Barclays PLC Annual Report 2000



	Notes to the accounts


	17 Loans and advances to customers


	2000		1999

	£m	£m	£m	£m

Repayable
on demand	13,452		9,903
not more than three months	39,207		35,258
over three months but not more than one year	18,054		16,476
over one year but not more than five years	29,837		25,319
over five years	63,980		31,651

	164,530		118,607
Less:
Provisions	(2,327)		(1,959)
Interest in suspense	(93)		(80)
	(2,420)		(2,039)

	162,110		116,568

By geographical area
Banking business:
UK	115,314		78,677
Other European Union	10,203		5,976
United States	6,376		4,048
Rest of the World	8,950		8,344

Total banking business	140,843		97,045
Total trading business	23,687		21,562

	164,530		118,607


	At 31st December 2000, there were loans and advances to customers of Ł614m (1999 Ł738m) outstanding from associated undertakings and joint ventures. Banking business loans and advances to customers include finance lease receivables of Ł4,750m (1999 Ł5,660m) which are stated in the balance sheet after deducting Ł2,950m (1999 Ł3,979m) of unearned charges and interest. Mortgage incentive costs of Ł22m (1999 (Ł4m) 1998 Ł8m) have been charged/(credited) to net interest income. Assets acquired in the year for letting under finance leases amounted to Ł335m (1999 Ł781m). Additional analyses are provided within the loans and advances, provisions for bad and doubtful debts and potential credit risk lendings sections of the financial review. The geographical analysis of the banking business is based on the location of the office from which the lendings are made. The trading business, which is largely carried out in the UK, the United States and Japan is more international in nature and has not been analysed geographically. It primarily constitutes settlement and reverse repo balances. Securitisation transactions Loans and advances to customers include balances which have been securitised. In accordance with Financial Reporting Standard 5 (FRS 5), ‘Reporting the Substance of Transactions’, these balances are either accounted for on the basis of linked presentation or separate recognition of the gross assets and related funding. Linked presentation Banking business loans and advances to customers include loans subject to non-recourse finance arrangements which at 31st December 2000 and 1999 comprised portfolios of mortgage loans. The principal benefits of these loans were acquired from the Bank by special purpose securitisation companies which were funded primarily through the issue of floating rate notes. No gain or loss was recognised on the transfer. Barclays PLC and its subsidiary undertakings are not obliged to support any losses that may be suffered by the floating rate noteholders and do not intend to provide such support. Additionally, the floating rate notes were issued on the basis that noteholders are only entitled to obtain payment, as to both principal and interest, to the extent that the securitisation companies’ respective available resources, including funds due from customers in respect of the securitised loans, are sufficient and that noteholders have no recourse whatsoever to the Group. The securitisation companies involved are Gracechurch Mortgage Finance (No. 2) PLC, Gracechurch Mortgage Finance (No. 3) PLC and Millshaw SAMS (No. 1) Limited. All the shares in Gracechurch Mortgage Finance (No. 2) PLC and Gracechurch Mortgage Finance (No. 3) PLC are held beneficially by Gracechurch Mortgage (Holdings) Limited. All the shares in Millshaw SAMS (No. 1) Limited are held beneficially by Millshaw SAMS Holdings Limited. All the shares in Gracechurch Mortgage (Holdings) Limited and Millshaw SAMS Holdings Limited are held by Royal Exchange Trust Company Limited. The Group does not own, directly or indirectly, any of the share capital of the securitisation companies or their parent companies.
	The Bank has made an interest bearing subordinated loan to each of the Gracechurch Mortgage Finance securitisation companies repayable on final redemption of the floating rate notes. The Bank receives payments from the securitisation companies in respect of fees for loan administration services, and also under the terms of interest rate swaps written between the Bank and the Gracechurch Mortgage Finance securitisation companies to hedge their respective exposures to movements in interest rates arising from these transactions. In each case the effect of the interest rate swaps between the Bank and the securitisation companies, in conjunction with certain interest rate swaps with third parties, is that the securitisation companies swap all or part of the interest flows receivable from customers in respect of the securitised loans into variable rate interest flows which are designed broadly to match the interest payable to floating rate noteholders. The Bank has no right to repurchase the benefit of any of the securitised loans and no obligation to do so, other than in certain circumstances where the Bank is in breach of warranty. The personal mortgage loans subject to non-recourse finance are as follows:


Outstanding at 31st December 2000			Outstanding at 31st December 1999

Customer loans Łm	Non- returnable finance Łm	Funding provided by the Bank* Łm	Customer loans Łm	Non- returnable finance Łm	Funding provided by the Bank* Łm

297	286	11	333	268	65


	* Funding provided by the Bank includes Ł11m (1999 Ł11m) of subordinated loans. Linked presentation has been applied for these loans and the net of the loans and finance is included within loans and advances to customers on the balance sheet. Gross assets presentation During 1999 the Barclaycard credit and charge card receivables portfolio in the UK was securitised. The noteholders in this securitisation have a proportionate interest in each balance in the portfolio and at 31st December 2000 the sterling equivalent of this interest was Ł607m (1999 Ł607m). This securitisation does not qualify for linked presentation under Financial Reporting Standard 5 and therefore the total portfolio is included within gross loans. The funding giving rise to the noteholders interest is included within Debt securities in issue (note 30).