Barclays 2004 Annual Report Download - page 183

Barclays PLC Annual Report 2004
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38 Fair values of financial instruments (continued)
2004 2003
Carrying Fair Carrying Fair
amount value amount value
Note £m £m £m £m
Non-trading
Assets
Cash and balances at central banks (a) 1,753 1,753 1,726 1,726
Items in course of collection from other banks (a) 1,772 1,772 2,006 2,006
Treasury bills and other eligible bills (a) 1,380 1,380 3,113 3,113
Loans and advances to banks (c) 24,986 24,982 17,254 17,261
Loans and advances to customers (d) 189,847 190,005 167,858 168,047
Debt securities (e) 39,757 39,971 37,581 38,210
Equity shares (e) 1,293 1,513 954 1,134
Derivatives (see analysis in Note 37) (b) 1,223 3,166 1,856 3,851
Liabilities
Deposits by Banks and customers accounts (f) 246,174 246,180 213,455 213,470
Debt securities in issue (g) 67,806 67,900 49,569 50,888
Items in course of collection due to other banks (a) 1,205 1,205 1,286 1,286
Undated loan capital (h) 6,149 6,946 6,310 7,048
Dated loan capital (h) 6,128 6,483 6,029 6,263
Short positions in securities (see Note 26) (e) 350 351 7,706 7,664
Derivatives (see analysis in Note 37) (b) 1,033 3,032 2,198 4,156
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.
(i) The Group considers that, given the lack of an established market, the diversity of fee structures and the difficulty of separating the value
of the instruments from the value of the overall transaction, it is not meaningful to provide an estimate of the fair value of financial
commitments and contingent liabilities.