''Confidence is fundamental to the strength of the global financial markets. Any question of confidence must be addressed quickly and decisively. This weekend, the U.S. Government and Citi worked together in an unprecedented way and with great speed to address the speculation and rumors about Citi's financial health, which led to recent stock market valuations that ignored the strong fundamentals of our global businesses.

I appreciate this speculation has fuelled difficult questions and concerns from clients, colleagues, business partners and shareholders. Despite these challenges, all of you have distinguished yourselves in staying focused on serving clients and I am proud of your professionalism and hard work. Citi is America's bank around the world and our strength is viewed as an integral part of the overall strength of the U.S. financial system.

Tonight, we've taken an important step to dramatically reduce our future risk exposure and eliminate the lingering doubt in the market about Citi's financial strength. We have reached an agreement with the U.S. Treasury, Federal Reserve and FDIC that adds $40 billion of capital and significantly strengthens Citi's key capital ratios, liquidity and risk profile. I encourage you to review the press release, which provides details.

Our Board of Directors, which has approved this transaction, has also agreed to reduce the dividend to $0.01 for the next three years, which will maintain and further strengthen our solid capital position. 

This is an innovative, market-based solution that allows us to purchase insurance from the Fed to limit future risk. And while the global economic challenges are still not over, this transaction brings even greater clarity to our overall financial strength and ability to deliver on the promise of this great institution. 

I have no doubt that Citi has strong and stable operating income, unparalleled access to funding, extraordinary levels of liquidity and the best talent in the business. Continue to assure your clients and customers that our fundamentals are strong and our determination to find solutions to drive their financial success is unwavering. 

Thank you again for demonstrating that even during the toughest of economic times, Citi never sleeps.

Citi adds $40 billion of capital

• Citi to issue preferred stock and warrants to US Treasury and FDIC - strike price on warrants set at $10.61
• Citi to receive capital benefits from government guarantee on $306 billion of assets 
• Citi secures access to multiple additional liquidity facilities

Citi today announced that it has reached an agreement with the US. Treasury, the Federal Reserve Board, and the Federal Deposit Insurance Corp. (FDIC) on a series of steps to strengthen Citi's capital ratios, reduce risk, and increase liquidity, as described below:

CAPITAL
The U.S. Treasury will invest $20 billion in Citi preferred stock under the Troubled Asset Relief Program (TARP).

Citi will issue an incremental $7 billion in preferred stock to the U.S. Treasury and the FDIC as payment for a government guarantee on $306 billion of securities, loans, and commitments backed by residential and commercial real estate and other assets.

As a result of the asset guarantee, the $306 billion portfolio will have a new risk weighting of 20%, thus freeing up an additional $16 billion of capital to the company.

Citi will issue warrants to the U.S. Treasury and the FDIC for approximately 254 million shares of the company's common stock at a strike price of $10.61.
Citi also has agreed not to pay a quarterly common stock dividend exceeding $0.01 (one cent) per share for three years effective on the next quarterly common stock dividend payment.

The program significantly strengthens Citi's key capital ratios by generating approximately $40 billion of capital benefits as follows:

$20 billion from the TARP investment.

$3.5 billion, the portion of the $7 billion of preferred stock fee recognized for capital purposes.

$16 billion of capital benefits resulting from the asset guarantee.

Citi's Tier 1 capital ratio for the third quarter ended September 30, 2008, on a pro forma basis, for the October TARP capital injection and the new capital generated by today's announcement, subject to Federal Reserve Board approval, is expected to be approximately 14.8 per cent and its TCE/RWMA ratio would be approximately 9.3 per cent.

RISK REDUCTION
Under the guarantee, Citi will assume any losses on the portfolio up to $29 billion on a pre-tax basis, in addition to Citi's existing reserves; the government entities will assume 90 per cent of any losses above that level and Citi will assume the balance. Citi will retain these assets on its balance sheet and realize the associated cash flow.

LIQUIDITY
In addition to its extensive access to existing liquidity sources, Citi has been provided expanded access to both the Federal Reserve's Primary Dealer Credit Facility and the discount window, resulting in strong additional liquidity resources should they be needed. Citi also has access to the yet-unused Federal Reserve's Commercial Paper Funding Facility and intends to issue debt under the FDIC's Temporary Liquidity Guarantee Program.

The agreement also provides that an executive compensation plan, including bonuses, that rewards long-term performance and profitability, with appropriate limitations, must be submitted to, and approved by, the US government.

''This weekend, the US government and Citi worked together in an unprecedented way to address market confidence and the recent decline in Citi's stock price,'' said Vikram S. Pandit, Chief Executive Officer. ''We reached an agreement based on an innovative market solution to further strengthen our capital ratios, reduce risk, and increase liquidity. We appreciate the tremendous effort by the government to assure market stability.

''We are committed to streamlining our business and providing outstanding banking services to our clients around the world. We will continue to focus on opportunities and alternatives to further enhance the company's overall position and value,'' Pandit concluded.

The transaction has been unanimously approved by the Citi Board of Directors.