The US bank will become the second international bank to open an R&D center in Israel after Barclays Capital.
Israel's government has granted Citi NIS 93 million (about $25 million) over five years to help finance the center.
"Citi ... will add Israel to its portfolio of a center of strategic innovation that will focus on the development of advanced products and applications for the capital market," Don Callahan, Citi's chief operations and technology officer, said in a joint statement with Israel's Finance and Industry ministries.
Last year, Israel's government launched a plan to try and attract financial services sector firms to Israel.
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