Barclays 2015 Annual Report Download - page 197

home.barclays/annualreport Barclays PLC Annual Report 2015 I 195
Currency composition of wholesale debt
As at 31 December 2015, the proportion of wholesale funding by major currencies was as follows:
Currency composition of wholesale funding
USD
%
EUR
%
GBP
%
Other
%
Deposits from banks 25 51 19 5
Certificates of deposits and commercial paper 25 60 14 1
Asset backed commercial paper 92 8 – –
Senior unsecured (public benchmark) 43 20 28 9
Senior unsecured (privately placed) 39 21 18 22
Covered bonds/ABS 27 41 31 1
Subordinated liabilities 44 19 37 –
Total as at 31 December 2015 38 31 23 8
Total as at 31 December 2014 35 32 25 8
To manage cross-currency refinancing risk the Group manages to foreign exchange cash flow limits, which limit risk at specific maturities. Across
wholesale funding, the composition of wholesale funding is materially unchanged.
Term financing
The Group issued £9bn (2014: £15bn) of term funding net of early redemptions during 2015. The Group has £14bn of term debt maturing in 2016
and £16bn maturing in 2017a.
The Group expects to continue issuing public wholesale debt in 2016, in order to maintain a stable and diverse funding base by type, currency and
distribution channel.
Encumbrance
Asset encumbrance arises from collateral pledged against secured funding and other collateralised obligations. Barclays funds a portion of trading
portfolio assets and other securities via repurchase agreements and other similar borrowing, and pledges a portion of customer loans and advances
as collateral in securitisations, covered bond and other similar secured structures. Barclays monitors the mix of secured and unsecured funding
sources within the Group’s funding plan and seeks to efficiently utilise available collateral to raise secured funding and meet other collateralised
obligations.
Encumbered assets have been defined consistently with the Group’s reporting requirements under Article 100 of the CRR. Securities and
commodities assets are considered encumbered when they have been pledged or used to secure, collateralise or credit enhance a transaction which
impacts their transferability and free use. This includes external repurchase or other similar agreements with market counterparts.
Excluding assets positioned at central banks, as at 31 December 2015, £157bn (2014: £176bn) of the Group’s assets were encumbered, primarily due
to cash collateral posted, firm financing of trading portfolio assets and other securities and funding secured against loans and advances to
customers.
Assets may also be encumbered under secured funding arrangements with central banks, such as the Funding for Lending Scheme. In advance of
such encumbrance, assets are often positioned with central banks to facilitate efficient future draw down. £88bn (2014: £99bn) of on-balance sheet
assets were positioned at the central banks, consisting of encumbered assets and collateral pre-positioned and available for use in secured financing
transactions.
£212bn (2014: £270bn) of on and off-balance sheet assets not positioned at the central bank were identified as readily available and available for use
in secured financing transactions. Additionally, they include cash and securities held in the Group liquidity pool as well as unencumbered assets
which provide a source of contingent liquidity. While these additional assets are not relied upon in the Group’s LRA, a portion of these assets may be
monetised to generate liquidity through use as collateral for secured funding or through outright sale. Loans and advances to customers are only
classified as readily available if they are already in a form, such that, they can be used to raise funding without further management actions. This
includes excess collateral already in secured funding vehicles.
£208bn (2014: £208bn) of assets not positioned at the central bank were identified as available as collateral. These assets are not subject to any
restrictions on their ability to secure funding, to be offered as collateral, or to be sold to reduce potential future funding requirements, but are not
immediately available in the normal course of business in their current form. They primarily consist of loans and advances which would be suitable
for use in secured funding structures but are conservatively classified as not readily available because they are not in transferable form.
Not available as collateral consist of assets that cannot be pledged or used as security for funding due to restrictions that prevent their pledge or use
as security for funding in the normal course of business.
Derivatives and reverse repo assets relate specifically to derivatives, reverse repurchase agreements and other similar secured lending. These are
shown separately as these on-balance sheet assets cannot be pledged. However, these assets can give rise to the receipt of non-cash assets which
are held off-balance sheet, and can be used to raise secured funding or meet additional funding requirements.
In addition, £265bn (2014: £313bn) of the total £306bn (2014: £396bn) securities accepted as collateral, and held off-balance sheet, were
on-pledged, the significant majority of which related to matched-book activity where reverse repurchase agreements are matched by repurchase
agreements entered into to facilitate client activity. The remainder relates primarily to reverse repurchases used to settle trading portfolio liabilities
as well as collateral posted against derivative margin requirements.
Note
a Includes £0.6bn of bilateral secured funding in 2016 and £0.4bn in 2017.
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