A senior Citigroup Inc executive said the bank is comfortable with its valuation for an asset that one accounting expert expects to be written down.

Citigroup has a roughly $38 billion deferred tax asset, which essentially represents expected cash flow from future tax benefits. Accounting expert Robert Willens said on a conference call late last month that he expects the bank to write the asset down by about $10 billion in the fourth quarter. That would represent about 7 percent of the bank's net worth as measured by the reported value of the company's shareholder equity.

Any writedowns would sting Citigroup, which has taken $45 billion of government help in three separate rescue efforts. Taxpayers now hold about a third of the bank.

Speaking at a conference on Wednesday, Citigroup Vice Chairman Ned Kelly said the bank stands by its deferred tax asset valuation.

We are comfortable with the valuation, Kelly said, adding that the bank looks at its deferred tax asset at the end of each quarter. About $16 billion of the deferred tax asset must be realized by around 2016, and the rest has a much longer time frame, Kelly added.

Kelly was chief financial officer at Citigroup but stepped down over the summer soon after he was quoted in The Wall Street Journal describing the Federal Deposit Insurance Corp as the bank's tertiary regulator. The newspaper article described how the FDIC was pushing for new leadership at the bank.

On Wednesday, in response to a question about whether U.S. regulators would be as harsh to banks receiving government aid as European regulators have been, Kelly pointed to Citigroup's successful efforts to reduce its assets and said the bank is working well with the government.

I think we have a very constructive relationship with all of (our regulators), Kelly said.

(Reporting by Dan Wilchins; editing by John Wallace)

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