Barclays plc - Annual Report 2008 - Financial statements - The Group

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Notes to the accounts For the year ended 31st December 2008 47 Credit risk (continued) The movements on the impairment allowance during the year were as follows: 2008 Amounts At Acquisitions Unwind Exchange Amounts charged to Balance beginning and of and other written income at 31st of year disposals discount adjustments off Recoveries statement December £m £m £m £m £m £m £m £m Loans and advances to banks 3 – – 1 – 7 40 51 Loans and advances to customers: Residential mortgage loans 132 – (35) 19 (44) 3 232 307 Credit card receivables 841 306 (68) 94 (845) 69 1,048 1,445 Other personal lending 1,373 1 (32) 134 (525) 42 890 1,883 Wholesale and corporate loans and advances 1,310 – – 506 (1,428) 41 2,270 2,699 Finance lease receivables 113 – – 37 (77) 12 104 189 Total loans and advances to customers 3,769 307 (135) 790 (2,919) 167 4,544 6,523 Total impairment allowance 3,772 307 (135) 791 (2,919) 174 4,584 6,574 2007 Amounts At Acquisitions Unwind Exchange Amounts charged to Balance beginning and of and other written income at 31st of year disposals discount adjustments off Recoveries statement December £m £m £m £m £m £m £m £m Loans and advances to banks 4 – – – (1) 13 (13) 3 Loans and advances to customers: Residential mortgage loans 124 – – 2 (5) 5 6 132 Credit card receivables 1,030 (75) (60) 4 (819) 103 658 841 Other personal lending 1,139 – (53) 10 (668) 54 891 1,373 Wholesale and corporate loans and advances 939 1 – 37 (440) 46 727 1,310 Finance lease receivables 99 1 – – (30) 6 37 113 Total loans and advances to customers 3,331 (73) (113) 53 (1,962) 214 2,319 3,769 Total impairment allowance 3,335 (73) (113) 53 (1,963) 227 2,306 3,772 Loan Loss Rates Loans and Gross advances Loan loans and Impairment net of Impairment Loss advances allowance impairment charge Rate £m £m £m £m basis point As at 31st December 2008 516,096 (6,574) 509,522 4,913 95 As at 31st December 2007 389,290 (3,772) 385,518 2,782 71 274 Barclays PLC Annual Report 2008 | Find out more at www.barclays.com/annualreport08
47 Credit risk (continued) Renegotiated loans and advances Loans and advances are generally renegotiated either as part of an ongoing customer relationship or in response to an adverse change in the circumstances of the borrower. In the latter case renegotiation can result in an extension of the due date of payment or repayment plans under which the Group offers a concessionary rate of interest to genuinely distressed borrowers. This will result in the asset continuing to be overdue and will be individually impaired where the renegotiated payments of interest and principal will not recover the original carrying amount of the asset. In other cases, renegotiation will lead to a new agreement, which is treated as a new loan. Collateral and other credit enhancements held Financial assets that are past due or individually assessed as impaired may be partially or fully collateralised or subject to other forms of credit enhancement. Assets in these categories subject to collateralisation are mainly corporate loans, residential mortgage loans and finance lease receivables. Credit card receivables and other personal lending are generally unsecured (although in some instances a charge over the borrowers property of other assets may be sought). Corporate loans Security is usually taken in the form of a fixed charge over the borrower’s property or a floating charge over the assets of the borrower. Loan covenants may be put in place to safeguard the Group’s financial position. If the exposure is sufficiently large, either individually or at the portfolio level, credit protection in the form of guarantees, credit derivatives or insurance may be taken out. For these and other reasons collateral given is only accurately valued on origination of the loan or in the course of enforcement actions and as a result it is not practicable to estimate the fair value of the collateral held. Residential mortgage loans These are secured by a fixed charge over the property. A description and the estimated fair value of collateral held in respect of residential mortgage loans that are past due or individually assessed as impaired is as follows: Nature of assets 2008 2007 Fair value Fair value £m £m Residential property 7,264 6,488 Collateral included in the above table reflects the Group’s interest in the property in the event of default. That held in the form of charges against residential property in the UK is restricted to the outstanding loan balance. In other territories, where the Group is not obliged to return any sale proceeds to the mortgagee, the full estimated fair value has been included. Finance lease receivables The net investment in the lease is secured through retention of legal title to the leased assets. Collateral and other credit enhancements obtained The carrying value of assets held by the Group as at 31st December 2008 as a result of the enforcement of collateral was as follows: 3 Nature of assets 2008 2007 Carrying Carrying amount amount £m £m Residential property 171 34 Commercial and industrial property 2 1 Other credit enhancements 61 – Total 234 35 Financial statements Any properties repossessed are made available for sale in an orderly and timely fashion, with any proceeds realised being used to reduce or repay the outstanding loan. For business customers, in some circumstances, where excess funds are available after repayment in full of the outstanding loan, they are offered to any other, lower ranked, secured lenders. Any additional funds are returned to the customer. Barclays does not, as a rule, occupy repossessed properties for its business use. The Group does not use assets obtained in its operations. Assets obtained are normally sold, generally at auction, or realised in an orderly manner for the maximum benefit of the Group, the borrower and the borrower’s other creditors in accordance with the relevant insolvency regulations. Barclays PLC Annual Report 2008 275
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Financial statements Presentation o
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Independent Auditors’ report Inde
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Consolidated accounts Barclays PLC
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) financial assets, loans to custom
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11. Collateral and netting The Grou
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17. Issued debt and equity securiti
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24. Taxes, including deferred taxes
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The following IFRIC interpretations
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Consolidated balance sheet As at 31
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Consolidated cash flow statement Fo
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Statement of recognised income and
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4 Principal transactions 2008 2007
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9 Administration and general expens
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12 Trading portfolio 2008 2007 £m
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14 Derivative financial instruments
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16 Available for sale financial inv
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20 Investments in associates and jo
Page 35 and 36: 22 Intangible assets 2008 Internall
Page 37 and 38: 24 Financial liabilities designated
Page 39 and 40: 26 Insurance assets and liabilities
Page 41 and 42: 27 Subordinated liabilities (contin
Page 43 and 44: 27 Subordinated liabilities (contin
Page 45 and 46: 29 Securitisations The Group was pa
Page 47 and 48: 30 Retirement benefit obligations (
Page 53 and 54: 31 Ordinary shares, share premium,
Page 55 and 56: 32 Reserves (continued) Retained ea
Page 57 and 58: 34 Contingent liabilities and commi
Page 59 and 60: 37 Leasing The Group is both lessor
Page 61 and 62: 39 Acquisitions The Group made the
Page 63 and 64: 39 Acquisitions (continued) (c) Exp
Page 65 and 66: 42 Other entities There are a numbe
Page 67 and 68: 43 Related party transactions and D
Page 69 and 70: 43 Related party transactions and D
Page 71 and 72: 45 Share-based payments (continued)
Page 77 and 78: 47 Credit risk (continued) Whilst t
Page 79 and 80: 47 Credit risk (continued) Credit r
Page 81 and 82: 47 Credit risk (continued) Credit r
Page 83 and 84: 47 Credit risk (continued) All loan
Page 85: 47 Credit risk (continued) Loans an
Page 89 and 90: 47 Credit risk (continued) Reverse
Page 91 and 92: 48 Market risk (continued) To furth
Page 93 and 94: 48 Market risk (continued) Foreign
Page 95 and 96: 49 Liquidity risk (continued) Year-
Page 97 and 98: 49 Liquidity risk (continued) At 31
Page 99 and 100: 50 Fair value of financial instrume
Page 105 and 106: 52 Capital Management (continued) R
Page 107 and 108: 53 Segmental reporting (continued)
Page 109 and 110: 53 Segmental reporting (continued)
Page 111 and 112: Barclays Bank PLC data Consolidated
Page 117 and 118: c Principal transactions (continued
Page 119 and 120: f Other income 2008 2007 2006 £m
Page 121 and 122: k Called up share capital (continue
Page 123 and 124: l Reserves Other reserves Available
Page 125 and 126: Barclays Bank PLC data Financial Da
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Barclays plc - Annual Report 2008 - Financial statements - The Group

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