FORM 10-K CROSS-REFERENCE INDEX




Item Number		Page

Part I

1.	Business	4–34, 38, 141–145,
		148–149, 179,
		330–334

1A.	Risk Factors	57–69

1B.	Unresolved Staff Comments	Not Applicable

2.	Properties	332–333

3.	Legal Proceedings	334

4.	Mine Safety Disclosures	Not Applicable

Part II

5.	Market for Registrant’s Common
	Equity, Related Stockholder Matters,
	and Issuer Purchases of Equity
	Securities	158–159, 186, 327,
		335–336, 338

6.	Selected Financial Data	10–11

7.	Management’s Discussion and
	Analysis of Financial Condition and
	Results of Operations	6–40, 70–140

7A.	Quantitative and Qualitative
	Disclosures About Market Risk	70–140, 180–182,
		209–244, 252–310

8.	Financial Statements and
	Supplementary Data	153–329

9.	Changes in and Disagreements with
	Accountants on Accounting and
	Financial Disclosure	Not Applicable




9A.	Controls and Procedures	146–147

9B.	Other Information	Not Applicable

Part III

10.	Directors, Executive Officers and
	Corporate Governance	337–338, 340*

11.	Executive Compensation	**

12.	Security Ownership of Certain
	Beneficial Owners and Management
	and Related Stockholder Matters	***

13.	Certain Relationships and Related
	Transactions and Director
	Independence	****

14.	Principal Accountant Fees and
	Services	*****

Part IV

15.	Exhibits and Financial Statement
	Schedules



*	For additional information regarding Citigroup’s Directors, see “Corporate Governance,” “Proposal 1: Election of Directors” and “Section 16(a) Beneficial Ownership Reporting Compliance” in the definitive Proxy Statement for Citigroup’s Annual Meeting of Stockholders scheduled to be held on April 22, 2014, to be filed with the SEC (the Proxy Statement), incorporated herein by reference.
**	See “Executive Compensation—The Personnel and Compensation Committee Report,” “—Compensation Discussion and Analysis” and “—2013 Summary Compensation Table” in the Proxy Statement, incorporated herein by reference.
***	See “About the Annual Meeting,” “Stock Ownership” and “Proposal 4, Approval of Amendment to the Citigroup 2009 Stock Incentive Plan” in the Proxy Statement, incorporated herein by reference.
****	See “Corporate Governance—Director Independence,” “—Certain Transactions and Relationships, Compensation Committee Interlocks and Insider Participation,” and “—Indebtedness” in the Proxy Statement, incorporated herein by reference.
*****	See “Proposal 2: Ratification of Selection of Independent Registered Public Accounting Firm” in the Proxy Statement, incorporated herein by reference.



OVERVIEW	4
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	6
Executive Summary	6
Five-Year Summary of Selected Financial Data	10
SEGMENT AND BUSINESS—INCOME (LOSS) AND REVENUES	12
CITICORP	14
Global Consumer Banking	15
North America Regional Consumer Banking	17
EMEA Regional Consumer Banking	19
Latin America Regional Consumer Banking	21
Asia Regional Consumer Banking	23
Institutional Clients Group	25
Securities and Banking	26
Transaction Services	29
Corporate/Other	31
CITI HOLDINGS	32
BALANCE SHEET REVIEW	35
OFF-BALANCE-SHEET ARRANGEMENTS	39
CONTRACTUAL OBLIGATIONS	40
CAPITAL RESOURCES	41
Current Regulatory Capital Guidelines
Basel III
Regulatory Capital Standards Developments
Tangible Common Equity and Tangible Book Value Per Share
RISK FACTORS	57
MANAGING GLOBAL RISK	71
Risk Management—Overview
Risk Management Organization
Risk Aggregation and Stress Testing
Risk Capital
Table of Contents—Credit, Market (Including Funding and Liquidity), Operational, Country and Cross-Border Risk Sections
FAIR VALUE ADJUSTMENTS FOR DERIVATIVES AND FAIR VALUE OPTION LIABILITIES	137
CREDIT DERIVATIVES	139
SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES	142
DISCLOSURE CONTROLS AND PROCEDURES	147
MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING	148
FORWARD-LOOKING STATEMENTS	149



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM—INTERNAL CONTROL OVER FINANCIAL REPORTING	151
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM—CONSOLIDATED FINANCIAL STATEMENTS	152
FINANCIAL STATEMENTS AND NOTES TABLE OF CONTENTS	153
CONSOLIDATED FINANCIAL STATEMENTS	154
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	163
FINANCIAL DATA SUPPLEMENT	324
SUPERVISION, REGULATION AND OTHER	325
Supervision and Regulation
Disclosure Pursuant to Section 119 of the Iran Threat Reduction and Syria Human Rights Act
Customers
Competition
Properties
LEGAL PROCEEDINGS	329
UNREGISTERED SALES OF EQUITY, PURCHASES OF EQUITY SECURITIES, DIVIDENDS	330
CORPORATE INFORMATION	337
Citigroup Executive Officers
CITIGROUP BOARD OF DIRECTORS	340

Citigroup’s history dates back to the founding of Citibank in 1812. Citigroup’s original corporate predecessor was incorporated in 1988 under the laws of the State of Delaware. Following a series of transactions over a number of years, Citigroup Inc. was formed in 1998 upon the merger of Citicorp and Travelers Group Inc.

Citigroup is a global diversified financial services holding company, whose businesses provide consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, transaction services and wealth management. Citi has approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions.

At December 31, 2013, Citi had approximately 251,000 full-time employees, compared to approximately 259,000 full-time employees at December 31, 2012.

Citigroup currently operates, for management reporting purposes, via two primary business segments: Citicorp, consisting of Citi’s Global Consumer Banking businesses and Institutional Clients Group; and Citi Holdings, consisting of businesses and portfolios of assets that Citigroup has determined are not central to its core Citicorp businesses. For a further description of the business segments and the products and services they provide, see “Citigroup Segments” below, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 3 to the Consolidated Financial Statements.

Throughout this report, “Citigroup,” “Citi” and “the Company” refer to Citigroup Inc. and its consolidated subsidiaries.

Additional information about Citigroup is available on Citi’s website at www.citigroup.com. Citigroup’s recent annual reports on Form 10-K, quarterly reports on Form 10-Q, proxy statements, as well as other filings with the SEC, are available free of charge through Citi’s website by clicking on the “Investors” page and selecting “All SEC Filings.” The SEC’s website also contains current reports, information statements, and other information regarding Citi at www.sec.gov.

Certain reclassifications have been made to the prior periods’ financial statements to conform to the current period’s presentation. For information on certain recent such reclassifications, see Citi’s Forms 8-K furnished to the SEC on May 17, 2013 and August 30, 2013.

Please see “Risk Factors” and "Forward-Looking Statements" below for a discussion of the most significant risks and uncertainties that could impact Citigroup’s businesses, financial condition and results of operations.

EXECUTIVE SUMMARY

Overview

2013—Steady Progress on Execution Priorities and Strategy Despite Continued Challenging Operating Environment

2013 represented a continued challenging operating environment for Citigroup in several respects, including:


•	changing expectations regarding the Federal Reserve Board’s tapering of quantitative easing and the impact of this uncertainty on the markets, trading environment and customer activity;


•	the increasing costs of legal settlements across the financial services industry as Citi continued to work through its legacy legal issues; and


•	a continued low interest rate environment.

These issues significantly impacted Citi’s results of operations, particularly during the second half of 2013. Despite these challenges, however, Citi made progress on its execution priorities as identified in early 2013, including:


•	Efficient resource allocation, including disciplined expense management—During 2013, Citi completed the significant repositioning actions announced in the fourth quarter of 2012, which resulted in the exit of markets that do not fit Citi’s strategy and contributed to the reduction in its operating expenses year-over-year (see discussion below).

•

Continued focus on the wind down of Citi Holdings and getting Citi Holdings closer to “break even”—Citi Holdings’ assets declined by $39 billion, or 25%, during 2013, and the net loss for this segment improved by approximately 49% (see discussion below). Citi also was able to resolve certain of its legacy legal issues during 2013, including entering into agreements with Fannie Mae and Freddie Mac relating to residential mortgage representation and warranty repurchase matters.


•	Utilization of deferred tax assets (DTAs)—Citi utilized approximately $2.5 billion of its DTAs during 2013, including $700 million in the fourth quarter.

While making good progress on these initiatives in 2013, Citi expects the operating environment in 2014 to remain challenging. Short-term interest rates likely will remain low for some time, and thus spread compression could continue to impact most of Citi’s major geographies during the year. (As used throughout this Form 10-K, spread compression refers to the reduction in net interest revenue as a percentage of loans or deposits, as applicable, driven by either lower yields on interest-earning assets or higher costs to fund such assets, or a combination thereof). Given the current litigation and regulatory environment, Citi expects its legal and related expenses will likely remain elevated in 2014. There continues to be uncertainty regarding tapering by the Federal Reserve

Board and its impact on the markets, including the emerging markets, and global trading environment. In addition, despite an improved economic environment in 2013, there continues to be questions about the sustainability and pace of ongoing improvement in various markets. Finally, Citi continues to face significant regulatory changes, uncertainties and costs in the U.S. and non-U.S. jurisdictions in which it operates. For a more detailed discussion of these and other risks that could impact Citi’s businesses, results of operations and financial condition during 2014, see “Risk Factors” below.

Despite these ongoing challenges, however, Citi remains highly focused on the continued execution of the priorities discussed above and its strategy, which continues to be to wind down Citi Holdings as soon as practicable in an economically rational manner and leverage its unique global network to:


•	be a leading provider of financial services to the world’s largest multi-national corporations and investors; and


•	be the preeminent bank for the emerging affluent and affluent consumers in the world’s largest urban centers.

2013 Summary Results

Citigroup

Citigroup reported net income of $13.7 billion and diluted earnings per share of $4.35 in 2013, compared to $7.5 billion and $2.44 per share, respectively, in 2012. In 2013, results included a credit valuation adjustment (CVA) on derivatives (counterparty and own-credit), net of hedges, and debt valuation adjustment (DVA) on Citi’s fair value option debt of a pretax loss of $342 million ($213 million after-tax)as Citi’s credit spreads tightened during the year, compared to a pretax loss of $2.3 billion ($1.4 billion after-tax) in 2012. Results in the third quarter of 2013 also included a $176 million tax benefit, compared to a $582 million tax benefit in the third quarter of 2012, each of which related to the resolution of certain tax audit items and were recorded in Corporate/Other. In addition, 2013 results included a $189 million after-tax benefit related to the divestiture of Credicard, Citi’s non-Citibank branded cards and consumer finance business in Brazil (Credicard), recorded in Corporate/Other (see Note 2 to the Consolidated Financial Statements). Citigroup’s 2012 results included a pretax loss of $4.6 billion ($2.9 billion after-tax) related to the sale of minority investments (for additional information, see “Corporate/Other” below), as well as approximately $1.0 billion of fourth quarter 2012 pretax repositioning charges ($653 million after-tax).

Excluding the items above, Citi’s net income was $13.5 billion, or $4.30 per diluted share in 2013, up 11% compared to $11.9 billion, or $3.86 per share, in the prior year, as higher revenues, lower operating expenses and lower net credit losses were partially offset by a lower net loan loss reserve release and a higher effective tax rate in 2013 (see Note 9 to the Consolidated Financial Statements). (Citi’s results of operations excluding the impact of CVA/DVA, the impact of the Credicard divestiture, the impact of minority investments,

the repositioning charges in the fourth quarter of 2012 and the impact of the tax benefits, each as discussed above, are non-GAAP financial measures. Citi believes the presentation of its results of operations excluding these impacts provides a more meaningful depiction of the underlying fundamentals of its businesses.)

Citi’s revenues, net of interest expense, were $76.4 billion in 2013, up 10% versus the prior year. Excluding CVA/DVA and the impact of minority investments in 2012, revenues were $76.7 billion, up 1%, as revenues in Citi Holdings increased 22% compared to the prior year, while revenues in Citicorp were broadly unchanged. Net interest revenues of $46.8 billion were unchanged versus the prior year, largely driven by continued spread compression in Transaction Services in Citicorp, offset by improvements in Citi Holdings, principally reflecting lower funding costs. Excluding CVA/DVA and the impact of minority investments in 2012, non-interest revenues of $29.9 billion were up 2% from the prior year, principally driven by higher revenues in Securities and Banking, Latin America Regional Consumer Banking (RCB) and Transaction Services in Citicorp, as well as the absence of repurchase reserve builds for representation and warranty claims in Citi Holdings. The increase was partially offset by a decline in mortgage origination revenues, due to significantly lower U.S. mortgage refinancing activity in North America RCB, particularly in the second half of 2013.

Operating Expenses

Citigroup expenses decreased 3% versus the prior year to $48.4 billion. In 2013, Citi incurred legal and related costs of $3.0 billion, compared to $2.8 billion in the prior year. Excluding legal and related costs, the repositioning charges in the fourth quarter of 2012 and the impact of foreign exchange translation into U.S. dollars for reporting purposes (FX translation), which lowered reported expenses by approximately $600 million in 2013 compared to 2012, operating expenses remained relatively unchanged at $45.4 billion compared to $45.5 billion in the prior year. (Citi’s results of operations excluding the impact of FX translation are non-GAAP financial measures. Citigroup believes the presentation of its results of operations excluding the impact of FX translation is a more meaningful depiction of the underlying fundamentals of its businesses impacted by FX translation.)

Citicorp’s expenses were $42.5 billion, down 5% from the prior year, primarily reflecting efficiency savings and lower legal and related costs and repositioning charges, partially offset by volume-related expenses and ongoing investments in the businesses. In addition, as disclosed on February 28, 2014, Citicorp’s expenses in the fourth quarter of 2013 were impacted as a result of a fraud discovered in Banco Nacional de Mexico (Banamex), a Citi subsidiary in Mexico. The fraud increased fourth quarter of 2013 operating expenses in Transaction Services by an estimated $400 million, with an offset to compensation expense of approximately $40 million associated with the Banamex variable compensation plan. For further information, see “Institutional Clients Group—Transaction Services” below and Note 29 to the Consolidated Financial Statements.

Citi Holdings expenses increased 13% year-over-year to $5.9 billion, primarily due to higher legal and related expenses, partially offset by the continued decline in assets and the resulting decline in operating expenses.

Credit Costs and Allowance for Loan Losses

Citi’s total provisions for credit losses and for benefits and claims of $8.5 billion declined 25% from the prior year. Net credit losses of $10.5 billion were down 26% from 2012. Consumer net credit losses declined 27% to $10.3 billion, reflecting improvements in the North America mortgage portfolio within Citi Holdings, as well as North America Citi-branded cards and Citi retail services portfolios in Citicorp. Corporate net credit losses decreased 10% year-over-year to $201 million, driven primarily by continued credit improvement in Securities and Banking in Citicorp.

The net release of allowance for loan losses and unfunded lending commitments was $2.8 billion in 2013, 27% lower than 2012. Citicorp’s net reserve release declined 66% to $736 million, primarily due to a lower reserve release in North America Citi-branded cards and Citi retail services and volume-related loan loss reserve builds in international Global Consumer Banking (GCB). Citi Holdings net reserve release increased 27% to $2.0 billion, substantially all of which related to the North America mortgage portfolio. $2.6 billion of the $2.8 billion net reserve release related to Consumer lending, with the remainder applicable to Corporate.

Citigroup’s total allowance for loan losses was $19.6 billion at year-end 2013, or 2.98% of total loans, compared to $25.5 billion, or 3.92%, at the end of the prior year. The decline in the total allowance for loan losses reflected the continued wind down of Citi Holdings and overall continued improvement in the credit quality of the loan portfolios.

The Consumer allowance for loan losses was $17.1 billion, or 4.35% of total Consumer loans, at year-end 2013, compared to $22.7 billion, or 5.57% of total loans, at year-end 2012. Total non-accrual assets fell to $9.4 billion, a 22% reduction compared to year-end 2012. Corporate non-accrual loans declined 18% to $1.9 billion, while Consumer non-accrual loans declined 23% to $7.0 billion, both reflecting continued credit improvement.

Capital

Citigroup’s Tier 1 Capital and Tier 1 Common ratios were 13.7% and 12.6% as of December 31, 2013, respectively, compared to 14.1% and 12.7% as of December 31, 2012. Citi’s estimated Tier 1 Common ratio under Basel III was 10.6% at year-end 2013, up from an estimated 8.7% at year-end 2012. Citigroup’s estimated Basel III Supplementary Leverage ratio for the fourth quarter 2013 was 5.4%. (For additional information on Citi’s estimated Basel III Tier 1 Common ratio, Supplementary Leverage ratio and related components, see “Risk Factors—Regulatory Risks” and “Capital Resources” below.)

Citicorp

Citicorp net income increased 11% from the prior year to $15.6 billion. The increase largely reflected a lower impact of CVA/DVA and lower repositioning charges, partially offset by

higher provisions for income taxes. CVA/DVA, recorded in Securities and Banking, was a negative $345 million in 2013, compared to negative $2.5 billion in the prior year (for a summary of CVA/DVA by business within Securities and Banking for 2013 and comparable periods, see “Institutional Clients Group” below). Results in the third quarter of 2013 also included the $176 million tax benefit in 2013, compared to the $582 million tax benefit in the third quarter of 2012, and the $189 million after-tax benefit related to the divestiture of Credicard. Citicorp’s full year 2012 results included a pretax loss of $53 million ($34 million after-tax) related to the sale of minority investments as well as $951 million of pretax repositioning charges in the fourth quarter of 2012 ($604 million after-tax).

Excluding these items, Citicorp’s net income was $15.4 billion, down 1% from the prior year, as lower operating expenses and lower net credit losses were largely offset by a lower net loan loss reserve release and a higher effective tax rate in 2013.

Citicorp revenues, net of interest expense, increased 3% from the prior year to $71.8 billion. Excluding CVA/DVA and the impact of minority investments, Citicorp revenues were $72.2 billion in 2013, relatively unchanged from 2012. GCB revenues of $38.2 billion declined 2% versus the prior year. North America GCB revenues declined 6% to $19.8 billion, and international GCB revenues (consisting of Asia RCB, Latin America RCB and EMEA RCB) increased 1% year-over-year to $18.4 billion. Excluding the impact of FX translation, international GCB revenues rose 3% year-over-year, driven by 7% revenue growth in Latin America RCB, partially offset by a 1% revenue decline in both EMEA RCB and Asia RCB. Securities and Banking revenues were $23.0 billion in 2013, up 15% from the prior year. Excluding CVA/DVA, Securities and Banking revenues were $23.4 billion, or 4% higher than the prior year. Transaction Services revenues were $10.6 billion, down 1% from the prior year, but relatively unchanged excluding the impact of FX translation (for the impact of FX translation on 2013 results of operations for each of EMEA RCB, Latin America RCB, Asia RCB and Transaction Services, see the table accompanying the discussion of each respective business’ results of operations below). Corporate/Other revenues, excluding the impact of minority investments, increased to $77 million from $17 million in the prior year, mainly reflecting hedging gains.

In North America RCB, the revenue decline was driven by lower mortgage origination revenues due to the significant decline in U.S. mortgage refinancing activity, particularly in the second half of the year, partially offset by higher revenues in Citi retail services, mostly driven by the Best Buy portfolio acquisition in the third quarter of 2013. North America RCB average deposits of $166 billion grew 8% year-over-year and average retail loans of $43 billion grew 3%. Average card loans of $107 billion declined 2%, driven by increased payment rates resulting from ongoing consumer deleveraging, while card purchase sales of $240 billion increased 3% versus the prior year. For additional information on the results of operations of North America RCB for 2013, see “Global Consumer Banking—North America Regional Consumer Banking” below.

Year-over-year, international GCB average deposits declined 2%, while average retail loans increased 6%, investment sales increased 15%, average card loans increased 3%, and international card purchase sales increased 7%, all excluding Credicard and the impact of FX translation. The decline in Asia RCB revenues, excluding the impact of FX translation, reflected the continued impact of spread compression, regulatory changes in certain markets and the ongoing repositioning of Citi’s franchise in Korea. For additional information on the results of operations of Asia RCB for 2013, see “Global Consumer Banking—Asia Regional Consumer Banking” below.

In Securities and Banking, fixed income markets revenues of $13.1 billion, excluding CVA/DVA, declined 7% from the prior year, primarily reflecting industry-wide weakness in rates and currencies, partially offset by strong performance in credit-related and securitized products and commodities. Equity markets revenues of $3.0 billion in 2013, excluding CVA/DVA, were 22% above the prior year driven primarily by market share gains, continued improvement in cash and derivative trading performance and a more favorable market environment. Investment banking revenues rose 8% from the prior year to $4.0 billion, principally driven by higher revenues in equity underwriting and advisory, partially offset by lower debt underwriting revenues. Lending revenues of $1.2 billion increased 40% from the prior year, driven by lower mark-to-market losses on hedges related to accrual loans due to less significant credit spread tightening versus 2012. Excluding the mark-to-market on hedges related to accrual loans, core lending revenues decreased 4%, primarily due to increased hedge premium costs and moderately lower loan balances, partially offset by higher spreads. Private Bank revenues of $2.5 billion increased 4% from the prior year, excluding CVA/DVA, with growth across all regions and products, particularly in managed investments and capital markets. For additional information on the results of operations of Securities and Banking for 2013, see “Institutional Clients Group—Securities and Banking” below.

In Transaction Services, growth from higher deposit balances, trade loans and fees from increased market volumes was offset by continued spread compression. Excluding the impact of FX translation, Securities and Fund Services revenues increased 4%, as growth in settlement volumes and assets under custody were partially offset by spread compression related to deposits. Treasury and Trade Solutions revenues decreased 1% excluding the impact of FX translation, as the ongoing impact of spread compression globally was partially offset by higher balances and fee growth. For additional information on the results of operations of Transaction Services for 2013, see “Institutional Clients Group—Transaction Services” below.

Citicorp end-of-period loans increased 6% year-over-year to $573 billion, with 2% growth in Consumer loans and 11% growth in Corporate loans.

Citi Holdings

Citi Holdings’ net loss was $1.9 billion in 2013 compared to a $6.5 billion net loss in 2012. The decline in the net loss year-over-year was primarily driven by the absence of the 2012

pretax loss of $4.7 billion ($2.9 billion after-tax) related to the Morgan Stanley Smith Barney joint venture (MSSB). Excluding the 2012 MSSB loss, $77 million ($49 million after-tax) of repositioning charges in the fourth quarter 2012 and CVA/DVA (positive $3 million in 2013 compared to positive $157 million in 2012), Citi Holdings net loss of $1.9 billion in 2013 improved 49% from a net loss of $3.7 billion in the prior year. The improvement in the net loss was due to significantly lower provisions for credit losses and higher revenue, partially offset by the increase in expenses driven by higher legal and related costs, as discussed above.

Citi Holdings revenues increased to $4.5 billion, compared to a negative $792 million in the prior year. Excluding the 2012 MSSB loss and CVA/DVA, Citi Holdings revenues were $4.5 billion in 2013 compared to $3.7 billion in the prior year. Net interest revenues increased 22% year-over-year to $3.2 billion, largely driven by lower funding costs. Non-interest revenues, excluding the 2012 MSSB loss and CVA/DVA, increased 21% to $1.4 billion, primarily driven by lower asset marks and the lower repurchase reserve builds, partially offset by lower consumer revenues and gains on asset sales.

Citi Holdings assets declined 25% year-over-year to $117 billion as of year-end 2013, and represented approximately 6% of total Citi’s GAAP assets and 19% of its estimated risk-weighted assets under Basel III (based on the “Advanced Approaches” for determining risk-weighted assets).



In millions of dollars, except per-share amounts and ratios	2013		2012			2011		2010			2009
Net interest revenue	$	46,793	$	46,686		$	47,649	$	53,539		$	47,973
Non-interest revenue	29,573		22,442			29,682		32,237			31,592
Revenues, net of interest expense	$	76,366	$	69,128		$	77,331	$	85,776		$	79,565
Operating expenses	48,355		49,974			50,250		46,851			47,371
Provisions for credit losses and for benefits and claims	8,514		11,329			12,359		25,809			39,970
Income (loss) from continuing operations before income taxes	$	19,497	$	7,825		$	14,722	$	13,116		$	(7,776	)
Income taxes (benefits)	5,867		7			3,575		2,217			(6,716		)
Income (loss) from continuing operations	$	13,630	$	7,818		$	11,147	$	10,899		$	(1,060	)
Income (loss) from discontinued operations, net of taxes ⁽¹⁾	270		(58		)	68		(16		)	(451		)
Net income (loss) before attribution of noncontrolling interests	$	13,900	$	7,760		$	11,215	$	10,883		$	(1,511	)
Net income (loss) attributable to noncontrolling interests	227		219			148		281			95
Citigroup’s net income (loss)	$	13,673	$	7,541		$	11,067	$	10,602		$	(1,606	)
Less:
Preferred dividends-Basic	$	194	$	26		$	26	$	9		$	2,988
Impact of the conversion price reset related to the $12.5 billion convertible preferred stock private issuance-Basic	—		—			—		—			1,285
Preferred stock Series H discount accretion-Basic	—		—			—		—			123
Impact of the public and private preferred stock exchange offers	—		—			—		—			3,242
Dividends and undistributed earnings allocated to employee restricted and deferred shares that contain nonforfeitable rights to dividends, applicable to Basic EPS	263		166			186		90			2
Income (loss) allocated to unrestricted common shareholders for Basic EPS	$	13,216	$	7,349		$	10,855	$	10,503		$	(9,246	)
Less: Convertible preferred stock dividends	—		—			—		—			(540		)
Add: Interest expense, net of tax, on convertible securities and adjustment of undistributed earnings allocated to employee restricted and deferred shares that contain nonforfeitable rights to dividends, applicable to diluted EPS	1		11			17		2			—
Income (loss) allocated to unrestricted common shareholders for diluted EPS ⁽²⁾	$	13,217	$	7,360		$	10,872	$	10,505		$	(8,706	)
Earnings per share ⁽³⁾
Basic ⁽³⁾
Income (loss) from continuing operations	$	4.27	$	2.53		$	3.71	$	3.64		$	(7.60	)
Net income (loss)	4.35		2.51			3.73		3.65			(7.99		)
Diluted ⁽²⁾⁽³⁾
Income (loss) from continuing operations	$	4.26	$	2.46		$	3.60	$	3.53		$	(7.60	)
Net income (loss)	4.35		2.44			3.63		3.54			(7.99		)
Dividends declared per common share ⁽³⁾	0.04		0.04			0.03		—			0.10



	Citigroup Inc. and Consolidated Subsidiaries
In millions of dollars, except per-share amounts, ratios and direct staff	2013			2012			2011			2010			2009
At December 31:
Total assets	$	1,880,382		$	1,864,660		$	1,873,878		$	1,913,902		$	1,856,646
Total deposits	968,273			930,560			865,936			844,968			835,903
Long-term debt	221,116			239,463			323,505			381,183			364,019
Citigroup common stockholders’ equity	197,601			186,487			177,494			163,156			152,388
Total Citigroup stockholders’ equity	204,339			189,049			177,806			163,468			152,700
Direct staff (in thousands)	251			259			266			260			265
Ratios
Return on average assets	0.73		%	0.39		%	0.55		%	0.53		%	(0.08		)%
Return on average common stockholders’ equity ⁽⁴⁾	7.0			4.1			6.3			6.8			(9.4		)
Return on average total stockholders’ equity ⁽⁴⁾	6.9			4.1			6.3			6.8			(1.1		)
Efficiency ratio	63			72			65			55			60
Tier 1 Common ⁽⁵⁾⁽⁸⁾	12.64		%	12.67		%	11.80		%	10.75		%	9.60		%
Tier 1 Capital⁽⁸⁾	13.68			14.06			13.55			12.91			11.67
Total Capital⁽⁸⁾	16.65			17.26			16.99			16.59			15.25
Leverage ⁽⁶⁾	8.21			7.48			7.19			6.60			6.87
Citigroup common stockholders’ equity to assets	10.51		%	10.00		%	9.47		%	8.52		%	8.21		%
Total Citigroup stockholders’ equity to assets	10.87			10.14			9.49			8.54			8.22
Dividend payout ratio ⁽⁷⁾	0.9			1.6			0.8			NM			NM
Book value per common share ⁽³⁾	$	65.23		$	61.57		$	60.70		$	56.15		$	53.50
Ratio of earnings to fixed charges and preferred stock dividends	2.16x			1.37x			1.60x			1.51x			NM



In millions of dollars except as otherwise noted	2013			2012			2011			% Change 2013 vs. 2012		% Change 2012 vs. 2011
Net interest revenue	$	43,609		$	44,067		$	43,923		(1	)%	—	%
Non-interest revenue	28,215			25,853			27,095			9		(5	)
Total revenues, net of interest expense	$	71,824		$	69,920		$	71,018		3	%	(2	)%
Provisions for credit losses and for benefits and claims
Net credit losses	$	7,393		$	8,389		$	11,111		(12	)%	(24	)%
Credit reserve build (release)	(826		)	(2,222		)	(5,074		)	63		56
Provision for loan losses	$	6,567		$	6,167		$	6,037		6	%	2	%
Provision for benefits and claims	212			236			193			(10	)	22
Provision for unfunded lending commitments	90			40			92			NM		(57	)
Total provisions for credit losses and for benefits and claims	$	6,869		$	6,443		$	6,322		7	%	2	%
Total operating expenses	$	42,455		$	44,731		$	43,793		(5	)%	2	%
Income from continuing operations before taxes	$	22,500		$	18,746		$	20,903		20	%	(10	)%
Provisions for income taxes	6,996			4,400			5,685			59		(23	)
Income from continuing operations	$	15,504		$	14,346		$	15,218		8	%	(6	)%
Income (loss) from discontinued operations, net of taxes	270			(58		)	68			NM		NM
Noncontrolling interests	211			216			29			(2	)	NM
Net income	$	15,563		$	14,072		$	15,257		11	%	(8	)%
Balance sheet data (in billions of dollars)
Total end-of-period (EOP) assets	$	1,763		$	1,709		$	1,649		3	%	4	%
Average assets	1,748			1,717			1,684			2		2
Return on average assets	0.89		%	0.82		%	0.91		%
Efficiency ratio (Operating expenses/Total revenues)	59			64			62
Total EOP loans	$	573		$	540		$	507		6		7
Total EOP deposits	932			863			804			8		7



In millions of dollars except as otherwise noted	2013			2012			2011			% Change 2013 vs. 2012		% Change 2012 vs. 2011
Net interest revenue	$	28,668		$	28,686		$	28,930		—	%	(1	)%
Non-interest revenue	9,501			10,434			9,195			(9	)	13
Total revenues, net of interest expense	$	38,169		$	39,120		$	38,125		(2	)%	3	%
Total operating expenses	$	20,608		$	21,316		$	20,753		(3	)%	3	%
Net credit losses	$	7,211		$	8,107		$	10,489		(11	)%	(23	)%
Credit reserve build (release)	(669		)	(2,176		)	(4,515		)	69		52
Provisions for unfunded lending commitments	37			—			3			—		(100	)
Provision for benefits and claims	212			237			192			(11	)	23
Provisions for credit losses and for benefits and claims	$	6,791		$	6,168		$	6,169		10	%	—	%
Income from continuing operations before taxes	$	10,770		$	11,636		$	11,203		(7	)%	4	%
Income taxes	3,638			3,681			3,537			(1	)	4
Income from continuing operations	$	7,132		$	7,955		$	7,666		(10	)%	4	%
Noncontrolling interests	17			3			—			NM		—
Net income	$	7,115		$	7,952		$	7,666		(11	)%	4	%
Balance Sheet data (in billions of dollars)
Average assets	$	395		$	388		$	377		2	%	3	%
Return on average assets	1.81		%	2.07		%	2.06		%
Efficiency ratio	54			54			54
Total EOP assets	$	405		$	404		$	385		—		5
Average deposits	328			322			314			2		3
Net credit losses as a percentage of average loans	2.50		%	2.87		%	3.85		%
Revenue by business	.
Retail banking	$	16,945		$	18,182		$	16,517		(7	)%	10	%
Cards ⁽¹⁾	21,224			20,938			21,608			1		(3	)
Total	38,169			39,120			38,125			(2	)%	3	%
Income from continuing operations by business
Retail banking	$	2,136		$	3,048		$	2,591		(30	)%	18	%
Cards ⁽¹⁾	4,996			4,907			5,075			2		(3	)
Total	$	7,132		$	7,955		$	7,666		(10	)%	4	%



In millions of dollars, except as otherwise noted	2013			2012			2011			% Change 2013 vs. 2012		% Change 2012 vs. 2011
Net interest revenue	$	16,659		$	16,461		$	16,785		1	%	(2	)%
Non-interest revenue	3,119			4,488			3,241			(31	)	38
Total revenues, net of interest expense	$	19,778		$	20,949		$	20,026		(6	)%	5	%
Total operating expenses	$	9,591		$	9,931		$	9,691		(3	)%	2	%
Net credit losses	$	4,634		$	5,756		$	8,101		(19	)%	(29	)%
Credit reserve build (release)	(1,036		)	(2,389		)	(4,181		)	57		43
Provisions for benefits and claims	60			70			62			(14	)	13
Provision for unfunded lending commitments	6			1			(1		)	NM		NM
Provisions for credit losses and for benefits and claims	$	3,664		$	3,438		$	3,981		7	%	(14	)%
Income from continuing operations before taxes	$	6,523		$	7,580		$	6,354		(14	)%	19	%
Income taxes	2,455			2,852			2,343			(14	)	22
Income from continuing operations	$	4,068		$	4,728		$	4,011		(14	)%	18	%
Noncontrolling interests	2			1			—			100		—
Net income	$	4,066		$	4,727		$	4,011		(14	)%	18	%
Balance Sheet data (in billions of dollars)
Average assets	$	175		$	172		$	166		2	%	4	%
Return on average assets	2.32		%	2.75		%	2.42		%
Efficiency ratio	48			47			48
Average deposits	$	166		$	154		$	145		8		6
Net credit losses as a percentage of average loans	3.09		%	3.83		%	5.50		%
Revenue by business
Retail banking	$	5,378		$	6,686		$	5,118		(20	)%	31	%
Citi-branded cards	8,211			8,234			8,641			—		(5	)
Citi retail services	6,189			6,029			6,267			3		(4	)
Total	$	19,778		$	20,949		$	20,026		(6	)%	5	%
Income from continuing operations by business
Retail banking	$	478		$	1,244		$	470		(62	)%	NM
Citi-branded cards	2,009			2,020			2,092			(1	)	(3	)
Citi retail services	1,581			1,464			1,449			8		1
Total	$	4,068		$	4,728		$	4,011		(14	)%	18	%

2013 vs. 2012

Net income decreased 14%, mainly driven by lower revenues and lower loan loss reserve releases, partially offset by lower net credit losses and expenses.

Revenues decreased 6% primarily due to lower retail banking revenues. Retail banking revenues of $5.4 billion declined 20% due to lower mortgage origination revenues driven by the significantly lower U.S. mortgage refinancing activity, particularly during the second half of 2013 due to higher interest rates. In addition, retail banking continued to experience ongoing spread compression in the deposit portfolios within the consumer and commercial banking businesses. Partially offsetting the spread compression was growth in average deposits (8%), average commercial loans (15%) and average retail loans (3%). While Citi believes mortgage revenues may have broadly stabilized as of year-end 2013, retail banking revenues will likely continue to be negatively impacted in 2014 by the lower mortgage origination revenues and spread compression in the deposit portfolios.

Cards revenues increased 1%. In Citi-branded cards, revenues were unchanged at $8.2 billion as continued improvement in net interest spreads, reflecting higher yields as promotional balances represented a smaller percentage of the portfolio total as well as lower funding costs, were offset by a 5% decline in average loans. Citi-branded cards net interest revenue increased 1%, reflecting the higher yields and lower cost of funds, partially offset by the decline in average loans and a continued increased payment rate from consumer deleveraging. Citi-branded cards non-interest revenue declined 5% due to higher affinity rebates.

Citi retail services revenues increased 3% primarily due to the acquisition of the Best Buy portfolio, partially offset by declining non-interest revenues, driven by improving credit and the resulting impact on contractual partner payments. Citi retail services net interest revenues increased 6% driven by a 4% increase in average loans, primarily due to the Best Buy U.S. portfolio acquisition, although net interest spreads declined as the percentage of promotional balances within the portfolio increased and could continue to increase into 2014. Total card purchase sales of $240 billion increased 3% from the prior year, with 3% growth in Citi-branded cards and 5% growth in retail services. Citi expects cards revenues could continue to be negatively impacted by higher payment rates for consumers, reflecting the relatively slow economic recovery and deleveraging as well as Citi’s shift to higher credit quality borrowers.

Expenses decreased 3%, primarily due to lower legal and related costs and repositioning savings, partially offset by higher mortgage origination costs in the first half of 2013 and expenses in cards as a result of the Best Buy portfolio acquisition during the second half of the year.

Provisions increased 7%, as lower net credit losses in the Citi-branded cards and Citi retail services portfolios were offset by continued lower loan loss reserve releases ($1.0 billion in 2013 compared to $2.4 billion in 2012), primarily related to cards, as well as reserve builds for new loans originated in the Best Buy portfolio during the latter part of 2013, which are expected to continue into 2014.

2012 vs. 2011

Net income increased 18%, mainly driven by higher mortgage revenues in retail banking and a decline in net credit losses, partially offset by a reduction in loan loss reserve releases.

Revenues increased 5%, driven by a 38% increase in retail banking mortgage revenues resulting from the high level of U.S. refinancing activity as well as higher margins resulting from the shift to retail as compared to third-party origination channels. Excluding mortgages, revenue from the retail banking business was essentially unchanged, as volume growth and improved mix in the deposit and lending portfolios within the consumer and commercial portfolios were offset by significant spread compression.

Cards revenues declined 4%. In Citi-branded cards, both average loans and net interest revenue declined year-over-year, reflecting continued increased payment rates resulting from consumer deleveraging and the impact of the look-back provisions of The Credit Card Accountability Responsibility and Disclosure Act (CARD Act). In Citi retail services, net interest revenues improved slightly but were offset by declining non-interest revenues, driven by improving credit and the resulting impact on contractual partner payments.

Expenses increased 2%, primarily due to increased mortgage origination costs resulting from the higher retail channel mortgage volumes and $100 million of repositioning charges in the fourth quarter of 2012 as well as higher legal and related costs, partially offset by lower expenses in cards.

Provisions decreased 14%, due to a 29% decline in net credit losses, primarily in the cards portfolios, partly offset by lower loan loss reserve releases ($2.4 billion in 2012 compared to $4.2 billion in 2011).



In millions of dollars, except as otherwise noted	2013			2012			2011			% Change 2013 vs. 2012		% Change 2012 vs. 2011
Net interest revenue	$	948		$	1,010		$	915		(6	)%	10	%
Non-interest revenue	501			475			614			5		(23	)
Total revenues, net of interest expense	$	1,449		$	1,485		$	1,529		(2	)%	(3	)%
Total operating expenses	$	1,323		$	1,433		$	1,337		(8	)%	7	%
Net credit losses	$	68		$	105		$	172		(35	)%	(39	)%
Credit reserve build (release)	(18		)	(5		)	(118		)	NM		96
Provision for unfunded lending commitments	—			(1		)	4			100		NM
Provisions for credit losses	$	50		$	99		$	58		(49	)%	71	%
Income (loss) from continuing operations before taxes	$	76		$	(47	)	$	134		NM		NM
Income taxes (benefits)	17			(10		)	55			NM		NM
Income (loss) from continuing operations	$	59		$	(37	)	$	79		NM		NM
Noncontrolling interests	11			4			—			NM		—	%
Net income (loss)	$	48		$	(41	)	$	79		NM		NM
Balance Sheet data (in billions of dollars)
Average assets	$	10		$	9		$	10		11	%	(10	)%
Return on average assets	0.48		%	(0.46		)%	0.79		%
Efficiency ratio	91			96			87
Average deposits	$	12.6		$	12.6		$	12.5		—		1
Net credit losses as a percentage of average loans	0.85		%	1.40		%	2.37		%
Revenue by business
Retail banking	$	868		$	873		$	874		(1	)%	—	%
Citi-branded cards	581			612			655			(5	)	(7	)
Total	$	1,449		$	1,485		$	1,529		(2	)%	(3	)%
Income (loss) from continuing operations by business
Retail banking	$	(23	)	$	(92	)	$	(45	)	75	%	NM
Citi-branded cards	82			55			124			49		(56	)
Total	$	59		$	(37	)	$	79		NM		NM
Foreign Currency (FX) Translation Impact
Total revenue (loss)-as reported	$	1,449		$	1,485		$	1,529		(2	)%	(3	)%
Impact of FX translation ⁽¹⁾	—			(15		)	(90		)
Total revenues-ex-FX	$	1,449		$	1,470		$	1,439		(1	)%	2	%
Total operating expenses-as reported	$	1,323		$	1,433		$	1,337		(8	)%	7	%
Impact of FX translation ⁽¹⁾	—			(20		)	(89		)
Total operating expenses-ex-FX	$	1,323		$	1,413		$	1,248		(6	)%	13	%
Provisions for credit losses-as reported	$	50		$	99		$	58		(49	)%	71	%
Impact of FX translation ⁽¹⁾	—			(1		)	(3		)
Provisions for credit losses-ex-FX	$	50		$	98		$	55		(49	)%	78	%
Net income (loss)-as reported	$	48		$	(41	)	$	79		NM		NM
Impact of FX translation ⁽¹⁾	—			5			1
Net income (loss)-ex-FX	$	48		$	(36	)	$	80		NM		NM

2013 vs. 2012

Net income of $48 million compared to a net loss of $36 million in 2012 as lower expenses and lower net credit losses were partially offset by lower revenues, primarily due to the sales of Citi’s consumer operations in Turkey and Romania during 2013.

Revenues decreased 1%, mainly driven by the lower revenues resulting from the sales of the consumer operations referenced above, partially offset by higher volumes in core markets and a gain on sale related to the Turkey sale. Net interest revenue decreased 5%, due to continued spread compression in cards and an 8% decrease in average cards loans, primarily due to the sales in Turkey and Romania, partially offset by growth in average retail loans of 13%. Interest rate caps on credit cards, particularly in Poland, the continued liquidation of a higher yielding non-strategic retail banking portfolio and the continued low interest rate environment were the main contributors to the lower net interest spreads. Citi expects continued regulatory changes, including caps on interchange rates, and spread compression to continue to negatively impact revenues in this business during 2014. Non-interest revenue increased 6%, mainly reflecting higher investment fees and card fees due to increased sales volume and the gain on sale related to Turkey, partially offset by lower revenues due to the sales in Turkey and Romania. Cards purchase sales decreased 4% and investment sales decreased 5% due to the sales in Turkey and Romania. Excluding the impact of these divestitures, cards purchase sales increased 9% and investment sales increased 12%.

Expenses declined 6%, primarily due to repositioning savings as well as lower repositioning charges, partially offset by higher volume-related expenses and continued investment spending on new internal operating platforms.

Provisions declined 49% due to a 35% decrease in net credit losses largely resulting from the sales in Turkey and Romania and a net credit recovery in the second quarter 2013. Net credit losses also continued to reflect stabilizing credit quality and Citi’s strategic move toward lower-risk customers.

2012 vs. 2011

The net loss of $36 million compared to net income of $80 million in 2011 and was mainly due to higher expenses and lower loan loss reserve releases, partially offset by higher revenues.

Revenues increased 2%, with growth across the major products, particularly in Russia. Year-over-year, cards purchase sales increased 12%, investment sales increased 15% and retail loan volume increased 17%. Revenue growth year-over-year was partly offset by the absence of Akbank T.A.S. (Akbank), Citi’s equity investment in Turkey, which was moved to Corporate/Other in the first quarter of 2012. Net interest revenue increased 18%, driven by the absence of Akbank investment funding costs and growth in average deposits of 5%, average retail loans of 16% and average cards loans of 6%, partially offset by spread compression. Interest rate caps on credit cards, particularly in Turkey and Poland, the continued liquidation of the higher yielding non-strategic retail banking portfolio and the continued low interest rate environment were the main contributors to the lower net interest spreads. Non-interest revenue decreased 20%, mainly reflecting the absence of Akbank.

Expenses increased 13%, primarily due to $57 million of fourth quarter of 2012 repositioning charges in Turkey, Romania and Pakistan and the impact of continued investment spending on new internal operating platforms during 2012.

Provisions increased $43 million due to lower loan loss reserve releases, partially offset by lower net credit losses across most countries. Net credit losses decreased 36% due to the ongoing improvement in credit quality and the move toward lower-risk customers.



In millions of dollars, except as otherwise noted	2013			2012			2011			% Change 2013 vs. 2012		% Change 2012 vs. 2011
Net interest revenue	$	6,305		$	6,061		$	5,853		4	%	4	%
Non-interest revenue	3,013			2,697			2,694			12		—
Total revenues, net of interest expense	$	9,318		$	8,758		$	8,547		6	%	2	%
Total operating expenses	$	5,244		$	5,186		$	5,093		1	%	2	%
Net credit losses	$	1,727		$	1,405		$	1,333		23	%	5	%
Credit reserve build (release)	376			254			(153		)	48		NM
Provision for benefits and claims	152			167			130			(9	)	28
Provisions for loan losses and for benefits and claims (LLR & PBC)	$	2,255		$	1,826		$	1,310		23	%	39	%
Income from continuing operations before taxes	$	1,819		$	1,746		$	2,144		4	%	(19	)%
Income taxes	384			278			471			38		(41	)
Income from continuing operations	$	1,435		$	1,468		$	1,673		(2	)%	(12	)%
Noncontrolling interests	4			(2		)	—			NM		—
Net income	$	1,431		$	1,470		$	1,673		(3	)%	(12	)%
Balance Sheet data (in billions of dollars)
Average assets	$	82		$	80		$	80		3	%	—	%
Return on average assets	1.77		%	1.93		%	2.21		%
Efficiency ratio	56			59			60
Average deposits	$	46.2		$	45		$	45.8		3		(2	)
Net credit losses as a percentage of average loans	4.16		%	3.81		%	4.12		%
Revenue by business
Retail banking	$	6,135		$	5,857		$	5,557		5	%	5	%
Citi-branded cards	3,183			2,901			2,990			10		(3	)
Total	$	9,318		$	8,758		$	8,547		6	%	2	%
Income from continuing operations by business
Retail banking	$	833		$	909		$	952		(8	)%	(5	)%
Citi-branded cards	602			559			721			8		(22	)
Total	$	1,435		$	1,468		$	1,673		(2	)%	(12	)%
Foreign Currency (FX) Translation Impact
Total revenue-as reported	$	9,318		$	8,758		$	8,547		6	%	2	%
Impact of FX translation ⁽¹⁾	—			(33		)	(477		)
Total revenues-ex-FX	$	9,318		$	8,725		$	8,070		7	%	8	%
Total operating expenses-as reported	$	5,244		$	5,186		$	5,093		1	%	2	%
Impact of FX translation ⁽¹⁾	—			(62		)	(326		)
Total operating expenses-ex-FX	$	5,244		$	5,124		$	4,767		2	%	7	%
Provisions for LLR & PBC-as reported	$	2,255		$	1,826		$	1,310		23	%	39	%
Impact of FX translation ⁽¹⁾	—			(19		)	(104		)
Provisions for LLR & PBC-ex-FX	$	2,255		$	1,807		$	1,206		25	%	50	%
Net income-as reported	$	1,431		$	1,470		$	1,673		(3	)%	(12	)%
Impact of FX translation ⁽¹⁾	—			25			(82		)
Net income-ex-FX	$	1,431		$	1,495		$	1,591		(4	)%	(6	)%

2013 vs. 2012

Net income decreased 4% as higher credit costs, higher expenses and a higher effective tax rate (see Note 9 to the Consolidated Financial Statements) were partially offset by higher revenues.

Revenues increased 7%, primarily due to volume growth in retail banking and cards, partially offset by continued spread compression. Net interest revenue increased 4% due to increased volumes, partially offset by spread compression. Non-interest revenue increased 12%, primarily due to higher fees from increased business volumes in retail and cards. Retail banking revenues increased 5% as average loans increased 12%, investment sales increased 13% and average deposits increased 3%. Cards revenues increased 11% as average loans increased 10% and purchase sales increased 13%, excluding the impact of Credicard (see Note 2 to the Consolidated Financial Statements). Citi expects revenues in Latin America RCB could continue to be negatively impacted by spread compression during 2014, particularly in Mexico.

Expenses increased 2% due to increased volume-related costs, mandatory salary increases in certain countries and higher regulatory costs, partially offset by lower repositioning charges and higher repositioning savings.

Provisions increased 25%, primarily due to higher net credit losses as well as a higher loan loss reserve build. Net credit losses increased 25%, primarily in the Mexico cards and personal loan portfolios, reflecting both volume growth and portfolio seasoning, which Citi expects to continue into 2014. The loan loss reserve build increased 50%, primarily due to an increase in reserves in Mexico related to the top three Mexican homebuilders, with the remainder due to portfolio growth and seasoning and the impact of potential losses related to hurricanes in the region during September 2013.

During 2013, homebuilders in Mexico began to experience financial difficulties, primarily due to, among other things, decreases in government subsidies, new government policies promoting vertical housing and an overall renewed government emphasis on urban planning. The loan loss reserve build related to the Mexican homebuilders in 2013 was driven by deterioration in the financial and operating conditions of these companies and decreases in the value of Citi’s collateral securing its loans. Citi’s outstanding loans to the top three homebuilders totaled $251 million at year-end 2013. Citi continues to monitor the performance of its Mexico homebuilder clients, as well as the value of its collateral, to determine whether additional reserves or charge-offs may be required in future periods.

Going into 2014, absent any significant market developments, including further deterioration in Citi’s Mexican homebuilders clients or losses from the hurricanes in 2013, Citi expects net credit losses and reserve builds to be in line with portfolio growth and seasoning.

For information on the potential impact to Latin America RCB from foreign exchange controls, see “Managing Global Risk—Country and Cross-Border Risk—Cross-Border Risk” below.

2012 vs. 2011

Net income declined 6% as higher revenues were offset by higher credit costs and expenses.

Revenues increased 8%, primarily due to revenue growth in Mexico and higher volumes, mostly related to personal loans and credit cards. Net interest revenue increased 9% due to increased volumes, partially offset by continued spread compression. Non-interest revenue increased 6%, primarily due to increased business volumes in the private pension fund and insurance businesses.

Expenses increased 7%, primarily due to $131 million of repositioning charges in the fourth quarter of 2012, higher volume-driven expenses and increased legal and related costs.

Provisions increased 50%, primarily due to increased loan loss reserve builds driven by underlying business volume growth, primarily in Mexico and Colombia. In addition, net credit losses increased in the retail portfolios, primarily in Mexico, reflecting volume growth.



In millions of dollars, except as otherwise noted	2013			2012			2011			% Change 2013 vs. 2012		% Change 2012 vs. 2011
Net interest revenue	$	4,756		$	5,154		$	5,377		(8	)%	(4	)%
Non-interest revenue	2,868			2,774			2,646			3		5
Total revenues, net of interest expense	$	7,624		$	7,928		$	8,023		(4	)%	(1	)%
Total operating expenses	$	4,450		$	4,766		$	4,632		(7	)%	3	%
Net credit losses	$	782		$	841		$	883		(7	)%	(5	)%
Credit reserve build (release)	9			(36		)	(63		)	NM		43
Provision for unfunded lending commitments	31			—			—			—		—
Provisions for loan losses	$	822		$	805		$	820		2	%	(2	)%
Income from continuing operations before taxes	$	2,352		$	2,357		$	2,571		—	%	(8	)%
Income taxes	782			561			668			39		(16	)
Income from continuing operations	$	1,570		$	1,796		$	1,903		(13	)%	(6	)%
Noncontrolling interests	—			—			—			—		—
Net income	$	1,570		$	1,796		$	1,903		(13	)%	(6	)%
Balance Sheet data (in billions of dollars)
Average assets	$	129		$	127		$	122		2	%	4	%
Return on average assets	1.22		%	1.41		%	1.56		%
Efficiency ratio	58			60			58
Average deposits	$	102.6		$	110.8		$	110.5		(7	)	—
Net credit losses as a percentage of average loans	0.88		%	0.95		%	1.03		%
Revenue by business
Retail banking	$	4,564		$	4,766		$	4,968		(4	)%	(4	)%
Citi-branded cards	3,060			3,162			3,055			(3	)	4
Total	$	7,624		$	7,928		$	8,023		(4	)%	(1	)%
Income from continuing operations by business
Retail banking	$	848		$	987		$	1,214		(14	)%	(19	)%
Citi-branded cards	722			809			689			(11	)	17
Total	$	1,570		$	1,796		$	1,903		(13	)%	(6	)%
Foreign Currency (FX) Translation Impact
Total revenue-as reported	$	7,624		$	7,928		$	8,023		(4	)%	(1	)%
Impact of FX translation ⁽¹⁾	—			(238		)	(329		)
Total revenues-ex-FX	$	7,624		$	7,690		$	7,694		(1	)%	—	%
Total operating expenses-as reported	$	4,450		$	4,766		$	4,632		(7	)%	3	%
Impact of FX translation ⁽¹⁾	—			(172		)	(240		)
Total operating expenses-ex-FX	$	4,450		$	4,594		$	4,392		(3	)%	5	%
Provisions for loan losses-as reported	$	822		$	805		$	820		2	%	(2	)%
Impact of FX translation ⁽¹⁾	—			(20		)	(39		)
Provisions for loan losses-ex-FX	$	822		$	785		$	781		5	%	1	%
Net income-as reported	$	1,570		$	1,796		$	1,903		(13	)%	(6	)%
Impact of FX translation ⁽¹⁾	—			(20		)	(26		)
Net income-ex-FX	$	1,570		$	1,776		$	1,877		(12	)%	(5	)%

2013 vs. 2012

Net income decreased 12%, primarily due to a higher effective tax rate (see Note 9 to the Consolidated Financial Statements) and lower revenues, partially offset by lower expenses.

Revenues decreased 1%, as lower net interest revenue was partially offset by higher non-interest revenue. Net interest revenue declined 5%, primarily driven by continued spread compression and the repositioning of the franchise in Korea (see discussion below). Average retail deposits declined 4% resulting from continued efforts to rebalance the deposit portfolio mix. Average retail loans increased 3% (11% excluding Korea). Non-interest revenue increased 7%, mainly driven by 22% growth in investment sales volume, despite a decrease in volumes in the second half of the year due to investor sentiment, reflecting overall market uncertainty. Cards purchase sales grew 7%, with growth across the region. Despite lower overall revenues in 2013, several key markets within the region experienced revenue growth, including Hong Kong, India, Thailand and China, partially offset by regulatory changes in the region, particularly Korea as well as Indonesia, Australia and Taiwan.

Citi expects regulatory changes and spread compression to continue to have an adverse impact on Asia RCB revenues during 2014. In addition, consistent with its strategy to concentrate its consumer banking operations in major metropolitan areas and focus on high quality consumer segments, Citi is in an ongoing process to reposition its consumer franchise in Korea to improve its operating efficiency and returns. While revenues in Korea could begin to stabilize in early 2014, this market could continue to have a negative impact on year-over-year revenue comparisons for Asia RCB through 2014.

Expenses declined 3%, as lower repositioning charges and efficiency and repositioning savings were partially offset by increased investment spending, particularly investments in China cards.

Provisions increased 5%, reflecting a higher loan loss reserve build due to volume growth in China, Hong Kong, India and Singapore as well as regulatory requirements in Korea, partially offset by lower net credit losses. Despite this increase, overall credit quality in the region remained stable during the year.

2012 vs. 2011

Net income decreased 5% primarily due to higher expenses.

Revenues were unchanged year-over-year. Net interest revenue decreased 3%, as the benefit of higher loan and deposit balances was offset by spread compression, mainly in retail lending. Spread compression continued to reflect improvements in the customer risk profile, stricter underwriting criteria and the regulatory changes in Korea where policy actions, including rate caps and other initiatives, were implemented to slow the growth of consumer credit in that market, thus impacting volume growth, lending rates and fees. Non-interest revenue increased 6%, reflecting growth in cards purchase sales, partially offset by a decrease in revenue from foreign exchange products. Despite the continued spread compression and regulatory changes in the region, the underlying business metrics continued to grow, with average retail loans up 6% and average card loans up 2%.

Expenses increased 5%, primarily due to approximately $78 million of repositioning charges in the fourth quarter of 2012, largely in Korea, and increased investment spending, including China cards and branches, higher volume-driven expenses and increased regulatory costs.

Provisions increased 1%, primarily due to lower loan loss reserve releases, which was partially offset by lower net credit losses. Net credit losses continued to improve, declining 2% due to the ongoing improvement in credit quality.

Effective in the first quarter of 2014, certain business activities within Securities and Banking and Transaction Services will be realigned and aggregated as Banking and Markets and Securities Services components within the ICG segment. The change is due to the realignment of the management structure within the ICG segment and will have no impact on any total segment-level information. Citi intends to release a revised Quarterly Financial Data Supplement reflecting this realignment prior to the release of first quarter of 2014 earnings information.



In millions of dollars, except as otherwise noted	2013			2012			2011			% Change 2013 vs. 2012		% Change 2012 vs. 2011
Commissions and fees	$	4,515		$	4,318		$	4,449		5	%	(3	)%
Administration and other fiduciary fees	2,675			2,790			2,775			(4	)	1
Investment banking	3,862			3,618			3,029			7		19
Principal transactions	6,310			4,130			4,873			53		(15	)
Other	666			(83		)	1,822			NM		NM
Total non-interest revenue	$	18,028		$	14,773		$	16,948		22	%	(13	)%
Net interest revenue (including dividends)	15,550			15,957			15,183			(3	)	5
Total revenues, net of interest expense	$	33,578		$	30,730		$	32,131		9	%	(4	)%
Total operating expenses	$	19,897		$	20,199		$	20,747		(1	)%	(3	)%
Net credit losses	$	182		$	282		$	619		(35	)%	(54	)%
Provision for unfunded lending commitments	53			39			89			36		(56	)
Credit reserve (release)	(157		)	(45		)	(556		)	NM		92
Provisions for credit losses	$	78		$	276		$	152		(72	)%	82	%
Income from continuing operations before taxes	$	13,603		$	10,255		$	11,232		33	%	(9	)%
Income taxes	3,972			2,162			2,872			84		(25	)
Income from continuing operations	$	9,631		$	8,093		$	8,360		19	%	(3	)%
Noncontrolling interests	110			128			56			(14	)	NM
Net income	$	9,521		$	7,965		$	8,304		20	%	(4	)%
Average assets (in billions of dollars)	$	1,067		$	1,044		$	1,027		2	%	2	%
Return on average assets	0.89		%	0.76		%	0.81		%
Efficiency ratio	59			66			65
Revenues by region
North America	$	11,547		$	9,027		$	10,362		28	%	(13	)%
EMEA	9,995			9,925			10,638			1		(7	)
Latin America	4,662			4,683			3,948			—		19
Asia	7,374			7,095			7,183			4		(1	)
Total	$	33,578		$	30,730		$	32,131		9	%	(4	)%
Income from continuing operations by region
North America	$	3,242		$	1,716		$	1,692		89	%	1	%
EMEA	2,488			2,544			3,077			(2	)	(17	)
Latin America	1,640			1,891			1,539			(13	)	23
Asia	2,261			1,942			2,052			16		(5	)
Total	$	9,631		$	8,093		$	8,360		19	%	(3	)%
Average loans by region (in billions of dollars)
North America	$	98		$	83		$	69		18	%	20	%
EMEA	55			53			47			4		13
Latin America	38			35			29			9		21
Asia	65			63			52			3		21
Total	$	256		$	234		$	197		9	%	19	%



In millions of dollars, except as otherwise noted	2013			2012			2011			% Change 2013 vs. 2012		% Change 2012 vs. 2011
Net interest revenue	$	9,909		$	9,951		$	9,399		—	%	6	%
Non-interest revenue	13,109			10,071			12,301			30		(18	)
Revenues, net of interest expense	$	23,018		$	20,022		$	21,700		15	%	(8	)%
Total operating expenses	13,803			14,416			14,990			(4	)	(4	)
Net credit losses	145			168			602			(14	)	(72	)
Provision (release) for unfunded lending commitments	71			33			86			NM		(62	)
Credit reserve (release)	(209		)	(79		)	(572		)	NM		86
Provisions for credit losses	$	7		$	122		$	116		(94	)%	5	%
Income before taxes and noncontrolling interests	$	9,208		$	5,484		$	6,594		68	%	(17	)%
Income taxes	2,493			791			1,485			NM		(47	)
Income from continuing operations	$	6,715		$	4,693		$	5,109		43	%	(8	)%
Noncontrolling interests	91			111			37			(18	)	NM
Net income	$	6,624		$	4,582		$	5,072		45	%	(10	)%
Average assets (in billions of dollars)	$	907		$	904		$	896		—	%	1	%
Return on average assets	0.73		%	0.51		%	0.57		%
Efficiency ratio	60			72			69
Revenues by region
North America	$	9,045		$	6,473		$	7,925		40	%	(18	)%
EMEA	6,462			6,437			7,241			—		(11	)
Latin America	2,840			2,913			2,264			(3	)	29
Asia	4,671			4,199			4,270			11		(2	)
Total revenues	$	23,018		$	20,022		$	21,700		15	%	(8	)%
Income from continuing operations by region
North America	$	2,701		$	1,250		$	1,284		NM		(3	)%
EMEA	1,562			1,360			2,005			15		(32	)
Latin America	1,189			1,249			916			(5	)	36
Asia	1,263			834			904			51		(8	)
Total income from continuing operations	$	6,715		$	4,693		$	5,109		43	%	(8	)%
Securities and Banking revenue details (excluding CVA/DVA)
Total investment banking	$	3,977		$	3,668		$	3,334		8	%	10	%
Fixed income markets	13,107			14,122			11,050			(7	)	28
Equity markets	3,017			2,464			2,451			22		1
Lending	1,217			869			1,682			40		(48	)
Private bank	2,487			2,394			2,217			4		8
Other Securities and Banking	(442		)	(1,008		)	(766		)	56		(32	)
Total Securities and Banking revenues (ex-CVA/DVA)	$	23,363		$	22,509		$	19,968		4	%	13	%
CVA/DVA (excluded as applicable in lines above)	(345		)	(2,487		)	1,732			86	%	NM
Total revenues, net of interest expense	$	23,018		$	20,022		$	21,700		15	%	(8	)%

2013 vs. 2012

Net income increased 45%. Excluding negative $345 million of CVA/DVA (see table below), net income increased 12%, primarily driven by higher revenues and lower expenses, partially offset by a higher effective tax rate (see Note 9 to the Consolidated Financial Statements).

Revenues increased 15%. Excluding CVA/DVA:


•	Revenues increased 4%, reflecting higher revenues in equity markets, investment banking and the Private Bank, partially offset by lower revenues in fixed income markets. Overall, Citi’s wallet share continued to improve in most major products, while maintaining what Citi believes to be a disciplined risk appetite for the changing market environment during 2013.

•

Fixed income markets revenues decreased 7%, primarily reflecting industry-wide weakness in rates and currencies, partially offset by strong performance in credit-related and securitized products and commodities. Rates and currencies performance was lower compared to a strong 2012 that benefited from increased client revenues and a more liquid market environment, particularly in EMEA. 2013 results also reflected a general slowdown in client activity exacerbated by uncertainty, particularly in the latter part of 2013, around the tapering of quantitative easing as well as geopolitical issues. Credit-related and securitized products results reflected increased client activity driven by improved market conditions and demand for spread products. In addition, while not generally material to overall fixed income markets revenues, lower revenues from Citi Capital Advisors (CCA) during 2013 also contributed to the decline in fixed income markets revenue year-over-year, as Citi continued to wind down this business.


•	Equity markets revenues increased 22%, primarily due to market share gains, continued improvement in cash and derivative trading performance and a more favorable market environment.

•

Investment banking revenues increased 8%, reflecting gains in overall investment banking wallet share. Advisory revenues increased 19%, reflecting an improvement in wallet share, despite a contraction in the overall M&A market wallet. Equity underwriting revenues increased 51%, driven by improved wallet share and increased market activity, particularly initial public offerings. Debt underwriting revenues decreased 6%, primarily due to lower bond underwriting fees and a decline in wallet share during the year.

•

Lending revenues increased 40%, driven by lower mark-to-market losses on hedges related to accrual loans (see table below) due to less significant credit spread tightening versus 2012. Excluding the mark-to-market losses on hedges related to accrual loans, core lending revenues decreased 4%, primarily due to increased hedge premium costs and moderately lower loan balances, partially offset by higher spreads. Citi expects demand for Corporate loans to remain muted in the current market environment.


•	Private Bank revenues increased 4%, with growth across all regions and products, particularly in managed investments, where growth reflected both higher client assets under management and increased placement fees, as well as in capital markets. Revenue growth in lending and deposits, primarily driven by growth in client volumes, was partially offset by continued spread compression.

Expenses decreased 4%, primarily reflecting repositioning savings, the impact of lower performance-based compensation, lower repositioning charges and the impact of FX translation, partially offset by higher legal and related costs and volume-related expenses.

Provisions decreased $115 million, primarily reflecting higher loan loss reserve releases, partially offset by an increase in the provision for unfunded lending commitments in the Corporate loan portfolio.

2012 vs. 2011

Net income decreased 10%. Excluding negative $2.5 billion CVA/DVA (see table below), net income increased 56%, primarily driven by an increase in revenues and decrease in expenses.

Revenues decreased 8%. Excluding CVA/DVA:


•	Revenues increased 13%, reflecting higher revenues in most major S&B businesses. Overall, Citi gained wallet share during 2012 in most major products and regions, while maintaining what it believed to be a disciplined risk appetite for the market environment.

•

Fixed income markets revenues increased 28%, reflecting strong performance in rates and currencies and higher revenues in credit-related and securitized products. These results reflected an improved market environment and more balanced trading flows, particularly in the second half of 2012. Rates and currencies performance reflected strong client and trading results in G-10 FX, G-10 rates and Citi’s local markets franchise. Credit products, securitized markets and municipals products experienced improved trading results, particularly in the second half of 2012, compared to the prior-year period. Citi’s position serving corporate clients for markets products also contributed to the strength and diversity of client flows.


•	Equity markets revenues increased 1%, due to improved derivatives performance as well as the absence of proprietary trading losses in 2011, partially offset by lower cash equity volumes that impacted the industry as a whole. Citi’s improved performance in derivatives reflected improved trading and continued progress in capturing additional client wallet share.


•	Investment banking revenues increased 10%, reflecting increases in debt underwriting and advisory revenues, partially offset by lower equity underwriting revenues. Debt underwriting revenues rose 18%, driven by increases in investment grade and high yield bond issuances. Advisory revenues increased 4%, despite the overall reduction in market activity during the year. Equity

underwriting revenues declined 7%, driven by lower levels of market and client activity.

•

Lending revenues decreased 48%, driven by the mark-to-market losses on hedges related to accrual loans (see table below). The loss on lending hedges, compared to a gain in the prior year, resulted from credit spreads narrowing during 2012. Excluding the mark-to-market losses on hedges related to accrual loans, core lending revenues increased 35%, primarily driven by growth in the Corporate loan portfolio and improved spreads in most regions.


•	Private Bank revenues increased 8%, driven by growth in client assets as a result of client acquisition and development efforts in Citi’s targeted client segments. Deposit volumes, investment assets under management and loans all increased, while pricing and product mix optimization initiatives offset underlying spread compression across products.

Expenses decreased 4%. Excluding repositioning charges of $349 million in 2012 (including $237 million in the fourth quarter of 2012) compared to $267 million in 2011, expenses also decreased 4%, driven by efficiency savings from ongoing re-engineering programs and lower compensation costs.

Provisions increased 5% to $122 million, primarily reflecting lower loan loss reserve releases, partially offset by lower net credit losses, both due to portfolio stabilization.

The table below summarizes pretax gains (losses) related to changes in CVA/DVA and hedges on accrual loans for the periods indicated.



In millions of dollars	2013			2012			2011
S&B CVA/DVA
Fixed Income Markets	$	(300	)	$	(2,047	)	$	1,368
Equity Markets	(39		)	(424		)	355
Private Bank	(6		)	(16		)	9
Total S&B CVA/DVA	$	(345	)	$	(2,487	)	$	1,732
S&B Hedges on Accrual Loans gain (loss)⁽¹⁾	$	(287	)	$	(698	)	$	519


(1)	Hedges on S&B accrual loans reflect the mark-to-market on credit derivatives used to economically hedge the corporate loan accrual portfolio. The fixed premium cost of these hedges is netted against the core lending revenues to reflect the cost of the credit protection.

Transaction Services is composed of Treasury and Trade Solutions and Securities and Fund Services. Treasury and Trade Solutions provides comprehensive cash management and trade finance services for corporations, financial institutions and public sector entities worldwide. Securities and Fund Services provides securities services to investors, such as global asset managers, custody and clearing services to intermediaries, such as broker-dealers, and depository and agency/trust services to multinational corporations and governments globally. Revenue is generated from net interest revenue on the spread between trade loans or intercompany placements and interest paid to customers on deposits as well as fees for transaction processing and fees on assets under custody and administration.



In millions of dollars, except as otherwise noted	2013			2012			2011			% Change 2013 vs. 2012		% Change 2012 vs. 2011
Net interest revenue	$	5,641		$	6,006		$	5,784		(6	)%	4	%
Non-interest revenue	4,919			4,702			4,647			5		1
Total revenues, net of interest expense	$	10,560		$	10,708		$	10,431		(1	)%	3	%
Total operating expenses	6,094			5,783			5,757			5		—
Provisions for credit losses and for benefits and claims	71			154			36			(54	)	NM
Income before taxes and noncontrolling interests	$	4,395		$	4,771		$	4,638		(8	)%	3	%
Income taxes	1,479			1,371			1,387			8		(1	)
Income from continuing operations	2,916			3,400			3,251			(14	)	5
Noncontrolling interests	19			17			19			12		(11	)
Net income	$	2,897		$	3,383		$	3,232		(14	)%	5	%
Average assets (in billions of dollars)	$	160		$	140		$	131		14	%	7	%
Return on average assets	1.81		%	2.42		%	2.47		%
Efficiency ratio	58			54			55
Revenues by region
North America	$	2,502		$	2,554		$	2,437		(2	)%	5	%
EMEA	3,533			3,488			3,397			1		3
Latin America	1,822			1,770			1,684			3		5
Asia	2,703			2,896			2,913			(7	)	(1	)
Total revenues	$	10,560		$	10,708		$	10,431		(1	)%	3	%
Income from continuing operations by region
North America	$	541		$	466		$	408		16	%	14	%
EMEA	926			1,184			1,072			(22	)	10
Latin America	451			642			623			(30	)	3
Asia	998			1,108			1,148			(10	)	(3	)
Total income from continuing operations	$	2,916		$	3,400		$	3,251		(14	)%	5	%
Foreign currency (FX) translation impact
Total revenue-as reported	$	10,560		$	10,708		$	10,431		(1	)%	3	%
Impact of FX translation ⁽¹⁾	—			(159		)	(409		)
Total revenues-ex-FX	$	10,560		$	10,549		$	10,022		—	%	5	%
Total operating expenses-as reported	$	6,094		$	5,783		$	5,757		5	%	—	%
Impact of FX translation ⁽¹⁾	—			(53		)	(147		)
Total operating expenses-ex-FX	$	6,094		$	5,730		$	5,610		6	%	2	%
Net income-as reported	$	2,897		$	3,383		$	3,232		(14	)%	5	%
Impact of FX translation ⁽¹⁾	—			(106		)	(230		)
Net income-ex-FX	$	2,897		$	3,277		$	3,002		(12	)%	9	%
Key indicators (in billions of dollars)
Average deposits and other customer liability balances-as reported	$	434		$	404		$	364		7	%	11	%
Impact of FX translation ⁽¹⁾	—			(1		)	(9		)
Average deposits and other customer liability balances-ex-FX	$	434		$	403		$	355		8	%	14	%
EOP assets under custody ⁽²⁾(in trillions of dollars)	$	14.3		$	13.2		$	12.0		8	%	10	%

2013 vs. 2012

Net income decreased 12%, primarily due to higher expenses and a higher effective tax rate (see Note 9 to the Consolidated Financial Statements), partially offset by lower credit costs.

Revenues were unchanged as growth from higher deposit balances, trade loans and fees from higher market volumes was offset by continued spread compression. Treasury and Trade Solutions revenues decreased 1%, as the ongoing impact of spread compression globally was partially offset by higher balances and fee growth. Treasury and Trade Solutions average deposits increased 7% and average trade loans increased 22%, including the impact of the consolidation of approximately $7 billion of trade loans during the second quarter of 2013. Securities and Fund Services revenues increased 4%, as settlement volumes increased 15% and assets under custody increased 10%, partially offset by spread compression related to deposits. Despite the overall underlying volume growth, Citi expects spread compression will continue to negatively impact Transaction Services net interest revenues in the near term.

Expenses increased $311 million. The increase was due to an estimated $360 million charge in the fourth quarter of 2013 related to a fraud discovered in Banamex in February 2014. Specifically, as more fully described in Citi’s Form 8-K filed with the Securities and Exchange Commission on February 28, 2014, as of December 31, 2013, Citi, through Banamex, had extended approximately $585 million of short-term credit to Oceanografia S.A. de C.V. (OSA), a Mexican oil services company, through an accounts receivable financing program. OSA had been a key supplier to Petróleos Mexicanos (Pemex), the Mexican state-owned oil company, although, in February 2014, OSA was suspended from being awarded new Mexican government contracts. Pursuant to the program, Banamex extended credit to OSA to finance accounts receivables due from Pemex. In February 2014, Citi discovered that credit had been extended to OSA based on fraudulent accounts receivable documentation. The estimated $360 million charge in the fourth quarter of 2013 resulted from the difference between the $585 million Citi had recorded as owed by Pemex to Citi as of December 31, 2013, and an estimated $185 million that Citi currently believes is owed by Pemex, with an offset to compensation expense of approximately $40 million associated with the Banamex variable compensation plan. Excluding the charge related to the fraud in the fourth quarter of 2013, expenses were unchanged as volume-related growth and increased financial transaction taxes in EMEA, which are expected to continue in future periods, were offset by efficiency savings, lower repositioning charges and lower legal and related costs.

Provisions decreased by 54% due to lower credit costs. As discussed above, Citi currently believes it is owed approximately $185 million by Pemex pursuant to the Banamex accounts receivable financing program with OSA.

In addition, as of December 31, 2013, Citi, through Banamex, had approximately $33 million in either direct obligations of OSA or standby letters of credit issued on OSA’s behalf. Citi continues to review the events arising from or relating to the fraud and their potential impacts. Based on its continued review, Citi will determine whether all or any portion of the $33 million of direct loans made to OSA and the remaining approximately $185 million of accounts receivable due from Pemex may be impaired. Any such impairment would negatively impact provisions in Transaction Services in future periods.

Average deposits and other customer liabilities increased 8%, primarily as a result of client activity in Latin America, EMEA and North America (for additional information on Citi’s deposits, see “Managing Global Risk—Market Risk—Funding and Liquidity” below).

2012 vs. 2011

Net income increased 9%, reflecting growth in revenues, partially offset by higher expenses and credit costs.

Revenues increased 5% as higher trade loan and deposit balances were partially offset by continued spread compression and lower market volumes. Treasury and Trade Solutions revenues were up 8%, driven by growth in trade as end-of-period trade loans grew 24%. Cash management revenues also grew, reflecting growth in deposit balances and fees, partially offset by continued spread compression due to the continued low interest rate environment. Securities and Fund Services revenues decreased 2%, primarily driven by lower market volumes as well as spread compression on deposits.

Expenses increased 2%. Excluding repositioning charges of $134 million in 2012 (including $95 million in the fourth quarter of 2012) compared to $60 million in 2011, expenses were unchanged, primarily driven by incremental investment spending and higher legal and related costs, offset by efficiency savings.

Average deposits and other customer liabilities grew 14%, driven by focused deposit building activities as well as continued market demand for U.S. dollar deposits.

2013 vs. 2012

The Net loss decreased $772 million to $1.1 billion, primarily due to lower expenses and the $189 million after-tax benefit from the sale of Credicard (see “Executive Summary” above and Note 2 to the Consolidated Financial Statements), partially offset by a lower tax benefit.

Revenues increased $7 million, driven by hedging gains, partially offset by lower revenue from sales of available-for-sale (AFS) securities in 2013.

Expenses decreased 39%, largely driven by lower legal and related costs and repositioning charges.

2012 vs. 2011

The Net loss increased by $1.1 billion, primarily due to a decrease in revenues and an increase in expenses, particularly repositioning charges and legal and related expenses.

Revenues decreased $692 million, driven by a lower gain on the sale of minority investments in 2012 as compared to 2011 (a net pretax gain of $54 million in 2012 compared to $199 million in 2011), as well as lower investment yields on Citi’s Treasury portfolio and the negative impact of hedging activities. In 2012, the sale of minority investments included pretax gains of $1.1 billion and $542 million on the sales of Citi’s remaining stake in Housing Development Finance Corporation Ltd. (HDFC) and its stake in Shanghai Pudong Development Bank, respectively, offset by a pretax impairment charge relating to Akbank of $1.2 billion and the net pretax loss of $424 million related to the sale of a 10.1% stake in Akbank (for additional information on Citi’s remaining interest in Akbank, see Note 14 to the Consolidated Financial Statements). The 2011 pretax gain of $199 million related to the partial sale of Citi’s minority interest in HDFC.

Expenses increased by $923 million, largely driven by higher legal and related costs as well as higher repositioning charges, including $253 million in the fourth quarter of 2012.



										% Change		% Change
In millions of dollars, except as otherwise noted	2013			2012			2011			2013 vs. 2012		2012 vs. 2011
Net interest revenue	$	3,184		$	2,619		$	3,726		22	%	(30	)%
Non-interest revenue	1,358			(3,411		)	2,587			NM		NM
Total revenues, net of interest expense	$	4,542		$	(792	)	$	6,313		NM		NM
Provisions for credit losses and for benefits and claims
Net credit losses	$	3,070		$	5,842		$	8,576		(47	)%	(32	)%
Credit reserve build (release)	(2,033		)	(1,551		)	(3,277		)	(31	)	53
Provision for loan losses	$	1,037		$	4,291		$	5,299		(76	)%	(19	)%
Provision for benefits and claims	618			651			779			(5	)	(16	)
Provision (release) for unfunded lending commitments	(10		)	(56		)	(41		)	82		(37	)
Total provisions for credit losses and for benefits and claims	$	1,645		$	4,886		$	6,037		(66	)%	(19	)%
Total operating expenses	$	5,900		$	5,243		$	6,457		13	%	(19	)%
Loss from continuing operations before taxes	$	(3,003	)	$	(10,921	)	$	(6,181	)	73	%	(77	)%
Benefits for income taxes	(1,129		)	(4,393		)	(2,110		)	74		NM
Loss from continuing operations	$	(1,874	)	$	(6,528	)	$	(4,071	)	71	%	(60	)%
Noncontrolling interests	16			3			119			NM		(97	)
Citi Holdings net loss	$	(1,890	)	$	(6,531	)	$	(4,190	)	71	%	(56	)%
Balance sheet data (in billions of dollars)
Average assets	$	136		$	194		$	269		(30	)%	(28	)%
Return on average assets	(1.39		)%	(3.37		)%	(1.56		)%
Efficiency ratio	130			(662		)	102
Total EOP assets	$	117		$	156		$	225		(25	)%	(31	)%
Total EOP loans	93			116			141			(20	)	(18	)
Total EOP deposits	36			68			62			(47	)	10

2013 vs. 2012

The Net loss decreased by 71% to $1.9 billion. CVA/DVA was positive $3 million in 2013, compared to positive $157 million in 2012. 2012 also included the pretax loss of $4.7 billion ($2.9 billion after-tax) related to the sale of the Morgan Stanley Smith Barney joint venture (MSSB) to Morgan Stanley. Excluding CVA/DVA in both periods and the 2012 MSSB loss, the net loss decreased to $1.9 billion from a net loss of $3.7 billion in 2012, due to significantly lower provisions for credit losses and higher revenues, partially offset by higher expenses.

Revenues increased to $4.5 billion, primarily due to the absence of the 2012 MSSB loss. Excluding CVA/DVA in both periods and the 2012 MSSB loss, revenues increased 22%,

primarily driven by lower funding costs and lower residential mortgage repurchase reserve builds for representation and warranty claims. The repurchase reserve builds were $470 million in 2013, compared to $700 million in 2012 (for additional information on Citi’s repurchase reserve, see “Managing Global Risk—Credit Risk—Citigroup Residential Mortgages—Representations and Warranties Repurchase Reserve” below). Net interest revenues increased 22%, primarily due to the lower funding costs. Excluding the CVA/DVA in both periods and 2012 MSSB loss, non-interest revenues increased 21% to $1.4 billion, primarily driven by lower asset marks and the lower repurchase reserve builds, partially offset by lower consumer revenues and gains on asset sales.

Expenses increased 13%, primarily due to higher legal and related costs ($2.6 billion in 2013 compared to $1.2 billion in 2012), driven largely by legacy private-label securitization and other mortgage-related issues, partially offset by lower overall assets. Excluding legal and related costs, expenses declined 19% versus 2012. During 2013, approximately one-third of Citi Holdings’ expenses, excluding legal and related costs, consisted of mortgage-related expenses. Citi expects that the sale of mortgage servicing rights (MSRs) announced in January 2014 should benefit mortgage expenses in Citi Holdings during 2014 (see “Managing Global Risk—Credit Risk—Mortgage Servicing Rights” below). While Citi may seek to execute similar sales in the future, such sales often require investor and other approvals and could also be subject to regulatory review.

Provisions decreased 66%, driven by the absence of incremental net credit losses relating to the national mortgage settlement and those required by OCC guidance during 2012 (see discussion below), as well as improved credit in North America mortgages and overall lower asset levels.

Loan loss reserve releases increased 31% to $2 billion, which included a loan loss reserve release of approximately $2.2 billion related to the North America mortgage portfolio, partially offset by losses on asset sales. Loan loss reserves related to the North America mortgage portfolio were utilized to offset a substantial portion of the North America mortgage portfolio net credit losses during 2013.

2012 vs. 2011

The Net loss increased by 56% to $6.5 billion, primarily due to the 2012 MSSB loss. CVA/DVA was positive $157 million, compared to positive $74 million in 2011. Excluding CVA/DVA in both periods and the 2012 MSSB loss, the net loss decreased to $3.7 billion compared to a net loss of $4.2 billion in 2011, as lower revenues were partially offset by lower expenses, lower provisions and a tax benefit on the sale of a business in 2012.

Revenues decreased $7.1 billion to negative $792 million, primarily due to the 2012 MSSB loss. Excluding CVA/DVA in both periods and the 2012 MSSB loss, revenues decreased 40%, primarily due to lower loan balances driven by continued asset sales, divestitures and run-off and higher funding costs related to MSSB assets, the absence of private equity marks and lower gains on sales.

Expenses decreased 19%, driven by lower volumes and divestitures and slightly lower legal and related costs.

Provisions decreased 19%, driven primarily by improved credit in North America mortgages and lower volumes and divestitures, partially offset by lower loan loss reserve releases. Net credit losses decreased by 32% to $5.8 billion, primarily reflecting improvements in North America mortgages and despite being impacted by incremental mortgage charge-offs of approximately $635 million required by OCC guidance regarding the treatment of mortgage loans where the borrower has gone through Chapter 7 bankruptcy and approximately $370 million related to previously deferred principal balances on modified mortgages related to anticipated forgiveness of principal in connection with the national mortgage settlement. In addition, net credit losses in

2012 were negatively impacted by an additional aggregate amount of $146 million related to the national mortgage settlement (see “Managing Global Risk—Credit Risk—National Mortgage Settlement” below).

Japan Consumer Finance

In 2008, Citi decided to exit its Japan Consumer Finance business and has liquidated approximately 92% of the portfolio since that time. While the portfolio has been significantly reduced, Citi continues to monitor various aspects of this legacy business relating to the charging of “gray zone” interest, including customer defaults, refund claims and litigation, as well as financial, legislative, regulatory, judicial and other political developments. Gray zone interest represents interest at rates that are legal but for which claims may not be enforceable.

As of December 31, 2013, Citi’s Japan Consumer Finance business had approximately $278 million in outstanding loans that currently charge or have previously charged interest rates in the gray zone, compared to approximately $709 million as of December 31, 2012. However, Citi could also be subject to refund claims on previously outstanding loans that charged gray zone interest and thus could be subject to losses on loans in excess of these amounts.

At December 31, 2013, Citi’s reserves related to customer refunds in the Japan Consumer Finance business were $434 million, compared to $736 million at December 31, 2012. The decrease in the reserve year-over-year primarily resulted from the significant liquidation of the portfolio, payments made to customers and a continuing reduction in the population of current and former customers who are eligible to make refund claims.

Citi continues to monitor and evaluate developments relating to the charging of gray zone interest and the potential impact to both currently and previously outstanding loans in this legacy business as well as its reserves related thereto. The potential amount of losses and their impact on Citi is subject to significant uncertainty and continues to be difficult to predict.

Payment Protection Insurance (PPI)

The alleged mis-selling of PPI by financial institutions in the U.K. has been, and continues to be, the subject of intense review and focus by U.K. regulators, particularly the Financial Conduct Authority (FCA) (formerly the Financial Services Authority). The FCA has found certain problems across the industry with how these products were sold, including customers not realizing that the cost of PPI premiums was being added to their loan or PPI being unsuitable for the customer.

PPI is designed to cover a customer’s loan repayments if certain events occur, such as long-term illness or unemployment. Prior to 2008, certain of Citi’s legacy U.K. consumer finance businesses, primarily CitiFinancial Europe plc and Canada Square Operations Ltd (formerly Egg Banking plc), engaged in the sale of PPI. While Citi has sold a significant portion of these businesses, and the remaining businesses are in the process of wind down, Citi generally remains subject to customer complaints for, and retains the

potential liability relating to, the sale of PPI by these businesses.

In 2011, the FCA required all firms engaged in the sale of PPI in the U.K. to review their historical sales processes for PPI. In addition, the FCA is requiring all such firms to contact proactively any customers who may have been mis-sold PPI after January 2005 and invite them to have their individual sale reviewed (Customer Contact Exercise). Citi currently expects to complete the Customer Contact Exercise by the end of the first half of 2014. Additionally, while Citi is not required to contact customers proactively for the sale of PPI prior to January 2005, it is still subject to customer complaints and redress for those sales.

Redress, whether as a result of customer complaints pursuant to the required Customer Contact Exercise, or for the sale of PPI prior to January 2005, generally involves the repayment of premiums and the refund of all applicable contractual interest together with compensatory interest of 8%. Citi estimates that the number of PPI policies sold after January 2005 (across all applicable Citi businesses in the U.K.) was approximately 417,000, for which premiums totaling approximately $490 million were collected. As noted above, however, Citi also remains subject to customer complaints on the sale of PPI prior to January 2005 and, thus, it could be subject to customer complaints substantially higher than this amount.

During 2013, Citi increased its PPI reserves by approximately $123 million ($83 million of which was recorded in Citi Holdings and $40 million of which was recorded in Corporate/Other for discontinued operations), including a $62 million reserve increase in the fourth quarter of 2013 ($30 million of which was recorded in Citi Holdings and $32 million of which was recorded in Corporate/Other for discontinued operations). The increase for the full year 2013 compared to an increase of $266 million during 2012. While the overall level of claims generally decreased during the second half of 2013, the increase in the reserves both during 2013 and in the fourth quarter of 2013 was primarily due to an increase in the rate of response to the Customer Contact Exercise as well as a continued elevated level of customer complaints on the sale of PPI prior to January 2005, which Citi believes is largely as a result of the continued regulatory focus and increased customer awareness of PPI issues across the industry. During 2013, Citi paid $203 million of PPI claims, which were charged against the reserve, resulting in a year-end PPI reserve of $296 million (compared to $376 million as of December 31, 2012).

Citi believes the number of PPI complaints, the amount of refunds and the impact on Citi could remain volatile and are subject to continued significant uncertainty.

Cash and Deposits with Banks

Cash and deposits with banks is composed of both Cash and due from banks and Deposits with banks. Cash and due from banks includes (i) cash on hand at Citi’s domestic and overseas offices, and (ii) non-interest-bearing balances due from banks, including non-interest-bearing demand deposit accounts with correspondent banks, central banks (such as the Federal Reserve Bank), and other banks or depository institutions for normal operating purposes. Deposits with banks includes interest-bearing balances, demand deposits and time deposits held in or due from banks (including correspondent banks, central banks and other banks or depository institutions) maintained for, among other things, normal operating and regulatory reserve requirement purposes.

During 2013, cash and deposits with banks increased 43%, driven by a $67 billion, or 65%, increase in Deposits with banks, reflecting the growth in Citi’s deposits during the year (for additional information, see “Managing Global Risk—Market Risk—Funding and Liquidity” below). Sequentially, cash and deposits with banks decreased 3%, primarily driven by net loan growth and higher net trading account assets within Securities and Banking, as trading

account liabilities decreased by more then trading account assets, as discussed below, partially offset by higher deposits in Transaction Services and sales related to the continued reduction of Citi Holdings assets.

Average cash balances were $204 billion in the fourth quarter of 2013, compared to $180 billion in the third quarter of 2013.

Federal Funds Sold and Securities Borrowed or Purchased Under Agreements to Resell (Reverse Repos)

Federal funds sold consist of unsecured advances to third parties of excess balances in reserve accounts held at the Federal Reserve Bank. For the full year and fourth quarter of 2013, Citi’s federal funds sold were not significant.

Reverse repos and securities borrowed decreased 6% quarter-over-quarter, primarily due to a reduction in trading in the Markets businesses within Securities and Banking as counterparties became more cautious during the second half of 2013 as they reacted to potential tapering by the Federal Reserve Board and possible U.S. government default.

For further information regarding these balance sheet categories, see Note 11 to the Consolidated Financial Statements.

Trading Account Assets

Trading account assets declined during the second half of 2013 due to declines in client activity in Rates and Currencies in the Markets businesses within Securities and Banking, as referenced above. Average trading account assets were $239 billion in the fourth quarter of 2013, compared to $246 billion in the third quarter of 2013.

For further information on Citi’s trading account assets, see Note 13 to the Consolidated Financial Statements.

Investments

Investments generally remained stable during 2013, as a slight increase in foreign government securities was offset by declines in mortgage-backed securities to reduce the interest rate risk profile and U.S. Treasury and agency securities.

For further information regarding investments, see Note 14 to the Consolidated Financial Statements.

Loans

Loans represent the largest asset category of Citi’s balance sheet. Citi’s total loans, net of unearned income, were $665 billion at December 31, 2013, compared to $658 billion at September 30, 2013 and $655 billion at December 31, 2012. The impact of foreign exchange translation reduced loan balances by $8 billion year-over-year and by $1 billion quarter-over-quarter. Additionally, approximately $3 billion of loans were moved to Discontinued operations during the second quarter of 2013 as a result of the agreement to sell Credicard. Throughout this section, the discussion of loans excludes the impact of foreign exchange translation, and excludes Credicard loans for the fourth quarter of 2012 and the third quarter of 2013.

Excluding these items, Citi’s loans increased 3% from the prior-year period and 1% quarter-over-quarter, as demand from consumer and corporate customers continued to be supported by the economic recovery, partially offset by the continued wind down of Citi Holdings. At year-end 2013, Consumer and Corporate loans represented 59% and 41%, respectively, of Citi’s total loans.

Citicorp loans increased 8% year-over-year, with growth in both the Consumer and Corporate loan portfolios. Consumer loans grew 5% from the prior-year period. In North America, Consumer loans grew 4% from the prior-year period, primarily reflecting the addition of the approximately $7 billion of credit card loans as a result of the acquisition of the Best Buy portfolio in the third quarter of 2013. Internationally, Consumer loans increased 7% from the prior-year period, led by growth in Mexico, Hong Kong and India, offset by the ongoing repositioning efforts in Korea.

Corporate loans grew 12% from the prior-year period, with 12% growth in Asia, 7% growth in EMEA and 17% growth in North America, which included the consolidation of a $7 billion trade loan portfolio in Transaction Services during the second quarter of 2013. Private Bank loans increased 14% year-over-year, with the most significant growth in Asia and North America. Transaction Services loans grew 16% compared to the prior-year period, including the trade loan consolidation as well as origination growth in trade finance

throughout the year. Corporate loans, excluding trade loans, grew 10% from the prior-year period.

Citi Holdings loans declined 20% year-over-year, primarily due to continued run-off and asset sales.

During the fourth quarter of 2013, average loans of $659 billion yielded an average rate of 7.0%, compared to $645 billion and 7.0% respectively, in the third quarter of 2013.

For further information on Citi’s loan portfolios, see generally “Managing Global Risk—Market Risk—Funding and Liquidity” below and Note 15 to the Consolidated Financial Statements.

Other Assets

Other assets consist of brokerage receivables, goodwill, intangibles and mortgage servicing rights, in addition to other assets (including, among other items, loans held-for-sale, deferred tax assets, equity-method investments, interest and fees receivable, premises and equipment, certain end-user derivatives in a net receivable position, repossessed assets and other receivables).

During the fourth quarter of 2013, other assets decreased 2% primarily due to the sale of Credicard, which was reported in Discontinued operations. Year-over-year, other assets declined 9% primarily due to a reduction in Citi’s deferred tax assets and loans held-for-sale as well as FX translation.

LIABILITIES

Deposits

For a discussion of Citi’s deposits, see “Managing Global Risk —Market Risk—Funding and Liquidity” below.

Federal Funds Purchased and Securities Loaned or Sold Under Agreements to Repurchase (Repos)

Federal funds purchased consist of unsecured advances of excess balances in reserve accounts held at the Federal Reserve Bank from third parties. For the full year and fourth quarter of 2013, Citi’s federal funds purchased were not significant.

For further information on Citi’s secured financing transactions, see “Managing Global Risk—Market Risk—Funding and Liquidity” below. See also Note 11 to the Consolidated Financial Statements for additional information on these balance sheet categories.

Trading Account Liabilities

During the fourth quarter of 2013, Trading account liabilities decreased by 11%, due to lower inventory in Securities and Banking businesses, which was aligned with the corresponding decrease in reverse repos and trading account assets discussed above. Average Trading account liabilities were $66 billion, compared to $71 billion in the third quarter of 2013, primarily due to lower average Securities and Banking volumes.

For further information on Citi’s Trading account liabilities, see Note 13 to the Consolidated Financial Statements.



In millions of dollars	Global Consumer Banking		Institutional Clients Group		Corporate/Other and Consolidating Eliminations⁽²⁾		Subtotal Citicorp		Citi Holdings		Citigroup Parent Company- Issued Long-Term Debt and Stockholders’ Equity⁽³⁾			Total Citigroup Consolidated
Assets
Cash and deposits with banks	$	17,787	$	63,373	$	116,763	$	197,923	$	967	$	—		$	198,890
Federal funds sold and securities borrowed or purchased under agreements to resell	5,050		251,077		—		256,127		910		—			257,037
Trading account assets	6,279		275,662		242		282,183		3,745		—			285,928
Investments	30,403		114,978		150,873		296,254		12,726		—			308,980
Loans, net of unearned income and
allowance for loan losses	291,531		267,935		—		559,466		86,358		—			645,824
Other assets	53,495		72,472		45,360		171,327		12,396		—			183,723
Total assets	$	404,545	$	1,045,497	$	313,238	$	1,763,280	$	117,102	$	—		$	1,880,382
Liabilities and equity
Total deposits	$	332,422	$	573,782	$	26,099	$	932,303	$	35,970	$	—		$	968,273
Federal funds purchased and securities loaned or sold under agreements to repurchase	7,847		195,664		—		203,511		1		—			203,512
Trading account liabilities	24		107,463		264		107,751		1,011		—			108,762
Short-term borrowings	291		47,117		11,322		58,730		214		—			58,944
Long-term debt	1,934		37,474		18,773		58,181		6,131		156,804			221,116
Other liabilities	18,393		76,136		11,652		106,181		7,461		—			113,642
Net inter-segment funding (lending)	43,634		7,861		243,334		294,829		66,314		(361,143		)	—
Total liabilities	$	404,545	$	1,045,497	$	311,444	$	1,761,486	$	117,102	$	(204,339	)	$	1,674,249
Total equity	—		—		1,794		1,794		—		204,339			206,133
Total liabilities and equity	$	404,545	$	1,045,497	$	313,238	$	1,763,280	$	117,102	$	—		$	1,880,382

OFF-BALANCE-SHEET ARRANGEMENTS

Citigroup enters into various types of off-balance-sheet arrangements in the ordinary course of business. Citi’s involvement in these arrangements can take many different forms, including without limitation:


•	purchasing or retaining residual and other interests in unconsolidated special purpose entities, such as credit card receivables and mortgage-backed and other asset-backed securitization entities;


•	holding senior and subordinated debt, interests in limited and general partnerships and equity interests in other unconsolidated special purpose entities;


•	providing guarantees, indemnifications, loan commitments, letters of credit and representations and warranties; and


•	entering into operating leases for property and equipment.

Citi enters into these arrangements for a variety of business purposes. The securitization arrangements offer investors access to specific cash flows and risks created through the securitization process. The securitization arrangements also assist Citi and Citi’s customers in monetizing their financial assets at more favorable rates than Citi or the customers could otherwise obtain.

The table below shows where a discussion of Citi’s various off-balance-sheet arrangements may be found in this Form 10-K. In addition, see “Significant Accounting Policies and Significant Estimates—Securitizations” below as well as Notes 1, 22 and 27 to the Consolidated Financial Statements.

Types of Off-Balance-Sheet Arrangements Disclosures in this Form 10-K



Variable interests and other obligations, including contingent obligations, arising from variable interests in nonconsolidated VIEs	See Note 22 to the Consolidated Financial Statements.
Leases, letters of credit, and lending and other commitments	See Note 27 to the Consolidated Financial Statements.
Guarantees	See Note 27 to the Consolidated Financial Statements.

Overview

Capital is used principally to support assets in Citi’s businesses and to absorb credit, market and operational losses. Citi primarily generates capital through earnings from its operating businesses. Citi may augment its capital through issuances of common stock, perpetual preferred stock and equity issued through awards under employee benefit plans, among other issuances. During 2013, Citi issued approximately $4.3 billion of noncumulative perpetual preferred stock, resulting in a total of approximately $6.7 billion outstanding as of December 31, 2013.

Citi has also previously augmented its regulatory capital through the issuance of trust preferred securities, although the treatment of such instruments as regulatory capital will largely be phased out under the final U.S. Basel III rules (Final Basel III Rules) (see “Regulatory Capital Standards Developments” below). Accordingly, Citi has continued to redeem certain of its trust preferred securities in contemplation of such future phase out (see “Managing Global Risk—Market Risk—Funding and Liquidity—Long-Term Debt” below).

Further, changes in regulatory and accounting standards as well as the impact of future events on Citi’s business results, such as corporate and asset dispositions, may also affect Citi’s capital levels.

Citigroup’s capital management framework is designed to ensure that Citigroup and its principal subsidiaries maintain sufficient capital consistent with each entity’s respective risk profile and all applicable regulatory standards and guidelines. Citi assesses its capital adequacy against a series of internal quantitative capital goals, designed to evaluate the Company’s capital levels in expected and stressed economic environments. Underlying these internal quantitative capital goals are strategic capital considerations, centered on preserving and building financial strength. Senior management, with oversight from the Board of Directors, is responsible for the capital assessment and planning process, which is integrated into Citi’s capital plan, as part of the Federal Reserve Board’s Comprehensive Capital Analysis and Review (CCAR) process. Implementation of the capital plan is carried out mainly through Citigroup’s Asset and Liability Committee, with oversight from the Risk Management and Finance Committee of Citigroup’s Board of Directors. Asset and liability committees are also established globally and for each significant legal entity, region, country and/or major line of business.

Current Regulatory Capital Guidelines

Citigroup Capital Resources Under Current Regulatory Guidelines

Citigroup is subject to the risk-based capital guidelines issued by the Federal Reserve Board which currently constitute the Basel I credit risk capital rules and also the final (revised) market risk capital rules (Basel II.5). Commencing with 2014, Citi’s regulatory capital ratios will reflect, in part, the implementation of certain aspects of the Final Basel III Rules, such as those related to the transitioning toward qualifying capital components, including the application of regulatory capital adjustments and deductions. In addition, effective with the second quarter of 2014, Citi will begin applying the Basel III Advanced Approaches rules. For additional information regarding the implementation of the Final Basel III Rules, see “Regulatory Capital Standards Developments” below.

Historically, capital adequacy has been measured, in part, based on two risk-based capital ratios, the Tier 1 Capital and Total Capital (Tier 1 Capital + Tier 2 Capital) ratios. Tier 1 Capital consists of the sum of “core capital elements,” such as qualifying common stockholders’ equity, as adjusted, qualifying perpetual preferred stock, qualifying noncontrolling interests, and qualifying trust preferred securities, principally reduced by goodwill, other disallowed intangible assets, and disallowed deferred tax assets. Total Capital also includes “supplementary” Tier 2 Capital elements, such as qualifying subordinated debt and a limited portion of the allowance for credit losses. Both measures of capital adequacy are stated as a percentage of risk-weighted assets.

In 2009, the U.S. banking regulators developed a supervisory measure of capital termed “Tier 1 Common,” which is defined as Tier 1 Capital less non-common elements, including qualifying perpetual preferred stock, qualifying noncontrolling interests, and qualifying trust preferred securities. Until January 1, 2015, the Federal Reserve Board has retained this definition of Tier 1 Common Capital for CCAR purposes, which differs substantially from the more restrictive definition under the Final Basel III Rules. Moreover, the presentation of Tier 1 Common Capital and related ratio in the tables that follow, labeled “Current Regulatory Guidelines”, are also consistent in derivation with this supervisory definition.

Citigroup’s risk-weighted assets are principally derived from application of the risk-based capital guidelines related to the measurement of credit risk. Pursuant to these guidelines, on balance sheet assets and the credit equivalent amount of certain off-balance-sheet exposures (such as financial guarantees, unfunded lending commitments, letters of credit and derivatives) are assigned to one of several prescribed risk-weight categories based upon the perceived credit risk associated with the obligor or, if relevant, the guarantor, the nature of the collateral, or external credit ratings. Risk-weighted assets also incorporate a measure for market risk on covered trading account positions and foreign exchange and commodity positions whether or not carried in the trading account. Excluded from risk-weighted assets are any assets, such as goodwill and deferred tax assets, to the extent required to be deducted from regulatory capital.

Citigroup is also subject to a Leverage ratio requirement, a non-risk-based measure of capital adequacy, which is defined as Tier 1 Capital as a percentage of quarterly adjusted average total assets.

To be “well capitalized” under current federal bank regulatory agency definitions, a bank holding company must have a Tier 1 Capital ratio of at least 6%, a Total Capital ratio of at least 10%, and not be subject to a Federal Reserve Board directive to maintain higher capital levels. In addition, the Federal Reserve Board currently expects bank holding companies to maintain a minimum Leverage ratio of 3% or 4%, depending on factors specified in its regulations.

Citigroup Capital Ratios Under Current Regulatory Guidelines



	Dec. 31, 2013⁽¹⁾		Dec. 31, 2012⁽²⁾
Tier 1 Common	12.64	%	12.67	%
Tier 1 Capital	13.68		14.06
Total Capital (Tier 1 Capital + Tier 2 Capital)	16.65		17.26
Leverage	8.21		7.48


(1)	Risk-weighted assets for purposes of the Tier 1 Common, Tier 1 Capital and Total Capital ratios are calculated based on Basel I credit risk capital rules and final (revised) market risk capital rules (Basel II.5) effective on January 1, 2013.


(2)	Risk-weighted assets for purposes of the Tier 1 Common, Tier 1 Capital and Total Capital ratios are calculated based on Basel I credit risk and market risk capital rules.

As indicated in the table above, Citigroup was “well capitalized” under current federal bank regulatory agency definitions as of December 31, 2013 and December 31, 2012.



In millions of dollars	December 31, 2013			December 31, 2012
Tier 1 Common Capital
Citigroup common stockholders’ equity ⁽¹⁾	$	197,694		$	186,487
Regulatory Capital Adjustments and Deductions:
Less: Net unrealized gains (losses) on securities AFS, net of tax ⁽²⁾⁽³⁾	(1,724		)	597
Less: Accumulated net unrealized losses on cash flow hedges, net of tax ⁽⁴⁾	(1,245		)	(2,293		)
Less: Defined benefit plans liability adjustment, net of tax ⁽⁵⁾	(3,989		)	(5,270		)
Less: Cumulative effect included in fair value of financial liabilities attributable to the change in own creditworthiness, net of tax ⁽⁶⁾	(224		)	18
Less: Disallowed deferred tax assets ⁽⁷⁾	39,384			41,800
Less: Intangible assets:
Goodwill, net of related deferred tax liability (DTL)	23,362			24,170
Other disallowed intangible assets, net of related DTL	3,625			3,868
Less: Net unrealized losses on AFS equity securities, net of tax ⁽²⁾	66			—
Other	(369		)	(502		)
Total Tier 1 Common Capital	$	138,070		$	123,095
Tier 1 Capital
Qualifying perpetual preferred stock ⁽¹⁾	$	6,645		$	2,562
Qualifying trust preferred securities	3,858			9,983
Qualifying noncontrolling interests	871			892
Total Tier 1 Capital	$	149,444		$	136,532
Tier 2 Capital
Allowance for credit losses ⁽⁸⁾	$	13,756		$	12,330
Qualifying subordinated debt ⁽⁹⁾	18,758			18,689
Net unrealized pretax gains on AFS equity securities ⁽²⁾	—			135
Total Tier 2 Capital	$	32,514		$	31,154
Total Capital (Tier 1 Capital + Tier 2 Capital)	$	181,958		$	167,686

Citigroup Risk-Weighted Assets
In millions of dollars	December 31, 2013 ⁽¹¹⁾			December 31, 2012 ⁽¹²⁾
Credit Risk-Weighted Assets ⁽¹⁰⁾	$	963,949		$	929,722
Market Risk-Weighted Assets	128,758			41,531
Total Risk-Weighted Assets	$	1,092,707		$	971,253



In millions of dollars	Three Months Ended December 31, 2013			Twelve Months Ended December 31, 2013
Tier 1 Common Capital
Balance, beginning of period	$	135,540		$	123,095
Net income	2,456			13,673
Dividends declared	(100		)	(314		)
Net increase in treasury stock	(186		)	(811		)
Net increase in additional paid-in capital⁽¹⁾⁽²⁾	197			895
Net decrease in foreign currency translation adjustment included in accumulated other comprehensive income, net of tax	(391		)	(2,245		)
Net decrease in cumulative effect included in fair value of financial liabilities attributable to the change in own creditworthiness, net of tax	86			242
Net decrease in disallowed deferred tax assets	426			2,416
Net decrease in goodwill and other disallowed intangible assets, net of related DTL	65			1,051
Net increase in net unrealized losses on AFS equity securities, net of tax	(66		)	(66		)
Other	43			134
Net increase in Tier 1 Common Capital	$	2,530		$	14,975
Balance, end of period	$	138,070		$	138,070
Tier 1 Capital
Balance, beginning of period	$	145,791		$	136,532
Net increase in Tier 1 Common Capital	2,530			14,975
Net decrease in qualifying trust preferred securities	(363		)	(6,125		)
Net increase in qualifying perpetual preferred stock⁽²⁾	1,461			4,083
Net change in qualifying noncontrolling interests	25			(21		)
Net increase in Tier 1 Capital	$	3,653		$	12,912
Balance, end of period	$	149,444		$	149,444
Tier 2 Capital
Balance, beginning of period	$	32,550		$	31,154
Net increase in allowance for credit losses eligible for inclusion in Tier 2 Capital⁽³⁾	277			1,426
Net change in qualifying subordinated debt	(312		)	69
Net decrease in net unrealized pretax gains on AFS equity securities eligible for inclusion in Tier 2 Capital	(1		)	(135		)
Net change in Tier 2 Capital	$	(36	)	$	1,360
Balance, end of period	$	32,514		$	32,514
Total Capital (Tier 1 Capital + Tier 2 Capital)	$	181,958		$	181,958

Capital Resources of Citigroup’s Subsidiary U.S. Depository Institutions Under Current Regulatory Guidelines

Citigroup’s subsidiary U.S. depository institutions are also subject to risk-based capital guidelines issued by their respective primary federal bank regulatory agencies, which are similar to the guidelines of the Federal Reserve Board. The following table sets forth the capital tiers, risk-weighted assets, quarterly adjusted average total assets and capital ratios under current regulatory guidelines for Citibank, N.A., Citi’s primary subsidiary U.S. depository institution, as of December 31, 2013 and December 31, 2012.



In millions of dollars, except ratios	Dec. 31, 2013⁽¹⁾			Dec. 31, 2012⁽²⁾
Tier 1 Common Capital	$	121,713		$	116,633
Tier 1 Capital	122,450			117,367
Total Capital
(Tier 1 Capital + Tier 2 Capital)	141,341			135,513
Risk-Weighted Assets	905,836			825,976
Quarterly Adjusted Average Total Assets ⁽³⁾	1,317,673			1,308,406
Tier 1 Common ratio	13.44		%	14.12		%
Tier 1 Capital ratio	13.52			14.21
Total Capital ratio	15.60			16.41
Leverage ratio	9.29			8.97

(1) Risk-weighted assets for purposes of the Tier 1 Common, Tier 1 Capital and Total Capital ratios are calculated based on Basel I credit risk capital rules and final (revised) market risk capital rules (Basel II.5) effective on January 1, 2013.


(2)	Risk-weighted assets for purposes of the Tier 1 Common, Tier 1 Capital and Total Capital ratios are calculated based on Basel I credit risk and market risk capital rules.


(3)	Represents the Leverage ratio denominator.

Citigroup Broker-Dealer Subsidiaries

At December 31, 2013, Citigroup Global Markets Inc., a U.S. broker-dealer registered with the SEC that is an indirect wholly owned subsidiary of Citigroup, had net capital, computed in accordance with the SEC’s net capital rule, of $5.4 billion, which exceeded the minimum requirement by $4.5 billion.

In addition, certain of Citi’s other broker-dealer subsidiaries are subject to regulation in the countries in which they do business, including requirements to maintain specified levels of net capital or its equivalent. Citigroup’s other broker-dealer subsidiaries were in compliance with their capital requirements at December 31, 2013.

Basel III

For additional information on Citi’s estimated Basel III ratios, see “Risk Factors—Regulatory Risks” below.

Tier 1 Common Ratio

Citi’s estimated Basel III Tier 1 Common ratio was 10.6% at December 31, 2013, compared to 10.5% at September 30, 2013 and 8.7% at December 31, 2012 (all based on the “Advanced Approaches” for determining total risk-weighted assets).

The marginal increase quarter-over-quarter in Citi’s estimated Basel III Tier 1 Common ratio reflected continued growth in Tier 1 Common Capital resulting from quarterly net income and further DTA utilization of approximately $700 million (see “Significant Accounting Policies and Significant Estimates—Income Taxes” below), the effect of which was largely offset by higher risk-weighted assets, principally driven by an increase in estimated operational risk-weighted assets. Citi increased its estimate of operational risk-weighted assets during the fourth quarter due to an ongoing review, refinement and enhancement of its Basel III models, as well as in consideration of the evolving regulatory and litigation environment within the banking industry.

The significant year-over-year increase in Citi’s estimated Basel III Tier 1 Common ratio was primarily due to net income and other improvements to Tier 1 Common Capital, including a sizable reduction in Citi’s minority investments principally resulting from the sale of Citi’s remaining interest in the MSSB joint venture as well as approximately $2.5 billion utilization of DTAs, which was partially offset by additional net losses in AOCI and, to a lesser extent, share repurchases and dividends.

On February 21, 2014, the Federal Reserve Board announced that Citi was approved to exit the “parallel run” period regarding the application of the Basel III Advanced Approaches in the calculation of risk-weighted assets, effective for the second quarter of 2014. One of the stipulations for such approval is that Citi further increase its estimated operational risk-weighted assets to $288 billion from $232 billion as of December 31, 2013, reflecting ongoing developments regarding the overall banking industry operating environment. The pro forma impact of the required higher operational risk-weighted assets would have been a decrease of approximately 50 basis points in Citi’s estimated Basel III Tier 1 Common ratio at December 31, 2013 to approximately 10.1%. For additional information regarding the parallel run period applicable to the Advanced Approaches under the Final Basel III Rules, see “Regulatory Capital Standards Developments—Risk-Based Capital Ratios” below.



In millions of dollars	December 31, 2013⁽¹⁾			December 31, 2012⁽²⁾
Tier 1 Common Capital
Citigroup common stockholders’ equity⁽³⁾	$	197,694		$	186,487
Add: Qualifying noncontrolling interests	182			171
Regulatory Capital Adjustments and Deductions:
Less: Accumulated net unrealized losses on cash flow hedges, net of tax⁽⁴⁾	(1,245		)	(2,293		)
Less: Cumulative change in fair value of financial liabilities attributable to the change in own creditworthiness, net of tax ⁽⁵⁾	177			587
Less: Intangible assets:
Goodwill net of related DTL ⁽⁶⁾	24,518			25,488
Identifiable intangible assets other than mortgage servicing rights (MSRs), net of related DTL	4,950			5,632
Less: Defined benefit pension plan net assets	1,125			732
Less: Deferred tax assets (DTAs) arising from net operating loss, foreign tax credit and general business credit carry-forwards ⁽⁷⁾	26,439			28,800
Less: Excess over 10%/15% limitations for other DTAs, certain common stock investments, and MSRs ⁽⁷⁾⁽⁸⁾	16,315			22,316
Total Tier 1 Common Capital	$	125,597		$	105,396
Additional Tier 1 Capital
Qualifying perpetual preferred stock ⁽³⁾	$	6,645		$	2,562
Qualifying trust preferred securities ⁽⁹⁾	1,374			1,377
Qualifying noncontrolling interests	39			37
Regulatory Capital Deduction:
Less: Minimum regulatory capital requirements of insurance underwriting subsidiaries⁽¹⁰⁾	243			247
Total Tier 1 Capital	$	133,412		$	109,125
Tier 2 Capital
Qualifying subordinated debt	$	14,414		$	13,947
Qualifying trust preferred securities	745			2,582
Qualifying noncontrolling interests	52			49
Regulatory Capital Adjustment and Deduction:
Add: Excess of eligible credit reserves over expected credit losses⁽¹¹⁾	1,669			5,115
Less: Minimum regulatory capital requirements of insurance underwriting subsidiaries⁽¹⁰⁾	243			247
Total Tier 2 Capital	$	16,637		$	21,446
Total Capital (Tier 1 Capital + Tier 2 Capital)⁽¹²⁾	$	150,049		$	130,571



In millions of dollars	Three Months Ended December 31, 2013			Twelve Months Ended December 31, 2013
Tier 1 Common Capital
Balance, beginning of period	$	121,691		$	105,396
Net income	2,456			13,673
Dividends declared	(100		)	(314		)
Net increase in treasury stock	(186		)	(811		)
Net change in additional paid-in capital⁽¹⁾⁽²⁾	197			895
Net change in accumulated other comprehensive losses, net of tax	(335		)	(2,237		)
Net change in accumulated net unrealized losses on cash flow hedges, net of tax⁽³⁾	(96		)	(1,048		)
Net decrease in cumulative change in fair value of financial liabilities attributable to the change in own creditworthiness, net of tax	162			410
Net decrease in goodwill, net of related DTL ⁽⁴⁾	203			970
Net decrease in other intangible assets other than mortgage servicing rights (MSRs), net of related DTL	16			682
Net increase in defined benefit pension plan net assets	(171		)	(393		)
Net decrease in deferred tax assets (DTAs) arising from net operating loss, foreign tax credit and general business credit carryforwards	1,535			2,361
Net change in excess over 10%/15% limitations for other DTAs, certain common stock investments and MSRs ⁽⁵⁾	215			6,001
Other	10			12
Net increase in Tier 1 Common Capital	$	3,906		$	20,201
Balance, end of period	$	125,597		$	125,597
Tier 1 Capital
Balance, beginning of period	$	128,054		$	109,125
Net increase in Tier 1 Common Capital	3,906			20,201
Net increase in qualifying perpetual preferred stock⁽²⁾	1,461			4,083
Net decrease in qualifying trust preferred securities	(2		)	(3		)
Other	(7		)	6
Net increase in Tier 1 Capital	$	5,358		$	24,287
Balance, end of period	$	133,412		$	133,412
Tier 2 Capital
Balance, beginning of period	$	17,990		$	21,446
Net change in qualifying subordinated debt	(349		)	467
Net change in qualifying trust preferred securities	—			(1,837		)
Net change in excess of eligible credit reserves over expected credit losses	(998		)	(3,446		)
Other	(6		)	7
Net decrease in Tier 2 Capital	$	(1,353	)	$	(4,809	)
Balance, end of period	$	16,637		$	16,637
Total Capital (Tier 1 Capital + Tier 2 Capital)	$	150,049		$	150,049

Supplementary Leverage Ratio

Citigroup’s estimated Basel III Supplementary Leverage ratio was 5.4% for the fourth quarter of 2013, compared to an estimated 5.1% for the third quarter.The quarter-over-quarter ratio improvement was primarily due to an increase in Tier 1 Capital arising largely from quarterly net income, as well as a decrease in Total Leverage Exposure substantially resulting from lower on-balance-sheet assets.

The Supplementary Leverage ratio represents the average for the quarter of the three monthly ratios of Tier 1 Capital to Total Leverage Exposure (i.e., the sum of the ratios calculated for October, November and December, divided by three). Total Leverage Exposure is the sum of: (i) the carrying value of all on-balance-sheet assets less applicable Tier 1 Capital deductions; (ii) the potential future exposure on derivative contracts; (iii) 10% of the notional amount of unconditionally cancellable commitments; and (iv) the full notional amount of certain other off-balance sheet exposures (e.g., other commitments and contingencies).

Citi’s estimated Basel III Tier 1 Common ratio and estimated Basel III Supplementary Leverage ratio and certain related components are non-GAAP financial measures. Citigroup believes these ratios and their components provide useful information to investors and others by measuring Citigroup’s progress against future regulatory capital standards.

Regulatory Capital Standards Developments

Basel II.5

In June 2012, the U.S. banking agencies released final (revised) market risk capital rules (Basel II.5), which became effective on January 1, 2013. Subsequently, in December 2013, the Federal Reserve Board amended Basel II.5 by conforming such rules to certain elements of the Final Basel III Rules, as well as incorporating additional clarifications. These Basel II.5 revisions have not had a material impact on the measurement of Citi’s market risk-weighted assets.

Separately, in October 2013, the Basel Committee on Banking Supervision (Basel Committee) issued a new proposal with respect to its ongoing review of regulatory capital standards applicable to the trading book of banking organizations. The proposal, which is more definitive than the initial version published in May 2012, would significantly revise the current market risk capital framework, as well as address previously known shortcomings in the Basel II.5 rules. Among the more significant of the proposed revisions are those related to (i) strengthening and clarifying the boundary between trading book and banking book positions; (ii) incorporating certain modifications to the standardized approach to the calculation of risk-weighted assets; (iii) redesigning internal regulatory capital models; and (iv) expanding the scope and granularity of public disclosures. The Basel Committee has also initiated, in parallel, a quantitative impact study in an effort to assess the implications arising from the proposal. Timing as to finalization of the Basel Committee proposal, and the potential future impact on U.S. banking organizations, such as Citi, are uncertain.

Basel III

Overview

In July 2013, the U.S. banking agencies released the Final Basel III Rules, which comprehensively revise the regulatory capital framework for substantially all U.S. banking organizations and incorporate relevant provisions of the Dodd-Frank Act.

The Final Basel III Rules raise the quantity and quality of regulatory capital by formally introducing not only Tier 1 Common Capital and mandating it be the predominant form of regulatory capital, but also by narrowing the definition of qualifying capital elements at all three regulatory capital tiers (i.e., Tier 1 Common Capital, Additional Tier 1 Capital, and Tier 2 Capital) as well as imposing broader and more constraining regulatory capital adjustments and deductions. Moreover, these rules establish both a fixed and a discretionary capital buffer, which would be available to absorb losses in advance of any potential impairment of regulatory capital below the stated minimum risk-based capital ratio requirements.

For so-called “Advanced Approaches” banking organizations (generally those with consolidated total assets of at least $250 billion or consolidated total on-balance-sheet foreign exposures of at least $10 billion), which includes Citi and Citibank, N.A., the Final Basel III Rules are required to be adopted effective January 1, 2014, with the exception of the “Standardized Approach” for deriving risk-weighted assets, which becomes effective January 1, 2015. However, in order to minimize the effect of adopting these new requirements on U.S. banking organizations and consequently potentially also global economies, the Final Basel III Rules contain several differing, largely multi-year transition provisions (i.e., “phase-ins” and “phase-outs”) with respect to the stated minimum Tier 1 Common and Tier 1 Capital ratio requirements, substantially all regulatory adjustments and deductions, non-qualifying Tier 1 and Tier 2 Capital instruments (such as trust preferred securities), and the capital buffers. All of these transition provisions, with the exception of the phase-out of non-qualifying trust preferred securities from Tier 2 Capital, will be fully implemented by January 1, 2019 (i.e., hereinafter “fully phased-in”).

Risk-Based Capital Ratios

Under the Final Basel III Rules, when fully phased in by January 1, 2019, Citi will be required to maintain stated minimum Tier 1 Common, Tier 1 Capital and Total Capital ratios of 4.5%, 6% and 8%, respectively, and will be subject to substantially higher effective minimum ratio requirements due to the imposition of an additional 2.5% Capital Conservation Buffer and a surcharge of at least 2% as a global systemically important bank (G-SIB). Accordingly, Citi currently anticipates that its effective minimum Tier 1 Common, Tier 1 Capital and Total Capital ratio requirements as of January 1, 2019 will be at least 9%, 10.5% and 12.5%, respectively.

Further, the Final Basel III Rules implement the “capital floor provision” of the so-called “Collins Amendment” of the Dodd-Frank Act. This provision requires Advanced Approaches banking organizations to calculate each of the

three risk-based capital ratios under both the Standardized Approach starting on January 1, 2015 (or, for 2014, prior to the effective date of the Standardized Approach, the existing Basel I and Basel II.5 capital rules) and the Advanced Approaches and publicly report the lower (most conservative) of each of the resulting capital ratios. The Standardized Approach and the Advanced Approaches primarily differ in the composition and calculation of total risk-weighted assets, as well as in the definition of Total Capital.

Advanced Approaches banking organizations such as Citi and Citibank, N.A. are required, however, to participate in, and must receive Federal Reserve Board and OCC approval to exit a parallel run period with respect to the calculation of Advanced Approaches risk-weighted assets prior to being able to comply with the capital floor provision of the Collins Amendment. During such period, the publicly reported ratios of Advanced Approaches banking organizations (and the ratios against which compliance with the regulatory capital framework is to be measured) would consist of only those risk-based capital ratios calculated under the Basel I and Basel II.5 capital rules (or, after January 1, 2015, under the Standardized Approach). During the parallel run period, Advanced Approaches banking organizations are required to report their risk-based capital ratios under the Advanced Approaches only to their primary federal banking regulator, which for Citi is the Federal Reserve Board. Upon exiting parallel run, an Advanced Approaches banking organization would then be required to publicly report (and would be measured for compliance against) the lower of each of the risk-based capital ratios calculated under the capital floor provision of the Collins Amendment, as set forth above.

On February 21, 2014, the Federal Reserve Board and OCC granted permission for Citi and Citibank, N.A., respectively, to exit the parallel run period and to begin applying the Advanced Approaches framework in the calculation and public reporting of risk-based capital ratios, effective with the second quarter of 2014. Such approval is subject to Citi’s satisfactory compliance with certain commitments regarding the implementation of the Advanced Approaches rule, as well as general ongoing qualification requirements.

Capital Buffers

The Final Basel III Rules establish a 2.5% Capital Conservation Buffer applicable to substantially all U.S. banking organizations and, for Advanced Approaches banking organizations, a potential additional Countercyclical Capital Buffer of up to 2.5%. An Advanced Approaches banking organization’s Countercyclical Capital Buffer would be derived based upon the weighted average of the Countercyclical Capital Buffer requirements, if any, in those national jurisdictions in which the banking organization has private sector credit exposures. Moreover, the Countercyclical Capital Buffer would be invoked upon a determination by the U.S. banking agencies that the market is experiencing excessive aggregate credit growth, and would be an extension of the Capital Conservation Buffer (i.e., an aggregate combined buffer of potentially between 2.5% and 5%). While Advanced Approaches banking organizations may draw on the

Capital Conservation Buffer and, if invoked, the Countercyclical Capital Buffer, to absorb losses during periods of financial or economic stress, restrictions on earnings distributions (e.g., dividends, equity repurchases, and discretionary executive bonuses) would result, with the degree of such restrictions greater based upon the extent to which the buffer is drawn upon.

Under the Final Basel III Rules, the Capital Conservation Buffer for Advanced Approaches banking organizations, as well as the Countercyclical Capital Buffer, if invoked, must be calculated in accordance with the Collins Amendment, and thus be based on a comparison of each of the three reportable risk-based capital ratios as determined under both the Advanced Approaches and the Standardized Approach (or, for 2014, the existing Basel I and Basel II.5 capital rules) and the stated minimum required ratios for each (i.e., 4.5% Tier 1 Common, 6% Tier 1 Capital and 8% Total Capital), with the reportable Capital Conservation Buffer (and, if applicable, also the Countercyclical Capital Buffer) being the smallest of the three differences. Both of these buffers, which are to be comprised entirely of Tier 1 Common Capital, are to be phased in incrementally from January 1, 2016 through January 1, 2019.

G-SIB Surcharge

In July 2013, the Basel Committee issued an update of its G-SIB framework, incorporating a number of revisions relative to the original rules published in November 2011. Among the revisions are selected refinements to the methodology for assessing global systemic importance, clarifications related to the imposition of additional Tier 1 Common Capital surcharges, and certain public disclosure requirements.

Under the Basel Committee rules, the methodology for assessing G-SIBs is based primarily on quantitative measurement indicators underlying five equally weighted broad categories of systemic importance: (i) size; (ii) global (cross-jurisdictional) activity; (iii) interconnectedness; (iv) substitutability/financial institution infrastructure; and (v) complexity. With the exception of size, each of the other categories are comprised of multiple indicators also of equal weight, and amounting to 12 in total. The initial G-SIB surcharge, which is to be comprised entirely of Tier 1 Common Capital, ranges from 1% to 2.5% of risk-weighted assets. Moreover, under the Basel Committee’s rules, the G-SIB surcharge will be introduced in parallel with the Basel III Capital Conservation Buffer and, if applicable, any Countercyclical Capital Buffer, commencing phase-in on January 1, 2016 and becoming fully effective on January 1, 2019.

Separately, the Final Basel III Rules do not address G-SIBs. Nonetheless, the Federal Reserve Board is required by the Dodd-Frank Act to issue rules establishing a quantitative risk-based capital surcharge for financial institutions deemed to be systemically important and posing risk to market-wide financial stability, such as Citi, and the Federal Reserve Board has indicated that it intends for these rules to be consistent with the Basel Committee’s G-SIB rules. Although no such rules have yet been proposed by the Federal Reserve Board,

Citi anticipates that it will likely be subject to at least a 2% initial additional Tier 1 Common Capital surcharge.

Regulatory Capital Adjustments and Deductions

Substantially all of the regulatory capital adjustments and deductions required under the Final Basel III Rules are to be applied in arriving at Tier 1 Common Capital.

Assets required to be fully deducted from Tier 1 Common Capital include, in part, goodwill (both standalone and embedded) and identifiable intangible assets (other than MSRs), net assets of certain defined benefit pension plans, and DTAs arising from tax credit and net operating loss carry-forwards. Additionally, DTAs arising from temporary differences, significant investments in the common stock of unconsolidated financial institutions, and MSRs are subject to potential partial deduction under the so-called “threshold deductions” (i.e., the portions of these assets that individually and, in the aggregate, initially exceed 10% and subsequently collectively exceed 15%, respectively, of adjusted Tier 1 Common Capital). Furthermore, any assets required to be deducted from regulatory capital are also excluded from risk-weighted assets, as well as adjusted average total assets and Total Leverage Exposure for leverage ratio purposes.

The Final Basel III Rules also require that principally all of the components of AOCI be fully reflected in Tier 1 Common Capital, including net unrealized gains and losses on all AFS securities and adjustments to defined benefit plan liabilities. Conversely, the rules permit the exclusion of net gains and losses on cash flow hedges included in AOCI related to the hedging of items not recognized at fair value on a banking organization’s balance sheet. Moreover, an Advanced Approaches banking organization must adjust its Tier 1 Common Capital for the cumulative change in the fair value of financial liabilities attributable to the change in the banking organization’s own creditworthiness. Apart from Tier 1 Common Capital effects, the minimum regulatory capital requirements of insurance underwriting subsidiaries are required to be deducted equally from both Additional Tier 1 Capital and Tier 2 Capital.

The impact of these regulatory capital adjustments and deductions, with the exception of goodwill, which is required to be deducted in full commencing January 1, 2014, are generally to be phased in incrementally at 20% annually beginning on January 1, 2014, with full implementation by January 1, 2018.

Non-Qualifying Trust Preferred Securities

As for non-qualifying capital instruments, the Final Basel III Rules require that Advanced Approaches banking organizations phase-out from Tier 1 Capital trust preferred securities issued prior to May 19, 2010 by January 1, 2016 (other than certain grandfathered trust preferred securities), with 50% of these non-qualifying capital instruments includable in Tier 1 Capital in 2014 and 25% includable in 2015. The carrying value of trust preferred securities excluded from Tier 1 Capital may be included in full in Tier 2 Capital during those two years (i.e., 50% and 75% in 2014 and 2015, respectively), but must be phased out of Tier 2 Capital by January 1, 2022 (declining in 10% annual increments starting

at 60% in 2016). Moreover, under the Final Basel III Rules, any nonconforming Tier 2 Capital instruments issued prior to May 19, 2010 will also be required to be phased out by January 1, 2016, with issuances after May 19, 2010 required to be excluded entirely from Tier 2 Capital as of January 1, 2014.

Standardized Approach Risk-Weighted Assets

The Standardized Approach for determining risk-weighted assets is applicable to substantially all U.S. banking organizations, including Citi and Citibank, N.A. and, as of January 1, 2015, will replace the existing regulatory capital rules governing the calculation of risk-weighted assets. Although the mechanics of calculating risk-weighted assets remains largely unchanged from Basel I, the Standardized Approach incorporates heightened risk sensitivity for calculating risk-weighted assets for certain on-balance-sheet assets and off-balance-sheet exposures, including those to foreign sovereign governments and banks, corporate and securitization exposures, and counterparty credit risk on derivative contracts. Total risk-weighted assets under the Standardized Approach exclude risk-weighted assets arising from operational risk, require more limited approaches in measuring risk-weighted assets for securitization exposures, and apply the standardized risk weights to arrive at credit risk-weighted assets. As required under the Dodd-Frank Act, the Standardized Approach relies on alternatives to external credit ratings in the treatment of certain exposures.

Advanced Approaches Risk-Weighted Assets

The Advanced Approaches for determining risk-weighted assets amends the U.S. Basel II capital guidelines for calculating risk-weighted assets. Total risk-weighted assets under the Advanced Approaches would include not only Advanced Approaches in calculating credit and operational risk-weighted assets, but also market risk-weighted assets. Primary among the Basel II modifications are those related to the treatment of counterparty credit risk, as well as substantial revisions to the securitization exposure framework. As with the Standardized Approach, and as mandated by the Dodd-Frank Act, all references to, and reliance on, external credit ratings in deriving risk-weighted assets for various types of exposures are removed.

Leverage Ratios

Under the Final Basel III Rules, Advanced Approaches banking organizations are also required to calculate two leverage ratios, a “Tier 1” Leverage ratio and a “Supplementary” Leverage ratio. The Tier 1 Leverage ratio is a modified version of the current U.S. Leverage ratio and reflects the more restrictive Basel III definition of Tier 1 Capital in the numerator, but with the same current denominator consisting of average total assets less amounts deducted from Tier 1 Capital. The Supplementary Leverage ratio significantly differs from the Tier 1 Leverage ratio by also including certain off-balance-sheet exposures within the denominator of the ratio. Citi, as with substantially all U.S. banking organizations, will be required to maintain a minimum Tier 1 Leverage ratio of 4% effective January 1, 2014. Advanced Approaches banking organizations will be

required to maintain a stated minimum Supplementary Leverage ratio of 3% commencing on January 1, 2018, but must commence publicly disclosing this ratio on January 1, 2015.

In July 2013, subsequent to the release of the Final Basel III Rules, the U.S. banking agencies also issued a notice of proposed rulemaking which would amend the Final Basel III Rules to impose on the eight largest U.S. bank holding companies (currently identified as G-SIBs by the Financial Stability Board, which includes Citi) a 2% leverage buffer in addition to the stated 3% minimum Supplementary Leverage ratio requirement. The leverage buffer would operate in a manner similar to that of the Capital Conservation Buffer, such that if a banking organization failed to exceed the 2% requirement it would be subject to increasingly onerous restrictions (depending upon the extent of the shortfall) regarding capital distributions and discretionary executive bonus payments. Accordingly, the proposal would effectively raise the Supplementary Leverage ratio requirement to 5%. Additionally, the proposed rules would require that insured depository institution subsidiaries of these bank holding companies, such as Citibank, N.A., maintain a minimum Supplementary Leverage ratio of 6% to be considered “well capitalized” under the revised prompt corrective action framework established by the Final Basel III Rules. If adopted as proposed, Citi and Citibank, N.A. would need to be compliant with these higher effective minimum ratio requirements on January 1, 2018.

Separately, in January 2014, the Basel Committee adopted revisions which substantially modify its original rules in relation to the measurement of exposures for derivatives, securities financing transactions (SFTs), and most off-balance-sheet commitments and contingencies, all of which are included in the denominator of the Basel III Leverage ratio (the equivalent of the U.S. Supplementary Leverage ratio). Under the revised rules, banking organizations will be permitted limited netting of SFTs with the same counterparty and allowed to apply cash variation margin to reduce derivative exposures, both of which are subject to certain specific conditions, as well as cap written credit derivative exposures. Moreover, the credit conversion factors to be applied to certain off-balance-sheet exposures have been reduced from 100% to those applicable under the Basel III Standardized Approach for determining credit risk-weighted assets. The Basel Committee will also continue to monitor banking organizations’ Basel III Leverage ratios on a semiannual basis in order to assess whether any further revisions, including the calibration of the ratio, are deemed necessary prior to the incorporation of any final adjustments by January 1, 2017. Accordingly, the U.S. banking agencies may further revise the Supplementary Leverage ratio in the future based upon the current and any further revisions adopted by the Basel Committee.

Prompt Corrective Action Framework

The Final Basel III Rules revise the Prompt Corrective Action (PCA) regulations in certain respects. In general, the PCA regulations direct the U.S. banking agencies to enforce increasingly strict limitations on the activities of insured depository institutions that fail to meet certain regulatory capital thresholds. The revised PCA framework contains five categories of capital adequacy as measured by risk-based capital and leverage ratios: (i) “well capitalized;” (ii) “adequately capitalized;” (iii) “undercapitalized;” (iv) “significantly undercapitalized;” and (v) “critically undercapitalized.”

Additionally, the U.S. banking agencies revised the PCA regulations to accommodate a new minimum Tier 1 Common ratio requirement for substantially all categories of capital adequacy (other than critically undercapitalized), increase the minimum Tier 1 Capital ratio requirement at each category, and introduce for Advanced Approaches insured depository institutions the Supplementary Leverage ratio as a metric, but only for the “adequately capitalized” and “undercapitalized” categories. These revisions will become effective on January 1, 2015, with the exception of the Supplementary Leverage ratio for Advanced Approaches insured depository institutions, for which January 1, 2018 is the effective date. Accordingly, beginning January 1, 2015, an insured depository institution, such as Citibank, N.A., would need minimum Tier 1 Common, Tier 1 Capital, Total Capital, and Tier 1 Leverage ratios of 6.5% (a new requirement), 8% (a 2% increase over the current requirement), 10%, and 5%, respectively, to be considered “well capitalized.”

Disclosure Requirements

The Final Basel III Rules formally establish extensive qualitative and quantitative public disclosure requirements for substantially all U.S. banking organizations, as well as additional disclosures specifically required of Advanced Approaches banking organizations. The required disclosures are intended to provide transparency with respect to such regulatory capital aspects as capital structure, capital adequacy, capital buffers, credit risk, securitizations, operational risk, equities and interest rate risk. Qualitative disclosures that typically remain unchanged each quarter may be disclosed annually, however, any significant changes must be provided in the interim. Alternatively, quantitative disclosures must be provided quarterly. An Advanced Approaches banking organization is required to comply with the Advanced Approaches disclosures after exiting parallel run, unless it has not exited by the first quarter of 2015, in which case an Advanced Approaches banking organization is required to provide the disclosures set forth under the Standardized Approach until parallel run has been exited.

RISK FACTORS

The following discussion sets forth what management currently believes could be the most significant regulatory, market and economic, liquidity, legal and business and operational risks and uncertainties that could impact Citi’s businesses, results of operations and financial condition. Other risk and uncertainties, including those not currently known to Citi or its management, could also negatively impact Citi’s businesses, results of operations and financial condition. Thus, the following should not be considered a complete discussion of all of the risks and uncertainties Citi may face.

REGULATORY RISKS

Citi Faces Ongoing Significant Regulatory Changes and Uncertainties in the U.S. and Non-U.S. Jurisdictions in Which It Operates That Negatively Impact the Management of Its Businesses, Increase Its Compliance Risks and Costs and Could Adversely Affect Its Results of Operations.

Citi continues to be subject to a significant number of regulatory changes and uncertainties both in the U.S. and the non-U.S. jurisdictions in which it operates. These changes and uncertainties emanate not only from financial crisis related reforms, including continued implementation of The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act) in the U.S., but also reform proposals by national financial authorities and international standard setting bodies (such as the Financial Stability Board) as well as individual jurisdictions. The complexities and uncertainties arising from the volume of regulatory changes or proposals, across numerous regulatory bodies and jurisdictions, is further compounded by what appears to be an accelerating urgency to complete reforms and, in some cases, to do so in a manner that is the most advantageous or protectionist to the proposing jurisdiction.

The complete scope and form of a number of regulatory initiatives are still being finalized and, even when finalized, will likely require significant interpretation and guidance. Moreover, the heightened regulatory environment has resulted not only in a tendency toward more regulation, but also in some cases toward the most prescriptive regulation as regulatory agencies have often taken a restrictive approach to rulemaking, interpretive guidance, approvals and their general ongoing supervisory or prudential authority. In addition, even when U.S. and international regulatory initiatives overlap, in many instances they have not been undertaken on a coordinated basis and areas of divergence have developed with respect to the scope, interpretation, timing, structure or approach, leading to additional, inconsistent or even conflicting regulations.

Ongoing regulatory changes and uncertainties make Citi’s business planning difficult and could require Citi to change its business models or even its organizational structure, all of which could ultimately negatively impact Citi’s strategy and results of operations as well as realization

of its deferred tax assets (DTAs). For example, regulators have proposed applying limits to certain concentrations of risk, such as through single counterparty credit limits, and implementation of such limits could require Citi to restructure client or counterparty relationships and could result in the potential loss of clients. Further, certain regulatory requirements could require Citi to create new subsidiaries in foreign jurisdictions instead of its current branches, create subsidiaries to conduct particular businesses or operations (so-called “subsidiarization”), or impose additional capital or other requirements on branches in certain jurisdictions. This could, among other things, negatively impact Citi’s global capital and liquidity management and overall cost structure. Unless and until there is sufficient regulatory certainty, Citi’s business planning and/or proposed pricing for affected businesses necessarily include assumptions based on possible or proposed rules, requirements or outcomes, any of which could impede Citi’s ability to conduct its businesses effectively or comply with final requirements in a timely manner.

Business planning is further complicated by management’s continual need to review and evaluate the impact on Citi’s businesses of ongoing rule proposals, final rules and implementation guidance from numerous regulatory bodies worldwide, within compressed timeframes. In some cases, management’s implementation of a regulatory requirement and assessment of its impact is occurring simultaneously with legal challenges or legislative action to modify or repeal final rules, thus increasing management uncertainty. Moreover, recent regulatory guidance has focused on the need for financial institutions to perform increased due diligence and ongoing monitoring of third party vendor relationships, thus increasing the scope of management involvement and decreasing the efficiency otherwise resulting from these relationships. Citi must also spend significant time and resources managing the increased compliance risks and costs associated with ongoing global regulatory reforms. Citi has established various financial targets for 2015, including efficiency and returns targets, as well as ongoing expense reduction initiatives. Ongoing regulatory changes and uncertainties require management to continually manage Citi’s expenses and potentially reallocate resources, including potentially away from ongoing business investment initiatives.

Given the significant number of regulatory reform initiatives and continued uncertainty, it is not possible to determine the ultimate impact to Citi’s overall strategy, competitiveness and results of operations or, in many cases, its individual businesses.

Despite the Issuance of Final U.S. Basel III Rules, There Continues to Be Significant Uncertainty Regarding the Numerous Aspects of the Regulatory Capital Requirements Applicable to Citi and the Ultimate Impact of These Requirements on Citi’s Businesses, Products and Results of Operations.

subsidiaries, including Citibank, N.A., during 2013, there continues to be significant uncertainty regarding numerous aspects of these and other regulatory capital requirements applicable to Citi and, as a result, the ultimate impact of these requirements on Citi.

Citi’s estimated Basel III ratios and related components are based on its current interpretation, expectations and understanding of the final U.S. Basel III rules and are subject to, among other things, ongoing regulatory review, regulatory approval of Citi’s credit, market and operational Basel III risk models (as well as its market risk models under Basel II.5), additional refinements, modifications or enhancements (whether required or otherwise) to Citi’s models, and further implementation guidance in the U.S. Any modifications or requirements resulting from these ongoing reviews or the continued implementation of Basel III in the U.S. could result in changes in Citi’s risk-weighted assets or other elements involved in the calculation of Citi’s Basel III ratios, which could negatively impact Citi’s capital ratios and its ability to achieve its capital requirements as it projects or as required. Further, because operational risk is measured based not only upon Citi’s historical loss experience but also upon ongoing events in the banking industry generally, Citi’s level of operational risk-weighted assets could remain elevated for the foreseeable future, despite Citi’s continuing efforts to reduce its risk-weighted assets and exposures.

In addition, subsequent to the issuance of the final U.S. Basel III rules, the U.S. banking agencies proposed to amend the final U.S. Basel III rules to require the largest U.S. bank holding companies and their insured depository institution subsidiaries, including Citi and Citibank, N.A., to effectively maintain minimum Supplementary Leverage ratios (SLRs) of 5% and 6%, respectively, compared to the minimum 3% required under the final U.S. and Basel Committee Basel III rules. If adopted as proposed, the SLR, which was initially intended only to supplement the risk-based capital ratios, may become the binding regulatory capital constraint facing Citi and Citibank, N.A. In addition, when combined with the expected U.S. Tier 1 Common Capital “global systemically important bank” (G-SIB) surcharge and other capital requirements, Citi and Citibank, N.A. could be subject to higher capital requirements than many of their U.S. and non-U.S. competitors, leading to a potential competitive disadvantage and negative impact on Citi’s businesses and results of operations.

Various proposals relating to the future liquidity standards or funding requirements applicable to U.S. financial institutions further contribute to the uncertainty regarding the future capital requirements applicable to Citi. For example, the proposed U.S. Basel III Liquidity Coverage ratio (LCR) rules would require Citi to hold additional high-quality liquid assets; however, this requirement would also serve to increase the denominator of the SLR and, as a result, increase the amount of Tier 1 Capital required to be held by Citi to meet the minimum SLR requirements. The Federal Reserve Board has also indicated it is considering proposals relating to the use of short-term wholesale funding by U.S. financial institutions, particularly securities financing

transactions (SFTs), which could include a capital surcharge based on the institution’s reliance on such funding, and/or increased capital requirements applicable to SFT matched books.

As a result of these and other uncertainties arising from the ongoing implementation of Basel III and other current or potential capital requirements on a global basis, Citi’s capital planning and management remains challenging. It is also not possible to determine what the overall impact of these extensive regulatory capital changes will be on Citi’s competitive position (among both domestic and international peers), businesses, product offerings or results of operations.

For additional information on the Basel III Rules and other capital and liquidity standards developments and requirements referenced above, see “Liquidity Risks” below and “Capital Resources—Regulatory Capital Standards Developments” above.

The Impact to Citi’s Derivatives Businesses and Results of Operations Resulting from the Ongoing Implementation of Derivatives Regulation in the U.S. and Globally Remains Uncertain.

The ongoing implementation of derivatives regulations in the U.S. under the Dodd-Frank Act as well as in non-U.S. jurisdictions has impacted, and will continue to substantially impact, the derivatives markets by, among other things: (i) requiring extensive regulatory and public price reporting of derivatives transactions; (ii) requiring a wide range of over-the-counter derivatives to be cleared through recognized clearing facilities and traded on exchanges or exchange-like facilities; (iii) requiring the collection and segregation of collateral for most uncleared derivatives (margin requirements); and (iv) significantly broadening limits on the size of positions that may be maintained in specified derivatives. These market structure reforms have and will likely continue to make trading in many derivatives products more costly, may significantly reduce the liquidity of certain derivatives markets and could diminish customer demand for covered derivatives. However, given the early stage of implementation of these U.S. and global reforms, including the additional rulemaking that may be or is required to occur and the ongoing significant interpretive issues across jurisdictions, the ultimate impact to Citi’s results of operations in its derivatives businesses remains uncertain.

For example, in October 2013, certain CFTC rules relating to trading on a swap execution facility (SEF) became effective. As a result, certain non-U.S. trading platforms that do not want to register with the CFTC as a SEF are prohibiting firms with U.S. contacts, such as Citi, from trading on their non-U.S. platforms. This has resulted in some bifurcated client activity in the swaps marketplace, which could negatively impact Citi by reducing its access to non-U.S. platform client activity. Also in October 2013, the CFTC’s mandatory clearing requirements for the overseas branches of Citibank, N.A. became effective, and certain of Citi’s non-U.S. clients have ceased to clear their swaps with Citi given the mandatory requirement. More broadly, under the CFTC’s cross-border guidance, overseas clients who transact their derivatives business with overseas branches of

U.S. banks, including Citi, could be subject to additional U.S. registration and derivatives requirements, and these clients have expressed an unwillingness to continue to deal with overseas branches of U.S. banks as a result. These and similar issues could disproportionately impact Citi given its global footprint.

Further, the European Union continues to finalize its European Market Infrastructure Regulation which would require, among other things, information on all European derivatives transactions be reported to trade repositories and certain counterparties to clear “standardized” derivatives contracts through central counterparties. Regulators in Asia also continue to finalize their derivatives reforms which, to date, have taken a different approach as compared to the EU or the U.S. Most of these non-U.S. reforms will take effect after the reforms in the U.S. and, as a result, it is uncertain to what extent the non-U.S. reforms will impose different, additional or even inconsistent requirements on Citi’s derivatives activities.

The Dodd-Frank Act also contains a so-called “push-out” provision that, to date, has generally been interpreted to prevent FDIC-insured depository institutions from dealing in certain equity, commodity and credit-related derivatives. The ultimate scope of this provision and its potential consequences are not certain as rulemaking has not yet been completed. While this push-out provision was to be effective July 2013, U.S. regulators were permitted to grant up to an initial two-year transition period to affected depository institutions, and in June 2013, Citi, like other U.S. depository institutions, received approval for an initial two-year transition period for Citibank, N.A., its primary insured depository institution.

Citi currently conducts a substantial portion of its derivatives-dealing activities within and outside the U.S. through Citibank, N.A. The costs of revising customer relationships and modifying the organizational structure of Citi’s businesses or the subsidiaries engaged in these businesses, and the reaction of Citi’s clients to the potential bifurcation of their derivatives portfolios between Citibank, N.A. and another Citi affiliate for pushed-out derivatives, remain unknown. To the extent that certain of Citi’s competitors already conduct these derivatives activities outside of FDIC-insured depository institutions, Citi would be disproportionately impacted by any required restructuring. Moreover, the extent to which Citi’s non-U.S. operations will be impacted by the push-out provision remains unclear, and it is possible that Citi could lose market share in its derivatives business or client relationships in jurisdictions where foreign bank competitors can operate without the same constraints.

While the implementation and effectiveness of individual derivatives reforms may not in every case be significant, the cumulative impact of these reforms is uncertain and could be material to Citi’s results of operations and competitiveness in these businesses.

In addition, numerous aspects of the new derivatives regime require extensive compliance systems and processes to be put in place and maintained, including electronic recordkeeping, real-time public transaction reporting and

external business conduct requirements (e.g., required swap counterparty disclosures). These requirements have necessitated the installation of extensive technological, operational and compliance infrastructure, and Citi’s failure to effectively maintain such systems could subject it to increased compliance costs and regulatory and reputational risks. Moreover, these new derivatives-related systems and infrastructure will likely become the basis on which institutions such as Citi compete for clients. To the extent that Citi’s connectivity, product offerings or services for clients in these businesses is deficient, this could negatively impact Citi’s competitiveness and results of operations in these businesses.

It Is Uncertain What Impact the Restrictions on Proprietary Trading Activities under the Volcker Rule Will Have on Citi’s Global Market-Making Businesses and Results of Operations, and Implementation of the Final Rules Subjects Citi to Compliance Risks and Costs.

The “Volcker Rule” provisions of the Dodd-Frank Act are intended in part to prohibit the proprietary trading activities of institutions such as Citi. On December 10, 2013, the five regulatory agencies required to adopt rules to implement the Volcker Rule adopted a final rule. Although the rules implementing the Volcker Rule have been finalized, and the conformance period has been extended to July 2015, the final rules will require extensive regulatory interpretation and supervisory oversight, including coordination of this interpretive guidance and oversight among the five regulatory agencies implementing the rules.

As a result, the degree to which Citi’s market-making activities will be permitted to continue in their current form, and the potential impact to Citi’s results of operations from these businesses, remains uncertain. In addition, the final rules and restrictions imposed will affect Citi’s trading activities globally and, thus, will impact it disproportionately in comparison to foreign financial institutions that will not be subject to the Volcker Rule with respect to all of their activities outside of the U.S., further increasing the uncertainty of the impact to Citi’s results of operations.

While the final rules contain exceptions for market-making, underwriting, risk-mitigating hedging, and certain transactions on behalf of customers and activities in certain asset classes, and require that certain of these activities be designed not to encourage or reward “proprietary risk taking,” it remains unclear how these exceptions will be interpreted and administered. Absent further regulatory guidance, Citi is required to make certain assumptions as to the degree to which Citi’s activities in these areas will be permitted to continue in their current form. If these assumptions are not accurate, Citi could be subject to increased compliance risks and costs. Moreover, the final rules require an extensive compliance regime for the “permitted” activities under the Volcker Rule, including documentation of historical trading activities with clients, regulatory reporting, recordkeeping and similar requirements, with certain of these requirements effective in July 2014. If Citi’s implementation of this compliance

regime is not consistent with regulatory expectations, this could further increase its compliance risks and costs.

As in other areas of ongoing regulatory reform, alternative proposals for the regulation of proprietary trading are developing in non-U.S. jurisdictions, leading to overlapping or potentially conflicting regimes. For example, in the EU, the “Liikanen Report” on bank structural reform has been reflected in the recent European Commission proposal (the so-called “Barnier Proposal”), which would prohibit proprietary trading by in-scope credit institutions and banking groups, such as certain of Citi’s EU branches, and potentially require the mandatory separation of certain trading activities into a trading entity legally, economically and operationally separate from the legal entity holding the banking activities of a firm.

It is likely that, given Citi’s worldwide operations, some form of these or other proposals for the regulation of proprietary trading will eventually be applicable to a portion of Citi’s operations. While the Volcker Rule and these non-U.S. proposals are intended to address similar concerns— separating the perceived risks of proprietary trading and certain other investment banking activities in order not to affect more traditional banking and retail activities—they would do so under different structures, which could result in inconsistent regulatory regimes and additional compliance risks and costs for Citi in light of its global activities.

Requirements in the U.S. and Non-U.S. Jurisdictions to Facilitate the Future Orderly Resolution of Large Financial Institutions Could Require Citi to Restructure or Reorganize Its Businesses or Change Its Capital or Funding Structure in Ways That Could Negatively Impact Its Operations or Strategy.

Title I of the Dodd-Frank Act requires Citi to prepare and submit annually a plan for the orderly resolution of Citigroup (the bank holding company) and its significant legal entities under the U.S. Bankruptcy Code or other applicable insolvency law in the event of future material financial distress or failure. Citi is also required to prepare and submit an annual resolution plan for its primary insured depository institution subsidiary, Citibank, N.A., and to demonstrate how Citibank is adequately protected from the risks presented by non-bank affiliates. These plans must include information on resolution strategy, major counterparties and interdependencies, among other things, and require substantial effort, time and cost across all of Citi’s businesses and geographies. These resolution plans are subject to review by the Federal Reserve Board and the FDIC. Citi submitted its resolution plan for 2013, including the resolution plan for Citibank, N.A., in September 2013.

If the Federal Reserve Board and the FDIC both determine that Citi’s resolution plan is not “credible” (which, although not defined, is generally believed to mean the regulators do not believe the plan is feasible or would otherwise allow the regulators to resolve Citi in a way that protects systemically important functions without severe systemic disruption), and Citi does not remedy the identified deficiencies in the plan within the required time period, Citi could be required to restructure or reorganize businesses,

legal entities, operational systems and/or intracompany transactions in ways that could negatively impact its operations and strategy, or be subject to restrictions on growth. Citi could also eventually be subjected to more stringent capital, leverage or liquidity requirements, or be required to divest certain assets or operations.

In addition, other jurisdictions, such as the U.K., have requested or are expected to request resolution plans from financial institutions, including Citi, and the requirements and timing relating to these plans are or are expected to be different from the U.S. requirements and from each other. Responding to these additional requests will require additional effort, time and cost, and regulatory review and requirements in these jurisdictions could be in addition to, or conflict with, changes required by Citi’s regulators in the U.S.

Title II of the Dodd-Frank Act grants the FDIC the authority, under certain circumstances, to resolve systemically important financial institutions, including Citi. In connection with this authority, in December 2013, the FDIC released a notice describing its preferred single point of entry strategy for resolving systemically important financial institutions. In furtherance of this strategy, the Federal Reserve Board has indicated that it expects to propose minimum levels of unsecured long-term debt required for bank holding companies, as well as guidelines defining the terms or composition of qualifying debt instruments, to ensure that adequate resources are available at the holding company to resolve a systemically important financial institution if necessary. To the extent that these future requirements differ from Citi’s current funding profile, Citi may need to increase its aggregate long-term debt levels and/or alter the composition and terms of its debt, which could lead to increased costs of funds and have a negative impact on its net interest revenue, among other potential impacts. Additionally, if any final rules require compliance on an accelerated timeline, the resulting increased issuance volume may further increase Citi’s cost of funds. Furthermore, Citi could be at a competitive disadvantage versus financial institutions that are not subject to such minimum debt requirements, such as non-regulated financial intermediaries, smaller financial institutions and entities in jurisdictions with less onerous or no such requirements.

Additional Regulations with Respect to Securitizations Will Impose Additional Costs and May Prevent Citi from Performing Certain Roles in Securitizations.

Citi plays a variety of roles in asset securitization transactions, including acting as underwriter of asset-backed securities, depositor of the underlying assets into securitization vehicles, trustee to securitization vehicles and counterparty to securitization vehicles under derivative contracts. The Dodd-Frank Act contains a number of provisions that affect securitizations. These provisions, which in some cases will require multi-regulatory agency implementation and will largely be applicable across asset classes, include a prohibition on securitization participants engaging in transactions that would involve a material

conflict of interest with investors in the securitization and, in certain transactions, a retention requirement by securitizers of an unhedged exposure to at least 5% of the economic risk of the securitized assets. Regulations implementing these provisions have been proposed but in many cases have not yet been adopted. The SEC also has proposed additional extensive regulation of both publicly and privately offered securitization transactions through revisions to the registration, disclosure and reporting requirements for asset-backed securities and other structured finance products. Moreover, the final U.S. Basel III capital rules will increase the capital required to be held by Citi against various exposures to securitizations.

The cumulative effect of these extensive regulatory changes, as well as other potential future regulatory changes, cannot currently be assessed. It is likely, however, that these various measures will increase the costs or decrease the attractiveness of executing certain securitization transactions, and could effectively limit Citi’s overall volume of, and the role Citi may play in, securitizations and make it impractical for Citi to execute certain types of securitization transactions it previously executed. As a result, these effects could impair Citi’s ability to continue to earn income from these transactions or could hinder Citi’s ability to use such transactions to hedge risks, reduce exposures or reduce assets with adverse risk-weighting in its businesses, and those consequences could affect the conduct of these businesses. In addition, certain sectors of the securitization markets, particularly residential mortgage-backed securitizations, have been inactive or experienced dramatically diminished transaction volumes since the financial crisis. The impact of various regulatory reform measures could adversely impact any future recovery of these sectors of the securitization markets and, thus, the opportunities for Citi to participate in securitization transactions in such sectors.

MARKET AND ECONOMIC RISKS

The Continued Uncertainty Relating to the Sustainability and Pace of Economic Recovery in the U.S. and Globally, Including in the Emerging Markets, Could Have a Negative Impact on Citi’s Businesses and Results of Operations. Moreover, Any Significant Global Economic Downturn or Disruption, Including a Significant Decline in Global Trade Volumes, Could Materially and Adversely Impact Citi’s Businesses, Results of Operations and Financial Condition.

Citi’s businesses have been, and could continue to be, negatively impacted by the uncertainty surrounding the sustainability and pace of economic recovery in the U.S., as well as globally. Fiscal and monetary actions taken by U.S. and non-U.S. government and regulatory authorities to spur economic growth or otherwise, including by maintaining or increasing interest rates, can also impact Citi’s businesses and results of operations. For example, changing expectations regarding the Federal Reserve Board’s tapering of quantitative easing has impacted market and customer activity as well as trading volumes which has negatively

impacted the results of operations for Securities and Banking, and could continue to do so in the future.

Additionally, given its global focus, Citi could be disproportionately impacted as compared to its competitors by any impact of government or regulatory policies or economic conditions in the international and/or emerging markets (which Citi generally defines as the markets in Asia (other than Japan, Australia and New Zealand), the Middle East, Africa and central and eastern European countries in EMEA and the markets in Latin America). Countries such as India, Singapore, Hong Kong, Brazil and China, each of which are part of Citi’s emerging markets strategy, have recently experienced uncertainty over the potential impact of further tapering by the Federal Reserve Board and/or the extent of future economic growth. Actual or perceived impacts or a slowdown in growth in these and other emerging markets could negatively impact Citi’s businesses and results of operations. Further, if a particular country’s economic situation were to deteriorate below a certain level, U.S. regulators could impose mandatory loan loss and other reserve requirements on Citi, which could negatively impact its earnings, perhaps significantly.

Moreover, if a severe global economic downturn or other major economic disruption were to occur, including a significant decline in global trade volumes, Citi would likely experience substantial loan and other losses and be required to significantly increase its loan loss reserves, among other impacts. A global trade disruption that results in a permanently reduced level of trade volumes and increased costs of global trade, whether as a result of a prolonged “trade war” or some other reason, could significantly impact trade financing activities, certain trade dependent economies (such as the emerging markets in Asia), and certain industries heavily dependent on trade, among other things. Given Citi’s global strategy and focus on the emerging markets, such a downturn and decrease in global trade volumes could materially and adversely impact Citi’s businesses, results of operation and financial condition, particularly as compared to its competitors. This could include, among other things, the potential that a portion of any such losses would not be tax benefitted, given the current environment.

Concerns About the Level of U.S. Government Debt and a Downgrade (or a Further Downgrade) of the U.S. Government Credit Rating Could Negatively Impact Citi’s Businesses, Results of Operations, Capital, Funding and Liquidity.

Concerns about the overall level of U.S. government debt and/or a U.S. government default, as well as uncertainty relating to actions that may or may not be taken to address these and related issues, have adversely affected, and could continue to adversely affect, U.S. and global financial markets, economic conditions and Citi’s businesses and results of operations.

The credit rating agencies have also expressed concerns about these issues and have taken actions to downgrade and/or place the long-term sovereign credit rating of the U.S. government on negative outlook. A future downgrade (or

further downgrade) of U.S. debt obligations or U.S. government-related obligations, or concerns that such a downgrade might occur, could negatively impact Citi’s ability to obtain funding collateralized by such obligations and the pricing of such funding, as well as the pricing or availability of Citi’s funding as a U.S. financial institution, among other impacts. Any further downgrade could also have a negative impact on U.S. and global financial markets and economic conditions generally and, as a result, could have a negative impact on Citi’s businesses, results of operations, capital, funding and liquidity.

Citi’s Extensive Global Network Subjects It to Various International and Emerging Markets Risks as well as Increased Compliance and Regulatory Risks and Costs.

During 2013, international revenues accounted for approximately 59% of Citi’s total revenues. In addition, revenues from the emerging markets accounted for approximately 41% of Citi’s total revenues in 2013.

Citi’s extensive global network subjects it to a number of risks associated with international and emerging markets, including, among others, sovereign volatility, political events, foreign exchange controls, limitations on foreign investment, sociopolitical instability, fraud, nationalization, closure of branches or subsidiaries and confiscation of assets. For example, Citi operates in several countries, such as Argentina and Venezuela, with strict foreign exchange controls that limit its ability to convert local currency into U.S. dollars and/or transfer funds outside the country. In such cases, Citi could be exposed to a risk of loss in the event that the local currency devalues as compared to the U.S. dollar (see “Managing Global Risk—Cross-Border Risk” below). There have also been instances of political turmoil and other instability in some of the countries in which Citi operates, including in certain countries in the Middle East and Africa, to which Citi has responded by transferring assets and relocating staff members to more stable jurisdictions. Similar incidents in the future could place Citi’s staff and operations in danger and may result in financial losses, some significant, including nationalization of Citi’s assets.

Citi’s extensive global operations also increase its compliance and regulatory risks and costs. For example, Citi’s operations in emerging markets, including facilitating cross-border transactions on behalf of its clients, subject it to higher compliance risks under U.S. regulations primarily focused on various aspects of global corporate activities, such as anti-money-laundering regulations and the Foreign Corrupt Practices Act. These risks can be more acute in less developed markets and thus require substantial investment in compliance infrastructure or could result in a reduction in certain of Citi’s business activities. In addition, any failure by Citi to comply with applicable U.S. regulations, as well as the regulations in the countries and markets in which it operates as a result of its global footprint, could result in fines, penalties, injunctions or other similar restrictions, any of which could negatively impact Citi’s earnings and its reputation. Citi also provides a wide range of financial products and services to the U.S. and other governments, to

multi-national corporations and other businesses, and to prominent individuals and families around the world. The actions of these clients involving the use of Citi products or services could result in an adverse impact on Citi, including adverse regulatory and reputational impact.

There Continues to Be Uncertainty Relating to Ongoing Economic and Fiscal Issues in the Eurozone, Including the Potential Outcomes That Could Occur and the Impact Those Outcomes Could Have on Citi’s Businesses, Results of Operations or Financial Condition.

Several European countries, including Greece, Ireland, Italy, Portugal and Spain (GIIPS), have been the subject of credit deterioration due to weaknesses in their economic and fiscal situations. Concerns have been raised, both within the European Monetary Union (EMU) as well as internationally, as to the financial, political and legal effectiveness of measures taken to date, the ability of these countries to adhere to any required austerity, reform or similar measures and the potential impact of these measures on economic growth or recession, as well as deflation, in the region.

There have also been concerns that these issues could lead to a partial or complete break-up of the EMU. The exit of one or more member countries from the EMU could result in certain obligations relating to the exiting country being redenominated from the Euro to a new country currency. Redenomination could be accompanied by immediate revaluation of the new currency as compared to the Euro and the U.S. dollar, the extent of which would depend on the particular facts and circumstances. Any such redenomination/revaluation could cause significant legal and other uncertainty with respect to outstanding obligations of counterparties and debtors in any exiting country, whether sovereign or otherwise, and could lead to complex, lengthy litigation. Redenomination/revaluation could also be accompanied by the imposition of exchange and/or capital controls, required functional currency changes and “deposit flight.”

These ongoing uncertainties have caused, and could in the future cause, disruptions in the global financial markets and concerns regarding potential impacts to the global economy generally, particularly if sovereign debt defaults, significant bank failures or defaults and/or a partial or complete break-up of the EMU were to occur. These ongoing issues, or a worsening of these issues, could negatively impact Citi’s businesses, results of operations and financial condition, particularly given its global footprint and strategy, both directly through its own exposures as well as indirectly. For example, Citi has previously experienced widening of its credit spreads and thus increased costs of funding due to concerns about its Eurozone exposure. In addition, U.S. regulators could impose mandatory loan loss and other reserve requirements on U.S. financial institutions, including Citi, if a particular country’s economic situation deteriorates below a certain level, which could negatively impact Citi’s earnings, perhaps significantly.

LIQUIDITY RISKS

There Continues to Be Significant Uncertainty Regarding the Future Quantitative Liquidity Requirements Applicable to Citi and the Ultimate Impact of These Requirements on Citi’s Liquidity Planning, Management and Funding.

In 2010, the Basel Committee introduced an international framework for new Basel III quantitative liquidity requirements, including a Liquidity Coverage Ratio (LCR) and a Net Stable Funding Ratio (NSFR) and, in January 2013, the Basel Committee adopted final Basel III LCR rules (for additional information on Citi’s estimated LCR as of December 31, 2013, as calculated under the final Basel III LCR rules, as well as the Basel Committee’s NSFR framework, see “Managing Global Risk—Market Risk—Funding and Liquidity” below).

In October 2013, the U.S. banking agencies proposed rules with respect to the U.S. Basel III LCR. The proposed U.S. Basel III LCR is more stringent than the final Basel III LCR in several areas, including a (i) narrower definition of “high-quality liquid assets” (HQLA), particularly with respect to investment grade credit, (ii) potentially more severe standard for calculating net cash outflows under the LCR and (iii) shorter timeline for implementation (full compliance with the U.S. Basel III LCR by January 2017, versus January 2019 for the Basel III LCR). With respect to the computation of net cash outflows, the U.S. Basel III LCR proposal prescribes more conservative outflow assumptions for certain types of funding sources (in particular, for deposits) as compared to the final Basel III LCR rules. The U.S. Basel III LCR proposal would also require covered firms, including Citi and Citibank, N.A., to adopt a daily net cash flow calculation (the dollar amount on the day within a 30-day stress period that has the highest amount of net cumulative cash outflows) as opposed to the Basel Committee cumulative calculation at the end of the 30-day period. Covered firms would also be required to use the most conservative assumptions regarding when an inflow or outflow would occur (i.e., for instruments or transactions with no or variable maturity dates, the earliest possible date for outflows (e.g., day one) and the latest possible date for inflows (e.g., day 30)).

There continues to be significant uncertainty across the industry regarding the interpretation and implementation of the net cash outflows provisions of the U.S. Basel III LCR proposal. Depending on how these interpretive and other issues are resolved, Citi’s Basel III LCR under the proposed U.S. rules could decrease, perhaps significantly, as compared to Citi’s estimated Basel III LCR under the final Basel III rules. The implementation of the proposed U.S. Basel III LCR could also impact the way Citi manages its liquidity position, including the composition of its liquid assets and its liabilities, as well as require it to implement and maintain extensive compliance policies, procedures and systems to determine the composition and amount of HQLA on a daily basis.

Regarding the Basel III NSFR, in January 2014, the Basel Committee issued a revised framework for the calculation of a financial institution’s NSFR. This

framework remains subject to comment and is expected to be followed by a proposal by the U.S. banking agencies to implement the Basel III NSFR in the U.S. In addition to the LCR and NSFR, the Federal Reserve Board has indicated it is considering various initiatives to limit short-term funding risks, including further increases in the liquidity requirements applicable to securities financing transactions (SFTs), such as requiring larger liquidity buffers for firms with large amounts of SFTs, and/or mandatory margin or haircut requirements on SFTs.

As a result, there is significant uncertainty regarding the calculation, scope, implementation and timing of Citi’s future liquidity standards and requirements, and the ultimate impact of these requirements on Citi, its liquidity planning, management and funding. While uncertain, Citi could be required to increase the level of its deposits and debt funding, which could increase its Consolidated Balance Sheet and negatively impact its net interest revenue. Moreover, similar to the U.S. Basel III LCR proposal, to the extent other jurisdictions propose or adopt quantitative liquidity requirements that differ from the Basel Committee’s or the U.S. requirements, Citi could be at a competitive disadvantage because of its global footprint or could be required to meet different minimum liquidity standards in some or all of the jurisdictions in which it operates.

For a discussion of the potential negative impacts to Citi’s ability to meet its regulatory capital requirements as a result of certain of these liquidity proposals, see “Regulatory Risks” above.

The Maintenance of Adequate Liquidity and Funding Depends on Numerous Factors, Including Those Outside of Citi’s Control, Such as Market Disruptions and Increases in Citi’s Credit Spreads.

As a global financial institution, adequate liquidity and sources of funding are essential to Citi’s businesses. Citi’s liquidity and sources of funding can be significantly and negatively impacted by factors it cannot control, such as general disruptions in the financial markets, governmental fiscal and monetary policies, or negative investor perceptions of Citi’s creditworthiness. Market perception of sovereign default risks can also lead to inefficient money markets and capital markets, which could further impact Citi’s availability and cost of funding.

In addition, Citi’s cost and ability to obtain deposits, secured funding and long-term unsecured funding from the credit and capital markets are directly related to its credit spreads. Changes in credit spreads constantly occur and are market-driven, including both external market factors and factors specific to Citi, and can be highly volatile. Citi’s credit spreads may also be influenced by movements in the costs to purchasers of credit default swaps referenced to Citi’s long-term debt, which are also impacted by these external and Citi-specific factors. Moreover, Citi’s ability to obtain funding may be impaired if other market participants are seeking to access the markets at the same time, or if market appetite is reduced, as is likely to occur in a liquidity or other market crisis. In addition, clearing organizations,

regulators, clients and financial institutions with which Citi interacts may exercise the right to require additional collateral based on these market perceptions or market conditions, which could further impair Citi’s access to and cost of funding.

As a holding company, Citi relies on dividends, distributions and other payments from its subsidiaries to fund dividends as well as to satisfy its debt and other obligations. Several of Citi’s subsidiaries are subject to capital adequacy or other regulatory or contractual restrictions on their ability to provide such payments. Limitations on the payments that Citi receives from its subsidiaries could also impact its liquidity.

The Credit Rating Agencies Continuously Review the Ratings of Citi and Certain of Its Subsidiaries, and Reductions in Citi’s or Its More Significant Subsidiaries’ Credit Ratings Could Have a Negative Impact on Citi’s Funding and Liquidity Due to Reduced Funding Capacity and Increased Funding Costs, Including Derivatives Triggers That Could Require Cash Obligations or Collateral Requirements.

The credit rating agencies, such as Fitch, Moody’s and S&P, continuously evaluate Citi and certain of its subsidiaries, and their ratings of Citi’s and its more significant subsidiaries’ long-term/senior debt and short-term/ commercial paper, as applicable, are based on a number of factors, including standalone financial strength, as well as factors not entirely within the control of Citi and its subsidiaries, such as the agencies’ proprietary rating agency methodologies and assumptions, the rating agencies’ “government support uplift” assumptions, and conditions affecting the financial services industry and markets generally.

Citi and its subsidiaries may not be able to maintain their current respective ratings. A ratings downgrade by Fitch, Moody’s or S&P could negatively impact Citi’s ability to access the capital markets and other sources of funds as well as the costs of those funds, and its ability to maintain certain deposits. A ratings downgrade could also have a negative impact on Citi’s funding and liquidity due to reduced funding capacity, including derivative triggers, which could take the form of cash obligations and collateral requirements. In addition, a ratings downgrade could also have a negative impact on other funding sources, such as secured financing and other margined transactions for which there are no explicit triggers, as well as on contractual provisions which contain minimum ratings thresholds in order for Citi to hold third-party funds.

Moreover, credit ratings downgrades can have impacts which may not be currently known to Citi or which are not possible to quantify. For example, some entities may have ratings limitations as to their permissible counterparties, of which Citi may or may not be aware. In addition, certain of Citi’s corporate customers and trading counterparties, among other clients, could re-evaluate their business relationships with Citi and limit the trading of certain contracts or market instruments with Citi in response to ratings downgrades. Changes in customer and counterparty behavior could impact not only Citi’s funding and liquidity but also the

results of operations of certain Citi businesses. For additional information on the potential impact of a reduction in Citi’s or Citibank, N.A.’s credit ratings, see “Managing Global Risk—Market Risk—Funding and Liquidity—Credit Ratings” below.

LEGAL RISKS

Citi Is Subject to Extensive Legal and Regulatory Proceedings, Investigations, and Inquiries That Could Result in Substantial Losses. These Matters Are Often Highly Complex and Slow to Develop, and Results Are Difficult to Predict or Estimate.

At any given time, Citi is defending a significant number of legal and regulatory proceedings and is subject to numerous governmental and regulatory examinations, investigations and other inquiries. These proceedings, examinations, investigations and inquiries could result, individually or collectively, in substantial losses.

In the wake of the financial crisis of 2007-2009, the frequency with which such proceedings, investigations and inquiries are initiated, and the severity of the remedies sought (and in some cases obtained), have increased substantially, and the global judicial, regulatory and political environment has generally become more hostile to large financial institutions such as Citi. Many of the proceedings, investigations and inquiries involving Citi relating to events before or during the financial crisis have not yet been resolved, and additional proceedings, investigations and inquiries relating to such events may still be commenced. In addition, heightened expectations of the financial services industry by regulators and other enforcement authorities have led to renewed scrutiny of long-standing industry practices, and this heightened scrutiny could lead to more regulatory or other enforcement proceedings. The complexity of the federal and state regulatory and enforcement regimes in the U.S., coupled with the global scope of Citi’s operations and the increasing aggressiveness of the regulatory environment worldwide, also means that a single event may give rise to a large number of overlapping investigations and regulatory proceedings, either by multiple federal and state agencies in the U.S. or by multiple regulators and other governmental entities in different jurisdictions.

For example, Citi is currently subject to extensive legal and regulatory inquiries, actions and investigations relating to its historical mortgage-related activities, including claims regarding the accuracy of offering documents for residential mortgage-backed securities and alleged breaches of representation and warranties relating to the sale of mortgage loans or the placement of mortgage loans into securitization trusts. Citi is also subject to extensive legal and regulatory inquiries, actions and investigations relating to, among other things, Citi’s contribution to, or trading in products linked to, rates or benchmarks. These rates and benchmarks may relate to interest rates (such as the London Inter-Bank Offered Rate (LIBOR) or ISDAFIX), foreign exchange rates (such as the WM/Reuters fix), or other prices. Like other banks with operations in the U.S., Citi is also subject to

continuing oversight by the OCC and other bank regulators, and inquiries and investigations by other governmental and regulatory authorities, with respect to its anti-money laundering program. Other institutions subject to similar or the same inquiries, actions or investigations as those above have incurred substantial liability in relation to their activities in these areas, including in a few cases criminal convictions or deferred prosecution agreements respecting corporate entities as well as substantial fines and penalties.

Moreover, regulatory changes resulting from the Dodd-Frank Act and other recent regulatory changes - such as the limitations on federal preemption in the consumer arena, the creation of the Consumer Financial Protection Bureau with its own examination and enforcement authority and enhanced consumer protections globally, as well as the “whistle-blower” provisions of the Dodd-Frank Act - could further increase the number of legal and regulatory proceedings against Citi. In addition, while Citi takes numerous steps to prevent and detect employee misconduct, such as fraud, employee misconduct cannot always be deterred or prevented and could subject Citi to additional liability or losses.

These matters have resulted in, and will likely continue to result in, significant time, expense and diversion of management’s attention. In addition, they may result in adverse judgments, settlements, fines, penalties, restitution, disgorgement, injunctions, business improvement orders or other results adverse to it, which could materially and negatively affect Citi’s businesses, business practices, financial condition or results of operations, require material changes in Citi’s operations, or cause Citi reputational harm. Moreover, many large claims asserted against Citi are highly complex and slow to develop, and they may involve novel or untested legal theories. The outcome of such proceedings is difficult to predict or estimate until late in the proceedings, which may last several years. In addition, certain settlements are subject to court approval and may not be approved. Although Citi establishes accruals for its legal and regulatory matters according to accounting requirements, the amount of loss ultimately incurred in relation to those matters may be substantially higher than the amounts accrued.

For additional information relating to Citi’s legal and regulatory proceedings, see Note 28 to the Consolidated Financial Statements.

BUSINESS AND OPERATIONAL RISKS

Citi’s Results of Operations Could Be Negatively Impacted as Its Revolving Home Equity Lines of Credit Begin to “Reset.”

As of December 31, 2013, Citi’s home equity loan portfolio of approximately $31.6 billion included approximately $18.9 billion of home equity lines of credit that were still within their revolving period and had not commenced amortization, or “reset” (Revolving HELOCs). Of these Revolving HELOCs, approximately 72% will commence amortization during the period of 2015-2017.

Before commencing amortization, Revolving HELOC borrowers are required to pay only interest on their loans.

Upon amortization, these borrowers will be required to pay both interest, typically at a variable rate, and principal that amortizes over 20 years, rather than the typical 30-year amortization. As a result, Citi’s customers with Revolving HELOCs that reset could experience “payment shock” due to the higher required payments on the loans. Increases in interest rates could further increase these payments, given the variable nature of the interest rates on these loans post-reset.

Based on the limited number of Citi’s Revolving HELOCs that have reset as of December 31, 2013, Citi has experienced a higher 30+ days past due delinquency rate on its amortizing home equity loans as compared to its total outstanding home equity loan portfolio (amortizing and non-amortizing). These resets have generally occurred during a period of declining interest rates, which Citi believes has likely reduced the overall payment shock to borrowers. While Citi continues to review its options, increasing interest rates, stricter lending criteria and borrower loan-to-value positions could limit Citi’s ability to reduce or mitigate this reset risk going forward. Accordingly, as these loans begin to reset, Citi could experience higher delinquency rates and increased loan loss reserves and net credit losses in future periods, which could be significant and would negatively impact its results of operations.

For additional information on Citi’s Revolving HELOCs portfolio, see “Managing Global Risk—Credit Risk—North America Consumer Mortgage Lending” below.

Citi’s Ability to Return Capital to Shareholders Substantially Depends on the CCAR Process and the Results of Required Regulatory Stress Tests.

In addition to Board of Directors’ approval, any decision by Citi to return capital to shareholders, whether through an increase in its common stock dividend or through a share repurchase program, substantially depends on regulatory approval, including through the annual Comprehensive Capital Analysis and Review (CCAR) process required by the Federal Reserve Board and the supervisory stress tests required under the Dodd-Frank Act. Restrictions on Citi’s ability to return capital to shareholders as a result of these processes has negatively impacted market perceptions of Citi, and could do so in the future.

Citi’s ability to accurately predict or explain to stakeholders the outcome of the CCAR process, and thus address any such market perceptions, may be complicated by the Federal Reserve Board’s evolving criteria employed in its overall aggregate assessment of Citi. The Federal Reserve Board’s assessment of Citi is conducted not only by using the Board’s proprietary stress test models, but also a number of qualitative factors, including a detailed assessment of Citi’s “capital adequacy process,” as defined by the Federal Reserve Board. The Federal Reserve Board has stated that it expects leading capital adequacy practices will continue to evolve and will likely be determined by the Federal Reserve Board each year as a result of the Board’s cross-firm review of capital plan submissions.

Similarly, the Federal Reserve Board has indicated that, as part of its stated goal to continually evolve its annual

stress testing requirements, several parameters of the annual stress testing process may be altered from time to time, including the severity of the stress test scenario, Federal Reserve Board modeling of Citi’s balance sheet and the addition of components deemed important by the Federal Reserve Board (e.g., a counterparty failure). These parameter alterations are difficult to predict and may limit Citi’s ability to return capital to shareholders and address perceptions about Citi in the market. Because it is not clear how the Federal Reserve Board’s proprietary stress test models and qualitative assessment may differ from the modeling techniques and capital planning practices employed by Citi, it is likely that Citi’s stress test results (using its own models, estimation methodologies and processes) may not be consistent with those disclosed by the Federal Reserve Board, thus potentially leading to additional confusion and impacts to Citi’s perception in the market.

Citi’s Ability to Achieve Its 2015 Financial Targets Will Depend in Part on the Successful Achievement of Its Execution Priorities.

In March 2013, Citi established certain financial targets for 2015. Citi’s ability to achieve these targets will depend in part on the successful achievement of its execution priorities, including: efficient resource allocation, including disciplined expense management; a continued focus on the wind-down of Citi Holdings and getting Citi Holdings to “break even”; and utilization of its DTAs (see below). Citi’s ability to achieve its targets will also depend on factors it cannot control, such as ongoing regulatory changes and macroeconomic conditions. While Citi continues to take actions to achieve its execution priorities, there is no guarantee that Citi will be successful.

Citi continues to pursue its disciplined expense-management strategy, including re-engineering, restructuring operations and improving efficiency. However, there is no guarantee that Citi will be able to reduce its level of expenses, as a result of announced repositioning actions, efficiency initiatives, or otherwise. Citi’s expenses also depend, in part, on factors outside of its control. For example, Citi is subject to extensive legal and regulatory proceedings and inquiries, and its legal and related costs remain elevated. Moreover, investments Citi has made in its businesses, or may make in the future, may not be as productive or effective as Citi expects or at all.

In addition, while Citi has made significant progress in reducing the assets (including risk-weighted assets) in Citi Holdings, the pace of the wind-down of the remaining assets has slowed as Citi has disposed of many of the larger businesses within this segment and the remaining assets largely consist of legacy U.S. mortgages with an estimated weighted average life of six years. While Citi’s strategy continues to be to reduce the remaining assets in Citi Holdings as quickly as practicable in an economically rational manner, sales of the remaining larger businesses could largely depend on factors outside of Citi’s control, such as market appetite and buyer funding, and the remaining assets will largely continue to be subject to ongoing run-off and opportunistic sales. As a result, Citi

Holdings’ remaining assets could continue to have a negative impact on Citi’s overall results of operations. Moreover, Citi’s ability to utilize the capital supporting the remaining assets within Citi Holdings and thus use such capital for more productive purposes, including return of capital to shareholders, will also depend on the ultimate pace and level of the wind-down of Citi Holdings.

Citi’s Ability to Utilize Its DTAs, and Thus Reduce the Negative Impact of the DTAs on Citi’s Regulatory Capital, Will Be Driven by Its Ability to Generate U.S. Taxable Income.

At December 31, 2013, Citi’s net DTAs were $52.8 billion, of which approximately $41.9 billion and $40.6 billion were not included in Citi’s regulatory capital, due to either disallowance (deduction) or permitted exclusion, under current regulatory capital guidelines and the Final Basel III Rules, respectively. In addition, of the net DTAs as of year-end 2013, approximately $19.6 billion related to foreign tax credits (FTCs). The carry-forward utilization period for FTCs is 10 years and represents the most time-sensitive component of Citi’s DTAs. Of the FTCs at year-end, approximately $4.7 billion expire in 2017, $5.2 billion expire in 2018 and the remaining $9.7 billion expire over the period of 2019-2023. Citi must utilize any FTCs generated in the then-current year prior to utilizing any carry-forward FTCs. For additional information on Citi’s DTAs, including the FTCs, see “Significant Accounting Policies and Significant Estimates—Income Taxes” below and Note 9 to the Consolidated Financial Statements.

The accounting treatment for realization of DTAs, including FTCs, is complex and requires a significant amount of judgment and estimates regarding future taxable earnings in the jurisdictions in which the DTAs arise and available tax planning strategies. Citi’s ability to utilize its DTAs, including the FTC components, and thus use the capital supporting the DTAs for more productive purposes, will be dependent upon Citi’s ability to generate U.S. taxable income in the relevant tax carry-forward period, including its ability to offset any negative impact of Citi Holdings on Citi’s U.S. taxable income. Failure to realize any portion of the DTAs would also have a corresponding negative impact on Citi’s net income.

The Value of Citi’s DTAs Could Be Significantly Reduced If Corporate Tax Rates in the U.S. or Certain State or Foreign Jurisdictions Decline or as a Result of Other Changes in the U.S. Corporate Tax System.

Congress and the Obama Administration have discussed decreasing the U.S. corporate tax rate. Similar discussions have taken place in certain state and foreign jurisdictions, including recent proposals in the State of New York. While Citi may benefit in some respects from any decrease in corporate tax rates, a reduction in the U.S., state or foreign corporate tax rates could result in a decrease, perhaps significant, in the value of Citi’s DTAs, which would result in a reduction to Citi’s net income during the period in which the change is enacted. There have also been recent discussions of more sweeping changes to the U.S. tax

system, including changes to the tax treatment of foreign business income. It is uncertain whether or when any such tax reform proposals will be enacted into law, and whether or how they will affect Citi’s DTAs.

Citi’s Interpretation or Application of the Extensive Tax Laws to Which It Is Subject Could Differ from Those of the Relevant Governmental Authorities, Which Could Result in the Payment of Additional Taxes and Penalties.

Citi is subject to the various tax laws of the U.S. and its states and municipalities, as well as the numerous foreign jurisdictions in which it operates. These tax laws are inherently complex and Citi must make judgments and interpretations about the application of these laws to its entities, operations and businesses. Citi’s interpretations and application of the tax laws, including with respect to withholding tax obligations and stamp and other transactional taxes, could differ from that of the relevant governmental taxing authority, which could result in the potential for the payment of additional taxes, penalties or interest, which could be material.

Citi Maintains Contractual Relationships with Various Retailers and Merchants Within Its U.S. Credit Card Businesses in NA RCB, and the Failure to Maintain Those Relationships Could Have a Material Negative Impact on the Results of Operations or Financial Condition of Those Businesses.

Through its U.S. Citi-branded cards and Citi retail services credit card businesses within North America Regional Consumer Banking (NA RCB), Citi maintains numerous co-branding relationships with third-party retailers and merchants in the ordinary course of business pursuant to which Citi issues credit cards to customers of the retailers or merchants. These agreements provide for shared economics between the parties and ways to increase customer brand loyalty, and generally have a fixed term that may be extended or renewed by the parties or terminated early in certain circumstances. These agreements could be terminated due to, among other factors, a breach by Citi of its responsibilities under the applicable co-branding agreement, a breach by the retailer or merchant under the agreement, or external factors outside of either party’s control, including bankruptcies, liquidations, restructurings or consolidations and other similar events that may occur. While various mitigating factors could be available in the event of the loss of one or more of these co-branding relationships, such as replacing the retailer or merchant or by Citi’s offering new card products, the results of operations or financial condition of Citi-branded cards or Citi retail services, as applicable, or NA RCB could be negatively impacted, and the impact could be material.

Citi’s Operational Systems and Networks Have Been, and Will Continue to Be, Subject to an Increasing Risk of Continually Evolving Cybersecurity or Other Technological Risks, Which Could Result in the Disclosure of Confidential Client or Customer Information, Damage to Citi’s Reputation, Additional Costs to Citi, Regulatory Penalties and Financial Losses.

A significant portion of Citi’s operations relies heavily on the secure processing, storage and transmission of confidential and other information as well as the monitoring of a large number of complex transactions on a minute-by-minute basis. For example, through its global consumer banking, credit card and Transaction Services businesses, Citi obtains and stores an extensive amount of personal and client-specific information for its retail, corporate and governmental customers and clients and must accurately record and reflect their extensive account transactions. With the evolving proliferation of new technologies and the increasing use of the Internet and mobile devices to conduct financial transactions, large, global financial institutions such as Citi have been, and will continue to be, subject to an increasing risk of cyber incidents from these activities.

Although Citi devotes significant resources to maintain and regularly upgrade its systems and networks with measures such as intrusion and detection prevention systems and monitoring firewalls to safeguard critical business applications, there is no guarantee that these measures or any other measures can provide absolute security. Citi’s computer systems, software and networks are subject to ongoing cyber incidents such as unauthorized access; loss or destruction of data (including confidential client information); account takeovers; unavailability of service; computer viruses or other malicious code; cyber attacks; and other events. These threats may derive from human error, fraud or malice on the part of employees or third parties, or may result from accidental technological failure. Additional challenges are posed by external extremist parties, including foreign state actors, in some circumstances as a means to promote political ends. If one or more of these events occur, it could result in the disclosure of confidential client information, damage to Citi’s reputation with its clients and the market, customer dissatisfaction, additional costs to Citi (such as repairing systems, replacing customer debit or credit cards, or adding new personnel or protection technologies), regulatory penalties, exposure to litigation and other financial losses to both Citi and its clients and customers. Such events could also cause interruptions or malfunctions in the operations of Citi (such as the lack of availability of Citi’s online banking system or mobile banking platform), as well as the operations of its clients, customers or other third parties. Given Citi’s global footprint and the high volume of transactions processed by Citi, certain errors or actions may be repeated or compounded before they are discovered and rectified, which would further increase these costs and consequences.

Citi has been subject to intentional cyber incidents from external sources, including (i) denial of service attacks, which attempted to interrupt service to clients and customers; (ii) data breaches, which aimed to obtain

unauthorized access to customer account data; and (iii) malicious software attacks on client systems, which attempted to allow unauthorized entrance to Citi’s systems under the guise of a client and the extraction of client data. For example, in 2013 Citi and other U.S. financial institutions experienced distributed denial of service attacks which were intended to disrupt consumer online banking services. In addition, various retail stores were the subject of data breaches which led to access to customer account data. While Citi’s monitoring and protection services were able to detect and respond to the incidents targeting its systems before they became significant, they still resulted in certain limited losses in some instances as well as increases in expenditures to monitor against the threat of similar future cyber incidents. There can be no assurance that such cyber incidents will not occur again, and they could occur more frequently and on a more significant scale. In addition, because the methods used to cause cyber attacks change frequently or, in some cases, are not recognized until launched, Citi may be unable to implement effective preventive measures or proactively address these methods.

Third parties with which Citi does business may also be sources of cybersecurity or other technological risks. Citi outsources certain functions, such as processing customer credit card transactions, uploading content on customer-facing websites, and developing software for new products and services. These relationships allow for the storage and processing of customer information, by third-party hosting of or access to Citi websites, which could result in service disruptions or website defacements, and the potential to introduce vulnerable code, resulting in security breaches impacting Citi customers. While Citi engages in certain actions to reduce the exposure resulting from outsourcing, such as performing onsite security control assessments, limiting third-party access to the least privileged level necessary to perform job functions, and restricting third-party processing to systems stored within Citi’s data centers, ongoing threats may result in unauthorized access, loss or destruction of data or other cyber incidents with increased costs and consequences to Citi such as those discussed above. Furthermore, because financial institutions are becoming increasingly interconnected with central agents, exchanges and clearing houses, including through the derivatives provisions of the Dodd-Frank Act, Citi has increased exposure to operational failure or cyber attacks through third parties.

While Citi maintains insurance coverage that may, subject to policy terms and conditions including significant self-insured deductibles, cover certain aspects of cyber risks, such insurance coverage may be insufficient to cover all losses.

Citi’s Performance and the Performance of Its Individual Businesses Could Be Negatively Impacted If Citi Is Not Able to Hire and Retain Qualified Employees for Any Reason.

Citi’s performance and the performance of its individual businesses is largely dependent on the talents and efforts of highly skilled employees. Specifically, Citi’s continued

ability to compete in its businesses, to manage its businesses effectively and to continue to execute its overall global strategy depends on its ability to attract new employees and to retain and motivate its existing employees. Citi’s ability to attract and retain employees depends on numerous factors, including without limitation, its culture, compensation, the management and leadership of the company as well as its individual businesses, Citi’s presence in the particular market or region at issue and the professional opportunities it offers. The banking industry has and may continue to experience more stringent regulation of employee compensation, including limitations relating to incentive-based compensation, clawback requirements and special taxation. Moreover, given its continued focus on the emerging markets, Citi is often competing for qualified employees in these markets with entities that have a significantly greater presence in the region or are not subject to significant regulatory restrictions on the structure of incentive compensation. If Citi is unable to continue to attract and retain qualified employees for any reason, Citi’s performance, including its competitive position, the successful execution of its overall strategy and its results of operations could be negatively impacted.

Incorrect Assumptions or Estimates in Citi’s Financial Statements Could Cause Significant Unexpected Losses in the Future, and Changes to Financial Accounting and Reporting Standards Could Have a Material Impact on How Citi Records and Reports Its Financial Condition and Results of Operations.

Citi is required to use certain assumptions and estimates in preparing its financial statements under U.S. GAAP, including determining credit loss reserves, reserves related to litigation and regulatory exposures, DTAs and the fair values of certain assets and liabilities, among other items. If Citi’s assumptions or estimates underlying its financial statements are incorrect, Citi could experience unexpected losses, some of which could be significant.

Moreover, the Financial Accounting Standards Board (FASB) is currently reviewing or proposing changes to several financial accounting and reporting standards that govern key aspects of Citi’s financial statements, including those areas where Citi is required to make assumptions or estimates. For example, the FASB’s financial instruments project could, among other things, significantly change how Citi determines the accounting classification for financial instruments and could result in certain loans that are currently reported at amortized cost being accounted for at fair value through Other comprehensive income. The FASB has also proposed a new accounting model intended to require earlier recognition of credit losses on financial instruments. The proposed accounting model would require that life-time “expected credit losses” on financial assets not recorded at fair value through net income be recorded at inception of the financial asset, replacing the multiple existing impairment models under U.S. GAAP which generally require that a loss be “incurred” before it is recognized. In addition, the FASB has proposed changes in the accounting for insurance contracts, which would include

in its scope many instruments currently accounted for as financial instruments and guarantees, including some where credit rather than insurance risk is the primary risk factor. As a result, certain financial contracts deemed to have significant insurance risk could no longer be recorded at fair value, and the timing of income recognition for insurance contracts could also be changed. For additional information on these and other proposed changes, see Note 1 to the Consolidated Financial Statements.

Changes to financial accounting or reporting standards, whether promulgated or required by the FASB or other regulators, could present operational challenges and could require Citi to change certain of the assumptions or estimates it previously used in preparing its financial statements, which could negatively impact how it records and reports its financial condition and results of operations generally and/or with respect to particular businesses. In addition, the FASB continues its convergence project with the International Accounting Standards Board (IASB) pursuant to which U.S. GAAP and International Financial Reporting Standards (IFRS) may be converged. Any transition to IFRS could further have a material impact on how Citi records and reports its financial results. For additional information on the key areas for which assumptions and estimates are used in preparing Citi’s financial statements, see “Significant Accounting Policies and Significant Estimates” below and Note 28 to the Consolidated Financial Statements.

It Is Uncertain Whether Any Further Changes in the Administration of LIBOR Could Affect the Value of LIBOR-Linked Debt Securities and Other Financial Obligations Held or Issued by Citi.

As a result of concerns in recent years regarding the accuracy of LIBOR, changes have been made to the administration and process for determining LIBOR, including increasing the number of banks surveyed to set LIBOR, streamlining the number of LIBOR currencies and maturities and generally strengthening the oversight of the process, including by providing for U.K. regulatory oversight of LIBOR. In early 2014, Intercontinental Exchange (ICE) took over the administration of LIBOR from the British Banker’s Association (BBA).

It is uncertain whether or to what extent any further changes in the administration or method for determining LIBOR could have on the value of any LIBOR-linked debt securities issued by Citi, or any loans, derivatives and other financial obligations or extensions of credit for which Citi is an obligor. It is also not certain whether or to what extent any such changes would have an adverse impact on the value of any LIBOR-linked securities, loans, derivatives and other financial obligations or extensions of credit held by or due to Citi or on Citi’s overall financial condition or results of operations.

Citi May Incur Significant Losses If Its Risk Management Processes and Strategies Are Ineffective, and Concentration of Risk Increases the Potential for Such Losses.

Citi’s independent risk management organization is structured to facilitate the management of the principal risks Citi assumes in conducting its activities—credit risk, market risk and operational risk—across three dimensions: businesses, regions and critical products. Credit risk is the potential for financial loss resulting from the failure of a borrower or counterparty to honor its financial or contractual obligations. Market risk encompasses funding risk, liquidity risk and price risk. Price risk losses arise from fluctuations in the market value of trading and non-trading positions resulting from changes in interest rates, credit spreads, foreign exchange rates, equity and commodity prices and in their implied volatilities. Operational risk is the risk of loss resulting from inadequate or failed internal processes, systems or human factors, or from external events, and includes reputation and franchise risk associated with business practices or market conduct in which Citi is involved. For additional information on each of these areas of risk as well as risk management at Citi, including management review processes and structure, see “Managing Global Risk” below. Managing these risks is made especially challenging within a global and complex financial institution such as Citi, particularly given the complex and diverse financial markets and rapidly evolving market conditions in which Citi operates.

Citi employs a broad and diversified set of risk management and mitigation processes and strategies, including the use of various risk models, in analyzing and monitoring these and other risk categories. However, these models, processes and strategies are inherently limited because they involve techniques, including the use of historical data in some circumstances, and judgments that cannot anticipate every economic and financial outcome in the markets in which Citi operates nor can they anticipate the specifics and timing of such outcomes. Citi could incur significant losses if its risk management processes, strategies or models are ineffective in properly anticipating or managing these risks.

In addition, concentrations of risk, particularly credit and market risk, can further increase the risk of significant losses. At December 31, 2013, Citi’s most significant concentration of credit risk was with the U.S. government and its agencies, which primarily results from trading assets and investments issued by the U.S. government and its agencies (for additional information, see Note 24 to the Consolidated Financial Statements). Citi also routinely executes a high volume of securities, trading, derivative and foreign exchange transactions with counterparties in the financial services sector, including banks, other financial institutions, insurance companies, investment banks and government and central banks. To the extent regulatory or market developments lead to an increased centralization of trading activity through particular clearing houses, central agents or exchanges, this could increase Citi’s concentration of risk in this sector. Concentrations of risk can limit, and have limited, the effectiveness of Citi’s hedging strategies and have caused Citi to incur significant losses, and they may do so again in the future.

MANAGING GLOBAL RISK

Risk Management—Overview

Citigroup believes that effective risk management is of primary importance to its overall operations. Accordingly, Citi’s risk management process has been designed to monitor, evaluate and manage the principal risks it assumes in conducting its activities. Specifically, the activities that Citi engages in—and the risks those activities generate—must be consistent with Citi’s underlying commitment to the principles of “Responsible Finance.” For Citi, “Responsible Finance” means conduct that is transparent, prudent and dependable, and that delivers better outcomes for Citi’s clients and society.

In order to achieve these principles, Citi establishes and enforces expectations for its risk-taking activities through its risk culture, defined roles and responsibilities (the “Three Lines of Defense”), and through its supporting policies, procedures and processes that enforce these standards.

Citi’s Risk Culture. Citi’s risk management framework is designed to balance business ownership and accountability for risks with well defined independent risk management oversight and responsibility. Citi’s risk management framework is based on the following principles established by Citi’s Chief Risk Officer:


•	a defined risk appetite, aligned with business strategy;


•	accountability through a common framework to manage risks;


•	risk decisions based on transparent, accurate and rigorous analytics;


•	a common risk capital model to evaluate risks;


•	expertise, stature, authority and independence of risk managers; and


•	risk managers empowered to make decisions and escalate issues.

Significant focus has been placed on fostering a risk culture based on a policy of “Taking Intelligent Risk with Shared Responsibility, without Forsaking Individual Accountability”:


•	“Taking intelligent risk” means that Citi must identify, measure and aggregate risks, and it must establish risk tolerances based on a full understanding of concentrations and “tail risk.”


•	“Shared responsibility” means that all individuals collectively bear responsibility to seek input and leverage knowledge across and within the “Three Lines of Defense.”


•	“Individual accountability” means that all individuals must actively manage risk, identify issues, and make fully informed decisions that take into account all risks to Citi.

Roles and Responsibilities. While the management of risk is the collective responsibility of all employees, Citi assigns accountability into three lines of defense:


•	First line of defense: The business owns all of its risks, and is responsible for the management of those risks.


•	Second line of defense: Citi’s control functions (e.g., Risk, Compliance, etc.) establish standards for the management of risks and effectiveness of controls.


•	Third line of defense: Citi’s Internal Audit function independently provides assurance, based on a risk-based audit plan approved by the Board of Directors, that processes are reliable, and governance and controls are effective.

The Chief Risk Officer, with oversight from the Risk Management and Finance Committee of the Board of Directors, as well as the full Board of Directors, is responsible for:


•	establishing core standards for the management, measurement and reporting of risk;


•	identifying, assessing, communicating and monitoring risks on a company-wide basis;


•	engaging with senior management on a frequent basis on material matters with respect to risk-taking activities in the businesses and related risk management processes; and


•	ensuring that the risk function has adequate independence, authority, expertise, staffing, technology and resources.

Risk Management Organization

As set forth in the chart below, the risk management organization is structured so as to facilitate the management of risk across three dimensions: businesses, regions and critical products.

Each of Citi’s major business groups has a Business Chief Risk Officer who is the focal point for risk decisions, such as setting risk limits or approving transactions in the business. The majority of the staff in Citi’s independent risk management organization report to these Business Chief Risk Officers. There are also Chief Risk Officers for Citibank, N.A. and Citi Holdings.

Regional Chief Risk Officers, appointed in each of Asia, EMEA and Latin America, are accountable for all the risks in their geographic areas and are the primary risk contacts for the regional business heads and local regulators.

The positions of Product Chief Risk Officers are established for those risk areas of critical importance to Citi, currently fundamental credit, market risk and real estate risk. The Product Chief Risk Officers are accountable for the risks within their specialties across businesses and regions. The Product Chief Risk Officers serve as a resource to the Chief Risk Officer, as well as to the Business and Regional Chief Risk Officers, to better enable the Business and Regional Chief Risk Officers to focus on the day-to-day management of risks and responsiveness to business flow. The Chief Administrative Officer oversees the day-to-day management of the risk management organization as well as

Policies and Processes

Citi has established a robust process to oversee risk policy creation, ownership and ongoing management. Specifically, the Chief Risk Officer and the Risk Management Executive Committee (as described below), in some cases through established committees:


•	establish core policies to articulate rules and behaviors for activities where capital is at risk; and


•	establish policy standards, procedures, guidelines, risk limits and limit adherence processes covering new and current risk exposures across Citi that are in alignment with the risk appetite of the firm.

Key processes, as described below, include Risk Committees, Risk Aggregation and Stress Testing, and Risk Capital.

Key Risk Committees are established across the firm and broadly cover either (a) overall governance or (b) new or complex product governance.

Overall Governance


•	Risk Management Executive Committee: chaired by Citi’s Chief Risk Officer. Membership includes all direct reports of the Chief Risk Officer, as well as certain reports of the Head of Franchise Risk and Strategy. This Committee generally meets bi-weekly to discuss key risk issues across businesses, products and regions.


•	Citibank, N.A. Risk Committee: chaired by the Citibank, N.A Chief Risk Officer. Membership includes the Citibank, N.A Chief Executive Officer, Chief Operating Officer, Chief Financial Officer,

Treasurer, Chief Compliance Officer, Chief Lending Officer and General Counsel. The Citibank, N.A. Risk Committee is responsible for reviewing the risk appetite framework, thresholds and usage against the established thresholds for Citibank, N.A. The Committee is also responsible for reviewing reports designed to monitor market, credit, operational and other risk types within the bank.

•

Business and Regional Consumer Risk Committees: exist in all regions, with broad engagement from business, risk and other control functions. Among these risk committees is the Global Consumer Banking Risk Committee, which is chaired by the Global Consumer Banking Chief Executive Officer with the Global Consumer Banking Chief Risk Officer as the vice chair. The Committee places an emphasis on key performance trends, significant regulatory and control events and management actions.

•

ICG Risk Management Committee: reviews the risk profile of the Institutional Clients Group, discusses pertinent risk issues in trading, global transaction services, structuring and lending businesses and reviews strategic risk decisions for consistency with Citi’s risk appetite. Membership is comprised of Citi’s Chief Risk Officer and Head of Franchise Risk and Strategy, as well as the Global Head of Markets, the Chief Executive Officer and Chief Risk Officer of the Institutional Clients Group.


•	Business Risk, Compliance and Control Committees: exist at both the business and segment levels. These Committees, which generally meet on a quarterly basis, provide a senior management forum to focus on internal control, legal, compliance, regulatory and other risk and control issues.

•

Business Practices Committee: a Citi-wide governance committee designed to review practices involving potentially significant reputational or franchise issues for the firm. Each business also has its own Business Practices Committee. These Committees review whether Citi’s business practices have been designed and implemented in a way that meets the highest standards of professionalism, integrity and ethical behavior.


•	Risk Policy Coordination Group: established to ensure a consistent approach to risk policy architecture and risk management requirements across Citi. Membership includes independent risk representatives from each business, region and Citibank, N.A.

New or Complex Product Governance

New or complex product review committees have been established to ensure that new product risks are identified, evaluated and determined to be appropriate for Citi and its customers, and that the necessary approvals, controls and accountabilities are in place.

•

New Product Approval Committee: This Committee’s overall purpose is to ensure that significant risks, including reputation and franchise risks, in a new Institutional Clients Group product or service or complex transaction, are identified and evaluated from all relevant perspectives, determined to be appropriate, properly recorded for risk aggregation purposes, effectively controlled, and have accountabilities in place. Functions that participate in this Committee’s reviews (as necessary) include Legal, Bank Regulatory, Risk, Compliance, Accounting Policy, Product Control, and the Basel Interpretive Committee. Citibank, N.A. management participates in reviews of this Committee’s proposals contemplating the use of bank chain entities.

•

Consumer Product Approval Committee (CPAC): a senior, multidisciplinary approval committee for new products, services, channels or geographies for Global Consumer Banking. Each region has a regional CPAC, and a global CPAC addresses initiatives with high anti-money-laundering risk or cross-border elements. The composition of these Committees includes senior Risk, Legal, Compliance, Bank Regulatory, Operations and Technology and Operational Risk executives and is supported by other specialists, including fair lending. A member of Citibank, N.A. senior management also participates in the CPAC process.


•	Investment Products Risk Committee: this Committee chairs two new product approval committees to facilitate analysis and discussion of new retail investment products and services manufactured and/or distributed by Citi.


•	Manufacturing Product Approval Committee: responsible for reviewing new or meaningfully modified products or transactions manufactured by Citi that are distributed to individual investors as well as third-party retail distributors of Citi manufactured products.


•	Distribution Product Approval Committee: approves new investment products and services, including those manufactured by third parties as part of Citi’s “open architecture” distribution model, before they are offered to individual investors via Citi distribution businesses (e.g., Private Bank, Consumer, etc.) and sets requirements for the periodic review of existing products and services.

There are also many other committees across the firm that play critical roles in the management of risks, such

as the Asset and Liability Committee (ALCO) and the Operational Risk Council.

Risk Aggregation and Stress Testing

While Citi’s major risk areas are discussed individually on the following pages, these risks are also reviewed and managed in conjunction with one another and across the various businesses via Citi’s risk aggregation and stress testing processes. Moreover, in 2013, a formal policy governing Citi’s global systemic stress testing was established.

As noted above, independent risk management monitors and controls major risk exposures and concentrations across the organization. This requires the aggregation of risks, within and across businesses, as well as subjecting those risks to various stress scenarios in order to assess the potential economic impact they may have on Citigroup.

Stress tests are in place across Citi’s entire portfolio (i.e., trading, available-for-sale and accrual portfolios). These firm-wide stress reports measure the potential impact to Citi and its component businesses of changes in various types of key risk factors (e.g., interest rates, credit spreads, etc.). The reports also measure the potential impact of a number of historical and hypothetical forward-looking systemic stress scenarios, as developed internally by independent risk management. These firm-wide stress tests are produced on a monthly basis, and results are reviewed by senior management and the Board of Directors.

Supplementing the stress testing described above, Citi independent risk management, working with input from the businesses and finance, provides periodic updates to senior management and the Board of Directors on significant potential areas of concern across Citigroup that can arise from risk concentrations, financial market participants and other systemic issues. These areas of focus are intended to be forward-looking assessments of the potential economic impacts to Citi that may arise from these exposures.

The stress-testing and focus-position exercises described above are a supplement to the standard limit-setting and risk-capital exercises described below, as these processes incorporate events in the marketplace and within Citi that impact the firm’s outlook on the form, magnitude, correlation and timing of identified risks that may arise. In addition to enhancing awareness and understanding of potential exposures, the results of these processes then serve as the starting point for developing risk management and mitigation strategies.

In addition to Citi’s ongoing, internal stress testing described above, Citi is also required to perform stress testing on a periodic basis for a number of regulatory exercises, including the Federal Reserve Board’s Comprehensive Capital Analysis and Review (CCAR) and the OCC’s Dodd-Frank Act Stress Testing (DFAST). These regulatory exercises typically prescribe certain defined scenarios under which stress testing should be conducted, and they also provide defined forms for the output of the results. For additional information, see “Risk Factors—Business and Operational Risks” above.

Risk Capital

Citi calculates and allocates risk capital across the company in order to consistently measure risk taking across business activities and to assess risk-reward relationships.

Risk capital is defined as the amount of capital required to absorb potential unexpected economic losses resulting from extremely severe events over a one-year time period.


•	“Economic losses” include losses that are reflected on Citi’s Consolidated Income Statement and fair value adjustments to the Consolidated Financial Statements, as well as any further declines in value not captured on the Consolidated Income Statement.


•	“Unexpected losses” are the difference between potential extremely severe losses and Citi’s expected (average) loss over a one-year time period.


•	“Extremely severe” is defined as potential loss at a 99.9% and a 99.97% confidence level, based on the distribution of observed events and scenario analysis.

The drivers of economic losses are risks which, for Citi, are broadly categorized as credit risk, market risk and operational risk. Citi’s risk capital framework is reviewed and enhanced on a regular basis in light of market developments and evolving practices.

CREDIT RISK

Credit risk is the potential for financial loss resulting from the failure of a borrower or counterparty to honor its financial or contractual obligations. Credit risk arises in many of Citigroup’s business activities, including:


•	wholesale and retail lending;


•	capital markets derivative transactions;


•	structured finance; and


•	repurchase agreements and reverse repurchase transactions.

Credit risk also arises from settlement and clearing activities, when Citi transfers an asset in advance of receiving its counter-value or advances funds to settle a transaction on behalf of a client. Concentration risk, within credit risk, is the risk associated with having credit exposure concentrated within a specific client, industry, region or other category.

Credit Risk Management

Credit risk is one of the most significant risks Citi faces as an institution. As a result, Citi has a well established framework in place for managing credit risk across all businesses. This includes a defined risk appetite, credit limits and credit policies, both at the business level as well as at the firm-wide level. Citi’s credit risk management also includes processes and policies with respect to problem recognition, including “watch lists,” portfolio review, updated risk ratings and classification triggers.

With respect to Citi’s settlement and clearing activities, intra-day client usage of lines is closely monitored against limits, as well as against “normal” usage patterns. To the extent a problem develops, Citi typically moves the client to a secured (collateralized) operating model. Generally, Citi’s intra-day settlement and clearing lines are uncommitted and cancellable at any time.

To manage concentration of risk within credit risk, Citi has in place a concentration management framework consisting of industry limits, obligor limits and single-name triggers. In addition, as noted under “Managing Global Risk—Risk Aggregation and Stress Testing” above, independent risk management reviews concentration of risk across Citi’s regions and businesses to assist in managing this type of risk.

Credit Risk Measurement and Stress Testing

Credit exposures are generally reported in notional terms for accrual loans, reflecting the value at which the loans are carried on the Consolidated Balance Sheet. Credit exposure arising from capital markets activities is generally expressed as the current mark-to-market, net of margin, reflecting the net value owed to Citi by a given counterparty.

The credit risk associated with these credit exposures is a function of the creditworthiness of the obligor, as well as the terms and conditions of the specific obligation. Citi assesses the credit risk associated with its credit exposures on a regular basis through its loan loss reserve process (see “Significant Accounting Policies and Significant Estimates” and Notes 1 and 16 to the Consolidated Financial Statements), as well as through regular stress testing at the company, business, geography and product levels. These stress-testing processes typically estimate potential incremental credit costs that would occur as a result of either downgrades in the credit quality or defaults of the obligors or counterparties.



In millions of dollars	2013			2012			2011			2010			2009
Consumer loans
In U.S. offices
Mortgage and real estate⁽¹⁾	$	108,453		$	125,946		$	139,177		$	151,469		$	183,842
Installment, revolving credit, and other	13,398			14,070			15,616			28,291			58,099
Cards	115,651			111,403			117,908			122,384			28,951
Commercial and industrial	6,592			5,344			4,766			5,021			5,640
Lease financing	—			—			1			2			11
	$	244,094		$	256,763		$	277,468		$	307,167		$	276,543
In offices outside the U.S.
Mortgage and real estate⁽¹⁾	$	55,511		$	54,709		$	52,052		$	52,175		$	47,297
Installment, revolving credit, and other	33,182			33,958			32,673			36,132			39,859
Cards	36,740			40,653			38,926			40,948			41,493
Commercial and industrial	24,107			22,225			21,915			18,028			17,129
Lease financing	769			781			711			665			331
	$	150,309		$	152,326		$	146,277		$	147,948		$	146,109
Total Consumer loans	$	394,403		$	409,089		$	423,745		$	455,115		$	422,652
Unearned income	(572		)	(418		)	(405		)	69			808
Consumer loans, net of unearned income	$	393,831		$	408,671		$	423,340		$	455,184		$	423,460
Corporate loans
In U.S. offices
Commercial and industrial	$	32,704		$	26,985		$	20,830		$	13,669		$	15,614
Loans to financial institutions	25,102			18,159			15,113			8,995			6,947
Mortgage and real estate⁽¹⁾	29,425			24,705			21,516			19,770			22,560
Installment, revolving credit, and other	34,434			32,446			33,182			34,046			17,737
Lease financing	1,647			1,410			1,270			1,413			1,297
	$	123,312		$	103,705		$	91,911		$	77,893		$	64,155
In offices outside the U.S.
Commercial and industrial	$	82,663		$	82,939		$	79,764		$	72,166		$	67,344
Loans to financial institutions	38,372			37,739			29,794			22,620			15,113
Mortgage and real estate⁽¹⁾	6,274			6,485			6,885			5,899			9,779
Installment, revolving credit, and other	18,714			14,958			14,114			11,829			9,683
Lease financing	527			605			568			531			1,295
Governments and official institutions	2,341			1,159			1,576			3,644			2,949
	$	148,891		$	143,885		$	132,701		$	116,689		$	106,163
Total Corporate loans	$	272,203		$	247,590		$	224,612		$	194,582		$	170,318
Unearned income	(562		)	(797		)	(710		)	(972		)	(2,274		)
Corporate loans, net of unearned income	$	271,641		$	246,793		$	223,902		$	193,610		$	168,044
Total loans—net of unearned income	$	665,472		$	655,464		$	647,242		$	648,794		$	591,504
Allowance for loan losses—on drawn exposures	(19,648		)	(25,455		)	(30,115		)	(40,655		)	(36,033		)
Total loans—net of unearned income and allowance for credit losses	$	645,824		$	630,009		$	617,127		$	608,139		$	555,471
Allowance for loan losses as a percentage of total loans—net of unearned income⁽²⁾	2.97		%	3.92		%	4.69		%	6.31		%	6.09		%
Allowance for Consumer loan losses as a percentage of total Consumer loans—net of unearned income⁽²⁾	4.34		%	5.57		%	6.45		%	7.81		%	6.69		%
Allowance for Corporate loan losses as a percentage of total Corporate loans—net of unearned income⁽²⁾	0.97		%	1.14		%	1.31		%	2.75		%	4.57		%



In millions of dollars	2013			2012			2011			2010			2009
Allowance for loan losses at beginning of period	$	25,455		$	30,115		$	40,655		$	36,033		$	29,616
Provision for loan losses
Consumer⁽¹⁾⁽²⁾	$	7,603		$	10,371		$	12,075		$	24,886		$	32,115
Corporate	1			87			(739		)	75			6,353
	$	7,604		$	10,458		$	11,336		$	24,961		$	38,468
Gross credit losses
Consumer
In U.S. offices⁽¹⁾⁽²⁾	$	8,402		$	12,226		$	15,767		$	24,183		$	17,637
In offices outside the U.S.	3,998			4,139			4,932			6,548			8,437
Corporate
Commercial and industrial, and other
In U.S. offices	125			154			392			1,222			3,299
In offices outside the U.S.	144			305			649			571			1,564
Loans to financial institutions
In U.S. offices	2			33			215			275			274
In offices outside the U.S.	7			68			391			111			448
Mortgage and real estate
In U.S offices	62			59			182			953			592
In offices outside the U.S.	29			21			171			286			151
	$	12,769		$	17,005		$	22,699		$	34,149		$	32,402
Credit recoveries
Consumer
In U.S. offices	$	1,073		$	1,302		$	1,467		$	1,323		$	576
In offices outside the U.S.	1,065			1,055			1,159			1,209			970
Corporate
Commercial & industrial, and other
In U.S offices	62			243			175			591			276
In offices outside the U.S.	52			95			93			115			87
Loans to financial institutions
In U.S. offices	1			—			—			—			—
In offices outside the U.S.	20			43			89			132			11
Mortgage and real estate
In U.S offices	31			17			27			130			3
In offices outside the U.S.	2			19			2			26			1
	$	2,306		$	2,774		$	3,012		$	3,526		$	1,924
Net credit losses
In U.S. offices⁽¹⁾⁽²⁾	$	7,424		$	10,910		$	14,887		$	24,589		$	20,947
In offices outside the U.S.	3,039			3,321			4,800			6,034			9,531
Total	$	10,463		$	14,231		$	19,687		$	30,623		$	30,478
Other - net ^{(3)(4)(5)(6)(7)(8)}	$	(2,948	)	$	(887	)	$	(2,189	)	10,284			$	(1,573	)
Allowance for loan losses at end of period	$	19,648		$	25,455		$	30,115		$	40,655		$	36,033
Allowance for loan losses as a % of total loans⁽⁹⁾	2.97		%	3.92		%	4.69		%	6.31		%	6.09		%
Allowance for unfunded lending commitments⁽¹⁰⁾	$	1,229		$	1,119		$	1,136		$	1,066		$	1,157
Total allowance for loan losses and unfunded lending commitments	$	20,877		$	26,574		$	31,251		$	41,721		$	37,190
Net Consumer credit losses⁽¹⁾	$	10,262		$	14,008		$	18,073		$	28,199		$	24,528
As a percentage of average Consumer loans	2.63		%	3.43		%	4.15		%	5.72		%	5.41		%
Net Corporate credit losses	$	201		$	223		$	1,614		$	2,424		$	5,950
As a percentage of average Corporate loans	0.08		%	0.09		%	0.79		%	1.27		%	3.13		%

Non-Accrual Loans and Assets and Renegotiated Loans

The following pages include information on Citi’s “Non-Accrual Loans and Assets” and “Renegotiated Loans.” There is a certain amount of overlap among these categories. The following summary provides a general description of each category:

Non-Accrual Loans and Assets:


•	Corporate and Consumer (commercial market) non-accrual status is based on the determination that payment of interest or principal is doubtful.


•	Consumer non-accrual status is generally based on aging, i.e., the borrower has fallen behind in payments.


•	Mortgage loans discharged through Chapter 7 bankruptcy, other than FHA-insured loans, are classified as non-accrual. In addition, home equity loans in regulated bank entities are classified as non-accrual if the related residential first mortgage loan is 90 days or more past due.


•	North America Citi-branded cards and Citi retail services are not included because under industry standards, credit card loans accrue interest until such loans are charged off, which typically occurs at 180 days contractual delinquency.

Renegotiated Loans:


•	Both Corporate and Consumer loans whose terms have been modified in a troubled debt restructuring (TDR).


•	Includes both accrual and non-accrual TDRs.

Non-Accrual Loans and Assets

The table below summarizes Citigroup’s non-accrual loans as of the periods indicated. Non-accrual loans may still be current on interest payments. In situations where Citi reasonably expects that only a portion of the principal owed will ultimately be collected, all payments received are reflected as a reduction of principal and not as interest income. For all other non-accrual loans, cash interest receipts are generally recorded as revenue.

Renegotiated Loans

The following table presents Citi’s loans modified in TDRs.



In millions of dollars	Dec. 31, 2013		Dec. 31, 2012
Corporate renegotiated loans⁽¹⁾
In U.S. offices
Commercial and industrial⁽²⁾	$	36	$	180
Mortgage and real estate⁽³⁾	143		72
Loans to financial institutions	14		17
Other	364		447
	$	557	$	716
In offices outside the U.S.
Commercial and industrial⁽²⁾	$	161	$	95
Mortgage and real estate⁽³⁾	18		59
Other	58		3
	$	237	$	157
Total Corporate renegotiated loans	$	794	$	873
Consumer renegotiated loans^(4)(5)(6)(7)
In U.S. offices
Mortgage and real estate⁽⁸⁾	$	18,922	$	22,903
Cards	2,510		3,718
Installment and other⁽⁹⁾	626		1,088
	$	22,058	$	27,709
In offices outside the U.S.
Mortgage and real estate	$	641	$	932
Cards⁽¹⁰⁾	830		866
Installment and other	834		904
	$	2,305	$	2,702
Total Consumer renegotiated loans	$	24,363	$	30,411


(1)	Includes $312 million and $267 million of non-accrual loans included in the non-accrual assets table above at December 31, 2013 and December 31, 2012, respectively. The remaining loans are accruing interest.

(2)

In addition to modifications reflected as TDRs at December 31, 2013, Citi also modified $24 million and $91 million of commercial loans risk rated “Substandard Non-Performing” or worse (asset category defined by banking regulators) in offices inside and outside the U.S, respectively. These modifications were not considered TDRs because the modifications did not involve a concession (a required element of a TDR for accounting purposes).

(3)

In addition to modifications reflected as TDRs at December 31, 2013, Citi also modified $10 million of commercial real estate loans risk rated “Substandard Non-Performing” or worse (asset category defined by banking regulators) in offices inside the U.S. These modifications were not considered TDRs because the modifications did not involve a concession (a required element of a TDR for accounting purposes).


(4)	Includes $3,637 million and $4,198 million of non-accrual loans included in the non-accrual assets table above at December 31, 2013 and 2012, respectively. The remaining loans are accruing interest.


(5)	Includes $29 million and $38 million of commercial real estate loans at December 31, 2013 and 2012, respectively.


(6)	Includes $295 million and $261 million of other commercial loans at December 31, 2013 and 2012, respectively.


(7)	Smaller-balance homogeneous loans were derived from Citi’s risk management systems.


(8)	Reduction in 2013 includes $4,161 million related to TDRs sold or transferred to held-for-sale.


(9)	Reduction in 2013 includes approximately $345 million related to TDRs sold or transferred to held-for-sale.


(10)	Reduction in 2013 includes $52 million related to the sale of Brazil Credicard.

Forgone Interest Revenue on Loans ⁽¹⁾



In millions of dollars	In U.S. offices		In non- U.S. offices		2013 total
Interest revenue that would have been accrued at original contractual rates⁽²⁾	$	2,390	$	769	$	3,159
Amount recognized as interest revenue ⁽²⁾	1,140		327		1,467
Forgone interest revenue	$	1,250	$	442	$	1,692


(1)	Relates to Corporate non-accrual loans, renegotiated loans and Consumer loans on which accrual of interest has been suspended.


(2)	Interest revenue in offices outside the U.S. may reflect prevailing local interest rates, including the effects of inflation and monetary correction in certain countries.

North America Consumer Mortgage Lending

Overview

Citi’s North America Consumer mortgage portfolio consists of both residential first mortgages and home equity loans. At December 31, 2013, Citi’s North America Consumer residential first mortgage portfolio was $75.9 billion (compared to $88.2 billion at December 31, 2012), while the home equity loan portfolio was $31.6 billion (compared to $37.2 billion at December 31, 2012). At December 31, 2013, $44.6 billion of first mortgages was recorded in Citi Holdings, with the remaining $31.3 billion recorded in Citicorp. At December 31, 2013, $28.7 billion of home equity loans was recorded in Citi Holdings, with the remaining $2.9 billion recorded in Citicorp.

Citi’s residential first mortgage portfolio included $7.7 billion of loans with FHA insurance or VA guarantees at December 31, 2013, compared to $8.5 billion at December 31, 2012. This portfolio consists of loans to low-to-moderate-income borrowers with lower FICO (Fair Isaac Corporation) scores and generally has higher loan-to-value ratios (LTVs). Credit losses on FHA loans are borne by the sponsoring governmental agency, provided that the insurance terms have not been rescinded as a result of an origination defect. With respect to VA loans, the VA establishes a loan-level loss cap, beyond which Citi is liable for loss. While FHA and VA loans have high delinquency rates, given the insurance and guarantees, respectively, Citi has experienced negligible credit losses on these loans.

In addition, Citi’s residential first mortgage portfolio included $1.1 billion of loans with origination LTVs above 80% that have insurance through mortgage insurance companies at December 31, 2013, compared to $1.5 billion at December 31, 2012. At December 31, 2013, the residential first mortgage portfolio also had $0.8 billion of loans subject to long-term standby commitments (LTSCs) with U.S. government-sponsored entities (GSEs) for which Citi has limited exposure to credit losses, compared to $1.0 billion at December 31, 2012. Citi’s home equity loan portfolio also included $0.3 billion of loans subject to LTSCs with GSEs (compared to $0.4 billion at December 31, 2012) for which Citi also has limited exposure to credit losses. These guarantees and commitments may be rescinded in the event of loan origination defects. Citi’s allowance for loan loss calculations takes into consideration the impact of the guarantees and commitments described above.

Citi does not offer option-adjustable rate mortgages/negative-amortizing mortgage products to its customers. As a result, option-adjustable rate mortgages/negative-amortizing mortgages represent an insignificant portion of total balances, since they were acquired only incidentally as part of prior portfolio and business purchases.

As of December 31, 2013, Citi’s North America residential first mortgage portfolio contained approximately $5.0 billion of adjustable rate mortgages that are currently required to make a payment only of accrued interest for the payment period, or an interest-only payment, compared to $7.7 billion at December 31, 2012. This decline resulted primarily from repayments of $1.2 billion, conversions to

amortizing loans of $1.0 billion and asset sales of $0.4 billion. Borrowers who are currently required to make an interest-only payment cannot select a lower payment that would negatively amortize the loan. Residential first mortgages with this payment feature are primarily to high-credit-quality borrowers who have on average significantly higher origination and refreshed FICO scores than other loans in the residential first mortgage portfolio, and have exhibited significantly lower 30+ delinquency rates as compared with residential first mortgages without this payment feature. As such, Citi does not believe the residential mortgage loans with this payment feature represent substantially higher risk in the portfolio.

North America Consumer Mortgage Quarterly Credit Trends—Net Credit Losses and Delinquencies—Residential First Mortgages

The following charts detail the quarterly trends in loan balances, net credit losses and delinquencies for Citigroup’s residential first mortgage portfolio in North America. As set forth in the tables below, approximately 59% of Citi’s residential first mortgage exposure arises from its portfolio in Citi Holdings, which includes residential first mortgages originated by both CitiMortgage as well as Citi’s legacy CitiFinancial North America business.

North America Residential First Mortgage - EOP Loans⁽¹⁾

In billions of dollars

North America Residential First Mortgage - Net Credit Losses⁽¹⁾

In millions of dollars

Note: CMI refers to loans originated by CitiMortgage. CFNA refers to loans originated by CitiFinancial.

(1)

Includes the following charge-offs related to Citi’s fulfillment of its obligations under the national mortgage and independent foreclosure review settlements: 4Q’12, $32 million; 1Q’13, $25 million; 2Q’13, $18 million; 3Q’13, $8 million; and 4Q’13, $6 million. Citi expects net credit losses in its residential first mortgage portfolio in Citi Holdings to continue to be impacted by its fulfillment of the terms of the independent foreclosure review settlement. See “Independent Foreclosure Review Settlement” below.


(2)	4Q’12 excludes an approximately $10 million benefit to charge-offs related to finalizing the impact of OCC guidance with respect to the treatment of mortgage loans where the borrower has gone through Chapter 7 bankruptcy.

(3)

4Q’13 excludes approximately $84 million of net credit losses consisting of (i) approximately $69 million of charge-offs related to a change in the charge-off policy for mortgages originated in CitiFinancial to more closely align to policies used in the CitiMortgage business, and (ii) approximately $15 million of charge-offs related to a change in the estimate of net credit losses related to collateral dependent loans to borrowers that have gone through Chapter 7 bankruptcy.


(4)	Year-over-year change in the S&P/Case-Shiller U.S. National Home Price Index.


(5)	Year-over-year change as of November 2013.

North America Residential First Mortgage Delinquencies-Citi Holdings

In billions of dollars

Note: Days past due excludes (i) U.S. mortgage loans that are guaranteed by U.S. government-sponsored agencies because the potential loss predominantly resides with the U.S. agencies, and (ii) loans recorded at fair value. Totals may not sum due to rounding.

As set forth in the tables above, while loan balances and net credit losses have declined in both the CitiMortgage and CitiFinancial portfolios in Citi Holdings, the loans originated in the CitiFinancial business have become a larger proportion of the total North America residential first mortgage portfolio within Citi Holdings. As a result of the CitiFinancial borrower profile, these loans tend to have higher net credit loss rates, at approximately 5.0%, compared to a net credit loss rate of 1.0% for CitiMortgage residential first mortgages in Citi Holdings.

During 2013, continued management actions, including asset sales and, to a lesser extent, loan modifications, were the primary drivers of the overall delinquency improvement for Citi Holdings residential first mortgage portfolio. These management actions, along with a significant improvement in the Home Price Index (HPI) in the U.S. housing market during 2013 (despite a moderation in such improvement during the fourth quarter of 2013), also resulted in the improvement in net credit losses in the portfolio. In addition, Citi continued to observe fewer loans entering the 30-89 days past due delinquency bucket during the year, which it attributes to the continued general improvement in the economic environment.

During 2013, Citi sold approximately $2.3 billion of delinquent residential first mortgages (compared to $2.1 billion in 2012), including $0.2 billion during the fourth quarter of 2013. Citi also sold approximately $3.7 billion of re-performing residential first mortgages during 2013, although, as previously disclosed, sales of re-performing residential first mortgages tend to be yield sensitive. Additionally, Citi sold approximately $0.2 billion of U.S. mortgage loans that were guaranteed by U.S. government sponsored agencies and excluded from the charts above.

In addition, Citi modified approximately $1.4 billion of residential first mortgages during 2013 (compared to $0.9 billion in 2012), including $0.3 billion during the fourth quarter of 2013. Citi’s residential first mortgage portfolio continued to show some signs of the impact of re-defaults of previously modified mortgages during the year. For additional information on Citi’s residential first mortgage loan modifications, see Note 15 to the Consolidated Financial Statements.

Citi’s ability to reduce delinquencies or net credit losses in its residential first mortgage portfolio pursuant to asset sales or modifications could be limited going forward due to, among other things, the lower remaining inventory of delinquent loans to sell or modify, additional increases in interest rates or the lack of market demand for asset sales.

Citi’s residential first mortgages portfolio is primarily concentrated in California and the New York/New Jersey/Connecticut region (with New York the largest of the three states). The significant improvement in refreshed LTV percentages at December 31, 2013 was primarily the result of HPI improvements across substantially all metropolitan statistical areas, thereby increasing values used in the determination of LTV, although the HPI improvement varies from market to market. Additionally, delinquent and re-performing asset sales of high LTV loans during 2013 further reduced the amount of loans with greater than 100% LTV. To a lesser extent, modification programs involving principal forgiveness further reduced the loans in this category. While 90+ days past due delinquency rates have improved for the states or regions above, the continued lengthening of the foreclosure process (see discussion under “Foreclosures” below) could result in less improvement in these rates in the future, especially in judicial states.

Foreclosures

The substantial majority of Citi’s foreclosure inventory consists of residential first mortgages. At December 31, 2013, Citi’s foreclosure inventory included approximately $0.8 billion, or 1.2%, of Citi’s residential first mortgages, compared to approximately $1.2 billion, or 1.5%, at December 31, 2012 (based on the dollar amount of ending net receivables of loans in foreclosure inventory, excluding loans that are guaranteed by U.S. government agencies and loans subject to LTSCs).

While Citi’s foreclosure inventory declined year-over-year, due largely to portfolio delinquency trends, asset sales

and loan modifications, extensive state requirements and other regulatory requirements for the foreclosure process continue to impact foreclosure timelines. Citi’s average timeframes to move a loan out of foreclosure are two to three times longer than historical norms. Extended foreclosure timelines continue to be even more pronounced in judicial states (i.e., states that require foreclosures to be processed via court approval), where

Citi has a higher concentration of residential first mortgages in foreclosure. Active foreclosure units in process for over two years as a percentage of Citi’s total foreclosure inventory was approximately 29%, unchanged from December 31, 2012.

Citi’s servicing agreements for mortgage loans sold to the U.S. government sponsored enterprises (GSEs) generally provide the GSEs with significant mortgage servicing oversight, including, among other things, foreclosures or modification completion timelines. The agreements allow for the GSEs to take action against a servicer for violation of the timelines, including imposing compensatory fees. While the GSEs have not historically exercised their rights to impose compensatory fees, they have begun to regularly impose such fees.

In connection with Citi’s sale of mortgage servicing rights (MSRs) announced in January 2014, Citi and Fannie Mae substantially resolved pending and future compensatory fee claims related to Citi’s servicing of the loans sold in the transaction (for additional information, see “Mortgage Servicing Rights” below). To date, the GSEs’ imposition of compensatory fees, as a result of the extended foreclosure timelines or in connection with the announced sale of MSRs or otherwise, has not been material.

North America Consumer Mortgage Quarterly Credit Trends—Net Credit Losses and Delinquencies—Home Equity Loans

Citi’s home equity loan portfolio consists of both fixed-rate home equity loans and loans extended under home equity lines of credit. Fixed-rate home equity loans are fully amortizing. Home equity lines of credit allow for amounts to be drawn for a period of time with the payment of interest only and then, at the end of the draw period, the then-outstanding amount is converted to an amortizing loan (the interest-only payment feature during the revolving period is standard for this product across the industry). Prior to June 2010, Citi’s originations of home equity lines of credit typically had a 10-year draw period. Beginning in June 2010, Citi’s originations of home equity lines of credit typically have a five-year draw period as Citi changed these terms to mitigate risk. After conversion, the home equity loans typically have a 20-year amortization period.

At December 31, 2013, Citi’s home equity loan portfolio of $31.6 billion included approximately $18.9 billion of home equity lines of credit (Revolving HELOCs) that are still within their revolving period and have not commenced amortization, or “reset,” compared to $22.0 billion at December 31, 2012. The following chart sets forth these Revolving HELOCs (based on certain FICO and combined loan-to-value (CLTV) characteristics of the portfolio) and the year in which they reset:

Based on the limited number of Revolving HELOCs that have begun amortization as of December 31, 2013, approximately 6.0% of the amortizing home equity loans were 30+ days past due compared to 2.8% of the total outstanding home equity loan portfolio (amortizing and non-amortizing). However, these resets have generally occurred during a period of declining interest rates, which Citi believes has likely reduced the overall “payment shock” to the borrower. Citi continues to monitor this reset risk closely, particularly as it approaches 2015, and Citi will continue to consider any potential impact in determining its allowance for loan loss reserves. In addition, management continues to review additional actions to offset potential reset risk, such as extending offers to non-amortizing home equity loan borrowers to convert the non-amortizing home equity loan to a fixed-rate amortizing loan. See also “Risk Factors—Business and Operational Risks” above.

The following charts detail the quarterly trends in loan balances, net credit losses and delinquencies for Citi’s home equity loan portfolio in North America. The vast majority of Citi’s home equity loan exposure arises from its portfolio in Citi Holdings.

North America Home Equity - EOP Loans

In billions of dollars

North America Home Equity - Net Credit Losses⁽¹⁾

In millions of dollars

(1)

Includes the following amounts of charge-offs related to Citi’s fulfillment of its obligations under the national mortgage and independent foreclosure review settlements: 4Q’12, $30 million; 1Q’13, $51 million; 2Q’13, $12 million; 3Q’13, $14 million; and 4Q’13, $15 million. Citi expects net credit losses in its home equity loan portfolio in Citi Holdings to continue to be impacted by its fulfillment of the terms of the independent foreclosure review settlement. See “Independent Foreclosure Review Settlement” below.


(2)	4Q’12 excludes an approximately $30 million benefit to charge-offs related to finalizing the impact of the OCC guidance with respect to the treatment of mortgage loans where the borrower has gone through Chapter 7 bankruptcy.

(3)

4Q’13 excludes approximately $100 million of net credit losses consisting of (i) approximately $64 million for the acceleration of accounting losses associated with modified home equity loans determined to be collateral dependent, (ii) approximately $22 million of charge-offs related to a change in the charge-off policy for mortgages originated in CitiFinancial to more closely align to policies used in the CitiMortgage business, and (iii) approximately $14 million of charge-offs related to a change in the estimate of net credit losses related to collateral dependent loans to borrowers that have gone through Chapter 7 bankruptcy.

North America Home Equity Loan Delinquencies - Citi Holdings

In billions of dollars

Note: Days past due excludes (i) U.S. mortgage loans that are guaranteed by U.S. government-sponsored agencies, because the potential loss predominantly resides with the U.S. agencies, and (ii) loans recorded at fair value. Totals may not sum due to rounding.

Citi’s home equity portfolio is primarily concentrated in California and the New York/New Jersey/Connecticut region (with New York the largest of the three states). The significant improvement in refreshed CLTV percentages as of December 31, 2013 were primarily the result of improvements in HPI in these states/regions, thereby increasing values used in the determination of CLTV.

National Mortgage Settlement

Under the national mortgage settlement, entered into by Citi and other financial institutions in February 2012, Citi agreed to provide customer relief in the form of loan modifications for delinquent borrowers, including principal reductions, and other loss mitigation activities, and refinancing concessions to enable current borrowers whose properties are worth less than the balance of their loans to reduce their interest rates. Citi believes it has fulfilled its requirement for the loan modification remediation and refinancing concessions under the settlement. The results are pending review and

certification of the monitor required by the settlement, which is not expected to be completed until the first half of 2014.

Independent Foreclosure Review Settlement

As of December 31, 2013, Citi continues to fulfill its mortgage assistance obligations under the independent foreclosure review settlement, entered into by Citi and other major mortgage servicers in January 2013, and estimates it will incur additional net credit losses of approximately $25 million per quarter through the first half of 2014. Citi continues to believe its loan loss reserve as of December 31, 2013 will be sufficient to cover any mortgage assistance under the settlement.

Citi Holdings Consumer Mortgage FICO and LTV

The following charts detail the quarterly trends for the residential first mortgage and home equity loan portfolios within Citi Holdings by risk segment (FICO and LTV/CLTV).

Residential First Mortgages - Citi Holdings (EOP Loans)

In billions of dollars

Home Equity Loans - Citi Holdings (EOP Loans)

In billions of dollars

Notes: Tables may not sum due to rounding. Data appearing in the tables above have been sourced from Citi’s risk systems and, as such, may not reconcile with disclosures elsewhere generally due to differences in methodology or variations in the manner in which information is captured. Citi has noted such variations in instances where it believes they could be material to reconcile to the information presented elsewhere.


(1)	Excludes loans in Canada and Puerto Rico, loans guaranteed by U.S. government agencies (residential first mortgages table only), loans recorded at fair value (residential first mortgages table only) and loans subject to LTSCs.

During 2013, Citi Holdings residential first mortgages with an LTV above 100% declined by 65%, and with an LTV above 100% with FICO scores of less than 620 by 56%. The residential first mortgage portfolio has migrated to a higher FICO and lower LTV distribution primarily due to home price appreciation, asset sales of delinquent first mortgages and principal forgiveness. Loans 90+ days past due in the residential first mortgage portfolio with refreshed FICO scores of less than 620 as well as LTVs above 100% declined 64% year-over-year to $0.4 billion primarily due to home price appreciation, liquidations and asset sales of delinquent first mortgages.

In addition, during 2013, Citi Holdings home equity loans with a CLTV above 100% declined by 47%, and with a CLTV above 100% and FICO scores of less than 620 by 50%, primarily due to home price appreciation, repayments and charge-offs. Loans 90+ days past due in the home equity portfolio with refreshed FICO scores of less than 620 as well as CLTVs above 100% declined 60% year-over-year to $130 million primarily due to charge-offs, home price appreciation and modifications.

Mortgage Servicing Rights

To minimize credit and liquidity risk, Citi sells most of the conforming mortgage loans it originates but retains the servicing rights. These sale transactions create an intangible asset referred to as mortgage servicing rights (MSRs), which are recorded at fair value on Citi’s Consolidated Balance Sheet. The fair value of MSRs is primarily affected by changes in prepayments of mortgages that result from shifts in mortgage interest rates. Specifically, higher interest rates tend to lead to declining prepayments which causes the fair value of the MSRs to increase. In managing this risk, Citi economically hedges a significant portion of the value of its MSRs through the use of interest rate derivative contracts, forward purchase and sale commitments of mortgage-backed securities and purchased securities classified as trading account assets.

Citi’s MSRs totaled $2.7 billion as of December 31, 2013, compared to $2.6 billion and $1.9 billion at September 30, 2013 and December 31, 2012, respectively. The increase year-over-year primarily reflected the impact of higher interest rates and newly capitalized MSRs, partially offset by amortization. At December 31, 2013, approximately $2.1 billion of MSRs were specific to Citicorp, with the remainder to Citi Holdings. For additional information on Citi’s MSRs, see Note 22 to the Consolidated Financial Statements.

As announced in January 2014, Citi signed an agreement for the sale of Citi’s MSRs portfolio representing approximately 64,000 loans with outstanding unpaid principal balances of $10.3 billion (approximately 10% of Citi Holdings third-party servicing portfolio). The sale resulted in no adjustment to the value of Citi’s MSRs. The MSRs portfolio being sold includes the majority of delinquent loans serviced by CitiMortgage for Fannie Mae and represents almost 20% of the total loans serviced by CitiMortgage that are 60 days or more past due. Citi and Fannie Mae have substantially resolved pending and future compensatory fee claims related to Citi’s servicing on those loans. Transfer of the MSRs portfolio is expected to occur in tranches during 2014.

Citigroup Residential Mortgages—Representations and Warranties Repurchase Reserve

Overview

In connection with Citi’s sales of residential mortgage loans to the U.S. government-sponsored entities (GSEs) and private investors, as well as through private-label residential mortgage securitizations, Citi typically makes representations and warranties that the loans sold meet certain requirements, such as the loan’s compliance with any applicable loan criteria established by the buyer and the validity of the lien securing the loan. The specific representations and warranties made by Citi in any particular transaction depend on, among other things, the nature of the transaction and the requirements of the investor (e.g., whole loan sale to the GSEs versus loans sold through securitization transactions), as well as the credit quality of the loan (e.g., prime, Alt-A or subprime).

These sales expose Citi to potential claims for alleged breaches of its representations and warranties. In the event of a breach of its representations and warranties, Citi could be required either to repurchase the mortgage loans with the identified defects (generally at unpaid principal balance plus

accrued interest) or to indemnify (“make whole”) the investors for their losses on these loans.

Citi has recorded a repurchase reserve for its potential repurchase or make-whole liability regarding residential mortgage representation and warranty claims. During the period 2005-2008, Citi sold approximately $91 billion of mortgage loans through private-label securitizations, $66.4 billion of which was sold through its legacy Securities and Banking business and $24.6 billion of which was sold through CitiMortgage. Beginning in the first quarter of 2013, Citi considers private-label residential mortgage securitization representation and warranty claims as part of its litigation accrual analysis and not as part of its repurchase reserve. See Note 28 to the Consolidated Financial Statements for additional information Citi’s potential private-label residential mortgage securitization exposure.

Accordingly, Citi’s repurchase reserve has been recorded for purposes of its potential representation and warranty repurchase liability resulting from its whole loan sales to the GSEs and, to a lesser extent private investors, which are made through Citi’s Consumer business in CitiMortgage.

Repurchase Reserve

The repurchase reserve is based on various assumptions which are primarily based on Citi’s historical repurchase activity with the GSEs. As of December 31, 2013, the most significant assumptions used to calculate the reserve levels are the: (i) probability of a claim based on correlation between loan characteristics and repurchase claims; (ii) claims appeal success rates; and (iii) estimated loss per repurchase or make-whole payment. In addition, as part of its repurchase reserve analysis, Citi considers reimbursements estimated to be received from third-party sellers, which are generally based on Citi’s analysis of its most recent collection trends and the financial viability of the third-party sellers (i.e., to the extent Citi made representation and warranties on loans it purchased from third-party sellers that remain financially viable, Citi may have the right to seek recovery from the third party based on representations and warranties made by the third party to

Citi (a “back-to-back” claim)).

During 2013, Citi recorded an additional reserve of $470 million relating to its loan sale repurchase exposure, all of which was recorded in the first half of 2013. During the second and third quarters of 2013, Citi entered into previously-disclosed agreements with Fannie Mae and Freddie Mac, respectively, to resolve potential future origination-related representation and warranty repurchase claims on a pool of residential first mortgage loans that were, in each case, originated between 2000 and 2012. The change in estimate in the repurchase reserve during 2013 primarily resulted from GSE loan documentation requests received prior to the respective agreements referred to above. As a result of these agreements, and based on currently available information, Citi believes that changes in estimates in the repurchase reserve should generally be consistent with its levels of loan sales going forward.



	Total loans⁽¹⁾		90+ days past due⁽²⁾									30-89 days past due⁽²⁾
	December 31,		December 31,									December 31,
In millions of dollars, except EOP loan amounts in billions	2013		2013			2012			2011			2013			2012			2011
Citicorp⁽³⁾⁽⁴⁾
Total	$	302.3	$	2,973		$	3,081		$	3,406		$	3,220		$	3,509		$	4,075
Ratio			0.99		%	1.05		%	1.19		%	1.07		%	1.19		%	1.42		%
Retail banking
Total	$	151.9	$	952		$	879		$	769		$	1,049		$	1,112		$	1,040
Ratio			0.63		%	0.61		%	0.58		%	0.70		%	0.77		%	0.78		%
North America	44.1		257			280			235			205			223			213
Ratio			0.60		%	0.68		%	0.63		%	0.48		%	0.54		%	0.57		%
EMEA	5.6		34			48			59			51			77			94
Ratio			0.61		%	0.94		%	1.40		%	0.91		%	1.51		%	2.24		%
Latin America	30.6		470			323			253			395			353			289
Ratio			1.54		%	1.14		%	1.07		%	1.29		%	1.25		%	1.22		%
Asia	71.6		191			228			222			398			459			444
Ratio			0.27		%	0.33		%	0.33		%	0.56		%	0.66		%	0.66		%
Cards
Total	$	150.4	$	2,021		$	2,202		$	2,637		$	2,171		$	2,397		$	3,035
Ratio			1.34		%	1.47		%	1.72		%	1.44		%	1.60		%	1.98		%
North America—Citi-branded	70.5		681			786			1,016			661			771			1,078
Ratio			0.97		%	1.08		%	1.32		%	0.94		%	1.06		%	1.40		%
North America—Citi retail services	46.3		771			721			951			830			789			1,178
Ratio			1.67		%	1.87		%	2.38		%	1.79		%	2.04		%	2.95		%
EMEA	2.4		32			48			44			42			63			59
Ratio			1.33		%	1.66		%	1.63		%	1.75		%	2.17		%	2.19		%
Latin America	12.1		349			413			412			364			432			399
Ratio			2.88		%	2.79		%	3.01		%	3.01		%	2.92		%	2.91		%
Asia	19.1		188			234			214			274			342			321
Ratio			0.98		%	1.15		%	1.08		%	1.43		%	1.68		%	1.61		%
Citi Holdings⁽⁵⁾⁽⁶⁾
Total	$	91.2	$	2,710		$	4,611		$	5,849		$	2,724		$	4,228		$	5,148
Ratio			3.23		%	4.42		%	4.66		%	3.25		%	4.05		%	4.10		%
International	5.9		162			345			422			200			393			499
Ratio			2.75		%	4.54		%	3.91		%	3.39		%	5.17		%	4.62		%
North America	85.3		2,548			4,266			5,427			2,524			3,835			4,649
Ratio			3.27		%	4.41		%	4.73		%	3.24		%	3.96		%	4.05		%
Other ⁽⁷⁾	0.3
Total Citigroup	$	393.8	$	5,683		$	7,692		$	9,255		$	5,944		$	7,737		$	9,223
Ratio			1.48		%	1.93		%	2.25		%	1.54		%	1.94		%	2.24		%

Corporate Credit Details

Consistent with its overall strategy, Citi’s Corporate clients are typically large, multi-national corporations who value Citi’s global network. Citi aims to establish relationships with these clients that encompass multiple products, consistent with client needs, including cash management and trade services, foreign exchange, lending, capital markets and M&A advisory.

For corporate clients and investment banking activities across Citi, the credit process is grounded in a series of fundamental policies, in addition to those described under “Managing Global Risk—Risk Management—Overview” above. These include:


•	joint business and independent risk management responsibility for managing credit risks;


•	a single center of control for each credit relationship, which coordinates credit activities with each client;


•	portfolio limits to ensure diversification and maintain risk/capital alignment;


•	a minimum of two authorized credit officer signatures required on most extensions of credit, one of which must be from a credit officer in credit risk management;


•	risk rating standards, applicable to every obligor and facility; and


•	consistent standards for credit origination documentation and remedial management.

Corporate Credit Portfolio

The following table represents the Corporate credit portfolio (excluding Private Bank in Securities and Banking), before consideration of collateral or hedges, by remaining tenor at December 31, 2013 and 2012. The Corporate credit portfolio includes loans and unfunded lending commitments in Citi’s institutional client exposure in Institutional Client Group and, to a much lesser extent, Citi Holdings, by Citi’s internal management hierarchy and is broken out by (i) direct outstandings, which include drawn loans, overdrafts, bankers’ acceptances and leases, and (ii) unfunded lending commitments, which include unused commitments to lend, letters of credit and financial guarantees.

Portfolio Mix—Geography, Counterparty and Industry

Citi’s Corporate credit portfolio is diverse across geography and counterparty. The following table shows the percentage of direct outstandings and unfunded lending commitments by region based on Citi’s internal management geography:



	December 31, 2013		December 31, 2012
North America	51	%	52	%
EMEA	27		27
Asia	14		14
Latin America	8		7
Total	100	%	100	%

The maintenance of accurate and consistent risk ratings across the Corporate credit portfolio facilitates the comparison of credit exposure across all lines of business, geographic regions and products. Counterparty risk ratings reflect an estimated probability of default for a counterparty and are derived primarily through the use of validated statistical models, scorecard models and external agency ratings (under defined circumstances), in combination with consideration of factors specific to the obligor or market, such as management

experience, competitive position and regulatory environment. Facility risk ratings are assigned that reflect the probability of default of the obligor and factors that affect the loss-given-default of the facility, such as support or collateral. Internal obligor ratings that generally correspond to BBB and above are considered investment grade, while those below are considered non-investment grade.

Citigroup also has incorporated climate risk assessment and reporting criteria for certain obligors, as necessary. Factors evaluated include consideration of climate risk to an obligor’s business and physical assets and, when relevant, consideration of cost-effective options to reduce greenhouse gas emissions.

The following table presents the Corporate credit portfolio by facility risk rating at December 31, 2013 and December 31, 2012, as a percentage of the total Corporate credit portfolio:



	Direct outstandings and unfunded lending commitments
	December 31, 2013		December 31, 2012
AAA/AA/A	52	%	52	%
BBB	16		14
BB/B	30		32
CCC or below	2		2
Unrated	—		—
Total	100	%	100	%

Citi’s Corporate credit portfolio is also diversified by industry, with a concentration in the financial sector, broadly defined, and including banks, other financial institutions, insurance companies, investment banks and government and central banks. The following table shows the allocation of direct outstandings and unfunded lending commitments to industries as a percentage of the total Corporate credit portfolio:



	Direct outstandings and unfunded lending commitments
	December 31, 2013		December 31, 2012
Transportation and industrial	22	%	21	%
Petroleum, energy, chemical and metal	20		20
Consumer retail and health	15		15
Banks/broker-dealers	10		10
Technology, media and telecom	10		9
Public sector	6		8
Insurance and special purpose entities	5		6
Real estate	5		4
Hedge funds	4		4
Other industries	3		3
Total	100	%	100	%

Credit Risk Mitigation

As part of its overall risk management activities, Citigroup uses credit derivatives and other risk mitigants to hedge portions of the credit risk in its Corporate credit portfolio, in addition to outright asset sales. The purpose of these transactions is to transfer credit risk to third parties. The results of the mark-to-market and any realized gains or losses on credit derivatives are reflected in Principal transactions on the Consolidated Statement of Income.

At December 31, 2013 and December 31, 2012, $27.2 billion and $33.0 billion, respectively, of the Corporate credit portfolio was economically hedged. Citigroup’s expected loss model used in the calculation of its loan loss reserve does not include the favorable impact of credit

derivatives and other mitigants that are marked to market. In addition, the reported amounts of direct outstandings and unfunded lending commitments in the tables above do not reflect the impact of these hedging transactions. At December 31, 2013 and December 31, 2012, the credit protection was economically hedging underlying Corporate credit portfolio with the following risk rating distribution:

Rating of Hedged Exposure



	December 31, 2013		December 31, 2012
AAA/AA/A	26	%	34	%
BBB	36		39
BB/B	29		23
CCC or below	9		4
Total	100	%	100	%

At December 31, 2013 and December 31, 2012, the credit protection was economically hedging underlying Corporate credit portfolio exposures with the following industry distribution:

Industry of Hedged Exposure



	December 31, 2013		December 31, 2012
Transportation and industrial	31	%	27	%
Petroleum, energy, chemical and metal	23		25
Technology, media and telecom	14		11
Consumer retail and health	9		13
Banks/broker-dealers	8		10
Insurance and special purpose entities	7		5
Public Sector	6		5
Other industries	2		4
Total	100	%	100	%

For additional information on Citi’s Corporate credit portfolio, including allowance for loan losses, coverage ratios and Corporate non-accrual loans, see “Credit Risk—Loans Outstanding, Details of Credit Loss Experience, Allowance for Loan Losses and Non-Accrual Loans and Assets” above.

MARKET RISK

Market risk encompasses funding and liquidity risk and price risk, each of which arise in the normal course of business of a global financial intermediary such as Citi.

Market Risk Management

Each business is required to establish, with approval from Citi’s market risk management, a market risk limit framework for identified risk factors that clearly defines approved risk profiles and is within the parameters of Citi’s overall risk tolerance. These limits are monitored by independent market risk, Citi’s country and business Asset and Liability Committees and the Citigroup Asset and Liability Committee. In all cases, the businesses are ultimately responsible for the market risks taken and for remaining within their defined limits.

Funding and Liquidity Risk

Adequate liquidity and sources of funding are essential to Citi’s businesses. Funding and liquidity risks arise from several factors, many of which Citi cannot control, such as disruptions in the financial markets, changes in key funding sources, credit spreads, changes in Citi’s credit ratings and political and economic conditions in certain countries.

Overview

Citi’s funding and liquidity objectives are to maintain adequate liquidity to (i) fund its existing asset base; (ii) grow its core businesses in Citicorp; (iii) maintain sufficient excess liquidity, structured appropriately, so that it can operate under a wide variety of market conditions, including market disruptions for both short- and long-term periods; and (iv) satisfy regulatory requirements. Citigroup’s primary liquidity objectives are established by entity, and in aggregate, across three major categories:


•	the parent entity, which includes the parent holding company (Citigroup) and Citi’s broker-dealer subsidiaries that are consolidated into Citigroup (collectively referred to in this section as “parent”);


•	Citi’s significant Citibank entities, which consist of Citibank, N.A. units domiciled in the U.S., Western Europe, Hong Kong, Japan and Singapore (collectively referred to in this section as “significant Citibank entities”); and


•	other Citibank and Banamex entities.

At an aggregate level, Citigroup’s goal is to maintain sufficient funding in amount and tenor to fully fund customer assets and to provide an appropriate amount of cash and high-quality liquid assets (as discussed further below), even in times of stress. The liquidity framework provides that entities be self-sufficient or net providers of liquidity, including in conditions established under their designated stress tests.

Citi’s primary sources of funding include (i) deposits via Citi’s bank subsidiaries, which are Citi’s most stable and lowest cost source of long-term funding, (ii) long-term debt (primarily senior and subordinated debt) primarily issued at the parent and certain bank subsidiaries, and (iii) stockholders’ equity. These sources may be supplemented by short-term borrowings, primarily in the form of secured financing transactions.

As referenced above, Citigroup works to ensure that the structural tenor of these funding sources is sufficiently long in relation to the tenor of its asset base. The goal of Citi’s asset/liability management is to ensure that there is excess tenor in the liability structure so as to provide excess liquidity after funding the assets. The excess liquidity resulting from a longer-term tenor profile can effectively offset potential decreases in liquidity that may occur under stress. This excess funding is held in the form of high-quality liquid assets, which Citi generally refers to as its “liquidity resources,” and is described further below.

As set forth in the table above, Citigroup’s liquidity resources at December 31, 2013 increased from both September 30, 2013 and December 31, 2012. At the end of 2012, Citi had purposefully decreased its liquidity resources, primarily through long-term debt reductions and a one-time cash outflow on deposits related to the expiration of the FDIC’s Transaction Account Guarantee program. The growth in Citi’s liquidity resources during 2013 was primarily driven by increased deposits (see “Deposits” below), credit card securitization issuances through Citibank, N.A. and a continued reduction of Citi Holdings assets, partially offset by Global Consumer Banking and Securities and Banking lending growth.

The following table shows further detail of the composition of Citi’s liquidity resources by type of asset for each of the periods indicated. For securities, the amounts represent the liquidity value that potentially could be realized and thus excludes any securities that are encumbered, as well as the haircuts that would be required for securities sales or financing transactions.



In billions of dollars	Dec. 31, 2013		Sept 30, 2013		Dec. 31, 2012
Available cash	$	136.6	$	136.3	$	69.5
U.S. Treasuries	89.4		77.8		93.2
U.S. Agencies/Agency MBS	59.2		58.3		62.8
Foreign Government⁽¹⁾	123.0		121.2		120.8
Other Investment Grade⁽²⁾	15.5		16.0		13.4
Total	$	423.7	$	409.6	$	359.7

(1)

Foreign government also includes foreign government agencies, multinationals and foreign government guaranteed securities. Foreign government securities are held largely to support local liquidity requirements and Citi’s local franchises and, as of December 31, 2013, principally included government bonds from Brazil, Hong Kong, India, Japan, Korea, Poland, Mexico, Singapore, Taiwan and the United Kingdom.


(2)	Includes contractual committed facilities from central banks in the amount of $1 billion and $0.9 billion at the end of the fourth and third quarters of 2013, respectively.

As evident from the table above, as of December 31, 2013, more than 80% of Citi’s liquidity resources consisted of available cash, U.S. government securities and high-quality foreign sovereign debt securities, with the remaining amounts consisting of U.S. agency securities, agency MBS and investment grade debt.

Citi’s liquidity resources as set forth above do not include additional potential liquidity in the form of Citigroup’s borrowing capacity from the various Federal Home Loan Banks (FHLB), which was approximately $30 billion as of December 31, 2013 and is maintained by pledged collateral to all such banks. The liquidity resources shown above also do not include Citi’s borrowing capacity at the U.S. Federal Reserve Bank discount window or international central banks, which capacity would be in addition to the resources noted above.

In general, Citigroup can freely fund legal entities within its bank vehicles. Citigroup’s bank subsidiaries, including Citibank, N.A., can lend to the Citigroup parent and broker-dealer entities in accordance with Section 23A of the Federal Reserve Act. As of December 31, 2013, the amount available for lending to these entities under Section 23A was approximately $17 billion (unchanged from September 30, 2013), provided the funds are collateralized appropriately.

Deposits

Deposits are the primary and lowest cost funding source for Citi’s bank subsidiaries. The table below sets forth the end of period deposits, by business and/or segment, and the total average deposits for each of the periods indicated.



In billions of dollars	Dec. 31, 2013		Sept 30, 2013		Dec. 31, 2012
Global Consumer Banking
North America	$	170.2	$	168.6	$	165.2
EMEA	13.1		12.5		13.2
Latin America	47.7		47.5		48.6
Asia	101.4		101.6		110.0
Total	$	332.4	$	330.2	$	337.0
ICG
Securities and Banking	$	110.1	$	112.6	$	114.4
Transaction Services	463.7		452.8		408.7
Total	$	573.8	$	565.4	$	523.1
Corporate/Other	26.1		18.0		2.5
Total Citicorp	$	932.3	$	913.6	$	862.6
Total Citi Holdings⁽¹⁾	36.0		41.8		68.0
Total Citigroup Deposits (EOP)	$	968.3	$	955.4	$	930.6
Total Citigroup Deposits (AVG)	$	956.4	$	922.1	$	928.9


(1)	Included within Citi’s end-of-period deposit balance as of December 31, 2013 were approximately $30 billion of deposits related to Morgan Stanley Smith Barney (MSSB) customers that, as previously disclosed, will be transferred to Morgan Stanley, with remaining balances transferred in the amount of approximately $5 billion per quarter through the end of the second quarter of 2015.

End-of-period deposits increased 4% year-over-year and 1% quarter-over-quarter. The increase during 2013 reflected, in part, elevated levels of market liquidity and strong corporate balance sheets, but also was driven by underlying business growth.

Global Consumer Banking deposits decreased 1% year-over-year, as growth in consumer checking and savings balances was offset by reductions in Citi’s higher cost time deposits. Corporate deposits increased 10% year-over-year, as continued strong deposit flows led to 13% growth in Transaction Services. This deposit growth in Transaction Services was offset by a 4% decline in Securities and Banking deposits driven by reduced deposit balances with counterparties in Citi’s Markets businesses, while deposits increased in the Private Bank. Corporate/Other deposits also increased year-over-year as Citi issued tenored time deposits to further diversify its funding sources.

Average deposits increased 3% year-over-year and 4% quarter-over-quarter, despite the transfer of approximately $26 billion of deposits relating to MSSB to Morgan Stanley during the second half of 2013.

Operating balances represented 80% of Citicorp’s total deposit base as of December 31, 2013, compared to 79% at September 30, 2013 and 78% at December 31, 2012. Citi defines operating balances as checking and savings accounts for individuals, as well as cash management accounts for corporations; by comparison, time deposits have fixed rates

for the term of the deposit and generally lower margins. This shift to operating balances, combined with overall market conditions and prevailing interest rates, continued to reduce Citi’s cost of deposits during 2013. Excluding the impact of FDIC assessments and deposit insurance, the average rate on Citi’s total deposits was 0.50% at December 31, 2013, compared with 0.53% at September 30, 2013, and 0.65% at December 31, 2012.

Long-Term Debt

Long-term debt (generally defined as original maturities of one year or more) continued to represent the most significant component of Citi’s funding for the parent entities and was a supplementary source of funding for the bank.

Long-term debt is an important funding source for Citi’s parent entities due in part to its multi-year maturity structure. The weighted-average maturities of unsecured long-term debt issued by Citigroup and its affiliates (including Citibank, N.A.) with a remaining life greater than one year (excluding remaining trust preferred securities outstanding) was approximately 7.0 years as of December 31, 2013, roughly unchanged from the prior quarter and prior-year periods.

Citi’s long-term debt outstanding includes benchmark debt and what Citi refers to as customer-related debt, consisting of structured notes, such as equity- and credit-linked notes, as well as non-structured notes. Citi’s issuance of customer-related debt is generally driven by customer demand and supplements benchmark debt issuance as a source of funding for Citi’s parent entities.

Long-Term Debt Outstanding

The following table sets forth Citi’s total long-term debt outstanding for the periods indicated:



In billions of dollars	Dec. 31, 2013		Sept 30, 2013		Dec. 31, 2012
Parent	$	164.7	$	168.6	$	188.2
Benchmark Debt:
Senior debt	98.5		100.4		109.5
Subordinated debt	28.1		28.0		27.6
Trust preferred	3.9		4.3		10.1
Customer-Related Debt:
Structured debt	22.2		22.0		23.0
Non-Structured debt	7.8		9.2		10.8
Local Country and Other⁽¹⁾⁽²⁾	4.2		4.7		7.2
Bank	$	56.4	$	53.0	$	51.3
FHLB Borrowings	14.0		14.3		16.3
Securitizations⁽³⁾	33.6		30.3		24.8
Local Country and Other⁽²⁾	8.8		8.4		10.2
Total long-term debt	$	221.1	$	221.6	$	239.5

Note: Amounts represent the current value of long-term debt on Citi’s Consolidated Balance Sheet which, for certain debt instruments, includes consideration of fair value, hedging impacts and unamortized discounts and premiums.


(1)	Includes securitizations of $0.2 billion in each period presented.


(2)	Local country debt includes debt issued by Citi’s affiliates in support of their local operations.


(3)	Of the approximately $33.6 billion of total bank securitizations at December 31, 2013, approximately $32.4 billion related to credit card securitizations.

As set forth in the table above, Citi’s overall long-term debt decreased $18 billion year-over-year, although the pace of reductions slowed during the second half of 2013. At year-

end 2013, long-term debt outstanding had generally stabilized at $221 billion, as continued reductions in parent debt were offset by increases at the bank. In the bank, the increase in long-term debt during the year was driven by increased securitizations, specifically $11.5 billion of credit card securitizations by the Citibank Credit Card Issuance Trust (CCCIT), given the lower cost of this funding. Going into 2014, Citi expects to maintain its total long-term debt outstanding at approximately these levels, with a modest further reduction in parent debt partially offset by continued increased securitization activities at the bank. Overall, changes in Citi’s long-term debt outstanding will continue to reflect the funding needs of its businesses. It also will depend on the market and economic environment and any regulatory changes, such as prescribed levels of debt required to be maintained by Citi pursuant to the U.S. banking regulators orderly liquidation authority (for additional information, see “Risk Factors-Regulatory Risks” above).

As part of its liquidity and funding strategy, Citi has considered, and may continue to consider, opportunities to repurchase its long-term and short-term debt pursuant to open market purchases, tender offers or other means. Such repurchases decrease Citi’s overall funding costs. During 2013, Citi repurchased an aggregate of approximately $8.0 billion of its outstanding long-term and short-term debt primarily pursuant to selective public tender offers and open market purchases. Citi also redeemed $7.3 billion of trust preferred securities during the year, including $3.0 billion related to the exchange of trust preferred securities previously held by the U.S. Treasury and FDIC (for details on Citi’s remaining outstanding trust preferred securities, see Note 18 to the Consolidated Financial Statements).

Secured Financing

Secured financing primarily is conducted through Citi’s broker-dealer subsidiaries to facilitate customer matched-book activity and to efficiently fund a portion of the trading inventory. Generally, changes in the level of secured financing are primarily due to fluctuations in trading inventory (on an end-of-quarter or an average basis).

Secured financing was $204 billion as of December 31, 2013, compared to $217 billion as of September 30, 2013 and $211 billion as of December 31, 2012. The decrease in secured financing quarter-over-quarter was primarily driven by a reduction in trading positions in Securities and Banking businesses (see “Balance Sheet Review” above). Average balances for secured financing were approximately $216 billion for the quarter ended December 31, 2013, compared to $225 billion for the quarter ended September 30, 2013 and $230 billion for the quarter ended December 31, 2012.

Commercial Paper

The following table sets forth Citi’s commercial paper outstanding for each of its parent and significant Citibank entities, respectively, for each of the periods indicated.



In billions of dollars	Dec. 31, 2013		Sept 30, 2013		Dec. 31, 2012
Commercial paper
Parent	$	0.2	$	0.3	$	0.4
Significant Citibank entities⁽¹⁾	17.7		17.6		11.1
Total	$	17.9	$	17.9	$	11.5


(1)	The increase in the significant Citibank entities’ outstanding commercial paper during 2013 was due to the consolidation of $7 billion of trade loans in the second quarter of 2013.

Other Short-Term Borrowings

At December 31, 2013, Citi’s other short-term borrowings, which included borrowings from the FHLB and other market participants, were approximately $41 billion, unchanged from both the prior quarter and year-end 2012.

Short-Term Borrowings Table

The following table contains the year-end, average and maximum month-end amounts for the following respective short-term borrowings categories at the end of each of the three prior fiscal years.

Liquidity Management, Measurement and Stress Testing

Citi’s aggregate liquidity resources are managed by the Citi Treasurer. Liquidity is managed via a centralized treasury model by Corporate Treasury and by in-country treasurers. Pursuant to this structure, Citi’s liquidity resources are managed with a goal of ensuring the asset/liability match and that liquidity positions are appropriate in every entity and throughout Citi.

Citi’s Chief Risk Officer is responsible for the overall risk profile of Citi’s aggregate liquidity resources. The Chief Risk Officer and Citi’s Chief Financial Officer co-chair Citi’s Asset Liability Management Committee (ALCO), which includes Citi’s Treasurer and senior executives. ALCO sets the strategy of the liquidity portfolio and monitors its performance. Significant changes to portfolio asset allocations need to be approved by ALCO.

Citi’s liquidity resources are held in cash or high-quality securities that could readily be converted to cash in a stress situation. At December 31, 2013, Citi’s liquidity pool primarily was invested in cash; government securities, including U.S. agency debt, U.S. agency mortgage-backed securities and foreign sovereign debt; and a certain amount of highly rated investment-grade credits. While the vast majority of Citi’s liquidity pool at December 31, 2013 consisted of long positions, Citi utilizes derivatives to manage its interest rate and currency risks; credit derivatives are not used.

Liquidity Measurement and Stress Testing

Citi uses multiple measures in monitoring its liquidity, including those described below. In addition, there continue to be numerous regulatory developments relating to the future liquidity standards and requirements applicable to financial institutions such as Citi, including relating to certain of the measures discussed below. For additional information, see “Risk Factors—Liquidity Risks” above.

Liquidity stress testing is performed for each of Citi’s major entities, operating subsidiaries and/or countries. Stress testing and scenario analyses are intended to quantify the potential impact of a liquidity event on the balance sheet and liquidity position, and to identify viable funding alternatives that can be utilized. These scenarios include assumptions about significant changes in key funding sources, market triggers (such as credit ratings), potential uses of funding and political and economic conditions in certain countries. These conditions include standard and stressed market conditions as well as firm-specific events.

A wide range of liquidity stress tests is important for monitoring purposes. Some span liquidity events over a full year, some may cover an intense stress period of one month, and still other time frames may be appropriate. These potential liquidity events are useful to ascertain potential mismatches between liquidity sources and uses over a variety of horizons

(overnight, one week, two weeks, one month, three months, one year, two years). Liquidity limits are set accordingly. To monitor the liquidity of a unit, those stress tests and potential mismatches may be calculated with varying frequencies, with several important tests performed daily.

Liquidity Coverage Ratio. As indicated above, Citi measures liquidity stress periods of various lengths, with

emphasis on the 30-day, as well as the 12-month periods. In addition to measures Citi has developed for the 30-day stress scenario, Citi also monitors its liquidity by reference to the Liquidity Coverage Ratio (LCR), as calculated pursuant to the final Basel III LCR rules issued by the Basel Committee on Banking Supervision in January 2013. Generally, the LCR is designed to ensure banks maintain an adequate level of unencumbered high-quality liquid assets to meet liquidity needs under an acute 30-day stress scenario. Under the Basel Committee’s final Basel III LCR rules, the LCR is to be calculated by dividing the amount of unencumbered cash and highly liquid, unencumbered government, government-backed and corporate securities by estimated net outflows over a stressed 30-day period. The net outflows are calculated by applying assumed outflow factors, prescribed in the rules, to various categories of liabilities, such as deposits, unsecured and secured wholesale borrowings, unused commitments and derivatives-related exposures, partially offset by inflows from assets maturing within 30 days.

Based on Citi’s current interpretation of the Basel Committee’s final Basel III LCR rules, Citi’s estimated LCR was approximately 117% as of December 31, 2013, compared with approximately 113% at September 30, 2013 and 116% at December 31, 2012. The increase in the LCR during the fourth quarter primarily was due to the increase in Citi’s high-quality liquid assets, as discussed under “High Quality Liquid Assets” above, and continued improvement in the mix of deposits. Citi’s estimated LCR under the final Basel III rules as of December 31, 2013 represents additional liquidity of approximately $62 billion above the minimum 100% LCR threshold.

As discussed in more detail under “Risk Factors— Liquidity Risks” above, in October 2013, the U.S. banking agencies proposed rules with respect to the U.S. Basel III LCR. Along with others in the industry, Citi continues to review the U.S. proposal and its potential impact on its estimated liquidity resources and LCR.

Citi’s estimated LCR, as calculated under the Basel Committee’s final Basel III LCR rules, is a non-GAAP financial measure. Citi believes this measure provides useful information to investors and others by measuring Citi’s progress toward potential future expected regulatory liquidity standards. Citi’s estimated LCR for all periods presented is based on its current interpretation, expectations and understanding of the Basel Committee’s final rules. It is subject to, among other things, Citi’s continued review of the proposed U.S. Basel III LCR requirements, implementation of any final U.S. Basel III rules and further regulatory implementation guidance.

Long-term liquidity measure. For 12-month liquidity stress periods, Citi uses several measures, including the long-term liquidity measure. It is based on Citi’s internal 12-month, highly stressed market scenario and assumes market, credit and economic conditions are moderately to highly stressed with potential further deterioration. It is broadly defined as the ratio of unencumbered liquidity resources to net stressed cumulative outflows over a 12-month period.

Net Stable Funding Ratio. In January 2014, the Basel Committee issued revised guidelines for the implementation of

Credit Ratings

Citigroup’s funding and liquidity, its funding capacity, ability to access capital markets and other sources of funds, the cost of these funds, and its ability to maintain certain deposits are partially dependent on its credit ratings. The table below indicates the ratings for Citigroup and Citibank, N.A. as of December 31, 2013. While not included in the table below, Citigroup Global Markets Inc. (CGMI) is rated A/A-1 by

Standard & Poor’s as of December 31, 2013.

Debt Ratings as of December 31, 2013



	Citigroup Inc.			Citibank, N.A.
	Senior debt	Commercial paper	Outlook	Long- term	Short- term	Outlook
Fitch Ratings (Fitch)	A	F1	Stable	A	F1	Stable
Moody’s Investors Service (Moody’s)	Baa2	P-2	Stable	A2	P-1	Stable
Standard & Poor’s (S&P)	A-	A-2	Negative	A	A-1	Stable

Recent Credit Rating Developments

On December 4, 2013, S&P upgraded Citi’s unsupported rating (stand-alone credit profile) to ‘bbb+’ from ‘bbb,’ and simultaneously removed the one “transition notch,” resulting in no net change to the long- and short-term ratings of Citigroup Inc. and Citibank, N.A. As a result of the unsupported upgrade, Citi’s hybrid instruments were upgraded to ‘BB+’ from ‘BB’. S&P noted Citi’s progress in reducing non-core assets within Citi Holdings and the firm’s improved risk profile. As of December 31, 2013, S&P maintains outlooks of ‘Stable’ at Citibank, N.A. and ‘Negative’ at Citigroup Inc. Citigroup Inc.’s negative outlook reflects S&P’s ongoing assessment of government support. S&P cited the need for additional guidance from regulators before adjusting its support assumptions, and in early December 2013, stated that any removal of support is “likely to be gradual or partial.”

On November 14, 2013, Moody’s concluded its support reassessment for the six largest U.S. banks, including Citi, related to potential implementation of Orderly Liquidation Authority under the Dodd-Frank Act. Bank level support assumptions remained unchanged, and Moody’s upgraded Citibank, N.A.’s unsupported rating, which raised its supported long- and short-term ratings to ‘A2/P-1’ from ‘A3/P-2’. Moody’s removed Citigroup Inc.’s two notches of government support, but incorporated one notch of uplift for reduced loss given default assumptions under the proposed resolution framework. As a result, Citigroup Inc.’s long- and short-term ratings remained at ‘Baa2/P-2’. As of December 31, 2013, Moody’s has ‘Stable’ outlooks for both entities.

Potential Impacts of Ratings Downgrades

Ratings downgrades by Moody’s, Fitch or S&P could negatively impact Citigroup’s and/or Citibank, N.A.’s funding and liquidity due to reduced funding capacity, including derivatives triggers, which could take the form of cash obligations and collateral requirements.

The following information is provided for the purpose of analyzing the potential funding and liquidity impact to Citigroup and Citibank, N.A. of a hypothetical, simultaneous

ratings downgrade across all three major rating agencies. This analysis is subject to certain estimates, estimation methodologies, and judgments and uncertainties. Uncertainties include potential ratings limitations certain entities may have with respect to permissible counterparties, as well as general subjective counterparty behavior. For example, certain corporate customers and trading counterparties could re-evaluate their business relationships with Citi and limit the trading of certain contracts or market instruments with Citi. Changes in counterparty behavior could impact Citi’s funding and liquidity, as well as the results of operations of certain of its businesses. The actual impact to Citigroup or Citibank, N.A. is unpredictable and may differ materially from the potential funding and liquidity impacts described below.

For additional information on the impact of credit rating changes on Citi and its applicable subsidiaries, see “Risk Factors—Liquidity Risks” above.

Citigroup Inc. and Citibank, N.A.—Potential Derivative Triggers

As of December 31, 2013, Citi estimates that a hypothetical one-notch downgrade of the senior debt/long-term rating of Citigroup across all three major rating agencies could impact Citigroup’s funding and liquidity due to derivative triggers by approximately $1.0 billion. Other funding sources, such as secured financing transactions and other margin requirements, for which there are no explicit triggers, could also be adversely affected.

As of December 31, 2013, Citi estimates that a hypothetical one-notch downgrade of the senior debt/long-term rating of Citibank, N.A. across all three major rating agencies could impact Citibank, N.A.’s funding and liquidity by approximately $1.5 billion, due to derivative triggers.

In total, Citi estimates that a one-notch downgrade of Citigroup and Citibank, N.A., across all three major rating agencies, could result in aggregate cash obligations and collateral requirements of approximately $2.6 billion (see also Note 23 to the Consolidated Financial Statements). As set forth under “High-Quality Liquid Assets” above, the liquidity resources of Citi’s parent entities were approximately $67 billion, and the liquidity resources of Citi’s significant Citibank entities and other Citibank and Banamex entities were approximately $357 billion, for a total of approximately $424 billion as of December 31, 2013. These liquidity resources are available in part as a contingency for the potential events described above.

In addition, a broad range of mitigating actions are currently included in Citigroup’s and Citibank, N.A.’s contingency funding plans. For Citigroup, these mitigating factors include, but are not limited to, accessing surplus funding capacity from existing clients, tailoring levels of secured lending, and adjusting the size of select trading books and collateralized borrowings from Citi’s significant bank subsidiaries. Mitigating actions available to Citibank, N.A. include, but are not limited to, selling or financing highly liquid government securities, tailoring levels of secured lending, adjusting the size of select trading books, reducing loan originations and renewals, raising additional deposits, or borrowing from the FHLB or central banks. Citi believes these mitigating actions could substantially reduce the funding and liquidity risk, if any, of the potential downgrades described above.

Citibank, N.A.—Additional Potential Impacts

In addition to the above derivative triggers, Citi believes that a potential one-notch downgrade of Citibank, N.A.’s senior debt/long-term rating by S&P and Fitch could also have an adverse impact on the commercial paper/short-term rating of Citibank, N.A. As of December 31, 2013, Citibank, N.A. had liquidity commitments of approximately $17.7 billion to consolidated asset-backed commercial paper conduits (as referenced in Note 22 to the Consolidated Financial Statements).

In addition to the above-referenced liquidity resources of Citi’s significant Citibank entities and other Citibank and Banamex entities, Citibank, N.A. could reduce the funding and liquidity risk, if any, of the potential downgrades described above through mitigating actions, including repricing or reducing certain commitments to commercial paper conduits. In the event of the potential downgrades described above, Citi believes that certain corporate customers could re-evaluate their deposit relationships with Citibank, N.A. This re-evaluation could result in clients adjusting their discretionary deposit levels or changing their depository institution, which could potentially reduce certain deposit levels at Citibank, N.A. However, Citi could choose to adjust pricing, offer alternative deposit products to its existing customers or seek to attract deposits from new customers, in addition to the mitigating actions referenced above.

Price Risk

Price risk losses arise from fluctuations in the market value of trading and non-trading positions resulting from changes in interest rates, credit spreads, foreign exchange rates, equity and commodity prices, and in their implied volatilities.

Price Risk Measurement and Stress Testing

Price risks are measured in accordance with established standards to ensure consistency across businesses and the ability to aggregate risk. The measurement used for non-trading and trading portfolios, as well as associated stress testing processes, are described below.

Price Risk—Non-Trading Portfolios

Net Interest Revenue and Interest Rate Risk

Net interest revenue (NIR), for interest rate exposure purposes, is the difference between the yield earned on the non-trading portfolio assets (including customer loans) and the rate paid on the liabilities (including customer deposits or company borrowings). NIR is affected by changes in the level of interest rates, as well as the amounts of assets and liabilities, and the timing of repricing of assets and liabilities to reflect market rates.

Interest Rate Risk Measurement

Citi’s principal measure of risk to NIR is interest rate exposure (IRE). IRE measures the change in expected NIR in each currency resulting solely from unanticipated changes in forward interest rates. Factors such as changes in volumes, credit spreads, margins and the impact of prior-period pricing decisions are not captured by IRE. IRE also assumes that businesses make no additional changes in pricing or balances in response to the unanticipated rate changes.

For example, if the current 90-day LIBOR rate is 3% and the one-year-forward rate (i.e., the estimated 90-day LIBOR rate in one year) is 5%, the +100 bps IRE scenario measures the impact on NIR of a 100 bps instantaneous change in the 90-day LIBOR to 6% in one year.

The impact of changing prepayment rates on loan portfolios is incorporated into the results. For example, in the declining interest rate scenarios, it is assumed that mortgage portfolios prepay faster and that income is reduced. In addition, in a rising interest rate scenario, portions of the deposit portfolio are assumed to experience rate increases that may be less than the change in market interest rates.

Mitigation and Hedging of Interest Rate Risk

In order to manage changes in interest rates effectively, Citi may modify pricing on new customer loans and deposits, enter into transactions with other institutions or enter into derivative transactions that have the opposite risk exposures. Citi regularly assesses the viability of these and other strategies to reduce its interest rate risks and implements such strategies when it believes those actions are prudent. Such strategies are not included in the estimation of IRE.

Stress Testing

Citigroup employs additional measurements, including stress testing the impact of non-linear interest rate movements on the value of the balance sheet; the analysis of portfolio duration and volatility, particularly as they relate to mortgage loans and mortgage-backed securities; and the potential impact of the change in the spread between different market indices.

Changes in Interest Rates—Impacts on Net Interest Revenue, Other Comprehensive Income and Capital

Citi measures the potential impacts of changes in interest rates on Citi’s net interest revenue and value of its other comprehensive income (OCI), which can in turn impact Citi’s estimated Basel III Tier 1 Common ratio. Citi’s goal is to benefit from an increase in the market level of interest rates, while limiting the impact of changes in OCI on its regulatory capital position.

Citi manages interest rate risk as a consolidated net position. Citi’s client-facing businesses create interest rate sensitive-positions, including loans and deposits, as part of their ongoing activities. Citi Treasury accumulates these risk positions and manages them centrally. Operating within established limits, Citi Treasury makes positioning decisions and uses tools, such as Citi’s investment securities portfolio, firm-issued debt, and interest rate derivatives, to target the desired risk profile. Changes in Citi’s interest rate risk position reflect the accumulated changes in all non-trading assets and liabilities, with potentially large and offsetting impacts, as well as Citi Treasury’s positioning decisions.

OCI at risk is managed as part of the firm-wide interest rate risk position. OCI at risk considers potential changes in OCI (and the corresponding impact on the estimated Basel III Tier 1 Common ratio) relative to Citi’s capital generation capacity.

The increase in the estimated impact to net interest revenue in 2013 from the prior year primarily reflected changes in Citi’s balance sheet composition, including the continued growth and seasoning of Citi’s deposit balances and increases in Citi’s capital base, net of Citi Treasury positioning. The change in the estimated impact to OCI and estimated Basel III Tier 1 Common ratio from the prior year primarily reflected changes in the composition of Citi Treasury’s investment and derivatives portfolio.

In the event of an unanticipated parallel instantaneous 100 basis point increase in interest rates, Citi expects the negative impact to OCI would be offset through the combination of expected incremental net interest revenue and the expected recovery of the impact on OCI through accretion of Citi’s investment portfolio over a period of time. As of December

31, 2013, Citi expects that the $(3.1) billion impact to OCI in such a scenario could potentially be offset over approximately 18 months.

Citi routinely evaluates multiple interest rate scenarios, including interest rate increases and decreases and steepening and flattening of the yield curve, to anticipate how net interest revenue and OCI might be impacted in different interest rate environments. The following table sets forth the estimated impact to Citi’s net interest revenue, OCI and estimated Basel III Tier 1 Common ratio under four different changes in interest rates for the U.S. dollar and Citi’s other currencies. While Citi also monitors the impact of a parallel decrease in interest rates, a 100 basis point decrease in short-term interest rates is not meaningful, as it would imply negative interest rates in many of Citi’s markets.

Taxable Equivalent Basis



	Average volume						Interest revenue						% Average rate
In millions of dollars, except rates	2013		2012		2011		2013		2012		2011		2013		2012		2011
Assets
Deposits with banks⁽⁵⁾	$	144,904	$	157,911	$	169,587	$	1,026	$	1,261	$	1,742	0.71	%	0.80	%	1.03	%
Federal funds sold and securities borrowed or purchased under agreements to resell⁽⁶⁾
In U.S. offices	158,237		156,837		158,154		$	1,133	$	1,471	$	1,487	0.72	%	0.94	%	0.94	%
In offices outside the U.S.⁽⁵⁾	109,233		120,400		116,681		1,433		1,947		2,144		1.31	%	1.62	%	1.84	%
Total	$	267,470	$	277,237	$	274,835	$	2,566	$	3,418	$	3,631	0.96	%	1.23	%	1.32	%
Trading account assets⁽⁷⁾⁽⁸⁾
In U.S. offices	$	126,123	$	124,633	$	122,234	$	3,728	$	3,899	$	4,270	2.96	%	3.13	%	3.49	%
In offices outside the U.S.⁽⁵⁾	127,291		126,203		147,417		2,683		3,077		4,033		2.11	%	2.44	%	2.74	%
Total	$	253,414	$	250,836	$	269,651	$	6,411	$	6,976	$	8,303	2.53	%	2.78	%	3.08	%
Investments
In U.S. offices
Taxable	$	174,084	$	169,307	$	170,196	$	2,713	$	2,880	$	3,313	1.56	%	1.70	%	1.95	%
Exempt from U.S. income tax	18,075		16,405		13,592		811		816		922		4.49	%	4.97	%	6.78	%
In offices outside the U.S.⁽⁵⁾	114,122		114,549		122,298		3,761		4,156		4,478		3.30	%	3.63	%	3.66	%
Total	$	306,281	$	300,261	$	306,086	$	7,285	$	7,852	$	8,713	2.38	%	2.62	%	2.85	%
Loans (net of unearned income)⁽⁹⁾
In U.S. offices	$	354,707	$	359,794	$	369,656	$	25,941	$	27,077	$	29,111	7.31	%	7.53	%	7.88	%
In offices outside the U.S.⁽⁵⁾	292,852		286,025		270,604		19,660		20,676		20,365		6.71	%	7.23	%	7.53	%
Total	$	647,559	$	645,819	$	640,260	$	45,601	$	47,753	$	49,476	7.04	%	7.39	%	7.73	%
Other interest-earning assets⁽¹⁰⁾	$	38,233	$	40,766	$	49,467	$	602	$	580	$	513	1.57	%	1.42	%	1.04	%
Total interest-earning assets	$	1,657,861	$	1,672,830	$	1,709,886	$	63,491	$	67,840	$	72,378	3.83	%	4.06	%	4.23	%
Non-interest-earning assets⁽⁷⁾	$	222,526	$	234,437	$	238,550
Total assets from discontinued operations	2,909		3,432		4,200
Total assets	$	1,883,296	$	1,910,699	$	1,952,636

Taxable Equivalent Basis



	Average volume						Interest expense						% Average rate
In millions of dollars, except rates	2013		2012		2011		2013		2012		2011		2013		2012		2011
Liabilities
Deposits
In U.S. offices⁽⁵⁾	$	262,544	$	233,100	$	222,796	$	1,754	$	2,137	$	2,266	0.67	%	0.92	%	1.02	%
In offices outside the U.S.⁽⁶⁾	481,134		487,437		484,625		4,482		5,553		6,265		0.93	%	1.14	%	1.29	%
Total	$	743,678	$	720,537	$	707,421	$	6,236	$	7,690	$	8,531	0.84	%	1.07	%	1.21	%
Federal funds purchased and securities loaned or sold under agreements to repurchase⁽⁷⁾
In U.S. offices	$	126,742	$	121,843	$	120,039	$	677	$	852	$	776	0.53	%	0.70	%	0.65	%
In offices outside the U.S.⁽⁶⁾	102,623		101,928		99,848		1,662		1,965		2,421		1.62	%	1.93	%	2.42	%
Total	$	229,365	$	223,771	$	219,887	$	2,339	$	2,817	$	3,197	1.02	%	1.26	%	1.45	%
Trading account liabilities⁽⁸⁾⁽⁹⁾
In U.S. offices	$	24,834	$	29,486	$	37,279	$	93	$	116	$	266	0.37	%	0.39	%	0.71	%
In offices outside the U.S.⁽⁶⁾	47,908		44,639		49,162		76		74		142		0.16	%	0.17	%	0.29	%
Total	$	72,742	$	74,125	$	86,441	$	169	$	190	$	408	0.23	%	0.26	%	0.47	%
Short-term borrowings⁽¹⁰⁾
In U.S. offices	$	77,439	$	78,747	$	87,472	$	176	$	203	$	139	0.23	%	0.26	%	0.16	%
In offices outside the U.S.⁽⁶⁾	35,551		31,897		39,052		421		524		511		1.18	%	1.64	%	1.31	%
Total	$	112,990	$	110,644	$	126,524	$	597	$	727	$	650	0.53	%	0.66	%	0.51	%
Long-term debt⁽¹¹⁾
In U.S. offices	$	194,140	$	255,093	$	325,709	$	6,602	$	8,896	$	10,702	3.40	%	3.49	%	3.29	%
In offices outside the U.S.⁽⁶⁾	10,194		14,603		17,970		234		292		721		2.30	%	2.00	%	4.01	%
Total	$	204,334	$	269,696	$	343,679	$	6,836	$	9,188	$	11,423	3.35	%	3.41	%	3.32	%
Total interest-bearing liabilities	$	1,363,109	$	1,398,773	$	1,483,952	$	16,177	$	20,612	$	24,209	1.19	%	1.47	%	1.63	%
Demand deposits in U.S. offices	$	21,948	$	13,170	$	16,410
Other non-interest-bearing liabilities⁽⁸⁾	299,052		311,529		275,409
Total liabilities from discontinued operations	362		729		485
Total liabilities	$	1,684,471	$	1,724,201	$	1,776,256
Citigroup stockholders’ equity⁽¹²⁾	$	196,884	$	184,592	$	174,351
Noncontrolling interest	1,941		1,906		2,029
Total equity⁽¹²⁾	$	198,825	$	186,498	$	176,380
Total liabilities and stockholders’ equity	$	1,883,296	$	1,910,699	$	1,952,636
Net interest revenue as a percentage of average interest-earning assets⁽¹³⁾
In U.S. offices	$	926,291	$	941,367	$	971,785	$	25,591	$	24,586	$	26,022	2.76	%	2.61	%	2.68	%
In offices outside the U.S.⁽⁶⁾	731,570		731,463		738,101		21,723		22,642		22,147		2.97		3.10		3.00
Total	$	1,657,861	$	1,672,830	$	1,709,886	$	47,314	$	47,228	$	48,169	2.85	%	2.82	%	2.82	%



	2013 vs. 2012									2012 vs. 2011
	Increase (decrease) due to change in:									Increase (decrease) due to change in:
In millions of dollars	Average volume			Average rate			Net change			Average volume			Average rate			Net change
Deposits with banks⁽⁴⁾	$	(99	)	$	(136	)	$	(235	)	$	(114	)	$	(367	)	$	(481	)
Federal funds sold and securities borrowed or purchased under agreements to resell
In U.S. offices	$	13		$	(351	)	$	(338	)	$	(12	)	$	(4	)	$	(16	)
In offices outside the U.S.⁽⁴⁾	(169		)	(345		)	(514		)	67			(264		)	(197		)
Total	$	(156	)	$	(696	)	$	(852	)	$	55		$	(268	)	$	(213	)
Trading account assets⁽⁵⁾
In U.S. offices	$	46		$	(217	)	$	(171	)	$	82		$	(453	)	$	(371	)
In offices outside the U.S.⁽⁴⁾	26			(420		)	(394		)	(544		)	(412		)	(956		)
Total	$	72		$	(637	)	$	(565	)	$	(462	)	$	(865	)	$	(1,327	)
Investments⁽¹⁾
In U.S. offices	$	125		$	(297	)	$	(172	)	$	44		$	(583	)	$	(539	)
In offices outside the U.S.⁽⁴⁾	(15		)	(380		)	(395		)	(281		)	(41		)	(322		)
Total	$	110		$	(677	)	$	(567	)	$	(237	)	$	(624	)	$	(861	)
Loans (net of unearned income)⁽⁶⁾
In U.S. offices	$	(379	)	$	(757	)	$	(1,136	)	$	(764	)	$	(1,270	)	$	(2,034	)
In offices outside the U.S.⁽⁴⁾	485			(1,501		)	(1,016		)	1,133			(822		)	311
Total	$	106		$	(2,258	)	$	(2,152	)	$	369		$	(2,092	)	$	(1,723	)
Other interest-earning assets⁽⁷⁾	$	(37	)	$	59		$	22		$	(101	)	$	168		$	67
Total interest revenue	$	(4	)	$	(4,345	)	$	(4,349	)	$	(490	)	$	(4,048	)	$	(4,538	)



	2013 vs. 2012									2012 vs. 2011
	Increase (decrease) due to change in:									Increase (decrease) due to change in:
In millions of dollars	Average volume			Average rate			Net change			Average volume			Average rate			Net change
Deposits
In U.S. offices	$	247		$	(630	)	$	(383	)	$	101		$	(230	)	$	(129	)
In offices outside the U.S.⁽⁴⁾	(71		)	(1,000		)	(1,071		)	36			(748		)	(712		)
Total	$	176		$	(1,630	)	$	(1,454	)	$	137		$	(978	)	$	(841	)
Federal funds purchased and securities loaned or sold under agreements to repurchase
In U.S. offices	$	33		$	(208	)	$	(175	)	$	12		$	64		$	76
In offices outside the U.S.⁽⁴⁾	13			(316		)	(303		)	49			(505		)	(456		)
Total	$	46		$	(524	)	$	(478	)	$	61		$	(441	)	$	(380	)
Trading account liabilities⁽⁵⁾
In U.S. offices	$	(18	)	$	(5	)	$	(23	)	$	(48	)	$	(102	)	$	(150	)
In offices outside the U.S.⁽⁴⁾	5			(3		)	2			(12		)	(56		)	(68		)
Total	$	(13	)	$	(8	)	$	(21	)	$	(60	)	$	(158	)	$	(218	)
Short-term borrowings⁽⁶⁾
In U.S. offices	$	(3	)	$	(24	)	$	(27	)	$	(15	)	$	79		$	64
In offices outside the U.S.⁽⁴⁾	55			(158		)	(103		)	(104		)	117			13
Total	$	52		$	(182	)	$	(130	)	$	(119	)	$	196		$	77
Long-term debt
In U.S. offices	$	(2,078	)	$	(216	)	$	(2,294	)	$	(2,431	)	$	625		$	(1,806	)
In offices outside the U.S.⁽⁴⁾	(97		)	39			(58		)	(117		)	(312		)	(429		)
Total	$	(2,175	)	$	(177	)	$	(2,352	)	$	(2,548	)	$	313		$	(2,235	)
Total interest expense	$	(1,914	)	$	(2,521	)	$	(4,435	)	$	(2,529	)	$	(1,068	)	$	(3,597	)
Net interest revenue	$	1,910		$	(1,824	)	$	86		$	2,039		$	(2,980	)	$	(941	)

Value at Risk

Value at risk (VAR) estimates, at a 99% confidence level, the potential decline in the value of a position or a portfolio under normal market conditions assuming a one-day holding period. VAR statistics, which are based on historical data, can be materially different across firms due to differences in portfolio composition, differences in VAR methodologies, and differences in model parameters. As a result, Citi believes VAR statistics can be used more effectively as indicators of trends in risk taking within a firm, rather than as a basis for inferring differences in risk-taking across firms.

Citi uses a single, independently approved Monte Carlo simulation VAR model (see “VAR Model Review and Validation” below), which has been designed to capture material risk sensitivities (such as first- and second-order sensitivities of positions to changes in market prices) of various asset classes/risk types (such as interest rate, foreign exchange, equity and commodity risks). Citi’s VAR includes all positions, which are measured at fair value; it does not include investment securities classified as available-for-sale or held-to-maturity. For information on these securities, see Note 14 to the Consolidated Financial Statements.

Citi believes its VAR model is conservatively calibrated to incorporate the greater of short-term (most recent month) and long-term (three years) market volatility. The Monte Carlo simulation involves approximately 300,000 market factors, making use of approximately 200,000 time series, with sensitivities updated daily and model parameters updated weekly.

The conservative features of the VAR calibration contribute approximately a 16% add-on to what would be a VAR estimated under the assumption of stable and perfectly normally distributed markets.

As set forth in the table below, Citi’s total Trading and Credit Portfolios VAR was $144 million at December 31, 2013 and $118 million at December 31, 2012. Daily total Trading and Credit Portfolios VAR averaged $121 million in 2013 and ranged from $93 million to $175 million. The change in total Trading and Credit Portfolios VAR was primarily driven by a loss of diversification benefit due to a shift in asset class composition. Specifically, there was an increase in risk to G10 interest rate exposures and a reduction in commercial real estate exposures.



In millions of dollars	Dec. 31, 2013			2013 Average			Dec. 31, 2012			2012 Average
Interest rate	$	115		$	114		$	116		$	122
Foreign exchange	34			35			33			38
Equity	26			27			32			29
Commodity	13			12			11			15
Covariance adjustment⁽¹⁾	(63		)	(75		)	(76		)	(82		)
Total Trading VAR—all market risk factors, including general and specific risk (excluding credit portfolios)⁽²⁾	$	125		$	113		$	116		$	122
Specific risk-only component⁽³⁾	$	15		$	14		$	31		$	24
Total Trading VAR—general market risk factors only (excluding credit portfolios)⁽²⁾	$	110		$	99		$	85		$	98
Incremental Impact of the Credit Portfolio⁽⁴⁾	19			8			$	2		$	26
Total Trading and Credit Portfolios VAR	$	144		$	121		$	118		$	148

(1)

Covariance adjustment (also known as diversification benefit) equals the difference between the total VAR and the sum of the VARs tied to each individual risk type. The benefit reflects the fact that the risks within each and across risk types are not perfectly correlated and, consequently, the total VAR on a given day will be lower than the sum of the VARs relating to each individual risk type. The determination of the primary drivers of changes to the covariance adjustment is made by an examination of the impact of both model parameter and position changes.

(2) The total Trading VAR includes mark-to-market and certain fair value option trading positions from S&B and Citi Holdings, with the exception of hedges to the loan portfolio, fair value option loans, and all CVA exposures. Available-for-sale and accrual exposures are not included.


(3)	The specific risk-only component represents the level of equity and fixed income issuer-specific risk embedded in VAR.


(4)	The credit portfolio is composed of mark-to-market positions associated with non-trading business units including Citi Treasury, the CVA relating to derivative counterparties and all associated CVA hedges. DVA is not included. It also includes hedges to the loan portfolio, fair value option loans, and tail hedges that are not explicitly hedging the trading book.

The table below provides the range of market factor VARs inclusive of specific risk that was experienced during 2013 and 2012.



	2013				2012
In millions of dollars	Low		High		Low		High
Interest rate	$	92	$	142	$	101	$	149
Foreign exchange	21		66		25		53
Equity	18		60		17		59
Commodity	8		24		9		21

The following table provides the VAR for S&B during 2013, excluding the CVA relating to derivative counterparties, hedges of CVA, fair value option loans, and hedges to the loan portfolio.



In millions of dollars	Dec. 31, 2013
Total—all market risk factors, including general and specific risk	$	123
Average—during year	$	109
High—during quarter	151
Low—during quarter	81

VAR Model Review and Validation

Generally, Citi’s VAR review and model validation process entails reviewing the model framework, major assumptions, and implementation of the mathematical algorithm. In addition, as part of the model validation process, product specific back-testing on portfolios is periodically completed and reviewed with Citi’s U.S. banking regulators. Furthermore, Regulatory VAR (as described below) back-testing is performed against buy-and-hold profit and loss on a monthly basis for approximately 164 portfolios across the organization (trading desk level, ICG business segment and Citigroup) and the results are shared with the U.S. banking regulators.

Significant VAR model and assumption changes must be independently validated within Citi’s risk management organization. This validation process includes a review by Citi’s model validation group and further approval from its model validation review committee, which is composed of senior quantitative risk management officers. In the event of significant model changes, parallel model runs are undertaken prior to implementation. In addition, significant model and assumption changes are subject to the periodic reviews and approval by Citi’s U.S. banking regulators.

Citi uses the same independently validated VAR model for both Regulatory VAR and Risk Management VAR (i.e., Total Trading and Total Trading and Credit Portfolios VARs) and, as such, the model review and oversight process for both purposes is as described above.

Regulatory VAR, which is calculated in accordance with Basel II.5, differs from Risk Management VAR due to the fact that certain positions included in Risk Management VAR are not eligible for market risk treatment in Regulatory VAR. The composition of Risk Management VAR is discussed under “Value at Risk” above. The applicability of the VAR model for positions eligible for market risk treatment under U.S. regulatory capital rules is periodically reviewed and approved by Citi’s U.S. banking regulators.

In accordance with Basel II.5, Regulatory VAR includes all trading book covered positions and all foreign exchange and commodity exposures. Pursuant to Basel II.5, Regulatory VAR excludes positions that fail to meet the intent and ability to trade requirements and are therefore classified as non-trading book and categories of exposures that are specifically excluded as covered positions. Regulatory VAR excludes CVA on derivative instruments and DVA on Citi’s own fair value option liabilities, but includes associated hedges to that CVA as of April 2013 pursuant to regulatory guidance. As

reflected in the graph on the following page, the impact of this asymmetrical treatment of including only CVA hedges drove an increase in Regulatory VAR beginning in April 2013. Citi expects that, effective April 1, 2014, CVA hedges will no longer be included as a covered position for market risk-weighted assets in accordance with the Final Basel III Rules. Instead, these positions will be included in credit risk-weighted assets as computed under the Advanced Approaches for determining risk-weighted-assets.

Regulatory VAR Back-testing

In accordance with Basel II.5, Citi is required to perform back-testing to evaluate the effectiveness of its VAR model and to determine the capital multiplier used in the calculation of market risk-weighted-assets. Regulatory VAR back-testing is the process in which the daily one-day VAR, at a 99% confidence interval, is compared to the buy-and-hold profit and loss (e.g., the profit and loss impact if the portfolio is held constant at the end of the day and re-priced the following day) as required under Basel II.5. Based on a 99% confidence level, Citi would expect two to three days in any one year where buy-and-hold losses exceeded the Regulatory VAR. Given the conservative calibration of Citi’s VAR model (as a result of taking the greater of short- and long-term volatilities and fat tail scaling of volatilities), Citi would expect fewer exceptions under normal and stable market conditions. Periods

of unstable market conditions could increase the number of back-testing exceptions.

The following graph shows the daily buy-and-hold profit and loss associated with Citi’s covered positions under Basel II.5 compared to Citi’s one-day Regulatory VAR during 2013. As the graph indicates, for the twelve month period ending December 31, 2013, there were no back-testing exceptions observed for Citi’s Regulatory VAR. Citi posted buy-and-hold gains in 49% of days where daily Regulatory VAR back-testing was performed. The difference between the 49% of buy-and-hold gains for Regulatory VAR back-testing and the 92% of gains shown in the histogram of daily trading related revenue above reflects, among other things, that a significant portion of Citi’s trading related revenue is not generated from daily price movements on these positions and exposures as well as differences in the portfolio composition of Regulatory VAR and Risk Management VAR.

Stress Testing

Citi performs stress testing on a regular basis to estimate the impact of extreme market movements. It is performed on individual positions and trading portfolios, as well as in aggregate inclusive of multiple trading portfolios. Citi’s independent market risk management organization, after consultations with the businesses, develops both systemic and specific stress scenarios, reviews the output of periodic stress testing exercises, and uses the information to assess the ongoing appropriateness of exposure levels and limits. Citi uses two complementary approaches to market risk stress testing across all major risk factors (i.e., equity, foreign exchange, commodity, interest rate and credit spreads): top-down systemic stresses and bottom-up business specific

stresses. Systemic stresses are designed to quantify the potential impact of extreme market movements on a firm-wide basis, and are constructed using both historical periods of market stress and projections of adverse economic scenarios. Business specific stresses are designed to probe the risks of particular portfolios and market segments, especially those risks that are not fully captured in VaR and systemic stresses.

Factor Sensitivities

Factor sensitivities are expressed as the change in the value of a position for a defined change in a market risk factor, such as a change in the value of a Treasury bill for a one-basis-point change in interest rates. Citi’s independent market risk management ensures that factor sensitivities are calculated,

OPERATIONAL RISK

Operational risk is the risk of loss resulting from inadequate or failed internal processes, systems or human factors, or from external events. It includes the reputation and franchise risk associated with business practices or market conduct in which Citi is involved. Operational risk is inherent in Citigroup’s global business activities, as well as the internal processes that support those business activities, and can result in losses arising from events related to the following, among others:


•	fraud, theft and unauthorized activities;


•	employment practices and workplace environment;


•	clients, products and business practices;


•	physical assets and infrastructure; and


•	execution, delivery and process management.

Operational Risk Management

Citi’s operational risk is managed through an overall framework designed to balance strong corporate oversight with well defined independent risk management. This framework includes:


•	recognized ownership of the risk by the businesses;


•	oversight by Citi’s independent control functions; and


•	independent assessment by Citi’s Internal Audit function.

The goal is to keep operational risk at appropriate levels relative to the characteristics of Citigroup’s businesses, the markets in which it operates, its capital and liquidity, and the competitive, economic and regulatory environment.

To anticipate, mitigate and control operational risk, Citigroup maintains a system of policies and has established a consistent framework for monitoring, assessing and communicating operational risks and the overall effectiveness of the internal control environment across Citigroup. As part of this framework, Citi has established a “Manager’s Control Assessment” program to help managers self-assess key operational risks and controls and identify and address weaknesses in the design and/or effectiveness of internal controls that mitigate significant operational risks.

As noted above, each major business segment must implement an operational risk process consistent with the requirements of this framework. The process for operational risk management includes the following steps:


•	identify and assess key operational risks;


•	design controls to mitigate identified risks;


•	establish key risk and control indicators;


•	implement a process for early problem recognition and timely escalation;


•	produce a comprehensive operational risk report; and


•	ensure that sufficient resources are available to actively improve the operational risk environment and mitigate emerging risks.

As new products and business activities are developed, processes are designed, modified or sourced through alternative means and operational risks are considered.

An Operational Risk Council provides oversight for operational risk across Citigroup. The Council’s membership includes senior members of Citi’s Franchise Risk and Strategy

group and the Chief Risk Officer’s organization covering multiple dimensions of risk management, with representatives of the Business and Regional Chief Risk Officers’ organizations. The Council’s focus is on identification and mitigation of operational risk and related incidents. The Council works with the business segments and the control functions (e.g., Compliance, Finance, Human Resources and Legal) with the objective of ensuring a transparent, consistent and comprehensive framework for managing operational risk globally.

In addition, Enterprise Risk Management, within Citi’s Franchise Risk and Strategy group, proactively assists the businesses, operations and technology and the other independent control groups in enhancing the effectiveness of controls and managing operational risks across products, business lines and regions.

Operational Risk Measurement and Stress Testing

As noted above, information about the businesses’ operational risk, historical operational risk losses and the control environment is reported by each major business segment and functional area. The information is summarized and reported to senior management, as well as to the Audit Committee of Citi’s Board of Directors.

Operational risk is measured and assessed through risk capital (see “Managing Global Risk—Risk Capital” above). Projected operational risk losses under stress scenarios are also required as part of the Federal Reserve Board’s CCAR process.

COUNTRY RISK

Overview

Country risk is the risk that an event in a country (precipitated by developments internal or external to a country) could directly or indirectly impair the value of Citi’s franchise or adversely affect the ability of obligors within that country to honor their obligations to Citi, any of which could negatively impact Citi’s results of operations or financial condition. Country risk events could include sovereign volatility or defaults, banking failures or defaults, redenomination events (which could be accompanied by a revaluation (either devaluation or appreciation) of the affected currency), currency crises, foreign exchange and/or capital controls and/or political events and instability. Country risk events could result in mandatory loan loss and other reserve requirements imposed by U.S. regulators due to a particular country’s economic situation. See also “Risk Factors—Market and Economic Risks” above.

Citi has instituted a risk management process to monitor, evaluate and manage the principal risks it assumes in conducting its activities, including risks associated with Citi’s country risk exposures. For additional information, see “Managing Global Risk” above. As part of this risk management process, Citi has a dedicated country risk unit that assesses and manages its country risk exposures. Citi’s independent risk management, working with input from the businesses and finance, provides periodic updates to senior management on significant potential areas of concern across Citi that can arise from risk concentrations, financial market participants and other systemic issues. These areas of focus are intended to be forward-looking assessments of the potential economic impacts to Citi that may arise from these exposures.

While Citi continues to work to mitigate its exposures to potential country risk events, the impact of any such event is highly uncertain and will ultimately be based on the specific facts and circumstances. As a result, there can be no assurance that the various steps Citi has taken to protect its businesses, results of operations and financial condition against these events will be sufficient. In addition, there could be negative impacts to Citi’s businesses, results of operations or financial condition that are currently unknown to Citi and thus cannot be mitigated as part of its ongoing contingency planning.

Emerging Markets Trading Account Assets and Investment Securities

In the ordinary course of business, Citi holds securities in its trading accounts and investment accounts, including those above. Trading account assets are marked to market daily, with asset levels varying as Citi maintains inventory consistent with customer needs. Investment securities are recorded at either fair value or historical cost, based on the underlying accounting treatment, and are predominantly held as part of the local entity asset and liability management program, or to comply with local regulatory requirements. In the markets in the table above, 98% of Citi’s investment securities were related to sovereign issuers.

Emerging Markets Consumer Lending

GCB’s strategy within the emerging markets is consistent with GCB’s overall strategy, which is to leverage its global footprint and seek to be the preeminent bank for the emerging affluent and affluent consumers in large urban centers. In credit cards and in certain retail markets, Citi serves customers in a somewhat broader set of segments and geographies. Overall, Citi believes that its customers are more resilient than the overall market under a wide range of economic conditions. Citi’s Consumer business has a well-established risk appetite framework across geographies and products that reflects the business strategy and activities and establishes boundaries around the key risks that arise from the strategy and activities.

As of December 31, 2013, GCB had approximately $127 billion of Consumer loans outstanding to borrowers in the emerging markets, or approximately 42% of GCB’s total loans, compared to approximately $118 billion or 41% of total GCB loans as of December 31, 2012. Of the approximately $127 billion as of December 31, 2013, the five largest emerging markets— Mexico, Korea, Singapore, Hong Kong and India—comprised approximately 28% of GCB’s total loans.

Within the emerging markets, 28% of Citi’s GCB loans were mortgages, 27% were commercial markets loans, 23% were personal loans, and 22% were credit cards loans, each as of year-end 2013.

Overall consumer credit quality in the emerging markets remained generally stable in 2013, as net credit losses were 1.9% of average loans in 2013, compared to 1.8% in 2012, consistent with Citi’s target market strategy and risk appetite framework.

Emerging Markets Corporate Lending

Consistent with its overall strategy, Citi’s Corporate clients in the emerging markets are typically large, multi-national corporations who value Citi’s global network. Citi aims to establish relationships with these clients that encompass multiple products, consistent with client needs, including cash management and trade services, foreign exchange, lending, capital markets and M&A advisory. Citi believes that its target corporate segment is more resilient under a wide range of economic conditions, and that its relationship-based approach to client service enables it to effectively manage the risks inherent in such relationships. Citi has a well-established risk appetite framework around its corporate lending activities, including risk-based limits and approval authorities and portfolio concentration boundaries.

As of December 31, 2013, ICG had approximately $126 billion of loans outstanding to borrowers in the emerging markets, representing approximately 47% of ICG’s total loans outstanding, as compared to approximately $117 billion or 48% of ICG loans outstanding at December 31, 2012. No single emerging market country accounted for more than 6% of Citi’s ICG loans as of December 31, 2013.

As of December 31, 2013, approximately two-thirds of Citi’s emerging markets Corporate loans (excluding Private Bank in Securities and Banking) are to borrowers whose ultimate parent is rated investment grade, which Citi considers to be ratings of BBB or better according to Citi’s internal risk measurement system and methodology (for additional information on Citi’s internal risk measurement system for Corporate loans, see “Corporate Credit Details” above). The vast majority of the remainder are rated BB or B according to Citi’s internal risk measurement system and methodology.

Overall ICG net credit losses in the emerging markets were 0.04% of average loans in 2013, as compared to 0.2% in 2012. The ratio of non-accrual ICG loans to total loans in the emerging markets remained stable at 0.5% as of December 31, 2013, as compared with December 31, 2012.

The following chart shows the composition of emerging markets ICG loans overall and for Citi’s three largest ICG lending markets—Brazil, China and India—by type of loan.

Funded Emerging Markets ICG Loans by Loan Type

In billions of dollars

A significant portion of Corporate loans in S&B are to borrowers whose ultimate parent is headquartered in a

different country, often in the developed markets. For example, as of December 31, 2013, in Brazil, approximately 25% of Citi’s Corporate loans in S&B were to borrowers whose ultimate parent was domiciled in another country. In China, approximately 75% were to foreign multi-national corporations. In India, approximately 50% were to foreign multi-national corporations.

GIIPS Sovereign, Financial Institution and Corporate Exposures

Several European countries, including Greece, Ireland, Italy, Portugal and Spain (GIIPS), have been the subject of credit deterioration due to weaknesses in their economic and fiscal situations. Moreover, the ongoing Eurozone debt and economic crisis and other developments in the European Monetary Union (EMU) could lead to the withdrawal of one or more countries from the EMU or a partial or complete break-up of the EMU. The information below sets forth certain information regarding Citi’s country risk exposures on these topics as of December 31, 2013.

The information in the tables below is based on Citi’s internal risk management measures and systems. The country designation in Citi’s internal risk management systems is based on the country to which the client relationship, taken as a whole, is most directly exposed to economic, financial, sociopolitical or legal risks. As a result, Citi’s reported exposures in a particular country may include exposures to subsidiaries within the client relationship that are actually domiciled outside of the country (e.g., Citi’s Greece credit risk exposures may include loans, derivatives and other exposures to a U.K. subsidiary of a Greece-based corporation).

Citi believes that the risk of loss associated with the exposures set forth below is likely materially lower than the exposure amounts disclosed below and is sized appropriately relative to its franchise in these countries. In addition, the sovereign entities of the countries disclosed below, as well as the financial institutions and corporations domiciled in these countries, are important clients in the global Citi franchise. Citi fully expects to maintain its presence in these markets to service all of its global customers. As such, Citi’s exposures in these countries may vary over time based on its franchise, client needs and transaction structures.



																GIIPS⁽¹⁾
In billions of U.S. dollars	Greece			Ireland			Italy			Portugal			Spain			December 31, 2013			September 30, 2013
Funded loans, before reserves⁽²⁾	$	1.0		$	0.4		$	1.2		$	0.2		$	2.5		$	5.3		$	7.0
Derivative counterparty mark-to-market, inclusive of CVA⁽³⁾	0.5			0.5			9.2			0.2			2.9			13.3			12.7
Gross funded credit exposure	$	1.6		$	0.9		$	10.4		$	0.4		$	5.4		$	18.6		$	19.7
Less: margin and collateral⁽⁴⁾	$	(0.1	)	$	(0.3	)	$	(1.3	)	$	(0.1	)	$	(2.6	)	$	(4.3	)	$	(4.3	)
Less: purchased credit protection⁽⁵⁾	(0.3		)	(0.0)			(7.9		)	(0.2		)	(1.2		)	(9.6		)	(9.8		)
Net current funded credit exposure	$	1.1		$	0.6		$	1.3		$	0.1		$	1.6		$	4.7		$	5.6
Net trading exposure	$	0.1		$	0.3		$	1.4		$	0.1		$	2.3		$	4.2		$	0.4
AFS exposure	0.0			0.0			0.2			0.0			0.0			0.2			0.3
Net trading and AFS exposure⁽⁶⁾	$	0.1		$	0.3		$	1.6		$	0.1		$	2.3		$	4.4		$	0.6
Net current funded exposure	$	1.2		$	0.9		$	2.9		$	0.2		$	3.9		$	9.1		$	6.2
Additional collateral received, not reducing amounts above⁽⁷⁾	$	(0.7	)	$	(0.1	)	$	(0.1	)	(0.0)			$	(0.4	)	$	(1.3	)	$	(1.3	)
Net current funded credit exposure detail
Sovereigns	$	0.2		$	0.0		$	0.3		(0.0)			$	(0.2	)	$	0.4		$	1.1
Financial institutions	0.1			0.1			0.1			0.0			0.9			1.1			0.8
Corporations	0.8			0.5			0.8			0.1			0.9			3.2			$	3.7
Net current funded credit exposure	$	1.1		$	0.6		$	1.3		$	0.1		$	1.6		$	4.7		$	5.6
Net unfunded commitments⁽⁸⁾
Sovereigns	$	0.0		$	0.0		$	0.0		$	0.0		$	0.0		$	0.0		$	0.0
Financial institutions	0.0			0.0			0.1			0.0			0.5			0.7			0.4
Corporations, net	0.3			0.6			3.0			0.3			2.3			6.4			6.4
Total net unfunded commitments	$	0.3		$	0.6		$	3.1		$	0.3		$	2.8		$	7.1		$	6.8

Retail, Small Business and Citi Private Bank

As of December 31, 2013, Citi had approximately $4.7 billion of mostly locally funded accrual loans to retail, small business and Citi Private Bank customers in the GIIPS, the vast majority of which was in Citi Holdings. This compared to $4.5 billion as of September 30, 2013. Of the $4.7 billion, approximately (i) $3.3 billion consisted of retail and small business exposures in Spain ($2.7 billion) and Greece ($0.6 billion), (ii) $0.9 billion related to held-to-maturity securitized retail assets (primarily mortgage-backed securities in Spain), and (iii) $0.5 billion related to Private Bank customers, substantially all in Spain. This compared to approximately (i) $3.1 billion of retail and small business exposures in Spain ($2.5 billion) and Greece ($0.6 billion), (ii) $0.9 billion related to held-to-maturity securitized retail assets, and (iii) $0.5 billion related to Private Bank customers as of September 30, 2013.

In addition, Citi had approximately $4.4 billion of unfunded commitments to GIIPS retail customers as of December 31, 2013, compared to $4.1 billion as of September 30, 2013. Citi’s unfunded commitments to GIIPS retail customers, in the form of unused credit card lines, are generally cancellable upon the occurrence of significant credit events, including redenomination events.

Credit Default Swaps

Citi buys and sells credit protection through credit default swaps (CDS) on underlying GIIPS entities as part of its market-making activities for clients in its trading portfolios. Citi also purchases credit protection, through CDS, to hedge its own credit exposure to these underlying entities that arises from loans to these entities or derivative transactions with these entities.

Citi buys and sells CDS as part of its market-making activity, and purchases CDS for credit protection primarily with investment grade, global financial institutions predominantly outside the GIIPS. The counterparty credit exposure that can arise from the purchase or sale of CDS including any GIIPS counterparties, is managed and mitigated through legally enforceable netting and margining agreements with a given counterparty. Thus, the credit exposure to that counterparty is measured and managed in aggregate across all products covered by a given netting or margining agreement.

The notional amount of credit protection purchased or sold on GIIPS underlying single reference entities as of December 31, 2013 is set forth in the table below. The net notional contract amounts, less mark-to-market adjustments, are included in “Net current funded exposure” in the table above and appear in either “Net trading exposure” when part of a trading strategy or in “Purchased credit protection” when purchased as a hedge against a credit exposure.

Purchased credit protection generally pays out only upon the occurrence of certain credit events with respect to the country or borrower covered by the protection, as determined by a committee composed of dealers and other market participants. In addition to general counterparty credit risks, the credit protection may not fully cover all situations that may adversely affect the value of Citi’s exposure and, accordingly, Citi could still experience losses despite the existence of the credit protection.

When Citi purchases CDS as a hedge against a credit exposure, it generally seeks to purchase products from counterparties that would not be correlated with the underlying credit exposure it is hedging. In addition, Citi generally seeks to purchase products with a maturity date similar to the exposure against which the protection is purchased. While certain exposures may have longer maturities that extend beyond the CDS tenors readily available in the market, Citi generally will purchase credit protection with a maximum tenor that is readily available in the market.

The above table contains all net CDS purchased or sold on underlying GIIPS single reference entities, whether part of a trading strategy or as purchased credit protection. With respect to the $15.5 billion net purchased CDS contracts on underlying GIIPS reference entities at December 31, 2013 (compared to $14.0 billion at September 30, 2013), approximately 94% was purchased from non-GIIPS counterparties and 90% was purchased from investment grade counterparties.

Secured Financing Transactions

As part of its banking activities with its clients, Citi enters into secured financing transactions, such as repurchase agreements and reverse repurchase agreements. These transactions typically involve the lending of cash, against which securities are taken as collateral. The amount of cash loaned against the securities collateral is a function of the liquidity and quality of the collateral as well as the credit quality of the counterparty. The collateral is typically marked to market daily, and Citi has the ability to call for additional collateral (usually in the form of cash) if the value of the securities falls below a pre-defined threshold.

As shown in the table below, at December 31, 2013, Citi had loaned $14.4 billion in cash through secured financing transactions with GIIPS counterparties, usually through reverse repurchase agreements (compared to $11.7 billion as of September 30, 2013). Against those loans, it held approximately $16.7 billion fair value of securities collateral (compared to $13.7 billion as of September 30, 2013). In addition, Citi held $0.1 billion in variation margin (unchanged from September 30, 2013), most of which was in cash, against all secured financing transactions.

Consistent with Citi’s risk management systems, secured financing transactions are included in the counterparty derivative mark-to-market exposure at their net credit exposure value, which is typically small or zero given the over-collateralized structure of these transactions.

Redenomination and Devaluation Risk

As referenced above, the ongoing Eurozone debt crisis and other developments in the EMU could lead to the withdrawal of one or more countries from the EMU or a partial or complete break-up of the EMU (see also “Risk Factors—Market and Economic Risks” above). If one or more countries were to leave the EMU, certain obligations relating to the exiting country could be redenominated from the Euro to a new country currency. While alternative scenarios could develop, redenomination could be accompanied by immediate devaluation of the new currency as compared to the Euro and the U.S. dollar.

Citi, like other financial institutions with substantial operations in the EMU, is exposed to potential redenomination and devaluation risks arising from (i) Euro-denominated assets and/or liabilities located or held within the exiting country that are governed by local country law (“local exposures”), as well as (ii) other Euro-denominated assets and liabilities, such as loans, securitized products or derivatives, between entities outside of the exiting country and a client within the country that are governed by local country law (“offshore exposures”). However, the actual assets and liabilities that could be subject to redenomination and devaluation risk are subject to substantial legal and other uncertainty.

Citi has been, and will continue to be, engaged in contingency planning for such events, particularly with respect to the GIIPS. Generally, to the extent that Citi’s local and offshore assets are approximately equal to its liabilities within the exiting country, and assuming both assets and liabilities are symmetrically redenominated and devalued, Citi believes that its risk of loss as a result of a redenomination and devaluation event would not be material. However, to the extent its local and offshore assets and liabilities are not equal, or there is asymmetrical redenomination of assets versus liabilities, Citi could be exposed to losses in the event of a redenomination and devaluation. Moreover, a number of events that could accompany a redenomination and devaluation, including a drawdown of unfunded commitments or “deposit flight,” could exacerbate any mismatch of assets and liabilities within the exiting country.

Citi’s redenomination and devaluation exposures to the GIIPS as of December 31, 2013 are not additive to the risk exposures to such countries described above. Rather, Citi’s credit risk exposures in the affected country would generally be reduced to the extent of any redenomination and devaluation of assets.

As of December 31, 2013, Citi estimates that it had net asset exposure subject to redenomination and devaluation in Italy, principally relating to derivatives contracts. Citi also estimates that, as of such date, it had net asset exposure subject to redenomination and devaluation in Spain, principally related to offshore exposures related to held-to-

maturity securitized retail assets (primarily mortgage-backed securities) (see “Retail, Small Business and Citi Private Bank” above) and government bonds. However, as of December 31, 2013, Citi’s estimated redenomination and devaluation exposure to Italy was less than Citi’s net current funded credit exposure to Italy (before purchased credit protection) as reflected in the table above. Further, as of December 31, 2013, Citi’s estimated redenomination and devaluation exposure to Spain was less than Citi’s net current funded credit exposure to Spain (before purchased credit protection) as reflected under in the table above. As of December 31, 2013, Citi had a net liability position in each of Greece, Ireland and Portugal.

As referenced above, Citi’s estimated redenomination and devaluation exposure does not include purchased credit protection. As described above, Citi has purchased credit protection primarily from investment grade, global financial institutions predominantly outside of the GIIPS. To the extent the purchased credit protection is available in a redenomination/devaluation event, any redenomination/devaluation exposure could be reduced.

Any estimates of redenomination/devaluation exposure are subject to ongoing review and necessarily involve numerous assumptions, including which assets and liabilities would be subject to redenomination in any given case, the availability of purchased credit protection and the extent of any utilization of unfunded commitments, each as referenced above. In addition, other events outside of Citi’s control-such as the extent of any deposit flight and devaluation, the imposition of exchange and/or capital controls, the requirement by U.S. regulators of mandatory loan loss and other reserve requirements or any required timing of functional currency changes and the accounting impact thereof could further negatively impact Citi in such an event. Accordingly, in an actual redenomination and devaluation scenario, Citi’s exposures could vary considerably based on the specific facts and circumstances.

CROSS-BORDER RISK

Overview

Cross-border risk is the risk that actions taken by a non-U.S. government may prevent the conversion of local currency into non-local currency and/or the transfer of funds outside the country, among other risks, thereby impacting the ability of Citigroup and its customers to transact business across borders. Examples of cross-border risk include actions taken by foreign governments such as exchange controls and restrictions on the remittance of funds. These actions might restrict the transfer of funds or the ability of Citigroup to obtain payment from customers on their contractual obligations. Management of cross-border risk at Citi is performed through a formal review process that includes annual setting of cross-border limits and ongoing monitoring of cross-border exposures as well as monitoring of economic conditions globally through Citi’s independent risk management. See also “Risk Factors—Market and Economic Risks” above.

FFIEC—Cross-Border Outstandings

Citi’s cross-border disclosures are based on the country exposure bank regulatory reporting guidelines of the Federal Financial Institutions Examination Council (FFIEC), as revised in December 2013. The tables below reflect these revised guidelines for both December 31, 2013 and 2012.

Reporting of cross-border exposure under FFIEC bank regulatory guidelines differs significantly from Citi’s country risk reporting, as described under “Country Risk” above. The more significant differences are as follows:


•	FFIEC amounts are based on the domicile of the ultimate obligor, counterparty, collateral, issuer or guarantor, as applicable, whereas Citi’s country risk reporting is based on the identification of the country where the client relationship, taken as a whole, is most directly exposed to the economic, financial, sociopolitical or legal risks.


•	FFIEC amounts do not consider the benefit of collateral received for securities financing transactions (i.e. repurchase agreements, reverse repurchase agreements and securities loaned and borrowed) and are reported based on notional amounts, while country risk amounts are reported based on the net credit exposure arising from the transaction.

•

Cross-border reporting under FFIEC guidelines permits netting of derivatives receivables and payables, reported at fair value, but only under a legally binding netting agreement with the same specific counterparty, and does not include the benefit of margin received or hedges, compared to country risk reporting which recognizes the benefit of margin and hedges and permits netting so long as under the same legally binding netting agreement.


•	The netting of long and short positions for AFS securities and trading portfolios is not permitted under FFIEC reporting, whereas such positions are reported on a net basis under country risk reporting.


•	Credit default swaps (CDS) are included under cross-border reporting based on the gross notional amount sold and purchased, and do not include any offsetting CDS on

the same underlying entity, compared to country risk where CDS are reported based on the net notional amount of CDS purchased and sold, assuming zero recovery from the underlying entity and adjusted for any mark-to-market receivable or payable position.


•	FFIEC reporting requires loans be reported without the benefit of hedges, compared to country risk reporting which includes loans net of hedges and collateral.

Given the differences noted above, Citi’s cross-border exposures and total outstandings tend to fluctuate, in some cases, significantly, from period to period. As an example, because total outstandings under FFIEC guidelines do not include the benefit of margin or hedges, market volatility in interest rates, foreign exchange rates and credit spreads will cause significant fluctuations in the level of total outstandings, all else being equal.

In addition, as noted above, FFIEC bank regulatory guidelines for reporting of cross-border exposures were revised effective December 2013. These revisions resulted in changes to the presentation (including increasing the number of countries included) and calculation of Citi’s total cross-border outstandings, as compared to those previously disclosed at December 31, 2012. Specifically, the new guidelines (i) eliminate the separate reporting of “investments in and funding of local franchises” (i.e., local country assets) and require such assets to be included within the cross-border exposures below, (ii) no longer permit the offsetting of local country liabilities against local country assets, and (iii) make various changes in the categories required to be reported.



	December 31, 2013
	Cross-Border Claims on Third Parties and Local Country Assets
In billions of U.S. dollars	Banks		Public		NBFIs⁽¹⁾		Other (Corporate and Households)		Trading Assets⁽²⁾		Short Term Claims⁽²⁾		Total Outstanding⁽³⁾		Commitments and Guarantees⁽⁴⁾		Credit Derivatives Purchased⁽⁵⁾		Credit Derivatives Sold⁽⁵⁾
United Kingdom	$	30.6	$	12.3	$	37.2	$	31.6	$	14.5	$	62.3	$	111.7	$	17.7	$	136.5	$	130.9
Mexico	6.8		37.0		7.6		40.7		8.2		44.2		92.1		5.4		6.2		6.3
Japan	14.9		29.0		12.7		6.4		11.4		44.9		63.0		3.5		23.8		22.7
Cayman Islands	0.4		0.0		46.3		5.2		2.9		41.8		51.9		1.3		0.1		0.0
Korea	1.5		16.3		0.5		28.7		2.8		35.6		47.0		19.1		11.2		9.0
France	15.2		2.8		13.8		5.9		5.3		24.6		37.7		12.3		93.5		91.2
Australia	7.2		4.0		5.1		18.1		7.5		13.6		34.4		11.9		15.3		14.4
India	6.7		10.9		1.6		15.0		4.8		23.3		34.2		3.8		2.0		1.8
Germany	11.0		14.6		2.6		4.7		6.5		18.9		32.9		9.3		92.0		90.1
China: Mainland	9.1		8.7		1.5		12.9		3.1		22.5		32.2		1.6		7.1		7.4
Brazil	3.4		10.5		0.6		17.5		5.1		23.2		32.0		7.6		7.7		7.1
Singapore	2.2		9.4		1.4		16.1		0.8		13.9		29.1		2.1		1.2		1.2
Hong Kong	1.6		7.5		1.7		17.2		3.7		17.3		28.0		2.1		3.9		3.5
Netherlands	6.2		8.6		4.6		6.3		2.8		14.2		25.7		7.7		32.9		32.0
Italy	2.8		15.0		0.4		1.3		6.3		7.0		19.5		3.2		76.0		68.9
Switzerland	4.1		9.6		0.8		4.5		0.6		14.4		19.0		5.7		29.1		28.6
Taiwan	1.7		7.0		0.2		9.9		1.7		11.7		18.8		14.0		0.2		0.1
Spain	6.6		4.1		0.3		5.5		4.7		10.0		16.5		2.2		37.4		35.6

Argentina and Venezuela Developments

Citi operates in several countries with strict foreign exchange controls that limit its ability to convert local currency into U.S. dollars and/or transfer funds outside the country. In such cases, Citi could be exposed to a risk of loss in the event that the local currency devalues as compared to the U.S. dollar.

Argentina

Since 2011, the Argentine government has been tightening its foreign exchange controls. As a result, Citi’s access to U.S. dollars and other foreign currencies, which apply to capital repatriation efforts, certain operating expenses, and discretionary investments offshore, has become limited. In addition, beginning in January 2012, the Central Bank of Argentina increased its minimum capital requirements, which affects Citi’s ability to remit profits out of the country.

As of December 31, 2013, Citi’s net investment in its Argentine operations was approximately $730 million, compared to $720 million as of December 31, 2012 and $750 million as of September 30, 2013. During 2013, Citi Argentina paid dividends to Citi of approximately $90 million.

Citi uses the Argentine peso as the functional currency in Argentina and translates its financial statements into U.S. dollars using the official exchange rate as published by the Central Bank of Argentina. During the fourth quarter of 2013, devaluation of the Argentine peso continued at an accelerated rate, with an official exchange rate of 6.52 Argentine pesos to one U.S. dollar at December 31, 2013, compared to 5.79 and 4.90 Argentine pesos to one U.S. dollar at September 30, 2013 and December 31, 2012, respectively. It is expected that the devaluation of the Argentine peso will continue for the foreseeable future.

The impact of devaluations of the Argentine peso on Citi’s net investment in Argentina is reported as a translation loss in stockholders’ equity offset, to the extent hedged, by:


•	gains or losses recorded in stockholders’ equity on net investment hedges that have been designated as, and qualify for, hedge accounting under ASC 815 Derivatives and Hedging; and


•	gains or losses recorded in earnings for its U.S.-dollar-denominated monetary assets or currency futures held in Argentina that do not qualify as net investment hedges under ASC 815.

At December 31, 2013, Citi had cumulative translation losses related to its investment in Argentina, net of qualifying net investment hedges, of approximately $1.30 billion (pretax), which were recorded in stockholders’ equity. The cumulative translation losses would not be reclassified into earnings unless realized upon sale or liquidation of Citi’s Argentine operations.

While Citi currently uses the Argentine peso as the functional currency for its operations in Argentina, an increase in inflation resulting in a cumulative three-year inflation rate of 100% or more would result in a change in the functional currency to the U.S. dollar. Official inflation statistics published by INDEC, the Argentine government’s statistics institute, suggest an annual inflation rate of approximately 10% to 11% for each of the three years ended December 31,

2013, whereas private institutions, economists, and local labor unions calculate the inflation rate to be closer to 25% to 30% annually over the same period. On February 1, 2013, the International Monetary Fund (IMF) issued a declaration of censure against Argentina in connection with the Argentine government’s inaccurate inflation statistics. In February 2014, the Argentine government announced the new national consumer price index (CPI), and official inflation in January 2014 under the new CPI was 3.7%. A change in the functional currency to the U.S. dollar would result in future devaluations of the Argentine peso being recorded in earnings for Citi’s Argentine peso-denominated assets and liabilities.

As noted above, Citi hedges currency risk in its net investment in Argentina to the extent possible and prudent. Suitable hedging alternatives have become less available and more expensive and may not be available to offset any future currency devaluations that could occur. Moreover, on February 4, 2014, Argentina’s central bank enacted new regulations which limit banks’ holdings of foreign currency, which could further limit Citi’s ability to hedge its currency risk by holding U.S. dollar assets in Citi Argentina.

As of December 31, 2013, Citi’s total hedges against its net investment in Argentina were approximately $940 million.

Of this amount, approximately $160 million consisted of foreign currency forwards that are recorded as net investment hedges under ASC 815. This compared to approximately $200 million as of December 31, 2012 and September 30, 2013. The decrease in the net investment hedge year-over-year and sequentially was driven by significantly increased hedging costs. In addition, Citi Argentina held both U.S.-dollar-denominated net monetary assets of approximately $470 million (compared to $280 million and $370 million as of December 31, 2012 and September 30, 2013, respectively) and foreign currency futures with a notional value of approximately $310 million (compared to $170 million as of December 31, 2012 and $200 million as of September 30, 2013), neither of which qualify as net investment hedges under ASC 815.

The ongoing economic and political situation in Argentina could lead to further governmental intervention or regulatory restrictions on foreign investments in Argentina, including further devaluation of the Argentine peso, further limits to foreign currency holdings, or the potential redenomination of certain U.S. dollar assets and liabilities into Argentine pesos, which could be accompanied by a devaluation of the Argentine peso. Any redenomination could occur at different rates (asymmetric redenomination) and/or rates other than the official foreign exchange rate. The U.S. dollar assets and liabilities subject to redenomination, as well as any gains or losses resulting from redenomination, are subject to substantial uncertainty (see “Country Risk—GIIPS Sovereign, Financial Institution and Corporate Exposures—Redenomination and Devaluation Risk” above for a general discussion of redenomination and devaluation risk). As of December 31, 2013, Citi had total third-party assets of $3.9 billion in Citi Argentina, compared to $3.8 billion at December 31, 2012, consisting of cash, loans and securities. Included in the total assets were U.S.-dollar-denominated

assets of approximately $920 million, compared to $1.5 billion at December 31, 2012.

Venezuela

Since 2003, the Venezuelan government has enacted foreign exchange controls. Under these controls, the Venezuelan government’s Foreign Currency Administration Commission (CADIVI) purchases and sells foreign currency at an official foreign exchange rate fixed by the government (as of December 31, 2013, the official exchange rate was fixed at 6.3 bolivars to one U.S. dollar). The exchange controls have limited Citi’s ability to obtain U.S. dollars in Venezuela at the official foreign currency rate. Citi has not been able to acquire U.S. dollars from CADIVI since 2008.

In 2013, the Venezuelan government created the Complimentary System of Foreign Currency Acquirement (SICAD), an alternate foreign exchange mechanism in Venezuela established to settle certain import transactions. Since the SICAD commenced operations, it has conducted 15 auctions for approximately $1.7 billion. As of December 31, 2013, the rate published by SICAD for its recent auctions was 11.3 bolivars per U.S. dollar.

As of December 31, 2013, Citi used the official CADIVI exchange rate of 6.3 bolivars per U.S. dollar to re-measure foreign currency transactions in the financial statements of its Venezuelan operations (which use the U.S. dollar as the functional currency) into U.S. dollars, as the official exchange rate was the only rate legally available to Citi at December 31, 2013 in the country, despite the limited availability of U.S. dollars from CADIVI and although the official rate may not necessarily be reflective of economic reality. Re-measurement of Citi’s bolivar-denominated assets and liabilities due to changes in the exchange rate is recorded in earnings.

At December 31, 2013, Citi’s net investment in its Venezuelan operations was approximately $240 million (compared to $340 million at December 31, 2012 and $230 million at September 30, 2013), which included net monetary assets denominated in Venezuelan bolivars of approximately $220 million (compared to $290 million at December 31, 2012 and $220 million at September 30, 2013). Total third-party assets of Citi Venezuela were approximately $1.2 billion at December 31, 2013, composed primarily of cash, loans and debt securities.

In January 2014, the Venezuelan government announced that the exchange rate to be applied to foreign currency transactions related to foreign investment and various other operations will be the SICAD rate going forward. Accordingly, beginning in the first quarter of 2014, Citi will begin using the SICAD rate to remeasure its net bolivar-denominated monetary assets as this is the rate at which Citi will be able to acquire U.S. dollars. However, although the SICAD rate will be applicable to U.S. dollar purchases, Citi does not expect to be able to buy U.S. dollars in Venezuela in the foreseeable future. Based on the February 21, 2014 SICAD auction rate of 11.8 bolivars per U.S. dollar, Citi estimates that it will incur an approximate $110 million foreign currency loss in the first quarter of 2014, which could increase if the bolivar continues to devalue in the SICAD market. Additionally, beginning in the first quarter of 2014,

Citi’s revenues and expenses will be translated at the SICAD rate, and any further devaluations of the bolivar in the SICAD market will result in foreign exchange losses in the future.

More recently, the Venezuelan government has also announced the creation of a new foreign exchange market (SICAD II). Once the details of this new foreign exchange market have been announced, Citi will determine whether further changes to the foreign exchange rate used to translate Citi’s results in Venezuela are necessary. Any further changes could negatively affect Citi’s financial results in the future.

Egypt

There has been ongoing political transition and sporadic civil unrest in Egypt, contributing to significant economic uncertainty and volatility. Citi operates in Egypt through a branch of Citibank N.A., and uses the Egyptian pound as the functional currency to translate its financial statements into U.S. dollars using quoted exchange rates. As of December 31, 2013, Citi’s net investment in Egypt was approximately $250 million, unchanged from September 30, 2013, and Citi had cumulative translation losses related to its investment in Egypt, net of qualifying net investment hedges, of approximately $123 million (pretax), compared to approximately $116 million (pretax) as of September 30, 2013. Substantially all of the net investment is hedged with forward foreign-exchange derivatives. Total third-party assets of the Egypt Citibank, N.A. branch were approximately $1.6 billion (largely unchanged from September 30, 2013), composed primarily of cash on deposit with the Central Bank of Egypt, loans and short-term local government debt securities. A significant majority of these third-party assets were funded with local deposit liabilities. Citi continues to closely monitor the political and economic situation in Egypt, and will continue to take actions to mitigate its exposures to potential risk events.

Ukraine

There have been political changes, civil unrest and military action in Ukraine, contributing to significant economic uncertainty and volatility. Citi operates in Ukraine through a subsidiary of Citibank, N.A., and uses the U.S. dollar as the functional currency. As of December 31, 2013, Citi’s net investment in Ukraine was approximately $130 million. Substantially all of the net investment is hedged with a Ukraine sovereign bond indexed to foreign exchange rates which is subject to sovereign political risk. Total third-party assets of the Ukraine Citibank subsidiary were approximately $0.6 billion, as of December 31, 2013, composed primarily of cash on deposit with the Central Bank of Ukraine, short-term local government debt securities and corporate loans. A significant majority of these third-party assets were funded with local deposit liabilities. Citi continues to closely monitor the political, economic and military situation in Ukraine, and will continue to take actions to mitigate its exposures to potential risk events.

The following discussion relates to the derivative obligor information and the fair valuation for derivatives and liabilities for which the fair value option (FVO) has been elected. See Notes 25 and 26 to the Consolidated Financial Statements for additional information on Citi’s derivative activities and FVO liabilities, respectively.

Fair Valuation Adjustments for Derivatives

The fair value adjustments applied by Citi to its derivative carrying values consist of the following items:

•

Liquidity adjustments are applied to items in Level 2 or Level 3 of the fair-value hierarchy (see Note 25 to the Consolidated Financial Statements for more details) to ensure that the fair value reflects the price at which the net open risk position could be liquidated. The liquidity reserve is based on the bid/offer spread for an instrument. When Citi has elected to measure certain portfolios of financial investments, such as derivatives, on the basis of the net open risk position, the liquidity reserve is adjusted to take into account the size of the position. Citi uses the relevant benchmark curve for the currency of the derivative (e.g., the London Interbank Offered Rate for U.S. dollar derivatives) as the discount rate for uncollateralized derivatives. As of December 31, 2013, Citi has not recognized any valuation adjustments to reflect the cost of funding uncollateralized derivative positions beyond that implied by the relevant benchmark curve. Citi continues to monitor market practices and activity with respect to discounting in derivative valuation.

•

Credit valuation adjustments (CVA) are applied to over-the-counter derivative instruments, in which the base valuation generally discounts expected cash flows using the relevant base interest rate curves. Because not all counterparties have the same credit risk as that implied by the relevant base curve, a CVA is necessary to incorporate the market view of both counterparty credit risk and Citi’s own credit risk in the valuation.

Citi’s CVA methodology is composed of two steps. First, the exposure profile for each counterparty is determined using the terms of all individual derivative positions and a Monte Carlo simulation or other quantitative analysis to generate a series of expected cash flows at future points in time. The calculation of this exposure profile considers the effect of credit risk mitigants, including pledged cash or other collateral and any legal right of offset that exists with a counterparty through arrangements such as netting agreements. Individual derivative contracts that are subject to an enforceable master netting agreement with a counterparty are aggregated for this purpose, since it is those aggregate net cash flows that are subject to nonperformance risk. This process identifies specific, point-in-time future cash flows that are subject to nonperformance risk, rather than using the current recognized net asset or liability as a basis to measure the CVA.

Second, market-based views of default probabilities derived from observed credit spreads in the credit default swap

(CDS) market are applied to the expected future cash flows determined in step one. Citi’s own-credit CVA is determined using Citi-specific CDS spreads for the relevant tenor. Generally, counterparty CVA is determined using CDS spread indices for each credit rating and tenor. For certain identified netting sets where individual analysis is practicable (e.g., exposures to counterparties with liquid CDS), counterparty-specific CDS spreads are used.

The CVA is designed to incorporate a market view of the credit risk inherent in the derivative portfolio. However, most unsecured derivative instruments are negotiated bilateral contracts and are not commonly transferred to third parties. Derivative instruments are normally settled contractually or, if terminated early, are terminated at a value negotiated bilaterally between the counterparties. Therefore, the CVA (both counterparty and own-credit) may not be realized upon a settlement or termination in the normal course of business. In addition, all or a portion of the CVA may be reversed or otherwise adjusted in future periods in the event of changes in the credit risk of Citi or its counterparties, or changes in the credit mitigants (collateral and netting agreements) associated with the derivative instruments.

The table below summarizes the CVA applied to the fair value of derivative instruments for the periods indicated:



	Credit valuation adjustment contra-liability (contra-asset)
In millions of dollars	December 31, 2013			December 31, 2012
Counterparty CVA	$	(1,733	)	$	(2,971	)
Citigroup (own-credit) CVA	651			918
Total CVA—derivative instruments	$	(1,082	)	$	(2,053	)

Own Debt Valuation Adjustments

Own debt valuation adjustments (DVA) are recognized on Citi’s liabilities for which the fair value option (FVO) has been elected using Citi’s credit spreads observed in the bond market. Accordingly, the fair value of the liabilities for which the fair value option has been elected (other than non-recourse and similar liabilities) is impacted by the narrowing or widening of Citi’s credit spreads. Changes in fair value resulting from changes in Citi’s instrument-specific credit risk are estimated by incorporating Citi’s current credit spreads observable in the bond market into the relevant valuation technique used to value each liability.

CREDIT DERIVATIVES

Citigroup makes markets in and trades a range of credit derivatives on behalf of clients and in connection with its risk management activities. Through these contracts, Citi either purchases or writes protection on either a single-name or portfolio basis. Citi primarily uses credit derivatives to help mitigate credit risk in its corporate loan portfolio and other cash positions, and to facilitate client transactions.

Credit derivatives generally require that the seller of credit protection make payments to the buyer upon the occurrence of predefined events (settlement triggers). These settlement triggers, which are defined by the form of the derivative and the referenced credit, are generally limited to the market standard of failure to pay indebtedness and bankruptcy (or comparable events) of the reference credit and, in a more limited range of transactions, debt restructuring. Credit derivative transactions referring to emerging market reference credits will also typically include additional settlement triggers to cover the acceleration of indebtedness and the risk of repudiation or a payment moratorium. In certain transactions on a portfolio of referenced credits or asset-backed securities, the seller of protection may not be required to make payment until a specified amount of losses has occurred with respect to the portfolio and/or may only be required to pay for losses up to a specified amount.

Citi generally has a mismatch between the total notional amounts of protection purchased and sold, and it may hold the reference assets directly, rather than entering into offsetting credit derivative contracts as and when desired. The open risk exposures from credit derivative contracts are largely matched after certain cash positions in reference assets are considered and after notional amounts are adjusted, either to a duration-based equivalent basis or to reflect the level of subordination in tranched structures.

Citi monitors its counterparty credit risk in credit derivative contracts. As of December 31, 2013 and December 31, 2012, approximately 97% of the gross receivables are from counterparties with which Citi maintains collateral agreements. A majority of Citi’s top 15 counterparties (by receivable balance owed to Citi) are banks, financial institutions or other dealers. Contracts with these counterparties do not include ratings-based termination events. However, counterparty ratings downgrades may have an incremental effect by lowering the threshold at which Citi may call for additional collateral.

The ratings of the credit derivatives portfolio presented in the following table are based on the assigned internal or external ratings of the referenced asset or entity. Where external ratings are used, investment-grade ratings are considered to be ‘Baa/BBB’ and above, while anything below is considered non-investment grade. Citi’s internal ratings are in line with the related external rating system. On certain underlying referenced credits or entities, ratings are not available. Such referenced credits are included in the “not rated” category and are primarily related to credit default swaps and other derivatives referencing investment grade and high yield credit index products and customized baskets.

Note 1 to the Consolidated Financial Statements contains a summary of Citigroup’s significant accounting policies, including a discussion of recently issued accounting pronouncements. These policies, as well as estimates made by management, are integral to the presentation of Citi’s results of operations and financial condition. While all of these policies require a certain level of management judgment and estimates, this section highlights and discusses the significant accounting policies that require management to make highly difficult, complex or subjective judgments and estimates at times regarding matters that are inherently uncertain and susceptible to change (see also “Risk Factors—Business and Operational Risks”). Management has discussed each of these significant accounting policies, the related estimates, and its judgments with the Audit Committee of the Board of Directors. Additional information about these policies can be found in Note 1 to the Consolidated Financial Statements.

Valuations of Financial Instruments

Citigroup holds debt and equity securities, derivatives, retained interests in securitizations, investments in private equity and other financial instruments. In addition, Citi purchases securities under agreements to resell (reverse repos) and sells securities under agreements to repurchase (repos). Citigroup holds its investments, trading assets and liabilities, and resale and repurchase agreements on the Consolidated Balance Sheet to meet customer needs and to manage liquidity needs, interest rate risks and private equity investing.

Substantially all of the assets and liabilities described in the preceding paragraph are reflected at fair value on Citi’s Consolidated Balance Sheet. In addition, certain loans, short-term borrowings, long-term debt and deposits, as well as certain securities borrowed and loaned positions that are collateralized with cash, are carried at fair value. Approximately 39.0% and 42.7% of total assets, and 11.6% and 16.0% of total liabilities, were accounted for at fair value as of December 31, 2013 and 2012, respectively.

When available, Citi generally uses quoted market prices to determine fair value and classifies such items within Level 1 of the fair value hierarchy established under ASC 820-10, Fair Value Measurement (see Note 25 to the Consolidated Financial Statements). If quoted market prices are not available, fair value is based upon internally developed valuation models that use, where possible, current market-based or independently sourced market parameters, such as interest rates, currency rates and option volatilities. Where a model is internally developed and used to price a significant product, it is subject to validation and testing by Citi’s separate model verification group. Such models are often based on a discounted cash flow analysis. In addition, items valued using such internally generated valuation techniques are classified according to the lowest level input or value driver that is significant to the valuation. Thus, an item may be classified under the fair value hierarchy as Level 3 even though there may be some significant inputs that are readily observable.

The credit crisis caused some markets to become illiquid, thus reducing the availability of certain observable data used

by Citi’s valuation techniques. This illiquidity, in at least certain markets, continued through 2013. When or if liquidity returns to these markets, the valuations will revert to using the related observable inputs in verifying internally calculated values. For additional information on Citigroup’s fair value analysis, see Notes 25 and 26 to the Consolidated Financial Statements.

Recognition of Changes in Fair Value

Changes in the valuation of the trading assets and liabilities, as well as all other assets (excluding available-for-sale securities (AFS) and derivatives in qualifying cash flow hedging relationships) and liabilities carried at fair value, are recorded in the Consolidated Statement of Income. Changes in the valuation of AFS, other than write-offs and credit impairments, and the effective portion of changes in the valuation of derivatives in qualifying cash flow hedging relationships generally are recorded in Accumulated other comprehensive income (loss) (AOCI), which is a component of Stockholders’ equity on the Consolidated Balance Sheet. A full description of Citi’s policies and procedures relating to recognition of changes in fair value can be found in Notes 1, 25 and 26 to the Consolidated Financial Statements.

Evaluation of Other-than-Temporary Impairment

Citi conducts and documents periodic reviews of all securities with unrealized losses to evaluate whether the impairment is other-than-temporary. Under the guidance for debt securities, other-than-temporary impairment (OTTI) is recognized in earnings in the Consolidated Statement of Income for debt securities that Citi has an intent to sell or that Citi believes it is more likely than not that it will be required to sell prior to recovery of the amortized cost basis. For those securities that Citi does not intend to sell nor expect to be required to sell, credit-related impairment is recognized in earnings, with the non-credit-related impairment recorded in AOCI.

An unrealized loss exists when the current fair value of an individual security is less than its amortized cost basis. Unrealized losses that are determined to be temporary in nature are recorded, net of tax, in AOCI for AFS securities, while such losses related to held-to-maturity (HTM) securities are not recorded, as these investments are carried at their amortized cost (less any OTTI). For securities transferred to HTM from Trading account assets, amortized cost is defined as the fair value amount of the securities at the date of transfer plus any accretion income and less any impairments recognized in earnings subsequent to transfer. For securities transferred to HTM from AFS, amortized cost is defined as the original purchase cost, plus or minus any accretion or amortization of a purchase discount or premium, less any impairment recognized in earnings.

Regardless of the classification of the securities as AFS or HTM, Citi assesses each position with an unrealized loss for OTTI.

Management assesses equity method investments with fair value less than carrying value for OTTI, as discussed in Note 14 to the Consolidated Financial Statements. For

investments that management does not plan to sell prior to recovery of value, or Citi is not likely to be required to sell, various factors are considered in assessing OTTI. For investments that Citi plans to sell prior to recovery of value, or would likely be required to sell and there is no expectation that the fair value will recover prior to the expected sale date, the full impairment would be recognized in the Consolidated Statement of Income.

CVA/DVA Methodology

ASC 820-10 requires that Citi’s own credit risk be considered in determining the market value of any Citi liability carried at fair value. These liabilities include derivative instruments as well as debt and other liabilities for which the fair value option has been elected. The credit valuation adjustment (CVA) also incorporates the market view of the counterparty credit risk in the valuation of derivative assets. The CVA is recognized on the Consolidated Balance Sheet as a reduction or increase in the associated derivative asset or liability to arrive at the fair value (carrying value) of the derivative asset or liability. The debt valuation adjustment (DVA) is recognized on the balance sheet as a reduction or increase in the associated fair value option debt liability to arrive at the fair value of the liability. For additional information, see “Fair Value Adjustments for Derivatives and FVO Liabilities” above.

Allowance for Credit Losses

Allowance for Funded Lending Commitments

Management provides reserves for an estimate of probable losses inherent in the funded loan portfolio on the Consolidated Balance Sheet in the form of an allowance for loan losses. These reserves are established in accordance with Citigroup’s credit reserve policies, as approved by the Audit Committee of the Board of Directors. Citi’s Chief Risk Officer and Chief Financial Officer review the adequacy of the credit loss reserves each quarter with representatives from the risk management and finance staffs for each applicable business area. Applicable business areas include those having classifiably managed portfolios, where internal credit-risk ratings are assigned (primarily Institutional Clients Group and Global Consumer Banking), or modified Consumer loans, where concessions were granted due to the borrowers’ financial difficulties.

The above-mentioned representatives covering these respective business areas present recommended reserve balances for their funded and unfunded lending portfolios along with supporting quantitative and qualitative data. The quantitative data include:

Estimated Probable Losses for Non-Performing, Non-Homogeneous Exposures Within a Business Line’s Classifiably Managed Portfolio and Impaired Smaller-Balance Homogeneous Loans Whose Terms Have Been Modified Due to the Borrowers’ Financial Difficulties, Where It Was Determined That a Concession Was Granted to the Borrower.

Consideration may be given to the following, as appropriate, when determining this estimate: (i) the present value of expected future cash flows discounted at the loan’s original

effective rate; (ii) the borrower’s overall financial condition, resources and payment record; and (iii) the prospects for support from financially responsible guarantors or the realizable value of any collateral. When impairment is measured based on the present value of expected future cash flows, the entire change in present value is recorded in the Provision for loan losses.

Statistically Calculated Losses Inherent in the Classifiably Managed Portfolio for Performing and De Minimus Non-Performing Exposures.

The calculation is based upon: (i) Citigroup’s internal system of credit-risk ratings, which are analogous to the risk ratings of the major credit rating agencies; and (ii) historical default and loss data, including rating agency information regarding default rates from 1983 to 2012, and internal data dating to the early 1970s on severity of losses in the event of default. Adjustments may be made to this data. Such adjustments include: (i) statistically calculated estimates to cover the historical fluctuation of the default rates over the credit cycle, the historical variability of loss severity among defaulted loans, and the degree to which there are large obligor concentrations in the global portfolio; and (ii) adjustments made for specifically known items, such as current environmental factors and credit trends.

In addition, representatives from both the risk management and finance staffs that cover business areas with delinquency-managed portfolios containing smaller homogeneous loans present their recommended reserve balances based upon leading credit indicators, including loan delinquencies and changes in portfolio size, as well as economic trends, including housing prices, unemployment and GDP. This methodology is applied separately for each individual product within each different geographic region in which these portfolios exist.

This evaluation process is subject to numerous estimates and judgments. The frequency of default, risk ratings, loss recovery rates, the size and diversity of individual large credits, and the ability of borrowers with foreign currency obligations to obtain the foreign currency necessary for orderly debt servicing, among other things, are all taken into account during this review. Changes in these estimates could have a direct impact on Citi’s credit costs in any period and could result in a change in the allowance. Changes to the allowance are recorded in the Provision for loan losses.

Allowance for Unfunded Lending Commitments

A similar approach to the allowance for loan losses is used for calculating a reserve for the expected losses related to unfunded loan commitments and standby letters of credit. This reserve is classified on the Consolidated Balance Sheet in Other liabilities. Changes to the allowance for unfunded lending commitments are recorded in the Provision for unfunded lending commitments.

For a further description of the loan loss reserve and related accounts, see Notes 1 and 16 to the Consolidated Financial Statements.

Securitizations

Citigroup securitizes a number of different asset classes as a means of strengthening its balance sheet and accessing competitive financing rates in the market. Under these securitization programs, assets are transferred into a trust and used as collateral by the trust to obtain financing. The cash flows from assets in the trust service the corresponding trust liabilities and equity interests. If the structure of the trust meets certain accounting guidelines, trust assets are treated as sold and are no longer reflected as assets of Citi. If these guidelines are not met, the assets continue to be recorded as Citi’s assets, with the financing activity recorded as liabilities on Citi’s Consolidated Balance Sheet.

Citigroup also assists its clients in securitizing their financial assets and packages and securitizes financial assets purchased in the financial markets. Citi may also provide administrative, asset management, underwriting, liquidity facilities and/or other services to the resulting securitization entities and may continue to service some of these financial assets.

Goodwill

Citigroup has recorded on its Consolidated Balance Sheet goodwill of $25.0 billion (1.3% of assets) and $25.7 billion (1.4% of assets) at December 31, 2013 and December 31, 2012, respectively. Goodwill is tested for impairment annually on July 1 and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. No goodwill impairment was recorded during 2013, 2012 and 2011.

As discussed in Note 3 to the Consolidated Financial Statements, as of December 31, 2013, Citigroup consists of the following business segments: Global Consumer Banking, Institutional Clients Group, Corporate/Other and Citi Holdings. Goodwill impairment testing is performed at the level below the business segment (referred to as reporting unit). Goodwill is allocated to Citi’s reporting units at the date the goodwill is initially recorded. Once goodwill has been allocated to the reporting units, it generally no longer retains its identification with a particular acquisition, but instead becomes identified with the reporting unit as a whole. As a result, all of the fair value of each reporting unit is available to support the allocated goodwill. The nine reporting units at December 31, 2013 were North America Regional Consumer Banking, EMEA Regional Consumer Banking, Asia Regional Consumer Banking, Latin America Regional Consumer Banking, Securities and Banking, Transaction Services, Latin America Retirement Services, Citi Holdings—Cards and Citi Holdings—Other.

The reporting unit structure in 2013 was the same as the reporting unit structure in 2012, although selected names were changed and certain underlying businesses were transferred between certain reporting units in the third quarter of 2013. Specifically, assets were transferred from the legacy Brokerage Asset Management reporting unit to the Special Asset Pool, both components within the Citi Holdings segment. While goodwill affected by the reorganization is reassigned to reporting units that receive businesses using a

relative fair value approach, no goodwill was allocated to this transferred portfolio as the assets do not represent a business as defined by GAAP and therefore goodwill allocation was not appropriate. The legacy reporting unit was renamed as Latin America Retirement Services, and continues to hold the $42 million of goodwill as of December 31, 2013. Additionally, the legacy Local Consumer Lending— Cards reporting unit was renamed Citi Holdings—Cards, but no changes were made to the businesses and assets assigned to the reporting unit. An interim goodwill impairment test was performed on the impacted reporting units as of July 1, 2013, resulting in no impairment.

Under ASC 350, Intangibles—Goodwill and Other, the goodwill impairment analysis is done in two steps. Citi has an option to assess qualitative factors to determine if it is necessary to perform the goodwill impairment test. If, after assessing the totality of events or circumstances, Citi determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, no further testing is necessary. If, however, Citi determines that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then Citi is required to perform the first step of the two-step goodwill impairment test.

The first step requires a comparison of the fair value of the individual reporting unit to its carrying value, including goodwill. If the fair value of the reporting unit is in excess of the carrying value, the related goodwill is considered not to be impaired and no further analysis is necessary. If the carrying value of the reporting unit exceeds the fair value, there is an indication of potential impairment and a second step of testing is performed to measure the amount of impairment, if any, for that reporting unit.

If required, the second step involves calculating the implied fair value of goodwill for each of the affected reporting units. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination, which is the excess of the fair value of the reporting unit determined in step one over the fair value of the net assets and identifiable intangibles as if the reporting unit were being acquired. If the amount of the goodwill allocated to the reporting unit exceeds the implied fair value of the goodwill in the pro forma purchase price allocation, an impairment charge is recorded for the excess. A recognized impairment charge cannot exceed the amount of goodwill allocated to a reporting unit and cannot subsequently be reversed even if the fair value of the reporting unit recovers.

The carrying value used in both steps of the impairment test for each reporting unit is derived by allocating Citigroup’s total stockholders’ equity to each component (defined below) based on regulatory capital and tangible common equity assessed for each component. The assigned carrying value of Citi’s nine reporting units, plus the legacy Special Asset Pool and Corporate/Other (together the “components”), is equal to Citigroup’s total stockholders’ equity. Regulatory capital is derived using each component’s Basel III risk-weighted assets. Specifically identified Basel III capital deductions are then added to the components’ regulatory capital to assign Citigroup’s total tangible common equity. In allocating

Citigroup’s total stockholders’ equity to each component, the reported goodwill and intangibles associated with each reporting unit are specifically included in the carrying amount of the respective reporting units, and the remaining stockholders’ equity is then allocated to each component based on the relative tangible common equity associated with each component.

Goodwill impairment testing involves management judgment, requiring an assessment of whether the carrying value of the reporting unit can be supported by the fair value of the individual reporting unit using widely accepted valuation techniques, such as the market approach (earnings multiples and/or transaction multiples) and/or the income approach (discounted cash flow (DCF) method). In applying these methodologies, Citi utilizes a number of factors, including actual operating results, future business plans, economic projections and market data. Citi prepares a formal three-year strategic plan for its businesses on an annual basis. These projections incorporate certain external economic projections developed at the point in time the plan is developed. For the purpose of performing any impairment test, the most recent three-year forecast available is updated by Citi to reflect current economic conditions as of the testing date. Citi used the updated long-range financial forecasts as a basis for its annual goodwill impairment test. Management may engage an independent valuation specialist to assist in Citi’s valuation process.

Citigroup engaged an independent valuation specialist in 2013 and 2012 to assist in Citi’s valuation for most of the reporting units employing both the market approach and DCF method. Citi believes that the DCF method, using management projections for the selected reporting units and an appropriate risk-adjusted discount rate, is most reflective of a market participant’s view of fair values given current market conditions. For the reporting units where both methods were utilized in 2013 and 2012, the resulting fair values were relatively consistent and appropriate weighting was given to outputs from both methods.

The DCF method used at the time of each impairment test used discount rates that Citi believes adequately reflected the risk and uncertainty in the financial markets generally and specifically in the internally generated cash flow projections. The DCF method employs a capital asset pricing model in estimating the discount rate. Citi continues to value the remaining reporting units where it believes the risk of impairment to be low, primarily using the market approach.

Citi performs its annual goodwill impairment test as of July 1. The results of the 2013 annual impairment test validated that the fair values exceeded the carrying values for the reporting units that had goodwill at the testing date. Citi is also required to test goodwill for impairment whenever events or circumstances make it more likely than not that impairment may have occurred, such as a significant adverse change in the business climate, a decision to sell or dispose of all or a significant portion of a reporting unit, or a significant decline in Citi’s stock price. No other interim goodwill impairment tests were performed during 2013, outside of the test performed during the third quarter after the reporting unit reorganization, as discussed above.

Since none of the Company’s reporting units are publicly traded, individual reporting unit fair value determinations cannot be directly correlated to Citigroup’s common stock price. The sum of the fair values of the reporting units at July 1, 2013 exceeded the overall market capitalization, of Citi as of July 1, 2013. However, Citi believes that it was not meaningful to reconcile the sum of the fair values of Citi’s reporting units to its market capitalization as the market capitalization of Citigroup reflects the execution risk in a transaction involving Citigroup due to its size. However, the individual reporting units’ fair values are not subject to the same level of execution risk or a business model that is perceived to be as complex.

See Note 17 to the Consolidated Financial Statements for additional information on goodwill, including the changes in the goodwill balance year-over-year and the reporting unit goodwill balances as of December 31, 2013.

Income Taxes

Overview

Citi is subject to the income tax laws of the U.S., its states and local municipalities and the foreign jurisdictions in which Citi operates. These tax laws are complex and are subject to differing interpretations by the taxpayer and the relevant governmental taxing authorities. Disputes over interpretations of the tax laws may be subject to review and adjudication by the court systems of the various tax jurisdictions or may be settled with the taxing authority upon audit.

In establishing a provision for income tax expense, Citi must make judgments and interpretations about the application of these inherently complex tax laws. Citi must also make estimates about when in the future certain items will affect taxable income in the various tax jurisdictions, both domestic and foreign. Deferred taxes are recorded for the future consequences of events that have been recognized in the financial statements or tax returns, based upon enacted tax laws and rates. Deferred tax assets (DTAs) are recognized subject to management’s judgment that realization is more likely than not. See Note 9 to the Consolidated Financial Statements for a further discussion of Citi’s tax provision and related income tax assets and liabilities.

DTAs

At December 31, 2013, Citi had recorded net DTAs of $52.8 billion, a decrease of $2.5 billion (including approximately $700 million in the fourth quarter of 2013) from $55.3 billion at December 31, 2012. The decrease in total DTAs year-over-year was due to the earnings of Citicorp, partially offset by the continued negative impact of Citi Holdings on U.S. taxable income. Foreign tax credits (FTCs) composed approximately $19.6 billion of Citi’s DTAs as of December 31, 2013, compared to approximately $22 billion as of December 31, 2012. The decrease in FTCs year-over-year was due to the generation of U.S. taxable income and represented $2.4 billion of the $2.5 billion decrease in Citi’s overall DTAs noted above. The FTCs carry-forward periods represent the most time-sensitive component of Citi’s DTAs. For a tabular summary of Citi’s net DTAs balance as of December 31, 2013,

including the FTCs and applicable expiration dates of the FTCs, see Note 9 to the Consolidated Financial Statements.

While Citi’s net total DTAs decreased year-over-year, the time remaining for utilization has shortened, given the passage of time, particularly with respect to the FTC component of the DTAs. Although realization is not assured, Citi believes that the realization of the recognized net DTAs of $52.8 billion at December 31, 2013 is more likely than not based upon expectations as to future taxable income in the jurisdictions in which the DTAs arise and available tax planning strategies (as defined in ASC 740, Income Taxes) that would be implemented, if necessary, to prevent a carry-forward from expiring. In general, Citi would need to generate approximately $98 billion of U.S. taxable income during the FTC carry-forward periods to prevent this most time-sensitive component of Citi’s DTAs from expiring. Citi’s net DTAs will decline primarily as additional domestic GAAP taxable income is generated.

Citi has concluded that two components of positive evidence support the full realization of its DTAs. First, Citi forecasts sufficient U.S. taxable income in the carry-forward periods, exclusive of ASC 740 tax planning strategies. Citi’s forecasted taxable income, which will continue to be subject to overall market and global economic conditions, incorporates geographic business forecasts and taxable income adjustments to those forecasts (e.g., U.S. tax exempt income, loan loss reserves deductible for U.S. tax reporting in subsequent years), and actions intended to optimize its U.S. taxable earnings.

Second, Citi has sufficient tax planning strategies available to it under ASC 740 that would be implemented, if necessary, to prevent a carry-forward from expiring. These strategies include: repatriating low taxed foreign source earnings for which an assertion that the earnings have been indefinitely reinvested has not been made; accelerating U.S. taxable income into, or deferring U.S. tax deductions out of, the latter years of the carry-forward period (e.g., selling appreciated intangible assets, electing straight-line depreciation); accelerating deductible temporary differences outside the U.S.; and selling certain assets that produce tax-exempt income, while purchasing assets that produce fully taxable income. In addition, the sale or restructuring of certain businesses can produce significant U.S. taxable income within the relevant carry-forward periods.

Based upon the foregoing discussion, Citi believes the U.S. federal and New York state and city net operating loss carry-forward period of 20 years provides enough time to fully utilize the DTAs pertaining to the existing net operating loss carry-forwards and any net operating loss that would be created by the reversal of the future net deductions that have not yet been taken on a tax return.

With respect to the FTCs component of the DTAs, the carry-forward period is 10 years. Citi believes that it will generate sufficient U.S. taxable income within the 10-year carry-forward period to be able to fully utilize the FTCs, in addition to any FTCs produced in such period, which must be used prior to any carry-forward utilization.

Litigation Accruals

See the discussion in Note 28 to the Consolidated Financial Statements for information regarding Citi’s policies on establishing accruals for litigation and regulatory contingencies.

Accounting Changes and Future Application of Accounting Standards

See Note 1 to the Consolidated Financial Statements for a discussion of “Accounting Changes” and the “Future Application of Accounting Standards.”

Citi’s disclosure controls and procedures are designed to ensure that information required to be disclosed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, including without limitation that information required to be disclosed by Citi in its SEC filings is accumulated and communicated to management, including the Chief Executive Officer (CEO) and Chief Financial Officer (CFO) as appropriate to allow for timely decisions regarding required disclosure.

Citi’s Disclosure Committee assists the CEO and CFO in their responsibilities to design, establish, maintain and evaluate the effectiveness of Citi’s disclosure controls and procedures. The Disclosure Committee is responsible for, among other things, the oversight, maintenance and implementation of the disclosure controls and procedures, subject to the supervision and oversight of the CEO and CFO.

Citi’s management, with the participation of its CEO and CFO, has evaluated the effectiveness of Citigroup’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of December 31, 2013 and, based on that evaluation, the CEO and CFO have concluded that at that date Citigroup’s disclosure controls and procedures were effective.

Citi’s management is responsible for establishing and maintaining adequate internal control over financial reporting. Citi’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with U.S. generally accepted accounting principles. Citi’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of Citi’s assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that Citi’s receipts and expenditures are made only in accordance with authorizations of Citi’s management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of Citi’s assets that could have a material effect on its financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. In addition, given Citi’s large size, complex operations and global footprint, lapses or deficiencies in internal controls may occur from time to time.

Citi management assessed the effectiveness of Citigroup’s internal control over financial reporting as of December 31, 2013 based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (1992). Based on this assessment, management believes that, as of December 31, 2013, Citi’s internal control over financial reporting was effective. In addition, there were no changes in Citi’s internal control over financial reporting during the fiscal quarter ended December 31, 2013 that materially affected, or are reasonably likely to materially affect, Citi’s internal control over financial reporting.

The effectiveness of Citi’s internal control over financial reporting as of December 31, 2013 has been audited by KPMG LLP, Citi’s independent registered public accounting firm, as stated in their report below, which expressed an unqualified opinion on the effectiveness of Citi’s internal control over financial reporting as of December 31, 2013.

FORWARD-LOOKING STATEMENTS

Certain statements in this Form 10-K, including but not limited to statements included within the Management’s Discussion and Analysis of Financial Condition and Results of Operations, are “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. In addition, Citigroup also may make forward-looking statements in its other documents filed or furnished with the SEC, and its management may make forward-looking statements orally to analysts, investors, representatives of the media and others.

Generally, forward-looking statements are not based on historical facts but instead represent Citigroup’s and its management’s beliefs regarding future events. Such statements may be identified by words such as believe, expect, anticipate, intend, estimate, may increase, may fluctuate, and similar expressions, or future or conditional verbs such as will, should, would and could.

Such statements are based on management’s current expectations and are subject to risks, uncertainties and changes in circumstances. Actual results and capital and other financial conditions may differ materially from those included in these statements due to a variety of factors, including without limitation the precautionary statements included throughout this Form 10-K and the risks and uncertainties listed and described under “Risk Factors” above and summarized below:


•	regulatory changes and uncertainties faced by Citi in the U.S. and non-U.S. jurisdictions in which it operates and the potential impact these changes and uncertainties could have on Citi’s business planning, compliance risks and costs and overall results of operations;


•	continued uncertainty arising from numerous aspects of the regulatory capital requirements applicable to Citi, including Citi’s continued implementation of the final U.S. Basel III rules and the ongoing regulatory review of Citi’s risk models, and the potential impact these uncertainties could have on Citi’s ability to meet its capital requirements as it projects or as required;


•	the potential impact of U.S. and international derivatives regulation on Citi’s competitiveness, compliance costs and regulatory and reputational risks and results of operations;


•	ongoing implementation of proprietary trading restrictions under the “Volcker Rule” and similar international proposals and the potential impact of these reforms on Citi’s global market-making businesses, results of operations and compliance risks and costs;


•	the potential impact to Citi’s businesses and capital and funding structure as a result of regulatory requirements in the U.S. and in non-U.S. jurisdictions to facilitate the future orderly resolution of large financial institutions;


•	additional regulations with respect to securitizations and the potential impact to Citi and its businesses;


•	continued uncertainty relating to the sustainability and pace of economic recovery and growth in the U.S. and globally and the potential impact fiscal and monetary actions taken by U.S. and non-U.S. authorities may have

on economic recovery and growth, global trading markets, and the emerging markets, as well as Citi’s businesses and results of operations;


•	any significant global economic downturn or disruption, including a significant decline in global trade volumes, on Citi’s businesses, results of operations and financial condition, particularly as compared to Citi’s competitors;


•	uncertainty arising from the level of U.S. government debt or a potential U.S. government default or downgrade of the U.S. government credit rating on Citi’s businesses, results of operations, capital, funding and liquidity;


•	risks arising from Citi’s extensive operations outside of the U.S., including in the emerging markets, including foreign exchange controls, limitations on foreign investments, sociopolitical instability, fraud, nationalization, closure of branches or subsidiaries and confiscation of assets, as well as increased compliance and regulatory risks and costs;


•	ongoing economic and fiscal issues in the Eurozone and the potential outcomes that could occur, including the exit of one or more countries from the European Monetary Union and any resulting redenomination/revaluation, and the potential impact, directly or indirectly, on Citi’s businesses, results of operations or financial condition;


•	uncertainty regarding the future quantitative liquidity requirements applicable to Citi and the potential impact these requirements could have on Citi’s liquidity ratios, planning, management and funding;


•	potential impacts on Citi’s liquidity and/or costs of funding as a result of external factors, such as market disruptions, governmental fiscal and monetary policies and changes in Citi’s credit spreads;


•	reductions in Citi’s or its more significant subsidiaries’ credit ratings and the potential impact on Citi’s funding and liquidity, as well as the results of operations for certain of its businesses;

•

the potential impact on Citi’s businesses, business practices, reputation, financial condition or results of operations from the extensive legal and regulatory proceedings, investigations and inquiries to which Citi is subject, including those related to Citi’s U.S. mortgage-related activities, Citi’s contribution to, or trading in products linked to, various rates or benchmarks, and its anti-money laundering programs;


•	the potential impact to Citi’s delinquency rates, loan loss reserves and net credit losses as Citi’s revolving home equity lines of credit begin to “reset”;


•	results from the Comprehensive Capital Analysis and Review (CCAR) process and evolving supervisory stress tests and the potential impacts on Citi’s ability to return capital to shareholders and market perceptions of Citi;


•	Citi’s ability to successfully execute on and achieve its ongoing execution priorities and the potential impact its inability to do so could have on the achievement of its 2015 financial targets;


•	Citi’s ability to utilize its deferred tax assets (DTAs), including the foreign tax credit components of its DTAs, and thus utilize the regulatory capital supporting its DTAs for more productive purposes;


•	the potential impact on the value of Citi’s DTAs if corporate tax rates in the U.S. or certain state or foreign jurisdictions decline, or if other changes are made to the U.S. tax system, such as changes to the tax treatment of foreign business income;


•	the possibility that Citi’s interpretation or application of the extensive tax laws to which it is subject, such as with respect to withholding tax obligations and stamp and other transactional taxes, could differ from that of the relevant governmental taxing authorities;


•	Citi’s failure to maintain its contractual relationships with various third-party retailers and merchants within its U.S. credit card businesses in NA RCB, and the potential impact any such failure could have on the results of operations or financial condition of those businesses;


•	the potential impact to Citi from continually evolving cybersecurity and other technological risks and attacks, including additional costs, reputational damage, regulatory penalties and financial losses;


•	the potential impact on Citi’s performance, including its competitive position and ability to execute its strategy, if Citi is unable to hire or retain qualified employees;


•	incorrect assumptions or estimates in Citi’s financial statements, and the potential impact of regulatory changes to financial accounting and reporting standards on how Citi records and reports its financial condition and results of operations;


•	changes in the administration of or method for determining LIBOR on the value of any LIBOR-linked securities and other financial obligations held or issued by Citi; and


•	the effectiveness of Citi’s risk management and mitigation processes and strategies, including the effectiveness of its risk models.

Any forward-looking statements made by or on behalf of Citigroup speak only as to the date they are made, and Citi does not undertake to update forward-looking statements to reflect the impact of circumstances or events that arise after the date the forward-looking statements were made.

The Board of Directors and Stockholders

Citigroup Inc.:

We have audited Citigroup Inc. and subsidiaries’ (the “Company” or “Citigroup”) internal control over financial reporting as of December 31, 2013, based on criteria established in Internal Control-Integrated Framework (1992)issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying management’s annual report on internal control over financial reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s

internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

In our opinion, Citigroup maintained, in all material respects, effective internal control over financial reporting as of December 31, 2013, based on criteria established in Internal Control-Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Citigroup as of December 31, 2013 and 2012, and the related consolidated statements of income, comprehensive income, changes in stockholders’ equity and cash flows for each of the years in the three-year period ended December 31, 2013, and our report dated March 3, 2014 expressed an unqualified opinion on those consolidated financial statements.

/s/ KPMG LLP

New York, New York

March 3, 2014

The Board of Directors and Stockholders

Citigroup Inc.:

We have audited the accompanying consolidated balance sheets of Citigroup Inc. and subsidiaries (the “Company” or “Citigroup”) as of December 31, 2013 and 2012, and the related consolidated statements of income, comprehensive income, changes in stockholders’ equity and cash flows for each of the years in the three-year period ended December 31, 2013. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Citigroup as of December 31, 2013 and 2012, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2013, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Citigroup’s internal control over financial reporting as of December 31, 2013, based on criteria established in Internal Control-Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated March 3, 2014 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

/s/ KPMG LLP

New York, New York

March 3, 2014



CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Statement of Income— For the Years Ended December 31, 2013, 2012 and 2011	154
Consolidated Statement of Comprehensive Income— For the Years Ended December 31, 2013, 2012 and 2011	156
Consolidated Balance Sheet—December 31, 2013 and 2012	157
Consolidated Statement of Changes in Stockholders’ Equity —For the Years Ended December 31, 2013, 2012 and 2011	159
Consolidated Statement of Cash Flows— For the Years Ended December 31, 2013, 2012 and 2011	161



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1—Summary of Significant Accounting Policies	163
Note 2—Discontinued Operations	178
Note 3—Business Segments	180
Note 4—Interest Revenue and Expense	181
Note 5—Commissions and Fees	182
Note 6—Principal Transactions	183
Note 7—Incentive Plans	183
Note 8—Retirement Benefits	190
Note 9—Income Taxes	205
Note 10—Earnings per Share	210
Note 11—Federal Funds, Securities Borrowed, Loaned and Subject to Repurchase Agreements	211
Note 12—Brokerage Receivables and Brokerage Payables	213
Note 13—Trading Account Assets and Liabilities	213
Note 14—Investments	214
Note 15—Loans	225




Note 16—Allowance for Credit Losses	232
Note 17—Goodwill and Intangible Assets	235
Note 18—Debt	238
Note 19—Regulatory Capital and Citigroup, Inc. Parent Company Information	240
Note 20—Changes in Accumulated Other Comprehensive Income (Loss)	243
Note 21—Preferred Stock	246
Note 22—Securitizations and Variable Interest Entities	247
Note 23—Derivatives Activities	265
Note 24—Concentrations of Credit Risk	278
Note 25—Fair Value Measurement	279
Note 26—Fair Value Elections	302
Note 27—Pledged Assets, Collateral, Guarantees and Commitments	306
Note 28—Contingencies	312
Note 29—Subsequent Event	322
Note 30—Selected Quarterly Financial Data (Unaudited)	322



Delaware (State or other jurisdiction of incorporation or organization)		52-1568099 (I.R.S. Employer Identification No.)
399 Park Avenue, New York, NY (Address of principal executive offices)		10022 (Zip code)
(212) 559-1000 (Registrant's telephone number, including area code)



Large accelerated filer x	Accelerated filer o	Non-accelerated filer o (Do not check if a smaller reporting company)	Smaller reporting company o



	Contractual obligations by year
In millions of dollars	2014		2015		2016		2017		2018		Thereafter		Total
Long-term debt obligations—principal ⁽¹⁾	$	43,424	$	31,692	$	34,580	$	24,336	$	20,930	$	66,154	$	221,116
Long-term debt obligations—interest payments ⁽²⁾	1,555		1,135		1,238		871		749		2,368		7,916
Operating and capital lease obligations	1,557		1,192		1,018		826		681		5,489		10,763
Purchase obligations	852		645		507		380		162		247		2,793
Other liabilities ⁽³⁾	32,705		632		313		245		242		5,157		39,294
Total	$	80,093	$	35,296	$	37,656	$	26,658	$	22,764	$	79,415	$	281,882



In millions of dollars	Three Months Ended December 31, 2013			Twelve Months Ended December 31, 2013
Risk-Weighted Assets
Balance, beginning of period	$	1,068,991		$	971,253
Changes in Credit Risk-Weighted Assets
Net decrease in cash and due from banks	(1,348		)	(2,722		)
Net decrease in investment securities	(558		)	(3,280		)
Net increase in loans and leases, net	7,663			10,502
Net change in federal funds sold and securities purchased under agreements to resell	(1,601		)	1,095
Net decrease in over-the-counter derivatives	(2,202		)	(1,894		)
Net increase in commitments and guarantees	2,316			12,230
Net increase in securities lent	12,820			15,765
Other	3,397			2,531
Net increase in Credit Risk-Weighted Assets	$	20,487		$	34,227

Changes in Market Risk-Weighted Assets
Impact of adoption of Basel II.5	$	—		$	127,721
Movements in risk levels	(1,252		)	(29,542		)
Model and methodology updates	(1,988		)	(22,261		)
Other	6,469			11,309
Net increase in Market Risk-Weighted Assets	$	3,229		$	87,227
Balance, end of period	$	1,092,707		$	1,092,707



	Tier 1 Common ratio		Tier 1 Capital ratio		Total Capital ratio		Leverage ratio
	Impact of $100 million change in Tier 1 Common Capital	Impact of $1 billion change in risk- weighted assets	Impact of $100 million change in Tier 1 Capital	Impact of $1 billion change in risk- weighted assets	Impact of $100 million change in Total Capital	Impact of $1 billion change in risk- weighted assets	Impact of $100 million change in Tier 1 Capital	Impact of $1 billion change in quarterly adjusted average total assets
Citigroup	0.9 bps	1.2 bps	0.9 bps	1.3 bps	0.9 bps	1.5 bps	0.5 bps	0.5 bps
Citibank, N.A.	1.1 bps	1.5 bps	1.1 bps	1.5 bps	1.1 bps	1.7 bps	0.8 bps	0.7 bps


(2)	The diluted EPS calculation for 2009 utilizes basic shares and income allocated to unrestricted common stockholders (Basic) due to the negative income allocated to unrestricted common stockholders. Using diluted shares and income allocated to unrestricted common stockholders (Diluted) would result in anti-dilution.


(3)	All per share amounts and Citigroup shares outstanding for all periods reflect Citi’s 1-for-10 reverse stock split, which was effective May 6, 2011.


(4)	The return on average common stockholders’ equity is calculated using net income less preferred stock dividends divided by average common stockholders’ equity. The return on average total Citigroup stockholders’ equity is calculated using net income divided by average Citigroup stockholders’ equity.


(5)	As currently defined by the U.S. banking regulators, the Tier 1 Common ratio represents Tier 1 Capital less non-common elements, including qualifying perpetual preferred stock, qualifying noncontrolling interests in subsidiaries and qualifying trust preferred securities divided by risk-weighted assets.


(6)	The leverage ratio represents Tier 1 Capital divided by quarterly adjusted average total assets.


(7)	Dividends declared per common share as a percentage of net income per diluted share.


•	On January 1, 2010, Citi adopted ASC 810, Consolidation (formerly SFAS 166/167). Prior periods have not been restated as the standards were adopted prospectively.


(1)	Includes both Citi-branded cards and Citi retail services.


(2)	Reflects the impact of foreign exchange (FX) translation into U.S. dollars at 2013 average exchange rates for all periods presented.


(2)	Includes assets under custody, assets under trust and assets under administration.



In billions of dollars	December 31, 2013		September 30, 2013		December 31, 2012		EOP 4Q13 vs. 3Q13 Increase (decrease)			% Change		EOP 4Q13 vs. 4Q12 Increase (decrease)			% Change
Assets
Cash and deposits with banks	$	199	$	205	$	139	$	(6	)	(3	)%	$	60		43	%
Federal funds sold and securities borrowed or purchased under agreements to resell	257		274		261		(17		)	(6	)	(4		)	(2	)
Trading account assets	286		292		321		(6		)	(2	)	(35		)	(11	)
Investments	309		304		312		5			2		(3		)	(1	)
Loans, net of unearned income and allowance for loan losses	646		637		630		9			1		16			3
Other assets	183		188		202		(5		)	(3	)	(19		)	(9	)
Total assets	$	1,880	$	1,900	$	1,865	$	(20	)	(1	)%	$	15		1	%
Liabilities
Deposits	$	968	$	955	$	931	$	13		1	%	$	37		4	%
Federal funds purchased and securities loaned or sold under agreements to repurchase	204		216		211		(12		)	(6	)	(7		)	(3	)
Trading account liabilities	109		122		116		(13		)	(11	)	(7		)	(6	)
Short-term borrowings	59		59		52		—			—		7			13
Long-term debt	221		222		239		(1		)	—		(18		)	(8	)
Other liabilities	113		123		125		(10		)	(8	)	(12		)	(10	)
Total liabilities	$	1,674	$	1,697	$	1,674	$	(23	)	(1	)%	$	—		—	%
Total equity	206		203		191		3			1		15			8
Total liabilities and equity	$	1,880	$	1,900	$	1,865	$	(20	)	(1	)%	$	15		1	%


(2)	Consolidating eliminations for total Citigroup and Citigroup parent company assets and liabilities are recorded within the Corporate/Other segment.


(3)	The total stockholders’ equity and the majority of long-term debt of Citigroup reside in the Citigroup parent company Consolidated Balance Sheet. See Notes 18 and 19 to the Consolidated Financial Statements. Citigroup allocates stockholders’ equity and long-term debt to its businesses through inter-segment allocations as shown above.


(1)	For additional information about long-term debt obligations, see “Managing Global Risk—Market Risk—Funding and Liquidity” below and Note 18 to the Consolidated Financial Statements.


(3)	Includes accounts payable and accrued expenses recorded in Other liabilities on Citi’s Consolidated Balance Sheet. Also includes discretionary contributions for 2014 for Citi’s non-U.S. pension plans and the non-U.S. postretirement plans, as well as employee benefit obligations accounted for under SFAS 87 (ASC 715), SFAS 106 (ASC 715) and SFAS 112 (ASC 712).


(1)	Issuance costs of $93 million related to preferred stock outstanding at December 31, 2013 are excluded from common stockholders’ equity and netted against preferred stock in accordance with Federal Reserve Board regulatory reporting requirements, which differ from those under U.S. GAAP.


(3)	In addition, includes the net amount of unamortized loss on held-to-maturity (HTM) securities. This amount relates to securities that were previously transferred from AFS to HTM, and non-credit-related factors such as changes in interest rates and liquidity spreads for HTM securities with other-than-temporary impairment.


(5)	The Federal Reserve Board granted interim capital relief, allowing banking organizations to exclude from regulatory capital any amounts recorded in AOCI resulting from the adoption and application of ASC 715-20, Compensation—Retirement Benefits—Defined Benefits Plans (formerly SFAS 158).


(6)	The impact of changes in Citi’s own creditworthiness in valuing liabilities for which the fair value option has been elected is excluded from Tier 1 Capital, in accordance with current risk-based capital guidelines.


(8)	Includable up to 1.25% of risk-weighted assets. Any excess allowance for credit losses is deducted in arriving at risk-weighted assets.


(9)	Includes qualifying subordinated debt in an amount not exceeding 50% of Tier 1 Capital.


(10)	Includes risk-weighted credit equivalent amounts, net of applicable bilateral netting agreements, of approximately $61 billion for interest rate, commodity, equity, foreign exchange and credit derivative contracts as of December 31, 2013, compared with approximately $62 billion as of December 31, 2012. Credit risk-


(12)	Risk-weighted assets as computed under Basel I credit risk and market risk capital rules. Total risk-weighted assets at December 31, 2012, including estimated market risk-weighted assets of approximately $169.3 billion assuming application of the Basel II.5 rules, would have been approximately $1.11 trillion.


(1)	Primarily represents an increase in additional paid-in capital related to employee benefit plans.


(3)	The net increase for the year ended December 31, 2013 reflects, in part, an increase in the portion of the allowance for credit losses eligible for inclusion in Tier 2 Capital resulting from an increase in gross risk-weighted assets due to the adoption of Basel II.5.


(1)	Calculated based on the Final Basel III Rules, and with full implementation assumed for all capital components (i.e., an effective date of January 1, 2019), except for qualifying trust preferred securities that fully phase-out of Tier 2 Capital by January 1, 2022.


(2)	Calculated based on the proposed U.S. Basel III rules, and with full implementation assumed for capital components (i.e., an effective date of January 1, 2019), except for qualifying trust preferred securities that fully phase-out of Tier 2 Capital by January 1, 2022.


(4)	Tier 1 Common Capital is adjusted for accumulated net unrealized gains (losses) on cash flow hedges included in AOCI that relate to the hedging of items not recognized at fair value on the balance sheet.


(5)	The impact of changes in Citigroup’s own creditworthiness in valuing liabilities for which the fair value option has been elected and own-credit valuation adjustments on derivatives is excluded from Tier 1 Common Capital, in accordance with the Final Basel III Rules.


(6)	Includes goodwill “embedded” in the valuation of significant common stock investments in unconsolidated financial institutions.