New York, November 29, 2018 -- Moody's Investors Service ("Moody's") has placed on review for upgrade
all long-term ratings of Citigroup Inc. (senior debt at
Baa1) as well as the ratings of its lead bank, Citibank N.A.
(A1 for deposits) and certain other subsidiaries. Moody's has affirmed
all short-term ratings and assessments of Citigroup and those subsidiaries.
A complete list of affected ratings and entities can be found at the end
of this press release.
RATINGS RATIONALE
The review for upgrade reflects Citigroup's consistent execution
in 2018, which is further solidifying the solvency profile of the
bank. Citigroup's sweeping reengineering of the past decade
has placed the bank on a sounder strategic footing with a narrower geographic
footprint, and a more targeted institutional client and consumer
customer base. As a result, Citigroup has strengthened its
asset risk profile and improved the stability of its earnings compared
to many of its peers with extensive capital markets operations.
Citigroup, while still a large and complex organization, should
now be easier to govern and manage..
Since Moody's assigned a positive outlook to Citigroup in November
2017, the bank has improved its financial performance while maintaining
strong consumer and institutional asset quality. For the first
nine months of 2018, pretax earnings rose 3% to $18.1
billion and the efficiency ratio improved to 57.3% from
58.1%. The bank has also benefited from US tax reform,
which has lowered Citigroup's effective tax rate by eight percentage
points to 24%. This has contributed to a higher return on
common equity (9.5% compared to 7.2% in the
year earlier period), which has alleviated some shareholder pressures
on the firm.
Although Citigroup has cleaned up its balance sheet and is improving its
profitability, its strategy remains fairly unique compared to its
universal banking peers. Its redefined consumer strategy targets
affluent and emerging affluent customers in nineteen countries,
while operating a branch-light footprint within the US and pursuing
a broader customer segment in certain card and retail partnership markets.
Citigroup's US consumer franchise remains less diversified than
its closest US peers and is more reliant on unsecured lending which has
inherently weaker credit characteristics. The revised institutional
strategy centers on delivering core operating services through Citigroup's
global payment and custody network to a targeted set of corporate and
investor clients. The network is among the leading global franchises
in transaction services and, when combined with Citigroup's
market making capabilities, produces a robust stream of transaction
and related trading revenues in many environments, as well as a
growing stock of core institutional deposits.
Nonetheless, Citigroup's profitability has lagged some peers
with more diversified mixes of businesses. To narrow this gap and
achieve overall ROE targets, Citigroup's intends to generate
$2.8 billion in cost savings through 2020 to fund investments
in new technologies and drive down its efficiency ratio to approximately
53%, while strengthening the profitability in a few key businesses
-- namely consumer banking in North America and Mexico, as
well as equity markets and securities services. Citigroup's
profitability should also improve as the remaining non-core portfolio
continues to decline.
WHAT COULD MOVE THE RATINGS UP/DOWN
Moody's review for upgrade will focus on the feasibility of Citigroup
achieving its medium-term efficiency and profitability targets
in a competitive and increasingly digitized environment while maintaining
strong governance and controls on risk appetite. The review will
also consider the constancy of Citigroup's risk management culture
in response to changing conditions and potential risk concentrations,
such as commercial real estate or leveraged lending activity.
Citigroup's ratings outlooks may be returned to stable or the ratings
may be downgraded if the bank experiences a significant deterioration
in its capital or liquidity levels or demonstrates a marked increase in
its risk appetite, or were to experience a sizeable operational
risk charge or control failure
The following ratings actions were taken:
On Review for Upgrade:
..Issuer: Citigroup Inc.
.... Subordinate Medium-Term Note Program,
currently (P)Baa3
.... Senior Unsecured Medium-Term Note
Program, currently (P)Baa1
.... Subordinate Shelf, currently (P)Baa3
.... Senior Unsecured Shelf, currently
(P)Baa1
.... Pref. Stock Non-cumulative,
currently Ba2 (hyb)
.... Subordinate Regular Bond/Debenture,
currently Baa3
.... Senior Unsecured Regular Bond/Debenture,
currently Baa1, Rating Under Review; previously Baa1,
Positive
..Issuer: Citibank, N.A.
.... Adjusted Baseline Credit Assessment,
currently baa2
.... Baseline Credit Assessment, currently
baa2
.... LT Counterparty Risk Assessment,
currently A1(cr)
.... LT Counterparty Risk Rating, currently
A1
.... LT Issuer Rating, currently A1,
Rating Under Review; previously A1, Positive
.... LT Deposit Note/CD Program, currently
A1, Rating Under Review; previously A1, Positive
.... Senior Unsecured Medium-Term Note
Program, currently (P)A1
.... Senior Unsecured Regular Bond/Debenture,
currently A1, Rating Under Review; previously A1, Positive
.... LT Deposit Rating, currently A1,
Rating Under Review; previously A1, Positive
..Issuer: Citibank Europe plc
.... Adjusted Baseline Credit Assessment,
currently baa2
.... Baseline Credit Assessment, currently
baa2
.... LT Counterparty Risk Assessment,
currently A1(cr)
.... LT Counterparty Risk Rating, currently
A1
.... LT Deposit Rating, currently A1,
Rating Under Review; previously A1, Positive
..Issuer: Associates Corporation of North America
.... LT Issuer Rating, currently Baa1,
Rating Under Review; previously Baa1, Positive
.... Senior Unsecured Regular Bond/Debenture,
currently Baa1, Rating Under Review; previously Baa1,
Positive
..Issuer: Citibank International Limited
.... Senior Unsecured Regular Bond/Debenture,
currently A1, Rating Under Review; previously A1, Positive
..Issuer: Citibank, N.A. (Sydney
Branch)
.... LT Counterparty Risk Assessment,
currently A1(cr)
.... LT Counterparty Risk Rating, currently
A1
..Issuer: Citibank, N.A.,
London Branch
.... LT Counterparty Risk Assessment,
currently A1(cr)
.... LT Counterparty Risk Rating, currently
A1
.... Senior Unsecured Medium-Term Note
Program, currently (P)A1
.... Senior Unsecured Regular Bond/Debenture,
currently A1, Rating Under Review; previously A1, Positive
..Issuer: CitiFinancial Credit Company
.... LT Issuer Rating, currently Baa1,
Rating Under Review; previously Baa1, Positive
.... Senior Unsecured Regular Bond/Debenture,
currently Baa1, Rating Under Review; previously Baa1,
Positive
..Issuer: Citigroup Capital III
.... Preferred Stock, currently Ba1
(hyb)
..Issuer: Citigroup Capital XIII
.... Preferred Stock, currently Ba1
(hyb)
..Issuer: Citigroup Capital XVIII
.... Preferred Stock, currently Ba1
(hyb)
..Issuer: Citigroup Finance Canada Inc
.... Senior Unsecured Medium-Term Note
Program, currently (P)Baa1
..Issuer: Citigroup Funding, Inc.
.... Senior Unsecured Regular Bond/Debenture,
currently Baa1, Rating Under Review; previously Baa1,
Positive
..Issuer: Citigroup Global Markets Holdings Inc.
.... LT Issuer Rating, currently Baa1,
Rating Under Review; previously Baa1, Positive
.... Senior Unsecured Medium-Term Note
Program, currently (P)Baa1
.... Senior Unsecured Regular Bond/Debenture,
currently Baa1, Rating Under Review; previously Baa1,
Positive
.... Senior Unsecured Shelf, currently
(P)Baa1
..Issuer: Citigroup Global Markets Deutschland AG
.... LT Counterparty Risk Assessment,
currently A1(cr)
.... LT Issuer Rating, currently A2
..Issuer: Citigroup Global Markets Inc.
.... LT Counterparty Risk Assessment,
currently A1(cr)
.... LT Issuer Rating, currently A2,
Rating Under Review; previously A2, Positive
.... Senior Secured Medium-Term Note
Program, currently (P)A2
..Issuer: Citigroup Global Markets Limited
.... LT Counterparty Risk Assessment,
currently A1(cr)
.... LT Issuer Rating, currently A2,
Rating Under Review; previously A2, Positive
Affirmations:
..Issuer: Citibank Europe plc
.... ST Counterparty Risk Assessment,
Affirmed P-1(cr)
.... ST Counterparty Risk Rating, Affirmed
P-1
.... ST Deposit Rating, Affirmed P-1
..Issuer: Citibank, N.A.
.... ST Counterparty Risk Assessment,
Affirmed P-1(cr)
.... ST Counterparty Risk Rating, Affirmed
P-1
.... ST Deposit Rating, Affirmed P-1
.... Other Short Term Medium-Term Note
Program, Affirmed (P)P-1
..Issuer: Citibank, N.A. (Sydney
Branch)
.... ST Counterparty Risk Assessment,
Affirmed P-1(cr)
.... ST Counterparty Risk Rating, Affirmed
P-1
.... Commercial Paper, Affirmed P-1
..Issuer: Citibank, N.A.,
London Branch
.... ST Counterparty Risk Assessment,
Affirmed P-1(cr)
.... ST Counterparty Risk Rating, Affirmed
P-1
.... Other Short Term Medium-Term Note
Program, Affirmed (P)P-1
..Issuer: Citigroup Global Markets Holdings Inc.
.... Other Short Term Senior Unsecured Regular
Bond/Debenture, Affirmed P-2
..Issuer: Citigroup Inc.
.... Commercial Paper, Affirmed P-2
.... Other Short Term Medium-Term Note
Program, Affirmed (P)P-2
..Issuer: Citigroup Global Markets Deutschland AG
.... ST Counterparty Risk Assessment,
Affirmed P-1(cr)
.... ST Issuer Rating, Affirmed P-1
..Issuer: Citigroup Global Markets Inc.
.... ST Counterparty Risk Assessment,
Affirmed P-1(cr)
.... ST Issuer Rating, Affirmed P-1
..Issuer: Citigroup Global Markets Limited
.... ST Counterparty Risk Assessment,
Affirmed P-1(cr)
.... ST Issuer Rating, Affirmed P-1
Outlook Actions:
..Issuer: Associates Corporation of North America
....Outlook, Changed To Rating Under
Review From Positive
..Issuer: Citibank Europe plc
....Outlook, Changed To Rating Under
Review From Positive
..Issuer: Citibank, N.A.
....Outlook, Changed To Rating Under
Review From Positive
..Issuer: Citibank, N.A.,
London Branch
....Outlook, Changed To Rating Under
Review From Positive
..Issuer: CitiFinancial Credit Company
....Outlook, Changed To Rating Under
Review From Positive
..Issuer: Citigroup Finance Canada Inc
....Outlook, Changed To Rating Under
Review From Positive
..Issuer: Citigroup Global Markets Holdings Inc.
....Outlook, Changed To Rating Under
Review From Positive
..Issuer: Citigroup Inc.
....Outlook, Changed To Rating Under
Review From Positive
..Issuer: Citigroup Global Markets Deutschland AG
....Outlook, Changed To Rating Under
Review From Positive
..Issuer: Citigroup Global Markets Inc.
....Outlook, Changed To Rating Under
Review From Positive
..Issuer: Citigroup Global Markets Limited
....Outlook, Changed To Rating Under
Review From Positive
..Issuer: Citibank International Limited
....Outlook, Changed To Rating Under
Review From No Outlook
..Issuer: Citigroup Capital III
....Outlook, Changed To Rating Under
Review From No Outlook
..Issuer: Citigroup Capital XIII
....Outlook, Changed To Rating Under
Review From No Outlook
..Issuer: Citigroup Capital XVIII
....Outlook, Changed To Rating Under
Review From No Outlook
..Issuer: Citigroup Funding, Inc.
....Outlook, Changed To Rating Under
Review From No Outlook
..Issuer: Citibank, N.A. (Sydney
Branch)
....Outlook, Changed To Rating Under
Review From No Outlook
The principal methodology used in rating Citigroup Inc.,
Citigroup Capital III, Citigroup Capital XIII, Citigroup Capital
XVIII, Citibank International Limited, Citigroup Funding,
Inc., Citigroup Global Markets Holdings Inc.,
Citibank, N.A., Citibank Europe plc, Citibank,
N.A. (Sydney Branch), Citibank, N.A.,
London Branch, CitiFinancial Credit Company, Associates Corporation
of North America, and Citigroup Finance Canada Inc was Banks published
in August 2018. The principal methodologies used in rating Citigroup
Global Markets Deutschland AG, Citigroup Global Markets Limited,
and Citigroup Global Markets Inc. were Banks published in August
2018, and Securities Industry Market Makers published in June 2018.
Please see the Rating Methodologies page on www.moodys.com
for a copy of these methodologies.
REGULATORY DISCLOSURES
For ratings issued on a program, series or category/class of debt,
this announcement provides certain regulatory disclosures in relation
to each rating of a subsequently issued bond or note of the same series
or category/class of debt or pursuant to a program for which the ratings
are derived exclusively from existing ratings in accordance with Moody's
rating practices. For ratings issued on a support provider,
this announcement provides certain regulatory disclosures in relation
to the credit rating action on the support provider and in relation to
each particular credit rating action for securities that derive their
credit ratings from the support provider's credit rating.
For provisional ratings, this announcement provides certain regulatory
disclosures in relation to the provisional rating assigned, and
in relation to a definitive rating that may be assigned subsequent to
the final issuance of the debt, in each case where the transaction
structure and terms have not changed prior to the assignment of the definitive
rating in a manner that would have affected the rating. For further
information please see the ratings tab on the issuer/entity page for the
respective issuer on www.moodys.com.
For any affected securities or rated entities receiving direct credit
support from the primary entity(ies) of this credit rating action,
and whose ratings may change as a result of this credit rating action,
the associated regulatory disclosures will be those of the guarantor entity.
Exceptions to this approach exist for the following disclosures,
if applicable to jurisdiction: Ancillary Services, Disclosure
to rated entity, Disclosure from rated entity.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has issued
the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.
Peter E. Nerby
Senior Vice President
Financial Institutions Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
Ana Arsov
MD - Financial Institutions
Financial Institutions Group
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
