Fitch Downgrades Citigroup's Support Driven Ratings

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NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has downgraded the issuer default ratings (IDRs) of Citigroup Inc. (Citi) to 'A/F1' from 'A+/F1+' and removed these ratings from Rating Watch Negative. The Rating Outlook is Stable. A complete list of ratings follows this release.

The downgrade of the Long-term IDR reflects a lowering of the Support Floor of Citi to 'A' from 'A+' as broadly discussed in Fitch's special report titled 'U.S. Banks - Sovereign Support: When Does it End' dated Dec. 15, 2011. While Fitch believes that broad policy momentum remains to reduce taxpayer funds to support banks in times of crisis, this is progressing at an uneven pace globally. Consequently, Fitch continues to embody a view of support in the IDRs of Citi and other U.S. G-SIFIs over the near term.

The issue of 'too big to fail' is not one that can be solved rapidly and without increased global cooperation and particularly against the backdrop of still volatile financial markets. Fitch will continue to assess this view of support in light of further regulatory developments, the macro environment, health of institutions and the financial industry as a whole. As global market conditions normalize and resolution regimes become more harmonized, Fitch would reassess its current views for U.S. G-SIFIs.

Should Fitch over time further reduce its assessment of the probability of the U.S. government to support Citi and other G-SIFIs in the event of need, the IDRs and other support driven ratings could be negatively affected. In the event of a complete elimination of support, the Long-term IDR would be adjusted to the level of the Viability Rating (VR).

Citi's VR of 'a-' is unaffected by today's action and continues to reflect both Citi's fundamental strengths and remaining challenges. Strengths include its diverse revenue mix, conservative liquidity management and improved capital position. Remaining challenges include a sizeable though diminishing level of non-performing loans and non-core assets.

Citi's subordinated debt is maintained on Rating Watch Negative and preferred instruments have been placed on Rating Watch Negative reflecting heightened downgrade risk associated with the pending completion of Fitch's review of how it rates bank regulatory capital instruments. This review was initiated by the exposure draft entitled 'Rating Bank Regulatory Capital Securities' published on 28 July 2011.

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

Fitch has taken the following rating actions:

Citigroup Inc.

--Long-term Issuer Default Rating (IDR) downgraded to 'A' from 'A+'; removed from Rating Watch Negative with a Stable Outlook

--Senior unsecured downgraded to 'A' from 'A+'; removed from Rating Watch Negative;

--Subordinated downgraded to 'A-' from 'A'; Rating Watch Negative maintained;

--Preferred 'BBB' placed on Rating Watch Negative;

--Short-term IDR downgraded to 'F1' from 'F1+'; removed from Rating Watch Negative;

--Support affirmed at '1'; removed from Rating Watch Negative;

--Support floor downgraded to 'A' from 'A+'; removed from Rating Watch Negative;

--Viability Rating 'a-' unaffected;

--Individual Rating 'B/C' unaffected;

--Long-term FDIC guaranteed debt affirmed at 'AAA';

--Short-term FDIC guaranteed debt affirmed at 'F1+'.

Citibank, N.A.

--Long-term IDR downgraded to 'A' from 'A+'; removed from Rating Watch Negative with a Stable Outlook;

--Long term deposits downgraded to 'A+' from 'AA-'; removed from Rating Watch Negative;

--Short-term IDR downgraded to 'F1' from 'F1+'; removed from Rating Watch Negative;

--Short-term deposits downgraded to 'F1' from 'F1+'; removed from Rating Watch Negative;

--Support affirmed at '1'; removed from Rating Watch Negative;

--Support Floor downgraded to 'A' from 'A+'; removed from Rating Watch Negative;

--Viability Rating 'a-' unaffected;

--Individual Rating 'B/C' unaffected;

--Long-term FDIC guaranteed debt affirmed at 'AAA';

--Short-term FDIC guaranteed debt affirmed at 'F1+'.

Citibank (South Dakota), N.A.

--Long-term IDR downgraded to 'A' from 'A+'; removed from Rating Watch Negative with a Stable Outlook;

--Long-term deposits downgraded to 'A+' from 'AA-'; removed from Rating Watch Negative;

--Short-term IDR downgraded to 'F1' from 'F1+'; removed from Rating Watch Negative;

--Short-term deposits downgraded to 'F1' from 'F1+'; removed from Rating Watch Negative;

--Viability Rating 'a-' unaffected;

--Individual Rating 'B/C' unaffected;

--Support affirmed at '1'; removed from Rating Watch Negative;

--Support floor downgraded to 'A' from 'A+'; removed from Rating Watch Negative.

Citibank Banamex USA

--Long-term IDR downgraded to 'A' from 'A+'; removed from Rating Watch Negative with a Stable Outlook;

--Subordinated downgraded to 'A-'from 'A'; Rating Watch Negative maintained;

--Long-term deposits downgraded to 'A+' from 'AA-'; removed from Rating Watch Negative;

--Short-term IDR downgraded to 'F1' from 'F1+'; removed from Rating Watch Negative;

--Short-term deposits downgraded to 'F1' from 'F1+'; removed from Rating Watch Negative;

--Viability Rating 'a-' unaffected;

--Individual Rating 'B/C' unaffected;

--Support affirmed at '1'; removed from Rating Watch Negative;

--Support Floor downgraded to 'A' from 'A+'; removed from Rating Watch Negative.

Citigroup Funding Inc.

--Long-term IDR downgraded to 'A' from 'A+'; removed from Rating Watch Negative with a Stable Outlook;

--Senior unsecured downgraded to 'A' from 'A+'; removed from Rating Watch Negative;

--Short-term IDR downgraded to 'F1' from 'F1+'; removed from Rating Watch Negative;

--Short-term debt downgraded to 'F1' from 'F1+'; removed from Rating Watch Negative;

--Market linked securities downgraded to 'A emr' from 'A+ emr'; removed from Rating Watch Negative;

--Long-term FDIC guaranteed debt affirmed at 'AAA';

--Short-term FDIC guaranteed debt affirmed at 'F1+'.

Citigroup Global Markets Holdings Inc.

--Long-term IDR downgraded to 'A' from 'A+'; removed from Rating Watch Negative with a Stable Outlook;

--Senior unsecured downgraded to 'A' from 'A+'; removed from Rating Watch Negative;

--Subordinated downgraded to 'A-' from 'A'; Rating Watch Negative maintained;

--Short-term IDR downgraded to 'F1' from 'F1+'; removed from Rating Watch Negative;

--Short-term debt downgraded to 'F1' from 'F1+'; removed from Rating Watch Negative.

Citigroup Global Markets, Inc.

--Senior Secured downgraded to 'A' from 'A+'; removed from Rating Watch Negative;

--Short-term debt downgraded to 'F1' from 'F1+'; removed from Rating Watch Negative.

Citigroup Derivatives Services LLC.

--Long-term IDR downgraded to 'A' from 'A+'; removed from Rating Watch Negative with a Stable Outlook;

--Short-term IDR downgraded to 'F1' from 'F1+'; removed from Rating Watch Negative;

--Support affirmed at '1'.

Citibank Canada

--Long-term IDR downgraded to 'A' from 'A+'; removed from Rating Watch Negative with a Stable Outlook;

--Long-term deposits downgraded to 'A' from 'A+'; removed from Rating Watch Negative.

Citibank Japan Ltd.

--Long-term IDR downgraded to 'A' from 'A+'; removed from Rating Watch Negative with a Stable Outlook;

--Short-term IDR downgraded to 'F1' from 'F1+'; removed from Rating Watch Negative;

--Long-term IDR (local currency) downgraded to 'A' from 'A+'; removed from Rating Watch Negative with a Stable Outlook;

--Short-term IDR (local currency) downgraded to 'F1' from 'F1+'; removed from Rating Watch Negative;

--Support affirmed at '1'.

CitiFinancial Europe plc

--Long-term IDR downgraded to 'A' from 'A+'; removed from Rating Watch Negative with a Stable Outlook;

--Senior unsecured downgraded to 'A' from 'A+'; removed from Rating Watch Negative;

--Senior shelf downgraded to 'A' from 'A+'; removed from Rating Watch Negative;

--Subordinated downgraded to 'A-' from 'A'; Rating Watch Negative maintained.

Citibank International PLC

--Long-term IDR downgraded to 'A' from 'A+'; removed from Rating Watch Negative with a Stable Outlook;

--Short-term IDR downgraded to 'F1' from 'F1+'; removed from Rating Watch Negative;

--Support affirmed at '1'.

Commercial Credit Company

--Senior unsecured downgraded to 'A' from 'A+'; removed from Rating Watch Negative.

Associates Corporation of North America

--Senior unsecured downgraded to 'A' from 'A+'; removed from Rating Watch Negative;

--Subordinated downgraded to 'A-' from 'A'; Rating Watch Negative maintained.

Egg Banking plc

--Subordinated downgraded to 'A-' from 'A'; Rating Watch Negative maintained.

Citigroup Capital III, VII, VIII, IX, X, XII, XIII, XIV, XV, XVI, XVII, XVIII, XIX, XX, XXI, XXXI, and XXXII

--Trust preferred 'BBB' placed on Rating Watch Negative.

Adam Capital Trust III, Adam Statutory Trust III-V

--Trust preferred 'BBB' placed on Rating Watch Negative.

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

Applicable Criteria and Related Research:

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

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

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

--'Rating Hybrid Securities' (July 28, 2011);

--'Rating Banks in a Changing World' (Oct. 13, 2011)

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

Applicable Criteria and Related Research:

Global Financial Institutions Rating Criteria

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

Securities Firms Criteria

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

Bank Holding Companies

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

Rating Hybrid Securities

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=647091

Rating Banks in a Changing World (Credit Ratings Reflect Evolving Risk Profiles)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=653478

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE.

Fitch RatingsPrimary AnalystJoseph S. Scott, +1-212-908-0624Senior DirectorOne State Street PlazaNew York, NY 10004orSecondary AnalystChristopher D. Wolfe, +1-212-908-0771Managing DirectororCommittee ChairpersonThomas J. Abruzzo, +1-212-908-0793Managing DirectororMedia RelationsBrian Bertsch, New York, +1-212-908-0549[email protected]

Source: Fitch Ratings

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