7.3 billion - Citigroup

ownership interest in the investment funds. The Company hasalso established a number of investment funds as opportunitiesfor qualified employees to invest in private equity investments.The Company acts as investment manager to these funds andmay provide employees with financing on both recourse andnon-recourse bases for a portion of the employees‘ investmentcommitments.The Company has determined that a majority of theinvestment entities managed by Citigroup are provided adeferral from the requirements of SFAS 167, Amendments toFASB Interpretation No. 46(R), because they meet the criteria inAccounting Standards Update No. 2010-10, Consolidation(Topic 810), Amendments for Certain Investment Funds (ASU2010-10). These entities continue to be evaluated under therequirements of ASC 810-10, prior to the implementation ofSFAS 167 (FIN 46(R), Consolidation of Variable InterestEntities), which required that a VIE be consolidated by the partywith a variable interest that will absorb a majority of the entity‘sexpected losses or residual returns, or both.Where the Company has determined that certain investmententities are subject to the consolidation requirements of SFAS167, the consolidation conclusions reached upon initialapplication of SFAS 167 are consistent with the consolidationconclusions reached under the requirements of ASC 810-10,prior to the implementation of SFAS 167.Trust Preferred SecuritiesThe Company has raised financing through the issuance of trustpreferred securities. In these transactions, the Company forms astatutory business trust and owns all of the voting equity sharesof the trust. The trust issues preferred equity securities to thirdpartyinvestors and invests the gross proceeds in juniorsubordinated deferrable interest debentures issued by theCompany. The trusts have no assets, operations, revenues orcash flows other than those related to the issuance,administration and repayment of the preferred equity securitiesheld by third-party investors. Obligations of the trusts are fullyand unconditionally guaranteed by the Company.Because the sole asset of each of the trusts is a receivablefrom the Company and the proceeds to the Company from thereceivable exceed the Company‘s investment in the VIE‘sequity shares, the Company is not permitted to consolidate thetrusts, even though it owns all of the voting equity shares of thetrust, has fully guaranteed the trusts‘ obligations, and has theright to redeem the preferred securities in certain circumstances.The Company recognizes the subordinated debentures on itsConsolidated Balance Sheet as long-term liabilities. Foradditional information, see Note 15 to the ConsolidatedFinancial Statements.149CITIGROUP – 2012 FIRST QUARTER 10-Q