Citigroup Inc.

The following table reflects the incremental impact of adopting SFAS 166/167on Citigroup’s GAAP assets, liabilities, and stockholders’ equity.In billions of dollars January 1, 2010AssetsTrading account assets $ (9.9)Investments (0.6)Loans 159.4Allowance for loan losses (13.4)Other assets 1.8Total assets $137.3LiabilitiesShort-term borrowings $ 58.3Long-term debt 86.1Other liabilities 1.3Total liabilities $145.7Stockholders’ equityRetained earnings $ (8.4)Total stockholders’ equity (8.4)Total liabilities and stockholders’ equity $137.3The preceding tables reflect: (i) the portion of the assets of formerQSPEs to which Citigroup, acting as principal, had transferred assets andreceived sales treatment prior to January 1, 2010 (totaling approximately$712.0 billion), and (ii) the assets of significant VIEs as of January 1, 2010with which Citigroup is involved (totaling approximately $219.2 billion) thatwere previously unconsolidated and are required to be consolidated under thenew accounting standards. Due to the variety of transaction structures andthe level of Citigroup involvement in individual former QSPEs and VIEs, onlya portion of the former QSPEs and VIEs with which the Company is involvedwere required to be consolidated.In addition, the cumulative effect of adopting these new accountingstandards as of January 1, 2010 resulted in an aggregate after-tax chargeto Retained earnings of $8.4 billion, reflecting the net effect of anoverall pretax charge to Retained earnings (primarily relating to theestablishment of loan loss reserves and the reversal of residual interests held)of $13.4 billion and the recognition of related deferred tax assets amountingto $5.0 billion.The impact on certain of Citigroup’s regulatory capital ratios of adoptingthese new accounting standards, reflecting immediate implementation ofthe recently issued final risk-based capital rules regarding SFAS 166/167, wasas follows:As of January 1, 2010ImpactTier 1 CapitalTotal Capital(141) bps(142) bpsNon-Consolidation of Certain Investment FundsThe FASB issued Accounting Standards Update No. 2010-10, Consolidation(Topic 810), Amendments for Certain Investment Funds (ASU 2010‐10)in the first quarter of 2010. ASU 2010-10 provides a deferral to therequirements of SFAS 167 where the following criteria are met:• The entity being evaluated for consolidation is an investment company,as defined in ASC 946-10, Financial Services—Investment Companies,or an entity for which it is acceptable based on industry practice to applymeasurement principles that are consistent with an investment company;• The reporting enterprise does not have an explicit or implicit obligation tofund losses of the entity that could potentially be significant to the entity;and• The entity being evaluated for consolidation is not:–– a securitization entity;–– an asset-backed financing entity; or–– an entity that was formerly considered a qualifyingspecial-purpose entity.The Company has determined that a majority of the investment vehiclesmanaged by Citigroup are provided a deferral from the requirements ofSFAS 167, because they meet these criteria. These vehicles continue to beevaluated under the requirements of FIN 46(R) (ASC 810-10), prior to theimplementation of SFAS 167.Where the Company has determined that certain investment vehicles aresubject to the consolidation requirements of SFAS 167, the consolidationconclusions reached upon initial application of SFAS 167 are consistentwith the consolidation conclusions reached under the requirements ofASC 810‐10, prior to the implementation of SFAS 167.171