Citibank 2010 Annual Report Download - page 173

171
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 the Company 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 in ASC 946-10, Financial Services—Investment Companies,
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.
The Company has determined that a majority of the investment vehicles
managed by Citigroup are provided a deferral from the requirements of
SFAS 167, because 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 the Company 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.