Citibank 2012 Annual Report Download - page 210

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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 carrying values, consisted of the
following at December 31:
In millions of dollars 2012 2011
Federal funds sold $ 97 $ 37
Securities purchased under agreements to resell (1) 138,549 153,492
Deposits paid for securities borrowed 122,665 122,320
Total $261,311 $275,849
(1) Securities purchased under agreements to resell are reported net by counterparty, when applicable
requirements for net presentation are met. The amounts in the table above were reduced for allowable
netting by $49.4 billion and $53.0 billion at December 31, 2012 and 2011, respectively.
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 2012 2011
Federal funds purchased $ 1,005 $ 688
Securities sold under agreements to repurchase (1) 182,330 164,849
Deposits received for securities loaned 27,901 32,836
Total $211,236 $198,373
(1) Securities sold under agreements to repurchase are reported net by counterparty, when applicable
requirements for net presentation are met. The amounts in the table above were reduced for allowable
netting by $49.4 billion and $53.0 billion at December 31, 2012 and 2011, respectively.
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
fund a portion of the Company’s trading inventory efficiently. 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.