Barclays 2003 Annual Report Download - page 166

Notes to the Accounts
For the Year Ended 31st December 2003
164
46 Fair values of financial instruments (continued)
2003 2002
restated
Carrying Fair Carrying Fair
amount value amount value
Note £m £m £m £m
Non-trading
Assets
Cash and balances at central banks (a) 1,726 1,726 2,032 2,032
Items in course of collection from other banks (a) 2,006 2,006 2,335 2,335
Treasury bills and other eligible bills (a) 3,113 3,113 4,759 4,759
Loans and advances to banks (c) 17,254 17,261 15,369 15,370
Loans and advances to customers (d) 167,858 168,047 157,222 157,450
Debt securities (e) 37,581 38,210 40,268 40,977
Equity shares (e) 954 1,134 501 505
Derivatives (see analysis in Note 45) (b) 1,856 3,851 1,834 4,578
Liabilities
Deposits by Banks and customers accounts (f) 213,455 213,470 192,829 193,000
Debt securities in issue (g) 49,569 50,888 45,885 46,004
Items in course of collection due to other banks (a) 1,286 1,286 1,416 1,416
Undated loan capital (h) 6,310 7,048 6,678 7,308
Dated loan capital (h) 6,029 6,263 4,859 5,106
Short positions in securities (see Note 29) (e) 7,706 7,664 8,144 7,931
Derivatives (see analysis in Note 45) (b) 2,198 4,060 1,824 3,631
Notes
(a) Financial assets and financial liabilities where fair value approximates carrying value because they are either (i) carried at market value or (ii) have
minimal credit losses and are either short-term in nature or repriced frequently.
(b) Derivatives held for trading purposes are carried at fair value. Derivatives held for non-trading purposes are accounted for in accordance with the
accounting treatment of the underlying transaction or transactions being hedged. The fair value of these instruments is estimated using market
prices or pricing models consistent with the methods used for valuing similar instruments used for trading purposes.
(c) Within this calculation, the fair value for loans and advances to banks was estimated using discounted cash flows, applying either market rates,
where practicable, or rates currently offered by other financial institutions for placings with similar characteristics.
(d) The Group provides lending facilities of varying rates and maturities to corporate and personal customers. In estimating the fair value of such
instruments, the fair value of personal and corporate loans subject to variable interest rates is considered to approximate the carrying value.
The fair value of such instruments subject to fixed interest rates was estimated by discounting cash flows using market rates or rates normally
offered by the Group.
(e) The valuation of listed securities and investments is at quoted market prices and that of unlisted securities and investments is based on the
Directors’ estimate, which takes into consideration discounted cash flows, price earnings ratios and other suitable valuation techniques.
(f) Fair values of deposit liabilities payable on demand (interest free, interest bearing and savings deposits) approximate to their carrying value.
The fair value of all other deposits and other borrowings was estimated using discounted cash flows, applying either market rates, where
practicable, or rates currently offered by the Group for deposits of similar remaining maturities.
(g) Fair values of short-term debt securities in issue are approximately equal to their carrying amount. Fair values of other debt securities in issue
are based on quoted prices where available, or where these are unavailable, are estimated using other valuation techniques.
(h) The estimated fair values for dated and undated convertible and non-convertible loan capital were based upon quoted market rates for the issue
concerned or equivalent issues with similar terms and conditions.