Summary of the proposed Scheme for the Transfer of the International Personal Bank business of Citibank, N.A., London Branch to Citibank Europe plc., UK Branch
1. INTRODUCTION 1.1 It is proposed that the International Personal Bank ("IPB") business of Citibank, N.A., London Branch, as described in paragraph 4 below (the "Business"), will be transferred to Citibank Europe plc., UK Branch, (the UK branch of Citibank Europe plc., an Irish company). The transfer of the Business (the "Transfer") is to be implemented through the statutory process available under Part VII of the Financial Services and Markets Act 2000 (the "FSMA") for the transfer of banking businesses. 1.2 The Transfer is subject to the approval of the High Court of Justice in London. If the Court approves the Transfer, it is expected to take effect on or about 1 May 2017 (the "Transfer Date"). The Court hearing at which the Transfer will be considered and, if thought fit, approved is due to be held on 12 April 2017. Anyone who believes that they will be adversely affected by the Transfer can object or otherwise make representations, and if they wish, can appear at the Court hearing to raise objections or make representations. If you do wish to appear in Court, or if you wish to raise an objection/make a representation without appearing in Court, we would request that you write to Hogan Lovells International LLP, Atlantic House, Holborn Viaduct, London EC1A 2FG, quoting reference Citibank NA Court Scheme or email them at citibanknacourtscheme@hoganlovells.com by 6 April 2017 (three business days before the Court hearing). 1.3 This document provides a summary of the terms of the scheme (the "Scheme") under which the Transfer will be implemented, as required by regulation 5(4) of the Financial Services and Markets Act 2000 (Control of Business Transfers) (Requirements on Applicants) Regulations 2001. 1.4 The information in this document is only a summary of the Transfer and the Scheme. If you require further information or a copy of the Scheme free of charge, please contact us by telephone on 0808 109 8888 (or +44 (0)207 500 1445 if calling from outside the UK) or by writing to Citibank N.A. London Branch, Level 14, Citigroup Centre, 25 Canada Square, London E14 5LB, United Kingdom. A copy of the Scheme can also be obtained free of charge from www.ipb.citi.com. 2. EFFECTIVE DATE OF THE TRANSFER Assuming the Court approves the Transfer, the Scheme will become effective at 00.01 (UK time) on 1 May 2017, or on such other date and time as the Court may allow on the application of Citibank, N.A., London Branch and Citibank Europe plc., UK Branch (the "Effective Date"). Unless the Scheme becomes effective by 00.01 (UK time) on 1 May 2017, or on such other date and/or time as the Court may allow on the application of Citibank, N.A., London Branch and Citibank Europe plc., UK Branch, it will lapse. 3. REASON FOR THE TRANSFER Following the merger of Citibank International Limited into Citibank Europe plc. on 1st January 2016, it is proposed that the Business of Citibank, N.A., London Branch will be transferred into Citibank Europe plc., UK Branch, which is a branch of Citigroup s pan- European bank headquartered in Ireland, in order to streamline the regulatory regime of the IPB business and simplify resolution planning within Citigroup.
- 2-4. THE BUSINESS TO BE TRANSFERRED 4.1 The Business to be transferred from Citibank, N.A., London Branch to Citibank Europe plc is the IPB business of Citibank, N.A., London Branch. 4.2 The Business to be transferred from Citibank, N.A., London Branch to Citibank Europe plc., UK Branch includes most notably the following: (c) (d) the investment business under which Citibank, N.A., London Branch offers its customers investment products (including international brokerage, fixed income advisory, foreign exchange, structured notes and mutual funds);; the banking business including cash accounts and savings products (including time deposits) offered to customers of Citibank, N.A., London Branch and the lending business under which various forms of finance (including secured overdraft lending, margin lending and leveraged lending) are offered;; the benefit of all consents given to Citibank, N.A., London Branch by its customers for use of their personal data, insofar as that data relates to the Business;; and Citibank, N.A., London Branch's books and records relating to the Business. 4.3 As a result of the Transfer, customers, suppliers and other persons will have the same rights against Citibank Europe plc., UK Branch as they had against Citibank, N.A., London Branch before the Transfer took effect. Conversely, Citibank Europe plc., UK Branch will have the same rights against customers, suppliers and other persons as Citibank, N.A., London Branch had against customers, suppliers and other persons before the Transfer took effect. Citibank, N.A., London Branch will cease to have any rights or obligations in respect of the Business as a result of the Transfer except as described below. 5. WIDENING OF RIGHTS 5.1 Although rights under the agreements attributable to the Business that Citibank, N.A., London Branch has entered into with any customer (the "Customer Agreements") will not change as a result of the Transfer, the circumstances in which certain of those rights could be exercised by Citibank Europe plc., UK Branch (or Citibank Europe plc more widely) would be extended as a result of the Transfer, unless the Scheme provides otherwise. The Scheme will therefore impose a general restriction against this happening, as well as the specific restrictions described below. 5.2 However, these restrictions will only apply where rights would be extended as a result of the Transfer. They will not affect rights that Citibank, N.A., London Branch or Citibank Europe plc., UK Branch (or Citibank Europe plc more widely) or customers would otherwise have had, or may in future obtain, outside the Scheme. Set-Off Rights of Citibank Europe plc (Paragraph 14 of the Scheme) 5.3 A set-off right is the right of a bank, in certain circumstances, to use money deposited with them (such as in a current account or savings account) towards payment of a debt the same customer has with them (such as a loan or mortgage) that becomes repayable. 5.4 The Scheme (at paragraph 14) therefore provides that the current scope of Citibank, N.A., London Branch and Citibank Europe plc's rights will be maintained, by stating that after the Transfer Citibank Europe plc will not be able to:
- 3 - use money deposited in savings or current accounts transferred to Citibank Europe plc., UK Branch from Citibank, N.A., London Branch as a consequence of the Transfer to pay debts on existing Citibank Europe plc mortgages or loans;; or use money deposited in existing Citibank Europe plc savings or current accounts to pay debts on loans transferred to Citibank Europe plc., UK Branch from Citibank, N.A., London Branch as a consequence of the Transfer. 5.5 This will be the case unless Citibank Europe plc acquires set-off rights outside of the Scheme, for example if new contractual rights of set-off are introduced. 5.6 These restrictions will last until the date 3 months after the Effective Date, except in relation to deposits made for a fixed term or which are subject to a promotional rate if the deposit is maintained for a certain period, in which case the restrictions will last until 3 months after the end of that fixed term or promotional period. Cross Default Rights (Paragraph 20 of the Scheme) 5.7 A "cross default" clause is one which means that a customer will automatically be in breach of the account terms and conditions if in breach of certain other agreements. This may give rise to a right of early termination or a right to demand early repayment of any sum due to the bank. 5.8 The Scheme (at paragraph 20) states that, after the Transfer, where someone has accounts with both Citibank, N.A., London Branch and Citibank Europe plc: breach in relation to an existing account with Citibank Europe plc will not lead to a customer being asked to repay his transferred debt with Citibank, N.A., London Branch more quickly;; and breach of a transferred Citibank, N.A., London Branch account will not lead to a customer being asked to repay an existing mortgage or other debt with Citibank Europe plc more quickly. All monies rights (Paragraph 21 of the Scheme) 5.9 An "all monies" clause is one which allows a mortgage or charge to be used as security for all debts owed to the lender by a customer, not just the mortgage loan. 5.10 The Scheme (at paragraph 21) states that, after the Transfer, all monies clauses: in existing Citibank Europe plc customer agreements will not apply to debts transferred from Citibank, N.A., London Branch;; and in Customer Agreements transferred from Citibank, N.A., London Branch will not apply to existing debts owed to Citibank Europe plc or new Citibank Europe plc unsecured debts taken out after the Transfer Date. Consolidation rights (Paragraph 22 of the Scheme) 5.11 A "consolidation clause" is one which permits a mortgage lender to retain the security until all debts owed to the lender have been repaid, even if the mortgage loan has been repaid. 5.12 The Scheme (at paragraph 22) states that, after the Transfer, consolidation rights: in existing Citibank Europe plc customer agreements will not apply to prevent the release of the security until all obligations have been satisfied under any lending transferred from Citibank, N.A., London Branch;; or
- 4 - in Customer Agreements transferred from Citibank Europe plc will not apply to prevent the release of the security until all obligations have been satisfied under any existing lending provided by Citibank, N.A., London Branch. 6. ENTIRE AGREEMENT CLAUSES (PARAGRAPH 24 OF THE SCHEME) Some customer agreements state that the terms of those agreements apply to all accounts of a certain type that a customer holds with either Citibank, N.A., London Branch or Citibank Europe plc. The Scheme (at paragraph 24) provides that, from the Effective Date, those customer agreements will continue to apply to the same accounts as immediately prior to the Effective Date so that: (c) accounts that have transferred to Citibank Europe plc., UK Branch from Citibank, N.A., London Branch will continue to be governed by the relevant Citibank, N.A., London Branch customer agreement;; existing Citibank Europe plc accounts will continue to be governed by the relevant Citibank Europe plc customer agreement;; and the terms of new Citibank Europe plc customer agreement that are entered into on or after the Transfer Date will only apply to accounts that have transferred to Citibank Europe plc., UK Branch from Citibank, N.A., London Branch if explicitly agreed in such new customer agreement. 7. MARKETING PREFERENCES Where a customer of both Citibank Europe plc., UK Branch and Citibank, N.A., London Branch has agreed to receive marketing information from Citibank, N.A., London Branch but has declined to receive marketing information from Citibank Europe plc., UK Branch (or vice versa), the marketing preference given to Citibank, N.A., London Branch will apply. 8. COMPENSATION ARRANGEMENTS (PARAGRAPH 16 OF THE SCHEME) 8.1 Customer agreements state that customers will be protected under the Financial Services Compensation Scheme. 8.2 The Scheme (at paragraph 16) states that, after the Transfer, the customer agreements will be amended to reflect the fact that customers will be protected under the Irish Schemes (the Irish Deposit Guarantee Scheme and the Irish Investor Compensation Scheme). 8.3 Customers who have more than 100,000 (or 200,000 in the case of joint deposits) deposited across Citibank Europe plc., and Citibank, N.A., London Branch, and are concerned by the reduced level of protection may, in general, freely move their deposits or other assets with Citibank Europe plc., and Citibank, N.A., London Branch to another bank. 8.4 In order to avoid any prejudice to these customers, those customers will for up to 3 months following the Transfer be allowed, on request, to reduce the amounts they have deposited by moving funds from such accounts with Citibank Europe plc. UK Branch, to a different bank without notice, charge or loss of interest, provided that any transfer does not reduce that customer's total deposit to less than 100,000 (or 200,000 in the case of joint deposits). Customers will be given the choice as to which deposits. 8.5 In addition, Citibank Europe plc., UK Branch has applied to the Financial Services Compensation Scheme to top up the limit of protection for investment and non-investment
- 5 - insurance mediation business to maintain the same level of cover as the customer currently has. Citibank Europe plc., UK Branch has received such top up in relation to investment business. It is anticipated that Citibank Europe plc., UK Branch will receive the insurance mediation top up before the Transfer. Temporary high balance deposit protection will be provided for eligible deposits following the Transfer, under the Irish Deposit Guarantee Scheme. 9. TRANSITIONAL ARRANGEMENTS (PARAGRAPH 4.7 OF THE SCHEME) 9.1 The benefit of any applications made to Citibank, N.A., London Branch before the Transfer Date will transfer to Citibank Europe plc., UK Branch. 9.2 Any customer agreements that Citibank, N.A., London Branch purports to enter into after the Transfer Date will be deemed to be entered into by Citibank Europe plc., UK Branch, and any rights and interests of Citibank, N.A., London Branch under any related insurance policies will be deemed to be interests of Citibank Europe plc., UK Branch. 10. SUBJECT ACCESS REQUESTS (PARAGRAPH 9 OF THE SCHEME) 10.1 Where a customer has made a subject access request (under the Data Protection Act 1998) to Citibank, N.A., London Branch before the Transfer, which is actioned after the Transfer, Citibank Europe plc., UK Branch will be able to treat the request as limited to a request for information held by Citibank, N.A., London Branch before the Transfer. 10.2 Conversely, where a customer has made a subject access request to Citibank Europe plc before the Transfer, which is actioned after the Transfer, Citibank Europe plc., UK Branch will not need to provide information held by Citibank, N.A., London Branch before the Transfer. 11. CUSTOMER COMPLAINTS (PARAGRAPH 18 OF THE SCHEME) Customers who are not resident in the UK will be now able to apply to either the Irish Financial Services Ombudsman or the UK Financial Ombudsman Service. For customers resident in the UK the UK Financial Ombudsman will be the relevant ombudsman. 12. LIABILITY FOR UNAUTHORISED TRANSACTIONS (PARAGRAPH 19 OF THE SCHEME) Following the Transfer, customers who are not resident in the UK will be liable up to a maximum of 75 for losses incurred in respect of transactions they, or someone acting legitimately on their behalf, did not authorise and which arise from the use of a lost or stolen payment instrument (for example a cheque, or when they have failed to keep the personalised features of their account or such instrument safe from misappropriation). The relevant threshold for UK resident customers will remain at 50. 13. LITIGATION (PARAGRAPH 5 OF THE SCHEME) Any proceedings which are issued or served in relation to the Business following the Transfer should be issued or served against Citibank Europe plc., UK Branch. Citibank Europe plc., UK Branch will be entitled to all defences, claims, counterclaims and rights of set-off (subject to paragraphs 5.3 to 5.6 above) that would have been available to Citibank, N.A., London Branch in any such proceedings. Citibank, N.A., London Branch will continue any proceedings that are started prior to the Transfer unless it notifies the Court and the parties to such litigation otherwise.
- 6-14. BUSINESS WHICH MIGHT BE TRANSFERRED AFTER THE TRANSFER DATE 14.1 If any asset to be transferred is not, or is not capable of being, transferred to Citibank Europe plc., UK Branch under the Scheme on the Effective Date (for example, because the Court does not have jurisdiction to order its transfer), Citibank, N.A., London Branch will hold such asset from the Effective Date on trust for Citibank Europe plc., UK Branch. 14.2 Similarly, certain liabilities may not be transferred immediately under the Scheme. Creditors of Citibank, N.A., London Branch and Citibank Europe plc., UK Branch will not, however, be affected by any retention of liabilities by Citibank, N.A., London Branch, since Citibank Europe plc., UK Branch will pay to Citibank, N.A., London Branch the amount of any such liabilities under the terms of the agreement between them for the purchase of the Business. 14.3 The Scheme (at paragraph 3) provides that a loan, lease, letter of credit, bond, note, derivative, guarantee, indemnity or other liability will only transfer if and when any related encumbrance can be transferred at the same time (and vice versa). 15. MODIFICATIONS AND ADDITIONS 15.1 Citibank, N.A., London Branch and Citibank Europe plc., UK Branch can apply jointly, at any time before or after the Effective Date, to the Court for any amendment, variation, modification or addition to the Scheme provided that, if such application is made after the sanction of the Scheme, the PRA and the FCA shall be notified of, and have the right to be heard at, any hearing of the Court at which such application is considered. 15.2 At any time after the sanction of the Scheme, in the case of minor amendments, the amendment may be made without the consent of the Court provided that the PRA and the FCA have been notified of and have approved the amendment.
Citi International Personal Bank Level 14, Citigroup Centre 25 Canada Square London E14 5LB United Kingdom Tel: +44 (0) 20 7500 1445 Fax: +44 (0) 20 7500 1726 Email: ipb.london@citi.com www.ipb.citi.com Citibank N.A., London Branch is authorised and regulated by the Office of the Comptroller of the Currency (USA) and authorised by the Prudential Regulation Authority. Subject to regulation by the Financial Conduct Authority and limited regulation by the Prudential Regulation Authority. Details about the extent of our regulation by the Prudential Regulation Authority are available from us on request. Our firm reference number with our UK regulators is 124704. Citibank N.A., London Branch is registered as a branch in the UK at Citigroup Centre, Canada Square, Canary Wharf, London E14 5LB. Registered number BR001018. Citibank N.A. is incorporated with limited liability in the USA. Head office: 399 Park Avenue, New York, NY 10043, USA. Citibank N.A. 2016. CITI, CITI and Arc Design are registered service marks of Citigroup Inc. Calls may be monitored or recorded for training and service quality purposes. 2546 B 1216