Citibank 2013 Annual Report Download - page 113

95
CORPORATE CREDIT DETAILS
Consistent with its overall strategy, Citi’s Corporate clients are typically large,
multi-national corporations who value Citi’s global network. Citi aims to
establish relationships with these clients that encompass multiple products,
consistent with client needs, including cash management and trade services,
foreign exchange, lending, capital markets and M&A advisory.
For corporate clients and investment banking activities across Citi, the
credit process is grounded in a series of fundamental policies, in addition
to those described under “Managing Global Risk—Risk Management—
Overview” above. These include:
•฀ joint business and independent risk management responsibility for
managing credit risks;
•฀ a single center of control for each credit relationship, which coordinates
credit activities with each client;
•฀ portfolio limits to ensure diversification and maintain risk/capital
alignment;
•฀ a minimum of two authorized credit officer signatures required on most
extensions of credit, one of which must be from a credit officer in credit
risk management;
•฀ risk rating standards, applicable to every obligor and facility; and
•฀ consistent standards for credit origination documentation and remedial
management.
Corporate Credit Portfolio
The following table represents the Corporate credit portfolio (excluding
Private Bank in Securities and Banking), before consideration of
collateral or hedges, by remaining tenor at December 31, 2013 and 2012.
The Corporate credit portfolio includes loans and unfunded lending
commitments in Citi’s institutional client exposure in Institutional
Client Group and, to a much lesser extent, Citi Holdings, by Citi’s internal
management hierarchy and is broken out by (i) direct outstandings, which
include drawn loans, overdrafts, bankers’ acceptances and leases, and
(ii) unfunded lending commitments, which include unused commitments to
lend, letters of credit and financial guarantees.
At December 31, 2013 At December 31, 2012
In billions of dollars
Due
within
1 year
Greater
than 1 year
but within
5 years
Greater
than
5 years
Total
Exposure
Due
within
1 year
Greater
than 1 year
but within
5 years
Greater
than
5 years
Total
exposure
Direct outstandings $108 $ 80 $29 $217 $ 93 $ 76 $28 $196
Unfunded lending commitments 87 204 21 312 88 199 28 315
Total $195 $284 $50 $529 $181 $275 $56 $511
Portfolio Mix—Geography, Counterparty and Industry
Citi’s Corporate credit portfolio is diverse across geography and counterparty.
The following table shows the percentage of direct outstandings and
unfunded lending commitments by region based on Citi’s internal
management geography:
December 31,
2013
December 31,
2012
North America 51% 52%
EMEA 27 27
Asia 14 14
Latin America 87
Total 100% 100%
The maintenance of accurate and consistent risk ratings across the Corporate
credit portfolio facilitates the comparison of credit exposure across all lines
of business, geographic regions and products. Counterparty risk ratings
reflect an estimated probability of default for a counterparty and are derived
primarily through the use of validated statistical models, scorecard models
and external agency ratings (under defined circumstances), in combination
with consideration of factors specific to the obligor or market, such as
management experience, competitive position and regulatory environment.
Facility risk ratings are assigned that reflect the probability of default of
the obligor and factors that affect the loss-given-default of the facility, such
as support or collateral. Internal obligor ratings that generally correspond
to BBB and above are considered investment grade, while those below are
considered non-investment grade.
Citigroup also has incorporated climate risk assessment and reporting
criteria for certain obligors, as necessary. Factors evaluated include
consideration of climate risk to an obligor’s business and physical assets and,
when relevant, consideration of cost-effective options to reduce greenhouse
gas emissions.