RBS 2008 Annual Report Download - page 209

Notes on the accounts continued
RBS Group Annual Report and Accounts 2008208
11 Financial instruments (continued)
Reclassification of financial instruments
As discussed in accounting policies on page 178, during 2008 the
Group reclassified financial assets from the held-for-trading and
available-for-sale categories into the loans and receivables category (as
permitted by paragraph 50D of IAS 39 as amended) and from the held-
for-trading category into the available-for-sale category (as permitted by
paragraph 50B of IAS 39 as amended).
The turbulence in the financial markets during the second half of 2008
was regarded by management as rare circumstances in the context of
paragraph 50B of IAS 39 as amended.
The balance sheet values of these assets, the effect of the
reclassification on the income statement for the period from the date of
reclassification to 31 December 2008 and the gains and losses relating
to these assets recorded in the income statement for the years ended
31 December 2008, 2007 and 2006 were as follows:
2008 2007 2006
2008 – on reclassification 31 December 2008 After reclassification Gains/(losses)
Gains/(losses) recognised in
up to the Gains/ Amount the income
Effective Expected date of (losses) that would statement
Carrying interest cash Carrying Fair reclassi- Impairment in AFS have been in prior
value rate flows value value fication Income losses reserves recognised periods
£m % £m £m £m £m £m £m £m £m £m £m
Reclassified from HFT to LAR:
Loans:
Leveraged finance 3,602 10.15 6,083 4,304 2,523 (457) 454 — (1,206) (155) —
Corporate loans 5,040 6.19 7,582 5,827 4,940 (76) 198 — (681) (50) 3
8,642 13,665 10,131 7,463 (533) 652 — (1,887) (205) 3
Debt securities:
CDO of RMBS 215 4.92 259 236 221 45— (11) 56
RMBS 1,765 6.05 2,136 2,011 1,536 (115) 157 — (302) (12) —
CMBS 1 11.11 4111—— —— —
CLOs 835 6.34 1,141 952 717 (22) 104 — (130) (14) (2)
Other ABS 2,203 5.07 3,202 2,514 2,028 (67) 129 — (338) 3 (1)
Other 2,538 2.62 2,764 2,602 2,388 72 3— (166) 94 476
7,557 9,506 8,316 6,891 (127) 398 — (947) 76 479
Total 16,199 23,171 18,447 14,354 (660) 1,050 — (2,834) (129) 482
Reclassified from HFT to AFS:
Debt securities:
CDO of RMBS 6,228 8.14 8,822 5,695 5,695 (1,330) 1,147 (464) (1,069) (280) (400) —
RMBS 5,205 8.03 8,890 5,171 5,171 (530) 24 — (162) (122) (4) 73
CMBS 32 6.81 85 31 31 (5) 5—(3) 2 (4) —
CLOs 1,457 5.02 1,804 1,288 1,288 (168) 421 (383) 58 (36) 1
Other ABS 2,199 6.02 3,183 1,847 1,847 (356) (10) — (354) (311) (42) 72
Other 614 12.55 1,311 698 698 — 130 — (166) (5) (1) —
15,735 24,095 14,730 14,730 (2,389) 1,717 (464) (2,137) (658) (487) 146
Reclassified from AFS to LAR:
Debt securities 704 1.38 772 1,028 968 (12)(1) 6——(37)(1) ——
Total 32,638 48,038 34,205 30,052 (3,061) 2,773 (464) (2,137) (3,529) (616) 628
Note:
(1) Gains/(losses) recognised in the available-for-sale reserve.