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GOODWILL AND INTANGIBLE ASSETS

9 Months Ended

Sep. 30, 2012

14. GOODWILL AND INTANGIBLE ASSETS

Goodwill

The changes in Goodwill during the first nine months of 2012 were as follows:

*In millions of dollars*

Balance at December 31, 2011	$	25,413
Foreign exchange translation		397

Balance at March 31, 2012	$	25,810

Foreign exchange translation	$	(306	)
Smaller acquisitions/divestitures		(8	)
Purchase accounting adjustments and other		(13	)

Balance at June 30, 2012	$	25,483

Foreign exchange translation		449
Discontinued operations		(17	)

Balance at September 30, 2012	$	25,915

During the first nine months of 2012, no goodwill was written off due to impairment. The Company performed its annual goodwill impairment test during the third quarter of 2012 resulting in no impairment for any of the reporting units.

As per ASC 350, Intangibles—Goodwill and Other, management performed a qualitative assessment for the Transaction Services reporting unit. Through consideration of various factors including excess of fair value over the carrying value in prior year, projected growth via positive cash flows, and no adverse changes anticipated in the business and macroeconomic environment, management determined that it is not more likely than not that the fair value of this reporting unit is less than its carrying amount and therefore the two step impairment test was not required.

While there was no indication of impairment for the Brokerage and Asset Management (BAM) and Local Consumer Lending Cards (LCL Cards) reporting units, goodwill present in these reporting units may be particularly sensitive to further deterioration in economic conditions. If the future were to differ adversely from management's best estimate of key economic assumptions and associated cash flows were to decrease by a small margin, the Company could potentially experience future impairment charges with respect to the $42 million and $109 million of goodwill remaining in the BAM and LCL Cards reporting units, respectively. The fair value as a percentage of allocated book value as of the July 1, 2012 test for BAM and LCL Cards was 121% and 110%, respectively.

The following table shows reporting units with goodwill balances as of September 30, 2012:

*In millions of dollars* Reporting unit(1)	Goodwill

North America Regional Consumer Banking	$	6,808
EMEA Regional Consumer Banking		365
Asia Regional Consumer Banking		5,695
Latin America Regional Consumer Banking		1,889
Securities and Banking		9,411
Transaction Services		1,596
Brokerage and Asset Management		42
Local Consumer Lending—Cards		109

Total	$	25,915

(1): Local Consumer Lending—Other is excluded from the table as there is no goodwill allocated to it.

Intangible Assets

As of September 30, 2012 and December 31, 2011, the components of intangible assets were as follows:

	September 30, 2012						December 31, 2011

*In millions of dollars*	Gross carrying amount		Accumulated amortization		Net carrying amount		Gross carrying amount		Accumulated amortization		Net carrying amount
Purchased credit card relationships	$	7,633	$	5,628	$	2,005	$	7,616	$	5,309	$	2,307
Core deposit intangibles		1,314		997		317		1,337		965		372
Other customer relationships		821		382		439		830		356		474
Present value of future profits		239		133		106		235		123		112
Indefinite-lived intangible assets		499		—		499		492		—		492
Other(1)		4,825		2,228		2,597		4,866		2,023		2,843

Intangible assets (excluding MSRs)	$	15,331	$	9,368	$	5,963	$	15,376	$	8,776	$	6,600
Mortgage servicing rights (MSRs)		1,920		—		1,920		2,569		—		2,569

Total intangible assets	$	17,251	$	9,368	$	7,883	$	17,945	$	8,776	$	9,169

(1): Includes contract-related intangible assets.

The changes in intangible assets during the first nine months of 2012 were as follows:

*In millions of dollars*	Net carrying amount at December 31, 2011		Acquisitions/ divestitures		Amortization			Impairments			FX and other(1)			Discontinued Operations			Net carrying amount at September 30, 2012

Purchased credit card relationships	$	2,307	$	—	$	(303	)	$	—		$	1		$	—		$	2,005
Core deposit intangibles		372		—		(63	)		—			8			—			317
Other customer relationships		474		—		(34	)		—			(1	)		—			439
Present value of future profits		112		—		(7	)		—			1			—			106
Indefinite-lived intangible assets		492		—		—			—			7			—			499
Other		2,843		2		(241	)		(1	)		14			(20	)		2,597

Intangible assets (excluding MSRs)	$	6,600	$	2	$	(648	)	$	(1	)	$	30		$	(20	)	$	5,963
Mortgage servicing rights (MSRs)(2)		2,569																1,920

Total intangible assets	$	9,169															$	7,883

(1): Includes foreign exchange translation and purchase accounting adjustments.
(2): See Note 17 to the Consolidated Financial Statements for the roll-forward of MSRs.

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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