Offsetting of Assets and Liabilities

6 Months Ended

Jun. 30, 2013

Offsetting of Assets and Liabilities

19. Offsetting of Assets and Liabilities

The following tables provide information regarding the offsetting of derivative assets and securities purchased under agreements to resell within the consolidated balance sheet as of June 30, 2013 and December 31, 2012.

June 30, 2013
	Gross		Gross		Net		Gross
	Recognized		Amounts		Amounts		Amounts		Net
(In Millions)	Assets		Offset		Presented		Not Offset		Amount (3)
Derivative Assets (1)
Foreign Exchange Contracts Over the Counter (OTC)	$	4,403.4	$	1,403.1	$	3,000.3	$	—	$	3,000.3
Interest Rate Swaps OTC		120.3		60.9		59.4		—		59.4
Interest Rate Swaps Exchange Cleared		5.8		0.5		5.3		—		5.3
Interest Rate Options OTC		0.1		—		0.1		—		0.1
Cross Product Netting Adjustment		—		22.6		—		—		—
Cross Product Collateral Adjustment		—		68.8		—		—		—
Total Derivatives Subject to a Master Netting Arrangement		4,529.6		1,555.9		2,973.7		—		2,973.7
Total Derivatives Not Subject to a Master Netting Arrangement		412.3		—		412.3		—		412.3
Total Derivatives		4,941.9		1,555.9		3,386.0		—		3,386.0
Securities Purchased under Agreements to Resell (2)	$	500.0	$	—	$	500.0	$	500.0	$	—

(1) Derivative assets are reported in other assets in the consolidated balance sheet. Other assets (excluding derivative assets) totaled $2,839.0 million as of June 30, 2013.

(2) Securities purchased under agreements to resell are reported in federal funds sold and securities purchased under agreements to resell in the consolidated balance sheet. Federal funds sold totaled $31.2 million as of June 30, 2013.

(3) Northern Trust did not possess any cash collateral that was not offset in the consolidated balance sheet that could have been used to offset the net amounts presented in the consolidated balance sheet as of June 30, 2013.

December 31, 2012
	Gross		Gross		Net		Gross
	Recognized		Amounts		Amounts		Amounts		Net
(In Millions)	Assets		Offset		Presented		Not Offset		Amount (3)
Derivative Assets (1)
Foreign Exchange Contracts OTC	$	1,756.6	$	877.1	$	879.5	$	—	$	879.5
Interest Rate Swaps OTC		310.3		68.3		242.0		—		242.0
Cross Product Netting Adjustment		—		37.1		—		—		—
Cross Product Collateral Adjustment		—		118.6		—		—		—
Total		2,066.9		1,101.1		965.8		—		965.8
Securities Purchased under Agreements to Resell (2)	$	35.4	$	—	$	35.4	$	35.4	$	—

(1) Derivative assets are reported in other assets in the consolidated balance sheet. Other assets (excluding derivative assets) totaled $2,964.4 million as of December 31, 2012.

(2) Securities purchased under agreements to resell are reported in federal funds sold and securities purchased under agreements to resell in the consolidated balance sheet. Federal funds sold totaled $25.4 million as of December 31, 2012.

(3) Northern Trust did not possess any cash collateral that was not offset in the consolidated balance sheet that could have been used to offset the net amounts presented in the consolidated balance sheet as of December 31, 2012.

The following tables provide information regarding the offsetting of derivative liabilities and securities sold under agreements to repurchase within the consolidated balance sheet as of June 30, 2013 and December 31, 2012.

June 30, 2013
	Gross		Gross		Net		Gross
	Recognized		Amounts		Amounts		Amounts		Net
(In Millions)	Liabilities		Offset		Presented		Not Offset		Amount (2)
Derivative Liabilities (1)
Foreign Exchange Contracts OTC	$	4,240.1	$	1,403.1	$	2,837.0	$	—	$	2,837.0
Interest Rate Swaps OTC		167.1		60.9		106.2		—		106.2
Interest Rate Swaps Exchange Cleared		0.5		0.5		—		—		—
Interest Rate Options OTC		0.1		—		0.1		—		0.1
Credit Default Swaps OTC		0.1		—		0.1		—		0.1
Cross Product Netting Adjustment		—		22.6		—		—		—
Cross Product Collateral Adjustment		—		2,193.2		—		—		—
Total Derivatives Subject to a Master Netting Arrangement		4,407.9		3,680.3		727.6		—		727.6
Total Derivatives Not Subject to a Master Netting Arrangement		381.4		—		381.4		—		381.4
Total Derivatives		4,789.3		3,680.3		1,109.0		—		1,109.0
Securities Sold under Agreements to Repurchase	$	777.7	$	—	$	777.7	$	777.7	$	—

(1) Derivative liabilities are reported in other liabilities in the consolidated balance sheet. Other liabilities (excluding derivative liabilities) totaled $3,201.0 million as of June 30, 2013.

(2) Northern Trust did not place any cash collateral with counterparties that was not offset in the consolidated balance sheet that could have been used to offset the net amounts presented in the consolidated balance sheet as of June 30, 2013.

December 31, 2012
	Gross		Gross		Net		Gross
	Recognized		Amounts		Amounts		Amounts		Net
(In Millions)	Liabilities		Offset		Presented		Not Offset		Amount (2)
Derivative Liabilities (1)
Foreign Exchange Contracts OTC	$	1,772.7	$	877.1	$	895.6	$	—	$	895.6
Interest Rate Swaps OTC		249.3		68.3		181.0		—		181.0
Credit Default Swaps OTC		1.0		—		1.0		—		1.0
Cross Product Netting Adjustment		—		37.1		—		—		—
Cross Product Collateral Adjustment		—		425.0		—		—		—
Total		2,023.0		1,407.5		615.5		—		615.5
Securities Sold under Agreements to Repurchase	$	699.8	$	—	$	699.8	$	699.8	$	—

(1) Derivative liabilities are reported in other liabilities in the consolidated balance sheet. Other liabilities (excluding derivative liabilities) totaled $1,961.7 million as of December 31, 2012.

(2) Northern Trust did not place any cash collateral with counterparties that was not offset in the consolidated balance sheet that could have been used to offset the net amounts presented in the consolidated balance sheet as of December 31, 2012.

All of Northern Trust’s securities sold under agreements to repurchase (repurchase agreements) and securities purchased under agreements to resell (reverse repurchase agreements) involve the transfer of financial assets in exchange for cash subject to a right

and obligation to repurchase those assets for an agreed upon amount. In the event of a repurchase failure, the cash or financial assets are available for offset. All of Northern Trust’s repurchase agreements and reverse repurchase agreements are subject to a master netting arrangement, which sets forth the rights and obligations for repurchase and offset. Under the master netting arrangement, Northern Trust is entitled to set off receivables from and collateral placed with a single counterparty against obligations owed to that counterparty. In addition, collateral held by Northern Trust can be offset against receivables from that counterparty.

Derivative asset and liability positions with a single counterparty can be offset against each other in cases where legally enforceable master netting arrangements or similar agreements exist. Derivative assets and liabilities can be further offset by cash collateral received from, and deposited with, the transacting counterparty. The basis for this view is that, upon termination of transactions subject to a master netting arrangement or similar agreement, the individual derivative receivables do not represent resources to which general creditors have rights and individual derivative payables do not represent claims that are equivalent to the claims of general creditors. Effective in the second quarter of 2013, Northern Trust centrally clears those interest rate derivative instruments addressed under Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act. These transactions are subject to an agreement similar to a master netting arrangement which has the same rights of offset as described above.