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EliScholar – A Digital Platform for Scholarly Publishing at Yale YPFS Resource Library 11-24-2008 Citi Adds $40 Billion of Capital Benefit through Agreement with U.S. Treasury, Federal Reserve, and FDIC Citigroup https://elischolar.library.yale.edu/ypfs-documents2/2914  This resource is brought to you for free and open access by the Yale Program on Financial Stability and EliScholar, a digital platform for scholarly publishing provided by Yale University Library. For more information, please contact ypfs@yale.edu. 2/27/24, 1:46 PM Citi Adds $40 Billion of Capital Benefit through Agreement with U.S. Treasury, Federal Reserve, and FDIChttps://www.citigroup.com/global/news/press-release/2008/citi-adds-40-billion-of-capital-benefit-through-agreement-with-us-treasury-federal-reserve-and-fdic 1/5Home / News / Press ReleasesFor Immediate ReleaseCitigroup Inc. (NYSE: C)Citi Adds $40 Billion of Capital Benefit throughAgreement with U.S. Treasury, Federal Reserve, andFDICNovember 24, 2008H I G H L I G H T SCiti to issue preferred stock and warrants to U.S. Treasuryand FDICStrike price on warrants set at $10.61Citi to receive capital benefits from government guaranteeon $306 billion of assetsCiti secures access to multiple additional liquidity facilities ShareAboutUsBusinessesOurImpactNewsInvestorsCareers My Account2/27/24, 1:46 PM Citi Adds $40 Billion of Capital Benefit through Agreement with U.S. Treasury, Federal Reserve, and FDIChttps://www.citigroup.com/global/news/press-release/2008/citi-adds-40-billion-of-capital-benefit-through-agreement-with-us-treasury-federal-reserve-and-fdic 2/5Citi Adds $40 Billion of Capital Benefitthrough Agreement with U.S. Treasury,Federal Reserve, and FDIChighlightsNew York – Citi (NYSE: C) today announced that it has reached an agreement withthe U.S. Treasury, the Federal Reserve Board, and the Federal Deposit InsuranceCorp. (FDIC) on a series of steps to strengthen Citi's capital ratios, reduce risk, andincrease liquidity, as described below:CAPITALThe U.S. Treasury will invest $20 billion in Citi preferred stock under theTroubled Asset Relief Program (TARP).Citi will issue an incremental $7 billion in preferred stock to the U.S. Treasuryand the FDIC as payment for a government guarantee on $306 billion ofsecurities, loans, and commitments backed by residential and commercialreal estate and other assets.As a result of the asset guarantee, the $306 billion portfolio will have a newrisk weighting of 20%, thus freeing up an additional $16 billion of capital tothe company.Citi will issue warrants to the U.S. Treasury and the FDIC for approximately254 million shares of the company's common stock at a strike price of $10.61.Citi also has agreed not to pay a quarterly common stock dividend exceeding$0.01 (one cent) per share for three years effective on the next quarterlycommon stock dividend payment.The program significantly strengthens Citi's key capital ratios by generatingapproximately $40 billion of capital benefits as follows:$20 billion from the TARP investment.$3.5 billion, the portion of the $7 billion of preferred stock fee recognized forcapital purposes.$16 billion of capital benefits resulting from the asset guarantee.AboutUsBusinessesOurImpactNewsInvestorsCareers My Account2/27/24, 1:46 PM Citi Adds $40 Billion of Capital Benefit through Agreement with U.S. Treasury, Federal Reserve, and FDIChttps://www.citigroup.com/global/news/press-release/2008/citi-adds-40-billion-of-capital-benefit-through-agreement-with-us-treasury-federal-reserve-and-fdic 3/5Citi's Tier 1 capital ratio for the third quarter ended September 30, 2008, on a proforma basis, for the October TARP capital injection and the new capital generatedby today's announcement, subject to Federal Reserve Board approval, is expectedto be approximately 14.8% and its TCE/RWMA ratio would be approximately 9.3%.RISK REDUCTIONUnder the guarantee, Citi will assume any losses on the portfolio up to $29 billionon a pre-tax basis, in addition to Citi's existing reserves; the government entitieswill assume 90% of any losses above that level and Citi will assume the balance.Citi will retain these assets on its balance sheet and realize the associated cashflow.LIQUIDITYIn addition to its extensive access to existing liquidity sources, Citi has beenprovided expanded access to both the Federal Reserve's Primary Dealer CreditFacility and the discount window, resulting in strong additional liquidity resourcesshould they be needed. Citi also has access to the yet-unused Federal Reserve'sCommercial Paper Funding Facility and intends to issue debt under the FDIC'sTemporary Liquidity Guarantee Program.The agreement also provides that an executive compensation plan, includingbonuses, that rewards long-term performance and profitability, with appropriatelimitations, must be submitted to, and approved by, the U.S. government."This weekend, the U.S. government and Citi worked together in an unprecedentedway to address market confidence and the recent decline in Citi's stock price," saidVikram S. Pandit, Chief Executive Officer. "We reached an agreement based on aninnovative market solution to further strengthen our capital ratios, reduce risk, andincrease liquidity. We appreciate the tremendous effort by the government toassure market stability."We are committed to streamlining our business and providing outstandingbanking services to our clients around the world. We will continue to focus onopportunities and alternatives to further enhance the company's overall positionand value," Mr. Pandit concluded.The transaction has been unanimously approved by the Citi Board of Directors.For more details, please see the term sheet for the transaction atwww.citigroup.com/citi/fin/index.htmAboutUsBusin ssesOurImpactNewsInvestorsCar ers My Account2/27/24, 1:46 PM Citi Adds $40 Billion of Capital Benefit through Agreement with U.S. Treasury, Federal Reserve, and FDIChttps://www.citigroup.com/global/news/press-release/2008/citi-adds-40-billion-of-capital-benefit-through-agreement-with-us-treasury-federal-reserve-and-fdic 4/5CitiCiti, the leading global financial services company, has some 200 million customeraccounts and does business in more than 100 countries, providing consumers,corporations, governments and institutions with a broad range of financialproducts and services, including consumer banking and credit, corporate andinvestment banking, securities brokerage, and wealth management. Citi's majorbrand names include Citibank, CitiiFinancial, Primerica, Smith Barney, Banamex,and Nikko. Additional information may be found at www.citigroup.com orwww.citi.com.Forward-Looking StatementsCertain statements in this document are "forward-looking statements" within themeaning of the Private Securities Litigation Reform Act. These statements arebased on management's current expectations and are subject to uncertainty andchanges in circumstances. Actual results may differ materially from those includedin these statements due to a variety of factors. More information about thesefactors is contained in Citi's filings with the Securities and Exchange Commission.Sign up toreceive thelatest newsfrom Citi.Email Address* Select PreferencesEnter Email*Required FieldSelect SendAboutUsBus essesOurImpactNewsI vestorsCareers My Account2/27/24, 1:46 PM Citi Adds $40 Billion of Capital Benefit through Agreement with U.S. Treasury, Federal Reserve, and FDIChttps://www.citigroup.com/global/news/press-release/2008/citi-adds-40-billion-of-capital-benefit-through-agreement-with-us-treasury-federal-reserve-and-fdic 5/5ABOUT USStrategyLeadershipGlobalPresenceHeritageBUSINESSESServicesMarketsBanking andInternationalWealthU.S. PersonalBankingOUR IMPACTSustainabilityStrengtheningCommunityDiversity,Equity andInclusionINVESTORSQuarterlyEarningsEvents andPresentationsAnnualReports andProxyStatementsSEC FilingsOtherRegulatoryFilingsFixed IncomeInvestorRelationsStockholderServicesCorporateGovernanceESG forInvestorsInvestorContactsNEWSPressReleasesPerspectivesMediaResourcesInsights Careers AlumniContact UsRegulatoryDisclosuresTerms Privacy Notice at Collection CA Privacy HubAccessibility Suppliers Ethics Hotline Contact UsAboutUsBusinessesOurImpactNewsInvestorsCareers My Account

Citi Adds $40 Billion of Capital Benefit through Agreement with U.S. Treasury, Federal Reserve, and FDIC

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Citi Adds $40 Billion of Capital Benefit through Agreement with U.S. Treasury, Federal Reserve, and FDIC

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