Discontinued Operations

6 Months Ended

Jun. 30, 2011

2. Discontinued Operations

In June 2010, we decided that the wholesale banknotes business (“Banknotes Business”) within our Global Banking and Markets segment did not fit with our core strategy in the U.S. and, therefore, made the decision to exit this business. This business, which was managed out of the United States with operations in key locations worldwide, arranged for the physical distribution of banknotes globally to central banks, large commercial banks and currency exchanges. As a result of this decision, we recorded closure costs of $14 million during 2010, primarily relating to termination and other employee benefits. No significant additional closure costs are expected to be incurred. At June 30, 2011, the liability associated with these costs had been substantially utilized.

As part of the decision to exit the Banknotes Business, in October 2010 we sold the assets of our Asian banknotes operations (“Asian Banknotes Operations”) to an unaffiliated third party for total consideration of approximately $11 million in cash. As a result, during the third quarter of 2010 we classified the assets of the Asian Banknotes Operations of $23 million, including an allocation of goodwill of $21 million, as held for sale. Because the carrying value of the assets being sold exceeded the agreed-upon sales price, we recorded a lower of cost or fair value adjustment of $12 million in the third quarter of 2010. As the exit of our Banknotes Business, including the sale of our Asian Banknotes Operations, was substantially completed in the fourth quarter of 2010, we began to report the results of our Banknotes Business as discontinued operations at that time.

The exit of our Banknotes Business was completed in the second quarter of 2011 with the sale of our European Banknotes Business to HSBC Bank plc in April. The table below summarizes the operating results of our Banknotes Business for the periods presented.


	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2011		2010			2011			2010

			(in millions)

Net interest income and other revenues	$	3	$	28		$	19		$	56
Income (loss) from discontinued operations before income tax (benefit) expense		1		(2	)		(1	)		14

The following summarizes the assets and liabilities of our Banknotes Business which are reported as assets of discontinued operations and liabilities of discontinued operations in our consolidated balance sheet.


	June 30,		December 31,
	2011		2010

	(in millions)

Cash	$	-	$	117
Other assets		-		2

Assets of discontinued operations	$	-	$	119

Other liabilities	$	3	$	14

Liabilities of discontinued operations	$	3	$	14