Citibank 2011 Annual Report Download - page 204

182
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 carrying values, consisted of the following at
December 31:
In millions of dollars 2011 
&EDERALæFUNDSæSOLD $37  
3ECURITIESæPURCHASEDæUNDERæAGREEMENTSæTOæRESELLæ 153,492 
$EPOSITSæPAIDæFORæSECURITIESæBORROWED 122,320 
Total $275,849 
æ 3ECURITIESæPURCHASEDæUNDERæAGREEMENTSæTOæRESELLæAREæREPORTEDæNETæBYæCOUNTERPARTYæWHENæAPPLICABLEæ
REQUIREMENTSæFORæNETæPRESENTATIONæAREæMETæ4HEæAMOUNTSæINæTHEæTABLEæABOVEæWEREæREDUCEDæFORæALLOWABLEæ
NETTINGæBYææBILLIONæANDææBILLIONæATæ$ECEMBERæææANDææRESPECTIVELY
Federal funds purchased and securities loaned or sold under agreements
to repurchase, at their respective carrying values, consisted of the following at
December 31:
In millions of dollars 2011 
&EDERALæFUNDSæPURCHASED $ 688  
3ECURITIESæSOLDæUNDERæAGREEMENTSæTOæREPURCHASEæ 164,849 
$EPOSITSæRECEIVEDæFORæSECURITIESæLOANED 32,836 
Total $198,373 
æ 3ECURITIESæSOLDæUNDERæAGREEMENTSæTOæREPURCHASEæAREæREPORTEDæNETæBYæCOUNTERPARTYæWHENæAPPLICABLEæ
REQUIREMENTSæFORæNETæPRESENTATIONæAREæMETæ4HEæAMOUNTSæINæTHEæTABLEæABOVEæWEREæREDUCEDæFORæALLOWABLEæ
NETTINGæBYææBILLIONæANDææBILLIONæATæ$ECEMBERæææANDææRESPECTIVELY
The resale and repurchase agreements represent collateralized financing
transactions. The Company executes these transactions through its
broker-dealer subsidiaries to facilitate customer matched-book activity and
to efficiently fund a portion of the Company’s trading inventory. Transactions
executed by the Company’s bank subsidiaries primarily facilitate customer
financing activity.
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 in order
to maintain contractual margin protection. Collateral typically consists of
government and government-agency securities, corporate and municipal
bonds, and mortgage-backed and other asset-backed securities. 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.
A majority of securities borrowing and lending agreements 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 on a daily basis and obtains or posts
additional collateral in order to maintain contractual margin protection.