Barclays 2003 Annual Report Download - page 165

46 Fair values of financial instruments
Financial instruments include both financial assets and financial liabilities and also derivatives. The fair value of a financial instrument is the amount
at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.
Wherever possible, the Group has estimated fair value using market prices or data available for instruments with characteristics either identical or
similar to those of the instruments held by the Group. In certain cases, however, including loans and advances to customers, no ready markets
currently exist in the UK wherein exchanges between willing parties occur. Accordingly, various techniques have been developed to estimate what
the fair value of such instruments might be.
These estimation techniques are necessarily subjective in nature and involve several assumptions. There have been no significant changes in the
estimation techniques or the methodology used compared with those used at 31st December 2002.
Because a variety of estimation techniques are employed and significant estimates made, comparisons of fair values between financial institutions
may not be meaningful. Readers of these accounts are thus advised to use caution when using this data to evaluate the Group’s financial position.
Fair value information is not provided for items that do not meet the definitions of a financial instrument. These items include short-term debtors
and creditors, intangible assets such as the value of the Group’s branch network, the long-term relationships with depositors (core deposit intangibles),
premises and equipment and shareholders’ equity. These items are material and accordingly the fair value information presented does not purport
to represent, nor should it be construed to represent, the underlying value of the Group as a going concern at 31st December 2003.
The following table shows the carrying amount and the fair value of the Group’s financial instruments analysed between trading and non-trading
assets and liabilities.
2003 2002
Carrying Fair Carrying Fair
amount value amount value
Note £m £m £m £m
Trading
Assets
Treasury bills and other eligible bills (a) 4,064 4,064 2,886 2,886
Loans and advances to banks
(including reverse repurchase agreements) (a) 44,670 44,670 42,805 42,805
Loans and advances to customers
(including reverse repurchase agreements) (a) 58,961 58,961 45,176 45,176
Debt securities (a) 59,812 59,812 53,961 53,961
Equity shares (a) 6,905 6,905 2,628 2,628
Derivatives (see analysis in Note 45) (b) 15,812 15,812 13,454 13,454
London Metal Exchange warrants and other metals trading positions (see Note 23) (a) 1,290 1,290 829 829
Liabilities
Deposits by Banks and customers accounts
(including repurchase agreements) (a) 65,505 65,505 66,103 66,103
Short positions in securities (see Note 29) (a) 42,228 42,228 31,796 31,796
Derivatives (see analysis in Note 45) (b) 14,797 14,797 11,538 11,538
Barclays PLC Annual Report 2003 163