Barclays 2012 Annual Report Download - page 118

All disclosures in this section (pages 116-154) are unaudited unless otherwise stated
Credit risk
Credit risk is the risk of the Group suffering financial loss if any of its customers, clients or market counterparties
fails to fulfil their contractual obligations to the Group.
Analysis of the Group’s maximum exposure and collateral
and other credit enhancements held
Basis of preparation
The following tables present a reconciliation between the Group’s
maximum exposure and its net exposure to credit risk; reflecting the
financial effects of collateral, credit enhancements and other actions
taken to mitigate the Group’s exposure.
For financial assets recognised on the balance sheet, maximum
exposure to credit risk represents the balance sheet carrying value after
allowance for impairment. For off-balance sheet guarantees, the
maximum exposure is the maximum amount that Barclays would have
to pay if the guarantees were to be called upon. For loan commitments
and other credit related commitments that are irrevocable over the life
of the respective facilities, the maximum exposure is the full amount
of the committed facilities.
This and subsequent analyses of credit risk include only financial assets
subject to credit risk. They exclude other financial assets not subject to
credit risk, mainly equity securities held for trading, as available for sale
or designated at fair value, and traded commodities. Assets designated
at fair value in respect of linked liabilities to customers under
investment contracts have also not been included as the Group is not
exposed to credit risk on these assets. Credit losses in these portfolios,
if any, would lead to a reduction in the linked liabilities and not result
in a loss to the Group.
The Group mitigates the credit risk to which it is exposed through
netting and set-off, collateral and risk transfer. Further detail on the
Group’s policies to each of these forms of credit enhancement are
presented on pages 329-330.
Maximum exposure and effects of collateral and other credit enhancements (audited)
As at 31 December 2012
Maximum
exposure
£m
Netting
and set-off
£m
Collateral
£m
Risk
transfer
£m
Net
exposure
£m
On-balance sheet:
Cash and balances at central banks 86,175 – – – 86,175
Items in the course of collection from other banks 1,456 – – – 1,456
Trading portfolio assets:
Debt securities 114,759 – – – 114,759
Traded loans 2,404 – – – 2,404
Total trading portfolio assets 117,163 – – – 117,163
Financial assets designated at fair value:
Loans and advances 21,996 – (7,500) (111) 14,385
Debt securities 6,118 – (23) – 6,095
Other financial assets 7,727 – (5,629) – 2,098
Total financial assets designated at fair value 35,841 – (13,152) (111) 22,578
Derivative financial instruments 469,146 (387,672) (53,183) (8,132) 20,159
Loans and advances to banks 40,489 (1,012) (5,071) (136) 34,270
Loans and advances to customers:
Home loans 174,988 – (172,722) (53) 2,213
Credit cards, unsecured and other retail lending 66,414 (10) (18,612) (2,321) 45,471
Corporate loans 184,327 (10,243) (50,404) (8,489) 115,191
Total loans and advances to customers 425,729 (10,253) (241,738) (10,863) 162,875
Reverse repurchase agreements and other similar secured lending 176,956 – (175,348) – 1,608
Available for sale debt securities 74,677 – (234) (32) 74,411
Other assets 2,001 – – – 2,001
Total on-balance sheet 1,429,633 (398,937) (488,726) (19,274) 522,696
Off-balance sheet:
Securities lending arrangements – – – – –
Guarantees and letters of credit pledged as collateral security 15,855 – (2,278) (379) 13,198
Acceptances, endorsements and other contingent liabilities 6,002 – (61) (176) 5,765
Documentary credits and other short term trade related transactions 1,027 – (48) (11) 968
Standby facilities, credit lines and other commitments 247,816 – (17,973) (3,396) 226,447
Total off-balance sheet 270,700 – (20,360) (3,962) 246,378
Total 1,700,333 (398,937) (509,086) (23,236) 769,074
barclays.com/annualreport116 I Barclays PLC Annual Report 2012
Risk review
Credit risk