In addition the Company carries out banking activities through its subsidiary, Lloyds Bank plc. At 31 December 2014, the Company held deposits of £195 million with Lloyds Bank plc (2013: £511 million). Given the volume of transactions flowing through the account, it is not meaningful to provide gross inflow and outflow information. Included within subordinated liabilities is £nil (2013: £nil) and within other liabilities is £10,944 million (2013: £14,821 million) due to subsidiary undertakings. In addition, at 31 December 2014 the Company had interest rate and currency swaps with Lloyds Bank plc with an aggregate notional principal amount of £1,446 million and a net positive fair value of £752 million (2013: notional principal amount of £2,454 million and a net positive fair value of £1,452 million). Of this amount an aggregate notional principal amount of £449 million and a net positive fair value of £43 million (2013: notional principal amount of £1,854 million and a net positive fair value of £226 million) were designated as fair value hedges to manage the Company’s issuance of subordinated liabilities and debt securities in issue.
Derecognised following completion of the Group’s ECN exchange and retail offers1 (967) –
As discussed in note 9, the Company has entered into interest rate and currency swaps with its subsidiary, Lloyds Bank plc, to manage these risks.
Ranges represent the highest and lowest inputs used in the level 3 valuations.
NOTE 11: OTHER INFORMATION Lloyds Banking Group plc was incorporated as a public limited company and registered in Scotland under the UK Companies Act 1985 on 21 October 1985 with the registered number 95000. Lloyds Banking Group plc’s registered office is The Mound, Edinburgh EH1 1YZ, Scotland, and its principal executive offices in the UK are located at 25 Gresham Street, London EC2V 7HN.
SHARE DEALING FOR THE LLOYDS BANKING GROUP SHAREHOLDER ACCOUNT Share dealing services for the Lloyds Banking Group Shareholder Account are provided by Equiniti Shareview Dealing, operated by Equiniti Financial Services Limited. Details of the services provided can be found either on the Shareholder Information page of our website at www.lloydsbankinggroup.com, or by contacting Equiniti using the contact details provided on the next page.
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This Annual Report contains certain forward looking statements with respect to the business, strategy and plans of the Lloyds Banking Group and its current goals and expectations relating to its future financial condition and performance. Statements that are not historical facts, including statements about the Lloyds Banking Group or its directors’ and/or management’s beliefs and expectations, are forward looking statements. Words such as ‘believes’, ‘anticipates’, ‘estimates’, ‘expects’, ‘intends’, ‘aims’, ‘potential’, ’will’, ‘would’, ‘could’, ‘considered’, ‘likely’, ‘estimate’ and variations of these words and similar future or conditional expressions are intended to identify forward looking statements but are not the exclusive means of identifying such statements. By their nature, forward looking statements involve risk and uncertainty because they relate to events and depend upon circumstances that will or may occur in the future.
Basel III The capital reforms and introduction of a global liquidity standard proposed by the Basel Committee on Banking Supervision in 2010 and due to be phased in, through CRD IV, from 1 January 2014 onward.
Fair value adjustment Fair value adjustments arise on acquisition when assets and liabilities are acquired at fair values that are different from the carrying values in the acquired company. In respect of the Group’s acquisition of HBOS the principal adjustments were write-downs in respect of loans and advances to customers and debt issued.
Net interest margin Net interest margin is net interest income as a percentage of average interest-earning assets.
Sovereign exposures Exposures to central governments and central government departments, central banks and entities owned or guaranteed by the aforementioned.
Stress testing Stress and scenario testing is the term used to describe techniques where plausible events are considered as vulnerabilities to ascertain how this will impact the capital resources which are required to be held.
General Commentary 1 Present all related risk information together or provide an index or an aid to navigation. 107 2 Define the bank’s risk terminology and risk measures and present key parameter values used. 108-170 3 Describe and discuss top and emerging risks. 32-33, 110 4 Outline plans to meet each new key regulatory ratio. 147, 153-154, 159
Risk Governance and risk management strategies/business model 5 Summarise prominently the bank’s risk management organisation, processes and key functions. 114-115 6 Describe risk culture and how procedures and strategies are applied to support the culture. 108 7 Describe the key risks that arise from the bank’s business models and activities, the bank’s risk appetite in the context of its business models and how the bank manages such risks. 109, 116-170 8 Describe the use of stress testing within the bank’s risk governance and capital frameworks. 111 Capital adequacy and risk-weighted assets 9 Pillar 1 capital requirements and the application of counter-cyclical and capital conservation buffers or the minimum internal ratio established by management.
23 Provide breakdowns of significant trading and non trading market risk factors. 138-140 24 Describe significant market risk measurement model limitations, assumptions and validation procedures. 140-142, Pillar 3 25 Describe the primary risk management techniques employed to measure and assess the risk of loss beyond reported risk measures and parameters, such as VaR, earnings or economic value scenario results. 140-142, Pillar 3
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