Our funding strategy is to develop a diversified funding base, while providing protection against unexpected fluctuations.
Barclays aims to align sources of funding with their use. As such, Retail and Business Banking, Corporate Banking, and Wealth and Investment Management activities are largely funded with customer deposits. The funding gap for these businesses is met using asset-backed securities, as well as covered bonds secured primarily over customer loans and advances such as residential mortgages and credit card receivables.
The excess of the Investment Bank's loans and advances over customer deposits is funded with long-term debt and equity. The Investment Bank does not rely on customer deposit funding from Retail and Business Banking, Corporate Banking, and Wealth and Investment Management.
The Group maintains access to a variety of sources of wholesale funds in multiple currencies, including those available from money markets, repo markets and from term investors, across a variety of distribution channels and geographies. Barclays is an active participant in money markets, has direct access to US, European and Asian capital markets through our global investment banking operations and long-term investors through our global client base. As a result, wholesale funding is well diversified by product, investor, maturity, geography and currency.
A solid funding structure is the basis for sound liquidity risk management (see Liquidity framework for further details). Liquidity risk is the risk that Barclays is unable to meet its obligations as they fall due, leading to an inability to support normal business activity and meet liquidity regulatory requirements.
Barclays has established limits on a variety of on and off-balance sheet exposures. These limits serve to control the overall extent and composition of liquidity risk taken by managing exposure to particular sources of liabilities, asset liability mismatches and counterparty concentrations. We also limit activities permitted at a country level. Businesses are only allowed to have funding exposure to wholesale markets where they can, and exposure is managed relative to the size and complexity of their business.