Barclays 2004 Annual Report Download - page 182

Notes to the accounts
For the year ended 31st December 2004
180
38 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 2003.
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 2004.
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.
2004 2003
Carrying Fair Carrying Fair
amount value amount value
Note £m £m £m £m
Trading
Assets
Treasury bills and other eligible bills (a) 5,278 5,278 4,064 4,064
Loans and advances to banks
(including reverse repurchase agreements) (a) 50,145 50,145 44,670 44,670
Loans and advances to customers
(including reverse repurchase agreements) (a) 65,099 65,099 58,961 58,961
Debt securities (a) 87,671 87,671 59,812 59,812
Equity shares (a) 10,873 10,873 6,905 6,905
Derivatives (see analysis in Note 37) (b) 18,174 18,174 15,812 15,812
London Metal Exchange warrants and other metals trading positions (see Note 21) (a) 952 952 1,290 1,290
Liabilities
Deposits by Banks and customers accounts
(including repurchase agreements) (a) 82,568 82,568 65,505 65,505
Short positions in securities (see Note 26) (a) 53,364 53,364 42,228 42,228
Derivatives (see analysis in Note 37) (b) 18,009 18,009 14,797 14,797