Barclays 2010 Annual Report Download - page 257

41 Fair value of financial instruments continued
Level 3 movement analysis
The following table summarises the movements in the Level 3 balance during the year. The table shows gains and losses and includes amounts for
all financial assets and liabilities transferred to and from Level 3 during the year. Transfers have been reflected as if they had taken place at the beginning
of the year.
Analysis of movements in Level 3 financial assets
and liabilities Trading
portfolio
assets
£m
Financial
assets
designated
at fair value
£m
Available for
sale assets
£m
Trading
portfolio
liabilities
£m
Financial
liabilities
designated
at fair value
£m
Net
derivative
financial
instrumentsa
£m
Total
£m
As at 1st January 2010 6,078 10,700 1,277 (78) (3,828) 3,087 17,236
Purchases 2,830 890 234 (96) (12) 762 4,608
Sales (3,334) (1,117) (121) – 39 147 (4,386)
Issues – – – – (243) (555) (798)
Settlements (455) (924) (206) 63 601 (94) (1,015)
Total gains and losses in the period recognised in the
income statement:
– trading income 683 203 – – (730) (5) 151
– other income – 173 (94) – – – 79
Total gains or losses recognised in other comprehensive
income – – 208 – – – 208
Transfers in/(transfers out) (61) 979 1,992 10 536 (514) 2,942
As at 31st December 2010 5,741 10,904 3,290 (101) (3,637) 2,828 19,025
As at 1st January 2009 14,625 17,681 3,137 (258) (3,779) 7,493 38,899
Purchases 2,021 700 459 (70) (313) 2,334 5,131
Sales (7,018) (4,875) (9) 172 690 (3,548) (14,588)
Issues – – – – (1,343) (1,718) (3,061)
Settlements (410) (804) (347) – 763 (100) (898)
Total gains and losses in the period recognised in the
income statement:
– trading income (2,290) (3,356) – 27 1,574 (3,516) (7,561)
– other income – (434) (131) – – – (565)
Total gains or losses recognised in other comprehensive
income – – (103) – – – (103)
Transfers in/(transfers out) (850) 1,788 (1,729) 51 (1,420) 2,142 (18)
As at 31st December 2009 6,078 10,700 1,277 (78) (3,828) 3,087 17,236
The significant movements in Level 3 positions during the year are explained below:
– purchases of £4.6bn were primarily composed of £2.3bn of asset backed products, £0.6bn of equity products, £0.4bn of non-asset backed debt
instruments and £0.4bn of private equity assets;
– sales of £4.4bn included the sale of £2.4bn of asset backed products, £0.6bn of non-asset backed debt instruments, £0.6bn of private equity assets
and £0.4bn of commercial real estate loans;
– net Issuances and Settlements of £1.8bn were primarily driven by £0.6bn of commercial real estate settlements, and £0.5bn of equity product issuances;
– transfers into Level 3 primarily reflected a £2.0bn receivable arising as part of the acquisition of the North American businesses of Lehman Brothers.
This resulted from a change in the accounting treatment from loans and advances to available for sale financial instruments. This classification is due
to the uncertainty inherent in any litigation, rather than uncertainty relating to the valuation of the assets themselves. In addition, a further £1.0bn
was transferred from Level 2 to Level 3 due to unobservable valuation inputs becoming significant to the overall valuation of certain fixed rate loans.
Note
a The derivative financial instruments in the tables above are represented on a net basis
of £2,828m (2009: £3,087m). On a gross basis derivative financial assets are £9,082m
(2009: £12,201m), derivative financial liabilities are £6,254m (2009: £9,114m).
Barclays PLC Annual Report 2010 www.barclays.com/annualreport10 255
Strategy Performance Risk management and governance Shareholder informationFinancial statementsAbout Barclays