Barclays 2012 Annual Report Download - page 178

Contingent liquidity
In addition to the Group liquidity pool, Barclays has access to other unencumbered assets which provide a source of contingent liquidity. Whilst
these are not relied on in the Group’s LRA, a portion of these assets may be monetised in a stress to generate liquidity through use as collateral for
secured funding or through outright sale.
In either a Barclays-specific or market-wide liquidity stress, liquidity available via market sources could be severely disrupted. In circumstances
where market liquidity is unavailable or available only at heavily discounted prices, Barclays could generate liquidity via central bank facilities. The
Group maintains a significant amount of collateral pre-positioned at central banks and available to raise funding.
For more detail on the Group’s other unencumbered assets see page 180.
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 provide protection against unexpected fluctuations, while
minimising the cost of funding.
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, while 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 2012:
Assets
Customer loans and advancesa £364bn
Group liquidity pool £150bn
Other assetsb £163bn
Reverse repurchase agreements and matched assets and liabilitiesc £347bn
Derivative financial instrumentsb £466bn
Liabilities
Customer depositsa £336bn
<1 Year wholesale funding £101bn
>1 Year wholesale funding £138bn
Equity and other liabilitiesb £108bn
Repurchase agreements and matched assets and liabilitiesc £347bn
Derivative financial instrumentsb £460bn
Deposit funding (including Absa Group; audited)
Deposit Fundingd
2012 2011
Funding of loans and advances to customers
Loans and
advances to
customers
£bn
Customer
deposits
£bn
Loan to
deposit
ratio
%
Loan to
deposit
ratio
%
Retail and Business Banking 232.8 158.4 147 146
Corporate Bankinge62.9 97.1 65 83
Wealth and Investment Management 21.2 53.8 39 40
Total funding excluding secured 316.9 309.3 102 111
Secured funding – 48.8 – –
Sub-total including secured funding 316.9 358.1 88 101
Retail and Business Banking, Corporate Banking and Wealth and Investment Managemente316.9 309.3 102 111
Investment Bank 46.2 26.1 177 138
Head Office and Other Operations 0.8 0.2 – –
Trading settlement balances and cash collateral 61.8 50.1 123 142
Total 425.7 385.7 110 118
Notes
a Excluding cash collateral and settlement balances.
b Absa Group balances other than customer loans and advances of £37bn and customer deposits of £33bn are included in other assets and liabilities.
c Comprised of reverse repurchase that provide financing to customers collateralised by highly liquid securities on a short term basis or are used to settle short term
inventory positions; repo financing of trading portfolio assets and matched cash collateral and settlement balances.
d Included within Retail and Business Banking, Corporate Banking and the Investment Bank are Absa Group related balances totalling £37bn of loans and advances to
customers funded by £33bn of customer deposits.
e In addition Corporate Banking holds £17.6bn (2011: £17.2bn) loans and advances as financial assets held at fair value.
barclays.com/annualreport176 I Barclays PLC Annual Report 2012
Risk review
Funding risk – Liquidity continued