Barclays 2008 Annual Report Download - page 285

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Financial statements
Barclays PLC Annual Report 2008 283
49 Liquidity risk (continued)
Year-end assessment of liquidity
Barclays maintained a strong liquidity profile in 2008, sufficient to absorb the impact of a stressed funding environment. The Group has access to a
substantial pool of liquidity both in secured markets and from unsecured depositors including numerous foreign governments and central banks. In
addition, our limited reliance on securitisations as a source of funding has meant that the uncertainty in securitisation markets has not impacted our
liquidity risk profile.
Whilst funding markets were extremely difficult in the latter half of 2008, and particularly since September 2008, Barclays was able to increase available
liquidity, extend the term of unsecured liabilities, and reduce reliance on unsecured funding. Barclays has participated in various government and central
bank liquidity facilities, both to aid central banks implementation of monetary policy and support central bank initiatives, where participation has enabled
the lengthening of the term of our refinancing. These facilities have improved access to term funding, and helped moderate money market rates.
Global Retail and Commercial Banking
The sum of liabilities in Global Retail and Commercial Banking, Barclays Wealth and Head office functions exceeds assets in those businesses. As a result
they have no reliance on wholesale funding. The balance sheet is modelled to reflect behavioural experience in both assets and liabilities, and is managed
to maintain a positive cash profile.
Throughout 2008 Global Retail and Commercial Banking continued to grow the amount of customer deposits despite competitive pressures.
Barclays Capital
Barclays Capital manages liquidity to be self-funding through wholesale sources, managing access to liquidity to ensure that potential cash outflows in
a stressed environment are covered.
Funding reliability is maintained by accessing a wide variety of investors and geographies and by building and maintaining strong relationships with these
providers of liquidity. The depositors include asset managers, money market funds, corporates, government bodies, central banks and other financial
institutions. Deposits are predominantly sourced from Western Europe and North America.
Unsecured Funding
Additionally, unsecured funding is managed within specific term limits. The term of unsecured liabilities has been extended, with average life increasing
year over year.
Our capital markets debt issuance includes issues of senior and subordinated debt in US registered offerings and medium-term note programmes
and European medium-term note programs. Substantially all of our unsecured senior issuance is without covenants that trigger increased cost or
accelerate maturity.
Secured Funding
Barclays funds securities based on liquidity characteristics. Limits are in place for each security asset class reflecting liquidity in the cash and financing
markets for these assets. The vast majority of assets funded in repurchase and stock loan transactions are fundable within central bank facilities
(excluding Bank of England Emergency facilities and the Federal Reserve Primary Dealer Credit Facility). These are largely composed of G7 government
securities, US mortgage agency debentures and mortgage backed securities, investment grade corporate securities and listed equities.
Liquidity risk to secured funding is also mitigated by:
– selecting reliable counterparties
– maintaining term financing and by limiting the amount of overnight funding
– limiting overall secured funding usage
Readily available liquidity
Substantial resources are maintained to offset maturing deposits and debt. These readily available assets are sufficient to absorb stress level losses of
liquidity from unsecured as well as contingent cash outflows, such as collateral requirements on ratings downgrades. The sources of liquidity and
contingent liquidity are from a wide variety of sources, including deposits held with central banks and unencumbered securities.