GUARANTEES AND COMMITMENTS

Citi provides a variety of guarantees and indemnifications to its customers to enhance their credit standing and enable them to complete a wide variety of business transactions. For

certain contracts meeting the definition of a guarantee, the guarantor must recognize, at inception, a liability for the fair value of the obligation undertaken in issuing the guarantee.

In addition, the guarantor must disclose the maximum potential amount of future payments that the guarantor could be required to make under the guarantee, if there were a total

default by the guaranteed parties. The determination of the maximum potential future payments is based on the notional amount of the guarantees without consideration of possible recoveries under recourse provisions or from collateral held or pledged. As such, Citi believes such amounts bear no relationship to the anticipated losses, if any, on these guarantees. For additional information regarding Citi’s guarantees and indemnifications included in the tables below, as well as its other guarantees and indemnifications excluded from the tables below, see Note 27 to the Consolidated Financial Statements in Citi’s 2015 Annual Report on Form 10-K.

The following tables present information about Citi’s guarantees at September 30, 2016 and December 31, 2015:



	Maximum potential amount of future payments
In billions of dollars at September 30, 2016 except carrying value in millions	Expire within 1 year		Expire after 1 year		Total amount outstanding		Carrying value (in millions of dollars)
Financial standby letters of credit	$	25.8	$	69.3	$	95.1	$	170
Performance guarantees	7.7		3.8		11.5		19
Derivative instruments considered to be guarantees	4.5		78.4		82.9		954
Loans sold with recourse	—		0.2		0.2		13
Securities lending indemnifications⁽¹⁾	83.9		—		83.9		—
Credit card merchant processing⁽¹⁾⁽²⁾	83.3		—		83.3		—
Credit card arrangements with partners	—		1.5		1.5		206
Custody indemnifications and other	0.1		47.1		47.2		58
Total	$	205.3	$	200.3	$	405.6	$	1,420



	Maximum potential amount of future payments
In billions of dollars at December 31, 2015 except carrying value in millions	Expire within 1 year		Expire after 1 year		Total amount outstanding		Carrying value (in millions of dollars)
Financial standby letters of credit	$	23.8	$	73.0	$	96.8	$	152
Performance guarantees	7.4		4.1		11.5		23
Derivative instruments considered to be guarantees	3.6		74.9		78.5		1,779
Loans sold with recourse	—		0.2		0.2		17
Securities lending indemnifications⁽¹⁾	79.0		—		79.0		—
Credit card merchant processing⁽¹⁾⁽²⁾	84.2		—		84.2		—
Custody indemnifications and other	—		51.7		51.7		56
Total	$	198.0	$	203.9	$	401.9	$	2,027


(1)	The carrying values of securities lending indemnifications and credit card merchant processing were not material for either period presented, as the probability of potential liabilities arising from these guarantees is minimal.

(2)

At September 30, 2016 and December 31, 2015, this maximum potential exposure was estimated to be $83 billion and $84 billion, respectively. However, Citi believes that the maximum exposure is not representative of the actual potential loss exposure based on its historical experience. This contingent liability is unlikely to arise, as most products and services are delivered when purchased and amounts are refunded when items are returned to merchants.

Loans sold with recourse

Loans sold with recourse represent Citi’s obligations to

reimburse the buyers for loan losses under certain

circumstances. Recourse refers to the clause in a sales

agreement under which a seller/lender will fully reimburse

the buyer/investor for any losses resulting from the

purchased loans. This may be accomplished by the seller’s

taking back any loans that become delinquent.

In addition to the amounts shown in the tables above,

Citi has recorded a repurchase reserve for its potential

repurchases or make-whole liability regarding residential

mortgage representation and warranty claims related to its

whole loan sales to the U.S. government-sponsored

enterprises (GSEs) and, to a lesser extent, private investors.

The repurchase reserve was approximately $114 million and

$152 million at September 30, 2016 and December 31, 2015,

respectively, and these amounts are included in Other

liabilities on the Consolidated Balance Sheet.

Credit card arrangements with partners

Citi, in certain of its credit card partner arrangements,

provides guarantees to the partner regarding the volume of

certain customer originations during the term of the

agreement. To the extent such origination targets are not met,

the guarantees serve to compensate the partner for certain

payments that otherwise would have been generated in

connection with such originations.

Other guarantees and indemnifications

Credit Card Protection Programs

Citi, through its credit card businesses, provides various

cardholder protection programs on several of its card

products, including programs that provide insurance

coverage for rental cars, coverage for certain losses

associated with purchased products, price protection for

certain purchases and protection for lost luggage. These

guarantees are not included in the table, since the total

outstanding amount of the guarantees and Citi’s maximum

exposure to loss cannot be quantified. The protection is

limited to certain types of purchases and losses, and it is not

possible to quantify the purchases that would qualify for

these benefits at any given time. Citi assesses the probability

and amount of its potential liability related to these programs

based on the extent and nature of its historical loss

experience. At September 30, 2016 and December 31, 2015, the actual and estimated losses incurred and the carrying value of Citi’s obligations related to these programs were

immaterial.

Value-Transfer Networks

Citi is a member of, or shareholder in, hundreds of value transfer networks (VTNs) (payment, clearing and settlement

systems as well as exchanges) around the world. As a

condition of membership, many of these VTNs require that

members stand ready to pay a pro rata share of the losses

incurred by the organization due to another member’s default

on its obligations. Citi’s potential obligations may be limited

to its membership interests in the VTNs, contributions to the

VTN’s funds, or, in limited cases, the obligation may be unlimited. The maximum exposure cannot be estimated as

this would require an assessment of future claims that have

not yet occurred. Citi believes the risk of loss is remote

given historical experience with the VTNs. Accordingly,

Citi’s participation in VTNs is not reported in the guarantees

tables above, and there are no amounts reflected on the

Consolidated Balance Sheet as of September 30, 2016 or

December 31, 2015 for potential obligations that could arise

from Citi’s involvement with VTN associations.

Long-Term Care Insurance Indemnification

In the sale of an insurance subsidiary, the Company provided

an indemnification to an insurance company for policyholder

claims and other liabilities relating to a book of long-term

care (LTC) business (for the entire term of the LTC policies)

that is fully reinsured by another insurance company. The

reinsurer has funded two trusts with securities whose fair

value (approximately $7.4 billion at September 30, 2016,

compared to $6.3 billion at December 31, 2015) is designed

to cover the insurance company’s statutory liabilities for the

LTC policies. The assets in these trusts are evaluated and

adjusted periodically to ensure that the fair value of the

assets continues to cover the estimated statutory liabilities

related to the LTC policies, as those statutory liabilities

change over time.

If the reinsurer fails to perform under the reinsurance

agreement for any reason, including insolvency, and the

assets in the two trusts are insufficient or unavailable to the

ceding insurance company, then Citi must indemnify the

ceding insurance company for any losses actually incurred in

connection with the LTC policies. Since both events would

have to occur before Citi would become responsible for any

payment to the ceding insurance company pursuant to its

indemnification obligation, and the likelihood of such events

occurring is currently not probable, there is no liability

reflected in the Consolidated Balance Sheet as of September 30, 2016 and December 31, 2015 related to this indemnification. Citi continues to closely monitor its potential exposure under this indemnification obligation.

Futures and over-the-counter derivatives clearing

Citi provides clearing services for clients executing

exchange-traded futures and over-the-counter (OTC)

derivatives contracts with central counterparties (CCPs).

Based on all relevant facts and circumstances, Citi has

concluded that it acts as an agent for accounting purposes in

its role as clearing member for these client transactions. As

such, Citi does not reflect the underlying exchange-traded

futures or OTC derivatives contracts in its Consolidated

Financial Statements. See Note 19 for a discussion of Citi’s

derivatives activities that are reflected in its Consolidated

Financial Statements.

As a clearing member, Citi collects and remits cash and securities collateral (margin) between its clients and the

respective CCP. There are two types of margin: initial

margin and variation margin. Where Citi obtains benefits

from or controls cash initial margin (e.g., retains an interest

spread), cash initial margin collected from clients and

remitted to the CCP is reflected within Brokerage Payables (payables to customers) and Brokerage Receivables

(receivables from brokers, dealers and clearing

organizations), respectively. However, for OTC derivatives

contracts where Citi has contractually agreed with the client

that (a) Citi will pass through to the client all interest paid by

the CCP on cash initial margin; (b) Citi will not utilize its

right as a clearing member to transform cash margin into

other assets; and (c) Citi does not guarantee and is not liable

to the client for the performance of the CCP, cash initial

margin collected from clients and remitted to the CCP is not

reflected on Citi’s Consolidated Balance Sheet. The total

amount of cash initial margin collected and remitted in this

manner was approximately $6.0 billion and $4.3 billion as of

September 30, 2016 and December 31, 2015, respectively.

Variation margin due from clients to the respective CCP, or from the CCP to clients, reflects changes in the value of the client’s derivative contracts for each trading day. As a clearing member, Citi is exposed to the risk of nonperformance by clients (e.g., failure of a client to post

variation margin to the CCP for negative changes in the

value of the client’s derivative contracts). In the event of

non-performance by a client, Citi would move to close out

the client’s positions. The CCP would typically utilize initial

margin posted by the client and held by the CCP, with any

remaining shortfalls required to be paid by Citi as clearing

member. Citi generally holds incremental cash or securities

margin posted by the client, which would typically be

expected to be sufficient to mitigate Citi’s credit risk in the

event the client fails to perform.

As required by ASC 860-30-25-5, securities collateral posted by clients is not recognized on Citi’s Consolidated Balance Sheet.

Carrying Value—Guarantees and Indemnifications

At September 30, 2016 and December 31, 2015, the total carrying amounts of the liabilities related to the guarantees and indemnifications included in the tables above amounted

to approximately $1.4 billion and $2.0 billion, respectively. The carrying value of financial and performance guarantees is included in Other liabilities. For loans sold with recourse,

the carrying value of the liability is included in Other

liabilities.

Collateral

Cash collateral available to Citi to reimburse losses realized under these guarantees and indemnifications amounted to $52 billion at both September 30, 2016 and December 31, 2015. Securities and other marketable assets held as collateral amounted to $37 billion and $33 billion at September 30, 2016 and December 31, 2015, respectively. The majority of collateral is held to reimburse losses realized under securities lending indemnifications. Additionally, letters of credit in favor of Citi held as collateral amounted to $4.1 billion and $4.2 billion at September 30, 2016 and December 31, 2015, respectively. Other property may also be available to Citi to cover losses under certain guarantees and indemnifications; however, the value of such property has not been determined.

Performance risk

Presented in the tables below are the maximum potential amounts of future payments that are classified based upon internal and external credit ratings as of September 30, 2016 and December 31, 2015. The determination of the maximum potential future payments is based on the notional amount of the guarantees without consideration of possible recoveries under recourse provisions or from collateral held or pledged. As such, Citi believes such amounts bear no relationship to the anticipated losses, if any, on these guarantees.



	Maximum potential amount of future payments
In billions of dollars at September 30, 2016	Investment grade		Non-investment grade		Not rated		Total
Financial standby letters of credit	$	68.4	$	14.1	$	12.6	$	95.1
Performance guarantees	6.5		4.1		0.9		11.5
Derivative instruments deemed to be guarantees	—		—		82.9		82.9
Loans sold with recourse	—		—		0.2		0.2
Securities lending indemnifications	—		—		83.9		83.9
Credit card merchant processing	—		—		83.3		83.3
Credit card arrangements with partners	—		—		1.5		1.5
Custody indemnifications and other	47.1		0.1		—		47.2
Total	$	122.0	$	18.3	$	265.3	$	405.6



	Maximum potential amount of future payments
In billions of dollars at December 31, 2015	Investment grade		Non-investment grade		Not rated		Total
Financial standby letters of credit	$	69.2	$	15.4	$	12.2	$	96.8
Performance guarantees	6.6		4.1		0.8		11.5
Derivative instruments deemed to be guarantees	—		—		78.5		78.5
Loans sold with recourse	—		—		0.2		0.2
Securities lending indemnifications	—		—		79.0		79.0
Credit card merchant processing	—		—		84.2		84.2
Custody indemnifications and other	51.6		0.1		—		51.7
Total	$	127.4	$	19.6	$	254.9	$	401.9

Credit Commitments and Lines of Credit



In millions of dollars	U.S.		Outside of U.S.		September 30, 2016		December 31, 2015
Commercial and similar letters of credit	$	1,268	$	4,209	$	5,477	$	6,102
One- to four-family residential mortgages	1,644		1,810		3,454		3,196
Revolving open-end loans secured by one- to four-family residential properties	11,939		1,621		13,560		14,726
Commercial real estate, construction and land development	8,414		1,593		10,007		10,522
Credit card lines	571,251		99,088		670,339		573,057
Commercial and other consumer loan commitments	161,524		91,791		253,315		271,076
Other commitments and contingencies	2,477		9,021		11,498		9,982
Total	$	758,517	$	209,133	$	967,650	$	888,661

The majority of unused commitments are contingent upon customers’ maintaining specific credit standards.

Commercial commitments generally have floating interest rates and fixed expiration dates and may require payment of fees. Such fees (net of certain direct costs) are deferred and, upon exercise of the commitment, amortized over the life of the loan or, if exercise is deemed remote, amortized over the commitment period.