Barclays 2007 Annual Report Download - page 189

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Financial statements
Barclays PLC Annual Report 2007 187
12 Trading portfolio
2007 2006
£m £m
Trading portfolio assets
Treasury and other eligible bills 2,094 2,960
Debt securities 152,778 140,576
Equity securities 36,307 31,548
Traded loans 1,780 1,843
Commodities 732 940
Trading portfolio assets 193,691 177,867
Trading portfolio liabilities
Treasury and other eligible bills (486) (608)
Debt securities (50,506) (58,142)
Equity securities (13,702) (12,697)
Commodities (708) (427)
Trading portfolio liabilities (65,402) (71,874)
13 Financial assets designated at fair value
Held on own account
2007 2006
£m £m
Loans and advances 23,491 13,196
Debt securities 24,217 12,100
Equity securities 5,376 3,711
Other financial assets 3,545 2,792
Financial assets designated at fair value – held on own account 56,629 31,799
The maximum exposure to credit risk on loans and advances designated at fair value at 31st December 2007 was £23,491m (2006: £13,196m).
The amount by which related credit derivatives and similar instruments mitigate the exposure to credit risk at 31st December was £2,605m (2006: £28m).
The net loss attributable to changes in credit risk for loans and advances designated at fair value was £401m in 2007 (2006: £nil; 2005; £nil). The gains or
losses on related credit derivatives was £4m for the year (2006: £nil; 2005; £nil).
The cumulative net loss attributable to changes in credit risk for loans and advances designated at fair value since initial recognition is £401m at
31st December 2007 (2006: £3m; 2005: £3m). The cumulative change in fair value of related credit derivatives at 31st December 2007 is £4m
(2006: £nil; 2005; £nil).
Held in respect of linked liabilities to customers under investment contracts/liabilities arising from investment contracts
2007 2006
£m £m
Financial assets designated at fair value held in respect of linked liabilities to customers under investment contracts 90,851 82,798
Cash and bank balances within the portfolio 1,788 1,839
Assets held in respect of linked liabilities to customers under investment contracts 92,639 84,637
Liabilities to customers under investment contracts (92,639) (84,637)
A portion of the Group’s fund management business takes the legal form of investment contracts, under which legal title to the underlying investment
is held by the Group, but the inherent risks and rewards in the investments are borne by the investors. In the normal course of business, the Group’s
financial interest in such investments is restricted to fees for investment management services.
Due to the nature of these contracts, the carrying value of the assets is always the same as the value of the liabilities and any change in the value of the
assets results in an equal but opposite change in the value of the amounts due to the policyholders.
The Group is therefore not exposed to the financial risks – market risk, credit risk and liquidity risk inherent in the investments and they are omitted from
the disclosures on financial risks in Notes 46 to 48.
In the balance sheet, the assets are included as ‘Financial assets designated at fair value – held in respect of linked liabilities to customers under
investment contracts’. Cash balances within the portfolio have been included in the Group’s cash balances. The associated obligation to deliver the value
of the investments to customers at their fair value on balance sheet date is included as ‘Liabilities to customers under investment contracts’.
The increase/decrease in the value arising from the return on the investments and the corresponding increase/decrease in linked liabilities to customers is
included in the Other income note in Note 6.