Barclays 2013 Annual Report Download - page 214

Risk review
Funding risk – Liquidity continued
Contingent liquidity
In addition to the Group liquidity pool, Barclays has access to other unencumbered assets which provide a source of contingent liquidity. Whilst
these are not relied on in the Group’s LRA, a portion of these assets may be monetised in a stress to generate liquidity through use as collateral for
secured funding or through outright sale.
In either a Barclays-specific or market-wide liquidity stress, liquidity available via market sources could be severely disrupted. In circumstances
where market liquidity is unavailable or available only at heavily discounted prices, Barclays could generate liquidity via central bank facilities. The
Group maintains a significant amount of collateral pre-positioned at central banks and available to raise funding.
For more detail on the Group’s other unencumbered assets see page 216.
Funding structure
The basis for sound liquidity risk management is a solid funding structure that reduces the probability of a liquidity stress leading to an inability to
meet funding obligations as they fall due. The Group’s overall funding strategy is to develop a diversified funding base (both geographically and by
depositor type) and maintain access to a variety of alternative funding sources, to provide protection against unexpected fluctuations, while
minimising the cost of funding.
Within this, the Group aims to align the sources and uses of funding. As such, retail and commercial customer loans and advances are funded by
customer deposits. Other assets together with other loans and advances and unencumbered assets are funded by long term wholesale debt and
equity.
Trading portfolio assets are largely funded by repurchase agreements. The majority of reverse repurchase agreements are matched by repurchase
agreements. The remainder of reverse repurchase agreements are used to settle trading portfolio liabilities. The liquidity pool is predominantly
funded through wholesale markets. These funding relationships are summarised below:
AssetsaLiabilitiesa
£360m (2012: £362m) Customer loans and
advances
£127m (2012: £150m) Group liquidity pool
£162m (2012: £163m) Other assets
£340m (2012: £347m) Reverse repurchase
agreements and other
similar secured borrowingc
£323m (2012: £466m) Derivative financial
instruments
£366m (2012: £335m) Customer depositsb
£82m (2012: £102m) <1 Year wholesale funding
£103m (2012: £138m) >1 Year wholesale funding
£102m (2012: £106m) Equity and other liabilities
£340m (2012: £347m) Repurchase agreements
and other similar secured
borrowingc
£319m (2012: £460m) Derivative financial
instruments
Deposit funding (including BAGL) (audited)
Deposit fundingd
2013 2012
Funding of loans and advances to customers
As at 31 December 2013
Loans and
advances to
customers
£bn
Customer
deposits
£bn
Loan to
deposit
ratio
%
Loan to
deposit
ratio
%
Retail and Business Banking 234 174
Corporate Bankinge61 109
Wealth and Investment Management 23 63
Total funding excluding secured 318 346 92 102
Secured fundingf– 41
Sub-total including secured funding 318 387 82 88
Retail and Business Banking, Corporate Banking and Wealth and Investment Managemente318 346 92 102
Investment Bank 41 20
Head Office and Other Operations 1 –
Trading settlement balances and cash collateral 70 62
Total 430 428 101 110
The Group loan to deposit ratio as at 31 December 2013 was 101% (2012: 110%).
Notes
a BAGL Group balances other than customer loans and advances of £34bn and customer deposits of £33bn are included in other assets and liabilities.
b Excluding cash collateral and settlement balances.
c Comprised of reverse repurchases that provide financing to customers collateralised by highly liquid securities on a short term basis or are used to settle short term inventory
positions; repo financing of trading portfolio assets and matched cash collateral and settlement balances.
d Included within Retail, Corporate Banking, Wealth and Investment Management and the Investment Bank are BAGL Group related balances totalling £34bn of loans and advances
to customers funded by £33bn of customer deposits (£7bn of which is BAGL Investment Bank).
e In addition Corporate Banking holds £15.7bn (2012: £17.6bn) loans and advances as financial assets held at fair value.
f Secured funding includes covered bonds, public securitisations, bilateral repos and central banks borrowings. These are not included within customer deposits.
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212 Barclays PLC Annual Report 2013