Interim Results 2010 - Part 1 | Company Announcement

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	Covered amount
	£bn

Covered assets at 31 December 2009	230.5
Disposals	(3.2)
Maturities, amortisation and repayments	(13.1)
Re-classified assets	3.1
Withdrawn assets	(2.9)
Effect of foreign currency movements and other adjustments	1.1

Covered assets at 30 June 2010	215.5

·	The reduction in covered assets was due to run-off of the portfolio, disposals and early repayments.

·	The APA and the Group have reached agreement over the classification of some structured credit assets which has resulted in adjustments to the covered amount, without affecting the underlying risk protection.

·	The strengthening of the US Dollar against Sterling more than offset the weakening of the Euro, leading to an increase in covered assets.

	30 June 2010	31 December 2009
	£m	£m

Loans and advances	16,702	14,240
Debt securities	13,980	7,816
Derivatives	1,828	6,834

	32,510	28,890

By division:
UK Retail	2,765	2,431
UK Corporate	927	1,007
Global Banking & Markets	1,528	1,628
Ulster Bank	730	486
Non-Core	26,560	23,338

	32,510	28,890

·	Impairments in Non-Core accounted for the majority of the increase of £3,620 million in credit impairments and write-downs since the start of the year and of £1,977 million since 31 March 2010.

·	The APA and the Group have reached agreement over the classification of some structured credit assets which has resulted in adjustments to credit impairments and write downs mainly between debt securities and derivatives.

	30 June 2010			31 December 2009
	Triggered amount	Cash recoveries to date	Net triggered amount	Net triggered amount
	£m	£m	£m	£m

UK Retail	3,503	232	3,271	3,211
UK Corporate	3,431	777	2,654	2,966
Global Banking & Markets	2,579	289	2,290	1,640
Ulster Bank	917	78	839	657
Non-Core	26,590	1,792	24,798	18,128

	37,020	3,168	33,852	26,602

Interim Results 2010 - Part 1

Companies

UK 100

Latest directors dealings

(1)	The triggered amount on a covered asset is calculated when an asset is triggered (due to bankruptcy, failure to pay after a grace period and restructuring with an impairment) and is the lower of the covered amount and the outstanding amount for each covered asset. Given the grace period before assets trigger, the Group expects additional assets to trigger based on the current risk rating and level of impairments on covered assets.
(2)	Whilst the APA has agreed in principle to the withdrawal of £2.9 billion of derivative assets, it has not yet determined the amount that may be recognised in the computation of the first loss.
(3)	Following agreement over the classification of some structured credit assets, the APA and the Group are in discussion regarding possible changes to the trigger criteria in respect of these assets; this may result in earlier recognition of a triggered asset.

·	The Group currently expects recoveries on triggered amounts to be approximately 45% over the life of the relevant assets. On this basis, the expected loss on triggered assets at 30 June 2010 is approximately £20 billion (31 December 2009 - £15 billion), or 33% of the £60 billion first loss threshold under the APS.

·	Triggered amounts (before cash recoveries to date) moved from £28,267 million at 31 December 2009 to £33,172 million at 31 March 2010 and £37,020 million at 30 June 2010.