Derivative Financial Instruments (Tables)

3 Months Ended

Mar. 31, 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.

	March 31, 2013						December 31, 2012
	Notional Value		Fair Value				Notional Value		Fair Value
(In Millions)			Asset		Liability				Asset		Liability
Foreign Exchange Contracts	$	234,808.9	$	2,337.1	$	2,280.2	$	213,246.7	$	1,735.3	$	1,730.4
Interest Rate Option Contracts		23.9		—		—		31.4		—		—
Interest Rate Swap Contracts		4,882.7		166.9		159.8		4,915.2		180.6		174.0
Total	$	239,715.5	$	2,504.0	$	2,440.0	$	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 months ended March 31, 2013 and 2012.

(In Millions)	Location of Derivative Gain/(Loss) Recognized in Income	Amount of Derivative Gain/(Loss) Recognized in Income
		Three Months Ended March 31,
		2013		2012
Foreign Exchange Contracts	Foreign Exchange Trading Income	$	59.5	$	61.9
Interest Rate Swap and Option Contracts	Security Commissions and Trading Income		3.3		2.5
Total		$	62.8	$	64.4

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.

			March 31, 2013						December 31, 2012
	Derivative Instrument	Risk Classification	Notional Value		Fair Value				Notional Value		Fair Value
(In Millions)					Asset		Liability				Asset		Liability
Fair Value Hedges
Available for Sale Investment Securities	Interest Rate Swap Contracts	Interest Rate	$	3,495.7	$	5.7	$	60.9	$	3,617.0	$	3.4	$	75.1
Senior Notes and Long-Term Subordinated	Interest Rate Swap Contracts	Interest Rate		900.0		110.9		0.1		900.0		126.3		0.2
Cash Flow Hedges
Forecasted Foreign Currency Denominated Transactions	Foreign Contracts	Foreign Currency		531.7		5.9		15.4		669.0		8.7		11.5
Net Investment Hedges
Net Investments in Non-U.S. Affiliates	Foreign Contracts	Foreign Currency		1,551.0		46.5		0.7		1,451.4		2.3		27.8
Total			$	6,478.4	$	169.0	$	77.1	$	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 months ended March 31, 2013 and 2012.

(In Millions)	Derivative Instrument	Location of Derivative Gain/(Loss) Recognized in Income	Amount of Derivative Gain/(Loss) Recognized in Income
			Three Months Ended March 31,
			2013			2012
Available for Sale Investment Securities	Interest Rate Swap Contracts	Interest Income	$	3.4		$	(3.9	)
Senior Notes and Long-Term Subordinated Debt	Interest Rate Swap Contracts	Interest Expense		(0.7	)		35.4
Total			$	2.7		$	31.5

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

The following table provides cash flow hedge derivative gains and losses recognized in AOCI and the amounts reclassified to earnings during the three months ended March 31, 2013 and 2012.

(In Millions)	Foreign Exchange Contracts (Before Tax)						Interest Rate Swap Contracts (Before Tax)
Three Months Ended March 31,	2013			2012			2013		2012
Net Gain/(Loss) Recognized in AOCI	$	(9.2	)	$	18.9		$	—	$	—
Net Gain/(Loss) Reclassified from AOCI to Earnings
Other Operating Income		(0.7	)		(1.5	)		—		—
Interest Income		—			—			—		0.2
Other Operating Expense		(1.1	)		2.3			—		—
Total	$	(1.8	)	$	0.8		$	—	$	0.2

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 months ended March 31, 2013 and 2012.

	Hedging Gain/(Loss) Recognized in OCI (Before Tax)
	Three Months Ended March 31,
(In Millions)	2013		2012
Foreign Exchange Contracts	$	66.3	$	(36.3	)
Sterling Denominated Subordinated Debt		16.5		(8.9	)
Total	$	82.8	$	(45.2	)

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

The following table identifies the types and classifications of risk management derivative instruments not formally designated as hedges, their notional and fair values, and the respective risks addressed.

			March 31, 2013						December 31, 2012
(In Millions)	Derivative Instrument	Risk Classification	Notional Value		Fair Value				Notional Value		Fair Value
					Asset		Liability				Asset		Liability
Commercial Loans and Loan Commitments	Credit Default Swap Contracts	Credit	$	25.0	$	—	$	0.1	$	42.5	$	—	$	1.0
Forecasted Foreign Currency Denominated Transactions	Foreign Exchange Contracts	Foreign Currency		7.1		—		0.2		2.2		0.1		—
Commercial Loans	Foreign Exchange Contracts	Foreign Currency		134.6		0.7		1.6		135.8		1.3		0.7
Net Investments in Non-U.S. Affiliates	Foreign Exchange Contracts	Foreign Currency		54.3		0.3		0.3		1,051.8		8.9		2.3
Total			$	221.0	$	1.0	$	2.2	$	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 months ended March 31, 2013 and 2012.

(In Millions)	Location of Derivative Gain/ (Loss) Recognized in Income	Amount of Derivative Gain/(Loss) Recognized in Income
		Three Months Ended March  31,
		2013			2012
Credit Default Swap Contracts	Other Operating Income	$	(0.1	)	$	(1.1	)
Foreign Exchange Contracts	Other Operating Income		(2.9	)		(0.3	)
Total		$	(3.0	)	$	(1.4	)