Pledged Assets, Collateral and Restricted Assets

9 Months Ended

Sep. 30, 2023

Pledged Assets, Collateral and Restricted Assets

Pledged Assets. For our liquidity management strategy, we may pledge loans and/or securities to various financial market utilities to allow for client payment, clearing and settlement processing as part of our custody services. We may pledge loans or securities to Central Banks, Federal Home Loan Bank (FHLB) of Chicago and third parties for various purposes, for example: securing public and trust deposits, repurchase agreements and borrowings and derivative settlements.

The following table presents the carrying value of Northern Trust's pledged assets by type.

TABLE 57: TYPE OF PLEDGED ASSETS


(In Billions)	SEPTEMBER 30, 2023		DECEMBER 31, 2022
Debt Securities(1)	$	27.8	$	31.4
Loans(2)	11.2		11.8
Total Pledged Assets	$	39.0	$	43.2

(1) Debt securities are comprised of held to maturity and available for sale securities.

(2) Loans pledged at the FHLB of Chicago and the Federal Reserve Bank of Chicago.

Within pledged assets, there was collateral required which totaled $13.1 billion and $8.7 billion at September 30, 2023 and December 31, 2022, respectively.

The following table presents the AFS debt securities pledged as collateral that are included in pledged assets.

TABLE 58: FAIR VALUE OF AVAILABLE FOR SALE DEBT SECURITIES INCLUDED IN PLEDGED ASSETS


	SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE				DERIVATIVE CONTRACTS
(In Millions)	SEPTEMBER 30, 2023		DECEMBER 31, 2022		SEPTEMBER 30, 2023		DECEMBER 31, 2022
Debt Securities
Available for Sale	$	540.7	$	464.7	$	15.6	$	34.7

The secured parties to these transactions have the right to repledge or sell the securities as it relates to $540.7 million and $464.7 million of the pledged collateral as of September 30, 2023 and December 31, 2022, respectively.

Accepted Collateral. Northern Trust accepts financial assets as collateral that it may, in some instances, be permitted to repledge or sell. The collateral is generally obtained under certain reverse repurchase agreements and derivative contracts.

The following table presents the fair value of securities accepted as collateral.

TABLE 59: ACCEPTED COLLATERAL


(In Millions)	SEPTEMBER 30, 2023		DECEMBER 31, 2022
Collateral that may be repledged or sold
Reverse repurchase agreements(1)(2)	$	49,972.7	$	12,119.4
Derivative contracts	14.3		5.0
Collateral that may not be repledged or sold
Reverse repurchase agreements	—		450.0
Total Collateral Accepted	$	49,987.0	$	12,574.4

(1) The fair value of securities collateral that was repledged or sold totaled $49.6 billion and $11.5 billion at September 30, 2023 and December 31, 2022, respectively.

(2) This includes collateral accepted as related to the sponsored member program. Refer to Note 20—Commitments and Contingent Liabilities for further information.

Restricted Assets. Certain cash may be restricted in terms of usage or withdrawal. As a result of the continuing military conflict involving Ukraine and the Russian Federation and related sanctions and legal restrictions in place, cash balances denominated in Russian rubles received for the benefit of certain clients in our Asset Servicing business are subject to distribution restrictions. As of September 30, 2023 and December 31, 2022, these balances totaled $642.8 million and $330.4 million, respectively, and are reported in Cash and Due from Banks on the consolidated balance sheets.

At September 30, 2023 and December 31, 2022, Northern Trust held cash of $553.6 million and $574.2 million, respectively, to meet non-U.S. reserve requirements. As a result of the economic environment arising from the COVID-19 pandemic, the Federal Reserve reduced the U.S. reserve requirement to zero percent on March 26, 2020. There were no average deposits required to meet Federal Reserve Bank reserve requirements for the three and nine months ended September 30, 2023 and 2022.