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| ## Comptroller of the Currency                                        |
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| > Administrator of National Banks                                     |
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Washington, DC 20219

**Conditional Approval #476**

**August 2001**

**Decision of the Office of the Comptroller of the Currency**

**on the application TO MERGE**

**EUROPEAN AMERICAN BANK, UNIONDALE, NEW YORK**

**INTO AND UNDER THE CHARTER AND TITLE OF**

**CITIBANK, National ASSOCIATION, New York, NEW YORK**

###### July 2, 2001 

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##### A. INTRODUCTION

Citibank, National Association, New York, New York (\"Citibank\"),
applied to the Office of the Comptroller of the Currency ("OCC") for
approval to merge with European American Bank, Uniondale, New York
(\"EAB\") under Citibank's charter and title under 12 U.S.C. §§ 215a and
1828(c) (the "Merger"). This application was based upon an agreement
entered into between the proponents on February 12, 2001.

Citibank is a national bank that has its main office in New York, New
York, and whose 151 branches are located solely within the state of New
York, predominantly in New York City, Westchester and Nassau Counties.
EAB is a state bank with its main office in Uniondale, New York and
whose 96 branches are located solely within New York City and Long
Island. The majority of its branches are situated in Nassau and Suffolk
Counties. Both parties to this application are members of the Bank
Insurance Fund.

As of March 31, 2001, Citibank had approximately \$396 billion in
assets, \$71 billion in domestic deposits, and \$213 billion in foreign
deposits. On the same date, EAB had approximately \$15 billion in assets
and \$11 billion in total deposits. Citibank is an indirect wholly owned
subsidiary of Citigroup, Inc. ("Citigroup"), a multinational financial
holding company. EAB is a wholly owned subsidiary of ABN AMRO Bank,
N.V., a multinational financial holding company incorporated in the
Netherlands.

Citibank and EAB have published notice of the application in general
circulation newspapers serving the head office cities of those two
banks. All written comments received have been carefully considered as
part of the merger application (see discussion below).[^1]

The application, filed under the provisions of 12 U.S.C. §§ 215a and
1828(c), seeks to merge EAB under the charter of Citibank. Citibank will
operate the former head office and branches of EAB as branches of
Citibank under 12 U.S.C. § 36(b)(2)(A). As a result of the Merger,
Citibank will also acquire and operate EAB\'s existing subsidiaries
under the provisions of 12 C.F.R. 5.34.

B. The Bank Merger Act

The Bank Merger Act, 12 U.S.C. § 1828(c), requires the OCC\'s approval
for a merger between insured banks where the resulting institution will
be a national bank. Under the Act, the OCC generally may not approve a
merger that would substantially lessen competition. In addition, the Act
also requires the OCC to take into consideration the financial and
managerial resources and future prospects of the existing and proposed
institutions, and the convenience and needs of the community to be
served. For the reasons stated below, we find this Merger may be
approved under section 1828(c), subject to the conditions described
hereinafter.

1\. Competitive Analysis

The OCC reviewed the impact of the proposed transaction on competition
for the cluster of products and services offered by depository
institutions in the areas surrounding the target EAB. There is only one
relevant geographic market for this proposal where competition between
Citibank and EAB is direct and immediate: Metropolitan New York-New
Jersey.

The OCC applied its standard procedures for determining whether the
competitive effects of the merger in the above market clearly has
minimal or no significant adverse competitive effects and found that to
be true.

The banking market consists of the New York counties of Bronx, Dutchess,
Kings, Nassau, New York, Orange, Putnam, Queens, Richmond, Rockland,
Suffolk, Sullivan, Ulster and Westchester; the New Jersey counties of
Bergen, Essex, Hudson, Hunterdon, Middlesex, Monmouth, Morris, Ocean,
Passaic, Somerset, Sussex, Union, Warren and certain portions of Mercer;
Fairfield County, Connecticut along with certain portions of New Haven
and Litchfield Counties; and Pike County, Pennsylvania.

Within this market, 290 banks and thrifts compete for \$523 billion in
deposits. Citibank and its affiliates, with 162 branches, rank second
with a 10.8% market share. EAB, with 96 branches, ranks tenth with a
2.3% share. With a resulting market share of 13.1%, the Merger would not
increase the second place ranking of Citibank and its affiliates.

In reviewing Citibank's merger application, the U.S. Department of
Justice (\"DOJ\"), the Federal Deposit Insurance Corporation (\"FDIC\"),
and the Board of Governors of the Federal Reserve System (\"FRB\") also
considered the competitive impact of the proposed merger. The DOJ and
FDIC concluded the merger would not produce a significant effect on
competition or concentration of banking resources in the relevant
geographic market. The FRB has reserved comment on this factor for its
own Decision Order on a related application now pending with that
agency.

The OCC finds that, while the proposed merger would eliminate a direct
competitor from the Metropolitan New York-New Jersey market, the
continuing presence of other banking alternatives would mitigate any
adverse effects. Therefore, the OCC\'s criteria are satisfied for a
merger that will not have a significantly adverse impact on competition
within that banking market.

2\. Financial and Managerial Resources

The financial and managerial resources of Citibank and EAB are presently
satisfactory. The future prospects of the institutions, individually and
combined, are favorable. We find the financial and managerial resources
factor is consistent with approval of the merger.

Citibank is a wholly owned indirect subsidiary and the lead bank of
Citigroup, a \$946 billion diversified financial holding company that
operates on a global basis and is subject to oversight by numerous
regulators. Citibank has assets of \$396 billion and total risked-based
capital of \$37 billion. In the most recent examination, the OCC found
the bank to be well-capitalized and well-managed.

EAB is a wholly owned subsidiary of ABN AMRO Bank, N.V., a multinational
financial holding company incorporated in the Netherlands which also
operates on a global basis and is subject to oversight by numerous
regulators. EAB currently has assets of \$15 billion and \$1 billion in
total risk based capital. In its most recent examination of EAB, the
Federal Reserve Bank of New York found the bank to be well capitalized
and well managed.

Among the public comments received was an assertion that Citibank has
insufficient controls in place to prevent money laundering. The bank\'s
compliance with anti-money laundering regulations is regularly reviewed
and monitored as part of the OCC\'s routine, on-going supervisory
processes. In addition, Citibank has various anti-money laundering
internal control policies and mechanisms in place.

Based upon all the information in the record and our supervisory
knowledge of the management of Citigroup in connection with the
operation of Citibank and its affiliated national banks, we have
concluded that Citibank's financial and managerial resources do not
indicate that the financial condition of the bank resulting from the
proposed merger would be less than satisfactory.

3\. Convenience and Needs

The merger will not have an adverse impact on the convenience and needs
of the communities to be served. Citibank will continue to serve the
same areas that it and EAB now serve. There will not be a reduction of
products or services as a result of the merger. While Citibank
anticipates that some overlapping branches of the resulting institution
will be closed as a result of the transaction, current Citibank and EAB
customers, as customers of the resulting bank, will have a greater
number of branches at which to bank.

EAB customers will also benefit from an enhanced array of products and
services at the resulting bank, *e.g.*, insurance products and
broker-dealer services, higher lending limits, internet based products
and services, and international operations as well as the investment
banking services of Citibank's affiliates. Accordingly, we believe the
impact of the merger on the convenience and needs of the communities to
be served is consistent with approval of the application.

Several commenters expressed concerns with the possibility that Citibank
would close a number of EAB branches in the New York City Metropolitan
Statistical Area ("MSA"). On May 15, 2001, Citibank reported its plans
to close twenty-four EAB or Citibank branches that are in close
proximity to other EAB or Citibank branches in its New York marketplace.
These consolidations and closures constitute less than 10% of the total
combined Citibank and EAB branch network, and only three closures are
proposed in low- and moderate-income ("LMI") census tracts.[^2] Citibank
has represented that the fifteen stand-alone branches slated for closure
are within approximately one mile of Citibank or EAB branches that will
remain open. Nine EAB branches located in supermarkets have also been
scheduled for closure due to lack of economic viability. Citibank states
that almost all of EAB's in-store branches are within three miles of a
full service EAB or Citibank branch that will remain open. Two EAB
supermarket branches will continue to operate, because of their distance
from full-service branches and their location in communities that lack
banking services.

Additionally, Citibank has stated that it will follow its branch closing
policy for any closure, consolidation, or relocation. This policy
requires, among other things, consideration of the effect on customers
and the approval of Citibank's CRA Director for any closure. Further,
Citibank's CRA and Community Relations staff will conduct discussions
with affected communities.[^3]

One commenter also voiced concern that Citibank has a history of closing
branches in LMI neighborhoods. Citibank's October 26, 1998, Community
Reinvestment Act ("CRA") Performance Evaluation indicated that Citibank
had not closed any branches in LMI areas during the two year evaluation
period and noted that its delivery system was accessible to
substantially all portions of its assessment areas in the New York
marketplace. OCC examiners found that Citibank had not closed any
branches in the two years following the 1998 Performance Evaluation.

**C.** **Community Reinvestment Act**

The CRA requires the OCC to take into account each applicant bank's
record of helping to meet the credit needs of its entire community,
including LMI neighborhoods, when evaluating certain applications.[^4]
The types of applications that are subject to review under the CRA
include mergers between insured depository institutions.[^5] The OCC
considers the CRA performance of each depository institution involved in
the transaction. Under the CRA regulation, when evaluating a bank's
performance, the OCC considers the institution's capacity and
constraints, including the size and financial condition of the bank and
its subsidiaries.

EAB's most recent CRA Performance Evaluation conducted by the Federal
Reserve Bank of New York, dated March 2, 1998, reflected a
"Satisfactory" rating. The Federal Reserve Bank evaluated EAB's
performance using criteria relative to the bank's lending, investments,
and services. That Performance Evaluation indicated that no credit
practices were identified that violated the substantive provisions of
anti-discrimination laws and regulations.

Citibank's most recent CRA Performance Evaluation, dated October 26,
1998, reflected a "Satisfactory" rating. The OCC evaluated Citibank's
performance using criteria relative to the bank's lending, investments,
and services. That Performance Evaluation indicates that a concurrent
fair lending examination of Citicorp Mortgage, Inc.'s home purchase
loans disclosed no violations of the substantive provisions of
anti-discrimination laws or regulations.[^6] The analysis consisted of
comparing denied black and Hispanic applicants to approved white
applicants.

In considering Citibank's and EAB's CRA record of performance, the OCC
took into account the affordable home loan products these entities
offer. Citibank has offered proprietary affordable mortgage products, as
well Fannie Mae and Freddie Mac products, that incorporate such features
as low down payment requirements and flexible qualifying criteria.
CitiMortgage, Inc. ("CitiMortgage"), a subsidiary of Citibank, and
Fannie Mae recently announced a five-year, affordable mortgage lending
partnership to expand the availability of flexible mortgage products.
EAB has made affordable mortgages available through, among other
products, the EAB Neighborhood Mortgage Program. This product features
flexible loan qualifying guidelines, a low down payment, and discounted
interest rates, fees and closing costs for LMI applicants and properties
in LMI communities.[^7]

**1. Comments Regarding Associates National Bank**

A number of commenters expressed concern regarding the "Needs to
Improve" CRA rating of Associates National Bank, an affiliate of
Citibank. Citigroup acquired Associates National Bank in late 2000 as
part of its acquisition of Associates First Capital Corporation. The
federal statutes authorizing the merger of banks located in the same
state do not provide for consideration of the CRA records of affiliates
of the merging entities, nor does the CRA itself provide for such
consideration. [See]{.underline} 12 U.S.C. §§ 215, 215a, 1828(c), 2903;
[but]{.underline} [see]{.underline} 12 U.S.C. § 1831u(b)(3)(B) (under
Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994,
such a consideration is required for certain types of interstate bank
mergers).

Therefore, the OCC has not considered Associates National Bank's CRA
rating or record of performance in connection with this merger. Of
course, the CRA rating and record of performance of Associates National
Bank would be considered in any future CRA-covered application directly
involving that bank.

Prior to the OCC's decision to pose no objection to Citigroup's Notice
of Change in Bank Control to acquire Associates National Bank, Citigroup
pledged in the Notice to implement certain initiatives to improve the
lending policies and procedures applicable to its consumer finance
operations ("Consumer Finance Initiatives"). The Consumer Finance
Initiatives included undertakings to:

-   [Test a "referral up" program in four states before introducing a
    nationwide program]{.underline}. Under the pilot program, a prime
    credit borrower that applies for a mortgage loan product at a
    CitiFinancial office can be "pre-qualified" for a prime loan and
    will be provided information on how to apply for such a loan through
    other Citigroup subsidiaries.

-   [Introduce new lending programs]{.underline}. One program will
    reward a borrower with timely payments by granting interest rate
    reductions. Another program will offer customers who achieve a prime
    credit status the option of refinancing into a conventional real
    estate secured loan.

-   [Offer the option of monthly premium, single premium, and no credit
    life insurance]{.underline}. CitiFinancial will also provide
    consumers a "user-friendly" means of canceling single premium credit
    life insurance and provide related disclosures. [^8]

-   [Offer flexibility to a borrower to choose a product with or without
    a payment fee]{.underline}. CitiFinancial also will reduce from five
    to three years the term during which prepayment fees will be payable
    on its loans, unless a shorter period is required by state law.

-   [Prohibit balloon payments and negative amortization]{.underline}.
    CitiFinancial will continue to prohibit balloon payments and
    negative amortization in loans it originates and will extend this
    prohibition to loans from brokers. In addition, CitiFinancial will
    prohibit the refinancing of below-market rate loans by non-profits.

-   [Test a limitation on broker fees]{.underline}. Under a pilot in two
    states, CitiFinancial will cap lender and broker fees at 3% and
    eliminate prepayment fees.

-   [Implement procedures to review home foreclosure]{.underline}.
    CitiFinancial will establish a unit specifically trained to review
    pending and potential foreclosure actions and to take other action
    as it deems appropriate such as modifying the loan terms, refunding
    points or credit life insurance payments, and deferring payments
    until the borrower is able to resume payments.

-   [Review and revise existing CitiFinancial compliance
    programs]{.underline}. This review will include fair lending and
    compliance and examination policies and procedures in order to
    identify improvements and enhancements. CitiFinancial will also
    introduce an independent mystery shopper program at all
    CitiFinancial offices and at all former Associates offices.

-   [Reporting to Credit Bureaus]{.underline}. CitiFinancial also stated
    it will provide information on customer's payment records to credit
    bureaus to enable subprime borrowers to benefit from improvement in
    their credit performance.

Citibank notified the OCC that it will provide information on the
progress made under the Consumer Finance Initiatives in July, 2001, with
a report on the implementation progress as of June 30, 2001. The OCC has
already been provided with an interim report by Citibank. In approving
this application, the OCC has specifically relied upon Citibank's
representations with respect to reporting to the OCC on its
implementation of the Consumer Finance Initiatives. Accordingly, it is a
condition of this approval that Citibank will provide the OCC with
progress reports on its implementation of these Consumer Finance
Initiatives, beginning no later than July 31, 2001, and quarterly
thereafter until the implementation is completed. It is a further
condition of this approval that Citibank notify the OCC concerning
significant modifications to the Consumer Finance Initiatives.

The OCC also has reviewed the comments received in connection with the
Associates First Capital Corporation acquisition.[^9] The primary
concerns raised by those commenters related to Citigroup's subprime
lending practices, the targeting of subprime loans to minorities and LMI
geographies, the alleged targeting of prime loans to higher income
individuals and geographies, the size and volume of home improvement
loans not tied to home equity in LMI and minority geographies, and an
alleged lack of lending in New York City to LMI census tracts. To the
extent those comments bear on Citibank's CRA performance, the OCC is
taking them into account in a current CRA examination of Citibank.

**2. Citibank's Home Mortgage Lending**

Commenters also raised concerns with respect to Citibank's level of home
mortgage lending to LMI households and communities and to minority
borrowers. Additionally, commenters expressed concern regarding
Citibank's home improvement lending. These comments are addressed below.

*a.* ***Home Mortgage Lending to LMI Borrowers and in LMI Areas***

Two commenters expressed concern that Citibank needed to improve its
level of lending to LMI borrowers and LMI areas in the New York City
MSA. [^10] However, the OCC's review of this concern disclosed that
Citibank has an adequate record of lending to LMI areas and borrowers.
OCC examiners recently found that within the LMI census tracts in
Citibank's New York assessment area, where 10 percent of the housing
units are owner occupied, 8% of Citibank's home purchase loans, 55% of
its home improvement loans, and 7% of its refinance loans were in those
LMI census tracts.[^11] In addition, 14% of Citibank home purchase
loans, 32% of its home improvement loans, and 13% of its refinance loans
were to LMI borrowers. In response to the comments received, Citigroup
represented that in 2000, 22% of Citibank's HMDA-reportable loans were
booked in LMI census tracts and 23% to LMI households.[^12] With respect
to home purchase loans, Citibank reported that in 2000, 19% of these
loans were located in LMI census tracts and 24% went to LMI households.

*b. Home Mortgage Lending to Minority Borrowers*

Commenters asserted that 1999 Home Mortgage Disclosure Act ("HMDA")
numbers indicated Citibank and/or CitiMortgage made more refinance loans
(in 17 specified MSAs) or conventional home purchase loans (in 5
specified MSAs) to whites than to African Americans or Hispanics and, in
some instances, cited denial disparity ratios for those same loans.[^13]
It is important to note that HMDA data alone are inadequate to provide a
basis for concluding that a bank is engaged in lending discrimination or
in indicating whether its level of lending is sufficient. HMDA data do
not take into consideration borrower capacity, housing prices, and other
factors relevant in each of the individual markets and do not illustrate
the full range of the bank's lending activities or efforts.
Nevertheless, denial disparity ratios are of concern to the OCC and are
routinely evaluated in fair lending examinations.

While the OCC was unable to verify the ratios provided by the
commenters, the OCC confirmed that Citibank and CitiMortgage made more
loans to whites than to specific minorities. However, the commenters in
most instances did not fully analyze the data in the context of the
percentage of minority populations in the various MSAs or the level of
lending to minorities by other lenders in the same area.

The OCC found that in 11 of the 17 specified MSAs, Citibank and
CitiMortgage's percentage of lending to minorities was not significantly
less than the percentage of lending to minorities experienced by all
lenders in the same MSA.[^14] In addition, in the MSAs where commenters
expressed concerns with denial disparity ratios between whites and
minorities, the OCC found that Citibank and CitiMortgage's denial ratio
for the minority in question was actually less than the denial ratio of
all lenders in that particular MSA.

Citibank has represented in its response to commenters that it has a
second level review program in place for all declined applications to
ensure fair access to its products. In some instances, a third level
review must occur before an adverse action is taken.

*c. Citibank's Home Improvement Loan Program*

Two commenters expressed concern that Citibank was targeting small
dollar amount home improvement loans to traditionally underserved areas.
These commenters questioned the quality of this product and speculated
that Citibank introduced these loans solely to improve the appearance of
its HMDA data. Citibank responded that its initiation of the program in
1997 was a strategy designed to increase awareness among LMI and
minority individuals and communities nationwide of its home loan
products, especially home purchase loans. Citibank represents that the
program has played a more modest role in 2000 and the first part of
2001, and that Citibank has substantially expanded its "traditional"
home purchase lending to LMI borrowers.

OCC examiners investigated the concerns raised about this unsecured loan
product and found that it typically involved an unsecured, small dollar
amount loan (e.g., \$500), carried a low interest rate and no closing
costs, and was offered in minority and LMI areas in the form of "live
checks" or "preapproved" mail solicitations. We also found that Citibank
engaged in targeted mail marketing of various other unsecured, small
dollar loan products in minority and LMI areas that typically carried a
higher loan amount (e.g., \$1,000, \$2,500 and \$5,000) and higher rate
of interest. In addition, we found that Citibank's reporting of this
product as for home improvement purposes to be in compliance with HMDA
reporting requirements.

As noted above, comments related to this loan product, and its
responsiveness to the credit needs of Citibank's CRA assessment areas,
also are being taken into account in a current CRA examination of
Citibank.

We are aware that the New York State Banking Department (\"NYSBD\")
expressed concerns to Citigroup about this loan product and whether it
should be used to fulfill Citigroup's undertakings under the terms of a
July 22, 1998, letter agreement between Citigroup and the NYSBD, entered
into in connection with the Citigroup/Travelers application in 1998. At
issue appears to be primarily the manner in which the size of these
loans was disclosed to NYSBD. In order to be responsive to these and
other community lending concerns, Citigroup has entered into an
agreement with NYSBD, announced on June 26, 2001, to commit to certain
new projections regarding its HMDA-reportable lending in 2001, 2002, and
2003, and to specify the size of the home improvement loans that will
count toward meeting these projections ("agreement"). The agreement also
calls for the creation of new Loan Production Offices ("LPOs") in
predominately minority areas in New York City, under a three-year pilot
program. Based upon our review of information from the NYSBD and
Citigroup, the essence of the issues raised in this matter does not
affect the criteria for our consideration of the present application, as
discussed in this Decision.

**3. Subprime Lending and Allegations of Predatory Lending**

A number of commenters raised issues concerning the subprime lending
activities of various Citigroup subsidiaries. Most of these concerns
related to entities over which the OCC has no regulatory jurisdiction,
such as CitiFinancial Credit Company and the non-bank subsidiaries of
Associates First Capital Corporation. Because the OCC does not have
regulatory authority over these entities, we did not investigate
concerns regarding their operations.

With respect to Citibank itself, subprime lending constitutes a small
percentage of its mortgage business. Subprime mortgage loans are made
through Source One Mortgage Company, a subsidiary of CitiMortgage. OCC
examiners found that the volume of subprime loans generated through
Source One as of October 31, 2000, represented less than 1% of
CitiMortgage's entire portfolio.

Additionally, as Citigroup has reported to the FRB in connection with
the holding company application to acquire EAB, CitiMortgage has a
"referral-up" program in place. Under this program, applicants who apply
through the subprime channel are automatically considered for prime
credit when certain underwriting criteria are present. Other applicants
may be eligible for consideration for prime credit, depending on their
credit scores and the ratio of the loan amount to the value of the
collateral. Further, CitiMortgage's subprime lending channel (referred
to as "CitiMortgage (Extended Lending Channel)" ("ELC")) has implemented
other safeguards to protect borrowers, such as limitations on prepayment
penalties, refinancing protections, a policy against originating or
purchasing loans with balloon payments or negative amortization, and a
special toll free number for consumer complaints.

Citigroup also represented that corporate policies and standards for
compliance with fair lending laws cover the ELC. The ELC's underwriting
policies and procedures have been reviewed internally to ensure
compliance with fair lending laws. In addition, ELC employees are
required to go through comprehensive fair lending training. The ELC is
also subject to internal self-assessment, corporate audits, and mystery
shoppers.

Several commenters noted that the Federal Trade Commission has brought a
lawsuit against Citigroup and CitiFinancial Credit Company alleging that
Associates First Capital Corporation and its subsidiaries "Associates"
engaged in various unfair and deceptive practices. For example, the
complaint, filed March 6, 2001, includes allegations that Associates'
advertisements and statements concerning the costs and benefits of
certain loan and credit-related insurance products were deceptive in
violation of section 5(a) of the Federal Trade Commission Act[^15] ("FTC
Act"). Additionally, the complaint alleges that Associates engaged in
unfair debt collection practices in violation of the FTC Act. Finally,
the complaint also alleges violations of the Truth in Lending Act, Equal
Credit Opportunity Act, and Fair Credit Reporting Act. The defendants
have filed a motion to dismiss the complaint.[^16]

Some commenters requested that a decision on Citibank's application be
delayed until the lawsuit is resolved. However, the acts at issue in the
lawsuit were alleged to have been committed by companies that are now
affiliates of Citibank, and not by Citibank, and, further, they are
alleged to have occurred prior to Citigroup's acquisition of Associates
First Capital Corporation. Therefore, we do not believe that this matter
warrants a delay in our decision.

**4. EAB's Community Development Corporation**

Commenters also expressed a concern with respect to the potential loss
of EAB's Community Development Corporation ("EABCDC"). Citigroup stated
that it intends to integrate EAB's community development staff and
operations into Citigroup, but will honor EABCDC's existing commitments.
Citigroup also represented that it is committed to supporting the
community development initiatives of, and to continuing the
relationships fostered by, EABCDC. Further, Citigroup expects that
EABCDC's staff will continue to conduct substantially similar functions
at Citigroup following the merger. However, new community development
loans and investments generated will likely be booked as assets of
Citigroup's various banking subsidiaries, not of EABCDC.

**5. Conclusion Regarding Record of CRA Performance**

Based on the banks' records of CRA performance, discussed above, we find
that approval of the merger is consistent with the Community
Reinvestment Act.

#### D. Disposition of Hearing Requests

All but one of the 16 commenters on this application requested the OCC
to conduct a hearing.[^17] After careful consideration, the OCC has
determined not to conduct a hearing on this merger application or to
extend the comment period.

The general standard the OCC applies to determine whether to hold a
public hearing is contained in 12 C.F.R. 5.11, which provides:

> *The OCC generally grants a hearing request only if the OCC determines
> that written submissions would be insufficient or that a hearing would
> otherwise benefit the decisionmaking process. The OCC also may order a
> hearing if it concludes that a hearing would be in the public
> interest.*

The parties requesting hearings believed the OCC should conduct public
hearings primarily to collect testimony on Citigroup's subprime lending
practices. None of the parties indicated why written submissions would
be insufficient to make an adequate presentation of the issues or facts
to the OCC. In addition, the OCC had no other reason to believe that the
testimony would provide the OCC with relevant information on the pending
application. Citigroup's subprime lending activities are primarily
housed in CitiFinancial Credit Company and other holding company
subsidiaries that are neither subsidiaries of the merging entity,
Citibank, nor under the OCC's regulatory jurisdiction.

**E. Retention of Subsidiaries**

As part of the Merger application, Citibank proposes to retain and
operate EAB\'s various subsidiaries which are engaged in activities
represented as permissible for national banks. With the exception of two
entities, the EAB subsidiaries engage in activities for which Citibank
itself has previously established subsidiaries under the provisions of
12 C.F.R. 5.34 or 24.3. The remaining entities are engaged in
permissible activities described within 12 C.F.R. 5.34(e)(5)(v).
Accordingly, Citibank, as the bank resulting from this merger, is
expected to meet the qualifications of 12 C.F.R. 5.34 and is thus
permitted to retain the two EAB subsidiaries.

The applicants have represented that EAB holds no other equity interests
or other assets that would be impermissible for a national bank.

#### F. CONCLUSION AND APPROVAL

For the reasons set forth above, including the representations of the
applicants, we find that the proposed Merger between Citibank and EAB is
authorized as a merger transaction under the provisions of 12 U.S.C. §§
215a & 1828(c); Citibank, as the resulting bank after the Merger, is
authorized to retain and operate the former head office and branches of
EAB as branches, under 12 U.S.C. § 36(b)(2)(A); Citibank is authorized
to retain EAB\'s various subsidiaries; Citibank and EAB are in
satisfactory condition; and, the proposal is consistent with the
Community Reinvestment Act. Accordingly, the Merger application is
hereby approved, subject to the condition that Citibank provide the OCC
with progress reports on implementation of the Consumer Finance
Initiatives, beginning no later than July 31, 2001, and quarterly
thereafter, until implementation of the initiatives is completed.
Additionally, for the reasons set forth above, the requests for a public
hearing and for an extension of the comment period are denied.

7-2-01

[Signed]{.underline} \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Julie L. Williams Date

First Senior Deputy Comptroller

and Chief Counsel

Application Control Number: 2001-ML-02-0006

[^1]: During the public comment period, the OCC received comments from
    sixteen individuals or community organizations.

[^2]: One additional closure is planned in an area adjacent to a
    low-income census tract.

[^3]: Federal law requires banks to give notice of proposed branch
    closings. The Federal Deposit Insurance Act requires insured
    depository institutions to provide notice to the appropriate federal
    regulatory agency at least ninety days prior to such closing. 12
    U.S.C. § 1831r-1. Additionally, the OCC considers a bank's record of
    branch closings, including those in LMI areas, in conducting CRA
    examinations.

[^4]: 12 U.S.C. § 2903.

[^5]: 12 C.F.R. 25.29(a)(3).

[^6]: Citicorp Mortgage, Inc. was a subsidiary of Citibank at the time
    of the 1998 Performance Evaluation and now operates under the name
    CitiMortgage. For ease of reference, Citicorp Mortgage will be
    referred to as "CitiMortgage" in the remainder of this document.

[^7]: Citibank plans to consolidate EAB's Neighborhood Mortgage Program
    within existing Citibank affordable mortgage and purchase assistance
    programs.

[^8]: Citigroup has just announced that it will discontinue offering
    single premium credit life insurance. Under this revision to the
    Consumer Finance Initiatives, and following approvals by state
    insurance regulators, if any consumer chooses to purchase credit
    life insurance in connection with a loan, the consumer will make
    monthly premium payments that are not financed with the loan. In
    addition, Citigroup announced that it will begin to offer existing
    mortgage customers that had purchased single premium credit life
    insurance the opportunity to convert to monthly pay insurance.

[^9]: [See]{.underline} OCC's Corporate Decision No. 2000-21,
    *Interpretations and Actions*, December 2000, Vol. 13, No. 12,
    Notice by Citigroup Inc. of its intent to acquire a controlling
    interest in Associates National Bank (Delaware), Newark, Delaware.

[^10]: In connection with the current merger application, many of the
    commenters raised concerns with the level of lending to various LMI
    communities throughout the nation. While those areas may be within
    the assessment areas served by Citigroup bank or thrift subsidiaries
    that are affiliated with Citibank, Citibank's CRA assessment areas
    within the continental United States are confined to the New York
    City MSA and the Nassau-Suffolk MSA. [See]{.underline} 12 C.F.R.
    25.41 (discussing delineation of assessment areas). Accordingly, the
    OCC did not investigate or consider concerns raised with respect to
    lending to LMI borrowers and communities in assessment areas for
    banks other than Citibank. For example, concerns were raised by a
    commenter with respect to Citibank's record of lending in Rochester,
    New York. Inasmuch as Rochester is within the assessment area of
    Citibank (New York State), a state chartered bank, the OCC did not
    review the performance of Citibank (New York State) in that MSA.

[^11]: The examiners' review was based on HMDA data from October 1,
    1998, to June 30, 2000, and included HMDA-reportable loans generated
    by Citibank, CitiMortgage, CitiFinancial, Citibank, FSB, and
    Citibank (New York State).

[^12]: Citigroup's HMDA analysis included HMDA data for Citibank,
    CitiMortgage, Source One Mortgage Corporation, Citibank, FSB,
    Citibank (New York State), and Citibank (Nevada), N.A.

[^13]: One commenter expressed concerns with the accuracy of the 2000
    HMDA Loan Application Register ("LAR"). OCC examiners recently
    reviewed the accuracy of Citibank's 1999 HMDA data reported on the
    HMDA LAR and found no significant data errors. Additionally,
    Citigroup has represented that its business units have procedures in
    place, such as quarterly management reviews and internal audits, to
    ensure the accuracy and completeness of HMDA data.

[^14]: The OCC's review of the 1999 HMDA data disclosed that Citibank
    and CitiMortgage's level of refinance lending to minorities was at
    least 80% of the level experienced by all lenders in 11 of the 17
    markets. The following is a list of the MSAs in which CitiMortgage's
    percentage of lending to minorities was less than 80% of the
    percentage experienced by all lenders in that MSA: Buffalo (2.9% for
    CitiMortgage vs.16.1% for all lenders); Milwaukee (0.0% vs. 8.7%,
    but only 14 total loans originated); Memphis (12.2% vs. 21.2%); Salt
    Lake City (4.8 % vs. 6.1%); St. Louis (7.5% vs. 9.8%); and Phoenix
    (7.0% vs. 11.8). With respect to conventional home purchase loans,
    Citibank's level of lending to minorities was at least 80% of the
    level experienced by all lenders in all 5 MSAs where the commenters
    expressed concerns.

[^15]: 15 U.S.C § 45(a)(1).

[^16]: ^?^ Motion of Citigroup Inc., CitiFinancial Credit Co.,
    Associates First Capital Corp. & Associates Corp. of N. Am. to
    Dismiss Complaint, [Federal Trade Comm'n v. Citigroup Inc., et
    al.]{.underline}, No. 1:01-CV-0606 JTC (N.D. Ga.) (dated Apr. 16,
    2001).

[^17]: ^?^ Two commenters also requested the OCC to extend the public
    comment period. The OCC is not granting an extension of the comment
    period, because the commenters did not demonstrate that additional
    time was necessary to develop factual information, and no
    extenuating circumstances were present. [See]{.underline} 12 C.F.R.
    5.10(b)(2)(ii), (iii).