Derivative Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2013

Notional and Fair Value Amounts of Client-related and Trading Derivative Financial Instruments

The following table shows the notional and fair values of client-related and trading derivative financial instruments. Notional amounts of derivative financial instruments do not represent credit risk, and are not recorded in the consolidated balance sheet. They are used merely to express the volume of this activity. Northern Trust’s credit-related risk of loss is limited to the positive fair value of the derivative instrument, which is significantly less than the notional amount.

	June 30, 2013						December 31, 2012
	Notional		Fair Value				Notional		Fair Value
(In Millions)	Value		Asset		Liability		Value		Asset		Liability
Foreign Exchange Contracts	$	269,992.6	$	4,624.5	$	4,588.7	$	213,246.7	$	1,735.3	$	1,730.4
Interest Rate Option Contracts		36.2		0.1		0.1		31.4		—		—
Interest Rate Swap Contracts		5,050.4		142.7		135.5		4,915.2		180.6		174.0
Total	$	275,079.2	$	4,767.3	$	4,724.3	$	218,193.3	$	1,915.9	$	1,904.4

Location and Amount of Gains and Losses Recorded in Consolidated Statement of Income

The following table shows the location and amount of gains and losses recorded in the consolidated statement of income for the three and six months ended June 30, 2013 and 2012.

		Amount of Derivative Gain/(Loss) Recognized in Income
	Location of Derivative Gain/(Loss) Recognized in	Three Months Ended June 30,				Six Months Ended June 30,
(In Millions)	Income	2013		2012		2013		2012
Foreign Exchange Contracts	Foreign Exchange Trading Income	$	71.3	$	59.4	$	130.8	$	121.3
Interest Rate Swap and Option Contracts	Security Commissions and Trading Income		3.8		2.7		7.0		5.2
Total		$	75.1	$	62.1	$	137.8	$	126.5

Types and Classifications of Derivative Instruments

The following table identifies the types and classifications of derivative instruments designated as hedges and used by Northern Trust to manage risk, their notional and fair values, and the respective risks addressed.

			June 30, 2013						December 31, 2012
	Derivative	Risk	Notional		Fair Value				Notional		Fair Value
(In Millions)	Instrument	Classification	Value		Asset		Liability		Value		Asset		Liability
Fair Value Hedges
Available for Sale Investment Securities	Interest Rate Swap Contracts	Interest Rate	$	3,821.3	$	28.7	$	47.2	$	3,617.0	$	3.4	$	75.1
Senior Notes and Long- Term Subordinated Debt	Interest Rate Swap Contracts	Interest Rate		900.0		94.3		0.1		900.0		126.3		0.2
Cash Flow Hedges
Forecasted Foreign Currency Denominated Transactions	Foreign Exchange Contracts	Foreign Currency		471.9		5.9		13.1		669.0		8.7		11.5
Net Investment Hedges
Net Investments in Non-U.S. Affiliates	Foreign Exchange Contracts	Foreign Currency		1,607.7		45.3		0.7		1,451.4		2.3		27.8
Total			$	6,800.9	$	174.2	$	61.1	$	6,637.4	$	140.7	$	114.6

Gains/Losses of Derivative Financial Instruments

The following table shows the location and amount of derivative gains and losses recorded in the consolidated statement of income related to fair value hedges for the three and six months ended June 30, 2013 and 2012.

		Location of Derivative	Amount of Derivative Gain/(Loss) Recognized in Income
		Gain/(Loss)	Three Months Ended						Six Months Ended
	Derivative	Recognized	June 30,						June 30,
(In Millions)	Instrument	in Income	2013			2012			2013			2012
Available for Sale Investment Securities	Interest Rate Swap Contracts	Interest Income	$	34.6		$	(22.1	)	$	38.0		$	(70.2	)
Senior Notes and Long-Term Subordinated Debt	Interest Rate Swap Contracts	Interest Expense		(11.8	)		14.6			(12.5	)		162.9
Total			$	22.8		$	(7.5	)	$	25.5		$	92.7

Cash Flow Hedge Derivative Gains and Losses Recognized in AOCI and the Amounts Reclassified to Earnings

The following tables provide cash flow hedge derivative gains and losses recognized in AOCI and the amounts reclassified to earnings during the three and six months ended June 30, 2013 and 2012.

	Foreign Exchange
(In Millions)	Contracts (Before Tax)
Three Months Ended June 30,	2013			2012
Net Gain/(Loss) Recognized in AOCI	$	(0.1	)	$	(15.8	)
Net Gain/(Loss) Reclassified from AOCI to Earnings
Other Operating Income		(1.0	)		(0.8	)
Other Operating Expense		(1.8	)		(0.9	)
Total	$	(2.8	)	$	(1.7	)
	Foreign Exchange
(In Millions)	Contracts (Before Tax)
Six Months Ended June 30,	2013			2012
Net Gain/(Loss) Recognized in AOCI	$	(9.3	)	$	2.9
Net Gain/(Loss) Reclassified from AOCI to Earnings
Other Operating Income		(1.7	)		(2.3	)
Other Operating Expense		(2.9	)		1.4
Total	$	(4.6	)	$	(0.9	)

Net Investment Hedge Gains and Losses Recognized in AOCI

The following table provides net investment hedge gains and losses recognized in AOCI during the three and six months ended June 30, 2013 and 2012.

	Hedging Gain/(Loss)
	Recognized in OCI (Before Tax)
	Three Months Ended June 30,					Six Months Ended June 30,
(In Millions)	2013			2012		2013		2012
Foreign Exchange Contracts	$	(2.0	)	$	63.7	$	64.3	$	27.4
Sterling Denominated Subordinated Debt		(1.3	)		8.9		15.2		—
Total	$	(3.3	)	$	72.6	$	79.5	$	27.4

Types and Classifications of Risk Management Derivative Instruments Not Formally Designated as Hedges, Including Notional and Fair Values

The following table identifies the types of risk management derivative instruments not formally designated as hedges and their notional amounts and fair values.

		June 30, 2013						December 31, 2012
	Derivative	Notional		Fair Value				Notional		Fair Value
(In Millions)	Instrument	Value		Asset		Liability		Value		Asset		Liability
Credit Default Swap Contracts		$	25.0	$	—	$	0.1	$	42.5	$	—	$	1.0
Foreign Exchange Contracts			164.0		0.4		3.8		1,189.8		10.3		3.0
Total		$	189.0	$	0.4	$	3.9	$	1,232.3	$	10.3	$	4.0

Gains/Losses of Derivative Financial Instruments

The following table provides the location and amount of gains and losses recorded in the consolidated statement of income for the three and six months ended June 30, 2013 and 2012.

		Amount of Derivative Gain/(Loss)
	Location of	Recognized in Income
	Derivative Gain/	Three Months Ended						Six Months Ended
	(Loss) Recognized	June 30,						June 30,
(In Millions)	in Income	2013			2012			2013			2012
Credit Default Swap Contracts	Other Operating Income	$	—		$	(0.8	)	$	(0.1	)	$	(1.9	)
Foreign Exchange Contracts	Other Operating Income		(1.6	)		(0.9	)		(4.5	)		(1.2	)
Total		$	(1.6	)	$	(1.7	)	$	(4.6	)	$	(3.1	)