Barclays 2011 Annual Report Download - page 146

Risk management
Funding risk – Liquidity continued
Funding structure
The basis for sound liquidity risk management is a solid funding structure that reduces the probability of a liquidity stress leading to an inability to
meet funding obligations as they fall due.
The Group’s overall funding strategy is to develop a diversified funding base (both geographically and by depositor type) and maintain access to a
variety of alternative funding sources, to minimise the cost of funding while providing protection against unexpected fluctuations. Within this, the
Group aims to align the sources and uses of funding. As such, retail and commercial customer loans and advances are largely funded by customer
deposits. Other assets together with other loans and advances and unencumbered assets, are funded by long term wholesale debt and equity.
Trading portfolio assets and reverse repurchase agreements are largely funded in the wholesale markets by repurchase agreements and trading
portfolio liabilities, whilst derivative assets are largely matched by derivatives liabilities. The liquidity pool is predominantly funded through wholesale
markets. These funding relationships are summarised below as of 31 December 2011:
Assets Liabilities
Customer Loans and Advancesa £379bn Customer Depositsa £329bn
<1 year wholesale funding £130bn
>1 year wholesale funding £135bn
Equity and Other Liabilitiesb £117bn
Repo financing and matched assets and liabilitiesc £328bn
Derivatives £525bn
Group Liquidity Pool £152bn
Other Assetsb £169bn
Repo financing and matched assets and liabilitiesc £328bn
Derivatives £536bn
Deposit funding (audited)
Composition of Loan-to-Deposit Ratios by Business (audited)d
As at 31 December 2011
Loans and
Advances to
Customers
£bn
Customer
Deposits
£bn
Loan to
Deposit
Ratio
%
RBB 231.6 158.7 146
Barclays Corporated64.6 77.7 83
Barclays Wealth 18.8 46.5 40
Total funding excluding secured 315.0 282.9 111
Secured funding – 28.7 –
Sub-total including secured funding 315.0 311.6 101
RBB, Corporate and Wealth 315.0 282.9 111
Barclays Capital 63.4 46.0 138
Group Centre 0.9 – –
Trading settlement balances and cash collateral 52.6 37.1 142
Total 431.9 366.0 118
The Group loan to deposit ratio as at 31 December 2011 was 118% (2010: 124%) and the loan to deposit and long-term funding ratio was 75%
(2010: 77%).
RBB, Barclays Corporate and Barclays Wealth activities are largely funded with customer deposits. As at 31 December 2011, the loan to deposit ratio
for these businesses was 111% (2010: 114%) and the loan to deposit and secured funding ratio was 101% (2010: 105%). The funding gap for these
businesses is met using asset backed securities and covered bonds secured primarily over customer loans and advances such as residential mortgages
and credit card receivables.
The excess of Barclays Capital loans and advances over customer deposits is funded with long-term debt and equity.
Notes
a Excluding cash collateral and settlement balances.
b Absa Group balances other than customer loans and advances of £38.0bn and customer deposits of £33.0bn are included in other assets and other liabilities.
c Comprised of reverse repos that provide financing to customers collateralised by highly liquid securities on a short term basis or are used to settle short inventory positions; repo financing
of trading portfolio assets and matched cash collateral and settlement balances.
d In addition Barclays Corporate holds £17.2bn (2010: £14.4bn) loans and advances as financial assets held at fair value.
144 Barclays PLC Annual Report 2011 www.barclays.com/annualreport