Citigroup Inc.

Credit Card SecuritizationsThe Company securitizes credit card receivables through trusts that areestablished to purchase the receivables. Citigroup transfers receivables intothe trusts on a non-recourse basis. Credit card securitizations are revolvingsecuritizations; that is, as customers pay their credit card balances, the cashproceeds are used to purchase new receivables and replenish the receivablesin the trust. Prior to 2010, such transfers were accounted for as saletransactions under SFAS 140 and, accordingly, the sold assets were removedfrom the Consolidated Balance Sheet and a gain or loss was recognizedin connection with the transaction. With the adoption of SFAS 167, beginningin 2010 the trusts are treated as consolidated entities, because, as servicer,Citigroup has power to direct the activities that most significantly impactthe economic performance of the trusts and also holds a seller’s interest andcertain securities issued by the trusts, and provides liquidity facilities to thetrusts, which could result in potentially significant losses or benefits fromthe trusts. Accordingly, the transferred credit card receivables are required toremain on the Consolidated Balance Sheet with no gain or loss recognized.The debt issued by the trusts to third parties is included in the ConsolidatedBalance Sheet.The Company relies on securitizations to fund a significant portion ofits credit card businesses in North America. The following table reflectsamounts related to the Company’s securitized credit card receivables:Citicorp Citi HoldingsIn billions of dollars 2010 2009 2010 2009Principal amount of credit card receivables in trusts $67.5 $78.8 $34.1 $42.3Ownership interests in principal amount of trust credit card receivablesSold to investors via trust-issued securities $42.0 $66.5 $16.4 $28.2Retained by Citigroup as trust-issued securities 3.4 5.0 7.1 10.1Retained by Citigroup via non-certificated interests 22.1 7.3 10.6 4.0Total ownership interests in principal amount of trust credit card receivables $67.5 $78.8 $34.1 $42.3Other amounts recorded on the balance sheet related to interests retained in the trustsOther retained interests in securitized assets N/A $ 1.4 N/A $ 1.6Residual interest in securitized assets (1) N/A 0.3 N/A 1.2Amounts payable to trusts N/A 1.2 N/A 0.8(1) December 31, 2009 balances include net unbilled interest of $0.3 billion for Citicorp and $0.4 billion for Citi Holdings.N/A Not ApplicableCredit Card Securitizations—CiticorpNo gain or loss from securitization was recognized in 2010, since the transferof credit card receivables to the trust did not meet the criteria for saleaccounting. In the years ended December 31, 2009 and 2008, the Companyrecorded net gains (losses) from securitization of Citicorp’s credit cardreceivables of $349 million and $(1,007) million, respectively. Net gains(losses) reflect the following:• incremental gains (losses) from new securitizations;• the reversal of the allowance for loan losses associated with receivables sold;• net gains on replenishments of the trust assets offset by other-thantemporaryimpairments; and• changes in fair value for the portion of the residual interest classified astrading assets.237