49 Fair value of financial instruments

The fair value of a financial instrument is the amount for which an asset could be exchanged, or a liability settled, in an arms-length transaction between knowledgeable willing parties.

The following table summarises the carrying amounts of financial assets and financial liabilities presented on the Group’s balance sheet, and their fair values:

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2007 2006
Carrying  Fair  Carrying  Fair 
amount  value  amount  value 
Notes  £m  £m  £m  £m 
Financial assets: 
Cash and balances at central banks  a   5,801  5,801  7,345  7,345 
Items in the course of collection from other banks  a   1,836  1,836  2,408  2,408 
Trading portfolio assets 
– Treasury and other eligible bills  b   2,094  2,094  2,960  2,960 
– Debt securities  b   152,778  152,778  140,576  140,576 
– Equity securities  b   36,307  36,307  31,548  31,548 
– Traded Loans  b   1,780  1,780  1,843  1,843 
– Commodities  b   732  732  940  940 
Financial assets designated at fair value: 
held in respect of linked liabilities under investment contracts  b   90,851  90,851  82,798  82,798 
held under own account: 
– Equity securities  b   5,376  5,376  3,711  3,711 
– Loans and advances  b   23,491  23,491  13,196  13,196 
– Debt securities  b   24,217  24,217  12,100  12,100 
– Other financial assets designated at fair value  b   3,545  3,545  2,793  2,793 
Derivative financial instruments  b   248,088  248,088  138,353  138,353 
Loans and advances to banks  c   40,120  40,106  30,926  30,895 
Loans and advances to customers: 
– Residential mortgage loans  c   111,955  111,951  94,511  94,511 
– Credit card receivables  c   14,289  14,289  13,399  13,399 
– Other personal lending  c   24,968  24,968  20,511  20,488 
– Wholesale and corporate loans and advances  c   183,109  181,589  143,835  143,621 
– Finance lease receivables  c   11,077  11,066  10,044  10,042 
Available for sale financial instruments 
– Treasury and other eligible bills  b   2,723  2,723  2,420  2,420 
– Debt securities  b   38,673  38,673  47,912  47,912 
– Equity securities  b   1,676  1,676  1,371  1,371 
Reverse repurchase agreements and cash collateral on securities borrowed  c   183,075  183,075  174,090  174,090 
Financial liabilities: 
Deposits from banks  d   90,546  90,508  79,562  79,436 
Items in the course of collection due to other banks  a   1,792  1,792  2,221  2,221 
Customer accounts: 
– Current and demand accounts  d   80,006  80,006  77,216  77,216 
– Savings accounts  d   74,599  74,599  65,784  65,792 
– Other time deposits  d   140,382  141,917  113,754  113,653 
Trading portfolio liabilities: 
– Treasury and other eligible bills  b   486  486  608  608 
– Debt securities  b   50,506  50,506  58,142  58,142 
– Equity securities  b   13,702  13,702  12,697  12,697 
– Commodities  b   708  708  427  427 
Financial liabilities designated at fair value: 
– Liabilities to customers under investment contracts  b   92,639  92,639  84,637  84,637 
– Held on own account  b   74,489  74,489  53,987  53,987 
Derivative financial instruments  b   248,288  248,288  140,697  140,697 
Debt securities in issue  e   120,228  120,176  111,137  111,131 
Repurchase agreements and cash collateral on securities lent  d   169,429  169,429  136,956  136,956 
Subordinated liabilities  f   18,150  17,410  13,786  13,976