables	for	financial	instruments	purchased from	and	sold	to	brokers,	dealers	and	customers.	The	Company	is	exposed	to	risk of	loss	from	the	inability	of	brokers,	dealers	or	customers	to	pay	for	purchases	or to	deliver	the	financial	instruments	sold,	in	which	case	the	Company	would	have to	sell	or	purchase	the	financial	instruments	at	prevailing	market	prices.	Credit risk	is	reduced	to	the	extent	that	an	exchange	or	clearing	organization	acts	as	a counterparty	to	the	transaction.

The	Company	seeks	to	protect	itself	from	the	risks	associated	with	customer activities	by	requiring	customers	to	maintain	margin	collateral	in	compliance with	regulatory	and	internal	guidelines.	Margin	levels	are	monitored	daily,	and customers	deposit	additional	collateral	as	required.	Where	customers	cannot meet	collateral	requirements,	the	Company	will	liquidate	sufficient	underlying financial	instruments	to	bring	the	customer	into	compliance	with	the	required margin	level.

Exposure	to	credit	risk	is	impacted	by	market	volatility,	which	may	impair	the ability	of	clients	to	satisfy	their	obligations	to	the	Company.	Credit	limits	are established	and	closely	monitored	for	customers	and	brokers	and	dealers engaged	in	forwards,	futures	and	other	transactions	deemed	to	be	credit sensitive.

Brokerage	receivables	and	brokerage	payables,	which	arise	in	the	normal course	of	business,	consisted	of	the	following	at	December	31:

| In	millions	of	dollars | 2008 | 2007 |
| :--- | :--- | :--- |
| Receivables\tfrom\tcustomers | $26,297 | $39,137 |
| Receivables\tfrom\tbrokers,\tdealers,\tand\tclearing\torganizations | \t 17,981 | \t 18,222 |
| Total\tbrokerage\treceivables | $44,278 | $57,359 |
| Payables\tto\tcustomers | $54,167 | $54,038 |
| Payables\tto\tbrokers,\tdealers,\tand\tclearing\torganizations | \t 16,749 | \t 30,913 |
| Total\tbrokerage\tpayables | $70,916 | $84,951 |

Trading	account	assets	and	liabilities,	at	fair	value,	consisted	of	the	following	at December	31:

| In	millions	of	dollars | 2008 | 2007 |
| :--- | :--- | :--- |
| Trading\taccount\tassets |  |  |
| U.S.\tTreasury\tand\tfederal\tagency\tsecurities | $44,369 | $32,180 |
| State\tand\tmunicipal\tsecurities | 9,510 | 18,574 |
| Foreign\tgovernment\tsecurities | 57,422 | 52,332 |
| Corporate\tand\tother\tdebt\tsecurities | 54,654 | \t 181,333 |
| Derivatives\t^(1) | \t 115,289 | 76,881 |
| Equity\tsecurities | 48,503 | \t 106,868 |
| Mortgage\tloans\tand\tcollateralized\tmortgage\tsecurities | 21,830 | 56,740 |
| Other^\t(2) | 26,058 | 14,076 |
| Total\ttrading\taccount\tassets | $377,635 | $538,984 |
| Trading\taccount\tliabilities |  |  |
| Securities\tsold,\tnot\tyet\tpurchased | $50,693 | $78,541 |
| Derivatives\t^(1) | \t 116,785 | \t 103,541 |
| Total\ttrading\taccount\tliabilities | $167,478 | $182,082 |

(1)Pursuant	to	master	netting	agreements.

(2)Includes	commodity	inventory	measured	at	lower	of	cost	or	market.

| In	millions	of	dollars | 2008 | 2007 |
| :--- | :--- | :--- |
| Securities\tavailable-for-sale | $ 175,189\t\t $ | 193,113 |
| Debt\tsecurities\theld-to-maturity\t^(1) | 64,459 | 1 |
| Non-marketable\tequity\tsecurities\tcarried\tat\tfair\tvalue\t^(2) | 9,262 | 13,603 |
| Non-marketable\tequity\tsecurities\tcarried\tat\tcost\t^(3) | 7,110 | 8,291 |
| Total\tinvestments | $ 256,020\t\t $ | 215,008 |

(1) Recorded	at	amortized	cost.

(2) Unrealized	gains	and	losses	for	non-marketable	equity	securities	carried	at	fair	value	are	recognized	in	earnings.

(3) Non-marketable	equity	securities	carried	at	cost	primarily	consist	of	shares	issued	by	the	Federal	Reserve	Bank,	Federal	Home	Loan	Bank,	foreign	central	banks	and	various	clearing	houses	in which	Citigroup	is	a	member.

# Securities	Available-for-Sale

The	amortized	cost	and	fair	value	of	securities	available-for-sale	at	December	31,	2008	and	December	31,	2007	were	as	follows:

|  |  |  |  | 2008 | 2007^(1) | 2007^(1) | 2007^(1) | 2007^(1) |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | Gross | Gross |  |  | Gross | Gross |  |
|  | Amortized | unrealized | unrealized |  | Amortized | unrealized | unrealized | Fair |
| In\tmillions\tof\tdollars | cost | gains | losses | Fair\tvalue | cost | gains | losses | value |
| Debt\tsecurities\tavailable-for-sale: |  |  |  |  |  |  |  |  |
| Mortgage-backed\tsecurities^\t(2) | $32,798 | $266 | $3,196 | $29,868 | $63,888 | $158 | $971 | $63,075 |
| U.S.\tTreasury\tand\tfederal\tagencies | 23,702 | 340 | 77 | 23,965 | 19,428 | 66 | 70 | 19,424 |
| State\tand\tmunicipal | 18,156 | 38 | 4,370 | 13,824 | 13,342 | 120 | 256 | 13,206 |
| Foreign\tgovernment | 79,505 | 945 | 408 | 80,042 | 72,339 | 396 | 660 | 72,075 |
| U.S.\tcorporate | 10,258 | 59 | 590 | 9,727 | 9,648 | 70 | 120 | 9,598 |
| Other\tdebt\tsecurities | 12,172 | 42 | 314 | 11,900 | 12,336 | 97 | 464 | 11,969 |
| Total\tdebt\tsecurities\tavailable-for-sale | $176,591 | $1,690 | $8,955 | $169,326 | $ 190,981 | $907 | $2,541 | $189,347 |
| Marketable\tequity\tsecurities\tavailable-for-sale | $5,768 | $554 | $459 | $5,863 | $1,404 | $2,420 | $58 | $3,766 |
| Total\tsecurities\tavailable-for-sale | $182,359 | $2,244 | $9,414 | $175,189 | $ 192,385 | $3,327 | $2,599 | $193,113 |

(2) Includes	mortgage-backed	securities	of	U.S.	federal	agencies.

At	December	31,	2008,	the	cost	of	approximately	5,300	investments	in	equity and	fixed	income	securities	exceeded	their	fair	value	by	$9.414	billion.	Of	the $9.414	billion,	the	gross	unrealized	loss	on	equity	securities	was	$459	million. Of	the	remainder,	$5.692	billion	represents	fixed-income	investments	that	have been	in	a	gross	unrealized	loss	position	for	less	than	a	year	and,	of	these,	97% are	rated	investment	grade;	$3.263	billion	represents	fixed	income	investments that	have	been	in	a	gross	unrealized	loss	position	for	a	year	or	more	and,	of	these, 91%	are	rated	investment	grade.

Available-for-sale	mortgage-backed	securities	portfolio	fair	value	balance	of $29.868	billion	consists	of	$23.727	billion	of	government-sponsored	agencies securities,	and	$6.141	billion	of	privately	sponsored	securities	of	which	the majority	is	backed	by	mortgages	that	are	not	Alt-A	or	subprime.	This	balance decreased	from	$63.075	billion	as	of	December	31,	2007,	or	$33.207	billion,	due to	unrealized	losses,	pay-downs	received,	and	the	reclassification	of	Alt-A	and non-agency	securities	from	available-for-sale	to	held-to-maturity	investments.

The	increase	in	gross	unrealized	losses	on	mortgage-backed	securities	was primarily	related	to	a	widening	of	market	spreads,	reflecting	an	increase	in risk/liquidity	premiums.	The	increase	in	gross	unrealized	losses	on	state	and municipal	debt	securities	during	2008	was	a	result	of	market	disruption,	causing reduced	liquidity	and	an	increase	in	municipal	bond	yields.	For	these	securities, management	has	asserted	significant	holding	periods	that	in	certain	cases	now approach	maturity	of	the	securities.

As	discussed	in	more	detail	below,	the	Company	conducts	and	documents periodic	reviews	of	all	securities	with	unrealized	losses	to	evaluate	whether	the impairment	is	other	than	temporary,	pursuant	to	FASB	Staff	Position	No.	115-1, The	Meaning	of	Other-Than-Temporary	Impairment	and	Its	Application	to Certain	Investments	(FSP	FAS	115-1).	Any	unrealized	loss	identified	as	other than	temporary	is	recorded	directly	in	the	Consolidated	Statement	of	Income.

The	table	below	shows	the	fair	value	of	investments	in	available-for-sale	securities	that	have	been	in	an	unrealized	loss	position	for	less	than	12	months	or	for	12 months	or	longer	as	of	December	31,	2008	and	2007:

|  | Less	than	12	months | Less	than	12	months | 12	months	or	longer | 12	months	or	longer |  | Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | Gross |  | Gross |  | Gross |
|  | Fair | unrealized | Fair | unrealized | Fair | unrealized |
| In\tmillions\tof\tdollars\tat\tyear\tend | value | losses | value | losses | value | losses |
| 2008: |  |  |  |  |  |  |
| Securities\tavailable-for-sale |  |  |  |  |  |  |
| Mortgage-backed\tsecurities | $7,800 | $1,177 | $3,793 | $2,019 | $11,593 | $3,196 |
| U.S.\tTreasury\tand\tfederal\tagencies | 1,654 | 76 | 1 | 1 | 1,655 | 77 |
| State\tand\tmunicipal | \t 12,827 | 3,872 | 3,762 | 498 | 16,589 | 4,370 |
| Foreign\tgovernment | \t 10,697 | 201 | 9,080 | 207 | 19,777 | 408 |
| U.S.\tcorporate | 1,604 | 214 | 3,872 | 376 | 5,476 | 590 |
| Other\tdebt\tsecurities | 1,325 | 152 | 824 | 162 | 2,149 | 314 |
| Marketable\tequity\tsecurities\tavailable-for-sale | 3,254 | 386 | 102 | 73 | 3,356 | 459 |
| Total\tsecurities\tavailable-for-sale | $39,161 | $6,078 | $21,434 | $3,336 | $60,595 | $9,414 |
| 2007: |  |  |  |  |  |  |
| Securities\tavailable-for-sale |  |  |  |  |  |  |
| Mortgage-backed\tsecurities | $4,432 | $65 | $27,221 | $906 | $31,653 | $971 |
| U.S.\tTreasury\tand\tfederal\tagencies | 7,369 | 28 | 4,431 | 42 | 11,800 | 70 |
| State\tand\tmunicipal | 7,944 | 190 | 1,079 | 66 | 9,023 | 256 |
| Foreign\tgovernment | \t 34,929 | 305 | 9,598 | 355 | 44,527 | 660 |
| U.S.\tcorporate | 1,489 | 52 | 1,789 | 418 | 3,278 | 470 |
| Other\tdebt\tsecurities | 3,214 | 49 | 879 | 65 | 4,093 | 114 |
| Marketable\tequity\tsecurities\tavailable-for-sale | 60 | 12 | 39 | 46 | 99 | 58 |
| Total\tsecurities\tavailable-for-sale | $59,437 | $701 | $45,036 | $1,898 | $104,473 | $2,599 |

The	following	table	presents	the	amortized	cost	and	fair	value	of	debt	securities available-for-sale	by	contractual	maturity	dates	as	of	December	31,	2008:

(1)Includes	mortgage-backed	securities	of	U.S.	federal	agencies. (2)Investments	with	no	stated	maturities	are	included	as	contractual	maturities	of	greater	than 10	years.	Actual	maturities	may	differ	due	to	call	or	prepayment	rights.

(3)Includes	U.S.	corporate,	asset-backed	securities	issued	by	U.S.	corporations,	and	other	debt securities.

# The	following	table	presents	interest	and	dividends	on	investments:

| In	millions	of	dollars | 2008 | 2007 | 2006 |
| :--- | :--- | :--- | :--- |
| Taxable\tinterest | $9,407 | $12,169 | $9,096 |
| Interest\texempt\tfrom\tU.S.\tfederal\tincome\ttax | 836 | 897 | 660 |
| Dividends | 475 | 357 | 584 |
| Total\tinterest\tand\tdividends | $10,718 | $13,423 | $10,340 |

The	following	table	presents	realized	gains	and	losses	on	investments.	The gross	realized	investment	losses	include	losses	from	other-than-temporary impairment:

| In	millions	of	dollars | 2008 | 2007 | 2006 |
| :--- | :--- | :--- | :--- |
| Gross\trealized\tinvestment\tgains | $ 1,044 | $1,435 | $2,119 |
| Gross\trealized\tinvestment\tlosses | (3,105) | (267) | (328) |
| Net\trealized\tgains\t(losses) | $(2,061) | $1,168 | $1,791 |

# Debt	Securities	Held-to-Maturity

During	the	fourth	quarter	of	2008,	the	Company	reviewed	portfolios	of	debt securities	classified	in	Trading	account	assets	and	available-for-sale	securities, and	identified	positions	where	there	has	been	a	change	of	intent	to	hold	the	debt securities	for	much	longer	periods	of	time	than	originally	anticipated.	The Company	believes	that	the	expected	cash	flows	to	be	generated	from	holding	the assets	significantly	exceed	their	current	fair	value,	which	has	been	significantly and	adversely	impacted	by	the	reduced	liquidity	in	the	global	financial	markets. SFAS	115	requires	transfers	of	securities	out	of	the	trading	category	be	rare. Citigroup	made	a	number	of	transfers	out	of	the	trading	and	available-for-sale categories	in	order	to	better	reflect	the	revised	intentions	of	the	Company	in response	to	the	recent	significant	deterioration	in	market	conditions,	which	were especially	acute	during	the	fourth	quarter	of	2008.	These	rare	market	conditions were	not	foreseen	at	the	initial	purchase	date	of	the	securities.	Most	of	the	debt securities	previously	classified	as	trading	were	bought	and	held	principally	for the	purpose	of	selling	them	in	the	short	term,	many	in	the	context	of	Citigroup's acting	as	a	market	maker.	At	the	date	of	acquisition,	most	of	these	positions	were liquid,	and	the	Company	expected	active	and	frequent	buying	and	selling	with the	objective	of	generating	profits	on	short-term	differences	in	price.	However, subsequent	declines	in	value	of	these	securities	are	primarily	related	to	the ongoing	widening	of	market	credit	spreads	reflecting	increased	risk	and	liquidity premiums	that	buyers	are	currently	demanding.	As	market	liquidity	has decreased,	the	primary	buyers	for	these	securities	have	typically	demanded returns	on	investments	that	are	significantly	higher	than	previously	experienced. Reclassification	of	debt	securities	were	made	at	fair	value	on	the	date	of transfer.	The	December	31,	2008	carrying	value	of	the	securities	transferred from	Trading	account	assets	and	available-for-sale	securities	was	$33.3	billion and	$27.0	billion,	respectively.	The	Company	purchased	an	additional	$4.2 billion	of	held-to-maturity	securities	during	the	fourth	quarter	of	2008,	in accordance	with	prior	commitments.

The	carrying	value	and	fair	value	of	securities	held-to-maturity	at	December	31,	2008:

|  |  | Net	unrealized |  | Gross | Gross |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | Amortized | loss\ton\tdate\tof | Carrying | unrecognized | unrecognized | Fair |
| In\tmillions\tof\tdollars | cost\t^(1) | transfer | value^\t(2) | gains | losses | value |
| Debt\tsecurities\theld-to-maturity |  |  |  |  |  |  |
| Mortgage-backed\tsecurities | $37,719 | $6,981 | $30,738 | $43 | $3,030 | $27,751 |
| State\tand\tmunicipal | 6,051 | 350 | 5,701 | 5 | 339 | 5,367 |
| Other\tdebt\tsecurities | 28,708 | 688 | 28,020 | 212 | 973 | \t 27,259 |
| Total\tdebt\tsecurities\theld-to-maturity | $72,478 | $8,019 | $64,459 | $260 | $4,342 | $60,377 |

(2) Held-to-maturity	securities	are	carried	on	the	Balance	Sheet	at	amortized	cost	and	the	changes	in	the	value	of	these	securities,	other	than	impairment	charges,	are	not	reported	on	the	financial statements.

The	net	unrealized	losses	classified	in	accumulated	other	comprehensive income	that	relates	to	debt	securities	reclassified	from	available-for-sale investments	to	held-to-maturity	investments	was	$8.0	billion	as	of	December	31, 2008.	This	balance	is	amortized	over	the	remaining	life	of	the	related	securities as	an	adjustment	of	yield	in	a	manner	consistent	with	the

accretion	of	discount	on	the	same	transferred	debt	securities.	This	will	have	no impact	on	the	Company's	net	income,	because	the	amortization	of	the	unrealized holding	loss	reported	in	equity	will	offset	the	effect	on	interest	income	of	the accretion	of	the	discount	on	these	securities.

The	held-to-maturity	mortgage-backed	securities	portfolio's	carrying	value	of	$30.738	billion	with	a	fair	value	of	$27.751	billion	as	of	December	31,	2008,	includes the	following:

|  |  | Net	unrealized |  |  |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | loss\ton\tdate |  | Gross | Gross |  |
|  | Amortized | of | Carrying | unrecognized | unrecognized | Fair |
| In\tmillions\tof\tdollars | cost | transfer | value | gains | losses | value |
| Mortgage-backed\tsecurities\theld-to-maturity |  |  |  |  |  |  |
| U.S.\tgovernment\tagency\tsponsored\tsecurities | $1,716 | $76 | $1,640 | $— | $45 | $1,595 |
| U.S.\tnon-government\tagency\tsponsored\tsecurities |  |  |  |  |  |  |
| Alt-A | 16,658 | 4,216 | 12,442 | 23 | 1,802 | \t 10,663 |
| Prime | 7,481 | 1,436 | 6,045 | — | 623 | 5,422 |
| Subprime | 1,368 | 125 | 1,243 | 15 | 163 | 1,095 |
| Non-U.S.\tmortgage-backed\tsecurities | 10,496 | 1,128 | 9,368 | 5 | 397 | 8,976 |
| Total\tmortgage-backed\tsecurities\theld-to-maturity | $37,719 | $6,981 | $30,738 | $43 | $3,030 | $27,751 |

At	December	31,	2008,	the	amortized	cost	of	approximately	1,700	held-to-maturity	securities	exceeded	their	fair	value.	The	table	below	shows	the	fair	value	and	the unrealized	losses	of	these	securities	as	of	December	31,	2008:

|  | Less	than	12	months | Less	than	12	months | 12	months	or	longer | 12	months	or	longer |  | Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | Gross |  | Gross |  | Gross |
|  | Fair | unrealized | Fair | unrealized | Fair | unrealized |
| In\tmillions\tof\tdollars\tat\tyear\tend | value | losses | value | losses | value | losses |
| Debt\tsecurities\theld-to-maturity |  |  |  |  |  |  |
| Mortgage-backed\tsecurities | $\t\t3,941 | $\t\t\t676 | $23,344 | $2,354 | $27,285 | $3,030 |
| State\tand\tmunicipal | 4,918 | 339 | — | — | 4,918 | 339 |
| Other\tdebt\tsecurities | 5,500 | 237 | \t 14,409 | 736 | \t 19,909 | 973 |
| Total\tdebt\tsecurities\theld-to-maturity\t^(1) | $14,359 | $1,252 | $37,753 | $3,090 | $52,112 | $4,342 |

(1) Subsequent	to	the	transfer	of	the	securities	to	held-to-maturity,	an	other-than-temporary	impairment	charge	of	$337	million	was	recorded	in	earnings.

Excluded	from	the	gross	unrealized	losses	presented	in	this	table	is	the	$8.0	billion	of	gross	unrealized	losses	recorded	in	AOCI	related	to	the	held-to-maturity securities	that	were	reclassified	from	available-for-sale	investments.	Approximately	$5.2	billion	of	these	unrealized	losses	relate	to	securities	with	a	fair	value	of	$16.9 billion	at	December	31,	2008,	which	have	been	in	a	loss	position	for	twelve	months	or	longer.

The	following	table	presents	the	carrying	value	and	fair	value	of	debt	securities held-to-maturity	by	contractual	maturity	dates	as	of	December	31,	2008:

(1)Investments	with	no	stated	maturities	are	included	as	contractual	maturities	of	greater	than 10	years.	Actual	maturities	may	differ	due	to	call	or	prepayment	rights. (2)Includes	asset-backed	securities	and	all	other	debt	securities.

# Evaluating	Investments	for	Other-than-Temporary	Impairments

Regardless	of	the	classification	of	the	securities	as	available-for-sale	or	held-to- maturity,	the	Company	has	assessed	each	position	for	credit	impairment. Factors	considered	in	determining	whether	a	loss	is	temporary	include:

•	the	length	of	time	and	the	extent	to	which	fair	value	has	been	below	cost; •	the	severity	of	the	impairment;

•	the	cause	of	the	impairment	and	the	financial	condition	and	near-term prospects	of	the	issuer;

•	activity	in	the	market	of	the	issuer	which	may	indicate	adverse	credit conditions;	and

•	the	Company's	ability	and	intent	to	hold	the	investment	for	a	period	of	time sufficient	to	allow	for	any	anticipated	recovery.

The	Company's	review	for	impairment	generally	entails:

•	identification	and	evaluation	of	investments	that	have	indications	of	possible impairment;

•	analysis	of	individual	investments	that	have	fair	values	less	than	amortized cost,	including	consideration	of	the	length	of	time	the	investment	has	been	in an	unrealized	loss	position	and	the	expected	recovery	period;

•	discussion	of	evidential	matter,	including	an	evaluation	of	factors	or	triggers that	could	cause	individual	investments	to	qualify	as	having	other-than-

temporary	impairment	and	those	that	would	not	support	other-than-temporary impairment;	and

•	documentation	of	the	results	of	these	analyses,	as	required	under	business policies.

The	extent	of	the	Company's	analysis	regarding	credit	quality	and	the	stress	on assumptions	used	in	the	analysis	have	been	refined	for	securities	where	the current	fair	value	or	other	characteristics	of	the	security	warrant.	For	example, given	the	declines	in	fair	values	of	mortgage-backed	securities,	general	concerns regarding	housing	prices	and	the	delinquency	and	default	rates	on	the	mortgage loans	underlying	these	securities,	the	Company's	analysis	for	identifying securities	for	which	it	is	not	probable	that	all	principal	and	interest	contractually due	will	be	recovered	have	been	refined.

More	specifically,	for	U.S.	mortgage-backed	securities	(and	in	particular	for Alt-A	and	other	mortgage-backed	securities	that	have	significant	unrealized losses	as	a	percentage	of	amortized	cost),	credit	impairment	is	assessed	using	a cash	flow	model	that	estimates	the	cash	flows	on	the	underlying	mortgages, using	the	security-specific	collateral	and	transaction	structure.	The	model estimates	cash	flows	from	the	underlying	mortgage	loans	and	distributes	those cash	flows	to	various	tranches	of	securities,	considering	the	transaction	structure and	any	subordination	and	credit	enhancements	that	exist	in	that	structure.	The cash	flow	model	incorporates	actual	cash	flows	on	the	mortgage-backed securities	through	the	current	period	and	then	projects	the	remaining	cash	flows using	a	number	of	assumptions,	including	default	rates,	prepayment	rates,	and recovery	rates	(on	foreclosed	properties).

Management	develops	specific	assumptions	using	as	much	market	data	as possible	and	includes	internal	estimates	as	well	as	estimates	published	by	rating agencies	and	other	third-party	sources.	If	the	models	predict,	given	the	forward- looking	assumptions,	that	it	is	not	probable	that	a	mortgage-backed	security	will recover	all	principal	and	interest	due,	the	Company	records	other-than-temporary impairment	in	the	Consolidated	Statement	of	Income	equal	to	the	entire	decline in	fair	value	of	the	mortgage-backed	security.

Where	a	mortgage-backed	security	held	as	AFS	is	not	deemed	to	be	credit impaired,	management	performs	additional	analysis	to	assess	whether	it	has	the intent	and	ability	to	hold	each	security	for	a	period	of	time	sufficient	for	a forecasted	recovery	of	fair	value.	In	most	cases,	management	has	asserted	that	it has	the	intent	and	ability	to	hold	investments	for	the	forecasted	recovery	period, which	in	some	cases	may	be	the	security's	maturity	date.	Where	such	an assertion	has	not	been	made,	the	securities'	decline	in	fair	value	is	deemed	to	be other-than-temporary	and	is	recorded	in	earnings.	Management	has	asserted significant	holding	periods	for	mortgage-backed	securities	that	in	certain	cases now	approach	the	maturity	of	the	securities.	The	weighted-average	estimated	life of	the	securities	is	currently	approximately	7	years	for	U.S.	mortgage-backed securities.	The	estimated	life	of	the	securities	may	change	depending	on	future performance	of	the	underlying	loans,	including	prepayment	activity	and experienced	credit	losses.

In	addition,	because	of	the	market	disruption	that	occurred	late	in	the	third quarter	of	2008	for	state	and	municipal	debt	securities,	the	analysis	regarding these	potential	impairments	have	also	been	refined.

As	a	result	of	these	analyses,	during	2008	the	Company	recorded approximately	$2.8	billion	of	pretax	losses	for	other-than-temporary impairments,	$337	million	of	which	was	recorded	on	held-to-maturity investments	after	they	had	been	reclassified.

| In	millions	of	dollars	at	year	end | 2008 | 2007^	(3) |
| :--- | :--- | :--- |
| Consumer |  |  |
| In\tU.S.\toffices\nMortgage\tand\treal\testate\t^(1) | $229,565 | $251,927 |
| Installment,\trevolving\tcredit\tand\tother | \t 130,826 | \t 140,797 |
| Lease\tfinancing | 31 | 3,151 |
|  | $360,422 | $395,875 |
| In\toffices\toutside\tthe\tU.S. |  |  |
| Mortgage\tand\treal\testate\t^(1) | $48,277 | $55,152 |
| Installment,\trevolving\tcredit\tand\tother | \t 109,932 | \t 139,369 |
| Lease\tfinancing | 304 | 1,124 |
|  | $158,513 | $195,645 |
| Total\tconsumer\tloans | $518,935 | $591,520 |
| Net\tunearned\tincome | $738 | $787 |
| Consumer\tloans,\tnet\tof\tunearned\tincome | $519,673 | $592,307 |
| Corporate |  |  |
| In\tU.S.\toffices\nCommercial\tand\tindustrial\t^(2) | $33,450 | $30,092 |
| Loans\tto\tfinancial\tinstitutions | 10,200 | 8,778 |
| Lease\tfinancing | 1,476 | 1,630 |
| Mortgage\tand\treal\testate\t^(1) | 6,560 | 2,220 |
|  | $51,686 | $42,720 |
| In\toffices\toutside\tthe\tU.S. |  |  |
| Commercial\tand\tindustrial | $99,389 | $116,145 |
| Mortgage\tand\treal\testate\t^(1) | 7,480 | 4,156 |
| Loans\tto\tfinancial\tinstitutions | 18,413 | 20,467 |
| Lease\tfinancing | 1,850 | 2,292 |
| Governments\tand\tofficial\tinstitutions | 385 | 442 |
|  | $127,517 | $143,502 |
| Total\tcorporate\tloans | $179,203 | $186,222 |
| Net\tunearned\tincome^(4) | (4,660) | (536) |
| Corporate\tloans,\tnet\tof\tunearned\tincome | $174,543 | $185,686 |

(2)Includes	loans	not	otherwise	separately	categorized.

(4)Increase	in	unearned	income	in	2008	relates	to	the	transfer	of	loans	from	the	held-for-sale category	to	the	held-for-investment	category	at	a	discount	to	par.

Included	in	the	previous	loan	table	are	lending	products	whose	terms	may	give rise	to	additional	credit	issues.	Credit	cards	with	below-market	introductory interest	rates,	multiple	loans	supported	by	the	same	collateral	(e.g.,	home	equity loans),	or	interest-only	loans	are	examples	of	such	products.	However,	these products	are	not	material	to	Citigroup's	financial	position	and	are	closely managed	via	credit	controls	that	mitigate	their	additional	inherent	risk.

Impaired	loans	are	those	which	Citigroup	believes	it	is	probable	that	it	will	not collect	all	amounts	due	according	to	the	original	contractual	terms	of	the	loan. Impaired	loans	include	smaller-balance	homogeneous	loans	whose	terms	have been	modified	due	to	the	borrower's	financial	difficulties	and	Citigroup	granted a	concession	to	the	borrower.	Such	modifications	may	include	interest	rate reductions	for	other	than	a	temporary	period,	principal	forgiveness	and/or	term extensions.	Valuation	allowances	for	these	loans	are	estimated	considering	all available	evidence	including,	as	appropriate,	the	present	value	of	the	expected future	cash	flows	discounted	at	the	loan's	original	contractual	effective	rate,	the secondary	market	value	of	the	loan	and	the	fair	value	of	collateral	less	disposal costs.	This	excludes	smaller-balance	homogeneous	loans	that	have	not	been modified	and	are	carried	on	a	non-accrual	basis.

# The	following	table	presents	information	about	impaired	loans:

| In	millions	of	dollars	at	year	end | 2008 | 2007 | 2006 |
| :--- | :--- | :--- | :--- |
| Impaired\tcorporate\tloans | $9,536 | $1,735 | $458 |
| Impaired\tconsumer\tloans\t^(1) | 9,011 | 241 | \t 360 |
| Total\timpaired\tloans\t^(2) | $18,547 | $1,976 | $818 |
| Impaired\tcorporate\tloans\twith\tvaluation\tallowances\t^(3) | $9,531 | $1,724 | $439 |
| Impaired\tconsumer\tloans\twith\tvaluation\tallowances | 8,573 | — | — |
| Impaired\tcorporate\tvaluation\tallowance\t^(3) | $2,698 | $388 | $122 |
| Impaired\tconsumer\tvaluation\tallowance | 2,373 | — | — |
| (3)(4) |  |  |  |
| Total\tvaluation\tallowances | $5,071 | $388 | $122 |
| During\tthe\tyear |  |  |  |
| Average\tbalance\tof\timpaired\tcorporate\tloans\t^(3) | $4,163 | $1,050 | $767 |
| Average\tbalance\tof\timpaired\tconsumer\tloans | 5,266 | — | — |
| Interest\tincome\trecognized\ton\nImpaired\tcorporate\tloans | $49 | $101 | $63 |
| Impaired\tconsumer\tloans | $276 | — | — |

(1)Prior	to	2008,	the	Company's	financial	accounting	systems	did	not	separately	track	impaired smaller-balance,	homogeneous	Consumer	loans	whose	terms	were	modified	due	to	the borrowers'	financial	difficulties	and	it	was	determined	that	a	concession	was	granted	to	the borrower.	During	2008,	such	modified	impaired	Consumer	loans	amounted	to	$8.151	billion. However,	information	derived	from	the	Company's	risk	management	systems	indicates	that such	modifications	were	approximately	$12.3	billion,	$7.0	billion	and	$4.7	billion	at	December 31,	2008,	2007	and	2006,	respectively.

In	addition,	included	in	the	loan	table	are	purchased	distressed	loans,	which are	loans	that	have	evidenced	significant	credit	deterioration	subsequent	to origination	but	prior	to	acquisition	by	Citigroup.	In	conforming	to	the requirements	of	Statement	of	Position	No.	03-3,	"Accounting	for	Certain	Loans or	Debt	Securities	Acquired	in	a	Transfer"	(SOP	03-3),	which	became	effective in	2005,	these	purchased	loans	were	reclassified	from	Other	assets	to	Loans.

In	accordance	with	SOP	03-3,	the	difference	between	the	total	expected	cash flows	for	these	loans	and	the	initial	recorded	investments	must	be	recognized	in income	over	the	life	of	the	loans	using	a	level	yield.	Accordingly,	these	loans have	been	excluded	from	the	impaired	loan	information	presented	above.	In addition,	per	SOP	03-3,	subsequent	decreases	to	the	expected	cash	flows	for	a purchased	distressed	loan	require	a	build	of	an	allowance	so	the	loan	retains	its level	yield.	However,	increases	in	the	expected	cash	flows	are	first	recognized	as a	reduction	of	any	previously	established	allowance	and	then	recognized	as income	prospectively	over	the	remaining	life	of	the	loan	by	increasing	the	loan's level	yield.	Where	the	expected	cash	flows	cannot	be	reliably	estimated,	the purchased	distressed	loan	is	accounted	for	under	the	cost	recovery	method. The	carrying	amount	of	the	purchased	distressed	loan	portfolio	at December	31,	2008	was	$1,510	million	gross	of	an	allowance	of	$122	million.

(2)Excludes	loans	purchased	for	investment	purposes.

(3)Includes	amounts	related	to	Consumer	loans	not	separately	tracked	in	the	Company financial	accounting	systems	prior	to	2008.

(4)Included	in	the	Allowance	for	loan	losses.

The	changes	in	the	accretable	yield,	related	allowance	and	carrying	amount	net	of	accretable	yield	for	2008	are	as	follows:

|  | Accretable | amount	of	loan |  |
| :--- | :--- | :--- | :--- |
| In\tmillions\tof\tdollars | yield | receivable | Allowance |
| Beginning\tbalance^\t(1) | $\t\t219 | $2,373 | $76 |
| Purchases\t^(2) | 38 | 407 | — |
| Disposals/payments\treceived | — | (1,457) | — |
| Accretion | (171) | 171 | — |
| Builds\t(reductions)\tto\tthe\tallowance | 4 | — | 46 |
| Increase\tto\texpected\tcash\tflows | — | 42 | — |
| FX/Other | 2 | (26) | — |
| Balance,\tDecember\t31,\t2008\t^(3) | $\t\t\t\t92 | $1,510 | $122 |

(2) The	balance	reported	in	the	column	"Carrying	amount	of	loan	receivable"	consists	of	$114	million	of	purchased	loans	accounted	for	under	the	level-yield	method	and	$293	million	under	the	cost recovery	method.	These	balances	represent	the	fair	value	of	these	loans	at	their	acquisition	date.	The	related	total	expected	cash	flows	for	the	level-yield	loans	were	$151	million	at	their acquisition	dates.

(3) The	balance	reported	in	the	column	"Carrying	amount	of	loan	receivable"	consists	of	$995	million	of	loans	accounted	for	under	the	level-yield	method	and	$515	million	accounted	for	under	the	cost recovery	method.

| In	millions	of	dollars | 2008 | 2007 | 2006 |
| :--- | :--- | :--- | :--- |
| Allowance\tfor\tloan\tlosses\tat\tbeginning\tof\tyear | $16,117 | $8,940 | $9,782 |
| Additions\nConsumer\tprovision\tfor\tcredit\tlosses^\t(1) | \t 28,282 | \t 15,599 | 6,224 |
| Corporate\tprovision\tfor\tcredit\tlosses | 5,392 | 1,233 | 96 |
| Total\tprovision\tfor\tcredit\tlosses | $33,674 | $16,832 | $6,320 |
| Deductions^\t(2) |  |  |  |
| Consumer\tcredit\tlosses | $18,848 | $10,916 | $8,328 |
| Consumer\tcredit\trecoveries | (1,600) | (1,661) | (1,547) |
| Net\tconsumer\tloan\tlosses | $17,248 | $9,255 | $6,781 |
| Corporate\tcredit\tlosses | $1,922 | $948 | $312 |
| Corporate\tcredit\trecoveries | (149) | (277) | (232) |
| Net\tcorporate\tcredit\tlosses\t(recoveries) | $1,773 | $671 | $80 |
| Other,\tnet\t^(3) | $ (1,154) | $271 | $(301) |
| Allowance\tfor\tloan\tlosses\tat\tend\tof\tyear | $29,616 | $16,117 | $8,940 |
| Allowance\tfor\tcredit\tlosses\ton\tunfunded\tlending\tcommitments\tat\tbeginning\tof\tyear\t^(4) | $1,250 | $1,100 | $850 |
| Provision\tfor\tunfunded\tlending\tcommitments | (363) | 150 | 250 |
| Allowance\tfor\tcredit\tlosses\ton\tunfunded\tlending\tcommitments\tat\tend\tof\tyear\t^(4) | $887 | $1,250 | $1,100 |
| Total\tallowance\tfor\tcredit\tlosses | $30,503 | $17,367 | $10,040 |

(1) During	2007,	the	Company	changed	its	estimate	of	loan	losses	inherent	in	the	 Global	Cards	and	Consumer	Banking	portfolios	that	were	not	yet	visible	in	delinquency	statistics.	The	changes	in estimate	were	accounted	for	prospectively.	For	the	quarter	ended	March	31,	2007,	the	change	in	estimate	decreased	the	Company's	pretax	net	income	by	$170	million,	or	$0.02	per	diluted	share. For	the	quarter	ended	June	30,	2007,	the	change	in	estimate	decreased	the	Company's	pretax	net	income	by	$240	million,	or	$0.03	per	diluted	share.	For	the	quarter	ended	September	30,	2007, the	change	in	estimate	decreased	the	Company's	pretax	net	income	by	$900	million,	or	$0.11	per	diluted	share.

(3) 2008	primarily	includes	reductions	to	the	loan	loss	reserve	of	approximately	$800	million	related	to	foreign	currency	translation,	$102	million	related	to	securitizations,	$244	million	for	the	sale	of the	German	retail	banking	operations,	and	$156	million	for	the	sale	of	CitiCapital	partially	offset	by	additions	of	$106	million	related	to	the	Cuscatlán	and	Bank	of	the	Overseas	Chinese acquisitions.	2007	primarily	includes	reductions	to	the	loan	loss	reserve	of	$475	million	related	to	securitizations	and	transfers	to	loans	held-for-sale,	reductions	of	$83	million	related	to	the	transfer of	the	U.K.	CitiFinancial	portfolio	to	held-for-sale,	and	additions	of	$610	million	related	to	the	acquisition	of	Egg,	Nikko	Cordial,	Grupo	Cuscatlán	and	Grupo	Financiero	Uno.	2006	primarily	includes reductions	to	the	loan	loss	reserve	of	$429	million	related	to	securitizations	and	portfolio	sales	and	the	addition	of	$84	million	related	to	the	acquisition	of	the	CrediCard	portfolio.

(4) Represents	additional	credit	loss	reserves	for	unfunded	corporate	lending	commitments	and	letters	of	credit	recorded	within	 Other	liabilities	on	the	Consolidated	Balance	Sheet.

# 19.	GOODWILL	AND	INTANGIBLE	ASSETS

The	changes	in	goodwill	during	2007	and	2008	were	as	follows:

| 19.	GOODWILL	AND	INTANGIBLE	ASSETS |  |
| :--- | :--- |
| Goodwill |  |
| The\tchanges\tin\tgoodwill\tduring\t2007\tand\t2008\twere\tas\tfollows: |  |
| In\tmillions\tof\tdollars | Goodwill |
| Balance\tat\tDecember\t31,\t2006 | $33,264 |
| Acquisition\tof\tGFU | $865 |
| Acquisition\tof\tQuilter | 268 |
| Acquisition\tof\tNikko\tCordial\t^(1) | 892 |
| Acquisition\tof\tGrupo\tCuscatlán | 921 |
| Acquisition\tof\tEgg | 1,471 |
| Acquisition\tof\tOld\tLane | 516 |
| Acquisition\tof\tBISYS | 872 |
| Acquisition\tof\tBOOC | 712 |
| Acquisition\tof\tATD | 569 |
| Sale\tof\tAvantel | (118) |
| Foreign\texchange\ttranslation,\tsmaller\tacquisitions\tand\tother | 821 |
| Balance\tat\tDecember\t31,\t2007 | $41,053 |
| Sale\tof\tGerman\tretail\tbank | $(1,047) |
| Sale\tof\tCitiCapital | (221) |
| Sale\tof\tCitigroup\tGlobal\tServices\tLimited | (85) |
| Purchase\taccounting\tadjustments—BISYS | (184) |
| Purchase\tof\tthe\tremaining\tshares\tof\tNikko\tCordial—net\tof\tpurchase\taccounting\tadjustments | 287 |
| Acquisition\tof\tLegg\tMason\tPrivate\tPortfolio\tGroup | 98 |
| Foreign\texchange\ttranslation | (3,116) |
| Impairment\tof\tgoodwill | (9,568) |
| Smaller\tacquisitions,\tpurchase\taccounting\tadjustments\tand\tother | (85) |
| Balance\tat\tDecember\t31,\t2008 | $27,132 |

(1) Includes	a	reduction	of	$965	million	related	to	the	recognition	of	certain	tax	benefits.

The	changes	in	goodwill	by	segment	during	2007	and	2008	were	as	follows:

|  | Global | Consumer | Institutional | Wealth | Corporate/ |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| In\tmillions\tof\tdollars | Cards | Banking | Clients\tGroup | Management | Other | Total |
| Balance\tat\tDecember\t31,\t2006\t^(1) | $3,699 | $22,280 | $6,165 | $1,120 | $— | $33,264 |
| Goodwill\tacquired\tduring\t2007 | 1,171 | 1,755 | 3,315 | 844 | — | 7,085 |
| Goodwill\tdisposed\tof\tduring\t2007 | — | (118) | — | — | — | (118) |
| Other\t^(2) | 74 | 336 | 267 | 145 | — | 822 |
| Balance\tat\tDecember\t31,\t2007 | $4,944 | $24,253 | $9,747 | $2,109 | $— | $41,053 |
| Goodwill\tacquired\tduring\t2008 | $— | $88 | $1,331 | $269 | $— | $1,688 |
| Goodwill\tdisposed\tof\tduring\t2008 | (210) | (1,127) | (35) | (6) | — | (1,378) |
| Goodwill\timpaired\tduring\t2008 | — | (9,568) | — | — | — | (9,568) |
| Other\t^(2)(3) | 6,098 | (10,540) | 301 | (522) | — | (4,663) |
| Balance\tat\tDecember\t31,\t2008 | $10,832 | $3,106 | $11,344 | $1,850 | $— | $27,132 |

(1) Reclassified	to	conform	to	the	current	period's	presentation. (2) Other	changes	in	goodwill	primarily	reflect	foreign	exchange	effects	on	non-dollar-denominated	goodwill,	as	well	as	purchase	accounting	adjustments.

(3) As	of	June	30,	2008,	the	Company's	structure	was	reorganized	and	new	operating	segments	were	established.	As	goodwill	is	required	to	be	tested	for	impairment	at	the	reporting	unit	level, reporting	units	under	the	new	operating	segments	have	been	established.

Goodwill	impairment	testing	is	performed	at	a	level	below	the	business segments	(referred	to	as	a	reporting	unit).	Changes	in	the	management	structure in	2008	resulted	in	the	creation	of	new	business	segments.	As	a	result, commencing	with	the	third	quarter	of	2008,	the	Company	identified	new reporting	units	as	required	under	SFAS	No.	142,	Goodwill	and	Other	Intangible Assets	(SFAS	142).	Goodwill	affected	by	the	reorganization	has	been	reallocated from	seven	reporting	units	to	ten,	using	a	relative	fair-value	approach. Subsequent	to	the	reorganization,	goodwill	was	reallocated	to	disposals	and tested	for	impairment	under	the	new	reporting	units.

During	2008,	the	share	prices	of	financial	stocks	continued	to	be	very	volatile and	were	under	considerable	pressure	in	sustained	turbulent	markets.	In	this environment,	Citigroup's	market	capitalization	remained	below	book	value	for most	of	the	period	and	the	Company	performed	goodwill	impairment	testing	for all	reporting	units	as	of	February	28,	2008,	July	1,	2008	and	December	31, 2008.	In	addition,	the	Company	performed	impairment	testing	for	selected reporting	units	as	of	May	31,	2008	(Citigroup	Alternative	Investments)	and October	31,	2008	(Securities	and	Banking,	North	America	Consumer	Banking and	Latin	America	Consumer

Banking).	The	results	of	the	first	step	of	the	impairment	test	showed	no indication	of	impairment	in	any	of	the	reporting	units	at	any	of	the	periods except	December	31,	2008	and,	accordingly,	the	Company	did	not	perform	the second	step	of	the	impairment	test,	except	for	the	test	performed	as	of	December 31,	2008.	As	of	December	31,	2008,	there	was	an	indication	of	impairment	in the	North	America	Consumer	Banking,	Latin	America	Consumer	Banking	and EMEA	Consumer	Banking	reporting	units	and,	accordingly,	the	second	step	of testing	was	performed	on	these	reporting	units.

Based	on	the	results	of	the	second	step	of	testing,	the	Company	recorded	a	$9.6 billion	pretax	($8.7	billion	after	tax)	goodwill	impairment	charge	in	the	fourth quarter	of	2008,	representing	the	entire	amount	of	goodwill	allocated	to	these reporting	units.	The	primary	cause	for	the	goodwill	impairment	in	the	above reporting	units	was	the	rapid	deterioration	in	the	financial	markets,	as	well	as	in the	global	economic	outlook	particularly	during	the	period	beginning	mid- November	through	year	end	2008.	This	deterioration	further	weakened	the	near- term	prospects	for	the	financial	services	industry.	These	and	other	factors, including	the	increased	possibility	of	further	government	intervention,	also resulted	in	the	decline	in	the	Company's	market	capitalization	from approximately	$90	billion	at	July	1,	2008	and	approximately	$74	billion	at October	31,	2008	to	approximately	$36	billion	at	December	31,	2008. The	more	significant	fair-value	adjustments	in	the	pro	forma	purchase	price allocation	in	the	second	step	of	testing	were	to	fair-value	loans	and	debt	and	were made	to	identify	and	value	identifiable	intangibles.	The	adjustments	to	measure the	assets,	liabilities	and	intangibles	were	for	the	purpose	of	measuring	the implied	fair	value	of	goodwill	and	such	adjustments	are	not	reflected	in	the Consolidated	Balance	Sheet.

The	following	table	shows	reporting	units	with	goodwill	balances	and	the	excess of	fair	value	of	allocated	book	value	as	of	December	31,	2008.

| Reporting	Unit | Fair	Value	as	a	%	of | (post- |
| :--- | :--- | :--- |
| ($\tin\tmillions) | Allocated\tBook\tValue | impairment) |
| North\tAmerica\tCards | 139% | 6,765 |
| International\tCards | 218% | 4,066 |
| Asia\tConsumer\tBanking | 293% | 3,106 |
| Securities\t&amp;\tBanking | 109% | 9,774 |
| Global\tTransaction\tServices | 994% | 1,570 |
| North\tAmerica\tGWM | 386% | 1,259 |
| International\tGWM | 171% | 592 |

While	no	impairment	was	noted	in	step	one	of	our	Securities	and	Banking reporting	unit	impairment	test	at	October	31,	2008	and	December	31,	2008, goodwill	present	in	that	reporting	unit	may	be	particularly	sensitive	to	further deterioration	in	economic	conditions.	Under	the	market	approach	for	valuing	this reporting	unit,	the	earnings	multiples	and	transaction	multiples	were	selected from	multiples	obtained	using	data	from	guideline	companies	and	acquisitions. The	selection	of	the	actual	multiple	considers	operating	performance	and financial	condition	such	as	return	on	equity	and	net	income	growth	of	Securities and	Banking	as	compared	to	the	guideline	companies	and	acquisitions.	For	the valuation	under	the	income	approach,	the	Company	utilized	a	discount	rate which	it	believes	reflects	the	risk	and	uncertainty	related	to	the	projected	cash flows,	and	selected	2013	as	the	terminal	year.	In	2013,	the	value	was	derived assuming	a	return	to	historical	levels	of	core-business	profitability	for	the reporting	unit,	despite	the	significant	losses	experienced	in	2008.	This

assumption	is	based	on	management's	view	that	this	recovery	will	occur	based upon	various	macro-	economic	factors	such	as	the	recent	U.S.	government stimulus	actions,	restoring	marketplace	confidence	and	improved	risk- management	practices	on	an	industry-wide	basis.	Furthermore,	Company- specific	actions	such	as	its	recently	announced	realignment	of	its	businesses	to optimize	its	global	businesses	for	future	profitable	growth,	will	also	be	a	factor in	returning	the	Company's	core	Securities	and	Banking	business	to	historical levels.

The	components	of	intangible	assets	were	as	follows:

|  | December	31,	2008 | December	31,	2008 | December	31,	2008 | December	31,	2007 | December	31,	2007 | December	31,	2007 |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | Gross |  | Net | Gross |  | Net |
|  | carrying | Accumulated | carrying | carrying | Accumulated | carrying |
| In\tmillions\tof\tdollars | amount | amortization | amount | amount | amortization | amount |
| Purchased\tcredit\tcard\trelationships | $8,443 | $4,513 | $3,930 | $8,499 | $4,045 | $4,454 |
| Core\tdeposit\tintangibles | 1,345 | 662 | 683 | 1,435 | 518 | 917 |
| Other\tcustomer\trelationships | 4,031 | 168 | 3,863 | 2,746 | 197 | 2,549 |
| Present\tvalue\tof\tfuture\tprofits | 415 | 264 | 151 | 427 | 257 | 170 |
| Other\t^(1) | 5,343 | 1,285 | 4,058 | 5,783 | 1,157 | 4,626 |
| Total\tamortizing\tintangible\tassets | $ 19,577 | $6,892 | $ 12,685 | $18,890 | $6,174 | $12,716 |
| Indefinite-lived\tintangible\tassets | 1,474 | N/A | 1,474 | 1,591 | N/A | 1,591 |
| Mortgage\tservicing\trights | 5,657 | N/A | 5,657 | 8,380 | N/A | 8,380 |
| Total\tintangible\tassets | $ 26,708 | $6,892 | $ 19,816 | $28,861 | $6,174 | $22,687 |

(1) Includes	contract-related	intangible	assets.

N/ANot	Applicable.

The	intangible	assets	recorded	during	2008	and	their	respective	amortization	periods	are	as	follows:

|  |  | amortization |
| :--- | :--- | :--- |
|  |  | period\tin |
| In\tmillions\tof\tdollars | 2008 | years |
| Purchased\tcredit\tcard\trelationships | $103 | 15 |
| Customer\trelationship\tintangibles | \t 1,355 | 25 |
| Core\tdeposit\tintangibles | 15 | 11 |
| Other\tintangibles | 189 | 2 |
| Total\tintangible\tassets\trecorded\tduring\tthe\tperiod\t^(1) | $1,662 | 22 |

(1) There	was	no	significant	residual	value	estimated	for	the	intangible	assets	recorded	during	2007.

Intangible	assets	amortization	expense	was	$1,427	million,	$1,267	million	and $1,842	million	for	2008,	2007	and	2006,	respectively.	Intangible	assets amortization	expense	is	estimated	to	be	$1,253	million	in

The	changes	in	intangible	assets	during	2008	were	as	follows:

|  | Net	carrying |  |  |  |  | Net	carrying |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | amount\tat |  |  |  | FX | amount\tat |
|  | December\t31, |  |  |  | and | December\t31, |
| In\tmillions\tof\tdollars | 2007 | Acquisitions | Amortization | Impairments^\t(1)(2) | other\t^(3) | 2008 |
| Purchased\tcredit\tcard\trelationships | $4,454 | $103 | $(664) | $(28) | $65 | $3,930 |
| Core\tdeposit\tintangibles | 917 | 15 | (155) | — | (94) | 683 |
| Other\tcustomer\trelationships | 2,549 | 1,355 | (225) | (1) | 185 | 3,863 |
| Present\tvalue\tof\tfuture\tprofits | 170 | — | (13) | — | (6) | 151 |
| Indefinite-lived\tintangible\tassets | 1,591 | 550 | — | (937) | 270 | 1,474 |
| Other | 4,626 | 189 | (370) | (239) | (148) | 4,058 |
|  | $14,307 | $2,212 | $(1,427) | $(1,205) | $272 | $14,159 |
| Mortgage\tservicing\trights\t^(4) | 8,380 |  |  |  |  | 5,657 |
| Total\tintangible\tassets | $22,687 |  |  |  |  | $19,816 |

(1) During	the	first	quarter	of	2008,	Old	Lane	notified	investors	in	its	multistrategy	hedge	fund	that	they	would	have	the	opportunity	to	redeem	their	investments	in	the	fund,	without	restriction,	effective July	31,	2008.	In	April	2008,	substantially	all	unaffiliated	investors	had	notified	Old	Lane	of	their	intention	to	redeem	their	investments.	Based	on	the	Company's	expectation	of	the	level	of redemptions	in	the	fund,	the	Company	expected	that	the	cash	flows	from	the	hedge	fund	management	contract	will	be	lower	than	previously	estimated.	The	Company	performed	an	impairment analysis	of	the	intangible	asset	relating	to	the	hedge	fund	management	contract.	As	a	result,	an	impairment	loss	of	$202	million,	representing	the	remaining	unamortized	balance	of	the	intangible assets,	was	recorded	in	the	first	quarter	of	2008	operating	expenses	in	the	results	of	the	ICG	segment.	The	fair	value	was	estimated	using	a	discounted	cash	flow	approach.

(2) In	the	fourth	quarter	of	2008,	Citigroup	recorded	a	$937	million	impairment	charge	on	a	Nikko	Asset	Management	contract	intangible.	During	the	fourth	quarter,	it	was	determined	that	triggering events	occurred	that	required	further	testing	of	the	intangible	assets	for	impairment,	which	resulted	in	the	$937	million	impairment	charge.

(3) Includes	foreign	exchange	translation	and	purchase	accounting	adjustments.

(4) See	page	181	for	the	roll-forward	of	mortgage	servicing	rights.

# SHORT-TERM	BORROWINGS

Short-term	borrowings	consist	of	commercial	paper	and	other	borrowings	with weighted	average	interest	rates	as	follows:

|  | 2008 | 2008 | 2007 | 2007 |
| :--- | :--- | :--- | :--- | :--- |
| In\tmillions\tof\tdollars |  | Weighted |  | Weighted |
| at\tyear\tend | Balance | average | Balance | average |
| Commercial\tpaper |  |  |  |  |
| Citigroup\tFunding\tInc. | $28,654 | 1.66% | $34,939 | 5.05% |
| Other\tCitigroup\tsubsidiaries | 471 | 2.02 | 2,404 | 3.15 |
|  | $29,125 |  | $37,343 |  |
| Other\tborrowings | $97,566 | 2.40% | $109,145 | 3.62% |
| Total | $126,691 |  | $146,488 |  |

Borrowings	under	bank	lines	of	credit	may	be	at	interest	rates	based	on LIBOR,	CD	rates,	the	prime	rate,	or	bids	submitted	by	the	banks.	Citigroup	pays commitment	fees	for	its	lines	of	credit.

Some	of	Citigroup's	nonbank	subsidiaries	have	credit	facilities	with Citigroup's	subsidiary	depository	institutions,	including	Citibank,	N.A. Borrowings	under	these	facilities	must	be	secured	in	accordance	with Section	23A	of	the	Federal	Reserve	Act.

CGMHI	has	committed	financing	with	unaffiliated	banks.	At	December	31, 2008,	CGMHI	had	drawn	down	the	full	$1.050	billion	available	under	these facilities,	of	which	$600	million	is	guaranteed	by	Citigroup.	CGMHI	has bilateral	facilities	totaling	$500	million	with	unaffiliated	banks	with	maturities occurring	on	various	dates	in	the	second	half	of	2009.	They	also	have	substantial borrowing	agreements	consisting	of	facilities	that	CGMHI	has	been	advised	are available,	but	where	no	contractual	lending	obligation	exists.	These arrangements	are	reviewed	on	an	ongoing	basis	to	ensure	flexibility	in	meeting CGMHI's	short-term	requirements.

# LONG-TERM	DEBT

|  | Weighted |  |  |  |
| :--- | :--- | :--- | :--- | :--- |
|  | average |  |  |  |
| In\tmillions\tof\tdollars\tat\tyear\tend | coupon | Maturities | 2008 | 2007 |
| Citigroup\tparent\tcompany |  |  |  |  |
| Senior\tnotes\t^(1) | 4.33% | 2009-2098 | $138,005 | $119,680 |
| Subordinated\tnotes | 5.37 | 2009-2036 | 30,216 | 28,185 |
| Junior\tsubordinated\tnotes\trelating |  |  |  |  |
| to\ttrust\tpreferred\tsecurities | 6.94 | 2027-2067 | 24,060 | 23,756 |
| Other\tCitigroup\tsubsidiaries |  |  |  |  |
| Senior\tnotes\t^(2) | 2.69 | 2009-2045 | \t 105,629 | \t 180,689 |
| Subordinated\tnotes | 3.38 | 2009-2022 | 3,395 | 6,551 |
| Secured\tdebt | 2.92 | 2009-2017 | 290 | 433 |
| Citigroup\tGlobal\tMarkets |  |  |  |  |
| Holdings\tInc.\t^(3) |  |  |  |  |
| Senior\tnotes | 3.72 | 2009-2097 | 20,619 | 26,545 |
| Subordinated\tnotes | 3.56 | 2010 | 4 | 4,856 |
| Citigroup\tFunding\tInc.^\t(4)(5) |  |  |  |  |
| Senior\tnotes | 3.09 | 2009-2051 | 37,375 | 36,417 |
| Total |  |  | $359,593 | $427,112 |
| Senior\tnotes |  |  | $301,628 | $363,331 |
| Subordinated\tnotes |  |  | 33,615 | 39,592 |
| Junior\tsubordinated\tnotes\trelating |  |  |  |  |
| to\ttrust\tpreferred\tsecurities |  |  | 24,060 | 23,756 |
| Other |  |  | 290 | 433 |
| Total |  |  | $359,593 | $427,112 |

(2)At	December	31,	2008	and	2007,	collateralized	advances	from	the	Federal	Home	Loan	Bank are	$67.4	billion	and	$86.9	billion,	respectively.

(3)Includes	Targeted	Growth	Enhanced	Term	Securities	(TARGETS)	with	no	carrying	value	at December	31,	2008	and	$48	million	issued	by	TARGETS	Trust	XXIV	at	December	31,	2007 (	the	"CGMHI	Trusts").	CGMHI	owned	all	of	the	voting	securities	of	the	CGMHI	Trusts.	The CGMHI	Trusts	had	no	assets,	operations,	revenues	or	cash	flows	other	than	those	related	to the	issuance,	administration	and	repayment	of	the	TARGETS	and	the	CGMHI	Trusts' common	securities.	The	CGMHI	Trusts'	obligations	under	the	TARGETS	were	fully	and unconditionally	guaranteed	by	CGMHI,	and	CGMHI's	guarantee	obligations	were	fully	and unconditionally	guaranteed	by	Citigroup.

(4)Includes	Targeted	Growth	Enhanced	Term	Securities	(CFI	TARGETS)	with	no	carrying value	at	December	31,	2008	and	$55	million	issued	by	TARGETS	Trusts	XXV	and	XXVI	at December	31,	2007	(collectively,	the	"CFI	Trusts").	CFI	owned	all	of	the	voting	securities	of the	CFI	Trusts.	The	CFI	Trusts	had	no	assets,	operations,	revenues	or	cash	flows	other	than those	related	to	the	issuance,	administration	and	repayment	of	the	CFI	TARGETS	and	the CFI	Trusts'	common	securities.	The	CFI	Trusts'	obligations	under	the	CFI	TARGETS	were fully	and	unconditionally	guaranteed	by	CFI,	and	CFI's	guarantee	obligations	were	fully	and unconditionally	guaranteed	by	Citigroup.

(5)Includes	Principal-Protected	Trust	Securities	(Safety	First	Trust	Securities)	with	carrying values	of	$452	million	issued	by	Safety	First	Trust	Series	2006-1,	2007-1,	2007-2,	2007-3,

2007-4,	2008-1,	2008-2,	2008-3,	2008-4,	2008-5,	and	2008-6	(collectively,	the	"Safety	First Trusts")	at	December	31,	2008	and	$301	million	issued	by	Safety	First	Trust	Series	2006-1, 2007-1,	2007-2,	2007-3	and	2007-	4	at	December	31,	2007.	CFI	owns	all	of	the	voting securities	of	the	Safety	First	Trusts.	The	Safety	First	Trusts	have	no	assets,	operations, revenues	or	cash	flows	other	than	those	related	to	the	issuance,	administration	and repayment	of	the	Safety	First	Trust	Securities	and	the	Safety	First	Trusts'	common securities.	The	Safety	First	Trusts'	obligations	under	the	Safety	First	Trust	Securities	are	fully and	unconditionally	guaranteed	by	CFI,	and	CFI's	guarantee	obligations	are	fully	and unconditionally	guaranteed	by	Citigroup.

CGMHI	has	a	syndicated	five-year	committed	uncollateralized	revolving	line of	credit	facility	with	unaffiliated	banks	totaling	$3.0	billion,	which	matures	in 2011.	CGMHI	also	has	committed	long-term	financing	facilities	with unaffiliated	banks.	At	December	31,	2008,	CGMHI	had	drawn	down	the	full $1.025	billion	available	under	these	facilities,	of	which	$475	million	is guaranteed	by	Citigroup.	A	bank	can	terminate	these	facilities	by	giving	CGMHI prior	notice	(generally	one	year).	CGMHI	also	has	a	$75	million	bilateral	facility which	matures	in	2010.

CGMHI	also	has	substantial	borrowing	arrangements	consisting	of	facilities that	CGMHI	has	been	advised	are	available,	but	where	no	contractual	lending obligation	exists.	These	arrangements	are	reviewed	on	an	ongoing	basis	to ensure	flexibility	in	meeting	CGMHI's	short-term	requirements.

The	Company	issues	both	fixed	and	variable	rate	debt	in	a	range	of	currencies. It	uses	derivative	contracts,	primarily	interest	rate	swaps,	to	effectively	convert	a portion	of	its	fixed	rate	debt	to	variable	rate	debt	and

variable	rate	debt	to	fixed	rate	debt.	The	maturity	structure	of	the	derivatives generally	corresponds	to	the	maturity	structure	of	the	debt	being	hedged.	In addition,	the	Company	uses	other	derivative	contracts	to	manage	the	foreign exchange	impact	of	certain	debt	issuances.	At	December	31,	2008,	the Company's	overall	weighted	average	interest	rate	for	long-term	debt	was	3.83% on	a	contractual	basis	and	4.19%	including	the	effects	of	derivative	contracts.

Aggregate	annual	maturities	of	long-term	debt	obligations	(based	on	final	maturity	dates)	including	trust	preferred	securities	are	as	follows:

| In	millions	of	dollars | 2009 | 2010 | 2011 | 2012 | 2013 | Thereafter |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Citigroup\tparent\tcompany | $13,463 | $17,500 | $19,864 | $21,135 | $17,525 | $102,794 |
| Other\tCitigroup\tsubsidiaries | \t 55,853 | \t 16,198 | \t 18,607 | 2,718 | 4,248 | 11,691 |
| Citigroup\tGlobal\tMarkets\tHoldings\tInc. | 1,524 | 2,352 | 1,487 | 2,893 | 392 | 11,975 |
| Citigroup\tFunding\tInc. | \t 17,632 | 5,381 | 2,154 | 1,253 | 3,790 | 7,164 |
| Total | $88,472 | $41,431 | $42,112 | $27,999 | $25,955 | $133,624 |

Long-term	debt	at	December	31,	2008	and	December	31,	2007	includes $24,060	million	and	$23,756	million,	respectively,	of	junior	subordinated	debt. The	Company	formed	statutory	business	trusts	under	the	laws	of	the	state	of Delaware.	The	trusts	exist	for	the	exclusive	purposes	of	(i)	issuing	Trust Securities	representing	undivided	beneficial	interests	in	the	assets	of	the	Trust; (ii)	investing	the	gross	proceeds	of	the	Trust	Securities	in	junior	subordinated deferrable	interest	debentures	(subordinated	debentures)	of	its	parent;	and (iii)	engaging	in	only	those	activities	necessary	or	incidental	thereto.	Upon approval	from	the	Federal	Reserve,	Citigroup	has	the	right	to	redeem	these securities.

Citigroup	has	contractually	agreed	not	to	redeem	or	purchase	(i)	the	6.50% Enhanced	Trust	Preferred	Securities	of	Citigroup	Capital	XV	before September	15,	2056,	(ii)	the	6.45%	Enhanced	Trust	Preferred	Securities	of Citigroup	Capital	XVI	before	December	31,	2046,	(iii)	the	6.35%	Enhanced Trust	Preferred	Securities	of	Citigroup	Capital	XVII	before	March	15,	2057, (iv)	the	6.829%	Fixed	Rate/Floating	Rate	Enhanced	Trust	Preferred	Securities	of Citigroup	Capital	XVIII	before	June	28,	2047,	(v)	the	7.250%	Enhanced	Trust Preferred	Securities	of	Citigroup	Capital	XIX	before	August	15,	2047,	(vi)	the 7.875%	Enhanced	Trust	Preferred	Securities	of	Citigroup	Capital	XX	before December	15,	2067,	and	(vii)	the	8.300%	Fixed

Rate/Floating	Rate	Enhanced	Trust	Preferred	Securities	of	Citigroup	Capital XXI	before	December	21,	2067	unless	certain	conditions,	described	in Exhibit	4.03	to	Citigroup's	Current	Report	on	Form	8-K	filed	on	September	18, 2006,	in	Exhibit	4.02	to	Citigroup's	Current	Report	on	Form	8-K	filed	on November	28,	2006,	in	Exhibit	4.02	to	Citigroup's	Current	Report	on	Form	8-K filed	on	March	8,	2007,	in	Exhibit	4.02	to	Citigroup's	Current	Report	on	Form	8- K	filed	on	July	2,	2007,	in	Exhibit	4.02	to	Citigroup's	Current	Report	on	Form	8- K	filed	on	August	17,	2007,	in	Exhibit	4.2	to	Citigroup's	Current	Report	on Form	8-K	filed	on	November	27,	2007,	and	in	Exhibit	4.2	to	Citigroup's	Current Report	on	Form	8-K	filed	on	December	21,	2007,	respectively,	are	met.	These agreements	are	for	the	benefit	of	the	holders	of	Citigroup's	6.00%	Junior Subordinated	Deferrable	Interest	Debentures	due	2034.

Citigroup	owns	all	of	the	voting	securities	of	these	subsidiary	trusts.	These subsidiary	trusts	have	no	assets,	operations,	revenues	or	cash	flows	other	than those	related	to	the	issuance,	administration	and	repayment	of	the	subsidiary trusts	and	the	subsidiary	trusts'	common	securities.	These	subsidiary	trusts' obligations	are	fully	and	unconditionally	guaranteed	by	Citigroup.

The	following	table	summarizes	the	financial	structure	of	each	of	the	Company's	subsidiary	trusts	at	December	31,	2008:

| Trust	securities |  |  |  |  | Common | Junior	subordinated	debentures	owned	by	trust | Junior	subordinated	debentures	owned	by	trust | Junior	subordinated	debentures	owned	by	trust |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| with\tdistributions |  |  |  |  | shares |  |  | Redeemable |
| guaranteed\tby | Issuance | Securities | Liquidation | Coupon | issued |  |  | by\tissuer |
| Citigroup | date | issued | value | rate | to\tparent | Amount\t^(1) | Maturity | beginning |
| In\tmillions\tof\tdollars,\texcept\tshare\tamounts |  |  |  |  |  |  |  |  |
| Citigroup\tCapital\tIII | Dec.\t1996 | 200,000 | $200 | 7.625% | 6,186 | $206 | Dec.\t1,\t2036 | Not\tredeemable |
| Citigroup\tCapital\tVII | July\t2001 | 46,000,000 | 1,150 | 7.125% | 1,422,681 | 1,186 | July\t31,\t2031 | July\t31,\t2006 |
| Citigroup\tCapital\tVIII | Sept.\t2001 | 56,000,000 | 1,400 | 6.950% | 1,731,959 | 1,443 | Sept.\t15,\t2031 | Sept.\t17,\t2006 |
| Citigroup\tCapital\tIX | Feb.\t2003 | 44,000,000 | 1,100 | 6.000% | 1,360,825 | 1,134 | Feb.\t14,\t2033 | Feb.\t13,\t2008 |
| Citigroup\tCapital\tX | Sept.\t2003 | 20,000,000 | 500 | 6.100% | 618,557 | 515 | Sept.\t30,\t2033 | Sept.\t30,\t2008 |
| Citigroup\tCapital\tXI | Sept.\t2004 | 24,000,000 | 600 | 6.000% | 742,269 | 619 | Sept.\t27,\t2034 | Sept.\t27,\t2009 |
| Citigroup\tCapital\tXIV | June\t2006 | 22,600,000 | 565 | 6.875% | 40,000 | 566 | June\t30,\t2066 | June\t30,\t2011 |
| Citigroup\tCapital\tXV | Sept.\t2006 | 47,400,000 | 1,185 | 6.500% | 40,000 | 1,186 | Sept.\t15,\t2066 | Sept.\t15,\t2011 |
| Citigroup\tCapital\tXVI | Nov.\t2006 | 64,000,000 | 1,600 | 6.450% | 20,000 | 1,601 | Dec.\t31,\t2066 | Dec.\t31,\t2011 |
| Citigroup\tCapital\tXVII | Mar.\t2007 | 44,000,000 | 1,100 | 6.350% | 20,000 | 1,101 | Mar.\t15,\t2067 | Mar.\t15,\t2012 |
| Citigroup\tCapital\tXVIII | June\t2007 | 500,000 | 731 | 6.829% | 50 | 731 | June\t28,\t2067 | June\t28,\t2017 |
| Citigroup\tCapital\tXIX | Aug.\t2007 | 49,000,000 | 1,225 | 7.250% | 20 | 1,226 | Aug.\t15,\t2067 | Aug.\t15,\t2012 |
| Citigroup\tCapital\tXX | Nov.\t2007 | 31,500,000 | 788 | 7.875% | 20,000 | 788 | Dec.\t15,\t2067 | Dec.\t15,\t2012 |
| Citigroup\tCapital\tXXI | Dec.\t2007 | 3,500,000 | 3,500 | 8.300% | 500 | 3,501 | Dec.\t21,\t2077 | Dec.\t21,\t2037 |
| Citigroup\tCapital\tXXIX | Nov.\t2007 | 1,875,000 | 1,875 | 6.320% | 10 | 1,875 | Mar.\t15,\t2041 | Mar.\t15,\t2013 |
| Citigroup\tCapital\tXXX | Nov.\t2007 | 1,875,000 | 1,875 | 6.455% | 10 | 1,875 | Sept.\t15,\t2041 | Sept.\t15,\t2013 |
| Citigroup\tCapital\tXXXI | Nov.\t2007 | 1,875,000 | 1,875 | 6.700% | 10 | 1,875 | Mar.\t15,\t2042 | Mar.\t15,\t2014 |
| Citigroup\tCapital\tXXXII | Nov.\t2007 | 1,875,000 | 1,875 | 6.935% | 10 | 1,875 | Sept.\t15,\t2042 | Sept.\t15,\t2014 |
|  |  |  |  | 3\tmo.\tLIB |  |  |  |  |
| Adam\tCapital\tTrust\tIII | Dec.\t2002 | 17,500 | 18 | +335\tbp. | 542 | 18 | Jan.\t7,\t2033 | Jan.\t7,\t2008 |
|  |  |  |  | 3\tmo.\tLIB |  |  |  |  |
| Adam\tStatutory\tTrust\tIII | Dec.\t2002 | 25,000 | 25 | +325\tbp. | 774 | 26 | Dec.\t26,\t2032 | Dec.\t26,\t2007 |
|  |  |  |  | 3\tmo.\tLIB |  |  |  |  |
| Adam\tStatutory\tTrust\tIV | Sept.\t2003 | 40,000 | 40 | +295\tbp. | 1,238 | 41 | Sept.\t17,\t2033 | Sept.\t17,\t2008 |
|  |  |  |  | 3\tmo.\tLIB |  |  |  |  |
| Adam\tStatutory\tTrust\tV | Mar.\t2004 | 35,000 | 35 | +279\tbp. | 1,083 | 36 | Mar.\t17,\t2034 | Mar.\t17,\t2009 |
| Total\tobligated |  |  | $23,262 |  |  | $23,424 |  |  |

(1) Represents	the	proceeds	received	from	the	Trust	at	the	date	of	issuance.

In	each	case,	the	coupon	rate	on	the	debentures	is	the	same	as	that	on	the	trust	securities.	Distributions	on	the	trust	securities	and	interest	on	the	debentures	are	payable quarterly,	except	for	Citigroup	Capital	III,	Citigroup	Capital	XVIII	and	Citigroup	Capital	XXI	on	which	distributions	are	payable	semiannually.

During	2008,	Citigroup	did	not	issue	any	Enhanced	Trust	Preferred	Securities.

# 21.	PREFERRED	STOCK	AND	STOCKHOLDERS'	EQUITY

The	following	table	summarizes	the	Company's	Preferred	stock	outstanding	at	December	31,	2008	and	December	31,	2007:

| Dividend<br>rate | Redemption<br>price	per<br>depositary<br>share	/<br>preference<br>share | Number<br>of<br>depositary<br>shares | to<br>approximate<br>number	of<br>Citigroup<br>common<br>shares | December	31,<br>2008 | December	31,<br>2007 |
| :--- | :--- | :--- | :--- | :--- | :--- |
| 7.000% | $50 | 137,600,000 | 261,083,726 | $6,880 | $— |
| 7.000% | 50 | 60,000,000 | 113,844,648 | 3,000 | — |
| 7.000% | 50 | 20,000,000 | 37,948,216 | 1,000 | — |
| 7.000% | 50 | 15,000,000 | 28,461,162 | 750 | — |
| 8.400% | 1,000 | 6,000,000 | — | 6,000 | — |
| 8.500% | 25 | 81,600,000 | — | 2,040 | — |
| 5.000% | 1,000,000 | 25,000 | — | 23,709 | — |
| 8.000% | 1,000,000 | 20,000 | — | 19,531 | — |
| 7.000% | 50 | 9,000,000 | 17,076,697 | 450 | — |
| 7.000% | 50 | 8,000,000 | 15,179,286 | 400 | — |
| 7.000% | 50 | 100,000 | 189,741 | 5 | — |
| 7.000% | 50 | 300,000 | 569,223 | 15 | — |
| 6.500% | 50 | 63,373,000 | 93,940,986 | 3,169 | — |
| 8.125% | 25 | 148,600,000 | — | 3,715 | — |
|  |  |  | 568,293,685 | $70,664 | $\t— |

(1) Issued	on	January	23,	2008	as	depositary	shares,	each	representing	a	1/1,000th	interest	in	a	share	of	the	corresponding	series	of	Non-Cumulative	Convertible	Preferred	Stock.	Redeemable	in whole	or	in	part	on	or	after	February	15,	2015.	Under	the	terms	of	pre-existing	conversion	price	reset	agreements	with	holders	of	Series	A,	B,	C,	D,	J,	K,	L1	and	N	(the	"Old	Preferred	Stock"),	on February	17,	2009,	Citigroup	exchanged	shares	of	new	preferred	stock	(the	"New	Preferred	Stock")	for	an	equal	number	of	shares	of	Old	Preferred	Stock.	The	terms	and	conditions	of	the	New Preferred	Stock	are	identical	in	all	material	respects	to	the	terms	and	conditions	of	the	Old	Preferred	Stock,	except	that	the	Conversion	Price	and	Conversion	Rate	of	the	New	Preferred	Stock	have been	reset	to	$26.3517	and	1,897.4108,	respectively.	All	shares	of	the	Old	Preferred	Stock	were	canceled.	The	dividend	of	$0.88	per	depositary	share	is	payable	quarterly	when,	as	and	if	declared by	the	Company's	Board	of	Directors.	Redemption	is	subject	to	a	capital	replacement	covenant.

(2) Issued	on	April	28,	2008	as	depositary	shares,	each	representing	a	1/25th	interest	in	a	share	of	the	corresponding	series	of	Fixed	Rate/Floating	Rate	Non-Cumulative	Preferred	Stock.	Redeemable in	whole	or	in	part	on	or	after	April	30,	2018.	Dividends	are	payable	semi-annually	for	the	first	10	years	until	April	30,	2018	at	$42.70	per	depositary	share	and	thereafter	quarterly	at	a	floating	rate when,	as	and	if	declared	by	the	Company's	Board	of	Directors.

(3) Issued	on	May	13,	2008	and	May	28,	2008	as	depositary	shares,	each	representing	a	1/1,000th	interest	in	a	share	of	the	corresponding	series	of	Non-Cumulative	Preferred	Stock.	Redeemable	in whole	or	in	part	on	or	after	June	15,	2013.	The	dividend	of	$0.53	per	depositary	share	is	payable	quarterly	when,	as	and	if	declared	by	the	Company's	Board	of	Directors.

(4) Issued	on	October	28,	2008	as	Cumulative	Preferred	Stock	to	the	United	States	Treasury	under	the	Troubled	Asset	Relief	Program.	Redeemable	in	whole	or	in	part	subject	to	approval	of	the investor	and	compliance	with	certain	conditions.	Dividends	are	payable	quarterly	for	the	first	five	years	until	February	15,	2013	at	$12,500	per	preferred	share	and	thereafter	at	$22,500	per preferred	share	when,	as	and	if	declared	by	the	Company's	Board	of	Directors.

(5) Issued	on	December	31,	2008	as	Cumulative	Preferred	Stock	to	the	United	States	Treasury	under	the	Troubled	Asset	Relief	Program.	Redeemable	in	whole	or	in	part	subject	to	approval	of	the investor	and	compliance	with	certain	conditions.	The	dividend	of	$20,000	per	preferred	share	is	payable	quarterly	when,	as	and	if	declared	by	the	Company's	Board	of	Directors.

(6) Issued	on	January	23,	2008	and	January	29,	2008	as	depositary	shares,	each	representing	a	1/1,000th	interest	in	a	share	of	the	corresponding	series	of	Non-Cumulative	Convertible	Preferred Stock.	Redeemable	in	whole	or	in	part	on	or	after	February	15,	2015.	Convertible	into	Citigroup	common	stock	at	a	conversion	rate	of	approximately	1,482.3503	per	share,	which	is	subject	to adjustment	under	certain	conditions.	The	dividend	or	in	$0.81	per	depositary	share	is	payable	quarterly	when,	as	and	if	declared	by	the	Company's	Board	of	Directors.	Redemption	is	subject	to	a capital	replacement	covenant.

(7) Issued	on	January	25,	2008	as	depositary	shares,	each	representing	a	1/1,000th	interest	in	a	share	of	the	corresponding	series	of	Non-Cumulative	Preferred	Stock.	Redeemable	in	whole	or	in	part on	or	after	February	15,	2018.	The	dividend	of	$0.51	per	depositary	share	is	payable	quarterly	when,	as	and	if	declared	by	the	Company's	Board	of	Directors.	Redemption	is	subject	to	a	capital replacement	covenant.

If	dividends	are	declared	on	Series	E	as	scheduled,	the	impact	from	preferred

dividends	on	earnings	per	share	in	the	first	and	third	quarters	will	be	lower	than the	impact	in	the	second	and	fourth	quarters.	All	other	series	currently	have	a quarterly	dividend	declaration	schedule.

# Regulatory	Capital

Citigroup	is	subject	to	risk-based	capital	and	leverage	guidelines	issued	by	the Board	of	Governors	of	the	Federal	Reserve	System	(FRB).	Its	U.S.	insured depository	institution	subsidiaries,	including	Citibank,	N.A.,	are	subject	to similar	guidelines	issued	by	their	respective	primary	federal	bank	regulatory agencies.	These	guidelines	are	used	to	evaluate	capital	adequacy	and	include	the required	minimums	shown	in	the	following	table.

Citigroup	also	receives	dividends	from	its	non-bank	subsidiaries.	These	non- bank	subsidiaries	are	generally	not	subject	to	regulatory	restrictions	on dividends.

The	ability	of	CGMHI	to	declare	dividends	can	be	restricted	by	capital considerations	of	its	broker-dealer	subsidiaries.

(1)Total	Capital	includes	Tier	1	and	Tier	2.

(3)Applicable	only	to	depository	institutions.	For	bank	holding	companies	to	be	"well capitalized,"	they	must	maintain	a	minimum	Leverage	Ratio	of	3%.

There	are	various	legal	limitations	on	the	ability	of	Citigroup's	subsidiary depository	institutions	to	extend	credit,	pay	dividends	or	otherwise	supply	funds to	Citigroup	and	its	non-bank	subsidiaries.	The	approval	of	the	Office	of	the Comptroller	of	the	Currency,	in	the	case	of	national	banks,	or	the	Office	of Thrift	Supervision,	in	the	case	of	federal	savings	banks,	is	required	if	total dividends	declared	in	any	calendar	year	exceed	amounts	specified	by	the applicable	agency's	regulations.	State-chartered	depository	institutions	are subject	to	dividend	limitations	imposed	by	applicable	state	law. As	of	December	31,	2008,	Citigroup's	subsidiary	depository	institutions	can declare	dividends	to	their	parent	companies,	without	regulatory	approval,	of approximately	$69	million.	In	determining	the	dividends,	each	depository institution	must	also	consider	its	effect	on	applicable	risk-based	capital	and leverage	ratio	requirements,	as	well	as	policy	statements	of	the	federal	regulatory agencies	that	indicate	that	banking	organizations	should	generally	pay	dividends out	of	current	operating	earnings.

# 22.	CHANGES	IN	ACCUMULATED	OTHER	COMPREHENSIVE	INCOME	(LOSS)

Changes	in	each	component	of	"Accumulated	Other	Comprehensive	Income	(Loss)"	for	the	three-year	period	ended	December	31,	2008	are	as	follows:

|  | Net	unrealized | currency |  |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  | gains\t(losses) | translation |  |  | Accumulated |
|  | on | adjustment, |  | Pension | other |
|  | investment | net\tof | Cash\tflow | liability | comprehensive |
| In\tmillions\tof\tdollars | securities | hedges | hedges | adjustments | income\t(loss) |
| Balance,\tJanuary\t1,\t2006 | $1,084 | $(4,090) | $612 | $(138) | $(2,532) |
| Increase\tin\tnet\tunrealized\tgains\ton\tinvestment\tsecurities,\tnet\tof\ttaxes | 1,023 | — | — | — | 1,023 |
| Less:\tReclassification\tadjustment\tfor\tnet\tgains\tincluded\tin\tnet\tincome,\tnet\tof\ttaxes | (1,164) | — | — | — | (1,164) |
| Foreign\tcurrency\ttranslation\tadjustment,\tnet\tof\ttaxes\t^(2) | — | 1,294 | — | — | 1,294 |
| Cash\tflow\thedges,\tnet\tof\ttaxes | — | — | (673) | — | (673) |
| Minimum\tpension\tliability\tadjustment,\tnet\tof\ttaxes\t^(3) | — | — | — | (1) | (1) |
| Adjustment\tto\tinitially\tapply\tSFAS\tNo.\t158,\tnet\tof\ttaxes | — | — | — | (1,647) | (1,647) |
| Change | $(141) | $1,294 | $(673) | $(1,648) | $(1,168) |
| Balance,\tDecember\t31,\t2006 | $943 | $(2,796) | $(61) | $(1,786) | $(3,700) |
| Adjustment\tto\topening\tbalance,\tnet\tof\ttaxes\t^(4) | 149 | — | — | — | 149 |
| Adjusted\tbalance,\tbeginning\tof\tyear | $1,092 | $(2,796) | $(61) | $(1,786) | $(3,551) |
| Increase\tin\tnet\tunrealized\tgains\ton\tinvestment\tsecurities,\tnet\tof\ttaxes | 138 | — | — | — | 138 |
| Less:\tReclassification\tadjustment\tfor\tnet\tgains\tincluded\tin\tnet\tincome,\tnet\tof\ttaxes | (759) | — | — | — | (759) |
| Foreign\tcurrency\ttranslation\tadjustment,\tnet\tof\ttaxes\t^(2) | — | 2,024 | — | — | 2,024 |
| Cash\tflow\thedges,\tnet\tof\ttaxes\t^(5) | — | — | (3,102) | — | (3,102) |
| Pension\tliability\tadjustment,\tnet\tof\ttaxes\t^(6) | — | — | — | 590 | 590 |
| Change | $(621) | $2,024 | $(3,102) | $590 | $(1,109) |
| Balance,\tDecember\t31,\t2007 | $471 | $(772) | $(3,163) | $(1,196) | $(4,660) |
| Increase\tin\tnet\tunrealized\tgains\t(losses)\ton\tinvestment\tsecurities,\tnet\tof\ttaxes | (11,422) | — | — | — | (11,422) |
| Less:\tReclassification\tadjustment\tfor\tnet\tlosses\tincluded\tin\tnet\tincome,\tnet\tof\ttaxes | 1,304 | — | — | — | 1,304 |
| Foreign\tcurrency\ttranslation\tadjustment,\tnet\tof\ttaxes\t^(2) | — | (6,972) | — | — | (6,972) |
| Cash\tflow\thedges,\tnet\tof\ttaxes\t^(5) | — | — | (2,026) | — | (2,026) |
| Pension\tliability\tadjustment,\tnet\tof\ttaxes\t^(6) | — | — | — | (1,419) | (1,419) |
| Change | $(10,118) | $(6,972) | $(2,026) | $(1,419) | $(20,535) |
| Balance,\tDecember\t31,\t2008^\t(1) | $(9,647) | $(7,744) | $(5,189) | $(2,615) | $(25,195) |

(1) The	December	31,	2008	balance	of	$(9.6)	billion	for	net	unrealized	losses	on	investment	securities	consists	of	$(4.4)	billion	for	those	investments	classified	as	available-for-sale	and	$(5.2)	billion	for those	classified	as	held-to-maturity.

(2) Reflects,	among	other	items:	the	movements	in	the	British	pound,	Euro,	Korean	won,	Polish	zloty	and	Mexican	peso	against	the	U.S.	dollar,	and	changes	in	related	tax	effects	and	hedges	in	2006; the	movements	in	the	Euro,	Brazilian	real,	Canadian	dollar,	Polish	zloty,	Indian	rupee	and	Australian	dollar	against	the	U.S.	dollar,	and	related	tax	effects	and	hedges	in	2007;	and	the	movements in	the	Mexican	peso,	Euro,	British	pound,	Polish	zloty,	Korean	won	and	the	Brazilian	real	against	the	U.S.	dollar,	and	changes	in	related	tax	effects	and	hedges	in	2008.

(3) Additional	minimum	liability,	as	required	by	SFAS	No.	87,	 Employers'	Accounting	for	Pensions	(SFAS	87),	related	to	unfunded	or	book	reserve	plans,	such	as	the	U.S.	nonqualified	pension	plans and	certain	foreign	pension	plans.

(4) The	after-tax	adjustment	to	the	opening	balance	of	Accumulated	other	comprehensive	income	(loss)	represents	the	reclassification	of	the	unrealized	gains	(losses)	related	to	the	Legg	Mason securities,	as	well	as	several	miscellaneous	items	previously	reported	in	accordance	with	SFAS	115.	The	related	unrealized	gains	and	losses	were	reclassified	to	Retained	earnings	upon	the adoption	of	the	fair	value	option	in	accordance	with	SFAS	159.	See	Notes	1	and	27	on	pages	121	and	200,	respectively,	for	further	discussions.

(5) Primarily	driven	by	Citigroup's	pay	fixed/receive	floating	rate	swap	programs	that	are	hedging	the	floating	rate	on	deposits	and	long-term	debt.	The	declining	market	interest	rates	in	2007	and	2008 have	had	a	negative	impact	on	the	cash	flow	hedges	portfolio.

(6) Reflects	adjustments	to	funded	status	of	pension	and	postretirement	plans	as	required	by	SFAS	158,	which	is	the	difference	between	the	projected	benefit	obligation	and	the	fair	value	of	the	plans' assets.

(7) The	net	unrealized	loss	related	to	securities	transferred	to	held-to-maturity	is	$5.2	billion	as	of	December	31,	2008.

# 23.	SECURITIZATIONS	AND	VARIABLE	INTEREST	ENTITIES

Citigroup	and	its	subsidiaries	are	involved	with	several	types	of	off-balance sheet	arrangements,	including	special	purpose	entities	(SPEs).	See	Note	1	on page	122	for	a	discussion	of	proposed	accounting	changes	to	SFAS	140, Accounting	for	Transfers	and	Servicing	of	Financial	Assets	and	Extinguishments of	Liabilities	(SFAS	140),	and	FASB	Interpretation	No.	46,	"Consolidation	of Variable	Interest	Entities	(revised	December	2003)	(FIN	46	(R))."

# Uses	of	SPEs

An	SPE	is	an	entity	designed	to	fulfill	a	specific	limited	need	of	the	company that	organized	it.

The	principal	uses	of	SPEs	are	to	obtain	liquidity	and	favorable	capital treatment	by	securitizing	certain	of	Citigroup's	financial	assets,	to	assist	clients in	securitizing	their	financial	assets,	and	to	create	investment	products	for	clients. SPEs	may	be	organized	in	many	legal	forms	including	trusts,	partnerships,	or corporations.	In	a	securitization,	the	company	transferring	assets	to	an	SPE converts	those	assets	into	cash	before	they	would	have	been	realized	in	the normal	course	of	business,	through	the	SPE's	issuance	of	debt	and	equity instruments,	certificates,	commercial	paper,	and	other	notes	of	indebtedness, which	are	recorded	on	the	balance	sheet	of	the	SPE	and	not	reflected	on	the transferring	company's	balance	sheet,	assuming	applicable	accounting requirements	are	satisfied.	Investors	usually	have	recourse	to	the	assets	in	the SPE	and	often	benefit	from	other	credit	enhancements,	such	as	a	collateral account	or	overcollateralization	in	the	form	of	excess	assets	in	the	SPE,	or	from a	liquidity	facility,	such	as	a	line	of	credit,	liquidity	put	option	or	asset	purchase agreement.	The	SPE	can	typically	obtain	a	more	favorable	credit	rating	from rating	agencies	than	the	transferor	could	obtain	for	its	own	debt	issuances, resulting	in	less	expensive	financing	costs.	The	SPE	may	also	enter	into derivative	contracts	in	order	to	convert	the	yield	or	currency	of	the	underlying assets	to	match	the	needs	of	the	SPE	investors,	or	to	limit	or	change	the	credit risk	of	the	SPE.	Citigroup	may	be	the	provider	of	certain	credit	enhancements	as well	as	the	counterparty	to	any	related	derivative	contracts.

SPEs	may	be	Qualifying	SPEs	(QSPEs)	or	Variable	Interest	Entities	(VIEs)	or neither.

# Qualifying	SPEs

QSPEs	are	a	special	class	of	SPEs	defined	in	(SFAS	140).	QSPEs	have significant	limitations	on	the	types	of	assets	and	derivative	instruments	they	may own	or	enter	into	and	the	types	and	extent	of	activities	and	decision-making	they may	engage	in.	Generally,	QSPEs	are	passive	entities	designed	to	purchase assets	and	pass	through	the	cash	flows	from	those	assets	to	the	investors	in	the QSPE.	QSPEs	may	not	actively	manage	their	assets	through	discretionary	sales and	are	generally	limited	to	making	decisions	inherent	in	servicing	activities	and issuance	of	liabilities.	QSPEs	are	generally	exempt	from	consolidation	by	the transferor	of	assets	to	the	QSPE	and	any	investor	or	counterparty.

VIEs	are	entities	defined	in	(FIN	46(R)),	as	entities	that	have	either	a	total	equity investment	that	is	insufficient	to	permit	the	entity	to	finance	its	activities	without additional	subordinated	financial	support	or	whose	equity	investors	lack	the characteristics	of	a	controlling	financial	interest	(i.e.,	ability	to	make	significant decisions	through	voting	rights,	right	to	receive	the	expected	residual	returns	of the	entity	and	obligation	to	absorb	the	expected	losses	of	the	entity).	Investors that	finance	the	VIE	through	debt	or	equity	interests	or	other	counterparties	that provide	other	forms	of	support,	such	as	guarantees,	subordinated	fee arrangements,	or	certain	types	of	derivative	contracts,	are	variable	interest holders	in	the	entity.	The	variable	interest	holder,	if	any,	that	will	absorb	a majority	of	the	entity's	expected	losses,	receive	a	majority	of	the	entity's expected	residual	returns,	or	both,	is	deemed	to	be	the	primary	beneficiary	and must	consolidate	the	VIE.	Consolidation	under	FIN	46(R)	is	based	on	expected losses	and	residual	returns,	which	consider	various	scenarios	on	a	probability- weighted	basis.	Consolidation	of	a	VIE	is,	therefore,	determined	based	primarily on	variability	generated	in	scenarios	that	are	considered	most	likely	to	occur, rather	than	based	on	scenarios	that	are	considered	more	remote.	Certain	variable interests	may	absorb	significant	amounts	of	losses	or	residual	returns contractually,	but	if	those	scenarios	are	considered	very	unlikely	to	occur,	they may	not	lead	to	consolidation	of	the	VIE.

All	of	these	facts	and	circumstances	are	taken	into	consideration	when determining	whether	the	Company	has	variable	interests	that	would	deem	it	the primary	beneficiary	and,	therefore,	require	consolidation	of	the	related	VIE	or otherwise	rise	to	the	level	where	disclosure	would	provide	useful	information	to the	users	of	the	Company's	financial	statements.	In	some	cases,	it	is	qualitatively clear	based	on	the	extent	of	the	Company's	involvement	or	the	seniority	of	its investments	that	the	Company	is	not	the	primary	beneficiary	of	the	VIE.	In	other cases,	a	more	detailed	and	quantitative	analysis	is	required	to	make	such	a determination.

The	Company	generally	considers	the	following	types	of	involvement	to	be significant:

•	assisting	in	the	structuring	of	a	transaction	and	retaining	any	amount	of	debt financing	(e.g.,	loans,	notes,	bonds	or	other	debt	instruments)	or	an	equity investment	(e.g.,	common	shares,	partnership	interests	or	warrants);

•	writing	a	"liquidity	put"	or	other	liquidity	facility	to	support	the	issuance	of short-term	notes;

•	writing	credit	protection	(e.g.,	guarantees,	letters	of	credit,	credit	default	swaps or	total	return	swaps	where	the	Company	receives	the	total	return	or	risk	on	the assets	held	by	the	VIE);	or

•	certain	transactions	where	the	Company	is	the	investment	manager	and receives	variable	fees	for	services.

In	various	other	transactions,	the	Company	may	act	as	a	derivative counterparty	(for	example,	interest	rate	swap,	cross-currency	swap,	or	purchaser of	credit	protection	under	a	credit	default	swap	or	total	return	swap	where	the Company	pays	the	total	return	on	certain	assets	to	the	SPE);	may	act	as underwriter	or	placement	agent;	may	provide	administrative,	trustee,	or	other services;	or	may	make	a	market	in	debt	securities	or	other	instruments	issued	by VIEs.	The	Company	generally	considers	such	involvement,	by	itself,	"not significant"	under	FIN	46(R).

Citigroup's	involvement	with	QSPEs,	Consolidated	and	Unconsolidated	VIEs	with	which	the	Company	holds	significant	variable	interests	as	of	December	31,	2008 and	2007	is	presented	below:

|  |  |  |  |  | Funded	exposures	^(3) | Funded	exposures	^(3) | unconsolidated	VIEs	^(1)<br>Unfunded	exposures^	(4) | unconsolidated	VIEs	^(1)<br>Unfunded	exposures^	(4) |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | Total\ninvolvement\nwith\tSPE\nassets | QSPE\nassets | Consolidated\nVIE\tassets | Significant\nunconsolidated\nVIE\tassets^\t(2) | Debt\ninvestments | Equity\ninvestments | Funding\ncommitments | Guarantees\nand\nderivatives |
| Consumer\tBanking |  |  |  |  |  |  |  |  |
| Credit\tcard\tsecuritizations | $123,867 | $123,867 | $— | $— | $— | $— | $— | $— |
| Mortgage\tsecuritizations | 584,154 | \t 584,151 | 3 | — | — | — | — | — |
| Student\tloan\tsecuritizations | 15,650 | 15,650 | — | — | — | — | — | — |
| Other | 1,446 | — | 1,446 | — | — | — | — | — |
| Total | $725,117 | $723,668 | $1,449 | $— | $— | $— | $— | $— |
| Institutional\tClients\tGroup |  |  |  |  |  |  |  |  |
| Citi-administered\tasset-backed\tcommercial\tpaper\tconduits |  |  |  |  |  |  |  |  |
| (ABCP) | $59,635 | $— | $— | $59,635 | $— | $— | $59,435 | $200 |
| Third-party\tcommercial\tpaper\tconduits | 20,755 | — | — | 20,755 | 2 | — | 1,380 | 17 |
| Collateralized\tdebt\tobligations\t(CDOs) | 29,055 | — | 11,466 | 17,589 | 928 | — | 230 | 315 |
| Collateralized\tloan\tobligations\t(CLOs) | 20,253 | — | 122 | 20,131 | 1,430 | — | 14 | — |
| Mortgage\tloan\tsecuritization | 87,209 | 87,209 | — | — | — | — | — | — |
| Asset-based\tfinancing | 102,154 | — | 3,847 | 98,307 | 25,275 | 45 | 2,799 | 112 |
| Municipal\tsecurities\ttender\toption\tbond\ttrusts\t(TOBs) | 30,071 | 6,504 | 14,619 | 8,948 | 652 | 3 | 7,067 | 162 |
| Municipal\tinvestments | 17,138 | — | 866 | 16,272 | — | 2,746 | 790 | — |
| Client\tintermediation | 9,464 | — | 3,811 | 5,653 | 1,537 | — | — | — |
| Structured\tinvestment\tvehicles\t(SIVs) | — | — | — | — | — | — | — | — |
| Investment\tfunds | 10,556 | — | 2,157 | 8,399 | — | 156 | 2 | — |
| Other | 21,668 | 4,751 | 8,527 | 8,390 | 784 | 99 | 379 | — |
| Total | $407,958 | $98,464 | $45,415 | $264,079 | $30,608 | $3,049 | $72,096 | $806 |
| Global\tWealth\tManagement |  |  |  |  |  |  |  |  |
| Investment\tfunds | $71 | $— | $45 | $26 | $22 | $— | $10 | $— |
| Other | 9 | — | 9 | — | — | — | — | — |
| Total | $80 | $— | $54 | $26 | $22 | $— | $10 | $— |
| Corporate/Other |  |  |  |  |  |  |  |  |
| Trust\tpreferred\tsecurities | $23,899 | $— | $— | $23,899 | $— | $162 | $— | $— |
| Total\tCitigroup | $1,157,054 | $822,132 | $46,918 | $288,004 | $30,630 | $3,211 | $72,106 | $806 |

(1) The	definition	of	maximum	exposure	to	loss	is	included	in	the	text	that	follows.

(2) A	significant	unconsolidated	VIE	is	an	entity	where	the	Company	has	any	variable	interest	considered	to	be	significant	as	discussed	on	page	174	regardless	of	the	likelihood	of	loss	or	the	notional amount	of	exposure.

(3) Included	in	Citigroup's	December	31,	2008	Consolidated	Balance	Sheet.

(4) Not	included	in	Citigroup's	December	31,	2008	Consolidated	Balance	Sheet.

| Total	maximum	exposure<br>to	loss	in	significant<br>unconsolidated	VIEs<br>(continued)^(3) | Total<br>involvement<br>with	SPEs | QSPE<br>assets | Consolidated<br>VIE	assets | Significant<br>unconsolidated<br>VIE<br>assets^	(2) | Maximum	exposure	to<br>loss	in	significant<br>unconsolidated<br>VIE	assets^	(3) |
| :--- | :--- | :--- | :--- | :--- | :--- |
| $\t\t\t\t\t\t\t\t\t— | $\t\t\t125,109 | $125,109 | $\t\t\t\t\t\t\t\t\t— | $\t\t\t\t\t\t\t\t\t— | $\t\t\t\t\t\t\t\t\t— |
| \t\t— | 550,965 | 550,902 | 63 | — | — |
| \t\t— | 14,882 | 14,882 | — | — | — |
| \t\t— | 1,420 | — | 1,420 | — | — |
| $\t\t\t\t\t\t\t\t\t— | $\t\t\t692,376 | $690,893 | $\t\t\t\t1,483 | $\t\t\t\t\t\t\t\t\t— | $\t\t\t\t\t\t\t\t\t— |
| $\t\t59,635 | $\t\t\t\t\t72,558 | $\t\t\t\t\t\t\t\t\t— | $\t\t\t\t\t\t\t\t\t— | $\t\t72,558 | $\t\t72,558 |
| 1,399 | 27,021 | — | — | 27,021 | 2,154 |
| 1,473 | 74,106 | — | 22,312 | 51,794 | 13,979 |
| 1,444 | 23,227 | — | 1,353 | 21,874 | 4,762 |
| \t\t— | 92,263 | 92,263 | — | — | — |
| 28,231 | 96,072 | — | 4,468 | 91,604 | 34,297 |
| 7,884 | 50,129 | 10,556 | 17,003 | 22,570 | 17,843 |
| 3,536 | 13,715 | — | 53 | 13,662 | 2,711 |
| 1,537 | 12,383 | — | 2,790 | 9,593 | 1,643 |
| \t\t— | 58,543 | — | 58,543 | — | — |
| 158 | 11,422 | — | 140 | 11,282 | 212 |
| 1,262 | 37,895 | 14,526 | 12,809 | 10,560 | 1,882 |
| $106,559 | $\t\t\t569,334 | $117,345 | $119,471 | $332,518 | $152,041 |
| $\t\t\t\t\t\t\t\t\t32 | $\t\t\t\t\t\t\t\t\t\t656 | $\t\t\t\t\t\t\t\t\t— | $\t\t\t\t\t\t\t604 | $\t\t\t\t\t\t\t\t\t52 | $\t\t\t\t\t\t\t\t\t45 |
| \t\t— | — | — | — | — | — |
| $\t\t\t\t\t\t\t\t\t32 | $\t\t\t\t\t\t\t\t\t\t656 | $\t\t\t\t\t\t\t\t\t— | $\t\t\t\t\t\t\t604 | $\t\t\t\t\t\t\t\t\t52 | $\t\t\t\t\t\t\t\t\t45 |
| $\t\t\t\t\t\t\t162 | $\t\t\t\t\t23,756 | $\t\t\t\t\t\t\t\t\t— | $\t\t\t\t\t\t\t\t\t— | $\t\t23,756 | $\t\t\t\t\t\t\t162 |
| $106,753 | $1,286,122 | $808,238 | $121,558 | $356,326 | $152,248 |

# This	table	does	not	include:

•	certain	venture	capital	investments	made	by	some	of	the	Company's	private equity	subsidiaries,	as	the	Company	accounts	for	these	investments	in accordance	with	the	Investment	Company	Audit	Guide;

•	certain	limited	partnerships	where	the	Company	is	the	general	partner	and	the limited	partners	have	the	right	to	replace	the	general	partner	or	liquidate	the funds;

•	certain	investment	funds	for	which	the	Company	provides	investment management	services	and	personal	estate	trusts	for	which	the	Company provides	administrative,	trustee	and/or	investment	management	services; •	VIEs	structured	by	third	parties	where	the	Company	holds	securities	in inventory.	These	investments	are	made	on	arm's-length	terms;	and •	transferred	assets	to	a	VIE	where	the	transfer	did	not	qualify	as	a	sale	and where	the	Company	did	not	have	any	other	involvement	that	is	deemed	to	be	a variable	interest	with	the	VIE.	These	transfers	are	accounted	for	as	secured borrowings	by	the	Company.

The	asset	balances	for	consolidated	VIEs	represent	the	carrying	amounts	of	the assets	consolidated	by	the	Company.	The	carrying	amount	may	represent	the amortized	cost	or	the	current	fair	value	of	the	assets	depending	on	the	legal	form of	the	asset	(e.g.,	security	or	loan)	and	the	Company's	standard	accounting policies	for	the	asset	type	and	line	of	business.

The	asset	balances	for	unconsolidated	VIEs	where	the	Company	has	significant involvement	represent	the	most	current	information	available	to	the	Company.	In most	cases,	the	asset	balances	represent	an	amortized	cost	basis	without	regard	to impairments	in	fair	value,	unless	fair	value	information	is	readily	available	to	the Company.	For	VIEs	that	obtain	asset	exposures	synthetically	through	derivative instruments	(for	example,	synthetic	CDOs),	the	Company	includes	the	full original	notional	amount	of	the	derivative	as	an	asset.

The	maximum	funded	exposure	represents	the	balance	sheet	carrying	amount of	the	Company's	investment	in	the	VIE.	It	reflects	the	initial	amount	of	cash invested	in	the	VIE	plus	any	accrued	interest	and	is	adjusted	for	any	impairments in	value	recognized	in	earnings	and	any	cash	principal	payments	received.	The maximum	exposure	of	unfunded	positions	represents	the	remaining	undrawn committed	amount,	including	liquidity	and	credit	facilities	provided	by	the Company,	or	the	notional	amount	of	a	derivative	instrument	considered	to	be	a variable	interest,	adjusted	for	any	declines	in	fair	value	recognized	in	earnings. In	certain	transactions,	the	Company	has	entered	into	derivative	instruments	or other	arrangements	that	are	not	considered	variable	interests	in	the	VIE	under FIN	46(R)	(e.g.,	interest	rate	swaps,	cross-currency	swaps,	or	where	the Company	is	the	purchaser	of	credit	protection	under	a	credit	default	swap	or total	return	swap	where	the	Company	pays	the	total	return	on	certain	assets	to	the SPE).	Receivables	under	such	arrangements	are	not	included	in	the	maximum exposure	amounts.

# Consolidated	VIEs—Balance	Sheet	Classification

The	following	table	presents	the	carrying	amounts	and	classification	of consolidated	assets	that	are	collateral	for	consolidated	VIE	obligations:

|  | December	31, | December	31, |
| :--- | :--- | :--- |
| In\tbillions\tof\tdollars | 2008 | 2007 |
| Cash | $1.9 | $12.3 |
| Trading\taccount\tassets | 22.2 | 87.3 |
| Investments | 17.5 | 15.0 |
| Loans | 2.6 | 2.2 |
| Other\tassets | 2.7 | 4.8 |
| Total\tassets\tof\tconsolidated\tVIEs | $46.9 | $121.6 |

The	following	table	presents	the	carrying	amounts	and	classification	of	the	third- party	liabilities	of	the	consolidated	VIEs:

| party	liabilities	of	the	consolidated	VIEs: |  |
| :--- | :--- |
|  | December\t31, |
| In\tbillions\tof\tdollars | 2008 |
| Trading\taccount\tliabilities | $0.8 |
| Short-term\tborrowings | 17.0 |
| Long-term\tdebt | 6.8 |
| Other\tliabilities | 3.0 |
| Total\tliabilities\tof\tconsolidated\tVIEs | $27.6 |

The	consolidated	VIEs	included	in	the	table	above	represent	hundreds	of separate	entities	with	which	the	Company	is	involved.	In	general,	the	third-party investors	in	the	obligations	of	consolidated	VIEs	have	recourse	only	to	the	assets of	the	VIEs	and	do	not	have	recourse	to	the	Company,	except	where	the Company	has	provided	a	guarantee	to	the	investors	or	is	the	counterparty	to certain	derivative	transactions	involving	the	VIE.	In	addition,	the	assets	are generally	restricted	only	to	pay	such	liabilities.	Thus,	the	Company's	maximum exposure	to	loss	related	to	consolidated	VIEs	is	significantly	less	than	the carrying	value	of	the	consolidated	VIE	assets	due	to	outstanding	third-party financing.	Intercompany	liabilities	are	excluded	from	the	table.

# Significant	Interest	in	VIEs—Balance	Sheet	Classification

The	following	table	presents	the	carrying	amounts	and	classification	of significant	interests	in	VIEs:

|  | December	31, |
| :--- | :--- |
| In\tbillions\tof\tdollars | 2008 |
| Trading\taccount\tliabilities | $0.2 |
| Long-term\tdebt | 0.4 |
| Other\tliabilities | 0.6 |
| Total\tliabilities | $1.2 |

The	Company's	unfunded	exposure	to	loss	is	determined	based	on	the Company's	maximum	contractual	commitment	less	these	liabilities	recognized in	the	Balance	Sheet	as	displayed	above.

# Credit	Card	Securitizations

The	Company	securitizes	credit	card	receivables	through	trusts	which	are established	to	purchase	the	receivables.	Citigroup	sells	receivables	into	the	QSPE trusts	on	a	non-recourse	basis.	Credit	card	securitizations	are	revolving securitizations;	that	is,	as	customers	pay	their	credit	card	balances,	the	cash proceeds	are	used	to	purchase	new	receivables	and	replenish	the	receivables	in the	trust.	The	Company	relies	on	securitizations	to	fund	a	significant	portion	of its	managed	North	America	Cards	business.

The	following	table	reflects	amounts	related	to	the	Company's	securitized credit	card	receivables	at	December	31,	2008	and	2007:

| In	billions	of	dollars | 2008 | 2007 |
| :--- | :--- | :--- |
| Principal\tamount\tof\tcredit\tcard\treceivables\tin\ttrusts | $123.9 | $125.1 |
| Ownership\tinterests\tin\tprincipal\tamount\tof\ttrust\tcredit\tcard\treceivables: |  |  |
| Sold\tto\tinvestors\tvia\ttrust-issued\tsecurities | 98.2 | \t 102.3 |
| Retained\tby\tCitigroup\tas\ttrust-issued\tsecurities | 6.5 | 4.5 |
| Retained\tby\tCitigroup\tvia\tnon-certificated\tinterests\trecorded\tas\nconsumer\tloans | 19.2 | 18.3 |
| Total\townership\tinterests\tin\tprincipal\tamount\tof\ttrust\tcredit\tcard |  |  |
| receivables | $123.9 | $125.1 |
| Other\tamounts\trecorded\ton\tthe\tbalance\tsheet\trelated\tto\tinterests\nretained\tin\tthe\ttrusts: |  |  |
| Other\tretained\tinterest\tin\tsecuritized\tassets | $3.1 | $3.0 |
| Residual\tinterest\tin\tsecuritized\tassets^(1) | 1.7 | 3.4 |
| Amounts\tpayable\tto\ttrusts | 1.7 | 1.6 |

(1)Includes	net	unbilled	interest	in	sold	balances	of	$0.6	billion	and	$0.7	billion	as	of December	31,	2008	and	2007,	respectively.

The	Company	recorded	net	gains	(losses)	from	securitization	of	credit	card receivables	of	$(1,534)	million,	$1,084	million	and	$1,267	million	during	2008, 2007	and	2006,	respectively.	Net	gains	(losses)	reflect	the	following:

•	incremental	gains	(losses)	from	new	securitizations;

•	the	reversal	of	the	allowance	for	loan	losses	associated	with	receivables	sold; •	net	gains	on	replenishments	of	the	trust	assets	offset	by	other-than-temporary impairments;	and

•	mark-to-market	changes	for	the	portion	of	the	residual	interest	classified	as trading	assets.

The	following	table	summarizes	selected	cash	flow	information	related	to credit	card	securitizations	for	the	years	2008,	2007	and	2006:

| In	billions	of	dollars | 2008 | 2007 | 2006 |
| :--- | :--- | :--- | :--- |
| Proceeds\tfrom\tnew\tsecuritizations | $28.7 | $36.2 | $20.2 |
| Proceeds\tfrom\tcollections\treinvested\tin\tnew\treceivables | \t 214.3 | \t 218.0 | \t 213.1 |
| Contractual\tservicing\tfees\treceived | 2.0 | 2.1 | 2.1 |
| Cash\tflows\treceived\ton\tretained\tinterests\tand\tother |  |  |  |
| net\tcash\tflows | 7.2 | 7.6 | 7.9 |

Key	assumptions	used	for	the	securitization	of	credit	cards	during	2008	and 2007	in	measuring	the	fair	value	of	retained	interests	at	the	date	of	sale	or securitization	are	as	follows:

There	are	two	primary	trusts	through	which	the	Company	securitizes	credit card	receivables.	The	valuation	of	retained	interests	is	performed	separately	for each	trust,	resulting	in	the	disclosed	range	for	the	key	assumptions.	The	constant prepayment	rate	assumption	range	reflects	the	projected	payment	rates	over	the life	of	a	credit	card	balance,	excluding	new	card	purchases.	This	results	in	a	high payment	in	the	early	life	of	the	securitized	balances	followed	by	a	much	lower payment	rate,	which	is	depicted	in	the	disclosed	range.

The	effect	of	two	negative	changes	in	each	of	the	key	assumptions	used	to determine	the	fair	value	of	retained	interests	is	required	to	be	disclosed.	The negative	effect	of	each	change	must	be	calculated	independently,	holding	all other	assumptions	constant.	Because	the	key	assumptions	may	not	in	fact	be independent,	the	net	effect	of	simultaneous	adverse	changes	in	the	key assumptions	may	be	less	than	the	sum	of	the	individual	effects	shown	below. At	December	31,	2008,	the	key	assumptions	used	to	value	retained	interests and	the	sensitivity	of	the	fair	value	to	adverse	changes	of	10%	and	20%	in	each of	the	key	assumptions	were	as	follows:

|  | Residual | Retained | retained |
| :--- | :--- | :--- | :--- |
| In\tmillions\tof\tdollars | interest | certificates | interests |
| Carrying\tvalue\tof\tretained\tinterests | $1,069 | $6,050 | $3,763 |
| Discount\trates |  |  |  |
| Adverse\tchange\tof\t10% | $(36) | $(63) | $(10) |
| Adverse\tchange\tof\t20% | (70) | (126) | (20) |
| Constant\tprepayment\trate |  |  |  |
| Adverse\tchange\tof\t10% | $(81) | $— | $— |
| Adverse\tchange\tof\t20% | (153) | — | — |
| Anticipated\tnet\tcredit\tlosses |  |  |  |
| Adverse\tchange\tof\t10% | $(273) | $— | $(66) |
| Adverse\tchange\tof\t20% | (541) | — | (133) |

# Managed	Loans

After	securitization	of	credit	card	receivables,	the	Company	continues	to maintain	credit	card	customer	account	relationships	and	provides	servicing	for receivables	transferred	to	the	trusts.	As	a	result,	the	Company	considers	the securitized	credit	card	receivables	to	be	part	of	the	business	it	manages. The	following	tables	present	a	reconciliation	between	the	managed	basis	and on-balance	sheet	credit	card	portfolios	and	the	related	delinquencies	(loans which	are	90	days	or	more	past	due)	and	credit	losses,	net	of	recoveries.

| In	millions	of	dollars,	except	loans	in	billions | 2008 | 2007 |
| :--- | :--- | :--- |
| Loan\tamounts,\tat\tyear\tend |  |  |
| On\tbalance\tsheet | $87.5 | $93.5 |
| Securitized\tamounts(1) | \t 105.9 | \t 108.1 |
| Loans\theld-for-sale | — | 1.0 |
| Total\tmanaged\tloans | $193.4 | $202.6 |
| Delinquencies,\tat\tyear\tend |  |  |
| On\tbalance\tsheet | $2,490 | $1,929 |
| Securitized\tamounts | \t 2,655 | \t 1,864 |
| Loans\theld-for-sale | — | 14 |
| Total\tmanaged\tdelinquencies | $5,145 | $3,807 |

| for	the	year	ended	December	31, | 2008 | 2007 | 2006 |
| :--- | :--- | :--- | :--- |
| On\tbalance\tsheet | $5,918 | $3,877 | $3,208 |
| Securitized\tamounts | 7,407 | \t 4,728 | \t 3,986 |
| Loans\theld-for-sale | — | — | 5 |
| Total\tmanaged | $13,325 | $8,605 | $7,199 |

(1)Includes	$1.2	billion	in	interest	and	fee	receivables.

# Funding,	Liquidity	Facilities	and	Subordinate	Interests

Citigroup	securitizes	credit	card	receivables	through	three	securitization	trusts. The	trusts	are	funded	through	a	mix	of	sources,	including	commercial	paper	and medium-	and	long-term	notes.	Term	notes	can	be	issued	at	a	fixed	or	floating rate.	The	Omni	Trust	has	issued	approximately	$3.3	billion	of	commercial	paper through	the	Commercial	Paper	Funding	Facility	(CPFF).

Citigroup	is	a	provider	of	liquidity	facilities	to	the	commercial	paper	programs of	the	two	primary	securitization	trusts	with	which	it	transacts.	Both	facilities	are made	available	on	market	terms	to	each	trust.	With	respect	to	the	Palisades commercial	paper	program	in	the	Omni	Master	Trust	(the	"Omni	Trust"), Citibank	(South	Dakota),	N.	A.,	a	wholly	owned	subsidiary	of	Citigroup,	is	the sole	provider	of	a	full-liquidity	facility.	The	liquidity	facility	requires	Citibank (South	Dakota),	N.A.	to	purchase	Palisades's	commercial	paper	at	maturity	if	the commercial	paper	does	not	roll	over	as	long	as	there	are	available	credit enhancements	outstanding,	typically	in	the	form	of	subordinated	notes.	The Palisades	liquidity	commitment	amounted	to	$8.5	billion	at	December	31,	2008 and	$7.5	billion	at	December	31,	2007,	respectively.	During	2008,	Citibank (South	Dakota),	N.A.	also	became	the	sole	provider	of	a	full-liquidity	facility	to the	Dakota	commercial	paper	program	of	the	Citibank	Master	Credit	Card	Trust (the	"Master	Trust").	This	facility	requires	Citibank	(South	Dakota),	N.A.	to purchase	Dakota	commercial	paper	at	maturity	if	the	commercial	paper	does	not roll	over	as	long	as	there	are	available	credit	enhancements	outstanding,	typically in	the	form	of	subordinated	notes.	The	Dakota	liquidity	commitment	amounted to	$11	billion	at	December	31,	2008.

In	addition,	during	2008	Citibank	(South	Dakota),	N.A.	entered	into	an agreement	to	provide	liquidity	to	a	third-party	non-consolidated	multi-seller commercial	paper	conduit	(the	Conduit),	which	is	not	a	VIE.	Citibank	(South Dakota),	N.A.	provides	this	facility	on	market	terms.	The	Conduit	holds	a	$3.6 billion	bond	issued	by	the	Omni	Trust.	Citibank	(South	Dakota),	N.A.	will	be required	to	act	in	its	capacity	as	liquidity	provider	as	long	as	there	are	available credit	enhancements	outstanding	and	if:	(1)	the	Conduit	is	unable	to	roll	over	its maturing	commercial	paper;	or	(2)	Citibank	(South	Dakota),	N.A.	loses	its	A- 1/P-1	credit	rating.	At	December	31,	2008,	the	liquidity	commitment	for	this transaction	was	$4.0	billion.

In	October	2008,	Citibank	(South	Dakota),	N.A.	acquired	subordinated	bonds issued	by	the	Omni	Trust	having	an	aggregate	notional	principal	of	$265	million. The	issuance	of	these	bonds	by	the	Omni	Trust	to	Citibank	(South	Dakota),	N.A. was	effected	in	order	to	avert	a	downgrade	of	all	of	Omni	Trust's	outstanding AAA	and	A	securities	by	Standard	&	Poor's.	The	subordinated	notes	pay	interest installments	and	principal	upon	maturity	in	December	2009.	As	a	result	of	this action,	the	Company	is	currently	holding	ongoing	discussions	with	Board	staff from	the	Federal	Reserve	regarding	the	application	of	the	associated	risk-based capital	requirements.	The	action	will	increase	risk-weighted	assets	for	purposes of	calculating	the	Company's	risk-based	capital	ratios.	However,	the	timing	and extent	of	the	increase	is	not	yet	certain,	pending	completion	of	discussions	with the	Federal	Reserve.

In	December	2008,	the	excess	spread	for	the	Master	Trust	fell	below	the	trigger level	of	4.50%.	Beginning	in	January	2009,	this	event	requires	the	excess	cash	in the	Master	Trust	to	be	diverted	to	a	spread	account	set	aside	for	the	benefit	of	the investors	in	the	Trust,	instead	of	reverting	back	to	Citigroup	immediately.	The excess	spread	is	a	measure	of	the	profitability	of	the	credit	card	accounts	in	the Master	Trust	expressed	as	a	percent	of	the	principal	balance	outstanding.	If	the three-month	average	excess	spread	stays	between	4.00%	and	4.50%	of	the outstanding	principal	balance,	the	required	funding	of	the	spread	account	is	$680 million.	The	funds	in	the	spread	account	can	only	be	paid	to	investors	if	the Master	Trust	goes	into	liquidation.	If	the	three-month	average	excess	spread moves	back	above	the	4.50%	trigger	level,	the	funds	in	the	spread	account	will be	released	to	Citigroup.

In	February	2009,	Standard	&	Poor's	placed	its	BBB	rating	on	the	Master	Trust Class	C	notes	on	"ratings	watch	negative."	This	status	applies	for	90	days,	at which	time	Standard	&	Poor's	will	re-evaluate	the	credit	rating	of	the	bonds unless	Citigroup	takes	action	in	the	interim.	In	response,	the	Company	has decided	to	issue	a	Class	D	note	as	well	as	subordinate	a	portion	of	principal	cash flows	due	to	the	Company	in	the	form	of	non-certificated	seller's	interest. Citigroup	expects	to	issue	the	Class	D	note	in	the	second	quarter	of	2009	and	to effect	the	subordination	of	seller's	interest	cash	flows	in	March	2009.	Should these	actions	be	deemed	satisfactory,	the	Class	C	bonds	will	be	removed	from "ratings	watch	negative"	and	the	BBB	rating	will	be	affirmed	by	S&P.	If	these actions	are	executed,	Citigroup's	risk-weighted	assets	will	be	increased,	but	the timing	and	extent	of	such	increase	would	not	yet	be	certain	pending	resolution	of discussions	with	the	Federal	Reserve.

# Mortgage	Securitizations

The	Company	provides	a	wide	range	of	mortgage	loan	products	to	a	diverse customer	base.	In	connection	with	the	securitization	of	these	loans,	the Company's	U.S.	Consumer	mortgage	business	retains	the	servicing	rights,	which entitle	the	Company	to	a	future	stream	of	cash	flows	based	on	the	outstanding principal	balances	of	the	loans	and	the	contractual	servicing	fee.	Failure	to service	the	loans	in	accordance	with	contractual	requirements	may	lead	to	a termination	of	the	servicing	rights	and	the	loss	of	future	servicing	fees.	In	non- recourse	servicing,	the	principal	credit	risk	to	the	Company	is	the	cost	of temporary	advances	of	funds.	In	recourse	servicing,	the	servicer	agrees	to	share credit	risk	with	the	owner	of	the	mortgage	loans,	such	as	FNMA	or	FHLMC,	or with	a	private	investor,	insurer	or	guarantor.	Losses	on	recourse	servicing	occur primarily	when	foreclosure	sale	proceeds	of	the	property	underlying	a	defaulted mortgage	loan	are	less	than	the

outstanding	principal	balance	and	accrued	interest	of	the	loan	and	the	cost	of holding	and	disposing	of	the	underlying	property.	The	Company's	mortgage loan	securitizations	are	primarily	non-recourse,	thereby	effectively	transferring the	risk	of	future	credit	losses	to	the	purchasers	of	the	securities	issued	by	the trust.	Securities	and	Banking	retains	servicing	for	a	limited	number	of	its mortgage	securitizations.

The	Company's	Consumer	business	provides	a	wide	range	of	mortgage	loan products	to	its	customers.	Once	originated,	the	Company	often	securitizes	these loans	through	the	use	of	QSPEs.	These	QSPEs	are	funded	through	the	issuance of	Trust	Certificates	backed	solely	by	the	transferred	assets.	These	certificates have	the	same	average	life	as	the	transferred	assets.	In	addition	to	providing	a source	of	liquidity	and	less	expensive	funding,	securitizing	these	assets	also reduces	the	Company's	credit	exposure	to	the	borrowers.	These	mortgage	loan securitizations	are	primarily	non-recourse,	thereby	effectively	transferring	the risk	of	future	credit	losses	to	the	purchasers	of	the	securities	issued	by	the	trust. However,	the	Company	generally	retains	the	servicing	rights	and	in	certain instances	retains	investment	securities,	interest-only	strips	and	residual	interests in	future	cash	flows	from	the	trusts.

The	following	tables	summarize	selected	cash	flow	information	related	to mortgage	securitizations	for	the	years	2008,	2007	and	2006:

|  |  | 2008 |
| :--- | :--- | :--- |
|  |  | Securities\tand |
|  | U.S.\tConsumer | Banking |
| In\tbillions\tof\tdollars | mortgages | mortgages |
| Proceeds\tfrom\tnew\tsecuritizations | $89.2 | $6.3 |
| Contractual\tservicing\tfees\treceived | 2.1 | — |
| Cash\tflows\treceived\ton\tretained\tinterests |  |  |
| and\tother\tnet\tcash\tflows | 0.7 | 0.2 |

|  |  | 2007 |
| :--- | :--- | :--- |
|  |  | Securities\tand |
|  | U.S.\tConsumer | Banking |
| In\tbillions\tof\tdollars | mortgages | mortgages |
| Proceeds\tfrom\tnew\tsecuritizations | $107.2 | $40.1 |
| Contractual\tservicing\tfees\treceived | 1.7 | — |
| Cash\tflows\treceived\ton\tretained\tinterests |  |  |
| and\tother\tnet\tcash\tflows | 0.3 | 0.3 |

|  |  | Securities	and |
| :--- | :--- | :--- |
|  | U.S.\tConsumer | Banking |
| In\tbillions\tof\tdollars | mortgages | mortgages |
| Proceeds\tfrom\tnew\tsecuritizations | $67.5 | $31.9 |
| Contractual\tservicing\tfees\treceived | 1.0 | — |
| Cash\tflows\treceived\ton\tretained\tinterests\nand\tother\tnet\tcash\tflows | — | 0.2 |

The	Company	recognized	gains	(losses)	on	securitizations	of	U.S.	Consumer mortgages	of	$73	million,	$(27)	million,	and	$82	million	for	2008,	2007	and 2006,	respectively.	Gains	(losses)	recognized	on	the	securitization	of Securities	and	Banking	activities	during	2008,	2007	and	2006	were	$(16) million,	$145	million	and	$302	million,	respectively.

Key	assumptions	used	for	the	securitization	of	mortgages	during	2008	and	2007 in	measuring	the	fair	value	of	retained	interests	at	the	date	of	sale	or securitization	are	as	follows:

In	2008,	U.S.	Consumer	mortgage	rates	exhibited	considerable	variability	due to	economic	conditions	and	market	volatility.	This	resulted	in	a	significant variation	in	assumed	prepayment	rates	and	discount	rates.

The	range	in	the	key	assumptions	for	retained	interests	in	Securities	and Banking	is	due	to	the	different	characteristics	of	the	interests	retained	by	the Company.	The	interests	retained	by	Securities	and	Banking	range	from	highly rated	and/or	senior	in	the	capital	structure	to	unrated	and/or	residual	interests. The	effect	of	two	negative	changes	in	each	of	the	key	assumptions	used	to determine	the	fair	value	of	retained	interests	is	required	to	be	disclosed.	The negative	effect	of	each	change	must	be	calculated	independently,	holding	all other	assumptions	constant.	Because	the	key	assumptions	may	not	in	fact	be independent,	the	net	effect	of	simultaneous	adverse	changes	in	the	key assumptions	may	be	less	than	the	sum	of	the	individual	effects	shown	below. At	December	31,	2008,	the	key	assumptions	used	to	value	retained	interests and	the	sensitivity	of	the	fair	value	to	adverse	changes	of	10%	and	20%	in	each of	the	key	assumptions	were	as	follows:

# Mortgage	Servicing	Rights

The	fair	value	of	capitalized	mortgage	loan	servicing	rights	(MSR)	was	$5.7 billion	and	$8.4	billion	at	December	31,	2008	and	2007,	respectively.	The	MSRs correspond	to	principal	loan	balances	of	$662	billion	and	$586	billion	as	of December	31,	2008	and	2007,	respectively.	The	following	table	summarizes	the changes	in	capitalized	MSRs:

| In	millions	of	dollars | 2008 | 2007 |
| :--- | :--- | :--- |
| Balance,\tbeginning\tof\tyear | $ 8,380 | $ 5,439 |
| Originations | 1,311 | 1,843 |
| Purchases | 1 | 3,678 |
| Changes\tin\tfair\tvalue\tof\tMSRs\tdue\tto\tchanges\tin\tinputs\tand |  |  |
| assumptions | (2,682) | (247) |
| Transfer\tto\tTrading\taccount\tassets | (163) | (1,026) |
| Other\tchanges\t^(1) | (1,190) | (1,307) |
| Balance,\tend\tof\tyear | $ 5,657 | $ 8,380 |

(1)Represents	changes	due	to	customer	payments	and	passage	of	time.

The	market	for	MSRs	is	not	sufficiently	liquid	to	provide	participants	with quoted	market	prices.	Therefore,	the	Company	uses	an	option-adjusted	spread valuation	approach	to	determine	the	fair	value	of	MSRs.	This	approach	consists of	projecting	servicing	cash	flows	under	multiple	interest	rate	scenarios	and discounting	these	cash	flows	using	risk-adjusted	discount	rates.	The	key assumptions	used	in	the	valuation	of	MSRs	include	mortgage	prepayment	speeds and	discount	rates.	The	model	assumptions	and	the	MSR's	fair	value	estimates are	compared	to	observable	trades	of	similar	MSR	portfolios	and	interest-only security	portfolios,	as	available,	as	well	as	to	MSR	broker	valuations	and industry	surveys.	The	cash	flow	model	and	underlying	prepayment	and	interest rate	models	used	to	value	these	MSRs	are	subject	to	validation	in	accordance with	the	Company's	model	validation	policies.

The	fair	value	of	the	MSRs	is	primarily	affected	by	changes	in	prepayments that	result	from	shifts	in	mortgage	interest	rates.	In	managing	this	risk,	the Company	economically	hedges	a	significant	portion	of	the	value	of	its	MSRs through	the	use	of	interest	rate	derivative	contracts,	forward	purchase commitments	of	mortgage-backed	securities	and	purchased	securities	classified as	trading.

The	Company	receives	fees	during	the	course	of	servicing	previously securitized	mortgages.	The	amount	of	these	fees	for	the	years	ending December	31,	were	as	follows:

| In	millions	of	dollars | 2008 | 2007 | 2006 |
| :--- | :--- | :--- | :--- |
| Servicing\tfees | \t $2,121 | $1,683 | $1,036 |
| Late\tfees | 123 | 90 | 56 |
| Ancillary\tfees | 81 | 61 | 45 |
| Total\tMSR\tfees | $2,325 | $1,834 | $1,137 |

These	fees	are	classified	in	the	Consolidated	Statement	of	Income	as Commissions	and	fees.

# Student	Loan	Securitizations

The	Company	maintains	programs	to	securitize	certain	portfolios	of	student	loan assets.	Under	the	Company's	securitization	programs,	transactions	qualifying	as sales	are	off-balance	sheet	transactions	in	which	the	loans	are	removed	from	the Consolidated	Financial	Statements	of	the	Company	and	sold	to	a	QSPE.	These QSPEs	are	funded	through	the	issuance	of	pass-through	term	notes	collateralized solely	by	the	trust	assets.	For	off-balance	sheet	securitizations,	the	Company generally	retains	interests	in	the	form	of	subordinated	residual	interests	(i.e., interest-only	strips)	and	servicing	rights.

Under	terms	of	the	trust	arrangements	the	Company	has	no	obligations	to provide	financial	support	and	has	not	provided	such	support.	A	substantial portion	of	the	credit	risk	associated	with	the	securitized	loans	has	been transferred	to	third	party	guarantors	or	insurers	either	under	the	Federal	Family Education	Loan	Program,	authorized	by	the	U.S.	Department	of	Education	under the	Higher	Education	Act	of	1965,	as	amended,	or	private	credit	insurance. The	following	table	summarizes	selected	cash	flow	information	related	to student	loan	securitizations	for	the	years	2008,	2007	and	2006:

Key	assumptions	used	for	the	securitization	of	student	loans	during	2008	and 2007	in	measuring	the	fair	value	of	retained	interests	at	the	date	of	sale	or securitization	are	as	follows:

At	December	31,	2008,	the	key	assumptions	used	to	value	retained	interests and	the	sensitivity	of	the	fair	value	to	adverse	changes	of	10%	and	20%	in	each of	the	key	assumptions	were	as	follows:

# On-Balance	Sheet	Securitizations

The	Company	engages	in	on-balance	sheet	securitizations.	These	are securitizations	that	do	not	qualify	for	sales	treatment;	thus,	the	assets	remain	on the	Company's	balance	sheet.	The	following	table	presents	the	carrying	amounts and	classification	of	consolidated	assets	and	liabilities	transferred	in	transactions from	the	consumer	credit	card,	student	loan,	mortgage	and	auto	businesses, accounted	for	as	secured	borrowings:

|  | December	31, | December	31, |
| :--- | :--- | :--- |
| In\tbillions\tof\tdollars | 2008 | 2007 |
| Cash | $0.3 | $0.1 |
| Available-for-sale\tsecurities | 0.1 | 0.2 |
| Loans | 7.5 | 7.4 |
| Allowance\tfor\tloan\tlosses | (0.1) | (0.1) |
| Total\tassets | $7.8 | $7.6 |
| Long-term\tdebt | $6.3 | $5.8 |
| Other\tliabilities | 0.3 | 0.4 |
| Total\tliabilities | $6.6 | $6.2 |

All	assets	are	restricted	from	being	sold	or	pledged	as	collateral.	The	cash flows	from	these	assets	are	the	only	source	used	to	pay	down	the	associated liabilities,	which	are	non-recourse	to	the	Company's	general	assets.

# Citi-Administered	Asset-Backed	Commercial	Paper	Conduits

The	Company	is	active	in	the	asset-backed	commercial	paper	conduit	business	as administrator	of	several	multi-seller	commercial	paper	conduits,	and	also	as	a service	provider	to	single-seller	and	other	commercial	paper	conduits	sponsored by	third	parties.

The	multi-seller	commercial	paper	conduits	are	designed	to	provide	the Company's	customers	access	to	low-cost	funding	in	the	commercial	paper markets.	The	conduits	purchase	assets	from	or	provide	financing	facilities	to customers	and	are	funded	by	issuing	commercial	paper	to	third-party	investors. The	conduits	generally	do	not	purchase	assets	originated	by	the	Company.	The funding	of	the	conduit	is	facilitated	by	the	liquidity	support	and	credit enhancements	provided	by	the	Company	and	by	certain	third	parties.	As administrator	to	the	conduits,	the	Company	is	responsible	for	selecting	and structuring	of	assets	purchased	or	financed	by	the	conduits,	making	decisions regarding	the	funding	of	the	conduits,	including	determining	the	tenor	and	other features	of	the	commercial	paper	issued,	monitoring	the	quality	and	performance of	the	conduits'	assets,	and	facilitating	the	operations	and	cash	flows	of	the conduits.	In	return,	the	Company	earns	structuring	fees	from	clients	for individual	transactions	and	earns	an	administration	fee	from	the	conduit,	which is	equal	to	the	income	from	client	program	and	liquidity	fees	of	the	conduit	after payment	of	interest	costs	and	other	fees.	This	administration	fee	is	fairly	stable, since	most	risks	and	rewards	of	the	underlying	assets	are	passed	back	to	the customers	and,	once	the	asset	pricing	is	negotiated,	most	ongoing	income,	costs and	fees	are	relatively	stable	as	a	percentage	of	the	conduit's	size.

The	conduits	administered	by	the	Company	do	not	generally	invest	in	liquid securities	that	are	formally	rated	by	third	parties.	The	assets	are	privately negotiated	and	structured	transactions	that	are	designed	to	be	held	by	the	conduit, rather	than	actively	traded	and	sold.	The	yield	earned	by	the	conduit	on	each asset	is	generally	tied	to	the	rate	on	the	commercial	paper	issued	by	the	conduit, thus	passing	interest	rate	risk	to	the	client.	Each	asset	purchased	by	the	conduit	is structured	with	transaction-specific	credit

enhancement	features	provided	by	the	third-party	seller,	including	over- collateralization,	cash	and	excess	spread	collateral	accounts,	direct	recourse	or third-party	guarantees.	These	credit	enhancements	are	sized	with	the	objective	of approximating	a	credit	rating	of	A	or	above,	based	on	the	Company's	internal risk	ratings.

Substantially	all	of	the	funding	of	the	conduits	is	in	the	form	of	short-term commercial	paper.	As	of	December	31,	2008,	the	weighted	average	life	of	the commercial	paper	issued	was	approximately	37	days.	In	addition,	the	conduits have	issued	Subordinate	Loss	Notes	and	equity	with	a	notional	amount	of approximately	$80	million	and	varying	remaining	tenors	ranging	from	six months	to	seven	years.

The	primary	credit	enhancement	provided	to	the	conduit	investors	is	in	the form	of	transaction-specific	credit	enhancement	described	above.	In	addition, there	are	two	additional	forms	of	credit	enhancement	that	protect	the	commercial paper	investors	from	defaulting	assets.	First,	the	Subordinate	Loss	Notes	issued by	each	conduit	absorb	any	credit	losses	up	to	their	full	notional	amount.	It	is expected	that	the	Subordinate	Loss	Notes	issued	by	each	conduit	are	sufficient	to absorb	a	majority	of	the	expected	losses	from	each	conduit,	thereby	making	the single	investor	in	the	Subordinate	Loss	Note	the	primary	beneficiary	under	FIN 46(R).	Second,	each	conduit	has	obtained	a	letter	of	credit	from	the	Company, which	is	generally	8-10%	of	the	conduit's	assets.	The	letters	of	credit	provided by	the	Company	total	approximately	$5.8	billion	and	are	included	in	the Company's	maximum	exposure	to	loss.	The	net	result	across	all	multi-seller conduits	administered	by	the	Company	is	that,	in	the	event	of	defaulted	assets	in excess	of	the	transaction-specific	credit	enhancement	described	above,	any losses	in	each	conduit	are	allocated	in	the	following	order:

•	Subordinate	loss	note	holders

•	the	commercial	paper	investors

The	Company,	along	with	third	parties,	also	provides	the	conduits	with	two forms	of	liquidity	agreements	that	are	used	to	provide	funding	to	the	conduits	in the	event	of	a	market	disruption,	among	other	events.	Each	asset	of	the	conduit	is supported	by	a	transaction-specific	liquidity	facility	in	the	form	of	an	asset purchase	agreement	(APA).	Under	the	APA,	the	Company	has	agreed	to purchase	non-defaulted	eligible	receivables	from	the	conduit	at	par.	Any	assets purchased	under	the	APA	are	subject	to	increased	pricing.	The	APA	is	not designed	to	provide	credit	support	to	the	conduit,	as	it	generally	does	not	permit the	purchase	of	defaulted	or	impaired	assets	and	generally	reprices	the	assets purchased	to	consider	potential	increased	credit	risk.	The	APA	covers	all	assets in	the	conduits	and	is	considered	in	the	Company's	maximum	exposure	to	loss. In	addition,	the	Company	provides	the	conduits	with	program-wide	liquidity	in the	form	of	short-term	lending	commitments.	Under	these	commitments,	the Company	has	agreed	to	lend	to	the	conduits	in	the	event	of	a	short-term disruption	in	the	commercial	paper	market,	subject	to	specified	conditions.	The total	notional	exposure	under	the	program-wide	liquidity	agreement	is	$11.3 billion	and	is	considered	in	the	Company's	maximum	exposure	to	loss.	The Company	receives	fees	for	providing	both	types	of	liquidity	agreement	and considers	these	fees	to	be	on	fair	market	terms.

Finally,	the	Company	is	one	of	several	named	dealers	in	the	commercial	paper issued	by	the	conduits	and	earns	a	market-based	fee	for	providing	such	services. Along	with	third-party	dealers,	the	Company	makes	a	market	in	the	commercial paper	and	may	from	time	to	time	fund	commercial	paper	pending	sale	to	a	third party.	On	specific	dates	with	less	liquidity	in	the	market,	the	Company	may	hold in	inventory	commercial	paper	issued	by	conduits	administered	by	the	Company, as	well	as	conduits	administered	by	third	parties.	The	amount	of	commercial paper	issued	by	its	administered	conduits	held	in	inventory	fluctuates	based	on market	conditions	and	activity.	As	of	December	31,	2008,	the	Company	owned $57	million	of	commercial	paper	issued	by	its	administered	conduits. FIN	46(R)	requires	that	the	Company	quantitatively	analyze	the	expected variability	of	the	conduit	to	determine	whether	the	Company	is	the	primary beneficiary	of	the	conduit.	The	Company	performs	this	analysis	on	a	quarterly basis	and	has	concluded	that	the	Company	is	not	the	primary	beneficiary	of	the conduits	as	defined	in	FIN	46(R)	and,	therefore,	does	not	consolidate	the conduits	it	administers.	In	conducting	this	analysis,	the	Company	considers	three primary	sources	of	variability	in	the	conduit:	credit	risk,	interest-rate	risk	and	fee variability.

The	Company	models	the	credit	risk	of	the	conduit's	assets	using	a	Credit Value	at	Risk	(C-VaR)	model.	The	C-VaR	model	considers	changes	in	credit spreads	(both	within	a	rating	class	as	well	as	due	to	rating	upgrades	and downgrades),	name-specific	changes	in	credit	spreads,	credit	defaults	and recovery	rates	and	diversification	effects	of	pools	of	financial	assets.	The	model incorporates	data	from	independent	rating	agencies	as	well	as	the	Company's own	proprietary	information	regarding	spread	changes,	ratings	transitions	and losses	given	default.	Using	this	credit	data,	a	Monte	Carlo	simulation	is performed	to	develop	a	distribution	of	credit	risk	for	the	portfolio	of	assets owned	by	each	conduit,	which	is	then	applied	on	a	probability-weighted	basis	to determine	expected	losses	due	to	credit	risk.	In	addition,	the	Company continuously	monitors	the	specific	credit	characteristics	of	the	conduit's	assets and	the	current	credit	environment	to	confirm	that	the	C-VaR	model	used continues	to	incorporate	the	Company's	best	information	regarding	the	expected credit	risk	of	the	conduit's	assets.

The	Company	also	analyzes	the	variability	in	the	fees	that	it	earns	from	the conduit	using	monthly	actual	historical	cash	flow	data	to	determine	average	fee and	standard	deviation	measures	for	each	conduit.	Because	any	unhedged interest	rate	and	foreign-currency	risk	not	contractually	passed	on	to	customers	is absorbed	by	the	fees	earned	by	the	Company,	the	fee	variability	analysis incorporates	those	risks.

The	fee	variability	and	credit	risk	variability	are	then	combined	into	a	single distribution	of	the	conduit's	overall	returns.	This	return	distribution	is	updated and	analyzed	on	at	least	a	quarterly	basis	to	ensure	that	the	amount	of	the Subordinate	Loss	Notes	issued	to	third	parties	is	sufficient	to	absorb	greater	than 50%	of	the	total	expected	variability	in	the	conduit's	returns.	The	expected variability	absorbed	by	the	Subordinate	Loss	Note	investors	is	therefore measured	to	be	greater	than	the	expected	variability	absorbed	by	the	Company through	its	liquidity	arrangements	and	other	fees	earned,	and	the	investors	in commercial	paper	and	medium-term	notes.	While	the	notional	amounts	of	the Subordinate	Loss	Notes	are	quantitatively	small	compared	to	the	size	of	the conduits,	this	is	reflective	of	the	fact	that	most	of	the	substantive	risks	of	the conduits	are	absorbed	by	the	enhancements	provided	by	the	sellers	and	other third	parties	that	provide	transaction-level	credit	enhancement.	Because	FIN 46(R)	requires	these	risks	and	related

enhancements	to	be	excluded	from	the	analysis,	the	remaining	risks	and expected	variability	are	quantitatively	small.	The	calculation	of	variability	under FIN	46(R)	focuses	primarily	on	expected	variability,	rather	than	the	risks associated	with	extreme	outcomes	(for	example,	large	levels	of	default)	that	are expected	to	occur	very	infrequently.	So	while	the	Subordinate	Loss	Notes	are sized	appropriately	compared	to	expected	losses	as	measured	in	FIN	46(R),	they do	not	provide	significant	protection	against	extreme	or	unusual	credit	losses.

# Third-Party	Commercial	Paper	Conduits

The	Company	also	provides	liquidity	facilities	to	single-	and	multi-seller conduits	sponsored	by	third	parties.	These	conduits	are	independently	owned	and managed	and	invest	in	a	variety	of	asset	classes,	depending	on	the	nature	of	the conduit.	The	facilities	provided	by	the	Company	typically	represent	a	small portion	of	the	total	liquidity	facilities	obtained	by	each	conduit,	and	are collateralized	by	the	assets	of	each	conduit.	The	notional	amount	of	these facilities	is	approximately	$1.4	billion	as	of	December	31,	2008.	$2	million	was funded	under	these	facilities	as	of	December	31,	2008.

# Collateralized	Debt	and	Loan	Obligations

A	collateralized	debt	obligation	(CDO)	is	an	SPE	that	purchases	a	pool	of	assets consisting	of	asset-backed	securities	and	synthetic	exposures	through	derivatives on	asset-backed	securities	and	issues	multiple	tranches	of	equity	and	notes	to investors.	A	third-party	manager	is	typically	retained	by	the	CDO	to	select	the pool	of	assets	and	manage	those	assets	over	the	term	of	the	CDO.	The	Company earns	fees	for	warehousing	assets	prior	to	the	creation	of	a	CDO,	structuring CDOs	and	placing	debt	securities	with	investors.	In	addition,	the	Company	has retained	interests	in	many	of	the	CDOs	it	has	structured	and	makes	a	market	in those	issued	notes.

A	cash	CDO,	or	arbitrage	CDO,	is	a	CDO	designed	to	take	advantage	of	the difference	between	the	yield	on	a	portfolio	of	selected	assets,	typically residential	mortgage-backed	securities,	and	the	cost	of	funding	the	CDO	through the	sale	of	notes	to	investors.	"Cash	flow"	CDOs	are	vehicles	in	which	the	CDO passes	on	cash	flows	from	a	pool	of	assets,	while	"market	value"	CDOs	pay	to investors	the	market	value	of	the	pool	of	assets	owned	by	the	CDO	at	maturity. Both	types	of	CDOs	are	typically	managed	by	a	third-party	asset	manager.	In these	transactions,	all	of	the	equity	and	notes	issued	by	the	CDO	are	funded,	as the	cash	is	needed	to	purchase	the	debt	securities.	In	a	typical	cash	CDO,	a	third- party	investment	manager	selects	a	portfolio	of	assets,	which	the	Company	funds through	a	warehouse	financing	arrangement	prior	to	the	creation	of	the	CDO. The	Company	then	sells	the	debt	securities	to	the	CDO	in	exchange	for	cash raised	through	the	issuance	of	notes.	The	Company's	continuing	involvement	in cash	CDOs	is	typically	limited	to	investing	in	a	portion	of	the	notes	or	loans issued	by	the	CDO	and	making	a	market	in	those	securities,	and	acting	as derivative	counterparty	for	interest	rate	or	foreign	currency	swaps	used	in	the structuring	of	the	CDO.

A	synthetic	CDO	is	similar	to	a	cash	CDO,	except	that	the	CDO	obtains exposure	to	all	or	a	portion	of	the	referenced	assets	synthetically	through derivative	instruments,	such	as	credit	default	swaps.	Because	the	CDO	does	not need	to	raise	cash	sufficient	to	purchase	the	entire	referenced	portfolio,	a substantial	portion	of	the	senior	tranches	of	risk	is	typically	passed	on	to	CDO investors	in	the	form	of	unfunded	liabilities	or	derivative	instruments.	Thus,	the CDO	writes	credit	protection	on	select	referenced	debt	securities	to	the	Company or	third	parties	and	the	risk	is	then	passed	on	to	the	CDO	investors	in	the	form	of funded	notes	or	purchased	credit	protection	through	derivative

instruments.	Any	cash	raised	from	investors	is	invested	in	a	portfolio	of collateral	securities	or	investment	contracts.	The	collateral	is	then	used	to	support the	CDO's	obligations	on	the	credit	default	swaps	written	to	counterparties.	The Company's	continuing	involvement	in	synthetic	CDOs	generally	includes purchasing	credit	protection	through	credit	default	swaps	with	the	CDO,	owning a	portion	of	the	capital	structure	of	the	CDO,	in	the	form	of	both	unfunded derivative	positions	(primarily	super	senior	exposures	discussed	below)	and funded	notes,	entering	into	interest-rate	swap	and	total-return	swap	transactions with	the	CDO,	lending	to	the	CDO,	and	making	a	market	in	those	funded	notes. A	collateralized	loan	obligation	(CLO)	is	substantially	similar	to	the	CDO transactions	described	above,	except	that	the	assets	owned	by	the	SPE	(either cash	instruments	or	synthetic	exposures	through	derivative	instruments)	are corporate	loans	and	to	a	lesser	extent	corporate	bonds,	rather	than	asset-backed debt	securities.

# Consolidation

The	Company	has	retained	significant	portions	of	the	"super	senior"	positions issued	by	certain	CDOs.	These	positions	are	referred	to	as	"super	senior"	because they	represent	the	most	senior	positions	in	the	CDO	and,	at	the	time	of structuring,	were	senior	to	tranches	rated	AAA	by	independent	rating	agencies. These	positions	include	facilities	structured	in	the	form	of	short-term commercial	paper,	where	the	Company	wrote	put	options	("liquidity	puts")	to certain	CDOs.	Under	the	terms	of	the	liquidity	puts,	if	the	CDO	was	unable	to issue	commercial	paper	at	a	rate	below	a	specified	maximum	(generally	LIBOR +	35bps	to	LIBOR	+	40	bps),	the	Company	was	obligated	to	fund	the	senior tranche	of	the	CDO	at	a	specified	interest	rate.	As	of	December	31,	2008,	the Company	had	purchased	all	$25	billion	of	the	commercial	paper	subject	to	the liquidity	puts.

Since	inception	of	many	CDO	transactions,	the	subordinate	tranches	of	the CDOs	have	diminished	significantly	in	value	and	in	rating.	The	declines	in	value of	the	subordinate	tranches	and	in	the	super	senior	tranches	indicate	that	the super	senior	tranches	are	now	exposed	to	a	significant	portion	of	the	expected losses	of	the	CDOs,	based	on	current	market	assumptions.	The	Company evaluates	these	transactions	for	consolidation	when	reconsideration	events	occur, as	defined	in	FIN	46(R).

Upon	a	reconsideration	event,	the	Company	is	at	risk	for	consolidation	only	if the	Company	owns	a	majority	of	either	a	single	tranche	or	a	group	of	tranches that	absorb	the	remaining	risk	of	the	CDO.	Due	to	reconsideration	events	during 2007	and	2008,	the	Company	has	consolidated	34	of	the	46	CDOs/CLOs	in which	the	Company	holds	a	majority	of	the	senior	interests	of	the	transaction. The	Company	continues	to	monitor	its	involvement	in	unconsolidated	VIEs and	if	the	Company	were	to	acquire	additional	interests	in	these	vehicles	or	if	the CDOs'	contractual	arrangements	were	to	be	changed	to	reallocate	expected losses	or	residual	returns	among	the	various	interest	holders,	the	Company	may be	required	to	consolidate	the	CDOs.	For	cash	CDOs,	the	net	result	of	such consolidation	would	be	to	gross	up	the	Company's	balance	sheet	by	the	current fair	value	of	the	subordinate	securities	held	by	third	parties,	which	amounts	are not	considered	material.	For	synthetic	CDOs,	the	net	result	of	such	consolidation may	reduce	the	Company's	balance	sheet	by	eliminating	intercompany derivative	receivables	and	payables	in	consolidation.

# Cash	Flows	and	Retained	Interests

The	following	tables	summarize	selected	cash	flow	information	related	to	CDO and	CLO	securitizations	for	the	year	2008:

The	key	assumptions,	used	for	the	securitization	of	CDOs	and	CLOs	during	2008 in	measuring	the	fair	value	of	retained	interests	at	the	date	of	sale	or securitization,	are	as	follows:

The	effect	of	two	negative	changes	in	discount	rates	used	to	determine	the	fair value	of	retained	interests	is	disclosed	below.

| In	millions	of	dollars | CDOs | CLOs |
| :--- | :--- | :--- |
| Carrying\tvalue\tof\tretained\tinterests | \t $928 | $763 |
| Discount\trates |  |  |
| Adverse\tchange\tof\t10% | $(21) | $(11) |
| Adverse\tchange\tof\t20% | (41) | (23) |

# Asset-Based	Financing

The	Company	provides	loans	and	other	forms	of	financing	to	VIEs	that	hold assets.	Those	loans	are	subject	to	the	same	credit	approvals	as	all	other	loans originated	or	purchased	by	the	Company	and	related	loan	loss	reserves	are reported	as	part	of	the	Company's	Allowance	for	credit	losses	in	Note	18	on	page 165.	Financings	in	the	form	of	debt	securities	or	derivatives	are,	in	most circumstances,	reported	in	Trading	account	assets	and	accounted	for	at	fair	value through	earnings.

The	primary	types	of	asset-based	financing,	total	assets	of	the	unconsolidated VIEs	with	significant	involvement	and	the	Company's	maximum	exposure	to loss	at	December	31,	2008	are	shown	below.	For	the	Company	to	realize	that maximum	loss,	the	VIE	(borrower)	would	have	to	default	with	no	recovery	from the	assets	held	by	the	VIE.

| In	billions	of	dollars | Total | Maximum |
| :--- | :--- | :--- |
| Type | assets | exposure |
| Commercial\tand\tother\treal\testate | $46.9 | $9.3 |
| Hedge\tfunds\tand\tequities | 28.2 | 7.1 |
| Corporate\tloans | 9.5 | 8.1 |
| Asset\tpurchasing\tvehicles/SIVs | 2.4 | 0.5 |
| Airplanes,\tships\tand\tother\tassets | 11.3 | 3.2 |
| Total | $98.3 | $28.2 |

The	Company's	involvement	in	the	asset	purchasing	vehicles	and	SIVs sponsored	and	managed	by	third	parties	is	primarily	in	the	form	of	provided backstop	liquidity.	Those	vehicles	finance	a	majority	of	their	asset	purchases with	commercial	paper	and	short-term	notes.	Certain	of	the	assets	owned	by	the vehicles	have	suffered	significant	declines	in	fair	value,	leading	to	an	inability	to re-issue	maturing	commercial	paper	and	short-term	notes.	Citigroup	has	been required	to	provide	loans	to	those	vehicles	to	replace	maturing	commercial	paper and	short-term	notes,	in	accordance	with	the	original	terms	of	the	backstop liquidity	facilities.

The	following	table	summarizes	selected	cash	flow	information	related	to asset-based	financing	for	the	years	2008,	2007	and	2006:

| In	billions	of	dollars | 2008 | 2007 | 2006 |
| :--- | :--- | :--- | :--- |
| Proceeds\tfrom\tnew\tsecuritizations | $\t\t1.7 | — | — |
| Cash\tflows\treceived\ton\tretained\tinterests\tand\tother\tnet\tcash |  |  |  |
| flows | 0.4 | — | — |

# Municipal	Securities	Tender	Option	Bond	(TOB)	Trusts

The	Company	sponsors	TOB	trusts	that	hold	fixed-	and	floating-rate,	tax-exempt securities	issued	by	state	or	local	municipalities.	The	trusts	are	typically	single- issuer	trusts	whose	assets	are	purchased	from	the	Company	and	from	the secondary	market.	The	trusts	issue	long-term	senior	floating	rate	notes ("Floaters")	and	junior	residual	securities	("Residuals").	The	Floaters	have	a long-term	rating	based	on	the	long-term	rating	of	the	underlying	municipal	bond and	a	short-term	rating	based	on	that	of	the	liquidity	provider	to	the	trust.	The Residuals	are	generally	rated	based	on	the	long-term	rating	of	the	underlying municipal	bond	and	entitle	the	holder	to	the	residual	cash	flows	from	the	issuing trust.

The	Company	sponsors	three	kinds	of	TOB	trusts:	customer	TOB	trusts, proprietary	TOB	trusts	and	QSPE	TOB	trusts.

•	Customer	TOB	trusts	are	trusts	through	which	customers	finance	investments in	municipal	securities	and	are	not	consolidated	by	the	Company.	Proprietary and	QSPE	TOB	trusts,	on	the	other	hand,	provide	the	Company	with	the	ability to	finance	its	own	investments	in	municipal	securities.

•	Proprietary	TOB	trusts	are	generally	consolidated,	in	which	case	the	financing (the	Floaters)	is	recognized	on	the	Company's	balance	sheet	as	a	liability. However,	certain	proprietary	TOB	trusts	are	not	consolidated	by	the	Company, where	the	Residuals	are	held	by	hedge	funds	that	are	consolidated	and managed	by	the	Company.	The	assets	and	the	associated	liabilities	of	these TOB	trusts	are	not	consolidated	by	the	hedge	funds	(and,	thus,	are	not consolidated	by	the	Company)	under	the	application	of	the	AICPA	Investment Company	Audit	Guide,	which	precludes	consolidation	of	owned	investments. The	Company	consolidates	the	hedge	funds,	because	the	Company	holds controlling	financial	interests	in	the	hedge	funds.	Certain	of	the	Company's equity	investments	in	the	hedge	funds	are	hedged	with	derivatives	transactions executed	by	the	Company	with	third	parties	referencing	the	returns	of	the hedge	fund.

•	QSPE	TOB	trusts	provide	the	Company	with	the	same	exposure	as	proprietary TOB	trusts	and	are	not	consolidated	by	the	Company.

Credit	rating	distribution	is	based	on	the	external	rating	of	the	municipal	bonds within	the	TOB	trusts,	including	any	credit	enhancement	provided	by	monoline insurance	companies	or	the	Company	in	the	primary	or	secondary	markets,	as discussed	below.	The	total	assets	for	proprietary	TOB	Trusts	(consolidated	and non-consolidated)	includes	$0.9	billion	of	assets	where	the	Residuals	are	held	by a	hedge	fund	that	is	consolidated	and	managed	by	the	Company.

The	TOB	trusts	fund	the	purchase	of	their	assets	by	issuing	Floaters	along	with Residuals,	which	are	frequently	less	than	1%	of	a	trust's	total	funding.	The	tenor of	the	Floaters	matches	the	maturity	of	the	TOB	trust	and	is	equal	to	or	shorter than	the	tenor	of	the	municipal	bond	held	by	the	trust,	and	the	Floaters	bear interest	rates	that	are	typically	reset	weekly	to	a	new	market	rate	(based	on	the SIFMA	index).	Floater	holders	have	an	option	to	tender	the	Floaters	they	hold back	to	the	trust	periodically.	Customer	TOB	trusts	issue	the	Floaters	and Residuals	to	third	parties.	Proprietary	and	QSPE	TOB	trusts	issue	the	Floaters	to third	parties	and	the	Residuals	are	held	by	the	Company.

Approximately	$3.9	billion	of	the	municipal	bonds	owned	by	TOB	trusts	have an	additional	credit	guarantee	provided	by	the	Company.	In	all	other	cases,	the assets	are	either	unenhanced	or	are	insured	with	a	monoline	insurance	provider	in the	primary	market	or	in	the	secondary	market.	While

the	trusts	have	not	encountered	any	adverse	credit	events	as	defined	in	the underlying	trust	agreements,	certain	monoline	insurance	companies	have experienced	downgrades.	In	these	cases,	the	Company	has	proactively	managed the	TOB	programs	by	applying	additional	secondary	market	insurance	on	the assets	or	proceeding	with	orderly	unwinds	of	the	trusts.

The	Company,	in	its	capacity	as	remarketing	agent,	facilitates	the	sale	of	the Floaters	to	third	parties	at	inception	of	the	trust	and	facilitates	the	reset	of	the Floater	coupon	and	tenders	of	Floaters.	If	Floaters	are	tendered	and	the Company	(in	its	role	as	remarketing	agent)	is	unable	to	find	a	new	investor within	a	specified	period	of	time,	it	can	declare	a	failed	remarketing	(in	which case	the	trust	is	unwound)	or	may	choose	to	buy	the	Floaters	into	its	own inventory	and	may	continue	to	try	to	sell	it	to	a	third-party	investor.	While	the level	of	the	Company's	inventory	of	Floaters	fluctuates,	the	Company	held approximately	$1.9	billion	of	Floater	inventory	related	to	the	Customer, Proprietary	and	QSPE	TOB	programs	as	of	December	31,	2008.

If	a	trust	is	unwound	early	due	to	an	event	other	than	a	credit	event	on	the underlying	municipal	bond,	the	underlying	municipal	bond	is	sold	in	the secondary	market.	If	there	is	an	accompanying	shortfall	in	the	trust's	cash	flows to	fund	the	redemption	of	the	Floaters	after	the	sale	of	the	underlying	municipal bond,	the	trust	draws	on	a	liquidity	agreement	in	an	amount	equal	to	the	shortfall. Liquidity	agreements	are	generally	provided	to	the	trust	directly	by	the Company.	For	customer	TOBs	where	the	Residual	is	less	than	25%	of	the	trust's capital	structure,	the	Company	has	a	reimbursement	agreement	with	the	Residual holder	under	which	the	Residual	holder	reimburses	the	Company	for	any payment	made	under	the	liquidity	arrangement.	Through	this	reimbursement agreement,	the	Residual	holder	remains	economically	exposed	to	fluctuations	in value	of	the	municipal	bond.	These	reimbursement	agreements	are	actively margined	based	on	changes	in	value	of	the	underlying	municipal	bond	to mitigate	the	Company's	counterparty	credit	risk.	In	cases	where	a	third	party provides	liquidity	to	a	proprietary	or	QSPE	TOB	trust,	a	similar	reimbursement arrangement	is	made	whereby	the	Company	(or	a	consolidated	subsidiary	of	the Company)	as	Residual	holder	absorbs	any	losses	incurred	by	the	liquidity provider.	As	of	December	31,	2008,	liquidity	agreements	provided	with	respect to	customer	TOB	trusts	totaled	$7.1	billion,	offset	by	reimbursement	agreements in	place	with	a	notional	amount	of	$5.5	billion.	The	remaining	exposure	relates to	TOB	transactions	where	the	Residual	owned	by	the	customer	is	at	least	25% of	the	bond	value	at	the	inception	of	the	transaction.	In	addition,	the	Company has	provided	liquidity	arrangements	with	a	notional	amount	of	$6.5	billion	to QSPE	TOB	trusts	and	other	non-consolidated	proprietary	TOB	trusts	described above.

The	Company	considers	the	customer	and	proprietary	TOB	trusts	(excluding QSPE	TOB	trusts)	to	be	variable	interest	entities	within	the	scope	of	FIN	46(R). Because	third-party	investors	hold	the	Residual	and	Floater	interests	in	the customer	TOB	trusts,	the	Company's	involvement	and	variable	interests	include only	its	role	as	remarketing	agent	and	liquidity	provider.	On	the	basis	of	the variability	absorbed	by	the	customer	through	the	reimbursement	arrangement	or significant	residual	investment,	the	Company	does	not	consolidate	the	Customer TOB	trusts.	The	Company's	variable	interests	in	the	Proprietary	TOB	trusts include	the	Residual	as	well	as	the	remarking	and	liquidity	agreements	with	the trusts.	On	the	basis	of	the	variability	absorbed	through	these	contracts	(primarily the	Residual),	the	Company	generally	consolidates	the	Proprietary	TOB	trusts. Finally,	certain	proprietary	TOB	trusts	and	QSPE	TOB	trusts	are	not consolidated	by

application	of	specific	accounting	literature.	For	the	nonconsolidated	proprietary TOB	trusts	and	QSPE	TOB	trusts,	the	Company	recognizes	only	its	residual investment	on	its	balance	sheet	at	fair	value	and	the	third-party	financing	raised by	the	trusts	is	off-balance	sheet.

The	following	table	summarizes	selected	cash	flow	information	related	to municipal	bond	securitizations	for	the	years	2008,	2007	and	2006:

| In	billions	of	dollars | 2008 | 2007 | 2006 |
| :--- | :--- | :--- | :--- |
| Proceeds\tfrom\tnew\tsecuritizations | $ 1.2 | $10.5 | — |
| Cash\tflows\treceived\ton\tretained\tinterests\tand\tother\tnet\tcash |  |  |  |
| flows | 0.5 | — | — |

# Municipal	Investments

Municipal	investment	transactions	represent	partnerships	that	finance	the construction	and	rehabilitation	of	low-income	affordable	rental	housing.	The Company	generally	invests	in	these	partnerships	as	a	limited	partner	and	earns	a return	primarily	through	the	receipt	of	tax	credits	earned	from	the	affordable housing	investments	made	by	the	partnership.

# Client	Intermediation

Client	intermediation	transactions	represent	a	range	of	transactions	designed	to provide	investors	with	specified	returns	based	on	the	returns	of	an	underlying security,	referenced	asset	or	index.	These	transactions	include	credit-linked	notes and	equity-linked	notes.	In	these	transactions,	the	SPE	typically	obtains exposure	to	the	underlying	security,	referenced	asset	or	index	through	a derivative	instrument,	such	as	a	total-return	swap	or	a	credit-default	swap.	In turn	the	SPE	issues	notes	to	investors	that	pay	a	return	based	on	the	specified underlying	security,	referenced	asset	or	index.	The	SPE	invests	the	proceeds	in	a financial	asset	or	a	guaranteed	insurance	contract	(GIC)	that	serves	as	collateral for	the	derivative	contract	over	the	term	of	the	transaction.	The	Company's involvement	in	these	transactions	includes	being	the	counterparty	to	the	SPE's derivative	instruments	and	investing	in	a	portion	of	the	notes	issued	by	the	SPE. In	certain	transactions,	the	investor's	maximum	risk	of	loss	is	limited	and	the Company	absorbs	risk	of	loss	above	a	specified	level.

The	Company's	maximum	risk	of	loss	in	these	transactions	is	defined	as	the amount	invested	in	notes	issued	by	the	SPE	and	the	notional	amount	of	any	risk of	loss	absorbed	by	the	Company	through	a	separate	instrument	issued	by	the SPE.	The	derivative	instrument	held	by	the	Company	may	generate	a	receivable from	the	SPE	(for	example,	where	the	Company	purchases	credit	protection from	the	SPE	in	connection	with	the	SPE's	issuance	of	a	credit-linked	note), which	is	collateralized	by	the	assets	owned	by	the	SPE.	These	derivative instruments	are	not	considered	variable	interests	under	FIN	46(R)	and	any associated	receivables	are	not	included	in	the	calculation	of	maximum	exposure to	the	SPE.

# Structured	Investment	Vehicles

Structured	Investment	Vehicles	(SIVs)	are	SPEs	that	issue	junior	notes	and senior	debt	(medium-term	notes	and	short-term	commercial	paper)	to	fund	the purchase	of	high	quality	assets.	The	junior	notes	are	subject	to	the	"first	loss" risk	of	the	SIVs.	The	SIVs	provide	a	variable	return	to	the	junior	note	investors based	on	the	net	spread	between	the	cost	to	issue	the	senior	debt	and	the	return realized	by	the	high	quality	assets.	The	Company	acts	as	manager	for	the	SIVs and,	prior	to	December	13,	2007,	was	not	contractually	obligated	to	provide liquidity	facilities	or	guarantees	to	the	SIVs.

In	response	to	the	ratings	review	of	the	outstanding	senior	debt	of	the	SIVs	for a	possible	downgrade	announced	by	two	ratings	agencies	and	the	continued reduction	of	liquidity	in	the	SIV-related	asset-backed	commercial	paper	and medium-term	note	markets,	on	December	13,	2007,	Citigroup	announced	its commitment	to	provide	support	facilities	that	would	support	the	SIVs'	senior debt	ratings.	As	a	result	of	this	commitment,	Citigroup	became	the	SIVs' primary	beneficiary	and	began	consolidating	these	entities.

On	February	12,	2008,	Citigroup	finalized	the	terms	of	the	support	facilities, which	took	the	form	of	a	commitment	to	provide	$3.5	billion	of	mezzanine capital	to	the	SIVs	in	the	event	the	market	value	of	their	junior	notes	approaches zero.	The	mezzanine	capital	facility	was	increased	by	$1	billion	to	$4.5	billion, with	the	additional	commitment	funded	during	the	fourth	quarter	of	2008.	The facilities	rank	senior	to	the	junior	notes	but	junior	to	the	commercial	paper	and medium-term	notes.	The	facilities	were	at	arm's-length	terms.	Interest	was	paid on	the	drawn	amount	of	the	facilities	and	a	per	annum	fee	was	paid	on	the unused	portion.

During	the	period	to	November	18,	2008,	the	Company	wrote	down	$3.3 billion	on	SIV	assets.

In	order	to	complete	the	wind-down	of	the	SIVs,	the	Company,	in	a	nearly cashless	transaction,	purchased	the	remaining	assets	of	the	SIVs	at	fair	value, with	a	trade	date	of	November	18,	2008.	The	Company	funded	the	purchase	of the	SIV	assets	by	assuming	the	obligation	to	pay	amounts	due	under	the medium-term	notes	issued	by	the	SIVs,	as	the	medium-term	notes	mature.	The net	funding	provided	by	the	Company	to	fund	the	purchase	of	the	SIV	assets	was $0.3	billion.

As	of	December	31,	2008,	the	carrying	amount	of	the	purchased	SIV	assets was	$16.6	billion,	of	which	$16.5	billion	is	classified	as	HTM	assets.

# Investment	Funds

The	Company	is	the	investment	manager	for	certain	investment	funds	that	invest in	various	asset	classes	including	private	equity,	hedge	funds,	real	estate,	fixed income	and	infrastructure.	The	Company	earns	a	management	fee,	which	is	a percentage	of	capital	under	management,	and	may	earn	performance	fees.	In addition,	for	some	of	these	funds	the	Company	has	an	ownership	interest	in	the investment	funds.

The	Company	has	also	established	a	number	of	investment	funds	as opportunities	for	qualified	employees	to	invest	in	private	equity	investments.	The Company	acts	as	investment	manager	to	these	funds	and	may	provide	employees with	financing	on	both	a	recourse	and	non-recourse	basis	for	a	portion	of	the employees'	investment	commitments.

# Trust	Preferred	Securities

The	Company	has	raised	financing	through	the	issuance	of	trust	preferred	securities.	In	these	transactions,	the	Company	forms	a	statutory	business	trust	and	owns	all	of the	voting	equity	shares	of	the	trust.	The	trust	issues	preferred	equity	securities	to	third-party	investors	and	invests	the	gross	proceeds	in	junior	subordinated	deferrable interest	debentures	issued	by	the	Company.	These	trusts	have	no	assets,	operations,	revenues	or	cash	flows	other	than	those	related	to	the	issuance,	administration	and repayment	of	the	preferred	equity	securities	held	by	third-party	investors.	These	trusts'	obligations	are	fully	and	unconditionally	guaranteed	by	the	Company.

Because	the	sole	asset	of	the	trust	is	a	receivable	from	the	Company,	the	Company	is	not	permitted	to	consolidate	the	trusts	under	FIN	46(R),	even	though	the Company	owns	all	of	the	voting	equity	shares	of	the	trust,	has	fully	guaranteed	the	trusts'	obligations,	and	has	the	right	to	redeem	the	preferred	securities	in	certain circumstances.	The	Company	recognizes	the	subordinated	debentures	on	its	balance	sheet	as	long-term	liabilities.

# 24.	DERIVATIVES	ACTIVITIES

In	the	ordinary	course	of	business,	Citigroup	enters	into	various	types	of derivative	transactions.	These	derivative	transactions	include:

•	Futures	and	forward	contracts	which	are	commitments	to	buy	or	sell	at	a future	date	a	financial	instrument,	commodity	or	currency	at	a	contracted	price and	may	be	settled	in	cash	or	through	delivery.

•	Swap	contracts	which	are	commitments	to	settle	in	cash	at	a	future	date	or dates	that	may	range	from	a	few	days	to	a	number	of	years,	based	on differentials	between	specified	financial	indices,	as	applied	to	a	notional principal	amount.

•	Option	contracts	which	give	the	purchaser,	for	a	fee,	the	right,	but	not	the obligation,	to	buy	or	sell	within	a	limited	time	a	financial	instrument, commodity	or	currency	at	a	contracted	price	that	may	also	be	settled	in	cash, based	on	differentials	between	specified	indices	or	prices.

Citigroup	enters	into	these	derivative	contracts	for	the	following	reasons:

•	Trading	Purposes—Customer	Needs	–	Citigroup	offers	its	customers derivatives	in	connection	with	their	risk-management	actions	to	transfer, modify	or	reduce	their	interest	rate,	foreign	exchange	and	other	market/credit risks	or	for	their	own	trading	purposes.	As	part	of	this	process,	Citigroup considers	the	customers'	suitability	for	the	risk	involved,	and	the	business purpose	for	the	transaction.	Citigroup	also	manages	its	derivative-risk	positions through	offsetting	trade	activities,	controls	focused	on	price	verification,	and daily	reporting	of	positions	to	senior	managers.

•	Trading	Purposes—Own	Account	–	Citigroup	trades	derivatives	for	its	own account.	Trading	limits	and	price	verification	controls	are	key	aspects	of	this activity.

•	Asset/Liability	Management	Hedging—Citigroup	uses	derivatives	in connection	with	its	risk-management	activities	to	hedge	certain	risks	or reposition	the	risk	profile	of	the	Company.	For	example,	Citigroup	may	issue fixed-rate	long-term	debt	and	then	enter	into	a	receive-fixed,	pay-variable-rate interest	rate	swap	with	the	same	tenor	and	notional	amount	to	convert	the interest	payments	to	a	net	variable-rate	basis.	This	strategy	is	the	most	common form	of	an	interest	rate	hedge,	as	it	minimizes	interest	cost	in	certain	yield curve	environments.	Derivatives	are	also	used	to	manage	risks	inherent	in specific	groups	of	on-balance	sheet	assets	and	liabilities,	including investments,	corporate	and	consumer	loans,	deposit	liabilities,	as	well	as	other interest-sensitive	assets	and	liabilities.	In	addition,	foreign-	exchange	contracts are	used	to	hedge	non-U.S.	dollar	denominated	debt,	available-for-sale securities,	net	capital	exposures	and	foreign-exchange	transactions.

Derivatives	may	expose	Citigroup	to	market,	credit	or	liquidity	risks	in	excess of	the	amounts	recorded	on	the	Consolidated	Balance	Sheet.	Market	risk	on	a derivative	product	is	the	exposure	created	by	potential	fluctuations	in	interest rates,	foreign-exchange	rates	and	other	values	and	is	a	function	of	the	type	of product,	the	volume	of	transactions,	the	tenor	and	terms	of	the	agreement,	and the	underlying	volatility.	Credit	risk	is	the	exposure	to	loss	in	the	event	of nonperformance	by	the	other	party	to	the	transaction	where	the	value	of	any collateral	held	is	not	adequate	to	cover	such	losses.	The	recognition	in	earnings of	unrealized	gains	on	these	transactions	is	subject	to	management's	assessment as	to	collectibility.	Liquidity	risk	is	the	potential	exposure	that	arises	when	the size	of	the	derivative	position	may	not	be	able

to	be	rapidly	adjusted	in	periods	of	high	volatility	and	financial	stress	at	a reasonable	cost.

# Accounting	for	Derivative	Hedging

Citigroup	accounts	for	its	hedging	activities	in	accordance	with	SFAS	133.	As	a general	rule,	SFAS	133	hedge	accounting	is	permitted	for	those	situations	where the	Company	is	exposed	to	a	particular	risk,	such	as	interest-rate	or	foreign- exchange	risk,	that	causes	changes	in	the	fair	value	of	an	asset	or	liability,	or variability	in	the	expected	future	cash	flows	of	an	existing	asset,	liability	or	a forecasted	transaction	that	may	affect	earnings.

Derivative	contracts	hedging	the	risks	associated	with	the	changes	in	fair	value are	referred	to	as	fair	value	hedges,	while	contracts	hedging	the	risks	affecting the	expected	future	cash	flows	are	called	cash	flow	hedges.	Hedges	that	utilize derivatives	or	debt	instruments	to	manage	the	foreign	exchange	risk	associated with	equity	investments	in	non-U.S.	dollar	functional	currency	foreign subsidiaries	(net	investment	in	a	foreign	operation)	are	called	net	investment hedges.

All	derivatives	are	reported	on	the	balance	sheet	at	fair	value.	In	addition, where	applicable,	all	such	contracts	covered	by	master	netting	agreements	are reported	net.	Gross	positive	fair	values	are	netted	with	gross	negative	fair	values by	counterparty	pursuant	to	a	valid	master	netting	agreement.	In	addition, payables	and	receivables	in	respect	of	cash	collateral	received	from	or	paid	to	a given	counterparty	are	included	in	this	netting.	However,	non-cash	collateral	is not	included.

As	of	December	31,	2008	and	December	31,	2007,	the	amount	of	payables	in respect	of	cash	collateral	received	that	was	netted	with	unrealized	gains	from derivatives	was	$52	billion	and	$26	billion,	respectively,	while	the	amount	of receivables	in	respect	of	cash	collateral	paid	that	was	netted	with	unrealized losses	from	derivatives	was	$58	billion	and	$37	billion,	respectively.

If	certain	hedging	criteria	specified	in	SFAS	133	are	met,	including	testing	for hedge	effectiveness,	special	hedge	accounting	may	be	applied.	The	hedge- effectiveness	assessment	methodologies	for	similar	hedges	are	performed	in	a similar	manner	and	are	used	consistently	throughout	the	hedging	relationships. For	fair	value	hedges,	the	changes	in	value	of	the	hedging	derivative,	as	well	as the	changes	in	value	of	the	related	hedged	item,	due	to	the	risk	being	hedged,	are reflected	in	current	earnings.	For	cash	flow	hedges	and	net	investment	hedges, the	changes	in	value	of	the	hedging	derivative	are	reflected	in	Accumulated	other comprehensive	income	(loss)	in	Stockholders'	equity,	to	the	extent	the	hedge	was effective.	Hedge	ineffectiveness,	in	either	case,	is	reflected	in	current	earnings. For	asset/liability	management	hedging,	the	fixed-rate	long-term	debt	may	be recorded	at	amortized	cost	under	current	U.S.	GAAP.	However,	by	electing	to use	SFAS	133	hedge	accounting,	the	carrying	value	of	the	debt	is	adjusted	for changes	in	the	benchmark	interest	rate,	with	any	such	changes	in	value	recorded in	current	earnings.	The	related	interest-rate	swap	is	also	recorded	on	the	balance sheet	at	fair	value,	with	any	changes	in	fair	value	reflected	in	earnings.	Thus,	any ineffectiveness	resulting	from	the	hedging	relationship	is	recorded	in	current earnings.	Alternatively,	an	economic	hedge,	which	does	not	meet	the	SFAS	133 hedging	criteria,	would	involve	only	recording	the	derivative	at	fair	value	on	the balance	sheet,	with	its	associated	changes	in	fair	value	recorded	in	earnings.	The debt	would	continue	to	be	carried	at	amortized	cost	and,	therefore,	current earnings	would	be	impacted	only	by	the	interest	rate	shifts	that	cause	the	change in

the	swap's	value	and	the	underlying	yield	of	the	debt.	This	type	of	hedge	is undertaken	when	SFAS	133	hedge	requirements	cannot	be	achieved	or management	decides	not	to	apply	SFAS	133	hedge	accounting.	Another alternative	for	the	Company	would	be	to	elect	to	carry	the	note	at	fair	value under	SFAS	159.	Once	the	irrevocable	election	is	made	upon	issuance	of	the note,	the	full	change	in	fair	value	of	the	note	would	be	reported	in	earnings.	The related	interest	rate	swap,	with	changes	in	fair	value	also	reflected	in	earnings, provides	a	natural	offset	to	the	note's	fair	value	change.	To	the	extent	the	two offsets	would	not	be	exactly	equal,	the	difference	would	be	reflected	in	current earnings.	This	type	of	economic	hedge	is	undertaken	when	the	Company	prefers to	follow	this	simpler	method	that	achieves	similar	financial	statement	results	to an	SFAS	133	fair-value	hedge.

# Fair	value	hedges

•	Hedging	of	benchmark	interest	rate	risk—Citigroup	hedges	exposure	to changes	in	the	fair	value	of	outstanding	fixed-rate	issued	debt	and	borrowings. The	fixed	cash	flows	from	those	financing	transactions	are	converted	to benchmark	variable-rate	cash	flows	by	entering	into	receive-fixed,	pay-variable interest	rate	swaps.	These	fair-value	hedge	relationships	use	dollar-offset	ratio analysis	to	determine	whether	the	hedging	relationships	are	highly	effective	at inception	and	on	an	ongoing	basis.

Citigroup	also	hedges	exposure	to	changes	in	the	fair	value	of	fixed-rate	assets, including	available-for-sale	debt	securities	and	loans.	The	hedging	instruments used	are	receive-variable,	pay-fixed	interest	rate	swaps.	Most	of	these	fair-value hedging	relationships	use	dollar-offset	ratio	analysis	to	determine	whether	the hedging	relationships	are	highly	effective	at	inception	and	on	an	ongoing	basis, while	certain	others	use	regression	analysis.

•	Hedging	of	foreign	exchange	risk—Citigroup	hedges	the	change	in	fair	value attributable	to	foreign-exchange	rate	movements	in	available-for-sale	securities that	are	denominated	in	currencies	other	than	the	functional	currency	of	the entity	holding	the	securities,	which	may	be	within	or	outside	the	U.S. Typically,	the	hedging	instrument	employed	is	a	forward	foreign-exchange contract.	In	this	type	of	hedge,	the	change	in	fair	value	of	the	hedged	available- for-sale	security	attributable	to	the	portion	of	foreign	exchange	risk	hedged	is reported	in	earnings	and	not	Accumulated	other	comprehensive	income—a process	that	serves	to	offset	substantially	the	change	in	fair	value	of	the forward	contract	that	is	also	reflected	in	earnings.	Citigroup	typically	considers the	premium	associated	with	forward	contracts	(differential	between	spot	and contractual	forward	rates)	as	the	cost	of	hedging;	this	is	excluded	from	the assessment	of	hedge	effectiveness	and	reflected	directly	in	earnings.	Dollar- offset	method	is	typically	used	to	assess	hedge	effectiveness.	Since	that assessment	is	based	on	changes	in	fair	value	attributable	to	changes	in	spot rates	on	both	the	available-for-sale	securities	and	the	forward	contracts	for	the portion	of	the	relationship	hedged,	the	amount	of	hedge	ineffectiveness	is	not significant.

# Cash	flow	hedges

•	Hedging	of	benchmark	interest	rate	risk—Citigroup	hedges	variable	cash	flows resulting	from	floating-rate	liabilities	and	roll	over	(re-issuance)	of	short-term liabilities.	Variable	cash	flows	from	those	liabilities	are	converted	to	fixed-rate cash	flows	by	entering	into	receive-variable,	pay-fixed	interest-rate	swaps	and receive-variable,	pay-fixed

forward-starting	interest-rate	swaps.	For	some	hedges,	the	hedge ineffectiveness	is	eliminated	by	matching	all	terms	of	the	hedged	item	and	the hedging	derivative	at	inception	and	on	an	ongoing	basis.	Citigroup	does	not exclude	any	terms	from	consideration	when	applying	the	matched	terms method.	To	the	extent	all	terms	are	not	perfectly	matched,	these	cash-flow hedging	relationships	use	either	regression	analysis	or	dollar-offset	ratio analysis	to	assess	whether	the	hedging	relationships	are	highly	effective	at inception	and	on	an	ongoing	basis.	Since	efforts	are	made	to	match	the	terms	of the	derivatives	to	those	of	the	hedged	forecasted	cash	flows	as	closely	as possible,	the	amount	of	hedge	ineffectiveness	is	not	significant	even	when	the terms	do	not	match	perfectly.

Citigroup	also	hedges	variable	cash	flows	resulting	from	investments	in floating-rate,	available-for-sale	debt	securities.	Variable	cash	flows	from	those assets	are	converted	to	fixed-rate	cash	flows	by	entering	into	receive-fixed,	pay- variable	interest-rate	swaps.	These	cash-flow	hedging	relationships	use	either regression	analysis	or	dollar-offset	ratio	analysis	to	assess	whether	the	hedging relationships	are	highly	effective	at	inception	and	on	an	ongoing	basis.	Since efforts	are	made	to	align	the	terms	of	the	derivatives	to	those	of	the	hedged forecasted	cash	flows	as	closely	as	possible,	the	amount	of	hedge	ineffectiveness is	not	significant.

•	Hedging	of	foreign	exchange	risk—Citigroup	locks	in	the	functional	currency equivalent	of	cash	flows	of	various	balance	sheet	liability	exposures,	including deposits,	short-term	borrowings	and	long-term	debt	(and	the	forecasted issuances	or	rollover	of	such	items)	that	are	denominated	in	a	currency	other than	the	functional	currency	of	the	issuing	entity.	Depending	on	the	risk- management	objectives,	these	types	of	hedges	are	designated	as	either	cash- flow	hedges	of	only	foreign-exchange	risk	or	cash-flow	hedges	of	both	foreign- exchange	and	interest-rate	risk,	and	the	hedging	instruments	used	are	foreign- exchange	forward	contracts,	cross-currency	swaps	and	foreign-currency options.	For	some	hedges,	Citigroup	matches	all	terms	of	the	hedged	item	and the	hedging	derivative	at	inception	and	on	an	ongoing	basis	to	eliminate	hedge ineffectiveness.	Citigroup	does	not	exclude	any	terms	from	consideration	when applying	the	matched	terms	method.	To	the	extent	all	terms	are	not	perfectly matched,	any	ineffectiveness	is	measured	using	the	"hypothetical	derivative method"	from	FASB	Derivative	Implementation	Group	Issue	G7.	Efforts	are made	to	match	up	the	terms	of	the	hypothetical	and	actual	derivatives	used	as closely	as	possible.	As	a	result,	the	amount	of	hedge	ineffectiveness	is	not significant	even	when	the	terms	do	not	match	perfectly.

# Net	investment	hedges

Consistent	with	SFAS	No.	52,	Foreign	Currency	Translation	(SFAS	52),	SFAS 133	allows	hedging	of	the	foreign-currency	risk	of	a	net	investment	in	a	foreign operation.	Citigroup	uses	foreign-currency	forwards,	options	and	swaps	and foreign-currency-denominated	debt	instruments	to	manage	the	foreign-exchange risk	associated	with	Citigroup's	equity	investments	in	several	non-U.S.	dollar functional	currency	foreign	subsidiaries.	In	accordance	with	SFAS	52,	Citigroup records	the	change	in	the	carrying	amount	of	these	investments	in	the	cumulative translation	adjustment	account	within	Accumulated	other	comprehensive	income (loss).	Simultaneously,	the	effective	portion	of	the	hedge	of	this	exposure	is	also

recorded	in	the	cumulative	translation	adjustment	account	and	the	ineffective portion,	if	any,	is	immediately	recorded	in	earnings.

For	derivatives	used	in	net	investment	hedges,	Citigroup	follows	the	forward- rate	method	from	FASB	Derivative	Implementation	Group	Issue	H8.	According to	that	method,	all	changes	in	fair	value,	including	changes	related	to	the forward-rate	component	of	the	foreign-currency	forward	contracts	and	the	time- value	of	foreign-currency	options,	are	recorded	in	the	cumulative	translation adjustment	account.	For	foreign-currency-denominated	debt	instruments	that	are designated	as	hedges	of	net	investments,	the	translation	gain	or	loss	that	is recorded	in	the	cumulative	translation	adjustment	account	is	based	on	the	spot exchange	rate	between	the	functional	currency	of	the	respective	subsidiary	and the	U.S.	dollar,	which	is	the	functional	currency	of	Citigroup.	To	the	extent	the notional	amount	of	the	hedging	instrument	exactly	matches	the	hedged	net investment	and	the	underlying	exchange	rate	of	the	derivative	hedging instrument	relates	to	the	exchange	rate	between	the	functional	currency	of	the net	investment	and	Citigroup's	functional	currency	(or,	in	the	case	of	the	non- derivative	debt	instrument,	such	instrument	is	denominated	in	the	functional currency	of	the	net	investment),	no	ineffectiveness	is	recorded	in	earnings.

# Hedge	effectiveness

Key	aspects	of	achieving	SFAS	133	hedge	accounting	are	documentation	of hedging	strategy	and	hedge	effectiveness	at	the	hedge	inception	and substantiating	hedge	effectiveness	on	an	ongoing	basis.	A	derivative	must	be highly	effective	in	accomplishing	the	hedge	objective	of	offsetting	either changes	in	the	fair	value	or	cash	flows	of	the	hedged	item	for	the	risk	being hedged.	Any	ineffectiveness	in	the	hedge	relationship	is	recognized	in	current earnings.	The	assessment	of	effectiveness	excludes	changes	in	the	value	of	the hedged	item	that	are	unrelated	to	the	risks	being	hedged.	Similarly,	the assessment	of	effectiveness	may	exclude	changes	in	the	fair	value	of	a	derivative related	to	time	value	that,	if	excluded,	are	recognized	in	current	earnings. The	following	table	summarizes	certain	information	related	to	the	Company's hedging	activities	for	the	years	ended	December	31,	2008,	2007	and	2006:

| In	millions	of	dollars | 2008 | 2007 | 2006 |
| :--- | :--- | :--- | :--- |
| Fair\tvalue\thedges |  |  |  |
| Hedge\tineffectiveness\trecognized\tin\tearnings | $(559) | $91 | $ 245 |
| Net\tgain\texcluded\tfrom\tassessment\tof |  |  |  |
| effectiveness | 178 | 420 | 302 |
| Cash\tflow\thedges |  |  |  |
| Hedge\tineffectiveness\trecognized\tin\tearnings | (27) | — | (18) |
| Net\tgain\t(loss)\texcluded\tfrom\tassessment\tof |  |  |  |
| effectiveness | (17) | — | — |
| Net\tinvestment\thedges |  |  |  |
| Net\tgain\t(loss)\tincluded\tin\tforeign\tcurrency |  |  |  |
| translation\tadjustment\tin\taccumulated\tother |  |  |  |
| comprehensive\tincome | \t $2,811 | $(1,051) | $(569) |

For	cash	flow	hedges,	any	changes	in	the	fair	value	of	the	end-user	derivative remaining	in	Accumulated	other	comprehensive	income	(loss)	on	the Consolidated	Balance	Sheet	will	be	included	in	earnings	of	future	periods	to offset	the	variability	of	the	hedged	cash	flows	when	such	cash	flows	affect earnings.	The	net	loss	associated	with	cash	flow	hedges	expected	to	be reclassified	from	Accumulated	other	comprehensive	income	within	12	months	of December	31,	2008	is	approximately	$1.9	billion.

The	change	in	Accumulated	other	comprehensive	income	(loss)	from	cash	flow hedges	for	the	years	ended	December	31,	2008,	2007	and	2006	can	be summarized	as	follows	(after-tax):

| In	millions	of	dollars | 2008 | 2007 | 2006 |
| :--- | :--- | :--- | :--- |
| Beginning\tbalance | $(3,163) | $(61) | $ 612 |
| Net\tgain\t(loss)\tfrom\tcash\tflow\thedges | (2,738) | (2,932) | (29) |
| Net\tamounts\treclassified\tto\tearnings | 712 | (170) | (644) |
| Ending\tbalance | $(5,189) | $(3,163) | $(61) |

# 25.	CONCENTRATIONS	OF	CREDIT	RISK

Concentrations	of	credit	risk	exist	when	changes	in	economic,	industry	or geographic	factors	similarly	affect	groups	of	counterparties	whose	aggregate credit	exposure	is	material	in	relation	to	Citigroup's	total	credit	exposure. Although	Citigroup's	portfolio	of	financial	instruments	is	broadly	diversified along	industry,	product,	and	geographic	lines,	material	transactions	are completed	with	other	financial	institutions,	particularly	in	the	securities	trading, derivatives,	and	foreign	exchange	businesses.

In	connection	with	the	Company's	efforts	to	maintain	a	diversified	portfolio, the	Company	limits	its	exposure	to	any	one	geographic	region,	country	or individual	creditor	and	monitors	this	exposure	on	a	continuous	basis.	At December	31,	2008,	Citigroup's	most	significant	concentration	of	credit	risk	was with	the	U.S.	government	and	its	agencies.	The	Company's	exposure,	which primarily	results	from	trading	assets	and	investments	issued	by	the	U.S. government	and	its	agencies,	amounted	to	$93.7	billion	and	$73.8	billion	at December	31,	2008	and	2007,	respectively.	After	the	U.S.	government,	the Company's	next	largest	exposures	are	to	the	Mexican	and	Japanese	governments and	their	agencies,	which	are	rated	investment	grade	by	both	Moody's	and	S&P. The	Company's	exposure	to	Mexico	amounted	to	$35.0	billion	and	$32.0	billion at	December	31,	2008	and	2007,	respectively,	and	is	composed	of	investment securities,	loans	and	trading	assets.	The	Company's	exposure	to	Japan	amounted to	$29.1	billion	and	$26.1	billion	at	December	31,	2008	and	2007,	respectively, and	is	composed	of	investment	securities,	loans	and	trading	assets.

Effective	January	1,	2007,	the	Company	adopted	SFAS	157.	SFAS	157	defines fair	value,	establishes	a	consistent	framework	for	measuring	fair	value	and expands	disclosure	requirements	about	fair-value	measurements.	SFAS	157, among	other	things,	requires	the	Company	to	maximize	the	use	of	observable inputs	and	minimize	the	use	of	unobservable	inputs	when	measuring	fair	value. In	addition,	SFAS	157	precludes	the	use	of	block	discounts	when	measuring	the fair	value	of	instruments	traded	in	an	active	market,	which	discounts	were previously	applied	to	large	holdings	of	publicly	traded	equity	securities.	It	also requires	recognition	of	trade-date	gains	related	to	certain	derivative	transactions whose	fair	value	has	been	determined	using	unobservable	market	inputs.	This guidance	supersedes	the	guidance	in	Emerging	Issues	Task	Force	Issue	No.	02- 3,	"Issues	Involved	in	Accounting	for	Derivative	Contracts	Held	for	Trading Purposes	and	Contracts	Involved	in	Energy	Trading	and	Risk	Management Activities"	(EITF	Issue	02-3),	which	prohibited	the	recognition	of	trade-date gains	for	such	derivative	transactions	when	determining	the	fair	value	of instruments	not	traded	in	an	active	market.

As	a	result	of	the	adoption	of	SFAS	157,	the	Company	has	made	some amendments	to	the	techniques	used	in	measuring	the	fair	value	of	derivative	and other	positions.	These	amendments	change	the	way	that	the	probability	of	default of	a	counterparty	is	factored	into	the	valuation	of	derivative	positions,	include for	the	first	time	the	impact	of	Citigroup's	own	credit	risk	on	derivatives	and other	liabilities	measured	at	fair	value,	and	also	eliminate	the	portfolio	servicing adjustment	that	is	no	longer	necessary	under	SFAS	157.

# Fair-Value	Hierarchy

SFAS	157	specifies	a	hierarchy	of	valuation	techniques	based	on	whether	the inputs	to	those	valuation	techniques	are	observable	or	unobservable.	Observable inputs	reflect	market	data	obtained	from	independent	sources,	while unobservable	inputs	reflect	the	Company's	market	assumptions.	These	two	types of	inputs	have	created	the	following	fair-value	hierarchy:

This	hierarchy	requires	the	use	of	observable	market	data	when	available.	The Company	considers	relevant	and	observable	market	prices	in	its	valuations where	possible.	The	frequency	of	transactions,	the	size	of	the	bid-ask	spread	and the	amount	of	adjustment	necessary	when	comparing	similar	transactions	are	all factors	in	determining	the	liquidity	of	markets	and	the	relevance	of	observed prices	in	those	markets.

# Determination	of	Fair	Value

For	assets	and	liabilities	carried	at	fair	value,	the	Company	measures	such	value using	the	procedures	set	out	below,	irrespective	of	whether	these	assets	and liabilities	are	carried	at	fair	value	as	a	result	of	an	election	under	SFAS	159, FASB	Statement	No.	155,	Accounting	for	Certain	Hybrid	Financial	Instruments (SFAS	155),	or	FASB	Statement	No.	156,	Accounting

for	Servicing	of	Financial	Assets	(SFAS	156),	or	whether	they	were	previously carried	at	fair	value.

When	available,	the	Company	generally	uses	quoted	market	prices	to determine	fair	value	and	classifies	such	items	in	Level	1.	In	some	cases	where	a market	price	is	available,	the	Company	will	make	use	of	acceptable	practical expedients	(such	as	matrix	pricing)	to	calculate	fair	value,	in	which	case	the items	are	classified	in	Level	2.

If	quoted	market	prices	are	not	available,	fair	value	is	based	upon	internally developed	valuation	techniques	that	use,	where	possible,	current	market-based or	independently	sourced	market	parameters,	such	as	interest	rates,	currency rates,	option	volatilities,	etc.	Items	valued	using	such	internally	generated valuation	techniques	are	classified	according	to	the	lowest	level	input	or	value driver	that	is	significant	to	the	valuation.	Thus,	an	item	may	be	classified	in Level	3	even	though	there	may	be	some	significant	inputs	that	are	readily observable.

Where	available,	the	Company	may	also	make	use	of	quoted	prices	for	recent trading	activity	in	positions	with	the	same	or	similar	characteristics	to	that	being valued.	The	frequency	and	size	of	transactions	and	the	amount	of	the	bid-ask spread	are	among	the	factors	considered	in	determining	the	liquidity	of	markets and	the	relevance	of	observed	prices	from	those	markets.	If	relevant	and observable	prices	are	available,	those	valuations	would	be	classified	as	Level	2. If	prices	are	not	available,	other	valuation	techniques	would	be	used	and	the	item would	be	classified	as	Level	3.

Fair-value	estimates	from	internal	valuation	techniques	are	verified,	where possible,	to	prices	obtained	from	independent	vendors	or	brokers.	Vendors	and brokers'	valuations	may	be	based	on	a	variety	of	inputs	ranging	from	observed prices	to	proprietary	valuation	models.

The	following	section	describes	the	valuation	methodologies	used	by	the Company	to	measure	various	financial	instruments	at	fair	value,	including	an indication	of	the	level	in	the	fair-value	hierarchy	in	which	each	instrument	is generally	classified.	Where	appropriate,	the	description	includes	details	of	the valuation	models,	the	key	inputs	to	those	models	as	well	as	any	significant assumptions.

# Securities	purchased	under	agreements	to	resell	and	securities	sold	under agreements	to	repurchase

No	quoted	prices	exist	for	such	instruments	and	so	fair	value	is	determined	using a	discounted	cash-flow	technique.	Cash	flows	are	estimated	based	on	the	terms of	the	contract,	taking	into	account	any	embedded	derivative	or	other	features. Expected	cash	flows	are	discounted	using	market	rates	appropriate	to	the maturity	of	the	instrument	as	well	as	the	nature	and	amount	of	collateral	taken	or received.	Generally,	such	instruments	are	classified	within	Level	2	of	the	fair- value	hierarchy	as	the	inputs	used	in	the	fair	valuation	are	readily	observable.

# Trading	Account	Assets	and	Liabilities—Trading	Securities	and	Trading Loans

When	available,	the	Company	uses	quoted	market	prices	to	determine	the	fair value	of	trading	securities;	such	items	are	classified	in	Level	1	of	the	fair-value hierarchy.	Examples	include	some	government	securities	and	exchange-traded equity	securities.

For	bonds	and	secondary	market	loans	traded	over	the	counter,	the	Company generally	determines	fair	value	utilizing	internal	valuation	techniques.	Fair-value estimates	from	internal	valuation	techniques	are

verified,	where	possible,	to	prices	obtained	from	independent	vendors.	Vendors compile	prices	from	various	sources	and	may	apply	matrix	pricing	for	similar bonds	or	loans	where	no	price	is	observable.	If	available,	the	Company	may	also use	quoted	prices	for	recent	trading	activity	of	assets	with	similar	characteristics to	the	bond	or	loan	being	valued.	Trading	securities	and	loans	priced	using	such methods	are	generally	classified	as	Level	2.	However,	when	less	liquidity	exists for	a	security	or	loan,	a	quoted	price	is	stale	or	prices	from	independent	sources vary,	a	loan	or	security	is	generally	classified	as	Level	3.

Where	the	Company's	principal	market	for	a	portfolio	of	loans	is	the securitization	market,	the	Company	uses	the	securitization	price	to	determine	the fair	value	of	the	portfolio.	The	securitization	price	is	determined	from	the assumed	proceeds	of	a	hypothetical	securitization	in	the	current	market,	adjusted for	transformation	costs	(i.e.,	direct	costs	other	than	transaction	costs)	and securitization	uncertainties	such	as	market	conditions	and	liquidity.	As	a	result of	the	severe	reduction	in	the	level	of	activity	in	certain	securitization	markets since	the	second	half	of	2007,	observable	securitization	prices	for	certain	directly comparable	portfolios	of	loans	have	not	been	readily	available.	Therefore,	such portfolios	of	loans	are	generally	classified	in	Level	3	of	the	fair-value	hierarchy. However,	for	other	loan	securitization	markets,	such	as	those	related	to conforming	prime	fixed-rate	and	conforming	adjustable-rate	mortgage	loans, pricing	verification	of	the	hypothetical	securitizations	has	been	possible,	since these	markets	have	remained	active.	Accordingly,	these	loan	portfolios	are classified	as	Level	2	in	the	fair-value	hierarchy.

# Trading	Account	Assets	and	Liabilities—Derivatives

Exchange-traded	derivatives	are	generally	fair	valued	using	quoted	market	(i.e., exchange)	prices	and	so	are	classified	in	Level	1	of	the	fair-value	hierarchy. The	majority	of	derivatives	entered	into	by	the	Company	are	executed	over	the counter	and	so	are	valued	using	internal	valuation	techniques	as	no	quoted market	prices	exist	for	such	instruments.	The	valuation	techniques	and	inputs depend	on	the	type	of	derivative	and	the	nature	of	the	underlying	instrument. The	principal	techniques	used	to	value	these	instruments	are	discounted	cash flows,	Black-Scholes	and	Monte	Carlo	simulation.	The	fair	values	of	derivative contracts	reflect	cash	the	Company	has	paid	or	received	(for	example,	option premiums	paid	and	received).

The	key	inputs	depend	upon	the	type	of	derivative	and	the	nature	of	the underlying	instrument	and	include	interest	rate	yield	curves,	foreign-exchange rates,	the	spot	price	of	the	underlying	volatility	and	correlation.	The	item	is placed	in	either	Level	2	or	Level	3	depending	on	the	observability	of	the significant	inputs	to	the	model.	Correlation	and	items	with	longer	tenors	are generally	less	observable.

# Subprime-Related	Direct	Exposures	in	CDOs

The	Company	accounts	for	its	CDO	super	senior	subprime	direct	exposures	and the	underlying	securities	on	a	fair-value	basis	with	all	changes	in	fair	value recorded	in	earnings.	Citigroup's	CDO	super	senior	subprime	direct	exposures are	not	subject	to	valuation	based	on	observable	transactions.	Accordingly,	the fair	value	of	these	exposures	is	based	on	management's	best	estimates	based	on facts	and	circumstances	as	of	the	date	of	these	Consolidated	Financial Statements.

Citigroup's	CDO	super	senior	subprime	direct	exposures	are	Level	3	assets	and are	subject	to	valuation	based	on	significant	unobservable	inputs.	Fair

value	of	these	exposures	(other	than	high	grade	and	mezzanine	as	described below)	is	based	on	estimates	of	future	cash	flows	from	the	mortgage	loans underlying	the	assets	of	the	ABS	CDOs.	To	determine	the	performance	of	the underlying	mortgage	loan	portfolios,	the	Company	estimates	the	prepayments, defaults	and	loss	severities	based	on	a	number	of	macroeconomic	factors, including	housing	price	changes,	unemployment	rates,	interest	rates	and borrower	and	loan	attributes,	such	as	age,	credit	scores,	documentation	status, loan-to-value	(LTV)	ratios	and	debt-to-income	(DTI)	ratios.	The	model	is calibrated	using	available	mortgage	loan	information	including	historical	loan performance.	In	addition,	the	methodology	estimates	the	impact	of	geographic concentration	of	mortgages	and	the	impact	of	reported	fraud	in	the	origination	of subprime	mortgages.	An	appropriate	discount	rate	is	then	applied	to	the	cash flows	generated	for	each	ABCP	and	CDO-squared	tranche,	in	order	to	estimate its	current	fair	value.

When	necessary,	the	valuation	methodology	used	by	Citigroup	is	refined	and the	inputs	used	for	the	purposes	of	estimation	are	modified,	in	part,	to	reflect ongoing	market	developments.	More	specifically,	the	inputs	of	home	price appreciation	(HPA)	assumptions	and	delinquency	data	were	updated	during	the fourth	quarter	along	with	discount	rates	that	are	based	upon	a	weighted	average combination	of	implied	spreads	from	single	name	ABS	bond	prices	and	ABX indices,	as	well	as	CLO	spreads.

Beginning	with	the	third	quarter	of	2008,	the	Company	used	the	Loan Performance	Index	to	estimate	the	impact	of	housing	price	changes.	Previously, it	incorporated	the	S&P/Case-Shiller	Index.	This	change	was	made	because	the Loan	Performance	Index	provided	more	comprehensive	geographic	data.	In addition,	the	Company's	mortgage	default	model	uses	recent	mortgage performance	data,	a	period	of	sharp	home	price	declines	and	high	levels	of mortgage	foreclosures.

The	valuation	as	of	December	31,	2008	assumes	a	cumulative	decline	in	U.S. housing	prices	from	peak	to	trough	of	33%.	This	rate	assumes	declines	of	16% and	13%	in	2008	and	2009,	respectively,	the	remainder	of	the	33%	decline having	already	occurred	before	the	end	of	2007.

Starting	in	the	third	quarter	of	2008,	the	valuation	of	the	high	grade	and mezzanine	ABS	CDO	positions	was	changed	from	model	valuation	to	trader prices	based	on	the	underlying	assets	of	each	high	grade	and	mezzanine	ABS CDO.	Unlike	the	ABCP	and	CDO-squared	positions,	the	high	grade	and mezzanine	positions	are	now	largely	hedged	through	the	ABX	and	bond	short positions,	which	are,	by	necessity,	trader	priced.	Thus,	this	change	brings	closer symmetry	in	the	way	these	long	and	short	positions	are	valued	by	the	Company. Citigroup	intends	to	use	trader	marks	to	value	this	portion	of	the	portfolio	going forward	so	long	as	it	remains	largely	hedged.

The	primary	drivers	that	currently	impact	the	super	senior	valuations	are	the discount	rates	used	to	calculate	the	present	value	of	projected	cash	flows	and projected	mortgage	loan	performance.

Given	the	above,	the	Company's	CDO	super	senior	subprime	direct	exposures were	classified	in	Level	3	of	the	fair-value	hierarchy.

For	most	of	the	lending	and	structuring	direct	subprime	exposures	(excluding super	seniors),	fair	value	is	determined	utilizing	observable	transactions	where available,	other	market	data	for	similar	assets	in	markets	that	are	not	active	and other	internal	valuation	techniques.

The	investments	category	includes	available-for-sale	debt	and	marketable	equity securities,	whose	fair	value	is	determined	using	the	same	procedures	described for	trading	securities	above	or,	in	some	cases,	using	vendor	prices	as	the	primary source.

Also	included	in	investments	are	nonpublic	investments	in	private	equity	and real	estate	entities	held	by	the	S&B	business.	Determining	the	fair	value	of nonpublic	securities	involves	a	significant	degree	of	management	resources	and judgment	as	no	quoted	prices	exist	and	such	securities	are	generally	very	thinly traded.	In	addition,	there	may	be	transfer	restrictions	on	private	equity	securities. The	Company	uses	an	established	process	for	determining	the	fair	value	of	such securities,	using	commonly	accepted	valuation	techniques,	including	the	use	of earnings	multiples	based	on	comparable	public	securities,	industry-specific	non- earnings-based	multiples	and	discounted	cash	flow	models.	In	determining	the fair	value	of	nonpublic	securities,	the	Company	also	considers	events	such	as	a proposed	sale	of	the	investee	company,	initial	public	offerings,	equity	issuances, or	other	observable	transactions.

Private	equity	securities	are	generally	classified	in	Level	3	of	the	fair-value hierarchy.

# Short-Term	Borrowings	and	Long-Term	Debt

Where	fair-value	accounting	has	been	elected,	the	fair	value	of	non-structured liabilities	is	determined	by	discounting	expected	cash	flows	using	the	appropriate discount	rate	for	the	applicable	maturity.	Such	instruments	are	generally classified	in	Level	2	of	the	fair-value	hierarchy	as	all	inputs	are	readily observable.

The	Company	determines	the	fair	value	of	structured	liabilities	(where performance	is	linked	to	structured	interest	rates,	inflation	or	currency	risks)	and hybrid	financial	instruments	(performance	linked	to	risks	other	than	interest rates,	inflation	or	currency	risks)	using	the	appropriate	derivative	valuation methodology	(described	above)	given	the	nature	of	the	embedded	risk	profile. Such	instruments	are	classified	in	Level	2	or	Level	3	depending	on	the observability	of	significant	inputs	to	the	model.

# Market	Valuation	Adjustments

Liquidity	adjustments	are	applied	to	items	in	Level	2	and	Level	3	of	the	fair- value	hierarchy	to	ensure	that	the	fair	value	reflects	the	price	at	which	the	entire position	could	be	liquidated.	The	liquidity	reserve	is	based	on	the	bid-offer spread	for	an	instrument,	adjusted	to	take	into	account	the	size	of	the	position. Counterparty	credit-risk	adjustments	are	applied	to	derivatives,	such	as	over- the-counter	derivatives,	where	the	base	valuation	uses	market	parameters	based on	the	LIBOR	interest	rate	curves.	Not	all	counterparties	have	the	same	credit risk	as	that	implied	by	the	relevant	LIBOR	curve,	so	it	is	necessary	to	consider the	market	view	of	the	credit	risk	of	a	counterparty	in	order	to	estimate	the	fair value	of	such	an	item.

Bilateral	or	"own"	credit-risk	adjustments	are	applied	to	reflect	the	Company's own	credit	risk	when	valuing	derivatives	and	liabilities	measured	at	fair	value,	in accordance	with	the	requirements	of	SFAS	157.

Counterparty	and	own	credit	adjustments	consider	the	estimated	future	cash flows	between	Citi	and	its	counterparties	under	the	terms	of	the	instrument	and the	effect	of	credit	risk	on	the	valuation	of	those	cash	flows,	rather	than	a	point- in-time	assessment	of	the	current	recognized	net	asset	or	liability.	Furthermore, the	credit-risk	adjustments	take	into	account	the	effect	of	credit-risk	mitigants, such	as	pledged	collateral	and	any	legal	right	of	offset	(to	the	extent	such	offset exists)	with	a	counterparty	through	arrangements	such	as	netting	agreements.

# Auction	Rate	Securities

Auction	rate	securities	(ARS)	are	long-term	municipal	bonds,	corporate	bonds, securitizations	and	preferred	stocks	with	interest	rates	or	dividend	yields	that	are reset	through	periodic	auctions.	The	coupon	paid	in	the	current	period	is	based on	the	rate	determined	by	the	prior	auction.	In	the	event	of	an	auction	failure, ARS	holders	receive	a	"fail	rate"	coupon,	which	is	specified	by	the	original	issue documentation	of	each	ARS.

Where	insufficient	orders	to	purchase	all	of	the	ARS	issue	to	be	sold	in	an auction	were	received,	the	primary	dealer	or	auction	agent	would	traditionally have	purchased	any	residual	unsold	inventory	(without	a	contractual	obligation to	do	so).	This	residual	inventory	would	then	be	repaid	through	subsequent auctions,	typically	in	a	short	timeframe.	Due	to	this	auction	mechanism	and generally	liquid	market,	ARS	have	historically	traded	and	were	valued	as	short- term	instruments.

Citigroup	acted	in	the	capacity	of	primary	dealer	for	approximately	$72	billion of	ARS	and	continued	to	purchase	residual	unsold	inventory	in	support	of	the auction	mechanism	until	mid-February	2008.	After	this	date,	liquidity	in	the ARS	market	deteriorated	significantly,	auctions	failed	due	to	a	lack	of	bids	from third-party	investors,	and	Citigroup	ceased	to	purchase	unsold	inventory. Following	a	number	of	ARS	refinancings,	at	December	31,	2008,	Citigroup continued	to	act	in	the	capacity	of	primary	dealer	for	approximately	$37	billion of	outstanding	ARS.

The	Company	classifies	its	ARS	as	held-to-maturity,	available-for-sale	and trading	securities.

Prior	to	our	first	auction's	failing	in	the	first	quarter	of	2008,	Citigroup	valued ARS	based	on	observation	of	auction	market	prices,	because	the	auctions	had	a short	maturity	period	(7,	28	and	35	days).	This	generally	resulted	in	valuations	at par.	Once	the	auctions	failed,	ARS	could	no	longer	be	valued	using	observation of	auction	market	prices.	Accordingly,	the	fair	value	of	ARS	is	currently estimated	using	internally	developed	discounted	cash	flow	valuation	techniques specific	to	the	nature	of	the	assets	underlying	each	ARS.

For	ARS	with	U.S.	municipal	securities	as	underlying	assets,	future	cash	flows are	estimated	based	on	the	terms	of	the	securities	underlying	each	individual ARS	and	discounted	at	an	estimated	discount	rate	in	order	to	estimate	the	current fair	value.	The	key	assumptions	that	impact	the	ARS	valuations	are	estimated prepayments	and	refinancings,	estimated	fail	rate	coupons	(i.e.,	the	rate	paid	in the	event	of	auction	failure,	which	varies

according	to	the	current	credit	rating	of	the	issuer)	and	the	discount	rate	used	to calculate	the	present	value	of	projected	cash	flows.	The	discount	rate	used	for each	ARS	is	based	on	rates	observed	for	straight	issuances	of	other	municipal securities.	In	order	to	arrive	at	the	appropriate	discount	rate,	these	observed	rates were	adjusted	upward	to	factor	in	the	specifics	of	the	ARS	structure	being valued,	such	as	callability,	and	the	illiquidity	in	the	ARS	market.

For	ARS	with	student	loans	as	underlying	assets,	future	cash	flows	are estimated	based	on	the	terms	of	the	loans	underlying	each	individual	ARS, discounted	at	an	appropriate	rate	in	order	to	estimate	the	current	fair	value.	The key	assumptions	that	impact	the	ARS	valuations	are	the	expected	weighted average	life	of	the	structure,	estimated	fail	rate	coupons,	the	amount	of	leverage in	each	structure	and	the	discount	rate	used	to	calculate	the	present	value	of projected	cash	flows.	The	discount	rate	used	for	each	ARS	is	based	on	rates observed	for	basic	securitizations	with	similar	maturities	to	the	loans	underlying each	ARS	being	valued.	In	order	to	arrive	at	the	appropriate	discount	rate,	these observed	rates	were	adjusted	upward	to	factor	in	the	specifics	of	the	ARS structure	being	valued,	such	as	callability,	and	the	illiquidity	in	the	ARS	market. During	the	first	quarter	of	2008,	ARS	for	which	the	auctions	failed	and	where no	secondary	market	has	developed	were	moved	to	Level	3,	as	the	assets	were subject	to	valuation	using	significant	unobservable	inputs.	For	ARS	which	are subject	to	SFAS	157	classification,	the	majority	continue	to	be	classified	in Level	3.

The	Company	classifies	its	Alt-A	mortgage	securities	as	Held-to-Maturity, Available-for-Sale,	and	Trading	investments.	The	securities	classified	as	trading and	available-for-Sale	are	recorded	at	fair	value	with	changes	in	fair	value reported	in	current	earnings	and	OCI,	respectively.	For	these	purposes,	Alt-A mortgage	securities	are	non-agency	residential	mortgage-backed	securities (RMBS)	where	(1)	the	underlying	collateral	has	weighted	average	FICO	scores between	680	and	720	or	(2)	for	instances	where	FICO	scores	are	greater	than 720,	RMBS	have	30%	or	less	of	the	underlying	collateral	composed	of	full documentation	loans.

Similar	to	the	valuation	methodologies	used	for	other	trading	securities	and trading	loans,	the	Company	generally	determines	the	fair	value	of	Alt-A mortgage	securities	utilizing	internal	valuation	techniques.	Fair-value	estimates from	internal	valuation	techniques	are	verified,	where	possible,	to	prices obtained	from	independent	vendors.	Vendors	compile	prices	from	various sources.	Where	available,	the	Company	may	also	make	use	of	quoted	prices	for recent	trading	activity	in	securities	with	the	same	or	similar	characteristics	to	that being	valued.

The	internal	valuation	techniques	used	for	Alt-A	mortgage	securities,	as	with other	mortgage	exposures,	consider	estimated	housing	price	changes, unemployment	rates,	interest	rates	and	borrower	attributes.	They	also	consider prepayment	rates	as	well	as	other	market	indicators.

Alt-A	mortgage	securities	that	are	valued	using	these	methods	are	generally classified	as	Level	2.	However,	Alt-A	mortgage	securities	backed	by	Alt-A mortgages	of	lower	quality	or	more	recent	vintages	are	mostly	classified	in	Level 3	due	to	the	reduced	liquidity	that	exists	for	such	positions,	which	reduces	the reliability	of	prices	available	from	independent	sources.

# Commercial	Real	Estate	Exposure

Citigroup	reports	a	number	of	different	exposures	linked	to	commercial	real estate	at	fair	value	with	changes	in	fair	value	reported	in	earnings,	including securities,	loans	and	investments	in	entities	that	hold	commercial	real	estate loans	or	commercial	real	estate	directly.	The	Company	also	reports	securities backed	by	commercial	real	estate	as	Available-for-sale	investments,	which	are carried	at	fair	value	with	changes	in	fair-value	reported	in	AOCI. Similar	to	the	valuation	methodologies	used	for	other	trading	securities	and trading	loans,	the	Company	generally	determines	the	fair	value	of	securities	and loans	linked	to	commercial	real	estate	utilizing	internal	valuation	techniques. Fair-value	estimates	from	internal	valuation	techniques	are	verified,	where possible,	to	prices	obtained	from	independent	vendors.	Vendors	compile	prices from	various	sources.	Where	available,	the	Company	may	also	make	use	of quoted	prices	for	recent	trading	activity	in	securities	or	loans	with	the	same	or similar	characteristics	to	that	being	valued.	Securities	and	loans	linked	to commercial	real	estate	valued	using	these	methodologies	are	generally	classified as	Level	3	as	a	result	of	the	reduced	liquidity	currently	in	the	market	for	such exposures.

The	fair	value	of	investments	in	entities	that	hold	commercial	real	estate	loans or	commercial	real	estate	directly	is	determined	using	a	similar	methodology	to that	used	for	other	non-public	investments	in	real	estate	held	by	the	S&B business.	The	Company	uses	an	established	process	for	determining	the	fair value	of	such	securities,	using	commonly	accepted	valuation	techniques, including	the	use	of	earnings	multiples	based	on	comparable	public	securities, industry-specific	non-earnings-based	multiples	and	discounted	cash	flow models.	In	determining	the	fair	value	of	such	investments,	the	Company	also considers	events,	such	as	a	proposed	sale	of	the	investee	company,	initial	public offerings,	equity	issuances,	or	other	observable	transactions.	Such	investments are	generally	classified	in	Level	3	of	the	fair-value	hierarchy.

# Highly	Leveraged	Financing	Commitments

The	Company	reports	a	number	of	highly	leveraged	loans	as	held	for	sale,	which are	measured	on	a	LOCOM	basis.	The	fair	value	of	such	exposures	is determined,	where	possible,	using	quoted	secondary-market	prices	and	classified in	Level	2	of	the	fair-value	hierarchy	if	there	is	a	sufficient	level	of	activity	in	the market	and	quotes	or	traded	prices	are	available	with	suitable	frequency.

However,	due	to	the	dislocation	of	the	credit	markets	and	the	reduced	market interest	in	higher	risk/higher	yield	instruments	since	the	latter	half	of	2007, liquidity	in	the	market	for	highly	leveraged	financings	has	been	limited. Therefore,	a	majority	of	such	exposures	are	classified	in	Level	3	as	quoted secondary	market	prices	do	not	generally	exist.	The	fair	value	for	such	exposures is	determined	using	quoted	prices	for	a	similar	asset	or	assets,	adjusted	for	the specific	attributes	of	the	loan	being	valued.

# Items	Measured	at	Fair	Value	on	a	Recurring	Basis

The	following	tables	present	for	each	of	the	fair-value	hierarchy	levels	the Company's	assets	and	liabilities	that	are	measured	at	fair	value	on	a	recurring basis	at	December	31,	2008	and	December	31,	2007.	The	Company	often	hedges positions	that	have	been	classified	in	the	Level	3

category	with	financial	instruments	that	have	been	classified	as	Level	1	or	Level 2.	In	addition,	the	Company	also	hedges	items	classified	in	the	Level	3	category with	instruments	classified	in	Level	3	of	the	fair	value	hierarchy.	The	effects	of these	hedges	are	presented	gross	in	the	following	table.

|  |  |  |  | Gross |  | Net |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| In\tmillions\tof\tdollars\tat\tDecember\t31,\t2008 | Level\t1 | Level\t2 | Level\t3 | inventory | Netting^(1) | balance |
| Assets |  |  |  |  |  |  |
| Federal\tfunds\tsold\tand\tsecurities\tborrowed\tor\tpurchased\tunder\tagreements\tto\tresell | $— | $96,524 | $— | $96,524 | $(26,219) | $70,305 |
| Trading\taccount\tassets |  |  |  |  |  |  |
| Trading\tsecurities\tand\tloans | 90,530 | 121,043 | 50,773 | 262,346 | — | \t 262,346 |
| Derivatives | 9,675 | \t 1,102,252 | 60,725 | \t 1,172,652 | (1,057,363) | \t 115,289 |
| Investments | 44,342 | 111,836 | 28,273 | 184,451 | — | \t 184,451 |
| Loans\t^(2) | — | 2,572 | 160 | 2,732 | — | 2,732 |
| Mortgage\tservicing\trights | — | — | 5,657 | 5,657 | — | 5,657 |
| Other\tfinancial\tassets\tmeasured\ton\ta\trecurring\tbasis | — | 9,890 | 359 | 10,249 | (4,527) | 5,722 |
| Total\tassets | $144,547 | $1,444,117 | $145,947 | $1,734,611 | $(1,088,109) | $646,502 |
|  | 8.3% | 83.3% | 8.4% | 100.0% |  |  |
| Liabilities |  |  |  |  |  |  |
| Interest-bearing\tdeposits | $— | $2,552 | $54 | $2,606 | $— | $2,606 |
| Federal\tfunds\tpurchased\tand\tsecurities\tloaned\tor\tsold\tunder\tagreements\tto\trepurchase | — | 153,918 | 11,167 | 165,085 | (26,219) | \t 138,866 |
| Trading\taccount\tliabilities |  |  |  |  |  |  |
| Securities\tsold,\tnot\tyet\tpurchased | 36,848 | 13,192 | 653 | 50,693 | — | 50,693 |
| Derivatives | 10,038 | \t 1,096,113 | 57,139 | \t 1,163,290 | (1,046,505) | \t 116,785 |
| Short-term\tborrowings | — | 16,278 | 1,329 | 17,607 | — | 17,607 |
| Long-term\tdebt | — | 16,065 | 11,198 | 27,263 | — | 27,263 |
| Other\tfinancial\tliabilities\tmeasured\ton\ta\trecurring\tbasis | — | 8,222 | 1 | 8,223 | (4,527) | 3,696 |
| Total\tliabilities | $46,886 | $1,306,340 | $81,541 | $1,434,767 | $(1,077,251) | $357,516 |
|  | 3.3% | 91.0% | 5.7% | 100.0% |  |  |

# Items	Measured	at	Fair	Value	on	a	Recurring	Basis	(continued)

| In	millions	of	dollars	at	December	31,	2007 | Level	1 | Level	2 | Level	3 | Gross<br>inventory | Netting^(1) | Net<br>balance |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Assets |  |  |  |  |  |  |
| Federal\tfunds\tsold\tand\tsecurities\tborrowed\tor\tpurchased\tunder\tagreements\tto\tresell | $— | $132,383 | $16 | $132,399 | $(48,094) | $84,305 |
| Trading\taccount\tassets |  |  |  |  |  |  |
| Trading\tsecurities\tand\tloans | \t 151,684 | \t 234,846 | 75,573 | 462,103 | — | \t 462,103 |
| Derivatives | 7,204 | \t 428,779 | 31,226 | 467,209 | (390,328) | 76,881 |
| Investments | 64,375 | \t 125,282 | 17,060 | 206,717 | — | \t 206,717 |
| Loans\t^(2) | — | 3,718 | 9 | 3,727 | — | 3,727 |
| Mortgage\tservicing\trights | — | — | 8,380 | 8,380 | — | 8,380 |
| Other\tfinancial\tassets\tmeasured\ton\ta\trecurring\tbasis | — | 13,570 | 1,171 | 14,741 | (4,939) | 9,802 |
| Total\tassets | $223,263 | $938,578 | $133,435 | $1,295,276 | $(443,361) | $851,915 |
|  | 17.2% | 72.5% | 10.3% | 100.0% |  |  |
| Liabilities |  |  |  |  |  |  |
| Interest-bearing\tdeposits | $— | $3,542 | $56 | $3,598 | $— | $3,598 |
| Federal\tfunds\tpurchased\tand\tsecurities\tloaned\tor\tsold\tunder\tagreements\tto\trepurchase | — | \t 241,790 | 6,158 | 247,948 | (48,094) | \t 199,854 |
| Trading\taccount\tliabilities |  |  |  |  |  |  |
| Securities\tsold,\tnot\tyet\tpurchased | 68,928 | 9,140 | 473 | 78,541 | — | 78,541 |
| Derivatives | 8,602 | \t 447,119 | 33,696 | 489,417 | (385,876) | \t 103,541 |
| Short-term\tborrowings | — | 8,471 | 5,016 | 13,487 | — | 13,487 |
| Long-term\tdebt | — | 70,359 | 8,953 | 79,312 | — | 79,312 |
| Other\tfinancial\tliabilities\tmeasured\ton\ta\trecurring\tbasis | — | 6,506 | 1 | 6,507 | (4,939) | 1,568 |
| Total\tliabilities | $77,530 | $786,927 | $54,353 | $918,810 | $(438,909) | $479,901 |
|  | 8.4% | 85.7% | 5.9% | 100.0% |  |  |

(1) Represents	netting	of:	(i)	the	amounts	due	under	securities	purchased	under	agreements	to	resell	and	the	amounts	owed	under	securities	sold	under	agreements	to	repurchase	in	accordance	with FIN	41,	and	(ii)	derivative	exposures	covered	by	a	qualifying	master	netting	agreement	in	accordance	with	FIN	39,	cash	collateral	and	the	market	value	adjustment.

(2) There	is	no	allowance	for	loan	losses	recorded	for	loans	reported	at	fair	value.

# Changes	in	Level	3	Fair-Value	Category

The	following	tables	present	the	changes	in	the	Level	3	fair-value	category	for the	years	ended	December	31,	2008	and	2007.	The	Company	classifies	financial instruments	in	Level	3	of	the	fair-value	hierarchy	when	there	is	reliance	on	at least	one	significant	unobservable	input	to	the	valuation	model.	In	addition	to these	unobservable	inputs,	the	valuation	models	for	Level	3	financial instruments	typically	also	rely	on	a	number	of	inputs	that	are	readily	observable either	directly	or	indirectly.	Thus,	the	gains	and	losses	presented	below	include changes	in	the	fair	value	related	to	both	observable	and	unobservable	inputs.

The	Company	often	hedges	positions	with	offsetting	positions	that	are classified	in	a	different	level.	For	example,	the	gains	and	losses	for	assets	and liabilities	in	the	Level	3	category	presented	in	the	tables	below	do	not	reflect	the effect	of	offsetting	losses	and	gains	on	hedging	instruments	that	have	been classified	by	the	Company	in	the	Level	1	and	Level	2	categories.	In	addition,	the Company	hedges	items	classified	in	the	Level	3	category	with	instruments	also classified	in	Level	3	of	the	fair-value	hierarchy.	The	effects	of	these	hedges	are presented	gross	in	the	following	tables.

|  |  | Net	realized/unrealized | Net	realized/unrealized | Transfers | Purchases, |  | Unrealized |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | gains\t(losses)\tincluded\tin | gains\t(losses)\tincluded\tin | in\tand/or | issuances |  | gains |
|  | December\t31, | Principal |  | out\tof | and | December\t31, | (losses) |
| In\tmillions\tof\tdollars | 2007 | transactions | Other\t^(1)\t(2) | Level\t3 | settlements | 2008 | still\theld^(3) |
| Assets |  |  |  |  |  |  |  |
| Securities\tpurchased\tunder\tagreements\tto\tresell | $16 | $— | $— | $— | $(16) | $\t\t\t\t\t\t\t\t— | $\t\t\t\t\t\t\t\t— |
| Trading\taccount\tassets |  |  |  |  |  |  |  |
| Trading\tsecurities\tand\tloans | 75,573 | (28,052) | — | 7,418 | (4,166) | 50,773 | (19,572) |
| Derivatives,\tnet\t^(4) | (2,470) | 7,804 | — | (2,188) | 440 | 3,586 | 9,622 |
| Investments | 17,060 | — | (4,917) | 5,787 | 10,343 | 28,273 | (801) |
| Loans | 9 | — | (15) | — | 166 | 160 | (19) |
| Mortgage\tservicing\trights | 8,380 | — | (1,870) | — | (853) | 5,657 | (1,870) |
| Other\tfinancial\tassets\tmeasured\ton\ta\trecurring\tbasis | 1,171 | — | 86 | 422 | (1,320) | 359 | 86 |
| Liabilities |  |  |  |  |  |  |  |
| Interest-bearing\tdeposits | $56 | $(5) | $— | $13 | $(20) | $54 | $(3) |
| Securities\tsold\tunder\tagreements\tto\trepurchase | 6,158 | (273) | — | 6,158 | (1,422) | 11,167 | (136) |
| Trading\taccount\tliabilities |  |  |  |  |  |  |  |
| Securities\tsold,\tnot\tyet\tpurchased | 473 | 153 | — | 1,036 | (703) | 653 | 328 |
| Short-term\tborrowings | 5,016 | 106 | — | (1,798) | (1,783) | 1,329 | (63) |
| Long-term\tdebt | 8,953 | 2,228 | — | 38,792 | (34,319) | 11,198 | 1,115 |
| Other\tfinancial\tliabilities\tmeasured\ton\ta\trecurring\tbasis | 1 | — | (61) | — | (61) | 1 | — |

|  |  | Net	realized/unrealized | Net	realized/unrealized | Transfers | Purchases, |  | Unrealized |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | gains\t(losses)\tincluded\tin | gains\t(losses)\tincluded\tin | in\tand/or | issuances |  | gains |
|  | January\t1, | Principal |  | out\tof | and | December\t31, | (losses) |
| In\tmillions\tof\tdollars | 2007 | transactions | Other\t^(1)\t(2) | Level\t3 | settlements | 2007 | still\theld^(3) |
| Assets |  |  |  |  |  |  |  |
| Securities\tpurchased\tunder\tagreements\tto\tresell | $16 | $— | $— | $— | $— | $\t\t\t\t\t\t\t\t16 | $\t\t\t\t\t\t\t\t— |
| Trading\taccount\tassets |  |  |  |  |  |  |  |
| Trading\tsecurities\tand\tloans | 22,415 | (11,449) | — | 21,132 | 43,475 | 75,573 | (10,262) |
| Investments | 11,468 | — | 895 | 1,651 | 3,046 | 17,060 | 136 |
| Loans | — | (8) | — | (793) | 810 | 9 | — |
| Mortgage\tservicing\trights | 5,439 | — | 621 | — | 2,320 | 8,380 | 1,892 |
| Other\tfinancial\tassets\tmeasured\ton\ta\trecurring\tbasis | 948 | — | 2 | (43) | 264 | 1,171 | 20 |
| Liabilities |  |  |  |  |  |  |  |
| Interest-bearing\tdeposits | $60 | $12 | $34 | $(33) | $75 | $56 | $(45) |
| Securities\tsold\tunder\tagreements\tto\trepurchase | 6,778 | (194) | — | 78 | (892) | 6,158 | (141) |
| Trading\taccount\tliabilities |  |  |  |  |  |  |  |
| Securities\tsold,\tnot\tyet\tpurchased | 467 | (139) | — | (1,041) | 908 | 473 | (260) |
| Derivatives,\tnet\t^(4) | (1,875) | (3,840) | — | (3,280) | 3,785 | 2,470 | (9,462) |
| Short-term\tborrowings | 2,214 | 9 | (80) | 1,139 | 1,592 | 5,016 | (53) |
| Long-term\tdebt | 1,693 | (11) | (689) | 4,600 | 1,960 | 8,953 | (776) |
| Other\tfinancial\tliabilities\tmeasured\ton\ta\trecurring\tbasis | — | — | (23) | (1) | (21) | 1 | — |

(1) Changes	in	fair	value	for	available-for-sale	investments	(debt	securities)	are	recorded	in	 Accumulated	other	comprehensive	income	(loss),	while	gains	from	sales	and	losses	due	to	other-than- temporary	impairments	are	recorded	in	Realized	gains	(losses)	from	sales	of	investments	on	the	Consolidated	Statement	of	Income.

(2) Unrealized	gains	(losses)	on	MSRs	are	recorded	in	Commissions	and	fees	on	the	Consolidated	Statement	of	Income.

(3) Represents	the	amount	of	total	gains	or	losses	for	the	period,	included	in	earnings	(and	 Accumulated	other	comprehensive	income	(loss)	for	changes	in	fair	value	of	 Available-for-sale investments)	attributable	to	the	change	in	fair	value	relating	to	assets	and	liabilities	classified	as	Level	3	that	are	still	held	at	December	31,	2008	and	2007.

(4) Total	Level	3	derivative	exposures	have	been	netted	on	these	tables	for	presentation	purposes	only.

The	following	is	a	discussion	of	the	changes	to	the	Level	3	balances	for	each	of the	roll-forward	tables	presented	above.

The	significant	changes	from	December	31,	2007	to	December	31,	2008	in	Level 3	assets	and	liabilities	are	due	to:

- A	net	decrease	in	trading	securities	and	loans	of	$24.8	billion	that	was driven	by:

(i) Net	realized	and	unrealized	losses	of	$28.1	billion	recorded	in Principal	transactions,	which	composed	mostly	of	write-downs recognized	on	various	trading	securities	including	ABCP	of	$9	billion; (ii) Net	transfers	in	of	$7.4	billion,	which	consisted	of	approximately	$26 billion	of	net	transfers	in	from	Level	2	to	Level	3	as	the	availability	of observable	pricing	inputs	continued	to	decline	due	to	the	current	credit crisis,	offset	by	transfers	out	of	Level	3	of	approximately	$19	billion primarily	related	to	Level	3	trading	inventory	being	reclassified	to held-to-maturity	investments	during	the	fourth	quarter	of	2008;	and (iii)Net	settlements	of	trading	securities	of	$4.2	billion	in	Level	3.

- The	shift	in	the	Level	3	net	unrealized	gains/(losses)	from	trading derivatives	driven	by:

(i) A	net	gain	of	$7.8	billion	relating	to	complex	derivative	contracts, such	as	those	linked	to	credit,	equity	and	commodity	exposures.	These gains	include	both	realized	and	unrealized	gains	during	2008	and	are partially	offset	by	losses	recognized	in	instruments	that	have	been classified	in	Levels	1	and	2;

(ii) $2.2	billion	in	net	transfers	in	and/or	out	of	Level	3,	representing	a	net transfer	in	of	derivative	liabilities	during	the	year.

- The	increase	in	Level	3	Investments	of	$11.2	billion	primarily	resulted from:

(i) The	addition	of	$10.3	billion	from	net	purchases,	issuances	and settlements,	which	included	$8.7	billion	in	senior	debt	securities retained	by	the	Company	from	its	sale	of	a	corporate	loan	portfolio that	included	highly	leveraged	loans	during	the	second	quarter	of 2008,	plus	$3	billion	of	ARS	securities	purchased	from	GWM	clients, in	accordance	with	the	Auction	Rate	Securities	settlement	agreement	;

(ii) The	net	transfer	in	of	investment	securities	from	Level	2	to	Level	3	of $5.8	billion,	as	the	availability	of	observable	pricing	inputs	continued to	decline	due	to	the	current	credit	crisis;	and (iii)Net	losses	recognized	of	$4.9	billion	which	was	recorded	in Accumulated	other	comprehensive	income	(loss)	primarily	related	to Alt-A	MBS	classified	as	available-for-sale	investments.

- The	decrease	in	Mortgage	Servicing	Rights	of	$2.7	billion	was	primarily attributed	to	mark-to-market	losses	recognized	in	the	portfolio	due	to decreases	in	the	mortgage	interest	rates	and	increases	in	refinancing.

- The	increase	in	the	Level	3	balance	for	Securities	sold	under	agreements	to repurchase	of	$5	billion	is	driven	by	a	$6.2	billion	increase	from	net transfers	in	as	the	continued	credit	crisis	impacted	the	availability	of observable	inputs	for	the	underlying	securities	related	to	this	liability.	This was	offset	by	a	reduction	from	net	settlements	of	$1.4	billion.

- The	decrease	in	Level	3	short-term	borrowings	of	$3.7	billion	is	due	to	net transfers	out	of	$1.8	billion	as	valuation	methodology	inputs	considered	to be	unobservable	were	determined	not	to	be	significant	to	the	overall valuation.	In	addition,	net	payments	of	$1.8	billion	were	made	during	2008 against	the	Level	3	short-term	debt	obligations.

- The	increase	in	Level	3	Long-term	debt	of	$2.2	billion	is	driven	by:

(i) The	net	transfers	in	of	$38.8	billion,	substantially	all	of	which	related to	the	transfer	of	consolidated	SIV	debt	in	the	first	quarter	of	2008,	as the	availability	of	observable	inputs	continued	to	decline	due	to	the current	crisis;	offset	by

(ii) $2.2	billion	in	gains	recognized	as	credit	spreads	widened	during	the year;

(iii)$34.3	billion	decrease	from	net	settlements/payments.	Included	in these	settlements	were	$21	billion	of	payments	made	on	maturing	SIV debt	and	the	replacement	of	$17	billion	of	non-recourse,	consolidated SIV	debt	classified	as	Level	3	with	Citigroup	debt	classified	as	Level 2.	This	replacement	occurred	in	connection	with	the	purchase	of	the SIV	assets	by	the	Company	in	November	2008.

The	significant	changes	from	January	1,	2007	to	December	31,	2007	in	Level	3 assets	and	liabilities	are	due	to:

- The	increase	in	trading	securities	and	loans	of	$53.2	billion	that	was	driven primarily	by:

(i) The	net	additions/purchases	of	$43.5	billion,	which	included	asset- backed	commercial	paper	purchases	where	the	Company	had	liquidity puts	and	assets	bought	with	Nikko	Cordial	acquisitions

(ii) The	net	transfers	in	of	$21.1	billion	for	items	previously	classified	as Level	2	as	prices	and	other	valuation	inputs	became	unobservable with	the	market	dislocation	crises	that	began	in	the	second	half	of 2007;	and

(iii)Mark-to-market	losses	of	$11.4	billion	primarily	attributable	to writedowns	on	super	senior	tranches,	junior	tranches,	ABCP	and	other related	inventory.

- The	increase	in	Level	3	Investments	of	$5.6	billion,	primarily	resulting	from the	acquisition	of	Nikko	Cordial.

- The	increase	in	Mortgage	servicing	rights	of	$2.9	billion	which	was primarily	due	to	the	first	quarter	2007	acquisition	of	ABN	AMRO	Mortgage Group.

- The	decrease	in	net	derivative	trading	account	assets	of	$4.4	billion	was	due to	mark-to-market	losses	and	net	purchases/originations	of	$3.8	billion, offset	by	net	transfers	in	of	Level	3	trading	derivative	liabilities	of	$3.3 billion.

- The	increase	in	Level	3	Short-term	borrowings	and	Long-term	debt	of	$2.8	billion	and	$7.3	billion,	respectively,	resulted	from	transfers	in	of	Level	2	positions as	prices	and	other	valuation	inputs	became	unobservable,	plus	the	additions	of	new	issuances	for	fair	value	accounting	was	elected.

# Items	Measured	at	Fair	Value	on	a	Nonrecurring	Basis

Certain	assets	and	liabilities	are	measured	at	fair	value	on	a	nonrecurring	basis	and	therefore	are	not	included	in	the	tables	above.	These	include	assets	measured	at	cost that	have	been	written	down	to	fair	value	during	the	periods	as	a	result	of	an	impairment.	In	addition,	assets	such	as	loans	held	for	sale	that	are	measured	at	the	lower	of cost	or	market	(LOCOM)	that	were	recognized	at	fair	value	below	cost	at	the	end	of	the	period.

The	Company	recorded	goodwill	impairment	charges	of	$9.6	billion	as	of	December	31,	2008,	as	determined	based	on	Level	3	inputs.	The	primary	cause	of	goodwill impairment	was	the	overall	weak	industry	outlook	and	continuing	operating	losses.	These	factors	contributed	to	the	overall	decline	in	the	stock	price	and	the	related market	capitalization	of	Citigroup.	See	Note	19,	"Goodwill	and	Intangible	Assets"	on	page	166,	for	additional	information	on	goodwill	impairment.

The	Company	performed	an	impairment	analysis	of	intangible	assets	related	to	the	Old	Lane	multi-strategy	hedge	fund	during	the	first	quarter	of	2008.	As	a	result,	a pre-tax	write-down	of	$202	million,	representing	the	remaining	unamortized	balance	of	the	intangible	assets,	was	recorded	during	the	first	quarter	of	2008.	The measurement	of	fair	value	was	determined	using	Level	3	input	factors	along	with	a	discounted	cash	flow	approach.

During	the	fourth	quarter	of	2008,	the	Company	performed	an	impairment	analysis	of	Japan's	Nikko	Asset	Management	fund	contracts	which	represent	the	rights	to manage	and	collect	fees	on	investor	assets	and	are	accounted	for	as	indefinite-lived	intangible	assets.	As	a	result,	an	impairment	loss	of	$937	million	pre-tax	was recorded.	The	related	fair	value	was	determined	using	an	income	approach	which	relies	on	key	drivers	and	future	expectations	of	the	business	that	are	considered	Level	3 input	factors.

The	fair	value	of	loans	measured	on	a	LOCOM	basis	is	determined	where	possible	using	quoted	secondary-market	prices.	Such	loans	are	generally	classified	in	Level 2	of	the	fair-value	hierarchy	given	the	level	of	activity	in	the	market	and	the	frequency	of	available	quotes.	If	no	such	quoted	price	exists,	the	fair	value	of	a	loan	is determined	using	quoted	prices	for	a	similar	asset	or	assets,	adjusted	for	the	specific	attributes	of	that	loan.

The	following	table	presents	all	loans	held-for-sale	that	are	carried	at	LOCOM	as	of	December	31,	2008	and	December	31,	2007	(in	billions):

|  | Aggregate	cost | Fair	value | Level	2 | Level	3 |
| :--- | :--- | :--- | :--- | :--- |
| December\t31,\t2008 | $3.1 | $2.1 | $0.8 | $1.3 |
| December\t31,\t2007 | 33.6 | 31.9 | 5.1 | 26.8 |

Loans	held-for-sale	that	are	carried	at	LOCOM	as	of	December	31,	2008	significantly	declined	compared	to	December	31,	2007	because	most	of	these	loans	were either	sold	or	reclassified	to	held-for-investment	category.

Under	SFAS	159,	the	Company	may	elect	to	report	most	financial	instruments and	certain	other	items	at	fair	value	on	an	instrument-by-instrument	basis	with changes	in	fair	value	reported	in	earnings.	After	the	initial	adoption,	the	election is	made	upon	the	acquisition	of	an	eligible	financial	asset,	financial	liability	or firm	commitment	or	when	certain	specified	reconsideration	events	occur.	The fair-value	election	may	not	be	revoked	once	an	election	is	made. Additionally,	the	transition	provisions	of	SFAS	159	permit	a	one-time	election for	existing	positions	at	the	adoption	date	with	a	cumulative-effect	adjustment included	in	opening	retained	earnings	and	future	changes	in	fair	value	reported	in earnings.

The	Company	also	has	elected	the	fair-value	accounting	provisions	permitted under	SFAS	155	and	SFAS	156	for	certain	assets	and	liabilities.	In	accordance with	SFAS	155,	which	was	primarily	adopted	on	a	prospective	basis,	hybrid financial	instruments,	such	as	structured	notes	containing	embedded	derivatives that	otherwise	would	require	bifurcation,	as	well	as	certain	interest-only instruments,	may	be	accounted	for	at	fair	value	if	the	Company	makes	an irrevocable	election	to	do	so	on	an	instrument-by-instrument	basis.	The	changes in	fair	value	are	recorded	in	current	earnings.	Additional	discussion	regarding	the applicable	areas	in	which	SFAS	155	was	adopted	is	presented	in	Note	26	on	page 192.

SFAS	156	requires	all	servicing	rights	to	be	recognized	initially	at	fair	value. At	its	initial	adoption,	the	standard	permits	a	one-time	irrevocable	election	to	re- measure	each	class	of	servicing	rights	at	fair	value,	with	the	changes	in	fair	value recorded	in	current	earnings.	The	classes	of	servicing	rights	are	identified	based on	the	availability	of	market	inputs	used	in	determining	their	fair	values	and	the methods	for	managing	their	risks.	The	Company	has	elected	fair-value accounting	for	its	mortgage	and	student	loan	classes	of	servicing	rights.	The impact	of	adopting	this	standard	was	not	material.	See	Note	23	on	page	174	for further	discussions	regarding	the	accounting	and	reporting	of	mortgage	servicing rights.

The	following	table	presents,	as	of	December	31,	2008,	the	fair	value	of	those positions	selected	for	fair-value	accounting	in	accordance	with	SFAS	159,

|  |  | Changes |  | Changes |
| :--- | :--- | :--- | :--- | :--- |
|  |  | in\tfair- |  | in\tfair- |
|  |  | value |  | value |
|  | Fair\tvalue\tat | gains | Fair\tvalue\tat | gains |
|  | December\t31, | (losses) | December\t31, | (losses) |
| In\tmillions\tof\tdollars | 2008 | 2008 | 2007 | 2007 |
| Assets |  |  |  |  |
| Federal\tfunds\tsold\tand\tsecurities\tborrowed\tor\tpurchased\tunder\tagreements\tto\tresell |  |  |  |  |
| \t\t\t\tSelected\tportfolios\tof\tsecurities\tpurchased\tunder\tagreements\tto\tresell,\tsecurities\tborrowed\t^(1) | $70,305 | $2,438 | $84,305 | $1,462 |
| Trading\taccount\tassets: |  |  |  |  |
| Legg\tMason\tconvertible\tpreferred\tequity\tsecurities\toriginally\tclassified\tas\tavailable-for-sale | $— | $(13) | $614 | $(183) |
| Selected\tletters\tof\tcredit\thedged\tby\tcredit\tdefault\tswaps\tor\tparticipation\tnotes | — | — | 10 | (4) |
| Certain\tcredit\tproducts | 16,254 | (6,272) | 26,020 | (778) |
| Certain\thybrid\tfinancial\tinstruments | 33 | 3 | 97 | — |
| Retained\tinterests\tfrom\tasset\tsecuritizations | 3,026 | (1,890) | 2,476 | 343 |
| Total\ttrading\taccount\tassets | $19,313 | $(8,172) | $29,217 | $(622) |
| Investments: |  |  |  |  |
| Certain\tinvestments\tin\tprivate\tequity\tand\treal\testate\tventures | $469 | $(254) | $539 | $58 |
| Other | 295 | (35) | 320 | 9 |
| Total\tinvestments | $764 | $(289) | $859 | $67 |
| Loans: |  |  |  |  |
| Certain\tcredit\tproducts | $2,315 | $(59) | $3,038 | $102 |
| Certain\tmortgage\tloans | 36 | (34) | — | — |
| Certain\thybrid\tfinancial\tinstruments | 381 | (13) | 689 | (63) |
| Total\tloans | $2,732 | $(106) | $3,727 | $39 |
| Other\tassets: |  |  |  |  |
| Mortgage\tservicing\trights | $5,657 | $(1,870) | $8,380 | $(1,554) |
| Certain\tmortgage\tloans | 4,273 | 78 | 6,392 | 74 |
| Certain\tequity\tmethod\tinvestments | 936 | (362) | 1,131 | 45 |
| Total\tother\tassets | $10,866 | $(2,154) | $15,903 | $(1,435) |
| Total | $103,980 | $(8,283) | $134,011 | $(489) |
| Liabilities |  |  |  |  |
| Interest-bearing\tdeposits: |  |  |  |  |
| Certain\tstructured\tliabilities | $320 | $— | $264 | $3 |
| Certain\thybrid\tfinancial\tinstruments | 2,286 | 177 | 3,334 | 129 |
| Total\tinterest-bearing\tdeposits | $2,606 | $177 | $3,598 | $132 |
| Federal\tfunds\tpurchased\tand\tsecurities\tloaned\tor\tsold\tunder\tagreements\tto\trepurchase\nSelected\tportfolios\tof\tsecurities\tsold\tunder\tagreements\tto\trepurchase,\tsecurities\tloaned^\t(1) | $138,866 | $(319) | $199,854 | $(225) |
| Trading\taccount\tliabilities: |  |  |  |  |
| Selected\tletters\tof\tcredit\thedged\tby\tcredit\tdefault\tswaps\tor\tparticipation\tnotes | $72 | $(81) | $— | $— |
| Certain\thybrid\tfinancial\tinstruments | 4,679 | 4,663 | 7,228 | (409) |
| Total\ttrading\taccount\tliabilities | $4,751 | $4,582 | $7,228 | $(409) |
| Short-term\tborrowings: |  |  |  |  |
| Certain\tnon-collateralized\tshort-term\tborrowings | $2,303 | $(9) | $5,105 | $(64) |
| Certain\thybrid\tfinancial\tinstruments | 2,112 | 277 | 3,561 | 56 |
| Certain\tstructured\tliabilities | 3 | 1 | — | — |
| Certain\tnon-structured\tliabilities | 13,189 | 250 | 4,821 | — |
| Total\tshort-term\tborrowings | $17,607 | $519 | $13,487 | $(8) |
| Long-term\tdebt: |  |  |  |  |
| Certain\tstructured\tliabilities | $3,083 | $160 | $2,952 | $(40) |
| Certain\tnon-structured\tliabilities | 7,189 | 3,802 | 49,095 | 99 |
| Certain\thybrid\tfinancial\tinstruments | 16,991 | 3,730 | 27,265 | 1,233 |
| Total\tlong-term\tdebt | $27,263 | $7,692 | $79,312 | $1,292 |
| Total | $191,093 | $12,651 | $303,479 | $782 |

(1) Reflects	netting	of	the	amounts	due	from	securities	purchased	under	agreements	to	resell	and	the	amounts	owed	under	securities	sold	under	agreements	to	repurchase	in	accordance	with	FASB Interpretation	No.	41,	"Offsetting	of	Amounts	Related	to	Certain	Repurchase	and	Reverse	Repurchase	Agreements"	(FIN	41).

# Own-Credit	Valuation	Adjustment

The	fair	value	of	liabilities	for	which	the	fair-value	option	was	elected	(other than	non-recourse	and	similar	liabilities)	was	impacted	by	the	widening	of	the Company's	credit	spread.	The	estimated	change	in	the	fair	value	of	these liabilities	due	to	such	changes	in	the	Company's	own	credit	risk	(or	instrument- specific	credit	risk)	was	a	gain	of	$1,982	million	and	$212	million	for	the	three months	ended	December	31,	2008	and	December	31,	2007,	respectively,	and	a gain	of	$4,558	million	and	$888	million	for	the	years	ended	December	31,	2008 and	December	31,	2007,	respectively.	Changes	in	fair	value	resulting	from changes	in	instrument-specific	credit	risk	were	estimated	by	incorporating	the Company's	current

observable	credit	spreads	into	the	relevant	valuation	technique	used	to	value	each liability	as	described	above.

# SFAS	159	The	Fair-Value	Option	for	Financial	Assets	and	Financial Liabilities

Detailed	below	are	the	December	31,	2006	carrying	values	prior	to	adoption	of SFAS	159,	the	transition	adjustments	booked	to	opening	Retained	earnings	and the	fair	values	(that	is,	the	carrying	values	at	January	1,	2007	after	adoption)	for those	items	that	were	selected	for	fair-value	option	accounting	and	that	had	an impact	on	Retained	earnings:

|  |  | adjustment	to | January	1,	2007 |
| :--- | :--- | :--- | :--- |
|  | December\t31,\t2006 | January\t1,\t2007 | fair\tvalue |
|  | (carrying\tvalue | retained\tearnings– | (carrying\tvalue |
| In\tmillions\tof\tdollars | prior\tto\tadoption) | gain\t(loss) | after\tadoption) |
| Legg\tMason\tconvertible\tpreferred\tequity\tsecurities\toriginally\tclassified\tas\tavailable-for-sale^\t(1) | $797 | $(232) | $797 |
| Selected\tportfolios\tof\tsecurities\tpurchased\tunder\tagreements\tto\tresell\t^(2) | 167,525 | 25 | 167,550 |
| Selected\tportfolios\tof\tsecurities\tsold\tunder\tagreements\tto\trepurchase\t^(2) | 237,788 | 40 | 237,748 |
| Selected\tnon-collateralized\tshort-term\tborrowings | 3,284 | (7) | 3,291 |
| Selected\tletters\tof\tcredit\thedged\tby\tcredit\tdefault\tswaps\tor\tparticipation\tnotes | — | 14 | 14 |
| Various\tmiscellaneous\teligible\titems\t^(1) | 96 | 3 | 96 |
| Pretax\tcumulative\teffect\tof\tadopting\tfair-value\toption\taccounting |  | $(157) |  |
| After-tax\tcumulative\teffect\tof\tadopting\tfair-value\toption\taccounting |  | (99) |  |

(1) The	Legg	Mason	securities	as	well	as	several	miscellaneous	items	were	previously	reported	at	fair	value	in	available-for-sale	securities.	The	cumulative-effect	adjustment	represents	the reclassification	of	the	related	unrealized	gain/loss	from	Accumulated	other	comprehensive	income	(loss)	to	Retained	earnings	upon	the	adoption	of	the	fair	value	option.

(2) Excludes	netting	of	the	amounts	due	from	securities	purchased	under	agreements	to	resell	and	the	amounts	owed	under	securities	sold	under	agreements	to	repurchase	in	accordance	with	FIN 41.

Additional	information	regarding	each	of	these	items	and	other	fair-value elections	follows.

# Legg	Mason	convertible	preferred	equity	securities

The	Legg	Mason	convertible	preferred	equity	securities	(Legg	shares)	were acquired	in	connection	with	the	sale	of	Citigroup's	Asset	Management	business in	December	2005.

Prior	to	the	election	of	fair-value	option	accounting,	the	shares	were	classified as	available-for-sale	securities	with	the	unrealized	loss	of	$232	million	as	of December	31,	2006	included	in	Accumulated	other	comprehensive	income	(loss). In	connection	with	the	Company's	adoption	of	SFAS	159,	this	unrealized	loss was	recorded	as	a	reduction	of	January	1,	2007	Retained	earnings	as	part	of	the cumulative-effect	adjustment.

During	the	first	quarter	of	2008,	the	Company	sold	the	remaining	8.4	million Legg	shares	at	a	pretax	loss	of	$10.3	million	($6.7	million	after-tax).

# Selected	portfolios	of	securities	purchased	under	agreements	to	resell,

# securities	borrowed,	securities	sold	under	agreements	to	repurchase,	securities loaned	and	certain	non-collateralized	short-term	borrowings

The	Company	elected	the	fair-value	option	retrospectively	for	our	United	States and	United	Kingdom	portfolios	of	fixed-income	securities	purchased	under agreements	to	resell	and	fixed-income	securities	sold	under	agreements	to repurchase	(and	certain	non-collateralized	short-term	borrowings).	The	fair- value	option	was	also	elected	prospectively	in	the

second	quarter	of	2007	for	certain	portfolios	of	fixed-income	securities	lending and	borrowing	transactions	based	in	Japan.	In	each	case,	the	election	was	made because	the	related	interest-rate	risk	is	managed	on	a	portfolio	basis,	primarily with	derivative	instruments	that	are	accounted	for	at	fair	value	through	earnings. Previously,	these	positions	were	accounted	for	on	an	accrual	basis. Changes	in	fair	value	for	transactions	in	these	portfolios	are	recorded	in Principal	transactions.	The	related	interest	revenue	and	interest	expense	are measured	based	on	the	contractual	rates	specified	in	the	transactions	and	are reported	as	interest	revenue	and	expense	in	the	Consolidated	Statement	of Income.

# Selected	letters	of	credit	and	revolving	loans	hedged	by	credit	default	swaps	or participation	notes

The	Company	has	elected	the	fair-value	option	for	certain	letters	of	credit	that are	hedged	with	derivative	instruments	or	participation	notes.	Upon	electing	the fair-value	option,	the	related	portions	of	the	allowance	for	loan	losses	and	the allowance	for	unfunded	lending	commitments	were	reversed.	Citigroup	elected the	fair-value	option	for	these	transactions	because	the	risk	is	managed	on	a	fair- value	basis	and	to	mitigate	accounting	mismatches.

The	notional	amount	of	these	unfunded	letters	of	credit	was	$1.4	billion	as	of December	31,	2008	and	December	31,	2007.	The	amount	funded	was insignificant	with	no	amounts	90	days	or	more	past	due	or	on	a	non-accrual status	at	December	31,	2008	and	December	31,	2007.

These	items	have	been	classified	appropriately	in	Trading	account	assets	or Trading	account	liabilities	on	the	Consolidated	Balance	Sheet.	Changes	in	fair value	of	these	items	are	classified	in	Principal	transactions	in	the	Company's Consolidated	Statement	of	Income.

# Other	items	for	which	the	fair-value	option	was	selected	in accordance	with	SFAS	159

The	Company	has	elected	the	fair-value	option	for	the	following	eligible	items, which	did	not	affect	opening	Retained	earnings:

•	certain	credit	products;

•	certain	investments	in	private	equity	and	real	estate	ventures	and	certain equity-method	investments;

•	certain	structured	liabilities;

•	certain	non-structured	liabilities;	and

•	certain	mortgage	loans

Citigroup	has	elected	the	fair-value	option	for	certain	originated	and	purchased loans,	including	certain	unfunded	loan	products,	such	as	guarantees	and	letters	of credit,	executed	by	Citigroup's	trading	businesses.	None	of	these	credit	products is	a	highly	leveraged	financing	commitment.	Significant	groups	of	transactions include	loans	and	unfunded	loan	products	that	are	expected	to	be	either	sold	or securitized	in	the	near	term,	or	transactions	where	the	economic	risks	are	hedged with	derivative	instruments	such	as	purchased	credit	default	swaps	or	total	return swaps	where	the	Company	pays	the	total	return	on	the	underlying	loans	to	a	third party.	Citigroup	has	elected	the	fair-value	option	to	mitigate	accounting mismatches	in	cases	where	hedge	accounting	is	complex	and	to	achieve operational	simplifications.	Fair	value	was	not	elected	for	most	lending transactions	across	the	Company,	including	where	those	management	objectives would	not	be	met.

The	following	table	provides	information	about	certain	credit	products	carried at	fair	value:

|  |  | 2008 |  | 2007 |
| :--- | :--- | :--- | :--- | :--- |
|  | Trading |  | Trading |  |
| In\tmillions\tof\tdollars | assets | Loans | assets | Loans |
| Carrying\tamount\treported\ton\tthe |  |  |  |  |
| Consolidated\tBalance\tSheet | $16,254 | $2,315 | $26,020 | $3,038 |
| Aggregate\tunpaid\tprincipal\tbalance\tin |  |  |  |  |
| excess\tof\tfair\tvalue | $6,501 | $3 | $899 | $(5) |
| Balance\ton\tnon-accrual\tloans\tor\tloans |  |  |  |  |
| more\tthan\t90\tdays\tpast\tdue | $77 | $1,113 | $186 | $1,292 |
| Aggregate\tunpaid\tprincipal\tbalance\tin |  |  |  |  |
| excess\tof\tfair\tvalue\tfor\tnon-accrual |  |  |  |  |
| loans\tor\tloans\tmore\tthan\t90\tdays\tpast |  |  |  |  |
| due | $190 | $(4) | $68 | $— |

In	addition	to	the	amounts	reported	above,	$72	million	and	$141	million	of unfunded	loan	commitments	related	to	certain	credit	products	selected	for	fair- value	accounting	were	outstanding	as	of	December	31,	2008	and	December	31, 2007,	respectively.

Changes	in	fair	value	of	funded	and	unfunded	credit	products	are	classified	in Principal	transactions	in	the	Company's	Consolidated	Statement	of	Income. Related	interest	revenue	is	measured	based	on	the	contractual	interest	rates	and reported	as	Interest	revenue	on	trading	account	assets	or	loans	depending	on their	balance	sheet	classifications.	The	changes	in	fair	value	for	the	years	ended December	31,	2008	and	2007	due	to	instrument-specific	credit	risk	totaled	to	a loss	of	$38	million	and	$188	million,	respectively.

Citigroup	invests	in	private	equity	and	real	estate	ventures	for	the	purpose	of earning	investment	returns	and	for	capital	appreciation.	The	Company	has elected	the	fair-value	option	for	certain	of	these	ventures,	because	such investments	are	considered	similar	to	many	private	equity	or	hedge	fund activities	in	our	investment	companies,	which	are	reported	at	fair	value.	The	fair- value	option	brings	consistency	in	the	accounting	and	evaluation	of	certain	of these	investments.	As	required	by	SFAS	159,	all	investments	(debt	and	equity) in	such	private	equity	and	real	estate	entities	are	accounted	for	at	fair	value. These	investments	are	classified	as	Investments	on	Citigroup's	Consolidated Balance	Sheet.

Citigroup	also	holds	various	non-strategic	investments	in	leveraged	buyout funds	and	other	hedge	funds	that	previously	were	required	to	be	accounted	for under	the	equity	method.	The	Company	elected	fair-value	accounting	to	reduce operational	and	accounting	complexity.	Since	the	funds	account	for	all	of	their underlying	assets	at	fair	value,	the	impact	of	applying	the	equity	method	to Citigroup's	investment	in	these	funds	was	equivalent	to	fair-value	accounting. Thus,	this	fair-value	election	had	no	impact	on	opening	Retained	earnings.	These investments	are	classified	as	Other	assets	on	Citigroup's	Consolidated	Balance Sheet.

Changes	in	the	fair	values	of	these	investments	are	classified	in	Other	revenue in	the	Company's	Consolidated	Statement	of	Income.

The	Company	has	elected	the	fair-value	option	for	certain	structured	liabilities whose	performance	is	linked	to	structured	interest	rates,	inflation	or	currency risks	("structured	liabilities").	The	Company	elected	the	fair-value	option, because	these	exposures	are	considered	to	be	trading-related	positions	and, therefore,	are	managed	on	a	fair-value	basis.	These	positions	will	continue	to	be classified	as	debt,	deposits	or	derivatives	(Trading	account	liabilities)	on	the Company's	Consolidated	Balance	Sheet	according	to	their	legal	form.

For	those	structured	liabilities	classified	as	Long-term	debt	for	which	the	fair- value	option	has	been	elected,	the	aggregate	unpaid	principal	balance	exceeds the	aggregate	fair	value	of	such	instruments	by	$277	million	as	of	December	31, 2008	and	$7	million	as	of	December	31,	2007.

The	change	in	fair	value	for	these	structured	liabilities	is	reported	in	Principal transactions	in	the	Company's	Consolidated	Statement	of	Income.

Related	interest	expense	is	measured	based	on	the	contractual	interest	rates	and reported	as	such	in	the	Consolidated	Income	Statement.

# Certain	non-structured	liabilities

The	Company	has	elected	the	fair-value	option	for	certain	non-structured liabilities	with	fixed	and	floating	interest	rates	("non-structured	liabilities").

The	Company	has	elected	the	fair-value	option	where	the	interest-rate	risk	of such	liabilities	is	economically	hedged	with	derivative	contracts	or	the	proceeds are	used	to	purchase	financial	assets	that	will	also	be	accounted	for	at	fair	value through	earnings.	The	election	has	been	made	to	mitigate	accounting	mismatches and	to	achieve	operational	simplifications.	These	positions	are	reported	in	Short- term	borrowings	and	Long-term	debt	on	the	Company's	Consolidated	Balance Sheet.

The	majority	of	these	non-structured	liabilities	are	a	result	of	the	Company's election	of	the	fair-value	option	for	liabilities	associated	with	the	Citi-advised Structured	Investment	Vehicles	(SIVs),	which	were	consolidated	during	the fourth	quarter	of	2007.	The	change	in	fair	values	of	the	SIVs'	liabilities	reported in	earnings	was	$2.6	billion	for	the	year	ended	December	31,	2008.	For	these non-structured	liabilities	the	aggregate	fair	value	is	$263	million	lower	than	the aggregate	unpaid	principal	balance	as	of	December	31,	2008.

For	all	other	non-structured	liabilities	classified	as	Long-term	debt	for	which the	fair-value	option	has	been	elected,	the	aggregate	unpaid	principal	balance exceeds	the	aggregate	fair	value	of	such	instruments	by	$97	million	as	of December	31,	2008	while	the	aggregate	fair	value	exceeded	the	aggregate unpaid	principal	by	$112	million	as	of	December	31,	2007.	The	change	in	fair value	of	these	non-structured	liabilities	reported	a	gain	of	$1.2	billion	for	the year	ended	December	31,	2008.

The	change	in	fair	value	for	these	non-structured	liabilities	is	reported	in Principal	transactions	in	the	Company's	Consolidated	Statement	of	Income. Related	interest	expense	continues	to	be	measured	based	on	the	contractual interest	rates	and	reported	as	such	in	the	Consolidated	Income	Statement.

Citigroup	has	elected	the	fair-value	option	for	certain	purchased	and	originated prime	fixed-rate	and	conforming	adjustable-rate	first	mortgage	loans	held-for- sale.	These	loans	are	intended	for	sale	or	securitization	and	are	hedged	with derivative	instruments.	The	Company	has	elected	the	fair-value	option	to mitigate	accounting	mismatches	in	cases	where	hedge	accounting	is	complex and	to	achieve	operational	simplifications.	The	fair-value	option	was	not	elected for	loans	held-for-investment,	as	those	loans	are	not	hedged	with	derivative instruments.	This	election	was	effective	for	applicable	instruments	originated	or purchased	on	or	after	September	1,	2007.

The	following	table	provides	information	about	certain	mortgage	loans	carried at	fair	value:

|  | December	31, | December	31, |
| :--- | :--- | :--- |
| In\tmillions\tof\tdollars | 2008 | 2007 |
| Carrying\tamount\treported\ton\tthe\tConsolidated\nBalance\tSheet | $4,273 | $6,392 |
| Aggregate\tfair\tvalue\tin\texcess\tof\tunpaid |  |  |
| principal\tbalance | $138 | $136 |
| Balance\ton\tnon-accrual\tloans\tor\tloans\tmore\nthan\t90\tdays\tpast\tdue | $9 | $17 |
| Aggregate\tunpaid\tprincipal\tbalance\tin\texcess\tof |  |  |
| fair\tvalue\tfor\tnon-accrual\tloans\tor\tloans |  |  |
| more\tthan\t90\tdays\tpast\tdue | $2 | $— |

The	changes	in	fair	values	of	these	mortgage	loans	is	reported	in	Other	revenue in	the	Company's	Consolidated	Statement	of	Income.	The	changes	in	fair	value during	the	year	ended	December	31,	2008	due	to	instrument-specific	credit	risk resulted	in	a	$32	million	loss.	The	change	in	fair	value	during	2007	due	to instrument-specific	credit	risk	was	immaterial.	Related

interest	income	continues	to	be	measured	based	on	the	contractual	interest	rates and	reported	as	such	in	the	Consolidated	Income	Statement.

# Items	selected	for	fair-value	accounting	in	accordance	with	SFAS 155	and	SFAS	156

# Certain	hybrid	financial	instruments

The	Company	has	elected	to	apply	fair-value	accounting	under	SFAS	155	for certain	hybrid	financial	assets	and	liabilities	whose	performance	is	linked	to risks	other	than	interest	rate,	foreign	exchange	or	inflation	(e.g.,	equity,	credit	or commodity	risks).	In	addition,	the	Company	has	elected	fair-value	accounting under	SFAS	155	for	residual	interests	retained	from	securitizing	certain	financial assets.

The	Company	has	elected	fair-value	accounting	for	these	instruments	because these	exposures	are	considered	to	be	trading-related	positions	and,	therefore,	are managed	on	a	fair-value	basis.	In	addition,	the	accounting	for	these	instruments is	simplified	under	a	fair-value	approach	as	it	eliminates	the	complicated operational	requirements	of	bifurcating	the	embedded	derivatives	from	the	host contracts	and	accounting	for	each	separately.	The	hybrid	financial	instruments are	classified	as	Trading	account	assets,	Loans,	Deposits,	Trading	account liabilities	(for	prepaid	derivatives),	Short-term	borrowings	or	Long-Term	Debt on	the	Company's	Consolidated	Balance	Sheet	according	to	their	legal	form, while	residual	interests	in	certain	securitizations	are	classified	as	Trading account	assets.

For	hybrid	financial	instruments	for	which	fair-value	accounting	has	been elected	under	SFAS	155	and	that	are	classified	as	Long-term	debt,	the	aggregate unpaid	principal	exceeds	the	aggregate	fair	value	by	$1.9	billion	as	of December	31,	2008,	while	the	aggregate	fair	value	exceeds	the	aggregate	unpaid principal	balance	by	$460	million	as	of	December	31,	2007.	The	difference	for those	instruments	classified	as	Loans	is	immaterial.

Changes	in	fair	value	for	hybrid	financial	instruments,	which	in	most	cases includes	a	component	for	accrued	interest,	are	recorded	in	Principal	transactions in	the	Company's	Consolidated	Statement	of	Income.	Interest	accruals	for certain	hybrid	instruments	classified	as	trading	assets	are	recorded	separately from	the	change	in	fair	value	as	Interest	revenue	in	the	Company's	Consolidated Statement	of	Income.

The	Company	accounts	for	mortgage	servicing	rights	(MSRs)	at	fair	value	in accordance	with	SFAS	156.	Fair	value	for	MSRs	is	determined	using	an	option- adjusted	spread	valuation	approach.	This	approach	consists	of	projecting servicing	cash	flows	under	multiple	interest-rate	scenarios	and	discounting	these cash	flows	using	risk-adjusted	rates.	The	model	assumptions	used	in	the valuation	of	MSRs	include	mortgage	prepayment	speeds	and	discount	rates.	The fair	value	of	MSRs	is	primarily	affected	by	changes	in	prepayments	that	result from	shifts	in	mortgage	interest	rates.	In	managing	this	risk,	the	Company	hedges a	significant	portion	of	the	values	of	its	MSRs	through	the	use	of	interest-rate derivative	contracts,	forward-purchase	commitments	of	mortgage-backed securities,	and	purchased	securities	classified	as	trading.	See	Note	23	on	page 174	for	further	discussions	regarding	the	accounting	and	reporting	of	MSRs. These	MSRs,	which	totaled	$5.7	billion	and	$8.4	billion	as	of	December	31, 2008	and	December	31,	2007,	respectively,	are	classified	as	Mortgage	servicing rights	on	Citigroup's	Consolidated	Balance	Sheet.	Changes	in	fair	value	of MSRs	are	recorded	in	Commissions	and	fees	in	the	Company's	Consolidated Statement	of	Income.

# 28.	FAIR	VALUE	OF	FINANCIAL	INSTRUMENTS	(SFAS	107)

# Estimated	Fair	Value	of	Financial	Instruments

The	table	below	presents	the	carrying	value	and	fair	value	of	Citigroup's financial	instruments.	The	disclosure	excludes	leases,	affiliate	investments, pension	and	benefit	obligations	and	insurance	policy	claim	reserves.	In	addition, contractholder	fund	amounts	exclude	certain	insurance	contracts.	Also	as required,	the	disclosure	excludes	the	effect	of	taxes,	any	premium	or	discount that	could	result	from	offering	for	sale	at	one	time	the	entire	holdings	of	a particular	instrument,	excess	fair	value	associated	with	deposits	with	no	fixed maturity	and	other	expenses	that	would	be	incurred	in	a	market	transaction.	In addition,	the	table	excludes	the	values	of	non-financial	assets	and	liabilities,	as well	as	a	wide	range	of	franchise,	relationship	and	intangible	values	(but includes	mortgage	servicing	rights),	which	are	integral	to	a	full	assessment	of Citigroup's	financial	position	and	the	value	of	its	net	assets.

The	fair	value	represents	management's	best	estimates	based	on	a	range	of methodologies	and	assumptions.	The	carrying	value	of	short-term	financial instruments	not	accounted	for	at	fair	value	under	SFAS	155	or	SFAS	159,	as well	as	receivables	and	payables	arising	in	the	ordinary	course	of	business, approximates	fair	value	because	of	the	relatively	short	period	of	time	between their	origination	and	expected	realization.	Quoted	market	prices	are	used	when available	for	investments	and	for	both	trading	and	end-user	derivatives,	as	well as	for	liabilities,	such	as	long-term	debt,	with	quoted	prices.	For	performing loans	not	accounted	for	at	fair	value	under	SFAS	155	or	SFAS	159,	contractual cash	flows	are	discounted	at	quoted	secondary	market	rates	or	estimated	market rates	if	available.	Otherwise,	sales	of	comparable	loan	portfolios	or	current market	origination	rates	for	loans	with	similar	terms	and	risk	characteristics	are used.	For	loans	with	doubt	as	to	collectibility,	expected	cash	flows	are discounted	using	an	appropriate	rate	considering	the	time	of	collection	and	the premium	for	the	uncertainty	of	the	flows.	The	value	of	collateral	is	also considered.	For	liabilities	such	as	long-term	debt	not	accounted	for	at	fair	value under	SFAS	155	or	SFAS	159	and	without	quoted	market	prices,	market borrowing	rates	of	interest	are	used	to	discount	contractual	cash	flows. For	additional	information	regarding	the	Company's	determination	of	fair value,	including	items	accounted	for	at	fair	value	under	SFAS	155,	SFAS	156, and	SFAS	159,	see	Note	27	on	page	200.

|  | 2008 | 2008 | 2007 | 2007 |
| :--- | :--- | :--- | :--- | :--- |
|  | Carrying | Estimated | Carrying | Estimated |
| In\tbillions\tof\tdollars\tat\tyear\tend | value | fair\tvalue | value | fair\tvalue |
| Assets |  |  |  |  |
| Investments | $256.0 | $251.9 | $215.0 | $215.0 |
| Federal\tfunds\tsold\tand\tsecurities |  |  |  |  |
| borrowed\tor\tpurchased\tunder |  |  |  |  |
| agreements\tto\tresell | 184.1 | 184.1 | 274.1 | 274.1 |
| Trading\taccount\tassets | 377.6 | 377.6 | 539.0 | 539.0 |
| Loans\t^(1) | 660.9 | 642.7 | 753.7 | 769.4 |
| Other\tfinancial\tassets\t^(2) | 316.6 | 316.6 | 268.8 | 269.0 |

|  | 2008 | 2008 | 2007 | 2007 |
| :--- | :--- | :--- | :--- | :--- |
|  | Carrying | Estimated | Carrying | Estimated |
| In\tbillions\tof\tdollars\tat\tyear\tend | value | fair\tvalue | value | fair\tvalue |
| Liabilities |  |  |  |  |
| Deposits | $774.2 | $772.9 | $826.2 | $826.2 |
| Federal\tfunds\tpurchased\tand |  |  |  |  |
| securities\tloaned\tor\tsold |  |  |  |  |
| under\tagreements\tto |  |  |  |  |
| repurchase | 205.3 | 205.3 | 304.2 | 304.2 |
| Trading\taccount\tliabilities | 167.5 | 167.5 | 182.1 | 182.1 |
| Long-term\tdebt | 359.6 | 317.1 | 427.1 | 422.6 |
| Other\tfinancial\tliabilities\t^(3) | 253.9 | 253.9 | 280.4 | 280.4 |

(1)The	carrying	value	of	loans	is	net	of	the	 Allowance	for	loan	losses	of	$29.6	billion	for	2008 and	$16.1	billion	for	2007.	In	addition,	the	carrying	values	exclude	$3.7	billion	and	$8.2	billion of	lease	finance	receivables	in	2008	and	2007,	respectively.

(2)Includes	cash	and	due	from	banks,	deposits	with	banks,	brokerage	receivables,	reinsurance recoverable,	mortgage	servicing	rights,	separate	and	variable	accounts	and	other	financial instruments	included	in	Other	assets	on	the	Consolidated	Balance	Sheet,	all	of	which	the carrying	value	is	a	reasonable	estimate	of	fair	value.

(3)Includes	brokerage	payables,	separate	and	variable	accounts,	short-term	borrowings	and other	financial	instruments	included	in	Other	Liabilities	on	the	Consolidated	Balance	Sheet, all	of	which	the	carrying	value	is	a	reasonable	estimate	of	fair	value.

Fair	values	vary	from	period	to	period	based	on	changes	in	a	wide	range	of factors,	including	interest	rates,	credit	quality,	and	market	perceptions	of	value and	as	existing	assets	and	liabilities	run	off	and	new	transactions	are	entered into.

The	estimated	fair	values	of	loans	reflect	changes	in	credit	status	since	the loans	were	made,	changes	in	interest	rates	in	the	case	of	fixed-rate	loans,	and premium	values	at	origination	of	certain	loans.	The	carrying	values	(reduced	by the	Allowance	for	loan	losses)	exceeded	the	estimated	fair	values	of	Citigroup's loans,	in	aggregate,	by	$18.2	billion	in	2008	while	the	estimated	fair	values	of Citigroup	loans,	in	aggregate,	exceeded	the	carrying	values	(reduced	by	the allowance	for	loan	losses)	by	$15.7	billion	in	2007.	Within	these	totals,	carrying values	net	of	allowance	exceeded	estimated	fair	value	for	consumer	loans	by $15.9	billion,	a	decrease	of	$28.6	billion	from	2007.	The	carrying	values	net	of allowance	exceeded	the	estimated	fair	values	by	$2.3	billion	for	corporate	loans, a	decrease	of	$5.3	billion	from	2007.

# 29.	PLEDGED	ASSETS,	COLLATERAL,	COMMITMENTS	AND GUARANTEES

# Pledged	Assets

At	December	31,	2008	and	2007,	the	approximate	fair	values	of	securities	sold under	agreements	to	repurchase	and	other	assets	pledged,	excluding	the	impact of	FIN	39	and	FIN	41,	were	as	follows:

| In	millions	of	dollars | 2008 | 2007^(1) |
| :--- | :--- | :--- |
| For\tsecurities\tsold\tunder\tagreements\tto\trepurchase | $237,055 | $296,991 |
| As\tcollateral\tfor\tsecurities\tborrowed\tfor\tapproximately\tequivalent |  |  |
| value | 81,740 | 75,572 |
| As\tcollateral\ton\tbank\tloans | \t 144,982 | \t 151,957 |
| To\tclearing\torganizations\tor\tsegregated\tunder\tsecurities\tlaws\tand |  |  |
| regulations | 41,312 | 42,793 |
| For\tsecurities\tloaned | 51,158 | 94,161 |
| Other | 52,576 | 27,847 |
| Total | $608,823 | $689,321 |

In	addition,	included	in	cash	and	due	from	banks	at	December	31,	2008	and 2007	are	$11.7	billion	and	$9.6	billion,	respectively,	of	cash	segregated	under federal	and	other	brokerage	regulations	or	deposited	with	clearing	organizations. At	December	31,	2008	and	2007,	the	Company	had	$3.1	billion	and	$5.3 billion,	respectively,	of	outstanding	letters	of	credit	from	third-party	banks	to satisfy	various	collateral	and	margin	requirements.

# Collateral

At	December	31,	2008	and	2007,	the	approximate	market	value	of	collateral received	by	the	Company	that	may	be	sold	or	repledged	by	the	Company, excluding	amounts	netted	in	accordance	with	FIN	39	and	FIN	41,	was	$340.2 billion	and	$405.0	billion,	respectively.	This	collateral	was	received	in connection	with	resale	agreements,	securities	borrowings	and	loans,	derivative transactions	and	margined	broker	loans.

At	December	31,	2008	and	2007,	a	substantial	portion	of	the	collateral received	by	the	Company	had	been	sold	or	repledged	in	connection	with repurchase	agreements,	securities	sold,	not	yet	purchased,	securities	borrowings and	loans,	pledges	to	clearing	organizations,	segregation	requirements	under securities	laws	and	regulations,	derivative	transactions	and	bank	loans.

In	addition,	at	December	31,	2008	and	2007,	the	Company	had	pledged	$236 billion	and	$196	billion,	respectively,	of	collateral	that	may	not	be	sold	or repledged	by	the	secured	parties.

# Lease	Commitments

Rental	expense	(principally	for	offices	and	computer	equipment)	was	$2.7 billion,	$2.3	billion	and	$1.9	billion	for	the	years	ended	December	31,	2008, 2007	and	2006,	respectively.

Future	minimum	annual	rentals	under	noncancelable	leases,	net	of	sublease income,	are	as	follows:

| In	millions	of	dollars |  |
| :--- | :--- |
| 2009 | $1,470 |
| 2010 | \t 1,328 |
| 2011 | \t 1,134 |
| 2012 | \t 1,010 |
| 2013 | 922 |
| Thereafter | \t 3,415 |
| Total | $9,279 |

# Guarantees

The	Company	provides	a	variety	of	guarantees	and	indemnifications	to	Citigroup customers	to	enhance	their	credit	standing	and	enable	them	to	complete	a	wide variety	of	business	transactions.	FASB	Interpretation	No.	45,	"Guarantor's Accounting	and	Disclosure	Requirements	for	Guarantees,	Including	Indirect Guarantees	of	Indebtedness	of	Others"	(FIN	45),	provides	initial	measurement and	disclosure	guidance	in	accounting	for	guarantees.	FIN	45	requires	that,	for certain	contracts	meeting	the	definition	of	a	guarantee,	the	guarantor	must recognize,	at	inception,	a	liability	for	the	fair	value	of	the	obligation	undertaken in	issuing	the	guarantee.

In	addition,	the	guarantor	must	disclose	the	maximum	potential	amount	of future	payments	the	guarantor	could	be	required	to	make	under	the	guarantee,	if there	were	a	total	default	by	the	guaranteed	parties.	The	determination	of	the maximum	potential	future	payments	is	based	on	the	notional	amount	of	the guarantees	without	consideration	of	possible	recoveries	under	recourse provisions	or	from	collateral	held	or	pledged.	Such	amounts	bear	no	relationship to	the	anticipated	losses,	if	any,	on	these	guarantees.

The	following	tables	present	information	about	the	Company's	guarantees	at	December	31,	2008	and	December	31,	2007:

|  |  | Maximum	potential	amount	of	future	payments | Maximum	potential	amount	of	future	payments |  |
| :--- | :--- | :--- | :--- | :--- |
| In\tbillions\tof\tdollars\tat\tDecember\t31,\nexcept\tcarrying\tvalue\tin\tmillions | Expire\twithin\n1\tyear | Expire\tafter\n1\tyear | Total\tamount\noutstanding | Carrying\tvalue\n(in\tmillions) |
| 2008 |  |  |  |  |
| Financial\tstandby\tletters\tof\tcredit | $31.6 | $62.6 | $94.2 | $289.0 |
| Performance\tguarantees | 9.4 | 6.9 | 16.3 | 23.6 |
| Derivative\tinstruments\tconsidered\tto\tbe\tguarantees | 22.5 | 45.4 | 67.9 | 1,301.5 |
| Guarantees\tof\tcollection\tof\tcontractual\tcash\tflows^\t(1) | — | 0.3 | 0.3 | — |
| Loans\tsold\twith\trecourse | — | 0.3 | 0.3 | 56.4 |
| Securities\tlending\tindemnifications\t^(1) | 47.6 | — | 47.6 | — |
| Credit\tcard\tmerchant\tprocessing\t^(1) | 56.7 | — | 56.7 | — |
| Custody\tindemnifications\tand\tother | — | 21.6 | 21.6 | 149.2 |
| Total | $167.8 | $137.1 | $304.9 | $1,819.7 |

| In	billions	of	dollars	at	December	31,<br>except	carrying	value	in	millions | Expire	within<br>1	year | Expire	after<br>1	year | Total	amount<br>outstanding | Carrying	value<br>(in	millions) |
| :--- | :--- | :--- | :--- | :--- |
| 2007\t^(2) |  |  |  |  |
| Financial\tstandby\tletters\tof\tcredit | $43.5 | $43.6 | $87.1 | $160.6 |
| Performance\tguarantees | 11.3 | 6.8 | 18.1 | 24.4 |
| Derivative\tinstruments\tconsidered\tto\tbe\tguarantees | 4.2 | 0.7 | 4.9 | 163.0 |
| Loans\tsold\twith\trecourse | — | 0.5 | 0.5 | 45.5 |
| Securities\tlending\tindemnifications\t^(1) | 153.4 | — | 153.4 | — |
| Credit\tcard\tmerchant\tprocessing\t^(1) | 64.0 | — | 64.0 | — |
| Custody\tindemnifications\tand\tother | — | 53.4 | 53.4 | 306.0 |
| Total | $276.4 | $105.0 | $381.4 | $699.5 |

(1) The	carrying	values	of	guarantees	of	collections	of	contractual	cash	flows,	securities	lending	indemnifications	and	credit	card	merchant	processing	are	not	material,	as	the	Company	has determined	that	the	amount	and	probability	of	potential	liabilities	arising	from	these	guarantees	are	not	significant.

# Financial	Standby	Letters	of	Credit

Citigroup	issues	standby	letters	of	credit	which	substitute	its	own	credit	for	that of	the	borrower.	If	a	letter	of	credit	is	drawn	down,	the	borrower	is	obligated	to repay	Citigroup.	Standby	letters	of	credit	protect	a	third	party	from	defaults	on contractual	obligations.	Financial	standby	letters	of	credit	include	guarantees	of payment	of	insurance	premiums	and	reinsurance	risks	that	support	industrial revenue	bond	underwriting	and	settlement	of	payment	obligations	to	clearing houses,	and	also	support	options	and	purchases	of	securities	or	are	in	lieu	of escrow	deposit	accounts.	Financial	standbys	also	backstop	loans,	credit	facilities, promissory	notes	and	trade	acceptances.

# Performance	Guarantees

Performance	guarantees	and	letters	of	credit	are	issued	to	guarantee	a	customer's tender	bid	on	a	construction	or	systems-installation	project	or	to	guarantee completion	of	such	projects	in	accordance	with	contract	terms.	They	are	also issued	to	support	a	customer's	obligation	to	supply	specified	products, commodities,	or	maintenance	or	warranty	services	to	a	third	party.

# Derivative	Instruments	Considered	to	Be	Guarantees

Derivatives	are	financial	instruments	whose	cash	flows	are	based	on	a	notional amount	or	an	underlying	instrument,	where	there	is	little	or	no	initial	investment, and	whose	terms	require	or	permit	net	settlement.	Derivatives	may	be	used	for	a variety	of	reasons,	including	risk	management,	or	to	enhance	returns.	Financial institutions	often	act	as	intermediaries	for	their	clients,	helping	clients	reduce their	risks.	However,	derivatives	may	also	be	used	to	take	a	risk	position. The	derivative	instruments	considered	guarantees,	which	are	presented	in	the table	above,	include	only	those	instruments	that	require	Citi	to	make	payments	to the	counterparty	based	on	changes	in	an	underlying	that	is	related	to	an	asset,	a liability,	or	an	equity	security	held	by	the	guaranteed	party.	More	specifically, derivative	instruments	considered	guarantees	include	certain	over-the-counter written	put	options	where	the	counterparty	is	not	a	bank,	hedge	fund	or	broker- dealer	(such	counterparties	are	considered	to	be	dealers	in	these	markets,	and may	therefore	not	hold	the	underlying	instruments).	However,	credit	derivatives sold	by	the	Company	are	excluded	from	this	presentation,	as	they	are	disclosed separately	within	this	note	below.	In	addition,	non-credit	derivative	contracts that	are	cash	settled	and	for	which	the	Company	is	unable	to	assert	that	it	is probable	the	counterparty	held	the	underlying	instrument	at	the	inception	of	the contract	also	are	excluded	from	the	disclosure	above.

In	instances	where	the	Company's	maximum	potential	future	payment	is unlimited,	the	notional	amount	of	the	contract	is	disclosed.

# Guarantees	of	Collection	of	Contractual	Cash	Flows

Guarantees	of	collection	of	contractual	cash	flows	protect	investors	in	credit	card receivables	securitization	trusts	from	loss	of	interest	relating	to	insufficient collections	on	the	underlying	receivables	in	the	trusts.

# Loans	Sold	with	Recourse

Loans	sold	with	recourse	represent	the	Company's	obligations	to	reimburse	the buyers	for	loan	losses	under	certain	circumstances.	Recourse	refers	to	the	clause in	a	sales	agreement	under	which	a	lender	will	fully	reimburse	the	buyer/investor for	any	losses	resulting	from	the	purchased	loans.	This	may	be	accomplished	by the	seller's	taking	back	any	loans	that	become	delinquent.

# Securities	Lending	Indemnifications

Owners	of	securities	frequently	lend	those	securities	for	a	fee	to	other	parties who	may	sell	them	short	or	deliver	them	to	another	party	to	satisfy	some	other obligation.	Banks	may	administer	such	securities	lending	programs	for	their clients.	Securities	lending	indemnifications	are	issued	by	the	bank	to	guarantee that	a	securities	lending	customer	will	be	made	whole	in	the	event	that	the security	borrower	does	not	return	the	security	subject	to	the	lending	agreement and	collateral	held	is	insufficient	to	cover	the	market	value	of	the	security.

# Credit	Card	Merchant	Processing

Credit	card	merchant	processing	guarantees	represent	the	Company's	indirect obligations	in	connection	with	the	processing	of	private	label	and	bankcard transactions	on	behalf	of	merchants.

Citigroup's	primary	credit	card	business	is	the	issuance	of	credit	cards	to individuals.	In	addition,	the	Company	provides	transaction	processing	services	to various	merchants	with	respect	to	bankcard	and	private-label	cards.	In	the	event of	a	billing	dispute	with	respect	to	a	bankcard	transaction	between	a	merchant and	a	cardholder	that	is	ultimately	resolved	in	the	cardholder's	favor,	the	third party	holds	the	primary	contingent	liability	to	credit	or	refund	the	amount	to	the cardholder	and	charge	back	the	transaction	to	the	merchant.	If	the	third	party	is unable	to	collect	this	amount	from	the	merchant,	it	bears	the	loss	for	the	amount of	the	credit	or	refund	paid	to	the	cardholder.

The	Company	continues	to	have	the	primary	contingent	liability	with	respect to	its	portfolio	of	private-label	merchants.	The	risk	of	loss	is	mitigated	as	the cash	flows	between	the	third	party	or	the	Company	and	the	merchant	are	settled on	a	net	basis	and	the	third	party	or	the	Company	has	the	right	to

offset	any	payments	with	cash	flows	otherwise	due	to	the	merchant.	To	further mitigate	this	risk,	the	third	party	or	the	Company	may	require	a	merchant	to make	an	escrow	deposit,	delay	settlement,	or	include	event	triggers	to	provide the	third	party	or	the	Company	with	more	financial	and	operational	control	in	the event	of	the	financial	deterioration	of	the	merchant,	or	require	various	credit enhancements	(including	letters	of	credit	and	bank	guarantees).	In	the	unlikely event	that	a	private	label	merchant	is	unable	to	deliver	products,	services	or	a refund	to	its	private	label	cardholders,	Citigroup	is	contingently	liable	to	credit or	refund	cardholders.	In	addition,	although	a	third	party	holds	the	primary contingent	liability	with	respect	to	the	processing	of	bankcard	transactions,	in	the event	that	the	third	party	does	not	have	sufficient	collateral	from	the	merchant	or sufficient	financial	resources	of	its	own	to	provide	the	credit	or	refunds	to	the cardholders,	Citigroup	would	be	liable	to	credit	or	refund	the	cardholders. The	Company's	maximum	potential	contingent	liability	related	to	both bankcard	and	private	label	merchant	processing	services	is	estimated	to	be	the total	volume	of	credit	card	transactions	that	meet	the	requirements	to	be	valid chargeback	transactions	at	any	given	time.	At	December	31,	2008	and December	31,	2007,	this	maximum	potential	exposure	was	estimated	to	be	$57 billion	and	$64	billion,	respectively.

However,	the	Company	believes	that	the	maximum	exposure	is	not representative	of	the	actual	potential	loss	exposure	based	on	the	Company's historical	experience	and	its	position	as	a	secondary	guarantor	(in	the	case	of bankcards).	In	most	cases,	this	contingent	liability	is	unlikely	to	arise,	as	most products	and	services	are	delivered	when	purchased	and	amounts	are	refunded when	items	are	returned	to	merchants.	The	Company	assesses	the	probability	and amount	of	its	contingent	liability	related	to	merchant	processing	based	on	the financial	strength	of	the	primary	guarantor	(in	the	case	of	bankcards)	and	the extent	and	nature	of	unresolved	chargebacks	and	its	historical	loss	experience. At	December	31,	2008	and	December	31,	2007,	the	estimated	losses	incurred and	the	carrying	amounts	of	the	Company's	contingent	obligations	related	to merchant	processing	activities	were	immaterial.

# Custody	Indemnifications

Custody	indemnifications	are	issued	to	guarantee	that	custody	clients	will	be made	whole	in	the	event	that	a	third-party	subcustodian	or	depository	institution fails	to	safeguard	clients'	assets.

In	the	fourth	quarter	of	2007,	Citigroup	recorded	a	$306	million	(pretax)	charge related	to	certain	of	Visa	USA's	litigation	matters.	As	of	December	31,	2008,	the carrying	value	of	the	reserve	was	$149	million	and	was	included	in	Other liabilities.

# Other	Guarantees	and	Indemnifications

The	Company,	through	its	credit	card	business,	provides	various	cardholder protection	programs	on	several	of	its	card	products,	including	programs	that provide	insurance	coverage	for	rental	cars,	coverage	for	certain	losses	associated with	purchased	products,	price	protection	for	certain	purchases	and	protection	for lost	luggage.	These	guarantees	are	not	included	in	the	table,	since	the	total outstanding	amount	of	the	guarantees	and	the	Company's	maximum	exposure	to loss	cannot	be	quantified.	The	protection	is	limited	to	certain	types	of	purchases and	certain	types	of	losses	and	it	is	not	possible	to	quantify	the	purchases	that would	qualify	for	these	benefits	at	any	given	time.	The	Company	assesses	the probability	and	amount	of	its	potential	liability	related	to	these	programs	based on	the	extent	and	nature	of

its	historical	loss	experience.	At	December	31,	2008	and	2007,	the	actual	and estimated	losses	incurred	and	the	carrying	value	of	the	Company's	obligations related	to	these	programs	were	immaterial.

In	the	normal	course	of	business,	the	Company	provides	standard representations	and	warranties	to	counterparties	in	contracts	in	connection	with numerous	transactions	and	also	provides	indemnifications	that	protect	the counterparties	to	the	contracts	in	the	event	that	additional	taxes	are	owed	due either	to	a	change	in	the	tax	law	or	an	adverse	interpretation	of	the	tax	law. Counterparties	to	these	transactions	provide	the	Company	with	comparable indemnifications.	While	such	representations,	warranties	and	tax indemnifications	are	essential	components	of	many	contractual	relationships, they	do	not	represent	the	underlying	business	purpose	for	the	transactions.	The indemnification	clauses	are	often	standard	contractual	terms	related	to	the Company's	own	performance	under	the	terms	of	a	contract	and	are	entered	into in	the	normal	course	of	business	based	on	an	assessment	that	the	risk	of	loss	is remote.	Often	these	clauses	are	intended	to	ensure	that	terms	of	a	contract	are met	at	inception	(for	example,	that	loans	transferred	to	a	counterparty	in	a	sales transaction	did	in	fact	meet	the	conditions	specified	in	the	contract	at	the	transfer date).	No	compensation	is	received	for	these	standard	representations	and warranties,	and	it	is	not	possible	to	determine	their	fair	value	because	they	rarely, if	ever,	result	in	a	payment.	In	many	cases,	there	are	no	stated	or	notional amounts	included	in	the	indemnification	clauses	and	the	contingencies potentially	triggering	the	obligation	to	indemnify	have	not	occurred	and	are	not expected	to	occur.	There	are	no	amounts	reflected	on	the	Consolidated	Balance Sheet	as	of	December	31,	2008	and	December	31,	2007,	related	to	these indemnifications	and	they	are	not	included	in	the	table.

In	addition,	the	Company	is	a	member	of	or	shareholder	in	hundreds	of	value- transfer	networks	(VTNs)	(payment	clearing	and	settlement	systems	as	well	as securities	exchanges)	around	the	world.	As	a	condition	of	membership,	many	of these	VTNs	require	that	members	stand	ready	to	backstop	the	net	effect	on	the VTNs	of	a	member's	default	on	its	obligations.	The	Company's	potential obligations	as	a	shareholder	or	member	of	VTN	associations	are	excluded	from the	scope	of	FIN	45,	since	the	shareholders	and	members	represent	subordinated classes	of	investors	in	the	VTNs.	Accordingly,	the	Company's	participation	in VTNs	is	not	reported	in	the	table	and	there	are	no	amounts	reflected	on	the Consolidated	Balance	Sheet	as	of	December	31,	2008	or	December	31,	2007	for potential	obligations	that	could	arise	from	the	Company's	involvement	with VTN	associations.

At	December	31,	2008	and	December	31,	2007,	the	total	carrying	amounts	of the	liabilities	related	to	the	guarantees	and	indemnifications	included	in	the	table amounted	to	approximately	$1,820	million	and	$700	million,	respectively.	The carrying	value	of	derivative	instruments	is	included	in	either	Trading	liabilities or	Other	liabilities,	depending	upon	whether	the	derivative	was	entered	into	for trading	or	non-trading	purposes.	The	carrying	value	of	financial	and performance	guarantees	is	included	in	Other	liabilities.	For	loans	sold	with recourse,	the	carrying	value	of	the	liability	is	included	in	Other	liabilities.	In addition,	at	December	31,	2008	and	December	31,	2007,	Other	liabilities	on	the Consolidated	Balance	Sheet	include	an	allowance	for	credit	losses	of	$887 million	and	$1.25	billion	relating	to	letters	of	credit	and	unfunded	lending commitments,	respectively.

Cash	collateral	available	to	the	Company	to	reimburse	losses	realized	under these	guarantees	and	indemnifications	amounted	to	$33	billion	and	$112

billion	at	December	31,	2008	and	December	31,	2007,	respectively.	Securities and	other	marketable	assets	held	as	collateral	amounted	to	$27	billion	and	$54 billion,	the	majority	of	which	collateral	is	held	to	reimburse	losses	realized	under securities	lending	indemnifications.	The	decrease	from	the	prior	year	is	in	line with	the	decrease	in	the	notional	amount	of	these	indemnifications,	which	are collateralized.	Additionally,	letters	of	credit	in	favor	of	the	Company	held	as collateral	amounted	to	$503	million	and	$370	million	at	December	31,	2008	and December	31,	2007,	respectively.	Other	property	may	also	be	available	to	the Company	to	cover	losses	under	certain	guarantees	and	indemnifications; however,	the	value	of	such	property	has	not	been	determined.

# Performance	Risk

Citigroup	evaluates	the	performance	risk	of	its	guarantees	based	on	the	assigned referenced	counterparty	internal	or	external	ratings.	Where	external	ratings	are used,	investment-grade	ratings	are	considered	to	be	Baa/BBB	and	above,	while anything	below	is	considered	non-investment	grade.	The	Citigroup	internal ratings	are	in	line	with	the	related	external	rating	system.	On	certain	underlying referenced	credits	or	entities,	ratings	are	not	available.	Such	referenced	credits are	included	in	the	"Not-rated"	category.	The	maximum	potential	amount	of	the future	payments	related	to	guarantees	and	credit	derivatives	sold	is	determined	to be	the	notional	amount	of	these	contracts,	which	is	the	par	amount	of	the	assets guaranteed.

Presented	in	the	table	below	is	the	maximum	potential	amount	of	future payments	classified	based	upon	internal	and	external	credit	ratings	as	of December	31,	2008.	As	previously	mentioned,	the	determination	of	the maximum	potential	future	payments	is	based	on	the	notional	amount	of	the guarantees	without	consideration	of	possible	recoveries	under	recourse provisions	or	from	collateral	held	or	pledged.	Such	amounts	bear	no	relationship to	the	anticipated	losses,	if	any,	on	these	guarantees.

|  | Investment | Non-investment | Not |  |
| :--- | :--- | :--- | :--- | :--- |
| In\tbillions\tof\tdollars | grade | grade | rated | Total |
| Financial\tstandby\tletters\nof\tcredit | $49.2 | $28.6 | $16.4 | $94.2 |
| Performance\tguarantees | 5.7 | 5.0 | 5.6 | 16.3 |
| Derivative\tinstruments |  |  |  |  |
| deemed\tto\tbe |  |  |  |  |
| guarantees | — | — | 67.9 | 67.9 |
| Guarantees\tof\tcollection |  |  |  |  |
| of\tcontractual\tcash |  |  |  |  |
| flows | — | — | 0.3 | 0.3 |
| Loans\tsold\twith\trecourse | — | — | 0.3 | 0.3 |
| Securities\tlending |  |  |  |  |
| indemnifications | — | — | 47.6 | 47.6 |
| Credit\tcard\tmerchant\nprocessing | — | — | 56.7 | 56.7 |
| Custody\tindemnifications |  |  |  |  |
| and\tother | 18.5 | 3.1 | — | 21.6 |
| Total | $73.4 | $36.7 | $ 194.8 | $304.9 |

A	credit	derivative	is	a	bilateral	contract	between	a	buyer	and	a	seller	under which	the	seller	sells	protection	against	the	credit	risk	of	a	particular	entity ("reference	entity"	or	"reference	credit").	Credit	derivatives	generally	require that	the	seller	of	credit	protection	make	payments	to	the	buyer	upon	the occurrence	of	predefined	credit	events	(commonly	referred	to	as	"settlement triggers").	These	settlement	triggers	are	defined	by	the	form	of	the	derivative	and the	reference	credit	and	are	generally	limited	to	the	market	standard	of	failure	to pay	on	indebtedness	and	bankruptcy	of	the	reference	credit	and,	in	a	more limited	range	of	transactions,	debt	restructuring.	Credit	derivative	transactions referring	to	emerging	market	reference	credits	will	also	typically	include additional	settlement	triggers	to	cover	the	acceleration	of	indebtedness	and	the risk	of	repudiation	or	a	payment	moratorium.	In	certain	transactions,	protection may	be	provided	on	a	portfolio	of	referenced	credits	or	asset-backed	securities. The	seller	of	such	protection	may	not	be	required	to	make	payment	until	a specified	amount	of	losses	has	occurred	with	respect	to	the	portfolio	and/or	may only	be	required	to	pay	for	losses	up	to	a	specified	amount.

The	Company	makes	markets	in	and	trades	a	range	of	credit	derivatives,	both on	behalf	of	clients	as	well	as	for	its	own	account.	Through	these	contracts,	the Company	either	purchases	or	writes	protection	on	either	a	single	name	or	a portfolio	of	reference	credits.	The	Company	uses	credit	derivatives	to	help mitigate	credit	risk	in	its	corporate	loan	portfolio	and	other	cash	positions,	to take	proprietary	trading	positions,	and	to	facilitate	client	transactions.

The	range	of	credit	derivatives	sold	includes	credit	default	swaps,	total	return swaps	and	credit	options.

A	credit	default	swap	is	a	contract	in	which,	for	a	fee,	a	protection	seller (guarantor)	agrees	to	reimburse	a	protection	buyer	(beneficiary)	for	any	losses that	occur	due	to	a	credit	event	on	a	reference	entity.	If	there	is	no	credit	default event	or	settlement	trigger,	as	defined	by	the	specific	derivative	contract,	then the	guarantor	makes	no	payments	to	the	beneficiary	and	receives	only	the contractually	specified	fee.	However,	if	a	credit	event	occurs	and	in	accordance with	the	specific	derivative	contract	sold,	the	guarantor	will	be	required	to	make a	payment	to	the	beneficiary.

A	total	return	swap	transfers	the	total	economic	performance	of	a	reference asset,	which	includes	all	associated	cash	flows,	as	well	as	capital	appreciation	or depreciation.	The	protection	buyer	(beneficiary)	receives	a	floating	rate	of interest	and	any	depreciation	on	the	reference	asset	from	the	protection	seller (guarantor),	and	in	return	the	protection	seller	receives	the	cash	flows	associated with	the	reference	asset,	plus	any	appreciation.	Thus,	the	beneficiary	will	be obligated	to	make	a	payment	any	time	the	floating	interest	rate	payment according	to	the	total	return	swap	agreement	and	any	depreciation	of	the reference	asset	exceed	the	cash	flows	associated	with	the	underlying	asset.	A total	return	swap	may	terminate	upon	a	default	of	the	reference	asset	subject	to the	provisions	in	the	related	total	return	swap	agreement	between	the	protection seller	(guarantor)	and	the	protection	buyer	(beneficiary).

A	credit	option	is	a	credit	derivative	that	allows	investors	to	trade	or	hedge changes	in	the	credit	quality	of	the	reference	asset.	For	example,	in	a	credit spread	option,	the	option	writer	(guarantor)	assumes	the	obligation	to	purchase or	sell	the	reference	asset	at	a	specified	"strike"	spread	level.	The	option purchaser	(beneficiary)	buys	the	right	to	sell	the	reference	asset	to,	or	purchase	it from,	the	option	writer	at	the	strike	spread	level.	The	payments	on	credit	spread options	depend	either	on	a	particular	credit	spread	or	the	price	of	the	underlying credit-sensitive	asset.	The	options	usually	terminate	if	the	underlying	assets default.

A	credit-linked	note	is	a	form	of	credit	derivative	structured	as	a	debt	security with	an	embedded	credit	default	swap.	The	purchaser	of	the	note	writes	credit protection	to	the	issuer,	and	receives	a	return	which	will	be	negatively	affected by	credit	events	on	the	underlying	reference	credit.	If	the	reference	entity defaults,	the	purchaser	of	the	credit-linked	note	may	assume	the	long	position	in the	debt	security	and	any	future	cash	flows	from	it	but	will	lose	the	amount	paid to	the	issuer	of	the	credit-linked	note.	Thus	the	maximum	amount	of	the exposure	is	the	carrying	amount	of	the	credit-linked	note.	As	of	December	31, 2008,	the	amount	of	credit-linked	notes	held	by	the	Company	in	trading inventory	was	immaterial.

The	following	table	summarizes	the	key	characteristics	of	the	Company's credit	derivative	portfolio	as	protection	seller	(guarantor)	as	of	December	31, 2008:

|  | Maximum	potential | Fair |
| :--- | :--- | :--- |
|  | amount\tof | value |
| In\tmillions\tof\tdollars | future\tpayments | (payable) |
| By\tindustry/counterparty |  |  |
| Bank | $943,949 | $ 118,428 |
| Broker-dealer | 365,664 | 55,458 |
| Monoline | 139 | 91 |
| Non-financial | 7,540 | 2,556 |
| Insurance\tand\tother\tfinancial\tinstitutions | 125,988 | 21,700 |
| Total\tby\tindustry/counterparty | $1,443,280 | $ 198,233 |
| By\tinstrument: |  |  |
| Credit\tdefault\tswaps\tand\toptions | $1,441,375 | $ 197,981 |
| Total\treturn\tswaps\tand\tother | 1,905 | 252 |
| Total\tby\tinstrument | $1,443,280 | $ 198,233 |
| By\trating: |  |  |
| Investment\tgrade | $851,426 | $83,672 |
| Non-investment\tgrade | 410,483 | 87,508 |
| Not\trated | 181,371 | 27,053 |
| Total\tby\trating | $1,443,280 | $ 198,233 |

Citigroup	evaluates	the	payment/performance	risk	of	the	credit	derivatives	to which	it	stands	as	guarantor	based	on	the	credit	rating	which	has	been	assigned to	the	underlying	referenced	credit.	Where	external	ratings	by	nationally recognized	statistical	rating	organizations	(such	as	Moody's	and	S&P),	are	used, investment	grade	ratings	are	considered	to	be	Baa/BBB	or	above,	while	anything below	is	considered	non-investment	grade.	The	Citigroup	internal	ratings	are	in line	with	the	related	external	credit	rating	system.	On	certain	underlying referenced	credit,	mainly	related	to	over-the-counter	credit	derivatives,	ratings are	not	available,	and	these	are	included	in	the	not-rated	category.	Credit derivatives	written	on	an	underlying	non-investment	grade	referenced	credit represent	greater	payment	risk	to	the	Company.	The	non-investment	grade category	in	the	table	above	primarily	includes	credit	derivatives	where	the underlying	referenced	entity	has	been	downgraded	subsequent	to	the	inception	of the	derivative.

The	maximum	potential	amount	of	future	payments	under	credit	derivative contracts	presented	in	the	table	above	is	based	on	the	notional	value	of	the derivatives.	The	Company	believes	that	the	maximum	potential	amount	of	future payments	for	credit	protection	sold	is	not	representative	of	the	actual	loss exposure	based	on	historical	experience.	This	maximum	potential	amount	has not	been	reduced	by	the	Company's	rights	to	the	underlying	assets	and	the related	cash	flows.	In	accordance	with	most	credit	derivative	contracts,	should	a credit	event	(or	settlement	trigger)	occur,	the	Company	is	usually	liable	for	the difference	between	the	protection	sold	and	the	recourse	it	holds	in	the	value	of the	underlying	assets.	Thus,	if	the	reference	entity	defaults,	Citi	will	generally have	a	right	to	collect	on	the	underlying	reference	credit	and	any	related	cash flows,	while	being	liable	for	the	full	notional	amount	of	credit	protection	sold	to the	buyer.	Furthermore,	this	maximum	potential	amount	of	future	payments	for credit	protection	sold	has	not	been	reduced	for	any	cash	collateral	paid	to	a	given counterparty,	as	such	payments	would	be	calculated	after	netting	all	derivative exposures,	including	any	credit	derivatives,	with	that	counterparty	in	accordance with	a	related	master	netting	agreement.	Due	to	such	netting	processes, determining	the	amount	of	collateral	that	corresponds	to	credit	derivative exposures	only	is	not	possible.	The	Company	actively	monitors	open	credit	risk exposures,	and	manages	this	exposure	using	a	variety	of	strategies	including purchased	credit	derivatives,	cash	collateral	or	direct	holdings	of	the	referenced assets.	This	risk	mitigation	activity	is	not	captured	in	the	table	above.

# Credit	Commitments

The	table	below	summarizes	Citigroup's	other	commitments	as	of	December	31,	2008	and	December	31,	2007.

|  |  | Outside | December	31, | December	31, |
| :--- | :--- | :--- | :--- | :--- |
| In\tmillions\tof\tdollars | U.S. | U.S. | 2008 | 2007 |
| Commercial\tand\tsimilar\tletters\tof\tcredit | $2,187 | $6,028 | $8,215 | $9,175 |
| One-\tto\tfour-family\tresidential\tmortgages | 628 | 309 | 937 | 4,587 |
| Revolving\topen-end\tloans\tsecured\tby\tone-\tto\tfour-family\tresidential\tproperties | 22,591 | 2,621 | 25,212 | 35,187 |
| Commercial\treal\testate,\tconstruction\tand\tland\tdevelopment | 2,084 | 618 | 2,702 | 4,834 |
| Credit\tcard\tlines | 867,261 | \t 135,176 | 1,002,437 | 1,103,535 |
| Commercial\tand\tother\tconsumer\tloan\tcommitments | 217,818 | 92,179 | 309,997 | 473,631 |
| Total | $1,112,569 | $236,931 | $1,349,500 | $1,630,949 |

The	majority	of	unused	commitments	are	contingent	upon	customers' maintaining	specific	credit	standards.	Commercial	commitments	generally	have floating	interest	rates	and	fixed	expiration	dates	and	may	require	payment	of fees.	Such	fees	(net	of	certain	direct	costs)	are	deferred	and,	upon	exercise	of	the commitment,	amortized	over	the	life	of	the	loan	or,	if	exercise	is	deemed	remote, amortized	over	the	commitment	period.

# Commercial	and	similar	letters	of	credit

A	commercial	letter	of	credit	is	an	instrument	by	which	Citigroup	substitutes	its credit	for	that	of	a	customer	to	enable	the	customer	to	finance	the	purchase	of goods	or	to	incur	other	commitments.	Citigroup	issues	a	letter	on	behalf	of	its client	to	a	supplier	and	agrees	to	pay	the	supplier	upon	presentation	of documentary	evidence	that	the	supplier	has	performed	in	accordance	with	the terms	of	the	letter	of	credit.	When	drawn,	the	customer	then	is	required	to reimburse	Citigroup.

# One-	to	four-family	residential	mortgages

A	one-	to	four-family	residential	mortgage	commitment	is	a	written	confirmation from	Citigroup	to	a	seller	of	a	property	that	the	bank	will	advance	the	specified sums	enabling	the	buyer	to	complete	the	purchase.

# Revolving	open-end	loans	secured	by	one-	to	four-family	residential	properties

Revolving	open-end	loans	secured	by	one-	to	four-family	residential	properties are	essentially	home	equity	lines	of	credit.	A	home	equity	line	of	credit	is	a	loan secured	by	a	primary	residence	or	second	home	to	the	extent	of	the	excess	of	fair market	value	over	the	debt	outstanding	for	the	first	mortgage.

# Commercial	real	estate,	construction	and	land	development

Commercial	real	estate,	construction	and	land	development	include	unused portions	of	commitments	to	extend	credit	for	the	purpose	of	financing commercial	and	multifamily	residential	properties	as	well	as	land	development projects.	Both	secured-by-real-estate	and	unsecured	commitments	are	included in	this	line.	In	addition,	undistributed	loan	proceeds,	where	there	is	an	obligation to	advance	for	construction	progress,	payments	are	also	included	in	this	line. However,	this	line	only	includes	those	extensions	of	credit	that	once	funded	will be	classified	as	Loans	on	the	Consolidated	Balance	Sheet.

# Credit	card	lines

Citigroup	provides	credit	to	customers	by	issuing	credit	cards.	The	credit	card lines	are	unconditionally	cancellable	by	the	issuer.

# Commercial	and	other	consumer	loan	commitments

Commercial	and	other	consumer	loan	commitments	include	commercial commitments	to	make	or	purchase	loans,	to	purchase	third-party	receivables	and to	provide	note	issuance	or	revolving	underwriting	facilities.	Amounts	include $140	billion	and	$259	billion	with	an	original	maturity	of	less	than	one	year	at December	31,	2008	and	December	31,	2007,	respectively.

In	addition,	included	in	this	line	item	are	highly	leveraged	financing commitments	which	are	agreements	that	provide	funding	to	a	borrower	with higher	levels	of	debt	(measured	by	the	ratio	of	debt	capital	to	equity	capital	of the	borrower)	than	is	generally	considered	normal	for	other	companies.	This type	of	financing	is	commonly	employed	in	corporate	acquisitions,	management buy-outs	and	similar	transactions.

# 30.	CONTINGENCIES

As	described	in	the	"Legal	Proceedings"	discussion	on	page	227,	the	Company has	been	a	defendant	in	numerous	lawsuits	and	other	legal	proceedings	arising out	of	alleged	misconduct	in	connection	with:

(i) underwritings	for,	and	research	coverage	of,	WorldCom;

(ii)underwritings	for	Enron	and	other	transactions	and	activities	related	to Enron;

(iii)transactions	and	activities	related	to	research	coverage	of	companies	other than	WorldCom;	and

(iv)transactions	and	activities	related	to	the	IPO	Securities	Litigation.

As	of	December	31,	2008,	the	Company's	litigation	reserve	for	these	matters, net	of	amounts	previously	paid	or	not	yet	paid	but	committed	to	be	paid	in connection	with	the	Enron	class	action	settlement	and	other	settlements	arising out	of	these	matters,	was	approximately	$0.8	billion.	The	Company	believes	that this	reserve	is	adequate	to	meet	all	of	its	remaining	exposure	for	these	matters.

As	described	in	the	"Legal	Proceedings"	discussion	on	page	227,	the	Company is	also	a	defendant	in	numerous	lawsuits	and	other	legal	proceedings	arising	out of	alleged	misconduct	in	connection	with	other	matters.	In	view	of	the	large number	of	litigation	matters,	the	uncertainties	of	the	timing	and	outcome	of	this type	of	litigation,	the	novel	issues	presented,	and	the	significant	amounts involved,	it	is	possible	that	the	ultimate	costs	of	these	matters	may	exceed	or	be below	the	Company's	litigation	reserves.	The	Company	will	continue	to	defend itself	vigorously	in	these	cases,	and	seek	to	resolve	them	in	the	manner management	believes	is	in	the	best	interests	of	the	Company.

In	addition,	in	the	ordinary	course	of	business,	Citigroup	and	its	subsidiaries are	defendants	or	co-defendants	or	parties	in	various	litigation	and	regulatory matters	incidental	to	and	typical	of	the	businesses	in	which	they	are	engaged.	In the	opinion	of	the	Company's	management,	the	ultimate	resolution	of	these	legal and	regulatory	proceedings	would	not	be	likely	to	have	a	material	adverse	effect on	the	consolidated	financial	condition	of	the	Company	but,	if	involving monetary	liability,	may	be	material	to	the	Company's	operating	results	for	any particular	period.

# 31.	CITIBANK,	N.A.	STOCKHOLDER'S	EQUITY

# Statement	of	Changes	in	Stockholder's	Equity

| In	millions	of	dollars,	except	shares | 2008 | 2007 | 2006 |
| :--- | :--- | :--- | :--- |
| Preferred\tstock\t($100\tpar\tvalue) |  |  |  |
| Balance,\tbeginning\tof\tyear | $— | $— | $— |
| Redemption\tor\tretirement\tof\tpreferred\tstock | — | — | — |
| Balance,\tend\tof\tyear | $— | $— | $— |
| Common\tstock\t($20\tpar\tvalue) |  |  |  |
| Balance,\tbeginning\tof\tyear\t—\tshares: |  |  |  |
| 37,534,553\tin\t2008,\t2007\tand\t2006 | $751 | $751 | $751 |
| Balance,\tend\tof\tyear\t—\tshares:\n37,534,553\tin\t2008,\t2007\tand\t2006 | $751 | $751 | $751 |
| Surplus |  |  |  |
| Balance,\tbeginning\tof\tyear | $ 69,135 | $43,753 | $37,978 |
| Capital\tcontribution\tfrom\tparent\tcompany | 6,177 | \t 25,267 | 5,589 |
| Employee\tbenefit\tplans | 183 | 85 | 176 |
| Other\t^(1) | (728) | 30 | 10 |
| Balance,\tend\tof\tyear | $ 74,767 | $69,135 | $43,753 |
| Retained\tearnings |  |  |  |
| Balance,\tbeginning\tof\tyear | $ 31,915 | $30,358 | $24,062 |
| Adjustment\tto\topening\tbalance,\tnet\tof\ttaxes\t^(2) | — | (96) | — |
| Adjusted\tbalance,\tbeginning\tof\tperiod | $ 31,915 | $30,262 | $24,062 |
| Net\tincome\t(loss) | (6,215) | 2,304 | 9,338 |
| Dividends\tpaid | (41) | (651) | (3,042) |
| Other\t^(1) | (3,924) | — | — |
| Balance,\tend\tof\tyear | $ 21,735 | $31,915 | $30,358 |
| Accumulated\tother\tcomprehensive |  |  |  |
| income\t(loss) |  |  |  |
| Balance,\tbeginning\tof\tyear | $(2,495) | $ (1,709) | $ (2,550) |
| Adjustment\tto\topening\tbalance,\tnet\tof\ttaxes\t^(3) | — | (1) | — |
| Adjusted\tbalance,\tbeginning\tof\tperiod | $(2,495) | $ (1,710) | $ (2,550) |
| Net\tchange\tin\tunrealized\tgains\t(losses)\ton |  |  |  |
| investment\tsecurities\tavailable-for-sale,\tnet\tof |  |  |  |
| taxes | (6,746) | (1,142) | 234 |
| Net\tchange\tin\tforeign\tcurrency\ttranslation\nadjustment,\tnet\tof\ttaxes | (5,651) | 2,143 | 1,926 |
| Net\tchange\tin\tcash\tflow\thedges,\tnet\tof\ttaxes | (1,162) | (1,954) | (430) |
| Pension\tliability\tadjustment,\tnet\tof\ttaxes | 159 | 168 | (3) |
| Adjustment\tto\tinitially\tapply\tSFAS\t158,\tnet\tof |  |  |  |
| taxes | — | — | (886) |
| Net\tchange\tin\tAccumulated\tother\ncomprehensive\tincome\t(loss) | $(13,400) | $(785) | $841 |
| Balance,\tend\tof\tyear | $(15,895) | $ (2,495) | $ (1,709) |

# (Continued)

|  | Year	ended	December	31 | Year	ended	December	31 | Year	ended	December	31 |
| :--- | :--- | :--- | :--- |
| In\tmillions\tof\tdollars,\texcept\tshares | 2008 | 2007 | 2006 |
| Total\tcommon\tstockholder's\tequity | $ 81,358 | $99,306 | $73,153 |
| Total\tstockholder's\tequity | $ 81,358 | $99,306 | $73,153 |
| Comprehensive\tincome\t(loss) |  |  |  |
| Net\tincome\t(loss) | $(6,215) | $2,304 | $9,338 |
| Net\tchange\tin\tAccumulated\tother\tcomprehensive |  |  |  |
| income\t(loss) | (13,400) | (785) | 841 |
| Comprehensive\tincome\t(loss) | $(19,615) | $1,519 | $10,179 |

(1)	Primarily	represents	the	transfer	of	Citibank,	N.A.'s	investment	in	Citi	Financial	Japan,	KK to	the	Citigroup's	affiliate,	Nikko	Citi	Holdings.

(2)	The	adjustment	to	opening	balance	for	 Retained	earnings	represents	the	total	of	the	after- tax	gain	(loss)	amounts	for	the	adoption	of	the	following	accounting	pronouncements:

(3)	The	after-tax	adjustment	to	the	opening	balance	of	Accumulated	other	comprehensive income	(loss)	represents	the	reclassification	of	the	unrealized	gains	(losses)	related	to several	miscellaneous	items	previously	reported	in	accordance	with	SFAS	115.	The	related unrealized	gains	and	losses	were	reclassified	to	Retained	earnings	upon	the	adoption	of	the fair	value	option	in	accordance	with	SFAS	159.	See	Notes	1	and	27	on	pages	121	and	200 for	further	discussions.

# 32.	SUBSEQUENT	EVENTS

On	February	27,	2009,	Citigroup	announced	an	exchange	offer	of	its	common stock	for	up	to	$27.5	billion	of	its	existing	preferred	securities	and	trust	preferred securities	at	a	conversion	price	of	$3.25	per	share.	The	U.S.	government	will match	this	exchange	up	to	a	maximum	of	$25	billion	of	its	preferred	stock	at	the same	conversion	price.	These	transactions	will	significantly	dilute	the	existing common	stockholders	of	the	Company.	As	announced,	the	transactions	will increase	the	Company's	tangible	common	equity	(TCE).	The	transactions	will require	no	additional	U.S.	government	investment	in	Citigroup	and	will	not change	the	Company's	overall	strategy	or	operations.	In	addition,	the transactions	will	not	change	the	Company's	Tier	1	Capital	Ratio	of	11.9%	as	of December	31,	2008.	In	connection	with	the	transactions,	Citigroup	will	suspend dividends	on	its	preferred	securities	(other	than	its	trust	preferred	securities)	and, as	a	result,	on	its	common	stock.	Full	implementation	of	the	proposed	exchange offer	is	subject	to	approval	of	Citigroup's	shareholders,	which	cannot	be guaranteed.

# Reset	of	Conversion	Terms	of	the	$12.5	Billion	Convertible Preferred	Stock

On	January	23,	2009,	pursuant	to	Citibank's	prior	agreement	with	the	purchasers of	the	$12.5	billion	convertible	preferred	stock	issued	in	a	private	offering during	2008,	the	conversion	price	was	reset	from	$31.62	per	share	to	$26.35	per share.	The	reset	will	result	in	Citigroup	issuing	approximately	79	million additional	common	shares	if	converted.	There	will	be	no	impact	to	net	income, total	stockholders'	equity	or	capital	ratios	due	to	the	reset.	However,	the	reset will	result	in	a	reclassification	from	retained	earnings	to	additional	paid	in	capital of	$1.2	billion	to	reflect	the	benefit	of	the	reset	to	the	preferred	stockholders.

# 33.	CONDENSED	CONSOLIDATING	FINANCIAL	STATEMENT	SCHEDULES

These	condensed	consolidating	financial	statement	schedules	are	presented	for	purposes	of	additional	analysis	but	should	be	considered	in	relation	to	the	consolidated financial	statements	of	Citigroup	taken	as	a	whole.

# Citigroup	Parent	Company

The	holding	company,	Citigroup	Inc.

# Citigroup	Global	Markets	Holdings	Inc.	(CGMHI)

Citigroup	guarantees	various	debt	obligations	of	CGMHI	as	well	as	all	of	the	outstanding	debt	obligations	under	CGMHI's	publicly	issued	debt.

# Citigroup	Funding	Inc.	(CFI)

CFI	is	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.

# CitiFinancial	Credit	Company	(CCC)

An	indirect	wholly	owned	subsidiary	of	Citigroup.	CCC	is	a	wholly	owned	subsidiary	of	Associates.	Citigroup	has	issued	a	full	and	unconditional	guarantee	of	the outstanding	indebtedness	of	CCC.

# Associates	First	Capital	Corporation	(Associates)

A	wholly	owned	subsidiary	of	Citigroup.	Citigroup	has	issued	a	full	and	unconditional	guarantee	of	the	outstanding	long-term	debt	securities	and	commercial	paper	of Associates.	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.	Associates	is	the	immediate	parent	company	of	CCC.

# Other	Citigroup	Subsidiaries

Includes	all	other	subsidiaries	of	Citigroup,	intercompany	eliminations,	and	income/loss	from	discontinued	operations.

# Consolidating	Adjustments

Includes	Citigroup	parent	company	elimination	of	distributed	and	undistributed	income	of	subsidiaries,	investment	in	subsidiaries	and	the	elimination	of	CCC,	which	is included	in	the	Associates	column.

# Condensed	Consolidating	Statement	of	Income

|  |  |  |  |  |  | Other |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  |  |  |  |  | Citigroup |  |  |
|  |  |  |  |  |  | subsidiaries, |  |  |
|  |  |  |  |  |  | eliminations |  |  |
|  |  |  |  |  |  | and\tincome |  |  |
|  | Citigroup |  |  |  |  | from |  |  |
|  | parent |  |  |  |  | discontinued | Consolidating | Citigroup |
| In\tmillions\tof\tdollars | company | CGMHI | CFI | CCC | Associates | operations | adjustments | consolidated |
| Revenues |  |  |  |  |  |  |  |  |
| Dividends\tfrom\tsubsidiary\tbanks\tand\tbank\tholding\tcompanies | $1,788 | $— | $— | $— | $— | $— | $(1,788) | $— |
| Interest\trevenue | 758 | 18,569 | 3 | 7,218 | 8,261 | 79,064 | (7,218) | 106,655 |
| Interest\trevenue—intercompany | 4,822 | 2,109 | 5,156 | 67 | 575 | (12,662) | (67) | — |
| Interest\texpense | 9,455 | 11,607 | 3,294 | 141 | 608 | 27,999 | (141) | 52,963 |
| Interest\texpense—intercompany | (306) | 5,014 | 290 | 2,435 | 2,202 | (7,200) | (2,435) | — |
| Net\tinterest\trevenue | $(3,569) | $4,057 | $ 1,575 | $ 4,709 | $6,026 | $45,603 | $(4,709) | $53,692 |
| Commissions\tand\tfees | $(1) | $7,361 | $— | $87 | $182 | $3,685 | $(87) | $11,227 |
| Commissions\tand\tfees—intercompany | — | 521 | — | 37 | 52 | (573) | (37) | — |
| Principal\ttransactions | (159) | (22,175) | 5,261 | — | (6) | (5,109) | — | (22,188) |
| Principal\ttransactions—intercompany | 962 | 479 | (4,070) | — | 180 | 2,449 | — | — |
| Other\tincome | (6,253) | 2,896 | (174) | 389 | 344 | 13,249 | (389) | 10,062 |
| Other\tincome—intercompany | 6,521 | 2,635 | 187 | 27 | 69 | (9,412) | (27) | — |
| Total\tnon-interest\trevenues | $1,070 | $(8,283) | $ 1,204 | $540 | $821 | $4,289 | $(540) | $(899) |
| Total\trevenues,\tnet\tof\tinterest\texpense | $(711) | $(4,226) | $ 2,779 | $ 5,249 | $6,847 | $49,892 | $(7,037) | $52,793 |
| Provisions\tfor\tcredit\tlosses\tand\tfor\tbenefits\tand\tclaims | $— | $381 | $— | $ 4,638 | $5,020 | $29,313 | $(4,638) | $34,714 |
| Expenses |  |  |  |  |  |  |  |  |
| Compensation\tand\tbenefits | $(150) | $9,651 | $— | $667 | $906 | $22,033 | $(667) | $32,440 |
| Compensation\tand\tbenefits—intercompany | 9 | 912 | — | 188 | 189 | (1,110) | (188) | — |
| Other\texpense | 219 | 4,197 | 3 | 663 | 1,260 | 33,015 | (663) | 38,694 |
| Other\texpense—intercompany | 594 | 1,828 | 51 | 451 | 498 | (2,971) | (451) | — |
| Total\toperating\texpenses | $672 | $ 16,588 | $54 | $ 1,969 | $2,853 | $50,967 | $(1,969) | $71,134 |
| Income\t(loss)\tfrom\tcontinuing\toperations\tbefore\ttaxes,\tminority |  |  |  |  |  |  |  |  |
| interest,\tand\tequity\tin\tundistributed\tincome\tof\tsubsidiaries | $(1,383) | $(21,195) | $ 2,725 | $(1,358) | $(1,026) | $(30,388) | $(430) | $(53,055) |
| Income\ttaxes\t(benefits) | (2,223) | (8,463) | 953 | (526) | (310) | (10,569) | 526 | (20,612) |
| Minority\tinterest,\tnet\tof\ttaxes | — | — | — | — | — | (349) | — | (349) |
| Equities\tin\tundistributed\tincome\tof\tsubsidiaries | (29,122) | — | — | — | — | — | 29,122 | — |
| Income\t(loss)\tfrom\tcontinuing\toperations | $(28,282) | $(12,732) | $ 1,772 | $(832) | $(716) | $(19,470) | $28,166 | $(32,094) |
| Income\tfrom\tdiscontinued\toperations,\tnet\tof\ttaxes | 598 | — | — | — | — | 3,812 | — | 4,410 |
| Net\tincome\t(loss) | $(27,684) | $(12,732) | $ 1,772 | $(832) | $(716) | $(15,658) | $28,166 | $(27,684) |

|  |  |  |  |  |  | Other |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  |  |  |  |  | Citigroup |  |  |
|  |  |  |  |  |  | subsidiaries, |  |  |
|  |  |  |  |  |  | eliminations |  |  |
|  |  |  |  |  |  | and\tincome |  |  |
|  | Citigroup |  |  |  |  | from |  |  |
| In\tmillions\tof\tdollars | parent\ncompany | CGMHI | CFI | CCC | Associates | discontinued\noperations | Consolidating\nadjustments | Citigroup\nconsolidated |
| Revenues |  |  |  |  |  |  |  |  |
| Dividends\tfrom\tsubsidiary\tbanks\tand\tbank\tholding\tcompanies | $10,632 | $— | $— | $— | $— | $— | $(10,632) | $— |
| Interest\trevenue | 426 | 31,438 | 6 | \t 6,754 | 7,854 | 81,705 | (6,754) | 121,429 |
| Interest\trevenue—intercompany | 5,507 | 1,695 | \t 6,253 | 137 | 630 | (14,085) | (137) | — |
| Interest\texpense | 7,994 | 24,489 | \t 4,331 | 189 | 759 | 38,478 | (189) | 76,051 |
| Interest\texpense—intercompany | (80) | 5,871 | 882 | \t 2,274 | 2,955 | (9,628) | (2,274) | — |
| Net\tinterest\trevenue | $(1,981) | $2,773 | $1,046 | $4,428 | $4,770 | $38,770 | $(4,428) | $45,378 |
| Commissions\tand\tfees | $— | $ 11,089 | $— | $95 | $186 | $9,431 | $(95) | $20,706 |
| Commissions\tand\tfees—intercompany | (3) | 184 | — | 21 | 25 | (206) | (21) | — |
| Principal\ttransactions | 380 | (11,382) | (68) | — | 2 | (1,018) | — | (12,086) |
| Principal\ttransactions—intercompany | 118 | 605 | (561) | — | (30) | (132) | — | — |
| Other\tincome | (1,233) | 4,594 | 150 | 452 | 664 | 20,322 | (452) | 24,497 |
| Other\tincome—intercompany | 1,008 | 1,488 | (117) | 26 | (30) | (2,349) | (26) | — |
| Total\tnon-interest\trevenues | $270 | $6,578 | $(596) | $594 | $817 | $26,048 | $(594) | $33,117 |
| Total\trevenues,\tnet\tof\tinterest\texpense | $8,921 | $9,351 | $450 | $5,022 | $5,587 | $64,818 | $(15,654) | $78,495 |
| Provisions\tfor\tcredit\tlosses\tand\tfor\tbenefits\tand\tclaims | $— | $40 | $— | $2,515 | $2,786 | $15,091 | $(2,515) | $17,917 |
| Expenses |  |  |  |  |  |  |  |  |
| Compensation\tand\tbenefits | $170 | $ 11,631 | $— | $679 | $894 | $21,197 | $(679) | $33,892 |
| Compensation\tand\tbenefits—intercompany | 11 | 1 | — | 161 | 162 | (174) | (161) | — |
| Other\texpense | 383 | 3,696 | 2 | 524 | 713 | 21,116 | (524) | 25,910 |
| Other\texpense—intercompany | 241 | 1,959 | 71 | 299 | 397 | (2,668) | (299) | — |
| Total\toperating\texpenses | $805 | $ 17,287 | $73 | $1,663 | $2,166 | $39,471 | $(1,663) | $59,802 |
| Income\t(loss)\tfrom\tcontinuing\toperations\tbefore\ttaxes, |  |  |  |  |  |  |  |  |
| minority\tinterest,\tand\tequity\tin\tundistributed\tincome\tof |  |  |  |  |  |  |  |  |
| subsidiaries | $8,116 | $(7,976) | $377 | $844 | $635 | $10,256 | $(11,476) | $776 |
| Income\ttaxes\t(benefits) | (933) | (3,050) | 133 | 287 | 205 | 1,147 | (287) | (2,498) |
| Minority\tinterest,\tnet\tof\ttaxes | — | — | — | — | — | 285 | — | 285 |
| Equities\tin\tundistributed\tincome\tof\tsubsidiaries | (5,432) | — | — | — | — | — | 5,432 | — |
| Income\t(loss)\tfrom\tcontinuing\toperations | $3,617 | $(4,926) | $244 | $557 | $430 | $8,824 | $(5,757) | $2,989 |
| Income\tfrom\tdiscontinued\toperations,\tnet\tof\ttaxes | — | — | — | — | — | 628 | — | 628 |
| Net\tincome\t(loss) | $3,617 | $(4,926) | $244 | $557 | $430 | $9,452 | $(5,757) | $3,617 |

|  |  |  |  |  |  | Other |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  |  |  |  |  | Citigroup |  |  |
|  |  |  |  |  |  | subsidiaries, |  |  |
|  |  |  |  |  |  | eliminations |  |  |
|  |  |  |  |  |  | and\tincome |  |  |
|  | Citigroup |  |  |  |  | from |  |  |
|  | parent |  |  |  |  | discontinued | Consolidating | Citigroup |
| In\tmillions\tof\tdollars | company | CGMHI | CFI | CCC | Associates | operations | adjustments | consolidated |
| Revenues |  |  |  |  |  |  |  |  |
| Dividends\tfrom\tsubsidiary\tbanks\tand\tbank\tholding\tcompanies | $17,327 | $— | $— | $— | $— | $— | $(17,327) | $— |
| Interest\trevenue | 453 | \t 23,757 | — | \t 5,989 | 7,073 | 62,328 | (5,989) | 93,611 |
| Interest\trevenue—intercompany | 4,213 | 608 | \t 3,298 | 88 | 419 | (8,538) | (88) | — |
| Interest\texpense | 6,041 | \t 18,787 | \t 2,153 | 190 | 722 | 27,980 | (190) | 55,683 |
| Interest\texpense—intercompany | (53) | 2,940 | 890 | \t 1,710 | 2,472 | (6,249) | (1,710) | — |
| Net\tinterest\trevenue | $(1,322) | $2,638 | $255 | $4,177 | $4,298 | $32,059 | $(4,177) | $37,928 |
| Commissions\tand\tfees | $— | $9,539 | $— | $66 | $156 | $9,155 | $(66) | $18,850 |
| Commissions\tand\tfees—intercompany | — | 274 | — | 43 | 42 | (316) | (43) | — |
| Principal\ttransactions | 44 | 4,319 | (285) | — | 15 | 3,897 | — | 7,990 |
| Principal\ttransactions—intercompany | (14) | (295) | 152 | — | — | 157 | — | — |
| Other\tincome | 126 | 3,879 | 46 | 458 | 618 | 16,890 | (458) | 21,559 |
| Other\tincome—intercompany | (120) | 802 | (18) | 9 | 18 | (682) | (9) | — |
| Total\tnon-interest\trevenues | $36 | $18,518 | $(105) | $576 | $849 | $29,101 | $(576) | $48,399 |
| Total\trevenues,\tnet\tof\tinterest\texpense | $16,041 | $21,156 | $150 | $4,753 | $5,147 | $61,160 | $(22,080) | $86,327 |
| Provisions\tfor\tcredit\tlosses\tand\tfor\tbenefits\tand\tclaims | $— | $70 | $— | $1,209 | $1,395 | $6,072 | $(1,209) | $7,537 |
| Expenses |  |  |  |  |  |  |  |  |
| Compensation\tand\tbenefits | $93 | $11,240 | $— | $759 | $967 | $17,452 | $(759) | $29,752 |
| Compensation\tand\tbenefits—intercompany | 7 | 1 | — | 137 | 138 | (146) | (137) | — |
| Other\texpense | 174 | 3,661 | 1 | 528 | 690 | 16,023 | (528) | 20,549 |
| Other\texpense—intercompany | 155 | 1,627 | 44 | 198 | 266 | (2,092) | (198) | — |
| Total\toperating\texpenses | $429 | $16,529 | $45 | $1,622 | $2,061 | $31,237 | $(1,622) | $50,301 |
| Income\tfrom\tcontinuing\toperations\tbefore\ttaxes,\tminority |  |  |  |  |  |  |  |  |
| interest,\tand\tequity\tin\tundistributed\tincome\tof\tsubsidiaries | $15,612 | $4,557 | $105 | $1,922 | $1,691 | $23,851 | $(19,249) | $28,489 |
| Income\ttaxes\t(benefits) | (757) | 1,344 | 41 | 687 | 545 | 6,576 | (687) | 7,749 |
| Minority\tinterest,\tnet\tof\ttaxes | — | — | — | — | — | 289 | — | 289 |
| Equities\tin\tundistributed\tincome\tof\tsubsidiaries | 5,169 | — | — | — | — | — | (5,169) | — |
| Income\tfrom\tcontinuing\toperations | $21,538 | $3,213 | $64 | $1,235 | $1,146 | $16,986 | $(23,731) | $20,451 |
| Income\tfrom\tdiscontinued\toperations,\tnet\tof\ttaxes | — | 89 | — | — | — | 998 | — | 1,087 |
| Net\tincome | $21,538 | $3,302 | $64 | $1,235 | $1,146 | $17,984 | $(23,731) | $21,538 |

# Condensed	Consolidating	Balance	Sheet

|  |  |  |  |  |  | Other |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  |  |  |  |  | Citigroup |  |  |
|  | Citigroup |  |  |  |  | subsidiaries |  |  |
|  | parent |  |  |  |  | and | Consolidating | Citigroup |
| In\tmillions\tof\tdollars | company | CGMHI | CFI | CCC | Associates | eliminations | adjustments | consolidated |
| Assets |  |  |  |  |  |  |  |  |
| Cash\tand\tdue\tfrom\tbanks | $— | $3,142 | $— | $149 | $211 | $25,900 | $(149) | $29,253 |
| Cash\tand\tdue\tfrom\tbanks—intercompany | 13 | 1,415 | 1 | 141 | 185 | (1,614) | (141) | — |
| Federal\tfunds\tsold\tand\tresale\tagreements | — | \t 167,589 | — | — | — | 16,544 | — | 184,133 |
| Federal\tfunds\tsold\tand\tresale\tagreements—intercompany | — | 31,446 | — | — | — | (31,446) | — | — |
| Trading\taccount\tassets | 20 | \t 155,136 | 88 | — | 15 | 222,376 | — | 377,635 |
| Trading\taccount\tassets—intercompany | 818 | 11,197 | 4,439 | — | 182 | (16,636) | — | — |
| Investments | 25,611 | 382 | — | 2,059 | 2,366 | 227,661 | (2,059) | 256,020 |
| Loans,\tnet\tof\tunearned\tincome | — | 663 | — | \t 48,663 | 55,387 | 638,166 | (48,663) | 694,216 |
| Loans,\tnet\tof\tunearned\tincome—intercompany | — | — | \t 134,744 | 3,433 | 11,129 | (145,873) | (3,433) | — |
| Allowance\tfor\tloan\tlosses | — | (122) | — | (3,415) | (3,649) | (25,845) | 3,415 | (29,616) |
| Total\tloans,\tnet | $— | $541 | $134,744 | $48,681 | $62,867 | $466,448 | $(48,681) | $664,600 |
| Advances\tto\tsubsidiaries | 167,043 | — | — | — | — | (167,043) | — | — |
| Investments\tin\tsubsidiaries | 149,424 | — | — | — | — | — | (149,424) | — |
| Other\tassets | 12,148 | 74,740 | 51 | 6,156 | 6,970 | 332,920 | (6,156) | 426,829 |
| Other\tassets—intercompany | 14,998 | \t 108,952 | 3,997 | 254 | 504 | (128,451) | (254) | — |
| Total\tassets | $ 370,075 | $554,540 | $143,320 | $57,440 | $73,300 | $946,659 | $(206,864) | $1,938,470 |
| Liabilities\tand\tstockholders'\tequity |  |  |  |  |  |  |  |  |
| Deposits | $— | $— | $— | $— | $— | $774,185 | $— | $774,185 |
| Federal\tfunds\tpurchased\tand\tsecurities\tloaned\tor\tsold | — | \t 165,914 | — | — | — | 39,379 | — | 205,293 |
| Federal\tfunds\tpurchased\tand\tsecurities\tloaned\tor\tsold—intercompany | 8,673 | 34,007 | — | — | — | (42,680) | — | — |
| Trading\taccount\tliabilities | — | 70,006 | 14 | — | — | 97,458 | — | 167,478 |
| Trading\taccount\tliabilities—intercompany | 732 | 12,751 | 2,660 | — | — | (16,143) | — | — |
| Short-term\tborrowings | 2,571 | 9,735 | 30,994 | — | 222 | 83,169 | — | 126,691 |
| Short-term\tborrowings—intercompany | — | 87,432 | 66,615 | 6,360 | 39,637 | (193,684) | (6,360) | — |
| Long-term\tdebt | 192,290 | 20,623 | 37,374 | 2,214 | 8,333 | 100,973 | (2,214) | 359,593 |
| Long-term\tdebt—intercompany | — | 60,318 | 878 | \t 40,722 | 17,655 | (78,851) | (40,722) | — |
| Advances\tfrom\tsubsidiaries | 7,660 | — | — | — | — | (7,660) | — | — |
| Other\tliabilities | 7,347 | 75,722 | 855 | 1,907 | 1,808 | 77,868 | (1,907) | 163,600 |
| Other\tliabilities—intercompany | 9,172 | 10,213 | 232 | 833 | 332 | (19,949) | (833) | — |
| Stockholders'\tequity | 141,630 | 7,819 | 3,698 | 5,404 | 5,313 | 132,594 | (154,828) | 141,630 |
| Total\tliabilities\tand\tstockholders'\tequity | $ 370,075 | $554,540 | $143,320 | $57,440 | $73,300 | $946,659 | $(206,864) | $1,938,470 |

|  |  |  |  |  |  | Other |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  |  |  |  |  | Citigroup |  |  |
|  | Citigroup |  |  |  |  | subsidiaries |  |  |
|  | parent |  |  |  |  | and | Consolidating | Citigroup |
| In\tmillions\tof\tdollars | company | CGMHI | CFI | CCC | Associates | eliminations | adjustments | consolidated |
| Assets |  |  |  |  |  |  |  |  |
| Cash\tand\tdue\tfrom\tbanks | $— | $4,405 | $2 | $182 | $280 | $33,519 | $(182) | $38,206 |
| Cash\tand\tdue\tfrom\tbanks—intercompany | 19 | 892 | — | 139 | 160 | (1,071) | (139) | — |
| Federal\tfunds\tsold\tand\tresale\tagreements | — | \t 242,771 | — | — | — | 31,295 | — | 274,066 |
| Federal\tfunds\tsold\tand\tresale\tagreements—intercompany | — | 12,668 | — | — | — | (12,668) | — | — |
| Trading\taccount\tassets | 12 | \t 273,662 | 303 | — | 30 | 264,977 | — | 538,984 |
| Trading\taccount\tassets—intercompany | 262 | 7,648 | 1,458 | — | 5 | (9,373) | — | — |
| Investments | 10,934 | 431 | — | 2,275 | 2,813 | 200,830 | (2,275) | 215,008 |
| Loans,\tnet\tof\tunearned\tincome | — | 758 | — | \t 49,705 | 58,944 | 718,291 | (49,705) | 777,993 |
| Loans,\tnet\tof\tunearned\tincome—intercompany | — | — | \t 106,645 | 3,987 | 12,625 | (119,270) | (3,987) | — |
| Allowance\tfor\tloan\tlosses | — | (79) | — | (1,639) | (1,828) | (14,210) | 1,639 | (16,117) |
| Total\tloans,\tnet | $— | $679 | $106,645 | $52,053 | $69,741 | $584,811 | $(52,053) | $761,876 |
| Advances\tto\tsubsidiaries | 111,155 | — | — | — | — | (111,155) | — | — |
| Investments\tin\tsubsidiaries | 165,866 | — | — | — | — | — | (165,866) | — |
| Other\tassets | 7,804 | 88,333 | 76 | 5,552 | 7,227 | 255,900 | (5,552) | 359,340 |
| Other\tassets—intercompany | 6,073 | 32,051 | 4,846 | 273 | 480 | (43,450) | (273) | — |
| Total\tassets | $ 302,125 | $663,540 | $113,330 | $60,474 | $80,736 | $1,193,615 | $(226,340) | $2,187,480 |
| Liabilities\tand\tstockholders'\tequity |  |  |  |  |  |  |  |  |
| Deposits | $— | $— | $— | $— | $— | $826,230 | $— | $826,230 |
| Federal\tfunds\tpurchased\tand\tsecurities\tloaned\tor\tsold | — | \t 260,129 | — | — | — | 44,114 | — | 304,243 |
| Federal\tfunds\tpurchased\tand\tsecurities\tloaned\tor\tsold—intercompany | 1,486 | 10,000 | — | — | — | (11,486) | — | — |
| Trading\taccount\tliabilities | — | \t 117,627 | 121 | — | — | 64,334 | — | 182,082 |
| Trading\taccount\tliabilities—intercompany | 161 | 6,327 | 375 | — | 21 | (6,884) | — | — |
| Short-term\tborrowings | 5,635 | 16,732 | 41,429 | — | 1,444 | 81,248 | — | 146,488 |
| Short-term\tborrowings—intercompany | — | 59,461 | 31,691 | 5,742 | 37,181 | (128,333) | (5,742) | — |
| Long-term\tdebt | 171,637 | 31,401 | 36,395 | 3,174 | 13,679 | 174,000 | (3,174) | 427,112 |
| Long-term\tdebt—intercompany | — | 39,606 | 957 | \t 42,293 | 19,838 | (60,401) | (42,293) | — |
| Advances\tfrom\tsubsidiaries | 3,555 | — | — | — | — | (3,555) | — | — |
| Other\tliabilities | 4,580 | 98,425 | 268 | 2,027 | 1,960 | 82,645 | (2,027) | 187,878 |
| Other\tliabilities—intercompany | 1,624 | 9,640 | 165 | 847 | 271 | (11,700) | (847) | — |
| Stockholders'\tequity | 113,447 | 14,192 | 1,929 | 6,391 | 6,342 | 143,403 | (172,257) | 113,447 |
| Total\tliabilities\tand\tstockholders'\tequity | $ 302,125 | $663,540 | $113,330 | $60,474 | $80,736 | $1,193,615 | $(226,340) | $2,187,480 |

# Condensed	Consolidating	Statements	of	Cash	Flows

|  |  |  |  |  |  | Other |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  |  |  |  |  | Citigroup |  |  |
|  | Citigroup |  |  |  |  | subsidiaries |  |  |
| In\tmillions\tof\tdollars | parent\ncompany | CGMHI | CFI | CCC | Associates | and\neliminations | Consolidating\nadjustments | Citigroup\nconsolidated |
| Net\tcash\t(used\tin)\tprovided\tby\toperating\tactivities\tof\tcontinuing\noperations | $5,600 | $(21,162) | $(1,028) | $ 4,591 | $4,677 | $108,453 | $(4,591) | $96,540 |
| Cash\tflows\tfrom\tinvesting\tactivities |  |  |  |  |  |  |  |  |
| Change\tin\tloans | $— | $91 | $(26,363) | $(3,177) | $(1,118) | $(243,131) | $3,177 | $(270,521) |
| Proceeds\tfrom\tsales\tand\tsecuritizations\tof\tloans | — | 98 | — | — | — | 313,710 | — | 313,808 |
| Purchases\tof\tinvestments | (188,901) | (47) | — | (1,065) | (1,338) | (154,050) | 1,065 | (344,336) |
| Proceeds\tfrom\tsales\tof\tinvestments | 38,020 | — | — | 309 | 649 | 54,997 | (309) | 93,666 |
| Proceeds\tfrom\tmaturities\tof\tinvestments | 137,005 | — | 3 | 670 | 774 | 71,530 | (670) | 209,312 |
| Changes\tin\tinvestments\tand\tadvances\t—\tintercompany | (83,055) | — | — | (1,062) | 1,496 | 81,559 | 1,062 | — |
| Business\tacquisitions | — | (181) | — | — | — | 181 | — | — |
| Other\tinvesting\tactivities | — | (17,142) | — | — | — | (62,398) | — | (79,540) |
| Net\tcash\t(used\tin)\tprovided\tby\tinvesting\tactivities | $(96,931) | $(17,181) | $(26,360) | $(4,325) | $463 | $62,398 | $4,325 | $(77,611) |
| Cash\tflows\tfrom\tfinancing\tactivities |  |  |  |  |  |  |  |  |
| Dividends\tpaid | $(7,526) | $— | $— | $— | $— | $— | $— | $(7,526) |
| Dividends\tpaid\t—\tintercompany | (239) | (92) | — | — | — | 331 | — | — |
| Issuance\tof\tcommon\tstock | 6,864 | — | — | — | — | — | — | 6,864 |
| Issuance\tof\tpreferred\tstock | 70,626 | — | — | — | — | — | — | 70,626 |
| Treasury\tstock\tacquired | (7) | — | — | — | — | — | — | (7) |
| Proceeds/(repayments)\tfrom\tissuance\tof\tlong-term\tdebt\t—\tthird-party,\tnet | 15,086 | (9,543) | 2,496 | (960) | (5,345) | (45,181) | 960 | (42,487) |
| Proceeds/(repayments)\tfrom\tissuance\tof\tlong-term\tdebt\t—\tintercompany,\tnet | — | 26,264 | — | (956) | (2,183) | (24,081) | 956 | — |
| Change\tin\tdeposits | — | — | — | — | — | (37,811) | — | (37,811) |
| Net\tchange\tin\tshort-term\tborrowings\tand\tother\tinvestment\tbanking\tand |  |  |  |  |  |  |  |  |
| brokerage\tborrowings\t—\tthird-party | (3,197) | (6,997) | (10,100) | — | (112) | 6,610 | — | (13,796) |
| Net\tchange\tin\tshort-term\tborrowings\tand\tother\tadvances\t—\tintercompany | 10,118 | 27,971 | 34,991 | 1,619 | 2,456 | (75,536) | (1,619) | — |
| Capital\tcontributions\tfrom\tparent | — | — | — | — | — | — | — | — |
| Other\tfinancing\tactivities | (400) | — | — | — | — | — | — | (400) |
| Net\tcash\tprovided\tby\t(used\tin)\tfinancing\tactivities | $91,325 | $ 37,603 | $ 27,387 | $(297) | $(5,184) | $(175,668) | $297 | $(24,537) |
| Effect\tof\texchange\trate\tchanges\ton\tcash\tand\tdue\tfrom\tbanks | $— | $— | $— | $— | $— | $(2,948) | $— | $(2,948) |
| Net\tcash\tused\tin\tdiscontinued\toperations | $— | $— | $— | $— | $— | $(397) | $— | $(397) |
| Net\tdecrease\tin\tcash\tand\tdue\tfrom\tbanks | $(6) | $(740) | $(1) | $(31) | $(44) | $(8,162) | $31 | $(8,953) |
| Cash\tand\tdue\tfrom\tbanks\tat\tbeginning\tof\tperiod | $19 | $5,297 | $2 | $321 | $440 | $32,448 | $(321) | $38,206 |
| Cash\tand\tdue\tfrom\tbanks\tat\tend\tof\tperiod\tfrom\tcontinuing\toperations | $13 | $4,557 | $1 | $290 | $396 | $24,286 | $(290) | $29,253 |
| Supplemental\tdisclosure\tof\tcash\tflow\tinformation |  |  |  |  |  |  |  |  |
| Cash\tpaid\tduring\tthe\tyear\tfor: |  |  |  |  |  |  |  |  |
| Income\ttaxes | $440 | $(2,742) | $350 | $228 | $287 | $4,835 | $(228) | $3,170 |
| Interest | $9,341 | $ 16,990 | $3,761 | $ 2,677 | $502 | $25,084 | $(2,677) | $55,678 |
| Non-cash\tinvesting\tactivities: |  |  |  |  |  |  |  |  |
| Transfers\tto\trepossessed\tassets | $— | $— | $— | $ 1,571 | $1,621 | $1,818 | $(1,571) | $3,439 |

|  |  |  |  |  |  | Other |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  |  |  |  |  | Citigroup |  |  |
|  | Citigroup |  |  |  |  | subsidiaries |  |  |
|  | parent |  |  |  |  | and | Consolidating | Citigroup |
| In\tmillions\tof\tdollars | company | CGMHI | CFI | CCC | Associates | eliminations | adjustments | consolidated |
| Net\tcash\t(used\tin)\tprovided\tby\toperating\tactivities\tof\tcontinuing |  |  |  |  |  |  |  |  |
| operations | $(7,572) | $(26,696) | $(269) | $ 3,973 | $3,386 | $(40,386) | $(3,973) | $(71,537) |
| Cash\tflows\tfrom\tinvesting\tactivities |  |  |  |  |  |  |  |  |
| Change\tin\tloans | $— | $174 | $(23,943) | $(7,601) | $(8,389) | $(329,776) | $7,601 | $(361,934) |
| Proceeds\tfrom\tsales\tand\tsecuritizations\tof\tloans | — | — | — | — | — | 273,464 | — | 273,464 |
| Purchases\tof\tinvestments | (25,567) | (302) | — | (690) | (1,662) | (246,895) | 690 | (274,426) |
| Proceeds\tfrom\tsales\tof\tinvestments | 15,475 | — | — | 276 | 755 | 195,523 | (276) | 211,753 |
| Proceeds\tfrom\tmaturities\tof\tinvestments | 8,221 | — | — | 430 | 961 | 112,164 | (430) | 121,346 |
| Changes\tin\tinvestments\tand\tadvances—intercompany | (31,692) | — | — | 4,130 | (1,391) | 33,083 | (4,130) | — |
| Business\tacquisitions | — | — | — | — | — | (15,614) | — | (15,614) |
| Other\tinvesting\tactivities | — | (986) | — | — | — | (15,980) | — | (16,966) |
| Net\tcash\t(used\tin)\tprovided\tby\tinvesting\tactivities | $(33,563) | $(1,114) | $(23,943) | $(3,455) | $(9,726) | $5,969 | $3,455 | $(62,377) |
| Cash\tflows\tfrom\tfinancing\tactivities |  |  |  |  |  |  |  |  |
| Dividends\tpaid | $(10,778) | $— | $— | $— | $— | $— | $— | $(10,778) |
| Dividends\tpaid—intercompany | — | (1,903) | — | (4,900) | (1,500) | 3,403 | 4,900 | — |
| Issuance\tof\tcommon\tstock | 1,060 | — | — | — | — | — | — | 1,060 |
| Redemption\tor\tretirement\tof\tpreferred\tstock | (1,000) | — | — | — | — | — | — | (1,000) |
| Treasury\tstock\tacquired | (663) | — | — | — | — | — | — | (663) |
| Proceeds/(repayments)\tfrom\tissuance\tof\tlong-term\tdebt—third-party,\tnet | 47,271 | 940 | 16,656 | 270 | 457 | (12,345) | (270) | 52,979 |
| Proceeds/(repayments)\tfrom\tissuance\tof\tlong-term\tdebt—intercompany, |  |  |  |  |  |  |  |  |
| net | (399) | 14,097 | — | 9,243 | (4,511) | (9,187) | (9,243) | — |
| Change\tin\tdeposits | — | — | — | — | — | 93,422 | — | 93,422 |
| Net\tchange\tin\tshort-term\tborrowings\tand\tother\tinvestment\tbanking\tand |  |  |  |  |  |  |  |  |
| brokerage\tborrowings—\tthird-party | 5,603 | 2,630 | 7,593 | (1,200) | (886) | (4,515) | 1,200 | 10,425 |
| Net\tchange\tin\tshort-term\tborrowings\tand\tother\tadvances—intercompany | 990 | 12,922 | (410) | (3,998) | 12,717 | (26,219) | 3,998 | — |
| Capital\tcontributions\tfrom\tparent | — | — | 375 | — | — | (375) | — | — |
| Other\tfinancing\tactivities | (951) | — | — | — | — | — | — | (951) |
| Net\tcash\tprovided\tby\t(used\tin)\tfinancing\tactivities | $41,133 | $ 28,686 | $ 24,214 | $(585) | $6,277 | $44,184 | $585 | $144,494 |
| Effect\tof\texchange\trate\tchanges\ton\tcash\tand\tdue\tfrom\tbanks | $— | $— | $— | $— | $— | $1,005 | $— | $1,005 |
| Net\tcash\tprovided\tby\tdiscontinued\toperations | $— | $— | $— | $— | $— | $107 | $— | $107 |
| Net\t(decrease)/increase\tin\tcash\tand\tdue\tfrom\tbanks | $(2) | $876 | $2 | $(67) | $(63) | $10,879 | $67 | $11,692 |
| Cash\tand\tdue\tfrom\tbanks\tat\tbeginning\tof\tperiod | 21 | 4,421 | — | 388 | 503 | 21,569 | (388) | 26,514 |
| Cash\tand\tdue\tfrom\tbanks\tat\tend\tof\tperiod\tfrom\tcontinuing |  |  |  |  |  |  |  |  |
| operations | $19 | $5,297 | $2 | $321 | $440 | $32,448 | $(321) | $38,206 |
| Supplemental\tdisclosure\tof\tcash\tflow\tinformation |  |  |  |  |  |  |  |  |
| Cash\tpaid\tduring\tthe\tyear\tfor: |  |  |  |  |  |  |  |  |
| Income\ttaxes | $(1,225) | $230 | $18 | $387 | $54 | $6,846 | $(387) | $5,923 |
| Interest | 5,121 | 30,388 | 6,711 | 2,315 | 432 | 30,080 | (2,315) | 72,732 |
| Non-cash\tinvesting\tactivities: |  |  |  |  |  |  |  |  |
| Transfers\tto\trepossessed\tassets | $— | $— | $— | $ 1,083 | $1,226 | $1,061 | $(1,083) | $2,287 |

|  |  |  |  |  |  | Other |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  |  |  |  |  | Citigroup |  |  |
|  | Citigroup |  |  |  |  | subsidiaries |  |  |
|  | parent |  |  |  |  | and | Consolidating | Citigroup |
| In\tmillions\tof\tdollars | company | CGMHI | CFI | CCC | Associates | eliminations | adjustments | consolidated |
| Net\tcash\tprovided\tby\t(used\tin)\toperating\tactivities\tof\tcontinuing |  |  |  |  |  |  |  |  |
| operations | $17,391 | $(6,938) | $(142) | $ 3,646 | $3,849 | $(14,325) | $(3,646) | $(165) |
| Cash\tflows\tfrom\tinvesting\tactivities |  |  |  |  |  |  |  |  |
| Change\tin\tloans | $— | $188 | $— | $(5,805) | $(6,011) | $(350,239) | $5,805 | $(356,062) |
| Proceeds\tfrom\tsales\tand\tsecuritizations\tof\tloans | — | — | — | — | — | 253,176 | — | 253,176 |
| Purchases\tof\tinvestments | (15,998) | — | — | (4,239) | (6,103) | (274,023) | 4,239 | (296,124) |
| Proceeds\tfrom\tsales\tof\tinvestments | 4,700 | — | — | 957 | 1,703 | 80,596 | (957) | 86,999 |
| Proceeds\tfrom\tmaturities\tof\tinvestments | 10,623 | — | — | 3,451 | 4,797 | 105,691 | (3,451) | 121,111 |
| Changes\tin\tinvestments\tand\tadvances—intercompany | (21,542) | — | (36,114) | (2,058) | (2,653) | 60,309 | 2,058 | — |
| Business\tacquisitions | — | (9) | — | — | — | 9 | — | — |
| Other\tinvesting\tactivities | — | (4,427) | — | — | — | (8,879) | — | (13,306) |
| Net\tcash\tprovided\tby\tinvesting\tactivities | $(22,217) | $(4,248) | $(36,114) | $(7,694) | $(8,267) | $(133,360) | $7,694 | $(204,206) |
| Cash\tflows\tfrom\tfinancing\tactivities |  |  |  |  |  |  |  |  |
| Dividends\tpaid | $(9,826) | $— | $— | $— | $— | $— | $— | $(9,826) |
| Dividends\tpaid—intercompany | — | (4,644) | — | — | — | 4,644 | — | — |
| Issuance\tof\tcommon\tstock | 1,798 | — | — | — | — | — | — | 1,798 |
| Redemption\tor\tretirement\tof\tpreferred\tstock | (125) | — | — | — | — | — | — | (125) |
| Treasury\tstock\tacquired | (7,000) | — | — | — | — | — | — | (7,000) |
| Proceeds/(repayments)\tfrom\tissuance\tof\tlong-term\tdebt—third-party,\tnet | 22,202 | (11,353) | 14,522 | (881) | (810) | 42,658 | 881 | 67,219 |
| Proceeds/(repayments)\tfrom\tissuance\tof\tlong-term\tdebt—intercompany, |  |  |  |  |  |  |  |  |
| net | (52) | 6,382 | — | 961 | (10,862) | 4,532 | (961) | — |
| Change\tin\tdeposits | — | — | — | (1) | — | 121,203 | 1 | 121,203 |
| Net\tchange\tin\tshort-term\tborrowings\tand\tother\tinvestment\tbanking\tand |  |  |  |  |  |  |  |  |
| brokerage\tborrowings—third-party | (2) | 3,711 | 8,334 | (320) | 34 | 21,826 | 320 | 33,903 |
| Net\tchange\tin\tshort-term\tborrowings\tand\tother\tadvances—intercompany | (1,710) | 17,598 | 12,224 | 3,750 | 15,446 | (43,558) | (3,750) | — |
| Capital\tcontributions\tfrom\tparent | — | — | 1,175 | 238 | 235 | (1,410) | (238) | — |
| Other\tfinancing\tactivities | (685) | — | — | 2 | 2 | (2) | (2) | (685) |
| Net\tcash\tprovided\tby\tfinancing\tactivities | $4,600 | $ 11,694 | $ 36,255 | $ 3,749 | $4,045 | $149,893 | $(3,749) | $206,487 |
| Effect\tof\texchange\trate\tchanges\ton\tcash\tand\tdue\tfrom\tbanks | $— | $— | $— | $— | $— | $645 | $— | $645 |
| Net\tcash\tprovided\tby\tdiscontinued\toperations | $— | $— | $— | $— | $— | $121 | $— | $121 |
| Net\t(decrease)/increase\tin\tcash\tand\tdue\tfrom\tbanks | $(226) | $508 | $(1) | $(299) | $(373) | $2,974 | $299 | $2,882 |
| Cash\tand\tdue\tfrom\tbanks\tat\tbeginning\tof\tperiod | 247 | 3,913 | 1 | 687 | 876 | 18,595 | (687) | 23,632 |
| Cash\tand\tdue\tfrom\tbanks\tat\tend\tof\tperiod\tfrom\tcontinuing |  |  |  |  |  |  |  |  |
| operations | $21 | $4,421 | $— | $388 | $503 | $21,569 | $(388) | $26,514 |
| Supplemental\tdisclosure\tof\tcash\tflow\tinformation |  |  |  |  |  |  |  |  |
| Cash\tpaid\tduring\tthe\tyear\tfor: |  |  |  |  |  |  |  |  |
| Income\ttaxes | $(1,021) | $2,372 | $49 | $593 | $86 | $7,744 | $(593) | $9,230 |
| Interest | 5,492 | 20,720 | 2,893 | 156 | 483 | 21,884 | (156) | 51,472 |
| Non-cash\tinvesting\tactivities: |  |  |  |  |  |  |  |  |
| Transfers\tto\trepossessed\tassets | $— | $— | $— | $ 1,077 | $1,103 | $311 | $(1,077) | $1,414 |

# 34.	SELECTED	QUARTERLY	FINANCIAL	DATA	(UNAUDITED)

|  |  |  |  |  | 2008 | 2007 | 2007 | 2007 | 2007 |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| In\tmillions\tof\tdollars,\texcept\tper\tshare\tamounts | In\tmillions\tof\tdollars,\texcept\tper\tshare\tamounts | Fourth | Third | Second | First | Fourth | Third | Second | First |
| Revenues,\tnet\tof\tinterest\texpense | Revenues,\tnet\tof\tinterest\texpense | $5,595 | $16,680 | $18,077 | $12,441 | $6,419 | $21,640\t\t $25,790\t\t $24,646 | $21,640\t\t $25,790\t\t $24,646 | $21,640\t\t $25,790\t\t $24,646 |
| Operating\texpenses |  | 25,290 | \t 14,425 | \t 15,644 | \t 15,775 | 16,100 | \t 14,152 | \t 14,429 | \t 15,121 |
| Provisions\tfor\tcredit\tlosses\tand\tfor\tbenefits\tand\tclaims | Provisions\tfor\tcredit\tlosses\tand\tfor\tbenefits\tand\tclaims | 12,695 | 9,067 | 7,100 | 5,852 | 7,661 | 4,867 | 2,579 | 2,810 |
| Income\t(loss)\tfrom\tcontinuing\toperations\tbefore\tincome\ttaxes\tand\tminority\tinterest | Income\t(loss)\tfrom\tcontinuing\toperations\tbefore\tincome\ttaxes\tand\tminority\tinterest | $(32,390) | $ (6,812) | $ (4,667) | $ (9,186) | $(17,342) | $2,621\t\t $ | 8,782\t\t $ | 6,715 |
| Income\ttaxes | Income\ttaxes | (10,975) | (3,294) | (2,404) | (3,939) | (7,406) | 492 | 2,619 | 1,797 |
| Minority\tinterest,\tnet\tof\ttaxes | Minority\tinterest,\tnet\tof\ttaxes | (309) | (95) | 76 | (21) | 95 | 20 | 123 | 47 |
| Income\t(loss)\tfrom\tcontinuing\toperations | Income\t(loss)\tfrom\tcontinuing\toperations | $(21,106) | $ (3,423) | $ (2,339) | $ (5,226) | $(10,031) | $2,109\t\t $ | 6,040\t\t $ | 4,871 |
| Income\tfrom\tdiscontinued\toperations,\tnet\tof\ttaxes | Income\tfrom\tdiscontinued\toperations,\tnet\tof\ttaxes | 3,843 | 608 | (156) | 115 | 198 | 103 | 186 | 141 |
| Net\tincome\t(loss) | Net\tincome\t(loss) | $(17,263) | $ (2,815) | $ (2,495) | $ (5,111) | $(9,833) | $2,212\t\t $ | 6,226\t\t $ | 5,012 |
| Earnings\tper\tshare | (1)\t(2) |  |  |  |  |  |  |  |  |
| Basic |  |  |  |  |  |  |  |  |  |
| Income\tfrom\tcontinuing\toperations | Income\tfrom\tcontinuing\toperations | $(4.12) | $(0.71) | $(0.51) | $(1.04) | $(2.03) | $0.43\t\t $ | 1.23\t\t $ | 1.00 |
| Net\tincome | Net\tincome | (3.40) | (0.60) | (0.54) | (1.02) | (1.99) | 0.45 | 1.27 | 1.02 |
| Diluted |  |  |  |  |  |  |  |  |  |
| Income\tfrom\tcontinuing\toperations | Income\tfrom\tcontinuing\toperations | (4.12) | (0.71) | (0.51) | (1.04) | (2.03) | 0.42 | 1.21 | 0.98 |
| Net\tincome |  | $(3.40) | $(0.60) | $(0.54) | $(1.02) | $(1.99) | $0.44\t\t $ | 1.24\t\t $ | 1.01 |
| Common\tstock\tprice\tper\tshare |  |  |  |  |  |  |  |  |  |
| High |  | $23.00 | $21.12 | $26.81 | $29.69 | $48.32 | $52.84\t\t $ | 55.20\t\t $ | 55.25 |
| Low | Low | 3.77 | 14.03 | 16.76 | 18.62 | 29.29 | 45.30 | 51.05 | 48.75 |
| Close |  | 6.71 | 20.51 | 16.76 | 21.42 | 29.44 | 46.67 | 51.29 | 51.34 |
| Dividends\tper\tshare\tof\tcommon\tstock | Dividends\tper\tshare\tof\tcommon\tstock | $0.16 | $0.32 | $0.32 | $0.32 | $0.54 | $0.54\t\t $ | 0.54\t\t $ | 0.54 |

(1) Due	to	averaging	of	shares,	quarterly	earnings	per	share	may	not	add	up	to	the	totals	reported	for	the	full	year.

(2) Diluted	shares	are	equal	to	basic	shares	for	all	four	quarters	of	2008	and	the	fourth	quarter	of	2007	due	to	the	net	loss.	Adding	additional	shares	to	the	denominator	would	result	in	anti-dilution	due to	the	losses	in	2008	and	the	fourth	quarter	of	2007.

# FINANCIAL	DATA	SUPPLEMENT	(Unaudited)

# RATIOS

|  | 2008 | 2007 | 2006 |
| :--- | :--- | :--- | :--- |
| Net\tincome\tto\taverage\tassets | (1.28)% | 0.17% | 1.28% |
| Return\ton\tcommon\tstockholders'\tequity\t^(1) | (28.8) | 2.9 | 18.8 |
| Return\ton\ttotal\tstockholders'\tequity\t^(2) | (20.9) | 3.0 | 18.7 |
| Total\taverage\tequity\tto\taverage\tassets | 6.12 | 5.66 | 6.87 |
| Dividends\tpayout\tratio\t^(3) | NM | 300.0 | 45.5 |

(1)Based	on	net	income	less	preferred	stock	dividends	as	a	percentage	of	average	common stockholders'	equity.

(2)Based	on	net	income	as	a	percentage	of	average	total	stockholders'	equity.

# AVERAGE	DEPOSIT	LIABILITIES	IN	OFFICES	OUTSIDE	THE	U.S. 	(1)

|  | 2008 | 2008 | 2007 | 2007 | 2006 | 2006 |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | Average | Average | Average | Average | Average | Average |
| In\tmillions\tof\tdollars\tat\tyear\tend | balance | interest\trate | balance | interest\trate | balance | interest\trate |
| Banks | $60,315 | 3.25% | $68,538 | 4.72% | $50,478 | 3.56% |
| Other\tdemand\tdeposits | \t 212,781 | 1.85 | \t 208,634 | 2.57 | \t 156,197 | 2.53 |
| Other\ttime\tand\tsavings\tdeposits\t^(2) | \t 243,305 | 3.53 | \t 256,946 | 4.54 | \t 229,376 | 4.01 |
| Total | $516,401 | 2.81% | $534,118 | 3.79% | $436,051 | 3.42% |

(1) Interest	rates	and	amounts	include	the	effects	of	risk	management	activities	and	also	reflect	the	impact	of	the	local	interest	rates	prevailing	in	certain	countries.	See	Note	24	to	the	Consolidated Financial	Statements	on	page	188.

(2) Primarily	consists	of	certificates	of	deposit	and	other	time	deposits	in	denominations	of	$100,000	or	more.

# MATURITY	PROFILE	OF	TIME	DEPOSITS	($100,000	OR	MORE)	IN

# U.S.	OFFICES

| In	millions	of	dollars | Under	3 | Over	3	to	6 | Over	6	to	12 | Over	12 |
| :--- | :--- | :--- | :--- | :--- |
| at\tDecember\t31,\t2008 | months | months | months | months |
| Certificates\tof\tdeposit | $22,951 | $12,769 | $2,078 | $2,199 |
| Other\ttime\tdeposits | 585 | 216 | 157 | 863 |

# SHORT-TERM	AND	OTHER	BORROWINGS	(1)

|  | agreements	to	repurchase^(2) | agreements	to	repurchase^(2) | agreements	to	repurchase^(2) | Commercial	paper | Commercial	paper | Commercial	paper | Other	funds	borrowed^(2) | Other	funds	borrowed^(2) | Other	funds	borrowed^(2) |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| In\tmillions\tof\tdollars | 2008 | 2007 | 2006 | 2008 | 2007 | 2006 | 2008 | 2007 | 2006 |
| Amounts\toutstanding\tat\tyear\tend | $205,293 | $304,243 | $349,235 | $29,125 | $37,343 | $43,695 | $97,566 | $109,145 | $57,138 |
| Average\toutstanding\tduring\tthe\tyear\t^(3) | \t 284,467 | \t 386,628 | \t 290,663 | \t 33,533 | \t 45,204 | \t 32,468 | 86,849 | 95,262 | \t 38,691 |
| Maximum\tmonth-end\toutstanding | \t 354,685 | \t 441,844 | \t 349,235 | \t 41,212 | \t 57,303 | \t 43,695 | \t 121,834 | \t 145,783 | \t 57,138 |
| Weighted-average\tinterest\trate |  |  |  |  |  |  |  |  |  |
| During\tthe\tyear\t^(3)\t(4) | 3.98% | 5.96% | 6.00% | 3.10% | 5.23% | 4.96% | 1.71% | 2.76% | 3.71% |
| At\tyear\tend\t^(5) | 2.22% | 4.52% | 4.81% | 1.67% | 4.92% | 5.28% | 2.40% | 3.62% | 4.47% |

(1) Original	maturities	of	less	than	one	year.

(2) Rates	reflect	prevailing	local	interest	rates	including	inflationary	effects	and	monetary	correction	in	certain	countries.

(3) Excludes	discontinued	operations.

(4) Interest	rates	include	the	effects	of	risk	management	activities.	See	Notes	20	and	24	to	the	Consolidated	Financial	Statements	on	pages	168	and	188,	respectively.

(5) Based	on	contractual	rates	at	year	end.

# LEGAL	AND	REGULATORY	REQUIREMENTS

# Bank	Holding	Company/Financial	Holding	Company

Citigroup's	ownership	of	Citibank,	N.A.	(Citibank)	and	other	banks	makes Citigroup	a	"bank	holding	company"	under	U.S.	law.	Bank	holding	companies are	generally	limited	to	the	business	of	banking,	managing	or	controlling	banks, and	other	closely	related	activities.	Citigroup	is	qualified	as	a	"financial	holding company,"	which	permits	the	Company	to	engage	in	a	broader	range	of	financial activities	in	the	U.S.	and	abroad.	These	activities	include	underwriting	and dealing	in	securities,	insurance	underwriting	and	brokerage,	and	making investments	in	non-financial	companies	for	a	limited	period	of	time,	as	long	as the	Company	does	not	manage	the	non-financial	company's	day-to-day activities,	and	the	Company's	banking	subsidiaries	engage	only	in	permitted cross-marketing	with	the	non-financial	company.	If	Citigroup	ceases	to	qualify as	a	financial	holding	company,	it	could	be	barred	from	new	financial	activities or	acquisitions,	and	have	to	discontinue	the	broader	range	of	activities	permitted to	financial	holding	companies.

# Regulators

As	a	bank	holding	company,	Citigroup	is	regulated	and	supervised	by	the	FRB. Nationally	chartered	subsidiary	banks,	such	as	Citibank,	are	regulated	and supervised	by	the	Office	of	the	Comptroller	of	the	Currency	(OCC);	federal savings	associations	by	the	Office	of	Thrift	Supervision;	and	state-chartered depository	institutions	by	state	banking	departments	and	the	Federal	Deposit Insurance	Corporation	(FDIC).	The	FDIC	has	back-up	enforcement	authority	for banking	subsidiaries	whose	deposits	it	insures.	Overseas	branches	of	Citibank are	regulated	and	supervised	by	the	FRB	and	OCC	and	overseas	subsidiary banks	by	the	FRB.	Such	overseas	branches	and	subsidiary	banks	are	also regulated	and	supervised	by	regulatory	authorities	in	the	host	countries.

# Internal	Growth	and	Acquisitions

Unless	otherwise	required	by	the	FRB,	financial	holding	companies	generally can	engage,	directly	or	indirectly	in	the	U.S.	and	abroad,	in	financial	activities, either	de	novo	or	by	acquisition,	by	providing	after-the-fact	notice	to	the	FRB. However,	the	Company	must	obtain	the	prior	approval	of	the	FRB	before acquiring	more	than	five	percent	of	any	class	of	voting	stock	of	a	U.S.	depository institution	or	bank	holding	company.

Subject	to	certain	restrictions	and	the	prior	approval	of	the	appropriate	federal banking	regulatory	agency,	the	Company	can	acquire	U.S.	depository institutions,	including	out-of-state	banks.	In	addition,	intrastate	bank	mergers	are permitted	and	banks	in	states	that	do	not	prohibit	out-of-state	mergers	may merge.	A	national	or	state	bank	can	establish	a	new	branch	in	another	state	if permitted	by	the	other	state,	and	a	federal	savings	association	can	generally	open new	branches	in	any	state.

The	FRB	must	approve	certain	additional	capital	contributions	to	an	existing non-U.S.	investment	and	certain	acquisitions	by	the	Company	of	an	interest	in	a non-U.S.	company,	including	in	a	foreign	bank,	as	well	as	the	establishment	by Citibank	of	foreign	branches	in	certain	circumstances.

# Dividends

The	Company's	bank	holding	companies	and	banking	subsidiaries	are	limited	in their	ability	to	pay	dividends.	(See	Note	21	to	the	Consolidated	Financial Statements	on	page	171.)	In	addition	to	specific	limitations	on	the	dividends	that subsidiary	banks	can	pay	to	their	holding	companies,	federal	regulators	could prohibit	a	dividend	that	would	be	an	unsafe	or	unsound	banking	practice. It	is	FRB	policy	that	bank	holding	companies	should	generally	pay	dividends on	common	stock	only	out	of	income	available	over	the	past	year,	and	only	if prospective	earnings	retention	is	consistent	with	the	organization's	expected future	needs	and	financial	condition.	Moreover,	bank	holding	companies	should not	maintain	dividend	levels	that	undermine	the	company's	ability	to	be	a	source of	strength	to	its	banking	subsidiaries.

# Transactions	with	Nonbank	Subsidiaries

A	banking	subsidiary's	transactions	with	a	holding	company	or	nonbank subsidiary	generally	are	limited	to	10%	of	the	banking	subsidiary's	capital	stock and	surplus,	with	an	aggregate	limit	of	20%	of	the	banking	subsidiary's	capital stock	and	surplus	for	all	such	transactions.	Such	transactions	must	be	on	arm's- length	terms,	and	certain	credit	transactions	must	be	fully	secured	by	approved forms	of	collateral.

# Liquidation

The	Company's	right	to	participate	in	the	distribution	of	assets	of	a	subsidiary upon	the	subsidiary's	liquidation	will	be	subordinate	to	the	claims	of	the subsidiary's	creditors.	If	the	subsidiary	is	an	insured	depository	institution,	the Company's	claim	as	a	stockholder	or	creditor	will	be	subordinated	to	the	claims of	depositors	and	other	general	or	subordinated	creditors.

In	the	liquidation	of	a	U.S.	insured	depository	institution,	deposits	in	U.S. offices	and	certain	claims	for	administrative	expenses	and	employee compensation	will	have	priority	over	other	general	unsecured	claims,	including deposits	in	offices	outside	the	U.S.,	non-deposit	claims	in	all	offices,	and	claims of	a	parent	such	as	the	Company.	The	FDIC,	which	succeeds	to	the	position	of insured	depositors,	would	be	a	priority	creditor.

An	FDIC-insured	financial	institution	that	is	affiliated	with	a	failed	FDIC- insured	institution	may	have	to	indemnify	the	FDIC	for	losses	resulting	from	the insolvency	of	the	failed	institution,	even	if	this	causes	the	indemnifying institution	also	to	become	insolvent.	Obligations	of	a	subsidiary	depository institution	to	a	parent	company	are	subordinate	to	the	subsidiary's	indemnity liability	and	the	claims	of	its	depositors.

# Other	Bank	and	Bank	Holding	Company	Regulation

The	Company	and	its	banking	subsidiaries	are	subject	to	other	regulatory limitations,	including	requirements	for	banks	to	maintain	reserves	against deposits;	requirements	as	to	risk	based	capital	and	leverage	(see	"Capital Resources	and	Liquidity"	on	page	94	and	Note	20	to	the	Consolidated	Financial Statements	on	page	168);	restrictions	on	the	types	and	amounts	of	loans	that	may be	made	and	the	interest	that	may	be	charged;	and	limitations	on	investments that	can	be	made	and	services	that	can	be	offered.

The	FRB	may	also	expect	the	Company	to	commit	resources	to	its	subsidiary banks	in	certain	circumstances.	However,	the	FRB	may	not	compel	a	bank holding	company	to	remove	capital	from	its	regulated	securities	and	insurance subsidiaries	for	this	purpose.

A	U.S.	bank	is	not	required	to	repay	a	deposit	at	a	branch	outside	the	U.S.	if the	branch	cannot	repay	the	deposit	due	to	an	act	of	war,	civil	strife,	or	action taken	by	the	government	in	the	host	country.

# Privacy	and	Data	Security

Under	U.S.	federal	law,	the	Company	must	disclose	its	privacy	policy	to consumers,	permit	consumers	to	"opt	out"	of	having	non-public	customer information	disclosed	to	third	parties,	and	allow	customers	to	opt	out	of receiving	marketing	solicitations	based	on	information	about	the	customer received	from	another	subsidiary.	States	may	adopt	more	extensive	privacy protections.

The	Company	is	similarly	required	to	have	an	information	security	program	to safeguard	the	confidentiality	and	security	of	customer	information	and	to	ensure its	proper	disposal	and	to	notify	customers	of	unauthorized	disclosure,	consistent with	applicable	law	or	regulation.

# Non-U.S.	Regulation

A	substantial	portion	of	the	Company's	revenues	is	derived	from	its	operations outside	the	U.S.,	which	are	subject	to	the	local	laws	and	regulations	of	the	host country.	Those	requirements	affect	how	the	local	activities	are	organized	and	the manner	in	which	they	are	conducted.	The	Company's	foreign	activities	are	thus subject	to	both	U.S.	and	foreign	legal	and	regulatory	requirements	and supervision,	including	U.S.	laws	prohibiting	companies	from	doing	business	in certain	countries.

# SECURITIES	REGULATION

Certain	of	Citigroup's	subsidiaries	are	subject	to	various	securities	and commodities	regulations	and	capital	adequacy	requirements	of	the	regulatory and	exchange	authorities	of	the	jurisdictions	in	which	they	operate. Subsidiaries'	registrations	include	as	broker-dealer	and	investment	adviser	with the	SEC	and	as	futures	commission	merchant	and	commodity	pool	operator	with the	Commodity	Futures	Trading	Commission	(CFTC).	Subsidiaries' memberships	include	the	New	York	Stock	Exchange,	Inc.	(NYSE)	and	other principal	United	States	securities	exchanges,	as	well	as	the	Financial	Industry Regulatory	Authority	(FINRA)	and	the	National	Futures	Association	(NFA). Citigroup's	primary	U.S.	broker-dealer	subsidiary,	Citigroup	Global	Markets Inc.	(CGMI),	is	registered	as	a	broker-dealer	in	all	50	states,	the	District	of Columbia,	Puerto	Rico,	Taiwan	and	Guam.	CGMI	is	also	a	primary	dealer	in U.S.	Treasury	securities	and	a	member	of	the	principal	United	States	futures exchanges.	CGMI	is	subject	to	extensive	regulation,	including	minimum	capital requirements,	which	are	issued	and	enforced	by,	among	others,	the	SEC,	the CFTC,	the	NFA,	FINRA,	the	NYSE,	various	other	self-regulatory	organizations of	which	CGMI	is	a	member	and	the	securities	administrators	of	the	50	states, the	District	of	Columbia,	Puerto	Rico	and	Guam.	The	SEC	and	the	CFTC	also require	certain	registered	broker-dealers	(including	CGMI)	to	maintain	records concerning	certain	financial	and	securities	activities	of	affiliated	companies	that may	be	material	to	the	broker-dealer,	and	to	file	certain	financial	and	other information	regarding	such	affiliated	companies.

Citigroup's	securities	operations	abroad	are	conducted	through	various subsidiaries	and	affiliates,	principally	Citigroup	Global	Markets	Limited	in London	and	Nikko	Citigroup	Limited	(a	joint	venture	between	CGMHI	and Nikko	Cordial)	and	Nikko	Cordial	in	Tokyo.	Its	securities	activities	in	the	United Kingdom,	which	include	investment	banking,	trading,	and	brokerage	services, are	subject	to	the	Financial	Services	and	Markets	Act	of	2000,	which	regulates organizations	that	conduct	investment	businesses	in	the	United	Kingdom including	capital	and	liquidity	requirements,	and	to	the	rules	of	the	Financial Services	Authority.	Nikko	Citigroup	Limited	and	Nikko	Cordial	are	registered securities	companies	in	Japan,	and	as	such	their	activities	in	Japan	are	regulated principally	by	the	Financial	Services	Agency	of	Japan.	These	and	other subsidiaries	of	Citigroup	are	also	members	of	various	securities	and	commodities exchanges	and	are	subject	to	the	rules	and	regulations	of	those	exchanges. Citigroup's	other	offices	abroad	are	also	subject	to	the	jurisdiction	of	foreign financial	services	regulatory	authorities.

CGMI	is	a	member	of	the	Securities	Investor	Protection	Corporation	(SIPC), which,	in	the	event	of	the	liquidation	of	a	broker-dealer,	provides	protection	for customers'	securities	accounts	held	by	the	firm	of	up	to	$500,000	for	each eligible	customer,	subject	to	a	limitation	of	$100,000	for	claims	for	cash balances.	To	supplement	the	SIPC	coverage,	CGMI	has	purchased	for	the	benefit of	its	customers	additional	protection,	subject	to	an	aggregate	loss	limit	of	$600 million	and	a	per	client	cash	loss	limit	of	up	to	$1.9	million.

# Unresolved	SEC	Staff	Comments

The	Company	is	in	discussion	with	the	SEC	in	response	to	comment	letters received	from	the	SEC	Division	of	Corporate	Finance	primarily	regarding Goodwill.

# CAPITAL	REQUIREMENTS

As	a	registered	broker-dealer,	CGMI	is	subject	to	the	SEC's	Net	Capital	Rule. CGMI	computes	net	capital	under	the	alternative	method	of	the	Net	Capital Rule,	which	requires	the	maintenance	of	minimum	net	capital	equal	to	2%	of aggregate	debit	items	(as	defined).	A	member	of	the	NYSE	may	be	required	to reduce	its	business	if	its	net	capital	is	less	than	4%	of	aggregate	debit	balances (as	defined)	and	may	also	be	prohibited	from	expanding	its	business	or	paying cash	dividends	if	resulting	net	capital	would	be	less	than	5%	of	aggregate	debit balances.	Furthermore,	the	Net	Capital	Rule	does	not	permit	withdrawal	of equity	or	subordinated	capital	if	the	resulting	net	capital	would	be	less	than	5% of	such	aggregate	debit	balances.

The	Net	Capital	Rule	also	limits	the	ability	of	broker-dealers	to	transfer	large amounts	of	capital	to	parent	companies	and	other	affiliates.	Under	the	Net Capital	Rule,	equity	capital	cannot	be	withdrawn	from	a	broker-dealer	without the	prior	approval	of	that	broker-dealer's	designated	examining	authority	(in	the case	of	CGMI,	the	NYSE)	in	certain	circumstances,	including	when	net	capital after	the	withdrawal	would	be	less	than	(i)	120%	of	the	minimum	net	capital required	by	the	Net	Capital	Rule,	or	(ii)	25%	of	the	broker-dealer's	securities position	"haircuts."	"Haircuts"	is	the	term	used	for	deductions	from	capital	of certain	specified	percentages	of	the	market	value	of	securities	to	reflect	the possibility	of	a	market	decline	prior	to	disposition.	In	addition,	the	Net	Capital Rule	requires	broker-dealers	to	notify	the	SEC	and	the	appropriate	self- regulatory	organization	two	business	days	before	any	withdrawals	of	excess	net capital	if	the	withdrawals	(in	the	aggregate	over	any	30-day	period)	would exceed	the	greater	of	$500,000	or	30%	of	the	broker-dealer's	excess	net	capital, and	two	business	days	after	any

withdrawals	(in	the	aggregate	over	any	30-day	period)	that	exceed	the	greater	of $500,000	or	20%	of	excess	net	capital.	The	Net	Capital	Rule	also	authorizes	the SEC	to	order	a	freeze	(for	up	to	20	business	days)	on	the	transfer	of	capital	if	a broker-dealer	plans	a	withdrawal	of	more	than	30%	of	its	excess	net	capital (when	aggregated	with	all	other	withdrawals	during	the	previous	30	days)	and the	SEC	believes	that	such	a	withdrawal	may	be	detrimental	to	the	financial integrity	of	the	broker-dealer	or	may	jeopardize	the	broker-dealer's	ability	to	pay its	customers.

# GENERAL	BUSINESS	FACTORS

In	the	Company's	judgment,	no	material	part	of	the	Company's	business depends	upon	a	single	customer	or	group	of	customers,	the	loss	of	which	would have	a	materially	adverse	effect	on	the	Company,	and	no	one	customer	or	group of	affiliated	customers	accounts	for	as	much	as	10%	of	the	Company's consolidated	revenues.

# PROPERTIES

Citigroup's	principal	executive	offices	are	located	at	399	Park	Avenue	in	New York	City.	Citigroup,	and	certain	of	its	subsidiaries,	is	the	largest	tenant	of	this building.	The	Company	also	has	office	space	in	Citigroup	Center	(153	East	53 Street	in	New	York	City)	under	a	long-term	lease.	Citibank	leases	one	building and	owns	another	in	Long	Island	City,	New	York,	and	has	a	long-term	lease	on	a building	at	111	Wall	Street	in	New	York	City,	which	are	totally	occupied	by	the Company	and	certain	of	its	subsidiaries.

CGMHI	has	its	principal	offices	in	a	building	it	leases	at	388	Greenwich	Street in	New	York	City,	and	also	leases	the	neighboring	building	at	390	Greenwich Street,	both	of	which	are	fully	occupied	by	the	Company	and	certain	of	its subsidiaries.

Banamex	has	its	principal	offices	in	Mexico	City	in	facilities	that	are	part owned	and	part	leased	by	it.	Banamex	has	office	and	branch	sites	throughout Mexico.

The	Company	owns	other	offices	and	certain	warehouse	space,	none	of	which is	material	to	the	Company's	financial	condition	or	operations.

The	Company	believes	its	properties	are	adequate	and	suitable	for	its	business as	presently	conducted	and	are	adequately	maintained.	For	further	information concerning	leases,	see	Note	29	to	the	Consolidated	Financial	Statements	on	page 206.

# LEGAL	PROCEEDINGS

# Enron	Corp.

Beginning	in	2002,	Citigroup,	CGMI	and	certain	executive	officers	and	current and	former	employees	(along	with,	in	many	cases,	other	investment	banks	and certain	Enron	officers	and	directors,	lawyers	and/or	accountants)	were	named	as defendants	in	a	series	of	individual	and	putative	class	action	lawsuits	related	to Enron.	The	putative	securities	class	action	and	all	remaining	individual	actions (other	than	actions	brought	as	part	of	Enron's	Chapter	11	bankruptcy proceeding)	were	consolidated	or	coordinated	in	the	United	States	District	Court for	the	Southern	District	of	Texas.	The	consolidated	securities	class	action, brought	on	behalf	of	a	putative	class	of	individuals	who	purchased	Enron securities	(NEWBY,	ET	AL.	v.	ENRON	CORP.,	ET	AL.),	alleged	violations	of Sections	11	and	15	of	the	Securities	Act	of	1933,	as	amended,	and	Sections	10 and	20	of	the	Securities	Exchange	Act	of	1934,	as	amended.	Citigroup	agreed	to settle	this	action	on	June	10,	2005.	Under	the	terms	of	the	settlement,	approved by	the	District	Court	on	May	24,	2006,	$2.18	billion	was	paid	to	an	escrow account	for	the	benefit	of	the

settlement	class,	which	consists	of	all	purchasers	of	publicly	traded	equity	and debt	securities	issued	by	Enron	and	Enron-related	entities	between	September	9, 1997	and	December	2,	2001.	The	amount	paid	to	settle	this	action	was	covered by	existing	Citigroup	litigation	reserves.

On	April	4,	2008,	Citigroup	announced	an	agreement	to	settle	actions	filed	by Enron	in	its	Chapter	11	bankruptcy	proceedings	seeking	to	recover	payments	to Citigroup	as	alleged	preferences	or	fraudulent	conveyances,	to	disallow	or equitably	subordinate	claims	of	Citigroup	and	Citigroup	transferees	on	the	basis of	alleged	fraud,	and	to	recover	damages	from	Citigroup	for	allegedly	aiding	and abetting	breaches	of	fiduciary	duty.	Under	the	terms	of	the	settlement,	approved by	the	Bankruptcy	Court	for	the	Southern	District	of	New	York	on	April	24, 2008,	Citigroup	made	a	pretax	payment	of	$1.66	billion	to	Enron,	and	waived certain	claims	against	Enron's	estate.	Enron	also	allowed	specified	Citigroup- related	claims	in	the	bankruptcy	proceeding,	including	all	of	the	bankruptcy claims	of	parties	holding	approximately	$2.4	billion	of	Enron	credit-linked	notes ("CLNs"),	and	released	all	claims	against	Citigroup.	Citigroup	separately	agreed to	settle	an	action	brought	by	certain	trusts	that	issued	the	CLNs	in	question,	by the	related	indenture	trustee	and	by	certain	holders	of	those	securities.	The amounts	paid	to	settle	these	actions	were	covered	by	existing	Citigroup	litigation reserves.

A	number	of	other	individual	actions	have	been	settled,	including,	on January	21,	2009,	the	parties	settled	VANGUARD	BALANCED	INDEX FUND,	ET	AL.	v.	CITIGROUP,	ET	AL.,	an	action	filed	in	2003	in Pennsylvania	state	court	by	certain	investment	funds,	and	asserting	claims	under state	securities	and	common	law,	arising	out	of	plaintiffs'	purchase	of	certain Enron-related	securities.	The	case	had	been	coordinated	with	NEWBY (discussed	above)	until	it	was	remanded	to	the	United	States	District	Court	for the	Eastern	District	of	Pennsylvania	in	June	2008.	Pursuant	to	the	settlement,	the case	was	voluntarily	dismissed	on	February	4,	2009.

Additional	actions	remain	pending	against	Citigroup	and	its	affiliates	and	JP Morgan	Chase,	as	co-agents	on	certain	Enron	revolving	credit	facilities.	The plaintiffs	are	commercial	banks	that	participated	in	the	facilities	and	purchasers of	the	resulting	Enron	bank	debt	on	the	secondary	market.	Plaintiffs	allege	that defendants	aided	and	abetted	Enron's	fraud,	and	the	breaches	of	fiduciary	duty	of Enron's	officers,	by	engaging	in	transactions	that	they	knew	Enron	was	not properly	reporting	in	its	financial	statements,	and	that	defendants	knew	that Enron	was	in	default	under	various	provisions	of	its	credit	agreements	and fraudulently	failed	to	advise	the	syndicate	members.	These	cases	have	been consolidated	and	are	pending	in	the	United	States	District	Court	for	the	Southern District	of	New	York.

# Research

WorldCom,	Inc.	Beginning	in	2002,	Citigroup,	CGMI	and	certain	executive officers	and	current	and	former	employees	(along	with,	in	many	cases,	other investment	banks,	certain	WorldCom	officers	and	directors,	and/or	accountants) were	named	as	defendants	in	a	series	of	individual	and	putative	class	action lawsuits	relating	to	the	underwriting	of	WorldCom	securities	and	the	issuance	of research	analyst	reports	concerning	WorldCom.	The	putative	class	action	and	the majority	of	the	individual	actions	were	consolidated	in	the	United	States	District Court	for	the	Southern	District	of	New	York	as	IN	RE	WORLDCOM,	INC. SECURITIES	LITIGATION;	certain	individual	actions	remained	pending	in other	state	and	federal	courts.	Citigroup	settled	the	consolidated	putative	class action	in	May	2004.	Citigroup	has	now	settled	or	obtained	dismissal	of	all	but two	of	the

WorldCom-related	individual	actions.	The	amount	paid	to	settle	these	actions was	covered	by	existing	Citigroup	litigation	reserves.	One	of	the	two	remaining actions,	HOLMES,	ET	AL.	v.	GRUBMAN,	ET	AL.,	was	dismissed	by	the District	Court;	an	appeal	is	pending	in	the	United	States	Court	of	Appeals	for	the Second	Circuit.

Metromedia	Fiber	Network.	Beginning	in	2002,	Citigroup,	CGMI	and	certain executive	officers	and	current	and	former	employees	were	named	as	defendants in	a	series	of	putative	class	action	lawsuits,	alleging	violations	of	the	federal securities	laws,	including	Sections	10	and	20	of	the	Securities	Exchange	Act	of 1934	in	connection	with	Citigroup	research	analyst	reports.	One	of	these	actions, involving	Metromedia	Fiber	Network,	Inc.	("MFN"),	IN	RE	SALOMON ANALYST	METROMEDIA	LITIGATION,	was	brought	in	the	United	States District	Court	for	the	Southern	District	of	New	York.	On	January	6,	2005,	the District	Court	granted	in	part	and	denied	in	part	Citigroup's	motion	to	dismiss	the claims	against	it.	On	June	20,	2006,	the	District	Court	certified	the	plaintiff	class in	the	MFN	action.	On	September	30,	2008,	the	District	Court's	class certification	decision	was	vacated	on	appeal	by	the	United	States	Court	of Appeals	for	the	Second	Circuit.	On	October	1,	2008,	the	parties	reached	a settlement	that	was	preliminarily	approved	by	the	District	Court	on November	19,	2008.	The	amount	to	be	paid	to	settle	this	action	is	covered	by existing	Citigroup	litigation	reserves.

Global	Crossing,	Ltd.	In	January	2004,	the	Global	Crossing	Estate Representative	filed	an	adversary	action	in	the	United	States	Bankruptcy	Court for	the	Southern	District	of	New	York	against	Citigroup	and	several	other	banks seeking	to	rescind	the	payment	of	a	loan	made	to	a	Global	Crossing	subsidiary. Citigroup	moved	to	dismiss	the	action	in	May	2004,	and	the	motion	remains pending.	On	August	20,	2008,	Plaintiff	filed	an	amended	complaint	that narrowed	the	pending	claims.	Citigroup	has	yet	to	respond	to	the	amended complaint.

Disher.	In	March	2004,	a	putative	research-related	customer	class	action alleging	various	state	law	claims	arising	out	of	the	issuance	of	allegedly misleading	research	analyst	reports,	DISHER	v.	CITIGROUP	GLOBAL MARKETS	INC.,	was	filed	in	Illinois	state	court.	Citigroup	removed	this	action to	federal	court,	and	in	August	2005	the	United	States	Court	of	Appeals	for	the Seventh	Circuit	reversed	the	District	Court's	August	2004	order	remanding	the case	to	state	court,	and	directed	the	District	Court	to	dismiss	plaintiffs'	claims	as preempted.	On	June	26,	2006,	the	United	States	Supreme	Court	granted plaintiffs'	petition	for	a	writ	of	certiorari,	vacated	the	Seventh	Circuit's	opinion and	remanded	the	case	to	the	Seventh	Circuit	for	further	proceedings.	On January	22,	2007,	the	Seventh	Circuit	dismissed	Citigroup's	appeal	from	the District	Court's	removal	order	for	lack	of	appellate	jurisdiction.	On	February	1, 2007,	plaintiffs	secured	an	order	reopening	this	case	in	Illinois	state	court,	and on	February	16,	Citigroup	removed	the	reopened	action	to	federal	court.	On May	3,	2007,	the	District	Court	remanded	the	action	to	Illinois	state	court,	and on	June	13,	2007,	Citigroup	moved	in	state	court	to	dismiss	the	action,	which motion	remains	pending.

Arbitrations.	In	addition	to	the	various	lawsuits	discussed	above,	similar	claims against	Citigroup	and	certain	of	its	affiliates	relating	to	research	analyst	reports concerning	the	securities	mentioned	above,	and	other	securities,	are	pending	in several	arbitrations	around	the	country.

# Parmalat

On	July	29,	2004,	Enrico	Bondi,	as	extraordinary	commissioner	of	Parmalat	and other	affiliated	entities	("Bondi"),	filed	a	lawsuit	in	New	Jersey	state	court against	Citigroup,	Citibank,	and	certain	allegedly	controlled	Citigroup	entities, alleging	that	the	Citigroup	defendants	participated	in	fraud	committed	by	the officers	and	directors	of	Parmalat	and	seeking	unspecified	damages.	The	action alleged	a	variety	of	claims	under	New	Jersey	state	law,	including	fraud, negligent	misrepresentation,	and	violations	of	the	New	Jersey	Fraudulent Transfer	Act	and	the	New	Jersey	RICO	statute.	After	motion	practice,	the Citigroup	defendants	answered	the	complaint	and	Citibank	filed	counterclaims alleging	causes	of	action	for	fraud,	negligent	misrepresentation,	conversion	and breach	of	warranty.

On	April	15,	2008,	the	court	granted	the	Citigroup	defendants'	motion	for summary	judgment	on	all	claims,	except	the	claim	relating	to	allegations	of aiding	and	abetting	Parmalat	insiders	in	breaching	their	fiduciary	duties	to Parmalat,	insofar	as	that	claim	pertained	to	the	insiders'	larceny	from	Parmalat. The	court	also	denied	Bondi's	motion	for	summary	judgment	on	Citibank's counterclaim.

Trial	commenced	on	May	5,	2008.	On	October	20,	2008,	the	jury	returned	a verdict	in	favor	of	the	Citigroup	defendants.	On	Bondi's	claim,	the	jury	found that	the	Citigroup	defendants	were	not	liable.	On	Citibank's	counterclaims,	the jury	found	in	favor	of	Citibank	and	awarded	damages	of	$364	million,	plus interest	and	court	costs.	The	court	subsequently	denied	Bondi's	motions	for	a new	trial	on	his	claim,	and	for	judgment	notwithstanding	the	verdict	on Citibank's	counterclaims.	Bondi	filed	a	notice	of	appeal	on	January	28,	2009. Citigroup	(along	with,	among	others,	numerous	other	investment	banks	and certain	former	Parmalat	officers	and	accountants)	also	is	involved	in	various Parmalat-related	proceedings	in	Italy.	In	one	such	action,	the	Milan	prosecutor has	obtained	the	indictments	of	numerous	individuals,	including	a	Citigroup employee,	for	offenses	under	Italian	law	that	arise	out	of	the	collapse	of Parmalat.	The	trial	in	this	action	commenced	on	January	22,	2008,	and	is ongoing.	In	connection	with	this	proceeding,	the	Milan	prosecutor	may	seek administrative	remedies	against	Citigroup.	In	addition,	a	number	of	private parties,	including	former	investors	in	Parmalat	securities,	have	applied	to	join	the Milan	proceedings	as	civil	claimants	and	are	seeking	unspecified	civil	damages against	numerous	parties,	including	the	Citigroup	defendants.	In	Parma,	a	public prosecutor	is	conducting	a	criminal	investigation	into	alleged	bankruptcy offenses	relating	to	the	collapse	of	Parmalat.	In	December	2007,	the	prosecutor notified	12	current	and	former	Citigroup	employees	that	he	is	seeking	their indictment.	A	preliminary	hearing	on	the	alleged	offenses	with	respect	to	these Citigroup	employees	began	on	April	21,	2008,	and	is	ongoing.	On	October	8, 2008,	the	Italian	Court	issued	an	order	permitting	Parmalat	investors	to	proceed with	civil	claims	against	Citigroup,	subject	to	proper	service	of	a	summons	on Citigroup.	Additionally,	Bondi	has	attempted	to	file	a	civil	complaint	against Citigroup	in	the	context	of	the	Parma	proceedings,	seeking	14	billion	Euro	in damages.	The	Italian	Court	directed	him	to	serve	the	complaint,	which	he	did	in November	2008.

# Subprime	Mortgage–Related	Litigation	and	Other	Matters

Beginning	in	November	2007,	Citigroup	and	a	number	of	current	and	former officers,	directors,	and	employees	have	been	named	as	defendants	in	numerous complaints	brought	by	Citigroup	shareholders,	investors,

counterparties	and	others	concerning	Citigroup's	activities	relating	to	subprime mortgages,	including	Citigroup's	exposure	to	collateralized	debt	obligations ("CDOs"),	mortgage-backed	securities	("MBS"),	and	structured	investment vehicles	("SIVs"),	Citigroup's	underwriting	activity	for	subprime	mortgage lenders,	and	Citigroup's	more	general	involvement	in	subprime-	and	credit- related	activities.

Securities	Actions:	Four	putative	class	actions	were	filed	in	the	Southern District	of	New	York	by	Citigroup	shareholders	alleging	violations	of	Sections 10	and	20	of	the	Securities	Exchange	Act	of	1934.	On	August	19,	2008,	these actions	were	consolidated	under	the	caption	IN	RE	CITIGROUP	SECURITIES LITIGATION,	and	lead	plaintiff	and	counsel	were	appointed.	Plaintiffs' consolidated	amended	class	action	complaint	was	filed	on	December	1,	2008, and	alleges,	among	other	things,	that	Citigroup's	stock	price	was	artificially inflated	as	a	result	of	purportedly	misleading	disclosures	concerning	Citigroup's subprime	mortgage–related	exposures.

On	September	30	and	October	28,	2008,	Citigroup,	certain	Citigroup	entities, certain	current	and	former	directors	and	officers	of	Citigroup	and	Citigroup Funding,	Inc.,	and	certain	underwriters	of	Citigroup	notes	(including	CGMI) were	named	as	defendants	in	two	putative	class	actions	filed	in	New	York	state court	but	since	removed	to	the	United	States	District	Court	for	the	Southern District	of	New	York.	These	actions	allege	violations	of	Sections	11,	12,	and	15 of	the	Securities	Act	of	1933,	arising	out	of	various	offerings	of	Citigroup	notes during	2006,	2007,	and	2008.	On	December	10,	2008,	these	two	actions	were consolidated	under	the	caption	IN	RE	CITIGROUP	INC.	BOND	LITIGATION, and	lead	plaintiff	and	counsel	were	appointed.	On	January	15,	2009,	plaintiffs filed	a	consolidated	class	action	complaint.

Derivative	Actions:	Eleven	derivative	actions	have	been	filed	against	various current	and	former	officers	and	directors	of	Citigroup	alleging	mismanagement in	connection	with	subprime	mortgage–related	exposures.	Citigroup	is	named	as a	nominal	defendant	in	these	actions.

On	February	5,	2008,	four	derivative	actions	filed	in	Delaware	Chancery	Court were	consolidated	under	the	caption	IN	RE	CITIGROUP	INC. SHAREHOLDER	DERIVATIVE	LITIGATION	and	lead	plaintiff	and	counsel were	appointed.	On	September	15,	2008,	the	parties	stipulated	to	the	filing	of	the consolidated	second	amended	derivative	complaint.	Defendants	filed	motions	to dismiss	and	stay	the	complaint	on	November	5,	2008.	On	February	24,	2009,	the court	dismissed	every	claim	in	the	complaint	except	one,	as	to	which	it	said	that it	did	not	have	sufficient	information.

On	August	22,	2008,	the	five	derivative	actions	filed	in	the	Southern	District	of New	York	were	consolidated	under	the	caption	IN	RE	CITIGROUP	INC. SHAREHOLDER	DERIVATIVE	LITIGATION,	and	lead	plaintiff	and	counsel were	appointed.	On	November	11,	2008,	plaintiffs	filed	a	consolidated complaint,	which	alleges	federal	securities	fraud	and	state	law	violations. Defendants	filed	a	motion	to	dismiss	the	complaint	on	December	23,	2008. Two	derivative	actions	filed	in	New	York	state	court	have	been	stayed	by stipulation	between	the	parties.

ERISA	Actions:	Fourteen	putative	class	actions	have	been	filed	in	the	Southern District	of	New	York	asserting	claims	under	the	Employee	Retirement	Income Security	Act	("ERISA")	against	Citigroup	and	certain	Citigroup	employees alleged	to	have	served	as	ERISA	plan	fiduciaries.	On	January	22,	2008,	13	of these	actions	were	consolidated	under	the	caption	IN	RE	CITIGROUP	ERISA LITIGATION,	and	lead	plaintiff	and	counsel	were

appointed.	On	December	16,	2008,	the	fourteenth	action	was	consolidated	into this	litigation.	On	September	15,	2008,	plaintiffs	filed	a	consolidated	amended complaint	on	behalf	of	a	purported	class	of	participants	in	Citigroup-sponsored ERISA	plans	from	January	1,	2007	through	January	15,	2008.	The	complaint alleges	that	defendants	offered	Citigroup's	common	stock	as	an	investment option	in	the	Company's	401(k)	plans	when	it	was	no	longer	prudent	to	do	so, and	that	defendants	failed	adequately	to	disclose	Citigroup's	subprime	exposure to	ERISA	plan	beneficiaries.	Defendants	filed	a	motion	to	dismiss	the	complaint on	November	21,	2008.

# Other	Matters:

Underwriting	Actions.	American	Home	Mortgage.	On	March	21,	2008,	19 putative	class	actions	brought	by	shareholders	of	American	Home	Mortgage Investment	Corp.,	pending	in	the	United	States	District	Court	for	the	Eastern District	of	New	York,	were	consolidated	under	the	caption	IN	RE	AMERICAN HOME	MORTGAGE	SECURITIES	LITIGATION.	On	June	3,	2008,	plaintiffs filed	a	consolidated	amended	complaint,	alleging	violations	of	Sections	11	and 12	of	the	Securities	Act	of	1933	arising	out	of	allegedly	false	and	misleading statements	contained	in	the	registration	statements	and	prospectuses	issued	in connection	with	two	offerings	of	American	Home	Mortgage	securities underwritten	by	CGMI,	among	others.	Defendants,	including	Citigroup	and CGMI,	filed	a	motion	to	dismiss	the	complaint	on	September	12,	2008. Countrywide.	The	Company	has	been	named	in	several	putative	class	actions lawsuits	alleging	violations	of	Section	11	and	12	of	the	Securities	Act	of	1933 relating	to	its	role	as	one	of	numerous	underwriters	of	offerings	of	securities	and mortgage	pass-through	certificates	issued	by	Countrywide.	The	lawsuits	include a	consolidated	action	filed	in	the	United	States	District	Court	for	the	Central District	of	California	and	two	other	lawsuits	pending	in	the	Superior	Court	of	the California,	Los	Angeles	County.

Lehman.	The	Company	has	been	named	in	several	putative	class	action lawsuits	alleging	violations	of	Section	11	and	12	of	the	Securities	Act	of	1933 relating	to	its	role	as	one	of	numerous	underwriters	of	offerings	of	securities issued	by	Lehman	Brothers.	The	lawsuits	are	currently	pending	in	the	United States	District	Courts	for	the	Southern	District	of	New	York,	the	Eastern	District of	New	York	and	the	Eastern	and	Western	Districts	of	Arkansas.

Fannie	Mae.	Beginning	in	August	2008,	Citigroup	Global	Markets	Inc.,	along with	a	number	of	other	financial	institutions,	was	named	as	a	defendant	in	eight complaints	filed	by	shareholders	of	Federal	National	Mortgage	Association ("Fannie	Mae")	in	connection	with	the	underwriting	of	three	offerings	of	Fannie Mae	stock	during	2007	and	2008.	CGMI,	along	with	the	other	defendants, moved	to	dismiss	three	of	the	suits	that	alleged	violations	of	Section	12(a)(2)	of the	Securities	Act	of	1933.	The	remaining	actions	allege	violations	of Section	10(b)	of	the	Securities	Exchange	Act.	On	January	29,	2009,	the	U.S. Judicial	Panel	on	Multidistrict	Litigation	heard	oral	argument	on	whether	all lawsuits	pending	against	CGMI	and	several	other	lawsuits	pending	against	other defendants	should	be	consolidated.

Freddie	Mac.	Citigroup	Global	Markets	Inc.,	along	with	a	number	of	other financial	institutions,	has	been	named	as	a	defendant	in	two	lawsuits	pending	in the	United	States	District	Court	for	the	Southern	District	of	New	York	brought by	Freddie	Mac	shareholders	who	purchased	preferred	shares	traceable	to	a November	2007	offering	of	Z	Preferred	Shares.	Plaintiffs	allege	violations	of Section	12(a)(2)	of	the	Securities	Act	of	1933	and	Section	10(b)	of	the	Securities Exchange	Act	of	1934	because	the	offering	materials	failed	to	disclose	Freddie Mac's	exposure	to	mortgage-related	losses,	poor

underwriting	procedures	and	risk	management,	and	the	resulting	negative	impact to	Freddie's	capital.

Ambac	Financial	Group.	On	May	9,	2008,	four	putative	class	actions	brought by	shareholders	of	Ambac	Financial	Group,	Inc.,	pending	in	the	United	States District	Court	for	the	Southern	District	of	New	York,	were	consolidated	under the	caption	IN	RE	AMBAC	FINANCIAL	GROUP,	INC.	SECURITIES LITIGATION.	On	August	22,	2008,	plaintiffs	filed	a	consolidated	amended class	action	complaint	alleging	violations	of	Sections	11	and	12	of	the	Securities Act	of	1933	arising	out	of	allegedly	false	and	misleading	statements	contained	in the	registration	statements	and	prospectuses	issued	in	connection	with	offerings of	Ambac	securities,	some	of	which	were	underwritten	by	CGMI.	Defendants filed	a	motion	to	dismiss	the	complaint	on	October	21,	2008.

AIG.	Beginning	in	October	2008,	four	putative	class	actions	were	filed	in	the United	States	District	Court	for	the	Southern	District	of	New	York	by	American International	Group,	Inc.	("AIG")	investors	and	shareholders.	These	actions allege	violations	of	Sections	11,	12,	and	15	of	the	Securities	Act	of	1933	arising out	of	allegedly	false	and	misleading	statements	contained	in	the	registration statements	and	prospectuses	issued	in	connection	with	offerings	of	AIG	debt securities	and	common	stock,	some	of	which	were	underwritten	by	CGMI. Public	Nuisance	and	Related	Actions.	City	of	Cleveland	v.	Ameriquest Mortgage	Securities,	Inc.:	On	January	10,	2008,	the	City	of	Cleveland,	Ohio sued	Citigroup,	along	with	a	number	of	other	financial	institutions,	alleging	that defendants'	real	estate	lending	activities	constitute	a	public	nuisance	under	Ohio common	law.	On	October	8,	2008,	the	City	of	Cleveland	filed	a	second	amended complaint	against	numerous	financial	institutions,	including	CGMI	and	Citibank, in	the	United	States	District	Court	for	the	Northern	District	of	Ohio.	Defendants filed	a	motion	to	dismiss	the	complaint	on	November	24,	2008.

On	September	30,	2008,	Citibank,	N.A.	voluntarily	dismissed	its	federal	action against	the	City	of	Cleveland,	Ohio	seeking	declaratory	and	injunctive	relief	on the	ground	that	the	City	of	Cleveland's	public	nuisance	claim,	asserted	in	a separate	action,	is	preempted	by	federal	law	and	may	not	be	asserted	against national	banks	and	their	operating	subsidiaries.

Brewton	v.	Deutsche	Bank	Trust	Co.:	On	February	27,	2008,	plaintiff, proceeding	pro	se,	filed	a	complaint	against	numerous	financial	institutions, including	Citigroup,	alleging	that	defendants'	real	estate	lending	activities constitute	a	public	nuisance	under	Ohio	common	law.	The	case	was	removed	to the	United	States	District	Court	for	the	Northern	District	of	Ohio.	On	March	27, 2008,	Citigroup	answered	the	complaint.	On	November	14,	2008,	the	District Court	ordered	plaintiff	to	file	a	brief	by	December	19,	2008,	demonstrating	why he	has	standing	to	bring	his	claims.	No	such	brief	was	filed.

City	of	Cleveland	v.	J.P.	Morgan	Chase	Bank,	N.A.:	On	August	22,	2008,	the City	of	Cleveland	filed	a	complaint	in	Ohio	state	court	against	numerous financial	institutions,	including	CitiMortgage	and	CitiFinancial,	alleging violations	of	the	Ohio	Corrupt	Activities	Act	and	seeking	demolition	costs. CitiMortgage	and	CitiFinancial	filed	a	motion	to	sever	on	October	30,	2008. Other	cities	have	or	may	file	similar	complaints.

Regulatory	Matters.	Citigroup	and	certain	of	its	affiliates	also	have	received subpoenas	and/or	requests	for	information	from	various	governmental	and	self- regulatory	agencies	relating	to	subprime	mortgage–related	activities.	Citigroup and	its	affiliates	are	cooperating	fully	with	such	requests.

# Auction	Rate	Securities–Related	Litigation	and	Other	Matters

Beginning	in	March	2008,	Citigroup,	CGMI,	and	Smith	Barney,	and	a	number	of current	and	former	officers,	directors,	and	employees,	have	been	named	as defendants	in	numerous	complaints	brought	by	Citigroup	shareholders concerning	Auction	Rate	Securities	("ARS").

Securities	Actions:	Beginning	in	March	2008,	Citigroup,	CGMI	and	Smith Barney	were	named	as	defendants	in	a	series	of	putative	class	action	lawsuits related	to	ARS.	These	actions	have	been	consolidated	into	a	single	action pending	in	the	United	States	District	Court	for	the	Southern	District	of	New York,	captioned	IN	RE	CITIGROUP	AUCTION	RATE	SECURITIES LITIGATION.	A	consolidated	amended	complaint	was	filed	on	August	25, 2008,	asserting	claims	for	market	manipulation	under	Sections	10	and	20	of	the Securities	Exchange	Act	of	1934,	violations	of	the	Investment	Advisers	Act	and various	state	Deceptive	Practices	Acts,	as	well	as	claims	for	breach	of	fiduciary duty	and	injunctive	relief.	Defendants	filed	a	motion	to	dismiss	the	complaint	on October	24,	2008,	which	was	fully	briefed	on	January	23,	2009.

Finn	v.	Smith	Barney,	et	al.:	On	March	21,	2008,	an	investor	filed	a	complaint against	Citigroup,	CGMI	and	Smith	Barney,	and	his	financial	advisor	in	the United	States	District	Court	for	the	Southern	District	of	New	York,	alleging violations	of	Sections	10	and	20	of	the	Securities	Exchange	Act	of	1934	and Section	17	of	the	Securities	Act	of	1933,	as	well	as	claims	for	fraud,	negligent misrepresentation,	suitability,	breach	of	fiduciary	duty,	and	violation	of applicable	NASD	and	FINRA	conduct	rules,	arising	out	of	plaintiff's	investment in	ARS.	This	action	is	currently	stayed.

Hansen	Beverage	Co.	v.	Citigroup	Inc.,	et	al.:	On	July	11,	2008,	a	complaint was	filed	against	Citigroup,	CGMI	and	Smith	Barney,	alleging	violations	of Sections	10	and	20	of	the	Securities	Exchange	Act	of	1934	and	the	Investment Advisers	Act	arising	out	of	plaintiff's	investment	in	ARS.	On	September	22, 2008,	the	Citigroup	defendants	filed	a	motion	to	compel	arbitration,	which	was granted	on	October	10,	2008.	A	motion	to	reconsider	the	District	Court's decision	was	denied	on	October	21,	2008.	This	action	is	currently	stayed, pending	arbitration.

Derivative	Action:	A	derivative	action,	LOUISIANA	MUNICIPAL	POLICE EMPLOYEES'	RETIREMENT	SYSTEM	V.	PANDIT,	et	al.,	was	filed	against certain	officers	and	directors	of	Citigroup	in	the	Southern	District	of	New	York on	August	20,	2008,	asserting	state	law	claims	for	breach	of	fiduciary	duty, insider	selling,	abuse	of	control,	and	gross	mismanagement	and	federal	securities fraud	related	to	ARS.	On	November	7,	2008,	defendants	filed	a	motion	to dismiss	the	action.

Antitrust	Actions:	MAYOR	&	CITY	COUNCIL	OF	BALTIMORE, MARYLAND	v.	CITIGROUP	INC.,	ET	AL.	and	RUSSELL	MAYFIELD,	ET AL.	v.	CITIGROUP	INC.,	ET	AL.,	are	lawsuits	filed	in	the	Southern	District	of New	York	on	behalf	of	a	purported	class	of	ARS	issuers	and	investors, respectively,	against	Citigroup,	CGMI	and	various	other	financial	institutions.	In these	actions,	plaintiffs	allege	violations	of	Section	1	of	the	Sherman	Act	arising out	of	defendants'	alleged	conspiracy	to	artificially	restrain	trade	in	the	ARS market.	The	parties	currently	are	briefing	defendants'	motions	to	dismiss	these complaints,	which	were	filed	on	January	15,	2009.

Arbitrations.	In	addition	to	the	various	lawsuits	discussed	above,	several arbitrations	are	pending	against	Citigroup	and	certain	of	its	affiliates	relating	to ARS	investments.

# Falcon	and	ASTA/MAT–Related	Litigation	and	Other	Matters

Beginning	in	April	2008,	Citigroup	has	been	named	as	defendant	in	various complaints	filed	by	investors	in	the	Falcon	and	ASTA/MAT	funds,	various	of which	remain	pending.

Zentner	v.	Citigroup	Inc.	et	al.:	On	June	26,	2008,	an	investor	in	Falcon Strategies	Plus	LLC	filed	a	putative	class	action	complaint	in	New	York	state court,	asserting	claims	for	fraud	and	negligent	misrepresentation	under	New York	law,	and	breach	of	fiduciary	duty	under	Delaware	law,	relating	to	the marketing	of	shares	and	the	management	of	the	Falcon	fund.	Defendants	filed	a motion	to	dismiss	the	complaint	on	November	28,	2008.

In	re	MAT	Five	Securities	Litigation:	Three	actions	asserting	claims	for	alleged violations	of	Section	12	of	the	Securities	Act	of	1933,	as	well	as	violations	of	the Delaware	Securities	Act	and	breach	of	fiduciary	duty	under	Delaware	law,	were filed	by	investors	in	MAT	Five	LLC	in	the	Southern	District	of	New	York.	These actions	were	consolidated	under	the	caption	IN	RE	MAT	FIVE	SECURITIES LITIGATION.	A	consolidated	class	action	complaint	was	filed	on	October	2, 2008.	Defendants	filed	a	motion	to	dismiss	the	complaint	on	December	4,	2008. Puglisi	v.	Citigroup	Alternative	Investments	LLC,	et	al.:	On	October	17,	2008, an	investor	in	MAT	Five	LLC	filed	a	putative	class	action	complaint	in	New York	state	court,	alleging	breaches	of	fiduciary	duty	relating	to	the	marketing	of shares	and	the	management	of	the	MAT	Five	fund.	On	November	11,	2008, defendants	filed	a	notice	of	removal	to	the	United	States	District	Court	for	the Southern	District	of	New	York.	On	December	1,	2008,	the	District	Court accepted	the	case	as	related	to	IN	RE	MAT	FIVE	SECURITIES	LITIGATION (discussed	above),	and	consolidated	PUGLISI	with	that	action.	Plaintiff	filed	a motion	to	remand	the	action	to	state	court	on	January	9,	2009.

Goodwill	v.	MAT	Five	LLC,	et	al.:	On	June	26,	2008,	an	investor	in	MAT	Five LLC	filed	a	putative	class	action	complaint	in	California	state	court,	alleging violations	of	Section	12	of	the	Securities	Act	of	1933	relating	to	marketing	of shares	of	MAT	Five	LLC.	On	September	2,	2008,	defendants	filed	a	motion	to stay	this	action	pending	the	resolution	of	IN	RE	MAT	FIVE	SECURITIES LITIGATION	(discussed	above).

Marie	Raymond	Revocable	Trust,	et	al.	v.	MAT	Five	LLC,	et	al.:	On	June	19, 2008,	investors	in	MAT	Five	LLC	filed	a	class	action	complaint	in	the	Delaware Court	of	Chancery	seeking	to	enjoin	a	tender	offer	for	all	shares	of	MAT	Five LLC.	On	November	10,	2008,	a	stipulation	of	settlement	was	filed	that	provided for	additional	disclosures	and	additional	consideration	to	be	paid	to	investors. The	settlement	was	approved	by	the	Chancery	Court	on	December	19,	2008.	An appeal	from	the	Chancery	Court's	judgment	approving	the	settlement	was	filed by	class	member	objectors	on	January	14,	2009.

ECA	Acquisitions,	Inc.	v.	MAT	Three	LLC,	et	al.:	On	December	22,	2008, investors	in	MAT	One	LLC,	MAT	Two	LLC,	and	MAT	Three	LLC	filed	a putative	class	action	in	New	York	state	court,	alleging	breaches	of	fiduciary	duty in	connection	with	the	marketing	of	shares	and	the	management	of	these	funds. Defendants	removed	this	action	to	the	United	States	District	Court	for	the Southern	District	of	New	York	on	January	21,	2009.

Arbitrations.	In	addition	to	the	various	lawsuits	discussed	above,	several arbitrations	are	pending	against	Citigroup	and	certain	of	its	affiliates	relating	to ASTA/MAT	investments.

Other	Matters.	Citigroup	and	certain	of	its	affiliates	also	have	received subpoenas	and/or	requests	from	various	governmental	and	self-regulatory agencies	regarding	the	marketing	and	management	of	the	Falcon	and ASTA/MAT	funds.	Citigroup	and	its	affiliates	are	cooperating	fully	with	such requests.

# Allied	Irish	Bank

On	January	31,	2006,	the	United	States	District	Court	for	the	Southern	District	of New	York	partially	denied	motions	filed	by	Citibank	and	a	co-defendant	to dismiss	a	complaint	filed	by	Allied	Irish	Bank,	P.L.C.	("AIB")	in	May	2003, seeking	compensatory	and	punitive	damages	in	connection	with	losses	sustained by	a	subsidiary	of	AIB	in	2000–2002.	The	complaint	alleges	that	defendants	are liable	for	fraudulent	and	fictitious	foreign	currency	trades	entered	into	by	one	of AIB's	traders	through	defendants,	who	provided	prime	brokerage	services.	The court's	ruling	on	the	motions	to	dismiss	allowed	plaintiff's	common	law	claims, including	fraudulent	concealment	and	aiding	and	abetting	fraud,	to	proceed.

# Adelphia	Communications	Corporation

On	July	6,	2003,	an	adversary	proceeding	was	filed	by	the	Official	Committee	of Unsecured	Creditors	on	behalf	of	Adelphia	Communications	Corporation against	certain	lenders	and	investment	banks,	including	CGMI,	Citibank,	N.A., Citicorp	USA,	Inc.,	and	Citigroup	Financial	Products,	Inc.	(together,	the "Citigroup	Parties").	The	complaint	alleged	that	the	Citigroup	Parties	and numerous	other	defendants	committed	acts	in	violation	of	the	Bank	Holding Company	Act,	the	Bankruptcy	Code,	and	common	law.	It	sought	an	unspecified amount	of	damages.	In	November	2003,	a	similar	adversary	proceeding	was filed	by	the	Equity	Holders	Committee	of	Adelphia,	asserting	additional statutory	and	common	law	claims.	In	June	2004,	motions	to	dismiss	were	filed with	respect	to	the	complaints	of	the	two	committees.	Those	motions	were decided	by	the	bankruptcy	court,	and	were	granted	in	part	and	denied	in	part.	The district	court	affirmed	in	part	and	reversed	in	part	the	bankruptcy	court's decision.	The	Adelphia	Recovery	Trust,	which	has	replaced	the	committees	as the	plaintiff	in	the	action,	has	filed	an	amended	complaint	on	behalf	of	the Adelphia	Estate,	consolidating	the	two	prior	complaints;	motions	to	dismiss	the amended	complaint	and	answers	have	been	filed.

In	addition,	CGMI	was	among	the	underwriters	named	in	civil	actions	brought by	investors	in	Adelphia	debt	securities	in	connection	with	Adelphia	securities offerings	between	September	1997	and	October	2001.	Following	settlements	of the	class	action,	which	is	pending	appeal,	and	other	individual	actions,	two	cases remain	outstanding.	The	Second	Circuit	is	considering	whether	the	plaintiff	in one	has	proper	standing	to	sue.	In	September	2007,	motions	to	dismiss	in	the other	case	were	granted	in	part	and	denied	in	part.

# IPO	Securities	Litigation

In	April	2002,	consolidated	amended	complaints	were	filed	against	CGMI	and other	investment	banks	named	in	numerous	putative	class	actions	filed	in	the United	States	District	Court	for	the	Southern	District	of	New	York,	alleging violations	of	certain	federal	securities	laws	(including	Section	11	of	the Securities	Act	of	1933,	as	amended,	and	Section	10(b)	of	the	Securities Exchange	Act	of	1934,	as	amended)	with	respect	to	the	allocation	of	shares	for certain	initial	public	offerings,	related	aftermarket	transactions	and	damage	to investors	caused	by	allegedly	biased	research	analyst	reports.

Defendants'	motion	to	dismiss	was	denied.	On	October	13,	2004,	the	court granted	in	part	the	motion	to	certify	class	actions	for	six	focus	cases	in	the securities	litigation.	CGMI	is	not	a	defendant	in	any	of	the	six	focus	cases.	In December	2006,	the	United	States	Court	of	Appeals	for	the	Second	Circuit reversed	the	District	Court	and	held	that	the	classes	could	not	be certified.	Plaintiffs	filed	a	petition	for	rehearing	in	January	2007;	that	petition was	denied,	and	the	case	was	remanded	to	the	lower	court.	Plaintiffs	filed amended	pleadings	in	August	2007	and	a	new	motion	for	class	certification	in September	2007.	Defendants	moved	to	dismiss	the	amended	pleadings in	November	2007	and	filed	an	opposition	to	the	new	motion	for	class certification	in	December	2007.	On	March	26,	2008,	the	Southern	District	of New	York	denied	in	part	and	granted	in	part	Defendants'	motions	to	dismiss	the amended	complaints.	Following	mediation,	a	settlement	in	principle	has	been reached,	subject	to	negotiation	of	definitive	documentation	and	court	approval.

# Interchange	Fees

Citigroup	Inc.	and	certain	of	its	subsidiaries	are	defendants,	together	with	Visa, MasterCard,	and	various	other	banks,	in	actions	filed	on	behalf	of	a	putative class	of	retail	merchants	that	accept	Visa	and	MasterCard	payment	cards.	The first	of	these	actions	was	filed	in	June	2005,	and	the	lawsuits	were	subsequently consolidated	for	pretrial	proceedings,	together	with	related	lawsuits	brought	by individual	plaintiffs	against	Visa	and	MasterCard,	in	the	United	States	District Court	for	the	Eastern	District	of	New	York	under	the	caption	In	re	Payment Card	Interchange	Fee	and	Merchant	Discount	Litigation.	On	April	24,	2006, putative	class	plaintiffs	filed	a	First	Consolidated	and	Amended	Class	Action Complaint	("Consolidated	Complaint").	The	Consolidated	Complaint	alleges, among	other	things,	that	Defendants	have	engaged	in	conspiracies	to	set	the	price of	interchange	and	merchant	discount	fees	on	credit	and	off-line	debit	card transactions,	in	violation	of	Section	1	of	the	Sherman	Act	and	a	California statute.	The	complaint	also	alleges	additional	federal	antitrust	violations	by Defendants	of	Section	1	and	Section	2	of	the	Sherman	Act,	including	alleged unlawful	contracts	in	restraint	of	trade	pertaining	to	various	rules	governing merchant	conduct	maintained	by	Visa	or	MasterCard	and	alleged	unlawful maintenance	of	monopoly	power	by	Visa	and	its	member	banks.	The	District Court	granted	Defendants'	motion	to	dismiss	all	claims	for	damages	that	pre- date	January	1,	2004.	On	May	22,	2006,	the	putative	class	plaintiffs	filed	a supplemental	complaint	against	MasterCard	and	certain	other	bank	defendants, including	Citigroup	Inc.	and	certain	of	its	subsidiaries,	alleging	that MasterCard's	initial	public	offering	("IPO")	in	2006	violated	Section	7	of	the Clayton	Act	and	Section	1	of	the	Sherman	Act.	The	supplemental	complaint	also alleged	that	the	MasterCard	IPO	was	a	fraudulent	conveyance	under	New	York state	law.	The	defendants	to	the	supplemental	complaint	filed	a	motion	to dismiss	its	claims,	which	the	District	Court	granted,	with	leave	to	amend.	On January	29,	2009,	plaintiffs	filed	an	amended	supplemental	complaint challenging	MasterCard's	IPO,	and	also	filed	(1)	a	supplemental	complaint challenging	Visa's	IPO	on	similar	grounds,	and	(2)	a	second	amended consolidated	complaint,	adding	claims	related	to	(a)	alleged	continuing violations	of	the	antitrust	laws	by	all	defendants	after	the	Visa	and	MasterCard IPOs,	(b)	PIN	debit	transactions	on	the	Visa	network	and	(c)	alleged	unlawful maintenance	of	monopoly	power	by	MasterCard	and	its	member	banks. Plaintiffs'	motion	for	class	certification,	filed	on	May	8,	2008,	remains	pending.

# Wachovia/Wells	Fargo	Litigation

On	September	29,	2008,	Citigroup	Inc.	announced	that	it	had	reached	an agreement-in-principle	to	acquire	all	of	the	banking	subsidiaries	of	Wachovia Corporation	("Wachovia")	in	an	open-bank	transaction	assisted	by	the	Federal Deposit	Insurance	Corporation.	On	October	3,	2008,	Wachovia	announced	that	it had	entered	into	an	agreement	with	Wells	Fargo	&	Co.	("Wells	Fargo")	for Wells	Fargo	to	purchase	Wachovia.	Since	October	4,	2008,	litigation	has	been instigated	by	all	three	parties	and	others	in	various	courts,	including	the	New York	State	Supreme	Court	and	the	United	States	District	Court	for	the	Southern District	of	New	York.	In	this	litigation,	Citigroup	seeks	compensatory	and punitive	damages	from	Wachovia	and	Wells	Fargo	and	their	respective	directors and	advisors	on	various	claims,	including	violation	of	a	binding	exclusivity agreement	(the	"Exclusivity	Agreement")	between	Citigroup	and	Wachovia; tortious	interference	with	the	Exclusivity	Agreement;	and	unjust	enrichment. Wachovia	and	Wells	Fargo	seek,	among	other	relief,	a	declaration	that	the	Wells Fargo-Wachovia	transaction	is	valid	and	proper	and	not	prohibited	by	the Exclusivity	Agreement.

Leber.	In	October	2007,	a	purported	class	action	complaint,	LEBER	v. CITIGROUP	INC.,	ET	AL.,	was	filed	against	Citigroup	and	its	administration and	investment	committees,	alleging	that	they	engaged	in	prohibited	transactions and	breached	their	fiduciary	duties	of	loyalty	and	prudence	by	authorizing	or causing	the	Citigroup	401(k)	Plan	to	invest	in	Citigroup-affiliated	mutual	funds and	to	purchase	services	from	Citigroup-affiliated	entities.	On	July	18,	2008, plaintiffs	filed	an	amended	class	action	complaint.	On	August	29,	2008, defendants	filed	a	motion	to	dismiss	the	complaint.	On	October	31,	2008, plaintiffs	filed	a	motion	to	certify	a	class	of	all	participants	in	the	Citigroup 401(k)	Plan	from	2001	through	the	present.

Pension	Plan	Litigation.	Beginning	in	June	2005,	certain	participants	in	the Citigroup	Pension	Plan	filed	putative	class	action	complaints	against	the Citigroup	Pension	Plan	and	other	Citigroup	defendants,	alleging	violations	of ERISA.	In	September	2005,	the	claims	were	consolidated	as	IN	RE CITIGROUP	PENSION	PLAN	ERISA	LITIGATION	in	the	United	States District	Court	for	the	Southern	District	of	New	York.	Plaintiffs	filed	a consolidated	amended	class	action	complaint	alleging,	among	other	things,	that (i)	the	Citigroup	Pension	Plan	is	impermissibly	backloaded	due	to	insufficient interest	credits,	(ii)	the	Citigroup	Pension	Plan's	"fractional	test"	method	of computing	accrued	benefits	is	precluded	under	ERISA,	(iii)	the	Citigroup Pension	Plan	illegally	discriminates	based	on	age,	and	(iv)	Citigroup	Pension Plan	participants	were	not	provided	proper	notice	that	the	2000	and	2002	cash balance	amendments	would	reduce	the	rate	of	future	benefit	accrual.	In December	2006,	the	District	Court	denied	defendants'	summary	judgment motion,	granted	summary	judgment	to	plaintiffs	on	their	backloading,	age discrimination	and	notice	claims,	and	ordered	the	Citigroup	Pension	Plan reformed	to	comply	with	ERISA.	The	District	Court	also	granted	plaintiffs' motion	for	class	certification.	In	November	2007,	the	District	Court:	(i)	ordered that	defendants	fix	the	Citigroup	Pension	Plan's	unlawful	backloading	by increasing	pay	credits,	(ii)	denied	plaintiffs'	request	for	additional	relief	on	their backloading	claims,	(iii)	denied	plaintiffs'	request	for	relief	on	their	notice claims,	and	(iv)	reserved	its	rulings	on	the	proper	remedy,	if	any,	for	the Citigroup	Pension	Plan's	violation	of	ERISA's	ban	on	age	discrimination.	In January	2008,	the	District	Court	entered	a

partial	final	judgment	on	the	backloading	and	notice	claims	pursuant	to	Federal Rule	of	Civil	Procedure	54(b)	and	stayed	the	judgment	pending	appeal. Defendants	filed	a	notice	of	appeal	on	January	22,	2008,	and	plaintiffs	cross appealed	on	January	30,	2008;	oral	argument	is	scheduled	for	March	2009.

individual	purchasers	of	10-1/2%	Senior	Subordinated	Notes	(the	"Notes") issued	in	1995	in	connection	with	the	leveraged	recapitalization	of	Bruno's	Inc. sued	the	underwriters	of	the	Notes,	including	Salomon	Brothers,	Inc.,	together with	Bruno's	auditors,	in	Alabama	state	court.	Plaintiffs	brought	state	law	claims arising	out	of,	among	other	things,	alleged	material	misrepresentations	and omissions	in	the	Prospectus	issued	in	connection	with	the	offering.	The	case	was filed	following	the	prior	dismissal,	after	years	of	motion	practice,	of	a	lawsuit brought	in	April	2000	by	the	investment	advisor	to	these	46	plaintiffs	on	behalf of	its	clients,	which	alleged	identical	claims	against	defendants.	Plaintiffs	allege that	they	purchased	$190	million	of	the	Notes	and	seek	compensatory	damages, punitive	damages,	attorneys'	fees	and	costs.	After	the	commencement	of	the case	in	2004,	the	parties	engaged	in	extensive	procedural	motion	practice,	which resulted	in	the	dismissal	of	several	defendants	on	October	14,	2005.	Discovery	is ongoing	and	trial	is	currently	scheduled	to	commence	in	February	2010.

# Settlement	Payments

Payments	required	in	settlement	agreements	described	above	have	been	made	or are	covered	by	existing	litigation	reserves.

Additional	lawsuits	containing	claims	similar	to	those	described	above	may	be filed	in	the	future.

# UNREGISTERED	SALES	OF	EQUITY	SECURITIES	AND	USE	OF	PROCEEDS

# Share	Repurchases

Under	its	long-standing	repurchase	program,	the	Company	buys	back	common	shares	in	the	market	or	otherwise	from	time	to	time.	This	program	is	used	for	many purposes,	including	offsetting	dilution	from	stock-based	compensation	programs.

The	following	table	summarizes	the	Company's	share	repurchases	during	2008:

|  |  | Average | authorized |
| :--- | :--- | :--- | :--- |
|  | Total\tshares | price\tpaid | repurchase |
| In\tmillions,\texcept\tper\tshare\tamounts | repurchased | per\tshare | program |
| First\tquarter\t2008 |  |  |  |
| Open\tmarket\trepurchases\t^(1) | 0.2 | $27.19 | $6,743 |
| Employee\ttransactions\t^(2) | 5.0 | 25.26 | N/A |
| Total\tfirst\tquarter\t2008 | 5.2 | $25.31 | $6,743 |
| Second\tquarter\t2008 |  |  |  |
| Open\tmarket\trepurchases\t^(3) | — | $— | $6,743 |
| Employee\ttransactions | 0.8 | 22.91 | N/A |
| Total\tsecond\tquarter\t2008 | 0.8 | $22.91 | $6,759 |
| Third\tquarter\t2008 |  |  |  |
| Open\tmarket\trepurchases\t^(3) | 0.1 | $20.27 | $6,742 |
| Employee\ttransactions | 1.5 | 17.94 | N/A |
| Total\tthird\tquarter\t2008 | 1.6 | $17.96 | $6,742 |
| October\t2008 |  |  |  |
| Open\tmarket\trepurchases\t^(3) | — | $— | $6,742 |
| Employee\ttransactions | 0.2 | 18.96 | N/A |
| November\t2008 |  |  |  |
| Open\tmarket\trepurchases\t^(3) | 0.1 | $8.06 | $6,741 |
| Employee\ttransactions | 0.4 | 15.20 | N/A |
| December\t2008 |  |  |  |
| Open\tmarket\trepurchases\t^(3) | — | $— | $6,741 |
| Employee\ttransactions | 0.6 | 8.37 | N/A |
| Fourth\tquarter\t2008 |  |  |  |
| Open\tmarket\trepurchases\t^(3) | 0.1 | $9.72 | $6,741 |
| Employee\ttransactions | 1.2 | 12.63 | N/A |
| Total\tfourth\tquarter\t2008 | 1.3 | $12.42 | $6,741 |
| Year-to-date\t2008 |  |  |  |
| Open\tmarket\trepurchases | 0.4 | $21.30 | $6,741 |
| Employee\ttransactions | 8.5 | 21.94 | N/A |
| Total\tyear-to-date\t2008 | 8.9 | $21.91 | $6,741 |

(1) All	open	market	repurchases	were	transacted	under	an	existing	authorized	share	repurchase	plan.	On	April	17,	2006,	the	Board	of	Directors	authorized	up	to	an	additional	$10	billion	in	share repurchases.

(2) Consists	of	shares	added	to	treasury	stock	related	to	activity	on	employee	stock	option	program	exercises,	where	the	employee	delivers	existing	shares	to	cover	the	option	exercise,	or	under	the Company's	employee	restricted	or	deferred	stock	program,	where	shares	are	withheld	to	satisfy	tax	requirements.

(3) Represents	repurchases	recorded	related	to	customer	fails/errors.

# Executive	Officers

Citigroup's	Executive	Officers	on	February	27,	2009	are:

| Name | Age | Position	and	office	held |
| :--- | :--- | :--- |
| Shirish\tApte | 56 | CEO,\tCentral\tand\tEastern\tEurope |
| Ajay\tBanga | 49 | CEO,\tAsia |
| Sir\tWinfried\tF.W.\tBischoff | 67 | Former\tChairman |
| Don\tCallahan | 52 | Chief\tAdministrative\tOfficer |
| Gary\tCrittenden | 55 | Chief\tFinancial\tOfficer |
| Terri\tDial | 59 | CEO,\tConsumer\tBanking\tNorth\tAmerica;\tGlobal |
|  |  | Head,\tConsumer\tStrategy |
| James\tA.\tForese | 46 | Head,\tGlobal\tCapital\tMarkets |
| Steven\tJ.\tFreiberg | 51 | Chairman\t&amp;\tCEO,\tCiti\tHoldings—Global\tConsumer |
| John\tC.\tGerspach | 55 | Controller\tand\tChief\tAccounting\tOfficer |
| John\tHavens | 52 | Head,\tGlobal\tInstitutional\tBank |
| Michael\tS.\tHelfer | 63 | General\tCounsel\tand\tCorporate\tSecretary |
| Lewis\tB.\tKaden | 66 | Vice\tChairman |
| Edward\tJ.\tKelly,\tIII | 55 | Head,\tGlobal\tBanking\tand\tCiti\tAlternative\tInvestments |
| Brian\tLeach | 49 | Chief\tRisk\tOfficer |
| Manuel\tMedina-Mora | 58 | Chairman\t&amp;\tCEO,\tLatin\tAmerica\t&amp;\tMexico |
| William\tJ.\tMills | 53 | CEO,\tWestern\tEurope,\tMiddle\tEast\tand\tAfrica |
| Vikram\tS.\tPandit | 52 | Chief\tExecutive\tOfficer |
| William\tR.\tRhodes | 73 | Senior\tVice\tChairman;\tChairman,\tPresident\t&amp;\tCEO, |
|  |  | Citibank,\tN.A. |
| Stephen\tR.\tVolk | 72 | Vice\tChairman |

Each	executive	officer	has	held	executive	or	management	positions	with	the Company	for	at	least	five	years,	except	that:

•	Mr.	Callahan	joined	Citigroup	in	2007.	Prior	to	joining	Citi,	Mr.	Callahan	was a	Managing	Director	and	Head	of	Client	Coverage	Strategy	for	the	Investment Banking	Division	at	Credit	Suisse.	From	1993	to	2006,	Mr.	Callahan	worked at	Morgan	Stanley,	serving	in	numerous	roles,	including	Global	Head	of Marketing	and	Head	of	Marketing	for	the	Institutional	Equities	Division	and for	the	Institutional	Securities	Group.

•	Mr.	Crittenden	joined	Citigroup	in	March	2007.	Prior	to	joining	Citigroup, Mr.	Crittenden	was	Executive	Vice	President,	Chief	Financial	Officer,	and Head	of	Global	Network	Services	at	American	Express	from	2000	to	2007. •	Ms.	Dial	joined	Citigroup	in	June	2008.	Prior	to	joining	Citi,	Ms.	Dial	served as	Group	Executive	Director	of	UK	Retail	Banking	and	as	a	member	of	the Board	of	Directors	at	Lloyds	TSB	Group	plc.	Prior	to	Lloyds	TSB,	Ms.	Dial was	President	and	Chief	Executive	Officer	of	Wells	Fargo	Bank,	a	subsidiary of	Wells	Fargo	&	Co.

•	Mr.	Havens	joined	Citigroup	in	2007.	Prior	to	joining	Citigroup,	Mr.	Havens was	a	founder	and	Partner	of	Old	Lane,	LP,	a	multi-strategy	hedge	fund	and private	equity	fund	manager	that	was	acquired	by	Citi	in	2007.	Before	forming Old	Lane	in	2005,	Mr.	Havens	was	Head	of	Institutional	Equity	at	Morgan Stanley	and	a	member	of	the	firm's	Management	Committee. •	Mr.	Kaden	joined	Citigroup	in	September	2005.	Prior	to	joining	Citigroup, Mr.	Kaden	was	a	partner	at	Davis	Polk	&	Wardwell. •	Mr.	Kelly	joined	Citi	in	February	2008	from	The	Carlyle	Group,	a	private investment	firm,	where	he	was	a	Managing	Director.	Prior	to	joining	Carlyle	in July	2007,	he	was	a	Vice	Chairman	at	The	PNC	Financial	Services	Group following	PNC's	acquisition	of	Mercantile	Bankshares	Corporation	in	March 2007.	He	was	Chairman,	Chief	Executive	and	President	of	Mercantile	from March	2003	through	March	2007.

•	Mr.	Leach	joined	Citigroup	in	2008.	Prior	to	becoming	Citi's	Chief	Risk Officer	in	March	2008,	Mr.	Leach	was	the	co-COO	of	Old	Lane.	Mr.	Leach, along	with	several	former	colleagues	from	Morgan	Stanley,	founded	Old	Lane LP	in	2005.	Earlier,	he	had	worked	for	his	entire	financial	career	at	Morgan Stanley,	finishing	as	Risk	Manager	of	the	Institutional	Securities	Business. •	Mr.	Pandit,	prior	to	being	named	CEO	on	December	11,	2007,	was	Chairman and	CEO	of	Citigroup's	Institutional	Clients	Group.	Formerly	the	Chairman and	CEO	of	Alternative	Investments,	Mr.	Pandit	was	a	founding	member	and chairman	of	the	members	committee	of	Old	Lane,	LP,	which	was	acquired	by Citigroup	in	2007.	Prior	to	forming	Old	Lane,	Mr.	Pandit	held	a	number	of senior	positions	at	Morgan	Stanley	over	more	than	two	decades,	including President	and	Chief	Operating	Officer	of	Morgan	Stanley's	institutional securities	and	investment	banking	business	and	was	a	member	of	the	firm's Management	Committee.

•	Mr.	Volk	joined	Citigroup	in	July	2004.	From	2001	to	2004,	Mr.	Volk	was Chairman	of	Credit	Suisse	First	Boston.	Before	that,	Mr.	Volk	was	a	partner	at Shearman	&	Sterling.

# Comparison	of	Five-Year	Cumulative	Total	Return

The	following	graph	compares	the	cumulative	total	return	on	Citigroup's common	stock	with	the	S&P	500	Index	and	the	S&P	Financial	Index	over	the five-year	period	extending	through	December	31,	2008.	The	graph

assumes	that	$100	was	invested	on	December	31,	2003	in	Citigroup's	common stock,	the	S&P	500	Index	and	the	S&P	Financial	Index	and	that	all	dividends were	reinvested.

| DECEMBER	31 | CITIGROUP | S&amp;P	500	INDEX | S&amp;P	FINANCIAL	INDEX |
| :--- | :--- | :--- | :--- |
| 2004 | $102.72 | $110.88 | $110.91 |
| 2005 | 107.48 | 116.32 | 118.03 |
| 2006 | 128.49 | 134.69 | 140.68 |
| 2007 | 71.04 | 142.09 | 114.47 |
| 2008 | 17.07 | 89.52 | 51.15 |

# 10-K	CROSS-REFERENCE	INDEX

This	Annual	Report	on	Form	10-K	incorporates	the	requirements	of	the accounting	profession	and	the	Securities	and	Exchange	Commission,	including	a comprehensive	explanation	of	2008	results.

| 1.<br>Business | 2-3,	6–107,<br>138,<br>227–238 |
| :--- | :--- |
| 1A.\t Risk\tFactors | 47–50 |
| 1B.\t Unresolved\tStaff\tComments | 228 |
| Properties\n2. | 229 |
| 3.\t Legal\tProceedings | 229–235 |

# 4. Submission	of	Matters	to	a	Vote	of	Security

# Part	II

# 5. Market	for	Registrant's	Common	Equity,

# Related	Stockholder	Matters,	and	Issuer

# Part	III

# Part	IV

*	For	additional	information	regarding	Citigroup	Directors,	see	the	material	under	the captions	"Corporate	Governance,"	"Proposal	1:	Election	of	Directors"	and	"Section	16(a) Beneficial	Ownership	Reporting	Compliance"	in	the	definitive	Proxy	Statement	for Citigroup's	Annual	Meeting	of	Stockholders	to	be	held	on	April	21,	2009,	to	be	filed	with	the SEC	(the	Proxy	Statement),	incorporated	herein	by	reference. **	See	the	material	under	the	captions	"Executive	Compensation—The	Personnel	and Compensation	Committee	Report,"	"	Compensation	Discussion	and	Analysis"	and "Compensation	Tables"	in	the	Proxy	Statement,	incorporated	herein	by	reference. ***	See	the	material	under	the	captions	"About	the	Annual	Meeting,"	"Stock	Ownership"	and "Proposal	3:	Approval	of	Citigroup	2009	Stock	Incentive	Plan"	in	the	Proxy	Statement, incorporated	herein	by	reference.

****	See	the	material	under	the	captions	"Corporate	Governance—Director	Independence," "Certain	Transactions	and	Relationships,	Compensation	Committee	Interlocks	and	Insider Participation,"	"Indebtedness,"	"Proposal	1:	Election	of	Directors"	and	"Executive Compensation"	in	the	Proxy	Statement,	incorporated	herein	by	reference.

****	See	the	material	under	the	caption	"Proposal	2:	Ratification	of	Selection	of	Independent Registered	Public	Accounting	Firm"	in	the	Proxy	Statement,	incorporated	herein	by reference.

					None	of	the	foregoing	incorporation	by	reference	shall	include	the	information	referred	to	in Item	402(a)(8)	of	Regulation	S-K.

# CORPORATE	INFORMATION

# EXHIBITS	AND	FINANCIAL	STATEMENT	SCHEDULES

The	following	exhibits	are	either	filed	herewith	or	have	been	previously	filed with	the	Securities	and	Exchange	Commission	and	are	filed	herewith	by incorporation	by	reference:

•	Citigroup's	Restated	Certificate	of	Incorporation,	as	amended, •	Citigroup's	By-Laws,

•	Instruments	Defining	the	Rights	of	Security	Holders,	including	Indentures, •	Material	Contracts,	including	certain	compensatory	plans	available	only	to officers	and/or	directors,

•	Statements	re:	Computation	of	Ratios,

•	Subsidiaries	of	the	Registrant,

•	Consent	of	Expert,

•	Powers	of	Attorney	of	Directors	Armstrong,	Belda,	Bischoff,	Derr,	Deutch,

Hernández	Ramírez,	Liveris,	Mulcahy,	Parsons,	Ricciardi,	Rodin,	Rubin,

# Ryan,	and	Thomas,	and

•	CEO	and	CFO	certifications	under	Sections	302	and	906	of	the	Sarbanes- Oxley	Act	of	2002.

A	more	detailed	exhibit	index	has	been	filed	with	the	SEC.	Stockholders	may obtain	copies	of	that	index,	or	any	of	the	documents	in	that	index,	by	writing	to Citigroup	Inc.,	Corporate	Governance,	425	Park	Avenue,	2nd	floor,	New	York, New	York	10043,	or	on	the	Internet	at	http://www.sec.gov.

Financial	Statements	filed	for	Citigroup	Inc.	and	Subsidiaries:

•	Consolidated	Balance	Sheet	(Citibank,	N.A.)

United	States	Securities	and	Exchange	Commission Washington,	DC	20549 Form	10-K

Annual	Report	pursuant	to	Section	13	or	15	(d)	of	the	Securities	Exchange	Act	of 1934	for	the	fiscal	year	ended	December	31,	2008 Commission	File	Number	1-9924

Incorporated	in	the	State	of	Delaware IRS	Employer	Identification	Number:	52-1568099 Address:	399	Park	Avenue New	York,	New	York	10043 Telephone:	212	559	1000

# Stockholder	Information

Citigroup	common	stock	is	listed	on	the	New	York	Stock	Exchange	(NYSE) under	the	ticker	symbol	"C"	and	on	the	Tokyo	Stock	Exchange	and	the	Mexico Stock	Exchange.

Citigroup	Preferred	Stock	Series	F,	T	and	AA	are	also	listed	on	the	NYSE. Because	our	common	stock	is	listed	on	the	NYSE,	the	chief	executive	officer of	Citigroup	is	required	to	make	an	annual	certification	to	the	NYSE	stating	that he	was	not	aware	of	any	violation	by	Citigroup	of	the	corporate	governance listing	standards	of	the	NYSE.	The	annual	certification	to	that	effect	was	made	to the	NYSE	as	of	May	7,	2008.

# Transfer	Agent

Stockholder	address	changes	and	inquiries	regarding	stock	transfers,	dividend replacement,	1099-DIV	reporting,	and	lost	securities	for	common	and	preferred stocks	should	be	directed	to:

# Exchange	Agent

Holders	of	Golden	State	Bancorp,	Associates	First	Capital	Corporation,	Citicorp or	Salomon	Inc	common	stock,	Citigroup	Inc.	Preferred	Stock	Series	Q,	S,	or	U, or	Salomon	Inc	Preferred	Stock	Series	D	or	E	should	arrange	to	exchange	their certificates	by	contacting:

Computershare P.O.	Box	43078 Providence,	RI	02940-3078 Telephone	No.	781	575	4555 Toll-free	No.	888	250	3985 Facsimile	No.	201	324	3284 E-mail	address:	shareholder@computershare.com The	2008	Form	10-K	filed	with	the	Securities	and	Exchange	Commission	by the	Company,	as	well	as	other	annual	and	quarterly	reports,	are	available	from Citi	Document	Services	toll	free	at	877	936	2737	(outside	the	United	States	at 716	730	8055),	by	e-mailing	a	request	to	docserve@citi.com,	or	by	writing	to: Citi	Document	Services 540	Crosspoint	Parkway Getzville,	NY	14068

Copies	of	this	annual	report	and	other	Citigroup	financial	reports	can	be viewed	or	retrieved	through	the	Company's	Web	site	at http://www.citigroup.com	by	clicking	on	the	"Investors"	page	and	selecting	"All SEC	Filings"	or	through	the	SEC's	Web	site	at	http://www.sec.gov.

# Corporate	Governance	Materials

The	following	materials,	which	have	been	adopted	by	the	Company,	are available	free	of	charge	on	the	Company's	Web	site	at	http://www.citigroup.com by	clicking	on	"About	Citi"	and	then	"Corporate	Governance"	or	by	writing	to Citigroup	Inc.,	Corporate	Governance,	425	Park	Avenue,	2nd	floor,	New	York, New	York	10043:	the	Company's	(i)	corporate	governance	guidelines,	(ii)	code of	conduct,	(iii)	code	of	ethics	for	financial	professionals,	and	(iv)	charters	of (a)	the	audit	and	risk	management	committee,	(b)	the	personnel	and compensation	committee,	(c)	the	public	affairs	committee,	and	(d)	the nomination	and	governance	committee.	The	code	of	ethics	for	financial professionals	applies	to	the	Company's	principal	executive	officer,	principal financial	officer	and	principal	accounting	officer.	Amendments	and	waivers,	if any,	to	the	code	of	ethics	for	financial	professionals	will	be	disclosed	on	the Company's	Web	site.

# Securities	Registered	Pursuant	to	Section	12	(b)	and	(g)	of	the Exchange	Act

A	list	of	Citigroup	securities	registered	pursuant	to	Section	12	(b)	and	(g)	of	the Securities	Exchange	Act	of	1934	is	filed	as	an	exhibit	herewith	and	is	available from	Citigroup	Inc.,	Corporate	Governance,	425	Park	Avenue,	2nd	floor,	New York,	New	York	10043	or	on	the	Internet	at	http://www.sec.gov. As	of	February	2,	2009,	Citigroup	had	5,476,213,462	shares	of	common	stock outstanding.

As	of	February	2,	2009,	Citigroup	had	approximately	198,847	common stockholders	of	record.	This	figure	does	not	represent	the	actual	number	of beneficial	owners	of	common	stock	because	shares	are	frequently	held	in	"street name"	by	securities	dealers	and	others	for	the	benefit	of	individual	owners	who may	vote	the	shares.

Citigroup	is	a	well-known	seasoned	issuer,	as	defined	in	Rule	405	of	the Securities	Act	of	1933.

Citigroup	is	required	to	file	reports	pursuant	to	Section	13	or	Section	15	(d)	of the	Securities	Exchange	Act	of	1934.

Citigroup	(1)	has	filed	all	reports	required	to	be	filed	by	Section	13	or	15	(d)	of the	Securities	Exchange	Act	of	1934	during	the	preceding	12	months	(or	for	such shorter	period	that	the	registrant	was	required	to	file	such	reports)	and	(2)	has been	subject	to	such	filing	requirements	for	the	past	90	days.

Disclosure	of	delinquent	filers	pursuant	to	Item	405	of	Regulation	S-K	will	be contained	in	Citigroup's	2009	Proxy	Statement	incorporated	by	reference	in	Part III	of	this	Form	10-K.

Citigroup	is	a	large	accelerated	filer	(as	defined	in	Rule	12b-2	under	the Securities	Exchange	Act	of	1934).

Citigroup	is	not	a	shell	company	(as	defined	in	Rule	12b-2	under	the	Securities Exchange	Act	of	1934).

The	aggregate	market	value	of	Citigroup	common	stock	held	by	non-affiliates of	Citigroup	on	February	2,	2009	was	approximately	$19.9	billion. Certain	information	has	been	incorporated	by	reference	as	described	herein into	Part	III	of	this	annual	report	from	Citigroup's	2009	Proxy	Statement.

# Signatures

Pursuant	to	the	requirements	of	Section	13	or	15	(d)	of	the	Securities	Exchange Act	of	1934,	the	registrant	has	duly	caused	this	report	to	be	signed	on	its	behalf by	the	undersigned,	thereunto	duly	authorized,	on	the	27th	day	of	February, 2009.

Pursuant	to	the	requirements	of	the	Securities	Exchange	Act	of	1934,	this	report has	been	signed	below	by	the	following	persons	on	behalf	of	the	registrant	and	in the	capacities	indicated	on	the	27th	day	of	February,	2009.

Citigroup's	Principal	Executive	Officer	and	a	Director:

# Vikram	Pandit

Citigroup's	Principal	Financial	Officer:

# Gary	Crittenden

Citigroup's	Principal	Accounting	Officer:

# John	C.	Gerspach

The	Directors	of	Citigroup	listed	below	executed	a	power	of	attorney	appointing Gary	Crittenden	their	attorney-in-fact,	empowering	him	to	sign	this	report	on their	behalf.

C.	Michael	Armstrong Alain	J.P.	Belda Sir	Winfried	F.W.	Bischoff Kenneth	T.	Derr John	M.	Deutch Roberto	Hernández	Ramírez

Andrew	N.	Liveris

Anne	Mulcahy Richard	D.	Parsons Lawrence	R.	Ricciardi Judith	Rodin Robert	E.	Rubin Robert	L.	Ryan

Franklin	A.	Thomas

# CITIGROUP	BOARD	OF	DIRECTORS

C.	Michael	Armstrong Chairman,	Board	of	Trustees Johns	Hopkins	Medicine,	Health System	Corporation	and	Hospital

Alain	J.P.	Belda Chairman Alcoa	Inc.

Sir	Winfried	F.W.	Bischoff Former	Chairman Citigroup	Inc.

Kenneth	T.	Derr Chairman,	Retired Chevron	Corporation

John	M.	Deutch Institute	Professor Massachusetts	Institute of	Technology

Roberto	Hernández	Ramírez Chairman Banco	Nacional	de	Mexico

Andrew	N.	Liveris Chairman	and Chief	Executive	Officer The	Dow	Chemical	Company

Anne	Mulcahy Chairman	and Chief	Executive	Officer Xerox	Corporation

Vikram	Pandit Chief	Executive	Officer Citigroup	Inc.

Richard	D.	Parsons Chairman Citigroup	Inc.

Lawrence	R.	Ricciardi Senior	Vice	President, General	Counsel	and	Advisor to	the	Chairman,	Retired IBM	Corporation

Judith	Rodin President Rockefeller	Foundation

Robert	E.	Rubin Former	Senior	Counselor Citigroup	Inc.

Robert	L.	Ryan Chief	Financial	Officer,	Retired Medtronic	Inc.

Franklin	A.	Thomas Consultant TFF	Study	Group

# EXHIBIT	INDEX

10.02* Citigroup	Inc.	Amended	and	Restated	Compensation	Plan	for	Non-Employee	Directors	(as	of	September	21,	2004),	incorporated	by	reference	to Exhibit	10.01	to	the	Company's	Quarterly	Report	on	Form	10-Q	for	the	fiscal	quarter	ended	September	30,	2005	(File	No.	1-9924).

10.03.1* Form	of	Citigroup	Inc.	Non-Employee	Director	Equity	Award	Agreement	(pursuant	to	the	Amended	and	Restated	Compensation	Plan	for	Non- Employee	Directors),	incorporated	by	reference	to	Exhibit	10.1	to	the	Company's	Current	Report	on	Form	8-K	filed	January	14,	2005	(File	No.	1- 9924).

10.03.2* Form	of	Citigroup	Inc.	Non-Employee	Director	Equity	Award	Agreement	(effective	November	1,	2006),	incorporated	by	reference	to	Exhibit	10.05 to	the	Company's	Quarterly	Report	on	Form	10-Q	for	the	fiscal	quarter	ended	September	30,	2006	(File	No.	1-9924)	(the	"Company's	September	30, 2006	10-Q").

10.04* Citigroup	1999	Executive	Performance	Plan	(effective	January	1,	1999),	incorporated	by	reference	to	Annex	B	to	the	Company's	Proxy	Statement dated	March	8,	1999	(File	No.	1-9924).

10.14.2* Amendment	to	the	Citicorp	Directors'	Deferred	Compensation	Plan	(effective	as	of	December	31,	2001),	incorporated	by	reference	to	Exhibit 10.22.2	to	the	Company's	2001	10-K.

10.26.1* Letter	Agreement,	dated	as	of	February	23,	2007,	between	the	Company	and	Gary	Crittenden,	incorporated	by	reference	to	Exhibit	10.01	to	the Company's	Quarterly	Report	on	Form	10-Q	for	the	fiscal	quarter	ended	March	31,	2007	(File	No.	1-9924)	(the	"2007	Letter	Agreement").

10.26.2*+ Amendment	to	the	2007	Letter	Agreement,	dated	as	of	December	22,	2008,	between	the	Company	and	Gary	Crittenden.

10.27.1* Form	of	Citigroup	Inc.	Management	Committee	Long-Term	Incentive	Program	Award	Agreement	(effective	July	17,	2007),	incorporated	by reference	to	Exhibit	10.01	to	the	Company's	Quarterly	Report	on	Form	10-Q	for	the	fiscal	quarter	ended	June	30,	2007	(File	No.	1-9924)	(the	"2007 LTIP	Award	Agreement").

10.46* Form	of	Citigroup	Executive	Premium	Price	Option	Agreement,	incorporated	by	reference	to	Exhibit	99.2	to	the	Company's	Current	Report	on	Form	8- K	filed	January	21,	2009	(File	No.	1-9924).

12.02+ Calculation	of	Ratio	of	Income	to	Fixed	Charges	Including	Preferred	Stock	Dividends.

21.01+ Subsidiaries	of	the	Company.

23.01+ Consent	of	KPMG	LLP,	Independent	Registered	Public	Accounting	Firm.

31.01+ Certification	of	principal	executive	officer	pursuant	to	Section	302	of	the	Sarbanes-Oxley	Act	of	2002.

31.02+ Certification	of	principal	financial	officer	pursuant	to	Section	302	of	the	Sarbanes-Oxley	Act	of	2002.

32.01+ Certification	pursuant	to	18	U.S.C.	Section	1350,	as	adopted	pursuant	to	Section	906	of	the	Sarbanes-Oxley	Act	of	2002.

99.01+ Residual	Value	Obligation	Certificate.

99.02+ List	of	Securities	Registered	Pursuant	to	Section	12(b)	and	Section	12(g)	of	the	Securities	Exchange	Act	of	1934.

The	total	amount	of	securities	authorized	pursuant	to	any	instrument	defining	rights	of	holders	of	long-term	debt	of	the	Company	does	not	exceed	10%	of	the	total	assets of	the	Company	and	its	consolidated	subsidiaries.	The	Company	will	furnish	copies	of	any	such	instrument	to	the	SEC	upon	request.

Copies	of	any	of	the	exhibits	referred	to	above	will	be	furnished	at	a	cost	of	$0.25	per	page	(although	no	charge	will	be	made	for	the	2008	Annual	Report	on	Form	10-K) to	security	holders	who	make	written	request	therefor	to	Citigroup	Inc.,	Corporate	Governance,	425	Park	Avenue,	2nd	Floor,	New	York,	New	York	10043.

*	Denotes	a	management	contract	or	compensatory	plan	or	arrangement	required	to	be	filed	as	an	exhibit	pursuant	to	Item	15(b)	of	Form	10-K.

+	Filed	herewith.



Question: what was the percentage change in non-interest revenue from 2006 to 2007?
Answer: 51%