Wells Fargo 2013 Annual Report Download - page 210

Note 16: Derivatives (continued)
The following table provides information on the gross fair
values of derivative assets and liabilities, the balance sheet
netting adjustments and the resulting net fair value amount
recorded on our balance sheet, as well as the non-cash collateral
associated with such arrangements. We execute substantially all
of our derivative transactions under master netting
arrangements. We reflect all derivative balances and related cash
collateral subject to enforceable master netting arrangements on
a net basis within the balance sheet. The “Gross amounts
recognized” column in the following table include $59.8 billion
and $66.1 billion of gross derivative assets and liabilities,
respectively, at December 31, 2013, and $68.9 billion and
$75.8 billion, respectively, at December 31, 2012, with
counterparties subject to enforceable master netting
arrangements that are carried on the balance sheet net of
offsetting amounts. The remaining gross derivative assets and
liabilities of $12.9 billion and $7.3 billion, respectively, at
December 31, 2013 and $17.0 billion and $7.3 billion,
respectively, at December 31, 2012, include those with
counterparties subject to master netting arrangements for which
we have not assessed the enforceability because they are with
counterparties where we do not currently have positions to
offset, those subject to master netting arrangements where we
have not been able to confirm the enforceability and those not
subject to master netting arrangements. As such,we do not net
derivative balances or collateral within the balance sheet for
these counterparties.
We determine the balance sheet netting adjustments based
on the terms specified within each master netting arrangement.
We disclose the balance sheet netting amounts within the
column titled “Gross amounts offset in consolidated balance
sheet.” Balance sheet netting adjustments are determined at the
counterparty level for which there may be multiple contract
types. For disclosure purposes, we allocate these adjustments to
the contract type for each counterparty proportionally based
upon the “Gross amounts recognized” by counterparty. As a
result, the net amounts disclosed by contract type may not
represent the actual exposure upon settlement of the contracts.
Balance sheet netting does not include non-cash collateral
that we pledge. For disclosure purposes, we present these
amounts in the column titled “Gross amounts not offset in
consolidated balance sheet (Disclosure-only netting)” within the
table. We determine and allocate the Disclosure-only netting
amounts in the same manner as balance sheet netting amounts.
The “Net amounts” column within the following table
represents the aggregate of our net exposure to each
counterparty after considering the balance sheet and Disclosure-
only netting adjustments. We manage derivative exposure by
monitoring the credit risk associated with each counterparty
using counterparty specific credit risk limits, using master
netting arrangements and obtaining collateral. Derivative
contracts executed in over-the-counter markets include bilateral
contractual arrangements that are not cleared through a central
clearing organization but are typically subject to master netting
arrangements. The percentage of our bilateral derivative
transactions outstanding at period end in such markets, based
on gross fair value, is provided within the following table. Other
derivative contracts executed in over-the-counter or exchange-
traded markets are settled through a central clearing
organization and are excluded from this percentage. In addition
to the netting amounts included in the table, we also have
balance sheet netting related to resale and repurchase
agreements that are disclosed within Note 14.
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