RBS 2003 Annual Report Download - page 180

178
Notes on the accounts continued
Notes on the accounts
40 Financial instruments (continued)
Hedges
Derivatives and debt securities held for hedging purposes are accounted for in accordance with the treatment of the hedged
transaction. As a result, any gains or losses on the hedging instrument arising from changes in fair values are not recognised
in the profit and loss account immediately but are accounted for in the same manner as the hedged item.
2003 2003 2002 2002
Unrecognised Deferred Unrecognised Deferred
gains and gains and gains and gains and
losses losses losses losses
£m £m £m £m
At 1 January – gains 2,535 285 1,201 148
At 1 January – losses (2,275) (44) (1,329) (64)
260 241 (128) 84
Recognised gains that arose in previous periods (659) (72) (307) (35)
Recognised losses that arose in previous periods 636 12 322 22
Unrecognised gains and losses arising in the year (208) — 585 —
Unrecognised gains and losses deferred in the year 2 (2) (212) 212
Unrecognised gains and losses deferred and taken to profit and loss in the year — — — (42)
At 31 December 31 179 260 241
Of which – gains 2,236 213 2,535 285
Of which – losses (2,205) (34) (2,275) (44)
31 179 260 241
Gains expected to be recognised in the year to 31 December 2004
(year to 31 December 2003) 532 66 601 72
Gains expected to be recognised in the year to 31 December 2005 or later
(year to 31 December 2004 or later) 1,704 147 1,934 213
2,236 213 2,535 285
Losses expected to be recognised in the year to 31 December 2004
(year to 31 December 2003) (371) (5) (541) (12)
Losses expected to be recognised in the year to 31 December 2005 or later
(year to 31 December 2004 or later) (1,834) (29) (1,734) (32)
(2,205) (34) (2,275) (44)
During the year to 31 December 2003, gains of £58 million (2002 – £33 million) and losses of £95 million (2002 – £16 million) arising in
previous periods were taken directly to the profit and loss account on financial instruments no longer accounted for as hedges.