Citi`s $1.1 trillion of mysterious assets shadow earnings

Nowhere mentioned in the accompanying 66-page handout were the additional $1.1 trillion of assets that New York-based Citigroup keeps off its books: trusts to sell mortgage-backed securities, financing vehicles to issue short-term debt and collateralized debt obligations, or CDOs, to repackage bonds.

Now, as Citigroup prepares to announce second-quarter results July 18, those off-balance-sheet assets, used by US banks to expand lending without tying up capital, are casting a shadow over earnings.

Since last September, at least $100 billion of assets have flooded back onto Citigroup's balance sheet, accompanied by more than $7 billion of losses. "If you start adding up all the potential exposures, it's a huge number," said Sam Golden, a former ombudsman for the US Office of the Comptroller of the Currency who now heads the financial-industry practice for restructuring adviser Alvarez & Marsal in Houston. "The banks will say that it was disclosed. Investors are saying,