Citibank, N.A.

Company Profile

Reference Code: 12678

Publication Date: Aug 2006

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TABLE OF CONTENTS

TABLE OF CONTENTS

Company Overview ....................................................... 4

Key Facts........................................................................ 4

Business Description .................................................... 5

History ............................................................................ 6

Key Employees .............................................................. 9

Major Products And Services..................................... 10

SWOT Analysis ............................................................ 11

Top Competitors .......................................................... 16

Locations and Subsidiaries ........................................ 17

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CITIBANK, N.A.
Company Overview

COMPANY OVERVIEW

Citibank is the consumer and corporate banking division of Citigroup. The company
has operations in about 1,700 locations spanning over 70 countries worldwide.
Citibank provides a range of banking, lending and investment services to individual
consumers, small businesses, large corporations and governments. It is
headquartered in New York, the US.

Citibank has no published revenues for fiscal year 2005. The net profit was $8,830
million in fiscal year 2005, a decrease of 6.2% from 2004.

KEY FACTS

Head Office Citibank, N.A.

399 Park Avenue
New York
NY 10022
United States
Phone +1 212 559 1000

Fax +1 212 793 3946

Web Address http://www.citibank.com

Revenues/turnover 0

(US$ Mn)
Financial Year End December

Employees 0

SIC Codes SIC 6011 Federal Reserve Banks

SIC 6019 Central Reserve Depository Institutions, NEC
SIC 6021 National Commercial Banks
SIC 6712 Offices of Bank Holding Companies
NAICS Codes 52111, 522298, 52211, 52221, 551111

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Business Description

BUSINESS DESCRIPTION

Citibank is a commercial bank and a wholly owned subsidiary of Citigroup. Citibank’s

offerings include credit cards, consumer finance and retail banking products and
services; investment banking; commercial banking; cash management; trade finance
and e-commerce; and private banking. The bank has extensive operations in the US
and Asia including China, Hong Kong, India, Japan, the Philippines and Singapore. It
also has offices in Europe, Latin America, the Middle East and Africa. The company
divides its operations into three sectors: personal finance, small business and
corporate/institutional.

Citibank’s financial center network comprises local offices, supported by its electronic
delivery systems, including ATMs and the world wide web. The company’s credit card
solutions for individuals and businesses include the Citi Advantage Card, Citi Platinum
Select Card, and Citi Platinum Select Advantage Business Card.

Citibank also operates an internet banking site, Citibank.com offering consumer and
small business products and services. On the site, consumers may sign onto their Citi
card, bank and brokerage accounts, locate Citibank Financial Centers and ATMs
globally, access personal finance content and use a range of financial tools, among
other functions.

Citibank also provides transaction banking services including eBusiness,

eCommerce, cash-management and electronic-banking business, and Citibank global
securities services. Citibank global securities service provides securities-related
services such as custody, clearing, agency and trust, and depositary receipts. In
addition, its sales and trading business provides capital markets products to clients.

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CITIBANK, N.A.
History

HISTORY

Citibank was founded in 1812 as the City Bank of New York. It joined the US national
banking system in 1865 and took the name The National City Bank of New York. By
1894, the company had become the largest bank in the US.

The company began its international operations in 1902 opening its offices in Asia,
including Shanghai and Manila. Later in 1914, National City inaugurated the first
foreign branch of any US national bank, in Buenos Aires. A year later the bank
opened an office in Rio de Janeiro.

Citibank expanded its operations in 1918 with the acquisition of International Banking
Corporation, a US overseas bank. By 1929, the bank had become the largest
commercial bank in the world. The company also merged with the Farmers’ Loan and
Trust Company the same year. The merged company was known as the City Bank
Farmers Trust Company.

In 1955, the bank changed its name to The First National City Bank of New York. The
year 1961 saw First National City Overseas Investment Corporation become the
bank’s holding company for non-US-based subsidiaries and affiliates. The company
marked its 150th anniversary in 1962 by shortening its name to First National City
Bank.

In the 1970s, the company changed its name again. First National City Bank became
Citibank NA (for National Association) in 1976, while the First National City
Corporation holding company changed its name to Citicorp.

The company further expanded its businesses in 1981 with the purchase of Diners
Club. By 1992, Citibank had become the largest bank in the US. A year later, the
company merged the savings banks it acquired in the 1980s and began operating
them as Citibank FSB under a single charter.

The company continued its inorganic growth in the 1990s with the opening of the first
fully foreign owned commercial bank in Russia (1994) and the first full service branch
in China (1995). It also opened branches in Vietnam and South Africa.

In 1998, all Citicorp and Travelers Group divisions including Citibank were merged to
establish the world’s leading financial services group Citigroup.

The year 1999 saw Citibank growing its presence in Latin America with the acquisition
of Financiero Atlas, the second largest consumer finance company in Chile. The

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History

following year the company became the first international bank to open a full-service
branch in Israel. Other acquisitions during the year included the acquisition of
Hungarian retail activities of ING Bank.

In 2001, Citibank and China Merchants Bank issued China’s first international travel
cash card, Visa Travel Money. In the following year, Citibank announced the launch of
retail-banking operations in Moscow, making it the first US bank to conduct
commercial operations in the country.

A year later Citibank announced a cooperation agreement with Galaxy Securities,

China’s leading brokerage. Later in the year, Citibank’s parent Citigroup announced
the completion of the acquisition of Golden State Bancorp for $2.3 billion. Golden
State was subsequently merged into Citibank. This move succeeded in expanding
Citibank’s branch network in California fourfold.

In early 2003, Citibank agreed to purchase a minority stake in China-based Shanghai

Pudong Development Bank. In the closing month of the year, Citibank.com was
ranked number one in online by Gomez, an internet benchmarking and improvement
strategies firm.

The year 2004 saw the company launch Citibanking, a new proposition aimed at
providing comprehensive banking services and sophisticated tools to meet the
financial needs of the middle-income group in Hong Kong. Citibank also launched
Citibanking in Malaysia in the same year. Later in the year, Citibank and Cathay
Pacific Airways launched the first co-branded credit card for frequent travelers.
Following this the bank opened its first dedicated CitiGold Wealth Management
Center. The new center was opened to meet growing demand fro wealth management
services in Shanghai. The year also saw the Financial Services Agency of Japan
(FSA) issue an administrative order against Citibank Japan requiring that Citigroup
exit all private banking operations in Japan by September 2005. Towards the end of
the year KorAm was merged with the Citibank Korea branch to establish Citibank
Korea.

In August 2005, the bank entered into a merchant services alliance agreement with
First Data Corporation (a leading e-commerce and payment service provider) to sell
its Citi Merchant Services unit (a provider of credit and debit card payment processing
services) and manage the business in alliance with the company. In the following
month, Citibank closed its private banking business in Japan.

In May 2006, an IT problem at Citibank Japan disrupted hundreds of bank

transactions over several days, affecting 97,000 customers. In July 2006, the FSA

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History

ordered Citibank to fundamentally re-evaluate and redevelop its system of

governance, internal control and outsourcing following a series of system failures
involving transaction processing that affected thousands of individual and corporate
customers during the year.

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Key Employees

KEY EMPLOYEES

Name Job Title Board Compensation

William R Rhodes Chairman Senior Management

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Major Products And Services

MAJOR PRODUCTS AND SERVICES

Citibank is the consumer and corporate banking division of Citigroup. The company
has operations in around 1,700 locations in about 70 countries worldwide. Citibank
offers the following products and services:

Banking services:

Credit cards
Transaction services
Mortgages
Loans
Investments
Planning/retirement solutions
Insurance
Small business services

Corporate/Institutional services:

Asset management
Cash management services
Government services
Business Insurance
Private banking
Securities
Trading services

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SWOT Analysis

SWOT ANALYSIS

Citibank is a commercial bank and a wholly owned subsidiary of Citigroup. Citibank’s

offerings include credit cards, consumer finance and retail banking products and
services; investment banking; commercial banking; cash management; trade finance
and e-commerce; and private banking. The company has operations in around 1,700
locations in about 70 countries worldwide. It leverages its affiliation to Citigroup to gain
a competitive advantage. However, high compliance costs relating to Basel II could
adversely affect the margins of the company.

Strengths Weaknesses
Affiliation to the Citigroup Weakness in Citibank Japan’s IT systems

Strong Tier-1 ratio Decline in profits

Strong mandates
Opportunities Threats
Positive outlook for global banking industry High interest rates

Growing securitization in European markets Basel II Accord

Growing opportunities in investment banking Consolidation in the banking industry

Strengths

Affiliation to the Citigroup

Citibank benefits from its affiliation to the Citigroup, one of the world’s largest financial
services groups. At the end of fiscal 2005, Citigroup had an asset base of over $1.4
trillion and revenues of $120,318 million. Citibank has been leveraging the established
brand name of its parent group to win customers amidst intense competition. The
access to the parent group’s huge resources enables Citibank to pursue its expansion
plans through which it has built its presence in 70 countries. Additionally, it also gives
Citibank greater cross-selling opportunities. The company leverages its affiliation to
Citigroup to gain a competitive advantage.

Strong Tier-1 ratio

At the end of the fiscal year 2005, Citibank’s Tier 1 ratio was higher than some of its
competitors. The Tier 1 ratio is the capital adequacy ratio that allows the banks to

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SWOT Analysis

absorb losses without being required to cease trading. The Tier 1 ratio of the bank
was recorded at 8.4%, higher than its competitor Deutsche Bank (7.6%). The
company’s Tier 1 ratio is also higher than the average of 8% maintained by the global
banking institutions. A higher Tier 1 ratio secures the bank’s operations in the event of
a financial crisis.

Strong mandates

Citibank has strengthened its market position in the cash management business over
the past year. In fiscal 2005, Citibank’s cash management services recorded a strong
increase in the number of mandates. The bank won over 1,850 new mandates from
clients during the year. Additionally, Citibank also received about 1,000 incremental
mandates from existing customers over the course of the year. A strong increase in
mandates during the year reflects increasing confidence in the bank’s cash
management capabilities .

Weaknesses

Weakness in Citibank Japan’s IT systems

IT systems management at Citibank Japan has been less than adequate. In May
2006, an IT problem at Citibank Japan disrupted hundreds of bank transactions over
several days, affecting about 97,000 customers. As a result of the problem some
transactions were double-booked, while others were processed but not reflected in
statements. In June, an improper execution of night-time batch processing of the
system for corporate banking caused 1,900 transactions to be affected with similar
problems. Both glitches occurred at the system development department and the data
processing center of Citigroup in Singapore, to which the bank outsourced the tasks.
This follows data processing problems in 2004 that had caused massive losses of
Citibank’s customer information. A continued problem with its IT systems points to
weakness in the company’s current system of governance, internal control and
outsourcing, which have adversely affected its market image and knocked investor
confidence.

Decline in profits

Citibank has seen a decline in its net profits in the last year. In fiscal 2005, Citibank’s
net profits declined by 6.2% from 2004 to reach $8,830 million. The fall in the net
income reflects the fact that the bank was unable to manage its costs efficiently during
the year. A decline in net profit puts Citibank at a competitive disadvantage.

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SWOT Analysis

Opportunities

Positive outlook for global banking industry

The global banking industry recorded a CAGR of 4.9% in the 2001-2005 period. In
2005, the global commercial banking industry grew by 4.2% to about $33,404 billion.
The global commercial banking industry is expanding owing to a global economic
upturn. The outlook for the future is positive with the global commercial banking
industry likely to grow at a CAGR of about 5% in the next five years (2006-2010) to
reach about $42,800 billion in 2010. With Citibank presence in around 70 countries, it
is well-positioned to benefit from this positive outlook.

Growing securitization in European markets

Securitization in Europe has been recording strong growth over the past few years.
There has been substantial increase in activity in almost every asset class. Issuance
in the European securitization market set a record for the seventh consecutive year in
2005, growing 31.1% (from 2004) to E319.2 billion. Securitized issuance in Europe is
likely to increase by approximately 15% in 2006, with most of the increase expected to
come from the commercial mortgage-backed securities (CMBS) and collateralized
debt obligation (CDO) sectors. This presents an opportunity for Citibank to securitize
its loans and other assets, if required. This would enable it to transfer its risks to the
capital markets. Additionally, securitization would enable it to finance its customers
without tying up large amounts of borrowed capital. By converting intangible assets
into cash from its expected future profits, C

Growing opportunities in investment banking

The global investment banking industry is benefiting from the increasing

consolidations, mergers, acquisitions, corporate reforms and restructuring initiatives.
The number of corporate deals has been rising strongly in US and Asia-Pacific region.
Corporations across geographies have been considering mergers and acquisition
strategies to realize cost synergies against mounting oil prices; increased competition,
pricing pressures, gap in product mix and asset concentration.

The global investment banking and brokerage industry generated total revenues of
$57.5 billion in 2005, representing a compound annual growth rate (CAGR) of about
8.5% for the five-year period spanning 2001-2005. For this period, the leading
revenue source for the global investment banking and brokerage sector remained the
equity segment, which generated total revenues of $21.7 billion in 2005, equivalent to
about 38% of the overall industry value. On the other hand, the mergers and

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SWOT Analysis

acquisitions segment was worth approximately $19 billion, which represents about
33% of the industry’s value. In 2010 the global investment banking and brokerage
sector is expected to have a record value of approximately $86 billion, an increase of
about 49% since 2005. The CAGR of the sector in the period 2005-2010 is likely to
remain at about 8%. The increased demand for investment banking services should
see Citibank realize greater revenues from it securities and trading services.

Threats

High interest rates

The past few years have seen Central Banks impose higher interest rates to check
inflation and the overheating of regional economies. The US Federal Reserve has led
the way raising interest rates for the 17th consecutive time on June 29, 2006 to
5.25%. It is expected that interest rates in the US may reach 6% by the end of 2006.
At the same time, the Bank of England has maintained interest rates at a high of 4.5%
(at the end of May 2006) in UK. The European Central Bank (ECB) also raised
interest rates in June 2006 to 2.75%. During a high interest rate regime, the demand
for loans goes down as they become more expensive, which may adversely affect
Citibank’s revenues.

Basel II Accord

The Basel II Accord better aligns regulatory capital of a bank with its risk profile. The
Basel II Capital Accord requires banks to assess risk in each area of their business
and set aside adequate regulatory capital. Complying with the new qualification
standards requires comprehensive records of consistent, accurate and granular data
within the credit management information systems. The cost of complying with the
Basel II Accord has become a heavy burden for most banks. High compliance costs
could exert downward pressure on the margins of the company.

Consolidation in the banking industry

Consolidation in the banking sector appears set to continue in the US, Europe and
Germany. A number of large commercial banks, insurance companies and other
broad-based financial services firms have merged with other financial institutions to
diversify their offerings and reduce their corresponding business risks. On the back of
their enhanced size and competitive position, these institutions aim to increase their
market share and make the most of economies of scale, which could result in pricing
and margin pressure for the group in some product markets.

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SWOT Analysis

In fact, in the US banking industry, consolidation strongly continued in 2005. There

were 7,146 commercial banks at the end of March 2005, about 140 less than a year
earlier and about 770 fewer than the total number of banks at the end of 2000. In the
past few years the banking industry has seen some of the highest valued mergers and
acquisitions. These include the merger of UFJ Holdings and Mitsubishi Tokyo
Financial Group in 2005; JP Morgan’s acquisition of Bank One; and the acquisition of
FleetBoston Financial by Bank of America in 2003. Some of these mergers have
created the biggest banks in the banking industry intensifying the competition even
further. Ongoing consolidation in the international market is creating bigger rivals for
Citibank with resources matching that of its holding company (Citigroup). Some of
these consolidated companies may take away markets share from Citibank.

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Top Competitors

TOP COMPETITORS

The following companies are the major competitors of Citibank, N.A.:

Bank of America Corporation

Deutsche Bank AG
Federal Reserve Bank of New York
Franklin Resources, Inc.
HSBC Holdings plc
JP Morgan Chase & Co
Advest Group, Inc., The
American Business Bank
DVB Bank AG
BT Financial Group
First Banks Inc.
BankWest
Corporation Bank
Bendigo Bank Ltd.
Banco BBM S.A.

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Locations and Subsidiaries

LOCATIONS AND SUBSIDIARIES

Head Office

Citibank, N.A.
399 Park Avenue
New York
NY 10022
United States
P: 1 212 559 1000
F: 1 212 793 3946
www.citibank.com

Other Locations and Subsidiaries

Cititcorp Insurance Services, Inc. Citibank Overseas Investment Corporation

United States United States
CitiCapital Commercial Corporation Citicorp Leasing, Inc.
United States United States
Citibank International Citicorp Interim Services, Inc.
United States United States
Citicorp Credit Services, Inc. Student Loan Corporation, The
United States United States
Citibank Financial Investment Centre branch
Level 1
Rowes Arcade 215
Adelaide St
Brisbane
Queensland 4000
Australia

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