Citibank 2010 Annual Report Download - page 116

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CORPORATE LOAN DETAILS
For corporate clients and investment banking activities across Citigroup, 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 that coordinates •฀
credit activities with that client;
portfolio limits to ensure diversification and maintain risk/capital •฀
alignment;
a minimum of two authorized credit officer signatures required on •฀
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 Banking), before consideration of collateral, by maturity at December
31, 2010. The corporate portfolio is broken out by direct outstandings that
include drawn loans, overdrafts, interbank placements, bankers’ acceptances,
certain investment securities and leases, and unfunded commitments
that include unused commitments to lend, letters of credit and financial
guarantees.
At December 31, 2010 At December 31, 2009
In billions of dollars
Due
within
1 year
Greater
than 1 year
but within
5 years
Greater
than
5 years
Total
exposure
Due
within
1 year
Greater
than 1 year
but within
5 years
Greater
than
5 years
Total
exposure
Direct outstandings $191 $ 43 $ 8 $242 $213 $ 66 $ 7 $286
Unfunded lending commitments 174 94 19 287 182 120 10 312
Total $365 $137 $27 $529 $395 $186 $17 $598
Portfolio Mix
The corporate credit portfolio is diverse across counterparty, industry,
and geography. The following table shows the percentage of direct
outstandings and unfunded commitments by region:
December 31,
2010
December 31,
2009
North America 47% 51%
EMEA 28 27
Latin America 79
Asia 18 13
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.
Obligor risk ratings reflect an estimated probability of default for an
obligor and are derived primarily through the use of statistical models
(which are validated periodically), external rating agencies (under defined
circumstances) or approved scoring methodologies. Facility risk ratings
are assigned, using the obligor risk rating, and then factors that affect the
loss-given default of the facility, such as support or collateral, are taken
into account. With regard to climate change risk, factors evaluated include
consideration of the business impact, impact of regulatory requirements, or
lack thereof, and impact of physical effects on obligors and their assets.
These factors may adversely affect the ability of some obligors to perform
and thus increase the risk of lending activities to these obligors. Citigroup
also has incorporated climate risk assessment criteria for certain obligors,
as necessary. Internal obligor ratings equivalent to BBB and above are
considered investment grade. Ratings below the equivalent of the BBB
category are considered non-investment grade.