Barclays 2011 Annual Report Download - page 174

Financial review
Balance sheet commentary continued
Capital management
The Core Tier 1 ratio remained robust at 11.0% (2010: 10.8%) and the
Tier 1 ratio was 12.9% (2010: 13.5%).
Risk weighted assets decreased 2% from £398bn to £391bn in 2011. This
was largely driven by a reduction across credit, counterparty and market
risk in Barclays Capital, due to lower levels of activity, risk reduction and
sell down of credit market exposures. In addition, there was a reduction
from foreign currency movements, primarily depreciation of the Rand
and Euro against Sterling. These decreases more than outweighed the
approximate £30bn increase resulting from the implementation of CRD3
in December 2011.
Core Tier 1 capital increased by £0.2bn to £43.1bn. £2.6bn of capital
generated from retained profits was offset by reduction in the value of
the investment in Blackrock Inc. to September 2011, contributions made
to the UK Retirement fund and foreign currency movements. Total capital
resources decreased by £3.4bn to £63.9bn mainly as a result of the buy
back and redemption of Tier 1 instruments which will not qualify under
Basel 3.
Liquidity and Funding
The Group’s overall funding strategy is to develop a diversified funding
base and maintain access to a variety of funding sources, minimising the
cost of funding and providing protection against unexpected fluctuations.
The Group aims to align the sources and uses of funding.
Customer loans and advances are largely funded by deposits, with any
excess funded by long-term secured debt and equity. The total loan to
deposit ratio was 118% (2010: 124%) and the loan to deposit and
long-term funding ratio was 75% (2010: 77%).
Wholesale funding is well managed with trading portfolio assets being
largely funded by repurchase agreements and the majority of reverse
repurchase agreements being matched by repurchase financing.
Derivative assets and liabilities are also largely matched.
As at 31 December 2011, the Group had £265bn of wholesale debt
diversified across currencies, of which £39bn was secured. Term funding
raised in 2011 was £30bn (2010: £35bn) compared maturities of £25bn.
Approximately 10% of customer loans and advances were secured
against external funding, leaving significant headroom for further
secured issuance.
At 31 December 2011 the liquidity pool was £152bn (2010: £154bn) and
moved within a month-end range of £140bn to £167bn. The liquidity pool
comprises high quality, liquid unencumbered assets, diversified across
currencies broadly in line with wholesale debt requirements, with 93%
(2010: 88%) comprising cash and deposits with central banks and
government bonds.
172 Barclays PLC Annual Report 2011 www.barclays.com/annualreport