DISCONTINUED OPERATIONS, SIGNIFICANT DISPOSALS AND OTHER BUSINESS EXITS

9 Months Ended

Sep. 30, 2022

Discontinued Operations and Disposal Groups [Abstract]

DISCONTINUED OPERATIONS, SIGNIFICANT DISPOSALS AND OTHER BUSINESS EXITS

DISCONTINUED OPERATIONS, SIGNIFICANT DISPOSALS AND OTHER BUSINESS EXITS

Discontinued Operations

The Company’s results from Discontinued operations consisted of residual activities related to previously divested operations. All Discontinued operations results are recorded within Corporate/Other.

The following table summarizes financial information for all Discontinued operations:

	Three Months Ended September 30,				Nine Months Ended September 30,
In millions of dollars	2022		2021		2022		2021
Total revenues, net of interest expense	$	—	$	—	$	—	$	—
Income (loss) from discontinued operations(1)	$	(6)	$	(1)	$	(270)	$	7
Benefit for income taxes	—		—		(41)		—
Income (loss) from discontinued operations, net of taxes	$	(6)	$	(1)	$	(229)	$	7

(1)Amounts in each period relate to the sale of the Egg Banking business in 2011.

During the second quarter of 2022, the Company finalized the settlement of certain liabilities related to its legacy consumer operation in the U.K. (the legacy operation), including an indemnification liability related to its sale of the Egg Banking business in 2011, which led to the substantial liquidation of the legacy operation. As a result, a CTA loss (net of hedges) in AOCI of approximately $400 million pretax ($345 million after-tax) related to the legacy operation was released to earnings in the second quarter of 2022. Out of the total CTA release, a $260 million pretax loss ($221 million after-tax loss) was attributable to the Egg Banking business noted above, reported in Discontinued operations, and therefore the corresponding CTA release was also reported in Discontinued operations during the second quarter of 2022. The remaining CTA release of a $140 million pretax loss ($124 million after-tax loss) related to Legacy Holdings Assets was reported as part of Continuing operations within Legacy Franchises.

While the legacy operation was divested in multiple sales over the years, each transaction did not result in substantial liquidation given that Citi retained certain liabilities noted above, which were gradually settled over time until reaching the point of substantial liquidation during the second quarter of 2022, triggering the release of the CTA loss to earnings.

Cash flows from Discontinued operations were not material for the periods presented.

Significant Disposals

As of September 30, 2022, Citi has entered into sale agreements for nine consumer banking businesses that Citi intends to exit, including the sales of the Australia and Philippines businesses, which closed in the second and third quarters of 2022, respectively. The sale agreements have resulted in a transfer to HFS over time of approximately $26 billion in assets, including approximately $17 billion of loans (net of allowance of $292 million) and approximately $20 billion in liabilities, including approximately $20 billion in deposits. As a result, these assets and liabilities held by each business were reclassified to HFS within Other assets and Other liabilities, respectively, on the Consolidated Balance Sheet. The following five sale transactions were identified as significant disposals within the Legacy Franchises segment. All sale transactions that have yet to close in the table below are subject to regulatory approvals and other closing conditions.

			September 30, 2022
In millions of dollars			Assets												Liabilities
Consumer banking business in	Sale agreement date	Expected close	Cash and deposits with banks		Loans(1)		Goodwill(2)		Other assets, advances to/from subsidiaries		Other assets		Total assets		Deposits		Long-term debt		Other liabilities		Total liabilities
Australia(3)	8/9/21	closed 6/1/2022	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Philippines(4)	12/23/21	closed 8/1/2022	—		—		—		—		—		—		—		—		—		—
Thailand(5)	1/14/22	closed 11/1/2022	$	16	$	2,374	$	145	$	199	$	81	$	2,815	$	865	$	—	$	135	$	1,000
Taiwan(5)	1/28/22	second half 2023	96		7,455		192		4,727		190		12,660		9,851		—		214		10,065
India(5)	3/30/22	first half 2023	24		3,431		313		2,134		99		6,001		5,472		—		191		5,663

	Income (loss) before taxes(6)
	Three Months Ended September 30,				Nine Months Ended September 30,
In millions of dollars	2022		2021		2022		2021
Australia(3)	$	—	$	95	$	193	$	236
Philippines(4)	7		47		72		114
Thailand	28		17		106		108
Taiwan	15		71		111		221
India	37		59		161		157

(1)    Loans, net of allowance as of September 30, 2022: Thailand $67 million, Taiwan $56 million and India $44 million.

(2)    For Thailand, includes intangible assets.

(3)    On June 1, 2022, Citi completed the sale of its Australia consumer banking business, which was part of Legacy Franchises. The Australia consumer banking business had approximately $9.4 billion in assets, including $9.3 billion of loans (net of allowance of $140 million) and excluding goodwill. The total amount of liabilities was $7.3 billion including $6.8 billion in deposits. The transaction generated a pretax loss on sale of approximately $780 million ($650 million after-tax), subject to closing adjustments, recorded in Other revenue. The loss on sale primarily reflected the impact of an approximate pretax $620 million currency translation adjustment (CTA) loss (net of hedges) ($470 million after-tax) already reflected in the Accumulated other comprehensive income (AOCI) component of equity. The sale closed on June 1, 2022, and the CTA-related balance was removed from the AOCI component of equity, resulting in a neutral CTA impact to Citi’s Common Equity Tier 1 Capital. The income before taxes shown in the above table for Australia reflects Citi’s ownership through June 1, 2022.

(4)    On August 1, 2022, Citi completed the sale of its Philippines consumer banking business, which was part of Legacy Franchises. The Philippines consumer banking business had approximately $1.8 billion in assets, including $1.2 billion of loans (net of allowance of $80 million) and excluding goodwill. The total amount of liabilities was $1.3 billion, including $1.2 billion in deposits. The sale resulted in a pretax gain on sale of approximately $616 million ($290 million after-tax), subject to closing adjustments, recorded in Other revenue. The income before taxes shown in the above table for the Philippines reflects Citi’s ownership through August 1, 2022.

(5)    These sales are expected to result in an after-tax gain upon closing.

(6)    Income before taxes for the period in which the individually significant component was classified as HFS for all prior periods presented. For Australia, excludes the pretax loss on sale. For the Philippines, excludes the pretax gain on sale.

Citi did not have any other significant disposals as of September 30, 2022. As of November 4, 2022, Citi had not entered into sale agreements for its two other consumer banking businesses to be sold in Asia and EMEA.

For a description of the Company’s significant disposal transactions in prior periods and financial impact, see Note 2 to the Consolidated Financial Statements in Citi’s 2021 Form 10-K.

Other Business Exits

Wind-Down of Korea Consumer Banking Business

On October 25, 2021, Citi disclosed its decision to wind down and close its Korea consumer banking business, which is reported in the Legacy Franchises operating segment. In connection with the announcement, Citibank Korea Inc. (CKI) commenced a voluntary early termination program (Korea VERP). Due to the voluntary nature of this termination program, no liabilities for termination benefits are recorded until CKI makes formal offers to employees that are then irrevocably accepted by those employees. Related charges are recorded as Compensation and benefits.

During the first quarter of 2022, Citi recorded an additional pretax charge of $31 million, composed of gross charges connected to the Korea VERP.

The following table summarizes the reserve charges related to the Korea VERP and other initiatives reported in the Legacy Franchises operating segment and Corporate/Other:

In millions of dollars	Employee termination costs
Total Citigroup (pretax)
Original charges	$	1,052
Utilization	(1)
Foreign exchange	3
Balance at December 31, 2021	$	1,054
Additional charges	$	31
Utilization	(347)
Foreign exchange	(24)
Balance at March 31, 2022	$	714
Additional charges (releases)	$	(3)
Utilization	(670)
Foreign exchange	(41)
Balance at June 30, 2022	$	—
Additional charges (releases)	$	—
Utilization	—
Foreign exchange	—
Balance at September 30, 2022	$	—

The total estimated cash charges for the wind-down are $1.1 billion, most of which were recognized in 2021.

See Note 8 for details on the pension impact of the Korea wind-down.

Wind-Down of Russia Consumer and Institutional Banking Businesses

On August 25, 2022, Citi disclosed its decision to wind down its consumer banking and local commercial banking operations in Russia. As part of the wind-down, Citi is also actively pursuing sales of certain Russian consumer banking portfolios.

In connection with the wind-down plan, Citi expects to incur approximately $170 million in costs, primarily over the next 18 months, largely driven by restructuring, vendor termination fees and other related charges. These costs do not include the impact of any potential portfolio sales, should such sales be executed. During the third quarter of 2022, Citi recorded a pretax charge of approximately $10 million, composed of severance costs reported in the Legacy Franchises operating segment.

On October 14, 2022, Citi disclosed that it will be ending nearly all of the institutional banking services it offers in Russia by the end of the first quarter of 2023. Going forward, Citi’s only operations in Russia will be those necessary to fulfill its remaining legal and regulatory obligations.

On October 28, 2022, Citi entered into an agreement to sell a portfolio of ruble-denominated personal installment loans, totaling approximately $345 million in outstanding loan balances as of the third quarter of 2022, to Uralsib, a Russian commercial bank. Citi expects to incur a loss of approximately $35 million as a result of the sale, which is expected to close in the fourth quarter of 2022. In connection with the portfolio sale, Citi also entered into a referral agreement to transfer to Uralsib a portfolio of ruble-denominated credit card loans, subject to customer consents. The outstanding card loans balance was approximately $320 million as of the third quarter of 2022. Citi will refer credit card customers, who at the customers’ sole discretion will be eligible to refinance their outstanding card loan balances with Uralsib.