Citibank 2008 Annual Report Download - page 172

19. GOODWILL AND INTANGIBLE ASSETS
Goodwill
The changes in goodwill during 2007 and 2008 were as follows:
In millions of dollars Goodwill
Balance at December 31, 2006 $33,264
Acquisition of GFU $ 865
Acquisition of Quilter 268
Acquisition of Nikko Cordial (1) 892
Acquisition of Grupo Cuscatlán 921
Acquisition of Egg 1,471
Acquisition of Old Lane 516
Acquisition of BISYS 872
Acquisition of BOOC 712
Acquisition of ATD 569
Sale of Avantel (118)
Foreign exchange translation, smaller acquisitions and other 821
Balance at December 31, 2007 $41,053
Sale of German retail bank $ (1,047)
Sale of CitiCapital (221)
Sale of Citigroup Global Services Limited (85)
Purchase accounting adjustments—BISYS (184)
Purchase of the remaining shares of Nikko Cordial—net of purchase accounting adjustments 287
Acquisition of Legg Mason Private Portfolio Group 98
Foreign exchange translation (3,116)
Impairment of goodwill (9,568)
Smaller acquisitions, purchase accounting adjustments and other (85)
Balance at December 31, 2008 $27,132
(1) Includes a reduction of $965 million related to the recognition of certain tax benefits.
The changes in goodwill by segment during 2007 and 2008 were as follows:
In millions of dollars
Global
Cards
Consumer
Banking
Institutional
Clients Group
Global
Wealth
Management
Corporate/
Other Total
Balance at December 31, 2006 (1) $ 3,699 $ 22,280 $ 6,165 $1,120 $— $33,264
Goodwill acquired during 2007 1,171 1,755 3,315 844 — 7,085
Goodwill disposed of during 2007 — (118) — — — (118)
Other (2) 74 336 267 145 — 822
Balance at December 31, 2007 $ 4,944 $ 24,253 $ 9,747 $2,109 $— $41,053
Goodwill acquired during 2008 $ — $ 88 $ 1,331 $ 269 $— $ 1,688
Goodwill disposed of during 2008 (210) (1,127) (35) (6) — (1,378)
Goodwill impaired during 2008 — (9,568) — — — (9,568)
Other (2)(3) 6,098 (10,540) 301 (522) — (4,663)
Balance at December 31, 2008 $10,832 $ 3,106 $11,344 $1,850 $— $27,132
(1) Reclassified to conform to the current period’s presentation.
(2) Other changes in goodwill primarily reflect foreign exchange effects on non-dollar-denominated goodwill, as well as purchase accounting adjustments.
(3) As of June 30, 2008, the Company’s structure was reorganized and new operating segments were established. As goodwill is required to be tested for impairment at the reporting unit level, reporting units under the
new operating segments have been established.
Goodwill impairment testing is performed at a level below the business
segments (referred to as a reporting unit). Changes in the management
structure in 2008 resulted in the creation of new business segments. As a
result, commencing with the third quarter of 2008, the Company identified
new reporting units as required under SFAS No. 142, Goodwill and Other
Intangible Assets (SFAS 142). Goodwill affected by the reorganization has
been reallocated from seven reporting units to ten, using a relative fair-value
approach. Subsequent to the reorganization, goodwill was reallocated to
disposals and tested for impairment under the new reporting units.
During 2008, the share prices of financial stocks continued to be very
volatile and were under considerable pressure in sustained turbulent
markets. In this environment, Citigroup’s market capitalization remained
below book value for most of the period and the Company performed
goodwill impairment testing for all reporting units as of February 28, 2008,
July 1, 2008 and December 31, 2008. In addition, the Company performed
impairment testing for selected reporting units as of May 31, 2008 (Citigroup
Alternative Investments) and October 31, 2008 (Securities and Banking,
North America Consumer Banking and Latin America Consumer
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