Citibank 2010 Annual Report Download - page 206

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12. FEDERAL FUNDS/SECURITIES BORROWED,
LOANED, AND SUBJECT TO REPURCHASE
AGREEMENTS
Federal funds sold and securities borrowed or purchased under agreements to
resell, at their respective fair values, consisted of the following at December 31:
In millions of dollars 2010 2009
Federal funds sold $ 227 $ 4
Securities purchased under agreements to resell 129,918 105,165
Deposits paid for securities borrowed 116,572 116,853
Total $246,717 $222,022
Federal funds purchased and securities loaned or sold under agreements
to repurchase, at their respective fair values, consisted of the following at
December 31:
In millions of dollars 2010 2009
Federal funds purchased $ 478 $ 2,877
Securities sold under agreements to repurchase 160,598 129,656
Deposits received for securities loaned 28,482 21,748
Total $189,558 $154,281
The resale and repurchase agreements represent collateralized financing
transactions conducted through Citi’s broker-dealer subsidiaries to facilitate
customer matched-book activity and to efficiently fund a portion of the
trading inventory. For further information, see “Capital Resources and
Liquidity—Funding and Liquidity” above.
It is the Company’s policy to take possession of the underlying collateral,
monitor its market value relative to the amounts due under the agreements
and, when necessary, require prompt transfer of additional collateral or
reduction in the balance in order to maintain contractual margin protection.
In the event of counterparty default, the financing agreement provides the
Company with the right to liquidate the collateral held.
The majority of the resale and repurchase agreements are recorded at
fair value. The remaining portion is carried at the amount of cash initially
advanced or received, plus accrued interest, as specified in the respective
agreements. Resale agreements and repurchase agreements are reported net
by counterparty, when applicable. Excluding the impact of the allowable
netting, resale agreements totaled $184.6 billion and $166.0 billion at
December 31, 2010 and 2009, respectively.
A majority of the deposits paid for securities borrowed and deposits
received for securities loaned are recorded at the amount of cash advanced or
received and are collateralized principally by government and government-
agency securities and corporate debt and equity securities. The remaining
portion is recorded at fair value as the Company elected the fair value
option for certain securities borrowed and loaned portfolios. With respect
to securities loaned, the Company receives cash collateral in an amount
generally in excess of the market value of the securities loaned. The Company
monitors the market value of securities borrowed and securities loaned daily,
and additional collateral is obtained as necessary. Securities borrowed and
securities loaned are reported net by counterparty, when applicable.