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
## Table 0 ##
(1) Tier 1 Capital divided by adjusted average assets.
Citibank, N. A.  had a net loss for 2008 amounting to $6.2 billion.
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.
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 122 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 LongTerm Incentive Plan (MC LTIP), under the terms of the shareholderapproved 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:
## Table 1 ##
(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.
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:
## Table 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 overcollateralization, 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 shortterm 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 Company ?
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.
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:
## Table 3 ##
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.
2008 vs.  2007 Revenues, net of interest expense decreased 21%, driven by lower securitization revenue and higher credit losses in the securitization trusts, which were partially offset by higher net interest margin in cards and higher revenues in retail banking.
Lower securitization revenue was mainly driven by a write-down of $1.1 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.
Net interest revenue was up 21%, mainly driven by lower funding costs.
Non-interest revenue decreased 39%, primarily due to lower securitization revenue, higher credit losses in the securitization trusts, and the absence of a $297 million gain on the sale of MasterCard shares in 2007.
This decline was partially offset by a $349 million gain on the sale of Visa shares and a $170 million gain from a cards portfolio sale in 2008.
Operating expenses increased 31%, primarily driven by a $2.3 billion goodwill impairment charge in 2008.
Excluding the charge, expenses were down 5% mainly reflecting the absence of a $292 million Visa litigationrelated charge in 2007 and a $159 million Visa litigation reserve release in 2008, partially offset by $217 million repositioning charges in 2008.
Provisions for loan losses and for benefits and claims increased $540 million driven by higher net credit losses, up $165 million, and a higher loan loss reserve build, up $367 million, in both cards and retail banking.
Higher credit costs reflected a weakening of leading credit indicators, including the continued acceleration in the rate at which delinquent cards customers advanced to write-off, as well as trends in the macroeconomic environment, including the housing market downturn and rising unemployment.
The cards managed net credit loss ratio increased 191 basis points to 5.72%, while the retail banking net credit loss ratio increased 14 basis points to 3.54%.
Managed Presentations Managed-basis (Managed) presentations detail certain non-GAAP financial measures.
Managed presentations (applicable only to North American branded and retail partner credit card operations in NA RCB and Citi Holdings—Local Consumer Lending, respectively, as there are no deconsolidated credit card securitizations in any other region) include results from both the on-balance-sheet loans and off-balance-sheet loans, and exclude the impact of credit card securitizations activity.
Managed presentations assume that securitized loans have not been sold and present the results of the securitized loans in the same manner as Citigroup’s owned loans.
Citigroup believes that Managed presentations are useful to investors because they are widely used by analysts and investors within the credit card industry.
Managed presentations are commonly used by other companies within the financial services industry.
See also the “2010 Outlook” for NA RCB below.

<table><tr><td><i>In billions of dollars at year end</i></td><td>2008</td><td>2007</td></tr><tr><td>Tier 1 Capital</td><td>$71.0</td><td>$82.0</td></tr><tr><td>Total Capital (Tier 1 and Tier 2)</td><td>108.4</td><td>121.6</td></tr><tr><td>Tier 1 Capital Ratio</td><td>9.94%</td><td>8.98%</td></tr><tr><td>Total Capital Ratio (Tier 1 and Tier 2)</td><td>15.18</td><td>13.33</td></tr><tr><td>Leverage Ratio<sup>(1</sup><sup>)</sup></td><td>5.82</td><td>6.65</td></tr></table>
<table><tr><td>Unvested stock awards</td><td>Shares</td><td>Weighted average grant date fair value</td></tr><tr><td>Unvested at January 1, 2008</td><td>153,207,132</td><td>$50.70</td></tr><tr><td>Awards</td><td>149,140,314</td><td>$26.04</td></tr><tr><td>Cancellations</td><td>-20,945,018</td><td>$42.92</td></tr><tr><td>Deletions</td><td>-1,968,824</td><td>$25.94</td></tr><tr><td>Vestings<sup>-1</sup></td><td>-53,222,745</td><td>$47.06</td></tr><tr><td>Unvested at December 31, 2008</td><td>226,210,859</td><td>$36.23</td></tr></table>
<table><tr><td><i>In billions of dollars</i></td><td>December 31, 2008</td><td>December 31, 2007</td></tr><tr><td>Cash</td><td>$0.3</td><td>$0.1</td></tr><tr><td>Available-for-sale securities</td><td>0.1</td><td>0.2</td></tr><tr><td>Loans</td><td>7.5</td><td>7.4</td></tr><tr><td>Allowance for loan losses</td><td>-0.1</td><td>-0.1</td></tr><tr><td>Total assets</td><td>$7.8</td><td>$7.6</td></tr><tr><td>Long-term debt</td><td>$6.3</td><td>$5.8</td></tr><tr><td>Other liabilities</td><td>0.3</td><td>0.4</td></tr><tr><td>Total liabilities</td><td>$6.6</td><td>$6.2</td></tr></table>
<table><tr><td><i>In billions of dollars</i></td><td> December 31, 2007 exposures</td><td>2008 write- downs -1</td><td>2008 sales/ transfers -2</td><td> December 31, 2008 exposures</td></tr><tr><td> Direct ABS CDO super senior exposures:</td><td></td><td></td><td></td><td></td></tr><tr><td>Gross ABS CDO super senior exposures (A)</td><td>$39.8</td><td></td><td></td><td>$18.9</td></tr><tr><td>Hedged exposures (B)</td><td>10.5</td><td></td><td></td><td>6.9</td></tr><tr><td>Net ABS CDO super senior exposures:</td><td></td><td></td><td></td><td></td></tr><tr><td>ABCP/CDO<sup>(3</sup><sup>)</sup></td><td>20.6</td><td>$-9.0</td><td>$-1.7</td><td>9.9</td></tr><tr><td>High grade</td><td>4.9</td><td>-2.5 (4 )</td><td>-1.6</td><td>0.8</td></tr><tr><td>Mezzanine</td><td>3.6</td><td>-1.4 (4 )</td><td>-1.0</td><td>1.3</td></tr><tr><td>ABS CDO-squared</td><td>0.2</td><td>-0.2</td><td>0.0</td><td>0.0</td></tr><tr><td> Total net ABS CDO super senior exposures (A-B=C)</td><td>$29.3</td><td>$-13.1</td><td>$-4.2 (5 )</td><td>$12.0</td></tr><tr><td> Lending and structuring exposures:</td><td></td><td></td><td></td><td></td></tr><tr><td>CDO warehousing/unsold tranches of ABS CDOs</td><td>$0.2</td><td>$-0.1</td><td>$0.0</td><td>$0.1</td></tr><tr><td>Subprime loans purchased for sale or securitization</td><td>4.0</td><td>-1.3</td><td>-1.4</td><td>1.3</td></tr><tr><td>Financing transactions secured by subprime</td><td>3.8</td><td>-0.4 (4 )</td><td>-2.6</td><td>0.7</td></tr><tr><td> Total lending and structuring exposures (D)</td><td>$8.0</td><td>$-1.8</td><td>$-4.0</td><td>$2.0</td></tr><tr><td> Total net exposures C+D<sup>-6</sup></td><td>$37.3</td><td>$-14.9</td><td>$-8.3</td><td>$14.1</td></tr><tr><td>Credit adjustment on hedged counterparty exposures (E)<sup>(7</sup><sup>)</sup></td><td></td><td>$-5.7</td><td></td><td></td></tr><tr><td> Total net write-downs (C+D+E)</td><td></td><td>$-20.7</td><td></td><td></td></tr></table>

Question: what was the percentage increase in the total assets from 2007 to 2008
Answer: 0.02632