Barclays 2009 Annual Report Download - page 220

218 Barclays PLC Annual Report 2009 www.barclays.com/annualreport09
Notes to the accounts
For the year ended 31st December 2009
continued
13 Financial assets designated at fair value
Held on own account
2009 2008
£m £m
Loans and advances 22,390 30,187
Debt securities 4,007 8,628
Equity securities 6,256 6,496
Other financial assets 8,658 9,231
Financial assets designated at fair value – held on own account 41,311 54,542
The maximum exposure to credit risk on loans and advances designated at fair value at 31st December 2009 was £22,390m (2008: £30,187m).
The amount by which related credit derivatives and similar instruments mitigate the exposure to credit risk at 31st December 2009 was £1,416m
(2008: £2,084m).
The net loss attributable to changes in credit risk for loans and advances designated at fair value was £2,370m in 2009 (2008: £2,550m). The gains on
related credit derivatives was £229m for the year (2008: £519m).
The cumulative net loss attributable to changes in credit risk for loans and advances designated at fair value since initial recognition is £5,321m at
31st December 2009 (2008: £2,951m). The cumulative change in fair value of related credit derivatives at 31st December 2009 is £744m (2008: £515m).
Held in respect of linked liabilities to customers under investment contracts/liabilities arising from investment contracts
2009 2008
£m £m
Financial assets designated at fair value held in respect of linked liabilities to customers under investment contracts 1,257 66,657
Cash and bank balances within the portfolio 422 2,526
Assets held in respect of linked liabilities to customers under investment contracts 1,679 69,183
Liabilities to customers under investment contracts (1,679) (69,183)
A portion of the Group’s fund management business in 2008, mostly relating to BGI, 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 47 to 49.
On 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’. 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 fair value arising from the return on the investments and the corresponding increase/decrease in linked liabilities to customers
is disclosed in Note 6.