Citibank 2010 Annual Report Download - page 139

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The following table reflects the incremental impact of adopting SFAS
166/167 on Citigroup’s GAAP assets, liabilities, and stockholders’ equity.
In billions of dollars January 1, 2010
Assets
Trading account assets $ (9.9)
Investments (0.6)
Loans 159.4
Allowance for loan losses (13.4)
Other assets 1.8
Total assets $137.3
Liabilities
Short-term borrowings $ 58.3
Long-term debt 86.1
Other liabilities 1.3
Total liabilities $145.7
Stockholders’ equity
Retained earnings $ (8.4)
Total stockholders’ equity (8.4)
Total liabilities and stockholders’ equity $137.3
The preceding tables reflect: (i) the portion of the assets of former
QSPEs to which Citigroup, acting as principal, had transferred assets and
received sales treatment prior to January 1, 2010 (totaling approximately
$712.0 billion), and (ii) the assets of significant VIEs as of January 1, 2010
with which Citigroup is involved (totaling approximately $219.2 billion) that
were previously unconsolidated and are required to be consolidated under
the new accounting standards. Due to the variety of transaction structures
and the level of Citigroup involvement in individual former QSPEs and VIEs,
only a portion of the former QSPEs and VIEs with which Citi is involved were
required to be consolidated.
In addition, the cumulative effect of adopting these new accounting
standards as of January 1, 2010 resulted in an aggregate after-tax charge
to Retained earnings of $8.4 billion, reflecting the net effect of an
overall pretax charge to Retained earnings (primarily relating to the
establishment of loan loss reserves and the reversal of residual interests held)
of $13.4 billion and the recognition of related deferred tax assets amounting
to $5.0 billion.
The impact on certain of Citigroup’s regulatory capital ratios of adopting
these new accounting standards, reflecting immediate implementation of
the recently issued final risk-based capital rules regarding SFAS 166/167, was
as follows:
As of January 1, 2010
Impact
Tier 1 Capital (141) bps
Total Capital (142) bps
Non-Consolidation of Certain Investment Funds
The FASB issued Accounting Standards Update No. 2010-10, Consolidation
(Topic 810), Amendments for Certain Investment Funds (ASU 2010-10)
in the first quarter of 2010. ASU 2010-10 provides a deferral to the
requirements of SFAS 167 where the following criteria are met:
the entity being evaluated for consolidation is an investment company, as •฀
defined, or an entity for which it is acceptable based on industry practice
to apply measurement principles that are consistent with an investment
company;
the reporting enterprise does not have an explicit or implicit obligation •฀
to fund losses of the entity that could potentially be significant to the
entity; and
the entity being evaluated for consolidation is not:•฀
– a securitization entity;
– an asset-backed financing entity; or
– an entity that was formerly considered a qualifying special-purpose entity.
Citigroup has determined that a majority of the investment vehicles managed
by it are provided a deferral from the requirements of SFAS 167 as they meet
these criteria. These vehicles continue to be evaluated under the requirements
of FIN 46(R) (ASC 810-10), prior to the implementation of SFAS 167.
Where Citi has determined that certain investment vehicles are subject to
the consolidation requirements of SFAS 167, the consolidation conclusions
reached upon initial application of SFAS 167 are consistent with the
consolidation conclusions reached under the requirements of ASC 810-10,
prior to the implementation of SFAS 167.