Barclays 2010 Annual Report Download - page 229

25 Contingent liabilities and commitments continued
Assets pledged
Assets are pledged as collateral to secure liabilities under repurchase agreements, securitisations and stock lending agreements or as security deposits relating
to derivatives. The disclosure includes any asset transfers associated with liabilities under repurchase agreements and securities lending transactions.
The following table summarises the nature and carrying amount of the assets pledged as security against these liabilities:
2010
£m
2009
£m
Trading portfolio assets 111,703 96,176
Loans and advances 30,584 48,846
Available for sale investments 22,941 24,264
Other 45 77
Assets Pledged 165,273 169,363
Collateral held as security for assets
Under certain transactions, including reverse repurchase agreements and stock borrowing transactions, the Group is allowed to resell or repledge the
collateral held. The fair value at the balance sheet date of collateral accepted and repledged to others was as follows:
2010
£m
2009
£m
Fair value of securities accepted as collateral 422,890 357,159
Of which fair value of securities repledged/transferred to others 347,557 283,334
26 Legal proceedings
Lehman Brothers Holdings Inc.
On 15th September 2009, motions were filed in the United States Bankruptcy Court for the Southern District of New York (the Court) by Lehman
Brothers Holdings Inc. (LBHI), the SIPA Trustee for Lehman Brothers Inc. (the Trustee) and the Official Committee of Unsecured Creditors of Lehman
Brothers Holdings Inc. (the Committee). All three motions challenge certain aspects of the transaction pursuant to which Barclays Capital Inc. (BCI) and
other companies in the Group acquired most of the assets of Lehman Brothers Inc. (LBI) in September 2008 and the court order approving such sale.
The claimants seek an order voiding the transfer of certain assets to BCI; requiring BCI to return to the LBI estate alleged excess value BCI received; and
declaring that BCI is not entitled to certain assets that it claims pursuant to the sale documents and order approving the sale. On 16th November 2009,
LBHI, the Trustee and the Committee filed separate complaints in the Court asserting claims against BCI based on the same underlying allegations as
the pending motions and seeking relief similar to that which is requested in the motions. On 29th January 2010, BCI filed its response to the motions.
Barclays considers that the motions and claims against BCI are without merit and BCI is vigorously defending its position. On 29th January 2010, BCI also
filed a motion seeking delivery of certain assets that LBHI and LBI have failed to deliver as required by the sale documents and the court order approving
the sale. Approximately £2.6bn of the assets acquired as part of the acquisition had not been received by 31st December 2010, approximately £2.0bn of
which were recognised as part of the accounting for the acquisition and are included in the balance sheet as at 31st December 2010. This results in an
effective provision of £0.6bn against the uncertainty inherent in the litigation.
On 22nd February 2011, the Court issued its Opinion in relation to these matters. The Opinion calls for the parties to submit proposed Orders that will
implement the Opinion, and anticipates a possible status conference to resolve any potential differences between the parties regarding the final Order
that should be entered. Any such Order should clarify the precise impact of the Opinion, and may include specific guidance regarding the treatment of
specific types of assets. Such an Order may be the subject of further proceedings or appeals by one or more of the parties.
Barclays has considered the Opinion and the decisions contained therein and its possible actions with respect thereto. If the Opinion were to be
unaffected by future proceedings, Barclays estimates that its maximum possible loss, based on its worst case reading of the Opinion, would be
approximately £2.6bn, after taking into account the effective provision of £0.6bn. Any such loss, however, is not considered probable and Barclays
is satisfied with the current level of provision.
American Depositary Shares
Barclays Bank PLC, Barclays PLC and various current and former members of Barclays PLC’s Board of Directors have been named as defendants in five
proposed securities class actions (which have been consolidated) pending in the United States District Court for the Southern District of New York.
The consolidated amended complaint, dated 12th February 2010, alleges that the registration statements relating to American Depositary Shares
representing Preferred Stock, Series 2, 3, 4 and 5 (ADS) offered by Barclays Bank PLC at various times between 2006 and 2008 contained misstatements
and omissions concerning (amongst other things) Barclays portfolio of mortgage-related (including US subprime-related) securities, Barclays exposure
to mortgage and credit market risk and Barclays financial condition. The consolidated amended complaint asserts claims under Sections 11, 12(a)(2)
and 15 of the Securities Act of 1933. On 5th January 2011, the Court issued an order, and on 7th January 2011, judgment was entered, granting the
defendants’ motion to dismiss the complaint in its entirety and closing the case. On 4th February 2011, the plaintiffs filed a motion asking the Court to
reconsider in part its dismissal order, and that motion is pending. Barclays considers that these ADS-related claims against it are without merit and is
defending them vigorously. It is not possible to estimate any possible loss in relation to these claims or any effect that they might have upon operating
results in any particular financial period.
Other
Barclays is engaged in various other litigation proceedings both in the United Kingdom and a number of overseas jurisdictions, including the United
States, involving claims by and against it which arise in the ordinary course of business. Barclays does not expect the ultimate resolution of any of the
proceedings to which Barclays is party to have a significant adverse effect on the financial statements of the Group and Barclays has not disclosed the
contingent liabilities associated with these claims either because they cannot reasonably be estimated or because such disclosure could be prejudicial
to the conduct of the claims.
Barclays PLC Annual Report 2010 www.barclays.com/annualreport10 227
Strategy Performance Risk management and governance Shareholder informationFinancial statementsAbout Barclays