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BEST PRACTICE CASE STUDY:

WEALTH MANAGEMENT

Jeff Hammer, SVP

GWM Business Risk

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ent 1. Strategies and techniques for improving performance and

profitability in wealth management

2. The role of risk management in reducing credit risk, operational risk (e.g. fraud) and business risk

3. Professionalizing business risk

4. Sharing risk management best practices with other parts of the enterprise

Agenda Topics

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The Global Wealth Management Division

• Who is GWM

• Citi Private Bank

• Smith Barney

• Citi Investment Research

• Key Statistics

• Revenue/expense and other key statistics

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Global Wealth ManagementThe Global Wealth Management division at Citi comprises three of the most respected brands in wealth management: The Citi Private Bank, Smith Barney and Citi Investment Research. Global Wealth Management is a top-tier global wealth manager providing some of the best institutional capabilities available today. Serving both private and institutional clients, Global Wealth Management taps the strength and resources of Citi to maximize value and service.

•The Citi Private BankThe Citi Private Bank, one of the largest private banking businesses in the world, provides the wealth creators in today's global economy with a full range of finance, banking, investment, trust and advisory services through its nearly 470 private bankers and 290 product specialists in more than 30 countries. Our clients rely on us for comprehensive solutions, including access to capital, sophisticated investment strategies and liquidity management, as well as expertise from the Global Corporate and Investment Bank. Citi Private Bankers act as trusted advisors, designing and coordinating insightful solutions for individual client needs, with an emphasis on personalized, confidential service.  Smith BarneySmith Barney is the global private wealth management unit of Citi. It is a leading provider of comprehensive financial planning and advisory services to high net worth investors, institutions, corporations and private businesses, governments and foundations. With approximately 14,500 financial advisors in over 800 offices, Smith Barney offers a full suite of investment services, including asset allocation, private investments and lending services, hedge funds, cash and portfolio management, as well as retirement, education and estate planning. A division of Citigroup Global Capital Markets Inc., the firm currently has more than 9.6 million client accounts, representing $1.562 trillion in client assets.  

•Citi Investment ResearchCiti Investment Research is a highly respected research unit and is comprised of 390 research analysts across 22 countries. Citi Investment Research covers 3,100 companies, representing 90 percent of the market capitalization of the major global indices, and provides macro and quantitative analysis of global markets and sector trends. Combined with Citi's exceptional sales and trading capabilities and Smith Barney's financial consultants, the core focus of the group is to help investing clients make informed decisions by providing value-added, independent, insightful analysis.

The Global Wealth Management Brands

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The Global Wealth Management within Citigroup

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The Global Wealth Management @ June 30, 2007

GLOBAL WEALTH MANAGEMENT GWM CitigroupSix YTD 2007 vs. Six YTD 2007 vs.

(In millions of dollars) 1Q 2Q 1Q 2Q Months YTD 2006 Incr/ Months YTD 2006 Incr/

2006 2006 2007 2007 2007 (Decr) 2007 (Decr)

Smith Barney 1,987$ 1,990$ 2,246$ 2,611$ Private Bank 496 502 572 586 Total Revenues, Net of Interest Expense 2,483 2,492 2,818 3,197 6,015 21% 52,089 17%

Smith Barney 168 238 324 321 Private Bank 119 109 124 193 Net Income 287$ 347$ 448$ 514$ 962$ 52% 11,238$ 3%

Financial Advisors (FA) / Bankers 13,837 13,671 13,605 15,595 Annualized Revenue per FA / Banker (in thousands) 715$ 726$ 837$ 878$ Key Indicators (in billions of dollars):Client Assets Under Fee-Based Management 369$ 363$ 418$ 509$ Total Client Assets 1,347$ 1,321$ 1,493$ 1,788$ Average Deposits and Other Customer Liability Balances 99$ 100$ 113$ 113$

U.S.:Total Revenues, Net of Interest Expense 2,154$ 2,149$ 2,385$ 2,439$ 4,824$ Net Income 228$ 290$ 361$ 335$ 696$

International:Total Revenues, Net of Interest Expense 329$ 343$ 433$ 758$ 1,191$ Net Income 59$ 57$ 87$ 179$ 266$

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Strategies and techniques for improving performance and profitability

1. 5 Point Plan/Shared Responsibilities

2. Business Risk Committees

3. Citigroup Business Optimization – merging of Expense reduction, process improvements

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Our Shared Responsibilities

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5 Point Plan

1. Expanded Training: We need to instill in our employees an appreciation for our legacy, platform,

opportunities, and Shared Responsibilities, and give them the tools to accomplish our goals.

2. Improved Communications: We need to present a clear and consistent message of Citigroup’s

goal and Shared Responsibilities, celebrate our values and history, and enhance our communication.

3. Enhanced Focus on Talent & Development: We need to deepen our commitment to building and

developing our talent and help our managers reach their potential.

4. Balanced Performance Appraisals & Compensation: We need to strengthen the performance

appraisal and compensation process to consistently reinforce our Shared Responsibilities – thereby

maintaining yet balancing our focus on superior performance.

5. Strengthened Controls: We need to strengthen our independent controls and the control environment

throughout the company to support the businesses in their efforts to grow responsibly, minimize mistakes,

and to ensure that when mistakes occur, they are handled appropriately.

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5 Strengthened Controls: We need to strengthen our independent controls and the control environment throughout the company to support the businesses in their efforts to grow responsibly, minimize mistakes, and to ensure that when mistakes occur, they are handled appropriately.

Created a new structure within Citigroup: the Independent Global Compliance function,

responsible for continuing our progress in strengthening our control environment and ensuring our

businesses are compliant with appropriate rules and regulations.

Use Risk Control Self Assessments as management tools to ensure we are checking the right

things and to better anticipate challenges and vulnerabilities.

Conduct compliance training for all managers.

Expand our audit coverage to validate our controls; increase the number of our Guest Reviewers

to provide additional depth and perspective.

Conduct continuing education for our Control function professionals in five areas – Audit & Risk

Review, Finance, Independent Risk, Independent Compliance, and Legal.

Increase our resources for Compliance and Audit.

Unsatisfactory results on Risk Control Assessments, audits, or regulatory exams will be reviewed

personally with Chuck Prince and Bob Willumstad.

5 Point Plan – Strengthened Controls - expanded

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Reducing credit risk, operational risk (e.g. fraud) and business risk

1. Owner of Risk Management system

2. Role out and Trainer

3. Standard setter – for metrics

4. Review of policies/procedures and implementation

5. Product Committees – Business lead/ Risk management included in review and approval

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Professionalizing business risk

1. Change in governance due to Sarbanes Oxley

2. Separation of Risk from Compliance

3. Hiring practices (5 Point Plan)

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Sharing risk management best practices with other parts of the enterprise

1. Intranet websites for Operational Risk

2. Common Tool Usage

3. Monthly/quarterly/annual meetings calls

4. Annual Offsites

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QUESTIONS