Citigroup, Inc. · NYSE:C
Citigroup — Merger or Acquisition (September 2008)
13 slides from Citigroup's merger presentation, Sep 30, 2008
Slide 1: Citi Acquisition of Wachovia's Banking Operations
Citi Acquisition of Wachovia’s Banking Operations September 29, 2008
Slide 2: Transaction Structure
1 Transaction Structure Citi acquires Wachovia’s retail bank, corporate and investment bank and private bank businesses – Citi pays $2.2 billion to Wachovia in Citi common stock – Citi assumes substantially all of Wachovia’s debt; preferred stock excluded – Wachovia remains a publicly-traded holding
Slide 3: Terms of Loss Protection Arrangement with FDIC
2 Terms of Loss Protection Arrangement with FDIC $12 billion face value of preferred shares issued to the FDIC – 6% preferred dividend – Recorded at a discount to par value 100% Tier 1 credit Discount accretes over time through retained earnings Warrants on common stock, such that the combination of
Slide 4: Loss Protected Portfolio
3 Loss Protected Portfolio Residential Mortgages $156 Commercial Real Estate 100 Other Assets 56 Total Loss Protected Portfolio $312 Assets ($B) $30 billion expected losses recorded purchase accounting Additional potential losses to Citi capped at $12 billion ($4 billion a year for 3 years)
Slide 5: Earnings Impact to Common Shareholders
4 Earnings Impact to Common Shareholders Year 1: Transaction expected to be accretive before accounting for a $2.0 billion pre-tax restructuring charge – Approximately $1.3 billion in pre-tax expense synergies, offset by revenue dis-synergies – Approximately $3.0 billion pre-tax charge related to lo
Slide 6: Balance Sheet Impact
5 Balance Sheet Impact GAAP Assets ~$2.9 Tr Risk-weighted Assets ~$1.4 Tr Tier 1 Capital ~$130 B Total Capital ~$170 B Pro forma as of June 30, 2008 (1) Regulatory capital relief on substantially all of the loss protected assets – 150+ member due diligence team to vet loss protected assets Remaining
Slide 7: Purchase Accounting Summary
6 Purchase Accounting Summary Estimated net book value ~$63 Purchase accounting adjustments: Write-down of existing goodwill intangibles (39) Adjustment on credit impaired loans and securities (30) Release of existing LLR related to credit impaired loans 9 Other purchase accounting adjustments, incl
Slide 8: Competitive Positioning
7 Competitive Positioning Rank Institution Branches 1 Bank of America 6,143 2 JPMorgan Chase 5,410 3 Pro forma Citi (1) 4,365 4 Wells Fargo 3,436 5 Wachovia 3,346 10 Citi (1) 1,019 Source: SNL Datasource, except Citi and JPMorgan data. JPMorgan data from company presentations. Note: Branch data as o
Slide 9: Appendix
Appendix
Slide 10: Strategic and Financial Rationale
9 Strategic and Financial Rationale Creates a market-leading retail bank – Complementary branch and deposit footprint in very attractive markets Third largest retail branch network in the U.S. with more than 4,000 combined branches Approximately $1.3 trillion in combined global deposits – Complement
Slide 11: Market Leading Retail Bank
10 Market Leading Retail Bank Wachovia footprint concentrated in high growth and wealthy markets – Located in MSAs with average population growth of 8% vs. U.S. average 6% Leading position top MSAs – 3,346 Wachovia retail branches complement existing 1,019 Citi branches – Wachovia branches concentra
Slide 12: Pro forma Geographic Impact
11 Pro forma Geographic Impact Source: SNL; Data as of June 30, 2007; Proforma for pending acquisitions. 9.8% 3.4% National Deposit Share 4.0% 4 2 Citi 10.5% 13 7 Deposit Share in Top 20 MSAs # MSAs where in Top 5 # MSAs where in Top 3 Citi Pro forma Citi branches Wachovia branches
Slide 13: Other Strategic Benefits
12 U.S. franchise strengthens Citi’s domestic position in $5-$50 million Calibre Family Office focused on $50 million plus Private Bank Other Strategic Benefits Top 3 largest domestic cash management services provider – Complements Citi’s global footprint U.S. mid-market corporate franchise enhances