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Citibank, N.A.

Company Profile
Reference Code: 12678 Publication Date: Aug 2006

www.datamonitor.com
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CITIBANK, N.A.
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 Fax Web Address Revenues/turnover (US$ Mn) Financial Year End Employees SIC Codes

+1 212 559 1000 +1 212 793 3946 http://www.citibank.com 0

December 0 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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CITIBANK, N.A.
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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CITIBANK, N.A.
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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CITIBANK, N.A.
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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CITIBANK, N.A.
Key Employees

KEY EMPLOYEES

Name
William R Rhodes

Job Title
Chairman

Board
Senior Management

Compensation

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CITIBANK, N.A.
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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CITIBANK, N.A.
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
Affiliation to the Citigroup Strong Tier-1 ratio Strong mandates

Weaknesses
Weakness in Citibank Japan’s IT systems Decline in profits

Opportunities
Positive outlook for global banking industry Growing securitization in European markets Growing opportunities in investment banking

Threats
High interest rates Basel II Accord 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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CITIBANK, N.A.
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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CITIBANK, N.A.
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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CITIBANK, N.A.
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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CITIBANK, N.A.
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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CITIBANK, N.A.
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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CITIBANK, N.A.
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. United States CitiCapital Commercial Corporation United States Citibank International United States Citicorp Credit Services, Inc. United States Citibank Financial Investment Centre branch Level 1 Rowes Arcade 215 Adelaide St Brisbane Queensland 4000 Australia

Citibank Overseas Investment Corporation United States Citicorp Leasing, Inc. United States Citicorp Interim Services, Inc. United States Student Loan Corporation, The United States

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