Northern Trust Repays Government Investment

STEPHEN BERNARD

NEW YORK (AP) — Northern Trust Corp. said Wednesday it repaid the $1.58 billion it received last fall as part of the government's $700 billion bank investment program.

Chicago-based Northern Trust received the money as part of the Treasury Department's Troubled Asset Relief Program to help revive the stagnant credit and lending markets amid one of the worst periods of the credit crisis.

The government provided banks with capital in exchange for preferred stock and warrants to purchase common shares. The preferred stock carried an interest rate of 5 percent. The investment also included certain restrictions, such as caps on executive compensation that left some banks pushing to repay the loan as quickly as possible.

The custody bank said it will record a one-time after-tax charge of about $68.6 million in the second quarter tied to the repayment.

Wednesday's repayment did not include the repurchase of the warrants. Northern Trust said it notified the Treasury Department of its intent to purchase them. Northern Trust issued warrants for the government to purchase about 3.8 million common shares.