Barclays 2009 Annual Report Download - page 249

www.barclays.com/annualreport09 Barclays PLC Annual Report 2009 247
34 Contingent liabilities and commitments continued
Commitments to lend are agreements to lend to a customer in the future, subject to certain conditions. Such commitments are either made for a fixed
period, or have no specific maturity but are cancellable by the lender subject to notice requirements.
Documentary credits commit the Group to make payments to third parties, on production of documents, which are usually reimbursed immediately
by customers.
Capital commitments
At 31st December 2009 the commitments for capital expenditure under contract amounted to £129m (2008: £48m).
Assets pledged
Assets are pledged as collateral to secure liabilities under repurchase agreements, securitisations and stock lending agreements or as security deposits
relating to derivatives. The disclosure includes any asset transfers associated with liabilities under repurchase agreements and securities lending transactions.
The following table summarises the nature and carrying amount of the assets pledged as security against these liabilities:
2009 2008
£m £m
Trading portfolio assets 96,176 81,186
Loans and advances 48,846 28,789
Available for sale investments 24,264 32,321
Other 77 3,812
Assets pledged 169,363 146,108
Collateral held as security for assets
Under certain transactions, including reverse repurchase agreements and stock borrowing transactions, the Group is allowed to resell or repledge the
collateral held. The fair value at the balance sheet date of collateral accepted and repledged to others was as follows:
2009 2008
£m £m
Fair value of securities accepted as collateral 357,159 424,819
Of which fair value of securities repledged/transferred to others 283,334 374,222
35 Legal proceedings
On 25th November 2009, the UK Supreme Court decided the test case relating to current account overdraft charges in favour of the banks. The Office of
Fair Trading subsequently confirmed that it will not proceed with its investigation into the fairness of these charges following the Supreme Court judgment.
Accordingly, we are seeking to have all outstanding claims which were premised on the same legal principles as those at issue in the test case discontinued
or dismissed. There remain a small number of residual complaints challenging the charges on a different basis, but these complaints are not expected to
have a material effect on Barclays.
Barclays Bank PLC, Barclays PLC and various current and former members of Barclays PLC’s Board of Directors have been named as defendants in five
proposed securities class actions (which have been consolidated) pending in the United States District Court for the Southern District of New York. The
consolidated amended complaint, dated 12th February 2010, alleges that the registration statements relating to American Depositary Shares representing
Preferred Stock, Series 2, 3, 4 and 5 (ADS) offered by Barclays Bank PLC at various times between 2006 and 2008 contained misstatements and omissions
concerning (amongst other things) Barclays portfolio of mortgage-related (including US subprime-related) securities, Barclays exposure to mortgage and
credit market risk and Barclays financial condition. The consolidated amended complaint asserts claims under Sections 11, 12(a)(2) and 15 of the
Securities Act of 1933. Barclays considers that these ADS-related claims against it are without merit and is defending them vigorously. It is not possible to
estimate any possible loss in relation to these claims or any effect that they might have upon operating results in any particular financial period.
On 15th September 2009 motions were filed in the United States Bankruptcy Court for the Southern District of New York by Lehman Brothers Holdings Inc.
(LBHI), the SIPA Trustee for Lehman Brothers Inc. (the Trustee) and the Official Committee of Unsecured Creditors of Lehman Brothers Holdings Inc. (the
Committee). All three motions challenge certain aspects of the transaction pursuant to which Barclays Capital Inc. (BCI) and other companies in the
Barclays Group acquired most of the assets of Lehman Brothers Inc. (LBI) in September 2008 and the court order approving such sale. The claimants seek
an order: voiding the transfer of certain assets to BCI; requiring BCI to return to the LBI estate alleged excess value BCI received; and declaring that BCI is not
entitled to certain assets that it claims pursuant to the sale documents and order approving the sale. On 16th November 2009, LBHI, the Trustee and the
Committee filed separate complaints in the Bankruptcy Court asserting claims against BCI based on the same underlying allegations as the pending
motions and seeking relief similar to that which is requested in the motions. On 29th January 2010, BCI filed its response to the motions. Barclays considers
that the motions and claims against BCI are without merit and BCI is vigorously defending its position. On 29th January 2010, BCI also filed a motion
seeking delivery of certain assets that LBHI and LBI have failed to deliver as required by the sale documents and the court order approving the sale. It is not
possible to estimate any possible loss to Barclays in relation to these matters or any effect that these matters might have upon operating results in any
particular financial period.
Barclays is engaged in various other litigation proceedings both in the United Kingdom and a number of overseas jurisdictions, including the United States,
involving claims by and against it which arise in the ordinary course of business. Barclays does not expect the ultimate resolution of any of the proceedings
to which Barclays is party to have a significant adverse effect on the financial position of the Group and Barclays has not disclosed the contingent liabilities
associated with these claims either because they cannot reasonably be estimated or because such disclosure could be prejudicial to the conduct of the
claims.