BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM

WASHINGTON, D. C. 2055!

ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD

October 23, 2007

Carl Howard, Esq.

General Counsel

Bank Regulatory

Citigroup Inc.

425 Park Avenue, 2" Floor/Zone 2
New York, New York 10022

Dear Mr. Howard:

This letter is in response to a request dated September 24, 2007, from
Citigroup Inc. (“Citigroup”), New York, New York, to broaden the scope of its
temporary exemption from section 23A of the Federal Reserve Act and the Board’s
Regulation w' that the Board granted on August 20, 2007 (the “August 20"
exemption”).” The August 20" exemption allows Citigroup’ s subsidiary bank,
Citibank, N.A. (“Bank”), Las Vegas, Nevada, to engage in certain securities
financing transactions (“SFTs”) with its affiliate, Citigroup Global Markets Inc.
(“Affiliated U.S. Broker-Dealer”), New York, New York, subject to several
conditions described i in the August 20" exemption. You have asked the Board to
expand the August 20" exemption to permit Bank to engage in SFTs with its
European broker-dealer affiliate, Citigroup Global Markets Ltd., London, United
Kingdom (“Affiliated U.K. Broker-Dealer”).

You have represented that for operational reasons the Affiliated U.K.
Broker-Dealer can more efficiently administer SFTs with market participants
outside the United States. SFTs between Bank and the Affiliated U.K. Broker-
Dealer would be covered transactions under section 23A and Regulation W, for the
same reasons explained in the August 20" exemption. Because the

12 U.S.C. § 371¢; 12 CFR part 223.

> See Board Letter dated August 20, 2007, to Carl Howard, Esq. (Citigroup).


-2-

August 20" exemption applied only to SFTs between Bank and the Affiliated U.S.
Broker-Dealer, you have requested that the Board modify the exemption to allow
Bank to engage in SFTs using the Affiliated U.K. Broker-Dealer as its
intermediary instead of the Affiliated U.S. Broker-Dealer.

The Director of the Division of Banking Supervision and Regulation,
pursuant to authority delegated by the Board, and with the concurrence of the
General Counsel, has determined to expand the August 20" exemption to permit
Bank to engage in SFTs with its Affiliated U.K. Broker-Dealer, provided that the
SFTs are conducted subject to the same conditions and limits described in the
August 20" exemption. Specifically, Bank’s aggregate exempt covered
transactions under this expanded exemption, with the Affiliated U.S. Broker-
Dealer and the Affiliated U.K. Broker-Dealer, may not exceed $25 billion.

This determination is specifically conditioned on compliance by
Citigroup, Bank, and the Affiliated U.K. Broker-Dealer with all the commitments
and representations they made to the Board in connection with the exemption
request. These commitments and representations are deemed to be conditions
imposed in writing by the Board in connection with granting the request and, as
such, may be enforced in proceedings under applicable law. This determination is
based on the specific facts and circumstances of the transactions described in your
correspondence and this letter. Any material change in those facts and
circumstances or any failure by Citigroup, Bank, or the Affiliated U.K. Broker-
Dealer to observe any of its commitments or representations may result in a
different view or in a revocation of the exemption.

Sincerely yours,

Act dU ner

Robert deV. Frierson
Deputy Secretary of the Board

cc: Federal Reserve Bank of New York
Federal Deposit Insurance Corporation
Office of the Comptroller of the Currency