Barclays 2011 Annual Report Download - page 81

Risk management
Credit risk
Other sources of credit risk arise from trading activities, including debt
securities, settlement balances with market counterparties, available for
sale assets and reverse repurchase agreements.
Losses arising from assets held for trading (derivatives, debt securities)
are accounted for as trading losses, rather than impairment charges, even
though the fall in value causing the loss may be attributable to credit
deterioration.
Analysis of the Group’s maximum exposure to credit risk and
collateral and other credit enhancements held
The following table presents the Group’s maximum exposure to credit risk
as at 31 December and the financial effects of collateral, credit
enhancements and other actions taken to mitigate the Group’s exposure.
For financial assets recognised on the balance sheet, maximum exposure
to credit risk represents the balance sheet carrying value after allowance
for impairment. For off-balance sheet guarantees, the maximum exposure
is the maximum amount that Barclays would have to pay if the guarantees
were to be called upon. For loan commitments and other credit related
commitments that are irrevocable over the life of the respective facilities,
the maximum exposure is the full amount of the committed facilities.
This and subsequent analyses of credit risk include only financial assets
subject to credit risk. They exclude other financial assets not subject to
credit risk, mainly equity securities held in the trading portfolio, as
available for sale or designated at fair value, and commodities. Assets
designated at fair value in respect of linked liabilities to customers
under investment contracts have not been included as the Group is not
exposed to credit risk on these assets. Credit losses in these portfolios, if
any, would lead to a reduction in the linked liabilities and not result in a loss
to the Group.
Overview of Barclays Group credit risk exposures
Credit risk is the risk of suffering financial loss should the Group’s customers, clients or market
counterparties fail to fulfil their contractual obligations to the Group. The credit risk that the
Group faces arises mainly from wholesale and retail loans and advances, together with the
counterparty credit risk arising from derivative contracts entered into with clients.
All disclosures in this section (pages 79 to 120) are unaudited unless otherwise stated
Barclays PLC Annual Report 2011 www.barclays.com/annualreport 79
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