Barclays 2005 Annual Report Download - page 237

60 2004 Financial instruments (FRS 13) (continued)
The following table shows the carrying amount and the fair value of the Group’s financial instruments:
2004
Carrying Fair
amount value
Notes £m £m
Assets
Cash and balances at central banks (a) 1,753 1,753
Items in course of collection from other banks (a) 1,772 1,772
Treasury bills and other eligible bills (a) 6,658 6,658
Loans and advances to banks (c) 80,632 80,628
Loans and advances to customers (d) 262,409 262,567
Debt securities (e) 130,311 130,529
Equity shares (e) 11,399 11,619
Derivatives (b) 19,397 21,340
London Metal Exchange warrants and other metals trading positions (a) 952 952
Liabilities
Deposits by Banks and customers’ accounts (f) 328,516 328,522
Debt securities in issue (g) 83,842 83,936
Items in course of collection due to other banks (a) 1,205 1,205
Undated loan capital (h) 6,149 6,946
Dated loan capital (h) 6,128 6,483
Short positions in securities (e) 53,903 53,904
Derivatives (b) 19,042 21,041
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 eliminated 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
Director’s 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 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.
Barclays PLC
Annual Report 2005 235
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