Fitch Affirms Citigroup Inc.'s Ratings; Outlook Stable

  Fitch Affirms Citigroup Inc.'s Ratings; Outlook Stable

Business Wire

NEW YORK -- October 10, 2012

Fitch Ratings has affirmed the ratings of Citigroup Inc. (Citi), including the
company's 'A/F1' Issuer Default Ratings (IDRs) and 'a-'Viability Rating (VR).
The Rating Outlook is Stable. A complete list of ratings follows at the end of
this release.

Today's rating action on Citi was taken in conjunction with Fitch's Global
Trading and Universal Bank (GTUB) periodic review. Fitch's outlook for the
industry is stable on balance. The positive rating drivers include improved
liquidity, funding, capitalization and more streamlined businesses, all partly
driven by regulation. Offsetting these positive drivers are substantial
earnings pressure, regulatory uncertainty and heightened legal and operational
risk.

RATING ACTION AND RATIONALE

Citi's 'a-' VR continues to reflect both Citi's fundamental strengths and
remaining challenges. Citi's strengths include its diverse revenue mix,
conservative liquidity management and improved capital position. Challenges
include a still sizeable level of non-performing loans and non-core assets, as
well as modest levels of profitability as measured by core return on assets.

Non-core assets totaled $191 billion at June 30, 2012 or approximately 10% of
assets, down considerably from 34% of assets in early 2009. However, the
non-core assets housed in Citi Holdings continue to be a drag on overall
profitability, as well as asset quality ratios. Citi Holdings loans comprise
20% of total Citigroup loans, but over 60% of nonaccrual assets. That said,
reserve coverage of the Citi Holdings loan portfolio remains appropriate at
9.6% at quarter-end. The ratings incorporate an expectation of a slowing
runoff to the remaining assets in Citi Holdings, now comprised primarily of
loans in North America.

The current VR factors in Fitch core capital levels at or above the current
levels, and continued progress in meeting Basel III capital ratios (including
the proposed SIFI buffer). Fitch views strong capitalization as necessary
given remaining balances of non-core assets and non-performing loans. The
current VR also reflects the continued generation of operating profitability
and a gradual reduction of remaining non-core assets managed by Citi Holdings.

Regulatory and legal issues appear relatively manageable, but Citi and its
peers face financial challenges due to consumer banking regulatory changes in
the U.S., new capital markets regulations such as the Volcker Rule and
implementation of Basel III capital and liquidity standards. Fitch believes
Citi will be able to comfortably meet new regulatory requirements, but
recognizes that new regulations could affect revenue generation capacity
particularly in capital markets activities and U.S. consumer operations.
Citi's diverse international franchise enhances its financial resiliency.

RATING DRIVERS AND SENSITIVITIES - VR, IDRS & SENIOR DEBT

The VR could be positively affected if Citigroup significantly improves
operating performance as measured by operating return on assets (ROA). This
improvement could be achieved if performance of core operations is maintained,
while the drag on performance from non-core operating diminishes over time.

Reductions in current economic, financial, and regulatory uncertainties would
be contributing factors to any upward momentum in the VR. Other positive
drivers include sizeable reductions in remaining non-core assets and
non-performing loan levels, while maintaining conservative liquidity and
capitalization. Fitch views upward momentum in ratings as limited over the
near term though given the various headwinds facing Citi and the industry.

Downward pressure on the VR would result from a material loss, reduction in
capital ratios or significant deterioration in liquidity levels. Likewise, any
unforeseen outsized fines, settlements or other charges could also have
adverse rating implications. Fitch considered Morgan Stanley's purchase of an
additional 14% of the Morgan Stanley Smith Barney from Citi to be a modest net
positive for Citi. The transaction resulted in a moderately higher accounting
charge in 3Q'12 results than Fitch expectations, but remained a rating neutral
event.

RATING DRIVERS AND SENSITIVITIES - SUPPORT RATING AND SUPPORT RATING FLOOR

Citi's current 'A' Long-term IDR is above its 'a-' VR, reflecting the fact
that Citi's IDR benefits from support. The '1' Support Rating, and 'A' Support
Rating Floor for Citi, factors in government support in the event of need for
Citi and other U.S. G-SIFIs. At Citi's current VR, the firm's Long-term IDR
would be affected by a change in the support rating floor.

Fitch's rating action continues to embody a view of support in Citi's IDRs and
other U.S. Global Systemically Important Financial Institutions (G-SIFIs) over
the near-to-intermediate term. This viewpoint was broadly discussed in Fitch's
special report titled 'U.S. Banks - Sovereign Support: When Does it End' dated
Dec. 15, 2011. Fitch could reassess its support ratings for U.S. G-SIFIs if
global market conditions normalize and resolution regimes become more
harmonized across international jurisdictions.

While Fitch believes the policy goal is to no longer provide full support to
systemically important banks, this is progressing at an uneven pace globally.

SUBORDINATED DEBT AND OTHER HYBRID SECURITIES

Subordinated debt and other hybrid securities issued by Citi and by various
issuing vehicles are all notched down from Citi's or its bank subsidiaries' VR
in accordance with Fitch's assessment of each instrument's respective
nonperformance and relative loss severity risk profiles. Their ratings are all
primarily sensitive to any changes in the VRs of Citi or its subsidiaries.

HOLDING COMPANY RATING DRIVERS AND SENSIVITIES

Citi's IDR and VR are equalized with those of its operating companies and
banks reflecting its role as the bank holding company, which is mandated in
the U.S. to act as a source of strength for its bank subsidiaries. It has
modest double leverage of 108% at 2Q12.

SUBSIDIARY AND AFFILIATED COMPANY RATING DRIVERS AND SENSITIVITIES

The IDRs of Citi's major rated operating subsidiaries are equalized with
Citi's IDR reflecting Fitch's view that these entities are core to Citi's
business strategy and financial profile.

Citigroup is one of the leading banking institutions in the world with by far
the largest international banking franchise among U.S. peers. Early in 2009, a
strategic shift was announced which split Citi into two major operating units:
Citicorp to manage core operations (regional consumer banking and the
institutional clients group), and Citi Holdings to manage and dispose of
non-core assets.

Fitch affirms the following ratings:

Citigroup Inc.

--Long-term Issuer Default Rating (IDR) at 'A' with a Stable Outlook;

--Senior unsecured at 'A';

--Subordinated at 'BBB+';

--Preferred at 'BB';

--Short-term IDR at 'F1';

--Support at '1';

--Support floor at 'A';

--Viability Rating at 'a-'.

Citibank, N.A.

--Long-term IDR at 'A' with a Stable Outlook;

--Long term deposits at 'A+';

--Short-term IDR at 'F1';

--Short-term deposits at 'F1';

--Support at '1';

--Support Floor at 'A';

--Viability Rating at 'a-';

--Long-term FDIC guaranteed debt at 'AAA'.

Citibank Banamex USA

--Long-term IDR at 'A';

--Subordinated at 'BBB+';

--Long-term deposits at 'A+';

--Short-term IDR at 'F1';

--Short-term deposits at 'F1';

--Viability Rating at 'a-';

--Support at '1';

--Support Floor at 'A'.

Citigroup Funding Inc.

--Long-term IDR at 'A';

--Senior unsecured at 'A';

--Short-term IDR at 'F1';

--Short-term debt at 'F1';

--Market linked securities at 'A emr';

--Long-term FDIC guaranteed debt at 'AAA'.

Citigroup Global Markets Holdings Inc.

--Long-term IDR at 'A';

--Senior unsecured at 'A';

--Short-term IDR at 'F1';

--Short-term debt at 'F1'.

Citigroup Global Markets, Inc.

--Senior Secured at 'A';

--Short-term debt at 'F1'.

Citigroup Derivatives Services LLC.

--Long-term IDR at 'A';

--Short-term IDR at 'F1';

--Support at '1'.

Citibank Canada

--Long-term IDR at 'A';

--Long-term deposits at 'A'.

Citibank Japan Ltd.

--Long-term IDR at 'A';

--Short-term IDR at 'F1';

--Long-term IDR (local currency) at 'A';

--Short-term IDR (local currency) at 'F1';

--Support at '1'.

CitiFinancial Europe plc

--Long-term IDR at 'A';

--Senior unsecured at 'A';

--Senior shelf at 'A';

--Subordinated at 'BBB+'.

Citibank International PLC

--Long-term IDR at 'A';

--Short-term IDR at 'F1';

--Support affirmed at '1'.

Commercial Credit Company

--Senior unsecured at 'A'.

Associates Corporation of North America

--Senior unsecured at 'A'.

Egg Banking plc

--Subordinated at 'BBB+'.

Citigroup Capital III, VII, VIII, IX, X, XIII, XIV, XV, XVI, XVII, XVIII,and
XX

--Trust preferred at 'BB+'.

Adam Capital Trust III, Adam Statutory Trust III, IV, V

--Trust preferred at 'BB+'.

Additional information is available at 'www.fitchratings.com'. The ratings
above were solicited by, or on behalf of, the issuer, and therefore, Fitch has
been compensated for the provision of the ratings.

Applicable Criteria and Related Research:

--'Global Financial Institutions Rating Criteria' (Aug. 16, 2011);

--'Securities Firms Criteria' (Aug. 16, 2011);

--'Bank Holding Company Criteria' (Aug. 16, 2011);

--'Rating Bank Regulatory Capital and Similar Securities' (Dec. 15, 2012);

--'U.S. Banks - Sovereign Support: When Does it End' (Dec. 15, 2011).

Applicable Criteria and Related Research:

Rating Bank Regulatory Capital and Similar Securities

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=656371

U.S. Banks - Sovereign Support: When Does it End -- Amended

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=662250

Securities Firms Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=649173

Bank Holding Companies

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=648612

Global Financial Institutions Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=649171

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Contact:

Fitch Ratings
Primary Analyst
Joseph S. Scott, +1-212-908-0624
Senior Director
Fitch, Inc.
One State Street Plaza
New York, NY 10004
or
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Managing Director
or
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