Citicorp Case Analysis1. What is the difference between primary and secondary capital. How relevant is it in this case? Primary capital consists of common shares, perpetual preferred shares, surplus, undivided profits, mandatory convertible instruments (debt which must be convertible into shares or repaid with the proceeds of the sale of shares), loan loss reserves, and other capital reserves. These items are treated as permanent forms of capital because they are not subject to redemption or withdrawal. Secondary capital consists of non-permanent forms of equity, including limited-life preferred stock and subordinated notes and debentures. This case is relevant because Glass-Steagall did not prevent commercial banks from conducting securities-related activities abroad. By the mid-1980s, U.S. commercial banks such as Chase Manhattan, Citicorp, and JP Morgan had thriving overseas securities operations. Currencies are not securities within the meaning of the Glass-Steagall Act, but since exchange rates were allowed to float in the early 1970s, they carry similar market risk. In 1933, futures markets were small and dealt primarily in agricultural products, so they were not included in the legal definition of securities. By the mid-1980s, U.S. commercial banks were subject to major capital requirements set by the SEC, OCC, and FDIC, while U.S. securities companies were subject to the Uniform Net Capital Rule (UNCR) of the SEC.).