21. 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, 2010 are as follows:In millions of dollarsNetunrealizedgains (losses)on investmentsecuritiesForeigncurrencytranslationadjustment,net ofhedgesCash flowhedgesPensionliabilityadjustmentsAccumulatedothercomprehensiveincome (loss)Balance at January 1, 2008 $ 471 $ (772) $(3,163) $(1,196) $ (4,660)Change in net unrealized gains (losses) on investment securities, net of taxes (11,422) — — — (11,422)Reclassification adjustment for net losses included in net income, net of taxes 1,304 — — — 1,304Foreign currency translation adjustment, net of taxes (1) — (6,972) — — (6,972)Cash flow hedges, net of taxes (2) — — (2,026) — (2,026)Pension liability adjustment, net of taxes (3) — — — (1,419) (1,419)Change $ (10,118) $ (6,972) $(2,026) $(1,419) $(20,535)Balance at December 31, 2008 $ (9,647) $(7,744) $(5,189) $(2,615) $(25,195)Cumulative effect of accounting change (ASC 320-10-35/FSP FAS 115-2and FAS 124-2) (413) — — — (413)Balance at January 1, 2009 $(10,060) $(7,744) $(5,189) $(2,615) $(25,608)Change in net unrealized gains (losses) on investment securities, net of taxes (4) 5,268 — — — 5,268Reclassification adjustment for net losses included in net income, net of taxes 445 — — — 445Foreign currency translation adjustment, net of taxes (1) — (203) — — (203)Cash flow hedges, net of taxes (2) — — 2,007 — 2,007Pension liability adjustment, net of taxes (3) — — — (846) (846)Change $ 5,713 $ (203) $ 2,007 $ (846) $ 6,671Balance at December 31, 2009 $ (4,347) $(7,947) $(3,182) $(3,461) $(18,937)Change in net unrealized gains (losses) on investment securities, net of taxes (4) 2,609 — — — 2,609Reclassification adjustment for net gains included in net income, net of taxes (657) — — — (657)Foreign currency translation adjustment, net of taxes (1) — 820 — — 820Cash flow hedges, net of taxes (2) — — 532 — 532Pension liability adjustment, net of taxes (3) — — — (644) (644)Change $ 1,952 $ 820 $ 532 $ (644) 2,660Balance at December 31, 2010 $ (2,395) $(7,127) $(2,650) $(4,105) $(16,277)(1) Reflects, among other items: the movements in the British pound, Euro, Japanese yen, Korean won, Polish zloty and Mexican peso against the U.S. dollar, and changes in related tax effects and hedges.(2) Primarily driven by <strong>Citigroup</strong>’s pay fixed/receive floating interest rate swap programs that are hedging the floating rates on deposits and long-term debt.(3) Reflects adjustments to the funded status of pension and postretirement plans, which is the difference between the fair value of the plan assets and the projected benefit obligation.(4) See Note 15 to the Consolidated Financial Statements for details of the unrealized gains and losses on <strong>Citigroup</strong>’s available-for-sale and held-to-maturity securities and the net gains (losses) included in income.230
22. SECURITIZATIONS AND VARIABLE INTERESTENTITIESOverview<strong>Citigroup</strong> and its subsidiaries are involved with several types of off-balancesheetarrangements, including special purpose entities (SPEs). See Note 1to the Consolidated Financial Statements for a discussion of changes to theaccounting for transfers and servicing of financial assets and consolidationof variable interest entities (VIEs), including the elimination of qualifyingSPEs (QSPEs).Uses of SPEsAn SPE is an entity designed to fulfill a specific limited need of the companythat organized it. The principal uses of SPEs are to obtain liquidity andfavorable capital treatment by securitizing certain of <strong>Citigroup</strong>’s financialassets, to assist clients in securitizing their financial assets, and to createinvestment products for clients. SPEs may be organized in many legalforms including trusts, partnerships or corporations. In a securitization, thecompany transferring assets to an SPE converts all (or a portion) of thoseassets into cash before they would have been realized in the normal courseof business, through the SPE’s issuance of debt and equity instruments,certificates, commercial paper and other notes of indebtedness, which arerecorded on the balance sheet of the SPE and not reflected in the transferringcompany’s balance sheet, assuming applicable accounting requirementsare satisfied. Investors usually have recourse to the assets in the SPE andoften benefit from other credit enhancements, such as a collateral accountor over-collateralization in the form of excess assets in the SPE, a line ofcredit, or from a liquidity facility, such as a liquidity put option or assetpurchase agreement. The SPE can typically obtain a more favorable creditrating from rating agencies than the transferor could obtain for its own debtissuances, resulting in less expensive financing costs than unsecured debt.The SPE may also enter into derivative contracts in order to convert the yieldor currency of the underlying assets to match the needs of the SPE investorsor to limit or change the credit risk of the SPE. <strong>Citigroup</strong> may be the providerof certain credit enhancements as well as the counterparty to any relatedderivative contracts. Since QSPEs were eliminated, most of <strong>Citigroup</strong>’s SPEsare now VIEs.Variable Interest EntitiesVIEs are entities that have either a total equity investment that is insufficient topermit the entity to finance its activities without additional subordinated financialsupport, or whose equity investors lack the characteristics of a controllingfinancial interest (i.e., ability to make significant decisions through voting rights,and right to receive the expected residual returns of the entity or obligation toabsorb the expected losses of the entity). Investors that finance the VIE throughdebt or equity interests or other counterparties that provide other forms of support,such as guarantees, subordinated fee arrangements, or certain types of derivativecontracts, are variable interest holders in the entity. Since January 1, 2010, thevariable interest holder, if any, that has a controlling financial interest in a VIEis deemed to be the primary beneficiary and must consolidate the VIE. <strong>Citigroup</strong>would be deemed to have a controlling financial interest and be the primarybeneficiary if it has both of the following characteristics:• power to direct activities of a VIE that most significantly impact theentity’s economic performance; and• obligation to absorb losses of the entity that could potentially besignificant to the VIE or right to receive benefits from the entity that couldpotentially be significant to the VIE.The Company must evaluate its involvement in each VIE and understandthe purpose and design of the entity, the role the Company had in the entity’sdesign, and its involvement in its ongoing activities. The Company thenmust evaluate which activities most significantly impact the economicperformance of the VIE and who has the power to direct such activities.For those VIEs where the Company determines that it has the powerto direct the activities that most significantly impact the VIE’s economicperformance, the Company then must evaluate its economic interests, if any,and determine whether it could absorb losses or receive benefits that couldpotentially be significant to the VIE. When evaluating whether the Companyhas an obligation to absorb losses that could potentially be significant, itconsiders the maximum exposure to such loss without consideration ofprobability. Such obligations could be in various forms, including but notlimited to, debt and equity investments, guarantees, liquidity agreements,and certain derivative contracts.Prior to January 1, 2010, the variable interest holder, if any, that wouldabsorb a majority of the entity’s expected losses, receive a majority of theentity’s residual returns, or both, was deemed to be the primary beneficiary andconsolidated the VIE. Consolidation of the VIE was determined based primarilyon the variability generated in scenarios that are considered most likely tooccur, rather than on scenarios that are considered more remote. In manycases, a detailed quantitative analysis was required to make this determination.In various other transactions, the Company may act as a derivativecounterparty (for example, interest rate swap, cross-currency swap, orpurchaser of credit protection under a credit default swap or total returnswap 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 orother instruments issued by VIEs. The Company generally considers suchinvolvement, by itself, not to be variable interests and thus not an indicator ofpower or potentially significant benefits or losses.231
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UNITED STATESSECURITIES AND EXCHANG
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CITIGROUP’S 2010 ANNUAL REPORT ON
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As described above, Citigroup is ma
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Operating ExpensesCitigroup operati
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FIVE-YEAR SUMMARY OF SELECTED FINAN
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CITIGROUP REVENUESIn millions of do
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REGIONAL CONSUMER BANKINGRegional C
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2009 vs. 2008Revenues, net of inter
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2009 vs. 2008Revenues, net of inter
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2009 vs. 2008Revenues, net of inter
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SECURITIES AND BANKINGSecurities an
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TRANSACTION SERVICESTransaction Ser
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BROKERAGE AND ASSET MANAGEMENTBroke
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Japan Consumer FinanceCitigroup con
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The following table provides detail
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CORPORATE/OTHERCorporate/Other incl
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During 2010, average Consumer loans
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SEGMENT BALANCE SHEET AT DECEMBER 3
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Citigroup Regulatory Capital Ratios
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Capital Resources of Citigroup’s
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Regulatory Capital Standards Develo
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DepositsCiti continues to focus on
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Secured financing is primarily cond
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Each of the credit rating agencies
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RISK FACTORSThe ongoing implementat
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The emerging markets in which Citi
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is largely uncertain. However, any
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a short-term Liquidity Coverage Rat
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understanding or cause confusion ac
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MANAGING GLOBAL RISKRISK MANAGEMENT
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CREDIT RISKCredit risk is the poten
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(1) 2010 primarily includes an addi
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Non-Accrual Loans and AssetsThe tab
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Renegotiated LoansThe following tab
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Citi’s first mortgage portfolio i
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Consumer Mortgage FICO and LTVData
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Second Mortgages: December 31, 2010
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Interest Rate Risk Associated with
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North America Cards—FICO Informat
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CONSUMER LOAN DETAILSConsumer Loan
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Consumer Loan Modification Programs
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Payment deferrals that do not conti
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Repurchase ReserveCiti has recorded
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Securities and Banking-Sponsored Pr
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INTEREST REVENUE/EXPENSE AND YIELDS
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ANALYSIS OF CHANGES IN INTEREST EXP
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As required by SEC rules, the table
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The fair values shown are prior to
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Key Controls over Fair Value Measur
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The results of the July 1, 2010 tes
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MANAGEMENT’S ANNUAL REPORT ON INT
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• an “ownership change” under
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REPORT OF INDEPENDENT REGISTERED PU
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FINANCIAL STATEMENTS AND NOTES TABL
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CONSOLIDATED FINANCIAL STATEMENTSCO
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CONSOLIDATED BALANCE SHEET(Continue
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CONSOLIDATED STATEMENT OF CHANGES I
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CITIBANK CONSOLIDATED BALANCE SHEET
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NOTES TO CONSOLIDATED FINANCIAL STA
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Repurchase and Resale AgreementsSec
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ecoveries are added. Securities rec
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Consumer Mortgage Representations a
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Transfers of Financial AssetsFor a
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ACCOUNTING CHANGESChange in Account
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The following table reflects the in
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Measuring Liabilities at Fair Value
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Revisions to the Earnings-per-Share
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FUTURE APPLICATION OF ACCOUNTING ST
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CollateralCash collateral available
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29. CONTINGENCIESOverviewIn additio
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pursuant to which Citigroup agreed
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court filings under docket number 0
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30. CITIBANK, N.A. STOCKHOLDER’S
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Condensed Consolidating Statements
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Condensed Consolidating Statements
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Condensed Consolidating Balance She
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Condensed Consolidating Statements
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33. SELECTED QUARTERLY FINANCIAL DA
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SUPERVISION AND REGULATIONCitigroup
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Citigroup continues to evaluate its
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CORPORATE INFORMATIONCITIGROUP EXEC
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SignaturesPursuant to the requireme