Vikram Pandit - Chief Executive Officer Gary Crittenden - Chief Financial Officer Scott Freidenrich – Head, Investor Relations

Mike Mayo - Deutsche Bank John McDonald – Sanford Bernstein Guy Moszkowski – Bank of America - Merrill Lynch Meredith Whitney – Oppenheimer Glenn Schorr – UBS

(Operator Instructions) Welcome to Citi’s Fourth Quarter and Full Year 2008 Earnings Review, featuring Citi Chief Executive Officer, Vikram Pandit and Citi Chief Financial Officer Gary Crittenden. Today’s call will be hosted by Scott Freidenrich, Head of Citi Investor Relations.

Welcome to our Fourth Quarter and Full Year 2008 Earnings Review. The presentation we will be going through is available on our website at Citigroup.com. You may want to download it now if you have not already done so. The financial supplement is also available. On the call this morning is Chief Executive Officer, Vikram Pandit, followed by Chief Financial Officer, Gary Crittenden who will take you through the presentation. Afterwards we will be happy to take any questions you may have. Please limit follow up questions to one. Before we get started I would like to remind you that today’s presentation may contain forward looking statements. Citi’s financial results may differ materially from these statements so please refer to our SEC filings for a description of the factors that could cause our actual results to differ from expectations. With that said, let me turn it over to Vikram.

Our results released this morning are clearly disappointing and I can assure you that my number one priority is to return this company to profitability. In a few minutes Gary will take you through the earnings. I want to talk to you this morning about the strategic direction for Citi and really the strategic destination. Gary will then provide you a roadmap for restoring profitability and rebuilding our TCE. As you all know, the new management team has been here for a little over a year working on your behalf. As you also know, we came into this with a lot of embedded challenges. We recognize what we needed to do and we started to act quickly. For much of the year we’ve been dealing with dysfunctional markets which deteriorated even further after Labor Day. We kept working through all the dysfunctionalities. In May, at Citi Day, we outlined our three step plan; to get fit, to restructure Citi, to maximize Citi. For all of 2008 we focused on getting fit and as a result our assets were reduced from almost $2.4 trillion to $1.9 trillion. We had identified legacy assets which we have reduced to about $300 billion. Normalized expenses are down 16% to $12.8 billion in Q4 ’08 excluding one time items. We’re on track to achieving our targeted full year expense base of $50 to $52 billion. Headcount is down from 375,000 to 323,000 with defined plans to reach approximately 300,000 in the near term. Our Tier 1 capital ratio is up from 7.1% in Q4 ’07 to approximately 11.8% in Q4 ’08. We sold a number of small and large businesses and as you know, we added a lot of experienced talent to the company. It’s hard for people who are not here to truly understand the magnitude of change we’ve gone through at Citi. I really want to thank all of the people at Citi who have worked so hard to address all our challenges and accomplish so much in such a short time. As we’ve been getting fit, we have been continually focused on restoring profitability as fast as possible and positioning Citi for the markets of the future. The world is a different place than in May, and particularly post Lehman. The funding markets and capital markets have changed fundamentally. We’re all relying on funding support in some for or another. I’m sure many companies are rethinking how to architect themselves for the future. Considering the dysfunctional markets and the extent to which the world has changed, as well as the progress we had already made we’ve come to some conclusions about our future. First, there are businesses that we had exerted such as traditional asset management. Then we inherited some from acquisitions. For example we still have a few retail asset management businesses that are not core to our long term strategy. Secondly, the funding markets have changed and may have changed for the foreseeable future. We have to consider the impact on our strategies. We have concluded that certain aspects of our sales and trading business and our consumer lending businesses would be more challenged in this environment and need to be restructured. Thirdly, we have a pool of assets that are not necessary to our business. This includes the ring fence assets with the US Government loss sharing, some of these we have highlighted to you previously. Fourthly, we like the Smith Barney and Nikko cordial businesses. They’re good businesses and believe they have considerable value as evidenced by the transaction we just announced with Morgan Stanley. They do not really add sufficiently to our global strategy and they do add to management complexity. We’ve also come to the conclusion that our competitive advantage is our global presence which is rich in history and relationships. We have an irreplaceable franchise and this is the heart of our company. We have a presence in about 140 countries and we have built this over 200 years. Through this global network we’re helping the world globalize. We help local companies globalize. We help global company’s access local markets. We also have deposit making capabilities throughout the world which we can put to work with our consumers and institutional customers in a diversified way that produced the highest returns. That is what a global universal bank is. Given these conclusions we’ve decided to restructure the company into two; Citicorp and Citi Holdings. By implementing this, we can focus on maximizing the value of Citi by operating Citicorp as our core business and by optimizing Citi Holdings through rationalization and managing it through the cycle. With that has background let me briefly describe what’s in both and what we’re trying to achieve, first the strategic story and then the financial story. Let me begin with Citicorp. Citicorp is the global bank for businesses and consumers. Our distinctiveness is our globality. There are two parts to the business, the global institutional bank which includes our industry leading transaction services business that has a global network spanning 140 countries. Our institutional bank will encompass both corporate and investment banking and will remain a world class banking business providing a full range of services including advisory, underwriting, lending and market making. We’re committed to remaining a top tier player in this area. We’ll continue the process of de-risking and refocusing the sales and trading businesses towards more market making businesses. We have and will continue to exit several forms of proprietary risk taking. Where we continue to take principal risk we will only do so when we have proven teams and a clear source of advantage. We have reduced the capital in the securities and banking business significantly. The balance sheet in this business is down approximately 25% since the beginning of 2008 and we intend to operate the securities and banking businesses within Citicorp with approximately $700 billion of assets. We have great people and we’ve added substantial talent to those people. We’re building a risk culture that is consistent with our strategy. These changes and the accompanying risk profile will allow us to produce the desired consistent and stable earnings over time. We’ll continue to build our distinctive private bank that is well known globally and serves high net worth individuals including over 30% of the worlds billionaires. There are strong linkages between our private banking services and our advisory financing services. We are the number one wealth manager across Asia and the third largest in Latin America. Let me turn to retail banking. We have a strong presence in the US, Asia, Latin America, Central and Eastern Europe and the Middle East. This includes our credit card business in addition to our consumer and commercial banking business. The retail banking business is strongly positioned with good growth prospects. In the US our retail bank is well positioned in primary metropolitan areas with an attractive affluent and small business customer base with over 1,000 branches. Our branded cards business remains a top player. We’re already number two in Asia with a rich 100 plus year legacy. Going forward we’ll substantially expand our market leadership position and continue to focus on innovation particularly via technology. In Latin America we’re the leading local bank in Mexico with strong Central American businesses and an attractive presence in Brazil. In Central and Eastern Europe we’re a leading foreign player in Poland and Russia with smaller but still attractive positions in Hungry and the Czech Republic. Despite near term economic challenges we continue to see long term growth potential. The value of Citicorp is in its global scope and regional strength in its leading position in businesses and its linkages in terms of clients, products, funding, risk, costs, and infrastructure. For those of you who have followed the Citicorp of the past you know that this has been a great business for years, producing strong profitability and growth. Today, we have updated and clarified that strategy for the new age and I am very excited about its prospects. Let me turn to Citi Holdings. Citi Holdings includes a great set of businesses with strong market positions. However, they’re not central to the core Citicorp business and in many ways compete for its resources. Citi Holding has approximately $850 billion in assets and is designed to recognize the managerial needs of the underlying businesses by focusing on risk management and where appropriate accelerating and asset wind downs. In fact, we hope to make announcement regarding the CEO for this unit shortly. Our goal is to maximize its value by running these businesses well, restructuring and managing through the cycle and being alert to dispositions and combination possibilities. We plan to run the three businesses within Citi Holdings with dedicated and experienced management. Let me discuss each of them. The Brokerage and Asset Management business, these are excellent businesses with attractive returns. As I said, they’re not central to the core strategy of new Citicorp. The Smith Barney with Morgan Stanley joint venture creates the biggest brokerage network in the US. Citi and our clients will continue to benefit from the joint venture and the distribution power it will have. It’s as earnings upside that we participate in and the deal generates tangible common equity for us. Local consumer finance around the world, we have very strong consumer finance businesses in many countries including Citi Financial in the US. Some of these franchises are profitable today. Given the severity of economic downturn globally these need special attention as do consumer mortgages and private label cards both of which are included in this unit. Special asset pool, these include non-strategic consumer assets and securities and backing assets. All of our ring fence assets that are under the US Government loss sharing program will be managed from this business. Let me now turn to the financial story. First, this managerial shift is immediate. We’ll start managing the company consistent with this structure immediately and our management reporting will reflect this structure starting second quarter 2009. Our plan is to transition to this structure to the maximum extent and as quickly as possible and taking into account the interest of all our stakeholders including debt holders, preferred and common stock holders. We also recognize the major legal vehicle restructuring changes will require regulatory approval and resolution of tax and other issues. The new Citicorp will have assets of about $1.1 trillion and approximately two thirds of which will be deposit funded. It is our goal that approximately 80% of our profits will be driven by Citicorp and based on analysis we’ve done we expect Citicorp to be profitable in 2008 and going forward in similar markets. Our pre-tax earnings on a pro forma basis from this company would have been about $10 billion plus in 2008. Virtually all of the write downs will reside in Citi Holdings. With strong funding and relatively low risk over time Citicorp should a significantly high return, low risk higher growth business particularly because of its footprint in the emerging markets. The assets of Citi Holdings will be approximately $850 billion including all of the assets subject to loss sharing. We’ll focus on continuing to harness the value of Citi Holdings. We will maximize its pre-provision earnings with very attractive franchises in this unit. We’ll manage carefully to minimize loan losses and marks. We’ll maximize opportunities to monetize assets. The Smith Barney transaction represents and example of the approach and the significant value in these businesses and we will continue to look at all options this passionately. Let me sum up the separation. The separation is the result of strategic conclusions I outlined earlier and is responsible to the reality of the environment and the funding markets and is designed to position Citi for the markets of the future. We believe this is good for debt holders because there is no diminution of existing claims in any manner. There are improved prospects over time for a financial stronger Citigroup, greater realization of value from portfolio business. Again, there is no legal vehicle separation at this time. We believe this is good for shareholders. We can better contain the impact of our legacy assets through dedicated management. We can better manage the core businesses given reduced distractions and a simplified management model. We will be alert to disposition and combination possibilities but we’re not in a rush to sell businesses. We believe this best opens up the best and broadest range of options for Citigroup. Let me just spend a minute on capital. Earlier in 2008 we raised a lot of capital. At Citi Day I got a question about whether we raised too much. Clearly the markets have evolved from everyone’s expectations at that time. There are some concerns about our TCE. Let me first start by saying we have Tier 1 capital in excess of $118 billion. Tier 1 is the capital that supports our business. With an estimated Tier 1 capital ration of 11.8% this is what drives our business. The Government’s TARP investment in us and the loss sharing arrangement helped to ensure that we’re well capitalized. We look at it as a bridge to self capitalization and rebuilding of tangible common equity over time. We have a pact to rebuilding TCE over time. It starts with restoring profitability, monetizing certain assets in Citi Holding. There are other elements and Gary will take you through those in a minute. Gary will also take you through the details of earnings but for 2009 let me just make a few points on profitability. Obviously profitability will depend on revenue. Fourth quarter adjusted revenues indicate that our number of our core customer franchises continued to perform well. While the flows and therefore the revenues are linked to market and economic environment, our clients continue to be active and engaged with us. On costs for Citigroup we continue to believe we’ll be at $50 to $52 billion as we stated before. On risks we have reduced our risky assets significantly. We continue to hedge where possible. In our consumer businesses we’re bending the curve on losses. We have a smaller balance sheet. We have rink fence assets with the US Government. We’ve moved certain of our assets from mark to market to help the maturity accounts which should provide some reduction in earnings volatility. None of us have rose colored glasses on and understand how challenging the environment might continue to be. We’re anticipating that and doing what we can to get ahead of it. I intend to provide you with a lot more transparency about both Citicorp and Citi Holdings. I’m going to be speaking at the Citi Financial Services Conference not next week but the following week. Hopefully that transparency leads you to appreciate and understand the separation and as well gives you the information to understand the value of the franchises. Let me end by saying that I’m very excited about these moves that we made today. It focuses Citigroup on its strategic destination. We have clarity on how we’re going to get there. I’m going to turn it over to Gary to have him talk about clarity on profitability and getting to a higher level of TCE over time.

I’m going to start on slide one for the earnings discussion for the quarter. Slide one summarizes the main drivers of our fourth quarter results. Negative Securities and Banking revenues, significantly higher credit costs and restructuring charges were the main factors this quarter. There were three main components in Securities and Banking revenues. You can see these on the left hand side of the page. First, $7.3 billion of write downs and losses. Second, negative $2.5 billion in revenues in Securities and Banking private equity and equity investments. Third, negative $5.3 billion in revenues on our non-monoline derivative positions. Outside the above mentioned items, revenues were $21.2 billion. We saw our first absolute year over year expense decline since 2005 on a reported basis and this quarters costs include approximately $2 billion of restructuring charges and $563 million of an intangible asset impairment charge. Adjusting for the restructuring charge and for other press release disclosed items in all periods, the downward expense trend since the beginning of the year has continued. Credit costs were $12.7 billion in the quarter of $5 billion higher than last year. Together, the negative revenues in Securities and Banking and credit costs largely accounted for the quarter’s performance. I think when I mentioned the revenue marks I mentioned $7.3 billion and they were actually $7.8 billion in the quarter. During the quarter we also completed the sale of our German retail operations and our interest in Citigroup Global Services for after tax gains of $3.9 billion including current quarter hedge gains and $192 million respectively. I’m going to turn now to slide number two. This shows you our consolidated results for the quarter. To summarize fourth quarter results net revenues fell 13% year over year and 66% sequentially. Expenses were down 5% year over year. The cost of credit was up by $5 billion over last year primarily due to higher net credit losses of $2.6 billion and a $2.1 billion incremental net charge to increase loan loss reserves. These factors drove a loss from continuing operations of $12.1 billion for the quarter or a loss of $2.44 a share. Including the gain from the German retail banking operations and other discontinued operations items the total net loss was $8.3 billion for the quarter or a loss per share of $1.72. The EPS is based on a basic share count of 5.3 billion shares. We have performed a fourth quarter goodwill impairment analysis as we have done in previous quarters in 2008. In light of recent market and economic events and today’s restructuring announcements we are continuing to review goodwill to determine whether an impairment results. While goodwill impacts our GAAP financial statements, any resulting change would not negatively impact regulatory Tier 1 capital or TCE. We expect to complete our further analysis prior to filing our 10-K. I’m turning now to slide number three. Slide number three shows the components of the year over year decline in revenues. Adjusted for the marks we’ve taken in the Securities and Banking business, revenues for the quarter showed a $10.1 billion decline versus last year. In Global Cards, higher credit costs flowed through the securitization trusts and drove the $2.4 billion negative impact from securitization. Managed revenues were up 6% excluding the impact of foreign exchange and prior year gains. In Consumer Banking lower mortgage servicing revenues, declining investment revenues driven by sharply lower investment sales and asset values, spread compression, and foreign exchange were the primary drivers of the revenue decline. Securities and Banking had a difficult quarter and was the primary contributor to the year over year decline for the reasons that I mentioned earlier. The decline in wealth management revenues largely was due to the following asset values and decline in the capital markets most acutely in the US and Asia. Slightly offsetting these declines was Transaction Services where growth in balances and business wins in Treasury and Trade Solutions were offset partially by a decline in security services. Adjusting for the securities and banking items that I previously mentioned including the $7.8 billion in revenue marks the $2.5 billion in private equity and equity investment losses and $5.3 billion in negative revenues on our derivative positions from movements in credit spreads, revenues for the quarter would have been $21.2 billion. Slides with the details on the results for each of our businesses are included in the appendix of this presentation. I’m turning now to slide number four. The graph on slide four shows a nine quarter sequential trend of net interest margin for the company. Net interest margin for the quarter is 3.22% a 73 basis point improvement over last year and a nine basis point improvement over last quarter. Benefiting net interest margin this quarter was a decrease in overall funding rates versus the prior quarter which reflected the Feds rate cuts at the end of October and in December. Average interest earning assets were down by approximately $70 billion versus the prior quarter driven by a decrease in trading account assets and loans. Slide five shows the trend of our expense growth. The benefits of our reengineering program are clearly evident as the decline in expenses continues. Expenses fell 5% versus last year due to tight expense controls that we have been implementing during the course of the year. This quarter there are two factors to consider in comparison versus last year. First, we incurred approximately $2 billion in repositioning charges and second an intangible asset impairment charge of $563 million related to Nikko Asset Management. In the prior year period there were also two components. They included $539 million in repositioning charges and $306 million due to the Visa related litigation exposure. Excluding these four factors, expenses on a business as usual basis were down 16% versus last year. Excluding the impact of FX, reported expenses would have been essentially flat. Sequentially, expenses increased 6% due to the restructuring charge and the intangible asset impairment which were offset partially by the repositioning and auction rate securities charges last quarter. Excluding these expenses were down 8% sequentially. Looking at the chart on the right you can see that adjusting for the repositioning charge and the intangible asset impairment our expense base for the quarter would have been $12.8 billion. I’m turning now to slide number six. This graph indicates that we have continued to reverse the year over year headcount growth. Divestitures accounted for about half of the 14% decrease. December was the 14th consecutive month in which we have reduced our headcount. We will generate additional reductions from the three areas that are shown on the right hand side of the page. First, 5,500 from those who are on notice and who have stopped working but whom technically remain on the company’s payroll through the notice period. Second, 1,700 from the divestiture of Citi Technology Services which is expected to close in the first quarter. Finally, 15,000 from reductions for which we have already booked a reserve. Taking all this into account we expect to reach our target of 300,000 over the course of the next six months. Side number seven shows the key drivers of the year over year growth in our cost in credit. Net credit losses were $6.1 billion and higher than last year by $2.6 billion. Consumer Banking and Cards in North America comprise $1.8 billion or about 70% of the increase. In the Institutional Clients Group net credit losses increased by $294 million to $1 billion reflecting mortgage related and financial institutional exposures in Europe and a generally weakening corporate credit environment. The loan loss reserve build was $6 billion for the quarter higher than last years fourth quarter build by $2.1 billion. The allowance for loan losses on our balance sheet now stands at $29.6 billion. The $2 billion of loan loss reserve build was in the North American residential real estate portfolio and in North American cards. Additionally, we added reserves to our Auto and Personal Loans portfolio. With the addition to reserves in our North American Mortgage business we are at a 14.8 month coincident reserve coverage ratio for the residential real estate portfolio, 15.7 month and 13.8 months of coincident reserve coverage in our first and second mortgage portfolios respectively. In North American Cards we have increased our coincident coverage ratio to 12.8 months. Our serve build in Cards and Consumer Banking also reflects incremental reserves for loan modification activity with our customers across all our product lines. In Securities and Banking we added $2.2 billion net to our loan loss reserves. Of this, $1.6 billion was due to reserve builds for specific names including $1.2 billion for LyondellBasell. Of the remaining $0.6 billion the majority reflects deterioration in certain segments of the loan portfolio particularly highly leveraged industrial and commercial real estate borrowers. Turning now to slide number eight, most of you are familiar with this slide which charts the net credit loss ratios of our North American Cards and First Mortgage portfolios as well as the unemployment rate. Looking at the green line at the bottom you can see that the first mortgage NCL rate has essentially reached the peak which we experienced in the fourth quarter of 1992. Given the elevated first mortgage NCL rate that persisted after the peak in early 1990s as you can see on the left hand side of the page, and the ongoing deterioration in the current period we could see above average losses for the next several quarter to come. Turning to the Cards NCL rate you can see from the red and blue line that the loss rate has surpassed the early 1990s recession peak by 160 basis points. Given current estimates of rising unemployment into late 2009 or early 2010 we could expect to see the Cards NCL rate continue to rise. Turning to the yellow box at the top of the page you will see that the loss rate for Citi Branded cards, our largest portfolio remains well below our retail partner’s portfolio. That said, the NCL rate for both continued to accelerate in the quarter. It is unclear how closely credit loss behavior in the current recession will correlate with the 1990s recession. Loss rates in cards have now surpassed their historic highs while in first mortgages the rate is rapidly approaching the previous peak. Trends in international consumer remain substantially unchanged from last quarter and we have provided additional detail on this in the appendix. Slide nine shows the historic corporate default rates and our corporate loan loss ratio at the top. It shows historical corporate reserve build at the bottom. Investment grade and non-investment grade defaults have been trending upward since late 2007. We have been increasing our loan loss reserve ratio over the same period which is visible in the red line at the bottom. As it is apparent there has been a correlation between corporate default and the rate at which we add to our loan loss reserves. Turning to the reserves, we show the split between general reserve builds in blue and the FAS 114 or reserve build for a specific counterparties in gray. Specific reserve builds tend to be episodic by nature and are therefore unpredictable but still closely correlated to the rate of corporate defaults. This quarter’s $1.2 billion build for LyondellBasell is an example. In addition, since the second quarter of this year we have been building general reserves reflecting overall weakness in the corporate credit portfolio. Moody’s projects a 15% corporate default rate in 2009 for non-investment grade companies. Given the historical correlation between corporate default rates and our reserve builds it is possible that we may continue to add to our non-specific reserve balances. Slide number 10 provides the assets on the covered assets for which we have a loss sharing agreement with the US Government. On November 23rd we announced an agreement with the US Government to share losses on approximately $306 billion of securities, loans and commitments backed by residential and commercial real estate among other assets. That agreement has now been finalized to include $301 billion of assets. The agreement stipulated that while these assets would remain on our books they would be ring fence and receive and additional risk weighting benefiting our capital. Under the agreement Citi assumes the first $30 billion of pre-tax losses in addition to our existing reserves and assumes 10% of the remaining losses above the amounts. Since the announcement on November 23rd, we, along with the US Government have concluded a detailed review of the composition of the covered assets. There are three factors under the current agreement that most affected this composition. First, assets originated after March 13, 2008, would be excluded. Second, any foreign assets under a fairly broad definition of the term foreign would be excluded. The final factor which was a term added subsequent to September 23rd is that the loss sharing is determined on a portfolio basis. In other words, gain on the recapture of the liquidity premium and the recoveries related to the covered assets are netted against the covered losses across all of the assets in the portfolio. As the result of this final condition certain mark to market assets such as the ABCP CDO Super Senior Portfolio which totals approximately $9.9 billion have been excluded from the ring fence assets. What we have shown here is a breakout of these assets by loans, securities and unfunded commitments. There are four main categories of the assets in this portfolio. First, $192 billion of funded consumer loans comprising primarily of first and second mortgages. Second, $26 billion of corporate loans including leveraged finance and commercial real estate loans. Third, $32 billion from various corporate securities. Fourth, $51 billion of unfunded commitments primarily home equity and other corporate lines. Only $5 billion of the total corporate portfolio consists of mark to market assets. You can look at our website and you can get additional information on this loss sharing agreement. As I mentioned, as a result of this loss sharing agreement we will have a reduced risk weighting against the assets that are in this portfolio. Slide 11 shows an historical trend for our asset balances where we have made significant progress in reducing them. Since last years third quarter we’ve reduced assets by approximately $413 billion. We’ve done this in a number of ways including divestitures and a methodical effort to sell assets which we anticipate will continue into 2009 particularly in the context of what Vikram has discussed earlier this morning. Slide 12 shows the Tier 1 capital ratio and our structural liquidity position on the left side and our tangible common equity on the right. The Tier 1 capital ratio at quarter end was approximately 11.8%. The Tier 1 ratio benefited from the $7 billion preferred issuance related to the covered asset guarantee is expected to be approximately 30 basis points. The higher ratio versus the third quarter primarily reflects the issuance of preferred shares under the TARP program, the reduction in risk weighted assets as the result of the overall reduction in assets including asset sales and the benefit of the government guarantee on the covered asset portfolio. This was partially offset by an increase in the Tier 1 disallowed deferred asset. Losses incurred in the quarter and higher risk weighting on assets that were reclassified during the quarter. We increased our structural liquidity from 55% of assets in last years third quarter to approximately 66% at the end of this quarter. We achieved this through a combination of growing equity and shrinking assets which was offset partially by lower deposits and long term debt. We finished the quarter with tangible common equity of $29 billion, down from $44 billion at the end of last quarter. The largest component of the decline was an additional $11 billion in other comprehensive income otherwise known as OCI. Of the $11 billion change in OCI $4.6 billion came from foreign currency translation adjustment otherwise known at CTA. For the full year, the CTA contributed approximately $7 billion to the change in OCI. Based on the countries where we do business movements in the CTA are most sensitive to the changes in the Peso, Yen, Pound, Sterling and Euro. Changes in foreign currency translations are normal, however, this quarters change was much higher than in the past reflecting the significant weakening of some foreign currencies against the US dollar. Additionally, approximately $3.3 billion of the change in OCI is attributable to the change in net unrealized losses on available for sale securities. These AFS marks are exacerbated by the severe illiquidity in the market. By definition these AFS marks have been determined to be temporary and are expected to accrete back to their face value over the life of these positions. Looking at the factors that we’ve already quantified that could potentially benefit tangible equity we have first, approximately $6.5 billion from the joint venture transaction between Citi and Morgan Stanley when it closes and secondly, approximately $7.5 billion from the conversion of the ADIA mandatory convertible preferred stock. The first tranche in the amount of $1.9 billion is scheduled for conversion on March 15, 2010. Citi’s total deferred tax asset at year end 2008 was approximately $44 billion. The DTA is mainly composed of US source book tax timing differences related to loan loss reserves; US sourced net operating loss carry forwards and foreign tax credit carry forwards. There were several factors considering and determining whether evaluation allowance would be necessary including the fact that the carry over period for net operating loss utilization is 20 years while the foreign tax credit carry over period is 10 years. We concluded that these DTAs are expected to be realized in the future periods and therefore evaluation allowance was not needed. We will continue to review the DTA each quarter as the economic environment changes and we proceed with our planned reorganization. Turning now to liquidity, the combined parent and broker dealer entities continue to maintain sufficient liquidity to meet all maturing unsecured debt obligations due within a one year time horizon without accessing unsecured markets. Reserves of cash and highly liquid securities were $66.8 billion at the end of the quarter compared to $50.5 billion at the end of the prior quarter. Citigroup and other US financial services firms are currently benefiting from numerous government programs that are improving markets and enhancing our current liquidity position. At year end, the weighted average maturity of our Citigroup Inc. senior unsecured borrowings was 6.9 years, relatively unchanged from the seven years at year end 2007. We also reduced our commercial paper program from $34.9 billion at the end of 2007 to $28.7 billion. I’m turning now to slide number 13 which shows the nine quarter trend in our deposits. Deposits in the US shown in the blue bar increased by $13 billion sequentially. We saw increases both in retail banking deposits as well as a substantial increase in average transaction services deposits in the US. In retail banking average deposits in the US grew by almost $5 billion. As I mentioned last quarter our transaction services had deposit inflows of approximately $55 billion in the last two weeks of that quarter, most of which was in the US. That inflow, along with the continued deposit gathering in the US increased average deposits in North America by $22 billion sequentially. Internationally average retail banking deposits were down 3% sequentially excluding the impact of foreign exchange. Some customers continue to rebalance their portfolio for insurance purposes particularly in countries such as the UK which was partially offset by new deposit inflows. Average deposits in transaction services internationally were up 1% sequentially excluding the impact of foreign exchange. Turning to the securities and banking on slide number 14, the slide shows the major components of revenue for the quarter. First, the $7.8 billion in disclosed revenue marks. Second, the $2.5 billion in private equity and equity investment losses driven by the slowdown in global equity markets and assets value declines. This category is inherently unpredictable and this quarter had a particularly outsized impact on our revenues which we have highlighted here. Third, a $5.3 billion negative impact from the movement in credit spreads on our derivative positions which I will address in more detail on the next slide. Taken together these items accounted for $15.6 billion of negative revenues in Securities and Banking which implies that excluding them would result in $5 billion of positive revenues. Slide 15 shows the significant impact from the movement in corporate credit spreads on our fourth quarter results. The top graph shows an historical trend of three metrics. Citi’s Bond spreads in green; Citi’s credit default spreads in red, and finally the CDX High Grade index in blue which is a depiction of overall corporate credit default spreads. The graph shows historically Citi’s Bond spreads and credit default spreads have moved closely together and therefore we have used Citi’s credit default spreads a more liquid and more easily accessible metric to determine the fair value of liabilities on which we elected the fair value option. However, bond spreads and corporate default spreads began diverging toward the end of the third quarter but it was not clear at the time if this trend would persist. The trend continued through the fourth quarter. As the result of this divergence we made the decision to use bond spreads to estimate the impact of our own credit in the calculation of the fair value of those liabilities for which we elected the fair value option. As the top graph shows while our credit default spreads tightened during the quarter our bond spreads widened driving a $2 billion gain from the impact of our credit on debt for which we have elected the fair value option. Had we continued to use credit default swaps in the quarter we would have reported a loss of $500 million. We have historically used and continue to use our credit default spreads to determine the mark to market loss or gain on our derivative liability positions and counter party credit default swaps to mark to market derivative asset positions including our exposures to monolines. Historically the two have been closely correlated as well as shown in the graph and therefore the impact on our essentially matched derivative asset and liability positions have offset one another. During the quarter the two TARP infusions resulted in a tightening of our CDS spread which you can see on the graph. This resulted in a negative CVA of $833 million on our derivative liabilities. Corporate credit spreads across virtually every credit rating category widened substantially which led to a $4.4 billion mark to market loss from the credit value adjustment related to our non-monoline derivative asset positions. Together, we recorded a negative $5.3 billion impact on our credit derivative positions which I showed on the previous slide. Again, just a minor correction here the negative CVA on our own derivative liabilities was $883 million not $833 million. The volatility in credit spread along with the divergence of historical relationships had a significant impact on our results this quarter. Slide 16 shows the asset reductions in seven of the categories that comprise the majority of the marks each quarter. The first two columns show our total exposures in several key risk categories at the end of 2007 and 2008. As you can see from the green column in the center we have reduced all but one of these categories, while the majority of these reductions are driven by liquidations and sales, mark to market losses also contributed to the declines. The numbers also reflect reductions through various hedging strategy. The total reduction in these exposures in the seven asset categories over the last year is $115 billion. The increase in auction rate securities was due to the settlement announced in August which caused us to repurchase these securities from certain clients. The last two columns show how much of each of the total exposures in each asset categories are in mark to market at the end of 2007 and 2008. Here the reduction has been $159 billion which is greater than the reduction in exposures reflecting that we have moved many of these assets held to maturity accounts. While this accounting change will not reduce risks associated with this portfolio it has the potential to reduce earnings volatility associated with them. This would imply that the rate of decline in our assets in the future may be somewhat slower than has been in the past few quarters. Slide 17 shows the write downs and other transactions for each category of our direct sub-prime exposure. The total write downs including higher credit related costs for the quarter were significantly higher than for the third quarter. They amounted to $4.6 billion as shown towards the bottom of the slide including $3.9 billion taken against super senior net exposures of $16.3 billion shown in the middle of the first column and $705 million taken against the lending and structuring position of $3.3 billion. We started the quarter with a total sub-prime exposure of $19.6 billion and we ended with $14.1 billion as shown at the bottom of the last column. The discounted cash flow methodology and related assumptions used to value the positions generally remain consistent with what we did last quarter and have been described in detail on previous earnings calls. As I described in the last earnings call our valuation methodology uses a discount margin that is calibrated to the price of the underlying instruments such as the ABX indices and other cash bond marks. As a result of the significant decline in the values of these underlying instruments the discount margins increased significantly this quarter particularly for the ABCP exposures which is the primary contributor to the write downs. The credit value adjustment related to the monolines for the quarter was $897 million as is shown toward the bottom of the slide. At quarter end our CVA balance was $4.3 billion and the market value direct exposure increase to $6.8 billion from $6.6 billion during the fourth quarter reflecting in part the settlement and termination of transactions having a notional amount of $1.5 billion. Now to wrap up let me discuss some factors which you may want to consider as you think about our results for 2009. First on revenues, starting with the number that we showed you on slide number three, $13.4 billion after adjusting for marks and press release disclosed items which by nature can be episodic and not predictable there are a few additional things to think about. A $5.3 billion negative impact from credit spreads and the impact that had on our derivative positions. While spreads will continue to move around with some degree of volatility it is somewhat unusual for our derivative positions to have a credit value adjustment of the order of magnitude that we saw this quarter. As I explained earlier much of this had to do with specific events that occurred during the quarter. The second factors to consider when thinking about revenues is approximately the $2.5 billion of negative revenue from private equity and equity investments to the extent that equity markets recover these valuations could improve. Adjusting for the above items would bring you to revenues of $21.2 billion for the fourth quarter. Looking to 2009 there are a few additional factors to consider. First, the impact of re-pricing our credit card portfolio. We have done a very thorough analysis of our card portfolio and have made pricing adjustments which are expected to mitigate the credit costs in the business. Second, two TARP investments along with the asset guarantee have provided us with significant capital, most of which is yet to be deployed. We are considering the use of this capital very carefully and will put it to work in a way that is best for our clients, the markets and for our shareholders. This will generate additional revenues that would otherwise not have been reflected in our historical numbers. Of course preferred dividends related to preferred stock ownership will reduce earnings to the common shareholders. Third, as we have moved certain assets to maturity accounts, because we believe the current level of pricing makes them attractive opportunities. As a result we expect to see some revenue accretion due to the liquidity related marks on these assets over time. Finally, we continue to divest non-strategic businesses such as our German retail banking operations and we expect to record gains on these transactions which will benefit revenues. Offsetting these positive factors could be continuing marks on certain exposures which while reduced, still exist. Moving to expenses, as we said on November 17, we are targeting a full year expense base of between $50 and $52 billion. As you could see from our results this quarter we’re on track to achieving these expenses. Credit costs will remain a headwind during 2009. First on consumer credit we have said that based on our current assumptions and scenario planning estimates as we go into the first half of 2009 we expect NCLs for our consumer portfolios to be $1 to $2 billion higher each quarter when compared to the NCLs in the third quarter of 2008. We believe that they will be at the higher end of this range. On loan loss reserves we said that assuming that unemployment peaks toward the end of 2009 we would be coming to the end of significant additions to our consumer loan loss reserve over the next few quarters. Our assumption on employment hedge change and based on current data we believe that unemployment could peak as late as the first half of 2010. This implies that we will most likely continue to hedge our reserves until the end of 2009 and could see the end of significant additions by the end of this year. Corporate Credit is inherently difficult to predict. It would be reasonable to assume that as corporate default rates rise we expect to continue to add reserves and we will likely see higher net credit losses. To sum up, while numerous risks remain, we have taken many steps to potentially mitigate their impact. First we have built reserves and our total allowance stood at $29.6 billion at quarter end. Second, we have completed the covered asset agreement with the Government which provides significant protection on $301 billion of assets and commitments on the downside. Finally, we have moved certain assets from mark to market account to held to maturity which could provide some reductions in earnings volatility. Taken together the company has made very significant progress in de-risking its balance sheet and building a strong basic capital to generate future earnings. With that let me now open it up for questions and answers.

(Operator Instructions) Your first question comes from Mike Mayo - Deutsche Bank Mike Mayo - Deutsche Bank: Can you elaborate more on Citi Holdings? I understand that helps you focus more on risk management, maybe accelerate some dispositions, maybe helps you save some expenses and really gets the firm focused on what’s core and what’s not core. Is this a step toward any eventual spin off or will there be additional capital raised so you can take mark downs? How far beyond are you going then simply separating out the bad stuff into a new structure?

As I said before this is a managerial separation and that’s where we’re starting and we believe there’s a lot of value in clarifying focus on these things and having them managed in a way to harness value. What I also said we are working on getting this separation done as quickly as possible. It may translate into us thinking through legal and tax and other implications or legal structures but that’s now where we are today. It could open up options but I want to be very clear that we’re doing this in a way that takes into account the interest of all of our stakeholders including debt holders, preferred holders and common holders. Mike Mayo - Deutsche Bank: Of the $850 billion of assets $300 billion is the ring fence assets and the rest of it if you could just break it down in the major chunks by assets?

I will, and if you have a little of patience when we get to the Citi Financial Services day you’ll have a lot of information. Mike Mayo - Deutsche Bank: To be clear, you said Citi Holdings would include Consumer Mortgages, Private Label, Credit Cards and then the banking asset management business.

Not banking, brokerage. Mike Mayo - Deutsche Bank: That includes all the subsets?

Yes, it includes all of that that is correct.

Your next question comes from John McDonald – Sanford Bernstein John McDonald – Sanford Bernstein: A question on the covered asset pool will you use normal loan loss reserve accounting for that or it seems like you have a $9.5 billion reserve for those loans. As losses start coming in will you start drawing down that reserve?

No, we’ll have a normal loss reserving against this pool. Obviously over time as we exhaust the first loss associated with these assets and actually work through that and we have no exposure on the remaining amount of assets then the asset reserve that we have remaining against the assets against which we don’t have any loss exposure comes into play and allows us to use some of that loan loss reserve. For the initial period here hopefully we don’t go through that $30 billion. For the initial period it will be just normal loan loss reserving against that portfolio. John McDonald – Sanford Bernstein: That $9.5 billion you’ll keep that and provide as you would as if they weren’t covered?

That’s correct. John McDonald – Sanford Bernstein: Under the new structure would there be any change in the scope for the investment bank under the separation under Citicorp, risk activities, the scope of activities?

I talked about that briefly particularly in the sales and trading business I took you through the facts that our focus is going to be much more streamlined, market maintaining, prop trading only where we do have the right teams and really in advantage. Overall, effort to manage it with a much smaller amount of assets compared to where we’ve been. All that focus is still there. Don’t forget the true distinctiveness of our corporate investment banks comes from the multi-national clients we have around the world. Therefore we’re going to have an increased focus on some of the larger companies that need our services even more. The overall focus is that our distinctiveness is our globality and we want to serve those clients that value it most. John McDonald – Sanford Bernstein: Aside from the write downs and we know it was a difficult quarter for everybody could you give us a little bit of color on the core trends at your investment bank this quarter where you saw signs that maybe you’re getting some market share with the dislocation of the investment banks?

There are frozen ponds on both of those. There are certain businesses that actually did extremely well around the world. Then there were others that were challenged because the market conditions. You know which ones they are but things like our emerging market businesses did extremely well particularly in FX areas etc. By and large, what I will say to you is that this is an environment where a lot of clients need a lot of things and a lot of services and we’ve been lucky enough that they’ve been turning to us in investment banking. Those dialogues continue to be extremely active. We’ve benefited by that. John McDonald – Sanford Bernstein: Are you going to be restating your financial supplement and the way you present yourself in the near term will we get a new update on how you look at yourself managerially differently?

We are. We know you look forward to having a change in the supplement layout. We apologize for making that change but we really do think it’s very fundamental to the understanding of the company to split it along the lines of Citicorp and Citi Holdings. By the time we report at the end of the second quarter we hope to have made that split in our accounting. John McDonald – Sanford Bernstein: By the end of the second quarter?

By the end of the second quarter, correct.

Your next question comes from Guy Moszkowski – Bank of America - Merrill Lynch Guy Moszkowski – Bank of America - Merrill Lynch: I want to revisit a question that came up a couple minutes ago but maybe ask it a little differently. As you split this managerially and people start to think about the core businesses versus what will over time be managed down or separated it seems to me that it does highlight for people the need for capital for both and with, as you pointed out, your TCE down to about $29 billion this quarter notwithstanding the fact that some of it’s the OCI stuff that you talked about and there is some new capital rolling in over the next couple of years. It does seem thin and it seems basically as if all of that capital needs to be directed towards Citi Holdings and it kind of articulates the need for capital for the ongoing businesses. Do you have any capital raising plans? How do you think you can avoid that type of thought process for people?

The first thing I would say is that it’s always better to have more capital than less capital in general terms. We clearly think about it that way. We believe that we have very strong Tier 1 capital. As Vikram said in his introductory comments we view the Tier 1 capital that we have received from the Government as the primary way that we think about our capital and it obviously provides us a bridge as we increase the amount of tangible common equity that we have. If you think about these businesses there’s a very strong deposit base associated with the left hand side or with the Citicorp side of this entity. Then obviously you have asset rich businesses that are part of Citi Holdings. If you think about how this could evolve over time and if you think of Smith Barney as an analog for the kinds of things that could happen on that side of the business there are ways by focusing on these assets that we could generate capital, we could generate capital in the case of Smith Barney without taking a material impact on our earnings going forward at least based on the projections that we have done so far. We’ve made pretty good progress in reducing assets. Since we announced the legacy asset pool back in May I think we’ve reduced the total legacy assets by about $160 billion or something like that. That was roughly 25% of the total. A significant percentage of that total came down over the course of the last seven months and we’re going to do the same thing on those assets that are in the special asset category. Finally I would say that some of these asset categories simply roll off with time. You’ve got mortgages here, you’ve got auto loans here, you’ve got student loans here, and you have categories on that right hand side that mature with time. We think we’ve got a very strong capital base today. We think we’ve got a good plan for how to think about the business going forward. We think better transparency about the business is always a plus and you’re going to have better transparency about the individual components of the company with both having a very clear plan for how we’re going to manage them. Guy Moszkowski – Bank of America - Merrill Lynch: Have you begun exploring the potential sale of Primerica or is that a process that presumably only just now gets started.

We never talk, as you know, about what we have with individual businesses. What I can tell you is that’s a terrific business. It’s got a great leadership team. We value Rick and John enormously and the contribution that they make to the company. That’s a great business. There are other great businesses in the Citi Holdings franchise. It includes Nikko cordial; it includes our Citi Financial business in North America. There are some really outstanding businesses in Citi Holdings. We’re in no rush to necessarily separate ourselves from these businesses but we clearly have a long term plan and today is the first step in the process of clarifying how the company evolves over time. Guy Moszkowski – Bank of America - Merrill Lynch: I know you did explain it but there where a lot of things to capture I’d love it if you could explain how you had a $2 billion positive value adjustment on Structured Liabilities when your spreads actually narrowed?

I probably had you misunderstand me a little bit. Let me explain exactly what happened. As regards the normal derivative contracts, I’ll start with that then I’ll move to the second piece. Regarding our normal derivative contracts we had an overall loss there because the spreads on our own CDS widened out and the spreads on assets also widened. The combination of those two things together contributed to a higher loss. On our own debt we have transitioned the way we are calculating the credit value adjustment to utilize our cash bond spreads. Our cash bond spreads were significantly narrower in the quarter. As a result of that you can see that on the chart that I showed in the deck we have the $2 billion pick up. Guy Moszkowski – Bank of America - Merrill Lynch: On the Lyondell reserve the $1.2 billion that’s obviously a pre-tax number isn’t that less than what you said in the press release last week?

I believe that’s the same number but we’ll double check and let you know. Guy Moszkowski – Bank of America - Merrill Lynch: The net interest margin improvement that you talk about I was wondering if you could go over the sources again because is it primarily within S&B when you look at it on a business line basis because I’m certainly having trouble seeing it when I look at the consumer unit.

Yes, it is primarily in S&B. There was some yield compression as you property point out. That was offset by the benefit that we got from lower funding costs. There was the lower funding cost that we’ve now had happen throughout the course of this quarter and the net of that lower funding cost delivered the wider net interest margin for the quarter.

Your next question comes from Meredith Whitney – Oppenheimer Meredith Whitney – Oppenheimer: Had you done anything differently this quarter with your charge off, meaning did you sell them early, have you been working them out? The recovery rate dropped again and that’s an industry wide problem but I was wondering if you were doing anything different with that?

We haven’t done anything differently with our charge off rate methodology. Meredith Whitney – Oppenheimer: No, in terms of how you’re managing the charge off. I’m talking accounting I’m talking about an operations standpoint.

Operationally we’re doing a lot. We’re doing a lot on loan modifications on the mortgage portfolio. We’re doing a lot with credit card customers. There’s a very significant effort within the company. I think Vikram used the term to try and bend the curve that is to try and have a positive influence on where we think loss rates would go over time. Those loan modification programs obviously could be having the impact that you’re seeing. Meredith Whitney – Oppenheimer: I’m referring to, in loan modifications in terms of cram downs or the loan modifications because that’s still working out as far as I understand. I’m talking about in terms of cards, are you working these loans out yourself or are you using third party agent?

In general we work these loans out ourselves. It depends on where a loan is in its life. I don’t know the specifics of the detail here. Generally we work these loans out ourselves. There are certain loan categories when they get to be very, very old and past due then we occasionally bring in third parties or sell these assets to third parties that kind of activity takes place. Meredith Whitney – Oppenheimer: Of the things that are in the Holding company specifically the private label portfolio anything up for sale, is that a good understanding?

Here’s the way I would think about it. I would put it in the context of what I just said. There are some very good assets in the Citi Holding side of the portfolio, assets that we feel very positively about. I think Vikram used the terms that we’re not in a rush to sell anything. That accurately captures this. These are good businesses that we have as part of the company. What we’ve tried to do with this is provide strategic clarity and managerial clarity for these businesses going forward. What we’re going to try to do is over time manage them to ensure that we protect the shareholders and that we enhance the value that we have for our shareholders and protect other key stakeholders like bond holders and debt holders. Meredith Whitney – Oppenheimer: Given the fact that the Government has obviously put a lot of money into the company, have they in any way said they want you to limit your risk exposure overseas and is that why loan balances have pulled back dramatically. Otherwise you’re taking on risk beyond the US and providing liquidity beyond the US consumer.

The answer to that is no. I don’t even know I would qualify that but its no.

Your next question comes from Glenn Schorr – UBS Glenn Schorr – UBS: Did the Government have anything to say about the Smith Barney decision? Was the Smith Barney deal decision solely that of Citi management team?

We made that decision, that’s clearly true. It was our decision very clearly. You know about regulated banks and financial institutions we constantly talk to our regulators. That conversation is different from decision making we made this decision. Glenn Schorr – UBS: The split is interesting between Citicorp and Citi Holdings is the main reason you’re not there yet from a tax and regulatory and legal perspective the funding and how you split out assets is that the obvious reason that that takes a lot more time?

The way I would think about it is that there’s a whole series of reasons. The first and primary reason to do this is to ensure that we have real strategic clarity about the long term destination of Citicorp. That was the first think Vikram said, have real strategic clarity about what it is. To allow those of you who follow us very closely to have a clear picture in your mind of what the structure is going to look like, what that business looks like and the characteristics of it and how attractive that underlying franchise is. There are, as you correctly point out, lots of things that would have to happen before you would ever consider having these businesses operate independently. There’s intertwined legal entities, Meredith just mentioned the private label card business, I’m sure there is combined legal entities between the various parts of our card business. All of that will take a very long time to sort out. You have to start that process at some point. What we’re doing actually today is taking the first step in that process. The first step in the process is to separate organizationally. The second step in the process is to make sure that we have the accounting separated properly. The third step in the process could lead us to do legal entity separation. Then that opens up a broad range of options for us. All being conscious during the entire time of the broad range of stakeholders that we have here; the employees, the bond holders, and the shareholders. That’s the way we’re thinking about this. Glenn Schorr – UBS: A quick thought on the loan modification bill and the overall feel for what that means for the potential to accelerate losses and then the impact on the securitization markets that you feel, if the bill gets passed in current form what that would mean?

We have been very active in loan modification for a while now. The numbers of loans that we’ve modified are quite large. Those loan modifications can vary from very minor kinds of things to much more significant factors. The impact that has on us and the way we account for it depends a little bit on where in the process you actually intervene and have the loan modified. Without putting two fine a point on it I could say that our efforts are very targeted on trying to have an impact on bending what our loan loss curve is over time not increasing that. As you can see, there have been some pretty substantial increases in our loan losses in the mortgage portfolio so we’ve got a lot of work to do there. We’re actively engaged in that and as you know are supportive of that bill. Clearly our overall effort is to try as much as we possibly can to eventually bend the curve on these losses. Glenn Schorr – UBS: At current levels, you might not want to tell me, do you have a process of being able to track that original $29 billion of first loss position in the $301 billion where that mark to market is, how much of that first loss position is starting to move through, do you have the ability to track that?

There’s going to be rigorous reporting requirements around the $301 billion as you might imagine. There is a head of this business that’s been appointed; Rick Stuckey actually runs this business. It will have normal reporting around that. We’ll share that reporting with you. Obviously the US government is very interested in that reporting. We obviously signed the agreement last night and finalized the last assets that are going to be part of that portfolio last night. We will have very specific reporting around this and that will be available to you and to others. Glenn Schorr – UBS: Is it possible to do any sort of debt for equity swap for you guys or for anybody else for that matter anywhere part of the capital structure that you can push a consolidation where you flip the script on the cap structure?

Theoretically you are aware obviously of circumstances where people have done that in the past so theoretically possible. What we described today I think is clearly how we’re thinking about the business. The way we’re thinking about our Tier 1 capital, the way we plan to manage our Tier 1 capital, the way we’re thinking about our tangible column and what we have on the horizon for managing our tangible common. That’s where our thinking currently is.

That concludes our call today. Thank you all for joining and if you have any follow up questions please feel free to contact Investor Relations.