Barclays 2010 Annual Report Download - page 252

Notes to the financial statements
For the year ended 31st December 2010 continued
41 Fair value of financial instruments
The fair value of a financial instrument is the amount for which an asset could be exchanged, or a liability settled, in an arm’s length transaction between
knowledgeable willing parties.
Comparison of carrying amounts and fair values
The following table summarises the carrying amounts of financial assets and liabilities presented on the Group’s balance sheet, and their fair values
differentiating between financial assets and liabilities measured at fair value and those measured at amortised cost.
2010 2009
Notes
Carrying
amount
£m
Fair
Value
£m
Carrying
amount
£m
Fair
Value
£m
Financial assets:
Cash and balances at central banks a97,630 97,630 81,483 81,483
Items in the course of collection from other banks a1,384 1,384 1,593 1,593
Trading portfolio assets:
– Debt securities and other eligible bills b139,240 139,240 126,520 126,520
– Equity securities b25,613 25,613 19,602 19,602
– Traded Loans b2,170 2,170 2,962 2,962
– Commodities b1,844 1,844 2,260 2,260
Financial assets designated at fair value:
– Equity securities b5,685 5,685 6,256 6,256
– Loans and advances b22,352 22,352 22,390 22,390
– Debt securities b1,918 1,918 4,007 4,007
– Other financial assets designated at fair value b10,101 10,101 8,658 8,658
– Held in respect of linked liabilities under investment contracts b1,429 1,429 1,257 1,257
Derivative financial instruments b420,319 420,319 416,815 416,815
Loans and advances to banks c37,799 37,768 41,135 41,135
Loans and advances to customers:
– Residential mortgage loans c168,055 161,439 149,099 142,726
– Credit card receivables c22,658 22,658 21,889 21,889
– Other personal lending c26,608 26,240 25,435 25,430
– Wholesale and corporate loans and advances c200,618 196,124 212,928 207,648
– Finance lease receivables c10,003 10,046 10,873 10,898
Available for sale financial investments:
– Debt securities and other eligible bills b59,629 59,629 49,807 49,807
– Equity securities b5,481 5,481 6,676 6,676
Reverse repurchase agreements and other similar secured lending c205,772 205,527 143,431 142,524
Financial liabilities:
Deposits from banks d77,975 77,949 76,446 76,457
Items in the course of collection due to other banks a1,321 1,321 1,466 1,466
Customer accounts:
– Current and demand accounts d110,443 110,443 100,710 100,710
– Savings accounts d91,928 91,928 81,188 81,188
– Other time deposits d143,417 143,580 140,531 140,544
Trading portfolio liabilities:
– Debt securities and other eligible bills b64,607 64,607 44,708 44,708
– Equity securities b7,568 7,568 6,468 6,468
– Commodities b518 518 76 76
Financial liabilities designated at fair value:
– Debt securities b76,907 76,907 72,191 72,191
– Deposits b10,243 10,243 6,275 6,275
– Other financial assets designated at fair value b8,632 8,632 7,736 7,736
– Liabilities to customers under investment contracts b1,947 1,947 1,679 1,679
Derivative financial instruments b405,516 405,516 403,416 403,416
Debt securities in issue d156,623 155,974 135,902 135,405
Repurchase agreements and other similar secured lending d225,534 225,511 198,781 198,781
Subordinated liabilities d28,499 27,183 25,816 25,299
Notes
a Fair value approximates carrying value due to the short-term nature of these financial
assets and liabilities.
b The carrying value of financial instruments measured at fair value (including those held
for trading, designated at fair value, derivatives and available for sale) is determined in
accordance with the accounting policy noted on pages 196 and 198. Further description
and analysis of these fair values are set out below.
c The carrying value of financial assets measured at amortised cost (including loans and
advances, and other lending such as reverse repurchase agreements and cash collateral
on securities borrowed) is determined in accordance with the accounting policy noted on
pages 196 to 199. In many cases the fair value disclosed approximates the carrying value
because the instruments are short-term in nature or have interest rates that reprice
frequently. In other cases, fair value is determined using discounted cash flows, applying
market derived interest rates. Alternatively, the fair value is determined by applying an
average of available regional and industry segmental credit spreads to the loan portfolio,
taking the contractual maturity of the loan facilities into consideration.
d The carrying value of financial liabilities measured at amortised cost (including customer
accounts and other deposits such as repurchase agreements and cash collateral on
securities lent, debt securities in issue and subordinated liabilities) is determined in
accordance with the accounting policy noted on page 197. In many cases, the fair value
disclosed approximates the carrying value because the instruments are short-term in
nature or have interest rates that reprice frequently such as customer accounts and other
deposits and short-term debt securities. Fair values of other debt securities in issue are
based on quoted prices where available, or where these are unavailable, are estimated
using a valuation model. Fair values for dated and undated convertible and non
convertible loan capital are based on quoted market rates for the issue concerned or
similar issues with terms and conditions.
250 Barclays PLC Annual Report 2010 www.barclays.com/annualreport10