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back to:  Consolidated accounts Barclays PLC |
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17 Loans and advances to customers |
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At 31st December 2001, there were loans and advances to customers of £163m (2000 £25m) outstanding from associated undertakings and joint ventures.
Banking business loans and advances to customers include finance lease receivables of £4,433m (2000 £4,733m) which are stated in the balance sheet after deducting £2,318m (2000 £2,950m) of unearned charges and interest. Mortgage incentive costs of £115m (2000 £22m 1999 (£4m)) have been charged/(credited) to net interest income. Assets acquired in the year for letting under finance leases amounted to £898m (2000 £335m). 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. Provisions include specific provisions of £1,960m (2000 £1,582m) and general provisions of £704m (2000 £731m). Securitised 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 2001 and 2000 comprised portfolios of mortgage loans. The principal benefits of these loans were acquired from the Bank by special purpose securitisation vehicles 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. In June 2001, the floating rate notes of the Gracechurch Mortgage Finance securitisation companies were called. In each case the call of the notes was funded primarily by a loan from Barclays Bank PLC. In November 2001 the Gracechurch Mortgage Finance securitisation companies sold their residual mortgage portfolios to Barclays Bank PLC and used some of the funds raised to repay the loans. The Bank has made interest bearing subordinated loans to each of the securitisation companies repayable on final redemption of the floating rate notes. The subordinated loans to the Gracechurch Mortgage Finance securitisation companies were repaid in June 2001. The Bank received payments from the securitisation companies in respect of fees for loan administration services, and also under the terms of interest rate swaps, which were in place until June 2001, 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, was that the securitisation companies swapped all or part of the interest flows receivable from customers in respect of the securitised loans into variable rate interest flows which were designed broadly to match the interest paid 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: |
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* Funding provided by the Bank includes £1m (2000 £11m) 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 2001 the sterling equivalent of this interest was £607m (2000 £607m). This securitisation does not qualify for linked presentation under Financial Reporting Standard 5 and therefore the total portfolio is included within gross loans and in note 60. The funding giving rise to the noteholders interest is included within note 30, Debt securities in issue.
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