John McDonald - Sanford Bernstein Jim Mitchell - Buckingham Research Glenn Schorr - ISI Guy Moszkowski - Autonomous Research Betsy Graseck - Morgan Stanley Mike Mayo - CLSA Moshe Orenbuch - Credit Suisse Gerard Cassidy - RBC Capital Market Chris Kotowski - Oppenheimer & Co. Eric Wasserstrom - SunTrust Robinson Humphrey Erica Najarian - Bank of America Merrill Lynch Brian Kleinhanzl - KBW Ken Usdin - Jefferies Matt Burnell - Wells Fargo Security Derek De Vries - UBS Andrew Marquardt - Evercore Steven Chubak - Nomura

Hello, and welcome to Citi’s second quarter 2014 earnings review with Chief Executive Officer, Mike Corbat and Chief Financial Officer, John Gerspach. Today’s call will be hosted by Susan Kendall, Head of Citi Investor Relations. We ask that you please hold all questions until the completion of the formal remarks, at which time you will be given instruction for the question-and-answer session. Also, as a reminder, this conference is being recorded today. If you have any objections, please disconnect at this time. Ms. Kendall, you may begin.

Thank you, Regina. Good morning, and thank you all for joining us. On our call today, our CEO, Mike Corbat, will speak first, then John Gerspach, our CFO will take you through the earnings presentation, which is available for download on our website, citigroup.com. Afterwards, we’ll be happy to take questions. Before we get started, I would like to remind you that today’s presentation may contain forward-looking statements, which are based on management’s current expectations and are subject to uncertainty and changes in circumstances. Actual results, and capital and other financial condition may differ materially from these statements due to a variety of factors, including the precautionary statements referenced in our discussion today and those included in our SEC filings, including, without limitation, the Risk Factors section of our 2013 Form 10-K. With that said, let me turn it over to Mike.

Susan, thank you; and good morning everyone. Earlier today, we reported earnings of $181 million for the second quarter of 2014. Excluding the impact of the legacy mortgage settlement CVA and DVA, net income was $3.9 billion, up slightly from last year or $1.24 per share. Before I get into our operating performance I want to discuss our legacy mortgage settlement. The comprehensive settlement announced today with the U.S. Department of Justice, the State AGs and the FDIC resolves all pending civil investigations related to our legacy RMBS and CDO underwriting, structuring and issuance activities. We also have now resolved substantially all of our legacy RMBS and CDO litigation. We believe that this settlement is in the best interest of our shareholders and allows us to move forward and to focus on the future in serving our clients. During this quarter, our institutional businesses performed well outside of markets where macro uncertainty and historically low volatility reduced client activity clearly impacting our fixed income and equities revenues. Corporate investment banking revenues strengthened, led by strong equity and debt underwriting and our treasury and trade solutions businesses again saw underlying revenue growth as volumes continued to increase. In consumer banking, year-over-year comparisons continue to be affected by lower mortgage refinancing activity and our repositioning efforts in Korea. But we believe these businesses have now stabilized and we're better positioned for growth in the second half of the year. We grow our consumer loans despite the uneven economic environment and saw continued signs of progress in our U.S. cards business. Excluding the settlement announced today, Citi Holdings turned to profit for the first time since its formation and we announced agreements to sell our consumer businesses in Greece and Spain which will further reduce holdings assets in the third quarter. The holdings…

Okay, thank you, Mike and good morning everyone. To start, I’d like to highlight two items which affect the comparability of this quarter’s results to last year. First as Mike described, this quarter, we took a $3.7 billion after-tax charge related to the mortgage settlement for a negative impact on EPS of a $1.21 per share; and second, CVA and DVA was a negative $33 million pre-tax this quarter or $0.01 per share after tax compared to a positive 477 million pre-tax or $0.09 per share in the second quarter of last year. Adjusting for CVA, DVA and the impact of the settlement, we earned $1.24 per share in the recent quarter, compared to $1.25 per share in the second quarter of last year. Throughout today’s presentation, I’ll be discussing our results excluding these two items to provide comparability to prior periods. On slide four, we show total Citigroup results. We are in $3.9 billion in the second quarter and $8.1 billion for the first half of 2014, both up slightly from prior periods as lower revenues were offset by lower operating expenses and a decline in credit cost. Citigroup end-of-period loans grew 4% year-over-year to $668 billion as 8% growth in Citicorp was partially offset by the continued decline in Citi Holdings and deposits grew 3% to $966 billion. On slide five, we show more detail on expenses. Legal and related costs were roughly $400 million in the second quarter, mostly incurred in Citicorp. Repositioning costs were also around $400 million, including approximately $270 million of repositioning costs related to our consumer franchise in Korea. Excluding these items, core operating expenses of nearly $11 billion in the second quarter declined by over $225 million in constant dollars, driven by continued cost reduction initiatives and the decline in Citi Holdings’…

(Operator Instructions). Our first question will come from the line of John McDonald with Sanford Bernstein.

John a few questions, yes, just wanted to follow up on a couple of things you just mentioned. On the legal cost would you expect with the settlement now taking a lot of the mortgage exposure off the table? I assume that legal cost would look more like this quarter where ex-CMBS settlement they seem to come in around 400 million rather than the prior trend which was closer to about 800 million?

Well, let me break it down this way John. I’d say that with the legacy mortgage settlement behind us, we wouldn’t expect holdings to have any significant level of legal charges in the second half of 2014. Now as I said, legal expenses in Citicorp that they are going to remain somewhat elevated and episodic in nature. I wouldn’t expect anything significant.

And this quarter you had about 400 million in Citicorp in which you characterize that as still elevated to $400 million?

I would say that’s elevated versus what would expect in a normal environment, so we will see where we will go at the second half of the year.

Okay. And then I thought the repositioning expenses will be coming down in the second half of the year after the elevated charge this quarter for Korea. I thought you might have said that last quarter that they will be coming down after this. So, I thought you just said now that they would stay at the first half levels. What would be keeping the repositioning cost so high?

Well John, we continue to focus our efforts on our operations in the countries that we had identified as optimized markets. And matter of fact if you go back to the conference that we presented at near the end of May, we actually used the slide that showed that we had improved our efficiency ratio by over -- I think it was 300 basis points in those markets during 2013 and we generated further improvements during 2014 through a combination of efforts of branch closures, product rationalization, consolidation of operation and headcount reductions. And we're just going to continue that focus during the balance of this year and given that continued focus we just think it’s more likely that the repositioning reserves for the second half are going to be much more in line with what we had in the first.

Okay. And you mentioned North America consumer expenses likely to improve some more, overall expenses on the core expense face of about 11 billion this quarter companywide. Do you hope to improve from there going forward?

We expect the core expenses to decline sequentially in each of the next two quarters. Obviously, some -- we won’t get as much I think as everybody would like just because of the higher legal and regulatory cost that we're facing but we do anticipate continued sequential decline in the core operating expenses.

Okay. And just shifting gears to the DTA utilization. That was a big number this quarter, John and better than expected. The big settlement didn’t seem to have an impact, is that because it wasn’t tax deductible, could you just explain that?

You have got it, John. The lion’s share of the cost, if you take a look, we talked about taking a pre-tax charge of 3.8 billion and an after tax charge of 3.7 billion, so to your point not much of the settlement cost was tax deductible. And so perhaps the best way to take a look at the performance in the quarter is looking at the results excluding the settlement and there you will see that I think in the first quarter we had $5.9 billion or so of pre-tax earnings and in the second quarter we have roughly the same amount. So, when you are dealing with that level of pre-tax earnings, you are going to get DTA utilization of again somewhere between 700 million, 800 million or 1.1 billion in the quarter.

Okay. And that $1.1 billion this quarter contributed to $2.2 billion of Basel III capital build. Could you just explain that on page 36, you show out $1.1 billion led to $2.2 billion of increased Basel III capital?

Yes John that really is tied up in the multiplier effect and it’s a very, very complicated formula that you've got to go through and take a look at not just the level of DTA but first of all what type of DTA. In both the first and the second quarter most of the DTA that we've been able to utilize, has come out of the FTC, those foreign tax credits. So, you start by, that’s immediately dollar-for-dollar reduction because those things just come off the top. Then between the capital growth as well as the reduction that we've had in things like mortgage servicing rights, we've got even more room now in our 10% buckets as well as the overall 15% bucket. And so you just add up all the various multiplier effects and you end up with that $1.1 billion actually contributing $2.2 billion in regulatory capital.

Okay. Right, you got expansion of the cap, the dynamic cap. Last thing may be Mike, could you comment on the [indiscernible] or any update on the progress you are making understanding the fed’s concerns and what they are asking you to improve and your confidence and the ability to satisfy the high qualitative bar that the regulators are setting?

Sure. What I would say, John, this is Mike, that there is really very little additional information beyond what we've said at the venues along the way but I think to summarize that we still are operating and feel strongly that this isn’t an issue with our business model, our strategy, our levels of capital are clearly our ability to generate capital. Gene and the team are working to continue to enhance and where necessary, build the right (inclusive) [ph] processes in a range of scenarios around the firm. We feel good about the progress. We feel very good about the communication with the fed but its work in progress and we've got more work to do between now and year-end.

Your next question will come from the line of Jim Mitchell with Buckingham Research.

A quick question may be just a follow-up on the legal side, you guys settled for $4.5 billion in cash and took a $3.8 billion charge, you only used up $700 million in reserves. Is that effectively a reserve build for what remains and that makes you feel a little bit better about your coverage going forward or is that -- are you only really have $700 million set aside for that, that issue.

Here Jim, I’m not going to comment on the reserve levels that we have set up for any individual litigation but in the math that you’ve done, you’ve left out the cost of the consumer relief efforts and we do anticipate and have made provision for expense that we will incur in connection with those consumer relief efforts and so that, that estimate is also embedded in the $3.8 billion pre-tax charge that we took.

Okay, so it’s not just through reserves but also through expense.

Through the expense that we’ve taken this quarter, yes.

Okay, all right.

You know Jim, we start with the $4 billion penalty, then you’ve got the $500 million that we’ll pay to the state AGs and the FDI Citi. You add to that the cost of the consumer relief, because there are hard dollar costs associated with the consumer relief efforts and then you subtract out the reserves that we have previously established and that would leave -- that’s what leaves you with the $3.8 billion pre-tax number.

Okay, fair enough, just a follow up on the expenses and targets, I think we’ve obviously seen revenues come down quite a bit in capital markets year to date, I think you guys, as recently as early June at a conference have been sticking with your targets and I’ve had some questions on how you guys get there with lower revenues, is this part of the reason why restructuring costs are going to remain higher because you’re doing more on the expense side, so I guess they just want to see if that’s right and if you feel still comfortable with your ROA and efficiency ratio targets given where you are right now.

Yes, we’re still committed to those targets for 2015 and you know as we said we’re very focused on our execution efforts and in rationalizing the expense base in every one of our businesses.

And so the weaker revenues don’t give you pause.

Well I mean, I don’t want to be so cavalier about it, Jim to just say that we don’t consider the weaker revenues but we’ve taken all of that into consideration when we say that we’re still committed to those targets.

Right, right, okay. No, that’s great, and one last question just on deposit growth, is that very good quarter deposit growth and see corporate Asia has lagged quite a bit in your international side, is that simply a function of Korea or is there something else going there much broad based across Asia that’s limited deposit growth.

No, as you know Jim, we’re carefully managing deposit growth and we have been managing deposit growth for some time, you can’t just manage deposit growth at the top of the house, you need to manage it in each country and frankly in each legal vehicle, and so as we look at the liquidity needs for each of our -- each of the countries in which we operate we’re very focused on the level of deposits that we have and importantly the quality of those deposits. So you’re going to see -- you’ll see some regions where we have targeted higher deposit growth than others and it’s really based upon the liquidity needs in each of those regions.

Okay so it’s just you guys holding it back.

Well, we’re carefully managing deposits.

Okay, that’s all I got.

You have to manage your balance sheet.

No, I hear you, okay thanks, I appreciate it.

Not a problem.

Your next question will come from the line of Glenn Schorr with ISI.

Hello there, quick in holdings, heard your comments about second half profitability which is cool, I’m just curious, on the net interest revenue side, net interest revenues have increased last three quarters in a row but assets, loans and deposits are obviously shrinking with the whole run off, just curious on how that works.

Well, we -- there’s yield on assets and then there is cost of funds and we have been -- we’ve been actively managing both sides of that equation, so when you take a look at it you start to lower your cost of funds as you run off assets and that produces the results that you’re looking at.

That makes sense to me on cost of funds, I’m curious mechanically how that works, is that assigning the relative, meaning when the book is larger and they’re less liquid, it gets a higher cost and as the book gets smaller and more liquid you get a better funding cost, is that the big sling in there, I mean I’m -- it’s like a 150 million, it’s not enormous but it’s just counter intuitive.

Well it’s the type of funding that you have and the level and certainly the amount of funding that you have in each business as well and you know as the cost of that funding then goes down, you’re going to get a benefit, I don’t know how else to describe it, you know clearly some of the characteristics that you mentioned are driving characteristics, highly illiquid assets have a higher cost of fund -- cost more to fund than liquid assets, so as a book shifts from illiquid to more liquid you’re going to see that we can therefore change the funding problem.

Yes, I’m good with it, I appreciate it, same kind of com question, inside the equities business you mentioned some of the weaknesses was due to obviously lower volumes, the other part was I think I read a tagline on hedging on the Ukrainian side, produce part of the drop, can you just give a further comment I didn’t see it in the release but I think I saw it online.

Yes, no. In the second quarter, and again this is specific to the equities markets, the trading business. In the second quarter we had hedged our equities book in EMEA in anticipation of -- kind of a significant negative market reaction to the Russia, Ukraine situation. Now ultimately that did not materialize to the extent that we have planned for. And so as a consequence, our actions to de-risk the book actually resulted in realized losses during the quarter. So the realized losses that we took in lifting those hedges, equal to about 40% of the revenue decline in that product year-on-year. So we had a -- equities markets were down 26% year-over-year. And so that the de-risking activities actually contribute about 10 full percentage points to that decline.

Got it. Okay. It’s helpful. And then last one, in the FX business, I know this is a hard one, but the slowdown that we’ve seen, the environment obviously volatility has fallen off dramatically, is there any way to tribute how much of that is cyclical obvious of just lower volatility, lower client volumes, lower revenues to changes that have taken place in light of the recent investigations in the market?

I think that’s going to be really difficult to try to parse out.

It’s Mike. And I would say couple of things, I think that, again when you think of our FX business there’s a couple of components to it, which in some ways makes it different from others, one is, we’ve got the big transaction processing business and money is coming through the pipes that we process in a regular basis. I think to your question where we’ve seen the real slowdown is on the more active trading. And just that largely being as a result of the lower volatility. So I would view a lot of that as being largely cyclical. And I would expect as volatility comes back, some reasonable portion of that to come back with the volatility.

Okay. That’s exactly what I was looking for. Thanks Mike.

Your next question will come from the line of Guy Moszkowski with Autonomous Research.

Just a question first of all on your reasonable and possible losses with respect to the obviously, the resolution of a lot of issues, can you give us a sense of what that might look like versus last quarter when the (Q) [ph] comes out?

No Guy. We’ll address that when we publish the (Q) [ph].

Okay. Fair enough, thought I'd ask. I wanted to ask you question on the potential for the significant deposit movements in the probably foreseeable future at this point when the FED starts to move your short terms rate higher, it seems like the mechanics are going to be different than they have been in the past for all the reasons that we all know about. And I think we can say that there is a couple of schools of thought, as to what might happen when short term rates go up, one is deposits have really only shrunk a couple of times in the last century or so, it's always been very marginal, so not to worry. And then on the other hand JPMorgan has flagged their view kind of at the other end of the spectrum but maybe this time is different because of mechanics of what the FED’s going to do will be so different and may require a drain of, the FED maybe trillion dollars of bank deposits. As you think about liquidity planning and your internal stress testing, is there anything that you can share with us about the range of best and worst case deposit growth that you might be thinking about?

Yes. I am not going to give you a range Guy, but I’ll say this. I’d say that, when you think about the potential impact of the FED’s actions on deposits, one we’re probably less exposed than others on this, don’t forget, we’ve got of our $968 billion of deposits, it’s just a little over $400 billion are domestic deposits. So it’s not the biggest part of our book. And we, as I mentioned in response to one other question, we’ve really been managing our deposit base very carefully over the last few years. And so I think the other thing you need to consider is the quality of an institutions deposit base. And I think that what we’ve been able to achieve is an improvement in our quality of deposits, both internationally but specifically domestically, over the course of the last several years. We’re much more focused on and much more concentrated in real operating accounts, we’ve really driven down the level of time deposits that we have in the business. And importantly when you look at with some of the FED’s actions, I think that they are more likely to impact deposits that people take in from financial institutions. And if you’re managing your deposit base in connection with the LCR and NSFR rules, you’re going to be lowering that deposit base anyway so you should be less susceptible to big deposit movements because when the LCR and the NSFR rules deposits associated with financial institutions you get very little if any, credit for the liquidity value of those deposits. So they really bring you nothing as far as managing your overall funding, your overall liquidity. So we’ve been very focused on managing all the aspects of the deposit base over the past couple of years, both as to the nature of the deposits, the liquidity value of those deposits, and really trying to focus on core operating deposits in both retail and corporate customers.

Got it. So the follow-up question was going to be how all of this might interact with LCR but it sounds like what you’re saying is that the LCR shouldn’t change very much even with the kinds of flows that might be associated with that type of that activity because they would probably be low LCR credit deposits anyway?

Yes, it’s going to be real interesting to see how the FED goes about the next level of managing as far as increasing rates because when you take a look at how monetary policy is going to interact with regulatory policy I think we’re going to end up in a new world that none of us have lived through before nor has the FED.

Great. And then final question from me just on the core equity Tier 1 ratio that as you noted did pick up, that I believe is an advance calculation is that right? And if so, can you just tell us what the standardized was?

Yes, the number that we published is the advanced methodology because again our Tier 1 common ratio is lower under advanced and it is currently under standard. I don’t have the standard in front of me Guy, but it’s higher than what the advanced approach [indiscernible].

Okay, fair enough. And thanks for the (proponents) [ph] on the deposit outflows, that was very helpful.

Not a problem.

Your next question will come from the line of Betsy Graseck with Morgan Stanley.

Couple of questions, one is on the op risks RWAs, you noticed you mentioned at bottom of page 19 that the op risk RWAs are flat Q-on-Q at 288 while for the last few quarters. And I guess I am just wondering does that imply that the kind of settlement that we just had this morning was reflected in your RWA outlook before?

That’s our view Betsy that this settlement was already embedded in the increases that we took to the op risk risk weighted assets both in the fourth quarter of last year and the first quarter of this year.

Okay, because then when we’re looking at these articles that are out there and obviously we don’t know how much is reflecting of your views but you went in with the lower bid for the settlement than the ultimate final settlement, so I am just trying to square that.

Well, don’t forget it’s a (combination) [ph] but usually impacts op risk is the overall industry more than a particular institution.

Okay, so you would have thought that like the numbers that you actually came out with was more relevant than what the initial ask was that you might have had for yourself. Is that the way to think about it?

The way to think about it is really the operational risk environment that the industry is facing and we think that that is really was already embedded in the 288 number.

Okay. And then we…

As of the end of the first quarter.

Okay. And then we also have a couple of more things that still need to get resolved obviously it's been in the headlines for a while, things like LIBOR and FX. And so would those also be embedded within this number as well?

Based upon everyone’s current views as to what those could be.

Okay. Separate question on the Citicorp corporate other, its page 14. Just want to make sure I understand that expected sustainability of these numbers versus one timers in this quarter revenues down because of hedging activities, maybe to just understand what your thoughts are for that line item, how much did hedging activities impact that, would that have been more like 140 last quarter’s revenue line?

Yes, I think when you take a look at corp other, you’re going to get a variation around $100 million from quarter to quarter. Sometimes it will be a little bit less than a $100 million, sometimes it will be a little bit more than a $100 million.

Okay, on the revenue side.

Correct.

And then on the expenses little bit of higher legal and regulatory compliance, I am just legal sounds like it’s a one timer but reg compliance I am not sure if that’s a one timer or FED just keeps going so how much of that you’re thinking about the expense line now?

When you take a look at the first -- I'd take a look at the core operating expenses sequentially and if you look at them sequentially the 284 and the 297 are fairly close.

So legal and repo should fade over the next couple of years is that how to think about there?

Well, certainly repositioning as I said, repositioning cost overall for Citi should be -- the second half should be somewhat in line with what we had in the first half. And legal, as I said, I think that’s going to remain elevated but it’s also going to be somewhat episodic in nature.

And then just lastly on page 11, you have the consumer expense drivers and as of 2Q, in some cases, you've already exceeded what your year-end forecast is; does that suggest year-end forecast will be updated or we’re just running ahead of schedule and the levers for the expense line in global consumer are largely around the support side at this stage?

Yes, I'd say yes to everything you said. So when you look at some of the drivers, we are running ahead of where we thought we would be clearly on headcount. We didn’t feel that we could update you with the new year-end target at this point in time. So we will likely give you a better view as to where we're going to be at year-end when we come back to you in the third quarter. But obviously it should be lower than the 145 that we are right now. As a matter of fact, if you look at the target we have said it’s going to be less than 145. So if we get less than 145, we'll give you a sense as to how low we think we will be able to drive that next quarter. And I think as far as from a support side point of view that clearly is a big driver of expense in the consumer businesses and that is something that we're very focused on. Good progress in the second quarter, taking those support side down by about 30. And we hope to be able to do that and more in the third and fourth quarter.

And that’s in part the benefit from the project Rainbow?

In part, it’s Rainbow, it’s also -- we talked about in the past trying to run the consumer business as opposed to a collection of 35 individual consumer businesses, as more of a global consumer bank, and so that clearly has some aspect of it. But there’s also aspect that we can do just in the U.S where in the U.S., we sort of ran the consumer business not as a bank, but as a collection of product silos. And so as we begin to run the U.S. more as a retail bank, that also gives us the ability to close down sites and consolidate.

Okay, so there should be more income here on the expense outlook?

That’s what we're saying, yes.

Your next question will come from the line of Mike Mayo with CLSA.

Few questions, first, how much was the Ukraine hedging loss?

Well, I didn’t give you an exact dollar amount, Mike, but you can figure it out by the fact that I said it was -- it caused about 10%; so let’s call it just slightly around $100 million or so.

Okay, and as it relates to Korea, you’re saying the headline should be abating. Can you give us any income figures for Korea or revenues or some additional detail that you don’t disclose in the press release?

I’m not going to go into specifics. We don’t do specific country results. I will tell you this, our view is that -- again, revenues should be now growing sequentially in Korea. Excluding the repositioning charge, for the first time in several quarters, Korea actually turned a pre-tax profit. So again we're encouraged as to the future direction of our consumer franchise in Korea.

As it relates to expenses, a few people have asked about this, but when I go back to the March 2013 presentation that gave efficiency targets, it said the high end of efficiency assumes flat revenues and revenues for the first half of this year versus last year, down 3%. So once again, why are you still comfortable with your efficiency targets for 2015 when revenues have been so much worse, and you highlighted slide 10 and slide 13, your efficiency targets for global consumer and ICG, just can you confirm that is for the entire year 2015? You still expect to get not only those two targets but for Citi Corp as a whole?

Yes, I confirm that.

And if I to give -- a very short answer, you've given a lot of things that you’re doing, why can’t you still reach those efficiency targets even though revenues have been so much worse?

Mike, its Mike. I think, as John is going to walk through things, we’ve been taking a multi-pronged approach to the things. So the combination of headcount, support size, tech data information, we've been going across the board at different levers that we can pull to try and keep the expenses in line. And again I think as we think about the second half of the year, certainly on a sequential basis we are feeling better. I think if you look at the underlying drivers and fundamentals of the business, deposits, loans, what’s going on in TTS, what’s going on in the investment banking side of things, despite market challenges, parts of the firm are performing well and we think in the second year there are some continued revenue uplift there, and so again the combination of both levers around the efficiency ratio, the combination of revenue lift with expense discipline gets us to where we need to be.

And I guess the one wallet card is still legal and I know this settlement was lot more than I expected, or was more than almost any shareholder that I spoke with expected. And so if you can just give any additional color. I mean I just read one article saying that Department of Justice didn’t want to hear about your small market share in some of the mortgage areas whereas that seems to be a relevant consideration. So why did you go ahead and settle for what is a huge amount in the minds of many shareholders as opposed to pushing this one? And what does this mean for your remaining legal issues? And what are your remaining legal issues and what do you think about it?

I think when you look at our settlement, Mike; there are two components to it. One is the RMBS which has been quantified and then if you’ve got a go down the list of actually fine just on the list in terms of our size in participation. But I think the other side of that is what we did in terms of putting the CDO litigation behind us. And when you go back and you look at our participation and CDOs, you look at 2005, ’06, ’07, we were somewhere at or near the top of the lead tables year in and year out in CDOs, and so this was very important to get behind us and I think meaningful. And again as I think, we went through the negotiation, we felt to get this behind us that this was something that was in our shareholders’ best interest to move on from.

And what remains, I assume, FX and LIBOR are the big ones, how should we think about that potential exposure or am I correct in assuming those are the two big remaining legal exposures.

We don’t comment, Mike, in terms of forward-looking legal.

Okay. And last question. If interest rates increase by a 100 basis points, what’s the benefit to Citigroup today versus say a quarter ago?

A quarter ago, I think we’ve told you it’s somewhere between $1.8 billion and $1.9 billion for a parallel shift in the interest rate move, if interest rates move by a 100 basis points. That’s about a 100 hires (ph) in out somewhere between $1.9 billion and $2 billion.

Your next question will come from the Moshe Orenbuch with Credit Suisse.

Great, thanks. I guess I was sort of wondering when you had spoken at a conference towards the end of May, you had mentioned that you though the entire market’s revenue would be down kind of 20% to 25% and the FICC performance substantially better, and you kind of addressed a little bit around that but, I mean is it as simple as that June was better than the previous months, can you talk a little bit about that maybe put in the context of that current activity for the last couple of weeks and into the third quarter?

Yeah, I’d say that June was certainly a much better month overall from what we had -- the way we had viewed the market performance when we spoke at the conference at the end of May. And there is several events transpired at the end of May, beginning of June that had a common influence on the markets, specifically as it relates to spread products. So everything from the Crimea referendum, everything just sort of seem to calm down. And it was just a better overall environment, as I said, mostly for spread products in the month of June.

Now that’s just kind of continue to show through in July so far.

Again, it’s been just a couple of days in July, let’s not get too carried away.

Okay. Another question kind of unrelated and that is given the strength of your capital and the high level of capital generation, are there ways that you can actually kind of use that capital position before you have an opportunity to return capital next year? I mean are there activities that you had reduced or stopped doing that you would consider doing again? I mean are there any ways to think about that for the back half of this year just given I mean even the sin buckets, so there are ways to kind of use those just given the strength of that capital position?

I think Moshe, if you’d go back; I think there is a couple of different ways we potentially think about using it. One is we’re not going to do stupid things with it around putting risk on it doesn’t make sense or doesn’t fit to business model. But I think if you go back, you look at best pie and I think going forward then probably beat the opportunity to take a look at some more portfolios that might come available. And so again we’d take a hard look at those and if they are accretive to the business, we’d be prepared to act on those. Clearly we continue in our investor grow markets to grow and whether that’s footprint, clients, balance sheet and so we are putting our capital to work in those areas and I’d say those are probably the two primary things that we’ve looked at in terms of capital use.

Just a follow up on that, Mike. The private label card is an area where there have been a couple of portfolios that are up for sell, any other areas that you would just specifically highlight where you’ve seen kind of opportunities to put capital to work?

I think that the private label card, I think there is potentially some things coming forward in the cards business. John talked a little a bit about. We’ve been pleasantly surprised in terms of the uptake on the American Airlines’ portfolio opportunities to continue to grow organically. But I would say away from those things, Moshe, we are largely focused on what we can do organically around our business model.

Thanks.

And again you’ve seen both in consumer and both in ICG pretty good loan growth.

Your next question will come from the line of Gerard Cassidy with RBC Capital Market.

Following up on the comments about the good loan growth in ICG group, you guys had very strong corporate lending revenue growth in the quarter can you give us some color where the corporate loan growth is coming from?

Now again it’s pretty widespread, trade products have continued to perform well. We actually saw a slight rise in loan spreads in trade loans this quarter. And we had good uptick from a corporate lending point of view in both Europe and North America. And some of that was related to activity in the capital markets area and M&A, but again it’s been pretty good.

The results for the second quarter, in the years past the large banks second quarter results often reflected the Shared National Credit exam, can you give some color to the results reflect -- your results this quarter reflect any changes that the regulators may have had due to the SNC exam and maybe where does that stand right now the SNC exam?

Yes, I am not aware that we had to make any significant changes as a result of the Shared National Credit exam.

Another question sticking with the ICG group, can you guys estimate how much of the fall off in the trading revenues are cyclical versus secular? I know it’s a difficult question, but the volatility is certainly down in this business; hopefully it will come back to drive revenues higher, but can you give us an estimate what you’re thinking might be and then as part of that, are you at a size if it is a secular decline, are you comfortable with the size of your expense base if a part of it is a secular decline?

Yes, as you’ve said, Gerard, it’s really hard to come up with an actual number as to what is cyclical versus secular. We continue to evaluate how we view the various offering that we have in those markets businesses and we constantly adjust our capacity to where we think the new secular trend is, so again it’s somewhat product by product as opposed to just say, its markets in general and again its things move based upon market conditions. You take a look at our FICC revenues for this quarter. FICC revenues were down 12% now that was primarily driven by rates in currencies. And rates in currencies are going to respond to what’s going on in the market. But even in the rates in currencies, rates in currencies were down something close to 30% for the quarter. But you’re looking -- you’re comparing rates in currencies this second quarter compared to the second quarter of ’13 and second quarter of ’13 was relatively strong quarter for rates in currencies. And in fact our results in the second quarter benefited from some outside gains that we took as we correctly lowered our inventories in our local markets business in anticipation of increased negative sentiment in the EM associated with the tapering. So the absence of those prior year gains associated with the de-risking contributed probably a full 6 percentage point to the year-over-year decline in risk in currencies revenues, and so risk in currencies down 23% year-over-year that’s kind of in line with what would I think expect from a seasonal point of view and in the currency environment. So hard to find that there is something dramatically secular going on there. When you look at spread products on the other hand, spread products were up just about 30% year-over-year and basically the entire year-on-year increase occurred in the month of June following the improvement in markets sentiment that I referenced earlier. So you’re still seeing a lot of cyclical that’s running through the year the various businesses at this point.

And I think the second part of your question, if you go to Slide 13, ICG is not standing and watching that if you go back and look at Slide 13, you see the nine consecutive quarters, you see from a core operating expense that the business is taking out about $1.1 billion of operating expense. So again continuing to stay focused on the model when the cyclical versus secular and trying to make sure we’re adjusting to those two pieces.

Shifting gears moving onto Citi holdings, you’ve gave us some good color about the pending sales that you have in the pipeline and I think you’ve said almost $1 billion of that number come from mortgage loans, what are you seeing in pricing for the distressed assets in the mortgage area, I am assuming it’s improved but by how much?

It’s improved. I can’t give you an actual figure quarter-on-quarter. I just don’t have it in my head, but it has improved. But again it’s improved, but you have to take a look at those loans broken out by a bunch of different categories and also by the location of the loan, by specific MSA code. So it isn’t as though the entire market is re-priced up by 500 basis points or something like that. It really is product dependent and market dependent. And as you know, we have been very active sellers of these mortgages in the past. So it’s not that we haven’t already gone through this book and done a lot of sales activity.

This is in due putting this mortgage problem behind you with the settlement today, is there ever a reason to do a very large bulk sale in Citi Holdings? And to put it behind you, is that ever feasible?

I think it’s all dependent upon price. If the price was right, we’d be happy to do it. I think based on current market prices and you can see the improvements on the NCLs and you can kind of do your own market check and look at what the market would pay for these assets versus the funding collect out value and today I’d say it’s not there, but if they were to present itself, we’d be happy to react to it.

Would you say it’s extremely wide from what you, in terms of market prices versus what you’re comfortable with or are we within, is it something that within the realm of possibility?

No I think, again I think as John said, you can’t just take the entire portfolio and lump it because it goes through first through seconds through the deal with CFNA mortgages and all are very different and all have very different pricing characteristics to it. So it’s probably most likely amongst the prime first, you’d get close first and as you move down that spectrum that bid to offer spread so to speak would probably widen out. But again, as we look there what we want to sell, it’s not just the headline asset reduction, but more importantly it’s the removal of risk, it’s the removal of cost of servicing and in particular special servicing against these and obviously capital release. So we look at it against what we see the risk-adjusted earnings power of the asset is and if it’s close, we’re happy to move on I would say for a lot of the portfolio today we don’t see that, but not to say it won’t happen some point in the future.

Great. And then just last question, I may have missed this, I apologize. You guys have moved very swiftly in reducing your branch count here in, globally, but in North America as well. Is there much left to do in North America in terms of reducing the number of branches in the consumer business?

I think you will see continued centralization of our branches around the key metropolitan areas. And again in accordance with our stated strategy where we want to really focus on the large cities. So I still think that there is some level of branch rationalization yet to go.

Your next question will come from the line of Chris Kotowski with Oppenheimer & Co. Chris Kotowski - Oppenheimer & Co.: Yes, good morning. Earlier in the quarter there were a number of press reports about attempts to sell one main financial and I’m just thinking, does it make sense for Citi to sell a profit-making company for cash, but it can’t return to shareholders? Or is there a way to spin it out to shareholders or what if that got caught up in the whole CCAR process or would it count as a disposition if you did it that way?

Well I think, again kind of going back we in my words crossed the bridge back in 2009 when we placed one main into holdings or at that point Citi Financial into holdings. And while it’s a terrific business, the subprime unsecured lending business is not a business that's core to who we are or our client base for our future. So again what we’ve said is, we want to in essence maximize the exit value for our shareholders and we’ve been running that in accordance with that. And I think as we’ve shown in holdings dispositions we’re wide open to different structures, spin sale, different approaches are on the table. And I think as we get closer to kind of looking at that exit, we’ll certainly way all of those.

Your next question will come from the line of Eric Wasserstrom with SunTrust Robinson Humphrey.

Maybe if we could just step back for a few minutes and talk about the list of strategic priorities, Mike you’ve articulated since you moved into CEO role there was of course the operating expense reduction, the DTA utilization, the resumption of revenue growth across different regions. The reallocation of resources among different global geographies that maybe were under scale and maybe an unspoken one was some of the resizing that occurred in-site, ICG. So I wonder now, where would you say you are like which ending are you in with respect to those various priorities?

Well, I think if you go back and you touched on some, so I think you’ve seen from the efficiency ratio perspective in your operating expenses I think you’ve seen pretty consistent progress against moving towards the target that we set out for the company. I think that when you look at things such as DTA, at the point we really stated the priority of DTA utilization, DTA was still going the wrong way, we’re still increasing. And I think since that point in time we’ve showed the consistent ability to use it. I think the PC didn’t mention in there was we said John and I had put out it by the end of 2015, we wanted to get holdings to breakeven. And I think this quarter got us there a little bit early and it’s our job to work to try and obviously sustain that. And I think candidly the most challenging part of it has really been the revenue side of things, it’s been the environment. I think a combination of the economic, the regulatory and the political nature of things around the world has probably made things more challenging than we certainly would have liked. We’ve tried to continue to adjust the business model to that. So I think that we’ve made progress on everything that we’ve set out to do, we’ve got more work to do, we’re not going to rest until we get there. But I feel quite good and quite proud of what we’ve managed to accomplish in the last 1.5 years or so.

And you touched on the benefits to reductions from the sale of Greece and Spain. Were there any geographies that sort of moved into the review bucket in the past quarter or two quarters that maybe the market is nowhere?

No I think, again we showed the optimized list as part of the 2013 exercise, John spoke earlier to the progress against that bucket that in fact we’ve made about 330 basis points of efficiency gains in 2013 and we’ve continued to get those gains in 2014. And what we’ve said I think remains consistent today that we need to have a pathway or a line of vision or a line of sight to those businesses or geographies making sense over the intermediate or longer time frame. And so if we discover businesses or believe their businesses that can’t get there, they’ll absolutely come under strategic review.

And just last question from me on slide 24, the last 12 months return analysis. The 10% that’s listed there and then there is a call-out box, so including the DTA it would be 13%. You changed a little bit from the prior quarter. So I am just curious, would that number have increased the number excluding the DTA? Would that increase sequentially this period?

No actually on a trailing 12 months basis, because we’ve generated more capital our denominator has increased and therefore has lowered the return.

So that actually got to the cracks of my question, that the compounding of capital is occurring at a rate faster than what’s occurring in the new areas, effectively correct?

That’s exactly what’s going on. As I said in the opening in the first half of the year we generated about $10 billion of capital.

The next question will come from the line of Erica Najarian with Bank of America Merrill Lynch.

My questions have all been asked and answered.

Your next question will come from the line of Brian Kleinhanzl with KBW.

I just had a few quick questions here. You said that the revenues in Citi Holdings benefited from the asset sales done there. Can you give us what the dollar impact was from the benefit and it was all to NII?

If the dollar amount of the asset sales is somewhat similar to the dollar amount that we have disclosed last quarter as far as the benefit of asset sales, which was somewhere in the vicinity of $200 million or so. So it’s roughly flattish to the first quarter.

And then off Citi Holdings and the period of loans went down 8 billion, other assets went down about 300 million but the total assets went down 3 billion. What’s the driver of the delta there? Is it organic growth?

You’re focused on Holdings, right? I just want to make sure. Yes as we sign to sell the businesses in Spain and Greece, they come out of the loan book and they go into assets held for sale. So they move down into other asset category. That’s the way that once you’ve got an asset held for sale, you one line the assets and one line the liabilities of those businesses, and so therefore they come out of loans or whatever other balance sheet line they are in and they all go down to other assets and other liabilities. That’s all.

And then within the efficiency ratio that you looked out in the global consumer banking, excluding Korea and mortgage banking would be meaningfully lower. But even if you back out the expenses related to Korea this quarter, still mortgage banking is being a drag on the efficiency ratio. Do you still think that market share gains is enough to improve the efficiency ratio there or do you actually do more repositioning in North America mortgage?

Well we’ve actually have been taking -- the expenses have been coming out of North America mortgages. Now they come out of mortgages on somewhat of a lag basis because you tend to recognize your revenues, especially when you’re doing originate to sell you tend to recognize the revenues when you lock in the rate, when you do a rate lock. And then you still have another quarter where you’ve got to do all the processing in order to really make the sale. But, in general, the expenses have been coming down in North America. We think we have got the, with the expense reductions that we should expect to see in the third quarter, I think that the business is properly sized both from certainly from an expense point of view compared to the level of originations that we would expect to get out of that business.

Your next question will come from the line of Ken Usdin with Jefferies.

John, first on follow-up on Holdings, so the adjusted operating margins gotten up to 700 with the help from that 200 million of gains, is it fair to say that we are now kind of in this new higher range for that operating margin for Citi Holdings or is it still just dependent on whether or not you can get those gains every quarter as you continue to make incremental sales?

I would say it’s still dependent upon our ability to get those gains, so I would tend to look more of the 100 as the level that we would expect in that business, somewhere between 400 and 500. And if we get a reasonable amount of asset sales then you would get up to the 700 level.

Okay and then secondly on credit quality. This quarter is interesting that the reserve released in consumer and specifically North America card was bigger than it’s been for a while and then conversely the mortgage released in Holdings was actually smaller. So, can you help us dimension, how should we just think about aggregate release going forward and what you anticipate would be the bigger drivers from here?

Clearly the reserve release that we had in cards, as I tried to indicate in some of the remarks that I made, that was really in response to the fact that the credit performance in cards just got a lot better than what we have been anticipating at the end of the first quarter. At the end of the first quarter, we were talking about overall North America NCL rates sort of leveling off at 3% for the year and we just continue to see much more favorable delinquency experience as well as NCL experience in both branded cards and retail services. And we expect that level of NCL and delinquency to continue, so that’s what really drove the reserve release in the second quarter. I don’t expect that the reserve releases in those two cards businesses to stay at the level that we have had in either the first or the second quarter as we move into the second half of the year.

And then on the mortgage side is it just more dependent on sales from here then it is on credit performance?

No, if you take a look at just at mortgages, I believe that if you look at the reserve release as a percentage of the NCL that we have took in mortgages, it’s roughly equivalent to where we have been. I think that the reserve release was equal to about 86% of the net credit losses that we had in the Holdings’ mortgage book and we have been running somewhere between 85% and 90% in any of the last several quarters. So, that reserve release is likely going to again somewhere in that 85% to 90% range of the NCLs that we ultimately charge off in mortgages.

Okay and then quick question on the asset yield. So, you mentioned that the NIM should be pretty stable from here, deposit cost look sort of flattened. So, can you talk to us about incremental loan yields and incremental securities purchases and then ability to continue to just grow overall balance sheet in terms of NII dollars?

Our expectation is that loans will continue to grow. I mean we still have loan growth in, again focused on the Citicorp business. Citicorp loans grew 8% year-over-year and we anticipate again still getting good healthy loan growth in our Citicorp businesses. Those loan growth, even if spreads comedown a little bit on loans that still gives you a nice healthy contribution to your near and your NIM. I think you are right as far as deposit cost, I think that’s probably going to be somewhat flattish from here on out may be a slight uptick but not much. But we still have the ability to lower our overall cost of funds as we continue to issue, rollover the long-term debt at more favorable spreads then what we were issuing several years ago.

Okay and then last question on that last point, John. As far as the long-term debt and then also more importantly the continued preferred issuance and I think you guys are still around 70 basis points of B3 RWAs. Can you give us an understanding of just how much of that long-term debt is for roll and then also your general issuance plans on how much of that preferred bucket you want to continue to get on?

As far as long-term debt, I think we are pretty much at the level certainly of the long-term debt held at the holding company we are pretty much at the level that we think we need to be on a full year basis. And so there will continue to be issuance. We will give you an update on those issuance plans when we do our fixed income conference towards the end of this week but I think it’s pretty much in line with the guidance that we gave out at the end of the first quarter. And we will continue to be an issuer of preferred stock; we recognize that we’ve got some preferred stock issuance to do over the next three to five years, so we will be issuing preferred stock but in a somewhat paced approach. Operator Your next question will come from the line of Matt Burnell with Wells Fargo Security.

Good morning, thanks for taking my questions, just a follow up on John, your pretty positive commentary about underwriting strength and M&A strength and I guess I’m trying to get a little more color on was that just in the US or are you gaining, you feel you’re gaining share across the different geographies, Asia, Europe and the US in both those businesses.

I’d say it’s fairly widespread, obviously it’s going to be a little bit heavier in some geographies than other and I don’t want to get into you know a geography-by-geography commentary. But again it’s a wide spread you know improvement in the second quarter certainly in the wallet share and again as we look to, as the wallet share that we’re capturing in the announced M&A again that’s fairly broad based.

Okay and then just returning to slide 24, I appreciate the breakout of the average allocated TCE which I presume is going to be updated annually, I guess I’m curious as to the 42 billion of TCE allocated to corp and other, is that going to stay at a roughly similar amount to the total Citigroup capital or could that be moved down into some of the operating units over time.

Well when we set up the amount equal to corp other there we laid out the rationale for how we got there, it’s a little bit of the operations that we have in corp other, importantly it’s where we hold the capital associated with the DTA, it’s where we hold some of the operator’s capital that we can’t quite allocate to other businesses and importantly as we continue to generate capital, you know, far in excess of our ability to distribute capital, that amount will grow over time, so we’ll do an annual you know re-appropriation based upon what the level of capital that we think is appropriate for each business, but as long as we continue to be net generators of TCE you’re going to see more of that in the corp other number.

And then just finally from me, you mentioned that the impact of a 100 basis point higher rate is slightly more at the end of June then it was at the end of March, I noticed that your securities, your investment portfolio is up about 8% year-over-year or 4% quarter-over-quarter. Can you update on what the estimated reduction in your tangible common equity would be from a 100 basis point higher rate environment.

You know again, we’ll put this all out next, probably when we do the fixed income conference, but my recollection is that it goes to about $3.4 billion. Operator Your next question will come from the line of Derek De Vries with UBS.

Thanks, I have a couple of questions on Latin America, I guess starting with last week the Mexican Anti Trust Authority published recommendations on reform, I was hoping you could give us some of those key recommendations and maybe talk a little bit about the impact they could have on dynamics.

I have to tell you we don’t view what was published last week as having any significant near term impact on dynamics, I say that the industry’s still sorting through what was published and it’s still in the early stages of analysis.

Maybe a little more concrete, the provisions in Latin America ticked up, and I take on board your comments about portfolio growth and seasoning, but if there’s nothing sort of one off in nature there, is this a level we should sort of expect going forward from Latin America or is there some one-off things in there.

It’s not necessarily one-off, but again most of the performance and the credit performance in Latin America consumer really is being driven by Mexico cards, and the consumer in Mexico is still absorbing a little bit of the fiscal reform actions that they have gone through and clearly as the Mexico economy continues to struggle to really regain the momentum that everyone thought that it would have, consumer spending has not been robust, so we would anticipate, it’s what he said that the NCO rate will remain relatively high through the end of this year, that’s why we said that Latin America NCO rate will probably stay at around the first half levels but you know, we do believe that once that gets behind us there should be improvement in those NCO rates, as we go into next year, so still feel very good about the overall the underlying credit quality in our Mexico cards portfolio.

And then I guess one last question just touching on it, I think you’ve had talked about a lot today. The last quarter you said that when you made your 2015 targets you build in about 200 basis points in your efficiency ratio for litigation, so obviously going off a lot from this year, I am just wondering with three months further along, do you still feel comfortable, you’ll get enough of litigation stuff behind you this year at the 200 basis points for litigations. So a good gap as to where you’ll come out next year?

Just to be clear, I believe that what I said was that the 200 basis points would cover to both, repositioning as well as legal and related costs. So we’ll have to see as we get closer to the yearend we’ll take a look, but again, we still believe based upon what we look at today that we should be able to achieve the efficiency targets that we set out for 2015.

Your next question will come from the line of Andrew Marquardt with Evercore.

Just back on the balance sheet dynamics in a potentially changing rate environment at some point ended deposit velocity question that Guy was getting to earlier. Can you just help us understand if you do have certain level that you baked into your modeling, how do you think about the outcome in terms of may be that -- I mean over half deposits or in fact from ICG group and third is our -- in North America, so it’s still a relatively good contribution total deposits. How you do think about maybe isolating that component that could be at risk in terms of reversal, once raised eventually move higher?

Yes. Actually we don’t view that component as being at risk because, certainly, I won’t say there wasn’t $1 of deposit but it is at risk but the overall deposit level, we don’t view as being at risk, especially on a TTS businesses, the trend, the treasury and trade, the solutions of deposits, because they really represent for the most part operating account balances. And so those are the funds that businesses need to have in order just to conduct their ongoing operations. So again, we feel relatively good about it, now if the FED tapering or if the FED comes in and does something to try to drain liquidity out of the system that could impact future deposit growth, but it’s not likely to impact the absolute level of deposit that we currently have in those businesses.

And do you have any updated LCR reach it at this point or is that something we should refer not a fixed income call question maybe?

That calculation is still ongoing and we’ll give that to you when we do the fixed income call. It still is a very strong ratio. I just don’t have it in front of me right now.

The last quarter was about 120-ish, if I recall correctly?

Yes. It’s going to be just around that maybe even slightly higher, when we publish at this week.

Got it. And then just lastly, I know there’s been a lot of questions of interest ratios and goals, but can you just help us understand maybe just to come it down like, if in fact the revenue environment remains to have it and tougher for longer, if the revenue environment is stagnant here, there certainly sounds like there’s room on TCB to move nearly on ICG as well. And efficiency ratio really been met, if the revenue environment today seems as it is for another six quarter or so, is that possible is there enough room on what you have already or would it drive -- you generally think maybe point another something like to draw, that we consider other things?

Let’s think about the revenue environment that you refer to, all right. We have ongoing revenue growth and has had ongoing revenue growth in Latin America even as Mexico has slowed down. So the revenue environment for Latin America still seems to be in growth mode and we feel very good about the way our franchises position there. When you take a look at Asia, we now have got the Korea repositioning behind us. And we have had underlying growth in each of our franchises in Asia over the last several quarter, but that has been offset in many ways by the reduction in revenues in Korea so we actually are quite constructive as far as the revenue environment today in Asia, Asia consumer has producing growth both sequentially and year-over-year in the second half of the year. So we feel really good about the performance of our Asia consumer franchise going forward. In North America, we’ve got the mortgage repositioning out of the way, so our mortgage revenues stabilized in the first quarter they actually grew in the second quarter, we’ve got that business now positioned properly we think for the way the market should move forward. And again we’re not looking to constantly gain, we don’t look to be number one or number two in that business we just want to be able to serve our customers through our retail branches within appropriate mix of correspondence business. So again we’re very constructive on what we’ve been able to do with the mortgage business. Branded cards I mentioned we’ve got purchase sales growth, we’ve got good underlying momentum in the full rate loans in that business and importantly in the products where we have actually been investing. When you take a look at branded cards, branded cards I think…

That’s helpful, thanks for that summary. And then in terms of in markets and maybe it’s summarized in the ICG when you referenced your I think comp ratio this last quarter was 29% in line with last year. Should we expected that should remain or could it tick higher just because as one referenced earlier as well still trying to figure out how much is cyclical versus secular?

The 29% that I referenced is actually the comp ratio over a trailing 12 month basis. So that’s 29% both for full year 2013 and 29% for the last 12 months as measured as of the end of this quarter.

And should we expect that for the full year or is that?

I am not going to forecast where comp ratio is going to be but you can see that we’ve been holding in fairly constant.

Your next question will come from the line of Steven Chubak with Nomura.

So one of your competitors provided some helpful disclosure on the advanced approach framework under CCAR specifically which reflected an additional 100 basis point decline in the Firm’s Tier 1 common under stress due to the stressed RWA inflation under the Basel III advanced framework. And since the advanced framework appears to be your binding capital constraint at the moment, I was wondering whether you’ve conducted a similar assessment internally and if so if you could provide some guidance as to how the advanced approach framework could further impact future risk based capital ratios under CCAR?

I got to tell you, I have not spent any time looking at what our peer institution put out there, so I apologize.

Have you done the work yourselves though?

I am not sure what they did, so I don’t know what they did so I can’t comment as to whether or not we did something similar.

Okay, fair enough. And then switching gears and as a follow up to Betsy’s question on operational risk capital your comments indicated that 56 billion true-up proposed by the Fed or imposed by the Fed late last year, contemplate some buffer for litigation matters not yet resolved. And I was just wondering what the process is for the Fed providing guidance on op risk capital level so is the feedback given quarterly or is it nearly evaluated as part of the advanced model submissions which from what I recall is actually an annual process?

Yes, it’s something that is under discussion periodically. But obviously goes through a much fuller exam on an annual basis.

Okay. And then just one more from me on capital allocations, as part of your enhanced segment disclosure on slide 24 the amount of capital allocated exclusive of DTA to support the operations in Corp and Holdings and focusing I guess or excluding the corporate other segment was a combined 126 billion or so which implies on current RWA levels about a 10% Tier 1 common target. And I was wondering if we should think about that 10% Tier 1 common ratio as an appropriate through the cycle target for Citigroup at this juncture or is it simply still too early to make such a determination?

Again when you take a look at the underlying franchises in Citi right now. We clearly think that the Citicorp businesses are capable of producing mid-teens ROTCE, and again that’s going to be -- so the overall firm’s contribution to ROTCE is going to be dependent upon our ability to return capital at some point in time.

Actually there is one more quick question regarding the DTA disclosure. Can you update us on the level of U.S. foreign tax credits that are subject to expiry by 2018? I know it was about 9.9 billion at the end of the year, but obviously you’ve made some progress over the last two quarters.

Yes, we update those disclosures on an annual basis. There is just too much movement during individual quarters that actually come up with something that is relevant. So we will update you at the end of this year as to the progress that we have been making.

You have no further questions at this time.

Thank you Regina and thank you all for joining us today. If you have any follow up questions, please reach out to the investor relations team. Thanks.

Ladies and gentlemen, this concludes today’s conference. Thank you all for joining, and you may now disconnect.