3i Group plc Report and accounts 2005

Notes to the accounts

Notes to the accounts list

30 Interest rate sensitivity gap analysis
Interest rate risk emanates from the Group’s loan investments and the Group’s funding. The Group’s policy is that fixed rate lending is matched with fixed rate borrowings and the interest rate resetting profile of variable rate lending is matched with that of variable rate borrowings through gearing the portfolio. Financial instruments including interest rate swaps are used as part of this matching process. Equity investments, which are mainly funded by shareholders’ funds but also partially by borrowings in similar currencies, give rise to an interest rate sensitivity gap as a result of the equity investments being non-interest bearing and having no fixed maturity date. The interest rate sensitivity gap at 31 March 2005 was:
Assets


Not more than
three months
2005
£m		 More than
three months
but not
more than
six months
2005
£m		 More than
six months
but not
more than
one year
2005
£m		 More than
one year
but not
more than
five years
2005
£m


More than
five years
2005
£m



Non-interest
bearing
2005
£m



Total
2005
£m
Treasury bills and other eligible bills - - - - 1 - 1
Loans and advances to banks 909 110 - - - - 1,019
Debt securities held for treasury purposes 154 25 - - - - 179
Debt securities and other fixed income securities held as financial fixed assets              
Loan investments 262 41 29 256 705 - 1,293
Fixed income shares - - - - - 107 107
Equity shares - - - - - 2,901 2,901
Other assets - - - - - 201 201
  1,325 176 29 256 706 3,209 5,701
Liabilities
              
Deposits by banks 208 - - - - - 208
Debt securities in issue (142) (37) 27 349 892 - 1,089
Convertible bonds - - - 378 - - 378
Other liabilities - - - - - 339 339
Subordinated liabilities - - - - 50 - 50
Shareholders’ funds - - - - - 3,637 3,637
  66 (37) 27 727 942 3,976 5,701
Interest rate sensitivity gap 1,259 213 2 (471) (236) (767) -
Cumulative gap 1,259 1,472 1,474 1,003 767 - -

Assets
 More than
three months
2004
(as restated)*
£m		 More than
three months
but not
more than
six months
2004
(as restated)*
£m		 More than
six months
but not
more than
one year
2004
(as restated)*
£m		 More than
one year
but not
more than
five years
2004
(as restated)*
£m		 More than
five years
but not
more than
2004
(as restated)*
£m		 Not-interest
bearing
2004
(as restated)*
£m		 Total
2004
(as restated)*
£m
Treasury bills and other eligible bills - - - - 1 - 1
Loans and advances to banks 419 65 50 - - - 534
Debt securities held for treasury purposes 244 40 - - - - 284
Debt securities and other fixed income securities held as financial fixed assets              
Loan investments 424 39 59 301 489 - 1312
Fixed income shares - - - - - 150 150
Equity shares - - - - - 2,864 2,864
Other assets - - - - - 185 185
  1,087 144 109 301 490 3,199 5,330
Liabilities
              
Deposits by banks 215 - - - - - 215
Debt securities in issue (174) (24) 21 388 917 - 1,128
Convertible bonds - - - 367 - - 367
Other liabilities - - - - - 345 345
Subordinated liabilities - - - - 45 - 45
Shareholders’ funds - - - - - 3,230 3,230
  41 (24) 21 755 962 3,575 5,330
Interest rate sensitivity gap 1,046 168 88 (454) (472) (376) -
Cumulative gap 1,046 1,214 1,302 848 376 - -
* As restated to reflect the adoption of FRS 17 - Retirement Benefits and UITF 38 - Accounting for ESOP Trusts. See Basis of preparation.