20-F/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F/A

(Amendment No. 1)

(Mark One)

☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2017

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

OR

☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report                      to                     

Commission file number 001-14928

Santander UK plc

(Exact name of Registrant as specified in its charter)

England

(Jurisdiction of incorporation or organization)

2 Triton Square, Regent’s Place, London NW1 3AN, England

(Address of principal executive offices)

Julian Curtis

2 Triton Square, Regent’s Place, London NW1 3AN, England

Tel: +44 (0) 20 7756 4272

E-mail: julian.curtis@santander.co.uk

(Name, Telephone, Email and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

3.050% Notes due August 23, 2018, issued by Abbey National Treasury Services plc *	New York Stock Exchange
Floating Rate Notes due August 24, 2018, issued by Abbey National Treasury Services plc *	New York Stock Exchange
2.000% Notes due August 24, 2018, issued by Abbey National Treasury Services plc*	New York Stock Exchange
2.500% Notes due March 14, 2019, issued by Abbey National Treasury Services plc*	New York Stock Exchange
Floating Rate Notes due March 14, 2019, issued by Abbey National Treasury Services plc *	New York Stock Exchange
2.350% Notes due September 10, 2019, issued by Abbey National Treasury Services plc *	New York Stock Exchange
2.375% Notes due March 16, 2020, issued by Abbey National Treasury Services plc *	New York Stock Exchange
2.125% Notes due November 3, 2020, issued by Santander UK plc	New York Stock Exchange
Floating Rate Notes due November 3, 2020, issued by Santander UK plc	New York Stock Exchange
2.500% Notes due January 5, 2021, issued by Santander UK plc	New York Stock Exchange
4.000% Notes due March 13, 2024, issued by Abbey National Treasury Services plc *	New York Stock Exchange

* From June 1, 2016 Santander UK plc became the issuer in respect of the outstanding notes issued by Abbey National Treasury Services plc under its US SEC registered debt shelf. All notes transferred to Santander UK plc by Abbey National Treasury Services plc under its US SEC registered debt shelf and all notes issued by Santander UK plc in the future under its US SEC registered debt shelf will be the sole liability of Santander UK plc and are not guaranteed by any other entity.

Securities registered or to be registered pursuant to Section 12 (g) of the Act. None

Securities registered or to be registered pursuant to Section 15 (d) of the Act.

7.95% Term Subordinated Securities due October 26, 2029

Subordinated Guarantee by Santander UK plc (as successor in interest to Abbey National plc) of the 8.963% Non-Cumulative Perpetual Preferred Limited Partnership Interests issued by Abbey National Capital LP I

Subordinated Guarantee by Santander UK plc (as successor in interest to Abbey National plc) of the 8.963% Non-Cumulative Trust Preferred Securities issued by Abbey National Capital Trust I

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

Ordinary shares of nominal value of £0.10 each*	31,051,768,866
10 3/8% Non-cumulative Preference Shares of nominal value of £1 each	200,000,000
8 5/8% Non-cumulative Preference Shares of nominal value of £1 each	125,000,000
Series A Fixed/Floating Rate Non-cumulative Preference Shares of nominal value of £1 each	13,780

* All of the issued and outstanding ordinary shares of Santander UK plc are held by Santander UK Group Holdings plc.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ☒    No  ☐

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.    Yes  ☐    No  ☒

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  ☐                 Accelerated filer  ☐                Non-accelerated filer  ☒                 Emerging growth company  ☐

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act.  ☐

† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP  ☐ International Financial Reporting Standards as issued by the International Accounting Standards Board  ☒ Other  ☐

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.    Item 17  ☐    Item 18  ☐

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

Explanatory Note

Santander UK plc (“Santander UK”) is filing this Amendment No. 1 (the “Form 20-F/A”) to its Annual Report on Form 20-F for the year ended December 31, 2017 (the “Form 20-F”), which was filed with the Securities and Exchange Commission on March 7, 2018, to submit the Interactive Data File (as defined in Rule 11 of Regulation S-T) with respect to the audited consolidated financial statements of Santander UK and its consolidated subsidiaries for that fiscal year as an exhibit to the Form 20-F pursuant to paragraph 101 under “Instructions as to Exhibits” of Form 20-F in accordance with Rule 405 of Regulation S-T. Exhibit 101 was omitted from the Form 20-F in accordance with the 30-day grace period provided under Rule 405(a)(2)(ii) of Regulation S-T.

Except as set forth above, this Form 20-F/A does not modify or update any of the disclosures in the Form 20-F. This Form 20-F/A speaks as of the time of filing of the Form 20-F, does not reflect events that may have occurred subsequent to such filing, and does not modify or update in any way disclosures made in the Form 20-F.

EXHIBIT INDEX

Exhibits
101.INS*	XBRL Instance Document
101.SCH*	XBRL Taxonomy Extension Schema Document
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document

* In accordance with Rule 402 of Regulation S-T, the information in these exhibits shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

SIGNATURE

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this Amendment No.1 to the Annual Report on Form 20-F on its behalf.

SANTANDER UK plc
By:	/s/ Nathan Bostock
	Nathan Bostock
	Chief Executive Officer
Dated: 5 April 2018

XML

Document and Entity Information	12 Months Ended
	Dec. 31, 2017 shares
Document - Document and Entity Information [Abstract]
Document Type	20-F/A
Amendment Flag	false
Document Period End Date	Dec. 31, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	FY
Trading Symbol	CK0001087711
Entity Registrant Name	Santander UK plc
Entity Central Index Key	0001087711
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding	31,051,768,866

XML

Consolidated Income Statement - GBP (£) £ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Profit (loss) [abstract]
Interest and similar income	£ 5,905	£ 6,467	£ 6,695
Interest expense and similar charges	(2,102)	(2,885)	(3,120)
Net interest income	3,803	3,582	3,575
Fee and commission income	1,222	1,188	1,115
Fee and commission expense	(415)	(418)	(400)
Net fee and commission income	807	770	715
Net trading and other income	302	443	283
Total operating income	4,912	4,795	4,573
Operating expenses before impairment losses, provisions and charges	(2,499)	(2,414)	(2,400)
Impairment losses on loans and advances	(203)	(67)	(66)
Provisions for other liabilities and charges	(393)	(397)	(762)
Total operating impairment losses, provisions and charges	(596)	(464)	(828)
Profit before tax	1,817	1,917	1,345
Tax on profit	(561)	(598)	(381)
Profit after tax	1,256	1,319	964
Attributable to:
Equity holders of the parent	1,235	1,292	939
Non-controlling interests	21	27	25
Profit after tax	£ 1,256	£ 1,319	£ 964

XML

Consolidated Statement of Comprehensive Income - GBP (£) £ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Statement of comprehensive income [abstract]
Profit after tax	£ 1,256	£ 1,319	£ 964
Available-for-sale securities:
- Change in fair value	80	127	14
- Income statement transfers	(54)	(115)	42
- Taxation	(6)	(16)	(2)
Other comprehensive income available-for-sale securities, total	20	(4)	54
Cash flow hedges:
- Effective portion of changes in fair value	(238)	4,365	(307)
- Income statement transfers	(94)	(4,076)	305
- Taxation	89	(72)	(6)
Other comprehensive income cash flow hedges, total	(243)	217	(8)
Currency translation on foreign operations		(3)	(5)
Net other comprehensive income that may be reclassified to profit or loss subsequently	(223)	210	41
Other comprehensive income that will not be reclassified to profit or loss subsequently:
- Pension remeasurement	(103)	(528)	319
- Taxation	26	133	(89)
Other comprehensive income that will not be reclassified to profit or loss, total	(77)	(395)	230
Own credit adjustment:
- Transfers	(29)
- Taxation	7
Own credit adjustment, total	(22)
Net other comprehensive income that will not be reclassified to profit or loss subsequently	(99)	(395)	230
Total other comprehensive income net of tax	(322)	(185)	271
Total comprehensive income	934	1,134	1,235
Attributable to:
Equity holders of the parent	913	1,107	1,209
Non-controlling interests	21	27	26
Total comprehensive income	£ 934	£ 1,134	£ 1,235

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Consolidated Balance Sheet - GBP (£) £ in Millions	Dec. 31, 2017	Dec. 31, 2016
Assets
Cash and balances at central banks	£ 32,771	£ 17,107
Trading assets	30,555	30,035
Derivative financial instruments	19,942	25,471
Financial assets designated at fair value	2,096	2,140
Loans and advances to banks	5,927	4,348
Loans and advances to customers	199,490	199,738
Financial investments	17,611	17,466
Interests in other entities	73	61
Intangible assets	1,742	1,685	[1]
Property, plant and equipment	1,598	1,491
Retirement benefit assets	449	398
Other assets	2,511	2,571
Total assets	314,765	302,511	[1]
Liabilities
Deposits by banks	13,784	9,769
Deposits by customers	183,648	177,172
Trading liabilities	31,109	15,560
Derivative financial instruments	17,613	23,103
Financial liabilities designated at fair value	2,315	2,440
Debt securities in issue	42,633	50,346
Subordinated liabilities	3,793	4,303
Other liabilities	2,730	3,221
Provisions	558	700
Current tax liabilities	3	54
Deferred tax liabilities	88	128
Retirement benefit obligations	286	262
Total liabilities	298,560	287,058
Equity
Share capital	3,119	3,119
Share premium	5,620	5,620
Other equity instruments	2,281	1,785
Retained earnings	4,732	4,255	[1]
Other reserves	301	524
Total shareholders' equity	16,053	15,303	[1]
Non-controlling interests	152	150
Total equity	16,205	15,453	[1]
Total liabilities and equity	£ 314,765	£ 302,511	[1]

[1] Restated to reflect the change in accounting policy relating to business combinations between entities under common control, as described in Note 1.

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Consolidated Cash Flow Statement - GBP (£) £ in Millions		12 Months Ended
		Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Cash flows from operating activities
Profit after tax		£ 1,256	£ 1,319	£ 964
Non-cash items included in profit:
- Depreciation and amortisation		354	322	295
- Amortisation of premiums on debt securities		22	29	67
- Provisions for other liabilities and charges		393	397	762
- Impairment losses		257	132	156
- Corporation tax charge		561	598	381
- Other non-cash items		(230)	(628)	151
- Pension charge for defined benefit pension schemes		32	26	29
Adjustments to reconcile profit (loss)		1,389	876	1,841
Net change in operating assets and liabilities:
- Cash and balances at central banks		(25)	(30)	(22)
- Trading assets		(941)	(2,049)	(4,237)
- Derivative assets		5,529	(4,560)	2,110
- Financial assets designated at fair value		25	257	480
- Loans and advances to banks and customers		(1,832)	(2,265)	(7,789)
- Other assets		(246)	(121)	(532)
- Deposits by banks and customers		10,900	14,434	9,399
- Derivative liabilities		(5,490)	1,595	(1,224)
- Trading liabilities		15,017	2,837	(2,606)
- Financial liabilities designated at fair value		717	336	27
- Debt securities in issue		132	409	(1,166)
- Other liabilities		(1,397)	1,589	(138)
Net change in operating assets and liabilities		22,389	12,432	(5,698)
Corporation taxes paid		(484)	(507)	(419)
Effects of exchange rate differences		(574)	3,885	(585)
Net cash flows from operating activities		23,976	18,005	(3,897)
Cash flows from investing activities
Investments in other entities				(109)
Proceeds from disposal of subsidiaries	[1]		149
Purchase of property, plant and equipment and intangible assets		(542)	(374)	(356)
Proceeds from sale of property, plant and equipment and intangible assets		52	65	40
Purchase of financial investments		(726)	(9,539)	(2,021)
Proceeds from sale and redemption of financial investments		2,032	2,359	1,928
Net cash flows from investing activities		816	(7,340)	(518)
Cash flows from financing activities
Issue of AT1 Capital Securities		500		750
Issuance costs of AT1 Capital Securities		(4)
Issue of debt securities and subordinated notes		6,645	5,547	13,267
Issuance costs of debt securities and subordinated notes		(15)	(17)	(33)
Repayment of debt securities and subordinated notes		(13,763)	(11,352)	(16,098)
Repurchase of preference shares and other equity instruments			(7)	(99)
Dividends paid on ordinary shares		(829)	(419)	(575)
Dividends paid on preference shares and other equity instruments		(152)	(128)	(126)
Dividends paid on non-controlling interests		(19)	(12)
Net cash flows from financing activities		(7,637)	(6,388)	(2,914)
Change in cash and cash equivalents		17,155	4,277	(7,329)
Cash and cash equivalents at beginning of the year		25,705	20,351	27,363
Effects of exchange rate changes on cash and cash equivalents		(634)	1,077	317
Cash and cash equivalents at the end of the year		42,226	25,705	20,351
Cash and cash equivalents consist of:
Cash and balances at central banks		32,771	17,107	16,842
Less: regulatory minimum cash balances		(395)	(370)	(340)
Cash and bank balances at central banks less regulatory minimum cash balances		32,376	16,737	16,502
Net trading and other cash equivalents		5,953	6,537	2,068
Net non-trading other cash equivalents		3,897	2,431	1,781
Cash and cash equivalents at the end of the year		£ 42,226	£ 25,705	£ 20,351

[1] In 2016, the Santander UK group sold a number of subsidiaries for a cash consideration of £149m. The net assets disposed of consisted of other assets and other liabilities of £138m.

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Consolidated Cash Flow Statement (Parenthetical) £ in Millions	12 Months Ended
	Dec. 31, 2016 GBP (£)
Statement of cash flows [abstract]
Cash consideration received on sale of subsidiaries	£ 149	[1]
Net assets disposed	£ 138

[1] In 2016, the Santander UK group sold a number of subsidiaries for a cash consideration of £149m. The net assets disposed of consisted of other assets and other liabilities of £138m.

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Consolidated Statement of Changes in Equity - GBP (£) £ in Millions	Total		Share Capital [member]	Share Premium [member]	Other Equity Instruments [member]	Other Reserves Available-For-Sale [member]	Other Reserves Cash Flow Hedging [member]	Other Reserves Currency Translation [member]	Retained Earnings [member]	[1],[2]	Total [member]	Non-Controlling Interests [member]
Beginning balance at Dec. 31, 2014	£ 13,562		£ 3,119	£ 5,620	£ 1,125	£ (2)	£ 262	£ 13	£ 3,425		£ 13,562
Profit after tax	964								939		939	£ 25
Other comprehensive income, net of tax:
- Available-for-sale securities	54					54					54
- Cash flow hedges	(8)						(8)				(8)
- Pension remeasurement	230								229		229	1
- Currency translation on foreign operations	(5)							(5)			(5)
Total comprehensive income	1,235					54	(8)	(5)	1,168		1,209	26
Acquisition of subsidiary	109											109
Issue of AT1 Capital Securities	750				750						750
Repurchase of preference shares and other equity instruments	(99)				(83)				(16)		(99)
Dividends on ordinary shares	(427)								(427)		(427)
Dividends on preference shares and other equity instruments	(126)								(126)		(126)
Tax on other equity instruments	24								24		24
Ending balance at Dec. 31, 2015	15,028		3,119	5,620	1,792	52	254	8	4,048		14,893	135
Profit after tax	1,319								1,292		1,292	27
Other comprehensive income, net of tax:
- Available-for-sale securities	(4)					(4)					(4)
- Cash flow hedges	217						217				217
- Pension remeasurement	(395)								(395)		(395)
- Currency translation on foreign operations	(3)							(3)			(3)
Total comprehensive income	1,134					(4)	217	(3)	897		1,107	27
Repurchase of other equity instruments	(7)				(7)						(7)
Dividends on ordinary shares	(593)								(593)		(593)
Dividends on preference shares and other equity instruments	(128)								(128)		(128)
Dividends on non-controlling interests	(12)											(12)
Tax on other equity instruments	31								31		31
Ending balance at Dec. 31, 2016	15,453	[2]	3,119	5,620	1,785	48	471	5	4,255	[3]	15,303	150
Profit after tax	1,256								1,235		1,235	21
Other comprehensive income, net of tax:
- Available-for-sale securities	20					20					20
- Cash flow hedges	(243)						(243)				(243)
- Pension remeasurement	(77)								(77)		(77)
- Own credit adjustment	(22)								(22)		(22)
Total comprehensive income	934					20	(243)		1,136		913	21
Issue of AT1 Capital Securities	496				496						496
Dividends on ordinary shares	(553)								(553)		(553)
Dividends on preference shares and other equity instruments	(152)								(152)		(152)
Dividends on non-controlling interests	(19)											(19)
Tax on other equity instruments	46								46		46
Ending balance at Dec. 31, 2017	£ 16,205		£ 3,119	£ 5,620	£ 2,281	£ 68	£ 228	£ 5	£ 4,732		£ 16,053	£ 152

[1] Includes capital redemption reserve of £nil (2016: £nil, 2015: £21m) arising from the purchase of £300m fixed/floating rate non-cumulative callable preference shares in 2017, 2016 and 2015.

[2] Restated to reflect the change in accounting policy relating to business combinations between entities under common control, as described in Note 1.

[3] The impact of the early adoption of IFRS 9 requirements for the presentation of gains and losses on such financial liabilities relating to own credit in other comprehensive income as described in Note 1, was £18m (net of tax).

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Consolidated Statement of Changes in Equity (Parenthetical) - GBP (£)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Statement of changes in equity [abstract]
Capital redemption reserve	£ 0	£ 0	£ 21,000,000
Gains and losses on financial liabilities relating to own credit in other comprehensive income	£ 18,000,000

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Risk Framework

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Risk Framework

RISK FRAMEWORK

Key elements (unaudited)

Our Risk Framework sets out how we manage and control risk. It is based on the following key elements which we describe in more detail in the next pages:

Section	Content
How we define risk	We describe each of our key risk types.
How we approach risk – our culture and principles	We describe our risk culture and explain how we make it a day-to-day reality across our business.
Our risk governance structure	We describe how we consider risk in all our business decisions as part of our organisational structure, and the responsibilities of our people and our committees.
Our internal control system	We describe our internal control system and how it helps us manage and control risk.

In 2017, we updated our Risk Framework to ensure it remains comprehensive and to improve our focus on key risk issues:

– We introduced two new committees:

– The Board Responsible Banking Committee, which reviews risks relating to conduct, compliance, competition, financial crime and legal matters. It also provides advice, oversight and challenge to maintain a supportive risk culture throughout the business.

– The Incident Accountability Committee, which considers, calibrates and agrees any appropriate individual remuneration adjustments recommended by the Business Accountability Forum and presents recommendations to the Board Remuneration Committee.

– We now include legal risk as a risk type on its own. This reflects its importance and enables us to give it a higher level of focus.

– We transferred responsibility for reputational risk to the Chief Legal and Regulatory Officer (CLRO) from the Chief Risk Officer (CRO).

– We merged the management of conduct and regulatory risk to take advantage of the synergies between these risk types. This is aligned to the approach used by Banco Santander.

How we define risk (unaudited)

Risk is any uncertainty about us being able to achieve our business objectives. It can be split into a set of key risk types, each of which could affect our results and our financial resources. Our risk types are:

Key risk types	Description
Credit	The risk of loss due to the default or credit quality deterioration of a customer or counterparty to which we have provided credit, or for which we have assumed a financial obligation.
Market	Trading market risk – the risk incurred as a result of changes in market factors that affect the value of positions in the trading book. Banking market risk – the risk of loss of income or economic value due to changes to interest rates in the banking book or to changes in exchange rates, where such changes would affect our net worth through an adjustment to revenues, assets, liabilities and off-balance sheet exposures in the banking book.
Liquidity	The risk that we do not have sufficient liquid financial resources available to meet our obligations as they fall due, or we can only secure such resources at excessive cost. It is split into three types of risk: – Funding or structural liquidity risk – the risk that we may not have sufficient liquid assets to meet the payments required at a given time due to maturity transformation. – Contingent liquidity risk – the risk that future events may require a larger than expected amount of liquidity, that is the risk of not having sufficient liquid assets to meet sudden and unexpected short-term obligations. – Market liquidity risk – the risk that assets we hold to mitigate the risk of failing to meet our obligations as they fall due, which are normally liquid, become illiquid when they are needed.
Capital	The risk that we do not have an adequate amount or quality of capital to meet our internal business objectives, regulatory requirements, market expectations and dividend payments, including AT1 coupons.
Pension	The risk caused by our contractual or other liabilities with respect to a pension scheme (whether established for our employees or those of a related company or otherwise). It also refers to the risk that we will need to make payments or other contributions with respect to a pension scheme due to a moral obligation or for some other reason.
Conduct and     regulatory	Conduct risk – the risk that our decisions and behaviours lead to a detriment or poor outcome for our customers. It also refers to the risk that we fail to maintain high standards of market behaviour and integrity. Regulatory risk – the risk of financial or reputational loss, or imposition or conditions on regulatory permission, as a result of failing to comply with applicable codes, regulator’s rules, guidance and regulatory expectations.
Other key risk types	Operational risk – the risk of loss due to inadequate or failed internal processes, people and systems, or external events. Our top three key operational risks are: – Cyber risk – Third party supplier management – Process and change management. Financial crime risk – the risk that we are used to further financial crime, including money laundering, sanctions evasion, terrorist financing, bribery and corruption. Failure to meet our legal and regulatory obligations could result in criminal or civil penalties against Santander UK or individuals, as well as negatively affecting our customers and the communities we serve. Legal risk – the risk of an impact arising from legal deficiencies in contracts; failure to take appropriate measures to protect assets; failure to manage legal disputes appropriately; failure to assess or implement the requirements of a change of law; or failure to comply with law or regulation or to discharge duties or responsibilities created by law or regulation. Model risk – the risk that the results of our models may be inaccurate, causing us to make sub-optimal decisions, or that a model may be used inappropriately. Strategic risk – the risk of significant loss or damage arising from strategic decisions that impact the long-term interests of our key stakeholders or from an inability to adapt to external developments. Reputational risk – the risk of damage to the way our reputation and brand are perceived by the public, clients, government, colleagues, investors or any other interested party.

Enterprise wide risk is the aggregate view of all the key risk types described above.

How we approach risk – our culture and principles (unaudited)

The complexity and importance of the financial services industry demands a strong risk culture. We have extensive systems, controls and safeguards in place to manage and control the risks we face, but it is also crucial that everyone takes personal responsibility for managing risk. Our risk culture plays a key role in our aim to be the best bank for our people, customers, shareholders and communities. It is vital that everyone in our business understands that. To achieve this, our people have a strong, shared understanding of what risk is, and what their role is in helping to control it. We express this in our Risk Culture Statement:

Risk Culture Statement

Santander UK will only take risks that it understands and will always remain prudent in identifying, assessing, managing and reporting all risks. We proactively encourage our people to take personal responsibility for doing the right thing and to challenge without fear. We ensure decisions and actions take account of the best interests of all our stakeholders and are in line with The Santander Way.

The Board reviews and approves our Risk Culture Statement every year. The CEO, CRO and other senior executives are responsible for promoting our risk culture from the top. They drive cultural change and increased accountability across the business. We reinforce our Risk Culture Statement and embed our risk culture in all our business units through our Risk Framework, Risk Certifications and other initiatives. This includes highlighting that:

– It is everyone’s personal responsibility to play their part in managing risk

– We must Identify, Assess, Manage and Report risk quickly and accurately

– We make risk part of how we assess our people’s performance and how we recruit, develop and reward them

– Our internal control system is essential to make sure we manage and control risk in line with our principles, standards, Risk Appetite and policies.

We use Risk Certifications to confirm how we manage and control risks in line with our Risk Framework and within our Risk Appetite. As an example, every year, each member of our Executive Committee confirms in writing that they have managed risk in line with the Risk Framework in the part of the business for which they are responsible. Their certification lists any exceptions and the agreed actions taken to correct them. This is a very tangible sign of the personal accountability that is such a key part of our risk culture.

Making change happen: I AM Risk – everyone’s personal responsibility for managing risk

I AM Risk continues to play a key part in our aim to be the best bank for our people, customers, shareholders and communities. Our I AM Risk approach aims to make sure our people:

– Identify risks and opportunities

– Assess their probability and impact

– Manage the risks and suggest alternatives

– Report, challenge, review, learn and ‘speak up’.

We use I AM Risk in our risk certifications, policies, frameworks and governance, and in all our risk-related communications. We also include it in mandatory training and induction courses for our staff, in our codes of conduct and in rewards and incentives. We embed the behaviours we want to encourage in key processes and documents.

I AM Risk is how we make risk management part of everyone’s life as a Santander employee, from how we recruit them and manage their performance to how we develop and reward them. It is also how we encourage people to take personal responsibility for risk, speak up and come up with ideas that help us change. To support this, our learning website includes short films, factsheets and discussion boards.

As part of I AM Risk, we include mandatory risk objectives for all our people – from our Executive Risk Control Committee to branch staff. The Santander Way Steering Committee coordinates all our culture initiatives under the sponsorship of the CEO.

In 2017, we made good progress with continuing to embed personal accountability for managing risk across the business. For all new and existing employees, we enhanced our mandatory risk training and we ensured that the updated performance management risk objectives were used across the business. In our most recent employment engagement survey, 94% of employees acknowledged their personal responsibility for risk management and 97% of employees confirmed that they are aware of how to escalate and report potential risks. This demonstrates how we are successfully embedding risk management in our culture.

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Our risk governance structure

We are committed to the highest standards of corporate governance in every part of our business. This includes risk management. For details of our governance, including the Board and its Committees, see the ‘Governance’ section of this Annual Report.

The Board delegates certain responsibilities to Board Level Committees as needed and where appropriate. Our risk governance structure strengthens our ability to identify, assess, manage and report risks, as follows:

– Committees: A number of Board and Executive committees are responsible for specific parts of our Risk Framework

– Roles with defined risk management responsibilities: Senior roles with specific responsibilities for risk

– Risk organisational structure: We have ‘three lines of defence’ built into the way we run our business.

Committees

The Board Level Committee responsibilities for risk are:

Board Level Committee	Main risk responsibilities
The Board	– Has overall responsibility for business execution and for managing risk
	– Reviews and approves the Risk Framework and Risk Appetite.
Board Risk Committee	– Assesses the Risk Framework and recommends it to the Board for approval
	– Advises the Board on our overall Risk Appetite, tolerance and strategy
	– Oversees our exposure to risk and our strategy and advises the Board on both
	– Reviews the effectiveness of our risk management systems and internal controls.
Board Responsible Banking	– Responsible for culture and operational risks relating to conduct, compliance, competition, financial crime and legal matters
Committee	– Reviews reports from the CLRO on the adequacy and effectiveness of the compliance function
	– Ensures that adequate and effective control processes are in place to identify and manage reputational risks
	– Oversees our reputation and how this impacts our brand and market positioning.

The Executive Level Committee responsibilities for risk are:

Executive Level Committee	Main risk responsibilities
Executive Committee	– Reviews and approves business plans in line with our Risk Framework and Risk Appetite before they are sent to the Board to approve
	– Receives updates on key risk issues managed by CEO-level committees and monitors the actions taken.
Executive Risk Control Committee	– Reviews Risk Appetite proposals before they are sent to the Board Risk Committee and the Board to approve
	– Ensures that we comply with our Risk Framework, Risk Appetite and risk policies
	– Reviews and monitors our risk exposures and approves any corrective steps we need to take.
Asset and Liability	– Reviews liquidity risk appetite proposals before they are sent to the Board to approve
Committee (ALCO)	– Ensures we measure and control structural balance sheet risks, including capital, funding and liquidity, in line with the policies, strategies and plans set by the Board
	– Reviews and monitors the key asset and liability management activities of the business to ensure we keep our exposure in line with our Risk Appetite.
Pensions Committee	– Reviews pension risk appetite proposals before they are sent to the Board to approve
	– Approves actuarial valuations and reviews the impact they may have on our contributions, capital and funding
	– Consults with the pension scheme trustees on the scheme’s investment strategy.
Capital Committee	– Puts in place risk control processes, reporting systems and processes to make sure capital risks are managed within our Risk Framework
	– Reviews capital adequacy and capital plans, including the Internal Capital Adequacy Assessment Process (ICAAP), before they are sent to the Board to approve.
Incident Accountability Committee	– Considers, calibrates, challenges and agrees any appropriate individual remuneration adjustments recommended by the Business Accountability Forums
	– Presents recommendations to the Board Remuneration Committee.
Executive Credit Approval Committee	– Approves corporate and wholesale credit transactions which exceed levels delegated to lower level approval forums or individuals.
Executive Investment Approval Committee	– Approves equity type investment transactions which exceed levels delegated to lower level approval forums or individuals.

Roles with risk management responsibilities

Chief Executive Officer

The Board delegates responsibility for our business activities and managing risk on a day-to-day basis to the CEO. The main risk responsibilities of the CEO are to:

– Propose our strategy and business plan, put them into practice and manage the risks involved

– Ensure we have a suitable system of controls to manage risk and report to the Board on it

– Foster a culture that promotes ethical practices and social responsibility

– Ensure all our staff are aware of the policies and corporate values approved by the Board.

Chief Risk Officer

As the leader of the Risk Division, the CRO oversees and challenges risk activities, and ensures new lending decisions are made within our Risk Appetite. The CRO reports to the Board through the Board Risk Committee, and also reports to the CEO for operational purposes. The CRO also reports functionally to the global CRO for the Banco Santander group. The main responsibilities of the CRO are to:

– Propose a Risk Framework to the Board (through the Board Risk Committee) that sets out how we manage the risks from our business activities within our approved Risk Appetite

– Advise the CEO, the Board Risk Committee and Board on our Risk Appetite linked to our strategic business plan and why it is appropriate

– Reassure the Board and our regulators that we identify, assess and measure risk and that our systems, controls and delegated authorities to manage risk are adequate and effective

– Advise the CEO, Board Risk Committee, the Board and our regulators on how we manage key risks and escalate issues or breaches of Risk Appetite

– Ensure that our culture promotes ethical practices and social responsibility

– Ensure that our policies and corporate values approved by the Board are communicated so that our culture, values and ethics are aligned to our strategic objectives

– Ensure an appropriate governance structure is in place to make effective credit decisions.

The CRO is accountable for the control and oversight of credit, market, liquidity, capital, pension, strategic, operational and model risk. The CLRO is accountable for the control and oversight of legal, conduct and regulatory, reputational and financial crime risk, and is responsible for reporting on these risks to the CRO to provide them with a holistic enterprise wide view of all risks.

Chief Legal and Regulatory Officer

The CLRO is accountable for the control and oversight of legal, conduct and regulatory, reputational and financial crime risk. The CLRO reports relevant matters to the Board Responsible Banking Committee (BRBC), the Board Risk Committee and the Board. The main responsibilities of the CLRO are to:

– Propose a Risk Framework for legal, conduct and regulatory, reputational and financial crime risk to the Board (through the Board Risk Committee and the CRO) that sets out how we manage these risks in line with our Risk Appetite

– Advise the CRO, CEO, the Board Risk Committee and the Board on our risk appetite for legal, conduct and regulatory, reputational and financial crime risk, linked to our strategic business plan and why it is approved

– Reassure the CRO, the BRBC, the Board and our regulators that we identify, assess and measure legal, conduct and regulatory, reputational and financial crime risk appropriately and that our systems, controls and delegated authorities to manage risk are adequate and effective

– Advise the CRO, CEO, the Board Risk Committee, the BRBC, the Board and our regulators on how we manage key legal, conduct and regulatory, reputational and financial crime risks and escalate any issues or breaches of our Risk Appetite

– Ensure that our culture promotes ethical practices and social responsibility and contributes to the management of reputational risk

– Ensure that our policies and corporate values approved by the Board are communicated so that our culture, values and ethics are aligned to our strategic objectives.

– Provide an assessment on Legal, Conduct & Regulatory, Reputational and Financial Crime risks to the CEO, CRO, BRC, BRBC, Board and our regulators on how these risks are being managed in the Santander UK Group and escalate to the CRO, BRC and Board any issue or breach of appetite.

Chief Financial Officer

The main risk responsibilities of the CFO are to:

– Deliver the strategy approved by the Board, in line with the authority delegated to him by the CEO

– Manage the day-to-day operations of their business division, in line with agreed business plans, delegating appropriate authority prudently

– Manage and control effectively in line with the relevant risk types and activity framework relevant to the CFO Division

– Demonstrate an awareness and understanding of the main risks facing the CFO Division and how to manage the risks involved. The key risk types being:

– Interest Rate Risk and Forex Risk in the banking book: these risks are managed within the Risk Appetite and limits approved by the Board

– Liquidity Risk: these risks are managed within the Risk Appetite and limits approved by the Board

– Pension Risk: oversight of the management of the Pension Scheme by the Trustee and agreement with them to manage Pension Scheme assets and liabilities to minimise volatility in IAS19 funding levels and negative impact on capital. To agree investment strategy with the Trustee to manage risk of additional cash contributions being required because of poor investment performance

– Capital Risk: the capital position of the UK group and legal entities is managed in accordance with the Capital Risk Appetite and regulatory requirements

– Carries out appropriate contingency planning and balances risk impact with delivery of business as usual

– Promotes and embeds a risk awareness culture within CFO Division and actively encourages people to speak up and challenge without fear.

Chief Internal Auditor

The Chief Internal Auditor (CIA) reports to the Board through the Board Audit Committee, and also reports to the CEO for operational purposes. The CIA also reports functionally to the CIA of Banco Santander SA. The main responsibilities of the CIA are to:

– Ensure the scope of Internal Audit covers all activities (including outsourced activities) at a legal entity level

– Design and use an audit system that identifies key risks and evaluates controls

– Develop an audit plan to assess existing risks that involves producing audit, assurance and monitoring reports

– Carry out all audits, special reviews, reports and commissions that the Board Audit Committee asks for

– Monitor business activities regularly by consulting with internal control teams and our External Auditors

– Develop and run internal auditor training that includes regular skills assessments.

Risk organisational structure (unaudited)

We use the ‘three lines of defence’ model to manage risk. This model is widely used in the banking industry and has a clear set of principles to put in place a cohesive operating model across an organisation. It does this by separating risk management, risk control and risk assurance.

The diagram below shows the reporting lines to the Board with respect to risk:

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Internal control system (unaudited)

Our Risk Framework is an overarching view of our internal control system that helps us manage risk across the business. It sets out at a high level the principles, minimum standards, roles and responsibilities, and governance for internal control.

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Category	Description
Risk Frameworks	Set out how we should manage and control risk for: – The Santander UK group (overall framework) – Our key risk types (risk type frameworks) – Our key risk activities (risk activity frameworks).
Risk Management Responsibilities	Set out the Line 1 risk management responsibilities for Business Units and Business Support Units.
Strategic Commercial Plans	Plans produced by business area at least annually that describe the forecasted objectives, volumes and risk profile of new and existing business, within the limits defined in our Risk Appetite and policies in place.
Risk Appetite Statement	Defines the type and the level of risk that we are willing and able to take on to achieve our business plans. The policies set out what action we must (or must not) take to make sure we stay within our Risk Appetite. Risk Control Units set overarching policies. Business and Business Support Units have operational policies, standards and procedures that put these policies into practice. We expect all our people to manage risk within their own work by complying with these policies, standards and procedures.
Delegated Authorities/Mandates	Define who can do what under the authority delegated to the CEO by the Board.
Risk Certifications	Business Units, Business Support Units or Risk Control Units set out how they have managed and/or controlled risks in line with the risk frameworks and within Risk Appetite. They are completed at least once a year. They also explain any action taken. This process helps ensure people can be held personally accountable.

RISK APPETITE (unaudited)

How we control the risks we are prepared to take

When our Board sets our strategic objectives, it is important that we are clear about the risks we are prepared to take to achieve them. We express this through our Risk Appetite Statement, which defines the amount and kind of risk we are willing to take. Our Risk Appetite and strategy are closely linked and our strategy must be achievable within the limits set out in our Risk Appetite.

The principles of our Risk Appetite

Our Risk Appetite Statement lists ten principles that we use to set our Risk Appetite.

– We always aim to have enough financial resources to survive severe but plausible stressed economic and business conditions, as well as a very severe stress that would consume capital

– We should be able to predict how our income and losses might vary – that is, how volatile they are. That applies to all our risks and lines of business

– Our earnings and dividend payments should be stable, and in line with the return we aim to achieve

– We are an autonomous business, so we always aim to have strong capital and liquidity resources

– The way we fund our business should be based on diverse sources and duration of funding. This helps us to avoid relying too much on wholesale markets

– We set controls on large concentrations of risk, such as to single customers or specific industries

– There are some key risks we take, but for which we do not actively seek any reward, such as operational, conduct and regulatory, financial crime, legal and reputational risk. We take a risk-averse approach to all such risks

– We comply with all regulations – and aim to exceed the standards they set

– Our pay and bonus schemes should support these principles and our risk culture

– We always aim to earn the trust of our people, customers, shareholders and communities.

How we describe the limits in our Risk Appetite

Our Risk Appetite sets out detailed limits for different types of risk, using metrics and qualitative statements.

Metrics

We use metrics to set limits on losses, capital liquidity, and concentration. We set:

– Limits for losses for our most important risks, including credit, market, operational and conduct risk

– Capital limits, reflecting both the capital that regulators expect us to hold (regulatory capital) and our own internal measure (economic capital)

– Liquidity limits according to the most plausible stress scenario for our business

– Concentration limits, to determine the maximum concentration level that we are willing to accept.

These limits apply in normal business conditions, but also when we might be experiencing a far more difficult economic environment. A good example of this might be when the UK economy is performing much worse than we expected. We refer to conditions such as this as being under stress.

There is more on economic capital and stress scenarios later in this section.

Qualitative statements

For some risks we also use qualitative statements that describe in words the appetite we want to set. For example, in conduct risk, we use them to describe our Risk Appetite for products, sales, after-sales service, and culture. We also use them to prohibit or restrict exposure to certain sectors, types of customer and activities.

How we set our Risk Appetite, and stay within it

We control our Risk Appetite through our Risk Appetite Framework. Our Board approves and oversees our Risk Appetite Statement every year. This ensures it is consistent with our strategy and reflects the markets in which we operate. Our Executive Risk Control Committee is responsible for ensuring that our risk profile (the level of risk we are prepared to accept) is consistent with our Risk Appetite Statement. To do this they monitor our performance against our Risk Appetite, business plans and budgets each month. We also use stress testing to review how our business plan performs against our Risk Appetite Statement. This shows us if we would stay within our Risk Appetite under stress conditions. It also helps us to identify any adverse trends or inconsistencies.

We embed our Risk Appetite by setting more detailed risk limits for each business unit and key portfolio. These are set in a way so that if we stay within each detailed limit, we will stay within our overall Risk Appetite. When we use qualitative statements to describe our appetite for a risk, we link them to lower-level key risk indicators, so that we can monitor and report our performance against them.

We provide a programme of communication and training for our staff which helps ensure that Risk Appetite is well understood.

STRESS TESTING (unaudited)

Stress testing helps us understand how different events and economic conditions could affect our business plan, earnings and risk profile. This helps us plan and manage our business better.

Scenarios for stress testing

To see how we might cope with difficult conditions, we regularly develop challenging scenarios that we might face. We consult a broad range of internal stakeholders, including Board members, when we design and choose our most important scenarios. The scenarios cover a wide range of outcomes, risk factors, time horizons and market conditions. They are designed to test:

– The impact of shocks affecting the economy as a whole or the markets we operate in

– Key potential vulnerabilities of our business model

– Potential impacts on specific risk types.

We describe each scenario using a narrative setting out how events might unfold, as well as a market and/or economic context. For example the key economic factors we reflect in our ICAAP scenarios include house prices, interest rates, unemployment levels and the size of the UK economy. One scenario looks at what might happen in a recession where the output of the economy shrinks by around 5%, unemployment reaches over 9%, and house prices fall by around 30% in a context of high inflation and interest rates rising rapidly. We use a comprehensive suite of stress scenarios to explore sensitivities to market risk, including those based on historic market events.

How we use stress testing

We use stress testing to estimate the effect of these scenarios on our business and financial performance, including:

– Our business plan, and its assessment against our Risk Appetite

– Our capital strength, through our ICAAP

– Our liquidity position, through our Internal Liquidity Adequacy Assessment Process (ILAAP)

– Impacts on other risk types.

We use a wide range of models, approaches and assumptions. These help us interpret the links between factors in markets and the economy, and our financial performance. For example, one model looks at how changes to key macroeconomic variables such as unemployment rates might affect the number of customers who might fall into arrears on their mortgage.

Our stress testing models are subject to a formal review, independent validation and approval process. We highlight the key weaknesses and related model assumptions in the approval process for each stress test. In some cases, we overlay expert judgement onto the results of our models. Where this is material to the outcome of the stress test, the approving governance committee reviews it.

We take a multi-layered approach to stress testing to capture risks at various levels. This ranges from sensitivity analysis of a single factor to a portfolio, to wider exercises that cover all risks across our entire business. We use stress testing outputs to design action plans that aim to mitigate damaging effects.

We also conduct reverse stress tests. These are tests in which we identify and assess scenarios that are most likely to cause our business model to fail.

Board oversight of stress testing

The Executive Risk Control Committee approves the design of the scenarios in our ICAAP. The Board Risk Committee approves the stress testing framework. The Board reviews the outputs of stress testing as part of the approval processes for the ICAAP, the ILAAP, our Risk Appetite and regulatory stress tests.

Regulatory stress tests

We take part in a number of external stress testing exercises. These can include stress tests of the UK banking system conducted by the PRA. We also contribute to stress tests of Banco Santander.

For more on capital and liquidity stress testing, see the ‘Capital risk’ and ‘Liquidity risk’ sections.

HOW RISK IS DISTRIBUTED ACROSS OUR BUSINESS (unaudited)

Economic capital

As well as assessing how much regulatory capital we are required to hold, we use an internal Economic Capital (EC) model to measure our risk.

We use EC to get a consistent measure across different risk types. EC also takes account of how concentrated our portfolios are, and how much diversification there is between our various businesses.

As a consequence we can use EC for a range of risk management activities. For example, we can use it to help us compare requirements in our ICAAP or to get a risk-adjusted comparison of income from different activities.

Regulatory capital – risk-weighted assets

The table below shows the proportion of our regulatory capital risk-weighted assets we held in different parts of our business at 31 December 2017 and 2016. It is split between credit, market and operational risk against which we hold regulatory capital.

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2017 compared to 2016

The distribution of risk across our business was broadly unchanged in the year. The largest category continued to be credit risk in Retail Banking, which accounted for most of our risk-weighted assets. This reflects our business strategy and balance sheet. Market risk arises primarily as part of our trading book activities in Global Corporate Banking. Our operational risk capital requirements remained small and were concentrated in our Retail Banking activities.

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Credit risk

12 Months Ended

Dec. 31, 2017

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Credit risk

Credit risk

Overview (unaudited)

Key metrics (unaudited)

Credit risk is the risk of loss due to the default or credit quality deterioration of a customer or counterparty to which we have provided credit, or for which we have assumed a financial obligation. Santander UK group level We start by discussing credit risk at a Santander UK group level. We set out how our exposures arise, our types of customer and how we manage them, and our approach to credit risk across the credit risk lifecycle. We then analyse our key metrics, including maximum and net exposures, credit quality, risk concentrations, credit performance and forbearance. Business segments Then we cover Retail Banking separately from our other segments in more detail in the sections that follow. Our other segments are Commercial Banking, Global Corporate Banking and Corporate Centre.

NPL ratio improved to 1.42% (2016: 1.50%) NPL coverage ratio increased to 33% (2016: 31%) Impairment loss allowances increased to £940m (2016: £921m) Average LTV of 62% (2016: 65%) on new mortgage lending

Credit risk – Santander UK group level

SANTANDER UK GROUP LEVEL – CREDIT RISK MANAGEMENT

Exposures

Exposures to credit risk arise in our business segments from:

Retail Banking	Commercial Banking	Global Corporate Banking	Corporate Centre
–  Residential mortgages, business banking, consumer (auto) finance and other unsecured lending (personal loans, credit cards, and overdrafts).	– Loans, bank accounts, treasury services, invoice discounting, cash transmission, trade finance and asset finance.	– Loans, treasury products, and treasury markets activities.	– Asset and liability management of our balance sheet, as well as our non-core and Legacy Portfolios being run down.
–  We provide these to individuals and small businesses.	– We provide these to SMEs and mid corporates, as well as Commercial Real Estate customers and Social Housing associations.	– We provide these to large corporates, and financial institutions, as well as sovereigns and other international organisations.	– Exposures include sovereign and other international organisation assets that we hold for liquidity.

Our types of customers and how we manage them

We manage credit risk across all our business segments in line with the credit risk lifecycle that we show in the next section. We tailor the way we manage risk across the lifecycle to the type of customer. We classify our customers as standardised or non-standardised:

Standardised	Non-standardised
– Mainly individuals and small businesses. Their transactions are for relatively small amounts of money, and share similar credit characteristics.	–  Mainly medium and large corporate customers and financial institutions. Their transactions are for larger amounts of money, and have more diverse credit characteristics.
– In Retail Banking, Commercial Banking (for some small, non-complex corporate clients) and Corporate Centre (for our non–core portfolios).	–  In Retail Banking (for some business banking transactions), Commercial Banking, Global Corporate Banking and Corporate Centre.
– We manage risk using automated decision–making tools. These are backed by teams of analysts who specialise in this type of risk.	–  We manage risk through expert analysis. We support this with decision-making tools based on internal risk assessment models.

Our approach to credit risk

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We manage our portfolios across the credit risk lifecycle, from drawing up our risk strategy, plans, budgets and limits to making sure the actual risk profile of our exposures stays in line with our plans and within our Risk Appetite. We further tailor the way we manage risk across the life cycle to the type of product. We say more on this in the Credit risk – Retail Banking and the Credit risk – other segments sections.

1. Risk strategy and planning

All relevant areas of the business work together to create our business plans. This includes Risk, Marketing, Products and Finance. We aim to balance our strategy, business goals, and financial and technical resources with our attitude to risk (our Risk Appetite). To do this, we focus particularly on economic and market conditions and forecasts, regulations, conduct considerations, profitability, returns and market share. The result is an agreed set of targets and limits that help us direct our business.

2. Assessment and origination

Managing credit risk begins with lending responsibly. That means only lending to customers who can afford to pay us back, even if things get tighter for them, and are committed to paying us back. We undertake a thorough risk assessment to make sure customers can meet their obligations before we approve a credit application. We make these decisions with authority from the Board and we consider:

– The credit quality of the customer

– The underlying risk – and anything that mitigates it, such as netting or collateral

– Our risk policy, limits and appetite

– Whether we can balance the amount of risk we face with the returns we expect

We also use stress testing, for example to estimate how a customer might be able to cope if interest rates increase.

3. Monitoring

We measure and monitor changes in our credit risk profile on a regular and systematic basis against budgets, limits and benchmarks. We monitor credit performance by portfolio, segment, customer or transaction. If our portfolios do not perform as we expect, we investigate to understand the reasons. Then we take action to mitigate it as far as possible and bring performance back on track.

We monitor and review our risk profile through a formal structure of governance and forums/committees across our business segments. These agree and track any steps we need to take to manage our portfolios, to make sure the impact is prompt and effective. This structure is a vital feedback tool to co-ordinate issues, trends and developments across each part of the credit risk lifecycle.

A core part of our monitoring is credit concentrations, such as the proportion of our lending that goes to specific borrowers, groups or industries. We set concentration limits in line with our Risk Appetite and review them on a regular basis.

Managing concentrations of credit risk exposures is a key part of risk management. We track how concentrated our credit risk portfolios are using various criteria. These include geographical areas, economic sectors, products and groups of customers.

Geographical concentrations

As part of our approach to credit risk management and Risk Appetite, we set exposure limits to countries and geographical areas. We set our limits with reference to the country limits set by Banco Santander SA. These are determined according to how the country is classified (whether it is a developed OECD country or not), its credit rating, its gross domestic product, and the types of products and services Banco Santander wants to offer in that country.

For more geographical information, see the ‘Country risk exposures’ section.

Industry concentrations

As part of our approach to credit risk management and Risk Appetite, we set concentration limits by industry sector. These limits are set based on the industry outlook, our strategic aims and desired level of concentration, but also take into account any relevant limit set by Banco Santander SA.

We provide further portfolio analyses on committed exposures, which are typically higher than the balance sheet value, in the following ‘Credit risk review’ sections.

4. Arrears management

Sometimes our customers face financial difficulty and they may fall into payment arrears or breach conditions of their credit facility. If this happens, we work with them to get their account back on track. We aim to support our customers and keep our relationship with them. We do this by:

– Finding affordable and sustainable ways of repaying to fit their circumstances

– Monitoring their finances and using models to predict how we think they will cope financially. This helps us design and put in place the right strategy to manage their debt

– Working with them to get their account back to normal as soon as possible in a way that works for them and us

– Monitoring agreements we make to manage their debt so we know they are working.

Forbearance

When a customer gets into financial difficulties, we can change the terms of their loan, either temporarily or permanently. We do this to help customers through temporary periods of financial difficulty so they can get back on to sustainable terms and fully pay off the loan over its lifetime, with support if needed. This is known as forbearance. We try to do this before the customer defaults. Whatever we offer, we assess it to make sure the customer can afford the repayments.

Forbearance improves our customer relationships and our credit risk profile. We only use foreclosure or repossession as a last resort. We review our approach regularly to make sure it is still effective. In a few cases, we can help a customer in this way more than once. This can happen if the plan to repay their debt doesn’t work and we have to draw up another one. When this happens more than once in a year, or more than three times in five years, we call it multiple forbearance.

For a loan to exit forbearance all the following conditions must be met:

– The loan has been forborne at least two years ago or, where the forbearance was temporary, must have returned to performing under normal contractual terms for at least two years

– The loan has been performing under the forborne terms for at least two years

– The account is no longer in arrears

– The customer does not have any other debts with us which are more than 30 days in arrears.

5. Debt recovery

Sometimes, even when we have taken all reasonable and responsible steps we can to manage arrears, they prove ineffective. If this happens, we have to end our relationship with the customer and try to recover the whole debt, or as much of it as we can.

Risk measurement and control

We measure and control credit risk at all stages across the credit risk lifecycle. We have a range of tools, processes and approaches, but we rely mainly on:

– Credit control: as a core part of risk management we generate, extract and store accurate, comprehensive and timely data to monitor credit limits. We do this using internal data and data from third parties like credit bureaux

– Models: we use models widely to measure credit risk and capital needs. They range from statistical and expert models to benchmarks

– Review: we use formal and informal forums across the business to approve, validate, review and challenge our risk management. We do this to help us predict if our credit risk will worsen.

We use two key metrics to measure and control credit risk: Expected Loss (EL) and Non-Performing Loans (NPLs).

Metric	Description
EL	EL tells us what credit risk is likely to cost us. It is the product of:
	– Probability of default (PD) – how likely customers are to default. We estimate this using customer ratings or the transaction credit scores
	– Exposure at default (EAD) – how much customers will owe us if they default. We calculate this by comparing how much of their agreed credit (such as an overdraft) customers have used when they default with how much they normally use. This allows us to estimate the final extent of use of credit in the event of default
	– Loss given default (LGD) – how much we lose when customers actually default. We work this out using the actual losses on loans that default. We take into account the income we receive, including the collateral we held, the costs we incur and the recovery process timing.
	PD, EAD and LGD are calculated in accordance with CRD IV, and include direct and indirect costs. We base them on our own risk models and our assessment of each customer’s credit quality. For the rest of our Risk review, impairments, impairment losses and impairment loss allowances refer to calculations in accordance with IFRS, unless we specifically say they relate to CRD IV. For our IFRS accounting policy on impairment, see Note 1 to the Consolidated Financial Statements.
	The way we calculate impairment under IFRS changed from 1 January 2018 when IFRS 9 took effect. It uses an expected credit loss (ECL) model rather than an incurred loss model used by IAS 39. There are also differences between the ECL approach used by IFRS 9 and the EL approach used by CRD IV. For more, see ‘Future accounting developments’ in Note 1 to the Consolidated Financial Statements.
NPLs	We use NPLs – and related write-offs and recoveries – to monitor how our portfolios behave. We classify loans as NPLs where customers do not make a payment for three months or more, or if we have data to make us doubt they can keep up with their payments. The data we have on customers varies across our business segments. It typically includes where:
	Retail Banking – They have been reported bankrupt or insolvent – Their loan term has ended, but they still owe us money more than three months later – They have had forbearance as an NPL, but have not caught up with the payments they had missed before that – They have had multiple forbearance – We have suspended their fees and interest because they are in financial difficulties – We have repossessed the property.
	Other segments: Commercial Banking, Global Corporate Banking and Corporate Centre – They have had a winding up notice issued, or something happens that is likely to trigger insolvency – such as, another lender calls in a loan – Something happens that makes them less likely to be able to pay us – such as they lose an important client or contract – They have regularly missed or delayed payments, even though they have not gone over the three-month limit for NPLs – Their loan is unlikely to be refinanced or repaid in full on maturity – Their loan has an excessive LTV and it is unlikely that it will be resolved, such as by a change in planning policy, pay-downs from rental income, or increases in market values.

We also assess risks from other perspectives. These comprise internal rating deterioration, geographical location, business area, product and process. We do this to identify specific areas we need to focus on. We also use stress testing to establish vulnerabilities to economic deterioration. Our business segments tailor their approach to credit risk to their own customers. We explain their approaches in the business segment sections later on.

SANTANDER UK GROUP LEVEL – CREDIT RISK REVIEW

Our maximum and net exposure to credit risk

The tables below show the main differences between our maximum and net exposure to credit risk. They show the effects of collateral, netting, and risk transfer to mitigate our exposure. The tables only show the financial assets that credit risk affects.

For balance sheet assets, the maximum exposure to credit risk is the carrying value after impairment loss allowances. Off-balance sheet exposures are guarantees, formal standby facilities, credit lines and other commitments. For off-balance sheet guarantees, the maximum exposure is the maximum amount that we would have to pay if the guarantees were called on. For formal standby facilities, credit lines and other commitments that are irrevocable over the life of the facility, the maximum exposure is the total amount of the commitment.

	Maximum exposure									Collateral(1)
	Balance sheet asset
2017	Gross       amounts £bn		Impairment loss allowances and RV & VT(2) provisions £bn			Net     amounts £bn		Off-balance sheet £bn		Cash £bn			Non-cash £bn			Netting(3) £bn			Net exposure £bn
Cash and balances at central banks		32.8		–			32.8		–		–			–			–			32.8
Trading assets:
– Securities repurchased under resale agreements		8.9		–			8.9		–		–			(8.5	)		(0.4	)		–
– Debt securities		5.2		–			5.2		–		–			–			–			5.2
– Cash collateral		6.2		–			6.2		–		–			–			–			6.2
– Short-term loans		0.7		–			0.7		–		–			–			–			0.7
Total trading assets		21.0		–			21.0		–		–			(8.5	)		(0.4	)		12.1
Derivative financial instruments		19.9		–			19.9		–		(2.8	)		–			(14.8	)		2.3
Financial assets designated at fair value:
– Loans and advances to customers		1.6		–			1.6		–		–			(1.6	)		–			–
– Debt securities		0.5		–			0.5		–		–			–			–			0.5
Total financial assets designated at fair value		2.1		–			2.1		–		–			(1.6	)		–			0.5
Loans and advances to banks		5.9		–			5.9		1.6		–			(2.5	)		–			5.0
Loans and advances to customers:(4)
– Advances secured on residential property		155.4		(0.2	)		155.2		12.4		–			(167.4)(5)			–			0.2
– Corporate loans		31.0		(0.5	)		30.5		17.1		–			(21.8	)		–			25.8
– Finance leases		6.7		(0.1	)		6.6		0.6		(0.1	)		(5.8	)		–			1.3
– Other unsecured loans		6.2		(0.2	)		6.0		11.1		–			(0.1	)		–			17.0
– Amounts due from fellow Banco Santander group subsidiaries and joint ventures		1.2		–			1.2		–		–			–			–			1.2
Total loans and advances to customers		200.5		(1.0	)		199.5		41.2		(0.1	)		(195.1	)		–			45.5
Financial investments:
– Loans and receivables securities(4)		2.2		–			2.2		0.7		–			–			–			2.9
– Available-for-sale debt securities		8.8		–			8.8		–		–			–			–			8.8
– Held-to-maturity debt securities		6.5		–			6.5		–		–			–			–			6.5
Total financial investments		17.5		–			17.5		0.7		–			–			–			18.2
Total		299.7		(1.0	)		298.7		43.5		(2.9	)		(207.7	)		(15.2	)		116.4

(1) The forms of collateral we take to reduce credit risk include: residential and commercial property; other physical assets, including motor vehicles; liquid securities, including those transferred under reverse repurchase agreements; cash, including cash used as collateral for derivative transactions; and receivables. Charges on residential property are most of the collateral we take.

(2) Residual Value (RV) and Voluntary Termination (VT) provisions.

(3) We can reduce credit risk exposures by applying netting. We do this mainly for derivative and repurchase transactions with financial institutions. For derivatives, we use standard master netting agreements. They allow us to set off our credit risk exposure to a counterparty from a derivative against our obligations to the counterparty in the event of default. This gives us a lower net credit exposure. They may also reduce settlement exposure. For more on this, see ‘Credit risk mitigation’ in the ‘Other segments – credit risk management’ section.

(4) Balances include interest we have charged to the customer’s account and accrued interest that we have not charged to the account yet.

(5) The collateral value we have shown is limited to the balance of each associated individual loan. It does not include the impact of over–collateralisation (where the collateral has a higher value than the loan balance) and includes collateral we would receive on draw down of certain off–balance sheet commitments.

	Maximum exposure									Collateral(1)
	Balance sheet asset
2016	Gross       amounts £bn		Impairment loss allowances and RV & VT(2) provisions £bn			Net     amounts £bn		Off-balance sheet £bn		Cash £bn			Non-cash £bn			Netting(2) £bn			Net exposure £bn
Cash and balances at central banks		17.1		–			17.1		–		–			–			–			17.1
Trading assets:
– Securities repurchased under resale agreements		10.7		–			10.7		–		–			(8.6	)		(2.1	)		–
– Debt securities		6.2		–			6.2		–		–			–			–			6.2
– Cash collateral		6.2		–			6.2		–		–			–			–			6.2
– Short-term loans		0.9		–			0.9		–		–			–			–			0.9
Total trading assets		24.0		–			24.0		–		–			(8.6	)		(2.1	)		13.3
Derivative financial instruments		25.5		–			25.5		–		(2.4	)		–			(17.4	)		5.7
Financial assets designated at fair value:
– Loans and advances to customers		1.7		–			1.7		0.2		–			(1.8	)		–			0.1
– Debt securities		0.4		–			0.4		–		–			–			–			0.4
Total financial assets designated at fair value		2.1		–			2.1		0.2		–			(1.8	)		–			0.5
Loans and advances to banks		4.4		–			4.4		1.9		–			(1.5	)		–			4.8
Loans and advances to customers:(4)
– Advances secured on residential property		154.7		(0.3	)		154.4		10.8		–			(164.9)(5	)		–			0.3
– Corporate loans		32.0		(0.4	)		31.6		17.1		–			(23.1	)		–			25.6
– Finance leases		6.7		(0.1	)		6.6		0.4		(0.1	)		(5.7	)		–			1.2
– Other unsecured loans		6.2		(0.2	)		6.0		11.5		–			–			–			17.5
– Amounts due from fellow Banco Santander group subsidiaries and joint ventures		1.1		–			1.1		–		–			–			–			1.1
Total loans and advances to customers		200.7		(1.0	)		199.7		39.8		(0.1	)		(193.7	)		–			45.7
Financial investments:
– Loans and receivables securities(4)		0.3		–			0.3		1.6		–			–			–			1.9
– Available-for-sale debt securities		10.4		–			10.4		–		–			–			–			10.4
– Held-to-maturity debt securities		6.6		–			6.6		–		–			–			–			6.6
Total financial investments		17.3		–			17.3		1.6		–			–			–			18.9
Total		291.1		(1.0	)		290.1		43.5		(2.5	)		(205.6	)		(19.5	)		106.0

(1) The forms of collateral we take to reduce credit risk include: residential and commercial property; other physical assets, including motor vehicles; liquid securities, including those transferred under reverse repurchase agreements; cash, including cash used as collateral for derivative transactions; and receivables. Charges on residential property are most of the collateral we take.

(2) Residual Value (RV) and Voluntary Termination (VT) provisions.

(3) We can reduce credit risk exposures by applying netting. We do this mainly for derivative and repurchase transactions with financial institutions. For derivatives, we use standard master netting agreements. They allow us to set off our credit risk exposure to a counterparty from a derivative against our obligations to the counterparty in the event of default. This gives us a lower net credit exposure. They may also reduce settlement exposure. For more on this, see ‘Credit risk mitigation’ in the ‘Other segments – credit risk management’ section.

(4) Balances include interest we have charged to the customer’s account and accrued interest that we have not charged to the account yet.

(5) The collateral value we have shown is limited to the balance of each associated individual loan. It does not include the impact of over–collateralisation (where the collateral has a higher value than the loan balance) and includes collateral we would receive on draw down of certain off–balance sheet commitments.

Credit quality

Single rating scale (unaudited)

In the table below, we have used a single rating scale to ensure we are consistent across all our credit risk portfolios in how we report the risk of default. It has eight grades for non-defaulted exposures, from 9 (lowest risk) to 2 (highest risk). We define each grade by an upper and lower probability of default (PD) value and we scale the grades so that the default risk increases by a factor of ten every time the grade number drops by two steps. For example, risk grade 9 has an average PD of 0.010%, and risk grade 7 has an average PD of 0.100%. We give defaulted exposures a grade 1 and a PD value of 100%. In the final column of the table we show the approximate equivalent credit rating grade used by Standard & Poor’s Ratings Services (S&P).

	PD range
Santander UK risk grade	Mid %		Lower %		Upper  %		S&P equivalent
9		0.010		0.000		0.021		AAA to AA+
8		0.032		0.021		0.066		AA to AA-
7		0.100		0.066		0.208		A+ to BBB
6		0.316		0.208		0.658		BBB- to BB
5		1.000		0.658		2.081		BB-
4		3.162		2.081		6.581		B+ to B
3		10.000		6.581		20.811		B-
2		31.623		20.811		99.999		CCC to C
1 (Default)		100.000		100.000		100.000		D

Rating distribution

The tables below show the credit rating of our financial assets subject to credit risk. For more on the credit rating profiles of key portfolios, see the ‘Credit Risk – Retail Banking’ and ‘Credit Risk – other segments’ sections.

	Santander UK risk grade
2017	9             £bn		8         £bn		7         £bn		6         £bn		5         £bn		4         £bn		3 to 1         £bn		Other(1) £bn		Total £bn
Cash and balances at central banks		31.8		–		–		–		–		–		–		1.0		32.8
Trading assets:
– Securities repurchased under resale agreements		–		5.7		1.5		1.7		–		–		–		–		8.9
– Debt securities		1.2		3.1		0.9		–		–		–		–		–		5.2
– Cash collateral		0.1		0.9		5.1		0.1		–		–		–		–		6.2
– Short-term loans		0.7		–		–		–		–		–		–		–		0.7
Total trading assets		2.0		9.7		7.5		1.8		–		–		–		–		21.0
Derivative financial instruments		0.4		9.9		7.6		1.5		0.4		–		–		0.1		19.9
Financial assets designated at fair value:
– Loans and advances to customers		0.3		1.2		0.1		–		–		–		–		–		1.6
– Debt securities		0.4		0.1		–		–		–		–		–		–		0.5
Total financial assets designated at fair value		0.7		1.3		0.1		–		–		–		–		–		2.1
Loans and advances to banks		1.3		1.7		1.1		0.4		–		–		–		1.4		5.9
Loans and advances to customers:(2)
– Advances secured on residential property		3.2		26.7		75.2		35.2		6.2		4.5		4.4		–		155.4
– Corporate loans		1.7		5.1		2.1		4.6		9.6		5.1		1.5		1.3		31.0
– Finance leases		–		–		0.4		1.3		2.0		1.8		1.1		0.1		6.7
– Other unsecured loans		–		0.1		0.8		1.6		1.6		0.7		0.5		0.9		6.2
– Amounts due from fellow Banco Santander group subsidiaries and joint ventures		–		–		–		–		–		–		–		1.2		1.2
Total loans and advances to customers		4.9		31.9		78.5		42.7		19.4		12.1		7.5		3.5		200.5
Financial investments:
– Loans and receivables securities(2)		1.9		0.1		0.2		–		–		–		–		–		2.2
– Available-for-sale debt securities		6.5		1.9		0.4		–		–		–		–		–		8.8
– Held-to-maturity debt securities		6.5		–		–		–		–		–		–		–		6.5
Total financial investments		14.9		2.0		0.6		–		–		–		–		–		17.5
		56.0		56.5		95.4		46.4		19.8		12.1		7.5		6.0		299.7
Impairment loss allowances and RV & VT provisions(5)																		(1.0	)
Total																		298.7
Of which:
Neither past due nor impaired:
– Cash and balances at central banks		31.8		–		–		–		–		–		–		1.0		32.8
– Trading assets		2.0		9.7		7.5		1.8		–		–		–		–		21.0
– Derivative financial instruments		0.4		9.9		7.6		1.5		0.4		–		–		0.1		19.9
– Financial assets designated at fair value		0.7		1.3		0.1		–		–		–		–		–		2.1
– Loans and advances to banks		1.3		1.7		1.1		0.4		–		–		–		1.4		5.9
– Loans and advances to customers		4.9		31.9		78.5		42.7		19.3		12.1		3.8		3.5		196.7
– Financial investments		14.9		2.0		0.6		–		–		–		–		–		17.5
Total neither past due nor impaired		56.0		56.5		95.4		46.4		19.7		12.1		3.8		6.0		295.9
Past due but not impaired(3)		–		–		–		–		0.1		–		2.4		–		2.5
Impaired(4)		–		–		–		–		–		–		1.3		–		1.3
		56.0		56.5		95.4		46.4		19.8		12.1		7.5		6.0		299.7
Impairment loss allowances and RV & VT provisions(5)																		(1.0	)
Total																		298.7

(1) Other items include cash at hand and smaller cases mainly in the consumer (auto) finance and commercial mortgages portfolios. We use scorecards for these items, rather than rating models.

(2) Balances include interest we have charged to the customer’s account and accrued interest we have not charged to the account yet.

(3) Balances include mortgage loans in arrears which have been assessed for incurred but not observed (IBNO) losses as described in Note 1 to the Consolidated Financial Statements.

(4) Impaired loans are loans we have assessed for observed impairment loss allowances. This included loans individually assessed for impairment of £713m.

(5) Residual Value (RV) and Voluntary Termination (VT) provisions.

	Santander UK risk grade
2016	9 £bn		8 £bn		7 £bn		6 £bn		5 £bn		4 £bn		3 to 1 £bn		Other(1) £bn		Total  £bn
Cash and balances at central banks		15.9		–		–		–		–		–		–		1.2		17.1
Trading assets:
– Securities repurchased under resale agreements		–		5.4		4.2		0.9		0.2		–		–		–		10.7
– Debt securities		2.8		1.5		0.3		1.6		–		–		–		–		6.2
– Cash collateral		–		1.5		4.3		0.4		–		–		–		–		6.2
– Short-term loans		0.8		–		–		–		0.1		–		–		–		0.9
Total trading assets		3.6		8.4		8.8		2.9		0.3		–		–		–		24.0
Derivative financial instruments		1.1		10.4		9.9		3.4		0.6		–		–		0.1		25.5
Financial assets designated at fair value:												–		–
– Loans and advances to customers		0.6		0.5		0.6		–		–		–		–		–		1.7
– Debt securities		–		0.1		–		0.3		–		–		–		–		0.4
Total financial assets designated at fair value		0.6		0.6		0.6		0.3		–		–		–		–		2.1
Loans and advances to banks		1.7		1.5		0.5		0.2		–		–		–		0.5		4.4
Loans and advances to customers:(2)
– Advances secured on residential property		2.1		23.8		74.0		37.8		6.8		5.3		4.9		–		154.7
– Corporate loans		3.3		3.2		1.6		10.5		7.4		3.7		0.9		1.4		32.0
– Finance leases		–		–		0.4		1.3		2.0		1.9		1.0		0.1		6.7
– Other unsecured loans		–		–		0.2		1.5		2.4		0.9		0.4		0.8		6.2
– Amounts due from fellow Banco Santander group subsidiaries and joint ventures		1.1		–		–		–		–		–		–		–		1.1
Total loans and advances to customers		6.5		27.0		76.2		51.1		18.6		11.8		7.2		2.3		200.7
Financial investments:
– Loans and receivables securities(2)		0.1		–		0.2		–		–		–		–		–		0.3
– Available-for-sale debt securities		7.8		1.8		0.7		–		–		–		–		0.1		10.4
– Held-to-maturity debt securities		6.6		–		–		–		–		–		–		–		6.6
Total financial investments		14.5		1.8		0.9		–		–		–		–		0.1		17.3
		43.9		49.7		96.9		57.9		19.5		11.8		7.2		4.2		291.1
Impairment loss allowances and RV & VT provisions(5)																		(1.0)
Total																		290.1
Of which:
Neither past due nor impaired:
– Cash and balances at central banks		15.9		–		–		–		–		–		–		1.2		17.1
– Trading assets		3.6		8.4		8.8		2.9		0.3		–		–		–		24.0
– Derivative financial instruments		1.1		10.4		9.9		3.4		0.6		–		–		0.1		25.5
– Financial assets designated at fair value		0.6		0.6		0.6		0.3		–		–		–		–		2.1
– Loans and advances to banks		1.7		1.5		0.5		0.2		–		–		–		0.5		4.4
– Loans and advances to customers		6.5		27.0		76.2		51.1		18.5		11.7		3.3		2.3		196.6
– Financial investments		14.5		1.8		0.9		–		–		–		–		0.1		17.3
Total neither past due nor impaired		43.9		49.7		96.9		57.9		19.4		11.7		3.3		4.2		287.0
Past due but not impaired(3)		–		–		–		–		0.1		0.1		2.5		–		2.7
Impaired(4)		–		–		–		–		–		–		1.4		–		1.4
		43.9		49.7		96.9		57.9		19.5		11.8		7.2		4.2		291.1
Impairment loss allowances and RV & VT provisions(5)																		(1.0)
Total																		290.1

(1) Other items include cash at hand and smaller cases mainly in the consumer (auto) finance and commercial mortgages portfolios. We use scorecards for these items, rather than rating models.

(2) Balances include interest we have charged to the customer’s account and accrued interest we have not charged to the account yet.

(3) Balances include mortgage loans in arrears which have been assessed for IBNO losses as described in Note 1 to the Consolidated Financial Statements.

(4) Impaired loans are loans we have assessed for observed impairment loss allowances. This included loans individually assessed for impairment of £578m.

(5) Residual Value (RV) and Voluntary Termination (VT) provisions.

Age of loans and advances that are past due but not impaired

At 31 December 2017, loans and advances of £2.5bn (2016: £2.7bn) were past due but not impaired. Of these balances, £0.1bn (2016: £0.1bn) were less than 1 month overdue, £0.7bn (2016: £0.8bn) were 1 to 2 months overdue, £0.4bn (2016: £0.5bn) were 2 to 3 months overdue, £0.7bn (2016: £0.7bn) were 3 to 6 months overdue, and £0.6bn (2016: £0.6bn) were greater than 6 months overdue.

Credit performance

The customer loans in the tables below and in the remainder of the ‘Credit risk’ section are presented differently from the balances in the Consolidated Balance Sheet. The main difference is that the customer loans below exclude inter-company balances. We disclose transactions with related parties in Note 36 to the Consolidated Financial Statements. In addition, customer loans are presented on an amortised cost basis and exclude interest we have accrued but not charged to customers’ accounts yet.

2017	Customer loans £bn		NPLs(1)(2) £m		NPL ratio(3) %		NPL coverage(4) %		Gross write-offs £m		Impairment loss allowances £m
Retail Banking:		169.0		2,105		1.25		23		195		491
– of which mortgages		154.9		1,868		1.21		12		22		225
Commercial Banking		19.4		383		1.97		51		35		195
Global Corporate Banking		6.0		340		5.67		69		–		236
Corporate Centre		5.9		20		0.34		90		23		18
		200.3		2,848		1.42		33		253		940
2016
Retail Banking:		168.6		2,340		1.39		25(5)		210		583(5)
– of which mortgages		154.3		2,110		1.37		13		33		279
Commercial Banking		19.4		518		2.67		42		10		220
Global Corporate Banking		5.7		63		1.11		90		–		57
Corporate Centre		6.5		73		1.12		84		51		61
		200.2		2,994		1.50		31(5)		271		921(5)
Of which: Corporate lending
2017		27.3		838		3.07		58		56		485
2016		27.4		689		2.51		48		34		334

(1) We define NPLs in the ‘Credit risk management’ section.

(2) All NPLs continue accruing interest.

(3) NPLs as a percentage of customer loans.

(4) Impairment loss allowances as a percentage of NPLs. Impairment loss allowances relate to early arrears and performing assets (i.e. the incurred but not observed provision) as well as NPLs, so the ratio can exceed 100%.

(5) In the first half of 2017, we reclassified our provisions for residual value and voluntary termination from the consumer (auto) finance impairment loss allowance. In order to facilitate comparison with the current period, the 31 December 2016 consumer (auto) finance loan loss allowance and NPL coverage ratio were amended. This reclassification was also reflected in the Retail Banking loan loss allowance and NPL coverage ratios.

Corporate lending comprises the business banking portfolio of our Retail Banking segment, and our Commercial Banking and Global Corporate Banking segments.

2017 compared to 2016 (unaudited)

The NPL ratio improved 8bps to 1.42%, supported by our predictable medium-low risk profile, proactive management actions and the ongoing resilience of the UK economy.

– The Retail Banking NPL ratio improved to 1.25%, with a decrease in mortgage NPLs as a result of the ongoing resilience of the UK economy and our strong risk management practices. The loan loss rate remained low at 0.02% (2016: 0.01%).

– The NPL ratio for Commercial Banking improved to 1.97%, primarily due to the full repayment of three impaired loans and the write-off of some pre-2009 vintages. The loan loss rate improved to 0.07% (2016: 0.15%).

– The Global Corporate Banking NPL ratio of 5.67% was severely impacted by the Carillion plc loans that moved to non-performance in the year.

– The Corporate Centre NPL ratio decreased to 0.34%, reflecting management of non-core corporate and legacy portfolios.

For more on the credit performance of our key portfolios by business segment, see the ‘Retail Banking – credit risk review’ and ‘Other segments – credit risk review’ sections.

COUNTRY RISK EXPOSURES

We manage our country risk exposure under our global limits framework. Within this framework, we set our Risk Appetite for each country, taking into account factors that may affect its risk profile. These can include political events, macroeconomics and the nature of the risk. We actively manage exposures if we think we need to. We consider Banco Santander related risk separately.

The tables below show our total exposures, which are the total of balance sheet and off-balance sheet values. We calculate balance sheet values in accordance with IFRS (i.e. after netting allowed under IAS 32) except for credit provisions which we add back. Off-balance sheet values are undrawn facilities and letters of credit. We classify location by country of risk – the country where each client has its main business or assets. That is unless there is a full risk transfer guarantee in place, in which case we use the guarantor’s country of domicile. If a client has operations in many countries, we use their country of incorporation. The tables below exclude balances with other Banco Santander companies. We show them separately in the ‘Balances with other Banco Santander companies’ section.

	2017														2016
					Financial     institutions														Financial     institutions
	Governments £bn		Government guaranteed £bn		Banks(1) £bn		Other £bn		Retail £bn		Corporate £bn		Total(2) £bn		Governments £bn		Government guaranteed £bn		Banks(1) £bn		Other £bn		Retail £bn		Corporate £bn		Total(2) £bn
Eurozone
Ireland		–		–		0.2		1.1		–		0.8		2.1		–		–		0.5		0.4		–		0.5		1.4
Italy		0.4		–		–		0.1		–		0.1		0.6		1.0		–		–		0.1		–		0.2		1.3
Spain (excl. Santander)		–		–		0.3		0.1		–		0.1		0.5		–		–		0.3		0.1		–		0.2		0.6
Portugal		–		–		0.1		–		–		–		0.1		–		–		0.1		–		–		–		0.1
France		–		0.3		2.0		0.2		–		2.2		4.7		0.1		0.3		1.8		0.2		–		0.1		2.5
Germany		–		–		2.8		–		–		0.1		2.9		–		–		2.5		–		–		–		2.5
Luxembourg		–		–		–		1.3		–		0.4		1.7		–		–		–		2.3		–		0.3		2.6
Other(3)		0.3		–		1.1		0.2		–		1.4		3.0		0.3		–		1.1		0.3		–		1.1		2.8
		0.7		0.3		6.5		3.0		–		5.1		15.6		1.4		0.3		6.3		3.4		–		2.4		13.8
Other countries
UK		44.7		–		9.1		13.0		191.3		42.9		301.0		33.6		0.4		12.0		13.5		189.1		41.3		289.9
US		6.3		0.1		8.2		2.3		–		0.1		17.0		4.8		0.2		10.6		2.5		–		0.1		18.2
Japan(4)		3.0		–		2.6		0.2		–		0.8		6.6		2.8		–		3.2		0.1		–		1.4		7.5
Switzerland		0.2		–		0.2		–		–		0.2		0.6		0.2		–		0.1		–		–		0.2		0.5
Denmark		–		–		0.1		–		–		0.4		0.5		–		–		0.1		–		–		0.4		0.5
Russia		–		–		–		–		–		–		–		–		–		–		0.1		–		–		0.1
Other		0.1		–		2.3		0.9		–		1.9		5.2		0.1		–		2.6		0.6		–		2.3		5.6
		54.3		0.1		22.5		16.4		191.3		46.3		330.9		41.5		0.6		28.6		16.8		189.1		45.7		322.3
Total		55.0		0.4		29.0		19.4		191.3		51.4		346.5		42.9		0.9		34.9		20.2		189.1		48.1		336.1

(1) Excludes balances with central banks.

(2) Excludes cash at hand, interests in other entities, intangible assets, property, plant and equipment, tax assets, retirement benefit assets and other assets. Loans are included gross of credit provisions.

(3) Includes The Netherlands of £1.8bn (2016: £1.4bn), Cyprus of £nil (2016: £28m), Greece of £nil (2016: £nil).

(4) Balances are mainly equity instruments listed in Japan and reverse repos with Japanese banks, held as part of our Short Term Markets business. The equity exposures are hedged using derivatives and the additional reverse repos are fully collateralised.

Balances with other Banco Santander companies

We deal with other Banco Santander companies in the ordinary course of business. We do this where we have a particular business advantage or expertise and where they can offer us commercial opportunities. This is done on the same terms as for similar transactions with third parties. These transactions also arise where we support the activities of, or with, larger multinational corporate clients and financial institutions which may deal with other Banco Santander companies. We conduct these activities in a way that manages the credit risk within limits acceptable to the PRA. At 31 December 2017 and 2016, we had gross balances with other Banco Santander companies as follows:

	2017								2016
	Financial institutions								Financial institutions
	Banks £bn		Other £bn		Corporate £bn		Total £bn		Banks £bn		Other £bn		Corporate £bn		Total £bn
Assets
Spain		4.4		–		–		4.4		2.1		–		–		2.1
UK		–		1.3		–		1.3		–		1.1		–		1.1
Chile		–		–		–		–		0.1		–		–		0.1
Other <£100m		–		–		–		–		0.2		–		–		0.2
		4.4		1.3		–		5.7		2.4		1.1		–		3.5
Liabilities
Spain		5.1		0.3		0.1		5.5		2.9		0.2		0.1		3.2
UK		0.1		7.6		0.1		7.8		–		6.2		0.1		6.3
Uruguay		0.1		–		–		0.1		0.2		–		–		0.2
Chile		–		–		–		–		0.1		–		–		0.1
Other <£100m		–		0.1		–		0.1		0.2		0.1		–		0.3
		5.3		8.0		0.2		13.5		3.4		6.5		0.2		10.1

We consider the dissolution of the eurozone and widespread redenomination of our euro-denominated assets and liabilities to be highly improbable. However, we have analysed the redenomination risk that might arise from an exit of a member state from the euro or a total dissolution of the euro and how that would be implemented. It is not possible to predict what the total financial impact on us might be. Determining which balances would be legally redenominated is complex and depends on a number of factors, including the precise exit scenario. This is because the effects on contracts of a disorderly exit or one sanctioned under EU law may differ. We monitor these risks and have taken steps to mitigate them.

Credit risk – Retail Banking

Overview

We offer a full range of retail products and services through our branches, the internet, digital devices and over the phone, as well as through intermediaries. Credit risk management In this section, we explain how we manage and mitigate credit risk. Credit risk review In this section, we analyse our credit risk exposures and how they are performing. We also focus on forbearance and portfolios of particular interest. Our main portfolios are:

Residential mortgages – This is our largest portfolio. We lend to customers of good credit quality (prime lending). Most of our mortgages are for owner-occupied homes. We also have some buy-to-let mortgages where we focus on non-professional landlords with small portfolios. Business banking – This portfolio is comprised of small businesses with an annual turnover of up to £6.5m per annum. Consumer (auto) finance and other unsecured lending – Consumer (auto) finance includes financing for cars, vans, motorbikes and caravans – so long as they are privately bought. Other unsecured lending includes personal loans, credit cards and bank account overdrafts.

RETAIL BANKING – CREDIT RISK MANAGEMENT

LOGO

In Retail Banking, our customers are individuals and small businesses. We have a high volume of customers and transactions and they share similar credit characteristics, like their credit score or LTV. As a result, we manage our overall credit risk by looking at portfolios or groups of customers who share similar credit characteristics. Where we take this approach, we call them ‘standardised’ customers.

Exactly how we group customers into segments depends on the portfolio and the stage of the credit risk lifecycle. For example, we may segment customers at origination by their credit score. For accounts in arrears, we may segment them by how fast they improve or worsen. We regularly review each segment compared with our expectations for its performance, budget or limit.

1. Risk strategy and planning

For more on how we set our risk strategy and plans for Retail Banking, see the ‘Santander UK group level – credit risk management’ section.

2. Assessment and origination

We undertake a thorough risk assessment to make sure customers can meet their obligations before we approve a credit application. We do this mainly by looking at affordability and the customer’s credit profile:

Affordability

We take proportionate steps to establish that the customer will be able to make all the repayments on the loan over its full term. As part of this, we assess the risk that they will not pay us back. We do this by a series of initial affordability and credit risk assessments. If the loan is secured, we assess affordability by reviewing the customer’s income and spending, their other credit commitments, and what would happen if interest rates went up. For unsecured products that have fixed interest rates, affordability reviews for these products do not consider the impact of increases in interest rates. We regularly review the way we calculate affordability and refine it when we need to. This can be due to changes in regulations, the economy or our risk profile.

Credit profile

We look at each customer’s credit profile and signs of how reliable they are at repaying credit. When they apply, we use the data they give us, and:

– Credit policy: these are our rules and guidelines. We review them regularly to make sure our decisions are consistent and fair, and align to the risk profile we want. For secured lending, we look at the property and the LTV as well as the borrower

– Credit scores: based on statistics about the factors that make people fail to pay off debt. We use them to build models of what is likely to happen in the future. These models give a credit score to the customer or the loan they want, to show how likely it is to be repaid. We regularly review them

– Credit reference agencies: data from credit reference agencies about how the borrower has handled credit in the past

– Other Santander accounts: we look at how the customer is using their other accounts with us.

How we make the decision

Many of our decisions are automated as our risk systems contain data about affordability and credit history. We tailor the process and how we assess the application based on the type of product being taken. More complex transactions often need greater manual assessment. This means we have to rely more on our credit underwriters’ skill and experience in making the decision. This is particularly true for secured lending, where we might need to do more checks on the customer’s income, or get a property valuation from an approved surveyor, for example.

Credit risk mitigation

The types of credit risk mitigation, including collateral, across each of our portfolios is:

Portfolio	Description
Residential mortgages	Collateral is in the form of a first legal charge over the property. Before we grant a mortgage, we get an approved surveyor to value the property. We have our own guidelines for valuations, which build on guidance from the Royal Institution of Chartered Surveyors (RICS). For remortgages and some loans where the LTV is 75% or less, we might use an automated valuation instead.
Business banking	Includes secured and unsecured lending. We can take mortgage debentures as collateral if the business is incorporated. These are charges over a company’s assets. We can also take guarantees, but we do not treat them as collateral, and we do not put a cash value on them unless they are secured against a tangible asset. We base our lending decision on the customer’s trading cash flow. If a customer defaults, we work with them to consider debt restructuring options. We generally do not enforce our security over their assets except as a last resort. In which case we might appoint an administrator or receiver.
Consumer (auto) finance	Collateral is in the form of legal ownership of the vehicle for most consumer (auto) finance loans, with the customer being the registered keeper. Only a very small proportion of the consumer (auto) finance business is underwritten as a personal loan. In these cases there is no collateral or security tied to the loan. We use a leading vehicle valuation company to assess the LTV at the proposal stage.
Unsecured lending	Unsecured lending means there is no collateral or security tied to the loan that can be used to mitigate any potential loss if the customer does not pay us back.

3. Monitoring

Our risk assessment does not end once we have made the decision to lend. We monitor credit risk across the credit risk lifecycle, mainly using IT systems. There are three main parts:

– Behaviour scoring: we use statistical models that help to predict whether the customer will have problems repaying, based on data about how they use their accounts

– Credit reference agencies: we often use data from agencies on how the borrower is handling credit from other lenders in our behaviour scoring models. We also buy services like proprietary scorecards or account alerts, which tell us as soon as the customer does something that concerns us (such as missing a payment to another bank)

– Other Santander accounts: every month, we also look at how the customer is using their other accounts with us, so we can identify problems early.

For secured lending, our monitoring also needs to take account of changes in property prices. We estimate the property’s current value every three months. We use statistical models based on recent sales prices and valuations in that local area. A lack of data can mean our confidence in the model’s valuation drops below a certain minimum level, and in that case we use the House Price Index (HPI) instead. The way we use this monitoring to manage risk varies by product. For revolving credit facilities like credit cards and overdrafts, it might lead us to raise or lower credit limits. Our monitoring can also mean we change our minds about whether a product is still right for a customer. This can influence whether we approve an application for refinancing. In these ways we can balance our customers’ needs and their ability to manage credit. If we find evidence that a customer is in financial difficulties, we contact them about arrears management including forbearance, which we explain in more detail below.

Our day-to-day retail credit risk monitoring relies on a mix of product, customer and portfolio performance measures as described above. However, changes in the wider UK macro-economy also have an impact on our retail portfolios. In response to the increased uncertainty in the economic landscape in 2017, we introduced a Retail Risk Playbook tolerance framework to enhance our day-to-day risk monitoring. This is a formal, structured framework that sets out the macroeconomic variables that are most relevant to retail portfolio performance. We monitor these variables against the related forecasts that we have used in our business plans. If the economy deviates materially from our forecasts we will formally review and reconsider our retail risk management policy and strategy. This framework will remain in place for as long as we consider is necessary.

4. Arrears management

We have several strategies for managing arrears and these can be used before the customer has formally defaulted, or as early as the day after a missed payment. We assess the problems a customer is having, so we can offer them the right help to bring their account up-to-date as soon as possible.

The strategy we use depends on the risk and the customer’s circumstances. We provide a range of tools to assist customers in reaching an affordable and acceptable solution. That could mean visiting the customer, offering debt counselling by a third party, or paying off the debt using money from their other accounts with us (where we have the right to do so).

Forbearance

If a customer lets us know they are having financial difficulty, we aim to come to an arrangement with them before they actually default. Their problems can be the result of losing their job, falling ill, a relationship breaking down, or the death of someone close to them.

Forbearance is mainly for mortgages and unsecured loans. We offer forbearance in line with our risk policies, and on a case by case basis to ensure we continue to lend responsibly and help customers be able to continue to afford their payments. We may offer the following types of forbearance, but only if our assessments show the customer can meet the revised payments:

Action	Description
Capitalisation	We offer two main types, which are often combined with term extensions and, in the past, interest-only concessions:
	– If the customer cannot afford to increase their monthly payment enough to pay off their arrears in a reasonable time, but has been making their monthly payments (usually for at least six months), then we can add the arrears to the mortgage balance.
	– We can also add to the mortgage balance at the time of forbearance unpaid property charges which are due to a landlord and which we pay on behalf of the customer to avoid the lease being forfeited.
Term extension	We can extend the term of the loan, making each monthly payment smaller. At a minimum, we expect the customer to pay the interest in the short-term and have a realistic chance of repaying the full balance in the long-term. We may offer this option if the customer is up-to-date with their payments, but showing signs of financial difficulties. For mortgages, the customer must also meet our policies for maximum loan term and age when they finish repaying (usually no more than 75).
Interest-only	In the past, if it was not possible or affordable for a customer to have a term extension, we may have agreed to let them pay only the interest on the loan for a short time – usually less than a year. We only agreed to this where we believed their financial problems were temporary and they were likely to recover. Since March 2015 we no longer provide this option as a concession. Instead, interest-only is only offered as a short-term standard collections arrangement. We now record any related shortfall in monthly payments as arrears and report them to the credit reference agencies. As a result, we no longer classify new interest-only arrangements agreed since March 2015 as forbearance. We continue to manage and report all interest-only arrangements offered before this date as forbearance.
Reduced payment arrangements	We can suspend overdraft fees and charges while the customer keeps to a plan to reduce their overdraft each month.

When we agree to any forbearance, we review our impairment loss allowances for them. These accounts may stay in our performing portfolio but we report them separately as forborne. If an account is performing when we agree forbearance, we automatically classify it as forborne. We only classify it as NPL once it meets our standard criteria for NPL. If an account is in NPL when we agree forbearance, we keep it in the NPL category until the customer repays all the arrears, including those that existed before forbearance started.

Other changes in contract terms

Apart from forbearance, we have sometimes changed the contract terms to keep a good relationship with a customer. These customers showed no signs of financial difficulties at the time, so we do not classify the contract changes as forbearance, and most of the loans were repaid without any problems. We do not classify insolvency solutions for any unsecured retail customers as forbearance. This is in line with industry guidelines on the treatment of customers experiencing insolvency or bankruptcy.

5. Debt recovery

When a customer cannot or will not keep to an agreement for paying off their arrears, we consider recovery options. We only do this once we have tried to get the account back in order. To recover what we are owed, we may use a debt collection agency, sell the debt to another company, or take the customer to court.

For secured retail loans (most of which are mortgages), we can delay legal action. That can happen if the customer shows evidence that they will be able to pay off the mortgage or pay back the arrears. We aim to repossess only as a last resort when other options have been exhausted or if necessary to protect the property from damage or third party claims.

We make sure our estimated losses from repossessed properties are realistic by getting two independent valuations on each property, as well as the estimated cost of selling it. These form the basis of our impairment loss allowance calculations. Where we do enforce the possession of properties held as collateral, we use external agents to realise the value and settle the debt. During this process we do not own the property but we do administer the sale process. Any surplus funds are returned to the borrower or are otherwise dealt with in accordance with insolvency regulations.

Risk measurement and control

Retail Banking involves managing large numbers of accounts, so it produces a huge amount of data. This allows us to take a more analytical and data intense approach to measuring risk. This is reflected in the wide range of statistical models we use across the credit risk lifecycle. We use:

– Risk strategy and planning: econometric models

– Assessment and origination: application scorecards, and attrition, pricing, impairment and capital models

– Monitoring: behavioural scorecards and profitability models

– Arrears management: models to estimate the proportion of cases that will result in possession (known as roll rates)

– Debt recovery: recovery models.

We assess and review our impairment loss allowances regularly and have them independently reviewed. We look at a number of factors, including the cash flow available to service debt. We also use an agency to value any collateral – mainly mortgages.

RETAIL BANKING – CREDIT RISK REVIEW

RESIDENTIAL MORTGAGES

We offer mortgages to people who want to buy a property, and offer additional borrowing (known as further advances) to existing mortgage customers. The property must be in the UK, except for a small amount of lending in the Isle of Man and Jersey.

2017 compared to 2016 (unaudited)

Credit risk is at very low levels historically. The benign credit environment has supported our customers and helped to reduce credit risk. In particular, unemployment has been below 5% for 2 years. From our experience we know that unemployment is one of the most important factors in defaults on mortgages, our biggest loan book. Whilst the UK market continues to show resilience, we are cautious on the outlook in light of recent economic uncertainty.

Mortgage lending increased £0.6bn in 2017 (2016: £1.5bn), driven by management pricing actions in a competitive environment and an ongoing focus on customer service and retention. Mortgage gross lending was £25.5bn (2016: £25.8bn) and we retained 78% of mortgages reaching the end of their incentive period.

Borrower profile

In this table, ‘home movers’ include both existing customers moving house and taking out a new mortgage with us, and customers who switch their mortgage to us when they move house. ‘Remortgagers’ are external customers who are remortgaging with us. We have not included internal remortgages, further advances and any flexible mortgage drawdowns in the new business figures.

	Stock								New business
	2017				2016				2017				2016
	£m		%		£m		%		£m		%		£m		%
First-time buyers		28,768		19		29,143		19		4,046		17		4,193		17
Home movers		68,901		44		68,158		44		10,730		44		11,072		45
Remortgagers		50,473		33		50,325		33		8,071		33		7,092		29
Buy-to-let		6,802		4		6,648		4		1,371		6		2,212		9
		154,944		100		154,274		100		24,218		100		24,569		100

In addition to the new business included in the table above, there were £26.0bn (2016: £18.1bn) of internal remortgages where we kept existing customers with maturing products on new mortgages. We also provided £1.3bn (2016: £1.2bn) of further advances and flexible mortgage drawdowns.

2017 compared to 2016 (unaudited)

The mortgage borrower mix remained broadly unchanged, reflecting underlying stability in target market segments, product pricing and distribution strategy. We helped 24,000 first-time buyers (£4.0bn of gross lending) purchase their new home.

Interest rate profile

The interest rate profile of our mortgage asset stock was:

	2017				2016
	£m		%		£m		%
Fixed rate		102,268		66		91,817		59
Variable rate		29,370		19		33,627		22
Standard Variable Rate (SVR)		23,306		15		28,830		19
		154,944		100		154,274		100

2017 compared to 2016 (unaudited)

The proportion of SVR loan balances decreased to 15%, including attrition of £5.5bn (2016: £7.0bn). This was driven by customer refinancing and sentiment over expected future interest rate movements.

Geographical distribution

The geographical distribution of our mortgage asset stock was:

	Stock				New business
	2017		2016		2017		2016
UK region	£bn		£bn		£bn		£bn
London		37.6		37.2		5.8		6.7
Midlands and East Anglia		20.6		20.6		3.4		3.2
North		22.2		22.8		3.0		3.0
Northern Ireland		3.6		3.8		0.2		0.2
Scotland		6.8		7.0		1.0		0.9
South East excluding London		47.2		46.1		8.2		8.1
South West, Wales and other		16.9		16.8		2.6		2.5
		154.9		154.3		24.2		24.6

2017 compared to 2016 (unaudited)

The geographical distribution of the lending profile of the portfolio continued to represent a broad footprint across the UK, whilst maintaining a concentration around London and the South East.

Larger loans

The mortgage asset stock of larger loans was:

					South East including London					UK
Stock – individual mortgage loan size					2017 £m		2016   £m			2017 £m		2016   £m
<£0.25m						46,766		48,355			107,050	110,415
£0.25m to £0.50m						27,562		25,040			36,083	32,871
£0.50m to £1.0m						9,214		8,438			10,535	9,668
£1.0m to £2.0m						1,046		1,099			1,111	1,161
>£2.0m						163		157			165	159
						84,751		83,089			154,944	154,274
At 31 December 2017, there were 64 (2016: 65) individual mortgages greater than £2.0m. In 2017, there were 13 (2016: 13) new mortgages over £2.0m. Average loan size for new business The average loan size for new business in 2017 and 2016 was:
UK region										2017 £000		2016   £000
South East including London											260	264
Rest of the UK											146	144
UK as a whole											196	198
The loan-to-income multiple of mortgage lending during the year, representing average earnings of new business at inception, was 3.16 (2016: 3.16). Loan-to-value analysis This table shows the LTV distribution for our mortgage stock, NPL stock and new business. We use our estimate of the property value at the balance sheet date. We include fees added to the loan in the calculation. For flexible products, we only include the drawn amount, not undrawn limits.
	2017						2016
			Of which:						Of which:
LTV	Stock %		NPL stock %		New business   %		Stock %		NPL stock %			New business   %
Up to 50%		48		44		19		46	39			17
>50-75%		39		34		43		41	36			43
>75- 85%		8		8		19		8	9			23
>85-100%		4		7		19		4	8			17
>100%		1		7		–		1	8			–
		100		100		100		100	100			100
Collateral value of residential properties(1)(2)	£	154,721m	£	1,824m	£	24,218m	£	153,989m	£2,043m			£24,569m
	%		%		%		%		%			%
Simple average(3) LTV (indexed)		42		44		62		43	46			65
Valuation weighted average(4) LTV (indexed)		38		38		58		39	40			60
(1)  Includes collateral against loans in negative equity of £1,248m at 31 December 2017 (2016: £1,588m). (2)  The collateral value we have shown is limited to the balance of each associated individual loan. It does not include the impact of over-collateralisation (where the collateral has a higher value than the loan balance). (3)  Total of all LTV% divided by the total of all accounts. (4)  Total of all loan values divided by the total of all valuations. At 31 December 2017, the parts of the loans in negative equity which were effectively uncollateralised before taking account of impairment loss allowances reduced to £223m (2016: £285m). Credit performance
										2017 £m		2016   £m
Mortgage loans and advances to customers of which:											154,944	154,274
Performing(1)											151,948	150,895
Early arrears:											1,128	1,269
– 31 to 60 days											702	793
– 61 to 90 days											426	476
NPLs:(2)											1,868	2,110
– By arrears											1,427	1,578
– By bankruptcy											14	21
– By maturity default											303	316
– By forbearance											95	160
– By properties in possession (PIPs)											29	35
Impairment loss allowances											225	279
Early arrears ratio(3)											0.73%	0.82%
NPL ratio(4)											1.21%	1.37%
Coverage ratio(5)											12%	13%
(1)  Excludes mortgages where the customer did not pay for between 31 and 90 days, arrears, bankruptcy, maturity default, forbearance and PIPs NPLs. Includes £2,661m of mortgages (2016: £2,959m) where the customer did not pay for 30 days or less. (2)  We define NPLs in the ‘Credit risk management’ section. All NPLs are in the UK and continue accruing interest. (3)  Mortgages in early arrears as a percentage of mortgages. (4)  Mortgage NPLs as a percentage of mortgages. (5)  Impairment loss allowances as a percentage of NPLs.

NPL movements in 2017 We analyse NPL movements in 2017 in the table below. ‘Entries’ are loans which we have classified as NPL in the year and exclude ‘Policy entries’ that are due to definition changes. ‘PIP sales’ are loans that have been legally discharged when we have sold the property, and include any written-off portion. ‘Exits’ are loans that have been repaid (in full or in part), and loans that have returned to performing status. Forbearance activity does not change the NPL status.
					£m
At 1 January 2017					2,110
Entries					817
PIP sales					(66)
Exits					(993)
At 31 December 2017					1,868
2017 compared to 2016 (unaudited) Mortgage NPLs decreased to £1,868m (2016: £2,110m) and the NPL ratio decreased to 1.21% (2016: 1.37%). Lower NPL and coverage ratios were driven by the ongoing resilience of the UK economy and our strong risk management practices. Forbearance(1) The balances at 31 December 2017 and 2016, analysed by their payment status at the year-end and the forbearance we applied, were:
2017	Capitalisation £m	Term extension £m	Interest-only £m	Total £m	Impairment     loss allowances   £m
In arrears	260	63	175	498	22
Performing	392	178	407	977	5
	652	241	582	1,475	27
Proportion of portfolio	0.4%	0.2%	0.4%	1.0%
2016
In arrears	293	78	226	597	24
Performing	466	222	481	1,169	7
	759	300	707	1,766	31
Proportion of portfolio	0.5%	0.2%	0.4%	1.1%

(1) We base forbearance type on the first forbearance on the accounts.

2017 compared to 2016 (unaudited)

In 2017, the accounts in forbearance decreased, with the proportion of the mortgage portfolio in forbearance reducing slightly to 1.0% (2016: 1.1%).

– At 31 December 2017, the proportion of accounts in forbearance for more than six months that had made their last six months’ contractual payments increased slightly to 78% (2016: 74%).

– The weighted average LTV of all accounts in forbearance was 35% (2016: 36%) compared to the weighted average portfolio LTV of 38% (2016: 39%).

– At 31 December 2017, the carrying value of mortgages classified as multiple forbearance decreased to £123m (2016: £128m)

– At 31 December 2017, impairment loss allowances as a percentage of the overall mortgage portfolio were 0.15% (2016: 0.18%). The equivalent ratio for performing accounts in forbearance was 0.50% (2016: 0.60%), and for accounts in arrears in forbearance was 4.40% (2016: 4.02%). The higher ratios for accounts in forbearance reflect the higher levels of impairment loss allowances we hold on these accounts. This reflects the higher risk on them.

Other changes in contract terms

At 31 December 2017, there were £4.7bn (2016: £5.1bn) of other mortgages on the balance sheet that we had modified since January 2008. We agreed these modifications in order to keep a good relationship with the customer. The customers were not showing any signs of financial difficulty at the time, so did not classify these changes as forbearance.

We keep the performance and profile of the accounts under review. At 31 December 2017:

– The average LTV was 33% (2016: 35%) and 95% (2016: 94%) of accounts had made their last six months’ contractual payments

– The proportion of accounts that were 90 days or more in arrears was 1.52% (2016: 1.57%).

RESIDENTIAL MORTGAGES - PORTFOLIOS OF PARTICULAR INTEREST

Introduction (unaudited)

We are mainly a residential prime lender and we do not originate sub-prime or second charge mortgages. Despite that, some types of mortgages have higher risks and others stand out for different reasons. These are:

Product	Description
Interest-only loans and part interest-only, part repayment loans	With an interest-only mortgage, the customer pays the interest every month but does not repay the money borrowed (the principal) until the end of the mortgage. Some mortgages have a part that is interest-only, with the rest being a normal repayment mortgage. Customers with part interest-only, part repayment mortgages still have to pay back a lump sum at the end of their mortgage for the interest-only part. This means there is a higher credit risk on these loans as we depend on the customers to pay back a lump sum. We design new account LTV maximums to mitigate this credit risk. We also make sure the customer has a plausible repayment plan before we lend to them, and remains on track for the life of the loan. Since 2009, we have reduced the risk from new interest-only mortgages by lowering the maximum LTV (it has been 50% since 2012). When a customer plans to repay their mortgage by selling the property, we now only allow that if they own more than a set proportion of the equity. Customers with interest-only mortgages have to make arrangements to repay the principal at the end of the mortgage. We have a strategy to make sure that we tell these customers that they have to do this. We send them messages with their annual mortgage statements, and we run contact campaigns to encourage them to tell us how they plan to repay. In 2013, we contacted all our customers whose mortgages were due to mature before 2020. Since 2016, we have extended these campaigns to periodically contact all interest-only customers. We increase our contact frequency as customers approach term maturity. Outside of sending out annual mortgage statements, we contact more than 100,000 interest-only customers per year. If customers know they will not be able to repay their mortgage in full when it ends, or if their mortgage has already passed the date when it should have ended, we talk to them. If we think it is in the customer’s interests (and they can afford it), we look at other ways of managing it. That can mean turning the mortgage into a standard repayment one, and extending it. Or, if the customer is waiting for their means of repaying it (an investment plan or bonds, for example) to mature, it can just mean extending it.
Flexible loans	Flexible mortgages allow customers to pay more or less than their usual amount each month, or even to take ‘payment holidays’ when they pay nothing at all. Customers do not have to take (or draw down) the whole loan all at once – so if they took out a mortgage big enough to allow them to build a home extension after three years, they do not have to start paying interest on that extra money until they are ready to spend it. There are conditions on when and how much customers can draw down: – There are often limits on how much can be drawn down in any month – The customer cannot be in payment arrears – The customer cannot have insolvency problems, such as a county court judgement, bankruptcy, an individual voluntary arrangement, an administration order or a debt relief order. A customer can ask us to increase their credit limit (the total amount they are allowed to borrow on their mortgage), but that means we will go through our full standard credit approval process. We can also lower the customer’s credit limit at any time, so it never goes above 90% of the property’s current market value. We no longer offer flexible loan products for new mortgages. This is an area of interest in order to identify customers who might be using these facilities to self-forbear (such as regularly drawing down small amounts). If there is any sign that the credit risk has significantly increased, we reflect this in our provision calculations.
Loans with an LTV >100%	Where the mortgage balance is more than the property is now worth, we cannot recover the full value of the loan by repossessing and selling the property. This means there is a higher credit risk on these loans. In some cases, property prices have fallen, so mortgages we gave in the past with lower LTVs now have LTVs greater than 100%. Before 2009, we sometimes allowed customers to borrow more than the price of the property. We monitor existing accounts with LTVs >100% as part of our assessment of ongoing portfolio performance. We design new account LTV maximums to mitigate an increase in the volume of accounts with an LTV >100%.
Buy-to-Let (BTL) loans	Given that we have a relatively small share of the BTL market, we believe that we still have an opportunity to grow our presence in a controlled manner. We focus on non-professional landlords (landlords with a small number of properties), as this segment is more closely aligned with residential mortgages and covers most of the BTL market. Our policy is that BTL mortgages should finance themselves, with the rent covering the mortgage payments and other costs. Even so, there is always the risk that income from the property may not cover the costs, for example, if the landlord cannot find tenants for a while. In recent years, we have refined our BTL proposition to appeal to a wider catchment, and we have improved our systems to cater for this segment. We have prudent lending criteria, and specific policies for BTL. We only lend to non-professional landlords, to a maximum 75% LTV. The first applicant must earn a minimum income of £25,000 per year, and we require evidence of income in all cases. We also use a BTL affordability rate as part of our assessment about whether or not to lend. This means that the rental income must cover the monthly mortgage interest payments by a prescribed amount when calculated using a stressed interest rate. The prescribed amount is regularly reviewed and adjusted as necessary.

Credit performance

			Segment of particular interest(1)
2017	Total £m		Interest-only £m		Part interest- only, part repayment £m			Flexible(2) £m		LTV >100% £m		Buy-to-let £m		Other  portfolio  £m
Mortgage portfolio		154,944		38,893		13,794(3)			14,787		1,472		6,802	95,779
Performing		151,948		37,505		13,379			14,440		1,303		6,768	94,772
Early arrears:
– 31 to 60 days		702		317		94			67		22		9	296
– 61 to 90 days		426		203		58			35		15		4	168
NPLs		1,868		868		263			245		132		21	543
NPL ratio		1.21%		2.23%		1.91%			1.66%		8.97%		0.31%	0.57%
PIPs		29		17		5			3		10		1	6
2016
Mortgage portfolio		154,274		41,707		14,535(3	)		16,853		1,873		6,648	90,570
Performing		150,895		40,185		14,066			16,472		1,661		6,621	89,483
Early arrears:
– 31 to 60 days		793		360		111			71		33		7	314
– 61 to 90 days		476		224		70			45		22		2	191
NPLs		2,110		938		288			265		157		18	582
NPL ratio		1.37%		2.25%		1.98%			1.57%		8.38%		0.27%	0.64%
PIPs		35		15		7			4		13		1	9
(1)   Where a loan falls into more than one category, we have included it in all the categories that apply. As a result, the sum of the mortgages in the segments of particular interest and the other portfolio does not agree to the total mortgage portfolio. (2)   Includes legacy Alliance & Leicester flexible loans that work in a more limited way than our current Flexi loan product. (3)   Mortgage balance includes both the interest-only part of £10,121m (2016: £10,560m) and the non-interest-only part of the loan. 2017 compared to 2016 (unaudited) –  In 2017, the value and proportion of interest-only loans together with part interest-only, part repayment loans and flexible loans reduced, reflecting our strategy to manage down the overall exposure to these lending profiles. –  BTL mortgage balances increased £0.2bn to £6.8bn (2016: £6.6bn). We continue to focus our BTL book on non-professional landlords, as this segment is closely aligned with mortgages and accounts for the majority of the volume in the BTL market. In 2017, we completed 7,500 BTL mortgages, representing 6% of the value of our new business flow, at an average LTV of 61%. Interest-only sub analysis (unaudited) Full interest-only new business in the year
												2017 £m		2016  £m
Full interest-only loans													2,698	3,404
Full interest-only maturity profile
2017			Term expired £m		Within 2 years £m			Between 2 - 5 years £m		Between 5 -15 years £m		Greater than 15 years £m		Total  £m
Full interest-only portfolio				509		1,585			3,508		21,803		11,488	38,893
of which value weighted average LTV (indexed) is >75%				47		147			255		2,318		948	3,715
2016
Full interest-only portfolio				506		1,884			3,308		21,154		14,855	41,707
of which value weighted average LTV (indexed) is >75%				36		241			239		2,483		1,957	4,956
2017 compared to 2016 (unaudited) For full interest-only mortgages, of the total £509m that was term expired at 31 December 2017, 90% continued to pay the interest due under the expired contract terms. Interest-only mortgages that matured in 2017 totalled £859m, of which: –  £466m was subsequently repaid –  £nil was refinanced under normal credit terms –  £28m was refinanced under forbearance arrangements –  £365m remained unpaid and was classified as term expired at 31 December 2017. At 31 December 2017, there were 93,779 (2016: 103,213) flexible mortgage customers, with undrawn facilities of £6,192m (2016: £6,373m). The portfolio’s value weighted LTV (indexed) was 31% (2016: 31%). Forbearance(1)(2) The balances at 21 December 2017 and 2016 were:
								Interest-only(3) £m		Flexible £m		LTV >100% £m		Buy-to-Let  £m
2017									208		34		–	8
2016									322		56		–	9

(1) The figures reflect the amount of forbearance in the year, regardless of whether any forbearance on the accounts before.

(2) Where a loan falls into more than one category, we have included it in all the categories that apply.

(3) Comprises full interest-only loans and part interest-only, part repayment loans.

BUSINESS BANKING

2017 compared to 2016 (unaudited)

– NPLs increased by 6% to £115m (2016: £108m) with a NPL ratio of 6.01% (2016: 4.64%).

– Following a periodic review in 2017, a number of business banking customers were transferred to Commercial Banking, where their ongoing needs can be better served. The balance associated was £200m and prior periods have not been amended.

Within our Retail Banking segment we provide business banking services through the Santander Business franchise to small businesses with a turnover of up to £6.5m per annum. We offer current accounts, savings accounts, card acceptance services, insurance and loans.

In 2017, we embedded a new operating model and streamlined our portfolio to provide more capacity and enable greater support to our customers. We also introduced a fast track process for asset finance up to £150,000 and simplified the credit application process for smaller exposures to facilitate quicker lending decisions.

Our business banking customers are an integral part of the UK economy and our dedication to meeting their everyday banking needs has seen us recognised as Best Business Current Account Provider by Moneyfacts for the last 15 years.

We have also been recognised as the Business Bank of the Year for three years running by Moneyfacts and Most Trusted Bank for Small Businesses 2016 by Moneywise, demonstrating our commitment to becoming the bank of choice for UK companies. We are also working to make our award-winning accounts even better by adapting to changing trends.

Credit performance

2017	2017 £m		2016 £m
Loans and advances to customers of which:		1,912		2,327
– Performing(1)		1,793		2,216
– Early arrears		4		3
– NPLs(2)		115		108
Impairment loss allowances		54		57
NPL ratio(3)		6.01%		4.64%
Coverage ratio(4)		47%		53%
Gross write-offs		21		24

(1) Excludes loans and advances to customers where the customer did not pay for between 0 and 90 days and NPLs.

(2) We define NPLs in the ‘Credit risk management’ section.

(3) NPLs as a percentage of loans and advances to customers.

(4) Impairment loss allowances as a percentage of NPLs. Impairment loss allowances relate to early arrears and performing assets (i.e the IBNO provision) as well as NPLs, so the ratio can exceed 100%.

Forbearance

The balances at 31 December 2017 and 2016 were:

	£m
2017		85
2016		94

Enhancing risk management
In 2017, we enhanced our risk management function, to tailor it specifically to business banking due to our enhanced strategic focus. In line with our risk governance framework, and our three lines of defence model, this included independent assurance support.	The training around financial crime and other operational risks provided to our people in 2017 enables them to understand and manage all risk types more effectively. This will continue as a central feature in 2018.
This new model will move away from the local management of risk and controls by both the branch network (for Business Relationship Managers) and corporate banking (for Business Relationship Directors) into a centralised Business Assurance and Control Model. Our Business Assurance and Control Model is important to helping us achieve the commercial objectives of our business strategy by providing an enhanced framework for more robust and well-defined controls. We plan to support this with more training for staff in customer-facing roles. Financial crime continues to be an area of focus within business banking, and identifying and implementing appropriate enhancement remains a priority for us. This focus has highlighted the need to strengthen and enhance systems (both short and long term) to reduce our risk exposure. At the same time, we have begun a programme to focus on minimising any potential emerging risks.	LOGO

CONSUMER (AUTO) FINANCE AND OTHER UNSECURED LENDING

2017 compared to 2016 (unaudited)

– Consumer (auto) finance balances increased £0.2bn with higher retail loans, partially offset by a decrease in the stock of new car registrations. In 2017, consumer (auto) finance gross lending was £3,133m (2016: £3,111m). NPLs increased slightly to £34m (2016: £32m).

– Other unsecured lending was steady as a result of controlled management actions.

– Forbearance levels were broadly similar to last year with balances at 31 December 2017 of £77m (2016: £75m).

Consumer (auto) finance

We provide auto finance through Santander Consumer (UK) plc (SCUK), which is part of our Retail Banking segment. SCUK provides a range of products designed for the purchase of both new and used personal, business and commercial vehicles, motorcycles and caravans through an extensive network of motor dealers and manufacturer partners. SCUK’s products are predominantly distributed via intermediary introducers at the point of sale, and through partnerships with selected car and motorcycle manufacturers. At 31 December 2017, the business operated with seven Original Equipment Manufacturer partners which includes two joint venture arrangements.

Through SCUK’s Hyundai Capital UK Ltd (HCUK) and PSA Finance UK Ltd (PSAF) joint ventures, we provide retail point of sale customer finance as well as wholesale finance facilities for Hyundai and Kia, managed by HCUK, as well as Peugeot, Citroën and DS, managed by PSAF. We equity account for HCUK and consolidate PSAF.

SCUK, including PSAF, with total outstanding lending of £7.0bn at 31 December 2017 represented 4% of our total Retail Banking loans and 3% of total customer loans. Conditional sale and Personal Contract Purchase (PCP) lending was approximately 35% and 45%, respectively, of our lending. Wholesale loans to car dealerships at 31 December 2017 were approximately 15% of the loan book.

We maintained our prudent underwriting criteria through the year. The product mix was broadly unchanged in the year. This reflected underlying stability in target market segments, product pricing and distribution strategy. There was a slight shift in the year from new car loans into second hand car loans, both reflecting reduced consumer confidence linked to the underlying economic uncertainty in the UK.

The top risk to SCUK continues to be Residual Value (RV) risk. SCUK remains conservative in setting future asset values, and has embedded a prudent provisioning model as well as robust monitoring processes. The RV portfolio is monitored on a monthly basis, with key risk triggers in place to identify any material change in trends. SCUK’s conservative approach to setting Guaranteed Minimum Future Values (GMFV) also protects the customer and the business, by creating projected equity in the vehicle at the end of the loan agreement for the customer to use as a deposit on their next vehicle. SCUK typically sets the GMFV of the asset at 85% of the future value provided by CapHPI (valuation specialists). This creates equity in the asset from day one. In addition to this, SCUK takes an upfront RV provision of the GMFV value, based on a potential fall in car prices and an estimated percentage of hand-backs.

Other unsecured lending

Our other unsecured lending business consists of personal loans, credit cards and overdrafts, which is also part of our Retail Banking business segment:

– personal loans: we offer personal loans for most purposes, such as debt consolidation, home improvement, and to support significant life events such as weddings

– credit cards: we offer a wide range of credit cards designed to suit a variety of customers, including balance transfer cards and cards that offer rewards

– overdrafts: we also offer arranged overdrafts for customers who have a bank account with us. We evaluate our customers’ circumstances to decide how much they can borrow. In other cases, a customer may have overdrawn their bank account without arranging it with us first.

Credit performance

			Other unsecured
2017	Consumer (auto) finance £m		Personal loans £m		Credit cards £m		Overdrafts £m		Total other   unsecured   £m		Total £m
Loans and advances to customers of which:		6,957		2,169		2,444		565		5,178		12,135
– Performing(1)		6,861		2,129		2,377		516		5,022		11,883
– Early arrears		62		24		19		25		68		130
– NPLs(2)		34		16		48		24		88		122
Impairment loss allowances		77		44		62		29		135		212
NPL ratio(3)		0.49%								1.69%		1.00%
Coverage ratio(4)		226%								153%		174%
Gross write-offs		32								120		152

(1) Excludes loans and advances to customers where the customer did not pay for between 0 and 90 days and NPLs.

(2) We define NPLs in the ‘Credit risk management’ section.

(3) NPLs as a percentage of loans and advances to customers.

(4) Impairment loss allowances as a percentage of NPLs. Impairment loss allowances relate to early arrears and performing assets (i.e. the IBNO provision) as well as NPLs, so the ratio exceeds 100%.

				Other unsecured
2016	Consumer (auto) finance £m			Personal loans £m		Credit cards £m		Overdrafts £m		Total other   unsecured   £m		Total £m
Loans and advances to customers of which:		6,764			2,229		2,493		551		5,273		12,037
–  Performing(1)		6,682			2,188		2,422		501		5,111		11,793
–  Early arrears		50			24		23		25		72		122
–  NPLs(2)		32			17		48		25		90		122
Impairment loss allowances		78(5)			55		77		37		169		315
NPL ratio(3)		0.47%									1.71%		1.01%
Coverage ratio(4)		244%(5	)								188%		258%
Gross write-offs		30									123		153

(1) Excludes loans and advances to customers where the customer did not pay for between 0 and 90 days and NPLs.

(2) We define NPLs in the ‘Credit risk management’ section.

(3) NPLs as a percentage of loans and advances to customers.

(4) Impairment loss allowances as a percentage of NPLs. Impairment loss allowances relate to early arrears and performing assets (i.e. the IBNO provision) as well as NPLs, so the ratio exceeds 100%.

(5) In 2017, we reclassified our provisions for residual value and voluntary termination from the consumer finance loan loss allowance. In order to facilitate comparison with the current period, December 2016 consumer finance loan loss allowance and NPL coverage ratio were amended. This reclassification is reflected in the Retail Banking loan loss allowance and NPL coverage ratio.

At 31 December 2017, the average retail loan size was £12,500 (2016: £12,000) and the NPL ratio was broadly stable at 0.49% (2016: 0.47%). The average unsecured loan and credit card balances in 2017 were broadly stable at £9,300 (2016: £9,400) and £1,200 (2016: £1,300), respectively.

Forbearance

The balances at 31 December 2017 and 2016 were:

			Other unsecured
	Consumer (auto) finance £m		Personal loans £m		Credit cards £m		Overdrafts £m		Total other   unsecured   £m		Total £m
2017		–		1		48		28		77		77
2016		–		1		46		28		75		75

Managing growth in consumer credit
The UK consumer credit market continued to grow strongly in 2017. Dealership car finance saw the biggest growth in the year, although credit cards and personal loans also saw significant increases. This growth was much faster than the growth in household incomes. This prompted some discussions across the industry and amongst regulators around the possibility that customer affordability may become more stretched, particularly in a stress, and lead to higher losses to lenders in future.	For these reasons, we are confident that the below market growth in our consumer credit portfolios is the result of our prudent approach to risk management and control. Nonetheless, we are not complacent about the prospect for future risk events and are always looking at ways in which we can strengthen our approach.
At Santander UK, we did not see the same levels of consumer credit growth. Vehicle finance increased by 3% in 2017, and credit card and personal loan assets decreased slightly by 2.5% and 1%, respectively. We maintain rigorous credit scoring and affordability assessment criteria that we monitor and report continuously. For our consumer credit portfolios there were no significant changes to our risk policy or appetite in 2017. This approach resulted in stable, good credit quality consumer credit portfolios. Our credit assessments use a combination of internal, Credit Reference Agency and application data. Scorecards supported by policy rules give us confidence that customers are creditworthy and can afford their repayments. We closely monitor and manage the performance of our consumer credit portfolios using a range of information that includes portfolio and key segments performance, macroeconomic indicators and customer risk data.	LOGO

Credit risk – other segments

Overview

In Commercial Banking, we are exposed to credit risk through providing overdraft, loan, invoice discounting, trade finance, asset finance and treasury products. We offer bank accounts and cash transmission services to further support clients. In Global Corporate Banking, we are exposed to credit risk through lending and selling treasury products to large corporates, and through our treasury market activities. In Corporate Centre, our exposures come from asset and liability management of our balance sheet and our non-core and Legacy Portfolios in run-off.

Credit risk management In this section, we explain how we manage and mitigate credit risk. Credit risk review In this section, we analyse our credit risk exposures and how they are performing. We also focus on forbearance and portfolios of particular interest.

Our main portfolios are:

Commercial Banking	Global Corporate Banking	Corporate Centre
–  SME and mid corporate – banking, lending and treasury services mainly to enterprises with an annual turnover of up to £500m. –  Commercial Real Estate – lending to UK customers, mainly on tenanted property. We focus on the office, retail, industrial and residential sectors. –  Social Housing – lending and treasury services for UK Housing Associations who own residential real estate for rent.	–  Sovereign and Supranational – securities issued by local and central governments, and government guaranteed counterparties. We hold them to help meet our liquidity needs and for short-term trading. –  Large Corporate – loans and treasury products for large corporates to support their working capital and liquidity needs. –  Financial Institutions – mainly derivatives, repurchase and reverse repurchase transactions (known as repos and reverse repos), and stock borrowing/lending.	–  Sovereign and Supranational – securities issued by local and central governments, and government guaranteed counterparties. We hold them to help meet our liquidity needs. –  Structured Products – we have two portfolios. The ALCO portfolio is high quality assets. We chose them for diversification and liquidity. The Legacy Treasury asset portfolio is mainly asset-backed securities. –  Derivatives – older total return swaps we held for liquidity, that we are running down. –  Legacy Portfolios in run-off – assets from acquisitions that do not fit with our strategy. These include some commercial mortgages. –  Social Housing – legacy Social Housing loans that do not fit with our strategy.

OTHER SEGMENTS – CREDIT RISK MANAGEMENT

LOGO

In Commercial Banking, we classify most of our customers as non-standardised. We also have SME customers, which we mainly classify as standardised as it is a high volume portfolio with smaller exposures. In Global Corporate Banking and Corporate Centre, we classify all our customers as non-standardised, except for the commercial mortgages in our Legacy Portfolios in run-off.

We set out how we manage the credit risk on our standardised customers in the previous section ‘Credit risk – Retail Banking’. We manage the credit risk on our standardised customers in Commercial Banking and Corporate Centre in the same way, except that we do not use scorecards or credit reference agencies. In the rest of this section, we explain how we manage the credit risk on our non-standardised customers.

1. Risk strategy and planning

For details of how we set risk strategy and plans, see the ‘Santander UK group level – credit risk management’ section. For treasury products, we take credit risk up to limits for each client. We control, manage and report risks on a counterparty basis, regardless of which part of our business takes the risk.

2. Assessment and origination

We do a thorough risk assessment to make sure customers can meet their obligations before we approve a credit application. We do this mainly by assigning each customer a credit rating, using our internal rating scale (see ‘Credit quality’ in ‘Santander UK group level – credit risk review’ section). To do this, we look at the customer’s financial history and trends in the economy – backed up by the expert judgement of a risk analyst. We review our internal ratings at least every year. We also assess the underlying risk of the transaction, taking into account any mitigating factors (see the following tables) – and how it fits with our risk policies, limits and Risk Appetite, as set by the Board. We consider transactions in line with credit limits approved by the relevant credit authority. Our Executive Risk Control Committee is responsible for setting those limits. In Global Corporate Banking and Corporate Centre, a specialist analyst usually reviews a transaction at the start and over its life. They base their review on the financial strength of the client, its position in its industry, and its management strengths.

Credit risk mitigation

The types of credit risk mitigation, including collateral, across each of our portfolios are as follows.

Commercial Banking:

Portfolio	Description
SME and mid corporate	Includes secured and unsecured lending. We can use covenants (financial or non-financial) to support a customer’s credit rating. For example, we can set limits on how much they can spend or borrow, or how they operate as a business. We can take mortgage debentures as collateral. These are charges over a company’s assets. We can also take guarantees, but we do not treat them as collateral, and we do not put a cash value on them unless they are secured against a tangible asset. We base our lending decision on the customer’s trading cash flow. If they default, we will work with defaulted customers to consider debt restructuring options. We generally do not take control of their assets except when restructuring options have been exhausted or to protect our position in relation to third party claims. In this case, we might appoint an administrator. We also lend against assets (like vehicles and equipment) and invoices for some customers. For assets, we value them before we lend. For invoices, we review the customer’s ledgers regularly and lend against debtors that meet agreed criteria. If the customer defaults, we repossess and sell their assets or collect on their invoices.
Commercial Real Estate	We take a first legal charge on commercial property as collateral. The loan is subject to strict criteria, including the property condition, age and location, tenant quality, lease terms and length, and the sponsor’s experience and creditworthiness. Before agreeing the loan, we visit the property and get an independent professional valuation which assesses the property, the tenant and future demand (such as comparing market rent to current rent). Loan agreements typically allow us to get revaluations every two to three years, or more often if it is likely covenants may be breached, and to view the property each year.
Social Housing	We take a first legal charge on portfolios of residential real estate owned and let by UK Housing Associations as collateral. We revalue this every three to five years (in line with industry practice), using the standard methods for property used for Social Housing. The value would be considerably higher if we based it on normal residential use. The value of the collateral is in all cases more than the loan balance. On average, the loan balance is 25% to 50% of the implied market value, using our LGD methodology. We have not had a default, loss or repossession on Social Housing. Older Social Housing loans that do not fit our current business strategy are managed and reported in Corporate Centre.

Global Corporate Banking:

Portfolio	Description
Sovereign and Supranational	In line with market practice, there is no collateral against these assets.
Large Corporate	Most of these loans and products are unsecured, but we attach covenants to our credit agreements. We monitor whether borrowers keep in line with them so we detect any financial distress early. We also have a small structured finance portfolio, where we hold legal charges over the assets we finance.
Financial Institutions	We use standard legal agreements to reduce credit risk on derivatives, repos and reverse repos, and stock borrowing/lending. We also hold collateral and trade through central counterparties (CCPs) to reduce risk. Netting – We use netting agreements where they have legal force – mainly in the UK, the rest of Europe and the US. This means that if a counterparty defaults, we can legally offset what we owe them and what they owe us, and settle the net amount. However, netting arrangements often do not mean we can offset assets and liabilities for accounting purposes, as transactions are usually settled on a gross basis. In line with market practice, we use standard legal agreements. For derivatives, we use ISDA Master Agreements; for repos and reverse repos, we use Global Master Repurchase Agreements; and for stock borrowing/lending and other securities financing, we use Global Master Securities Lending Agreements. Collateral – We use the Credit Support Annex with the ISDA Master Agreement. This gives us collateral for our net exposures. The collateral can be cash, securities or equities. For stock borrowing/lending and repos and reverse repos, it includes high quality liquid debt securities and highly liquid equities listed on major developed markets. We revalue our exposures and collateral daily, adjusting the collateral to reflect deficits or surpluses. We have processes to control how we value and manage collateral, including documentation reviews and reporting. Collateral has to meet our ‘eligible collateral, haircuts and margining’ policy which controls the quality and how much of any one kind of collateral we can hold. That gives us confidence we will be able to cash in the collateral if a client defaults. We have these controls for equities and debt securities. The collateral held for reverse repos is worth at least 100% of our exposure. CCPs – These are intermediaries between a buyer and a seller – generally a clearing house. We use CCPs as a way to reduce counterparty credit risk in derivatives.

Corporate Centre:

Portfolio	Description
Sovereign and Supranational	In line with market practice, there is no collateral against these assets.
Structured Products	These are our ALCO and Legacy Treasury asset portfolios. These assets are unsecured, but benefit from senior positions in the creditor hierarchy. Their credit rating reflects the over-collateralisation in the structure, and the assets that underpin their cash flows and repayment schedules. We use a detailed expected cash flow analysis to assess if there is any impairment. We take into account the structure and assets backing each individual security. We set up an impairment loss allowance if we know an issuer has financial difficulties or they are not keeping to the terms of the contract.
Derivatives	We manage the risk on this portfolio in the same way as for the derivatives in Global Corporate Banking.
Legacy Portfolios in run-off	We often hold collateral through a first legal charge over the underlying asset or cash. We get independent third party valuations on fixed charge security like aircraft or ships in line with industry guidelines. We then decide if we need to set up an impairment loss allowance. To do that, we bear in mind: –  The borrower’s ability to generate cash flow –  The age of the assets –  Whether the loan is still performing satisfactorily –  Whether or not the reduction in value is likely to be temporary –  Whether there are other ways to solve the problem. Where a borrower gets into difficulty we look to dispose of the collateral, either with agreement or through the insolvency process. We do this as early as possible, to minimise any loss. We rarely take ownership of collateral.
Social Housing	We manage the risk on this portfolio in the same way as for the Social Housing portfolio in Commercial Banking.

3. Monitoring

We regularly monitor and report our credit risk by portfolio, segment, industry, location and customer. We give our Executive Risk Control Committee a detailed analysis of our credit exposures and risk trends every month. We also report our larger exposures and risks to the Board Risk Committee every month.

Our Watchlist

For non-standardised customers, we also use a Watchlist to help us identify potential problem debt early. Just because a customer is on our Watchlist does not mean they have defaulted. It just means that something has happened that has increased the probability of default. There are several reasons we might put customers on this list. For example, if they suffer a downturn in trade, breach a covenant, lose a major contract, slip into early arrears, or their key management resign. Whatever the trigger, we review the case to assess the potential financial impact.

We classify Watchlist cases as:

– Enhanced monitoring: for less urgent cases. If they are significant, we monitor them more often

– Proactive management: for more urgent or serious cases. We may take steps to restructure debt including extending the term, taking more collateral, agreeing a lower credit limit or seeking repayment of the loan through refinancing or other means.

We assess cases on the Watchlist for impairment collectively, unless they are in the hands of our Restructuring & Recoveries team at which point we assess them individually. If a case becomes NPL, we take it off the Watchlist and assess it for impairment individually.

When a customer is included in proactive management, we usually review the value of any collateral as part of working out what to do next. We also assess whether we need to set up an impairment loss allowance. This is based on the expected future cash flows and the value of the collateral compared to the loan balance. We also take into account any forbearance we offer (which we describe later on). This includes whether any extra security or guarantees are available, the likelihood of more equity and the potential to enhance value through asset management.

In Global Corporate Banking and Corporate Centre we monitor the credit quality of our portfolios of treasury products daily. We use both internal and third-party data to detect any potential credit deterioration.

4. Arrears management

We identify problem debt by close monitoring, supported by our Watchlist process. When there is a problem, our relationship managers are the first to act, supported by the relevant credit risk expert. If a case becomes more urgent or needs specialist attention, and if it becomes NPL, we transfer it to our Restructuring & Recoveries team.

We aim to act before a customer actually defaults (to prevent it, if possible). The strategy we use depends on the type of customer, their circumstances and the level of risk. We use restructuring and rehabilitation tools to try to help our customers find their own way out of financial difficulty and agree on a plan that works for both of us.

We aim to identify warning signs early by monitoring customers’ financial and trading data, checking to make sure they are not breaching any covenants, and by having regular dialogue with them. Once a month, we hold Watchlist meetings to agree a strategy for each portfolio. Our Restructuring & Recoveries team attend these meetings, and we may hand over more serious cases to them.

Forbearance

If a customer is having financial difficulty, we will work with them before they actually default to see if the difficulty can be addressed through forbearance. Their problems might be clear from the results of covenant testing, reviews of trading and other data they give us under the terms of their loan or as part of our ongoing conversations with them.

We may offer the following types of forbearance. We only do this if our assessments indicate the customer can meet the revised payments:

Action	Description
Term extension	We can extend the term of the loan. At a minimum, we expect the customer to be able to pay the interest in the short-term and have a realistic chance of repaying the full balance in the long-term.
	We may offer this option if the customer is up-to-date with their payments, but showing signs of financial difficulties. We may also offer this option where the loan is about to mature and near-term refinancing is not possible on market terms.
Interest-only	We can agree to let a customer pay only the interest on the loan for a short time – usually less than a year. We only agree to this if we believe their financial problems are temporary and they are going to recover.
	After the interest-only period, we expect the customer to go back to making full payments of interest and capital once they are in a stronger financial position. We regularly look at the customer’s financial situation to see when they can afford to do that.
Other payment rescheduling (including capitalisation)	If a customer is having cash flow issues, we may agree to lower or stop their payments until they have had time to recover. We may: – Reschedule payments to better match the customer’s cash flow – for example if the business is seasonal – Provide a temporary increase in facilities to cover peak demand ahead of the customer’s trading improving. We might do this by adding their arrears to their loan balance (we call this arrears capitalisation) or drawing from an overdraft. We may also offer other types of forbearance, including providing new facilities, interest rate concessions, seasonal profiling and interest roll-up. In rare cases, we agree to forgive or reduce part of the debt.

When we agree to any forbearance, we review our impairment loss allowances for them. These accounts may stay in our performing portfolio but we report them separately as forborne. If an account is performing when we agree forbearance and there is clear evidence that the customer is consistently meeting their new terms and the risk profile is improving, we classify the loan as fully performing. If an account is in NPL when we agree forbearance, we keep it in the NPL category. Once we see that the customer is consistently meeting the new terms we reclassify the loan as performing.

Other forms of debt management

When customers are in financial difficulty we can also manage debt in other ways, depending on the facts of the specific case:

Action	Description
Waiving or changing covenants	If a borrower breaks a covenant, we can either waive it or change it, taking their latest and future financial position into account. We may also add a condition on the use of any surplus cash (after operating costs) to pay down their debt to us.
Asking for more collateral or guarantees	If a borrower has unencumbered assets, we may accept new or extra collateral in return for revised financing terms. We may also take a guarantee from other companies in the same group and/or major shareholders. We only do this where we believe the guarantor will be able to meet their commitment.
Asking for more equity	Where a borrower can no longer pay the interest on their debt, we may accept fresh equity capital from new or existing investors to change the capital structure in return for better terms on the existing debt.

5. Debt recovery

Consensual arrangements

Where we cannot find a solution like any of the ones we describe above, we look for an exit. If circumstances permit, we aim to do this by agreeing with the borrower that they will sell some or all of their assets on a voluntary basis or agreeing to give them time to refinance their debt with another lender.

Enforcement and recovery

Where we cannot find a way forward or reach a consensual arrangement, we consider recovery options. This can be through:

– The insolvency process

– Enforcing over any collateral

– Selling the debt on the secondary market

– Considering other legal action available to recover what we are owed from debtors and guarantors.

If there is a shortfall, we write it off against the impairment loss allowance held, once the sale has gone through. In certain very rare instances we may act as mortgagee in possession of assets held as collateral against non-performing commercial lending. In such cases the assets are carried on our balance sheet and are classified according to our accounting policies.

Risk measurement and control

We measure the credit risk on treasury products by adding their potential future exposure to market movements over their lives to their fair value. Then we add it to any other exposure and measure the total against our credit limits for each client.

We assess our impairment loss allowances regularly and have them independently reviewed. We look at a number of factors, including the:

– Cash flow available to service debt

– Value of collateral, based on third-party professional valuations.

OTHER SEGMENTS – CREDIT RISK REVIEW

2017 compared to 2016 (unaudited)

Corporate lending growth has been impacted by uncertainty in the UK economy in relation to the UK’s future relationship with the EU. UK businesses face ongoing uncertainty over future trade arrangements, and how the transition to these new rules will be managed. This has impacted business investment, although this is still forecasted to grow. In 2017, there were signs certain vulnerable sectors could be impacted in the context of the changing macro-economic environment.

Committed exposures

Credit risk arises on asset balances and off-balance sheet transactions such as credit facilities or guarantees. As a result, committed exposures are typically higher than asset balances. However, committed exposures can be smaller than the asset balances on the balance sheet due to netting. We show Sovereigns and Supranationals net of short positions and Large Corporate reverse repurchase agreement exposures are shown net of repurchase agreement liabilities and include OTC derivatives. In addition, the derivative and other treasury product exposures (which are classified as ‘Financial Institutions’) shown are also typically lower than the asset balances. This is because we show our overall risk exposure which takes into account our procedures to mitigate credit risk. The asset balances on our balance sheet only reflect the more restrictive netting permitted by IAS 32.

Rating distribution

These tables show our credit risk exposure according to our internal rating scale (see ‘Credit quality’ in the ‘Santander UK group level – credit risk review’ section) for each portfolio. On this scale, the higher the rating, the better the quality of the counterparty.

Underlying credit quality has remained stable within our Commercial Banking, Global Corporate Banking and Corporate Centre portfolios. In the second half of 2017 a number of enhancements were made to better harmonise treatments across our reporting classifications. This has resulted in some migrations as shown in the tables below, but on a like for like basis, no deterioration in credit quality has been observed. An exception to this resides in the Large Corporate portfolio where the increase in band 1-3 is driven by 3 new NPL cases in 2017.

	Santander UK risk grade
2017	9 £m		8 £m		7 £m		6 £m		5 £m		4 £m		3 to 1 £m		Other(1)   £m		Total   £m
Commercial Banking
SME and mid corporate		–		–		259		2,183		5,402		3,574		998		214		12,630
Commercial Real Estate		–		–		–		395		6,135		2,014		60		2		8,606
Social Housing		499		2,600		171		–		–		–		4		–		3,274
		499		2,600		430		2,578		11,537		5,588		1,062		216		24,510
Global Corporate Banking
Sovereign and Supranational		590		3,321		444		–		–		–		–		–		4,355
Large Corporate		260		2,979		8,391		8,879		573		2		355		–		21,439
Financial Institutions		2,362		1,463		2,494		33		103		–		–		–		6,455
		3,212		7,763		11,329		8,912		676		2		355		–		32,249
Corporate Centre
Sovereign and Supranational		44,477		18		–		–		–		–		–		–		44,495
Structured Products		2,487		1,560		300		32		–		–		–		–		4,379
Derivatives		–		212		–		–		–		–		–		–		212
Legacy Portfolios in run-off(2)		–		–		1		359		104		124		37		400		1,025
Social Housing		1,841		3,641		451		43		–		–		–		–		5,976
		48,805		5,431		752		434		104		124		37		400		56,087
2016
Commercial Banking
SME and mid corporate		22		112		344		2,826		4,219		3,142		533		130		11,328
Commercial Real Estate		–		–		302		5,852		2,754		498		118		1		9,525
Social Housing		1,355		1,499		215		–		–		–		–		–		3,069
		1,377		1,611		861		8,678		6,973		3,640		651		131		23,922
Global Corporate Banking
Sovereign and Supranational		1,025		3,111		977		–		–		–		–		–		5,113
Large Corporate		204		2,028		5,347		9,493		4,296		56		75		1		21,500
Financial Institutions		439		3,877		2,913		597		49		–		–		–		7,875
		1,668		9,016		9,237		10,090		4,345		56		75		1		34,488
Corporate Centre
Sovereign and Supranational		34,474		–		–		–		–		–		–		–		34,474
Structured Products		1,597		1,755		654		–		–		–		–		–		4,006
Derivatives		–		175		312		–		–		–		–		–		487
Legacy Portfolios in run-off(2)		2		1		5		540		215		69		63		480		1,375
Social Housing		3,313		2,707		548		43		–		–		–		–		6,611
		39,386		4,638		1,519		583		215		69		63		480		46,953

(1) Consists of smaller exposures mainly in the commercial mortgage portfolio. We use scorecards for them, instead of a rating model.

(2) Consists of commercial mortgages and residual structured and asset finance loans (shipping, aviation, and structured finance).

Geographical distribution

We typically classify geographical location according to the counterparty’s country of domicile unless there is a full risk transfer guarantee in place, in which case we use the guarantor’s country of domicile instead.

2017	UK £m		Europe £m		US £m		Rest of World £m		Total  £m
Commercial Banking
SME and mid corporate		12,513		116		1		–		12,630
Commercial Real Estate		8,606		–		–		–		8,606
Social Housing		3,274		–		–		–		3,274
		24,393		116		1		–		24,510
Global Corporate Banking
Sovereign and Supranational		–		1,032		1		3,322		4,355
Large Corporate		17,430		3,699		111		199		21,439
Financial Institutions		3,102		2,121		614		618		6,455
		20,532		6,852		726		4,139		32,249
Corporate Centre
Sovereign and Supranational		35,659		1,514		6,091		1,231		44,495
Structured Products		2,086		1,217		–		1,076		4,379
Derivatives		–		63		149		–		212
Legacy Portfolios in run-off		909		–		–		116		1,025
Social Housing		5,976		–		–		–		5,976
		44,630		2,794		6,240		2,423		56,087
2016
Commercial Banking
SME and mid corporate		11,188		83		57		–		11,328
Commercial Real Estate		9,525		–		–		–		9,525
Social Housing		3,069		–		–		–		3,069
		23,782		83		57		–		23,922
Global Corporate Banking
Sovereign and Supranational		332		1,643		–		3,138		5,113
Large Corporate		17,793		3,356		73		278		21,500
Financial Institutions		4,282		1,629		1,175		789		7,875
		22,407		6,628		1,248		4,205		34,488
Corporate Centre
Sovereign and Supranational		26,693		1,569		4,770		1,442		34,474
Structured Products		1,352		1,529		–		1,125		4,006
Derivatives		312		12		163		–		487
Legacy Portfolios in run-off		1,205		–		–		170		1,375
Social Housing		6,611		–		–		–		6,611
		36,173		3,110		4,933		2,737		46,953

2017 compared to 2016 (unaudited)

Commercial Banking

In 2017, we saw solid lending growth to trading business customers, offset by active management of our Commercial Real Estate portfolio. Committed exposures increased, despite the uncertain operating environment after the UK’s decision to leave the EU and the resulting slowdown in SME activity.

– Our SME and mid corporate exposures increased by 12% as growth in the Mid Corporate portfolio more than offset a reduction in SME exposures.

– Our Commercial Real Estate portfolio decreased by 10% as we continue to actively manage exposures in line with our proactive risk management practices and strive to maintain portfolio quality.

– Our Social Housing portfolio increased by 7%, driven by refinancing of longer-dated loans, previously managed in Corporate Centre, onto shorter maturities and current market terms.

Global Corporate Banking

Our committed exposures decreased by 7% mainly due to decreases in our Sovereign and Supranational and Financial Institutions portfolios.

– Sovereign and Supranational exposures decreased by 15%. The portfolio profile stayed mainly short-term, reflecting the purpose of the holdings.

– Large Corporate exposures decreased slightly. Credit quality was relatively stable overall, except for the impairment of three customers that moved to non-performance, including Carillion plc.

– Financial Institutions exposures decreased by 18%, largely driven by the transfer of prohibited activity to Banco Santander as part of ring-fencing.

Corporate Centre

In 2017, committed exposures increased by 19% mainly driven by our Sovereign and Supranational portfolio.

– Sovereign and Supranational exposures are mainly cash at central banks and highly-rated liquid assets we hold as part of normal liquid asset portfolio management. The increase of 29% in the overall exposure was driven by an increase in deposits in the UK.

– Legacy Portfolios in run-off reduced by 24% in 2017. The disposal of all aviation deals within this portfolio is now complete.

– Social Housing exposures reduced in 2017 to £6.0bn (2016: £6.6bn) as we continue to refinance longer-dated loans onto shorter maturities and current market terms that are then managed in Commercial Banking.

Credit risk mitigation

Commercial Banking

As discussed above, we only hold collateral on Commercial Real Estate loans within our Commercial Banking portfolio. Impaired loans in the Commercial Real Estate portfolio reduced from 2016, resulting in a decrease in the collateral we held against impaired loans. At 31 December 2017, the collateral we held against impaired loans was 15% (2016: 42%) of the carrying amount of the impaired loan balances.

Global Corporate Banking

At 31 December 2017, the top 20 clients with derivative exposure made up 65% (2016: 69%) of our total derivative exposure, all of which were banks and CCPs. The weighted-average credit rating was 7.2 (2016: 7.3). At 31 December 2017 and 2016, we held no collateral against impaired loans in the Large Corporate portfolio.

Corporate Centre

We reduce credit risk in derivatives with netting agreements, collateralisation and the use of CCPs. At 31 December 2017, we had cash collateral of £348m (2016: £457m) held against our Legacy Portfolios in run-off. The collateral we held against impaired loans was 100% (2016: 100%) of the carrying amount of the impaired loan balances.

Credit performance

We monitor exposures that show potentially higher risk characteristics using our Watchlist process (described in ‘Monitoring’ in the ‘Credit risk management’ section). The table below shows the exposures we monitor, and those we classify as non-performing by portfolio at 31 December 2017 and 2016.

	Committed exposure
			Watchlist								Observed
2017	Fully performing £m		Enhanced monitoring £m		Proactive  management  £m		Non- performing exposure(1) £m		Total(2)  £m		impairment  loss  allowances  £m
Commercial Banking
SME and mid corporate		11,185		815		296		334		12,630		128
Commercial Real Estate		8,254		160		133		59		8,606		27
Social Housing		3,274		–		–		–		3,274		–
		22,713		975		429		393		24,510		155
Global Corporate Banking
Sovereign and Supranational		4,355		–		–		–		4,355		–
Large Corporate		20,757		284		8		390		21,439		236
Financial Institutions		6,354		1		100		–		6,455		–
		31,466		285		108		390		32,249		236
Corporate Centre
Sovereign and Supranational		44,495		–		–		–		44,495		–
Structured Products		4,379		–		–		–		4,379		–
Derivatives		212		–		–		–		212		–
Legacy Portfolios in run-off		977		22		6		20		1,025		6
Social Housing		5,972		4		–		–		5,976		–
		56,035		26		6		20		56,087		6
Total observed impairment loss allowances												397
Allowance for IBNO(3)												52
Total impairment loss allowances												449

(1) Non-performing exposure includes committed facilities and derivative exposures. So it can exceed the NPLs in the table on page 96 which only include drawn balances.

(2) Includes committed facilities and derivatives. We define ‘Enhanced Monitoring’ and ‘Proactive Management’ in the ‘Monitoring‘ section.

(3) Allowance for IBNO losses as described in Note 1 to the Consolidated Financial Statements.

	Committed exposure
			Watchlist								Observed
2016	Fully performing £m		Enhanced monitoring £m		Proactive  management  £m		Non- performing exposure(1) £m		Total(2)  £m		impairment  loss  allowances  £m
Commercial Banking
SME and mid corporate		9,744		892		331		361		11,328		139
Commercial Real Estate		9,136		161		49		179		9,525		44
Social Housing		2,930		139		–		–		3,069		–
		21,810		1,192		380		540		23,922		183
Global Corporate Banking
Sovereign and Supranational		5,113		–		–		–		5,113		–
Large Corporate		20,702		659		70		69		21,500		33
Financial Institutions		7,671		202		2		–		7,875		–
		33,486		861		72		69		34,488		33
Corporate Centre
Sovereign and Supranational		34,474		–		–		–		34,474		–
Structured Products		4,006		–		–		–		4,006		–
Derivatives		487		–		–		–		487		–
Legacy Portfolios in run-off		1,273		20		9		73		1,375		31
Social Housing		6,447		164		–		–		6,611		–
		46,687		184		9		73		46,953		31
Total observed impairment loss allowances												247
Allowance for IBNO(3)												91
Total impairment loss allowances												338

(1) Non-performing exposure includes committed facilities and derivative exposures. So it can exceed the NPLs in the table below which only include drawn balances.

(2) Includes committed facilities and derivatives. We define ‘Enhanced Monitoring’ and ‘Proactive Management’ in the ‘Monitoring‘ section.

(3) Allowance for IBNO losses as described in Note 1 to the Consolidated Financial Statements.

2017 compared to 2016 (unaudited)

Commercial Banking

Our SME and mid corporate portfolio improved across all categories as a result of a number of successful exits and the write off of some pre-2009 vintages. In our Commercial Real Estate portfolio, non-performing exposures (NPEs) reduced by 67% to £59m (2016: £179m) driven by a number of successful exits. A single legacy case, where the collateral exceeded the value of the loan, was downgraded to NPE in 2016. The asset was sold and the loan repaid in full in 2017.

Global Corporate Banking

Large Corporate exposures subject to enhanced monitoring decreased by 57% driven by the return of a number of cases to performing as a result of improved trading. However, NPEs increased to £390m (2016: £69m) due to the impairment of three customers that moved to non-performance, including Carillion plc. Financial Institutions exposures subject to enhanced monitoring decreased to £1m (2016: £202m) driven by two cases returning to performing status.

Corporate Centre

In our Legacy Portfolios in run-off portfolio, exposures subject to enhanced monitoring and proactive management remained stable. NPE reduced to £20m (2016: £73m) driven by sales of aviation and shipping assets. In our Social Housing portfolio, exposures subject to enhanced monitoring decreased to £4m (2016: £164m), two large cases that were added in 2016 due to governance issues returned to performing in Q2 2017.

Non-performing loans and advances ^{(1) (2)}

	2017						2016
	Commercial Banking £m		Global Corporate Banking £m		Corporate  Centre  £m		Commercial Banking £m		Global Corporate Banking £m		Corporate  Centre  £m
Loans and advances to customers of which:(2)		19,391		6,037		5,905		19,381		5,659		6,478
NPLs(3)		383		340		20		518		63		73
Impairment loss allowances		195		236		18		220		57		61
	%		%		%		%		%		%
NPL ratio(4)		1.98		5.63		0.34		2.67		1.11		1.12
Coverage ratio(5)		51		69		90		42		90		84

(1) We define NPLs in the ‘Credit risk management’ section.

(2) Includes Social Housing loans and finance leases.

(3) All NPLs continue accruing interest.

(4) NPLs as a percentage of loans and advances to customers.

(5) Impairment loss allowances as a percentage of NPLs. Impairment loss allowances relate to early arrears and performing assets (i.e. the IBNO provision) as well as NPLs, so the ratio can exceed 100%.

NPL movements in 2017

We analyse NPL movements in 2017 below. ‘Entries’ are loans which we have classified as NPLs in 2017. ‘Exits’ are the part of loans that has been repaid (in full or in part), and loans that returned to performing status. ‘Write-offs’ are the unrecovered part of loans where we have exhausted recovery options, including realising any collateral. Forbearance does not change the NPL status.

	Drawn balances
	Commercial Banking £m			Global Corporate Banking £m			Corporate  Centre  £m
At 1 January 2017		518			63			73
Entries		194			328			18
Exits		(294	)		(51	)		(48)
Write offs		(35	)		–			(23)
At 31 December 2017		383			340			20

2017 compared to 2016 (unaudited)

Commercial Banking

The Commercial Banking NPL ratio improved to 1.98%, primarily due to the full repayment of three impaired loans and the write-off of some pre-2009 vintages in Q1 2017.

Global Corporate Banking

The Global Corporate Banking NPL ratio of 5.63% was severely impacted by the Carillion plc loans that moved to non-performance in 2017. Impairment losses on loans and advances increased to £236m, primarily relating to Carillion plc exposures.

Corporate Centre

The Corporate Centre NPL ratio decreased to 0.34%, reflecting management of non-core corporate and legacy portfolios.

Forbearance

We only make forbearance arrangements for lending to customers. The balances at 31 December 2017 and 2016, analysed by their payment status at the year-end and the forbearance we applied, were:

	2017						2016
	Commercial Banking £m		Global Corporate Banking £m		Corporate  Centre(2)  £m		Commercial Banking £m		Global Corporate Banking £m		Corporate  Centre(2)  £m
Stock(1)
– Term extension		136		55		–		168		11		1
– Interest-only		152		–		14		158		–		20
– Other payment rescheduling		127		299		13		208		10		16
		415		354		27		534		21		37
Of which:
– Non-performing		273		347		11		344		10		15
– Performing		142		7		16		190		11		22
		415		354		27		534		21		37
Proportion of portfolio		1.7%		1.1%		2.6%		2.2%		0.1%		2.7%

(1) We base forbearance type on the first forbearance we applied. Tables only show accounts open at the year-end. Amounts are drawn balances and include off balance sheet balances.

(2) Exposure within the Legacy Portfolios in run-off only.

2017 compared to 2016 (unaudited)

In Commercial Banking, the cumulative forbearance stock reduced by 22% to £415m at 31 December 2017 (2016: £534m). This decrease was mainly due to the successful resolution of NPL cases, and performing cases exiting forbearance according to defined criteria. This impact was offset by an increase in the stock position of forbearance due to the inflows in the year in Global Corporate Banking, where the Carillion plc loans that moved to non-performance in 2017 had a severe impact. At 31 December 2017, there were five forborne cases (2016: two cases) in Global Corporate Banking.

PORTFOLIOS OF PARTICULAR INTEREST

Introduction (unaudited)

Some types of lending have higher risk and others stand out for different reasons. In the section below we provide further details of our Commercial Real Estate and Social Housing portfolios.

Product	Description
Commercial Real Estate	The Commercial Real Estate market experienced a challenging environment in the immediate years after the last financial crisis and has previously seen regular cyclical downturns. In addition to the disclosures on the Commercial Real Estate portfolio earlier in this section, we include below more detail on credit management, credit performance, and LTV and sector analysis.
Social Housing	The Social Housing sector in the UK is critical in ensuring the supply of affordable housing across the country. Housing associations now play a prominent role in addressing the UK’s shortage of housing stock across all tenures. The sector benefits from a zero-loss default history aided by its regulated nature. We hold a significant position in this market. Continued investment in this sector is seen as a direct way to support the UK and, indirectly, the wider community initiatives undertaken by our customers.

Commercial Real Estate

Credit performance

The table below shows the main Commercial Real Estate credit performance metrics at 31 December 2017 and 2016.

	Customer loans(1) £bn		NPLs(2)(3) £m		NPL ratio(4) %		NPL coverage(5) %		Gross write-offs £m		Impairment  loss allowances  £m
2017		8.1		69		0.85		78		11		54
2016		9.0		180		2.00		32		1		58

(1) Comprises commercial real estate drawn loans in the business banking portfolio of our Retail Banking segment of £257m (2016: £365m) and in the Commercial Real Estate portfolio of our Commercial Banking segment of £7,886m (2016: £8,678m).

(2) We define NPLs in the ‘Credit risk management’ section.

(3) All NPLs continue accruing interest.

(4) NPLs as a percentage of customer loans.

(5) Impairment loss allowances as a percentage of NPLs. Impairment loss allowances relate to early arrears and performing assets (i.e. the IBNO provision) as well as NPLs, so the ratio can exceed 100%.

Commercial Real Estate loans written before 2009 totalled £380m (2016: £543m). The pre-2009 loans were written on market terms which, compared with more recent times and following a significant tightening in our lending criteria, included higher original LTVs, lower interest coverage and exposure to development risk.

LTV analysis

This table shows the LTV distribution for our Commercial Real Estate loan stock and NPL stock (based on the drawn balance and our latest estimate of the property’s current value) of the portfolio at 31 December 2017 and 2016.

	2017				2016
Loans and advances to customers	£m		%		£m		%
<=50%		4,146		51		3,879		44
>50-70%		3,035		37		4,007		44
>70-100%		36		–		194		2
>100% i.e. negative equity		52		1		88		1
Standardised portfolio(1)		629		8		652		7
Total with collateral		7,898		97		8,820		98
Development loans		246		3		223		2
		8,144		100		9,043		100
	2017				2016
NPLs	£m		%		£m		%
<=50%		6		9		7		4
>50-70%		2		3		2		1
>70-100%		1		1		74		41
>100% i.e. negative equity		48		70		74		41
Standardised portfolio(1)		12		17		5		3
Total with collateral		69		100		162		90
Development loans		–		–		18		10
		69		100		180		100

(1) Consists of smaller value transactions, mainly commercial mortgages.

Sector analysis

The table below shows the sector analysis of the portfolio at 31 December 2017 and 2016.

	2017				2016
Sector	£m		%		£m		%
Office		2,181		27		2,359		26
Retail		1,389		17		1,739		19
Industrial		1,176		14		1,274		14
Residential		1,001		12		1,016		11
Mixed use		1,146		14		1,184		13
Student accommodation		133		2		224		3
Hotels and leisure		304		4		389		5
Other		185		2		206		2
Standardised portfolio(1)		629		8		652		7
		8,144		100		9,043		100

(1) Consists of smaller value transactions, mainly commercial mortgages.

The Commercial Real Estate portfolio of £8,144m (2016: £9,043m) is well diversified across sectors, with no significant regional or single name concentration, representing 30% (2016: 33%) of our total lending to corporates and 4% (2016: 4%) of total customer loans.

At 31 December 2017, the LTV profile of the portfolio remained conservative with £7,181m (2016: £7,886m) of the non-standardised portfolio assets at or below 70% LTV.

Loans with development risk were only 3% (2016: 2%) of the total Commercial Real Estate portfolio. Development lending is typically on a non-speculative basis with significant pre-lets in place and/or pre-sales in place.

The average loan balance at 31 December 2017 was £4.7m (2016: £4.8m) and the top ten exposures made up 10% (2016: 8%) of the total Commercial Real Estate portfolio exposure.

Refinancing risk

As part of our annual review process, for Commercial Real Estate loans approaching maturity, we look at the prospects of refinancing the loan on current market terms and applicable credit policy. Where this seems unlikely we put the case on our Watchlist.

At 31 December 2017, Commercial Real Estate loans of £1,090m (2016: £1,408m) were due to mature within 12 months. Of these, £59m, i.e. 5% (2016: £161m, i.e. 11%) had an LTV ratio higher than is acceptable under our current credit policy. At 31 December 2017, £53m of this (2016: £149m) had been put on our Watchlist or recorded as NPL and had an impairment loss allowance of £27m (2016: £31m).

2017 compared to 2016 (unaudited)

In our Commercial Real Estate portfolio, customer loans decreased by 10% as we actively manage exposures to certain segments in line with our proactive risk management practices. In 2017, we maintained a prudent lending approach, with no new business written above 70% LTV (2016: nil) and 91% of new business written at or below 60% LTV (2016: 95%). The weighted average LTV on the CRE portfolio was 48% (2016: 50%) and the average loan size was £4.7m (2016: £4.8m).

Exposures subject to enhanced monitoring remained stable at £160m (2016: £161m). Exposures subject to proactive management increased by 171% to £133m (2016: £49m) largely driven by the downgrade of one customer in Q4 2017 following protracted lease re-negotiations. Non-performing exposures reduced by 67% to £59m (2016: £179m) driven by a number of successful exits. Our non-performing loan ratio was 0.85% (2016: 2.00%). A single legacy case, where the collateral exceeded the value of the loan, was downgraded to NPL in 2016. The asset was sold and the loan repaid in full in 2017.

Social Housing

At 31 December 2017 and 2016, our total Social Housing exposure in Commercial Banking and Corporate Centre was:

	2017				2016
	Drawn   £m		Total  £m		Drawn   £m		Total  £m
Commercial Banking		2,118		3,274		1,897		3,069
Corporate Centre		5,060		5,976		5,442		6,611
		7,178		9,250		7,339		9,680

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Market risk

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Market risk

Market risk

Overview (unaudited)

Key metrics (unaudited)

Market risk comprises trading market risk and banking market risk. Trading market risk is the risk of losses in trading positions, both on and off-balance sheet, due to movements in market prices or other external factors. Banking market risk is the risk of loss of income or economic value due to changes to interest rates in the banking book or to changes in exchange rates, where such changes would affect our net worth through an adjustment to revenues, assets, liabilities and off-balance sheet exposures in the banking book. In this section, we set out which of our assets and liabilities are exposed to trading and banking market risk. Then we explain how we manage these risks and discuss our key market risk metrics.

Net Interest Margin (NIM) sensitivity to +50bps decreased to £212m and to -50bps increased to £(125)m (2016: £240m and £(82)m) Economic Value of Equity (EVE) sensitivity to +50bps increased to £95m and to -50bps increased to £(213)m (2016: £54m and £(30)m) Available-for-sale securities three month stressed loss decreased to £193m (2016: £280m)

BALANCE SHEET ALLOCATION BY MARKET RISK CLASSIFICATION

We analyse our assets and liabilities exposed to market risk between trading and banking market risk as follows:

	2017						2016
	Trading £m		Banking £m		Total  £m		Trading £m		Banking  £m		Total  £m		Key risk factors
Assets subject to market risk
Cash and balances at central banks		–		32,771		32,771		–		17,107		17,107	FX, Interest rate
Trading assets		30,555		–		30,555		30,035		–		30,035	Equity, FX, interest rate
Derivative financial instruments		14,744		5,198		19,942		18,101		7,370		25,471	Equity, FX, interest rate
Financial assets designated at fair value		–		2,096		2,096		516		1,624		2,140	Interest rate, credit spread
Loans and advances to banks		–		5,927		5,927		–		4,348		4,348	FX, interest rate
Loans and advances to customers		–		199,490		199,490		–		199,738		199,738	Interest rate
Financial investments		–		17,611		17,611		–		17,466		17,466	FX, interest rate, inflation, credit spread
Macro hedge of interest rate risk(1)		–		833		833		–		1,098		1,098	Interest rate
Retirement benefit assets		–		449		449		–		398		398	Equity, FX, interest rate, inflation, credit spread
		45,299		264,375		309,674		48,652		249,149		297,801
Liabilities subject to market risk
Deposits by banks		–		13,784		13,784		–		9,769		9,769	FX, interest rate
Deposits by customers		–		183,648		183,648		–		177,172		177,172	Interest rate
Trading liabilities		31,109		–		31,109		15,560		–		15,560	Equity, FX, interest rate
Derivative financial instruments		16,891		722		17,613		20,018		3,085		23,103	Equity, FX, interest rate
Financial liabilities designated at fair value		1,612		703		2,315		1,665		775		2,440	Interest rate, credit spread
Debt securities in issue		–		42,633		42,633		–		50,346		50,346	FX, interest rate
Subordinated liabilities		–		3,793		3,793		–		4,303		4,303	FX, interest rate
Macro hedge of interest rate risk(2)		–		–		–		–		350		350	Interest rate
Retirement benefit obligations		–		286		286		–		262		262	Equity, FX, interest rate, inflation, credit spread
		49,612		245,569		295,181		37,243		246,062		283,305

(1) This is included in Other assets of £2,511m (2016: £2,571m).

(2) This is included in Other liabilities of £2,730m (2016: £3,221m).

We classify assets or liabilities as trading market risk (in total or just in part) as follows:

Balance sheet classification	Market risk classification
Trading assets and liabilities	We classify all our trading portfolios as trading market risk. This is mainly because we are planning to sell or repurchase them in the near future. For more, see Notes 11 and 23 to the Consolidated Financial Statements.
Financial assets and liabilities designated at fair value	We classify all our financial assets designated at fair value as banking market risk. We classify our warrant programmes, our Global Structured Solutions Programme and structured customer deposits as trading market risk. This is because we manage them on a fair value basis. We classify all our other financial liabilities designated at fair value as banking market risk. For more, see Notes 13 and 24 to the Consolidated Financial Statements.
Derivative financial instruments	For accounting purposes, we classify derivatives as held for trading unless they are designated as being in a hedging relationship. Most of our derivatives arise from sales and trading activities and are treated as trading market risk. We treat derivatives that we do not manage on a trading intent basis as banking market risk. For more, see Note 12 to the Consolidated Financial Statements.

TRADING MARKET RISK

OUR KEY TRADING MARKET RISKS (unaudited)

Our main exposure to trading market risk is in Global Corporate Banking and it is an inherent part of providing financial services for our customers. It comes from providing derivative products and services to corporate, business and financial institution customers. It also comes from our short-term market activities and the hedging of structured products that are designed for onward sale to retail and wholesale investors. Our exposures are mainly affected by market movements in interest rates, equities, credit spreads, and foreign exchange. We have no exposures in Retail Banking, Commercial Banking or Corporate Centre.

Trading market risk can reduce our net income. Its effect can be seen in our Consolidated Income Statement, where it appears in the ‘Net trading and other income’ line, under ‘Net trading and funding of other items by the trading book’.

TRADING MARKET RISK MANAGEMENT

Risk appetite

Our framework for dealing with market risk is part of our overall Risk Framework. The market risk Framework sets out our high-level arrangements and minimum standards for managing, controlling and overseeing trading market risk. Our Risk Appetite sets the controls, risk limits and key risk metrics for trading market risk. The key risk metrics include a stress economic loss limit and risk-factor stress scenarios. We report these key metrics to the Board Risk Committee and the Executive Risk Control Committee (ERCC) each month. A specific stress scenario has been created to report the XVA related risks in a comprehensive way. The stressed scenario will be monitored against the specific trigger that was set by ERCC during the annual limits review for 2018 and will be reported to both the BRC and ERCC periodically.

Risk measurement (unaudited)

We have a range of ways of measuring trading market risk, but one of the most important is a statistical measure based on a historical simulation of events called ‘Value at Risk’ (VaR).

VaR

 VaR

– VaR estimates the maximum losses that we might suffer because of unfavourable changes in the markets under normal non-stressed market conditions.

– To calculate VaR we run a historical simulation, at a given confidence level, over a specified time period. We use one or two years of daily price history, with each day given equal weighting.

– This means we include most market risk factors that could make a difference, and it gives us a consistent way of assessing risk for all these factors in all our portfolios.

– We work with three main types of VaR, which all use the same calculation models. They are Internal VaR, Regulatory VaR and Stressed VaR. We have governance and controls for all forms of VaR, and we regularly review and assess them.

 Internal VaR

– We use this to calculate the total VaR in our trading book. It covers all the risk asset classes: interest rate, equity, credit (spread) and foreign exchange. We use two years of data for this simulation.

– Like the rest of Banco Santander, we use a time horizon of one day and a confidence level of 99%. For any given day’s trading position, we would expect to suffer losses greater than the VaR estimate 1% of the time – once every 100 trading days, or two to three times a year.

– For Internal VaR, we also calculate a time-weighted VaR using Banco Santander’s method. This gives more weight to the most recent days in the last two years, which means VaR changes more quickly in line with current market volatility. That gives us a better indication of how the market’s behaviour is changing, mitigating some limitations of VaR.

– We measure Internal VaR every day, comparing the equally-weighted result with the time-weighted result and report the higher against the Santander UK and business unit level limits. The Santander UK limits are approved by the Executive Risk Control Committee. We also report our equally weighted VaR against asset class and individual desk level limits. Whenever we find a limit has been exceeded, we report it, following the market risk framework. The main classes of risk that we measure Internal VaR on are:

–  Interest rate risks: this measures the effect of changes in interest rates and how volatile they are. The effects are on cash instruments, securities and derivatives. This includes swap spread risk (the difference between swap rates and government bond rates), basis risk (changes in interest rate tenor basis) and inflation risk (changes in inflation rates).

–  Equity risks: this measures the effect of changes in equity prices, volatility and dividends on stock and derivatives.

–  Credit (spread) risks: this measures the effect of changes in the credit spread of corporate bonds and credit derivatives.

 Regulatory VaR and Stressed VaR

– We use these VaR models to calculate how much capital we need to hold for trading market risk. For these calculations, we only look at the factors for which we hold approval from the PRA. For credit and foreign exchange – factors which are not approved by the PRA for our VaR capital models – we use the standardised approach to calculate how much capital to hold. For more on this, see the ‘Capital requirement measures’ section.

– For Regulatory VaR, we use a time horizon of ten days and a confidence level of 99%. To calculate the ten-day time horizon, we use the one-day VaR multiplied by the square root of ten. This is the industry standard approach to scaling known as the ‘square root of time’ approach. We use the same two years of history as with Internal VaR. Stressed VaR is the same, except that we use only one year of history, from a time when markets were stressed relative to our current portfolio.

– The PRA also assesses Regulatory VaR and Stressed VaR.

The limitations of VaR

The main limitation of VaR is that it assumes what happened in the past is a reliable way to predict what will happen in the future. If something that affected the markets over the past two years is no longer relevant, then the actual value at risk could be much more or less than the VaR predicts. Sometimes it is obvious that the past data will not predict the future: there is unlikely to be enough data on the history of the market if a product is brand new, for example. In that case, we use proxy data – calculations of what might have happened if the product had existed. That helps make VaR data more complete, but it makes it less accurate. We control and keep a record of how we use proxy data.

Another limitation is that VaR is based on positions at the end of the business day. So the actual value at risk at 1pm could be higher than that at the end of the day. And, when we are calculating a ten-day time horizon using the ‘square root of time’ approach, it means we do not capture the actual ten-day price movements. This can lead to under or over estimating the ten-day result. But we analyse this every quarter and the analysis is also sent to the PRA.

There is also the fact that VaR gives no guide to how big the loss could be on the 1% of trading days that it is greater than the VaR. To make up for that (and for other reasons), we use stress testing and expected shortfall analysis, which we explain later in this section.

Using a time horizon of one day means VaR does not tell us everything about exposures that we cannot liquidate or hedge within a day, or products with infrequent pricing or whose structures are more complex. We monitor those exposures using illiquid risks metrics (explained in ‘Other ways of measuring risk’) and stress testing. In addition to using the illiquid risks metrics, to ensure such exposures are adequately included in our regulatory capital requirements, we have developed the Risks Not in VaR (RNIV) framework, in line with the regulatory requirement.

In general, VaR takes account of the main ways risk factors affect each other, and the way most market movements affect valuations. But the more complex the products, and the larger the markets’ current movements, the less well the model is likely to fare.

Back-testing – comparing VaR estimates with reality

Every day, we back-test the one day 99% Internal and Regulatory VaR. That means looking at the VaR estimates for the last year (250 working days) and seeing how they compare to the actual profits and losses. Or, to be more precise, how they compare to the market risk-related revenue, as the CRR and PRA define it. It is not normally possible to back-test the Stressed VaR model, because it is not intended to tell us anything about our performance in normal conditions.

To back-test VaR, we use a one-day time horizon. Our back-testing looks at two different types of profit and loss metrics:

– Actual: trading profit and loss, less fees, commissions, brokerage, reserves that are not related to market risk, and Day One sales profits

– Hypothetical: like the ‘Actual’ type but also excluding intra-day figures and the effects of the passage of time. It is, in effect, just leaving the pure market risk driven effects on the profit and loss.

Exceptions

Back-testing allows us to identify exceptions – times when the predictions were out of line with what happened. We can then look for trends in these exceptions, which can help us decide whether we need to recalibrate our VaR model. The CRR sets out criteria for how many exceptions are acceptable in the Regulatory VaR model. The PRA’s Supervisory Statements clarify the requirements further. If there are five or more exceptions in 250 days, then points are added to our capital requirement multiplier. In 2017, as in 2016, no points were added to our multiplier, and we did not find any trends in the exceptions we experienced.

Other ways of measuring risk

As well as VaR, we use the following methods to measure risk:

Method	Description
Profit and loss	The value of our tradeable instruments, such as shares and bonds, changes constantly. We report our profits and losses from them every day.
Non-statistical measures	We also have ways of measuring risk that do not depend on statistics. That includes looking at how sensitive we are to the variables we use to value our market risk positions. We record all our market risk exposures, set limits to the sensitivities for each, and then check every day whether we are staying within those limits.
Illiquid risks	The financial instruments that we cannot sell or hedge in a day are classified as ‘illiquid risks’. We measure and monitor those differently depending on how long they would take to sell or hedge. There are three categories: less than a month, one to six months, or greater than six months. We check each category every day against our limits.
Expected shortfall (ES) analysis	We also use a measurement called ES analysis. It goes some way to mitigate the limitations of the VaR model. ES allows us to better measure how big the loss could be on the 1% of the trading days that it is greater than VaR.

Stress testing

The Basel Capital Accord underlined that stress testing is an essential part of risk management. It helps us to measure and control the risk of losses in difficult, volatile or unusual markets. It also makes us more transparent as the scenarios are easy to understand in headline terms.

Stress testing scenarios

The scenarios we use for stress testing are part of our process for setting our trading market risk appetite. They are central to the monthly Board Risk Appetite reporting. The scenarios are also part of the daily processes for setting and monitoring risk management limits. The scenarios we create are partly inspired by past events, like the global financial crisis. They also include plausible ways that unusual market conditions could occur in future. This includes changes in interest rates, equity prices, exchange rates and credit spreads.

Some scenarios are more severe than others. We consider them all, along with VaR, so that we have a more complete and accurate idea of our overall risk profile. When we set the sizes of the ‘shocks’ (sudden market changes) in each scenario, we look at how long each different type of risk would last. This is because we can sell some positions more easily than others. If it would take a long time to reduce a particular position in the stressed circumstances, we need to apply a correspondingly large shock to that position (as prices will move further over a longer time period). That helps us to see how different amounts of liquidity in the markets would affect us in a stress event, such as an equity crash. It is important to make sure that the stress result we report is as realistic as possible.

How we use stress testing

We use limits to manage how much risk we take. They are expressed as how much we could lose in a stress event. We need to make sure the effects of potential poor market conditions do not exceed the Risk Appetite set by the Board. Each of our desks uses stress testing as part of their daily risk management metrics. We regularly inform senior managers – including the Executive Risk Control Committee and the Board Risk Committee – about the results of our stress calculations, based on our current positions.

Capital requirement measures

Whenever we make changes to our models, we assess their effect on our capital requirements. Sometimes that means we need to tell the PRA and get their approval before we can make the change.

Method	Description
The Internal Models Approach (IMA)	The PRA has given us permission to use the IMA, in line with CRR, and every three months the PRA reviews what we are doing. The IMA means we can use Regulatory and Stressed VaR and RNIV to calculate the trading market risk capital requirement for the risk factors and businesses that we have PRA approval for.
The standardised approach	For risk factors and businesses not included in the IMA, we use the standardised approach set out by the CRR and PRA Supervisory Statements. At 31 December 2017, this amounted to 11% (2016: 10%) of our total market risk capital requirement.
Stressed versus Regulatory VaR	Stressed VaR is the biggest part of our trading market risk capital requirements. In 2017 and 2016, it was an average of six times bigger than the Regulatory VaR part. The factors that had the biggest effect on Stressed VaR in 2017 and 2016 were interest rate delta and interest rate basis. (For more on each of those factors, see the footnotes to the table in the ‘Trading market risk review’ section.) The difference is caused by the way the market was behaving during the time the Stressed VaR data covers. We regularly check the stress period we use, to make sure we are using the worst period of stress since 2007 that is relevant to our portfolio. In 2017 the selected stressed VaR historical window has had three different 250 day periods applied, aligning to the portfolio at the time.
Risks Not in VaR (RNIV) risk capital	These risk factors can arise when there is not enough (or no) market data from the past, or when the quality of the data is not good enough. They tend to be for products that are not priced regularly, or whose risk structure is more complex. In 2017, RNIV risk factors made up, on average, less than 3% (2016: 4%) of our IMA capital requirements for trading market risk. The biggest individual risk factors are dividend risk, caused by changes in market expectations about dividends, and Repo, which is the risk of a difference in the markets forward price and our own models’ internal forward price. The VaR approach does not capture these risks very well because of the illiquid nature of the risk factors. We normally find new RNIVs by analysing profit and loss, and new products. Then we include them in our calculation of our capital requirement, whether or not they are material at the time, and inform the regulator in the appropriate manner. We can use two approaches to calculate how much RNIV capital we should hold, depending on what kind of market data is available. The first approach means doing a calculation like those for Regulatory VaR and Stressed VaR. For this approach we also use a multiplication factor, following the CRR and PRA rules. The second approach is stress-based, using sensitivities and plausible stressed market moves. At the moment, we only have stress-based RNIVs. And each individual RNIV value is independent, so it does not benefit from diversification in the capital requirements calculation.

Risk mitigation (unaudited)

We manage and control trading market risk within clear parameters. We measure and monitor our risk exposures against these limits. There are specific levels that trigger relevant teams to take action or alert people in other functions. This means we can limit the impact of any negative market movements, while also improving our earnings. We keep the business units that originate trading market risk separate from the functions responsible for managing, controlling and overseeing risk.

Risk monitoring and reporting (unaudited)

We document and maintain a complete set of written policies, procedures and processes to help identify, assess, manage and report trading market risk.

TRADING MARKET RISK REVIEW

2017 compared to 2016 (unaudited)

The VaR figures show how much the fair values of all our tradeable instruments could have changed. Since trading instruments are recorded at fair value, these are also the amounts by which they could have increased or reduced our net income. There was only one floor-wide limit breach in 2017, which occurred in January 2017. This limit breach was driven by the time weighted VaR metric (which is extremely sensitive to the most recent VaR results), and was being driven by a theoretical loss at the end of 2016. This loss was caused by 2016 year-end demand for US Dollars during a time of increased illiquidity, and compounded by a three day effect in the risk sensitivity calculation.

The three loss back-testing exceptions in 2017 were driven by individual events, and no changes or recalibrations to the VaR model were deemed necessary. The exception which occurred in April 2017 was marginal and was mainly driven by underlying interest rate changes. The changes were due to market reaction to the political and economic uncertainty at that time. The two exceptions that occurred in December 2017 were in cross currency and FX swap basis and were driven by US Dollar liquidity issues at year-end which began in mid-December 2017. This was due to year-end volatility and the impact of upcoming tax reforms in the US. There was also one gain exception in December 2017, driven by basis spread (delta) and FX basis due to volatility leading up to year-end.

VaR

This table and graph shows our Internal VaR for exposure to each of the main classes of risk for 2017 and 2016.

	Year-end exposure				Average exposure				Highest exposure				Lowest exposure
	2017	2016			2017	2016			2017		2016		2017		2016
Trading instruments	£m	£m			£m	£m			£m		£m		£m		£m
Interest rate risks	2.6		2.9		2.5		2.5			3.5		3.6		1.8		1.7
Equity risks	0.3		1.4		0.6		0.9			2.0		1.5		0.2		0.6
Credit (spread) risks	–		–		–		–			–		–		–		–
Foreign exchange risks	0.3		1.5		0.4		1.4			1.6		2.2		–		0.1
Diversification offsets(1)	(0.7)		(2.3	)	(0.8)		(2.0	)		–		–		–		–
Total correlated one-day VaR	2.5		3.5		2.7		2.8			3.7		3.6		2.0		1.7

(1) The highest and lowest exposures for each risk type did not necessarily happen on the same day as the highest and lowest total correlated one-day VaR. It is impossible to calculate a corresponding correlation offset effect, so we have not included it in the table.

LOGO

Back-testing (unaudited)

The graph below shows our one-day 99% Internal VaR compared to the Actual and Hypothetical profit and loss.

LOGO

BANKING MARKET RISK

OUR KEY BANKING MARKET RISKS (unaudited)

Banking market risk mainly comes from providing banking products and services to our customers, as well as our structural balance sheet exposures. It arises in all our business segments. In Retail Banking and Commercial Banking, it is a by-product of us writing customer business and we transfer most of these risks to Corporate Centre to manage. The only types of material banking market risk that we keep in Retail Banking and Commercial Banking are short-term mismatches due to forecasting variances in prepayment and launch risk. This is where customers repay their loans at a different point than their expected maturity date or do not take the expected volume of new products. In Global Corporate Banking, it arises from short-term markets and lending to corporates, which we also transfer to Corporate Centre to manage. Corporate Centre also manages our structural balance sheet exposures, such as foreign exchange and income statement volatility risk.

Our key banking market risks are:

Key risks	Description
Interest rate risk	Yield curve risk: comes from timing mismatches in repricing fixed and variable rate assets, liabilities and off-balance sheet instruments. It also comes from investing non rate sensitive liabilities in interest-earning assets. We mainly measure yield curve risk with NIM and EVE sensitivities. We also use other risk measures, like stress testing and VaR. Our NIM and EVE sensitivities cover all the material yield curve risk in our banking book balance sheet.
	Basis risk: comes from pricing assets using a different rate index to the liabilities that fund them. We are exposed to basis risks associated with Base Rate, reserve rate linked assets we deposit with central banks, the Sterling Overnight Index Average (SONIA) rate, and LIBOR rates of different terms.
Inflation and spread risks	This arises when the value of (or income from) our assets or liabilities is affected by changes in inflation and credit spreads. We hold securities for liquidity and investment purposes that are exposed to these risks. We account for them as available-for-sale (AFS) securities or as held-to-maturity (HTM) investments. For more on our accounting policies, see Note 1 to the Consolidated Financial Statements.
Foreign exchange risk	Our non-trading businesses operate mainly in sterling markets, so we do not create significant foreign exchange exposures. The only exception to this is money we raise in foreign currencies. For more on this, see the ‘Wholesale funding’ section.
Income statement volatility risk	We measure most of the assets and liabilities in our banking book balance sheet at amortised cost. We sometimes manage their risk profile by using derivatives. As all derivatives are accounted for at fair value, the mismatch in their accounting treatment can lead to volatility in our income statement. This happens even if the derivative is an economic hedge of the asset or liability.

BANKING MARKET RISK MANAGEMENT

Risk appetite

Our framework for dealing with market risk is part of our overall Risk Framework. The banking market risk framework sets out our high-level arrangements and standards to manage, control and oversee banking market risk. Our Risk Appetite sets the controls, risk limits and key risk metrics for banking market risk. We articulate risk appetite by the income and value sensitivity limits we set in our Risk Appetite, at both Santander UK and Banco Santander group levels.

Risk measurement (unaudited)

For banking market risk, we mainly measure our exposures with NIM and EVE sensitivity analysis. We support this with the risk measures we explained in the ‘Trading market risk management’ section. We also monitor our interest rate repricing gap.

NIM and EVE sensitivities

NIM and EVE sensitivity measures are commonly used in the financial services industry. The calculations for NIM and EVE sensitivities involve many assumptions, including expected customer behaviour (such as early repayment of loans) and how interest rates may move. These assumptions are a key part of our overall control framework, so we update and review them regularly. Our NIM and EVE sensitivities include the interest rate risk from all our banking book positions. Our banking book positions generate almost all our reported net interest income.

 NIM sensitivity

 –  NIM sensitivity is an income-based measure we use to forecast the changes to interest income and interest expense in different scenarios. It gives us a combined impact on net interest income over a given period – usually 12 or 36 months.

 –  We calculate NIM sensitivity by simulating the NIM using two yield curves. The difference between the two NIM totals is the NIM sensitivity.

 –  Our main model assumptions are that:

 –  The balance sheet is dynamic. This means that it includes the run-off of current assets and liabilities as well as retained and new business

 –  We use a behavioural balance sheet rather than contractual one. This means that we adjust balances for behavioural or assumed profile. We do this with most retail products whose behavioural maturity is different to the contractual maturity. This is usually because customers are exercising the option to withdraw or prepay early, or there is no contractual maturity.

 EVE sensitivity

 –  We calculate EVE as the change in the net present value of all the interest rate sensitive items in the banking book balance sheet for a defined set of instantaneous parallel and non-parallel shifts in the yield curve.

 –  We use a static balance sheet. This means that all balance sheet items run-off according to their contractual, behavioural or assumed run-off behaviour (whichever is appropriate), and there is no retained or new business.

The limitations of sensitivities

We use sensitivities to measure the impact of standard, instantaneous, parallel shifts in relevant yield curves. The advantage of using standard parallel shifts is they generally give us a constant measure of the size of our market risk exposure, with a simple and consistent stress. This compares to specific scenarios like ‘flat rates’. The magnitude of flat rates depends on the shape of the current curve and the shift required to reach the flat rate scenario. There is one exception to the relative simplicity of parallel shifts. In order to limit negative interest rates, the yield curve may be ‘floored’. Using material parallel shocks does not always seem realistic, or it might not necessarily test the scenarios that have the most impact on us. So we run non-parallel stress tests too – to calculate the impact of some plausible non-parallel scenarios, and over various time periods for income stresses (usually one or three years).

Other ways of measuring risk

As well as using sensitivities and stress tests, we can measure banking market risk using net notional positions. This can give us a simple expression of our exposure, although it generally needs to be combined with other risk measures to cover all aspects of a risk profile, such as projected changes over time.

Other metrics we can use include VaR and Earnings at Risk (EaR). VaR can be useful because it captures changes in economic values. However, VaR will not reflect the actual impact of most of our banking book assets and liabilities on our Income Statement. This is because we account for them at amortised cost rather than fair value. EaR is similar to VaR but captures changes in income rather than value. This approach is mainly used to generate a one-year EaR measure to assess the capital requirement for Basis Risk.

Stress testing

We use stress testing of market risk factors to complement the risk measurement we get from standard sensitivities.

Stress testing scenarios

Simple stress tests (like parallel shifts in relevant curves) give us clear measures of risk control and a consistent starting point for setting limits. More complex, multi-factor and multi-time period stress tests can give us information about specific potential events. They can also test various outcomes that we might not capture through parallel stresses or VaR-type measures because of data or model limitations. We can also use stress tests to estimate losses in extreme market events beyond the confidence level used in VaR models. We can adapt our stress tests to reflect current concerns or market conditions quicker than we can with other risk measures, like VaR. We can include both individual business area stresses and Santander UK-wide scenarios.

Our stress tests fall into three categories:

– Specific, deterministic stress tests that are not referenced to market history or expectations (such as parallel stresses of a given size)

– Historic, deterministic stress tests with changes in market risk factors based either on specific past events (like the situation in the fourth quarter of 2008) or on our statistical analysis of changes in the past

– Hypothetical, deterministic stress tests with changes in market risk factors based on our judgement of possible future rates in a given scenario.

We can produce stress tests using either income or value measures. They cover one or more categories of exposures accounted for on an accruals basis or at fair value. We use expert judgement to define appropriate hypothetical stress tests and any adjusting assumptions based on the balance sheet, management actions and customer behaviour.

How we use stress testing

We discuss stress testing results at senior management committees. They affect Corporate Centre’s decisions by highlighting possible risks in the banking book and the effectiveness of remedial actions we could take. We compare stress test results with stress limits and triggers set by our internal committees, or against metrics set by the PRA. If the results are over our limits or triggers, we take remedial actions and follow an escalation process.

Risk mitigation (unaudited)

We mitigate Income Statement volatility mainly through hedge accounting. We monitor any hedge accounting ineffectiveness that might lead to Income Statement volatility with a VaR measure and trigger, reported monthly. For our accounting policies for derivatives and hedge accounting, see Note 1 to the Consolidated Financial Statements. We typically hedge the interest rate risk of the securities we hold for liquidity and investment purposes with interest rate swaps, retaining spread and inflation exposures. These retained exposures are the key drivers of the VaR and stress tests we use to assess the risk of the portfolio.

We hedge our foreign currency funding positions back to sterling, so our foreign exchange positions tend to be residual exposures that remain after hedging. These positions could be, for example, to ‘spot’ foreign exchange rates or to cross currency basis. We monitor foreign exchange risk against absolute net exposures and VaR-based limits and triggers. For more, see ‘Our funding strategy and structure’ and ‘Term issuance’ in the ‘Liquidity risk’ section.

Risk monitoring and reporting (unaudited)

We monitor the banking market risks of the portfolios we hold for liquidity and investment purposes using sensitivities, VaR and stress tests. We report them against limits and triggers to senior management daily and to ALCO and Executive Risk Control Committee monthly. The VaR we report captures all key sources of volatility (including interest rate, inflation and credit spread risks) to fully reflect the potential volatility.

BANKING MARKET RISK REVIEW

2017 compared to 2016 (unaudited)

The movement in NIM sensitivities in 2017 was largely driven by higher levels of the yield curve over the second half of 2017 and the subsequent base rate rise in November 2017. During 2017, we took actions to prepare for the possibility of negative rates in the UK, including a review of our models to ensure they better reflected the risks inherent in the current low rate environment. These changes in our underlying models also contributed to the movements in the year.

The increase in EVE sensitivities in 2017 was mainly due to the same changes in our underlying models. These movements were partially offset by the impact of the Base Rate rise and the increased volume of fixed rate assets left unhedged over the year.

The increase in the basis risk EaR in 2017 was largely due to changes in the underlying net basis position as a result of the continued reduction in SVR mortgages and growth in bank account liability volumes.

The main risk factors of the portfolios of securities held for liquidity and investment purposes remain the inflation and spread risk exposures. The risk of the portfolios decreased in 2017 due to a reduction in the portfolio size as maturities and sales outweighed purchases, in addition to the portfolio rebalancing away from asset classes with relatively higher risk.

Interest rate risk

Yield curve risk

The table below shows how our base case income and valuation would be affected by a 50 basis point parallel shift (both up and down) applied instantaneously to the yield curve at 31 December 2017 and 2016. Sensitivity to parallel shifts represents the amount of risk in a way that we think is both simple and scalable. 50 basis points is the stress we typically focus on for banking market risk controls, although we also monitor sensitivities to other parallel and non-parallel shifts as well as scenarios.

	2017					2016
	+50bps		-50bps			+50bps		-50bps
	£m		£m			£m		£m
NIM sensitivity		212		(125	)		240		(82	)
EVE sensitivity (unaudited)		95		(213	)		54		(30	)

Basis risk (unaudited)

We report basis risk using the EaR approach.

	2017		2016
	£m		£m
Basis risk EaR		24		13

Interest rate repricing gap (unaudited)

The table below shows the interest rate repricing gap of our balance sheet by repricing buckets.

	3 months			1 year			3 years			5 years		>5 years			Not sensitive			Total
2017	£m			£m			£m			£m		£m			£m			£m
Assets		142,195			34,661			59,253			18,746		15,453			16,782			287,090
Liabilities		178,179			18,003			25,487			17,746		25,559			24,801			289,775
Off-balance sheet		(10,383	)		(3,025	)		4,364			5,636		6,093			–			2,685
Net gap		(46,367	)		13,633			38,130			6,636		(4,013	)		(8,019	)		–
2016
Assets		139,262			31,817			54,289			16,883		16,358			17,337			275,946
Liabilities		166,131			20,418			23,231			18,451		25,517			26,000			279,748
Off-balance sheet		(15,463	)		7,596			(611	)		7,361		4,919			–			3,802
Net gap		(42,332	)		18,995			30,447			5,793		(4,240	)		(8,663	)		–

Inflation and spread risks (unaudited)

The table below shows the risk metrics covering the portfolios of securities held for liquidity and investment purposes.

	2017		2016
	£m		£m
VaR		3		5
Worst three month stressed loss		193		280

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Liquidity risk

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Liquidity risk

Liquidity risk

Overview (unaudited)

Key metrics (unaudited)

Liquidity risk is the risk that, while still being solvent, we do not have the liquid financial resources to meet our obligations when they fall due, or we can only obtain them at high cost. In this section, we describe our sources and uses of liquidity and how we manage liquidity risk. We also analyse our key liquidity metrics, including our Liquidity Coverage Ratio (LCR) and our eligible liquidity pool. We then explain our funding strategy and structure and we analyse our wholesale funding. Finally, we analyse how we have encumbered some of our assets to support our funding activities.

LCR decreased to 120% (2016: 139%) Wholesale funding with maturity <1 year down to £14.9bn (2016: £21.4bn) LCR eligible liquidity pool decreased to £48.5bn (2016: £50.7bn)

OUR KEY LIQUIDITY RISKS (unaudited)

Through our Liquidity Risk Appetite framework, we manage our funding or structural contingent and market liquidity risks wherever they arise. This can be in any of the following areas:

Key risks	Description
Retail and corporate deposit outflows	–  Outflows if we are seen as more of a credit risk than our peers.
Wholesale secured and	–  Wholesale unsecured deposits failing to roll over at maturity date.
unsecured liquidity outflows	–  An inability to replace our wholesale secured funding on maturity.
Off-balance sheet activities	–  Collateral outflows if our credit rating was downgraded. This could also lead to higher costs or less capacity to raise funding.
	–  Outflows of collateral we owe but that have not yet been called.
	–  Outflows of collateral due to market movements.
	–  Drawdowns on committed facilities based on facility type, and counterparty type and creditworthiness.
Other risks	–  Funding concentrations – outflows against concentrations of wholesale secured funding providers.
	–  Intra-day cash flows – shortfall on the liquidity we need to support intra-day needs.
	–  Intra-group commitments and support – cash in our subsidiaries becoming unavailable to the wider Santander UK group and contingent calls for funding from our subsidiaries and affiliates.
	–  Franchise retention – outflows we need to support our future business and reputation.

Our main sources of liquidity

Customer deposits finance most of our customer lending. Although these funds are mostly callable, they give us a stable and predictable core of funding. This is due to the nature of retail accounts and the breadth of our retail customer relationships.

We have a strong wholesale funding investor base, diversified across product types and geographies. Through the wholesale markets, we have active relationships in many sectors including banks, other financial institutions, corporates and investment funds. We access the wholesale funding markets for subordinated debt, longer-dated senior unsecured debt through Santander UK Group Holdings plc, covered bonds, structured notes, shorter-dated senior unsecured debt and short-term funding. We also access these markets through Abbey National Treasury Services plc for short-term funding, and through securitisations of certain assets. For more on our programmes, see Notes 16, 24 and 25 in the Consolidated Financial Statements.

We generate funding on the strength of our own balance sheet, our own profitability and our own network of investors. We do not rely on a guarantee from Banco Santander SA or any other member of the Banco Santander group. We do not raise funds to finance other members of the Banco Santander group or guarantee their debts, other than some of our own subsidiaries. As we are a PRA-regulated group, we have to meet PRA liquidity needs on a standalone basis. This means we have to prove to the PRA that we can withstand liquidity and capital stress tests. While we manage our funding and liquidity on a standalone basis, we coordinate our issuance plans with Banco Santander where it is appropriate to do. We also comply with rules set by the PRA, other regulators, and Banco Santander standards. While we manage, consolidate and monitor liquidity risk centrally, we also manage and monitor it in the business area it comes from.

Our main uses of liquidity

Our main uses of liquidity are to fund our lending in Retail Banking and Commercial Banking, to pay interest and dividends, and to repay debt. Our ability to pay dividends depends on various factors. These include our regulatory capital needs, the level of our distributable reserves, and our financial performance. We also use liquidity to pay for business combinations.

LIQUIDITY RISK MANAGEMENT

Introduction (unaudited)

We manage liquidity risk on a consolidated basis. We created our governance, oversight and control frameworks, and our LRA, on the same basis. Under this model, and the PRA’s liquidity rules, Santander UK plc and its subsidiaries Abbey National Treasury Services plc and Cater Allen Limited form the Domestic Liquidity Sub-group (DoLSub), which allows the entities to collectively meet regulatory requirements. Each member of the DoLSub will support the others by transferring surplus liquidity in times of stress.

Risk appetite

Our LRA statement is based on the principles of liquidity management we use to manage our balance sheet. It also supports our need to meet or exceed the rules of our regulators. In line with our liquidity management principles, we:

– Ensure that all maturing liabilities can be financed as they fall due, including across currencies and on an intraday basis

– Maintain a level of customer loans versus customer deposits that prevents an over-reliance on wholesale markets

– Maintain sufficient capacity to monetise liquid assets and other counterbalancing capacity within an appropriate timeframe

– Avoid an over-reliance on funding from a single product, customer or counterparty

– Fund long-term assets with long-term liabilities

– Maintain sufficient unencumbered customer assets to support current and future funding and collateral requirements, including under stress

– Ensure that liquidity costs and benefits are allocated to business activities from which they arose.

The Board, under advice from the Board Risk Committee, approves our LRA. Our LRA, in the context of our overall Risk Appetite, is reviewed and approved by the Board each year, or more often if needed.

Risk measurement (unaudited)

We use a number of metrics to manage liquidity risk. These include metrics that show the difference between cash and collateral inflows and outflows in different periods. They also include structural metrics, such as our LDR ratio and our level of encumbered assets.

Stress testing

We also have a liquidity stress test framework in place which is central to our LRA measurement and monitoring. It includes three severe but plausible stress test scenarios. To fit with our risk appetite, the liquidity outflows that come from these stress tests must be fully covered with high-quality liquid assets, other liquid assets and management actions sanctioned at the right level of governance. Additionally, a quarterly funding plan disruption stress scenario now forms part of our LRA monitoring.

Our Risk division runs our stress tests. They are:

Test	Description
Our LRA stress	Three stress tests that cover idiosyncratic, market wide and combined scenarios and look at all our risks during these events. We reviewed and revised our LRA stresses in 2017 and updated the previous single stress scenario to these three whilst also calculating the outflows resulting from each and introducing regular funding plan disruption stress tests.
Global economic stress	A stress test that looks at a slowdown in emerging markets which triggers a rapid deterioration in market sentiment globally and reduced confidence in the banking industry. Consumer purchasing power diminishes, resulting in retail and commercial outflows and drawdowns on liquidity facilities.
Acute retail stress	Stress tests that look at a significant event that damages confidence of retail and commercial depositors, causing a material loss of deposits.
Slow retail stress	Stress tests that look at the impact of a gradual prolonged period of loss of retail and commercial deposits and reduced wholesale financing.
Wholesale stress	A stress test that assesses the impact of a significant loss of wholesale market confidence in Santander UK under which wholesale funding is no longer available to us in any currency.
Protracted stress	A 12-month stress with a three-month period of severe liquidity constraint followed by a slow recovery in confidence in a recessionary economic environment.
Severe combined stress	A stress test that looks at a deep and prolonged UK recession which impairs confidence in the UK banking sector, and results in a reduction in wholesale funding availability. Simultaneously Santander UK suffers an idiosyncratic shock leading to retail and commercial outflows.

We also conduct sensitivity analysis and reverse stress testing for instant liquidity shocks by each key liquidity risk. We do this to understand the impacts they would have on our LRA and our regulatory liquidity metrics.

We monitor our LCR to ensure we continue to meet the requirements. Although the Basel Committee published its final Net Stable Funding Ratio (NSFR) standards in October 2014, the NSFR has not yet been implemented within Europe (unlike the LCR). As such there is no formal NSFR requirement applicable to UK or other EU banks until such time as the European Commission adopts appropriate regulatory and technical standards. Nonetheless, we monitor our NSFR on an ongoing basis and stand ready to comply with the standards once agreed.

Risk mitigation (unaudited)

The Board aims to make our balance sheet resilient at all times and for it to be perceived as such by stakeholders. This preserves our short and long-term viability. The Board recognises that as we are involved in maturity transformation, we cannot hold enough liquidity to cover all possible stress scenarios. The Board requires us to hold enough liquidity to make sure we will survive three plausible but severe stress scenarios. We do this by keeping a prudent balance sheet structure and maintaining our approved liquid resources. The three stress scenarios cover a severe idiosyncratic, market wide and combined stress scenario and we hold sufficient liquidity to survive the worst outcome.

Ongoing business management

Within our framework of prudent funding and liquidity management, we manage our activities to minimise our liquidity risk. We have clear responsibilities for short-term funding, medium-term funding, encumbrance, collateral and liquid asset management. This ensures we manage liquidity risks as part of our daily operations, strategy and planning. We distinguish between short-term and strategic activities as follows:

Short-term tactical liquidity management	Description
Liquid resources	We maintain liquid assets, contingent liquidity and defined management actions to source funds. We do this to cover unexpected demands on cash. This is in both a plausible and significant stress scenario and other more distant and severe but less probable scenarios. Our main stress events are large and unexpected deposit withdrawals by retail customers and the loss of unsecured wholesale funding.
Funding profile	We use metrics to help control outflows in different maturities and concentrations.
Intra-day collateral management	We make sure we have enough collateral to support our involvement in payment and settlement systems.

Strategic funding management	Description
Structural balance sheet shape	We manage our maturity transformation, where we invest shorter-term funding in longer-term assets. We also manage our use of wholesale funding for non-marketable assets, and our use of non-marketable assets to generate liquidity.
Wholesale funding strategy	We avoid relying too much on any individual or groups of customer, currency, market or product that might become highly correlated in a time of stress. We also avoid excessive concentrations in the maturity of our wholesale funding.
Wholesale funding capacity	We maintain and promote our client relationships. We also monitor our line availability and maintain our funding capacity by using lines and markets.

We regularly test the liquidity of our eligible liquidity pool, in line with PRA and Basel rules. We do this by realising some of the assets through repurchase or outright sale to the market. We make sure that over any 12-month period we realise a significant part of our eligible liquidity pool. As well as our eligible liquidity pool, we hold a portfolio of unencumbered liquid assets at all times. Our LRA and PRA requirements determine the size and composition of this portfolio. These assets give us a source of contingent liquidity, as we can realise some of them in a time of stress to create liquidity through repurchase or outright sale to the market.

Structure and organisation

Santander UK has a centralised function for the management of funding, liquidity, capital – the CFO Division. The division also manages interest rate risk in our banking book. Under this approach, the CFO Division is responsible for centralising and managing these risks on behalf of Santander UK. A robust Funds Transfer Pricing (FTP) framework is critical to ensure that these risks are appropriately transferred into the CFO Division and that the costs and benefits are then passed back to the business (and ultimately our customers) and to incentivise the right behaviours in the businesses.

The role of the CFO Division is to:

– Manage the provision of funding in order to meet the requirements of business strategy and plans

– Propose the LRA to the Risk Division and Santander UK Board for approval

– Manage the required liquid asset buffer

– Maintain the Santander UK funding plan, ensuring it is compliant with the LRA and regulatory liquidity and capital requirements

– Manage day-to-day operational liquidity and intra-day liquidity risk

– Manage the Santander UK Recovery Plan and from January 2018 the Resolution Plan and operational continuity processes

– Maintain policy and methodology for liquidity and interest rate FTP

– Manage and submit liquidity regulatory reporting.

Recovery and resolution framework

In the event of a liquidity or capital stress, Santander UK has developed a series of actions that would be taken that form part of the Recovery and Resolution Plan. This enables us to respond to a wide variety of stresses, from mild to severe, in a coordinated and efficient manner. The Recovery and Resolution Plan addresses how a capital or liquidity stress would be managed. It would be invoked in response to triggers across a range of metrics falling outside threshold levels, or a qualitative assessment of potential serious risks to our financial position and balance sheet strength. All of these metrics are part of our existing risk management processes. The Recovery and Resolution Plan has two phases with the first invoked as early and proactively as possible in order to mitigate a stress with suitable actions. Phase 2 would be invoked if a stress is severe enough to warrant more significant action.

The Recovery Plan is approved by the Board under advice from the Board Audit Committee and is subject to ongoing review and enhancement.

Risk monitoring and reporting (unaudited)

We monitor liquidity risk daily, weekly and monthly. We do this through different committees and levels of management, including ALCO and the Board Risk Committee.

LIQUIDITY RISK REVIEW (unaudited)

2017 compared to 2016

– Throughout 2017 we maintained robust risk management controls to monitor and manage the levels of our eligible liquidity pool and encumbrance. The LCR decreased to 120% at 31 December 2017 (2016: 139%), reflecting the increased requirements due to EU adoption of Regulatory Technical Standards for assessing additional collateral outflows and efficient liquidity planning. The average LCR was 129%.

– Our LCR eligible liquidity pool significantly exceeded our wholesale funding of less than one year, with a coverage ratio of 326% at 31 December 2017 (2016: 237%), the coverage ratio increased primarily due to lower term funding maturities in 2018, the ratio continues to be volatile due to the management of normal short-term business commitments.

– The reduction in the LRA was due to the increased severity of the stress scenarios and the extended 90 day term of the stress compared to the 60 day term of the 2016 scenario. There is also a new requirement to hold sufficient liquidity to cover the functioning of the notes circulation scheme.

Liquidity Coverage Ratio

This table shows our LCR and LRA at 31 December 2017 and 2016. It reflects the stress testing methodology in place at that time.

	LCR						LRA(1)
	2017 £bn			2016 £bn			2017 £bn			2016 £bn
Eligible liquidity pool (liquidity value)		47.4			50.1			45.7			45.2
Net stress outflows		(39.7	)		(36.0	)		(34.7	)		(27.3	)
Surplus		7.7			14.1			11.0			17.9
Eligible liquidity pool as a percentage of anticipated net cash flows		120%			139%			132%			166%

(1) The 2016 LRA was a two month stress horizon, the 2017 LRA is a three month requirement based on the running of three stress scenarios.

LCR eligible liquidity pool

This table shows the carrying value and liquidity value of our eligible liquidity pool assets at 31 December 2017 and 2016. It also shows the weighted average carrying value in the year.

	Carrying value				Liquidity value(1)				Weighted average carrying value in the year
	2017 £bn		2016 £bn		2017 £bn		2016 £bn		2017 £bn		2016 £bn
Cash and balances at central banks		30.9		16.0		30.9		16.0		23.6		19.0
Government bonds		12.5		29.5		12.3		29.5		19.6		18.4
Supranational bonds and multilateral development banks		1.0		1.5		1.0		1.5		1.1		1.4
Covered bonds		2.7		2.9		2.3		2.6		2.7		2.6
Asset-backed securities		0.6		0.7		0.5		0.5		0.8		0.8
Equities		0.8		0.1		0.4		–		1.1		0.5
		48.5		50.7		47.4		50.1		48.9		42.7

(1) Liquidity value is the carrying value with the applicable LCR haircut applied.

Currency analysis

This table shows the carrying value of our eligible liquidity pool by major currencies at 31 December 2017 and 2016, the composition of the pool is consistent with the currency profile of our net liquidity outflows.

	US Dollar £bn		Euro £bn		Sterling £bn		Other £bn		Total £bn
2017		9.2		1.8		36.7		0.8		48.5
2016		10.1		2.4		37.6		0.6		50.7

Composition of the eligible liquidity pool

This table shows the allocation of the carrying value of the assets in our eligible liquidity pool for LRA and LCR purposes at 31 December 2017 and 2016.

	2017										2016
	LCR eligible liquidity pool										LCR eligible liquidity pool
	Level 1 £bn		Level 2A £bn		Level 2B £bn		Total £bn		Of which LRA eligible £bn		Level 1 £bn		Level 2A £bn		Level 2B £bn		Total £bn		Of which LRA eligible £bn
Cash and balances at central banks		30.9		–		–		30.9		30.3		16.0		–		–		16.0		15.0
Government bonds:
–  AAA to AA-		11.0		–		–		11.0		11.0		28.9		0.2		–		29.1		29.1
–  A+ to A		–		1.5		–		1.5		1.5		–		0.4		–		0.4		0.4
Supranational bonds and multilateral development banks:
–  AAA to AA-		1.0		–		–		1.0		1.0		1.5		–		–		1.5		1.5
Covered bonds:
–  AAA to AA-		1.5		1.2		–		2.7		2.7		1.7		1.2		–		2.9		2.9
Asset-backed securities:
–  AAA to AA-		–		–		0.6		0.6		0.6		–		–		0.7		0.7		0.3
Equities		–		–		0.8		0.8		0.8		–		–		0.1		0.1		0.1
		44.4		2.7		1.4		48.5		47.9		48.1		1.8		0.8		50.7		49.3

FUNDING RISK MANAGEMENT

Funding strategy (unaudited)

Our funding strategy continues to be based on maintaining a conservatively structured balance sheet and diverse sources of funding.

Most of our funding comes from customer deposits. The rest is sourced from a mix of secured and unsecured funding in the wholesale markets. Overall this means that we do not rely too heavily on wholesale funds. This is reflected in our customer LDR ratio which we monitor against budget on a monthly basis. At the same time, it makes sure our sources of funding are not too concentrated on any one product. We have checks and controls to limit our asset encumbrance from our secured funding operations. As part of maintaining a diverse funding base, we raise funding in a number of currencies, including euro, and convert it into sterling through currency swaps to fund our commercial assets which are largely sterling denominated.

Our base of stable retail and corporate deposits is a key funding source for us. We leverage our large and diverse customer base to offer products that give us a long-term sustainable source of funding. We do this by focusing on building long-term relationships. Around 90% of our total core retail customer liabilities are covered by the Financial Services Compensation Scheme (the FSCS).

Behavioural maturities

The contractual maturity of balance sheet assets and liabilities highlights the maturity transformation that underpins the role of banks to lend long term, but to fund themselves mainly with shorter-term liabilities, like customer deposits.

We achieve this by diversifying our funding operations across a wide customer base, both in numbers and by type of depositor. In practice, the behavioural profiles of many liabilities show more stability and longer maturity than the contractual maturity. This is especially true of many types of retail and corporate deposits that, while they may be repayable on demand or at short notice, have shown good stability even in times of stress.

We model behaviour profiles using our experience of customer behaviour. We use this data to determine the funds transfer pricing interest rates at which we reward and charge our business units for sources and uses of funds. We apply this rate until a customer changes onto a different product or service offered by us or by one of our competitors.

We continue to improve the quality of our retail, commercial and wholesale deposits. Across all customer segments, we aim to deepen our customer relationships. We do this to lengthen the contractual and behavioural profile of our liability base. In Retail Banking, we support this aim with attractive products such as the 1l2l3 World offering.

Deposit funding

Our Retail Banking and Commercial Banking activities are mainly funded by customer deposits. The rest is funded through wholesale markets.

Wholesale funding

Wholesale funding and issuance model (unaudited)

Banco Santander is a multiple point of entry resolution group. This means that should it fail, it would be split up into parts. Healthy parts might be sold or be kept as a residual group without their distressed sister companies. The resolution or recapitalisation of the distressed parts might be effected via ‘bail in’ of bonds that had been issued to the market by a regional intermediate holding company.

Santander UK is a single point of entry resolution group. This means that resolution would work downwards from the group’s holding company (i.e. Santander UK Group Holdings plc). Losses in subsidiaries would first be transferred up to Santander UK Group Holdings plc. If the holding company is bankrupt as a result, the group needs resolving. The ‘bail in’ tool is applied to the holding company, with the equity being written off and bonds converted into equity as necessary to recapitalise the group. Those bondholders would become the new owners, and the group would stay together.

Santander UK Group Holdings plc is the immediate holding company of Santander UK plc, which in turn is the immediate parent company of Abbey National Treasury Services plc. This structure is a Bank of England recommended configuration which aims to resolve banks without disrupting the activities of their operating companies, thereby maintaining continuity of services for customers.

Our current structure is:

LOGO

(1) Short-term funding is in the process of being transferred from Abbey National Treasury Services plc to Santander UK plc.

Composition of wholesale funding (unaudited)

We are active in the wholesale markets and we have direct access to both money market and long-term investors through our funding programmes. This makes our wholesale funding well diversified by product, maturity, geography and currency. This includes currencies available across a range of channels from money markets, repo markets, senior unsecured, secured, medium-term and subordinated debt. Details of our main programmes are available in the Funding Information section of our website www.santander.co.uk/uk/about-santander-uk/investor-relations/funding-information.

As part of our ring-fencing plan, Santander UK plc is now our main operating company issuer of senior unsecured debt and covered bonds. Santander UK Group Holdings plc is the issuer of subordinated debt and Minimum Requirement for Own Funds and Eligible Liabilities (MREL)/Total Loss Absorbing Capacity (TLAC) eligible senior unsecured debt. For more on our ring-fencing plan see Note 39.

We also have access to the UK Government schemes set out below. For each scheme, eligible collateral includes all collateral that is eligible in the Bank of England’s Discount Window Facility. We ensure that sufficient collateral is placed and available at the Discount Window.

Scheme	Description
Discount Window Facility (DWF)	The DWF is a bilateral on-demand service for firms experiencing either a firm-specific or market-wide shock. It allows firms to borrow highly liquid assets in return for less liquid collateral. This lending can be large in size and for a variable term.
Term Funding Scheme (TFS)	The TFS aims to reinforce the transmission of Base Rate cuts to the interest rates actually faced by households and businesses by providing term funding to banks at rates close to Base Rate. The TFS allows participants to borrow central bank reserves in exchange for eligible collateral. It links the price and quantity of funding to net lending to UK households, the non-financial sector and non-bank credit providers over a specified period.
Funding for Lending Scheme (FLS)	The FLS is designed to boost lending to UK households and non-financial companies. It does this by giving funding to banks and building societies for an extended period – it links both the price and quantity of funding to the net UK non-financial sector lending over a specified period. The FLS lets participants borrow UK Treasury bills in exchange for eligible collateral in a drawdown window. The FLS was closed on 31 January 2018.
Contingent Term Repo Facility (CTRF)	The CTRF will be activated by the Bank of England in response to actual or prospective market-wide stress. It gives short-term liquidity to the market through monthly auctions using eligible collateral as security.
Indexed Long-Term Repo (ILTR)	The ILTR is aimed at banks, building societies and broker-dealers with a predictable need for liquid assets. The Bank of England offers funds via an ILTR operation once each calendar month, normally with a six-month maturity. Participants can borrow using eligible collateral as security.

FUNDING RISK REVIEW

2017 compared to 2016 (unaudited)

– Together with our immediate parent, Santander UK Group Holdings plc, our overall funding strategy remains to develop and sustain a diversified funding base. We also need to fulfil regulatory requirements as well as support our credit ratings. 2017 presented a positive market environment for issuance despite the continuing backdrop of global geo-political tensions and other political issues causing intermittent volatility. Despite concerns around political events such as the French and UK elections and the ongoing negotiation of the UK’s exit from the EU, the market remained open and offered excellent funding opportunities across all asset classes and currencies, allowing issuers to fund themselves in the wholesale markets at the lowest levels since the financial crisis. Equities also proved resilient and ended the year at record highs. In April 2017, we took advantage of the strong risk appetite for higher risk products and issued £500m Perpetual Capital Securities to our immediate parent, Santander UK Group Holdings plc.

– In 2017, medium term funding balances were lower with TFS drawdown replacing some of our matured funding. Our total term funding was £11.8bn (2016: £12.9bn), of which £0.5bn (2016: £nil) was capital issuance, £7.3bn (2016: £8.4bn) was medium-term issuance and £4.0bn (2016: £4.5bn) was TFS.

– The £7.3bn medium-term funding included £2.1bn of downstreamed funding from issuances by our immediate parent (this is currently in the form of loans that rank pari passu with our existing senior unsecured liabilities), £1.2bn of senior unsecured notes from the Company, £2.3bn of covered bonds and £1.7bn of securitisations.

– Maturities in 2017 were £13.1bn (2016: £13.5bn). At 31 December 2017, 75% (2016: 67%) of wholesale funding had a maturity of greater than one year, with an overall residual duration of 43 months (2016: 41 months). The total drawdown outstanding from the TFS was £8.5bn (2016: £4.5bn) and the total drawdowns of UK Treasury Bills under the FLS remained at £3.2bn (2016 £3.2bn).

– Our level of encumbrance from external and internal issuance of securitisations and covered bonds decreased in 2017, as planned. This reflected greater maturities than new issues in the period. We expect our overall level of encumbrance to remain broadly static in 2018.

Reconciliation of wholesale funding to the balance sheet

This table reconciles our wholesale funding to our balance sheet at 31 December 2017 and 2016.

Balance sheet line item

Financial

Funding

Deposits

Deposits by

Trading

liabilities designated at

Debt securities

Subordinated

Other equity

analysis

by banks

customers(1)

liabilities

fair value

in issue

liabilities

instruments(2)

2017

£bn

£bn

£bn

£bn

£bn

£bn

£bn

£bn

Deposits

0.3

0.2

–

–

0.1

–

–

–

Certificates of deposit and commercial paper

8.0

–

–

–

0.4

7.6

–

–

Senior unsecured – public benchmark

17.8

–

6.0

–

–

11.8

–

–

– privately placed

3.1

–

–

–

1.1

2.0

–

–

Covered bonds

14.2

–

–

–

–

14.2

–

–

Securitisation and structured issuance

5.5

1.0(3

)

0.5

–

–

4.0

–

–

Term Funding Scheme

8.5

8.5

–

–

–

–

–

–

Subordinated liabilities and equity

5.5

–

–

–

–

–

3.2

2.3

Total wholesale funding

62.9

9.7

6.5

–

1.6

39.6

3.2

2.3

Repos

25.6

0.1

–

25.5

–

–

–

–

Foreign exchange and hedge accounting

3.9

–

0.3

–

–

3.0

0.6

–

Other

10.3

4.0(3

)

–

5.6(4

)

0.7

–

–

–

Balance sheet total

102.7

13.8

6.8

31.1

2.3

42.6

3.8

2.3

2016

Deposits by banks

0.7

0.3

–

0.4

–

–

–

–

Certificates of deposit and commercial paper

8.4

–

–

–

0.5

7.9

–

–

Senior unsecured – public benchmark

16.7

–

4.1

–

–

12.6

–

–

– privately placed

4.9

–

–

–

1.4

3.5

–

–

Covered bonds

15.2

–

–

–

–

15.2

–

–

Securitisation and structured issuance

9.6

2.1(3

)

0.5

–

–

7.0

–

–

Term Funding Scheme

4.5

4.5

–

–

–

–

–

–

Subordinated liabilities and equity

5.2

–

–

–

–

–

3.4

1.8

Total wholesale funding

65.2

6.9

4.6

0.4

1.9

46.2

3.4

1.8

Repos

8.8

–

–

8.8

–

–

–

–

Foreign exchange and hedge accounting

5.4

–

0.4

–

–

4.1

0.9

–

Other

9.8

2.9(3

)

–

6.4(4

)

0.5

–

–

–

Balance sheet total

89.2

9.8

5.0

15.6

2.4

50.3

4.3

1.8

(1) This is included in our balance sheet total of £183,648m (2016: £177,172m).

(2) This is £14m (2016: £14m) fixed/floating rate non-cumulative callable preference shares, £235m (2016: £235m) Step-up Callable Perpetual Reserve Capital Instruments and £2,046m (2016: £1,550m) Perpetual Capital Securities. See Note 31 to the Consolidated Financial Statements.

(3) Securitisation and structured issuance comprise of repurchase agreements. Other comprises of items in the course of transmission and other deposits, excluding the Term Funding Scheme. See Note 21 to the Consolidated Financial Statements.

(4) Short positions in securities and unsettled trades, cash collateral and short-term deposits. See Note 23 to the Consolidated Financial Statements.

Maturity profile of wholesale funding

This table shows our main sources of wholesale funding. It does not include securities financing repurchase and reverse repurchase agreements. The table is based on exchange rates at issue and scheduled repayments and call dates. It does not reflect the final contractual maturity of the funding.

			>1 and		>3 and		>6 and		>9 and		Sub-total		>1 and		>2 and
	<=1 month		<=3 months		<= 6 months		<=9 months		<=12 months		<=1 year		<=2 years		<=5 years		>5 years		Total
2017	£bn		£bn		£bn		£bn		£bn		£bn		£bn		£bn		£bn		£bn
Downstreamed from Santander UK Group Holdings plc to Santander UK plc(1)
Senior unsecured – public benchmark		–		–		–		–		–		–		–		3.8		2.1		5.9
– privately placed		–		–		–		–		–		–		–		–		0.1		0.1
Subordinated liabilities and equity (incl. AT1)		–		–		–		–		–		–		0.8		0.8		1.4		3.0
		–		–		–		–		–		–		0.8		4.6		3.6		9.0
Other Santander UK plc
Deposits by banks		–		0.1		–		–		–		0.1		–		–		–		0.1
Certificates of deposit and commercial paper		0.2		0.6		0.6		0.1		0.1		1.6		–		–		–		1.6
Senior unsecured – public benchmark		0.8		–		–		1.3		–		2.1		2.9		5.4		1.5		11.9
– privately placed		–		0.7		–		–		–		0.7		1.3		0.6		0.4		3.0
Covered bonds		0.9		–		1.0		–		–		1.9		1.3		7.7		3.3		14.2
Securitisation and structured issuance(2)		–		–		0.4		–		0.9		1.3		0.6		1.2		0.1		3.2
Term Funding Scheme		–		–		–		–		–		–		–		8.5		–		8.5
Subordinated liabilities		0.1		–		–		–		0.1		0.2		–		–		2.3		2.5
		2.0		1.4		2.0		1.4		1.1		7.9		6.1		23.4		7.6		45.0
Other group entities
Deposits by banks		0.1		0.1		–		–		–		0.2		–		–		–		0.2
Certificates of deposit and commercial paper		2.7		2.4		1.3		–		–		6.4		–		–		–		6.4
Securitisation and structured issuance(3)		–		–		–		–		0.4		0.4		1.0		0.9		–		2.3
		2.8		2.5		1.3		–		0.4		7.0		1.0		0.9		–		8.9
Total		4.8		3.9		3.3		1.4		1.5		14.9		7.9		28.9		11.2		62.9
Of which:
– Secured		0.9		–		1.4		–		1.3		3.6		2.9		18.3		3.4		28.2
– Unsecured		3.9		3.9		1.9		1.4		0.2		11.3		5.0		10.6		7.8		34.7
		4.8		3.9		3.3		1.4		1.5		14.9		7.9		28.9		11.2		62.9
2016
Downstreamed from Santander UK Group Holdings plc to Santander UK plc(1)
Senior unsecured – public benchmark		–		–		–		–		–		–		–		2.7		1.3		4.0
– privately placed		–		–		–		–		–		–		–		–		0.1		0.1
Subordinated liabilities and equity (incl. AT1)		–		–		–		–		–		–		–		0.8		1.7		2.5
		–		–		–		–		–		–		–		3.5		3.1		6.6
Other Santander UK plc
Deposits by banks		0.1		–		–		–		–		0.1		–		–		–		0.1
Senior unsecured – public benchmark		–		0.9		–		0.9		–		1.8		2.1		6.7		2.1		12.7
– privately placed		0.9		–		–		0.4		0.2		1.5		0.6		1.4		0.2		3.7
Covered bonds		1.0		–		0.8		–		1.4		3.2		1.8		6.1		4.1		15.2
Securitisation and structured issuance(2)		0.8		0.3		1.1		1.4		0.9		4.5		1.3		0.7		0.6		7.1
Term funding scheme		–		–		–		–		–		–		–		4.5		–		4.5
Subordinated liabilities		0.1		–		–		–		–		0.1		0.2		0.2		2.2		2.7
		2.9		1.2		1.9		2.7		2.5		11.2		6.0		19.6		9.2		46.0
Other group entities
Deposits by banks		0.4		–		–		0.2		–		0.6		–		–		–		0.6
Certificates of deposit and commercial paper		2.9		3.1		1.3		0.7		0.4		8.4		–		–		–		8.4
Senior unsecured – privately placed		–		–		–		–		–		–		0.1		0.5		0.5		1.1
Securitisation and structured issuance(3)		0.3		0.3		0.2		0.2		0.2		1.2		0.9		0.4		–		2.5
		3.6		3.4		1.5		1.1		0.6		10.2		1.0		0.9		0.5		12.6
Total		6.5		4.6		3.4		3.8		3.1		21.4		7.0		24.0		12.8		65.2
Of which:
– Secured		2.1		0.6		2.1		1.6		2.5		8.9		4.0		11.7		4.7		29.3
– Unsecured		4.4		4.0		1.3		2.2		0.6		12.5		3.0		12.3		8.1		35.9
		6.5		4.6		3.4		3.8		3.1		21.4		7.0		24.0		12.8		65.2

(1) Currently all our senior debt issued out of Santander UK Group Holdings plc is downstreamed into Santander UK plc on an equivalent rankings basis (e.g. senior unsecured is downstreamed as senior unsecured, subordinated capital instruments are downstreamed as subordinated capital instruments, etc.). However, under the end-state MREL/TLAC regime, senior unsecured debt issued out of Santander UK Group Holdings plc will be downstreamed in a form that is subordinated to senior unsecured debt, but senior to subordinated capital instruments issued out of Santander UK plc.

(2) This includes funding from mortgage-backed securitisation vehicles where Santander UK plc is the asset originator.

(3) This includes funding from asset-backed securitisation vehicles where entities other than Santander UK plc are the asset originator.

Currency composition of wholesale funds

This table shows our wholesale funding by major currency at 31 December 2017 and 2016.

	2017								2016
	Sterling %		US Dollar %		Euro %		Other %		Sterling %		US Dollar %		Euro %		Other %
Downstreamed from Santander UK Group Holdings plc to Santander UK plc
Senior unsecured – public benchmark		9		67		22		2		12		63		21		4
– privately placed		–		–		–		100		–		–		–		100
Subordinated liabilities and equity (incl. AT1)		68		32		–		–		61		39		–		–
		28		54		14		4		31		53		13		3
Other Santander UK plc
Deposits by banks		27		73		–		–		33		67		–		–
Certificates of deposit and commercial paper		89		10		–		1
Senior unsecured – public benchmark		9		49		42		–		12		49		39		–
– privately placed		7		19		70		4		3		1		93		3
Covered bonds		47		–		52		1		41		–		58		1
Securitisation and structured issuance		80		20		–		–		59		29		12		–
Term Funding Scheme		100		–		–		–		100		–		–		–
Subordinated liabilities		52		48		–		–		55		45		–		–
		49		19		32		–		39		21		39		1
Other group entities
Deposits by banks		–		100		–		–		7		93		–		–
Certificates of deposit and commercial paper		34		65		1		–		31		68		1		–
Senior unsecured – privately placed		–		–		–		–		22		59		19		–
Securitisation and structured issuance		91		–		9		–		87		5		8		–
		47		50		3		–		41		55		4		–
Total		45		28		25		2		39		30		30		1

Term issuance

In 2017, our external term issuance (sterling equivalent) was:

	Sterling £bn		US Dollar £bn		Euro £bn		Other £bn		Total 2017 £bn		Total 2016 £bn
Downstreamed from Santander UK Group Holdings plc to Santander UK plc
Senior unsecured – public benchmark		–		1.6		0.4		–		2.0		3.1
– privately placed		–		–		–		0.1		0.1		0.1
Subordinated debt and equity (incl. AT1)		0.5		–		–		–		0.5		–
		0.5		1.6		0.4		0.1		2.6		3.2
Other Santander UK plc
Securitisations		0.5		–		–		–		0.5		0.6
Covered bonds		2.3		–		–		–		2.3		0.6
Senior unsecured – public benchmark		–		1.1		–		–		1.1		–
– privately placed		0.1		–		–		–		0.1		–
Term Funding Scheme		4.0		–		–		–		4.0		4.5
		6.9		1.1		–		–		8.0		5.7
Other group entities
Securitisations		0.9		0.3		–		–		1.2		0.8
Covered bonds		–		–		–		–		–		0.8
Senior unsecured – public benchmark		–		–		–		–		–		1.4
– privately placed		–		–		–		–		–		1.0
		0.9		0.3		–		–		1.2		4.0
Total gross issuances		8.3		3.0		0.4		0.1		11.8		12.9

Encumbrance (unaudited)

We have encumbered an asset if we have pledged it as collateral against an existing liability. This means it is no longer available to secure funding, meet our collateral needs or be sold to reduce future funding needs.

Being able to pledge assets as collateral is an integral part of a financial institution’s operations. It includes asset securitisation or related structured funding, pledging collateral to support using payment or settlement systems and entering into derivatives, securities repurchase agreements and securities borrowing arrangements.

We do various things that lead to asset encumbrance. These include where we:

– Enter into securitisation, covered bonds, and repurchase agreements (including central bank programmes) to access medium and long-term funding

– Enter into short-term funding transactions. These include repurchase agreements, reverse repurchase agreements and stock borrowing transactions as part of our operational liquidity management

– Participate in payment and settlement systems

– Post collateral as part of derivatives activity.

We monitor our mix of secured and unsecured funding sources in our funding plan. We aim to use our available collateral efficiently to raise secured funding and to meet our other collateralised obligations.

Our biggest source of encumbrance is where we use our mortgage portfolio to raise funds through securitisation, covered bonds or other structured borrowing. We control our levels of encumbrance from these by setting a minimum level of unencumbered assets that must be available after we factor in our future funding plans, whether we can use our assets for our future collateral needs, the impact of a possible stress and our current level of encumbrance.

On-balance sheet encumbered and unencumbered assets

	Assets encumbered as a result of transactions with counterparties other than central banks								Other assets (assets encumbered at the central bank and unencumbered  assets)
									Assets		Assets not positioned at the central bank
2017	As a result of covered bonds £m		As a result of securitis- ations £m		Other £m		Total £m		positioned at the central bank (i.e. pre- positioned plus encumbered) £m		Readily available for encumbrance £m		Other assets capable of being encumbered £m		Cannot be encumbered £m		Total £m		Total assets £m
Cash and balances at central banks(1)(2)		–		–		1,010		1,010		395		31,366		–		–		31,761		32,771
Trading assets		–		–		17,092		17,092		–		903		12,560		–		13,463		30,555
Derivative financial instruments		–		–		–		–		–		–		–		19,942		19,942		19,942
Financial assets designated at fair value		–		–		–		–		–		1,405		691		–		2,096		2,096
Loans and advances to banks		–		–		105		105		–		935		4,887		–		5,822		5,927
Loans and advances to customers		18,891		16,530		31		35,452		57,644		64,412		20,459		21,523		164,038		199,490
Financial investments		–		–		6,755		6,755		–		10,856		–		–		10,856		17,611
Interests in other entities		–		–		–		–		–		–		–		73		73		73
Intangible assets		–		–		–		–		–		–		–		1,742		1,742		1,742
Property, plant and equipment		–		–		–		–		–		–		1,598		–		1,598		1,598
Retirement benefit assets		–		–		–		–		–		–		–		449		449		449
Other assets		–		–		–		–		–		–		–		2,511		2,511		2,511
Total assets		18,891		16,530		24,993		60,414		58,039		109,877		40,195		46,240		254,351		314,765
2016
Cash and balances at central banks(1)(2)		–		–		600		600		370		16,137		–		–		16,507		17,107
Trading assets		–		–		13,582		13,582		–		2,807		13,646		–		16,453		30,035
Derivative financial instruments		–		–		–		–		–		–		–		25,471		25,471		25,471
Financial assets designated at fair value		–		–		–		–		–		1,463		677		–		2,140		2,140
Loans and advances to banks		–		–		115		115		–		1,030		3,203		–		4,233		4,348
Loans and advances to customers		20,234		19,996		25		40,255		23,801		96,741		18,137		20,804		159,483		199,738
Financial investments		–		–		2,684		2,684		–		14,782		–		–		14,782		17,466
Interests in other entities		–		–		–		–		–		–		–		61		61		61
Intangible assets(3)		–		–		–		–		–		–		–		1,685		1,685		1,685
Property, plant and equipment		–		–		–		–		–		–		1,491		–		1,491		1,491
Retirement benefit assets		–		–		–		–		–		–		–		398		398		398
Other assets		–		–		–		–		–		–		–		2,571		2,571		2,571
Total assets		20,234		19,996		17,006		57,236		24,171		132,960		37,154		50,990		245,275		302,511

(1) Encumbered cash and balances at central banks include minimum cash balances we have to hold at central banks for regulatory purposes.

(2) Readily realisable cash and balances at central banks are amounts held at central banks as part of our liquidity management activities.

(3) Restated to reflect the change in accounting policy relating to business combinations between entities under common control, as described in Note 1 to the Consolidated Financial Statements.

Assets encumbered as a result of transactions with counterparties other than central banks mainly relate to funding we had secured against our loans and advances to customers. It also includes cash collateral in trading assets that we posted to meet margin needs on derivatives.

Other assets classified as readily available for encumbrance include cash and securities we hold in our eligible liquidity pool. They also include other unencumbered assets that give us a source of contingent liquidity. We do not rely on these extra unencumbered assets in our LRA, but we might use some of them in a time of stress. We can create liquidity by using them as collateral for secured funding or through outright sale.

Other assets that are not classified as readily available for encumbrance are mainly derivatives and loans and advances to customers and banks.

Loans and advances to customers are only classified as readily available for encumbrance if they are already in a form we can use to raise funding without any other actions on our part. This includes excess collateral that is already in a secured funding structure. It also includes collateral that is pre-positioned at central banks and is available for use in secured financing.

All other loans and advances are classified as not readily available for encumbrance, but some would still be suitable for use in secured funding structures.

Encumbrance of customer loans and advances

We have issued prime retail mortgage-backed and other asset-backed securitised products to a diverse investor base through our mortgage-backed and other asset-backed funding programmes.

We have raised funding with:

– Mortgage-backed notes, both issued to third parties and retained – the latter being central bank eligible collateral for funding purposes in other Bank of England facilities

– Other asset-backed notes.

We also have a covered bond programme. Under this, we issue securities to investors secured by a pool of residential mortgages.

For more on how we have issued notes from our secured programmes externally and also retained them, and what we have used them for, see Notes 16 and 33 to the Consolidated Financial Statements.

CREDIT RATINGS (unaudited)

Contractual credit rating downgrade exposure (cumulative cash flow)

This table shows the cumulative cash outflows of Santander UK plc due to a credit rating downgrade.

	2017				2016
	One-notch downgrade £bn		Two-notch downgrade £bn		One-notch downgrade £bn		Two-notch downgrade £bn
Securitisation derivatives		2.3		2.3		3.3		3.4
Contingent liabilities and derivatives margining		1.6		1.8		1.3		1.6
Total contractual funding or margin requirements		3.9		4.1		4.6		5.0

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Capital risk

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Capital risk

Capital risk

Overview (unaudited)

Key metrics (unaudited)

Capital risk is the risk that we do not have an adequate amount or quality of capital to meet our internal business needs, regulatory requirements and market expectations, including dividend and AT1 distributions. In this section, we set out how we are regulated by the PRA (as a UK banking group) and the European Central Bank (ECB) as a member of the Banco Santander group. We also give details of the Bank of England’s 2017 stress testing exercise and an update on emerging rules. We explain how we manage capital on a standalone basis as a subsidiary in the Banco Santander group. We then analyse our capital resources and key capital ratios.

CET1 capital ratio of 12.2% (2016: 11.6%) Total capital resources increased to £17.1bn (2016: £16.2 bn)

THE SCOPE OF OUR CAPITAL ADEQUACY

Regulatory supervision

Santander UK plc is incorporated in the UK. For capital purposes, we are subject to prudential supervision by the:

– PRA: as a UK banking group

– ECB: as a member of the Banco Santander group. The ECB supervises Banco Santander as part of the Single Supervisory Mechanism (SSM).

Although we are part of the Banco Santander group, we do not have a guarantee from our ultimate parent Banco Santander SA and we operate as an autonomous subsidiary. As we are regulated by the PRA, we have to meet the PRA capital requirements on a standalone basis. We also have to show the PRA that we can withstand capital stress tests without the support of our parent. Reinforcing our corporate governance framework, the PRA exercises oversight through its rules and regulations on the Board and senior management appointments.

Santander UK Group Holdings plc is the holding company of Santander UK plc and is the head of the Santander UK group for regulatory capital and leverage purposes. The basis of consolidation for our capital disclosures is the same one we use for our Consolidated Financial Statements.

CAPITAL RISK MANAGEMENT

The Board is responsible for capital management strategy and policy and ensuring that our capital resources are monitored and controlled within regulatory and internal limits. We manage our funding and maintain capital adequacy on a standalone basis. We operate within the capital risk framework and appetite approved by our Board. This takes into account the commercial environment we operate in, our strategy for each of our material risks and the potential impact of any adverse scenarios or stresses on our capital position.

Management of capital requirements

Our capital risk appetite aims to maintain capital levels appropriate to the level of stress applied, and the expected regulatory response.

– In an adverse economic stress, which we might expect to occur once in 20 years, the firm should maintain an economic capital surplus, and should exceed all regulatory capital minimum criteria at all times

– In a very severe economic stress, which we might expect to occur once in 100 years, and which has been designed to test any specific weaknesses of a firm’s business model, the firm should maintain an economic capital surplus, and should meet all regulatory minimums at all times. This is subject to the use of regulatory buffers designed for such a stress.

Management of capital resources

We use a mix of regulatory and economic capital ratios and limits, internal buffers and restrictions to manage our capital resources. We also take account of the costs of differing capital instruments and capital management techniques. We also use these to shape the best structure for our capital needs.

We decide how to allocate our capital resources as part of our strategic planning process. We base this in part on the relative returns on capital using both economic and regulatory capital measures.

We plan for severe stresses and we set out what action we would take if an extremely severe stress threatened our viability and solvency. This could include not paying dividends, selling assets, reducing our business and issuing more capital.

Risk measurement

We apply Banco Santander SA’s approach to capital measurement and risk management for CRD IV. As a result, Santander UK plc is classified as a significant subsidiary of Banco Santander SA. For more on the CRD IV risk measurement of our exposures, see Banco Santander SA’s Pillar 3 report.

Key metrics (unaudited)

The main metrics we use to measure capital risk are:

Key risk metrics	Description
CET1 capital ratio	CET1 capital as a percentage of RWAs.
Total capital ratio	CRD IV end-point Tier 1 capital divided by RWAs.

Stress testing (unaudited)

Each year we create a capital plan, as part of our ICAAP. We also develop a series of macroeconomic scenarios to stress test our capital needs, and confirm that we have enough regulatory capital to meet our projected and stressed capital needs and to meet our obligations as they fall due. We augment our regulatory minimum capital with internally assigned buffers. We hold buffers to ensure we have enough time to take action against unexpected movements.

Risk mitigation

We have designed our capital risk framework, policies and procedures to ensure that we operate within our risk appetite.

We manage capital transferability between our subsidiaries in line with our business strategy, our risk and capital management policies, and UK laws and regulations. There are no legal restrictions on us moving capital resources promptly, or repaying liabilities, between the Company and its subsidiaries.

Santander UK plc, Abbey National Treasury Services plc, and Cater Allen Limited, which are the three PRA-regulated entities in the Santander UK group, are party to a capital support deed dated 23 December 2015 (the Capital Support Deed) with certain other non-regulated subsidiaries of Santander UK plc and Santander UK Group Holdings plc. The parties to the Capital Support Deed form a core UK group as defined in the PRA Rulebook. Exposures of each of the three regulated entities to other members of the core UK group are exempt from large exposure limits that would otherwise apply. The purpose of the Capital Support Deed is to support the prompt transfer of available capital resources from, or repayment of liabilities by, the non-regulated parties to any of the regulated parties in the event that one of the regulated parties has breached or is at risk of breaching its capital resources requirements or risk concentrations requirements. The core UK group permission expires on 31 December 2018.

Risk monitoring and reporting

We monitor and report regularly against our capital plan. We do this to identify any change in business performance that might affect our capital. Every month, we also review the economic assumptions we use to create and stress test our capital plan. We do this to identify any potential reduction in our capital.

CAPITAL RISK REVIEW

2017 compared to 2016 (unaudited)

Our CET1 capital ratio improved 60bps to 12.2% at 31 December 2017 (2016: 11.6%), reflecting higher CET1 capital from steady profits and lower RWAs. Our total capital ratio increased to 19.7% at 31 December 2017 (2016: 18.5%), with higher CET1 and AT1 capital.

Bank of England stress testing

The latest PRA stress test results were released on 28 November 2017. We significantly exceeded the PRA’s stress test CET1 capital ratio threshold requirement of 7.6%, with a stressed CET1 capital ratio of 9.6%, before management actions and 9.7% after allowed management actions. We also exceeded the leverage threshold requirement of 3.25%, with a stressed leverage ratio of 3.3%. Once again, we had the lowest stressed CET1 drawdown of all the participating UK banks, demonstrating the resilience of our balance sheet and predictable medium-low risk profile.

The Bank of England’s CET1 hurdle rate comprises the CRR Pillar 1 minimum of 4.5% and the Pillar 2A CET1 minimum of 3.1%. The minimum came into effect on 1 January 2018 and represents an increase of 0.3 percentage points over the previous Pillar 2A CET1 minimum of 2.8%, which was applicable until 31 December 2017.

Our plans for 2018 include a number of refinements to our regulatory capital models in response to supervisory recommendations and consultations. The FPC announced an increase in the countercyclical buffer from 0% to 1%. IFRS 9 was implemented from 1 January 2018, changing the way in which we raise loan loss provisions, and has the potential to make regulatory stress testing results far more pro-cyclical than the current approach. We are engaging with the PRA regarding disclosures and the need to recalibrate capital requirements as a result of this change in approach. The estimated impact of IFRS 9 on the CET1 capital ratio is 8bps before the application of any regulatory transitional arrangements which the Santander UK group will adopt and which is expected to reduce the amount impacting the CET1 capital ratio in 2018. As a result, the adoption of IFRS 9 is not expected to have a material impact on the Santander UK group’s capital position.

Key capital ratios (unaudited)

	2017 %		2016 %
CET1 capital ratio		12.2		11.6
AT1		2.4		1.8
Grandfathered Tier 1		0.8		0.8
Tier 2		4.3		4.3
Total capital ratio		19.7		18.5
The total subordination available to Santander UK plc bondholders was 19.7% (2016: 18.5%) of RWAs.

Regulatory capital resources

This table shows our regulatory capital.

	2017 £m		2016 £m
CET1 capital		10,620		10,201
AT1 capital		2,762		2,271
Tier 1 capital		13,382		12,472
Tier 2 capital		3,741		3,772
Total regulatory capital		17,123		16,244

AT1 capital

These are preference shares and innovative/hybrid Tier 1 securities. None of the instruments we issued before 1 January 2014 fully meet the CRD IV AT1 capital rules, which apply from that date. These instruments will be phased out by CRD IV rules which restrict their recognition as capital. The £750m Perpetual Capital Securities (net of issuance costs), the £800m Perpetual Capital Securities and the £500m Perpetual Capital Securities we issued since then fully meet the CRD IV AT1 capital rules.

Tier 2 capital

These are fully CRD IV eligible Tier 2 instruments and grandfathered Tier 2 instruments whose recognition as capital is being phased out under CRD IV.

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Accounting Policies

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Accounting Policies

1. ACCOUNTING POLICIES

These financial statements are prepared for Santander UK plc (the Company) and the Santander UK plc group (the Santander UK group) under the UK Companies Act 2006. The principal activity of the Santander UK group is the provision of an extensive range of personal financial services, and a wide range of banking and financial services to personal, business and public sector customers.

Santander UK plc is a public limited company, incorporated in England and Wales having a registered office at 2 Triton Square, Regent’s Place, London, NW1 3AN, phone number 0870-607-6000. It is an operating company undertaking banking and financial services transactions

Basis of preparation

These financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to 31 December each year. The financial statements have been prepared on the going concern basis using the historical cost convention, as modified by the revaluation of available-for-sale financial assets, financial assets and financial liabilities held at fair value through profit or loss and all derivative contracts, assets held for sale, retirement benefit obligations and cash-settled share-based payments, where applicable. An assessment of the appropriateness of the adoption of the going concern basis of accounting is disclosed in the Directors’ statement of going concern set out in the Directors’ Report.

Compliance with International Financial Reporting Standards

The Santander UK group Consolidated Financial Statements have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (IASB), including interpretations issued by the IFRS Interpretations Committee (IFRS IC) of the IASB (together IFRS). The Santander UK group has also complied with its legal obligation to comply with International Financial Reporting Standards as adopted by the European Union as there are no applicable differences between the two frameworks for the periods presented.

The Company financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union and as applied in accordance with the provision of the UK Companies Act 2006.

Disclosures required by IFRS 7 ‘Financial Instruments: Disclosure’ relating to the nature and extent of risks arising from financial instruments, and IAS 1 ‘Presentation of Financial Statements’ relating to objectives, policies and processes for managing capital, can be found in the Risk review which form an integral part of these financial statements.

The Santander UK group designates certain financial liabilities at fair value through profit or loss where they contain embedded derivatives or where associated derivatives used to economically hedge the risk are held at fair value. Following the endorsement of IFRS 9 ‘Financial Instruments’ by the EU in December 2016, the Santander UK group has elected to early apply from 1 January 2017 the requirements for the presentation of gains and losses on such financial liabilities relating to own credit in other comprehensive income without applying the other requirements in IFRS 9. The cumulative own credit adjustment component of the cumulative fair value adjustment on financial liabilities designated at fair value through profit or loss was £18m (net of tax) and is included in opening retained earnings.

Change in accounting policy

During the year, management changed the accounting policy for business combinations between entities under common control. Previously, the Santander UK group applied acquisition accounting under IFRS 3 where the acquisition was for cash consideration. Where the acquisition was for non-cash consideration, the acquisition was accounted for in a manner consistent with group reconstruction relief under the UK GAAP (merger accounting). Management has elected to account for all business combinations between entities under common control at their book values in the acquired entity by including the acquired entity’s results from the date of the business combinations and not restating comparatives. Management believes changing to this basis of accounting is more relevant to accounting for business combinations between entities under common control. Applying acquisition accounting to such transactions where all of the businesses are ultimately controlled by the same party both before and after the business combinations is seen as being less relevant as there are no parties external to Banco Santander SA. For the Santander UK group, the effect of changing the accounting policy is to reduce goodwill by £631m and reduce retained earnings by the same amount, this amount representing the difference between the purchase price and the aggregate book value of the assets and liabilities of Santander Cards Limited, Santander Cards (UK) Limited (and its subsidiaries), Santander Cards Ireland Limited and Santander Consumer (UK) plc, which were acquired from Banco Santander SA in 2010. Each of the comparative periods presented has been restated to reflect the change in accounting policy. The application of the change in accounting policy did not result in any material change to the accounting for the acquisition of Alliance & Leicester plc from Banco Santander SA in 2009.

Future accounting developments

As at 31 December 2017, the Santander UK group has not yet adopted the following significant new or revised standards and interpretations, and amendments thereto, which have been issued but which are not yet effective for the Santander UK group:

a) IFRS 9 ‘Financial Instruments’ (IFRS 9) – In July 2014, the International Accounting Standards Board (IASB) approved IFRS 9 to replace IAS 39 ‘Financial Instruments: Recognition and Measurement’.

IFRS 9 sets out the requirements for recognition and measurement of financial instruments. The main new developments of the standard are discussed below.

Classification and measurement of financial assets and financial liabilities: Under IFRS 9, financial assets are classified on the basis of the business model within which they are held and their contractual cash flow characteristics. These factors determine whether the financial assets are measured at amortised cost, fair value through other comprehensive income or fair value through profit or loss. For many financial assets, the classification and measurement outcomes are similar to IAS 39. However, under IFRS 9, embedded derivatives are not separated from host financial assets and equity securities are measured at fair value either through profit or loss or, in certain circumstances, an irrevocable election may be made to present fair value movements in other comprehensive income. The requirements for the classification and measurement of financial liabilities were carried forward unchanged from IAS 39, however, the requirements relating to the fair value option for financial liabilities were changed to address own credit risk and, in particular, the presentation of gains and losses within other comprehensive income. For the Santander UK group:

– The vast majority of financial assets which are classified as loans and receivables or held-to-maturity investments under IAS 39 (including certain debt securities) will continue to be measured at amortised cost under IFRS 9;

– Most debt securities classified as available-for-sale financial assets will be measured at fair value through other comprehensive income, with some being measured at fair value through profit or loss;

– Treasury and other eligible bills classified as available-for-sale financial assets will be measured at amortised cost or fair value through other comprehensive income depending upon the business model in which they are held; and

– Certain loans currently designated at fair value through profit or loss under IAS 39 may be reclassified to amortised cost where they are held within a business model whose objective is to hold the assets to collect contractual cash flows and those cash flows represent solely payments of principal and interest on the principal outstanding.

Impairment: IFRS 9 introduces fundamental changes to the impairment of financial assets measured at amortised cost or at fair value through other comprehensive income, lease receivables and certain commitments to extend credit and financial guarantee contracts. It is no longer necessary for losses to be incurred before credit losses are recognised. Instead, under IFRS 9, an entity always accounts for expected credit losses (ECLs), and any changes in those ECLs. The ECL approach must reflect both current and forecast changes in macroeconomic data over a horizon that extends from 12 months to the remaining life of the asset if a borrower’s credit risk is deemed to have deteriorated significantly at the reporting date compared to the origination date. The estimate of ECLs, should reflect an unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes and considering reasonable and supportable information at the reporting date. Similar to the current incurred credit loss provisioning approach, management will exercise judgement as to whether additional adjustments are required in order to adequately reflect possible events or current conditions that could affect credit risk.

For financial assets, an ECL is the current value of the difference between the contractual cash flows owed to the entity and the cash flows which the entity expects to receive. For undrawn loan commitments, an ECL is the current value of the difference between the contractual cash flows owed to the entity and the cash flows which the entity expects to receive if the loan is drawn.

An assessment of each facilities’ credit risk profile will determine whether they are to be allocated to one of three stages:

– Stage 1: when it is deemed there has been no significant increase in credit risk since initial recognition, a loss allowance equal to a 12-month ECL – i.e. the proportion of lifetime expected losses resulting from possible default events within the next 12-months – will be applied;

– Stage 2: when it is deemed there has been a significant increase in credit risk since initial recognition, but no credit impairment has materialised, a loss allowance equal to the lifetime ECL – i.e. lifetime expected loss resulting from all possible defaults throughout the residual life of a facility – will be applied; and

– Stage 3: when the facility is considered credit impaired, a loss allowance equal to the lifetime ECL will be applied. Similar to incurred losses under IAS 39, objective evidence of credit impairment is required.

The assessment of whether a significant increase in credit risk has occurred since initial recognition involves the application of both quantitative measures and qualitative factors, requires management judgement and is a key aspect of the IFRS 9 methodology.

Hedge accounting: The general hedge accounting requirements align more closely with risk management practices and establish a more principle-based approach thereby allowing hedge accounting to be applied to a wider variety of hedging instruments and risks. Macro hedge accounting is being dealt with as a separate project. Until such time as that project is complete, and to remove any potential conflict between any existing macro hedge accounting undertaken under IAS 39 and the new general hedge accounting requirements of IFRS 9, entities can choose to continue to apply the existing hedge accounting requirements in IAS 39. Santander UK group has decided to continue IAS 39 hedge accounting and consequently, there are no changes being implemented to hedge accounting policies and practices.

Transition and impact: IFRS 9 has been endorsed for use in the European Union. The mandatory effective date of IFRS 9 is 1 January 2018. The classification, measurement and impairment requirements will be applied retrospectively by adjusting the opening balance sheet at the date of initial application. There is no requirement to restate comparative information.

For the Santander UK group, the application of IFRS 9 decreases shareholders’ equity at 1 January 2018 by £192m (net of tax), comprised of a £49m decrease arising from the application of the new classification and measurement requirements for financial assets (as explained above), and a c£211m decrease arising from the application of the new ECL impairment methodology, these amounts being partially offset by the recognition of a deferred tax asset of £68m.

These impacts take into account the narrow-scope amendments made to IFRS 9 by the IASB in October 2017 entitled ‘Prepayment Features with Negative Compensation (Amendments to IFRS 9)’. These amendments which are not effective until annual periods beginning on or after 1 January 2019 can be adopted early. The amendments permit some prepayable financial assets with negative compensation to be measured at amortised cost that, but for the amendment, would have been measured at fair value through profit or loss. Negative compensation arises where the contractual terms permit the borrower to prepay the instrument before its contractual maturity, but the prepayment amount could be less than unpaid amounts of principal and interest. To qualify for amortised cost measurement, the negative compensation must be “reasonable compensation” for early termination of the contract. The amendments are awaiting EU endorsement.

As referred to in the ‘Compliance with International Financial Reporting Standards’ section above, the Santander UK group elected to early apply from 1 January 2017 the requirements for the presentation of gains and losses on certain financial liabilities relating to own credit in other comprehensive income. This presentational change had no impact on shareholders’ equity.

Recommendations of the Enhanced Disclosure Task Force (EDTF) with respect to Expected Credit Losses

The following additional information is provided in accordance with the recommendations of the EDTF in their 30 November 2015 report entitled ‘Impact of Expected Credit Loss Approaches on Bank Risk Disclosures’ regarding applying the key principles within an expected credit loss (ECL) approach and the risk management organisation, processes and key functions.

a) How Santander UK interprets and expects to apply the key principles within an ECL approach

In forecasting ECLs under IFRS 9, Santander UK has leveraged retail and corporate credit risk models used for underwriting, portfolio management and regulatory capital. These credit risk measurement tools principally capture idiosyncratic (customer and facility) risk drivers and when transformed into probability of default (PD), exposure at default (EAD) and loss given default (LGD) estimates, form the basis for quantifying ECL.

Outputs from these models have been incorporated into a new modelling framework developed for IFRS 9, which combines other factors that explicitly capture systemic effects (relating to changes in credit conditions) and the maturity of the exposure. Systemic effects are accounted for by using the outputs of existing macroeconomic stress testing models as factors in the ECL calculation, while the addition of time related factors (such as time since last rating) enable the forecasting of risk, for each individual loan, to be extended over the lifetime of the exposure and reflect economic forecasts.

The ability to forecast beyond 12 months is further supplemented by the introduction of a new survival rate (SR) model which predicts the likelihood that an exposure will still be open and not defaulted at any point during its remaining life (after making allowance for early redemptions).

The calculation of ECL is based on either possible defaults within a period of 12 months following the reporting date (12-month ECL) or defaults arising throughout the residual life of the exposure (Lifetime ECL). The forecast horizon will be determined according to a stage allocation assessment, whereby an underlying facility is assigned to one of three stages as set out above. The assessment of whether there has been significant increase in credit risk since initial recognition, for the purpose of moving exposures between stages, will incorporate a number of quantitative, qualitative and days past due ‘backstop’ tests. The determination incorporates a measure of the change in default risk between initial recognition and the reporting date.

For each term loan the output of the PD, EAD, LGD and SR models are multiplied together to derive a measure of ECL for each month to the end of the contractual period. The resulting ECL forecast is then discounted using the effective interest rate to reflect the time value of money. Summing each monthly ECL to the end of the contractual term gives the lifetime ECL, while the 12-month ECL is calculated by summing the first 12-monthly ECL values only. For revolving credit facilities the lifetime period is determined to be the point at which either the SR model predicts all exposures have closed or the ECL value is zero through the effects of discounting.

ECLs will be based on macroeconomic inputs reflecting a set of scenarios that will incorporate, as a minimum; a base scenario, an upside scenario and a downside scenario based on various macroeconomic variables, e.g. GDP, house prices, unemployment rates, etc. Each scenario will be assigned a probability weighting that reflects the likelihood of occurrence. The resulting ECL for each scenario will be combined to give an unbiased, probability-weighted ECL value.

b) Santander UK’s governance processes over ECL

A separate IFRS 9 Steering Group, was set up to manage the implementation of IFRS 9. With respect to ECL, a number of cross-functional working groups were mobilised to opine and make proposals on model design and integration, technical accounting and implementation. Approvals and ratification were sought at a series of Management Committees and Forums, whilst key risks, assumptions, issues, and dependencies, aligned to material portfolios/key design considerations, have been tracked at the Steering Group.

ECL impairment models are sensitive to changes in credit conditions, and reflect various management judgements that give rise to measurement uncertainty. The governance framework for generating and reviewing the scenarios and weights leverages Santander UK’s existing processes to assess risk appetite and manage stress testing, which incorporate the views of subject matter experts across numerous business functions and a comparison with external benchmarks prior to running forecasting models. The following fora review provision drivers and ensure that management judgements remain appropriate:

– The Model Risk Control Forum, which reviews and approves required changes to ECL models;

– The Asset and Liability Committee is responsible for reviewing and approving the economic scenarios and probability weights used to calculate forward-looking scenarios;

– The Credit Provisions Forum reviews management judgements and approves IFRS 9 ECL impairment allowances; and

– The Board Audit Committee reviews and challenges the appropriateness of the estimates and judgements made by management.

b) IFRS 15 ‘Revenue from Contracts with Customers’ (IFRS 15) – In May 2014, the IASB issued IFRS 15. The effective date of IFRS 15 is 1 January 2018. The standard establishes a principles-based approach for revenue recognition and introduces the concept of recognising revenue for performance obligations as they are satisfied. Revenue relating to lease contracts, insurance contracts and financial instruments is outside the scope of IFRS 15. For Santander UK group’s fee and commission income, which is within the scope of the standard, income is recognised as services are provided and this continues under the performance obligation approach in IFRS 15. There have been no significant changes in the recognition of in scope income and, consequently, IFRS 15 has no material impact for the Santander UK group.

c) IFRS 16 ‘Leases’ (IFRS 16) – In January 2016, the IASB issued IFRS 16. The standard is effective for annual periods beginning on or after 1 January 2019. Earlier adoption is permitted for entities that apply IFRS 15 at or before the date of initial application of IFRS 16. IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure for both lessees and lessors. For lessee accounting, IFRS 16 introduces a single lessee accounting model and requires a lessee to recognise a right-of-use asset representing its right to use the underlying leased asset and a lease liability representing its obligation to make lease payments for all leases with a term of more than 12 months, unless the underlying asset is of low value. For lessor accounting, IFRS 16 substantially carries forward the lessor accounting requirements from the existing leasing standard (IAS 17) and a lessor continues to classify its leases as operating leases or finance leases and to account for those two types of leases differently. At the date of publication of these Consolidated Financial Statements the impact of the standard is currently being assessed and it is not yet practicable to quantify the effect of IFRS 16 on these Consolidated Financial Statements. Details of existing operating lease commitments in respect of leases where the Santander UK group is lessee and that are likely to come on the balance sheet under IFRS 16 are set out in Note 29.

Comparative information

As required by US public company reporting requirements, these financial statements include two years of comparative information for the consolidated income statement, consolidated statement of comprehensive income, consolidated statement of changes in equity, consolidated statement of cash flows and related Notes.

Consolidation

a) Subsidiaries

The Consolidated Financial Statements incorporate the financial statements of Santander UK plc and entities (including structured entities) controlled by the Company and its subsidiaries. Control is achieved where the Company has (i) power over the investee; (ii) is exposed, or has rights, to variable returns from its involvement with the investee; and (iii) has the ability to use its power to affect its returns. The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above.

When the Company has less than a majority of the voting rights of an investee, it has power over the investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The Company considers all relevant facts and circumstances in assessing whether or not the Company’s voting rights in an investee are sufficient to give it power, including:

– The size of the Company’s holding of voting rights relative to the size and dispersion of holdings of the other vote holders

– Potential voting rights held by the Company, other vote holders or other parties

– Rights arising from other contractual arrangements

– Any additional facts and circumstances that indicate that the Company has, or does not have, the current ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders’ meetings.

Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Specifically, the results of a subsidiary acquired or disposed of during the year are included in the consolidated income statement and the consolidated statement of comprehensive income from the date the Company gains control until the date when the Company ceases to control the subsidiary. Inter-company transactions, balances and unrealised gains on transactions between Santander UK group companies are eliminated; unrealised losses are also eliminated unless the cost cannot be recovered.

The acquisition method of accounting is used to account for the acquisition of subsidiaries which meet the definition of a business. The cost of an acquisition is measured at the fair value of the assets given up, shares issued or liabilities undertaken at the date of acquisition. Acquisition related costs are expensed as incurred. The excess of the cost of acquisition, as well as the fair value of any interest previously held, over the fair value of the Santander UK group’s share of the identifiable net assets of the acquired subsidiary, associate or business at the date of acquisition is recorded as goodwill. When the Santander UK group loses control of a subsidiary, the profit or loss on disposal is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), less liabilities of the subsidiary and any non-controlling interests. Amounts previously recognised in other comprehensive income in relation to the subsidiary are accounted for (i.e. reclassified to profit or loss or transferred directly to retained earnings) in the same manner as would be required if the relevant assets or liabilities are disposed of. The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under IAS 39 ‘Financial Instruments: Recognition and Measurement’ or, when applicable, the costs on initial recognition of an investment in an associate or jointly controlled entity.

Business combinations between entities under common control (i.e. fellow subsidiaries of Banco Santander SA (the ultimate parent)) are outside the scope of IFRS 3 – ‘Business Combinations’, and there is no other guidance for such transactions under IFRS. The Santander UK group elects to account for business combinations between entities under common control at their book values in the acquired entity by including the acquired entity’s results from the date of the business combination and not restating comparatives. Reorganisations of entities within the Santander UK group are accounted for at their book values.

Interests in subsidiaries are eliminated during the preparation of the Consolidated Financial Statements. Interests in subsidiaries in the Company unconsolidated financial statements are held at cost subject to impairment.

b) Joint ventures

Joint ventures are joint arrangements whereby the parties that have joint control of the arrangement have rights to the net assets of the joint arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control. Accounting policies have been aligned to the extent there are differences from the Santander UK group’s policies.

The Santander UK group’s investments in joint ventures are accounted for by the equity method of accounting and are initially recorded at cost and adjusted each year to reflect the Santander UK group’s share of the post-acquisition results of the joint venture. When the Santander UK group’s share of losses of a joint venture exceed the Santander UK group’s interest in that joint venture, the Santander UK group discontinues recognising its share of further losses. Additional losses are recognised only to the extent that the Santander UK group has incurred legal or constructive obligations or made payments on behalf of the joint venture.

Foreign currency translation

Items included in the financial statements of each entity (including foreign branch operations) in the Santander UK group are measured using the currency that best reflects the economic substance of the underlying events and circumstances relevant to that entity (the functional currency). The Consolidated Financial Statements are presented in sterling, which is the functional currency of the Company.

Income statements and cash flows of foreign entities are translated into the Santander UK group’s presentation currency at average exchange rates for the year and their balance sheets are translated at the exchange rates ruling on 31 December.

Exchange differences arising from the translation of the net investment in foreign entities are recognised in other comprehensive income. When a foreign entity is sold, such exchange differences are recognised in the income statement as part of the gain or loss on sale.

Foreign currency transactions are translated into the functional currency of the entity involved at the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement unless recognised in other comprehensive income in connection with a cash flow hedge. Non-monetary items denominated in a foreign currency measured at historical cost are not retranslated. Exchange rate differences arising on non-monetary items measured at fair value are recognised in the consolidated income statement except for differences arising on available-for-sale equity securities which are recognised in other comprehensive income.

Revenue recognition

a) Interest income and expense

Interest income on financial assets that are classified as loans and receivables, held-to-maturity investments or available-for-sale securities, and interest expense on financial liabilities other than those at fair value through profit or loss are determined using the effective interest method. The effective interest rate is the rate that discounts the estimated future cash payments or receipts over the expected life of the instrument or, when appropriate, a shorter period, to the net carrying amount of the financial asset or financial liability. When calculating the effective interest rate, the future cash flows are estimated after considering all the contractual terms of the instrument excluding future credit losses. The calculation includes all amounts paid or received by the Santander UK group that are an integral part of the overall return, direct incremental transaction costs related to the acquisition, issue or disposal of the financial instrument and all other premiums or discounts. Interest income on assets classified as loans and receivables and available-for-sale, interest expense on liabilities classified at amortised cost, and interest income and expense on hedging derivatives are recognised in interest and similar income and interest expense and similar charges in the income statement.

In accordance with IFRS, the Santander UK group recognises interest income on assets after they have been written down as a result of an impairment loss. Interest continues to be accrued on all loans and the element of interest that is not anticipated to be recovered is provided for. Interest income on impaired financial assets is recognised using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss.

b) Fee and commission income and expense

Fees and commissions that are not an integral part of the effective interest rate are recognised when the service is provided, or on the performance of a significant act. For retail and corporate products, fee and commission income consists principally of collection services fees, commission on foreign currencies, commission and other fees received from retailers for processing credit card transactions, fees received from other credit card issuers for providing cash advances for their customers through the Santander UK group’s branch and ATM networks, annual fees payable by credit card holders and fees for non-banking financial products. Revenue from these income streams is recognised when the service is provided.

For insurance products, fee and commission income consists principally of commissions earned on the sale of building and contents insurance, life protection insurance and payment cover insurance. Revenue from these income streams is recognised when the service is provided.

Fee and commission income which forms an integral part of the effective interest rate of a financial instrument (e.g. certain loan commitment fees) is recognised as an adjustment to the effective interest rate and recorded in ‘Interest income’.

c) Dividend income

Except for equity securities classified as trading assets or financial assets held at fair value through profit or loss, described below, dividend income is recognised when the right to receive payment is established. This is the ex-dividend date for equity securities.

d) Net trading and other income

Net trading and other income comprises all gains and losses from changes in the fair value of financial assets and liabilities held at fair value through profit or loss (including financial assets and liabilities held for trading, trading derivatives and designated as fair value through profit or loss), together with related interest income, expense, dividends and changes in fair value of any derivatives managed in conjunction with these assets and liabilities. Changes in fair value of derivatives in a fair value hedging relationship are also recognised in net trading and other income. Net trading and other income also include income from operating lease assets, and profits/(losses) arising on the sales of property, plant and equipment and subsidiary undertakings.

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, including computer software, which are assets that necessarily take a substantial period of time to develop for their intended use, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use. All other borrowing costs are recognised in profit or loss in the period in which they occur.

Pensions and other post-retirement benefits

The Santander UK group operates various pension schemes. The schemes are generally funded through payments to insurance companies or trustee-administered funds, as determined by periodic actuarial calculations. A defined benefit scheme is a pension scheme that guarantees an amount of pension benefit to be provided, usually as a function of one or more factors such as age, years of service or compensation. A defined contribution plan is a pension scheme under which the Santander UK group pays fixed contributions as they fall due into a separate entity (a fund). The pension paid to the member at retirement is based on the amount in the separate fund for each member. The Santander UK group has no legal or constructive obligations to pay further contributions into the fund to ‘top up’ benefits to a certain guaranteed level. Pension costs are charged to the ‘Administration expenses’, within the line item ‘Operating expenses before impairment losses, provisions and charges’ with the net interest on the defined benefit asset or liability included within ‘Net interest income’ in the income statement.

a) Defined benefit schemes

The asset or liability recognised in respect of defined benefit pension schemes is the present value of the defined benefit obligation at the balance sheet date, less the fair value of scheme assets. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The assets of the schemes are measured at their fair values at the balance sheet date. Full actuarial valuations of the Santander UK group’s defined benefit schemes are carried out on a triennial basis. Each scheme’s trustee is responsible for the actuarial valuations and in doing so considers or relies in part on a report of a third party expert.

The present value of the defined benefit obligation is estimated by projecting forward the growth in current accrued pension benefits to reflect inflation and salary growth to the date of pension payment, then discounted to present value using the yield applicable to high-quality AA rated corporate bonds of the same currency and which have terms to maturity closest to the terms of the scheme liabilities, adjusted where necessary to match those terms. In determining the value of scheme liabilities, demographic and financial assumptions are made by management about life expectancy, inflation, discount rates, pension increases and earnings growth, based on past experience and future expectations. Financial assumptions are based on market conditions at the balance sheet date and can generally be derived objectively.

Demographic assumptions require a greater degree of estimation and judgement to be applied to externally derived data. Any surplus or deficit of scheme assets over liabilities is recognised in the balance sheet as an asset (surplus) or liability (deficit). An asset is only recognised to the extent that the surplus can be recovered through reduced contributions in the future or through refunds from the scheme. The income statement includes the net interest income/expense on the net defined benefit liability/asset, current service cost and any past service cost and gain or loss on settlement. Remeasurement of defined benefit pension schemes, including return on scheme assets (excludes amounts included in net interest), actuarial gains and losses (arising from changes in demographic assumptions, the impact of scheme experience and changes in financial assumptions) and the effect of the changes to the asset ceiling (if applicable), are recognised in other comprehensive income.

Remeasurement recognised in other comprehensive income will not be reclassified to the income statement. Past-service costs are recognised as an expense in the income statement at the earlier of when the scheme amendment or curtailment occurs and when the related restructuring costs or termination benefits are recognised. Curtailments include the impact of significant reductions in the number of employees covered by a scheme, or amendments to the terms of the scheme so that a significant element of future service will no longer qualify for benefits or will qualify only for reduced benefits. Curtailment gains and losses on businesses that meet the definition of discontinued operations are included in profit or loss for the year from discontinued operations. Gains and losses on settlements are recognised when the settlement occurs.

b) Defined contribution plans

For defined contribution plans, the Santander UK group pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. Once the contributions have been paid, the Santander UK group has no further payment obligation. The regular contributions constitute net periodic costs for the year in which they are due and are included in staff costs which are presented in Administration expenses in the income statement.

c) Post-retirement medical benefit plans

Post-retirement medical benefit liabilities are determined using the Projected Unit Credit Method, with actuarial valuations updated at each year-end. The expected benefit costs are accrued over the period of employment using an accounting methodology similar to that for the defined benefit pension scheme.

Share-based payments

The Santander UK group engages in cash-settled and equity-settled share-based payment transactions in respect of services received from certain of its employees. Shares of the Santander UK group’s parent, Banco Santander SA are purchased in the open market by the Santander UK group (for the Employee Sharesave scheme) or are purchased by Banco Santander SA or another Banco Santander company (for awards granted under the Long-Term Incentive Plan and the Deferred Shares Bonus Plan) to satisfy share options as they vest.

Options granted under the Employee Sharesave scheme are accounted for as cash-settled share-based payment transactions. Awards granted under the Long-Term Incentive Plan and Deferred Shares Bonus Plan are accounted for as equity-settled share-based payment transactions.

The fair value of the services received is measured by reference to the fair value of the shares or share options initially on the date of the grant for both the cash and equity settled share-based payments and then subsequently at each reporting date for the cash settled share-based payments. The cost of the employee services received in respect of the shares or share options granted is recognised in the income statement within administration expenses, over the period that the services are received, which is the vesting period.

A liability equal to the portion of the goods or services received is recognised at the current fair value determined at each balance sheet date for cash-settled share-based payments. A liability equal to the amount to be reimbursed to Banco Santander SA is recognised at the current fair value determined at the grant date for equity-settled share-based payments.

The fair value of the options granted under the Employee Sharesave scheme is determined using an option pricing model, which takes into account the exercise price of the option, the current share price, the risk free interest rate, the expected volatility of the Banco Santander SA share price over the life of the option and the dividend growth rate. The fair value of the awards granted for the Long-Term Incentive Plan was determined at the grant date using an option pricing model, which takes into account the share price at grant date, the risk free interest rate, the expected volatility of the Banco Santander SA share price over the life of the award and the dividend growth rate. Vesting conditions included in the terms of the grant are not taken into account in estimating fair value, except for those that include terms related to market conditions. Non-market vesting conditions are taken into account by adjusting the number of shares or share options included in the measurement of the cost of employee service so that ultimately, the amount recognised in the income statement reflects the number of vested shares or share options.

Where an award has been modified, as a minimum, the expense of the original award continues to be recognised as if it had not been modified. Where the effect of a modification is to increase the fair value of an award or increase the number of equity instruments, the incremental fair value of the award or incremental fair value of the modification of the award is recognised in addition to the expense of the original grant, measured at the date of modification, over the modified vesting period.

A cancellation that occurs during the vesting period is treated as an acceleration of vesting, and recognised immediately for the amount that would otherwise have been recognised for services over the vesting period.

Goodwill and other intangible assets

Goodwill represents the excess of the cost of an acquisition, as well as the fair value of any interest previously held, over the fair value of the Santander UK group’s share of the identifiable net assets of the acquired subsidiary, associate, or business at the date of acquisition. Goodwill on the acquisition of subsidiaries and businesses is included in intangible assets. Goodwill on acquisitions of associates is included as part of investment in associates. Goodwill is tested for impairment at each balance sheet date, or more frequently when events or changes in circumstances dictate, and carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity or business include the carrying amount of goodwill relating to the entity or business sold.

Other intangible assets are recognised if they arise from contracted or other legal rights or if they are capable of being separated or divided from the Santander UK group and sold, transferred, licensed, rented or exchanged. The value of such intangible assets is amortised on a straight-line basis over the useful economic life of the assets in question, which ranges from three to seven years. Other intangible assets are reviewed annually for impairment indicators and tested for impairment where indicators are present.

Software development costs are capitalised when they are direct costs associated with identifiable and unique software products that are expected to provide future economic benefits and the cost of these products can be measured reliably. These costs include payroll, the costs of materials and services and directly attributable overheads. Internally developed software meeting these criteria and externally purchased software are classified in intangible assets on the balance sheet and amortised on a straight-line basis over their useful life of three to seven years, unless the software is an integral part of the related computer hardware, in which case it is treated as property, plant and equipment as described below. Capitalisation of costs ceases when the software is capable of operating as intended. Costs associated with maintaining software programmes are expensed as incurred.

Property, plant and equipment

Property, plant and equipment include owner-occupied properties (including leasehold properties), office fixtures and equipment and computer software. Property, plant and equipment are carried at cost less accumulated depreciation and accumulated impairment losses. A review for indications of impairment is carried out at each reporting date. Gains and losses on disposal are determined by reference to the carrying amount and are reported in net trading and other income. Repairs and renewals are charged to the income statement when the expenditure is incurred. Internally developed software meeting the criteria set out in ’Goodwill and other intangible assets’ above and externally purchased software are classified in property, plant and equipment on the balance sheet where the software is an integral part of the related computer hardware (e.g. operating system of a computer).

Classes of property, plant and equipment are depreciated on a straight-line basis over their useful life, as follows:

Owner-occupied properties	Not exceeding 50 years
Office fixtures and equipment	3 to 15 years
Computer software	3 to 7 years

Depreciation is not charged on freehold land and assets under construction.

Financial assets and liabilities

Financial assets and liabilities are initially recognised when the Santander UK group becomes a party to the contractual terms of the instrument. The Santander UK group determines the classification of its financial assets and liabilities at initial recognition. Financial assets are classified as financial assets at fair value through profit or loss, loans and receivables, available-for-sale financial assets and held-to-maturity investments. Financial assets that are classified at fair value through profit or loss, which have not been designated as such or are not accounted for as derivatives, or assets classified as available-for-sale, may subsequently in rare circumstances, be reclassified from the fair value through profit or loss category to the loans and receivables, available-for-sale or held-to-maturity categories. In order to meet the criteria for reclassification, the asset must no longer be held for the purpose of selling or repurchasing in the near-term and must also meet the definition of the category into which it is to be reclassified had it not been required to classify it at fair value through profit or loss at initial recognition. The reclassified value is the fair value of the asset at the date of reclassification. The Santander UK group has not utilised this option and therefore has not reclassified any assets from the fair value through profit or loss category that were classified as such at initial recognition. Financial liabilities are classified as fair value through profit or loss if they are either held for trading or otherwise designated at fair value through profit or loss on initial recognition.

Financial assets are derecognised when the rights to receive cash flows have expired or the Santander UK group has transferred its contractual right to receive the cash flows from the assets and either: (1) substantially all the risks and rewards of ownership have been transferred; or (2) the Santander UK group has neither retained nor transferred substantially all of the risks and rewards, but has transferred control. Financial liabilities are derecognised when extinguished, cancelled or expired.

A regular way purchase is a purchase of a financial asset under a contract whose terms require delivery of the asset within the timeframe established generally by regulation or convention in the market place concerned. Regular way purchases of financial assets classified as loans and receivables, issues of equity or financial liabilities measured at amortised cost are recognised on settlement date; all other regular way purchases and issues are recognised on trade date.

a) Financial assets and liabilities at fair value through profit or loss

Financial assets and financial liabilities are classified as fair value through profit or loss if they are either held for trading or otherwise designated at fair value through profit or loss on initial recognition.

Financial assets and financial liabilities are classified as held for trading if they are derivatives or if they are acquired or incurred principally for the purpose of selling or repurchasing in the near-term, or form part of a portfolio of financial instruments that are managed together and for which there is evidence of short-term profit taking.

In certain circumstances financial assets and financial liabilities other than those that are held for trading are designated at fair value through profit or loss where this results in more relevant information because it significantly reduces a measurement inconsistency that would otherwise arise from measuring assets or liabilities or recognising the gains or losses on them on a different basis, where the assets or liabilities are managed and their performance evaluated on a fair value basis, or where a financial asset or financial liability contains one or more embedded derivatives which are not closely related to the host contract.

Financial assets and financial liabilities classified as fair value through profit or loss are initially recognised at fair value and transaction costs are taken directly to the income statement. Gains and losses arising from changes in fair value are included directly in the income statement except for gains and losses on financial liabilities designated at fair value through profit and loss relating to own credit which are presented in other comprehensive income.

Derivative financial instruments, trading assets and liabilities and financial assets and liabilities designated at fair value are classified as fair value through profit or loss.

b) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments, that are not quoted in an active market and which are not classified as available-for-sale or fair value through profit or loss. They arise when the Santander UK group provides money or services directly to a customer with no intention of trading the loan. Loans and receivables are initially recognised at fair value including direct and incremental transaction costs. They are subsequently valued at amortised cost, using the effective interest method. Loans and receivables consist of loans and advances to banks, loans and advances to customers, and loans and receivables securities.

c) Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial assets that are designated as available-for-sale and are not categorised into any of the other categories described. They are initially recognised at fair value including direct and incremental transaction costs. They are subsequently held at fair value. Gains and losses arising from changes in fair value of available-for-sale securities are recognised in other comprehensive income until sale or until determined to be impaired when the cumulative gain or loss or impairment losses are transferred to the income statement. Where the financial asset is interest-bearing, interest is determined using the effective interest method.

Income on investments in equity shares, debt instruments and other similar interests is recognised in the income statement as and when dividends are declared and interest is accrued. Impairment losses and foreign exchange translation differences on monetary items are recognised in the income statement.

d) Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Santander UK group’s management has the positive intention and ability to hold to maturity other than:

– Those that the Santander UK group designates upon initial recognition as at fair value through profit or loss;

– Those that the Santander UK group designates as available-for-sale; and

– Those that meet the definition of loans and receivables.

These are initially recognised at fair value including direct and incremental transaction costs and measured subsequently at amortised cost, using the effective interest method, less any provision for impairment.

A sale or reclassification of a more than insignificant amount of held-to-maturity investments would result in the reclassification of all held-to-maturity investments to available-for-sale financial assets.

e) Borrowings

Borrowings (which include deposits by banks, deposits by customers, debt securities in issue and subordinated liabilities) are recognised initially at fair value, being their issue proceeds (fair value of consideration received) net of transaction costs incurred. Borrowings are subsequently stated at amortised cost or fair value through profit or loss dependent on designation at initial recognition. Savings accounts and time deposits are interest-bearing.

Preference shares which carry a contractual obligation to transfer economic benefits are classified as financial liabilities and are presented in subordinated liabilities. The coupon on these preference shares is recognised in the income statement as interest expense on an amortised cost basis using the effective interest method.

f) Other financial liabilities

All other financial liabilities are initially recognised at fair value net of transaction costs incurred. They are subsequently stated at amortised cost, using the effective interest method.

Contracts involving the receipt of cash on which customers receive an index-linked return are accounted for as equity index-linked deposits. The principal products are Capital Guaranteed/Protected Products which give the customers a limited participation in the upside growth of an equity index. In the event the index falls in price, a cash principal element is guaranteed/protected. The equity index-linked deposits contain embedded derivatives. These embedded derivatives, in combination with the principal cash deposit element, are designed to replicate the investment performance profile tailored to the return agreed in the contracts with customers. The cash principal element is accounted for as deposits by customers at amortised cost. The embedded derivatives are separated from the host instrument and are separately accounted for as derivative financial instruments.

g) Sale and repurchase agreements (including stock borrowing and lending)

Securities sold subject to a commitment to repurchase them at a predetermined price (repos) under which substantially all the risks and rewards of ownership are retained by the Santander UK group remain on the balance sheet and a liability is recorded in respect of the consideration received. Securities purchased under commitments to resell (reverse repos) are not recognised on the balance sheet and the consideration paid is recorded as an asset. The difference between the sale and repurchase price is treated as trading income in the income statement, except where the repo is not treated as part of the trading book, in which case the difference is recorded in interest income or expense.

Securities lending and borrowing transactions are generally secured, with collateral taking the form of securities or cash advanced or received. Securities lent or borrowed are not reflected on the balance sheet. Collateral in the form of cash received or advanced is recorded as a deposit or a loan. Collateral in the form of securities is not recognised.

h) Day One profit adjustments

The fair value of a financial instrument on initial recognition is generally its transaction price (that is, the fair value of the consideration given or received). However, sometimes the fair value will be based on other observable current market transactions in the same instrument, without modification or repackaging, or on a valuation technique whose variables include only data from observable markets, such as interest rate yield curves, option volatilities and currency rates. When such evidence exists, the Santander UK group recognises a trading gain or loss at inception (Day One gain or loss), being the difference between the transaction price and the fair value. When significant unobservable parameters are used, the entire Day One gain or loss is deferred and is recognised in the income statement over the life of the transaction until the transaction matures, is closed out, the valuation inputs become observable or the Santander UK group enters into an offsetting transaction.

Derivative financial instruments

Derivative financial instruments (derivatives) are contracts or agreements whose value is derived from one or more underlying indices or asset values inherent in the contract or agreement, which require no or little initial net investment and are settled at a future date. Transactions are undertaken in interest rate, cross currency, equity, residential property and other index-related swaps, forwards, caps, floors, swaptions, as well as credit default and total return swaps, equity index contracts and exchange traded interest rate futures, and equity index options.

Derivatives are held for trading or for risk management purposes. Derivatives are classified as held for trading unless they are designated as being in a hedge relationship. The Santander UK group chooses to designate certain derivatives as in a hedging relationship if they meet specific criteria, as further described within ‘hedge accounting’ below.

Derivatives are recognised initially (on the date on which a derivative contract is entered into), and are subsequently remeasured, at their fair value. Fair values of exchange-traded derivatives are obtained from quoted market prices. Fair values of over-the-counter derivatives are obtained using valuation techniques, including discounted cash flow and option pricing models.

Derivatives may be embedded in other financial instruments, such as the conversion option in a convertible bond. Embedded derivatives are treated as separate derivatives when their economic characteristics and risks are not closely related to those of the host contract; the terms of the embedded derivative would meet the definition of a stand-alone derivative if they were contained in a separate contract; and the combined contract is not held for trading or designated at fair value. These embedded derivatives are measured at fair value with changes in fair value recognised in the income statement.

Contracts containing embedded derivatives are not subsequently reassessed for separation unless either there has been a change in the terms of the contract which significantly modifies the cash flows (in which case the contract is reassessed at the time of modification) or the contract has been reclassified (in which case the contract is reassessed at the time of reclassification).

All derivatives are carried as assets when their fair value is positive and as liabilities when their fair value is negative, except where netting is permitted. The method of recognising fair value gains and losses depends on whether derivatives are held for trading or are designated as hedging instruments and, if the latter, the nature of the risks being hedged. All gains and losses from changes in the fair value of derivatives held for trading are recognised in the income statement, and included within net trading and other income.

Offsetting financial assets and liabilities

Financial assets and liabilities including derivatives are offset and the net amount reported in the balance sheet when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously. The Santander UK group is party to a number of arrangements, including master netting arrangements under industry standard agreements which facilitate netting of transactions in jurisdictions where netting agreements are recognised and have legal force. The netting arrangements do not generally result in an offset of balance sheet assets and liabilities for accounting purposes, as transactions are usually settled on a gross basis.

Hedge accounting

The Santander UK group applies hedge accounting to represent, to the maximum possible extent permitted under accounting standards, the economic effects of its risk management strategies. Derivatives are used to hedge exposures to interest rates, exchange rates and certain indices such as retail price indices.

At the time a financial instrument is designated as a hedge (i.e. at the inception of the hedge), the Santander UK group formally documents the relationship between the hedging instrument(s) and hedged item(s), its risk management objective and strategy for undertaking the hedge. The documentation includes the identification of each hedging instrument and respective hedged item, the nature of the risk being hedged (including the benchmark interest rate being hedged in a hedge of interest rate risk) and how the hedging instrument’s effectiveness in offsetting the exposure to changes in the hedged item’s fair value attributable to the hedged risk is to be assessed. Accordingly, the Santander UK group formally assesses, both at the inception of the hedge and on an ongoing basis, whether the hedging derivatives have been and will be highly effective in offsetting changes in the fair value attributable to the hedged risk during the period that the hedge is designated. A hedge is normally regarded as highly effective if, at inception and throughout its life, the Santander UK group can expect, and actual results indicate, that changes in the fair value or cash flow of the hedged items are effectively offset by changes in the fair value or cash flow of the hedging instrument. If at any point it is concluded that it is no longer highly effective in achieving its documented objective, hedge accounting is discontinued.

Where derivatives are held for risk management purposes, and when transactions meet the required criteria for documentation and hedge effectiveness, the derivatives may be designated as either: (i) hedges of the change in fair value of recognised assets or liabilities or firm commitments (fair value hedges); (ii) hedges of the variability in highly probable future cash flows attributable to a recognised asset or liability, or a forecast transaction (cash flow hedges); or (iii) a hedge of a net investment in a foreign operation (net investment hedges). The Santander UK group applies fair value hedge accounting and cash flow hedge accounting but not hedging of a net investment in a foreign operation.

a) Fair value hedge accounting

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the income statement, together with the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. Where the hedged item is measured at amortised cost, the fair value changes due to the hedged risk adjust the carrying amount of the hedged asset or liability. Changes in the fair value of portfolio hedged items are presented separately in the consolidated balance sheet in macro hedge of interest rate risk and recognised in the income statement within net trading and other income. If the hedge no longer meets the criteria for hedge accounting, changes in the fair value of the hedged item attributable to the hedged risk are no longer recognised in the income statement. For fair value hedges of interest rate risk, the cumulative adjustment that has been made to the carrying amount of the hedged item is amortised to the income statement using the effective interest method over the period to maturity. For portfolio hedged items, the cumulative adjustment is amortised to the income statement using the straight line method over the period to maturity.

b) Cash flow hedge accounting

The effective portion of changes in the fair value of qualifying cash flow hedges is recognised in other comprehensive income in the cash flow hedging reserve. The gain or loss relating to the ineffective portion is recognised immediately in the income statement. Amounts accumulated in equity are reclassified to the income statement in the periods in which the hedged item affects profit or loss. When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised in the income statement when the forecast transaction is ultimately recognised in the income statement. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the income statement.

The Santander UK group is exposed to cash flow interest rate risk on its floating rate assets and foreign currency risk on its fixed rate debt issuances denominated in foreign currency. Cash flow hedging is used to hedge the variability in cash flows arising from both these risks.

Securitisation transactions

The Santander UK group has entered into certain arrangements where undertakings have issued mortgage-backed and other asset-backed securities or have entered into funding arrangements with lenders in order to finance specific loans and advances to customers. As the Santander UK group has retained substantially all the risks and rewards of the underlying assets, such financial instruments continue to be recognised on the balance sheet, and a liability recognised for the proceeds of the funding transaction.

Impairment of financial assets

At each balance sheet date the Santander UK group assesses whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. In the case of equity investments classified as available-for-sale, a significant or prolonged decline in the fair value of the security below its cost is considered an indicator that the assets are impaired.

Assets carried at amortised cost

For loans and advances, loans and receivables securities and held-to-maturity investments, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in profit or loss. If a loan or held-to-maturity investment has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor’s credit rating), the reversal of the previously recognised impairment loss is recognised in profit or loss.

More detailed policies for certain portfolios measured at amortised cost are described below.

a) Loans and advances

Impairment loss allowances for loans and advances, less amounts released and recoveries of amounts written off are charged to the line item ‘Impairment losses on loans and advances’ in the income statement. The impairment loss allowances are deducted from the ‘Loans and advances to banks’, ‘Loans and advances to customers’ and ‘Loans and receivables securities’ line items on the balance sheet.

i) Retail assets

Retail customers are assessed either individually or collectively for impairment. Potential indicators of loss events which may be evidence of impairment for retail borrowers may include:

– Missed payments of capital or interest

– The borrower notifying the Santander UK group of current or likely financial distress

– Request from a borrower to change contractual terms as a result of the borrower’s financial difficulty (i.e. forbearance)

– Arrears on other accounts held by the borrower.

Individual assessment

For individually assessed assets, the Santander UK group measures the amount of the loss as the difference between the carrying amount of the asset and the present value of the estimated future cash flows from the asset discounted at the asset’s original effective interest rate.

Collective assessment

In making a collective assessment for impairment, financial assets are grouped together according to their credit risk characteristics. These can include grouping by product, loan-to-value, brand, geography, type of customer and previous insolvency events. For each such portfolio or sub-segment of the portfolio, future cash flows are estimated through the use of historical loss experience. The historical loss experience is adjusted to include the effects of changes in current economic, behavioural and other conditions that cannot be successfully depicted solely from historical experience. The loss is discounted at the effective interest rate, except where portfolios meet the criteria for short-term receivables. The unwind of the discount over time is reported through interest and other similar income within the income statement, with an increase to the impairment loss allowances on the balance sheet. Loans for which evidence of potential loss have been specifically identified are group together for the purpose of calculating an allowance for observed losses. Loans for which no evidence of loss has been specifically identified on an individual basis are grouped together according to their credit risk characteristics for the purpose of calculating an allowance for incurred but not observed (IBNO) losses. Such losses will only be individually identified in the future.

Observed impaired loss allowance

An impairment loss allowance for observed losses is established for all non-performing loans where it is increasingly probable that some of the capital or interest will not be repaid or recovered through enforcement of any applicable security. The allowance for observed losses is determined on a collective (or portfolio) basis for groups of loans with similar credit risk characteristics. The length of time before a loan is regarded as non-performing is typically when the customer fails to make payments when contractually due for three months or longer, although there can be additional qualifying criteria depending upon the product. For additional information on the definition of non-performing loans (NPLs), see ‘Credit risk management – risk measurement and control’ in the Risk review.

For mortgages and other secured advances, the allowance for observed losses is calculated as the product of the account outstanding balance (exposure) at the reporting date, the estimated proportion that will be repossessed (the loss propensity) and the percentage of exposure which will result in a loss (the loss ratio). The loss propensities for the observed segment (i.e. where the loan is classified as non-performing) represents the percentage that will ultimately be written off, or repossessed for secured advances. Loss propensities are based on recent historical experience, typically covering a period of no more than the most recent twelve months in the year under review. The loss ratio is based on actual cases which have been repossessed and sold using the most recent twelve month average data, segmented by LTV, and is then discounted using the effective interest rate.

For unsecured advances, such as unsecured personal loans, credit cards and overdrafts, the allowance for observed losses is calculated as the product of the number of accounts in the portfolio, the estimated proportion of accounts that will be written off, the estimated proportion of such cases that will result in a loss (the loss factor) and the average loss incurred (the loss per case). The loss per case is based on actual cases using the most recent six month average data of losses that have been incurred, and is then discounted using the effective interest rate.

Based on historical experience, the gross loss ratio or gross loss per case is realised in cash several months after the customer first defaults, during which time interest and fees and charges continue to accrue on the account. The future fees and charges included in the gross loss ratio or gross loss per case are removed and the balance discounted so as to calculate the present value of the loss ratio or loss per case. The discounted loss ratio or loss per case for accounts where a payment has already been missed is higher than for accounts that are up to date because the discounting effect is lower reflecting the fact that the process to recover the funds is further advanced.

IBNO impairment loss allowances

An allowance for IBNO losses is established for loans which are either:

– Performing and no evidence of loss has been specifically identified on an individual basis but because the loans that are not yet past due are known from past experience to have deteriorated since the initial decision to lend was made (for example, where a borrower has not yet missed a payment but is experiencing financial difficulties at the reporting date, e.g. due to a loss of employment, divorce or bereavement), or

– In arrears and not classified as non-performing.

The impairment loss calculation resembles the one explained above for the observed segment except that for the IBNO segment:

– Where the account is currently up to date, the loss propensity represents the percentage of such cases that are expected to miss a payment in the appropriate emergence period and which will ultimately be written off

– Where the account is delinquent, the loss propensity represents the percentage of such cases that will ultimately be written off.

Emergence period

This is the period which the Santander UK group’s statistical analysis shows to be the period in which losses that had been incurred but have not been separately identified at the balance sheet date become evident as the loans turn into past due. The emergence period is taken into consideration when determining the loss propensities for performing IBNO segment. Based on the Santander UK group’s statistical analysis, the emergence period is six months for unsecured lending and twelve months for secured lending. The longer emergence period for secured lending reflects the fact that a customer is more likely to default on unsecured debt before defaulting on secured lending. The factors considered in determining the length of the emergence period for unsecured lending are recent changes in customers’ debit/credit payment profiles and credit scores. The factors considered for secured lending are the frequency and duration of exceptions from adherence to the contractual payment schedule.

ii) Corporate assets

Impairment losses are assessed individually for corporate assets that are individually significant and collectively for corporate assets that are not individually significant.

Individual assessment

At each balance sheet date, the Santander UK group conducts impairment reviews to assess whether there is objective evidence of impairment for individually significant corporate assets. A specific observed impairment is established for all individually significant loans that have experienced a loss event such as where:

– An asset has a payment default which has been outstanding for three months or more

– Non-payment defaults have occurred but where it has become evident that a forbearance exercise will be undertaken due to the inability of the borrower to meet its current contractual repayment schedule

– It is becoming probable that the borrower will enter bankruptcy or other financial reorganisation

– The borrower has a winding up notice issued or insolvency event

– The borrower has had event(s) occur which are likely to adversely impact upon their ability to meet their financial obligations (e.g. where a customer loses a key client or contract)

– The borrower has regularly and persistently missed/delayed payments but where the account has been maintained below three months past due

– The customer loan is due to mature within six months and where the prospects of achieving a refinancing are considered low.

In such situations the asset is transferred to the Commercial Banking Restructuring & Recoveries team. As part of their impairment reviews, an assessment is undertaken of the expected future cash flows (including, where appropriate, cash flows through enforcement of any applicable security held) in relation to the relevant asset, discounted at the loan’s original effective interest rate. The result is compared to the current carrying value of the asset. Any shortfall evidenced as a result of such a review will be assessed and recorded as an observed specific impairment loss allowance.

Collective assessment

Observed impairment loss allowances

A collective impairment loss allowance is established for loans which are not individually significant and have suffered a loss event. These non-individually significant loans are grouped together according to their credit risk characteristics and the allowance for observed losses is determined on a collective basis by applying loss rates (i.e. estimated loss given default) derived from analysis of historical loss data of observed losses.

IBNO impairment loss allowances

Loans for which no evidence of loss has been specifically identified on an individual basis are grouped together according to their credit risk characteristics for the purpose of calculating an IBNO allowance for incurred inherent losses. Such losses will only be individually identified in the future. As soon as information becomes available which identifies incurred losses on individual loans within the group, those loans are removed from the group and assessed on an individual basis for impairment or included in the observed collective assessment above depending on their individual significance.

The allowance for IBNO losses is determined on a portfolio basis using the following factors:

– Historical loss experience in portfolios of similar credit risk characteristics (for example, by product)

– The estimated period between an impairment event occurring and the loss being identified and evidenced by the establishment of an observed loss allowance against the individual loan (known as the emergence period, as discussed below)

– Management’s judgement as to whether current economic and credit conditions are such that the actual level of incurred inherent losses at the balance sheet date is likely to be greater or less than that suggested by historical experience.

Emergence period

This is the period in which losses that had been incurred but have not been separately identified become evident. The emergence period spans between six to twelve months according to the corporate portfolio being assessed and is estimated having regard to historic experience and loan characteristics across the portfolio. The factors considered in determining the length of the emergence period include the frequency of the management information received or any change in account utilisation behaviour.

iii) Assets subject to forbearance

To support Retail and Corporate customers that encounter actual or apparent financial difficulties, the Santander UK group may grant a concession, whether temporary or permanent, to amend contractual amounts or timings where a customer’s financial distress indicates a potential that satisfactory repayment may not be made within the original terms and conditions of the contract. These arrangements are known as forbearance. There are different risk characteristics associated with loans that are subject to forbearance as compared to loans that are not. A range of forbearance arrangements may be entered into by the Santander UK group, reflecting the different risk characteristics of such loans. The Santander UK group’s forbearance programmes are described in the credit risk section in the Risk review.

Retail assets

Mortgages

The main types of forbearance offered are capitalisation or a term extension, subject to customer negotiation and vetting. These accounts are reported in arrears until the arrears are capitalised, at which point the accounts will be transferred to the ‘performing’ category. However, accounts which were classified as ‘non-performing’ at the point forbearance is agreed continue to be reported as ‘non-performing’ until the payments received post forbearance equate to the amount of arrears outstanding at the point of forbearance. The impairment provision on these accounts is based on the delinquency cycle in which the account was classified when it entered forbearance, unless the account’s status has further deteriorated since then, in which case the impairment provision will be based on the current status.

The impairment loss allowances on these accounts are calculated in the same manner as on any other account, using the Santander UK group’s collective assessment methodology. In making a collective assessment for impairment, accounts are grouped according to their credit risk characteristics. For each category of loans, accounts are individually assigned a loss propensity based on a defined behavioural scorecard which reflects any history of forbearance. The loss propensity applied in the collective assessment calculation is higher for forborne accounts than for other performing loans reflecting the higher risk of default attached to these accounts.

Unsecured personal loans (UPLs)

The main type of forbearance offered is reduced repayment arrangements. Where accounts undergoing forbearance are in arrears, these continue to be reported in the delinquency cycle, until all arrears are capitalised or paid up, at which point the accounts will be transferred to the ‘performing’ category. The impairment provision on these accounts is based on the delinquency cycle in which the account was classified when it entered forbearance, unless the account’s status has further deteriorated since then, in which case the impairment provision will be based on the current status. Where the accounts reside in the ‘performing’ category as a result of forbearance, the impairment allowance requirements are based on default probability that take account of the higher inherent risk in the forborne asset relative to other performing assets.

Other unsecured (credit cards and overdrafts)

The main type of forbearance offered is reduced repayment arrangements. Reduced payment arrangements are treated for impairment purposes in the same way as UPLs above.

Corporate assets

For corporate borrowers, the main types of forbearance offered are term extensions or interest-only concessions and in limited circumstances, other forms of forbearance options (including debt-for-equity swaps), subject to customer negotiation and vetting. If such accounts were classified in the ‘non-performing’ loan category prior to the forbearance, they continue to be classified as non-performing until evidence of compliance with the new terms is demonstrated (typically over a period of at least three months) before being reclassified as ‘substandard’. If the account was categorised as performing at the time the revised arrangements were agreed, the case is reclassified to ‘substandard’ upon completion of the forbearance agreement.

Once a substandard asset has demonstrated continued compliance with the new terms and the risk profile is deemed to have improved it may be reclassified as a ‘performing asset’. Until then, impairment loss allowances for such loans are assessed individually, taking into account the value of collateral held as confirmed by third party professional valuations and the available cash flow to service debt over the period of the forbearance. These impairment loss allowances are assessed and reviewed regularly. In the case of a debt for equity conversion, the converted debt is written off against the existing impairment loss allowance at the point forbearance is granted.

iv) Reversals of impairment

If in a subsequent period, the amount of an impairment loss reduces and the reduction can be related objectively to an event occurring after the impairment was recognised, the excess is written back by reducing the impairment loss allowance accordingly. The write-back is recognised in the income statement.

v) Write-off

For secured loans, a write-off is only made when all collection procedures have been exhausted and the security has been sold or from claiming on any mortgage indemnity guarantee or other insurance. In the corporate portfolio, there may be occasions where a write-off occurs for other reasons, for example, following a consensual restructure or refinancing of the debt or where the debt is sold for strategic reasons into the secondary market at a value lower than the face value of the debt.

There is no threshold based on past due status beyond which all secured loans are written off as there can be significant variations in the time needed to enforce possession and sale of the security, especially due to the different legal frameworks that apply in different regions of the UK. For unsecured loans, a write-off is only made when all internal avenues of collecting the debt have been exhausted and the debt is passed over to external collection agencies. A past due threshold is applied to unsecured debt where accounts that are 180 days past due are written off unless there is a dispute awaiting resolution. Contact is made with customers with the aim to achieve a realistic and sustainable repayment arrangement. Litigation and/or enforcement of security is usually carried out only when the steps described above have been undertaken without success.

All write-offs are on a case-by-case basis, taking account of the exposure at the date of write-off, after accounting for the value from any collateral or insurance held against the loan. The exception to this is in cases where fraud has occurred, where the exposure is written off once full investigations have been completed and the probability of recovery is minimal. The time span between discovery and write-off will be short and may not result in an impairment loss allowance being raised. The write-off policy is regularly reviewed. Write-offs are charged against previously established impairment loss allowances.

vi) Recoveries

Recoveries of impairment losses are not included in the impairment loss allowance, but are taken to income and offset against impairment losses. Recoveries of impairment losses are classified in the income statement as ‘Impairment losses on loans and advances’.

b) Loans and receivables securities and held-to-maturity investments

Loans and receivables securities and held-to-maturity investments are assessed individually for impairment. An impairment loss is incurred if there is objective evidence that a loss event has occurred since initial recognition of the assets that has an impact on the estimated future cash flows of the asset. Potential indicators of loss events include significant financial distress of the issuer and default or delinquency in interest and principal payments (breach of contractual terms).

Loans and receivables securities and held-to-maturity investments are monitored for potential impairment through a detailed expected cash flow analysis, where appropriate, taking into account the structure and underlying assets of each individual security. Once specific events give rise to a reasonable expectation that future anticipated cash flows may not be received, the asset originating these doubtful cash flows will be deemed to be impaired with the impairment loss being measured as the difference between the expected future cash flows discounted at the original effective interest rate and the carrying value of the asset.

c) Assets classified as available-for-sale

The Santander UK group assesses at each balance sheet date whether there is objective evidence that an available-for-sale financial asset is impaired. In addition to the criteria for loans and advances and loans and receivables securities set out above, the assessment involves reviewing the financial circumstances (including creditworthiness) and future prospects of the issuer, assessing the future cash flows expected to be realised and, in the case of equity shares, considering whether there has been a significant or prolonged decline in the fair value of the security below its cost. The cumulative loss is measured as the difference between the acquisition cost and the current fair value, less any impairment loss previously reported in the income statement and is removed from other comprehensive income and recognised in the income statement. For impaired debt instruments, further impairment losses are recognised where there has been a further negative impact on expected future cash flows.

If, in a subsequent period, the fair value of a debt instrument classified as available-for-sale increases and the increase is due to an event occurring after the impairment loss was recognised in the income statement (with objective evidence to support this), the impairment loss is reversed through the income statement. If, in a subsequent period, the fair value of an equity instrument classified as available-for-sale increases, all such increases in the fair value are treated as a revaluation, and are recognised in other comprehensive income. Impairment losses recognised on equity instruments are not reversed through the income statement.

Impairment of non-financial assets

At each balance sheet date, or more frequently when events or changes in circumstances dictate, property plant and equipment (including operating lease assets) and intangible assets (including goodwill) are assessed for indicators of impairment. If indications are present, these assets are subject to an impairment review.

The impairment review comprises a comparison of the carrying amount of the asset or cash generating unit with its recoverable amount: the higher of the asset’s or cash-generating unit’s fair value less costs to sell and its value in use. The cash-generating unit represents the lowest level at which non-financial assets including goodwill is monitored for internal management purposes and is not larger than an operating segment.

The fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Value in use is calculated by discounting management’s expected future cash flows obtainable as a result of the asset’s continued use, including those resulting from its ultimate disposal, at a market based discount rate on a pre-tax basis. The recoverable amounts of goodwill have been based on value in use calculations.

The carrying values of property, plant and equipment, goodwill and other intangible assets are written down by the amount of any impairment and the loss is recognised in the income statement in the period in which it occurs. A previously recognised impairment loss relating to property, plant and equipment may be reversed in part or in full when a change in circumstances leads to a change in the estimates used to determine the property, plant and equipment’s recoverable amount. The carrying amount of the property, plant and equipment will only be increased up to the amount that would have been had the original impairment not been recognised. Impairment losses on goodwill are not reversed. For conducting goodwill impairment reviews, cash generating units are the lowest level at which management monitors the return on investment on assets.

Leases

a) The Santander UK group as lessor

Operating lease assets are recorded at cost and depreciated over the life of the asset after taking into account anticipated residual values. Operating lease rental income and depreciation is recognised on a straight-line basis over the life of the asset. Amounts due from lessees under finance leases and hire purchase contracts are recorded as receivables at the amount of the Santander UK group’s net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the Santander UK group’s net investment outstanding in respect of the leases and hire purchase contracts.

b) The Santander UK group as lessee

The Santander UK group enters into operating leases for the rental of equipment or real estate. Payments made under such leases are charged to the income statement on a straight-line basis over the period of the lease. When an operating lease is terminated before the lease period has expired, any payment to be made to the lessor by way of penalty is recognised as an expense in the period in which termination takes place.

If the lease agreement transfers the risk and rewards of the asset, the lease is recorded as a finance lease and the related asset is capitalised. At inception, the asset is recorded at the lower of the present value of the minimum lease payments or fair value and depreciated over the lower of the estimated useful life and the life of the lease. The corresponding rental obligations are recorded as borrowings. The aggregate benefit of incentives, if any, is recognised as a reduction of rental expense over the lease term on a straight-line basis.

Income taxes, including deferred taxes

The tax expense represents the sum of the income tax currently payable and deferred income tax.

Income tax payable on profits, based on the applicable tax law in each jurisdiction, is recognised as an expense in the period in which profits arise. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date. Current taxes associated with the repurchase of equity instruments are reported directly in equity.

A current tax liability for the current or prior period is measured at the amount expected to be paid to the tax authorities. Where the amount of the final tax liability is uncertain or where a position is challenged by a taxation authority, the liability recognised is the most likely outcome. Where a most likely outcome cannot be determined, a weighted average basis is applied.

Deferred income tax is the tax expected to be payable or recoverable on income tax losses available to carry forward and on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the Consolidated Financial Statements and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which the assets may be utilised as they reverse. Such deferred tax liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill. Deferred tax assets and liabilities are not recognised from the initial recognition of other assets (other than in a business combination) and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised based on rates enacted or substantively enacted at the balance sheet date. Deferred tax is charged or credited in the income statement, except when it relates to items recognised in other comprehensive income or directly in equity, in which case the deferred tax is also recognised in other comprehensive income or directly in equity. Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries except where the Santander UK group is able to control reversal of the temporary difference and it is probable that it will not reverse in the foreseeable future. The Santander UK group reviews the carrying amount of deferred tax assets at each balance sheet date and reduces it to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax relating to actuarial gains and losses on defined benefits is recognised in other comprehensive income. Deferred tax relating to fair value re-measurements of available-for sale investments and cash flow hedging instruments is charged or credited directly to other comprehensive income and is subsequently recognised in the income statement when the deferred fair value gain or loss is recognised in the income statement.

Deferred and current tax assets and liabilities are only offset when they arise in the same tax reporting group and where there is both the legal right and the intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Cash and cash equivalents

For the purposes of the cash flow statement, cash and cash equivalents comprise balances with less than three months maturity from the date of acquisition, including cash and non-restricted balances with central banks, treasury bills and other eligible bills, loans and advances to banks and short-term investments in securities.

Balances with central banks represent amounts held at the Bank of England and the US Federal Reserve as part of the Santander UK group’s liquidity management activities. In addition, it includes certain minimum cash balances held for regulatory purposes required to be maintained with the Bank of England.

Provisions

Provisions are recognised for present obligations arising as consequences of past events where it is more likely than not that a transfer of economic benefits will be necessary to settle the obligation, and it can be reliably estimated.

Conduct provisions are made for the estimated cost of making redress payments with respect to the past sales of products, based on conclusions regarding the number of claims that will be received, including the number of those that will be upheld, the estimated average settlement per case and other related costs. Provision is made for the anticipated cost of restructuring, including redundancy costs, when an obligation exists. An obligation exists when the Santander UK group has a detailed formal plan for restructuring a business, has raised valid expectations in those affected by the restructuring, and has started to implement the plan or announce its main features.

When a leasehold property ceases to be used in the business, provision is made where the unavoidable costs of the future obligations relating to the lease are expected to exceed anticipated rental income. The net costs are discounted using market rates of interest to reflect the long-term nature of the cash flows.

Provision is made for irrevocable loan commitments, other than those classified as held for trading, within impairment loss allowances if it is probable that the facility will be drawn and the resulting loan will be recognised at a value less than the cash advanced.

Contingent liabilities are possible obligations whose existence will be confirmed only by certain future events or present obligations where the transfer of economic benefit is uncertain or cannot be reliably measured. Contingent liabilities are not recognised but are disclosed unless they are remote.

Financial guarantee contracts

Financial guarantee contracts are contracts that require the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payments when due in accordance with the terms of a debt instrument. The Santander UK group accounts for guarantees that meet the definition of a financial guarantee contract at fair value on initial recognition. In subsequent periods, these guarantees are measured at the higher of the initial fair value less cumulative amortisation and the amount that would be recognised as a provision in accordance with IAS 37.

Share capital

a) Share issue costs

Incremental external costs directly attributable to the issue of new shares are deducted from equity net of related income taxes.

b) Dividends

Dividends on ordinary shares are recognised in equity in the period in which the right to receive payment is established.

CRITICAL ACCOUNTING POLICIES AND AREAS OF SIGNIFICANT MANAGEMENT JUDGEMENT

The preparation of the Consolidated Financial Statements requires management to make estimates and judgements that affect the reported amount of assets and liabilities at the date of the Consolidated Financial Statements and the reported amount of income and expenses during the reporting period. Management evaluates its estimates and judgements on an ongoing basis. Management bases its estimates and judgements on historical experience and on various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.

The following accounting estimates and judgements are considered important to the portrayal of the Santander UK group’s financial results and financial condition because: (i) they are highly susceptible to change from period to period as assumptions are made to calculate the estimates, and (ii) any significant difference between the estimated amounts and actual amounts could have a material impact on the Santander UK group’s future financial results and financial condition.

In calculating each estimate, a range of outcomes was calculated based principally on management’s conclusions regarding the input assumptions relative to historic experience. The actual estimates were based on what management concluded to be the most probable assumptions within the range of reasonably possible assumptions.

a) Impairment loss allowances for loans and advances to customers

The Santander UK group estimates impairment losses for loans and advances to customers, loans and receivables securities, and loans and advances to banks as described in the accounting policy ‘Impairment of financial assets’. Management’s assumptions about impairment losses are based on past performance, past customer behaviour, the credit quality of recent underwritten business and general economic conditions, which are not necessarily an indication of future losses.

At 31 December 2017, impairment allowances held against loans and advances to customers totalled £940m (2016: £921m). The net impairment loss (i.e. after recoveries) for loans and advances to customers recognised in 2017 was £203m (2016: £67m, 2015: £66m). In calculating impairment loss allowances, a range of outcomes was calculated, either for each individual loan or by portfolio taking account of the uncertainty relating to economic conditions. For retail lending, the range was based on different management assumptions as to loss propensity and loss ratio relative to historic experience. For corporate lending, the range reflects different realisation assumptions in respect of collateral held.

If management had used different assumptions, a larger or smaller impairment loss allowance would have resulted that could have had a material impact on the Santander UK group’s reported profit before tax. Specifically, if management’s conclusions were different, but within the range of what management deemed to be reasonably possible, the impairment loss for loans and advances could have decreased by £162m (2016: £193m, 2015: £221m), with a consequential increase in profit before tax, or increased by £229m (2016: £223m, 2015: £167m), with a consequential decrease in profit before tax.

b) Provision for conduct remediation

The provision charge for conduct remediation relating to past activities and products sold recognised in 2017 was £144m (2016: £146m, 2015: £500m) before tax, comprising charges for Payment Protection Insurance (PPI) of £109m (2016: £144m, 2015: £450m) and other products of £35m (2016: £2m, 2015: £50m). The balance sheet provision amounted to £403m (2016: £493m, 2015: £637m), of which £356m (2016: £457m, 2015: £465m) related to PPI. Detailed disclosures on the provision for conduct remediation can be found in Note 27.

The provision mainly represents management’s best estimate of Santander UK’s future liability in respect of mis-selling of PPI policies. It requires significant judgement by management in determining appropriate assumptions, which include the level of complaints expected to be received, of those, the number that will be upheld and redressed, as well as the redress costs for each of the different populations of customers identified. Based on these factors, management determines its best estimate of the anticipated costs of redress and expected operating costs.

The most critical factor in determining the level of PPI provision is the volume of claims. The uphold rate is informed by historical experience and the average cost of redress can be predicted reasonably accurately given that management is dealing with a high volume and reasonably homogeneous population. In setting the provision, management estimated the total claims that were likely to be received until August 2019.

Had management used different assumptions, a larger or smaller provision charge would have resulted that could have had a material impact on the Santander UK group’s reported profit before tax. Detailed disclosures on the assumptions used, including sensitivities, can be found in Note 27.

c) Pensions

The Santander UK group operates a number of defined benefit pension schemes as described in Note 28 and estimates their position as described in the accounting policy ‘Pensions and other post retirement benefits’.

The defined benefit pension schemes which were in a net asset position had a surplus of £449m (2016: £398m) and the defined benefit pension schemes which were in a net liability position had a deficit of £286m (2016: £262m).

Accounting for defined benefit pension schemes requires management to make assumptions principally about the discount rate adopted, but also about mortality, price inflation, pension increases, life expectancy and earnings growth. Management’s assumptions are based on past experience and current economic trends, which are not necessarily an indication of future experience.

During the year the methodology to derive the inflation rate was changed to better reflect management’s view of inflation expectations. At 31 December 2017 this had a negative impact on the accounting surplus of £125m.

Detailed disclosures on the current year service cost and deficit/surplus, including sensitivities and the date of the last formal actuarial valuations of the assets and liabilities of the schemes can also be found in Note 28.

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Segments

12 Months Ended

Dec. 31, 2017

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Segments

2. SEGMENTS

The principal activity of the Santander UK group is financial services, predominantly in the United Kingdom. The Santander UK group’s business is managed and reported on the basis of the following segments:

– Retail Banking offers a wide range of products and financial services to individuals and small businesses through a network of branches and ATMs, as well as through telephony, digital and intermediary channels. Retail Banking includes business banking customers, small businesses with an annual turnover of up to £6.5m, and Santander Consumer Finance, predominantly a vehicle finance business.

– Commercial Banking offers a wide range of products and financial services provided by relationship teams that are based in a network of regional Corporate Business Centres (CBCs) and through telephony and digital channels. The management of our customers is organised across two relationship teams - the Regional Corporate Bank (RCB) that covers non-property backed trading businesses that are UK domiciled with annual turnover above £6.5m and Specialist Sector Groups (SSG) that cover real estate, social housing, education, healthcare, and hotels.

– Global Corporate Banking services corporate clients with a turnover of £500m and above per annum and financial institutions. GCB clients require specially tailored solutions and value-added services due to their size, complexity and sophistication. We provide these clients with products to manage currency fluctuations, protect against interest rate risk, and arrange capital markets finance and specialist trade finance solutions, as well as providing support to the rest of Santander UK’s business segments.

– Corporate Centre predominantly consists of the non-core corporate and treasury legacy portfolios. Corporate Centre is also responsible for managing capital and funding, balance sheet composition, structure and strategic liquidity risk. The non-core corporate and treasury legacy portfolios are being run-down and/or managed for value.

The segments are strategic business units that offer different products and services. They are managed separately because each business requires different technology and marketing strategies.

The basis of presentation in this Annual Report has been changed, and the prior periods restated to reflect a change in the internal transfer of revenues and costs from Corporate Centre to the three customer business segments. This enables a more targeted apportionment of capital and other resources in line with the strategy of each segment.

The segmental information below is presented in a manner consistent with the internal reporting provided to the committee which is responsible for allocating resources and assessing performance of the operating segments and has been identified as the chief operating decision maker. The segmental information is prepared on a statutory basis of accounting.

Transactions between the business segments are on normal commercial terms and conditions. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. Internal charges and internal UK transfer pricing adjustments have been reflected in the performance of each segment. Revenue sharing agreements are used to allocate external customer revenues to a business segment on a reasonable basis. Funds are ordinarily reallocated between segments, resulting in funding cost transfers disclosed in operating income. Interest charged for these funds is based on the Santander UK group’s cost of wholesale funding.

Interest income and interest expense have not been reported separately. The majority of the revenues from the segments are interest income in nature and net interest income is relied on primarily to assess the performance of the segment and to make decisions regarding allocation of segmental resources.

Revenue by products and services

Details of revenue by product or service are disclosed in Notes 3 to 5.

Results by segment

2017	Retail Banking £m			Commercial Banking £m			Global Corporate Banking £m			Corporate Centre £m			Total £m
Net interest income		3,302			395			74			32			3,803
Non-interest income		615			74			364			56			1,109
Total operating income		3,917			469			438			88			4,912
Operating expenses before impairment losses, provisions and charges		(1,871	)		(223	)		(304	)		(101	)		(2,499	)
Impairment (losses)/releases on loans and advances		(36	)		(13	)		(174	)		20			(203	)
Provisions for other liabilities and charges		(342	)		(55	)		(11	)		15			(393	)
Total operating impairment losses, provisions and (charges)/releases		(378	)		(68	)		(185	)		35			(596	)
Profit/(loss) before tax		1,668			178			(51	)		22			1,817
Revenue from external customers		4,505			631			506			(730	)		4,912
Inter-segment revenue		(588	)		(162	)		(68	)		818			–
Total operating income		3,917			469			438			88			4,912
Customer loans		168,991			19,391			6,037			5,905			200,324
Total assets(1)		174,524			19,391			51,078			69,772			314,765
Customer deposits		149,315			18,697			4,546			3,363			175,921
Total liabilities		150,847			18,697			45,603			83,413			298,560

(1) Includes customer loans, net of impairment loss allowances.

2016	Retail Banking(2) £m			Commercial Banking £m			Global Corporate Banking £m			Corporate Centre £m			Total £m
Net interest income/(expense)		3,140			383			73			(14	)		3,582
Non-interest income		562			76			312			263			1,213
Total operating income		3,702			459			385			249			4,795
Operating expenses before impairment losses, provisions and charges		(1,800	)		(215	)		(280	)		(119	)		(2,414	)
Impairment (losses)/releases on loans and advances		(20	)		(29	)		(21	)		3			(67	)
Provisions for other liabilities and charges		(338	)		(26	)		(12	)		(21	)		(397	)
Total operating impairment losses, provisions and charges		(358	)		(55	)		(33	)		(18	)		(464	)
Profit before tax		1,544			189			72			112			1,917
Revenue from external customers		4,369			644			466			(684	)		4,795
Inter-segment revenue		(667	)		(185	)		(81	)		933			–
Total operating income		3,702			459			385			249			4,795
Customer loans		168,638			19,381			5,659			6,478			200,156
Total assets(1)		175,100			19,381			39,777			68,253			302,511
Customer deposits		148,063			17,203			4,054			3,031			172,351
Total liabilities		149,793			17,203			36,506			83,556			287,058
2015
Net interest income		3,097			399			52			27			3,575
Non-interest income		526			91			303			78			998
Total operating income		3,623			490			355			105			4,573
Operating expenses before impairment losses, provisions and (charges)/releases		(1,898	)		(217	)		(287	)		2			(2,400	)
Impairment (losses)/releases on loans and advances		(90	)		(25	)		13			36			(66	)
Provisions for other liabilities and (charges)/releases		(728	)		(23	)		(14	)		3			(762	)
Total operating impairment losses, provisions and (charges)/releases		(818	)		(48	)		(1	)		39			(828	)
Profit before tax		907			225			67			146			1,345
Revenue/(charges) from external customers		4,529			626			437			(1,019	)		4,573
Inter-segment revenue		(906	)		(136	)		(82	)		1,124			–
Total operating income		3,623			490			355			105			4,573
Customer loans		167,093			18,680			5,470			7,391			198,634
Total assets(1)		173,479			18,680			36,593			52,023			280,775
Customer deposits		140,358			15,076			3,013			3,808			162,255
Total liabilities		143,157			15,076			32,290			75,224			265,747

(1) Includes customer loans, net of impairment loss allowances.

(2) Restated to reflect the change in accounting policy relating to business combinations between entities under common control, as described in Note 1.

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Net Interest Income

12 Months Ended

Dec. 31, 2017

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Net Interest Income

3. NET INTEREST INCOME

	Group
	2017 £m			2016 £m			2015 £m
Interest and similar income:
Loans and advances to banks		184			127			115
Loans and advances to customers		5,494			6,198			6,491
Other		227			142			89
Total interest and similar income		5,905			6,467			6,695
Interest expense and similar charges:
Deposits by banks		(46	)		(56	)		(63	)
Deposits by customers		(1,330	)		(1,891	)		(1,979	)
Debt securities in issue		(590	)		(771	)		(926	)
Subordinated liabilities		(134	)		(143	)		(138	)
Other		(2	)		(24	)		(14	)
Total interest expense and similar charges		(2,102	)		(2,885	)		(3,120	)
Net interest income		3,803			3,582			3,575

Interest and similar income includes £66m (2016: £79m, 2015: £81m) on impaired loans.

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Net Fee and Commission Income

12 Months Ended

Dec. 31, 2017

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Net Fee and Commission Income

4. NET FEE AND COMMISSION INCOME

	Group
	2017 £m			2016 £m			2015 £m
Fee and commission income:
Retail and corporate products		1,167			1,123			1,043
Insurance products		55			65			72
Total fee and commission income		1,222			1,188			1,115
Fee and commission expense:
Retail and corporate products		(406	)		(408	)		(392	)
Other		(9	)		(10	)		(8	)
Total fee and commission expense		(415	)		(418	)		(400	)
Net fee and commission income		807			770			715

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Net Trading and Other Income

12 Months Ended

Dec. 31, 2017

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Net Trading and Other Income

5. NET TRADING AND OTHER INCOME

	Group
	2017 £m			2016 £m			2015 £m
Net trading and funding of other items by the trading book		205			75			252
Net income from operating lease assets		44			35			46
Net gains on assets designated at fair value through profit or loss		80			253			33
Net (losses)/gains on liabilities designated at fair value through profit or loss		(97	)		28			(65	)
Net (losses)/gains on derivatives managed with assets/liabilities held at fair value through profit or loss		(17	)		(135	)		26
Hedge ineffectiveness		5			28			(20	)
Net profit on sale of available-for-sale assets		54			115			–
Other		28			44			11
		302			443			283

‘Net trading and funding of other items by the trading book’ includes fair value losses of £27m (2016: £50m, 2015: £5m) on embedded derivatives bifurcated from certain equity index-linked deposits, as described in the derivatives accounting policy in Note 1. The embedded derivatives are economically hedged internally with the equity derivatives trading desk. These transactions are managed as part of the overall positions of the equity derivatives trading desk, the results of which are also included in this line item, and amounted to gains of £28m (2016: £51m, 2015: £7m). As a result, the net fair value movements recognised on the equity index-linked deposits and the related economic hedges were net gains of £1m (2016: £1m, 2015: £2m).

In 2017, ‘Net profit on sale of available-for-sale assets’ includes a gain of £48m in respect of the sale of Vocalink shares. In 2016, ‘Net profit on sale of available-for-sale assets’ included the gain of £119m in respect of the sale of Visa shares.

In September 2017, as part of a capital management exercise, we purchased 91% of the 7.375% 20 Year Step-up perpetual callable subordinated notes. In May 2016, as part of a liability management exercise, certain debt instruments were purchased pursuant to a tender offer. These had no significant impact on the income statement.

Exchange rate differences recognised in the Consolidated Income Statement on items not at fair value through profit or loss were £109m expense (2016: £4,051m expense, 2015: £477m income) and are presented in the line ‘Net trading and funding of other items by the trading book.’ These are principally offset by related releases from the cash flow hedge reserve of £94m income (2016: £4,076m income, 2015: £305m expense) as set out in the Consolidated Statement of Comprehensive Income, which are also presented in ‘Net trading and funding of other items by the trading book’. Exchange rate differences on items measured at fair value through profit or loss are included in the line items relating to changes in fair value.

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Operating Expenses Before Impairment Losses, Provisions and Charges

12 Months Ended

Dec. 31, 2017

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Operating Expenses Before Impairment Losses, Provisions and Charges

6. OPERATING EXPENSES BEFORE IMPAIRMENT LOSSES, PROVISIONS AND CHARGES

	Group
	2017 £m		2016 £m		2015 £m
Staff costs:
Wages and salaries		743		728		723
Performance-related payments		157		157		163
Social security costs		93		94		92
Pensions costs – defined contribution plans		54		52		50
– defined benefit plans		32		26		29
Other share-based payments		10		3		(5	)
Other personnel costs		45		62		63
		1,134		1,122		1,115
Other administration expenses		1,011		970		990
Depreciation, amortisation and impairment		354		322		295
		2,499		2,414		2,400

Staff costs

‘Performance-related payments’ include bonuses paid in the form of cash and share awards granted under the Long-Term Incentive Plan. Included in this are the Santander UK group’s equity-settled share-based payments, none of which related to option-based schemes. These are disclosed in the table below as ‘Shares award’. ‘Other share-based payments’ consist of options granted under the Employee Sharesave scheme which comprise the Santander UK group’s cash-settled share-based payments. Further details can be found in Note 34. Performance-related payments above include amounts related to deferred performance awards as follows:

	Costs recognised in 2017			Costs expected to be recognised in 2018 or later
	Arising from awards in current year £m	Arising from awards in prior year £m	Total  £m	Arising from awards in current year £m	Arising from awards in prior year £m	Total  £m
Cash	5	8	13	10	7	17
Shares	3	13	16	8	10	18
	8	21	29	18	17	35

The following table shows the amount of bonus awarded to employees for the performance year 2017. In the case of deferred cash and share awards, the final amount paid to an employee is influenced by forfeiture provisions and any performance conditions to which these awards are subject. The deferred share award amount is based on the fair value of these awards at the date of grant.

	Expenses charged in the year				Expenses deferred to future periods				Total
	2017 £m		2016 £m		2017 £m		2016 £m		2017 £m		2016 £m
Cash award – not deferred		116		118		–		–		116		118
– deferred		13		15		17		18		30		33
Shares award – not deferred		12		11		–		–		12		11
– deferred		16		13		18		14		34		27
Total discretionary bonus		157		157		35		32		192		189

The average number of full-time equivalent staff was 19,559 (2016: 19,863, 2015: 20,405).

Depreciation, amortisation and impairment

In 2017, an impairment charge of £32m was recognised that primarily related to capitalised software costs for a credit risk management system, part of which was no longer in use. In 2016, an impairment charge of £45m was recognised that primarily related to a multi-entity banking platform developed for our non-ring-fenced bank under the original ring-fencing structure.

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Audit and Other Services

12 Months Ended

Dec. 31, 2017

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Audit and Other Services

7. AUDIT AND OTHER SERVICES

	Group
	2017 £m		2016 £m		2015 £m
Audit fees:
Fees payable to the Company’s auditor(1) and its associates for the audit of the Santander UK group’s annual accounts		7.4		4.6		3.6
Fees payable to the Company’s auditor(1) and its associates for other services to the Santander UK group:
– Audit of the Santander UK group’s subsidiaries		1.4		1.1		1.8
Total audit fees(2)		8.8		5.7		5.4
Non-audit fees:
Audit-related assurance services(3)		0.7		0.6		2.7
Taxation compliance services		–		0.1		0.2
Other assurance services		0.1		–		–
Other non-audit services		0.4		1.9		1.7
Total non-audit fees		1.2		2.6		4.6

(1) PricewaterhouseCoopers LLP became the Santander UK group’s principal auditor in 2016. Deloitte LLP was the principal auditor during 2015. Excluded from 2016 fees are amounts of £0.2m payable to Deloitte LLP in relation to the 2015 statutory audit.

(2) The 2017 audit fees included £0.6m (2016: £nil) which related to the prior year.

(3) The 2017 audit-related assurance services included £0.1m (2016: £nil) which related to the prior year.

Total audit fees of £8.8m include fees of £1.6m in respect of the audit of the application of IFRS 9. Audit-related assurance services relate to services performed in connection with the statutory and regulatory filings of the Company and its associates. Of this category £0.1 m (2016: £0.1m, 2015: £1.2m) accords with the definition of ‘Audit fees’ per US Securities and Exchange Commission (SEC) guidance. The remaining £0.6m (2016: £0.5 m, 2015: £1.5m) accords with the definition of ‘Audit-related fees’ per that guidance and relates to services performed in connection with securitisation, debt issuance and related work and reporting to prudential and conduct regulators which is in accordance with the definition ‘Audit-related fees’ per SEC guidance. Taxation compliance services accord with the SEC definition of ‘Tax fees’ and relate to compliance services performed in respect of US Tax returns and other similar tax compliance services. Other assurance services and other non-audit services accord with the SEC definition of ‘All other fees’. In 2017 and 2016 these included services performed in respect of the Global Corporate Banking remediation programme. 2015 included services provided by the predecessor auditor in respect of Santander UK’s preparation for MiFiD II and IFRS 9 Implementation. In 2017 the Company’s auditors also earned fees of £45,000 (2016: £893,000) payable by entities outside the Santander UK group for the review of the financial position of corporate and other borrowers.

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Impairment Losses and Provisions

12 Months Ended

Dec. 31, 2017

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Impairment Losses and Provisions

8. IMPAIRMENT LOSSES AND PROVISIONS

	Group
	2017 £m			2016 £m			2015 £m
Impairment losses on loans and advances:
Loans and advances to customers (See Note 15)		257			132			156
Recoveries of loans and advances, net of collection costs (See Note 15)		(54	)		(65	)		(90	)
		203			67			66
Provisions for other liabilities and charges (See Note 27)		385			397			762
Provisions for residual value and voluntary termination (See Note 15)		8			–			–
		393			397			762
		596			464			828

There were no impairment losses on loans and advances to banks and financial investments.

Impairment losses on loans and advances increased by £136m to £203m (2016: £67m) primarily due to Carillion plc exposures.

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Taxation

12 Months Ended

Dec. 31, 2017

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Taxation

9. TAXATION

	Group
	2017 £m			2016 £m			2015 £m
Current tax:
UK corporation tax on profit for the year		556			611			346
Adjustments in respect of prior years		(27	)		(13	)		(16	)
Total current tax		529			598			330
Deferred tax:
Charge/(credit) for the year		23			(11	)		54
Adjustments in respect of prior years		9			11			(3	)
Total deferred tax		32			–			51
Tax on profit		561			598			381

The standard rate of UK corporation tax was 27.25% for banking entities and 19.25% for non-banking entities (2016: 28.00% for banking entities and 20.00% for non-banking entities) following the introduction of an 8% surcharge to be applied to banking companies from 1 January 2016. Taxation for other jurisdictions is calculated at the rates prevailing in the relevant jurisdictions. The Finance (No.2) Act 2015 introduced reductions in the corporation tax rate from 20% to 19% in 2017 and 18% by 2020. The Finance Act 2016, which was substantively enacted on 6 September 2016, introduced a further reduction in the standard rate of corporation tax rate to 17% from 2020. The effects of the changes in tax rates are included in the deferred tax balances at both 31 December 2017 and 2016.

The Santander UK group’s effective tax rate for 2017, based on profit before tax, was 30.9% (2016: 31.2%, 2015: 28.3%). The tax on profit before tax differs from the theoretical amount that would arise using the basic corporation tax rate of the Company as follows:

	Group
	2017 £m			2016 £m			2015 £m
Profit before tax		1,817			1,917			1,345
Tax calculated at a tax rate of 19.25% (2016: 20.00%, 2015: 20.25%)		350			384			272
Bank surcharge on profits		132			134			–
Non-deductible preference dividends paid		9			8			6
Non-deductible UK Bank Levy		25			30			20
Non-deductible conduct remediation		35			39			90
Other non-equalised items		30			8			8
Effect of non-UK profits and losses		–			(1	)		(1	)
Utilisation of capital losses for which credit was not previously recognised		–			–			(4	)
Effect of change in tax rate on deferred tax provision		(2	)		(2	)		9
Adjustment to prior year provisions		(18	)		(2	)		(19	)
Tax charge		561			598			381

The decrease in effective tax rate from 2016 to 2017 is largely due to the reduction in the statutory tax rate, reductions in the bank levy and releases in accruals for prior periods offset by the impact of non-deductible conduct remediation in 2017. It is anticipated that the Santander UK group’s effective tax rate in future periods will continue to be impacted by the 8% surcharge, the level of any non-deductible conduct remediation, changes to the cost of the Bank Levy and reductions in the statutory rate as noted above.

Current tax assets and liabilities

Movements in current tax assets and liabilities during the year were as follows:

	Group
	2017  £m	2016   £m
Assets	–		49
Liabilities	(54)		(1)
At 1 January	(54)		48
Income statement charge	(529)		(598)
Other comprehensive income credit/(charge)	44		(49)
Corporate income tax paid	484		507
Other movements	52		38
	(3)		(54)
Assets	–		–
Liabilities	(3)		(54)
At 31 December	(3)		(54)

The amount of corporation income tax paid differs from the tax charge for the period as a result of the timing of payments due to the tax authorities together with the effects of movements in deferred tax, adjustments to prior period current tax provisions and current tax recognised directly in other comprehensive income.

Santander UK proactively engages with HM Revenue & Customs to resolve tax matters relating to prior years. The accounting policy for recognising provisions for such matters are described in Note 1 to the Consolidated Financial Statements. It is not expected that there will be any material movement in such provisions within the next twelve months. Santander UK adopted the Code of Practice on Taxation for Banks in 2010.

Deferred tax

The table below shows the deferred tax assets and liabilities including the movement in the deferred tax account during the year:

	Group
	Fair value of    financial    instruments    £m		Pension    remeasurement    £m		Cash flow    hedges    £m		Available-    for-sale    £m		Tax losses    carried    forward    £m		Accelerated    tax    depreciation    £m		Other    temporary    differences    £m		Total  £m
At 1 January 2017		(31)		(35)		(50)		(27)		5		(5)		15	(128)
Income statement (charge)/credit		(10)		(32)		–		–		20		1		(11)	(32)
Transfers/reclassifications		–		–		–		7		–		–		(7)	–
Credited/(charged) to other comprehensive income		–		26		53		(6)		–		–		(1)	72
At 31 December 2017		(41)		(41)		3		(26)		25		(4)		(4)	(88)
At 1 January 2016		(76)		(115)		(27)		(11)		8		3		(5)	(223)
Income statement (charge)/credit		44		(53)		–		–		(3)		(8)		20	–
Credited/(charged) to other comprehensive income		1		133		(23)		(16)		–		–		–	95
At 31 December 2016		(31)		(35)		(50)		(27)		5		(5)		15	(128)

The deferred tax assets/(liabilities) scheduled above have been recognised in the Santander UK group on the basis that sufficient future taxable profits are forecast within the foreseeable future, in excess of the profits arising from the reversal of existing taxable temporary differences, to allow for the utilisation of the assets as they reverse. Based on the conditions at the balance sheet date, management determined that a reasonably possible change in any of the key assumptions underlying the estimated future taxable profits in the Santander UK group’s five-year plan (described in Note 20) would not cause a reduction in the deferred tax assets recognised. At 31 December 2017, the Santander UK group and a trading subsidiary Santander Lending Limited recognised a deferred tax asset of £4m (2016: £5m) in respect of prior year trading losses. Future profit forecasts are such that recognition criteria under IAS 12 have been met. These tax losses do not time expire. At 31 December 2017, the Santander UK group has a recognised deferred tax asset in respect of UK capital losses carried forward of £21m (2016: £nil). There are no unrecognised capital losses carried forward (2016: £nil).

In addition, the Santander UK group has net operating losses carried forward in the US of $76m (2016: $80m). A deferred tax asset on these losses has not been recognised as the Santander UK group does not currently anticipate being able to offset the losses against future profits or gains in order to realise any economic benefit in the foreseeable future and in particular these losses will expire on closure of the Abbey National Treasury Services plc US Branch.

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Dividends on Ordinary Shares

12 Months Ended

Dec. 31, 2017

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Dividends on Ordinary Shares

10. DIVIDENDS ON ORDINARY SHARES

Dividends on ordinary shares declared and paid during the year were as follows:

	Group						Group
	2017     Pence per   share		2016     Pence per   share		2015     Pence per   share		2017   £m		2016   £m		2015   £m
In respect of current year – first interim		1.04		1.02		1.05		323		317		325
– second interim		0.74		0.89		0.33		230		276		102
		1.78		1.91		1.38		553		593		427

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Trading Assets

12 Months Ended

Dec. 31, 2017

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Trading Assets

11. TRADING ASSETS
	Group
	2017   £m		2016   £m
Securities purchased under resale agreements		8,870		10,712
Debt securities		5,156		6,248
Equity securities		9,662		5,986
Cash collateral		6,156		6,169
Short-term loans		711		920
		30,555		30,035

A significant portion of the debt and equity securities are held in our eligible liquidity pool. They comprise mainly of government bonds and quoted stocks. Detailed disclosures can be found in ‘Liquidity risk’ section of the Risk review.

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Derivative Financial Instruments

12 Months Ended

Dec. 31, 2017

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Derivative Financial Instruments

12. DERIVATIVE FINANCIAL INSTRUMENTS

a) Use of derivatives

The Santander UK group transacts derivatives for four primary purposes:

– To manage the portfolio risks arising from customer business

– To manage and hedge the Santander UK group’s own risks

– To create risk management solutions for customers

– To generate profits through sales activities.

Under IAS 39, all derivatives are classified as ‘held for trading’ (except for derivatives which are designated as effective hedging instruments in accordance with the detailed requirements of IAS 39) even if this is not the purpose of the transaction. The held for trading classification therefore includes two types of derivatives:

– Those used in sales activities and those providing risk solutions for customers

– Those used for own risk management purposes but, for various reasons, either the Santander UK group does not elect to claim hedge accounting for or they do not meet the qualifying criteria for hedge accounting. These consist of:

– Non-qualifying hedging derivatives (economic hedges), whose terms match other on-balance sheet instruments but do not meet the technical criteria for hedge accounting, or which use natural offsets within other on-balance sheet instruments containing the same risk features as part of an integrated approach to risk management, and hence do not require the application of hedge accounting to achieve a reduction in income statement volatility

– Derivatives managed in conjunction with financial instruments designated at fair value (the fair value option). The fair value option is described more fully in the Accounting Policy ‘Financial assets’ and Notes 13 and 24. The Santander UK group’s business model is primarily structured to maximise use of the fair value option, rather than electing to apply hedge accounting, in order to reduce the administrative burden on the Santander UK group associated with complying with the detailed hedge accounting requirements of IAS 39

– Derivatives that do not meet the qualifying criteria for hedge accounting, including ineffective hedging derivatives and any components of hedging derivatives that are excluded from assessing hedge effectiveness

– Derivative contracts that represent the closing-out of existing positions through the use of matching deals.

The following table summarises the activities undertaken, the related risks associated with such activities and the types of derivatives used in managing such risks. These risks may also be managed using on-balance sheet instruments as part of an integrated approach to risk management.

Activity	Risk	Type of derivative
Management of the return on variable rate assets financed by shareholders’ funds and net non-interest-bearing liabilities.	Reduced profitability due to falls in interest rates.	Receive fixed interest rate swaps.
Management of the basis between administered rate assets and liabilities and wholesale market rates.	Reduced profitability due to adverse changes in the basis spread.	Basis swaps.
Management of repricing profile of wholesale funding.	Reduced profitability due to adverse movement in wholesale interest rates when large volumes of wholesale funding are repriced.	Forward rate agreements.
Fixed rate lending and investments.	Sensitivity to increases in interest rates.	Pay fixed interest rate swaps.
Fixed rate retail and wholesale funding.	Sensitivity to falls in interest rates.	Receive fixed interest rate swaps.
Equity-linked retail funding.	Sensitivity to increases in equity market indices.	Receive equity swaps.
Management of other net interest income on retail activities.	Sensitivity of income to changes in interest rates.	Interest rate swaps.
Issuance of products with embedded equity options.	Sensitivity to changes in underlying index and index volatility causing option exercise.	Interest rate swaps combined with equity options.
Lending and investments.	Sensitivity to weakening credit quality.	Purchase credit default swaps and total return swaps.
Borrowing funds in foreign currencies.	Sensitivity to changes in foreign exchange rates.	Cross currency swaps.
Lending and issuance of products with embedded interest rate options.	Sensitivity to changes in underlying rate and rate volatility causing option exercise.	Interest rate swaps plus caps/floors.
Investment in, and issuance of, bonds with put/call features.	Sensitivity to changes in rates causing option exercise.	Interest rate swaps combined with swaptions(1) and other matched options.
Management of the cost of offering sharesave schemes to employees.	Reduced profitability due to increases in the Banco Santander SA share price.	Equity options and equity forwards.

(1) A swaption is an option on a swap that gives the holder the right but not the obligation to buy or sell a swap.

The Santander UK group’s derivative activities do not give rise to significant open positions in portfolios of derivatives. Any residual position is managed to ensure that it remains within acceptable risk levels, with matching deals being utilised to achieve this where necessary. When entering into derivative transactions, the Santander UK group employs the same credit risk management procedures to assess and approve potential credit exposures that are used for traditional lending.

b) Trading derivatives

Most of the Santander UK group’s derivative transactions relate to sales activities and derivative contracts that represent the closing-out of existing positions through the use of matching deals. Sales activities include the structuring and marketing of derivative products to customers to enable them to take, transfer, modify or reduce current or expected risks. Limited positions may be traded actively or be held over a period of time to benefit from expected changes in exchange rates, interest rates, equity prices or other market parameters. Trading includes market-making, positioning and arbitrage activities. Market-making entails quoting bid and offer prices to other market participants for the purpose of generating revenues based on spread and volume; positioning means managing market risk positions in the expectation of benefiting from favourable movements in prices, rates or indices; arbitrage involves identifying and profiting from price differentials between markets and products.

Commercial Banking and Global Corporate Banking deal with customers who wish to enter into derivative contracts. Any market risk arising from such transactions is hedged by Global Corporate Banking. Global Corporate Banking is responsible for implementing Santander UK group derivative hedging with the external market together with its own trading activities. For trading activities, its objectives are to gain value by:

– Marketing derivatives to end users and hedging the resulting exposures efficiently

– The management of trading exposure reflected on the Santander UK group’s balance sheet.

c) Hedging derivatives

The Santander UK group uses derivatives (principally interest rate swaps and cross-currency swaps) for hedging purposes in the management of its own asset and liability portfolios, including fixed-rate lending, fixed-rate asset purchases, medium-term note issues, capital issues, and structural positions. This enables the Santander UK group to optimise the overall cost to it of accessing debt capital markets, and to mitigate the market risk which would otherwise arise from structural imbalances in the maturity and other profiles of its assets and liabilities. Such risks may also be managed using natural offsets within other on-balance sheet instruments as part of an integrated approach to risk management.

Derivative products which are combinations of more basic derivatives (such as swaps with embedded option features), or which have leverage features, may be used in circumstances where the underlying position being hedged contains the same risk features. In such cases, the derivative used will be structured to match the risks of the underlying asset or liability. Exposure to market risk on such contracts is therefore hedged.

d) Analysis of derivative financial instruments

The contract/notional amounts of derivatives in the tables below indicate the nominal value of transactions outstanding at the balance sheet date; they do not represent actual exposures.

	Group
	2017						2016
			Fair value						Fair value
	Notional amount £m		Assets £m		Liabilities £m		Notional amount £m		Assets £m		Liabilities £m
Derivatives held for trading:
Exchange rate contracts		144,160		2,559		4,130		165,521		3,664		6,022
Interest rate contracts		863,151		11,612		11,140		942,798		14,117		14,341
Equity and credit contracts		19,814		888		693		15,325		1,321		860
Total derivatives held for trading		1,027,125		15,059		15,963		1,123,644		19,102		21,223
Derivatives held for hedging
Designated as fair value hedges:
Exchange rate contracts		2,641		312		6		3,819		751		–
Interest rate contracts		59,610		1,272		1,470		70,849		1,578		1,790
Equity derivative contracts		16		–		4		74		4		–
		62,267		1,584		1,480		74,742		2,333		1,790
Designated as cash flow hedges:
Exchange rate contracts		23,117		3,206		55		23,786		3,907		8
Interest rate contracts		12,884		84		115		12,683		120		82
Equity derivative contracts		26		9		–		24		9		–
		36,027		3,299		170		36,493		4,036		90
Total derivatives held for hedging		98,294		4,883		1,650		111,235		6,369		1,880
Total derivative financial instruments		1,125,419		19,942		17,613		1,234,879		25,471		23,103

Derivative assets and liabilities are reported on a gross basis on the balance sheet unless there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously. Further information about offsetting is presented in Note 38.

The table below analyses the notional and fair values of derivatives by trading and settlement method.

	Notional
			Traded over the counter						Asset				Liability
2017	Traded on     recognised exchanges £m		Settled by central counterparties £m		Not settled by central counterparties £m		Total £m		Traded on     recognised exchanges £m		Traded over the counter £m		Traded on recognised exchanges £m		Traded over the counter £m
Exchange rate contracts		–		–		169,918		169,918		–		6,077		–		4,191
Interest rate contracts		71,618		626,600		237,427		935,645		–		12,968		–		12,725
Equity and credit contracts		30		–		19,826		19,856		–		897		1		696
		71,648		626,600		427,171		1,125,419		–		19,942		1		17,612
2016
Exchange rate contracts		–		–		193,126		193,126		–		8,322		–		6,030
Interest rate contracts		69,501		725,626		231,203		1,026,330		1		15,814		–		16,213
Equity and credit contracts		34		–		15,389		15,423		–		1,334		1		859
		69,535		725,626		439,718		1,234,879		1		25,470		1		23,102

e) Analysis of derivatives designated as hedges

Net gains or losses arising from fair value and cash flow hedges included in net trading and other income

	Group
	2017 £m			2016 £m			2015 £m
Fair value hedging:
Gains/(losses) on hedging instruments		56			(274	)		(26	)
(Losses)/gains on hedged items attributable to hedged risks		(2	)		335			87
Fair value hedging ineffectiveness		54			61			61
Cash flow hedging ineffectiveness		(49	)		(33	)		(81	)
		5			28			(20	)

Santander UK hedges its exposures to various risks, including interest rate risk and foreign currency risk, in connection with certain mortgage assets, covered bond issuances, and subordinated and senior debt securities in issue. The gains or losses arising on these assets and liabilities are presented in the table above on a combined basis.

Hedged cash flows

The following table shows when the hedged cash flows are expected to affect the income statement for designated cash flow hedges.

	Group
2017	Up to 1 year £m			1 to 2     years £m			2 to 3     years £m			3 to 4     years £m			4 to 5     years £m			Over 5     years £m			Total £m
Forecast receivable cash flows		275			280			262			197			160			668			1,842
Forecast payable cash flows		(3,486	)		(5,288	)		(3,912	)		(3,572	)		(2,224	)		(7,364	)		(25,846	)
2016
Forecast receivable cash flows		240			220			217			202			146			668			1,693
Forecast payable cash flows		(4,059	)		(3,392	)		(3,681	)		(2,998	)		(2,274	)		(5,611	)		(22,015	)

There were no transactions for which cash flow hedge accounting had to be ceased during the years ended 31 December 2017 and 2016 as a result of the cash flows no longer being expected to occur. In 2015, there was one cash flow hedge of equity price risk for which hedge accounting ceased as a result of the cash flows no longer being expected to occur.

During the year, gains and losses transferred from the cash flow hedging reserve to net interest income were a net gain of £183m (2016: £167m, 2015: £157m) and to net trading and other income were a net loss of £89m (2016: gain of £3,909m, 2015: loss of £462m).

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Financial Assets Designated at Fair Value

12 Months Ended

Dec. 31, 2017

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Financial Assets Designated at Fair Value

13. FINANCIAL ASSETS DESIGNATED AT FAIR VALUE

	Group
	2017  £m		2016  £m
Loans and advances to customers:
Loans to housing associations		1,034		1,215
Other loans		515		516
		1,549		1,731
Debt securities		547		409
		2,096		2,140

Loans and advances to customers represent loans to housing associations secured on residential property and other loans.

– Loans to housing associations secured on residential property which, at the date of their origination, were managed, and their performance evaluated, on a fair value basis in accordance with a documented investment strategy, and information about them was provided on that basis to management.

– Other loans representing a portfolio of roll-up mortgages and associated receivables, are managed, and their performance evaluated, on a fair value basis in accordance with a documented investment strategy, and information about them is provided on that basis to management. Since 2009, the Santander UK group’s policy has been not to designate similar new loans at fair value through profit or loss.

The net gain during the year attributable to changes in credit risk for loans and advances designated at fair value was £49m (2016: £40m, 2015: £39m). The cumulative net loss attributable to changes in credit risk for loans and advances designated at fair value at 31 December 2017 was £120m (2016: £169m).

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Loans and Advances to Banks

12 Months Ended

Dec. 31, 2017

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Loans and Advances to Banks

14. LOANS AND ADVANCES TO BANKS

	Group
	2017  £m		2016  £m
Securities purchased under resale agreements		2,464		1,462
Placements with other banks		3,463		2,886
		5,927		4,348

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Loans and Advances to Customers

12 Months Ended

Dec. 31, 2017

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Loans and Advances to Customers

15. LOANS AND ADVANCES TO CUSTOMERS

	Group
	2017 £m			2016  £m
Loans secured on residential properties		155,355			154,727
Corporate loans		31,006			31,978
Finance leases		6,710			6,730
Secured advances		–			10
Other unsecured loans		6,230			6,165
Amounts due from fellow Banco Santander subsidiaries and joint ventures		1,199			1,112
Amounts due from Santander UK Group Holdings plc		8			5
Loans and advances to customers		200,508			200,727
Impairment loss allowances		(940	)		(921)
Residual value and voluntary termination provisions(1)		(78	)		(68)
Net loans and advances to customers		199,490			199,738

(1) In the first half of 2017, we reclassified our provisions for residual value and voluntary termination from the consumer finance impairment loss allowance. In order to facilitate comparison with the current period, prior year comparatives were amended.

Movement in impairment loss allowances:

	Group
	Loans secured on residential properties £m			Corporate loans £m			Finance leases £m			Other unsecured loans £m			Total  £m
At 1 January 2017		279			382			45			215			921
(Release)/charge to the income statement		(37	)		172			20			102			257
Write-offs and other items(1)		(17	)		(64	)		(19	)		(138	)		(238)
At 31 December 2017		225			490			46			179			940
Of which:
– Observed		105			433			12			59			609
– Incurred but not yet observed		120			57			34			120			331
		225			490			46			179			940
Recoveries, net of collection costs		3			1			6			44			54
At 1 January 2016		424			395			20			269			1,108
(Release)/charge to the income statement		(116	)		59			47			142			132
Write-offs and other items(1)		(29	)		(72	)		(22	)		(196	)		(319)
At 31 December 2016		279			382			45			215			921
Of which:
– Observed		130			287			13			73			503
– Incurred but not yet observed		149			95			32			142			418
		279			382			45			215			921
Recoveries, net of collection costs		4			3			2			56			65

(1) Mortgage write-offs exclude the effect of the unwind over time of the discounting in estimating losses, as described in the accounting policy ‘Impairment of financial assets’ in Note 1. Mortgage write-offs including this effect were £22m (2016: £33m, 2015: £40m).

Finance lease and hire purchase contract receivables may be analysed as follows:

													Group
	2017							2016
	Gross     investment £m		Unearned finance income £m			Net     investment £m		Gross     investment £m		Unearned finance income £m			Net      investment  £m
Not later than one year		3,633		(177	)		3,456		3,047		(183	)		2,864
Later than one year and not later than five years		3,316		(226	)		3,090		3,906		(236	)		3,670
Later than five years		214		(50	)		164		264		(68	)		196
		7,163		(453	)		6,710		7,217		(487	)		6,730

The Santander UK group enters into finance leasing arrangements primarily for the financing of motor vehicles and a range of assets to its corporate customers. Included in the carrying value of net investment in finance leases and hire purchase contracts is £886m (2016: £748m) of unguaranteed residual value at the end of the current lease terms, which is expected to be recovered through re-payment, re-financing or sale. Contingent rent income of £5m (2016: £4m, 2015: £4m) was earned during the year, which was classified in ‘Interest and similar income’.

Finance lease receivable balances are secured over the asset leased. The Santander UK group is not permitted to sell or repledge the asset in the absence of default by the lessee. The Directors consider that the carrying amount of the finance lease receivables approximates to their fair value.

Included within loans and advances to customers are advances assigned to bankruptcy remote structured entities and Abbey Covered Bonds LLP. These loans provide security to issues of covered bonds and asset or mortgage-backed securities made by the Santander UK group. See Note 16 for further details.

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Securitisations and Covered Bonds

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Securitisations and Covered Bonds

16. SECURITISATIONS AND COVERED BONDS

The Santander UK group uses structured entities to securitise some of the mortgage and other loans to customers that it originates. The Santander UK group also issues covered bonds, which are guaranteed by a pool of the Santander UK group’s mortgage loans that it has transferred into Abbey Covered Bonds LLP. The Santander UK group issues mortgage-backed securities, other asset-backed securities and covered bonds mainly in order to obtain diverse, low cost funding, but also to be used as collateral for raising funds via third party bilateral secured funding transactions or for creating collateral which could in the future be used for liquidity purposes. The Santander UK group has successfully used bilateral secured transactions as an additional form of medium-term funding; this has allowed the Santander UK group to further diversify its medium-term funding investor base. The Santander UK group’s principal securitisation programmes and covered bond programme, together with the balances of the advances subject to securitisation and the carrying value of the notes in issue at 31 December 2017 and 2016 are listed below. The related notes in issue are set out in Note 25.

Loans and advances to customers include portfolios of residential mortgage loans, and receivables derived from credit agreements with retail customers for the purchases of financed vehicles, which are subject to non-recourse finance arrangements. These loans and receivables have been purchased by, or assigned to, structured entities or Abbey Covered Bonds LLP, and have been funded primarily through the issue of mortgage-backed securities, other asset-backed securities or covered bonds. No gain or loss has been recognised as a result of these sales. The structured entities and Abbey Covered Bonds LLP are consolidated as subsidiaries. The Company and its subsidiaries do not own directly, or indirectly, any of the share capital of any of the structured entities.

a) Securitisations

The gross assets securitised at 31 December 2017 and 2016 under the structures described below were:

	2017 £m		2016 £m
Master trust structures:
– Holmes		4,299		5,560
– Fosse		5,732		7,182
– Langton		3,893		5,211
		13,924		17,953
Other securitisation structures:
– Motor		1,318		1,117
– Auto ABS UK Loans		1,498		1,260
		2,816		2,377
Total gross assets securitised		16,740		20,330

i) Master trust structures

The Santander UK group makes use of a type of securitisation known as a master trust structure. In this structure, a pool of assets is assigned to a trust company by the asset originator. A funding entity acquires a beneficial interest in the pool of assets held by the trust company with funds borrowed from qualifying structured entities, which at the same time issue asset-backed securities to third-party investors or the Santander UK group. The trust company holds the pool of assets on trust for the funding entity and the originator. The originator holds a beneficial interest over the share of the pool of assets not purchased by the funding entity, known as the seller share.

The Company and its subsidiaries are under no obligation to support any losses that may be incurred by the securitisation companies or holders of the securities and do not intend to provide such further support. Holders of the securities are only entitled to obtain payment of principal and interest to the extent that the resources of the securitisation companies are sufficient to support such payments, and the holders of the securities have agreed in writing not to seek recourse in any other form.

Santander UK plc and its subsidiaries receive payments from the securitisation companies in respect of fees for administering the loans, and payment of deferred consideration for the sale of the loans. Santander UK plc and its subsidiaries have no right or obligation to repurchase any securitised loan, except if certain representations and warranties given by Santander UK plc or its subsidiaries at the time of transfer are breached and, in certain cases, if there is a product switch.

Holmes

Outstanding balances of assets securitised and notes in issue (non-recourse finance) at 31 December 2017 and 2016 were:

2017

2016

Securitisation company

Closing date of securitisation

Gross assets securitised £m

Notes in issue £m

Issued to Santander UK plc as collateral £m

Gross assets securitised £m

Notes in issue £m

Issued to Santander UK plc as collateral £m

Holmes Master Issuer plc – 2010/1

12 November 2010

–

–

–

318

383

–

Holmes Master Issuer plc – 2011/3

21 September 2011

534

561

–

512

618

–

Holmes Master Issuer plc – 2012/1

24 January 2012

–

–

–

98

118

–

Holmes Master Issuer plc – 2012/2

17 April 2012

–

–

–

585

706

–

Holmes Master Issuer plc – 2012/3

7 June 2012

–

–

–

426

514

–

Holmes Master Issuer plc – 2013/1

30 May 2013

–

–

–

28

–

34

Holmes Master Issuer plc – 2016/1

26 May 2016

694

340

389

1,017

644

584

Holmes Master Issuer plc – 2017/1

16 October 2017

474

499

–

–

–

–

Beneficial interest in mortgages held by Holmes Trustees Ltd

2,597

–

–

2,576

–

–

4,299

1,400

389

5,560

2,983

618

Less: Held by the Santander UK group

–

–

Total securitisations (SeeNote 25)

1,400

2,983

Using a master trust structure, Santander UK plc has assigned portfolios of residential mortgages and their related security to Holmes Trustees Limited, a trust company that holds the portfolios of mortgages on trust for Santander UK plc and Holmes Funding Limited. Proceeds from notes issued to third party investors or the Santander UK group by structured entities under the Holmes master trust structure have been loaned to Holmes Funding Limited, which in turn used the funds to purchase its referred beneficial interests in the portfolio of assets held by Holmes Trustees Limited. The minimum value of assets required to be held by Holmes Trustees Limited is a function of the notes in issue under the Holmes master trust structure and Santander UK plc’s required minimum share. The Holmes securitisation companies have placed cash deposits totalling £nil (2016: £231m), which have been accumulated to finance the redemption of a number of securities issued by the Holmes securitisation companies. The share of Holmes Funding Limited in the trust assets is therefore reduced by this amount.

Holmes Funding Limited has a beneficial interest of £1.7bn (2016: £3.0bn) in the residential mortgage loans held by Holmes Trustees Limited, the remaining share of the beneficial interest in residential mortgage loans held by Holmes Trustees Limited belongs to Santander UK plc.

In 2017, £0.5bn (2016: £1.2bn) of mortgage-backed notes were issued from Holmes Master Issuer plc. Mortgage-backed securities totalling £2.0bn (2016: £3.7bn) equivalent were redeemed during the year.

Fosse

Outstanding balances of assets securitised and notes in issue (non-recourse finance) at 31 December 2017 and 2016 were:

			2017					2016
Securitisation company	Closing date of securitisation		Gross assets securitised £m	Notes in issue £m		Issued to Santander UK plc as collateral £m		Gross assets securitised £m	Notes in issue £m		Issued to Santander UK plc as collateral £m
Fosse Master Issuer plc – 2010/1		12 March 2010	–		–		–	446		535		–
Fosse Master Issuer plc – 2011/2		6 December 2011	176		191		34	204		211		34
Fosse Master Issuer plc – 2012/1		22 May 2012	–		–		–	700		738		105
Fosse Master Issuer plc – 2014/1		19 June 2014	–		–		–	366		441		–
Fosse Master Issuer plc – 2015/1		24 March 2015	333		425		–	559		673		–
Beneficial interest in mortgages held by Fosse Master Trust Ltd			5,223		–		–	4,907		–		–
			5,732		616		34	7,182		2,598		139
Less: Held by the Santander UK group					–					–
Total securitisations (See Note 25)					616					2,598

The Fosse Master Trust securitisation structure was established in 2006. Notes were issued by Fosse Master Issuer plc to third party investors and the proceeds loaned to Fosse Funding (No.1) Limited, which in turn used the funds to purchase beneficial interests in mortgages held by Fosse Trustee (UK) Limited. Both Fosse Funding (No.1) Limited and Santander UK plc have a beneficial interest in the mortgages held in trust by Fosse Trustee (UK) Limited. The minimum value of assets required to be held by Fosse Trustee Limited is a function of the notes in issue under the Fosse master trust structure and Santander UK plc’s required minimum share.

Fosse Master Issuer plc has cash deposits totalling £24m (2016: £260m), which have been accumulated to finance the redemption of a number of securities issued by Fosse Master Issuer plc. Fosse Funding (No.1) Limited’s beneficial interest in the assets held by Fosse Trustee (UK) Limited is therefore reduced by this amount.

In 2017 and 2016 there were no mortgage-backed notes issued from Fosse Master Issuer plc. Mortgage-backed notes totalling £1.9bn (2016: £2.9bn) equivalent were redeemed during the year.

Langton

Outstanding balances of assets securitised and notes in issue (non-recourse finance) at 31 December 2017 and 2016 were:

			2017					2016
Securitisation company	Closing date of securitisation		Gross assets securitised £m	Notes in issue £m		Issued to Santander UK plc as collateral £m		Gross assets securitised £m	Notes in issue £m		Issued to Santander UK plc as collateral £m
Langton Securities (2010-1) plc (1)		1 October 2010	986		–		984	987		–		984
Langton Securities (2008-1) plc (2)		23 March 2011	1,373		–		1,371	1,376		–		1,372
Beneficial interest in mortgages held by Langton Master Trust Ltd			1,534		–		–	2,848		–		–
			3,893		–		2,355	5,211		–		2,356

The Langton Master Trust securitisation structure was established in 2008. Notes were issued by the Langton Securities entities to Santander UK plc for the purpose of creating collateral to be used for funding and liquidity. Each entity loaned the proceeds of the Notes issued to Langton Funding (No.1) Limited, which in turn used the funds to purchase a beneficial interest in the mortgages held by Langton Mortgages Trustee (UK) Limited. Both Langton Funding (No.1) Limited and Santander UK plc have a beneficial interest in the mortgages held in trust by Langton Mortgages Trustee (UK) Limited. The minimum value of assets required to be held by Langton Mortgages Trustee Limited (UK) is a function of the notes in issue under the Langton master trust structure and Santander UK plc’s required minimum share.

In 2017 and 2016, there were no issuances from any of the Langton issuing companies. Mortgage-backed notes totalling £nil (2016: £3.4bn) equivalent were redeemed during the year.

ii) Other securitisation structures

The Santander UK group issues notes through pass-through stand-alone vehicles for the securitisation of receivables derived from credit agreements with retail customers for the purchase of financed vehicles.

Motor

Outstanding balances of assets securitised and notes in issue (non-recourse finance) at 31 December 2017 and 2016 were:

			2017				2016
Securitisation company	Closing date of securitisation		Gross assets securitised £m	Notes in issue £m		Issued to Santander Consumer (UK) plc as collateral £m	Gross assets securitised £m	Notes in issue £m		Issued to  Santander  Consumer  (UK) plc  as collateral  £m
Motor 2014-1 plc		16 April 2014	–		–	–	125		–	136
Motor 2015-1 plc		2 March 2015	164		38	136	436		352	136
Motor 2016-1 plc		15 December 2016	578		300	300	556		298	300
Motor 2017-1 plc		20 September 2017	576		514	78	–		–	–
			1,318		852	514	1,117		650	572
Less: Held by the Santander UK group					–				–
Total securitisations (See Note 25)					852				650

In 2017 there were issuances of £0.5bn (2016: £0.6bn) of asset-backed notes from the Motor securitisation structures. Asset-backed notes totalling £0.3bn (2016: £0.5bn) equivalent were redeemed during the year. In 2016 Motor 2016-1M Limited borrowed £0.2bn through an asset-backed senior loan facility under the Motor securitisation arrangement. This was repaid in full in August 2017.

Auto ABS UK Loans

Outstanding balances of assets securitised and notes in issue (non-recourse finance) at 31 December 2017 and 2016 were:

		2017				2016
Securitisation company	Closing date  of securitisation	Gross assets securitised £m	Notes in issue £m		Issued to PSA Finance UK Limited as collateral £m	Gross assets securitised £m	Notes in issue £m		Issued to PSA  Finance UK  Limited  as collateral  £m
Auto ABS UK Loans plc	30 April 2017	1,111		925	221	1,260		1,275	113
Auto ABS UK Loans 2017 plc	15 November 2017	387		315	85	–		–	–
		1,498		1,240	306	1,260		1,275	113
Less: Held by the Santander UK group				–				–
Total securitisations (See Note 25)				1,240				1,275

In 2017, asset-backed notes totalling £0.5bn (2016: £0.5bn) were issued from Auto ABS UK Loans plc and £0.4bn (2016: £nil) were issued by Auto ABS UK loans 2017 plc. Asset-backed notes totalling £0.7bn (2016: £0.4bn) were redeemed during the year by Auto ABS UK Loans plc.

b) Covered bonds

Santander UK plc (the Issuer) also issues covered bonds, which are a direct, unsecured and unconditional obligation of the Issuer. The covered bonds benefit from a guarantee from Abbey Covered Bonds LLP. The Issuer makes a term advance to Abbey Covered Bonds LLP equal to the sterling proceeds of each issue of covered bonds. Abbey Covered Bonds LLP uses the proceeds of the term advance to purchase portfolios of residential mortgage loans and their security from Santander UK plc. Under the terms of the guarantee, Abbey Covered Bonds LLP has agreed to pay an amount equal to the guaranteed amounts when the same shall become due for payment but which would otherwise be unpaid by the Issuer.

Outstanding balances of loans and advances assigned to the covered bond programme at 31 December 2017 and 2016 were:

	2017			2016
	Gross assets assigned £m		Notes in issue £m	Gross assets assigned £m		Notes in issue £m
Euro 35bn Global Covered Bond Programme		19,772	16,866		20,263		17,941
Less: Held by the Santander UK group			(1,067)				(1,313	)
Total covered bonds (See Note 25)			15,799				16,628

In 2017, there were issuances of £2.3bn (2016: £2.2bn) from the covered bond programme. Covered bonds totalling £3.3bn (2016: £0.8bn) equivalent were redeemed during the year.

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Transfers of Financial Assets Not Qualifying for Derecognition

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Transfers of Financial Assets Not Qualifying for Derecognition

17. TRANSFERS OF FINANCIAL ASSETS NOT QUALIFYING FOR DERECOGNITION

The Santander UK group enters into transactions in the normal course of business by which it transfers recognised financial assets directly to third parties or to structured entities. These transfers may give rise to the full or partial derecognition of the financial assets concerned.

– Full derecognition occurs when the Santander UK group transfers its contractual right to receive cash flows from the financial assets, or retains the right but assumes an obligation to pass on the cash flows from the asset, and transfers substantially all the risks and rewards of ownership. The risks include credit, interest rate, currency, prepayment and other price risks

– Partial derecognition occurs when the Santander UK group sells or otherwise transfers financial assets in such a way that some but not substantially all of the risks and rewards of ownership are transferred but control is retained. These financial assets are recognised on the balance sheet to the extent of the Santander UK group’s continuing involvement. There are no assets subject to partial derecognition.

Financial assets that do not qualify for derecognition consist of (i) securities held by counterparties as collateral under repurchase agreements, (ii) securities lent under securities lending agreements, and (iii) loans that have been securitised under arrangements by which the Santander UK group retains a continuing involvement in such transferred assets.

As the substance of the sale and repurchase and securities lending transactions is secured borrowings, the asset collateral continues to be recognised in full and the related liability reflecting the Santander UK group’s obligation to repurchase the transferred assets for a fixed price at a future date is recognised in deposits from banks or customers, as appropriate. As a result of these transactions, the Santander UK group is unable to use, sell or pledge the transferred assets for the duration of the transaction. The Santander UK group remains exposed to interest rate risk and credit risk on these pledged instruments. The counterparty’s recourse is not limited to the transferred assets.

The Santander UK group securitisation transfers do not qualify for derecognition. The Santander UK group remains exposed to credit risks arising from the mortgage loans and has retained control of the transferred assets. Circumstances in which the Santander UK group has continuing involvement in the transferred assets may include retention of servicing rights over the transferred assets, entering into a derivative transaction with the securitisation vehicle, retaining an interest in the securitisation vehicle or providing a cash reserve fund. Where the Santander UK group has continuing involvement it continues to recognise the transferred assets to the extent of its continuing involvement and recognises an associated liability. The net carrying amount of the transferred assets and associated liabilities reflects the rights and obligations that the Santander UK group has retained.

The following table analyses the carrying amount of financial assets that did not qualify for derecognition and their associated financial liabilities:

	Group
Nature of transaction	2017 £m		2017 £m			2016 £m		2016 £m
Sale and repurchase agreements		10,808		(7,734	)		5,600		(3,831	)
Securities lending agreements		302		(235	)		244		(117	)
Securitisations (See Notes 16 and 25)		12,847		(4,108	)		15,066		(7,434	)
		23,957		(12,077	)		20,910		(11,382	)

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Financial Investments

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Financial Investments

18. FINANCIAL INVESTMENTS

	Group
	2017 £m		2016 £m
Loans and receivables securities		2,180		257
Debt securities:
– Available-for-sale		8,772		10,449
– Held-to-maturity		6,578		6,648
Available-for-sale equity securities		81		112
		17,611		17,466

A significant portion of the debt securities are held in our eligible liquidity pool and consist mainly of government bonds and covered bonds. Detailed disclosures can be found in the ‘Liquidity risk’ section of the Risk review.

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Interests in Other Entities

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Interests in Other Entities

19. INTERESTS IN OTHER ENTITIES

	Group
	2017    £m	2016    £m
Joint ventures	73	61
	73	61

The Santander UK group consists of a parent company, Santander UK plc, incorporated in the UK and a number of subsidiaries and joint ventures held directly and indirectly by the Company. The Company has no individually significant associates. Details of subsidiaries, joint ventures and associates are set out in the Shareholder Information section and form an integral part of these financial statements.

a) Interests in subsidiaries

On 1 January 2018, Santander UK plc acquired 100% of the share capital of Santander UK Operations Ltd (formerly Geoban UK Ltd, a subsidiary of Geoban SA) and Santander UK Technology Ltd (formerly Isban UK Ltd, a subsidiary of Ingenieria De Software Bancario SL) for an aggregate cash consideration of £55m. Immediately prior to this, the UK branch of Produban Servicios Informaticos Generales SL was acquired by Santander UK Technology Ltd for a cash consideration of £17m. These acquisitions will enable the Santander UK group to be more customer-centric by having greater business alignment and end-to-end control of IT and operations. In each case, the cash consideration is subject to the finalisation of the book values of the businesses transferred.

Subsidiaries with significant non-controlling interests

The only subsidiary with significant non-controlling interests is PSA Finance UK Limited, which operates in the UK. In 2017 and 2016, the proportion of ownership interests and voting rights held by non-controlling interests was 50%.

	2017    £m	2016    £m
Profit attributable to non-controlling interests	21	27
Accumulated non-controlling interests of the subsidiary	152	150
Dividends paid to non-controlling interests	19	12
Summarised financial information:
– Total assets	3,215	3,450
– Total liabilities	2,909	3,417
– Profit for the year	43	55
– Total comprehensive income for the year	43	55

Interests in consolidated structured entities

Structured entities are formed by Santander UK to accomplish specific and well-defined objectives. Santander UK consolidates these structured entities when the substance of the relationship indicates control, as described in Note 1. In addition to the structured entities disclosed in Note 16 which are used for securitisation and covered bond programmes, the only other structured entities consolidated by the Santander UK group are described below. All the external assets in these entities are included in the financial statements and in relevant Notes of these Consolidated Financial Statements. Other than as set out below, no significant judgements were required with respect to control or significant influence.

i) Guaranteed Investment Products 1 PCC Limited (GIP)

GIP is a Guernsey-incorporated, closed-ended, protected cell company. The objective of each cell is to achieve capital growth for retail investors. In order to achieve the investment objective, GIP, on behalf of the respective cells, has entered into transactions with Santander UK. Santander Guarantee Company, a Santander UK group company, also guarantees the shareholders of cells a fixed return on their investment and/or the investment amount. GIP has no third party assets. Although the share capital is owned by the retail investors, Santander UK continues to have exposure to variable risks and returns through Santander Guarantee Company’s guarantee and has therefore consolidated this entity.

ii) Santander UK Foundation Limited

Santander UK Foundation Limited supports disadvantaged people throughout the UK through the charitable priorities of education and financial capability. The entity was set up by Santander UK and all its revenue arises through donations from Santander UK, and its third party assets are minimal, comprising of available-for-sale assets of £16m (2016: £15m). This entity has been consolidated as Santander UK directs its activities.

b) Interests in joint ventures

Santander UK does not have any individually material interests in joint ventures. As set out in the accounting policies in Note 1, interests in joint ventures are accounted for using the equity method. In the year ended 31 December 2017, Santander UK’s share in the profit after tax of its joint ventures was £12m (2016: £13m) before elimination of transactions between Santander UK and the joint ventures. At 31 December 2017, the carrying amount of Santander UK’s interest was £73m (2016: £61m). At 31 December 2017 and 2016, the joint ventures had no commitments and contingent liabilities.

c) Interests in unconsolidated structured entities

Structured entities sponsored by the Santander UK group

Santander UK has interests in structured entities which it sponsors but does not control. Santander UK considers itself a sponsor of a structured entity when it facilitates the establishment of the structured entity. Other than as set out below, no significant judgements were required with respect to control or significant influence. The structured entities sponsored but not consolidated by Santander UK are as follows.

i) Santander (UK) Common Investment Fund

In 2008, a common investment fund was established to hold the assets of the Santander UK Group Pension Scheme. The Santander (UK) Common Investment Fund is not consolidated by Santander UK, but its assets of £11,626m (2016: £11,125m) are accounted for as part of the defined benefit assets and obligations recognised on Santander UK’s balance sheet. See Note 28 for further information about the entity. As this entity holds the assets of the pension scheme it is outside the scope of IFRS 10. Santander UK’s maximum exposure to loss is equal to the sum of the carrying amount of the assets held.

ii) Trust preferred entities

The trust preferred entities, Abbey National Capital Trust I and Abbey National Capital LP I are 100% owned finance subsidiaries (as defined in Regulation S-X under the US Securities Act 1933, as amended) of Santander UK plc which were set up by Santander UK solely for the issuance of trust preferred securities to third parties and lend the funds on to other Santander UK companies. On 7 February 2000, Abbey National Capital Trust I issued US$1bn of 8.963% Non-cumulative Trust Preferred Securities, which have been registered under the US Securities Act of 1933, as amended. Abbey National Capital Trust I serves solely as a passive vehicle holding the partnership preferred securities issued by Abbey National Capital LP I and each has passed all the rights relating to such partnership preferred securities to the holders of trust preferred securities issued by Abbey National Capital Trust I. All of the trust preferred securities and the partnership preferred securities have been fully and unconditionally guaranteed on a subordinated basis by Santander UK plc. The terms of the securities do not include any significant restrictions on the ability of Santander UK plc to obtain funds, by dividend or loan, from any subsidiary. The trust preferred entities are not consolidated by Santander UK as Santander UK plc is not exposed to variability of returns from the entities.

iii) Credit Protection entities

Santander UK has established two credit protection vehicles, Grafton CLO 2016-1 Designated Activity Company (Grafton) and Red 1 Finance CLO 2017-1 Designated Activity Company (Red 1), private limited companies incorporated in Ireland. Grafton and Red 1 have issued £100m and £87m Credit Linked Notes respectively to third party investors which reference portfolios of Santander UK group loans. Concurrently these vehicles sell credit protection to Santander UK in respect of the referenced loans and, in return for a fee, are liable to make protection payments to the Santander UK group upon the occurrence of a credit event in relation to any of the referenced loans. The entities are not consolidated by Santander UK because the third party investors have the exposure, or rights to, to the variability of returns from the performance of the entity. No assets are transferred to, or income received from, these vehicles. The maximum exposure to loss is equal to any unamortised fees paid to the credit protection entities in connection with the credit protection outlined above.

Structured entities not sponsored by the Santander UK group

Santander UK also has interests in structured entities which it does not sponsor or control. These largely relate to the legacy treasury asset portfolio and consist of holdings of mortgage and other asset-backed securities issued by entities that were established and/or sponsored by other unrelated financial institutions. These securities comprise the loans and receivables securities included in Note 18. Management has concluded that the Santander UK group has no control or significant influence over these entities and that the carrying value of the interests held in these entities represents the maximum exposure to loss.

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Intangible Assets

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Intangible Assets

20. INTANGIBLE ASSETS

a) Goodwill

	Group
	Cost £m		Accumulated    impairment    £m		Net book value    £m
At 31 December 2016(1), 1 January 2017(1) and 31 December 2017		1,285		(82)		1,203

(1) Comparative periods restated to reflect the change in accounting policy relating to business combinations between entities under common control, as described in Note 1.

Impairment of goodwill

During 2017 and 2016, no impairment of goodwill was recognised. Impairment testing in respect of goodwill allocated to each cash-generating unit (CGU) is performed annually or more frequently if there are impairment indicators present. For the purpose of impairment testing, the CGUs are based on customer groups within the relevant business divisions.

The cash flow projections for each CGU are based on the five-year plan prepared for regulatory purposes, based on Santander UK’s 3-Year Plan and approved by the Santander UK plc Board. The assumptions included in the expected future cash flows for each CGU take into consideration the UK economic environment and financial outlook within which the CGU operates. Key assumptions include projected GDP growth rates, the level of interest rates and the level and change in unemployment rates in the UK. The discount rate used to discount the cash flows is based on a pre-tax rate that reflects the weighted average cost of capital allocated by Santander UK to investments in the business division in which the CGU operates. The growth rate used reflects management’s five-year forecasts, with a terminal growth rate for each year applied thereafter, in line with the estimated long-term average UK GDP growth rate.

Based on the conditions at the balance sheet date, management determined that a reasonably possible change in any of the key assumptions described above would not cause an impairment of goodwill to be recognised.

The following CGUs (all within Retail Banking) include in their carrying values goodwill that comprises the goodwill reported by Santander UK. The CGUs do not carry on their balance sheets any other intangible assets with indefinite useful lives. The calculations have been based on value in use using cash flows based on the five-year plan.

	Goodwill				Discount rate				Growth rate(2)
CGU	2017 £m		2016(1) £m		2017 %		2016 %		2017 %		2016 %
Personal financial services		1,169		1,169		10.8		11.4		1		2
Private banking		30		30		10.8		11.4		1		1
Other		4		4		10.8		11.4		1		2
		1,203		1,203

(1) Restated to reflect the change in accounting policy relating to business combinations between entities under common control, as described in Note 1.

(2) Average growth rate based on the five-year plan for the first five years and a growth rate of 1.5% (2016: 2.0%) applied thereafter.

In 2017, the discount rate decreased by 0.6 percentage points to 10.8% (2016: 11.4%). The decrease reflected changes in current market and economic conditions. In 2017, the change in growth rates reflected Santander UK’s updated strategic priorities in the context of forecast economic conditions.

b) Other intangibles

	Group
	Cost £m			Accumulated amortisation/ impairment £m			Net book value £m
At 1 January 2017		760			(278	)		482
Additions		205			–			205
Disposals		(3	)		3			–
Charge		–			(116	)		(116	)
Impairment		–			(32	)		(32	)
At 31 December 2017		962			(423	)		539
At 1 January 2016		601			(204	)		397
Additions		213			–			213
Disposals		(54	)		47			(7	)
Charge		–			(76	)		(76	)
Impairment		–			(45	)		(45	)
At 31 December 2016		760			(278	)		482

Other intangible assets consist of computer software. The assessment of whether an asset is exhibiting indicators of impairment as well as the calculation of impairment, which requires the estimate of future cash flows and fair values less costs to sell, also requires the preparation of cash flow forecasts and fair values for assets that may not be regularly bought and sold.

In 2017, intangible asset impairments primarily related to capitalised software costs for a credit risk management system, part of which was no longer in use. In 2016, intangible asset impairments primarily related to a multi-entity banking platform developed for our non-ring-fenced bank under the original ring-fencing structure.

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Deposits by Banks

12 Months Ended

Dec. 31, 2017

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Deposits by Banks

21. DEPOSITS BY BANKS

	Group
	2017		2016
	£m		£m
Items in the course of transmission		303		308
Securities sold under repurchase agreements		1,076		2,384
Deposits held as collateral		1,760		778
Other deposits(1)		10,645		6,299
		13,784		9,769

(1) Includes drawdown from the TFS of £8.5bn (2016: £4.5bn).

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Deposits by Customers

12 Months Ended

Dec. 31, 2017

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Deposits by Customers

22. DEPOSITS BY CUSTOMERS

	Group
	2017 £m		2016 £m
Current and demand accounts – interest-bearing		85,749		85,967
– non-interest-bearing		2		67
Savings accounts(1)		70,461		58,305
Time deposits		19,951		27,203
Securities sold under repurchase agreements		502		502
Amounts due to Santander UK Group Holdings plc(2)		6,256		4,464
Amounts due to fellow Banco Santander subsidiaries		727		664
		183,648		177,172

(1) Includes equity index-linked deposits of £1,301m (2016: £1,618m). The capital amount guaranteed/protected and the amount of return guaranteed in respect of the equity index-linked deposits were £1,301m and £67m (2016: £1,618m and £129m) respectively.

(2) Includes downstreamed funding from our immediate parent company Santander UK Group Holdings plc.

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Trading Liabilities

12 Months Ended

Dec. 31, 2017

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Trading Liabilities

23. TRADING LIABILITIES

	Group
	2017 £m		2016 £m
Securities sold under repurchase agreements		25,504		8,798
Short positions in securities and unsettled trades		3,694		2,801
Cash collateral		1,911		3,535
Short-term deposits		–		426
		31,109		15,560

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Financial Liabilities Designated at Fair Value

12 Months Ended

Dec. 31, 2017

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Financial Liabilities Designated at Fair Value

24. FINANCIAL LIABILITIES DESIGNATED AT FAIR VALUE

	Group
	2017 £m		2016 £m
US$10bn Euro Commercial Paper Programmes		387		454
US$30bn Euro Medium Term Note Programme		169		184
Structured Notes Programmes		932		1,137
Warrants programme		–		2
Eurobonds		147		137
Structured deposits		680		526
		2,315		2,440

The fair value is based on quoted prices in an active market for the specific instrument concerned, if available. When quoted market prices are unavailable, the fair value is estimated using valuation techniques, the inputs for which are either based upon quoted prices in an inactive market for the instrument, or are estimated by comparison with quoted prices in an active market for similar instruments. In both cases, the fair value includes the effect of applying the credit spread which is appropriate to the Santander UK group’s liabilities. The change in fair value attributable to the Santander UK group’s own credit spread is computed as follows: for each security at each reporting date, an externally verifiable price is obtained or a price is derived using credit spreads for similar securities for the same issuer or credit default swaps. Each security is then valued using discounted cash flows, incorporating a LIBOR-based discount curve. The difference in the valuations is attributable to the Santander UK group’s own credit spread. This methodology is applied consistently across all securities where it is believed that counterparties would consider the Santander UK group’s creditworthiness when pricing trades.

As part of our ring-fencing plans, with effect from 1 November 2017, all outstanding structured notes and warrants issued by Abbey National Treasury Services plc under the Structured Notes Programmes and the Warrants Programme were novated to Santander UK plc. All rights, obligations and liabilities of Abbey National Treasury Services plc under these structured notes and warrants have been taken over and assumed by Santander UK plc and all future structured notes will be issued by Santander UK plc. In addition, during 2017 Santander UK plc established separate commercial paper and certificate of deposit programmes, with similar terms to the existing Abbey National Treasury Services plc programmes. For more information on our ring-fencing plans, see Note 39.

Gains and losses arising from changes in the credit spread of securities issued by the Santander UK group reverse over the contractual life of the debt, provided that the debt is not repaid at a premium or a discount. The net loss during the year attributable to changes in the Santander UK group’s own credit risk on the above securities was £29m (2016: £6m gain, 2015: £23m gain). The cumulative net loss attributable to changes in the Santander UK group’s own credit risk on the above securities at 31 December 2017 was £7m (2016: £22m gain). Of the change in carrying value during the year ended 31 December 2017, cash and non-cash changes amounted to £(263)m and £138m respectively. Non-cash changes consist of £(46)m of unrealised foreign exchange differences, £37m for changes in fair value and £147m of other changes predominantly accrued interest.

At 31 December 2017, the amount that would be required to be contractually paid at maturity of the securities above was £4m lower (2016: £35m) than the carrying value.

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Debt Securities in Issue

12 Months Ended

Dec. 31, 2017

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Debt Securities in Issue

25. DEBT SECURITIES IN ISSUE

	Group
	2017 £m		2016 £m
Medium-term notes:
– US$30bn Euro Medium Term Note Programme		8,816		10,818
– US SEC-registered – Santander UK plc		6,280		7,499
– US$20bn Commercial Paper Programmes		2,906		2,678
		18,002		20,995
Euro 35bn Global Covered Bond Programme (See Note 16)		15,799		16,628
Certificates of deposit		4,681		5,217
Credit Linked Notes		43		–
Securitisation programmes (See Note 16)		4,108		7,506
		42,633		50,346

As part of our ring-fencing plans, during 2017 Santander UK plc established separate commercial paper and certificate of deposit programmes, with similar terms to the existing Abbey National Treasury Services plc programmes. For more information on our ring-fencing plans, see Note 39.

The credit linked note was issued by PSA Finance UK Limited and references a pool of auto loans and leases originated by PSA Finance UK Limited that, in return for a fee, provides credit protection on the first 7.6% of losses in the reference portfolio.

Of the change in carrying value in 2017, cash and non-cash changes amounted to £(6,688)m and £(1,025)m respectively. Non-cash changes comprised £(929)m of unrealised foreign exchange differences and £(96)m of other changes, mainly accrued interest.

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Subordinated Liabilities

12 Months Ended

Dec. 31, 2017

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Subordinated Liabilities

26. SUBORDINATED LIABILITIES

	Group
	2017 £m		2016 £m
£325m Sterling Preference Shares		344		344
£175m Fixed/Floating Rate Tier One Preferred Income Capital Securities		2		2
Undated subordinated liabilities		584		768
Dated subordinated liabilities		2,863		3,189
		3,793		4,303

The above securities will, in the event of the winding up of the issuer, be subordinated to the claims of depositors and all other creditors of the issuer, other than creditors whose claims rank equally with, or are junior to, the claims of the holders of the subordinated liabilities. The subordination of specific subordinated liabilities is determined in respect of the issuer and any guarantors of that liability. The claims of holders of preference shares and preferred securities are generally junior to those of the holders of undated subordinated liabilities, which in turn are junior to the claims of holders of the dated subordinated liabilities. The subordination of the preference shares and preferred securities ranks equally with that of the £300m fixed/floating rate non-cumulative callable preference shares and £300m Step-up Callable Perpetual Reserve Capital Instruments classified as other equity instruments, as described in Note 31.

During 2017 and 2016, the Santander UK group had no defaults of principal, interest or other breaches with respect to its subordinated liabilities. No repayment or purchase by the issuer of the subordinated liabilities may be made prior to their stated maturity without the consent of the PRA.

During 2017, Santander UK exercised its option to call the £175m Fixed/Floating Rate Tier One Preferred Income Capital Securities. These were fully redeemed on 9 February 2018.

Of the change in carrying value during the year ended 31 December 2017, cash and non-cash changes amounted to £(52)m and £(458)m respectively. Non-cash changes included £(235)m in respect of unrealised foreign exchange differences and £(223)m of other changes.

Undated subordinated liabilities

	Group
	Call date		2017 £m		2016 £m
10.0625% Exchangeable subordinated capital securities		Any interest payment date		205		205
7.375% 20 Year Step-up perpetual callable subordinated notes		2020		17		198
7.125% 30 Year Step-up perpetual callable subordinated notes		2030		362		365
				584		768

In common with other debt securities issued by Santander UK group companies, the undated subordinated liabilities are redeemable in whole at the option of Santander UK plc, on any interest payment date, in the event of certain tax changes affecting the treatment of payments of interest on the subordinated liabilities in the UK, at their principal amount together with any accrued interest.

During 2017, Santander UK plc exercised its option to call, and redeemed, 91% of the 7.375% 20 Year Step-up perpetual callable subordinated notes.

Dated subordinated liabilities

			Group
	Maturity		2017 £m		2016 £m
11.50% Subordinated guaranteed bond		2017		–		58
10.125% Subordinated guaranteed bond		2023		78		84
9.625% Subordinated notes		2023		129		134
5% Subordinated notes (US$1,500m)		2023		1,103		1,208
4.75% Subordinated notes (US$1,000m)		2025		745		816
7.95% Subordinated notes (US$1,000m)		2029		275		307
6.50% Subordinated notes		2030		40		40
8.963% Subordinated notes (US$1,000m)		2030		113		126
5.875% Subordinated notes		2031		9		10
5.625% Subordinated notes (US$500m)		2045		371		406
				2,863		3,189

The dated subordinated liabilities are redeemable in whole at the option of Santander UK plc, on any interest payment date, in the event of certain tax changes affecting the treatment of payments of interest on the subordinated liabilities in the UK, at their principal amount together with any accrued interest.

Each of the subordinated liabilities issued by Santander UK Group Holdings plc has been downstreamed to Santander UK plc by means of Santander UK plc issuing equivalent subordinated liabilities to Santander UK Group Holdings plc.

During 2017, Santander UK plc exercised its option to call the 10.125% Subordinated guaranteed bond. These were fully redeemed on 4 January 2018.

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Provisions

12 Months Ended

Dec. 31, 2017

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Provisions

27. PROVISIONS

	Group
	Conduct remediation
	PPI £m			Wealth and Investment £m			Other products £m			Regulatory- related £m			Vacant property £m			Other £m			Total £m
At 1 January 2017		457			22			14			96			47			64			700
Additional provisions		109			–			35			93			4			144			385
Utilisation		(210	)		(29	)		(5	)		(132	)		(12	)		(149	)		(537	)
Transfers		–			10			–			–			–			–			10
At 31 December 2017		356			3			44			57			39			59			558
To be settled:
– Within 12 months		167			3			35			57			23			59			344
– In more than 12 months		189			–			9			–			16			–			214
		356			3			44			57			39			59			558
At 1 January 2016		465			146			26			93			68			72			870
Additional provisions		144			–			2			141			(6	)		116			397
Utilisation		(152	)		(124	)		(14	)		(138	)		(15	)		(124	)		(567	)
At 31 December 2016		457			22			14			96			47			64			700
To be settled:
– Within 12 months		294			22			4			96			25			59			500
– In more than 12 months		163			–			10			–			22			5			200
		457			22			14			96			47			64			700

a) Conduct remediation

The amounts in respect of conduct remediation comprise the estimated cost of making redress payments, including related costs, with respect to the past sales or administration of products. The provision for conduct remediation represents management’s best estimate of the anticipated costs of related customer contact and/or redress, including related costs.

(i) Payment Protection Insurance (PPI)

In August 2010, the FSA (now the FCA) published a policy statement entitled ‘The assessment and redress of Payment Protection Insurance complaints’ (the Policy Statement). The Policy Statement contained rules which altered the basis on which regulated firms must consider and deal with complaints in relation to the sale of PPI and potentially increased the amount of compensation payable to customers whose complaints are upheld.

In November 2015, the FCA issued a Consultation Paper 15/39 (Rules and guidance on payment protection insurance complaints) which introduced the concept of unfair commission in relation to Plevin for customer redress plus a deadline by which customers would need to make their PPI complaints. On 2 August 2016, the FCA issued Consultation Paper 16/20 (Rules and Guidance on payment protection insurance complaints: Feedback on CP 15/39 and further consultation). The paper outlined the FCA’s proposed approach to PPI in light of the 2014 decision of the Supreme Court in Plevin v Paragon Personal Finance Ltd (Plevin) and also recommended a two-year deadline period starting in June 2017, which was later than proposed in CP 15/39. The paper also included proposals in relation to how redress for Plevin-related claims should be calculated including consideration of how profit share arrangements should be reflected in commission levels. The final rules released on 2 March 2017 in Policy Statement 17/3 (Payment Protection Insurance Complaints: Feedback on CP16/20 and final rules and guidance) confirmed that the two-year deadline period would start in August 2017. There was also a requirement to proactively mail previously rejected complainants in scope of s140A of the Consumer Credit Act to explain they are eligible to complain again in light of Plevin. Lastly there are some clarifications to the profit share percentage calculations. These changes may impact on the future amounts expected to be paid.

A provision for conduct remediation has been recognised in respect of the mis-selling of PPI policies. The provision is calculated based on a number of key assumptions which involve significant management judgement. These are:

– Claim volumes – the estimated number of customer complaints received

– Uphold rate – the estimated percentage of complaints that are, or will be, upheld in favour of the customer

– Average cost of redress – the estimated payment to customers, including compensation for any direct loss plus interest.

The assumptions have been based on the following:

– Analysis completed of the causes of complaints, uphold rates, industry factors, FCA activity/guidance and how these are likely to vary in the future;

– Actual claims activity registered to date

– The level of redress paid to customers, together with a forecast of how this is likely to change over time

– The impact on complaints levels of proactive customer contact

– The effect media coverage and time bar are expected to have on the complaints inflows

– Commission and profit share earned from Insurance providers over the lifetime of the products

– In relation to a specific PPI portfolio of complaints, an analysis of the relevant facts and circumstances including legal and regulatory responsibilities.

The key assumptions are kept under review, and are regularly reassessed and validated against actual customer data. The provision represents management’s best estimate of Santander UK’s future liability in respect of mis-selling of PPI policies.

The most critical factor in determining the level of provision is the volume of claims. The uphold rate is informed by historical experience and the average cost of redress can be predicted reasonably accurately given that management is dealing with a high volume and reasonably homogeneous population. In setting the provision, management estimated the total claims that were likely to be received until August 2019.

The table below sets out the key drivers of the provision balance and forecast assumptions used in calculating the provision, as well as the sensitivity of the provision to changes in the assumptions. It reflects a blended view across all our retail products and portfolios and includes redress for Plevin-related claims.

A provision for conduct remediation has been recognised in respect of the mis-selling of PPI policies. The provision is calculated based on a number of key assumptions which involve significant management judgement. These are:

– Claim volumes – the estimated number of customer complaints received

– Uphold rate – the estimated percentage of complaints that are, or will be, upheld in favour of the customer

– Average cost of redress – the estimated payment to customers, including compensation for any direct loss plus interest.

The assumptions have been based on the following:

– Analysis completed of the causes of complaints, uphold rates, industry factors, FCA activity/guidance and how these are likely to vary in the future;

– Actual claims activity registered to date

– The level of redress paid to customers, together with a forecast of how this is likely to change over time

– The impact on complaints levels of proactive customer contact

– The effect media coverage and time bar are expected to have on the complaints inflows

– Commission and profit share earned from Insurance providers over the lifetime of the products

– In relation to a specific PPI portfolio of complaints, an analysis of the relevant facts and circumstances including legal and regulatory responsibilities.

The key assumptions are kept under review, and are regularly reassessed and validated against actual customer data. The provision represents management’s best estimate of Santander UK’s future liability in respect of mis-selling of PPI policies.

The most critical factor in determining the level of provision is the volume of claims. The uphold rate is informed by historical experience and the average cost of redress can be predicted reasonably accurately given that management is dealing with a high volume and reasonably homogeneous population. In setting the provision, management estimated the total claims that were likely to be received until August 2019.

The table below sets out the key drivers of the provision balance and forecast assumptions used in calculating the provision, as well as the sensitivity of the provision to changes in the assumptions. It reflects a blended view across all our retail products and portfolios and includes redress for Plevin-related claims.

	Cumulative to 31 December 2017		Future expected (unaudited)		Sensitivity analysis Increase/decrease in provision
Inbound complaints(1) (‘000)		1,623		660		25 = £9m
Outbound contact (‘000)		487		127		25 = £5m
Response rate to outbound contact		54%		100%		1% = £0.3m
Average uphold rate per claim(2)		47%		68%		1% = £2.6m
Average redress per claim(3)		£1,378		£564		£100 = £50m

(1) Includes all claims received regardless of whether we expect to make a payment; i.e. regardless of the likelihood of the Santander UK group incurring a liability. Excludes claims where the complainant has not held a PPI policy.

(2) Claims include inbound and responses to outbound contact.

(3) The average redress per claim reduced from the cumulative average value at 31 December 2017 of £1,378m to a future average value of £564 due to the inclusion of Plevin cases in the provision, as well as a shift in the complaint mix to a greater proportion of storecards, which typically held lower average balances.

2017 compared to 2016

The remaining provision for PPI redress and related costs amounted to £356m. The total charge for the year was £109m (2016: £144m) and was driven by an increase in estimated future claims driven by the start of the FCA advertising campaign for PPI, offset by an expected decline relating to a specific PPI portfolio review. We continue to monitor our provision levels in respect of recent claims experience. In 2016, a provision of £114m was made when we applied the principles published in the August 2016 FCA papers, and a further £32m was made in relation to a past business review.

Monthly utilisation increased from the 2016 average following the confirmation of a deadline for customer complaints, broadly in line with our assumptions. We continue to monitor our provision levels in respect of recent claims experience.

2016 compared to 2015

We made an additional £144m provision charge in the year, which included our best estimate of Plevin related claim costs and a £30m charge for a portfolio under a past business review. With the FCA consultation that was expected to close in the first quarter of 2017, we assessed the adequacy of our provision and applied the principles published in the August 2016 FCA consultation paper to our current assumptions. We continued to review our provision levels in respect of recent claims experience and noted that once the final FCA guidance was published it was possible further PPI-related provision adjustments would be required in future years.

Monthly utilisation during the year, excluding the impact of past business review activity, was slightly higher than the 2015 average and in line with our assumptions.

(ii) Wealth and investment

During 2012, the FCA (then known as the FSA) undertook an industry-wide thematic review of the sale of investment products, and subsequently sales of premium investment funds. The FCA’s review included Santander UK, and identified shortcomings in the collection of customer information and risk profile alignment and concerns about product suitability, fees and charges. As a result, Santander UK initiated customer contact exercises to provide appropriate redress to customers who had suffered detriment.

A provision has been recognised in respect of the above sales for redress payments and related costs. The provision is calculated based on a number of factors and assumptions including:

– Customer communications – the results of contact with affected customers

– Acceptance of offers made – acceptances by affected customers and additional losses claimed from some customers

– Average redress paid – the estimated payment to customers, including compensation for any direct loss plus interest.

At 31 December 2017, the provision was £3m (2016: £22m), reflecting the remediation exercise being close to completion.

(iii) Other products

A provision for conduct remediation has also been recognised in respect of sales of other products. The provision represents management’s best estimate of the anticipated costs of related customer contact and/or redress, including related costs. A number of uncertainties remain as to the eventual costs with respect to conduct remediation in respect of these products given the inherent difficulties in determining the number of customers involved and the amount of any redress to be provided to them.

Provisions for other liabilities and charges of £35m in the second quarter of 2017 relate to the sale of interest rate derivatives, following an ongoing review regarding regulatory classification of certain customers potentially eligible for redress.

b) Regulatory-related

(i) Financial Services Compensation Scheme (FSCS)

The FSCS is the UK’s independent statutory compensation fund for customers of authorised financial services firms and pays compensation if a firm is unable to pay claims against it. The FSCS is funded by levies on the industry (and recoveries and borrowings where appropriate). The levies raised comprise both management expenses levies and, where necessary, compensation levies on authorised firms.

Each deposit-taking institution contributes towards the management expenses levies in proportion to their share of total protected deposits on 31 December of the year preceding the scheme year, which runs from 1 April to 31 March. In determining an appropriate accrual in respect of the management expenses levy, certain assumptions have been made, based on information received from the FSCS, and the Santander UK group’s historic share of industry protected deposits.

Following the default of a number of deposit takers since 2008, the FSCS borrowed funds from HM Treasury to meet the compensation costs for customers of those firms. The interest on the borrowings with HM Treasury is now assessed at the higher of 12 month LIBOR plus 111 basis points and the relevant rate published by the Debt Management Office.

Whilst it is expected that the substantial majority of the principal will be repaid from funds the FSCS receives from asset sales, surplus cash flow or other recoveries in relation to the assets of the firms that defaulted, to the extent that there remains a shortfall, the FSCS can recover any shortfall of the principal by levying the deposit-taking sector in instalments. The Santander UK group made capital contributions in August 2013, August 2014 and August 2015.

The FSCS and HM Treasury have agreed that the terms of the repayment of the borrowings will be reviewed every three years in light of market conditions and of the actual repayment from the estates of failed banks. The ultimate amount of any compensation levies to be charged in future years also depends on a number of factors including the level of protected deposits and the population of deposit-taking participants and will be determined at a later date.

Dunfermline Building Society was the first deposit taker to be resolved under the Special Resolution Regime which came into force under the Banking Act 2009. Recoveries were paid to HM Treasury and the FSCS has an obligation to contribute to the costs of the resolution, subject to a statutory cap. The Santander UK group’s contributions in 2015 included payments for this resolution.

On 31 March 2017 UK Asset Resolution announced the sale by Bradford & Bingley of certain mortgage assets. On 25 April 2017, as a result of that transaction, the amount that FSCS owes to HM Treasury reduced to £4.7bn, from the previous £15.7bn. The interest payable on the loan, and the Santander UK group’s share of that interest, fell accordingly. The Santander UK group purchased £1.5bn of the securities issued by UK Asset Resolution.

For the year ended 31 December 2017, the Santander UK group charged £1m (2016: £34m, 2015: £76m) to the income statement in respect of the costs of the FSCS. The charge includes the effect of adjustments to provisions made in prior years as a result of more accurate information now being available, and is net of a refund of £12m in respect of recoveries made by the FSCS from Icelandic banks.

(ii) UK Bank Levy

The Finance Act 2011 introduced an annual bank levy in the UK. The UK Bank Levy is based on the total chargeable equity and liabilities as reported in the balance sheet of a Relevant Group at the end of a chargeable period. The Relevant Group for this purpose is a Foreign Banking Group whose ultimate parent is Banco Santander SA. The UK Bank Levy is calculated principally on the consolidated balance sheet of the UK sub-group parented by Santander UK Group Holdings plc. In determining the chargeable equity and liabilities the following amounts are excluded: adjusted Tier 1 capital; certain ‘protected deposits’ (for example those protected under the FSCS); liabilities that arise from certain insurance business within banking groups; liabilities in respect of currency notes in circulation; FSCS liabilities; liabilities representing segregated client money; and deferred tax liabilities, current tax liabilities, liabilities in respect of the UK Bank Levy, revaluation of property liabilities, liabilities representing the revaluation of business premises and defined benefit retirement liabilities.

It is also permitted in specified circumstances to reduce certain liabilities: by netting them against certain assets; offsetting assets on the relevant balance sheets that would qualify as high quality liquid assets (in accordance with the PRA definition); and repo liabilities secured against sovereign and supranational debt.

In addition to changes in UK corporation tax rates, Finance (No.2) Act 2015 reduced the UK Bank Levy rate from 0.21% via subsequent annual reductions to 0.10% from 1 January 2021. As a result, a rate of 0.17% applies for 2017 (2016: 0.18%). Certain liabilities are subject to only a half rate, namely any deposits not otherwise excluded, (except for those from financial institutions and financial traders) and liabilities with a maturity greater than one year at the balance sheet date. The UK Bank Levy is not charged on the first £20bn of chargeable equity and liabilities.

The cost of the UK Bank Levy for 2017 was £92m (2016: £107m, 2015: £101m). The Santander UK group paid £109m in 2017 (2016: £101m) and provided for a liability of £44m at 31 December 2017 (2016: £60m).

c) Vacant property

Vacant property provisions are made by reference to an estimate of any expected sub-let income, compared to the head rent, and the possibility of disposing of Santander UK’s interest in the lease, taking into account conditions in the property market. These provisions are reassessed on a semi-annual basis and will normally run off over the period of the leases concerned, where a property is disposed of earlier than anticipated any remaining balance in the provision relating to that property is released.

d) Other

Other provisions principally comprise amounts in respect of operational loss and operational risk provisions, restructuring charges and litigation and related expenses.

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Retirement Benefit Plans

12 Months Ended

Dec. 31, 2017

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Retirement Benefit Plans

28. RETIREMENT BENEFIT PLANS

The amounts recognised in the balance sheet were as follows:

			Group
			2017 £m			2016 £m
Assets/(liabilities)
Funded defined benefit pension scheme – surplus				449			398
Funded defined benefit pension scheme – deficit				(245	)		(223	)
Unfunded defined benefit pension scheme				(41	)		(39	)
Total net assets				163			136
Remeasurement (gains)/losses recognised in other comprehensive income during the year were as follows:
	Group
	2017 £m		2016 £m			2015 £m
Pension remeasurement		103		528			(319	)

a) Defined contribution pension plans

The Santander UK group operates a number of defined contribution pension plans. The assets of the defined contribution pension plans are held and administered separately from those of the Santander UK group. In December 2017 the group ceased to contribute to the Santander Retirement Plan, an occupational defined contribution plan, and future contributions are paid into a defined contribution Master Trust, LifeSight. This Master Trust is the plan into which eligible employees are enrolled automatically. The assets of the Santander Retirement Plan and the Master Trust are held in separate trustee-administered funds.

An expense of £54m (2016: £52m, 2015: £50m) was recognised for defined contribution plans in the year, and is included in staff costs classified within operating expenses (see Note 6). None of this amount was recognised in respect of key management personnel for the years ended 31 December 2017, 2016 and 2015.

b) Defined benefit pension schemes

The Santander UK group operates a number of defined benefit pension schemes. The main pension scheme is the Santander (UK) Group Pension Scheme (“the Scheme”). It comprises seven legally segregated sections under the terms of a merger of former schemes operated by Santander UK plc agreed in 2012. The Scheme covers 17% (2016: 18%) of the Santander UK group’s employees, and is a closed funded defined benefit scheme. Under the projected unit method, the current service cost when expressed as a percentage of pensionable salaries will gradually increase over time.

The corporate trustee of the Santander (UK) Group Pension Scheme is Santander (UK) Group Pension Scheme Trustees Limited (the Trustee), a private limited company incorporated in 1996 and a wholly-owned subsidiary of Santander UK plc. The principal duty of the Trustee is to act in the best interests of the members of the Scheme. The Trustee board comprises seven Directors selected by Santander UK plc, plus seven member-nominated Directors selected from eligible members who apply for the role.

Formal actuarial valuations of the assets and liabilities of the defined benefit schemes are carried out on at least a triennial basis by independent professionally-qualified actuaries and valued for accounting purposes at each balance sheet date. The latest formal actuarial valuation for the Santander (UK) Group Pension Scheme at 31 March 2016 was finalised in March 2017. The next triennial funding valuation will be as at 31 March 2019.

The assets of the funded schemes including the Scheme are held independently of the Santander UK group’s assets in separate trustee administered funds. Investment strategy across the sections of the Scheme remains under regular review. Investment decisions are delegated by the Trustee to a common investment fund, managed by Santander (CF Trustee) Limited, a private limited company owned by five Trustee directors, three appointed by Santander UK plc and two by the Trustee. The Santander (CF Trustee) Limited directors’ principal duty, within the investment powers delegated to them, is to act in the best interest of the members of the Santander (UK) Group Pension Scheme. Ultimate responsibility for investment strategy rests with the Trustee of the Scheme who is required under the Pensions Act 2004 to prepare a statement of investment principles.

The Trustee has developed the following investment principles:

– To maintain a portfolio of suitable assets of appropriate quality, suitability and liquidity which will generate income and capital growth to meet, together with new contributions from members and the employers, the cost of current and future benefits which the Scheme provides, as set out in the trust deed and rules

– To limit the risk of the assets failing to meet the liabilities, over the long-term and on a shorter-term basis as required by prevailing legislation

– To invest in a manner appropriate to the nature and duration of the expected future retirement benefit payments

– To minimise the long-term cash costs of the Scheme to us by maximising the return on the assets whilst having regard to the objectives shown above.

The Santander UK group’s defined benefit pension schemes expose us to actuarial risks such as investment risk, interest rate risk, longevity risk, salary risk and inflation risk:

Investment risk

Scheme assets are invested in a diversified portfolio of debt securities, equities and other return-seeking assets. If the assets underperform the discount rate used to calculate the defined benefit obligation, it will reduce the surplus or increase the deficit. Volatility in asset values and the discount rate will lead to volatility in the net pension liability on the Santander UK group’s balance sheet and in other comprehensive income. To a lesser extent this will also lead to volatility in the pension expense in the Santander UK group’s income statement. The actual performance of assets will impact the amount the Santander UK group needs to contribute to the Scheme in the future.

Interest rate risk

The present value of the Scheme’s liability is calculated using a discount rate determined by reference to high quality corporate bond yields. A decrease in the bond yield will increase the present value of the Scheme’s liability; however this will be partially offset by an increase in the value of the Scheme’s debt investments.

Longevity risk	The present value of the Scheme’s liability is calculated by reference to the best estimate of the life expectancy of scheme participants both during and after their employment. An increase in life expectancy of the Scheme participants will increase the present value of the Scheme’s liability as benefits will be paid for longer.
Salary risk	The present value of the Scheme’s liability is calculated by reference to the future salaries of scheme participants. As such, an increase in the salary of the Scheme participants will increase the present value of the Scheme’s liability. This risk has been minimised by the introduction of a salary increase cap of 1% p.a. from 1 March 2015.
Inflation risk	An increase in inflation rate will increase the Scheme’s liability as benefits will increase more quickly, accompanied by an expected increase in the return on the Scheme’s investments.

The Santander UK group does not hold material insurance policies over the schemes, and has not entered into any significant transactions with the schemes.

The total amount charged to the Income Statement, including any amounts classified as redundancy costs was as follows:

	Group
	2017 £m			2016 £m			2015 £m
Net interest income		(5	)		(18	)		(4	)
Current service cost		31			33			37
Past service cost		1			1			2
Administration costs		8			8			6
		35			24			41
The amounts recognised in other comprehensive income during the year were as follows:
	Group
	2017 £m			2016 £m			2015 £m
Return on plan assets (excluding amounts included in net interest expense)		(435	)		(1,447	)		164
Actuarial (gains)/losses arising from changes in demographic assumptions		(151	)		30			(67	)
Actuarial gains arising from experience adjustments		(11	)		(80	)		(202	)
Actuarial losses/(gains) arising from changes in financial assumptions		700			2,025			(211	)
Cumulative actuarial reserve acquired with subsidiary		–			–			(3	)
Pension remeasurement		103			528			(319	)
Movements in the present value of defined benefit obligations during the year were as follows:
				Group
				2017 £m			2016 £m
At 1 January					(11,082	)		(9,004	)
Current service cost paid by Santander UK plc					(30	)		(23	)
Current service cost paid by subsidiaries					(1	)		(2	)
Current service cost paid by fellow Banco Santander subsidiaries					(12	)		(8	)
Interest cost					(305	)		(333	)
Employer salary sacrifice contributions					(6	)		(7	)
Past service cost					(1	)		(1	)
Remeasurement:
– Actuarial movements arising from changes in demographic assumptions					151			(30	)
– Actuarial movements arising from experience adjustments					11			80
– Actuarial movements arising from changes in financial assumptions					(700	)		(2,025	)
Benefits paid					392			271
At 31 December					(11,583	)		(11,082	)
Movements in the fair value of scheme assets during the year were as follows:
				Group
				2017 £m			2016 £m
At 1 January					11,218			9,450
Interest income					310			351
Contributions paid by employer and scheme members					171			236
Contributions paid by fellow Banco Santander subsidiaries					12			13
Administration costs paid					(8	)		(8	)
Return on plan assets (excluding amounts included in net interest expense)					435			1,447
Benefits paid					(392	)		(271	)
At 31 December					11,746			11,218

The following tables provide information on the composition and fair value of the plan assets by category at 31 December 2017 and 2016.

	Group
	Quoted prices in     active markets				Prices not quoted in     active markets				Total
2017	£m		%		£m		%		£m		%
UK equities		187		1		–		–		187		1
Overseas equities		2,204		19		706		6		2,910		25
Corporate bonds		1,665		14		209		2		1,874		16
Government fixed interest bonds		255		2		–		–		255		2
Government index-linked bonds		3,506		30		–		–		3,506		30
Property		–		–		1,547		13		1,547		13
Cash		–		–		206		2		206		2
Other		–		–		1,261		11		1,261		11
		7,817		66		3,929		34		11,746		100
2016
UK equities		148		1		–		–		148		1
Overseas equities		2,064		19		597		5		2,661		24
Corporate bonds		1,778		16		162		1		1,940		17
Government fixed interest bonds		226		2		–		–		226		2
Government index-linked bonds		3,294		29		–		–		3,294		29
Property		–		–		1,361		12		1,361		12
Cash		–		–		197		2		197		2
Other		–		–		1,391		13		1,391		13
		7,510		67		3,708		33		11,218		100

Scheme assets are stated at fair value based upon quoted prices in active markets with the exception of property funds and those classified under ‘Other’. The ‘Other’ category consists of asset-backed securities, annuities, funds (including private equity funds) and derivatives that are used to protect against exchange rate, equity market, inflation and interest rate movements. The property funds were valued using market valuations prepared by an independent expert. Of the assets in the ‘Other’ category, investments in absolute return funds and foreign exchange, equity and interest rate derivatives were valued by investment managers by reference to market observable data. Private equity funds were valued by reference to their latest published accounts whilst the insured annuities were valued by scheme actuaries based on the liabilities insured.

The actual gains on scheme assets for the Santander UK group were £746m (2016: £1,798m, 2015: £177m).

The Santander UK group’s pension schemes did not directly hold any equity securities of the Company or any of its related parties at 31 December 2017 and 2016. The Santander UK group’s pension scheme assets do not include any property or other assets that are occupied or used by the Santander UK group.

The investment policy and performance of the Scheme is monitored regularly by Santander UK plc and the Santander (CF) Trustee to ensure that the risk and return profile of investments meets objectives. Any changes to the investment policy are agreed with the Trustee and documented in the Statement of Investment Policy for the Common Investment Fund.

The strategic asset allocation target is an asset mix based on up to 20% quoted equities, at least 50% debt instruments (including gilts, index–linked gilts, and corporate bonds) and up to 30% property and alternatives. A strategy is in place to manage interest rate and inflation risk relating to the liabilities. At 31 December 2017, the Scheme held interest rate swaps with a gross notional value of £2,116m (2016: £1,945m) and inflation swaps with a gross notional value of £1,030m (2016: £1,030m) for the purposes of liability matching. In addition the Scheme entered into an equity collar in 2017 which had a notional value of £2bn at 31 December 2017.

Funding

In March 2017 in compliance with the Pensions Act 2004, the Trustee and the Santander UK group agreed to a new recovery plan in respect of the Scheme and schedule of contributions following the finalisation of the 31 March 2016 actuarial valuation. The funding target for this actuarial valuation is for the Scheme to have sufficient assets to make payments to members in respect of the accrued benefits as and when they fall due. In accordance with the terms of the Trustee agreement in place at the time, the Santander UK group contributed £163m in 2017 (2016: £199m) to the Scheme, of which £123m (2016: £101m) was in respect of agreed deficit repair contributions. The agreed schedule of the Santander UK group’s remaining contributions to the Scheme comprises contributions of £119m each year from 1 April 2017 increasing by 5% to 31 March 2026 plus contributions of £28m per annum increasing at 5% from 1 April 2021 to 31 March 2023 followed by £66m per annum increasing at 5% per annum from 1 April 2023 to 31 March 2026. In addition the Santander UK group have agreed to pay further contingent contributions should investment performance be worse than expected, or should the funding position have fallen behind plan at the next formal actuarial valuation.

Actuarial assumptions

The principal actuarial assumptions used for the defined benefit schemes were as follows:

	Group
	2017   %	2016   %	2015   %
To determine benefit obligations:
– Discount rate for scheme liabilities	2.5	2.8	3.7
– General price inflation	3.2	3.1	3.0
– General salary increase	1.0	1.0	1.0
– Expected rate of pension increase	2.9	2.9	2.8
	Years	Years	Years
Longevity at 60 for current pensioners, on the valuation date:
– Males	27.4	27.8	27.7
– Females	30.1	30.3	30.2
Longevity at 60 for future pensioners currently aged 40, on the valuation date:
– Males	28.9	30.0	29.9
– Females	31.7	32.2	32.2

The rate used to discount the retirement benefit obligation is based on the annual yield at the balance sheet date of high quality corporate bonds on that date, adjusted to match the terms of the Scheme liabilities.

There are only a limited number of higher quality Sterling denominated corporate bonds, particularly those that are longer dated. Therefore, in order to set a suitable discount rate, we need to construct a corporate bond yield curve. We consider a number of different data sources and methods of projecting forward the corporate bond curve. When considering the different models, we project forward the expected cash flows of the Scheme and adopt a single equivalent cash flow weighted discount rate, subject to management judgement.

Consistent with our discount rate methodology, we set the inflation assumption using the expected cash flows of the Scheme, fitting them to an inflation curve to give a weighted average inflation assumption. We then deduct an inflation risk premium. During the year the methodology for determining the inflation risk premium was changed. A cap was introduced to better reflect management’s view of inflation expectations.

As part of the triennial actuarial valuations an independent analysis of the Santander (UK) Group Pension Scheme’s actual mortality experience was carried out. During the year, and following the March 2016 actuarial valuation review, the Continuous Mortality Investigation Table “S2 Light” was adopted (updated from the S1 Light tables used previously). To reflect experience, and including a margin for prudence, for the funding basis, the adjustment adopted was a loading for the probability of death of 104% for male members and 82% for female members. The mortality assumption for accounting purposes was also updated to be in line with the best estimate assumptions and is now assumed to follow 108% for males and 86% for females of the standard “S2 Light” All Pensioners tables, based on the experience of Self–Administered Pension Schemes (SAPS) and projected in line with CMI 2016 improvements to the measurement date.

Allowance is then made for expected future improvements to life expectancy based on the Continuous Mortality Investigation Table CMI 2016 with a long–term rate of future improvements to life expectancy of 1.25% for male and female members. This has been updated since 31 December 2016 when the CMI 2015 table was adopted with long–term rate of future improvements of 1.5% for male and 1.25% for female members. In addition to updating the mortality assumptions during the year, adjustments were also made to the allowance for commutation to reflect actual Scheme experience over the intervaluation period from 2013 to 2016.

The table above shows that a participant retiring at age 60 at 31 December 2017 is assumed to live for, on average, 27.4 years in the case of a male member and 30.1 years in the case of a female member (2016: 27.8 years male and 30.3 years female). In practice, there will be variation between individual members but these assumptions are expected to be appropriate across all participants. It is assumed that younger members will live longer in retirement than those retiring now. This reflects the expectation that mortality rates will continue to fall over time as medical science and standards of living improve. To illustrate the degree of improvement assumed the table also shows the life expectancy for members aged 40 now, when they retire in 20 years’ time at age 60.

At 31 December 2017 the change in the inflation rate methodology above had a negative impact of £125m, and the changes in the mortality and commutation assumptions had a positive impact of £150m, on the accounting surplus of £163m (2016: surplus of £136m).

Actuarial assumption sensitivities

The sensitivity analyses below have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant.

		Increase/(decrease)
		2017  £m	2016 £m
Discount rate	Change in pension obligation at year-end from a 25 bps increase	(550)		(593	)
	Change in pension cost for the year from a 25 bps increase	(19)		(21	)
General price inflation	Change in pension obligation at year-end from a 25 bps increase	365		405
	Change in pension cost for the year from a 25 bps increase	12		13
General salary increase	Change in pension obligation at year-end from a 25 bps increase	n/a		n/a
Mortality	Change in pension obligation at year-end from each additional year of longevity assumed	367		369

The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated. Furthermore, in presenting the above sensitivity analyses, the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognised in the balance sheet. There was no change in the methods and assumptions used in preparing the sensitivity analyses from prior years.

The benefits expected to be paid in each of the next five years, and in the aggregate for the five years thereafter are:

Year ending 31 December	£m
2018		252
2019		253
2020		270
2021		290
2022		313
Five years ending 2027		1,836

The average duration of the defined benefit obligation at 31 December 2017 was 20.1 years (2016: 21.0 years) and comprised:

	2017  years	2016  years
Active members	26.5		26.8
Deferred members	24.4		25.7
Retired members	13.9		14.6

Maturity profile of undiscounted benefit payments (unaudited)

The maturity profile of the estimated undiscounted benefit payments expected to be paid from the Scheme over its life at 31 December 2017 was:

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Contingent Liabilities and Commitments

12 Months Ended

Dec. 31, 2017

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Contingent Liabilities and Commitments

29. CONTINGENT LIABILITIES AND COMMITMENTS

	Group
	2017 £m		2016 £m
Guarantees given to third parties		1,557		1,859
Formal standby facilities, credit lines and other commitments with original term to maturity of:
– One year or less		10,664		9,462
– Later than one year		31,278		32,154
		43,499		43,475

Where the items set out below can be reliably estimated, they are disclosed in the table above.

Guarantees given to third parties

Guarantees given to third parties consist primarily of letters of credit, bonds and guarantees granted as part of normal product facilities which are offered to customers.

Formal standby facilities, credit lines and other commitments

Standby facilities, credit lines and other commitments are also granted as part of normal product facilities which are offered to customers.

Retail facilities comprise undrawn facilities granted on flexible mortgages, bank overdrafts and credit cards. On flexible mortgages, the credit limit is set at the point of granting the loan through property value and affordability assessments.

Ongoing assessments are made to ensure that credit limits remain appropriate considering any change in the security value or the customer’s financial circumstances. For unsecured overdraft facilities and credit cards, the facilities are granted based on new business risk assessment and are reviewed more frequently based on internal, as well as external data. The delinquency status of the account would result in the withdrawal of the facility. Corporate facilities can comprise standby and revolving facilities which are subject to ongoing compliance with covenants and may require the provision of agreed security. Failure to comply with these terms can result in the withdrawal of the unutilised facility headroom.

FSCS

As described in Note 27, the Santander UK group participates in the UK’s national resolution scheme, the FSCS, and is thus subject to levies to fund the FSCS. In the event that the FSCS significantly increase the levies to be paid by firms the associated costs to the Santander UK group would rise.

Loan representations and warranties

In connection with the securitisations and covered bond transactions described in Note 16, the Santander UK group entities selling the relevant loans into the applicable securitisation or covered bond portfolios make representations and warranties with respect to such loans, in each case as of the date of the sale of the loans into the applicable portfolio. These representations and warranties cover, among other things, the ownership of the loan by the relevant Santander UK group entity, absence of a material breach or default by the relevant borrower under the loan, the loan’s compliance with applicable laws and absence of material disputes with respect to the relevant borrower, asset and loan. The specific representations and warranties made by Santander UK group companies which act as sellers of loans in these securitisations and covered bond transactions depend in each case on the nature of the transaction and the requirements of the transaction structure. In addition, market conditions and credit rating agency requirements may affect the representations and warranties required of the relevant Santander UK group companies in these transactions.

In the event that there is a material breach of the representations and warranties given by Santander UK plc as seller of loans under the residential mortgage–backed securitisations or the covered bond transaction included in Note 16, or if such representations and warranties prove to be materially untrue as at the date when they were given (being the sale date of the relevant mortgage loans), Santander UK plc may be required to repurchase the affected mortgage loans (generally at their outstanding principal balance plus accrued interest). These securitisation and covered bond transactions are collateralised by prime residential mortgage loans. Santander UK plc is principally a retail prime lender and has no appetite or product offering for any type of sub-prime business. In addition, Santander UK plc’s credit policy explicitly prohibits such lending.

Similarly, under the auto loan securitisations in Note 16, in the event that there is a breach or inaccuracy in respect of a representation or warranty relating to the loans, the relevant Santander UK group entity who sold the auto loans into the securitisation portfolio, will be required to repurchase such loans from the structure (also at their outstanding principal balance plus accrued interest). In addition to breaches of representation and warranties, under the auto loan securitisations, the seller may also have a repurchase obligation if certain portfolio limits are breached (which include, amongst other things, limits as to the size of a loan given to an individual customer, LTV ratio, average term to maturity and average seasoning).

In the case of a repurchase of a loan from the relevant securitisation or covered bond portfolio, the Santander UK group may bear any subsequent credit loss on such loan. The Santander UK group manages and monitors its securitisation and covered bond activities closely to minimise potential claims.

The outstanding balances under the securitisation and covered bond transactions originated by the Santander UK group are set out in Note 16.

Other legal actions and regulatory matters

The Santander UK group engages in discussion, and co-operates, with the FCA, PRA and other bodies in their supervision of the Santander UK group, including reviews exercised under statutory powers, regarding its interaction with past and present customers, both as part of general thematic work and in relation to specific products and services. During the ordinary course of business Santander UK is also subject to complaints and threatened legal proceedings brought by or on behalf of current or former employees, customers, investors or other third parties, in addition to legal and regulatory reviews, challenges and enforcement investigations. All such matters are assessed periodically to determine the likelihood of Santander UK incurring a liability. It is not currently practicable to estimate the possible financial effect of these matters.

In those instances where it is concluded that it is not yet probable that a quantifiable payment will be made, for example because the facts are unclear or further time is required to fully assess the merits of the case or to reasonably quantify the expected payment, no provision is made.

Note 27 details our provisions including those in relation to PPI. In relation to a specific PPI portfolio of complaints, a legal dispute regarding allocation of liability is in its early stages. There are factual issues to be resolved which may have legal consequences including in relation to liability. These issues create uncertainties which mean that it is difficult to reliably predict the resolution of the matter including timing or the significance of the possible impact. The PPI provision includes our best estimate of Santander UK’s liability to the specific portfolio. Further information has not been provided on the basis that it would be seriously prejudicial.

Consumer credit

Santander UK group’s unsecured lending and other consumer credit business is governed by consumer credit law and related regulations. Claims brought by customers in relation to potential breaches of these requirements could result in costs to the Santander UK group where such potential breaches are not found to be de minimis. It is not possible to provide any meaningful estimate or range of the possible cost.

Taxation

The Santander UK group engages in discussion, and co-operates, with HM Revenue & Customs in their oversight of the Santander UK group’s tax matters. The Santander UK group adopted the UK’s Code of Practice on Taxation for Banks in 2010.

Other

On 2 November 2015, Visa Europe Ltd agreed to sell 100% of its share capital to Visa Inc. The deal closed on 21 June 2016. As a member and shareholder of Visa Europe Ltd, Santander UK received upfront consideration made up of cash and convertible preferred stock. Additional deferred cash consideration is also payable following the third anniversary of closing. Conversion of the preferred stock into Class A Common Stock of Visa Inc. depends on the outcome of litigation against Visa involving UK & Ireland (UK&I) multilateral interchange fees (MIFs). Santander UK and certain other UK&I banks have agreed to indemnify Visa Inc. in the event that the preferred stock is insufficient to meet the costs of this litigation. Visa Inc. has recourse to this indemnity once more than €1bn of losses relating to UK&I MIFs have arisen or once the total value of the preferred stock issued to UK&I banks on closing has been reduced to nil. In valuing the preferred stock, Santander UK makes adjustments for illiquidity and the potential for changes in conversion. Visa Inc. may have recourse to a general indemnity in place under Visa Europe Operating Regulations for damages not satisfied through the above mechanism.

As part of the sale of subsidiaries, and as is normal in such circumstances, Santander UK has given warranties and indemnities to the purchasers.

Obligations under stock borrowing and lending agreements

Obligations under stock borrowing and lending agreements represent contractual commitments to return stock borrowed. These obligations are offset by a contractual right to receive stock under other contractual agreements. See Note 33.

Other off-balance sheet commitments

The Santander UK group has commitments to lend at fixed interest rates which expose us to interest rate risk. For further information, see the Risk review.

Operating lease commitments

	Group
Rental commitments under non-cancellable operating leases	2017 £m		2016 £m
Not later than one year		73		82
Later than one year and not later than five years		160		252
Later than five years		70		134
		303		468

Under the terms of these leases, the Santander UK group has the opportunity to extend its occupation of properties by a minimum of three years subject to 12 months’ notice and lease renewal being available from external landlords during the term of the lease. At expiry, the Santander UK group has the option to reacquire the freehold of certain properties.

During 2017, Santander UK group rental expense amounted to £61m (2016: £61m, 2015: £61m) in respect of minimum rentals. There was no sub-lease rental income, and no contingent rent expense included in this rental expense.

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Share Capital

12 Months Ended

Dec. 31, 2017

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Share Capital

30. SHARE CAPITAL

	Group
	Ordinary shares of £0.10 each				£300m Preference shares   of £1,000 each					Total
Issued and fully paid share capital	No.		£m		No.			£m		£m
At 1 January 2016		31,051,768,866		3,105		13,797			14		3,119
Repurchases		–		–		(17	)		–		–
At 31 December 2016, 1 January 2017 and 31 December 2017		31,051,768,866		3,105		13,780			14		3,119

	Group
Share premium	2017 £m		2016   £m
At 1 January and 31 December		5,620		5,620

£300m Fixed/Floating Rate Non-Cumulative Callable Preference Shares

The preference shares entitle the holders to a fixed non-cumulative dividend, at the discretion of Santander UK plc, of 6.22% per annum payable annually from 24 May 2010 until 24 May 2019 and quarterly thereafter at a rate of 1.13% per annum above three month sterling LIBOR. The preference shares are redeemable only at the option of Santander UK plc on 24 May 2019 or on each quarterly dividend payment date thereafter. No such redemption may be made without the consent of the PRA.

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Other Equity Instruments

12 Months Ended

Dec. 31, 2017

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Other Equity Instruments

31. OTHER EQUITY INSTRUMENTS

	Group
	2017 £m		2016   £m
£300m Step-up Callable Perpetual Reserve Capital Instruments		235	235
AT1 securities:
– £500m Perpetual Capital Securities		496	–
– £750m Perpetual Capital Securities		750	750
– £300m Perpetual Capital Securities		300	300
– £500m Perpetual Capital Securities		500	500
		2,281	1,785

£300m Step-up Callable Perpetual Reserve Capital Instruments

The £300m Step-up Callable Perpetual Reserve Capital Instruments were issued in 2001 by Santander UK plc. Reserve Capital Instruments are redeemable by Santander UK plc on 14 February 2026 or on any coupon payment date thereafter, subject to the prior approval of the PRA and provided that the auditors have reported to the trustee within the previous six months that the solvency condition is met. The Reserve Capital Instruments bear interest at a rate of 7.037% per annum, payable annually in arrears, from 14 February 2001 to 14 February 2026. Thereafter, the reserve capital instruments will bear interest at a rate, reset every five years, of 3.75% per annum above the gross redemption yield on the UK five-year benchmark gilt rate. Interest payments may be deferred by Santander UK plc. The Reserve Capital Instruments are not redeemable at the option of the holders and the holders do not have any rights against other Santander UK group companies. Upon the occurrence of certain tax or regulatory events, the Reserve Capital Instruments may be exchanged, their terms varied, or redeemed. Where interest payments have been deferred, the Company may not declare or pay dividends on or redeem or repurchase any junior securities until it next makes a scheduled payment on the Reserve Capital Instruments and Tier One Preferred Income Capital Securities. The Reserve Capital Instruments are unsecured securities of Santander UK plc and are subordinated to the claims of unsubordinated creditors and subordinated creditors holding loan capital of Santander UK plc. Upon the winding up of Santander UK plc, holders of Reserve Capital Instruments will rank pari passu with the holders of the most senior class(es) of preference shares (if any) of Santander UK plc then in issue and in priority to all other Santander UK plc shareholders. No such redemption may be made without the consent of the PRA.

Other equity instruments include AT1 securities issued by the Company. The £500m and £300m Perpetual Capital Securities issued in 2014 and the £750m and £500m Perpetual Capital Securities issued in 2015 and 2017 meet the CRD IV AT1 rules and are fully recognised as AT1 capital.

£500m Perpetual Capital Securities

On 10 April 2017, the Company issued £500m Perpetual Capital Securities, all of which were subscribed by the Company’s immediate parent, Santander UK Group Holdings plc. The securities are perpetual and pay a distribution rate on 24 March, June, September and December. At each distribution payment date, the Company can decide whether to pay the distribution rate, which is non–cumulative, in whole or in part. The distribution rate is 6.75% per annum until 24 June 2024; thereafter, the distribution rate resets every five years to a rate of 5.792% per annum above the then prevailing 5 year sterling mid swap rate. The Perpetual Capital Securities will be automatically written down should the Common Equity Tier 1 capital ratio of the Santander UK prudential consolidation group as defined in the PRA’s rules fall below 7%. The Perpetual Capital Securities are redeemable at the option of the Company on 24 June 2024 or on any reset date thereafter. No such redemption may be made without the consent of the PRA.

£750m Perpetual Capital Securities

On 10 June 2015, the Company issued £750m Perpetual Capital Securities, of which 100%was subscribed by the Company’s immediate parent, Santander UK Group Holdings plc. The securities are perpetual and pay a distribution rate on 24 March, June, September and December, commencing from September 2015. At each distribution payment date the Company can decide whether to pay the distribution rate which is non-cumulative, in whole or in part. The distribution rate is 7.375% per annum until 24 June 2022; thereafter the distribution rate resets every five years to a rate of 5.543% per annum above the then prevailing 5 year sterling mid swap rate. The Perpetual Capital Securities will be automatically written down if the Common Equity Tier 1 capital ratio of the Santander UK prudential consolidation group as defined in the PRA’s rules fall below 7%. The Perpetual Capital Securities are redeemable at the option of the Company on 24 June 2022 or any reset date thereafter. No such redemption may be made without the PRA’s consent.

£300m Perpetual Capital Securities

On 2 December 2014, the Company issued £300m Perpetual Capital Securities to its immediate parent company, Santander UK Group Holdings plc. The securities are perpetual and pay a distribution rate on 24 March, June, September and December, commencing from March 2015. At each distribution payment date, the Company can decide whether to pay the distribution rate, which is non-cumulative, in whole or in part. The distribution rate is 7.60% per annum until 24 December 2019; thereafter, the distribution rate resets every five years to a rate 6.066% per annum above the then prevailing 5 year sterling mid swap rate. The Perpetual Capital Securities will be automatically written down and the investors will lose their entire investment in the securities should the Common Equity Tier 1 capital ratio of the Santander UK prudential consolidation group as defined in the PRA’s rules fall below 7%. The Perpetual Capital Securities are redeemable at the option of the Company on 24 December 2019 or on each distribution payment date thereafter. No such redemption may be made without the consent of the PRA. In turn, Santander UK Group Holdings plc issued a similar security. The issuance was 100% subscribed by Banco Santander SA.

£500m Perpetual Capital Securities

On 24 June 2014, the Company issued £500m Perpetual Capital Securities to its immediate parent company, Santander UK Group Holdings plc. The securities are perpetual and pay a distribution rate on 24 March, June, September and December, commencing from March 2015. At each distribution payment date, the Company can decide whether to pay the distribution rate, which is non–cumulative, in whole or in part. The distribution rate is 6.475% per annum until 24 June 2019; thereafter, the distribution rate resets every five years to a rate 4.291% per annum above the then prevailing 5 year sterling mid swap rate. The Perpetual Capital Securities will be automatically written down and the investors will lose their entire investment in the securities should the Common Equity Tier 1 capital ratio of the Santander UK prudential consolidation group as defined in the PRA’s rules fall below 7%. The Perpetual Capital Securities are redeemable at the option of the Company on 24 June 2019 or on each distribution payment date thereafter. No such redemption may be made without the consent of the PRA. In turn, Santander UK Group Holdings plc issued a similar security. The issuance was 100% subscribed by Banco Santander SA.

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Non-Controlling Interests

12 Months Ended

Dec. 31, 2017

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Non-Controlling Interests

32. NON–CONTROLLING INTERESTS

	Group
	2017   £m		2016   £m
PSA Finance UK Limited		152		150
		152		150

PSA Finance UK Limited is the only subsidiary in the Santander UK group that gives rise to significant non-controlling interests. See Note 19 for summarised financial information of PSA Finance UK Limited.

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Assets Charged as Security for Liabilities and Collateral Accepted as Security for Assets

12 Months Ended

Dec. 31, 2017

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Assets Charged as Security for Liabilities and Collateral Accepted as Security for Assets

33. ASSETS CHARGED AS SECURITY FOR LIABILITIES AND COLLATERAL ACCEPTED AS SECURITY FOR ASSETS

The following transactions are conducted under terms that are usual and customary to collateralised transactions including, where relevant, standard securities lending and repurchase agreements.

a) Assets charged as security for liabilities

The financial assets below are analysed between those assets accounted for on-balance sheet and off-balance sheet in accordance with IFRS.

	Group
	2017  £m	2016  £m
On-balance sheet:
Treasury bills and other eligible securities	12,576	6,491
Cash	3,658	4,123
Loans and advances to customers – securitisations and covered bonds (See Note 16)	35,421	40,230
Loans and advances to customers	15,047	10,601
Debt securities	130	755
Equity securities	8,629	5,637
Total on-balance sheet	75,461	67,837
Off-balance sheet:
Treasury bills and other eligible securities	30,220	15,013
Debt securities	850	331
Equity securities	1,943	1,557
Total off-balance sheet	33,013	16,901

The Santander UK group provides assets as collateral in the following areas of the business.

Sale and repurchase agreements

Subsidiaries of the Company enter into sale and repurchase agreements and similar transactions of equity and debt securities, which are accounted for as secured borrowings. Upon entering into such transactions, the subsidiaries provide collateral in excess of the borrowed amount. The carrying amount of assets that were so provided at 31 December 2017 was £34,310m (2016: £17,359m), of which £2,931m (2016: £4,949m) was classified within ‘Loans and advances to customers – securitisations and covered bonds’ in the table above.

Securitisations and covered bonds

As described in Note 16, Santander UK plc and certain of its subsidiaries enter into securitisation transactions whereby portfolios of residential mortgage loans and other loans are purchased by or assigned to structured securitisation companies, and have been funded through the issue of mortgage-backed securities and other asset–backed securities. Holders of the securities are only entitled to obtain payments of principal and interest to the extent that the resources of the securitisation companies are sufficient to support such payments and the holders of the securities have agreed in writing not to seek recourse in any other form. At 31 December 2017, £1,091m (2016: £363m) of loans were so assigned by the Santander UK group. Santander UK plc also has a covered bond programme, whereby securities are issued to investors and are secured by a pool of residential mortgages. At 31 December 2017, the pool of residential mortgages for the covered bond programme was £19,772m (2016: £20,263m). At 31 December 2017, total notes issued externally from secured programmes (securitisations and covered bonds) decreased to £19,907m (2016: £24,134m), including gross issuance of £3,980m (2016: £2,771m) and redemptions of £10,030m (2016: £6,844m). At 31 December 2017, a total of £4,359m (2016: £4,998m) of notes issued under securitisation and covered bond programmes had also been retained internally, a proportion of which had been used as collateral for raising funds via third party bilateral secured funding transactions, which totalled £1,834m at 31 December 2017 (2016: £2,764m), or for creating collateral which could in the future be used for liquidity purposes.

Stock borrowing and lending agreements

Asset balances under stock borrowing and lending agreements represent stock lent by the Santander UK group. These balances amounted to £38,016m at 31 December 2017 (2016: £27,975m) and are offset by contractual commitments to return stock borrowed or cash received.

Derivatives business

In addition to the arrangements described, collateral is also provided in the normal course of derivative business to counterparties. At 31 December 2017, £3,658m (2016: £3,523m) of such collateral in the form of cash had been provided by the Santander UK group and is included in the table.

b) Collateral accepted as security for assets

The collateral held as security for assets below are analysed between those liabilities accounted for on the balance sheet and off-balance sheet in accordance with IFRS.

	Group
	2017  £m	2016  £m
On-balance sheet:
Trading liabilities	1,911	3,535
Deposits by banks	1,760	785
Deposits by customers	8	–
Total on-balance sheet	3,679	4,320
Off-balance sheet:
Trading liabilities	36,230	26,980
Deposits by banks	2,425	1,167
Total off-balance sheet	38,655	28,147

Purchase and resale agreements

Subsidiaries of the Company also enter into purchase and resale agreements and similar transactions of equity and debt securities, which are accounted for as collateralised loans. Upon entering into such transactions, the subsidiaries receive collateral in excess of the loan amount. The level of collateral held is monitored daily and if required, further calls are made to ensure the market values of collateral remains at least equal to the loan balance. The subsidiaries are permitted to sell or repledge the collateral held in the absence of default. At 31 December 2017, the fair value of such collateral received was £16,356m (2016: £15,483m). Of the collateral received, almost all was sold or repledged. The subsidiaries have an obligation to return collateral that they have sold or pledged.

Stock borrowing and lending agreements

Obligations under stock borrowing and lending agreements represent contractual commitments to return stock borrowed. These obligations totalled £22,299m at 31 December 2017 (2016: £12,664m) and are offset by a contractual right to receive stock lent by the Santander UK group.

Derivatives business

In addition to the arrangements described, collateral is also received from counterparties in the normal course of derivative business. At 31 December 2017, £3,679m (2016: £4,320m) of such collateral in the form of cash had been received by the Santander UK group and is included in the table.

Lending activities

In addition to the collateral held as security for assets, the Santander UK group may obtain a charge over a customer’s property in connection with its lending activities. Details of these arrangements are set out in the ‘Credit risk’ section of the Risk review.

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Share-Based Compensation

12 Months Ended

Dec. 31, 2017

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Share-Based Compensation

34. SHARE-BASED COMPENSATION

The Santander UK group operates share schemes and arrangements for eligible employees. The main current schemes are the Sharesave Schemes, the Long-Term Incentive Plan and the Deferred Shares Bonus Plan. The Santander UK group’s other current arrangement and scheme, respectively, are free shares awarded to eligible employees and partnership shares. All the share options and awards relate to shares in Banco Santander SA.

The amount charged to the income statement in respect of share-based payment transactions is set out in Note 6. The total carrying amount at the end of the year for liabilities arising from share-based payment transactions was £16.7m (2016: £4.4m), none of which had vested at 31 December 2017 (2016: £nil). Cash received from the exercise of share options was £2.3m (2016: £nil, 2015: £nil).

The main schemes are:

a) Sharesave Schemes

The Santander UK group launched its tenth HM Revenue & Customs approved Sharesave Scheme under Banco Santander SA ownership in September 2017. The first nine Sharesave Schemes were launched each year from 2008 to 2016 in the month of September under broadly similar terms as the 2017 Scheme. Under, the Sharesave Scheme’s current HMRC-approved savings limits, eligible employees may enter into contracts to save between £5 and £500 per month. For all schemes, at the expiry of a fixed term of three or five years after the grant date, the employees have the option to use these savings to acquire shares in Banco Santander SA at a discount, calculated in accordance with the rules of the scheme. The discount is currently 20% of the average middle market quoted price of Banco Santander SA shares over the first three dealing days prior to invitation. The vesting of awards under the scheme depends on continued employment with the Banco Santander SA group. Participants in the scheme have six months from the date of vest in which the option can be exercised.

The fair value of each Sharesave option for 2017, 2016 and 2015 has been estimated at the date of acquisition or grant using a Partial Differentiation Equation model with the following assumptions:

	2017		2016		2015
Risk free interest rate		0.89% – 1.08%		0.31% – 0.41%		1.06% – 1.37%
Dividend yield		5.48% – 5.51%		6.28% – 6.46%		6.91% – 7.36%
Expected volatility of underlying shares based on implied volatility to maturity date of each scheme		26.16% – 26.31%		31.39% – 32.00%		28.54% – 29.11%
Expected lives of options granted under 3 and 5 year schemes		3 and 5 years		3 and 5 years		3 and 5 years

With the exception of vesting conditions that include terms related to market conditions, vesting conditions included in the terms of the grant are not taken into account in estimating fair value. Non-market vesting conditions are taken into account by adjusting the number of shares or share options included in the measurement of the cost of the employee service so that ultimately, the amount recognised in the income statement reflects the number of vested shares or share options.

Where vesting conditions are related to market conditions, the charges for the services received are recognised regardless of whether or not the market–related vesting conditions are met, provided that the non-market vesting conditions are met. Share price volatility has been based upon the range of implied volatility for the Banco Santander SA shares at the strikes and tenors in which the majority of the sensitivities lie.

The following table summarises movements in the number of share options during the year, and changes in weighted average exercise price over the same period.

	2017					2016					2015
	Number of options ‘000			Weighted average exercise price £		Number of options ‘000			Weighted average exercise price £		Number of options ‘000			Weighted average exercise price £
Outstanding at 1 January		28,916			3.08		24,762			3.53		19,122			4.19
Granted		3,916			4.02		17,296			4.91		14,074			3.13
Exercised		(1,918	)		3.77		(338	)		3.67		(1,839	)		3.75
Forfeited/expired		(3,713	)		3.40		(12,804	)		3.51		(6,595	)		4.50
Outstanding at 31 December		27,201			3.12		28,916			3.08		24,762			3.53
Exercisable at 31 December		5,200			3.17		2,334			4.30		2,807			3.76

The weighted average grant-date fair value of options granted under the Sharesave scheme during the year was £1.02 (2016: £0.65, 2015: £0.50). The weighted average share price at the date the share options were exercised was £4.96 (2016: £3.79, 2015: £3.79).

The following table summarises the range of exercise prices and weighted average remaining contractual life of the options outstanding at 31 December 2017 and 2016.

	2017				2016
Range of exercise prices	Weighted average remaining contractual life Years		Weighted average exercise price £		Weighted average remaining contractual life Years		Weighted average exercise price £
£2 to £ 3		3		2.75		4		2.75
£3 to £4		1		3.17		3		3.28
£4 to £5		3		4.21		2		4.82

b) Long–Term Incentive Plan (LTIP)

The LTIP was reintroduced in 2014 and amended for 2015 awards under which conditional cash awards were made to certain Executive Directors, Key Management Personnel (as defined in Note 35) and other nominated individuals which are converted into shares in Banco Santander SA at the time of vesting and deferred for three years. There have been no LTIP awards granted since 2015 due to the introduction of a single variable remuneration framework across the Banco Santander group in 2016.

The LTIP plans granted in 2015 and 2014 involve a one-year performance cycle for vesting with further three-year performance conditions applied to the deferral of 2015 awards. Beneficiaries were granted an initial award determined in GBP which was converted into shares in Banco Santander SA in January 2015 and January 2016 respectively based on performance over the performance cycle. The 2014 LTIP vested at 100% in January 2015 based on Banco Santander SA’s relative Total Shareholder Return (TSR) performance in 2014 versus a comparator group, was deferred over three years and is payable in 2018 based on further performance testing. The 2015 LTIP vested at 91.5% in January 2016 based on Banco Santander SA’s Earnings Per Share (EPS) and Return on Tangible Equity (RoTE) performance against budget in 2015, was deferred over three years and is payable in 2019 based on further performance testing.

2015 LTIP

Employees were granted an initial award determined in GBP in 2015 which was converted into shares in Banco Santander SA, in January 2016, based on Banco Santander SA’s relative EPS and RoTE performance in 2015 versus a comparator group. The 2015 LTIP vested at 91.5% in January 2016. The vested award is payable in 2019 subject to Banco Santander SA’s continuing relative performance to comparators.

The following table summarises the movement in the value of conditional awards in the 2015 LTIP during 2017, 2016 and 2015:

	2017 £000			2016 £000			2015 £000
Outstanding at 1 January		6,718			6,769			–
Granted		–			–			6,769
Forfeited/cancelled		(215) (1	)		(51	)		–
Outstanding at 31 December		6,503			6,718			6,769

(1) The outstanding shares have been updated to compensate for the equity dilution caused by the shares issued by Banco Santander SA in July 2017.

The amount that could vest after the deferral period will depend 25% on EPS growth vs Peers, 25% on RoTE, 20% on Top 3 best bank to work for, 15% on Top 3 bank in customer satisfaction and 15% on loyal customers. The peer group against whom the EPS growth will be measured is a comparator group of 17 financial institutions. EPS and RoTE will be measured over a three-year period from 2015 to 2017, others will be tested once for performance to 2017. Performance testing will take place during 2018.

Banco Santander SA’s place in the EPS ranking	Maximum shares in that tranche to be delivered  %
1st to 5th	100
6th	87.5
7th	75
8th	62.5
9th	50
10th and below	–
Banco Santander SA’s RoTE	Maximum shares in that tranche to be delivered  %
12% or above	100
11% to 12%	75
Below 11%	–

On a country level, 100% vests if Banco Santander SA is rated a top 3 best bank to work for and top 3 in customer satisfaction. 100% vests if the target for loyal customers is met by December 2018 weighted equally between retail and corporate customers. For full vesting at the Banco Santander group level, at least 6 of the 10 core countries for Banco Santander should get the top 3 best bank to work for, must be top 3 in customer satisfaction in all 10 countries, must have 17 million retail and 1.1 million corporate loyal customers. A sliding scale applies below this threshold with 50% vesting if there are 15 million retail and 1 million corporate loyal customers, any less would lead to no vesting.

2014 LTIP

Employees were granted an initial award determined in GBP in 2014 which was converted into shares in Banco Santander SA in January 2015 based on Banco Santander SA’s relative TSR performance in 2014 versus a comparator group. The 2014 LTIP vested at 100% in January 2015. The vested award has been deferred over three years and payable in equal tranches in 2016, 2017 and 2018 subject to Banco Santander SA’s continuing relative TSR performance to comparators and continuing employment. Relative TSR performance to 31 December 2017 will be tested during 2018 to determine the final tranche of the award vesting and will be paid in June 2018 subject to continued employment.

The following table summarises the movement in the value of conditional awards in the 2014 LTIP during 2017, 2016 and 2015:

	2017 £000			2016 £000			2015 £000
Outstanding at 1 January		3,193			5,102			5,355
Forfeited/cancelled		(1,283)  (1	)		(1,909	)		(253	)
Outstanding at 31 December		1,910			3,193			5,102

(1) The outstanding shares have been updated to compensate for the equity dilution caused by the shares issued by Banco Santander SA in July 2017.

See Note 35 for details of conditional share awards made to certain Executive Directors, Other Key Management Personnel and other individuals under the LTIP.

c) Deferred shares

Deferred incentive awards are designed to align employee performance with shareholder value and encourage increased retention of senior employees. During 2016 and 2017, in compliance with the PRA Rulebook and Remuneration Code, conditional share awards were made to Santander UK employees (designated as Code Staff). Such employees receive part of their annual bonus as a deferred award comprising 50% in shares, and 50% in cash. Any deferred awards, including those in Banco Santander SA shares, are dependent on future service. For 2016 and 2017 bonus awards, deferral of the award is over a three, five or seven-year period, dependent on Code Staff categorisation or Senior Manager Function designation, with delivery of equal tranches of shares taking place on or around the anniversary of the initial award. Deferred awards in shares are subject to an additional one-year retention period from the point of delivery.

Code Staff are required to defer either 40% or 60% of any annual bonus (40% for variable pay of less than £500,000, 60% for variable pay at or above this amount). Vesting of both deferred incentive awards and long-term incentive awards is subject to risk and performance adjustment in the event of deficient performance and prudent financial control provisions in accordance with the PRA Rulebook and Remuneration Code. For Code Staff, any variable remuneration paid for performance after 1 January 2015, is also subject to clawback in line with the PRA Rulebook and Remuneration Code.

d) Other arrangements and schemes

The Santander UK group also operates a Partnership Shares scheme for eligible employees under the Share Incentive Plan (SIP) umbrella. Participants can elect to invest up to £1,800 per tax year (or no more than 10% of an employee’s salary for the tax year) from pre-tax salary to purchase Banco Santander SA shares. Shares are held in trust for the participants. There are no vesting conditions attached to these shares, and no restrictions as to when the shares can be removed from the trust. However, if a participant chooses to sell the shares before the end of five years, they will be liable for the taxable benefit received when the shares are taken out of the trust. The shares can be released from trust after five years free of income tax and national insurance contributions. 2,147,399 shares were outstanding at 31 December 2017 (2016: 2,110,617 shares).

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Transactions With Directors and Other Key Management Personnel

12 Months Ended

Dec. 31, 2017

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Transactions With Directors and Other Key Management Personnel

35. TRANSACTIONS WITH DIRECTORS AND OTHER KEY MANAGEMENT PERSONNEL

a) Remuneration of Directors and Other Key Management Personnel

The remuneration of the Directors and Other Key Management Personnel of the Santander UK group is set out in aggregate below.

Directors’ remuneration	2017 £		2016 £		2015 £
Salaries and fees		4,406,908		3,604,999		4,694,260
Performance-related payments(1)		3,685,464		2,330,000		2,607,407
Other fixed remuneration (pension and other allowances & non-cash benefits)		1,580,321		635,493		1,002,320
Expenses		96,358		120,302		115,382
Total remuneration		9,769,051		6,690,794		8,419,369
Directors’ and Other Key Management Personnel compensation	2017 £		2016 £		2015 £
Short-term employee benefits(2)		24,642,085		24,757,161		19,950,608
Post-employment benefits		2,292,857		1,918,144		1,825,688
Share-based payments		–		–		400,948
Total compensation		26,934,942		26,675,305		22,177,244

(1) In line with the Code, a proportion of the performance-related payment was deferred. Further details can be found in Note 34.

(2) Excludes grants of shares in Banco Santander SA made as buy-outs of deferred performance-related payments in 2017 of 603,614 shares in connection with previous employment for four individuals (2016: nil 2015: nil). Excludes payments made as buy-outs of deferred performance-related payments of £52,100 in connection with previous employment for one individual (2016: £2,732,357 for five individuals; 2015: £3,453,956 for five individuals)

In 2017, the remuneration, excluding pension contributions, of the highest paid Director, was £4,714,578 (2016: £4,535,756) of which £2,425,000 (2016: £2,330,000) was performance related. In 2017, there was no pension benefit accrued for the highest paid Director but in respect of the qualifying past services to Santander UK to 31 May 2009 he has a deferred pension benefit accruing under a defined benefit scheme of £15,450 p.a. (2016: £15,450 p.a).

b) Retirement benefits

Defined benefit pension schemes are provided to certain employees. See Note 28 for a description of the schemes and the related costs and obligations. One director has a deferred pension benefit accruing under a defined benefit scheme of £15,450 p.a. in respect of the qualifying services to Santander UK and based on previous service with Santander UK to 31 May 2009 (2016: £15,450). Ex gratia pensions paid to former Directors of Santander UK plc in 2017, which have been provided for previously, amounted to £2,482 (2016: £14,893, 2015: £14,893). In 1992, the Board decided not to award any new such ex gratia pensions.

c) Transactions with Directors, Other Key Management Personnel and each of their connected persons

Directors, Other Key Management Personnel (Defined as the Board of the Company and the Executive Committee of Santander UK plc who served during the year) and their connected persons have undertaken the following transactions with the Santander UK group in the course of normal banking business.

	2017						2016
Secured loans, unsecured loans and overdrafts	No.			£000			No.			£000
At 1 January		17			5,195			18			5,492
Net movements		(10	)		(3,979	)		(1	)		(297	)
At 31 December		7			1,216			17			5,195
Deposit, bank and instant access accounts and investments
At 1 January		26			9,138			26			14,678
Net movements		(1	)		4,046			–			(5,540	)
At 31 December		25			13,184			26			9,138

During 2017, no Directors undertook sharedealing transactions through the Santander UK group’s execution-only stockbroker (2016: two Directors) with an aggregate net value of £nil (2016: £10,080). Any transactions were on normal business terms and standard commission rates were payable.

In 2017 and 2016, no Director held any interest in the shares of any company within Santander UK at any time and no Director exercised or was granted any rights to subscribe for shares in any company within Santander UK. In addition, in 2017 and 2016, no Directors exercised share options over shares in Banco Santander SA, the ultimate parent company of the Company.

Secured loans, unsecured loans and overdrafts are made to Directors, Other Key Management Personnel and their connected persons, in the ordinary course of business, with terms prevailing for comparable transactions and on the same terms and conditions as applicable to other employees within the Santander UK group. Such loans do not involve more than the normal risk of collectability or present any unfavourable features. Amounts deposited by Directors, Other Key Management Personnel and their connected persons earn interest at the same rates as those offered to the market or on the same terms and conditions applicable to other employees within the Santander UK group. Deposits, bank and instant access accounts and investments are entered into by Directors, Other Key Management Personnel and their connected persons on normal market terms and conditions, or on the same terms and conditions as applicable to other employees within Santander UK group.

In 2017, loans were made to two Directors (2016: five Directors), with a principal amount of £53,452 outstanding at 31 December 2017 (2016: £25,560). In 2017, loans were made to five members of Santander UK’s Other Key Management Personnel (2016: twelve), with a principal amount of £1,162,384 outstanding at 31 December 2017 (2016: £5,169,234).

In 2017 and 2016, there were no other transactions, arrangements or agreements with Santander UK in which Directors, Other Key Management Personnel or persons connected with them had a material interest. In addition, in 2017 and 2016, no Director had a material interest in any contract of significance other than a service contract with Santander UK at any time during the year.

d) Santander Long-Term Incentive Plan

In 2017, no Executive Directors (2016: nil, 2015: one) or Other Key Management Personnel (2016: nil, 2015: thirteen) were granted conditional awards under the Santander LTIP. No LTIP award was granted in 2017 or 2016.

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Related Party Disclosures

12 Months Ended

Dec. 31, 2017

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Related Party Disclosures

36. RELATED PARTY DISCLOSURES

a) Parent undertaking and controlling party

The Company’s immediate parent is Santander UK Group Holdings plc, a company incorporated in England and Wales. Its ultimate parent and controlling party is Banco Santander SA, a company incorporated in Spain. The smallest and largest groups into which the Santander UK group’s results are included are the group accounts of Santander UK Group Holdings plc and Banco Santander SA, respectively, copies of which may be obtained from Shareholder Relations, 2 Triton Square, Regent’s Place, London NW1 3AN, on the corporate website (www.santander.co.uk) or on the Banco Santander corporate website (www.santander.com).

b) Transactions with related parties

Transactions with related parties during the year and balances outstanding at the year-end:

																							Group
	Interest, fees and other income received									Interest, fees and other expenses paid						Amounts owed by related parties				Amounts owed to related parties
	2017 £m			2016 £m			2015 £m			2017 £m		2016 £m		2015 £m		2017 £m		2016 £m		2017 £m			2016 £m
Ultimate parent		(60	)		(81	)		(76	)		321		188		99		4,398		2,148		(5,079	)		(2,882	)
Immediate parent		(3	)		(3	)		(3	)		207		139		19		8		5		(7,374	)		(5,962	)
Fellow subsidiaries		(76	)		(271	)		(439	)		491		653		743		102		363		(981	)		(1,101	)
Associates & joint ventures		(20	)		(27	)		(24	)		–		1		–		1,175		1,090		(33	)		(37	)
		(159	)		(382	)		(542	)		1,019		981		861		5,683		3,606		(13,467	)		(9,982	)

Further information on balances due from/(to) other Banco Santander group companies is set out in the section ‘Balances with other Banco Santander companies’ in the Risk review. In addition, transactions with pension schemes operated by the Santander UK group are described in Note 28.

The above transactions were made in the ordinary course of business and substantially on the same terms as for comparable transactions with third party counterparties, except those carried out with Banco Santander SA and subsidiaries of the Company as part of our ring-fencing plans as described in Note 39, and within limits acceptable to the PRA. Such transactions do not involve more than the normal risk of collectability or present any unfavourable features.

In addition, and as described in Note 39, on 16 October 2017 Santander UK plc, Abbey National Treasury Services plc, Santander UK Group Holdings plc and Banco Santander SA entered into a ring-fencing transfer scheme which formalised the business transfers required to implement the planned ring-fenced structure.

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Financial Instruments

12 Months Ended

Dec. 31, 2017

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Financial Instruments

37. FINANCIAL INSTRUMENTS

a) Measurement basis of financial assets and liabilities

Financial assets and financial liabilities are measured on an ongoing basis either at fair value or at amortised cost. Note 1 describes how the classes of financial instruments are measured, and how income and expenses, including fair value gains and losses, are recognised. The following tables analyse financial instruments into those measured at fair value and those measured at amortised cost in the balance sheet:

	Group
	2017						2016(1)
	Held at    fair value    £m		Held at    amortised    cost    £m		Total   £m		Held at    fair value    £m		Held at    amortised cost    £ m		Total   £m
Assets
Cash and balances at central banks		–		32,771		32,771		–		17,107		17,107
Trading assets		30,555		–		30,555		30,035		–		30,035
Derivative financial instruments		19,942		–		19,942		25,471		–		25,471
Financial assets designated at fair value		2,096		–		2,096		2,140		–		2,140
Loans and advances to banks		–		5,927		5,927		–		4,348		4,348
Loans and advances to customers		–		199,490		199,490		–		199,738		199,738
Financial investments		8,853		8,758		17,611		10,561		6,905		17,466
		61,446		246,946		308,392		68,207		228,098		296,305
Non-financial assets						6,373						6,206
Total assets						314,765						302,511
Liabilities
Deposits by banks		–		13,784		13,784		–		9,769		9,769
Deposits by customers		–		183,648		183,648		–		177,172		177,172
Trading liabilities		31,109		–		31,109		15,560		–		15,560
Derivative financial instruments		17,613		–		17,613		23,103		–		23,103
Financial liabilities designated at fair value		2,315		–		2,315		2,440		–		2,440
Debt securities in issue		–		42,633		42,633		–		50,346		50,346
Subordinated liabilities		–		3,793		3,793		–		4,303		4,303
		51,037		243,858		294,895		41,103		241,590		282,693
Non-financial liabilities						3,665						4,365
Total liabilities						298,560						287,058

(1) Restated to reflect the change in accounting policy relating to business combinations between entities under common control, as described in Note 1.

b) Valuation of financial instruments

Financial instruments that are classified or designated at fair value through profit or loss, including those held for trading purposes, or available-for-sale, and all derivatives are stated at fair value. The fair value of such financial instruments is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal, or in its absence, the most advantageous market to which Santander UK group has access at that date. The fair value of a liability reflects its non-performance risk.

Changes in the valuation of such financial instruments, including derivatives, are included in the line item ‘Net trading and other income’ in the Consolidated Income Statement or in ‘Other comprehensive income’ in the Consolidated Statement of Comprehensive Income as applicable.

(i) Initial measurement

The best evidence of the fair value of a financial instrument at initial recognition is the transaction price unless the valuation is evidenced by comparison with other observable current market transactions in the same instrument or based on a valuation technique whose variables include significant data from observable markets. Any difference between the transaction price and the value based on a valuation technique where the inputs are not based on data from observable current markets is not recognised in profit or loss on initial recognition. Subsequent gains or losses are only recognised to the extent that they arise from a change in a factor that market participants would consider in setting a price.

(ii) Subsequent measurement

The Santander UK group applies the following fair value hierarchy that prioritises the inputs to valuation techniques used in measuring fair value. The hierarchy establishes three categories for valuing financial instruments, giving the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three categories are: quoted prices in active markets (Level 1), internal models based on observable market data (Level 2) and internal models based on other than observable market data (Level 3). If the inputs used to measure an asset or a liability fall to different levels within the hierarchy, the classification of the entire asset or liability will be based on the lowest level input that is significant to the overall fair value measurement of the asset or liability.

The Santander UK group categorises assets and liabilities measured at fair value within the fair value hierarchy based on the inputs to the valuation techniques as follows:

Level 1	Unadjusted quoted prices for identical assets or liabilities in an active market that the Santander UK group can access at the measurement date. Level 1 positions include debt securities, equity securities, exchange traded derivatives and short positions in securities.
Level 2	Quoted prices in inactive markets, quoted prices for similar assets or liabilities, recent market transactions, inputs other than quoted market prices for the asset or liability that are observable either directly or indirectly for substantially the full term, and inputs to valuation techniques that are derived principally from or corroborated by observable market data through correlation or other statistical means for substantially the full term of the asset or liability. Level 2 positions include loans and advances to banks, loans and advances to customers, equity securities, exchange rate derivatives, interest rate derivatives, equity and credit derivatives, debt securities, deposits by banks, deposits by customers and debt securities in issue.
Level 3	Significant inputs to the pricing or valuation techniques are unobservable. Level 3 positions include exchange rate derivatives, equity and credit derivatives, loans and advances to customers, debt securities, equity securities and debt securities in issue.

The Santander UK group assesses active markets for equity instruments based on the average daily trading volume both in absolute terms and relative to the market capitalisation for the instrument. The Santander UK group assesses active markets for debt instruments based on both the average daily trading volume and the number of days with trading activity. The Santander UK group assesses active markets for exchange traded derivatives based on the average daily trading volume both in absolute terms and relative to the market capitalisation for the instrument.

Market activity and liquidity is discussed in the relevant monthly Risk Forum as well as being part of the daily update given by each business at the start of the trading day. This information, together with the observation of active trading and the magnitude of the bid-offer spreads allow consideration of the liquidity of a financial instrument.

Underlying assets and liabilities are reviewed to consider the appropriate adjustment to mark the mid-price reported in the trading systems to a fair value. This process takes into account the liquidity of the position in the size of the adjustment required. These liquidity adjustments are presented and discussed at the monthly Risk Forum.

The appropriate measurement levels are regularly reviewed. Underlying assets and liabilities are regularly reviewed to determine whether a position should be regarded as illiquid; the most important practical consideration being the observability of trading. Where the bid-offer spread is observable, this is tested against actual trades. Changes in the observability of significant valuation inputs during the reporting period may result in a transfer of assets and liabilities within the fair value hierarchy. The Santander UK group recognises transfers between levels of the fair value hierarchy when there is a significant change in either its principal market or the level of observability of the inputs to the valuation techniques as at the end of the reporting period.

The Santander UK group manages certain groups of financial assets and liabilities on the basis of its net exposure to either market risks or credit risk. As a result it has elected to use the exception under IFRS 13 which permits the fair value measurement of a group of financial assets and financial liabilities on the basis of the price that would be received to sell a net long position for a particular risk exposure or paid to transfer a net short position for a particular risk exposure in an orderly transaction between market participants at the measurement date under current market conditions.

Financial instruments valued using observable market prices

If a quoted market price in an active market is available for an instrument, the fair value is calculated as the current bid price multiplied by the number of units of the instrument held.

Financial instruments valued using a valuation technique

In the absence of a quoted market price in an active market, management uses internal models to make its best estimate of the price that the market would set for that financial instrument. In order to make these estimations, various techniques are employed, including extrapolation from observable market data and observation of similar financial instruments with similar characteristics. Wherever possible, valuation parameters for each product are based on prices directly observable in active markets or that can be derived from directly observable market prices. Chosen valuation techniques incorporate all the factors that market participants would take into account in pricing transactions.

Unrecognised gains as a result of the use of valuation models using unobservable inputs (Day One profits)

The timing of recognition of deferred Day One profit and loss is determined individually. It is deferred until either the instrument’s fair value can be determined using market observable inputs or is realised through settlement. The financial instrument is subsequently measured at fair value, adjusted for the deferred Day One profit and loss. Subsequent changes in fair value are recognised immediately in the Income Statement without immediate reversal of deferred Day One profits and losses.

c) Fair values of financial instruments carried at amortised cost

The following tables analyse the fair value of the financial instruments carried at amortised cost at 31 December 2017 and 2016, including their levels in the fair value hierarchy – Level 1, Level 2 and Level 3. It does not include fair value information for financial assets and financial liabilities carried at amortised cost if the carrying amount is a reasonable approximation of fair value. Cash and balances at central banks which comprise of demand deposits with the Bank of England and the US Federal Reserve together with cash in tills and ATMs have been excluded from the table, as the carrying amount of cash and balances at central banks is deemed an appropriate approximation of fair value. The fair value of the portfolio of UK Government debt securities classified as held-to-maturity investments, as referred to in Note 1, is categorised in Level 1 of the fair value hierarchy. Apart from these securities, there were no other financial instruments carried at amortised cost whose fair values would be classified in Level 1.

																			Group
									2017										2016
	Fair value								Carrying		Fair value								Carrying
	Level 1 £m		Level 2 £m		Level 3 £m		Total £m		value £m		Level 1 £m		Level 2 £m		Level 3 £m		Total £m		value £m
Assets
Loans and advances to banks		–		5,358		556		5,914		5,927		–		3,737		478		4,215		4,348
Loans and advances to customers – unimpaired		–		6,481		194,551		201,032		198,629		–		6,739		195,673		202,412		198,788
– impaired		–		–		784		784		861		–		–		824		824		950
Financial investments		6,435		2,211		–		8,646		8,758		6,436		272		–		6,708		6,905
		6,435		14,050		195,891		216,376		214,175		6,436		10,748		196,975		214,159		210,991
Liabilities
Deposits by banks		–		13,249		557		13,806		13,784		–		9,360		438		9,798		9,769
Deposits by customers		–		564		183,226		183,790		183,648		–		582		176,883		177,465		177,172
Debt securities in issue		–		44,296		–		44,296		42,633		–		51,053		1,196		52,249		50,346
Subordinated liabilities		–		4,256		–		4,256		3,793		–		4,562		–		4,562		4,303
		–		62,365		183,783		246,148		243,858		–		65,557		178,517		244,074		241,590

There are no loans and advances to banks and financial investments that are impaired.

The carrying value above of any financial assets and liabilities that are designated as hedged items in a portfolio (or macro) fair value hedge relationship excludes gains and losses attributable to the hedged risk, as this is presented included in other assets on the balance sheet.

Valuation methodology

The fair value of financial instruments is the estimated price at which an orderly transaction to sell the asset or to transfer the liability would take place between market participants at the measurement date under current market conditions. If a quoted market price is available for an instrument, the fair value is calculated based on the market price. Where quoted market prices are not available, fair value is determined using pricing models which use a mathematical methodology based on accepted financial theories, depending on the product type and its components. Further information on fair value measurement can be found in Note 1 and the valuation techniques section below.

Fair value management

The fair value exposures set out in the tables above are managed by using a combination of hedging derivatives and offsetting on balance sheet positions. The approach to specific categories of financial instruments is described below.

Assets:

Loans and advances to banks

These comprise secured loans, short-term placements with banks including collateral and unsettled financial transactions. The secured loans have been valued on the basis of spreads on credit default swaps for the term of the loans using valuation technique A as described below. The carrying amount of the other items is deemed a reasonable approximation of their fair value, as the transactions are very short-term in duration.

Loans and advances to customers

The approach to estimating the fair value of loans and advances to customers has been determined by discounting expected cash flows to reflect current market rates for lending of a similar credit quality. The determination of their fair values is an area of considerable estimation and uncertainty as there is no observable market and values are significantly affected by customer behaviour.

i) Advances secured on residential property

The mortgage portfolio is stratified into tranches by LTV; (being a significant driver of market pricing) and the fair value of each tranche is calculated by discounting contractual cash flows, after taking account of expected customer prepayment rates, using a valuation spread based on new business interest rates derived from competitor market information adjusted for the implied cost of funding. Adjustments have also been made to:

– Reduce the weighted average lives of low LTV loans on SVR to reflect the uncertainty inherent in the value that could be achieved, given that the borrower could refinance at any time.

– Discount the value of performing loans with a LTV over 90% (with the exception of loans under the UK Government’s Help to Buy scheme) to reflect the higher risk of this part of the portfolio.

– For impaired loans, we apply a discount to reflect the fact that the model does not fully take into account the higher risk nature of these loans and, in addition, discount the collateral value of loans with a LTV over 80% to reflect the greater possibility of repossession and recovery value.

ii) Corporate loans

The corporate loan portfolio is stratified by product. The determination of the fair values of performing loans takes account of the differential between existing margins and estimated new business rates for similar loans in terms of segment, maturity and structure. Provisions are considered appropriate for the book that is not impaired. A discount has been applied to impaired loans. Although exits have generally been achieved at carrying value, this does not reflect the discount a purchaser would require. A discount has therefore been applied based on the target return sought by distressed bond funds, who are the typical purchaser of the assets.

With respect to Social Housing, part of this portfolio is held at fair value for historic reasons. The same methodology has been applied to calculate the fair value of loans held at amortised cost. The fair value of this part of the portfolio has been determined using valuation technique A as described below.

With respect to the other non-core corporate and legacy portfolios, including commercial mortgages, their market value is estimated, based on an orderly three year disposal process. In addition, the same discount has been applied to the impaired book as for the corporate loans above.

iii) Other loans

These consist of unsecured personal loans, credit cards, overdrafts and consumer credit (car loans). The weighted average lives of these portfolios are short, and the business was written relatively recently. As a result, contractual interest rates approximate new business interest rates, and therefore no mark-to-market surplus or deficit has been recorded with respect to the performing book with the exception of unsecured personal loans where a small surplus or deficit has been recognised based on the differential between existing margins and an estimate of new business rates for similar loans. A discount has been applied to the impaired part of the book.

Financial investments

Loans and receivable securities consist of asset-backed securities. These are complex products and are valued with the assistance of an independent, specialist valuation firm. These fair values are determined using industry-standard valuation techniques, including discounted cash flow models. The inputs to these models used in these valuation techniques include quotes from market makers, prices of similar assets, adjustments for differences in credit spreads, and additional quantitative and qualitative research.

Held-to-maturity investments consist of a portfolio of government debt securities. The same methodology has been applied to calculate the fair value of loans held at amortised cost. The fair value of this portion of the portfolio has been determined using valuation technique A as described below.

Liabilities:

Deposits by banks

The fair value of deposits by banks, including repos, has been estimated using valuation technique A as described below.

Deposits by customers

The majority of deposit liabilities are payable on demand and therefore can be deemed short-term in nature with the fair value equal to the carrying value. However, given the long-term and continuing nature of the relationships with the Santander UK group’s customers, the Directors believe there is significant value to the Santander UK group in this source of funds. Certain of the deposit liabilities are at a fixed rate until maturity. The deficit/surplus of fair value over carrying value of these liabilities has been estimated by reference to the market rates available at the balance sheet date for similar deposit liabilities of similar maturities. The fair value of such deposits liabilities has been estimated using valuation technique A as described below.

Debt securities in issue and subordinated liabilities

Where reliable prices are available, the fair value of debt securities in issue and subordinated liabilities has been calculated using quoted market prices. Other market values have been determined using valuation technique A as described below.

d) Fair values of financial instruments measured at fair value on a recurring basis

The following tables summarise the fair values of the financial assets and liabilities accounted for at fair value at 31 December 2017 and 2016, analysed by their levels in the fair value hierarchy – Level 1, Level 2 and Level 3.

																		Group
								2017								2016
		Level 1 £m		Level 2 £m		Level 3 £m		Total £m		Level 1 £m		Level 2 £m		Level 3 £m		Total £m		Valuation technique
Assets
Trading assets	Loans and advances to banks		–		6,897		–		6,897		–		7,478		–		7,478		A
	Loans and advances to customers		656		8,184		–		8,840		762		9,561		–		10,323		A
	Debt securities		5,156		–		–		5,156		6,248		–		–		6,248		–
	Equity securities		9,662		–		–		9,662		5,986		–		–		5,986		–
			15,474		15,081		–		30,555		12,996		17,039		–		30,035
Derivative financial instruments	Exchange rate contracts		–		6,061		16		6,077		–		8,300		22		8,322		A
	Interest rate contracts		–		12,956		12		12,968		1		15,795		19		15,815		A & C
	Equity and credit contracts		–		861		36		897		–		1,272		62		1,334		B & D
			–		19,878		64		19,942		1		25,367		103		25,471
Financial assets designated at fair value	Loans and advances to customers		–		1,485		64		1,549		–		1,668		63		1,731		A
	Debt securities		184		187		176		547		–		208		201		409		A & B
			184		1,672		240		2,096		–		1,876		264		2,140
Financial investments	Available-for-sale equity securities		19		9		53		81		17		63		32		112		B
	Available-for-sale debt securities		8,770		2		–		8,772		10,449		–		–		10,449		C
			8,789		11		53		8,853		10,466		63		32		10,561
Total assets at fair value			24,447		36,642		357		61,446		23,463		44,345		399		68,207
Liabilities
Trading liabilities	Deposits by banks		–		1,885		–		1,885		–		4,200		–		4,200		A
	Deposits by customers		–		25,530		–		25,530		–		8,559		–		8,559		A
	Short positions		3,694		–		–		3,694		2,801		–		–		2,801		–
			3,694		27,415		–		31,109		2,801		12,759		–		15,560
Derivative financial	Exchange rate contracts		–		4,176		15		4,191		–		6,009		21		6,030		A
instruments	Interest rate contracts		–		12,720		5		12,725		–		16,202		11		16,213		A & C
	Equity and credit contracts		1		653		43		697		1		817		42		860		B & D
			1		17,549		63		17,613		1		23,028		74		23,103
Financial liabilities	Debts securities in issue		–		1,629		6		1,635		–		1,908		6		1,914		A
designated at fair value	Structured deposits		–		680		–		680		–		526		–		526		A
			–		2,309		6		2,315		–		2,434		6		2,440
Total liabilities at fair value			3,695		47,273		69		51,037		2,802		38,221		80		41,103

Transfers between levels of the fair value hierarchy

Transfers between levels of the fair value hierarchy are reported at the beginning of the period in which they occur.

In 2017, there were no transfers of financial instruments between Levels 1 and 2. During 2016, ‘Available-for-sale debt securities – Debt securities’ with fair values of £25m were transferred from Level 1 to Level 2 principally due to a lack of market transactions in these instruments.

During 2017 and 2016, there were no transfers of financial instruments between Levels 2 and 3.

e) Valuation techniques

The main valuation techniques employed in internal models to measure the fair value of the financial instruments disclosed above at 31 December 2017 and 2016 are set out below. In substantially all cases, the principal inputs into these models are derived from observable market data. The Santander UK group did not make any material changes to the valuation techniques and internal models it used during the years ended 31 December 2017, 2016 and 2015.

A In the valuation of financial instruments requiring static hedging (for example interest rate, currency derivatives and commodity swaps) and in the valuation of loans and advances and deposits, the ‘present value’ method is used. Expected future cash flows are discounted using the interest rate curves of the applicable currencies or forward commodity prices. The interest rate curves are generally observable market data and reference yield curves derived from quoted interest rates in appropriate time bandings, which match the timings of the cash flows and maturities of the instruments. The forward commodity prices are generally observable market data.

B In the valuation of equity financial instruments requiring dynamic hedging (principally equity securities, options and other structured instruments), proprietary local volatility and stochastic volatility models are used. These types of models are widely accepted in the financial services industry. Observable market inputs used in these models include the bid-offer spread, foreign currency exchange rates, volatility and correlation between indices. In limited circumstances, other inputs may be used in these models that are based on data other than observable market data, such as the Halifax’s UK House Price Index (HPI) volatility, HPI forward growth, HPI spot rate, mortality, mean reversion and contingent litigation risk.

C In the valuation of financial instruments exposed to interest rate risk that require either static or dynamic hedging (such as interest rate futures, caps and floors, and options), the present value method (futures), Black’s model (caps/floors) and the Hull/White and Markov functional models (Bermudan options) are used. These types of models are widely accepted in the financial services industry. The significant inputs used in these models are observable market data, including appropriate interest rate curves, volatilities, correlations and exchange rates. In limited circumstances, other inputs may be used in these models that are based on data other than observable market data, such as HPI volatility, HPI forward growth, HPI spot rate and mortality.

D In the valuation of linear instruments such as credit risk and fixed-income derivatives, credit risk is measured using dynamic models similar to those used in the measurement of interest rate risk. In the case of non-linear instruments, if the portfolio is exposed to credit risk such as credit derivatives, the probability of default is determined using the par spread level. The main inputs used to determine the underlying cost of credit of credit derivatives are quoted credit risk premiums and the correlation between the quoted credit derivatives of various issuers.

The fair values of the financial instruments arising from the Santander UK group’s internal models take into account, among other things, contract terms and observable market data, which include such factors as bid-offer spread, interest rates, credit risk, exchange rates, the quoted market price of raw materials and equity securities, volatility and prepayments. In all cases, when it is not possible to derive a valuation for a particular feature of an instrument, management uses judgement to determine the fair value of the particular feature. In exercising this judgement, a variety of tools are used including proxy observable data, historical data and extrapolation techniques. Extrapolation techniques take into account behavioural characteristics of equity markets that have been observed over time, and for which there is a strong case to support an expectation of a continuing trend in the future. Estimates are calibrated to observable market prices when they become available.

The Santander UK group believes its valuation methods are appropriate and consistent with other market participants. Nevertheless, the use of different valuation methods or assumptions, including imprecision in estimating unobservable market inputs, to determine the fair value of certain financial instruments could result in different estimates of fair value at the reporting date and the amount of gain or loss recorded for a particular instrument. Most of the valuation models are not significantly subjective, because they can be tested and, if necessary, recalibrated by the internal calculation of and subsequent comparison to market prices of actively traded securities, where available.

f) Fair value adjustments

The internal models incorporate assumptions that the Santander UK group believes would be made by a market participant to establish fair value. Fair value adjustments are adopted when the Santander UK group considers that there are additional factors that would be considered by a market participant that are not incorporated in the valuation model.

The Santander UK group classifies fair value adjustments as either ‘risk-related’ or ‘model-related’. The fair value adjustments form part of the portfolio fair value and are included in the balance sheet values of the product types to which they have been applied. The majority of these adjustments relate to Global Corporate Banking. The magnitude and types of fair value adjustment adopted by Global Corporate Banking are listed in the following table:

	2017 £m		2016 £m
Risk-related:
– Bid-offer and trade specific adjustments		34		37
– Uncertainty		43		49
– Credit risk adjustment		36		50
– Funding fair value adjustment		6		20
		119		156
Model-related		8		1
Day One profit		1		4
		128		161

Risk-related adjustments

Risk-related adjustments are driven, in part, by the magnitude of the Santander UK group’s market or credit risk exposure, and by external market factors, such as the size of market spreads.

(i) Bid-offer and trade specific adjustments

IFRS 13 requires that portfolios are marked at bid or offer, as appropriate. Valuation models will typically generate mid-market values. The bid-offer adjustment reflects the cost that would be incurred if substantially all residual net portfolio market risks were closed using available hedging instruments or by disposing of or unwinding the position. The majority of the bid-offer adjustment relates to OTC derivative portfolios. For each portfolio, the major risk types are identified. For each risk type, the net portfolio risks are first classified into buckets, and then a bid-offer spread is applied to each risk bucket based upon the market bid-offer spread for the relevant hedging instrument.

The grouping of risk categories is dependent on the sensitivity factors of the trading portfolio. For example, interest rate risk will be by tenor and options will be by strikes. The granularity of the risk bucketing is principally determined by reference to the risk management practice undertaken, the granularity of risk bucketing in the risk reporting process, and the extent of correlation between risk buckets. Within a risk type, the bid-offer adjustment for each risk bucket may be aggregated without offset or limited netting may be applied to reflect correlation between buckets. There is no netting applied between risk types or between portfolios that are not managed together for risk management purposes. There is no netting across legal entities.

(ii) Uncertainty

Certain model inputs may be less readily determinable from market data, and/or the choice of model itself may be more subjective. In these circumstances, there exists a range of possible values that the financial instrument or market parameter may assume and an adjustment may be necessary to reflect the likelihood that in estimating the fair value of the financial instrument, market participants would adopt more conservative values for uncertain parameters and/or model assumptions than those used in the valuation model.

(iii) Credit risk adjustment

Credit risk adjustments comprise credit and debit valuation adjustments. The credit valuation adjustment (CVA) is an adjustment to the valuation of OTC derivative contracts to reflect within fair value the possibility that the counterparty may default, and the Santander UK group may not receive the full market value of the transactions. The debit valuation adjustment (DVA) is an adjustment to the valuation of the OTC derivative contracts to reflect within the fair value the possibility that the Santander UK group may default, and that the Santander UK group may not pay full market value of the transactions.

The Santander UK group calculates a separate CVA and DVA for each Santander UK legal entity, and within each entity for each counterparty to which the entity has exposure. The Santander UK group calculates the CVA by applying the probability of default of the counterparty to the expected positive exposure to the counterparty, and multiplying the result by the loss expected in the event of default i.e. LGD. Conversely, the Santander UK group calculates the DVA by applying the PD of the Santander UK group, conditional on the non-default of the counterparty, to the expected positive exposure of the counterparty to the Santander UK group and multiplying the result by the LGD. Both calculations are performed over the life of the potential exposure.

For most products the Santander UK group uses a simulation methodology to calculate the expected positive exposure to a counterparty. This incorporates a range of potential exposures across the portfolio of transactions with the counterparty over the life of the portfolio. The simulation methodology includes credit mitigants such as counterparty netting agreements and collateral agreements with the counterparty.

For certain types of exotic derivatives where the products are not currently supported by the standard methodology, the Santander UK group adopts alternative methodologies. These may involve mapping transactions against the results for similar products which are valued using the standard methodology. In other cases, a simplified version of the standard methodology is applied. The calculation is applied at a trade level, with more limited recognition of credit mitigants such as netting or collateral agreements than used in the standard methodology.

The methodologies do not, in general, account for wrong-way risk. Wrong-way risk arises where the underlying value of the derivative prior to any credit risk adjustment is positively correlated to the probability of default of the counterparty. When there is significant wrong-way risk, a trade-specific approach is applied to reflect the wrong-way risk within the valuation. Exposure to wrong-way risk is limited via internal governance processes and deal pricing. The Santander UK group considers that an appropriate adjustment to reflect wrong-way risk is currently £nil (2016: £nil).

(iv) Funding fair value adjustment (FFVA)

The FFVA is an adjustment to the valuation of OTC derivative positions to include the net cost of funding uncollateralised derivative positions. This is calculated by applying a suitable funding cost to the expected future funding exposure of any uncollateralised component of the OTC derivative portfolio.

Model-related adjustments

Models used for portfolio valuation purposes may be based upon a simplifying set of assumptions that do not capture all material market characteristics. Additionally, markets evolve, and models that were adequate in the past may require development to capture all material market characteristics in current market conditions. In these circumstances, model limitation adjustments are adopted. The Quantitative Risk Group (QRG), an independent quantitative support function reporting into the Risk Department, highlights the requirement for model limitation adjustments and develops the methodologies employed. As model development progresses, model limitations are addressed within the core revaluation models and a model limitation adjustment is no longer needed.

Day One profit adjustments

Day One profit adjustments are adopted where the fair value estimated by a valuation model is based on one or more significant unobservable inputs. Day One profit adjustments are calculated and reported on a portfolio basis.

g) Control framework

Fair values are subject to a control framework designed to ensure that they are either determined or validated by a function independent of the risk-taker. To this end, ultimate responsibility for the determination of fair values lies jointly with the Risk Department and the Finance Department. For all financial instruments where fair values are determined by reference to externally quoted prices or observable pricing inputs to models, independent price determination or validation is utilised. In inactive markets, direct observation of a traded price may not be possible. In these circumstances, the Santander UK group will source alternative market information to validate the financial instrument’s fair value, with greater weight given to information that is considered to be more relevant and reliable.

The factors that are considered in this regard include:

– The extent to which prices may be expected to represent genuine traded or tradeable prices

– The degree of similarity between financial instruments

– The degree of consistency between different sources

– The process followed by the pricing provider to derive the data

– The elapsed time between the date to which the market data relates and the balance sheet date

– The manner in which the data was sourced.

The source of pricing data is considered as part of the process that determines the classification of the level of a financial instrument. Consideration is given to the quality of the information available that provides the current mark-to-model valuation and estimates of how different these valuations could be on an actual trade, taking into consideration how active the market is. For spot assets that cannot be sold due to illiquidity, forward estimates are discounted to estimate a realisable value over time. Adjustments for illiquid positions are regularly reviewed to reflect changing market conditions.

Internal valuation model review

For fair values determined using a valuation model, the control framework may include, as applicable, independent development or validation of: (i) the logic within the models; (ii) the inputs to those models; (iii) any adjustments required outside the models; and (iv) where possible, model outputs. Internal valuation models are validated independently by the QRG. A validation report is produced for each model-derived valuation that assesses the mathematical assumptions behind the model, the implementation of the model and its integration within the trading system. Where there is observable market data, the models calibrate to market. Where pricing data is unobservable, the input parameters are regularly reviewed by the QRG. The results of the independent valuation process and any changes to the fair value adjustments methodology are approved in line with the model risk framework and policy.

h) Internal models based on observable market data (Level 2)

1. Trading assets and liabilities

Loans and advances to banks and loans and advances to customers – securities purchased under resale agreements

These consist of repos and reverse repos as part of trading activities. The fair value is estimated by using the ‘present value’ method. Future cash flows are evaluated taking into consideration any derivative features of the reverse repos and are then discounted using the appropriate market rates for the applicable maturity and currency. Under these agreements, the Santander UK group receives collateral with a market value equal to, or in excess of, the principal amount loaned. The level of collateral held is monitored daily and if required, further calls are made to ensure the market values of collateral remains at least equal to the loan balance. As a result, there would be no adjustment, or an immaterial adjustment, to reflect the credit quality of the counterparty related to these agreements. As the inputs are based on observable market data, these reverse repos are classified as Level 2.

Loans and advances to banks and loans and advances to customers – other

These consist of term deposits placed which are short-term in nature and are both utilised and managed as part of the funding requirements of the trading book. The fair value is estimated using the ‘present value’ method. Expected future cash flows are discounted using the interest rate curves of the applicable currencies. The interest rate curves are generally observable market data and reference yield curves derived from quoted interest rates in appropriate time bandings, which match the timings of the cash flows and maturities of the instruments. As the inputs are based on observable market data, these loans are classified as Level 2.

Deposits by banks and deposits by customers – securities sold under repurchase agreements

These consist of repos with both professional non-bank customers and bank counterparties as part of trading activities. The fair value of repos is estimated using the same technique as those reverse repos in trading assets discussed above. Under these agreements, the Santander UK group is required to provide and maintain collateral with a market value equal to, or in excess of, the principal amount borrowed. As a result, there would be no adjustment, or an immaterial adjustment, to reflect the credit quality of the Santander UK group related to these agreements. As the inputs are based on observable market data, these repos are classified as Level 2.

Deposits by banks and deposits by customers – other

These consist of certain term and time deposits which tend to be short-term in nature and are both utilised and managed as part of the funding requirements of the trading book. These instruments are valued using the same techniques as those instruments in trading assets – loans and advances to banks and loans and advances to customers discussed above. As the inputs are based on observable market data, these deposits are classified as Level 2.

2. Derivative financial instruments

These consist of exchange rate, interest rate, equity and credit and commodity contracts. The models used in estimating the fair value of these derivatives do not contain a high level of subjectivity as the methodologies used do not require significant judgement, and the inputs used are observable market data such as plain vanilla interest rate swaps and option contracts. As the inputs are based on observable market data, these derivatives are classified as Level 2. Certain cross currency swaps, reversionary property interests, credit default swaps and options and forwards contain significant unobservable inputs or are traded less actively or traded in less-developed markets, and so are classified as Level 3. The valuation of such instruments is further discussed in the ‘internal models based on information other than market data’ section below.

3. Financial assets and liabilities designated at fair value (FVTPL)

Loans and advances to customers

These consist of loans secured on residential property to housing associations. The fair value of these loans is estimated using the ‘present value’ model based on a credit curve derived from current market spreads observable in the Social Housing loan data. Observable market data include current market spreads for new accepted mandates and bids for comparable loans and are used to support or challenge the benchmark level. This provides a range of reasonably possible estimates of fair value. As the inputs are based on market observable data, these loans are classified as Level 2. Certain loans and advances to customers which represent a portfolio of roll-up mortgages contain significant unobservable inputs and so are classified as Level 3. The valuation of such instruments is further discussed below.

Debt securities

These consist of holdings of asset-backed securities. A significant portion of these securities are priced using the ‘present value’ models, based on observable market data e.g. LIBOR, credit spreads. Where there are quoted prices, the model value is checked against the quoted prices for reference purposes, but is not used as the fair value as the market for these instruments is lacking in liquidity and depth. As the inputs are based on observable market data, these debt securities are classified as Level 2. Certain debt securities which represent reversionary property securities and securities issued by Banco Santander entities contain significant unobservable inputs, and so are classified as Level 3. The valuation of such instruments is further discussed below.

Debt securities in issue

These include commercial paper, medium-term notes and other bonds and are valued using the same techniques as those instruments in financial assets at FVTPL – debt securities discussed above. As the inputs used are based on observable market data, these debt securities are classified as Level 2. Certain debt securities in issue which represent the more exotic senior debt issuances, consisting of power reverse dual currency (PRDC) notes contain significant unobservable inputs and so are classified as Level 3. The valuation of such instruments is further discussed below.

Structured deposits

These consist of certain structured term deposits utilised and managed as part of the funding requirements of the trading book. These instruments are valued using the same techniques as those instruments in trading assets – loans and advances to banks and loans and advances to customers discussed above. As the inputs are based on observable market data, these deposits are classified as Level 2.

4. Financial investments

Available-for-sale equity securities

These consist of unquoted equity investments in companies providing infrastructure services to the financial services industry and a small portfolio held within the Santander UK Foundation (which is consolidated by the Santander UK group). In the valuation of equity financial instruments requiring dynamic hedging, proprietary local volatility and stochastic volatility models are used. These types of models are widely accepted in the financial services industry.

Observable market inputs used in these models include the bid-offer spread, foreign currency exchange rates, volatility and correlation between indices. As the inputs are based on observable market data, these equity securities are classified as Level 2.

Available-for-sale debt securities

These consist of certain asset backed securities where quoted market prices are not available, for which valuation techniques are used to determine fair value and where these techniques use inputs that are based significantly on observable market data.

i) Internal models based on information other than market data (Level 3)

The table below provides an analysis of financial instruments valued using internal models based on information other than market data together with the subsequent valuation technique used for each type of instrument. Each instrument is initially valued at transaction price:

			Balance sheet value						Fair value movements recognised in profit/(loss)
Balance sheet line item	Category	Financial instrument product type	2017 £m			2016 £m			2017 £m			2016 £m			2015 £m
1. Derivative assets	Exchange rate contracts	Cross-currency swaps		1			1			–			1			3
2. Derivative assets	Exchange rate contracts	Securitisation cross currency swaps		15			21			(11	)		12			–
3. Derivative assets	Interest rate contracts	Bermudan swaptions		6			7			(1	)		(3	)		(9	)
4. Derivative assets	Interest rate contracts	Securitisation swaps		6			12			(8	)		–			–
5. Derivative assets	Equity and credit contracts	Reversionary property interests		31			36			(6	)		12			2
6. Derivative assets	Credit contracts	Credit default swaps		–			5			(5	)		1			(2	)
7. Derivative assets	Equity contracts	Property-related options and forwards		5			21			(1	)		(5	)		(4	)
8. FVTPL	Loans and advances to customers	Roll-up mortgage portfolio		64			63			2			4			2
9. FVTPL	Debt securities	Reversionary property securities		176			201			(18	)		–			17
10. Financial investments	Available-for-sale equity securities	Unlisted equity shares		53			32			–			–(1)			–(1)
11. Derivative liabilities	Exchange rate contracts	Securitisation cross currency swaps		(15	)		(21	)		11			(12	)		–
12. Derivative liabilities	Interest rate contracts	Bermudan swaptions		(1	)		(2	)		1			2			–
13. Derivative liabilities	Interest rate contracts	Securitisation swaps		(4	)		(9	)		7			–			–
14. Derivative liabilities	Equity contracts	Property-related options and forwards		(43	)		(42	)		(5	)		(5	)		(3	)
15. FVTPL	Debt securities in issue	Non-vanilla debt securities		(6	)		(6	)		–			–			(4	)
Total net assets				288			319
Total (expense)/income										(34	)		7			2

(1) Gains and losses arising from changes in the fair value of securities classified as available-for–sale are recognised in ‘Other comprehensive income’.

Valuation techniques

1. Derivative assets – Exchange rate contracts

These are used to hedge the foreign currency risks arising from the PRDC notes issued, as described in Instrument 15 below. These derivatives are valued using a standard valuation model valuing each leg of the swap, with expected future cash flows less notional amount exchanged at maturity date discounted using an appropriate floating rate. The floating rate is adjusted by the relevant cross currency basis spread. Interest rates, foreign exchange rates, cross currency basis spread and long-dated foreign exchange (FX) volatility are used as inputs to determine fair value. Interest rates, foreign exchange rates are market observable.

Cross currency spreads may be market observable or unobservable depending on the liquidity of the cross currency pair. As the Japanese Yen-US dollar cross currency pair related to the PRDC notes is liquid, the cross currency spreads (including long-dated cross currency spread) for these swaps are market observable. The significant unobservable inputs are the long-dated FX volatility and the correlation between the underlying assets. The correlation between the underlying assets is assumed to be zero, as there are no actively traded options from which correlations between the underlying assets could be implied. Furthermore, the zero correlation assumption implies that the sources of the long-dated FX volatility are independent.

Long-dated FX volatility – Long-dated FX volatility is extrapolated from shorter-dated FX volatilities which are market observable. Short-dated FX volatility is observable from the trading of FX options. As there is no active market for FX options with maturities greater than five years (long-dated FX options), long-dated FX volatility is not market observable. Furthermore, as historical prices are not relevant in determining the cost of hedging long-dated FX risk, long-dated FX volatility cannot be inferred from historical volatility. The long-dated FX volatility is extrapolated from the shorter-dated FX volatilities using Black’s model.

FX volatility is modelled as the composition of the domestic interest rate, foreign interest rates and FX spot volatilities using standard Hull-White formulae. The Hull-White approach is used for estimating the future distribution of domestic and foreign zero-coupon rates, constructed from the relevant yield curves. Using short-dated FX options, the FX spot volatility is calculated which is then extrapolated to derive the long-dated FX volatility.

2. Derivative assets – Exchange rate contracts

These are securitisation based swaps for which the notional amount is adjusted to match the changes in the outstanding reference mortgage portfolio with time. These swaps are valued using a standard valuation model for which the main inputs used are market observable information in the vanilla swap market and a prepayment parameter. The significant unobservable input for the valuation of these financial instruments is prepayment.

Prepayment – This captures the prepayment, default and arrears of the reference portfolio and is modelled using an analysis of the underlying portfolio plus observed historical market data.

3. Derivative assets – Interest rate contracts

These are options giving the holder the right to enter into an interest rate swap on any one of a number of predetermined dates. These Bermudan swaptions are valued using a standard valuation model. In valuing the Bermudan swaptions, the main inputs used are market observable information in the vanilla swaption market and a mean reversion parameter. The significant unobservable input for the valuation of these financial instruments is mean reversion.

Mean reversion – The input used reflects the level of de-correlation in the swaption market. This parameter is not directly observable in the market but can be deduced from broker quotes or using expert judgement. An adjustment is made to reflect this uncertainty by stressing the parameter.

4. Derivative assets – Interest rate contracts

These derivatives are the same as Instrument 2.

5. Derivative assets – Equity and credit contracts

These are valued using a probability weighted set of HPI forward prices, which are assumed to be a reasonable representation of the increase in value of the Santander UK group’s reversionary interest portfolio underlying the derivatives. The probability used reflects the likelihood of the home owner vacating the property and is calculated from mortality rates and acceleration rates which are a function of age and gender, obtained from the relevant mortality tables. Indexing is felt to be appropriate due to the size and geographical dispersion of the reversionary interest portfolio. These are determined using HPI Spot Rates adjusted to reflect estimated forward growth. The Halifax’s UK HPI is the UK’s longest running monthly house price data series covering the whole country. The indices calculated are standardised and represent the price of a typically transacted house. Both national and regional HPI are published. The national HPI is published monthly. The regional HPI reflects the national HPI disaggregated into 12 UK regions and is published quarterly. Both indices are published on two bases, including and excluding seasonal adjustments in the housing market. Non-seasonally adjusted (NSA) national and regional HPI are used in the valuation model to avoid any subjective judgement in the adjustment process which is made by Markit (which now publishes the Halifax House Price Index).

The inputs used to determine the value of the reversionary property derivatives are HPI spot, HPI forward growth and mortality rates. The principal pricing parameter is HPI forward growth.

HPI Spot Rate – The HPI spot rate used is a weighted average of NSA regional HPI spot rates i.e. adjusted for difference in the actual regional composition of the property underlying the reversionary interest portfolio and the composition of the published regional indices. The regional HPI spot rate (which is observable market data) is only published on specific quarterly dates. In between these dates, its value is estimated by applying the growth rate over the relevant time period inferred from the national HPI spot rates (which are observable market data and published monthly) to the most recently calculated weighted average regional HPI spot rate based on published regional indices. An adjustment is also made to reflect the specific property risk i.e. possible deviation between the actual growth in the house prices underlying the reversionary interest portfolio and their assumed index-linked growth, based on the regional HPI. This adjustment is based on the average historical deviation of price changes of the actual property portfolio from that of the published indices over the time period since the last valuation date.

HPI Forward Growth Rate – Long-dated HPI forward growth rate is not directly observable in the market but is estimated. A specific spread is applied to the long-dated forward growth rate to reflect the uncertainty surrounding long-dated data. This spread is calculated by analysing the historical volatility of the HPI. An adjustment is made to reflect the specific property risk as for the HPI spot rate above.

Mortality Rate – Mortality rates are obtained from tables published by the UK Institute and Faculty of Actuaries. These mortality rates are adjusted by acceleration rates to reflect the mortality profile of the holders of Santander UK group’s reversionary property products underlying the derivatives. Mortality rates do not have a significant effect on the value of the instruments.

6. Derivative assets – Credit contracts

These are credit default swaps held against certain bonds. The credit default swaps are valued using the credit spreads of the referenced bonds. These referenced bonds are valued with the assistance of valuations prepared by an independent, specialist valuation firm as a deep and liquid market does not exist. In valuing the credit default swaps, the main inputs used to determine the underlying cost of credit are quoted risk premiums and the correlation between the quoted credit derivatives of various issuers. The assumptions relating to the correlation between the values of quoted and unquoted assets are based on historical correlations between the impact of adverse changes in market variables and the corresponding valuation of the associated unquoted assets. The measurement of the assets will vary depending on whether a more or less conservative scenario is selected. The other main input is the probability of default of the referenced bonds. The significant unobservable input for the valuation of these financial instruments is the probability of default.

Probability of default – The probability of default is assessed by considering the credit quality of the underlying referenced bonds. However, as no deep and liquid market exists for these assets the assessment of the probability of default is not directly observable and instead an estimate is calculated using the Standard Gaussian Copula model.

7. Derivative assets – Equity contracts

There are three types of derivatives within this category:

European options – These are valued using a modified Black-Scholes model where the HPI is log-normally distributed with the forward rates determined from the HPI forward growth.

Asian options – Asian (or average value) options are valued using a modified Black-Scholes model, with an amended strike price and volatility assumption to account for the average exercise period, through a closed form adjustment that reflects the strike price relative to the distribution of stock prices at each relevant date. This is also known as the Curran model.

Forward contracts – Forward contracts are valued using a standard forward pricing model.

The inputs used to determine the value of the above instruments are HPI spot rate, HPI forward growth rate and HPI volatility. The principal pricing parameter is HPI forward growth rate.

HPI Spot Rate – The HPI spot rate used is the NSA national HPI spot rate which is published monthly and directly observable in the market. This HPI rate used is different from the weighted average regional HPI spot rate used in the valuation of Instrument 5 above, as the underlying of these derivatives is the UK national HPI spot rate.

HPI Forward Growth Rate – The HPI forward growth rate used is unobservable and is the same as used in the valuation of Instrument 5 above.

HPI Volatility – Long-dated HPI volatility is not directly observable in the market and is estimated. An adjustment is applied to the long-dated HPI volatility rate to reflect the uncertainty surrounding long-dated data. This adjustment is based on the empirical standard deviation of historical volatility over a range of time horizons. HPI volatility rates do not have a significant effect on the value of the instruments.

8. FVTPL – Loans and advances to customers

These represent roll-up mortgages (sometimes referred to as lifetime mortgages), which are an equity release scheme under which a property owner takes out a loan secured against their home. The owner does not make any interest payments during their lifetime and the fixed interest payments are rolled up into the mortgage. The loan or mortgage (capital and rolled-up interest) is repaid upon the owner’s vacation of the property and the value of the loan is only repaid from the value of the property. This is known as a ‘no negative pledge’. The Santander UK group suffers a loss if the sale proceeds from the property are insufficient to repay the loan, as it is unable to pursue the homeowner’s estate or beneficiaries for the shortfall.

The value of the mortgage ‘rolls up’ or accretes until the owner vacates the property. In order to value the roll-up mortgages, the Santander UK group uses a probability-weighted set of European option prices (puts) determined using the Black-Scholes model, in which the ‘no negative pledges’ are valued as short put options. The probability weighting applied is calculated from mortality rates and acceleration rates as a function of age and gender, taken from mortality tables.

The inputs used to determine the value of these instruments are HPI spot, HPI forward growth, HPI volatility, mortality rates and repayment rates. The principal pricing parameter is HPI forward growth. The HPI forward growth rate used is unobservable and is the same as used in the valuation of Instrument 5 above. The other parameters do not have a significant effect on the value of the instruments.

9. FVTPL – Debt securities

These consisting of reversionary property securities are an equity release scheme, where the property owner receives an upfront lump sum in return for paying a fixed percentage of the sales proceeds of the property when the owner vacates the property. These reversionary property securities are valued using a probability-weighted set of HPI forward prices which are assumed to be a reasonable representation of the increase in value of the Santander UK group’s reversionary interest portfolio underlying the derivatives. The probability weighting used reflects the probability of the home owner vacating the property through death and is calculated from death rates and acceleration factors which are a function of age and gender, obtained from the relevant mortality table.

The inputs used to determine the value of these instruments are HPI spot, HPI forward growth and mortality rates. The principal pricing parameter is HPI forward growth. Discussion of the HPI spot rate, HPI forward growth rate and mortality rates for this financial instrument is the same as Instrument 5 above. An adjustment is also made to reflect the specific property risk. Discussion of the specific property risk adjustment is the same as Instrument 5 above.

10. Available-for-sale financial assets – Equity securities

These consist of unquoted equity investments in companies providing infrastructure services to the financial services industry. In the valuation of equity financial instruments requiring dynamic hedging, proprietary local volatility and stochastic volatility models are used. These types of models are widely accepted in the financial services industry.

Observable market inputs used in these models include equity prices, bid-offer spread, foreign currency exchange rates. The significant unobservable input is contingent litigation costs and related expenses.

Contingent litigation costs and related expenses are estimated by reference to best estimates received from third party legal counsel.

11. Derivative liabilities – Exchange rate contracts

These derivatives are the same as Instrument 2 with the exception that they have a negative fair value.

12. Derivative liabilities – Interest rate contracts

These derivatives are the same as Instrument 3 with the exception that they have a negative fair value.

13. Derivative liabilities – Interest rate contracts

These derivatives are the same as Instrument 2 with the exception that they have a negative fair value.

14. Derivative liabilities – Equity contracts

These derivatives are the same as Instrument 7 with the exception that they have a negative fair value.

15. FVTPL – Debt securities in issue

These are PRDC notes. These notes are financial structured products where an investor is seeking a better return and a borrower/issuer a lower rate by taking advantage of the interest rate differential between two countries. The note pays a foreign interest rate in the investor’s domestic currency. The power component of the name denotes higher initial coupons and the fact that coupons rise as the domestic/foreign exchange rate depreciates. The power feature comes with a higher risk for the investor. Cash flows may have a digital cap feature where the rate gets locked once it reaches a certain threshold. Other add-on features are barriers such as knockouts and cancellation provisions for the issuer.

These debt securities in issue are valued using a three-factor Gaussian Model. The three factors used in the valuation are domestic interest rates, foreign interest rates and foreign exchange rates. The correlations between the factors are assumed to be zero within the valuation. The Hull-White approach is used for estimating the future distribution of domestic and foreign zero-coupon rates, constructed from the relevant yield curves. A Geometric Brownian Motion model is used for estimating the future distribution of spot foreign exchange rates. The foreign exchange and interest rate volatilities are the most crucial pricing parameters; the model calibrates to the relevant swaption volatility surface.

The significant unobservable inputs for the valuation of these financial instruments are the long dated FX volatility and the correlation between the underlying assets and are the same as Instrument 1.

Reconciliation of fair value measurements in Level 3 of the fair value hierarchy

The following table provides a reconciliation of the movement between opening and closing balances of Level 3 financial instruments, measured at fair value using a valuation technique with significant unobservable inputs:

	Group
	Assets												Liabilities
	Derivatives £m			Fair value through profit and loss £m			Financial investments £m			Total £m			Derivatives  £m	Fair value through profit and loss £m			Total £m
At 1 January 2017		103			264			32			399		(74)		(6	)		(80	)
Total (losses)/gains recognised in profit/(loss):
– Fair value movements		(32	)		(16	)		–			(48	)	14		–			14
– Foreign exchange and other movements		32			–			–			32		(32)		–			(32	)
Gains recognised in other comprehensive income		–			–			21			21		–		–			–
Additions		9			–			–			9		(2)		–			(2	)
Sales		–			(8	)		–			(8	)	–		–			–
Settlements		(48	)		–			–			(48	)	31		–			31
At 31 December 2017		64			240			53			357		(63)		(6	)		(69	)
(Losses)/gains recognised in profit/(loss) relating to assets and liabilities held at the end of the year		–			(16	)		–			(16	)	(18)		–			(18	)
At 1 January 2016		188			267			100			555		(105)		(5	)		(110	)
Total gains/(losses) recognised in profit/(loss):
– Fair value movements		18			4			–			22		(15)		–			(15	)
– Foreign exchange and other movements		(32	)		–			–			(32	)	32		(1	)		31
Gains recognised in other comprehensive income		–			–			26			26		–		–			–
Additions		4			–			25			29		(3)		–			(3	)
Sales		–			(7	)		(119	)		(126	)	–		–			–
Settlements		(75	)		–			–			(75	)	17		–			17
At 31 December 2016		103			264			32			399		(74)		(6	)		(80	)
(Losses)/gains recognised in profit/(loss) relating to assets and liabilities held at the end of the year		(14	)		4			–			(10	)	17		(1	)		16

Total gains or losses are included in ‘Net trading and other income’ (see Note 5).

Effect of changes in significant unobservable assumptions to reasonably possible alternatives (Level 3)

As discussed above, the fair value of financial instruments are, in certain circumstances, measured using valuation techniques that incorporate assumptions that are not evidenced by prices from observable current market transactions in the same instrument and are not based on observable market data and, as such require the application of a degree of judgement. Changing one or more of the inputs to the valuation models to reasonably possible alternative assumptions would change the fair values significantly. The following table shows the sensitivity of these fair values to reasonably possible alternative assumptions.

Favourable and unfavourable changes are determined on the basis of changes in the value of the instrument as a result of varying the levels of the unobservable input as described in the table below. The potential effects do not take into effect any hedged positions.

				Significant unobservable input							Sensitivity
					Assumption value						Favourable		Unfavourable
2017	Fair value £m			Assumption description	Range(1)		Weighted average		Shift		changes £m		changes £m
3. Derivative assets – Interest rate contracts:		6		Mean reversion		(2)% – 2%		0%		(2)%		1		(1	)
– Bermudan swaptions
5. Derivative assets – Equity and credit contracts:		31		HPI Forward growth rate		0% – 5%		2.42%		1%		10		(10	)
– Reversionary property derivatives				HPI Spot rate		n/a		773(2)		10%		8		(8	)
7. Derivative assets – Equity contracts:		5		HPI Forward growth rate		0% – 5%		2.32%		1%		1		(1	)
– Property-related options and forwards				HPI Spot rate		n/a		727(2)		10%		2		–
8. FVTPL – Loans and advances to customers:		64		HPI Forward growth rate		0% – 5%		2.57%		1%		2		(2	)
– Roll-up mortgage portfolio
9. FVTPL – Debt securities:		176		HPI Forward growth rate		0% – 5%		2.42%		1%		3		(3	)
– Reversionary property securities				HPI Spot rate		n/a		773(2)		10%		11		(11	)
10. Financial investments – AFS equity securities:		53		Contingent litigation risk		0% – 100%		35%		20%		6(3		(6)(3
– Unlisted equity shares
12. Derivative liabilities – Interest rate contracts:		(1	)	Mean reversion		(2)% – 2%		0%		(2)%		1		(1	)
– Bermudan swaptions
14. Derivative liabilities – Equity contracts:		(43	)	HPI Forward growth rate		0% – 5%		2.32%		1%		3		(3	)
– Property-related options and forwards				HPI Spot rate		n/a		727(2)		10%		7		(8	)
2016
3. Derivative assets – Interest rate contracts:		7		Mean reversion		(2)% – 2%		0%		(2)%		1		(1	)
– Bermudan swaptions
5. Derivative assets – Equity and credit contracts:		36		HPI Forward growth rate		0% – 5%		2.79%		1%		11		(11	)
– Reversionary property derivatives				HPI Spot rate		n/a		748(2)		10%		9		(9	)
6. Derivative assets – Credit contracts:		5		Probability of default		0% – 5%		0.39%		20%		1		(1	)
– Credit default swaps
7. Derivative assets – Equity contracts:		21		HPI Forward growth rate		0% – 5%		2.71%		1%		1		(1	)
– Property-related options and forwards				HPI Spot rate		n/a		702(2)		10%		1		(1	)
8. FVTPL – Loans and advances to customers:		63		HPI Forward growth rate		0% – 5%		2.84%		1%		2		(2	)
– Roll-up mortgage portfolio
9. FVTPL – Debt securities:		201		HPI Forward growth rate		0% – 5%		2.79%		1%		12		(12	)
– Reversionary property securities				HPI Spot rate		n/a		748(2)		10%		18		(18	)
10. Financial investments – AFS equity securities:		32		Contingent litigation risk		0% – 100%		48%		20%		7(3)		(7)(3)
– Unlisted equity shares
12. Derivative liabilities – Interest rate contracts:		(2	)	Mean reversion		(2)% – 2%		0%		(2)%		1		(1	)
– Bermudan swaptions
14. Derivative liabilities – Equity contracts:		(42	)	HPI Forward growth rate		0% – 5%		2.71%		1%		4		(4	)
– Property-related options and forwards				HPI Spot rate		n/a		702(2)		10%		8		(9	)

(1) The range of actual assumption values used to calculate the weighted average disclosure.

(2) Represents the HPI spot rate index level at 31 December 2017 and 2016.

(3) Gains and losses arising from changes in the fair value of securities classified as available-for-sale are recognised in ‘Other comprehensive income’; for all other assets and liabilities shown in the tables above, gains and losses arising from changes in their fair value are recognised in the Consolidated Income Statement.

No sensitivities are presented for Derivative assets – cross currency swaps (instrument 1), Derivative assets – securitisation cross currency swaps (instrument 2), Derivative assets –securitisation swaps (instrument 4) and the FVTPL – debt securities in issue (instrument 15) and related exchange rate and interest rate derivatives (instruments 1, 11 and 13) as the terms of these instruments are fully matched. As a result, any changes in the valuation of the debt securities in issue would be exactly offset by an equal and opposite change in the valuation of the exchange rate derivatives.

j) Maturities of financial liabilities and off-balance sheet commitments

The table below analyses the maturities of the undiscounted cash flows relating to financial liabilities and off-balance sheet commitments of the Santander UK group based on the remaining period to the contractual maturity date at the balance sheet date. Deposits by customers largely consist of retail deposits. There are no significant financial liabilities related to financial guarantee contracts. This table is not intended to show the liquidity of the Santander UK group.

	Group
2017	On demand £m		Not later than three months £m		Later than three months and not later than one year £m		Later than one year and not later than five years £m		Later than five years £m		Total £m
Liabilities
Deposits by banks		2,452		1,466		914		8,874		208		13,914
Deposits by customers		154,114		4,764		13,869		6,720		4,604		184,071
Trading liabilities		1,520		26,914		152		161		2,580		31,327
Derivative financial instruments:
– Held for trading		9		620		1,203		2,505		12,701		17,038
– Held for hedging(1)		6		11		27		420		1,300		1,764
Financial liabilities designated at fair value		7		545		222		789		814		2,377
Debt securities in issue		–		8,395		4,821		22,927		7,933		44,076
Subordinated liabilities		–		289		147		783		5,571		6,790
Total financial liabilities		158,108		43,004		21,355		43,179		35,711		301,357
Off-balance sheet commitments given		2,082		6,874		1,844		12,399		18,860		42,059
2016
Liabilities
Deposits by banks		2,366		916		677		5,833		96		9,888
Deposits by customers		145,810		4,996		13,420		11,077		2,390		177,693
Trading liabilities		3,535		10,042		21		602		1,474		15,674
Derivative financial instruments:
– Held for trading		41		904		1,569		4,352		15,494		22,360
– Held for hedging(1)		–		14		38		575		1,357		1,984
Financial liabilities designated at fair value		9		404		229		1,117		759		2,518
Debt securities in issue		–		9,189		7,010		21,889		14,775		52,863
Subordinated liabilities		–		450		554		1,739		6,054		8,797
Total financial liabilities		151,761		26,915		23,518		47,184		42,399		291,777
Off-balance sheet commitments given		1,692		5,128		2,642		23,584		8,570		41,616

(1) Comprises the derivatives liabilities for which contractual maturities are essential for an understanding of the timing of the cash flows.

As the above table is based on contractual maturities, no account is taken of call features related to subordinated liabilities. In addition, the repayment terms of debt securities may be accelerated in line with the covenants described in Note 26. Further, no account is taken of the possible early repayment of the Santander UK group’s mortgage-backed non-recourse finance which is redeemed by the Santander UK group as funds become available from redemptions of the residential mortgages. The Santander UK group has no control over the timing and amount of redemptions of residential mortgages.

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Offsetting Financial Assets and Liabilities

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Offsetting Financial Assets and Liabilities

38. OFFSETTING FINANCIAL ASSETS AND LIABILITIES

Financial assets and financial liabilities are reported on a net basis on the balance sheet only if there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis, or to realise the asset and settle the liability simultaneously. The following table shows the impact of netting arrangements on:

– All financial assets and liabilities that are reported net on the balance sheet

– All derivative financial instruments and repurchase agreements and other similar secured lending and borrowing agreements that are subject to enforceable master netting arrangements or similar agreements, but do not qualify for balance sheet netting.

The table identifies the amounts that have been offset in the balance sheet and also those amounts that are covered by enforceable netting arrangements (offsetting arrangements and financial collateral) but do not qualify for netting under the requirements described above.

For derivative contracts, the ‘Financial instruments’ column identifies financial assets and liabilities that are subject to set off under netting agreements, such as the ISDA Master Agreement or derivative exchange or clearing counterparty agreements, whereby all outstanding transactions with the same counterparty can be offset and close-out netting applied across all outstanding transaction covered by the agreements if an event of default or other predetermined events occur. Financial collateral refers to cash and non-cash collateral obtained, typically daily or weekly, to cover the net exposure between counterparties by enabling the collateral to be realised in an event of default or if other predetermined events occur.

For repurchase and reverse repurchase agreements and other similar secured lending and borrowing, the ‘Financial instruments’ column identifies financial assets and liabilities that are subject to set off under netting agreements, such as global master repurchase agreements and global master securities lending agreements, whereby all outstanding transactions with the same counterparty can be offset and close-out netting applied across all outstanding transactions covered by the agreements if an event of default or other predetermined events occur. Financial collateral typically comprises highly liquid securities which are legally transferred and can be liquidated in the event of counterparty default.

The Santander UK group engages in a variety of counterparty credit mitigation strategies in addition to netting and collateral arrangements. Therefore, the net amounts presented in the tables below do not purport to represent the Santander UK group’s actual credit exposure.

	Group
	Amounts subject to enforceable netting arrangements
	Effects of offsetting on balance sheet							Related amounts not offset
2017	Gross amounts £m		Amounts offset £m			Net amounts reported on the balance sheet £m		Financial  instruments  £m	Financial collateral(1) £m			Net amount £m		Assets not subject to enforceable netting arrangements(2) £m		Balance sheet total(3) £m
Assets
Derivative financial instruments		30,155		(10,479	)		19,676	(14,772)		(2,785	)		2,119		266		19,942
Reverse repurchase, securities borrowing & similar agreements:
– Trading assets		15,224		(6,354	)		8,870	(355)		(8,515	)		–		–		8,870
– Loans and advances to banks		2,464		–			2,464	–		(2,464	)		–		–		2,464
Loans and advances to customers and banks(4)		6,121		(1,459	)		4,662	–		–			4,662		198,291		202,953
		53,964		(18,292	)		35,672	(15,127)		(13,764	)		6,781		198,557		234,229
Liabilities
Derivative financial instruments		27,839		(10,479	)		17,360	(14,772)		(1,951	)		637		253		17,613
Repurchase, securities lending & similar agreements:
– Trading liabilities		31,858		(6,354	)		25,504	(355)		(25,149	)		–		–		25,504
– Deposits by banks and customers		1,578		–			1,578	–		(1,578	)		–		–		1,578
Deposits by customers and banks(4)		8,440		(1,459	)		6,981	–		–			6,981		188,873		195,854
		69,715		(18,292	)		51,423	(15,127)		(28,678	)		7,618		189,126		240,549
2016
Assets
Derivative financial instruments		34,125		(8,819	)		25,306	(17,417)		(2,384	)		5,505		165		25,471
Reverse repurchase, securities borrowing & similar agreements:
– Trading assets		12,607		(1,895	)		10,712	(2,113)		(8,599	)		–		–		10,712
– Loans and advances to banks		1,462		–			1,462	–		(1,462	)		–		–		1,462
Loans and advances to customers and banks(4)		5,494		(1,491	)		4,003	–		–			4,003		198,621		202,624
		53,688		(12,205	)		41,483	(19,530)		(12,445	)		9,508		198,786		240,269
Liabilities
Derivative financial instruments		31,635		(8,819	)		22,816	(17,417)		(2,565	)		2,834		287		23,103
Repurchase, securities lending & similar agreements:
– Trading liabilities		10,693		(1,895	)		8,798	(2,113)		(6,685	)		–		–		8,798
– Deposits by banks and customers		2,886		–			2,886	–		(2,886	)		–		–		2,886
Deposits by customers and banks(4)		6,643		(1,491	)		5,152	–		–			5,152		178,903		184,055
		51,857		(12,205	)		39,652	(19,530)		(12,136	)		7,986		179,190		218,842

(1) Financial collateral is reflected at its fair value, but has been limited to the net balance sheet exposure so as not to include any over-collateralisation.

(2) This column includes contractual rights of set-off that are subject to uncertainty under the laws of the relevant jurisdiction.

(3) The balance sheet total is the sum of ‘Net amounts reported on the balance sheet’ that are subject to enforceable netting arrangements and ‘Amounts not subject to enforceable netting arrangements’.

(4) The amounts offset within loans and advances to customers/banks or deposits by customers/banks relate to offset mortgages which are classified as either and that are subject to netting.

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Ring-Fencing

12 Months Ended

Dec. 31, 2017

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Ring-Fencing

39. RING-FENCING

Regulation

The Financial Services (Banking Reform) Act 2013 inserted provisions into the Financial Services and Markets Act 2000 (FSMA) and related legislation (the Banking Reform Legislation) requiring the Santander UK group amongst a number of other UK banking groups, to operationally and legally separate certain retail banking activities from certain wholesale or investment banking activities by 1 January 2019. This is known as ‘ring-fencing’. The Banking Reform Legislation specifies:

– Certain banking services or activities, the performance of which will cause a UK bank to be a ring-fenced bank (RFB); and

– Certain banking services and activities, along with certain types of credit risk exposure or off-balance sheet items, which an RFB will be prohibited from carrying on or incurring (prohibited business).

As a result, under the ring-fencing regime, an RFB is only permitted to carry on banking services or activities that are not prohibited (permitted business).

Proposed Santander UK group model

Under the model chosen by the Santander UK group to implement its ring-fencing plan:

– Santander UK plc will be the primary RFB within an RFB sub-group, will continue to be a subsidiary of Santander UK Group Holdings plc, will continue to accept deposits from the public and will be the holding company of the Santander UK RFB sub-group. Cater Allen Limited will also be an RFB and part of the Santander UK RFB sub-group. Neither Santander UK plc nor Cater Allen Limited will conduct prohibited business;

– The business of the Crown Dependency branches (Jersey and Isle of Man) of Santander UK plc will be transferred outside the Santander UK plc group pursuant to transfer schemes effected under relevant Jersey and Isle of Man law;

– Abbey National Treasury Services plc will become a wholly-owned direct subsidiary of Santander UK Group Holdings plc, and will be emptied of all material assets, save for a small pool of residual assets. The prohibited business of Abbey National Treasury Services plc, which principally includes our derivatives business with financial institutions, certain corporates and elements of our short term markets business, will transfer to Banco Santander SA or its London branch (SLB). The majority of the permitted business of Abbey National Treasury Services plc will transfer to Santander UK plc, with a small amount of the permitted business of Abbey National Treasury Services plc transferring to SLB. The branch of Abbey National Treasury Services plc in the US will be closed by the end of December 2018; and

– Except for the business of the Crown Dependency branches, SLB will carry on all business that constitutes prohibited business, save for a small pool of assets in Abbey National Treasury Services plc.

Implementation plan

The Santander UK group is on track to enable the ring-fencing structure to be implemented in advance of the regulatory deadline.

On 16 October 2017, Santander UK plc, Abbey National Treasury Services plc, Santander UK Group Holdings plc and Banco Santander S.A. entered into a ring-fencing transfer scheme (RFTS) which formalised the business transfers required to implement the planned ring-fenced structure. These business transfers will be made at book value which represents appropriate and reasonable compensation and a fair value for the Santander UK group.

The RFTS is a transfer scheme under Part VII of FSMA that enables UK banks to implement the ring-fencing requirements. This is a court process that requires (i) the PRA to approve the scheme (in consultation with the FCA); (ii) the appropriate regulatory authority in respect of each transferee to provide a certificate of adequate financial resources in relation to that transferee; and (iii) an independent expert (approved by the PRA, after consultation with the FCA) to provide a scheme report stating whether any adverse effect on persons affected by the scheme is likely to be greater than is reasonably necessary to achieve the ring-fencing purposes of the scheme.

For the prohibited business transfers, additional approvals will be required from the Spanish Ministry of Economy, the Bank of Spain and the European Central Bank. In the case of the Crown Dependency branches, approvals will be required from either the Jersey Financial Services Commission and the Royal Court of Jersey, or the Isle of Man Financial Services Authority and the Isle of Man High Court of Justice.

In January 2018, the PRA approved the application to the court, and in February 2018 the court approved the communication of the proposed scheme to relevant stakeholders to allow them to express their views in court in relation to the scheme. However, until final court approvals have been obtained, which is not expected until the end of the second quarter of 2018, there remains uncertainty regarding the final ring-fenced structure of the Santander UK group.

The RFTS will also unwind Cross Guarantees, releasing each of Santander UK plc and Abbey National Treasury Services plc from all liabilities under those guarantees, with effect from 1 January 2019.

In addition to the transfers above, a small number of business transfers will be effected in advance where court or regulator approvals are not required. Negotiations with counterparties are ongoing, and until those negotiations are complete, uncertainty remains about the mechanisms by which those transfers will be effected.

As a result of these uncertainties, management considers that no transfers have reached the stage of being regarded as highly probable and, as such, assets and liabilities associated with those proposed transfers have not been classified as held for sale at 31 December 2017.

Furthermore, the management of certain banking services or activities, typically short term markets activities, will be transferred by concurrently running-off existing business in Abbey National Treasury Services plc and writing new business in Santander UK plc or SLB.

Balance sheet impact

As a result of ring-fencing, it is intended that all prohibited business will be transferred to SLB, save for the business of the Crown Dependency branches which will be transferred outside the Santander UK plc group, and a small pool of residual assets that will remain in Abbey National Treasury Services plc. Santander UK Group Holdings plc will also acquire 100% of the ordinary share capital of Abbey National Treasury Services plc from Santander UK plc. At 31 December 2017:

– The prohibited business that is expected to move to SLB mainly comprised:

– A small number of the trading assets of £31bn and trading liabilities of £31bn that related to prohibited business.

– £15bn of the derivative assets of £20bn and £17bn of the derivative liabilities of £18bn which related to the derivatives business with financial institutions

– A small amount (less than £1bn) of loans and advances to customers of £8bn relating to prohibited corporate loans.

– The business of the Crown Dependency branches mainly comprised customer deposits of £6bn.

– The small pool of residual business that it is anticipated will not be capable of transfer mainly comprised net assets of less than £1bn

In addition, almost all of the permitted business of Abbey National Treasury Services plc will move to Santander UK plc. At 31 December 2017, this business mainly comprised:

– All the remaining non-prohibited trading assets of £31bn and trading liabilities of £31bn that related to the permitted elements of Abbey National Treasury Services plc’s short term markets business.

– All the remaining loans and advances to customers of Abbey National Treasury Services plc of £8bn that related to permitted corporate loans.

– £1bn of the derivative assets of £20bn and £1bn of the derivative liabilities of £18bn which related to the derivatives business with financial institutions.

– Most of the £1bn of financial liabilities designated at fair value and £6bn of debt securities in issue that related to short term funding in Abbey National Treasury Services plc.

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Events After the Balance Sheet Date

12 Months Ended

Dec. 31, 2017

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Events After the Balance Sheet Date

40. EVENTS AFTER THE BALANCE SHEET DATE

There have been no significant events between 31 December 2017 and the date of approval of these financial statements which would require a change to or additional disclosure in the financial statements.

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Changes to Comparative Data

12 Months Ended

Dec. 31, 2017

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Changes to Comparative Data

41. CHANGES TO COMPARATIVE DATA

The following sets out changes to comparative data from those presented in our 2015 Form 20-F.

The tables below set out the changes to comparative data from those presented in our 2015 Form 20-F due to the following:

– In the fourth quarter of 2017, the basis of presentation of the segmental information was changed, and the prior period restated, to reflect a change in the internal transfer of revenues and costs from the Corporate Centre to the three customer business segments. This enables a more targeted apportionment of capital and other resources in line with the strategy of each segment.

– In the fourth quarter of 2016, certain customers were transferred between our Retail Banking and Commercial Banking business segments, in line with how we now manage our customers. Small business customers with turnover up to £6.5m per annum (previously up to £250,000) are now served as business banking customers in Retail Banking. The balances transferred from Commercial Banking to Retail Banking were £2.2bn in customer loans and £3.2bn in customer deposits at 31 December 2016 (2015: £2.3bn and £3.0bn, respectively). The segmental analyses for Retail Banking and Commercial Banking have been adjusted to reflect these changes for prior years.

– As described in Note 1, during 2017 management changed the accounting policy for business combinations between entities under common control. For the Santander UK group, the effect of changing the accounting policy is to reduce goodwill by £631m and reduce retained earnings by the same amount.

Consolidated Statement of Changes in Equity

For the year ended 31 December 2015

	Retained earnings £m			Total shareholders’ equity £m			Total equity £m
At 1 January 2015 – as reported in 2015		4,056			14,193			14,193
Adjustment		(631	)		(631	)		(631	)
At 1 January 2015 – as reported in 2017		3,425			13,562			13,562
At 31 December 2015 – as reported in 2015		4,679			15,524			15,659
Adjustment		(631	)		(631	)		(631	)
At 31 December 2015 – as reported in 2017		4,048			14,893			15,028

Note 2. Segments

	Retail Banking									Commercial Banking
2015	As reported in 2017 £m			Adjustment £m			As reported in 2015 £m			As reported in 2017 £m			Adjustment £m			As reported in 2015 £m
Net interest income		3,097			112			2,985			399			(61	)		460
Non-interest income		526			5			521			91			(18	)		109
Total operating income		3,623			117			3,506			490			(79	)		569
Operating expenses before impairment losses, provisions and charges		(1,898	)		(115	)		(1,783	)		(217	)		115			(332	)
Impairment (losses)/releases on loans and advances		(90	)		(14	)		(76	)		(25	)		14			(39	)
Provisions for other liabilities and (charges)/releases		(728	)		(1	)		(727	)		(23	)		1			(24	)
Total operating impairment losses, provisions and (charges)/releases		(818	)		(15	)		(803	)		(48	)		15			(63	)
Profit before tax		907			(13	)		920			225			51			174
Revenue from external customers		4,529			94			4,435			626			(94	)		720
Inter-segment revenue		(906	)		23			(929	)		(136	)		(15	)		(151	)
Total operating income		3,623			117			3,506			490			(79	)		569
Customer loans		167,093			2,263			164,830			18,680			(2,263	)		20,943
Total assets		173,479			1,632			171,847			18,680			(2,263	)		20,943
Customer deposits		140,358			3,026			137,332			15,076			(3,026	)		18,102
Total liabilities		143,157			3,026			140,131			15,076			(3,026	)		18,102

	Global Corporate Banking									Corporate Centre									Total
2015	As reported in 2017 £m			Adjustment £m			As reported in 2015 £m			As reported in 2017 £m			Adjustment £m			As reported in 2015 £m			As reported in 2017 £m			Adjustment £m			As reported in 2015 £m
Net interest income		52			(20	)		72			27			(31	)		58			3,575			–			3,575
Non-interest income		303			(4	)		307			78			17			61			998			–			998
Total operating income		355			(24	)		379			105			(14	)		119			4,573			–			4,573
Operating expenses before impairment losses, provisions and (charges)/releases		(287	)		–			(287	)		2			–			2			(2,400	)		–			(2,400	)
Impairment releases/(losses) on loans and advances		13			–			13			36			–			36			(66	)		–			(66	)
Provisions for other liabilities and (charges)/releases		(14	)		–			(14	)		3			–			3			(762	)		–			(762	)
Total operating impairment losses, provisions and (charges)/releases		(1	)		–			(1	)		39			–			39			(828	)		–			(828	)
Profit before tax		67			(24	)		91			146			(14	)		160			1,345			–			1,345
Revenue from external customers		437			–			437			(1,019	)		–			(1,019	)		4,573			–			4,573
Inter-segment revenue		(82	)		(24	)		(58	)		1,124			(14	)		1,138			–			–			–
Total operating income		355			(24	)		379			105			(14	)		119			4,573			–			4,573
Customer loans		5,470			–			5,470			7,391			–			7,391			198,634			–			198,634
Total assets		36,593			–			36,593			52,023			–			52,023			280,775			(631	)		281,406
Customer deposits		3,013			–			3,013			3,808			–			3,808			162,255			–			162,255
Total liabilities		32,290			–			32,290			75,224			–			75,224			265,747			–			265,747

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Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2017

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Basis of preparation

Basis of preparation

These financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to 31 December each year. The financial statements have been prepared on the going concern basis using the historical cost convention, as modified by the revaluation of available-for-sale financial assets, financial assets and financial liabilities held at fair value through profit or loss and all derivative contracts, assets held for sale, retirement benefit obligations and cash-settled share-based payments, where applicable. An assessment of the appropriateness of the adoption of the going concern basis of accounting is disclosed in the Directors’ statement of going concern set out in the Directors’ Report.

Compliance with International Financial Reporting Standards

The Santander UK group Consolidated Financial Statements have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (IASB), including interpretations issued by the IFRS Interpretations Committee (IFRS IC) of the IASB (together IFRS). The Santander UK group has also complied with its legal obligation to comply with International Financial Reporting Standards as adopted by the European Union as there are no applicable differences between the two frameworks for the periods presented.

The Company financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union and as applied in accordance with the provision of the UK Companies Act 2006.

Disclosures required by IFRS 7 ‘Financial Instruments: Disclosure’ relating to the nature and extent of risks arising from financial instruments, and IAS 1 ‘Presentation of Financial Statements’ relating to objectives, policies and processes for managing capital, can be found in the Risk review which form an integral part of these financial statements.

The Santander UK group designates certain financial liabilities at fair value through profit or loss where they contain embedded derivatives or where associated derivatives used to economically hedge the risk are held at fair value. Following the endorsement of IFRS 9 ‘Financial Instruments’ by the EU in December 2016, the Santander UK group has elected to early apply from 1 January 2017 the requirements for the presentation of gains and losses on such financial liabilities relating to own credit in other comprehensive income without applying the other requirements in IFRS 9. The cumulative own credit adjustment component of the cumulative fair value adjustment on financial liabilities designated at fair value through profit or loss was £18m (net of tax) and is included in opening retained earnings.

Change in accounting policy

During the year, management changed the accounting policy for business combinations between entities under common control. Previously, the Santander UK group applied acquisition accounting under IFRS 3 where the acquisition was for cash consideration. Where the acquisition was for non-cash consideration, the acquisition was accounted for in a manner consistent with group reconstruction relief under the UK GAAP (merger accounting). Management has elected to account for all business combinations between entities under common control at their book values in the acquired entity by including the acquired entity’s results from the date of the business combinations and not restating comparatives. Management believes changing to this basis of accounting is more relevant to accounting for business combinations between entities under common control. Applying acquisition accounting to such transactions where all of the businesses are ultimately controlled by the same party both before and after the business combinations is seen as being less relevant as there are no parties external to Banco Santander SA. For the Santander UK group, the effect of changing the accounting policy is to reduce goodwill by £631m and reduce retained earnings by the same amount, this amount representing the difference between the purchase price and the aggregate book value of the assets and liabilities of Santander Cards Limited, Santander Cards (UK) Limited (and its subsidiaries), Santander Cards Ireland Limited and Santander Consumer (UK) plc, which were acquired from Banco Santander SA in 2010. Each of the comparative periods presented has been restated to reflect the change in accounting policy. The application of the change in accounting policy did not result in any material change to the accounting for the acquisition of Alliance & Leicester plc from Banco Santander SA in 2009.

Future accounting developments

As at 31 December 2017, the Santander UK group has not yet adopted the following significant new or revised standards and interpretations, and amendments thereto, which have been issued but which are not yet effective for the Santander UK group:

a) IFRS 9 ‘Financial Instruments’ (IFRS 9) – In July 2014, the International Accounting Standards Board (IASB) approved IFRS 9 to replace IAS 39 ‘Financial Instruments: Recognition and Measurement’.

IFRS 9 sets out the requirements for recognition and measurement of financial instruments. The main new developments of the standard are discussed below.

Classification and measurement of financial assets and financial liabilities: Under IFRS 9, financial assets are classified on the basis of the business model within which they are held and their contractual cash flow characteristics. These factors determine whether the financial assets are measured at amortised cost, fair value through other comprehensive income or fair value through profit or loss. For many financial assets, the classification and measurement outcomes are similar to IAS 39. However, under IFRS 9, embedded derivatives are not separated from host financial assets and equity securities are measured at fair value either through profit or loss or, in certain circumstances, an irrevocable election may be made to present fair value movements in other comprehensive income. The requirements for the classification and measurement of financial liabilities were carried forward unchanged from IAS 39, however, the requirements relating to the fair value option for financial liabilities were changed to address own credit risk and, in particular, the presentation of gains and losses within other comprehensive income. For the Santander UK group:

– The vast majority of financial assets which are classified as loans and receivables or held-to-maturity investments under IAS 39 (including certain debt securities) will continue to be measured at amortised cost under IFRS 9;

– Most debt securities classified as available-for-sale financial assets will be measured at fair value through other comprehensive income, with some being measured at fair value through profit or loss;

– Treasury and other eligible bills classified as available-for-sale financial assets will be measured at amortised cost or fair value through other comprehensive income depending upon the business model in which they are held; and

– Certain loans currently designated at fair value through profit or loss under IAS 39 may be reclassified to amortised cost where they are held within a business model whose objective is to hold the assets to collect contractual cash flows and those cash flows represent solely payments of principal and interest on the principal outstanding.

Impairment: IFRS 9 introduces fundamental changes to the impairment of financial assets measured at amortised cost or at fair value through other comprehensive income, lease receivables and certain commitments to extend credit and financial guarantee contracts. It is no longer necessary for losses to be incurred before credit losses are recognised. Instead, under IFRS 9, an entity always accounts for expected credit losses (ECLs), and any changes in those ECLs. The ECL approach must reflect both current and forecast changes in macroeconomic data over a horizon that extends from 12 months to the remaining life of the asset if a borrower’s credit risk is deemed to have deteriorated significantly at the reporting date compared to the origination date. The estimate of ECLs, should reflect an unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes and considering reasonable and supportable information at the reporting date. Similar to the current incurred credit loss provisioning approach, management will exercise judgement as to whether additional adjustments are required in order to adequately reflect possible events or current conditions that could affect credit risk.

For financial assets, an ECL is the current value of the difference between the contractual cash flows owed to the entity and the cash flows which the entity expects to receive. For undrawn loan commitments, an ECL is the current value of the difference between the contractual cash flows owed to the entity and the cash flows which the entity expects to receive if the loan is drawn.

An assessment of each facilities’ credit risk profile will determine whether they are to be allocated to one of three stages:

– Stage 1: when it is deemed there has been no significant increase in credit risk since initial recognition, a loss allowance equal to a 12-month ECL – i.e. the proportion of lifetime expected losses resulting from possible default events within the next 12-months – will be applied;

– Stage 2: when it is deemed there has been a significant increase in credit risk since initial recognition, but no credit impairment has materialised, a loss allowance equal to the lifetime ECL – i.e. lifetime expected loss resulting from all possible defaults throughout the residual life of a facility – will be applied; and

– Stage 3: when the facility is considered credit impaired, a loss allowance equal to the lifetime ECL will be applied. Similar to incurred losses under IAS 39, objective evidence of credit impairment is required.

The assessment of whether a significant increase in credit risk has occurred since initial recognition involves the application of both quantitative measures and qualitative factors, requires management judgement and is a key aspect of the IFRS 9 methodology.

Hedge accounting: The general hedge accounting requirements align more closely with risk management practices and establish a more principle-based approach thereby allowing hedge accounting to be applied to a wider variety of hedging instruments and risks. Macro hedge accounting is being dealt with as a separate project. Until such time as that project is complete, and to remove any potential conflict between any existing macro hedge accounting undertaken under IAS 39 and the new general hedge accounting requirements of IFRS 9, entities can choose to continue to apply the existing hedge accounting requirements in IAS 39. Santander UK group has decided to continue IAS 39 hedge accounting and consequently, there are no changes being implemented to hedge accounting policies and practices.

Transition and impact: IFRS 9 has been endorsed for use in the European Union. The mandatory effective date of IFRS 9 is 1 January 2018. The classification, measurement and impairment requirements will be applied retrospectively by adjusting the opening balance sheet at the date of initial application. There is no requirement to restate comparative information.

For the Santander UK group, the application of IFRS 9 decreases shareholders’ equity at 1 January 2018 by £192m (net of tax), comprised of a £49m decrease arising from the application of the new classification and measurement requirements for financial assets (as explained above), and a c£211m decrease arising from the application of the new ECL impairment methodology, these amounts being partially offset by the recognition of a deferred tax asset of £68m.

These impacts take into account the narrow-scope amendments made to IFRS 9 by the IASB in October 2017 entitled ‘Prepayment Features with Negative Compensation (Amendments to IFRS 9)’. These amendments which are not effective until annual periods beginning on or after 1 January 2019 can be adopted early. The amendments permit some prepayable financial assets with negative compensation to be measured at amortised cost that, but for the amendment, would have been measured at fair value through profit or loss. Negative compensation arises where the contractual terms permit the borrower to prepay the instrument before its contractual maturity, but the prepayment amount could be less than unpaid amounts of principal and interest. To qualify for amortised cost measurement, the negative compensation must be “reasonable compensation” for early termination of the contract. The amendments are awaiting EU endorsement.

As referred to in the ‘Compliance with International Financial Reporting Standards’ section above, the Santander UK group elected to early apply from 1 January 2017 the requirements for the presentation of gains and losses on certain financial liabilities relating to own credit in other comprehensive income. This presentational change had no impact on shareholders’ equity.

Recommendations of the Enhanced Disclosure Task Force (EDTF) with respect to Expected Credit Losses

The following additional information is provided in accordance with the recommendations of the EDTF in their 30 November 2015 report entitled ‘Impact of Expected Credit Loss Approaches on Bank Risk Disclosures’ regarding applying the key principles within an expected credit loss (ECL) approach and the risk management organisation, processes and key functions.

a) How Santander UK interprets and expects to apply the key principles within an ECL approach

In forecasting ECLs under IFRS 9, Santander UK has leveraged retail and corporate credit risk models used for underwriting, portfolio management and regulatory capital. These credit risk measurement tools principally capture idiosyncratic (customer and facility) risk drivers and when transformed into probability of default (PD), exposure at default (EAD) and loss given default (LGD) estimates, form the basis for quantifying ECL.

Outputs from these models have been incorporated into a new modelling framework developed for IFRS 9, which combines other factors that explicitly capture systemic effects (relating to changes in credit conditions) and the maturity of the exposure. Systemic effects are accounted for by using the outputs of existing macroeconomic stress testing models as factors in the ECL calculation, while the addition of time related factors (such as time since last rating) enable the forecasting of risk, for each individual loan, to be extended over the lifetime of the exposure and reflect economic forecasts.

The ability to forecast beyond 12 months is further supplemented by the introduction of a new survival rate (SR) model which predicts the likelihood that an exposure will still be open and not defaulted at any point during its remaining life (after making allowance for early redemptions).

The calculation of ECL is based on either possible defaults within a period of 12 months following the reporting date (12-month ECL) or defaults arising throughout the residual life of the exposure (Lifetime ECL). The forecast horizon will be determined according to a stage allocation assessment, whereby an underlying facility is assigned to one of three stages as set out above. The assessment of whether there has been significant increase in credit risk since initial recognition, for the purpose of moving exposures between stages, will incorporate a number of quantitative, qualitative and days past due ‘backstop’ tests. The determination incorporates a measure of the change in default risk between initial recognition and the reporting date.

For each term loan the output of the PD, EAD, LGD and SR models are multiplied together to derive a measure of ECL for each month to the end of the contractual period. The resulting ECL forecast is then discounted using the effective interest rate to reflect the time value of money. Summing each monthly ECL to the end of the contractual term gives the lifetime ECL, while the 12-month ECL is calculated by summing the first 12-monthly ECL values only. For revolving credit facilities the lifetime period is determined to be the point at which either the SR model predicts all exposures have closed or the ECL value is zero through the effects of discounting.

ECLs will be based on macroeconomic inputs reflecting a set of scenarios that will incorporate, as a minimum; a base scenario, an upside scenario and a downside scenario based on various macroeconomic variables, e.g. GDP, house prices, unemployment rates, etc. Each scenario will be assigned a probability weighting that reflects the likelihood of occurrence. The resulting ECL for each scenario will be combined to give an unbiased, probability-weighted ECL value.

b) Santander UK’s governance processes over ECL

A separate IFRS 9 Steering Group, was set up to manage the implementation of IFRS 9. With respect to ECL, a number of cross-functional working groups were mobilised to opine and make proposals on model design and integration, technical accounting and implementation. Approvals and ratification were sought at a series of Management Committees and Forums, whilst key risks, assumptions, issues, and dependencies, aligned to material portfolios/key design considerations, have been tracked at the Steering Group.

ECL impairment models are sensitive to changes in credit conditions, and reflect various management judgements that give rise to measurement uncertainty. The governance framework for generating and reviewing the scenarios and weights leverages Santander UK’s existing processes to assess risk appetite and manage stress testing, which incorporate the views of subject matter experts across numerous business functions and a comparison with external benchmarks prior to running forecasting models. The following fora review provision drivers and ensure that management judgements remain appropriate:

– The Model Risk Control Forum, which reviews and approves required changes to ECL models;

– The Asset and Liability Committee is responsible for reviewing and approving the economic scenarios and probability weights used to calculate forward-looking scenarios;

– The Credit Provisions Forum reviews management judgements and approves IFRS 9 ECL impairment allowances; and

– The Board Audit Committee reviews and challenges the appropriateness of the estimates and judgements made by management.

b) IFRS 15 ‘Revenue from Contracts with Customers’ (IFRS 15) – In May 2014, the IASB issued IFRS 15. The effective date of IFRS 15 is 1 January 2018. The standard establishes a principles-based approach for revenue recognition and introduces the concept of recognising revenue for performance obligations as they are satisfied. Revenue relating to lease contracts, insurance contracts and financial instruments is outside the scope of IFRS 15. For Santander UK group’s fee and commission income, which is within the scope of the standard, income is recognised as services are provided and this continues under the performance obligation approach in IFRS 15. There have been no significant changes in the recognition of in scope income and, consequently, IFRS 15 has no material impact for the Santander UK group.

c) IFRS 16 ‘Leases’ (IFRS 16) – In January 2016, the IASB issued IFRS 16. The standard is effective for annual periods beginning on or after 1 January 2019. Earlier adoption is permitted for entities that apply IFRS 15 at or before the date of initial application of IFRS 16. IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure for both lessees and lessors. For lessee accounting, IFRS 16 introduces a single lessee accounting model and requires a lessee to recognise a right-of-use asset representing its right to use the underlying leased asset and a lease liability representing its obligation to make lease payments for all leases with a term of more than 12 months, unless the underlying asset is of low value. For lessor accounting, IFRS 16 substantially carries forward the lessor accounting requirements from the existing leasing standard (IAS 17) and a lessor continues to classify its leases as operating leases or finance leases and to account for those two types of leases differently. At the date of publication of these Consolidated Financial Statements the impact of the standard is currently being assessed and it is not yet practicable to quantify the effect of IFRS 16 on these Consolidated Financial Statements. Details of existing operating lease commitments in respect of leases where the Santander UK group is lessee and that are likely to come on the balance sheet under IFRS 16 are set out in Note 29.

Comparative information

As required by US public company reporting requirements, these financial statements include two years of comparative information for the consolidated income statement, consolidated statement of comprehensive income, consolidated statement of changes in equity, consolidated statement of cash flows and related Notes.

Consolidation

Consolidation

a) Subsidiaries

The Consolidated Financial Statements incorporate the financial statements of Santander UK plc and entities (including structured entities) controlled by the Company and its subsidiaries. Control is achieved where the Company has (i) power over the investee; (ii) is exposed, or has rights, to variable returns from its involvement with the investee; and (iii) has the ability to use its power to affect its returns. The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above.

When the Company has less than a majority of the voting rights of an investee, it has power over the investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The Company considers all relevant facts and circumstances in assessing whether or not the Company’s voting rights in an investee are sufficient to give it power, including:

– The size of the Company’s holding of voting rights relative to the size and dispersion of holdings of the other vote holders

– Potential voting rights held by the Company, other vote holders or other parties

– Rights arising from other contractual arrangements

– Any additional facts and circumstances that indicate that the Company has, or does not have, the current ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders’ meetings.

Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Specifically, the results of a subsidiary acquired or disposed of during the year are included in the consolidated income statement and the consolidated statement of comprehensive income from the date the Company gains control until the date when the Company ceases to control the subsidiary. Inter-company transactions, balances and unrealised gains on transactions between Santander UK group companies are eliminated; unrealised losses are also eliminated unless the cost cannot be recovered.

The acquisition method of accounting is used to account for the acquisition of subsidiaries which meet the definition of a business. The cost of an acquisition is measured at the fair value of the assets given up, shares issued or liabilities undertaken at the date of acquisition. Acquisition related costs are expensed as incurred. The excess of the cost of acquisition, as well as the fair value of any interest previously held, over the fair value of the Santander UK group’s share of the identifiable net assets of the acquired subsidiary, associate or business at the date of acquisition is recorded as goodwill. When the Santander UK group loses control of a subsidiary, the profit or loss on disposal is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), less liabilities of the subsidiary and any non-controlling interests. Amounts previously recognised in other comprehensive income in relation to the subsidiary are accounted for (i.e. reclassified to profit or loss or transferred directly to retained earnings) in the same manner as would be required if the relevant assets or liabilities are disposed of. The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under IAS 39 ‘Financial Instruments: Recognition and Measurement’ or, when applicable, the costs on initial recognition of an investment in an associate or jointly controlled entity.

Business combinations between entities under common control (i.e. fellow subsidiaries of Banco Santander SA (the ultimate parent)) are outside the scope of IFRS 3 – ‘Business Combinations’, and there is no other guidance for such transactions under IFRS. The Santander UK group elects to account for business combinations between entities under common control at their book values in the acquired entity by including the acquired entity’s results from the date of the business combination and not restating comparatives. Reorganisations of entities within the Santander UK group are accounted for at their book values.

Interests in subsidiaries are eliminated during the preparation of the Consolidated Financial Statements. Interests in subsidiaries in the Company unconsolidated financial statements are held at cost subject to impairment.

b) Joint ventures

Joint ventures are joint arrangements whereby the parties that have joint control of the arrangement have rights to the net assets of the joint arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control. Accounting policies have been aligned to the extent there are differences from the Santander UK group’s policies.

The Santander UK group’s investments in joint ventures are accounted for by the equity method of accounting and are initially recorded at cost and adjusted each year to reflect the Santander UK group’s share of the post-acquisition results of the joint venture. When the Santander UK group’s share of losses of a joint venture exceed the Santander UK group’s interest in that joint venture, the Santander UK group discontinues recognising its share of further losses. Additional losses are recognised only to the extent that the Santander UK group has incurred legal or constructive obligations or made payments on behalf of the joint venture.

Foreign currency translation

Foreign currency translation

Items included in the financial statements of each entity (including foreign branch operations) in the Santander UK group are measured using the currency that best reflects the economic substance of the underlying events and circumstances relevant to that entity (the functional currency). The Consolidated Financial Statements are presented in sterling, which is the functional currency of the Company.

Income statements and cash flows of foreign entities are translated into the Santander UK group’s presentation currency at average exchange rates for the year and their balance sheets are translated at the exchange rates ruling on 31 December.

Exchange differences arising from the translation of the net investment in foreign entities are recognised in other comprehensive income. When a foreign entity is sold, such exchange differences are recognised in the income statement as part of the gain or loss on sale.

Foreign currency transactions are translated into the functional currency of the entity involved at the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement unless recognised in other comprehensive income in connection with a cash flow hedge. Non-monetary items denominated in a foreign currency measured at historical cost are not retranslated. Exchange rate differences arising on non-monetary items measured at fair value are recognised in the consolidated income statement except for differences arising on available-for-sale equity securities which are recognised in other comprehensive income.

Revenue recognition

Revenue recognition

a) Interest income and expense

Interest income on financial assets that are classified as loans and receivables, held-to-maturity investments or available-for-sale securities, and interest expense on financial liabilities other than those at fair value through profit or loss are determined using the effective interest method. The effective interest rate is the rate that discounts the estimated future cash payments or receipts over the expected life of the instrument or, when appropriate, a shorter period, to the net carrying amount of the financial asset or financial liability. When calculating the effective interest rate, the future cash flows are estimated after considering all the contractual terms of the instrument excluding future credit losses. The calculation includes all amounts paid or received by the Santander UK group that are an integral part of the overall return, direct incremental transaction costs related to the acquisition, issue or disposal of the financial instrument and all other premiums or discounts. Interest income on assets classified as loans and receivables and available-for-sale, interest expense on liabilities classified at amortised cost, and interest income and expense on hedging derivatives are recognised in interest and similar income and interest expense and similar charges in the income statement.

In accordance with IFRS, the Santander UK group recognises interest income on assets after they have been written down as a result of an impairment loss. Interest continues to be accrued on all loans and the element of interest that is not anticipated to be recovered is provided for. Interest income on impaired financial assets is recognised using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss.

b) Fee and commission income and expense

Fees and commissions that are not an integral part of the effective interest rate are recognised when the service is provided, or on the performance of a significant act. For retail and corporate products, fee and commission income consists principally of collection services fees, commission on foreign currencies, commission and other fees received from retailers for processing credit card transactions, fees received from other credit card issuers for providing cash advances for their customers through the Santander UK group’s branch and ATM networks, annual fees payable by credit card holders and fees for non-banking financial products. Revenue from these income streams is recognised when the service is provided.

For insurance products, fee and commission income consists principally of commissions earned on the sale of building and contents insurance, life protection insurance and payment cover insurance. Revenue from these income streams is recognised when the service is provided.

Fee and commission income which forms an integral part of the effective interest rate of a financial instrument (e.g. certain loan commitment fees) is recognised as an adjustment to the effective interest rate and recorded in ‘Interest income’.

c) Dividend income

Except for equity securities classified as trading assets or financial assets held at fair value through profit or loss, described below, dividend income is recognised when the right to receive payment is established. This is the ex-dividend date for equity securities.

d) Net trading and other income

Net trading and other income comprises all gains and losses from changes in the fair value of financial assets and liabilities held at fair value through profit or loss (including financial assets and liabilities held for trading, trading derivatives and designated as fair value through profit or loss), together with related interest income, expense, dividends and changes in fair value of any derivatives managed in conjunction with these assets and liabilities. Changes in fair value of derivatives in a fair value hedging relationship are also recognised in net trading and other income. Net trading and other income also include income from operating lease assets, and profits/(losses) arising on the sales of property, plant and equipment and subsidiary undertakings.

Borrowing costs

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, including computer software, which are assets that necessarily take a substantial period of time to develop for their intended use, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use. All other borrowing costs are recognised in profit or loss in the period in which they occur.

Pensions and other post-retirement benefits

Pensions and other post-retirement benefits

The Santander UK group operates various pension schemes. The schemes are generally funded through payments to insurance companies or trustee-administered funds, as determined by periodic actuarial calculations. A defined benefit scheme is a pension scheme that guarantees an amount of pension benefit to be provided, usually as a function of one or more factors such as age, years of service or compensation. A defined contribution plan is a pension scheme under which the Santander UK group pays fixed contributions as they fall due into a separate entity (a fund). The pension paid to the member at retirement is based on the amount in the separate fund for each member. The Santander UK group has no legal or constructive obligations to pay further contributions into the fund to ‘top up’ benefits to a certain guaranteed level. Pension costs are charged to the ‘Administration expenses’, within the line item ‘Operating expenses before impairment losses, provisions and charges’ with the net interest on the defined benefit asset or liability included within ‘Net interest income’ in the income statement.

a) Defined benefit schemes

The asset or liability recognised in respect of defined benefit pension schemes is the present value of the defined benefit obligation at the balance sheet date, less the fair value of scheme assets. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The assets of the schemes are measured at their fair values at the balance sheet date. Full actuarial valuations of the Santander UK group’s defined benefit schemes are carried out on a triennial basis. Each scheme’s trustee is responsible for the actuarial valuations and in doing so considers or relies in part on a report of a third party expert.

The present value of the defined benefit obligation is estimated by projecting forward the growth in current accrued pension benefits to reflect inflation and salary growth to the date of pension payment, then discounted to present value using the yield applicable to high-quality AA rated corporate bonds of the same currency and which have terms to maturity closest to the terms of the scheme liabilities, adjusted where necessary to match those terms. In determining the value of scheme liabilities, demographic and financial assumptions are made by management about life expectancy, inflation, discount rates, pension increases and earnings growth, based on past experience and future expectations. Financial assumptions are based on market conditions at the balance sheet date and can generally be derived objectively.

Demographic assumptions require a greater degree of estimation and judgement to be applied to externally derived data. Any surplus or deficit of scheme assets over liabilities is recognised in the balance sheet as an asset (surplus) or liability (deficit). An asset is only recognised to the extent that the surplus can be recovered through reduced contributions in the future or through refunds from the scheme. The income statement includes the net interest income/expense on the net defined benefit liability/asset, current service cost and any past service cost and gain or loss on settlement. Remeasurement of defined benefit pension schemes, including return on scheme assets (excludes amounts included in net interest), actuarial gains and losses (arising from changes in demographic assumptions, the impact of scheme experience and changes in financial assumptions) and the effect of the changes to the asset ceiling (if applicable), are recognised in other comprehensive income.

Remeasurement recognised in other comprehensive income will not be reclassified to the income statement. Past-service costs are recognised as an expense in the income statement at the earlier of when the scheme amendment or curtailment occurs and when the related restructuring costs or termination benefits are recognised. Curtailments include the impact of significant reductions in the number of employees covered by a scheme, or amendments to the terms of the scheme so that a significant element of future service will no longer qualify for benefits or will qualify only for reduced benefits. Curtailment gains and losses on businesses that meet the definition of discontinued operations are included in profit or loss for the year from discontinued operations. Gains and losses on settlements are recognised when the settlement occurs.

b) Defined contribution plans

For defined contribution plans, the Santander UK group pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. Once the contributions have been paid, the Santander UK group has no further payment obligation. The regular contributions constitute net periodic costs for the year in which they are due and are included in staff costs which are presented in Administration expenses in the income statement.

c) Post-retirement medical benefit plans

Post-retirement medical benefit liabilities are determined using the Projected Unit Credit Method, with actuarial valuations updated at each year-end. The expected benefit costs are accrued over the period of employment using an accounting methodology similar to that for the defined benefit pension scheme.

Share-based payments

Share-based payments

The Santander UK group engages in cash-settled and equity-settled share-based payment transactions in respect of services received from certain of its employees. Shares of the Santander UK group’s parent, Banco Santander SA are purchased in the open market by the Santander UK group (for the Employee Sharesave scheme) or are purchased by Banco Santander SA or another Banco Santander company (for awards granted under the Long-Term Incentive Plan and the Deferred Shares Bonus Plan) to satisfy share options as they vest.

Options granted under the Employee Sharesave scheme are accounted for as cash-settled share-based payment transactions. Awards granted under the Long-Term Incentive Plan and Deferred Shares Bonus Plan are accounted for as equity-settled share-based payment transactions.

The fair value of the services received is measured by reference to the fair value of the shares or share options initially on the date of the grant for both the cash and equity settled share-based payments and then subsequently at each reporting date for the cash settled share-based payments. The cost of the employee services received in respect of the shares or share options granted is recognised in the income statement within administration expenses, over the period that the services are received, which is the vesting period.

A liability equal to the portion of the goods or services received is recognised at the current fair value determined at each balance sheet date for cash-settled share-based payments. A liability equal to the amount to be reimbursed to Banco Santander SA is recognised at the current fair value determined at the grant date for equity-settled share-based payments.

The fair value of the options granted under the Employee Sharesave scheme is determined using an option pricing model, which takes into account the exercise price of the option, the current share price, the risk free interest rate, the expected volatility of the Banco Santander SA share price over the life of the option and the dividend growth rate. The fair value of the awards granted for the Long-Term Incentive Plan was determined at the grant date using an option pricing model, which takes into account the share price at grant date, the risk free interest rate, the expected volatility of the Banco Santander SA share price over the life of the award and the dividend growth rate. Vesting conditions included in the terms of the grant are not taken into account in estimating fair value, except for those that include terms related to market conditions. Non-market vesting conditions are taken into account by adjusting the number of shares or share options included in the measurement of the cost of employee service so that ultimately, the amount recognised in the income statement reflects the number of vested shares or share options.

Where an award has been modified, as a minimum, the expense of the original award continues to be recognised as if it had not been modified. Where the effect of a modification is to increase the fair value of an award or increase the number of equity instruments, the incremental fair value of the award or incremental fair value of the modification of the award is recognised in addition to the expense of the original grant, measured at the date of modification, over the modified vesting period.

A cancellation that occurs during the vesting period is treated as an acceleration of vesting, and recognised immediately for the amount that would otherwise have been recognised for services over the vesting period.

Goodwill and other intangible assets

Goodwill and other intangible assets

Goodwill represents the excess of the cost of an acquisition, as well as the fair value of any interest previously held, over the fair value of the Santander UK group’s share of the identifiable net assets of the acquired subsidiary, associate, or business at the date of acquisition. Goodwill on the acquisition of subsidiaries and businesses is included in intangible assets. Goodwill on acquisitions of associates is included as part of investment in associates. Goodwill is tested for impairment at each balance sheet date, or more frequently when events or changes in circumstances dictate, and carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity or business include the carrying amount of goodwill relating to the entity or business sold.

Other intangible assets are recognised if they arise from contracted or other legal rights or if they are capable of being separated or divided from the Santander UK group and sold, transferred, licensed, rented or exchanged. The value of such intangible assets is amortised on a straight-line basis over the useful economic life of the assets in question, which ranges from three to seven years. Other intangible assets are reviewed annually for impairment indicators and tested for impairment where indicators are present.

Software development costs are capitalised when they are direct costs associated with identifiable and unique software products that are expected to provide future economic benefits and the cost of these products can be measured reliably. These costs include payroll, the costs of materials and services and directly attributable overheads. Internally developed software meeting these criteria and externally purchased software are classified in intangible assets on the balance sheet and amortised on a straight-line basis over their useful life of three to seven years, unless the software is an integral part of the related computer hardware, in which case it is treated as property, plant and equipment as described below. Capitalisation of costs ceases when the software is capable of operating as intended. Costs associated with maintaining software programmes are expensed as incurred.

Property, plant and equipment

Property, plant and equipment

Property, plant and equipment include owner-occupied properties (including leasehold properties), office fixtures and equipment and computer software. Property, plant and equipment are carried at cost less accumulated depreciation and accumulated impairment losses. A review for indications of impairment is carried out at each reporting date. Gains and losses on disposal are determined by reference to the carrying amount and are reported in net trading and other income. Repairs and renewals are charged to the income statement when the expenditure is incurred. Internally developed software meeting the criteria set out in ’Goodwill and other intangible assets’ above and externally purchased software are classified in property, plant and equipment on the balance sheet where the software is an integral part of the related computer hardware (e.g. operating system of a computer).

Classes of property, plant and equipment are depreciated on a straight-line basis over their useful life, as follows:

Owner-occupied properties	Not exceeding 50 years
Office fixtures and equipment	3 to 15 years
Computer software	3 to 7 years

Depreciation is not charged on freehold land and assets under construction.

Financial assets and liabilities

Financial assets and liabilities

Financial assets and liabilities are initially recognised when the Santander UK group becomes a party to the contractual terms of the instrument. The Santander UK group determines the classification of its financial assets and liabilities at initial recognition. Financial assets are classified as financial assets at fair value through profit or loss, loans and receivables, available-for-sale financial assets and held-to-maturity investments. Financial assets that are classified at fair value through profit or loss, which have not been designated as such or are not accounted for as derivatives, or assets classified as available-for-sale, may subsequently in rare circumstances, be reclassified from the fair value through profit or loss category to the loans and receivables, available-for-sale or held-to-maturity categories. In order to meet the criteria for reclassification, the asset must no longer be held for the purpose of selling or repurchasing in the near-term and must also meet the definition of the category into which it is to be reclassified had it not been required to classify it at fair value through profit or loss at initial recognition. The reclassified value is the fair value of the asset at the date of reclassification. The Santander UK group has not utilised this option and therefore has not reclassified any assets from the fair value through profit or loss category that were classified as such at initial recognition. Financial liabilities are classified as fair value through profit or loss if they are either held for trading or otherwise designated at fair value through profit or loss on initial recognition.

Financial assets are derecognised when the rights to receive cash flows have expired or the Santander UK group has transferred its contractual right to receive the cash flows from the assets and either: (1) substantially all the risks and rewards of ownership have been transferred; or (2) the Santander UK group has neither retained nor transferred substantially all of the risks and rewards, but has transferred control. Financial liabilities are derecognised when extinguished, cancelled or expired.

A regular way purchase is a purchase of a financial asset under a contract whose terms require delivery of the asset within the timeframe established generally by regulation or convention in the market place concerned. Regular way purchases of financial assets classified as loans and receivables, issues of equity or financial liabilities measured at amortised cost are recognised on settlement date; all other regular way purchases and issues are recognised on trade date.

a) Financial assets and liabilities at fair value through profit or loss

Financial assets and financial liabilities are classified as fair value through profit or loss if they are either held for trading or otherwise designated at fair value through profit or loss on initial recognition.

Financial assets and financial liabilities are classified as held for trading if they are derivatives or if they are acquired or incurred principally for the purpose of selling or repurchasing in the near-term, or form part of a portfolio of financial instruments that are managed together and for which there is evidence of short-term profit taking.

In certain circumstances financial assets and financial liabilities other than those that are held for trading are designated at fair value through profit or loss where this results in more relevant information because it significantly reduces a measurement inconsistency that would otherwise arise from measuring assets or liabilities or recognising the gains or losses on them on a different basis, where the assets or liabilities are managed and their performance evaluated on a fair value basis, or where a financial asset or financial liability contains one or more embedded derivatives which are not closely related to the host contract.

Financial assets and financial liabilities classified as fair value through profit or loss are initially recognised at fair value and transaction costs are taken directly to the income statement. Gains and losses arising from changes in fair value are included directly in the income statement except for gains and losses on financial liabilities designated at fair value through profit and loss relating to own credit which are presented in other comprehensive income.

Derivative financial instruments, trading assets and liabilities and financial assets and liabilities designated at fair value are classified as fair value through profit or loss.

b) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments, that are not quoted in an active market and which are not classified as available-for-sale or fair value through profit or loss. They arise when the Santander UK group provides money or services directly to a customer with no intention of trading the loan. Loans and receivables are initially recognised at fair value including direct and incremental transaction costs. They are subsequently valued at amortised cost, using the effective interest method. Loans and receivables consist of loans and advances to banks, loans and advances to customers, and loans and receivables securities.

c) Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial assets that are designated as available-for-sale and are not categorised into any of the other categories described. They are initially recognised at fair value including direct and incremental transaction costs. They are subsequently held at fair value. Gains and losses arising from changes in fair value of available-for-sale securities are recognised in other comprehensive income until sale or until determined to be impaired when the cumulative gain or loss or impairment losses are transferred to the income statement. Where the financial asset is interest-bearing, interest is determined using the effective interest method.

Income on investments in equity shares, debt instruments and other similar interests is recognised in the income statement as and when dividends are declared and interest is accrued. Impairment losses and foreign exchange translation differences on monetary items are recognised in the income statement.

d) Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Santander UK group’s management has the positive intention and ability to hold to maturity other than:

– Those that the Santander UK group designates upon initial recognition as at fair value through profit or loss;

– Those that the Santander UK group designates as available-for-sale; and

– Those that meet the definition of loans and receivables.

These are initially recognised at fair value including direct and incremental transaction costs and measured subsequently at amortised cost, using the effective interest method, less any provision for impairment.

A sale or reclassification of a more than insignificant amount of held-to-maturity investments would result in the reclassification of all held-to-maturity investments to available-for-sale financial assets.

e) Borrowings

Borrowings (which include deposits by banks, deposits by customers, debt securities in issue and subordinated liabilities) are recognised initially at fair value, being their issue proceeds (fair value of consideration received) net of transaction costs incurred. Borrowings are subsequently stated at amortised cost or fair value through profit or loss dependent on designation at initial recognition. Savings accounts and time deposits are interest-bearing.

Preference shares which carry a contractual obligation to transfer economic benefits are classified as financial liabilities and are presented in subordinated liabilities. The coupon on these preference shares is recognised in the income statement as interest expense on an amortised cost basis using the effective interest method.

f) Other financial liabilities

All other financial liabilities are initially recognised at fair value net of transaction costs incurred. They are subsequently stated at amortised cost, using the effective interest method.

Contracts involving the receipt of cash on which customers receive an index-linked return are accounted for as equity index-linked deposits. The principal products are Capital Guaranteed/Protected Products which give the customers a limited participation in the upside growth of an equity index. In the event the index falls in price, a cash principal element is guaranteed/protected. The equity index-linked deposits contain embedded derivatives. These embedded derivatives, in combination with the principal cash deposit element, are designed to replicate the investment performance profile tailored to the return agreed in the contracts with customers. The cash principal element is accounted for as deposits by customers at amortised cost. The embedded derivatives are separated from the host instrument and are separately accounted for as derivative financial instruments.

g) Sale and repurchase agreements (including stock borrowing and lending)

Securities sold subject to a commitment to repurchase them at a predetermined price (repos) under which substantially all the risks and rewards of ownership are retained by the Santander UK group remain on the balance sheet and a liability is recorded in respect of the consideration received. Securities purchased under commitments to resell (reverse repos) are not recognised on the balance sheet and the consideration paid is recorded as an asset. The difference between the sale and repurchase price is treated as trading income in the income statement, except where the repo is not treated as part of the trading book, in which case the difference is recorded in interest income or expense.

Securities lending and borrowing transactions are generally secured, with collateral taking the form of securities or cash advanced or received. Securities lent or borrowed are not reflected on the balance sheet. Collateral in the form of cash received or advanced is recorded as a deposit or a loan. Collateral in the form of securities is not recognised.

h) Day One profit adjustments

The fair value of a financial instrument on initial recognition is generally its transaction price (that is, the fair value of the consideration given or received). However, sometimes the fair value will be based on other observable current market transactions in the same instrument, without modification or repackaging, or on a valuation technique whose variables include only data from observable markets, such as interest rate yield curves, option volatilities and currency rates. When such evidence exists, the Santander UK group recognises a trading gain or loss at inception (Day One gain or loss), being the difference between the transaction price and the fair value. When significant unobservable parameters are used, the entire Day One gain or loss is deferred and is recognised in the income statement over the life of the transaction until the transaction matures, is closed out, the valuation inputs become observable or the Santander UK group enters into an offsetting transaction.

Derivative financial instruments

Derivative financial instruments

Derivative financial instruments (derivatives) are contracts or agreements whose value is derived from one or more underlying indices or asset values inherent in the contract or agreement, which require no or little initial net investment and are settled at a future date. Transactions are undertaken in interest rate, cross currency, equity, residential property and other index-related swaps, forwards, caps, floors, swaptions, as well as credit default and total return swaps, equity index contracts and exchange traded interest rate futures, and equity index options.

Derivatives are held for trading or for risk management purposes. Derivatives are classified as held for trading unless they are designated as being in a hedge relationship. The Santander UK group chooses to designate certain derivatives as in a hedging relationship if they meet specific criteria, as further described within ‘hedge accounting’ below.

Derivatives are recognised initially (on the date on which a derivative contract is entered into), and are subsequently remeasured, at their fair value. Fair values of exchange-traded derivatives are obtained from quoted market prices. Fair values of over-the-counter derivatives are obtained using valuation techniques, including discounted cash flow and option pricing models.

Derivatives may be embedded in other financial instruments, such as the conversion option in a convertible bond. Embedded derivatives are treated as separate derivatives when their economic characteristics and risks are not closely related to those of the host contract; the terms of the embedded derivative would meet the definition of a stand-alone derivative if they were contained in a separate contract; and the combined contract is not held for trading or designated at fair value. These embedded derivatives are measured at fair value with changes in fair value recognised in the income statement.

Contracts containing embedded derivatives are not subsequently reassessed for separation unless either there has been a change in the terms of the contract which significantly modifies the cash flows (in which case the contract is reassessed at the time of modification) or the contract has been reclassified (in which case the contract is reassessed at the time of reclassification).

All derivatives are carried as assets when their fair value is positive and as liabilities when their fair value is negative, except where netting is permitted. The method of recognising fair value gains and losses depends on whether derivatives are held for trading or are designated as hedging instruments and, if the latter, the nature of the risks being hedged. All gains and losses from changes in the fair value of derivatives held for trading are recognised in the income statement, and included within net trading and other income.

Offsetting financial assets and liabilities

Offsetting financial assets and liabilities

Financial assets and liabilities including derivatives are offset and the net amount reported in the balance sheet when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously. The Santander UK group is party to a number of arrangements, including master netting arrangements under industry standard agreements which facilitate netting of transactions in jurisdictions where netting agreements are recognised and have legal force. The netting arrangements do not generally result in an offset of balance sheet assets and liabilities for accounting purposes, as transactions are usually settled on a gross basis.

Hedge accounting

Hedge accounting

The Santander UK group applies hedge accounting to represent, to the maximum possible extent permitted under accounting standards, the economic effects of its risk management strategies. Derivatives are used to hedge exposures to interest rates, exchange rates and certain indices such as retail price indices.

At the time a financial instrument is designated as a hedge (i.e. at the inception of the hedge), the Santander UK group formally documents the relationship between the hedging instrument(s) and hedged item(s), its risk management objective and strategy for undertaking the hedge. The documentation includes the identification of each hedging instrument and respective hedged item, the nature of the risk being hedged (including the benchmark interest rate being hedged in a hedge of interest rate risk) and how the hedging instrument’s effectiveness in offsetting the exposure to changes in the hedged item’s fair value attributable to the hedged risk is to be assessed. Accordingly, the Santander UK group formally assesses, both at the inception of the hedge and on an ongoing basis, whether the hedging derivatives have been and will be highly effective in offsetting changes in the fair value attributable to the hedged risk during the period that the hedge is designated. A hedge is normally regarded as highly effective if, at inception and throughout its life, the Santander UK group can expect, and actual results indicate, that changes in the fair value or cash flow of the hedged items are effectively offset by changes in the fair value or cash flow of the hedging instrument. If at any point it is concluded that it is no longer highly effective in achieving its documented objective, hedge accounting is discontinued.

Where derivatives are held for risk management purposes, and when transactions meet the required criteria for documentation and hedge effectiveness, the derivatives may be designated as either: (i) hedges of the change in fair value of recognised assets or liabilities or firm commitments (fair value hedges); (ii) hedges of the variability in highly probable future cash flows attributable to a recognised asset or liability, or a forecast transaction (cash flow hedges); or (iii) a hedge of a net investment in a foreign operation (net investment hedges). The Santander UK group applies fair value hedge accounting and cash flow hedge accounting but not hedging of a net investment in a foreign operation.

a) Fair value hedge accounting

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the income statement, together with the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. Where the hedged item is measured at amortised cost, the fair value changes due to the hedged risk adjust the carrying amount of the hedged asset or liability. Changes in the fair value of portfolio hedged items are presented separately in the consolidated balance sheet in macro hedge of interest rate risk and recognised in the income statement within net trading and other income. If the hedge no longer meets the criteria for hedge accounting, changes in the fair value of the hedged item attributable to the hedged risk are no longer recognised in the income statement. For fair value hedges of interest rate risk, the cumulative adjustment that has been made to the carrying amount of the hedged item is amortised to the income statement using the effective interest method over the period to maturity. For portfolio hedged items, the cumulative adjustment is amortised to the income statement using the straight line method over the period to maturity.

b) Cash flow hedge accounting

The effective portion of changes in the fair value of qualifying cash flow hedges is recognised in other comprehensive income in the cash flow hedging reserve. The gain or loss relating to the ineffective portion is recognised immediately in the income statement. Amounts accumulated in equity are reclassified to the income statement in the periods in which the hedged item affects profit or loss. When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised in the income statement when the forecast transaction is ultimately recognised in the income statement. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the income statement.

The Santander UK group is exposed to cash flow interest rate risk on its floating rate assets and foreign currency risk on its fixed rate debt issuances denominated in foreign currency. Cash flow hedging is used to hedge the variability in cash flows arising from both these risks.

Securitisation transactions

Securitisation transactions

The Santander UK group has entered into certain arrangements where undertakings have issued mortgage-backed and other asset-backed securities or have entered into funding arrangements with lenders in order to finance specific loans and advances to customers. As the Santander UK group has retained substantially all the risks and rewards of the underlying assets, such financial instruments continue to be recognised on the balance sheet, and a liability recognised for the proceeds of the funding transaction.

Impairment of financial assets

Impairment of financial assets

At each balance sheet date the Santander UK group assesses whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. In the case of equity investments classified as available-for-sale, a significant or prolonged decline in the fair value of the security below its cost is considered an indicator that the assets are impaired.

Assets carried at amortised cost

For loans and advances, loans and receivables securities and held-to-maturity investments, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in profit or loss. If a loan or held-to-maturity investment has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor’s credit rating), the reversal of the previously recognised impairment loss is recognised in profit or loss.

More detailed policies for certain portfolios measured at amortised cost are described below.

a) Loans and advances

Impairment loss allowances for loans and advances, less amounts released and recoveries of amounts written off are charged to the line item ‘Impairment losses on loans and advances’ in the income statement. The impairment loss allowances are deducted from the ‘Loans and advances to banks’, ‘Loans and advances to customers’ and ‘Loans and receivables securities’ line items on the balance sheet.

i) Retail assets

Retail customers are assessed either individually or collectively for impairment. Potential indicators of loss events which may be evidence of impairment for retail borrowers may include:

– Missed payments of capital or interest

– The borrower notifying the Santander UK group of current or likely financial distress

– Request from a borrower to change contractual terms as a result of the borrower’s financial difficulty (i.e. forbearance)

– Arrears on other accounts held by the borrower.

Individual assessment

For individually assessed assets, the Santander UK group measures the amount of the loss as the difference between the carrying amount of the asset and the present value of the estimated future cash flows from the asset discounted at the asset’s original effective interest rate.

Collective assessment

In making a collective assessment for impairment, financial assets are grouped together according to their credit risk characteristics. These can include grouping by product, loan-to-value, brand, geography, type of customer and previous insolvency events. For each such portfolio or sub-segment of the portfolio, future cash flows are estimated through the use of historical loss experience. The historical loss experience is adjusted to include the effects of changes in current economic, behavioural and other conditions that cannot be successfully depicted solely from historical experience. The loss is discounted at the effective interest rate, except where portfolios meet the criteria for short-term receivables. The unwind of the discount over time is reported through interest and other similar income within the income statement, with an increase to the impairment loss allowances on the balance sheet. Loans for which evidence of potential loss have been specifically identified are group together for the purpose of calculating an allowance for observed losses. Loans for which no evidence of loss has been specifically identified on an individual basis are grouped together according to their credit risk characteristics for the purpose of calculating an allowance for incurred but not observed (IBNO) losses. Such losses will only be individually identified in the future.

Observed impaired loss allowance

An impairment loss allowance for observed losses is established for all non-performing loans where it is increasingly probable that some of the capital or interest will not be repaid or recovered through enforcement of any applicable security. The allowance for observed losses is determined on a collective (or portfolio) basis for groups of loans with similar credit risk characteristics. The length of time before a loan is regarded as non-performing is typically when the customer fails to make payments when contractually due for three months or longer, although there can be additional qualifying criteria depending upon the product. For additional information on the definition of non-performing loans (NPLs), see ‘Credit risk management – risk measurement and control’ in the Risk review.

For mortgages and other secured advances, the allowance for observed losses is calculated as the product of the account outstanding balance (exposure) at the reporting date, the estimated proportion that will be repossessed (the loss propensity) and the percentage of exposure which will result in a loss (the loss ratio). The loss propensities for the observed segment (i.e. where the loan is classified as non-performing) represents the percentage that will ultimately be written off, or repossessed for secured advances. Loss propensities are based on recent historical experience, typically covering a period of no more than the most recent twelve months in the year under review. The loss ratio is based on actual cases which have been repossessed and sold using the most recent twelve month average data, segmented by LTV, and is then discounted using the effective interest rate.

For unsecured advances, such as unsecured personal loans, credit cards and overdrafts, the allowance for observed losses is calculated as the product of the number of accounts in the portfolio, the estimated proportion of accounts that will be written off, the estimated proportion of such cases that will result in a loss (the loss factor) and the average loss incurred (the loss per case). The loss per case is based on actual cases using the most recent six month average data of losses that have been incurred, and is then discounted using the effective interest rate.

Based on historical experience, the gross loss ratio or gross loss per case is realised in cash several months after the customer first defaults, during which time interest and fees and charges continue to accrue on the account. The future fees and charges included in the gross loss ratio or gross loss per case are removed and the balance discounted so as to calculate the present value of the loss ratio or loss per case. The discounted loss ratio or loss per case for accounts where a payment has already been missed is higher than for accounts that are up to date because the discounting effect is lower reflecting the fact that the process to recover the funds is further advanced.

IBNO impairment loss allowances

An allowance for IBNO losses is established for loans which are either:

– Performing and no evidence of loss has been specifically identified on an individual basis but because the loans that are not yet past due are known from past experience to have deteriorated since the initial decision to lend was made (for example, where a borrower has not yet missed a payment but is experiencing financial difficulties at the reporting date, e.g. due to a loss of employment, divorce or bereavement), or

– In arrears and not classified as non-performing.

The impairment loss calculation resembles the one explained above for the observed segment except that for the IBNO segment:

– Where the account is currently up to date, the loss propensity represents the percentage of such cases that are expected to miss a payment in the appropriate emergence period and which will ultimately be written off

– Where the account is delinquent, the loss propensity represents the percentage of such cases that will ultimately be written off.

Emergence period

This is the period which the Santander UK group’s statistical analysis shows to be the period in which losses that had been incurred but have not been separately identified at the balance sheet date become evident as the loans turn into past due. The emergence period is taken into consideration when determining the loss propensities for performing IBNO segment. Based on the Santander UK group’s statistical analysis, the emergence period is six months for unsecured lending and twelve months for secured lending. The longer emergence period for secured lending reflects the fact that a customer is more likely to default on unsecured debt before defaulting on secured lending. The factors considered in determining the length of the emergence period for unsecured lending are recent changes in customers’ debit/credit payment profiles and credit scores. The factors considered for secured lending are the frequency and duration of exceptions from adherence to the contractual payment schedule.

ii) Corporate assets

Impairment losses are assessed individually for corporate assets that are individually significant and collectively for corporate assets that are not individually significant.

Individual assessment

At each balance sheet date, the Santander UK group conducts impairment reviews to assess whether there is objective evidence of impairment for individually significant corporate assets. A specific observed impairment is established for all individually significant loans that have experienced a loss event such as where:

– An asset has a payment default which has been outstanding for three months or more

– Non-payment defaults have occurred but where it has become evident that a forbearance exercise will be undertaken due to the inability of the borrower to meet its current contractual repayment schedule

– It is becoming probable that the borrower will enter bankruptcy or other financial reorganisation

– The borrower has a winding up notice issued or insolvency event

– The borrower has had event(s) occur which are likely to adversely impact upon their ability to meet their financial obligations (e.g. where a customer loses a key client or contract)

– The borrower has regularly and persistently missed/delayed payments but where the account has been maintained below three months past due

– The customer loan is due to mature within six months and where the prospects of achieving a refinancing are considered low.

In such situations the asset is transferred to the Commercial Banking Restructuring & Recoveries team. As part of their impairment reviews, an assessment is undertaken of the expected future cash flows (including, where appropriate, cash flows through enforcement of any applicable security held) in relation to the relevant asset, discounted at the loan’s original effective interest rate. The result is compared to the current carrying value of the asset. Any shortfall evidenced as a result of such a review will be assessed and recorded as an observed specific impairment loss allowance.

Collective assessment

Observed impairment loss allowances

A collective impairment loss allowance is established for loans which are not individually significant and have suffered a loss event. These non-individually significant loans are grouped together according to their credit risk characteristics and the allowance for observed losses is determined on a collective basis by applying loss rates (i.e. estimated loss given default) derived from analysis of historical loss data of observed losses.

IBNO impairment loss allowances

Loans for which no evidence of loss has been specifically identified on an individual basis are grouped together according to their credit risk characteristics for the purpose of calculating an IBNO allowance for incurred inherent losses. Such losses will only be individually identified in the future. As soon as information becomes available which identifies incurred losses on individual loans within the group, those loans are removed from the group and assessed on an individual basis for impairment or included in the observed collective assessment above depending on their individual significance.

The allowance for IBNO losses is determined on a portfolio basis using the following factors:

– Historical loss experience in portfolios of similar credit risk characteristics (for example, by product)

– The estimated period between an impairment event occurring and the loss being identified and evidenced by the establishment of an observed loss allowance against the individual loan (known as the emergence period, as discussed below)

– Management’s judgement as to whether current economic and credit conditions are such that the actual level of incurred inherent losses at the balance sheet date is likely to be greater or less than that suggested by historical experience.

Emergence period

This is the period in which losses that had been incurred but have not been separately identified become evident. The emergence period spans between six to twelve months according to the corporate portfolio being assessed and is estimated having regard to historic experience and loan characteristics across the portfolio. The factors considered in determining the length of the emergence period include the frequency of the management information received or any change in account utilisation behaviour.

iii) Assets subject to forbearance

To support Retail and Corporate customers that encounter actual or apparent financial difficulties, the Santander UK group may grant a concession, whether temporary or permanent, to amend contractual amounts or timings where a customer’s financial distress indicates a potential that satisfactory repayment may not be made within the original terms and conditions of the contract. These arrangements are known as forbearance. There are different risk characteristics associated with loans that are subject to forbearance as compared to loans that are not. A range of forbearance arrangements may be entered into by the Santander UK group, reflecting the different risk characteristics of such loans. The Santander UK group’s forbearance programmes are described in the credit risk section in the Risk review.

Retail assets

Mortgages

The main types of forbearance offered are capitalisation or a term extension, subject to customer negotiation and vetting. These accounts are reported in arrears until the arrears are capitalised, at which point the accounts will be transferred to the ‘performing’ category. However, accounts which were classified as ‘non-performing’ at the point forbearance is agreed continue to be reported as ‘non-performing’ until the payments received post forbearance equate to the amount of arrears outstanding at the point of forbearance. The impairment provision on these accounts is based on the delinquency cycle in which the account was classified when it entered forbearance, unless the account’s status has further deteriorated since then, in which case the impairment provision will be based on the current status.

The impairment loss allowances on these accounts are calculated in the same manner as on any other account, using the Santander UK group’s collective assessment methodology. In making a collective assessment for impairment, accounts are grouped according to their credit risk characteristics. For each category of loans, accounts are individually assigned a loss propensity based on a defined behavioural scorecard which reflects any history of forbearance. The loss propensity applied in the collective assessment calculation is higher for forborne accounts than for other performing loans reflecting the higher risk of default attached to these accounts.

Unsecured personal loans (UPLs)

The main type of forbearance offered is reduced repayment arrangements. Where accounts undergoing forbearance are in arrears, these continue to be reported in the delinquency cycle, until all arrears are capitalised or paid up, at which point the accounts will be transferred to the ‘performing’ category. The impairment provision on these accounts is based on the delinquency cycle in which the account was classified when it entered forbearance, unless the account’s status has further deteriorated since then, in which case the impairment provision will be based on the current status. Where the accounts reside in the ‘performing’ category as a result of forbearance, the impairment allowance requirements are based on default probability that take account of the higher inherent risk in the forborne asset relative to other performing assets.

Other unsecured (credit cards and overdrafts)

The main type of forbearance offered is reduced repayment arrangements. Reduced payment arrangements are treated for impairment purposes in the same way as UPLs above.

Corporate assets

For corporate borrowers, the main types of forbearance offered are term extensions or interest-only concessions and in limited circumstances, other forms of forbearance options (including debt-for-equity swaps), subject to customer negotiation and vetting. If such accounts were classified in the ‘non-performing’ loan category prior to the forbearance, they continue to be classified as non-performing until evidence of compliance with the new terms is demonstrated (typically over a period of at least three months) before being reclassified as ‘substandard’. If the account was categorised as performing at the time the revised arrangements were agreed, the case is reclassified to ‘substandard’ upon completion of the forbearance agreement.

Once a substandard asset has demonstrated continued compliance with the new terms and the risk profile is deemed to have improved it may be reclassified as a ‘performing asset’. Until then, impairment loss allowances for such loans are assessed individually, taking into account the value of collateral held as confirmed by third party professional valuations and the available cash flow to service debt over the period of the forbearance. These impairment loss allowances are assessed and reviewed regularly. In the case of a debt for equity conversion, the converted debt is written off against the existing impairment loss allowance at the point forbearance is granted.

iv) Reversals of impairment

If in a subsequent period, the amount of an impairment loss reduces and the reduction can be related objectively to an event occurring after the impairment was recognised, the excess is written back by reducing the impairment loss allowance accordingly. The write-back is recognised in the income statement.

v) Write-off

For secured loans, a write-off is only made when all collection procedures have been exhausted and the security has been sold or from claiming on any mortgage indemnity guarantee or other insurance. In the corporate portfolio, there may be occasions where a write-off occurs for other reasons, for example, following a consensual restructure or refinancing of the debt or where the debt is sold for strategic reasons into the secondary market at a value lower than the face value of the debt.

There is no threshold based on past due status beyond which all secured loans are written off as there can be significant variations in the time needed to enforce possession and sale of the security, especially due to the different legal frameworks that apply in different regions of the UK. For unsecured loans, a write-off is only made when all internal avenues of collecting the debt have been exhausted and the debt is passed over to external collection agencies. A past due threshold is applied to unsecured debt where accounts that are 180 days past due are written off unless there is a dispute awaiting resolution. Contact is made with customers with the aim to achieve a realistic and sustainable repayment arrangement. Litigation and/or enforcement of security is usually carried out only when the steps described above have been undertaken without success.

All write-offs are on a case-by-case basis, taking account of the exposure at the date of write-off, after accounting for the value from any collateral or insurance held against the loan. The exception to this is in cases where fraud has occurred, where the exposure is written off once full investigations have been completed and the probability of recovery is minimal. The time span between discovery and write-off will be short and may not result in an impairment loss allowance being raised. The write-off policy is regularly reviewed. Write-offs are charged against previously established impairment loss allowances.

vi) Recoveries

Recoveries of impairment losses are not included in the impairment loss allowance, but are taken to income and offset against impairment losses. Recoveries of impairment losses are classified in the income statement as ‘Impairment losses on loans and advances’.

b) Loans and receivables securities and held-to-maturity investments

Loans and receivables securities and held-to-maturity investments are assessed individually for impairment. An impairment loss is incurred if there is objective evidence that a loss event has occurred since initial recognition of the assets that has an impact on the estimated future cash flows of the asset. Potential indicators of loss events include significant financial distress of the issuer and default or delinquency in interest and principal payments (breach of contractual terms).

Loans and receivables securities and held-to-maturity investments are monitored for potential impairment through a detailed expected cash flow analysis, where appropriate, taking into account the structure and underlying assets of each individual security. Once specific events give rise to a reasonable expectation that future anticipated cash flows may not be received, the asset originating these doubtful cash flows will be deemed to be impaired with the impairment loss being measured as the difference between the expected future cash flows discounted at the original effective interest rate and the carrying value of the asset.

c) Assets classified as available-for-sale

The Santander UK group assesses at each balance sheet date whether there is objective evidence that an available-for-sale financial asset is impaired. In addition to the criteria for loans and advances and loans and receivables securities set out above, the assessment involves reviewing the financial circumstances (including creditworthiness) and future prospects of the issuer, assessing the future cash flows expected to be realised and, in the case of equity shares, considering whether there has been a significant or prolonged decline in the fair value of the security below its cost. The cumulative loss is measured as the difference between the acquisition cost and the current fair value, less any impairment loss previously reported in the income statement and is removed from other comprehensive income and recognised in the income statement. For impaired debt instruments, further impairment losses are recognised where there has been a further negative impact on expected future cash flows.

If, in a subsequent period, the fair value of a debt instrument classified as available-for-sale increases and the increase is due to an event occurring after the impairment loss was recognised in the income statement (with objective evidence to support this), the impairment loss is reversed through the income statement. If, in a subsequent period, the fair value of an equity instrument classified as available-for-sale increases, all such increases in the fair value are treated as a revaluation, and are recognised in other comprehensive income. Impairment losses recognised on equity instruments are not reversed through the income statement.

Impairment of non-financial assets

Impairment of non-financial assets

At each balance sheet date, or more frequently when events or changes in circumstances dictate, property plant and equipment (including operating lease assets) and intangible assets (including goodwill) are assessed for indicators of impairment. If indications are present, these assets are subject to an impairment review.

The impairment review comprises a comparison of the carrying amount of the asset or cash generating unit with its recoverable amount: the higher of the asset’s or cash-generating unit’s fair value less costs to sell and its value in use. The cash-generating unit represents the lowest level at which non-financial assets including goodwill is monitored for internal management purposes and is not larger than an operating segment.

The fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Value in use is calculated by discounting management’s expected future cash flows obtainable as a result of the asset’s continued use, including those resulting from its ultimate disposal, at a market based discount rate on a pre-tax basis. The recoverable amounts of goodwill have been based on value in use calculations.

The carrying values of property, plant and equipment, goodwill and other intangible assets are written down by the amount of any impairment and the loss is recognised in the income statement in the period in which it occurs. A previously recognised impairment loss relating to property, plant and equipment may be reversed in part or in full when a change in circumstances leads to a change in the estimates used to determine the property, plant and equipment’s recoverable amount. The carrying amount of the property, plant and equipment will only be increased up to the amount that would have been had the original impairment not been recognised. Impairment losses on goodwill are not reversed. For conducting goodwill impairment reviews, cash generating units are the lowest level at which management monitors the return on investment on assets.

Leases

Leases

a) The Santander UK group as lessor

Operating lease assets are recorded at cost and depreciated over the life of the asset after taking into account anticipated residual values. Operating lease rental income and depreciation is recognised on a straight-line basis over the life of the asset. Amounts due from lessees under finance leases and hire purchase contracts are recorded as receivables at the amount of the Santander UK group’s net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the Santander UK group’s net investment outstanding in respect of the leases and hire purchase contracts.

b) The Santander UK group as lessee

The Santander UK group enters into operating leases for the rental of equipment or real estate. Payments made under such leases are charged to the income statement on a straight-line basis over the period of the lease. When an operating lease is terminated before the lease period has expired, any payment to be made to the lessor by way of penalty is recognised as an expense in the period in which termination takes place.

If the lease agreement transfers the risk and rewards of the asset, the lease is recorded as a finance lease and the related asset is capitalised. At inception, the asset is recorded at the lower of the present value of the minimum lease payments or fair value and depreciated over the lower of the estimated useful life and the life of the lease. The corresponding rental obligations are recorded as borrowings. The aggregate benefit of incentives, if any, is recognised as a reduction of rental expense over the lease term on a straight-line basis.

Income taxes, including deferred taxes

Income taxes, including deferred taxes

The tax expense represents the sum of the income tax currently payable and deferred income tax.

Income tax payable on profits, based on the applicable tax law in each jurisdiction, is recognised as an expense in the period in which profits arise. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date. Current taxes associated with the repurchase of equity instruments are reported directly in equity.

A current tax liability for the current or prior period is measured at the amount expected to be paid to the tax authorities. Where the amount of the final tax liability is uncertain or where a position is challenged by a taxation authority, the liability recognised is the most likely outcome. Where a most likely outcome cannot be determined, a weighted average basis is applied.

Deferred income tax is the tax expected to be payable or recoverable on income tax losses available to carry forward and on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the Consolidated Financial Statements and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which the assets may be utilised as they reverse. Such deferred tax liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill. Deferred tax assets and liabilities are not recognised from the initial recognition of other assets (other than in a business combination) and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised based on rates enacted or substantively enacted at the balance sheet date. Deferred tax is charged or credited in the income statement, except when it relates to items recognised in other comprehensive income or directly in equity, in which case the deferred tax is also recognised in other comprehensive income or directly in equity. Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries except where the Santander UK group is able to control reversal of the temporary difference and it is probable that it will not reverse in the foreseeable future. The Santander UK group reviews the carrying amount of deferred tax assets at each balance sheet date and reduces it to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax relating to actuarial gains and losses on defined benefits is recognised in other comprehensive income. Deferred tax relating to fair value re-measurements of available-for sale investments and cash flow hedging instruments is charged or credited directly to other comprehensive income and is subsequently recognised in the income statement when the deferred fair value gain or loss is recognised in the income statement.

Deferred and current tax assets and liabilities are only offset when they arise in the same tax reporting group and where there is both the legal right and the intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Cash and cash equivalents

Cash and cash equivalents

For the purposes of the cash flow statement, cash and cash equivalents comprise balances with less than three months maturity from the date of acquisition, including cash and non-restricted balances with central banks, treasury bills and other eligible bills, loans and advances to banks and short-term investments in securities.

Balances with central banks represent amounts held at the Bank of England and the US Federal Reserve as part of the Santander UK group’s liquidity management activities. In addition, it includes certain minimum cash balances held for regulatory purposes required to be maintained with the Bank of England.

Provisions

Provisions

Provisions are recognised for present obligations arising as consequences of past events where it is more likely than not that a transfer of economic benefits will be necessary to settle the obligation, and it can be reliably estimated.

Conduct provisions are made for the estimated cost of making redress payments with respect to the past sales of products, based on conclusions regarding the number of claims that will be received, including the number of those that will be upheld, the estimated average settlement per case and other related costs. Provision is made for the anticipated cost of restructuring, including redundancy costs, when an obligation exists. An obligation exists when the Santander UK group has a detailed formal plan for restructuring a business, has raised valid expectations in those affected by the restructuring, and has started to implement the plan or announce its main features.

When a leasehold property ceases to be used in the business, provision is made where the unavoidable costs of the future obligations relating to the lease are expected to exceed anticipated rental income. The net costs are discounted using market rates of interest to reflect the long-term nature of the cash flows.

Provision is made for irrevocable loan commitments, other than those classified as held for trading, within impairment loss allowances if it is probable that the facility will be drawn and the resulting loan will be recognised at a value less than the cash advanced.

Contingent liabilities are possible obligations whose existence will be confirmed only by certain future events or present obligations where the transfer of economic benefit is uncertain or cannot be reliably measured. Contingent liabilities are not recognised but are disclosed unless they are remote.

Financial guarantee contracts

Financial guarantee contracts

Financial guarantee contracts are contracts that require the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payments when due in accordance with the terms of a debt instrument. The Santander UK group accounts for guarantees that meet the definition of a financial guarantee contract at fair value on initial recognition. In subsequent periods, these guarantees are measured at the higher of the initial fair value less cumulative amortisation and the amount that would be recognised as a provision in accordance with IAS 37.

Share capital

Share capital

a) Share issue costs

Incremental external costs directly attributable to the issue of new shares are deducted from equity net of related income taxes.

b) Dividends

Dividends on ordinary shares are recognised in equity in the period in which the right to receive payment is established.

Critical Accounting Policies and Areas of Significant Management Judgement

CRITICAL ACCOUNTING POLICIES AND AREAS OF SIGNIFICANT MANAGEMENT JUDGEMENT

The preparation of the Consolidated Financial Statements requires management to make estimates and judgements that affect the reported amount of assets and liabilities at the date of the Consolidated Financial Statements and the reported amount of income and expenses during the reporting period. Management evaluates its estimates and judgements on an ongoing basis. Management bases its estimates and judgements on historical experience and on various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.

The following accounting estimates and judgements are considered important to the portrayal of the Santander UK group’s financial results and financial condition because: (i) they are highly susceptible to change from period to period as assumptions are made to calculate the estimates, and (ii) any significant difference between the estimated amounts and actual amounts could have a material impact on the Santander UK group’s future financial results and financial condition.

In calculating each estimate, a range of outcomes was calculated based principally on management’s conclusions regarding the input assumptions relative to historic experience. The actual estimates were based on what management concluded to be the most probable assumptions within the range of reasonably possible assumptions.

a) Impairment loss allowances for loans and advances to customers

The Santander UK group estimates impairment losses for loans and advances to customers, loans and receivables securities, and loans and advances to banks as described in the accounting policy ‘Impairment of financial assets’. Management’s assumptions about impairment losses are based on past performance, past customer behaviour, the credit quality of recent underwritten business and general economic conditions, which are not necessarily an indication of future losses.

At 31 December 2017, impairment allowances held against loans and advances to customers totalled £940m (2016: £921m). The net impairment loss (i.e. after recoveries) for loans and advances to customers recognised in 2017 was £203m (2016: £67m, 2015: £66m). In calculating impairment loss allowances, a range of outcomes was calculated, either for each individual loan or by portfolio taking account of the uncertainty relating to economic conditions. For retail lending, the range was based on different management assumptions as to loss propensity and loss ratio relative to historic experience. For corporate lending, the range reflects different realisation assumptions in respect of collateral held.

If management had used different assumptions, a larger or smaller impairment loss allowance would have resulted that could have had a material impact on the Santander UK group’s reported profit before tax. Specifically, if management’s conclusions were different, but within the range of what management deemed to be reasonably possible, the impairment loss for loans and advances could have decreased by £162m (2016: £193m, 2015: £221m), with a consequential increase in profit before tax, or increased by £229m (2016: £223m, 2015: £167m), with a consequential decrease in profit before tax.

b) Provision for conduct remediation

The provision charge for conduct remediation relating to past activities and products sold recognised in 2017 was £144m (2016: £146m, 2015: £500m) before tax, comprising charges for Payment Protection Insurance (PPI) of £109m (2016: £144m, 2015: £450m) and other products of £35m (2016: £2m, 2015: £50m). The balance sheet provision amounted to £403m (2016: £493m, 2015: £637m), of which £356m (2016: £457m, 2015: £465m) related to PPI. Detailed disclosures on the provision for conduct remediation can be found in Note 27.

The provision mainly represents management’s best estimate of Santander UK’s future liability in respect of mis-selling of PPI policies. It requires significant judgement by management in determining appropriate assumptions, which include the level of complaints expected to be received, of those, the number that will be upheld and redressed, as well as the redress costs for each of the different populations of customers identified. Based on these factors, management determines its best estimate of the anticipated costs of redress and expected operating costs.

The most critical factor in determining the level of PPI provision is the volume of claims. The uphold rate is informed by historical experience and the average cost of redress can be predicted reasonably accurately given that management is dealing with a high volume and reasonably homogeneous population. In setting the provision, management estimated the total claims that were likely to be received until August 2019.

Had management used different assumptions, a larger or smaller provision charge would have resulted that could have had a material impact on the Santander UK group’s reported profit before tax. Detailed disclosures on the assumptions used, including sensitivities, can be found in Note 27.

c) Pensions

The Santander UK group operates a number of defined benefit pension schemes as described in Note 28 and estimates their position as described in the accounting policy ‘Pensions and other post retirement benefits’.

The defined benefit pension schemes which were in a net asset position had a surplus of £449m (2016: £398m) and the defined benefit pension schemes which were in a net liability position had a deficit of £286m (2016: £262m).

Accounting for defined benefit pension schemes requires management to make assumptions principally about the discount rate adopted, but also about mortality, price inflation, pension increases, life expectancy and earnings growth. Management’s assumptions are based on past experience and current economic trends, which are not necessarily an indication of future experience.

During the year the methodology to derive the inflation rate was changed to better reflect management’s view of inflation expectations. At 31 December 2017 this had a negative impact on the accounting surplus of £125m.

Detailed disclosures on the current year service cost and deficit/surplus, including sensitivities and the date of the last formal actuarial valuations of the assets and liabilities of the schemes can also be found in Note 28.

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Credit risk (Tables)

12 Months Ended

Dec. 31, 2017

Summary of Exposures to Credit Risk in Business Segments

Exposures to credit risk arise in our business segments from:

Retail Banking	Commercial Banking	Global Corporate Banking	Corporate Centre
–  Residential mortgages, business banking, consumer (auto) finance and other unsecured lending (personal loans, credit cards, and overdrafts).	– Loans, bank accounts, treasury services, invoice discounting, cash transmission, trade finance and asset finance.	– Loans, treasury products, and treasury markets activities.	– Asset and liability management of our balance sheet, as well as our non-core and Legacy Portfolios being run down.
–  We provide these to individuals and small businesses.	– We provide these to SMEs and mid corporates, as well as Commercial Real Estate customers and Social Housing associations.	– We provide these to large corporates, and financial institutions, as well as sovereigns and other international organisations.	– Exposures include sovereign and other international organisation assets that we hold for liquidity.

Types Of Customers And HowTo Manage Them

We manage credit risk across all our business segments in line with the credit risk lifecycle that we show in the next section. We tailor the way we manage risk across the lifecycle to the type of customer. We classify our customers as standardised or non-standardised:

Standardised	Non-standardised
– Mainly individuals and small businesses. Their transactions are for relatively small amounts of money, and share similar credit characteristics.	–  Mainly medium and large corporate customers and financial institutions. Their transactions are for larger amounts of money, and have more diverse credit characteristics.
– In Retail Banking, Commercial Banking (for some small, non-complex corporate clients) and Corporate Centre (for our non–core portfolios).	–  In Retail Banking (for some business banking transactions), Commercial Banking, Global Corporate Banking and Corporate Centre.
– We manage risk using automated decision–making tools. These are backed by teams of analysts who specialise in this type of risk.	–  We manage risk through expert analysis. We support this with decision-making tools based on internal risk assessment models.

Summary of Key Metrics to Measure and Control Credit Risk

We use two key metrics to measure and control credit risk: Expected Loss (EL) and Non-Performing Loans (NPLs).

Metric	Description
EL	EL tells us what credit risk is likely to cost us. It is the product of:
	– Probability of default (PD) – how likely customers are to default. We estimate this using customer ratings or the transaction credit scores
	– Exposure at default (EAD) – how much customers will owe us if they default. We calculate this by comparing how much of their agreed credit (such as an overdraft) customers have used when they default with how much they normally use. This allows us to estimate the final extent of use of credit in the event of default
	– Loss given default (LGD) – how much we lose when customers actually default. We work this out using the actual losses on loans that default. We take into account the income we receive, including the collateral we held, the costs we incur and the recovery process timing.
	PD, EAD and LGD are calculated in accordance with CRD IV, and include direct and indirect costs. We base them on our own risk models and our assessment of each customer’s credit quality. For the rest of our Risk review, impairments, impairment losses and impairment loss allowances refer to calculations in accordance with IFRS, unless we specifically say they relate to CRD IV. For our IFRS accounting policy on impairment, see Note 1 to the Consolidated Financial Statements.
	The way we calculate impairment under IFRS changed from 1 January 2018 when IFRS 9 took effect. It uses an expected credit loss (ECL) model rather than an incurred loss model used by IAS 39. There are also differences between the ECL approach used by IFRS 9 and the EL approach used by CRD IV. For more, see ‘Future accounting developments’ in Note 1 to the Consolidated Financial Statements.
NPLs	We use NPLs – and related write-offs and recoveries – to monitor how our portfolios behave. We classify loans as NPLs where customers do not make a payment for three months or more, or if we have data to make us doubt they can keep up with their payments. The data we have on customers varies across our business segments. It typically includes where:
	Retail Banking – They have been reported bankrupt or insolvent – Their loan term has ended, but they still owe us money more than three months later – They have had forbearance as an NPL, but have not caught up with the payments they had missed before that – They have had multiple forbearance – We have suspended their fees and interest because they are in financial difficulties – We have repossessed the property.
	Other segments: Commercial Banking, Global Corporate Banking and Corporate Centre – They have had a winding up notice issued, or something happens that is likely to trigger insolvency – such as, another lender calls in a loan – Something happens that makes them less likely to be able to pay us – such as they lose an important client or contract – They have regularly missed or delayed payments, even though they have not gone over the three-month limit for NPLs – Their loan is unlikely to be refinanced or repaid in full on maturity – Their loan has an excessive LTV and it is unlikely that it will be resolved, such as by a change in planning policy, pay-downs from rental income, or increases in market values.

Summary of Difference Between Maximum and Net Exposure to Credit Risk

The tables below show the main differences between our maximum and net exposure to credit risk. They show the effects of collateral, netting, and risk transfer to mitigate our exposure. The tables only show the financial assets that credit risk affects.

For balance sheet assets, the maximum exposure to credit risk is the carrying value after impairment loss allowances. Off-balance sheet exposures are guarantees, formal standby facilities, credit lines and other commitments. For off-balance sheet guarantees, the maximum exposure is the maximum amount that we would have to pay if the guarantees were called on. For formal standby facilities, credit lines and other commitments that are irrevocable over the life of the facility, the maximum exposure is the total amount of the commitment.

	Maximum exposure									Collateral(1)
	Balance sheet asset
2017	Gross       amounts £bn		Impairment loss allowances and RV & VT(2) provisions £bn			Net     amounts £bn		Off-balance sheet £bn		Cash £bn			Non-cash £bn			Netting(3) £bn			Net exposure £bn
Cash and balances at central banks		32.8		–			32.8		–		–			–			–			32.8
Trading assets:
– Securities repurchased under resale agreements		8.9		–			8.9		–		–			(8.5	)		(0.4	)		–
– Debt securities		5.2		–			5.2		–		–			–			–			5.2
– Cash collateral		6.2		–			6.2		–		–			–			–			6.2
– Short-term loans		0.7		–			0.7		–		–			–			–			0.7
Total trading assets		21.0		–			21.0		–		–			(8.5	)		(0.4	)		12.1
Derivative financial instruments		19.9		–			19.9		–		(2.8	)		–			(14.8	)		2.3
Financial assets designated at fair value:
– Loans and advances to customers		1.6		–			1.6		–		–			(1.6	)		–			–
– Debt securities		0.5		–			0.5		–		–			–			–			0.5
Total financial assets designated at fair value		2.1		–			2.1		–		–			(1.6	)		–			0.5
Loans and advances to banks		5.9		–			5.9		1.6		–			(2.5	)		–			5.0
Loans and advances to customers:(4)
– Advances secured on residential property		155.4		(0.2	)		155.2		12.4		–			(167.4)(5)			–			0.2
– Corporate loans		31.0		(0.5	)		30.5		17.1		–			(21.8	)		–			25.8
– Finance leases		6.7		(0.1	)		6.6		0.6		(0.1	)		(5.8	)		–			1.3
– Other unsecured loans		6.2		(0.2	)		6.0		11.1		–			(0.1	)		–			17.0
– Amounts due from fellow Banco Santander group subsidiaries and joint ventures		1.2		–			1.2		–		–			–			–			1.2
Total loans and advances to customers		200.5		(1.0	)		199.5		41.2		(0.1	)		(195.1	)		–			45.5
Financial investments:
– Loans and receivables securities(4)		2.2		–			2.2		0.7		–			–			–			2.9
– Available-for-sale debt securities		8.8		–			8.8		–		–			–			–			8.8
– Held-to-maturity debt securities		6.5		–			6.5		–		–			–			–			6.5
Total financial investments		17.5		–			17.5		0.7		–			–			–			18.2
Total		299.7		(1.0	)		298.7		43.5		(2.9	)		(207.7	)		(15.2	)		116.4

(1) The forms of collateral we take to reduce credit risk include: residential and commercial property; other physical assets, including motor vehicles; liquid securities, including those transferred under reverse repurchase agreements; cash, including cash used as collateral for derivative transactions; and receivables. Charges on residential property are most of the collateral we take.

(2) Residual Value (RV) and Voluntary Termination (VT) provisions.

(3) We can reduce credit risk exposures by applying netting. We do this mainly for derivative and repurchase transactions with financial institutions. For derivatives, we use standard master netting agreements. They allow us to set off our credit risk exposure to a counterparty from a derivative against our obligations to the counterparty in the event of default. This gives us a lower net credit exposure. They may also reduce settlement exposure. For more on this, see ‘Credit risk mitigation’ in the ‘Other segments – credit risk management’ section.

(4) Balances include interest we have charged to the customer’s account and accrued interest that we have not charged to the account yet.

(5) The collateral value we have shown is limited to the balance of each associated individual loan. It does not include the impact of over–collateralisation (where the collateral has a higher value than the loan balance) and includes collateral we would receive on draw down of certain off–balance sheet commitments.

	Maximum exposure									Collateral(1)
	Balance sheet asset
2016	Gross       amounts £bn		Impairment loss allowances and RV & VT(2) provisions £bn			Net     amounts £bn		Off-balance sheet £bn		Cash £bn			Non-cash £bn			Netting(2) £bn			Net exposure £bn
Cash and balances at central banks		17.1		–			17.1		–		–			–			–			17.1
Trading assets:
– Securities repurchased under resale agreements		10.7		–			10.7		–		–			(8.6	)		(2.1	)		–
– Debt securities		6.2		–			6.2		–		–			–			–			6.2
– Cash collateral		6.2		–			6.2		–		–			–			–			6.2
– Short-term loans		0.9		–			0.9		–		–			–			–			0.9
Total trading assets		24.0		–			24.0		–		–			(8.6	)		(2.1	)		13.3
Derivative financial instruments		25.5		–			25.5		–		(2.4	)		–			(17.4	)		5.7
Financial assets designated at fair value:
– Loans and advances to customers		1.7		–			1.7		0.2		–			(1.8	)		–			0.1
– Debt securities		0.4		–			0.4		–		–			–			–			0.4
Total financial assets designated at fair value		2.1		–			2.1		0.2		–			(1.8	)		–			0.5
Loans and advances to banks		4.4		–			4.4		1.9		–			(1.5	)		–			4.8
Loans and advances to customers:(4)
– Advances secured on residential property		154.7		(0.3	)		154.4		10.8		–			(164.9)(5	)		–			0.3
– Corporate loans		32.0		(0.4	)		31.6		17.1		–			(23.1	)		–			25.6
– Finance leases		6.7		(0.1	)		6.6		0.4		(0.1	)		(5.7	)		–			1.2
– Other unsecured loans		6.2		(0.2	)		6.0		11.5		–			–			–			17.5
– Amounts due from fellow Banco Santander group subsidiaries and joint ventures		1.1		–			1.1		–		–			–			–			1.1
Total loans and advances to customers		200.7		(1.0	)		199.7		39.8		(0.1	)		(193.7	)		–			45.7
Financial investments:
– Loans and receivables securities(4)		0.3		–			0.3		1.6		–			–			–			1.9
– Available-for-sale debt securities		10.4		–			10.4		–		–			–			–			10.4
– Held-to-maturity debt securities		6.6		–			6.6		–		–			–			–			6.6
Total financial investments		17.3		–			17.3		1.6		–			–			–			18.9
Total		291.1		(1.0	)		290.1		43.5		(2.5	)		(205.6	)		(19.5	)		106.0

(1) The forms of collateral we take to reduce credit risk include: residential and commercial property; other physical assets, including motor vehicles; liquid securities, including those transferred under reverse repurchase agreements; cash, including cash used as collateral for derivative transactions; and receivables. Charges on residential property are most of the collateral we take.

(2) Residual Value (RV) and Voluntary Termination (VT) provisions.

(3) We can reduce credit risk exposures by applying netting. We do this mainly for derivative and repurchase transactions with financial institutions. For derivatives, we use standard master netting agreements. They allow us to set off our credit risk exposure to a counterparty from a derivative against our obligations to the counterparty in the event of default. This gives us a lower net credit exposure. They may also reduce settlement exposure. For more on this, see ‘Credit risk mitigation’ in the ‘Other segments – credit risk management’ section.

(4) Balances include interest we have charged to the customer’s account and accrued interest that we have not charged to the account yet.

(5) The collateral value we have shown is limited to the balance of each associated individual loan. It does not include the impact of over–collateralisation (where the collateral has a higher value than the loan balance) and includes collateral we would receive on draw down of certain off–balance sheet commitments.

Summary of Credit Rating of Financial Assets Subject to Credit Risk

The tables below show the credit rating of our financial assets subject to credit risk. For more on the credit rating profiles of key portfolios, see the ‘Credit Risk – Retail Banking’ and ‘Credit Risk – other segments’ sections.

	Santander UK risk grade
2017	9             £bn		8         £bn		7         £bn		6         £bn		5         £bn		4         £bn		3 to 1         £bn		Other(1) £bn		Total £bn
Cash and balances at central banks		31.8		–		–		–		–		–		–		1.0		32.8
Trading assets:
– Securities repurchased under resale agreements		–		5.7		1.5		1.7		–		–		–		–		8.9
– Debt securities		1.2		3.1		0.9		–		–		–		–		–		5.2
– Cash collateral		0.1		0.9		5.1		0.1		–		–		–		–		6.2
– Short-term loans		0.7		–		–		–		–		–		–		–		0.7
Total trading assets		2.0		9.7		7.5		1.8		–		–		–		–		21.0
Derivative financial instruments		0.4		9.9		7.6		1.5		0.4		–		–		0.1		19.9
Financial assets designated at fair value:
– Loans and advances to customers		0.3		1.2		0.1		–		–		–		–		–		1.6
– Debt securities		0.4		0.1		–		–		–		–		–		–		0.5
Total financial assets designated at fair value		0.7		1.3		0.1		–		–		–		–		–		2.1
Loans and advances to banks		1.3		1.7		1.1		0.4		–		–		–		1.4		5.9
Loans and advances to customers:(2)
– Advances secured on residential property		3.2		26.7		75.2		35.2		6.2		4.5		4.4		–		155.4
– Corporate loans		1.7		5.1		2.1		4.6		9.6		5.1		1.5		1.3		31.0
– Finance leases		–		–		0.4		1.3		2.0		1.8		1.1		0.1		6.7
– Other unsecured loans		–		0.1		0.8		1.6		1.6		0.7		0.5		0.9		6.2
– Amounts due from fellow Banco Santander group subsidiaries and joint ventures		–		–		–		–		–		–		–		1.2		1.2
Total loans and advances to customers		4.9		31.9		78.5		42.7		19.4		12.1		7.5		3.5		200.5
Financial investments:
– Loans and receivables securities(2)		1.9		0.1		0.2		–		–		–		–		–		2.2
– Available-for-sale debt securities		6.5		1.9		0.4		–		–		–		–		–		8.8
– Held-to-maturity debt securities		6.5		–		–		–		–		–		–		–		6.5
Total financial investments		14.9		2.0		0.6		–		–		–		–		–		17.5
		56.0		56.5		95.4		46.4		19.8		12.1		7.5		6.0		299.7
Impairment loss allowances and RV & VT provisions(5)																		(1.0	)
Total																		298.7
Of which:
Neither past due nor impaired:
– Cash and balances at central banks		31.8		–		–		–		–		–		–		1.0		32.8
– Trading assets		2.0		9.7		7.5		1.8		–		–		–		–		21.0
– Derivative financial instruments		0.4		9.9		7.6		1.5		0.4		–		–		0.1		19.9
– Financial assets designated at fair value		0.7		1.3		0.1		–		–		–		–		–		2.1
– Loans and advances to banks		1.3		1.7		1.1		0.4		–		–		–		1.4		5.9
– Loans and advances to customers		4.9		31.9		78.5		42.7		19.3		12.1		3.8		3.5		196.7
– Financial investments		14.9		2.0		0.6		–		–		–		–		–		17.5
Total neither past due nor impaired		56.0		56.5		95.4		46.4		19.7		12.1		3.8		6.0		295.9
Past due but not impaired(3)		–		–		–		–		0.1		–		2.4		–		2.5
Impaired(4)		–		–		–		–		–		–		1.3		–		1.3
		56.0		56.5		95.4		46.4		19.8		12.1		7.5		6.0		299.7
Impairment loss allowances and RV & VT provisions(5)																		(1.0	)
Total																		298.7

(1) Other items include cash at hand and smaller cases mainly in the consumer (auto) finance and commercial mortgages portfolios. We use scorecards for these items, rather than rating models.

(2) Balances include interest we have charged to the customer’s account and accrued interest we have not charged to the account yet.

(3) Balances include mortgage loans in arrears which have been assessed for incurred but not observed (IBNO) losses as described in Note 1 to the Consolidated Financial Statements.

(4) Impaired loans are loans we have assessed for observed impairment loss allowances. This included loans individually assessed for impairment of £713m.

(5) Residual Value (RV) and Voluntary Termination (VT) provisions.

	Santander UK risk grade
2016	9 £bn		8 £bn		7 £bn		6 £bn		5 £bn		4 £bn		3 to 1 £bn		Other(1) £bn		Total  £bn
Cash and balances at central banks		15.9		–		–		–		–		–		–		1.2		17.1
Trading assets:
– Securities repurchased under resale agreements		–		5.4		4.2		0.9		0.2		–		–		–		10.7
– Debt securities		2.8		1.5		0.3		1.6		–		–		–		–		6.2
– Cash collateral		–		1.5		4.3		0.4		–		–		–		–		6.2
– Short-term loans		0.8		–		–		–		0.1		–		–		–		0.9
Total trading assets		3.6		8.4		8.8		2.9		0.3		–		–		–		24.0
Derivative financial instruments		1.1		10.4		9.9		3.4		0.6		–		–		0.1		25.5
Financial assets designated at fair value:												–		–
– Loans and advances to customers		0.6		0.5		0.6		–		–		–		–		–		1.7
– Debt securities		–		0.1		–		0.3		–		–		–		–		0.4
Total financial assets designated at fair value		0.6		0.6		0.6		0.3		–		–		–		–		2.1
Loans and advances to banks		1.7		1.5		0.5		0.2		–		–		–		0.5		4.4
Loans and advances to customers:(2)
– Advances secured on residential property		2.1		23.8		74.0		37.8		6.8		5.3		4.9		–		154.7
– Corporate loans		3.3		3.2		1.6		10.5		7.4		3.7		0.9		1.4		32.0
– Finance leases		–		–		0.4		1.3		2.0		1.9		1.0		0.1		6.7
– Other unsecured loans		–		–		0.2		1.5		2.4		0.9		0.4		0.8		6.2
– Amounts due from fellow Banco Santander group subsidiaries and joint ventures		1.1		–		–		–		–		–		–		–		1.1
Total loans and advances to customers		6.5		27.0		76.2		51.1		18.6		11.8		7.2		2.3		200.7
Financial investments:
– Loans and receivables securities(2)		0.1		–		0.2		–		–		–		–		–		0.3
– Available-for-sale debt securities		7.8		1.8		0.7		–		–		–		–		0.1		10.4
– Held-to-maturity debt securities		6.6		–		–		–		–		–		–		–		6.6
Total financial investments		14.5		1.8		0.9		–		–		–		–		0.1		17.3
		43.9		49.7		96.9		57.9		19.5		11.8		7.2		4.2		291.1
Impairment loss allowances and RV & VT provisions(5)																		(1.0)
Total																		290.1
Of which:
Neither past due nor impaired:
– Cash and balances at central banks		15.9		–		–		–		–		–		–		1.2		17.1
– Trading assets		3.6		8.4		8.8		2.9		0.3		–		–		–		24.0
– Derivative financial instruments		1.1		10.4		9.9		3.4		0.6		–		–		0.1		25.5
– Financial assets designated at fair value		0.6		0.6		0.6		0.3		–		–		–		–		2.1
– Loans and advances to banks		1.7		1.5		0.5		0.2		–		–		–		0.5		4.4
– Loans and advances to customers		6.5		27.0		76.2		51.1		18.5		11.7		3.3		2.3		196.6
– Financial investments		14.5		1.8		0.9		–		–		–		–		0.1		17.3
Total neither past due nor impaired		43.9		49.7		96.9		57.9		19.4		11.7		3.3		4.2		287.0
Past due but not impaired(3)		–		–		–		–		0.1		0.1		2.5		–		2.7
Impaired(4)		–		–		–		–		–		–		1.4		–		1.4
		43.9		49.7		96.9		57.9		19.5		11.8		7.2		4.2		291.1
Impairment loss allowances and RV & VT provisions(5)																		(1.0)
Total																		290.1

(1) Other items include cash at hand and smaller cases mainly in the consumer (auto) finance and commercial mortgages portfolios. We use scorecards for these items, rather than rating models.

(2) Balances include interest we have charged to the customer’s account and accrued interest we have not charged to the account yet.

(3) Balances include mortgage loans in arrears which have been assessed for IBNO losses as described in Note 1 to the Consolidated Financial Statements.

(4) Impaired loans are loans we have assessed for observed impairment loss allowances. This included loans individually assessed for impairment of £578m.

(5) Residual Value (RV) and Voluntary Termination (VT) provisions.

Summary of Credit Performance

In addition, customer loans are presented on an amortised cost basis and exclude interest we have accrued but not charged to customers’ accounts yet.

2017	Customer loans £bn		NPLs(1)(2) £m		NPL ratio(3) %		NPL coverage(4) %		Gross write-offs £m		Impairment loss allowances £m
Retail Banking:		169.0		2,105		1.25		23		195		491
– of which mortgages		154.9		1,868		1.21		12		22		225
Commercial Banking		19.4		383		1.97		51		35		195
Global Corporate Banking		6.0		340		5.67		69		–		236
Corporate Centre		5.9		20		0.34		90		23		18
		200.3		2,848		1.42		33		253		940
2016
Retail Banking:		168.6		2,340		1.39		25(5)		210		583(5)
– of which mortgages		154.3		2,110		1.37		13		33		279
Commercial Banking		19.4		518		2.67		42		10		220
Global Corporate Banking		5.7		63		1.11		90		–		57
Corporate Centre		6.5		73		1.12		84		51		61
		200.2		2,994		1.50		31(5)		271		921(5)
Of which: Corporate lending
2017		27.3		838		3.07		58		56		485
2016		27.4		689		2.51		48		34		334

(1) We define NPLs in the ‘Credit risk management’ section.

(2) All NPLs continue accruing interest.

(3) NPLs as a percentage of customer loans.

(4) Impairment loss allowances as a percentage of NPLs. Impairment loss allowances relate to early arrears and performing assets (i.e. the incurred but not observed provision) as well as NPLs, so the ratio can exceed 100%.

(5) In the first half of 2017, we reclassified our provisions for residual value and voluntary termination from the consumer (auto) finance impairment loss allowance. In order to facilitate comparison with the current period, the 31 December 2016 consumer (auto) finance loan loss allowance and NPL coverage ratio were amended. This reclassification was also reflected in the Retail Banking loan loss allowance and NPL coverage ratios.

Summary of Country Risk Explosures

We show them separately in the ‘Balances with other Banco Santander companies’ section.

	2017														2016
					Financial     institutions														Financial     institutions
	Governments £bn		Government guaranteed £bn		Banks(1) £bn		Other £bn		Retail £bn		Corporate £bn		Total(2) £bn		Governments £bn		Government guaranteed £bn		Banks(1) £bn		Other £bn		Retail £bn		Corporate £bn		Total(2) £bn
Eurozone
Ireland		–		–		0.2		1.1		–		0.8		2.1		–		–		0.5		0.4		–		0.5		1.4
Italy		0.4		–		–		0.1		–		0.1		0.6		1.0		–		–		0.1		–		0.2		1.3
Spain (excl. Santander)		–		–		0.3		0.1		–		0.1		0.5		–		–		0.3		0.1		–		0.2		0.6
Portugal		–		–		0.1		–		–		–		0.1		–		–		0.1		–		–		–		0.1
France		–		0.3		2.0		0.2		–		2.2		4.7		0.1		0.3		1.8		0.2		–		0.1		2.5
Germany		–		–		2.8		–		–		0.1		2.9		–		–		2.5		–		–		–		2.5
Luxembourg		–		–		–		1.3		–		0.4		1.7		–		–		–		2.3		–		0.3		2.6
Other(3)		0.3		–		1.1		0.2		–		1.4		3.0		0.3		–		1.1		0.3		–		1.1		2.8
		0.7		0.3		6.5		3.0		–		5.1		15.6		1.4		0.3		6.3		3.4		–		2.4		13.8
Other countries
UK		44.7		–		9.1		13.0		191.3		42.9		301.0		33.6		0.4		12.0		13.5		189.1		41.3		289.9
US		6.3		0.1		8.2		2.3		–		0.1		17.0		4.8		0.2		10.6		2.5		–		0.1		18.2
Japan(4)		3.0		–		2.6		0.2		–		0.8		6.6		2.8		–		3.2		0.1		–		1.4		7.5
Switzerland		0.2		–		0.2		–		–		0.2		0.6		0.2		–		0.1		–		–		0.2		0.5
Denmark		–		–		0.1		–		–		0.4		0.5		–		–		0.1		–		–		0.4		0.5
Russia		–		–		–		–		–		–		–		–		–		–		0.1		–		–		0.1
Other		0.1		–		2.3		0.9		–		1.9		5.2		0.1		–		2.6		0.6		–		2.3		5.6
		54.3		0.1		22.5		16.4		191.3		46.3		330.9		41.5		0.6		28.6		16.8		189.1		45.7		322.3
Total		55.0		0.4		29.0		19.4		191.3		51.4		346.5		42.9		0.9		34.9		20.2		189.1		48.1		336.1

(1) Excludes balances with central banks.

(2) Excludes cash at hand, interests in other entities, intangible assets, property, plant and equipment, tax assets, retirement benefit assets and other assets. Loans are included gross of credit provisions.

(3) Includes The Netherlands of £1.8bn (2016: £1.4bn), Cyprus of £nil (2016: £28m), Greece of £nil (2016: £nil).

(4) Balances are mainly equity instruments listed in Japan and reverse repos with Japanese banks, held as part of our Short Term Markets business. The equity exposures are hedged using derivatives and the additional reverse repos are fully collateralised.

Summary of Balances with Other Banco Santander Companies

At 31 December 2017 and 2016, we had gross balances with other Banco Santander companies as follows:

	2017								2016
	Financial institutions								Financial institutions
	Banks £bn		Other £bn		Corporate £bn		Total £bn		Banks £bn		Other £bn		Corporate £bn		Total £bn
Assets
Spain		4.4		–		–		4.4		2.1		–		–		2.1
UK		–		1.3		–		1.3		–		1.1		–		1.1
Chile		–		–		–		–		0.1		–		–		0.1
Other <£100m		–		–		–		–		0.2		–		–		0.2
		4.4		1.3		–		5.7		2.4		1.1		–		3.5
Liabilities
Spain		5.1		0.3		0.1		5.5		2.9		0.2		0.1		3.2
UK		0.1		7.6		0.1		7.8		–		6.2		0.1		6.3
Uruguay		0.1		–		–		0.1		0.2		–		–		0.2
Chile		–		–		–		–		0.1		–		–		0.1
Other <£100m		–		0.1		–		0.1		0.2		0.1		–		0.3
		5.3		8.0		0.2		13.5		3.4		6.5		0.2		10.1

Summary of Types of Credit Risk Mitigation

The types of credit risk mitigation, including collateral, across each of our portfolios is:

Portfolio	Description
Residential mortgages	Collateral is in the form of a first legal charge over the property. Before we grant a mortgage, we get an approved surveyor to value the property. We have our own guidelines for valuations, which build on guidance from the Royal Institution of Chartered Surveyors (RICS). For remortgages and some loans where the LTV is 75% or less, we might use an automated valuation instead.
Business banking	Includes secured and unsecured lending. We can take mortgage debentures as collateral if the business is incorporated. These are charges over a company’s assets. We can also take guarantees, but we do not treat them as collateral, and we do not put a cash value on them unless they are secured against a tangible asset. We base our lending decision on the customer’s trading cash flow. If a customer defaults, we work with them to consider debt restructuring options. We generally do not enforce our security over their assets except as a last resort. In which case we might appoint an administrator or receiver.
Consumer (auto) finance	Collateral is in the form of legal ownership of the vehicle for most consumer (auto) finance loans, with the customer being the registered keeper. Only a very small proportion of the consumer (auto) finance business is underwritten as a personal loan. In these cases there is no collateral or security tied to the loan. We use a leading vehicle valuation company to assess the LTV at the proposal stage.
Unsecured lending	Unsecured lending means there is no collateral or security tied to the loan that can be used to mitigate any potential loss if the customer does not pay us back.

Retail Banking Forbearance Action Description

We may offer the following types of forbearance, but only if our assessments show the customer can meet the revised payments:

Action	Description
Capitalisation	We offer two main types, which are often combined with term extensions and, in the past, interest-only concessions:
	– If the customer cannot afford to increase their monthly payment enough to pay off their arrears in a reasonable time, but has been making their monthly payments (usually for at least six months), then we can add the arrears to the mortgage balance.
	– We can also add to the mortgage balance at the time of forbearance unpaid property charges which are due to a landlord and which we pay on behalf of the customer to avoid the lease being forfeited.
Term extension	We can extend the term of the loan, making each monthly payment smaller. At a minimum, we expect the customer to pay the interest in the short-term and have a realistic chance of repaying the full balance in the long-term. We may offer this option if the customer is up-to-date with their payments, but showing signs of financial difficulties. For mortgages, the customer must also meet our policies for maximum loan term and age when they finish repaying (usually no more than 75).
Interest-only	In the past, if it was not possible or affordable for a customer to have a term extension, we may have agreed to let them pay only the interest on the loan for a short time – usually less than a year. We only agreed to this where we believed their financial problems were temporary and they were likely to recover. Since March 2015 we no longer provide this option as a concession. Instead, interest-only is only offered as a short-term standard collections arrangement. We now record any related shortfall in monthly payments as arrears and report them to the credit reference agencies. As a result, we no longer classify new interest-only arrangements agreed since March 2015 as forbearance. We continue to manage and report all interest-only arrangements offered before this date as forbearance.
Reduced payment arrangements	We can suspend overdraft fees and charges while the customer keeps to a plan to reduce their overdraft each month.

Summary of Residential Mortgages by Borrower Profile

We have not included internal remortgages, further advances and any flexible mortgage drawdowns in the new business figures.

	Stock								New business
	2017				2016				2017				2016
	£m		%		£m		%		£m		%		£m		%
First-time buyers		28,768		19		29,143		19		4,046		17		4,193		17
Home movers		68,901		44		68,158		44		10,730		44		11,072		45
Remortgagers		50,473		33		50,325		33		8,071		33		7,092		29
Buy-to-let		6,802		4		6,648		4		1,371		6		2,212		9
		154,944		100		154,274		100		24,218		100		24,569		100

Summary of Residential Mortgages by Interest Rate Profile

The interest rate profile of our mortgage asset stock was:

	2017				2016
	£m		%		£m		%
Fixed rate		102,268		66		91,817		59
Variable rate		29,370		19		33,627		22
Standard Variable Rate (SVR)		23,306		15		28,830		19
		154,944		100		154,274		100

Summary of Residential Mortgages by Geographical Distribution

The geographical distribution of our mortgage asset stock was:

	Stock				New business
	2017		2016		2017		2016
UK region	£bn		£bn		£bn		£bn
London		37.6		37.2		5.8		6.7
Midlands and East Anglia		20.6		20.6		3.4		3.2
North		22.2		22.8		3.0		3.0
Northern Ireland		3.6		3.8		0.2		0.2
Scotland		6.8		7.0		1.0		0.9
South East excluding London		47.2		46.1		8.2		8.1
South West, Wales and other		16.9		16.8		2.6		2.5
		154.9		154.3		24.2		24.6

Summary of Residential Mortgages by Loan Size

The mortgage asset stock of larger loans was:

	South East including London				UK
Stock – individual mortgage loan size	2017 £m		2016   £m		2017 £m		2016   £m
<£0.25m		46,766		48,355		107,050	110,415
£0.25m to £0.50m		27,562		25,040		36,083	32,871
£0.50m to £1.0m		9,214		8,438		10,535	9,668
£1.0m to £2.0m		1,046		1,099		1,111	1,161
>£2.0m		163		157		165	159
		84,751		83,089		154,944	154,274

Summary of Residential Mortgages by Average Loan Size for New Business

The average loan size for new business in 2017 and 2016 was:

UK region	2017 £000		2016   £000
South East including London		260	264
Rest of the UK		146	144
UK as a whole		196	198

Summary of Residential Mortgages by Loan to Value

This table shows the LTV distribution for our mortgage stock, NPL stock and new business. We use our estimate of the property value at the balance sheet date. We include fees added to the loan in the calculation. For flexible products, we only include the drawn amount, not undrawn limits.

	2017						2016
			Of which:						Of which:
LTV	Stock %		NPL stock %		New business   %		Stock %		NPL stock %	New business   %
Up to 50%		48		44		19		46	39	17
>50-75%		39		34		43		41	36	43
>75- 85%		8		8		19		8	9	23
>85-100%		4		7		19		4	8	17
>100%		1		7		–		1	8	–
		100		100		100		100	100	100
Collateral value of residential properties(1)(2)	£	154,721m	£	1,824m	£	24,218m	£	153,989m	£2,043m	£24,569m
	%		%		%		%		%	%
Simple average(3) LTV (indexed)		42		44		62		43	46	65
Valuation weighted average(4) LTV (indexed)		38		38		58		39	40	60
(1)  Includes collateral against loans in negative equity of £1,248m at 31 December 2017 (2016: £1,588m). (2)  The collateral value we have shown is limited to the balance of each associated individual loan. It does not include the impact of over-collateralisation (where the collateral has a higher value than the loan balance). (3)  Total of all LTV% divided by the total of all accounts. (4)  Total of all loan values divided by the total of all valuations.

Summary of Residential Mortgages by Credit Performance

Credit performance

	2017 £m		2016   £m
Mortgage loans and advances to customers of which:		154,944	154,274
Performing(1)		151,948	150,895
Early arrears:		1,128	1,269
– 31 to 60 days		702	793
– 61 to 90 days		426	476
NPLs:(2)		1,868	2,110
– By arrears		1,427	1,578
– By bankruptcy		14	21
– By maturity default		303	316
– By forbearance		95	160
– By properties in possession (PIPs)		29	35
Impairment loss allowances		225	279
Early arrears ratio(3)		0.73%	0.82%
NPL ratio(4)		1.21%	1.37%
Coverage ratio(5)		12%	13%
(1)  Excludes mortgages where the customer did not pay for between 31 and 90 days, arrears, bankruptcy, maturity default, forbearance and PIPs NPLs. Includes £2,661m of mortgages (2016: £2,959m) where the customer did not pay for 30 days or less. (2)  We define NPLs in the ‘Credit risk management’ section. All NPLs are in the UK and continue accruing interest. (3)  Mortgages in early arrears as a percentage of mortgages. (4)  Mortgage NPLs as a percentage of mortgages. (5)  Impairment loss allowances as a percentage of NPLs.

Summary of Residential Mortgages by Forbearance Applied

The balances at 31 December 2017 and 2016, analysed by their payment status at the year-end and the forbearance we applied, were:

2017	Capitalisation £m	Term extension £m	Interest-only £m	Total £m	Impairment     loss allowances   £m
In arrears	260	63	175	498	22
Performing	392	178	407	977	5
	652	241	582	1,475	27
Proportion of portfolio	0.4%	0.2%	0.4%	1.0%
2016
In arrears	293	78	226	597	24
Performing	466	222	481	1,169	7
	759	300	707	1,766	31
Proportion of portfolio	0.5%	0.2%	0.4%	1.1%

(1) We base forbearance type on the first forbearance on the accounts.

Mortgages With Higher Risks

We are mainly a residential prime lender and we do not originate sub-prime or second charge mortgages. Despite that, some types of mortgages have higher risks and others stand out for different reasons. These are:

Product	Description
Interest-only loans and part interest-only, part repayment loans	With an interest-only mortgage, the customer pays the interest every month but does not repay the money borrowed (the principal) until the end of the mortgage. Some mortgages have a part that is interest-only, with the rest being a normal repayment mortgage. Customers with part interest-only, part repayment mortgages still have to pay back a lump sum at the end of their mortgage for the interest-only part. This means there is a higher credit risk on these loans as we depend on the customers to pay back a lump sum. We design new account LTV maximums to mitigate this credit risk. We also make sure the customer has a plausible repayment plan before we lend to them, and remains on track for the life of the loan. Since 2009, we have reduced the risk from new interest-only mortgages by lowering the maximum LTV (it has been 50% since 2012). When a customer plans to repay their mortgage by selling the property, we now only allow that if they own more than a set proportion of the equity. Customers with interest-only mortgages have to make arrangements to repay the principal at the end of the mortgage. We have a strategy to make sure that we tell these customers that they have to do this. We send them messages with their annual mortgage statements, and we run contact campaigns to encourage them to tell us how they plan to repay. In 2013, we contacted all our customers whose mortgages were due to mature before 2020. Since 2016, we have extended these campaigns to periodically contact all interest-only customers. We increase our contact frequency as customers approach term maturity. Outside of sending out annual mortgage statements, we contact more than 100,000 interest-only customers per year. If customers know they will not be able to repay their mortgage in full when it ends, or if their mortgage has already passed the date when it should have ended, we talk to them. If we think it is in the customer’s interests (and they can afford it), we look at other ways of managing it. That can mean turning the mortgage into a standard repayment one, and extending it. Or, if the customer is waiting for their means of repaying it (an investment plan or bonds, for example) to mature, it can just mean extending it.
Flexible loans	Flexible mortgages allow customers to pay more or less than their usual amount each month, or even to take ‘payment holidays’ when they pay nothing at all. Customers do not have to take (or draw down) the whole loan all at once – so if they took out a mortgage big enough to allow them to build a home extension after three years, they do not have to start paying interest on that extra money until they are ready to spend it. There are conditions on when and how much customers can draw down: – There are often limits on how much can be drawn down in any month – The customer cannot be in payment arrears – The customer cannot have insolvency problems, such as a county court judgement, bankruptcy, an individual voluntary arrangement, an administration order or a debt relief order. A customer can ask us to increase their credit limit (the total amount they are allowed to borrow on their mortgage), but that means we will go through our full standard credit approval process. We can also lower the customer’s credit limit at any time, so it never goes above 90% of the property’s current market value. We no longer offer flexible loan products for new mortgages. This is an area of interest in order to identify customers who might be using these facilities to self-forbear (such as regularly drawing down small amounts). If there is any sign that the credit risk has significantly increased, we reflect this in our provision calculations.
Loans with an LTV >100%	Where the mortgage balance is more than the property is now worth, we cannot recover the full value of the loan by repossessing and selling the property. This means there is a higher credit risk on these loans. In some cases, property prices have fallen, so mortgages we gave in the past with lower LTVs now have LTVs greater than 100%. Before 2009, we sometimes allowed customers to borrow more than the price of the property. We monitor existing accounts with LTVs >100% as part of our assessment of ongoing portfolio performance. We design new account LTV maximums to mitigate an increase in the volume of accounts with an LTV >100%.
Buy-to-Let (BTL) loans	Given that we have a relatively small share of the BTL market, we believe that we still have an opportunity to grow our presence in a controlled manner. We focus on non-professional landlords (landlords with a small number of properties), as this segment is more closely aligned with residential mortgages and covers most of the BTL market. Our policy is that BTL mortgages should finance themselves, with the rent covering the mortgage payments and other costs. Even so, there is always the risk that income from the property may not cover the costs, for example, if the landlord cannot find tenants for a while. In recent years, we have refined our BTL proposition to appeal to a wider catchment, and we have improved our systems to cater for this segment. We have prudent lending criteria, and specific policies for BTL. We only lend to non-professional landlords, to a maximum 75% LTV. The first applicant must earn a minimum income of £25,000 per year, and we require evidence of income in all cases. We also use a BTL affordability rate as part of our assessment about whether or not to lend. This means that the rental income must cover the monthly mortgage interest payments by a prescribed amount when calculated using a stressed interest rate. The prescribed amount is regularly reviewed and adjusted as necessary.

Summary of Residential Mortgages Portfolios of Particular Interest by Credit Performance

Credit performance

			Segment of particular interest(1)
2017	Total £m		Interest-only £m		Part interest- only, part repayment £m			Flexible(2) £m		LTV >100% £m		Buy-to-let £m		Other  portfolio  £m
Mortgage portfolio		154,944		38,893		13,794(3)			14,787		1,472		6,802	95,779
Performing		151,948		37,505		13,379			14,440		1,303		6,768	94,772
Early arrears:
– 31 to 60 days		702		317		94			67		22		9	296
– 61 to 90 days		426		203		58			35		15		4	168
NPLs		1,868		868		263			245		132		21	543
NPL ratio		1.21%		2.23%		1.91%			1.66%		8.97%		0.31%	0.57%
PIPs		29		17		5			3		10		1	6
2016
Mortgage portfolio		154,274		41,707		14,535(3	)		16,853		1,873		6,648	90,570
Performing		150,895		40,185		14,066			16,472		1,661		6,621	89,483
Early arrears:
– 31 to 60 days		793		360		111			71		33		7	314
– 61 to 90 days		476		224		70			45		22		2	191
NPLs		2,110		938		288			265		157		18	582
NPL ratio		1.37%		2.25%		1.98%			1.57%		8.38%		0.27%	0.64%
PIPs		35		15		7			4		13		1	9
(1)   Where a loan falls into more than one category, we have included it in all the categories that apply. As a result, the sum of the mortgages in the segments of particular interest and the other portfolio does not agree to the total mortgage portfolio. (2)   Includes legacy Alliance & Leicester flexible loans that work in a more limited way than our current Flexi loan product. (3)   Mortgage balance includes both the interest-only part of £10,121m (2016: £10,560m) and the non-interest-only part of the loan.

Summary of Residential Mortgages Portfolios of Particular Interest by Forbearance Applied

Forbearance⁽¹⁾⁽²⁾

The balances at 21 December 2017 and 2016 were:

	Interest-only(3) £m		Flexible £m		LTV >100% £m		Buy-to-Let  £m
2017		208		34		–	8
2016		322		56		–	9

(1) The figures reflect the amount of forbearance in the year, regardless of whether any forbearance on the accounts before.

(2) Where a loan falls into more than one category, we have included it in all the categories that apply.

(3) Comprises full interest-only loans and part interest-only, part repayment loans.

Summary of Business Banking by Credit Performance

Credit performance

2017	2017 £m		2016 £m
Loans and advances to customers of which:		1,912		2,327
– Performing(1)		1,793		2,216
– Early arrears		4		3
– NPLs(2)		115		108
Impairment loss allowances		54		57
NPL ratio(3)		6.01%		4.64%
Coverage ratio(4)		47%		53%
Gross write-offs		21		24

(1) Excludes loans and advances to customers where the customer did not pay for between 0 and 90 days and NPLs.

(2) We define NPLs in the ‘Credit risk management’ section.

(3) NPLs as a percentage of loans and advances to customers.

(4) Impairment loss allowances as a percentage of NPLs. Impairment loss allowances relate to early arrears and performing assets (i.e the IBNO provision) as well as NPLs, so the ratio can exceed 100%.

Summary of Business Banking by Forbearance

Forbearance

The balances at 31 December 2017 and 2016 were:

	£m
2017		85
2016		94

Summary of Consumer (Auto) Finance and Other Unsecured Lending by Credit Performance

Credit performance

			Other unsecured
2017	Consumer (auto) finance £m		Personal loans £m		Credit cards £m		Overdrafts £m		Total other   unsecured   £m		Total £m
Loans and advances to customers of which:		6,957		2,169		2,444		565		5,178		12,135
– Performing(1)		6,861		2,129		2,377		516		5,022		11,883
– Early arrears		62		24		19		25		68		130
– NPLs(2)		34		16		48		24		88		122
Impairment loss allowances		77		44		62		29		135		212
NPL ratio(3)		0.49%								1.69%		1.00%
Coverage ratio(4)		226%								153%		174%
Gross write-offs		32								120		152

(1) Excludes loans and advances to customers where the customer did not pay for between 0 and 90 days and NPLs.

(2) We define NPLs in the ‘Credit risk management’ section.

(3) NPLs as a percentage of loans and advances to customers.

(4) Impairment loss allowances as a percentage of NPLs. Impairment loss allowances relate to early arrears and performing assets (i.e. the IBNO provision) as well as NPLs, so the ratio exceeds 100%.

				Other unsecured
2016	Consumer (auto) finance £m			Personal loans £m		Credit cards £m		Overdrafts £m		Total other   unsecured   £m		Total £m
Loans and advances to customers of which:		6,764			2,229		2,493		551		5,273		12,037
–  Performing(1)		6,682			2,188		2,422		501		5,111		11,793
–  Early arrears		50			24		23		25		72		122
–  NPLs(2)		32			17		48		25		90		122
Impairment loss allowances		78(5)			55		77		37		169		315
NPL ratio(3)		0.47%									1.71%		1.01%
Coverage ratio(4)		244%(5	)								188%		258%
Gross write-offs		30									123		153

(1) Excludes loans and advances to customers where the customer did not pay for between 0 and 90 days and NPLs.

(2) We define NPLs in the ‘Credit risk management’ section.

(3) NPLs as a percentage of loans and advances to customers.

(4) Impairment loss allowances as a percentage of NPLs. Impairment loss allowances relate to early arrears and performing assets (i.e. the IBNO provision) as well as NPLs, so the ratio exceeds 100%.

(5) In 2017, we reclassified our provisions for residual value and voluntary termination from the consumer finance loan loss allowance. In order to facilitate comparison with the current period, December 2016 consumer finance loan loss allowance and NPL coverage ratio were amended. This reclassification is reflected in the Retail Banking loan loss allowance and NPL coverage ratio.

Summary of Consumer (Auto) Finance and Other Unsecured Lending By Forbearance

Forbearance

The balances at 31 December 2017 and 2016 were:

			Other unsecured
	Consumer (auto) finance £m		Personal loans £m		Credit cards £m		Overdrafts £m		Total other   unsecured   £m		Total £m
2017		–		1		48		28		77		77
2016		–		1		46		28		75		75

Summary of Other Segments Exposures By Credit Rating

Rating distribution

These tables show our credit risk exposure according to our internal rating scale (see ‘Credit quality’ in the ‘Santander UK group level – credit risk review’ section) for each portfolio. On this scale, the higher the rating, the better the quality of the counterparty.

	Santander UK risk grade
2017	9 £m		8 £m		7 £m		6 £m		5 £m		4 £m		3 to 1 £m		Other(1)   £m		Total   £m
Commercial Banking
SME and mid corporate		–		–		259		2,183		5,402		3,574		998		214		12,630
Commercial Real Estate		–		–		–		395		6,135		2,014		60		2		8,606
Social Housing		499		2,600		171		–		–		–		4		–		3,274
		499		2,600		430		2,578		11,537		5,588		1,062		216		24,510
Global Corporate Banking
Sovereign and Supranational		590		3,321		444		–		–		–		–		–		4,355
Large Corporate		260		2,979		8,391		8,879		573		2		355		–		21,439
Financial Institutions		2,362		1,463		2,494		33		103		–		–		–		6,455
		3,212		7,763		11,329		8,912		676		2		355		–		32,249
Corporate Centre
Sovereign and Supranational		44,477		18		–		–		–		–		–		–		44,495
Structured Products		2,487		1,560		300		32		–		–		–		–		4,379
Derivatives		–		212		–		–		–		–		–		–		212
Legacy Portfolios in run-off(2)		–		–		1		359		104		124		37		400		1,025
Social Housing		1,841		3,641		451		43		–		–		–		–		5,976
		48,805		5,431		752		434		104		124		37		400		56,087
2016
Commercial Banking
SME and mid corporate		22		112		344		2,826		4,219		3,142		533		130		11,328
Commercial Real Estate		–		–		302		5,852		2,754		498		118		1		9,525
Social Housing		1,355		1,499		215		–		–		–		–		–		3,069
		1,377		1,611		861		8,678		6,973		3,640		651		131		23,922
Global Corporate Banking
Sovereign and Supranational		1,025		3,111		977		–		–		–		–		–		5,113
Large Corporate		204		2,028		5,347		9,493		4,296		56		75		1		21,500
Financial Institutions		439		3,877		2,913		597		49		–		–		–		7,875
		1,668		9,016		9,237		10,090		4,345		56		75		1		34,488
Corporate Centre
Sovereign and Supranational		34,474		–		–		–		–		–		–		–		34,474
Structured Products		1,597		1,755		654		–		–		–		–		–		4,006
Derivatives		–		175		312		–		–		–		–		–		487
Legacy Portfolios in run-off(2)		2		1		5		540		215		69		63		480		1,375
Social Housing		3,313		2,707		548		43		–		–		–		–		6,611
		39,386		4,638		1,519		583		215		69		63		480		46,953

(1) Consists of smaller exposures mainly in the commercial mortgage portfolio. We use scorecards for them, instead of a rating model.

(2) Consists of commercial mortgages and residual structured and asset finance loans (shipping, aviation, and structured finance).

Summary of Other Segments Exposures by Geographical Distribution

Geographical distribution

We typically classify geographical location according to the counterparty’s country of domicile unless there is a full risk transfer guarantee in place, in which case we use the guarantor’s country of domicile instead.

2017	UK £m		Europe £m		US £m		Rest of World £m		Total  £m
Commercial Banking
SME and mid corporate		12,513		116		1		–		12,630
Commercial Real Estate		8,606		–		–		–		8,606
Social Housing		3,274		–		–		–		3,274
		24,393		116		1		–		24,510
Global Corporate Banking
Sovereign and Supranational		–		1,032		1		3,322		4,355
Large Corporate		17,430		3,699		111		199		21,439
Financial Institutions		3,102		2,121		614		618		6,455
		20,532		6,852		726		4,139		32,249
Corporate Centre
Sovereign and Supranational		35,659		1,514		6,091		1,231		44,495
Structured Products		2,086		1,217		–		1,076		4,379
Derivatives		–		63		149		–		212
Legacy Portfolios in run-off		909		–		–		116		1,025
Social Housing		5,976		–		–		–		5,976
		44,630		2,794		6,240		2,423		56,087
2016
Commercial Banking
SME and mid corporate		11,188		83		57		–		11,328
Commercial Real Estate		9,525		–		–		–		9,525
Social Housing		3,069		–		–		–		3,069
		23,782		83		57		–		23,922
Global Corporate Banking
Sovereign and Supranational		332		1,643		–		3,138		5,113
Large Corporate		17,793		3,356		73		278		21,500
Financial Institutions		4,282		1,629		1,175		789		7,875
		22,407		6,628		1,248		4,205		34,488
Corporate Centre
Sovereign and Supranational		26,693		1,569		4,770		1,442		34,474
Structured Products		1,352		1,529		–		1,125		4,006
Derivatives		312		12		163		–		487
Legacy Portfolios in run-off		1,205		–		–		170		1,375
Social Housing		6,611		–		–		–		6,611
		36,173		3,110		4,933		2,737		46,953

Summary of Other Segments Exposures by Credit Performance

We monitor exposures that show potentially higher risk characteristics using our Watchlist process (described in ‘Monitoring’ in the ‘Credit risk management’ section). The table below shows the exposures we monitor, and those we classify as non-performing by portfolio at 31 December 2017 and 2016.

	Committed exposure
			Watchlist								Observed
2017	Fully performing £m		Enhanced monitoring £m		Proactive  management  £m		Non- performing exposure(1) £m		Total(2)  £m		impairment  loss  allowances  £m
Commercial Banking
SME and mid corporate		11,185		815		296		334		12,630		128
Commercial Real Estate		8,254		160		133		59		8,606		27
Social Housing		3,274		–		–		–		3,274		–
		22,713		975		429		393		24,510		155
Global Corporate Banking
Sovereign and Supranational		4,355		–		–		–		4,355		–
Large Corporate		20,757		284		8		390		21,439		236
Financial Institutions		6,354		1		100		–		6,455		–
		31,466		285		108		390		32,249		236
Corporate Centre
Sovereign and Supranational		44,495		–		–		–		44,495		–
Structured Products		4,379		–		–		–		4,379		–
Derivatives		212		–		–		–		212		–
Legacy Portfolios in run-off		977		22		6		20		1,025		6
Social Housing		5,972		4		–		–		5,976		–
		56,035		26		6		20		56,087		6
Total observed impairment loss allowances												397
Allowance for IBNO(3)												52
Total impairment loss allowances												449

(1) Non-performing exposure includes committed facilities and derivative exposures. So it can exceed the NPLs in the table on page 96 which only include drawn balances.

(2) Includes committed facilities and derivatives. We define ‘Enhanced Monitoring’ and ‘Proactive Management’ in the ‘Monitoring‘ section.

(3) Allowance for IBNO losses as described in Note 1 to the Consolidated Financial Statements.

	Committed exposure
			Watchlist								Observed
2016	Fully performing £m		Enhanced monitoring £m		Proactive  management  £m		Non- performing exposure(1) £m		Total(2)  £m		impairment  loss  allowances  £m
Commercial Banking
SME and mid corporate		9,744		892		331		361		11,328		139
Commercial Real Estate		9,136		161		49		179		9,525		44
Social Housing		2,930		139		–		–		3,069		–
		21,810		1,192		380		540		23,922		183
Global Corporate Banking
Sovereign and Supranational		5,113		–		–		–		5,113		–
Large Corporate		20,702		659		70		69		21,500		33
Financial Institutions		7,671		202		2		–		7,875		–
		33,486		861		72		69		34,488		33
Corporate Centre
Sovereign and Supranational		34,474		–		–		–		34,474		–
Structured Products		4,006		–		–		–		4,006		–
Derivatives		487		–		–		–		487		–
Legacy Portfolios in run-off		1,273		20		9		73		1,375		31
Social Housing		6,447		164		–		–		6,611		–
		46,687		184		9		73		46,953		31
Total observed impairment loss allowances												247
Allowance for IBNO(3)												91
Total impairment loss allowances												338

(1) Non-performing exposure includes committed facilities and derivative exposures. So it can exceed the NPLs in the table below which only include drawn balances.

(2) Includes committed facilities and derivatives. We define ‘Enhanced Monitoring’ and ‘Proactive Management’ in the ‘Monitoring‘ section.

(3) Allowance for IBNO losses as described in Note 1 to the Consolidated Financial Statements.

Summary of Other Segments Non Performing Loans and Advances

Non-performing loans and advances ^{(1) (2)}

	2017						2016
	Commercial Banking £m		Global Corporate Banking £m		Corporate  Centre  £m		Commercial Banking £m		Global Corporate Banking £m		Corporate  Centre  £m
Loans and advances to customers of which:(2)		19,391		6,037		5,905		19,381		5,659		6,478
NPLs(3)		383		340		20		518		63		73
Impairment loss allowances		195		236		18		220		57		61
	%		%		%		%		%		%
NPL ratio(4)		1.98		5.63		0.34		2.67		1.11		1.12
Coverage ratio(5)		51		69		90		42		90		84

(1) We define NPLs in the ‘Credit risk management’ section.

(2) Includes Social Housing loans and finance leases.

(3) All NPLs continue accruing interest.

(4) NPLs as a percentage of loans and advances to customers.

(5) Impairment loss allowances as a percentage of NPLs. Impairment loss allowances relate to early arrears and performing assets (i.e. the IBNO provision) as well as NPLs, so the ratio can exceed 100%.

Summary of Other Segments by Forbearance Applied

Forbearance

We only make forbearance arrangements for lending to customers. The balances at 31 December 2017 and 2016, analysed by their payment status at the year-end and the forbearance we applied, were:

	2017						2016
	Commercial Banking £m		Global Corporate Banking £m		Corporate  Centre(2)  £m		Commercial Banking £m		Global Corporate Banking £m		Corporate  Centre(2)  £m
Stock(1)
– Term extension		136		55		–		168		11		1
– Interest-only		152		–		14		158		–		20
– Other payment rescheduling		127		299		13		208		10		16
		415		354		27		534		21		37
Of which:
– Non-performing		273		347		11		344		10		15
– Performing		142		7		16		190		11		22
		415		354		27		534		21		37
Proportion of portfolio		1.7%		1.1%		2.6%		2.2%		0.1%		2.7%

(1) We base forbearance type on the first forbearance we applied. Tables only show accounts open at the year-end. Amounts are drawn balances and include off balance sheet balances.

(2) Exposure within the Legacy Portfolios in run-off only.

Summary of Commercial Real Estate by Credit Performance

The table below shows the main Commercial Real Estate credit performance metrics at 31 December 2017 and 2016.

	Customer loans(1) £bn		NPLs(2)(3) £m		NPL ratio(4) %		NPL coverage(5) %		Gross write-offs £m		Impairment  loss allowances  £m
2017		8.1		69		0.85		78		11		54
2016		9.0		180		2.00		32		1		58

(1) Comprises commercial real estate drawn loans in the business banking portfolio of our Retail Banking segment of £257m (2016: £365m) and in the Commercial Real Estate portfolio of our Commercial Banking segment of £7,886m (2016: £8,678m).

(2) We define NPLs in the ‘Credit risk management’ section.

(3) All NPLs continue accruing interest.

(4) NPLs as a percentage of customer loans.

(5) Impairment loss allowances as a percentage of NPLs. Impairment loss allowances relate to early arrears and performing assets (i.e. the IBNO provision) as well as NPLs, so the ratio can exceed 100%.

Summary of Commercial Real Estate by Loan to Value

This table shows the LTV distribution for our Commercial Real Estate loan stock and NPL stock (based on the drawn balance and our latest estimate of the property’s current value) of the portfolio at 31 December 2017 and 2016.

	2017				2016
Loans and advances to customers	£m		%		£m		%
<=50%		4,146		51		3,879		44
>50-70%		3,035		37		4,007		44
>70-100%		36		–		194		2
>100% i.e. negative equity		52		1		88		1
Standardised portfolio(1)		629		8		652		7
Total with collateral		7,898		97		8,820		98
Development loans		246		3		223		2
		8,144		100		9,043		100
	2017				2016
NPLs	£m		%		£m		%
<=50%		6		9		7		4
>50-70%		2		3		2		1
>70-100%		1		1		74		41
>100% i.e. negative equity		48		70		74		41
Standardised portfolio(1)		12		17		5		3
Total with collateral		69		100		162		90
Development loans		–		–		18		10
		69		100		180		100

(1) Consists of smaller value transactions, mainly commercial mortgages.

Summary of Commercial Real Estate by Sector

The table below shows the sector analysis of the portfolio at 31 December 2017 and 2016.

	2017				2016
Sector	£m		%		£m		%
Office		2,181		27		2,359		26
Retail		1,389		17		1,739		19
Industrial		1,176		14		1,274		14
Residential		1,001		12		1,016		11
Mixed use		1,146		14		1,184		13
Student accommodation		133		2		224		3
Hotels and leisure		304		4		389		5
Other		185		2		206		2
Standardised portfolio(1)		629		8		652		7
		8,144		100		9,043		100

(1) Consists of smaller value transactions, mainly commercial mortgages.

Social Housing Exposure

At 31 December 2017 and 2016, our total Social Housing exposure in Commercial Banking and Corporate Centre was:

	2017				2016
	Drawn   £m		Total  £m		Drawn   £m		Total  £m
Commercial Banking		2,118		3,274		1,897		3,069
Corporate Centre		5,060		5,976		5,442		6,611
		7,178		9,250		7,339		9,680

Residential Mortgages [member]

Summary of NPL Movements

We analyse NPL movements in 2017 in the table below. ‘Entries’ are loans which we have classified as NPL in the year and exclude ‘Policy entries’ that are due to definition changes. ‘PIP sales’ are loans that have been legally discharged when we have sold the property, and include any written-off portion. ‘Exits’ are loans that have been repaid (in full or in part), and loans that have returned to performing status. Forbearance activity does not change the NPL status.
	£m
At 1 January 2017	2,110
Entries	817
PIP sales	(66)
Exits	(993)
At 31 December 2017	1,868

Other Segments [Member]

Summary of NPL Movements

We analyse NPL movements in 2017 below. ‘Entries’ are loans which we have classified as NPLs in 2017. ‘Exits’ are the part of loans that has been repaid (in full or in part), and loans that returned to performing status. ‘Write-offs’ are the unrecovered part of loans where we have exhausted recovery options, including realising any collateral. Forbearance does not change the NPL status.

	Drawn balances
	Commercial Banking £m			Global Corporate Banking £m			Corporate  Centre  £m
At 1 January 2017		518			63			73
Entries		194			328			18
Exits		(294	)		(51	)		(48)
Write offs		(35	)		–			(23)
At 31 December 2017		383			340			20

XML

Market risk (Tables)

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Summary of Balance Sheet Allocation by Market Risk Classification

We analyse our assets and liabilities exposed to market risk between trading and banking market risk as follows:

	2017						2016
	Trading £m		Banking £m		Total  £m		Trading £m		Banking  £m		Total  £m		Key risk factors
Assets subject to market risk
Cash and balances at central banks		–		32,771		32,771		–		17,107		17,107	FX, Interest rate
Trading assets		30,555		–		30,555		30,035		–		30,035	Equity, FX, interest rate
Derivative financial instruments		14,744		5,198		19,942		18,101		7,370		25,471	Equity, FX, interest rate
Financial assets designated at fair value		–		2,096		2,096		516		1,624		2,140	Interest rate, credit spread
Loans and advances to banks		–		5,927		5,927		–		4,348		4,348	FX, interest rate
Loans and advances to customers		–		199,490		199,490		–		199,738		199,738	Interest rate
Financial investments		–		17,611		17,611		–		17,466		17,466	FX, interest rate, inflation, credit spread
Macro hedge of interest rate risk(1)		–		833		833		–		1,098		1,098	Interest rate
Retirement benefit assets		–		449		449		–		398		398	Equity, FX, interest rate, inflation, credit spread
		45,299		264,375		309,674		48,652		249,149		297,801
Liabilities subject to market risk
Deposits by banks		–		13,784		13,784		–		9,769		9,769	FX, interest rate
Deposits by customers		–		183,648		183,648		–		177,172		177,172	Interest rate
Trading liabilities		31,109		–		31,109		15,560		–		15,560	Equity, FX, interest rate
Derivative financial instruments		16,891		722		17,613		20,018		3,085		23,103	Equity, FX, interest rate
Financial liabilities designated at fair value		1,612		703		2,315		1,665		775		2,440	Interest rate, credit spread
Debt securities in issue		–		42,633		42,633		–		50,346		50,346	FX, interest rate
Subordinated liabilities		–		3,793		3,793		–		4,303		4,303	FX, interest rate
Macro hedge of interest rate risk(2)		–		–		–		–		350		350	Interest rate
Retirement benefit obligations		–		286		286		–		262		262	Equity, FX, interest rate, inflation, credit spread
		49,612		245,569		295,181		37,243		246,062		283,305

(1) This is included in Other assets of £2,511m (2016: £2,571m).

(2) This is included in Other liabilities of £2,730m (2016: £3,221m).

Summary of Internal VaR for Exposure to Main Classes of Risk

This table and graph shows our Internal VaR for exposure to each of the main classes of risk for 2017 and 2016.

	Year-end exposure				Average exposure				Highest exposure				Lowest exposure
	2017	2016			2017	2016			2017		2016		2017		2016
Trading instruments	£m	£m			£m	£m			£m		£m		£m		£m
Interest rate risks	2.6		2.9		2.5		2.5			3.5		3.6		1.8		1.7
Equity risks	0.3		1.4		0.6		0.9			2.0		1.5		0.2		0.6
Credit (spread) risks	–		–		–		–			–		–		–		–
Foreign exchange risks	0.3		1.5		0.4		1.4			1.6		2.2		–		0.1
Diversification offsets(1)	(0.7)		(2.3	)	(0.8)		(2.0	)		–		–		–		–
Total correlated one-day VaR	2.5		3.5		2.7		2.8			3.7		3.6		2.0		1.7

(1) The highest and lowest exposures for each risk type did not necessarily happen on the same day as the highest and lowest total correlated one-day VaR. It is impossible to calculate a corresponding correlation offset effect, so we have not included it in the table.

Summary of NIM and EVE Sensitivity of Interest Rate Risk

The table below shows how our base case income and valuation would be affected by a 50 basis point parallel shift (both up and down) applied instantaneously to the yield curve at 31 December 2017 and 2016. Sensitivity to parallel shifts represents the amount of risk in a way that we think is both simple and scalable. 50 basis points is the stress we typically focus on for banking market risk controls, although we also monitor sensitivities to other parallel and non-parallel shifts as well as scenarios.

	2017					2016
	+50bps		-50bps			+50bps		-50bps
	£m		£m			£m		£m
NIM sensitivity		212		(125	)		240		(82	)
EVE sensitivity (unaudited)		95		(213	)		54		(30	)

XML

Liquidity risk (Tables)

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Summary of Reconciliation of Wholesale Funding to Balance Sheet

This table reconciles our wholesale funding to our balance sheet at 31 December 2017 and 2016.

Balance sheet line item

Financial

Funding

Deposits

Deposits by

Trading

liabilities designated at

Debt securities

Subordinated

Other equity

analysis

by banks

customers(1)

liabilities

fair value

in issue

liabilities

instruments(2)

2017

£bn

£bn

£bn

£bn

£bn

£bn

£bn

£bn

Deposits

0.3

0.2

–

–

0.1

–

–

–

Certificates of deposit and commercial paper

8.0

–

–

–

0.4

7.6

–

–

Senior unsecured – public benchmark

17.8

–

6.0

–

–

11.8

–

–

– privately placed

3.1

–

–

–

1.1

2.0

–

–

Covered bonds

14.2

–

–

–

–

14.2

–

–

Securitisation and structured issuance

5.5

1.0(3

)

0.5

–

–

4.0

–

–

Term Funding Scheme

8.5

8.5

–

–

–

–

–

–

Subordinated liabilities and equity

5.5

–

–

–

–

–

3.2

2.3

Total wholesale funding

62.9

9.7

6.5

–

1.6

39.6

3.2

2.3

Repos

25.6

0.1

–

25.5

–

–

–

–

Foreign exchange and hedge accounting

3.9

–

0.3

–

–

3.0

0.6

–

Other

10.3

4.0(3

)

–

5.6(4

)

0.7

–

–

–

Balance sheet total

102.7

13.8

6.8

31.1

2.3

42.6

3.8

2.3

2016

Deposits by banks

0.7

0.3

–

0.4

–

–

–

–

Certificates of deposit and commercial paper

8.4

–

–

–

0.5

7.9

–

–

Senior unsecured – public benchmark

16.7

–

4.1

–

–

12.6

–

–

– privately placed

4.9

–

–

–

1.4

3.5

–

–

Covered bonds

15.2

–

–

–

–

15.2

–

–

Securitisation and structured issuance

9.6

2.1(3

)

0.5

–

–

7.0

–

–

Term Funding Scheme

4.5

4.5

–

–

–

–

–

–

Subordinated liabilities and equity

5.2

–

–

–

–

–

3.4

1.8

Total wholesale funding

65.2

6.9

4.6

0.4

1.9

46.2

3.4

1.8

Repos

8.8

–

–

8.8

–

–

–

–

Foreign exchange and hedge accounting

5.4

–

0.4

–

–

4.1

0.9

–

Other

9.8

2.9(3

)

–

6.4(4

)

0.5

–

–

–

Balance sheet total

89.2

9.8

5.0

15.6

2.4

50.3

4.3

1.8

(1) This is included in our balance sheet total of £183,648m (2016: £177,172m).

(2) This is £14m (2016: £14m) fixed/floating rate non-cumulative callable preference shares, £235m (2016: £235m) Step-up Callable Perpetual Reserve Capital Instruments and £2,046m (2016: £1,550m) Perpetual Capital Securities. See Note 31 to the Consolidated Financial Statements.

(3) Securitisation and structured issuance comprise of repurchase agreements. Other comprises of items in the course of transmission and other deposits, excluding the Term Funding Scheme. See Note 21 to the Consolidated Financial Statements.

(4) Short positions in securities and unsettled trades, cash collateral and short-term deposits. See Note 23 to the Consolidated Financial Statements.

Summary of Sources of Wholesale Funding by Maturity

This table shows our main sources of wholesale funding. It does not include securities financing repurchase and reverse repurchase agreements. The table is based on exchange rates at issue and scheduled repayments and call dates. It does not reflect the final contractual maturity of the funding.

			>1 and		>3 and		>6 and		>9 and		Sub-total		>1 and		>2 and
	<=1 month		<=3 months		<= 6 months		<=9 months		<=12 months		<=1 year		<=2 years		<=5 years		>5 years		Total
2017	£bn		£bn		£bn		£bn		£bn		£bn		£bn		£bn		£bn		£bn
Downstreamed from Santander UK Group Holdings plc to Santander UK plc(1)
Senior unsecured – public benchmark		–		–		–		–		–		–		–		3.8		2.1		5.9
– privately placed		–		–		–		–		–		–		–		–		0.1		0.1
Subordinated liabilities and equity (incl. AT1)		–		–		–		–		–		–		0.8		0.8		1.4		3.0
		–		–		–		–		–		–		0.8		4.6		3.6		9.0
Other Santander UK plc
Deposits by banks		–		0.1		–		–		–		0.1		–		–		–		0.1
Certificates of deposit and commercial paper		0.2		0.6		0.6		0.1		0.1		1.6		–		–		–		1.6
Senior unsecured – public benchmark		0.8		–		–		1.3		–		2.1		2.9		5.4		1.5		11.9
– privately placed		–		0.7		–		–		–		0.7		1.3		0.6		0.4		3.0
Covered bonds		0.9		–		1.0		–		–		1.9		1.3		7.7		3.3		14.2
Securitisation and structured issuance(2)		–		–		0.4		–		0.9		1.3		0.6		1.2		0.1		3.2
Term Funding Scheme		–		–		–		–		–		–		–		8.5		–		8.5
Subordinated liabilities		0.1		–		–		–		0.1		0.2		–		–		2.3		2.5
		2.0		1.4		2.0		1.4		1.1		7.9		6.1		23.4		7.6		45.0
Other group entities
Deposits by banks		0.1		0.1		–		–		–		0.2		–		–		–		0.2
Certificates of deposit and commercial paper		2.7		2.4		1.3		–		–		6.4		–		–		–		6.4
Securitisation and structured issuance(3)		–		–		–		–		0.4		0.4		1.0		0.9		–		2.3
		2.8		2.5		1.3		–		0.4		7.0		1.0		0.9		–		8.9
Total		4.8		3.9		3.3		1.4		1.5		14.9		7.9		28.9		11.2		62.9
Of which:
– Secured		0.9		–		1.4		–		1.3		3.6		2.9		18.3		3.4		28.2
– Unsecured		3.9		3.9		1.9		1.4		0.2		11.3		5.0		10.6		7.8		34.7
		4.8		3.9		3.3		1.4		1.5		14.9		7.9		28.9		11.2		62.9
2016
Downstreamed from Santander UK Group Holdings plc to Santander UK plc(1)
Senior unsecured – public benchmark		–		–		–		–		–		–		–		2.7		1.3		4.0
– privately placed		–		–		–		–		–		–		–		–		0.1		0.1
Subordinated liabilities and equity (incl. AT1)		–		–		–		–		–		–		–		0.8		1.7		2.5
		–		–		–		–		–		–		–		3.5		3.1		6.6
Other Santander UK plc
Deposits by banks		0.1		–		–		–		–		0.1		–		–		–		0.1
Senior unsecured – public benchmark		–		0.9		–		0.9		–		1.8		2.1		6.7		2.1		12.7
– privately placed		0.9		–		–		0.4		0.2		1.5		0.6		1.4		0.2		3.7
Covered bonds		1.0		–		0.8		–		1.4		3.2		1.8		6.1		4.1		15.2
Securitisation and structured issuance(2)		0.8		0.3		1.1		1.4		0.9		4.5		1.3		0.7		0.6		7.1
Term funding scheme		–		–		–		–		–		–		–		4.5		–		4.5
Subordinated liabilities		0.1		–		–		–		–		0.1		0.2		0.2		2.2		2.7
		2.9		1.2		1.9		2.7		2.5		11.2		6.0		19.6		9.2		46.0
Other group entities
Deposits by banks		0.4		–		–		0.2		–		0.6		–		–		–		0.6
Certificates of deposit and commercial paper		2.9		3.1		1.3		0.7		0.4		8.4		–		–		–		8.4
Senior unsecured – privately placed		–		–		–		–		–		–		0.1		0.5		0.5		1.1
Securitisation and structured issuance(3)		0.3		0.3		0.2		0.2		0.2		1.2		0.9		0.4		–		2.5
		3.6		3.4		1.5		1.1		0.6		10.2		1.0		0.9		0.5		12.6
Total		6.5		4.6		3.4		3.8		3.1		21.4		7.0		24.0		12.8		65.2
Of which:
– Secured		2.1		0.6		2.1		1.6		2.5		8.9		4.0		11.7		4.7		29.3
– Unsecured		4.4		4.0		1.3		2.2		0.6		12.5		3.0		12.3		8.1		35.9
		6.5		4.6		3.4		3.8		3.1		21.4		7.0		24.0		12.8		65.2

(1) Currently all our senior debt issued out of Santander UK Group Holdings plc is downstreamed into Santander UK plc on an equivalent rankings basis (e.g. senior unsecured is downstreamed as senior unsecured, subordinated capital instruments are downstreamed as subordinated capital instruments, etc.). However, under the end-state MREL/TLAC regime, senior unsecured debt issued out of Santander UK Group Holdings plc will be downstreamed in a form that is subordinated to senior unsecured debt, but senior to subordinated capital instruments issued out of Santander UK plc.

(2) This includes funding from mortgage-backed securitisation vehicles where Santander UK plc is the asset originator.

(3) This includes funding from asset-backed securitisation vehicles where entities other than Santander UK plc are the asset originator.

Summary of Wholesale Funding by Currency

This table shows our wholesale funding by major currency at 31 December 2017 and 2016.

	2017								2016
	Sterling %		US Dollar %		Euro %		Other %		Sterling %		US Dollar %		Euro %		Other %
Downstreamed from Santander UK Group Holdings plc to Santander UK plc
Senior unsecured – public benchmark		9		67		22		2		12		63		21		4
– privately placed		–		–		–		100		–		–		–		100
Subordinated liabilities and equity (incl. AT1)		68		32		–		–		61		39		–		–
		28		54		14		4		31		53		13		3
Other Santander UK plc
Deposits by banks		27		73		–		–		33		67		–		–
Certificates of deposit and commercial paper		89		10		–		1
Senior unsecured – public benchmark		9		49		42		–		12		49		39		–
– privately placed		7		19		70		4		3		1		93		3
Covered bonds		47		–		52		1		41		–		58		1
Securitisation and structured issuance		80		20		–		–		59		29		12		–
Term Funding Scheme		100		–		–		–		100		–		–		–
Subordinated liabilities		52		48		–		–		55		45		–		–
		49		19		32		–		39		21		39		1
Other group entities
Deposits by banks		–		100		–		–		7		93		–		–
Certificates of deposit and commercial paper		34		65		1		–		31		68		1		–
Senior unsecured – privately placed		–		–		–		–		22		59		19		–
Securitisation and structured issuance		91		–		9		–		87		5		8		–
		47		50		3		–		41		55		4		–
Total		45		28		25		2		39		30		30		1

Summary of External Term Issuance (Sterling Equivalent)

In 2017, our external term issuance (sterling equivalent) was:

	Sterling £bn		US Dollar £bn		Euro £bn		Other £bn		Total 2017 £bn		Total 2016 £bn
Downstreamed from Santander UK Group Holdings plc to Santander UK plc
Senior unsecured – public benchmark		–		1.6		0.4		–		2.0		3.1
– privately placed		–		–		–		0.1		0.1		0.1
Subordinated debt and equity (incl. AT1)		0.5		–		–		–		0.5		–
		0.5		1.6		0.4		0.1		2.6		3.2
Other Santander UK plc
Securitisations		0.5		–		–		–		0.5		0.6
Covered bonds		2.3		–		–		–		2.3		0.6
Senior unsecured – public benchmark		–		1.1		–		–		1.1		–
– privately placed		0.1		–		–		–		0.1		–
Term Funding Scheme		4.0		–		–		–		4.0		4.5
		6.9		1.1		–		–		8.0		5.7
Other group entities
Securitisations		0.9		0.3		–		–		1.2		0.8
Covered bonds		–		–		–		–		–		0.8
Senior unsecured – public benchmark		–		–		–		–		–		1.4
– privately placed		–		–		–		–		–		1.0
		0.9		0.3		–		–		1.2		4.0
Total gross issuances		8.3		3.0		0.4		0.1		11.8		12.9

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Capital risk (Tables)

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Summary of Regulatory Capital Resources

This table shows our regulatory capital.

	2017 £m		2016 £m
CET1 capital		10,620		10,201
AT1 capital		2,762		2,271
Tier 1 capital		13,382		12,472
Tier 2 capital		3,741		3,772
Total regulatory capital		17,123		16,244

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Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Schedule of Useful Lives or Depreciation Rates Used for Property, Plant and Equipment

Classes of property, plant and equipment are depreciated on a straight-line basis over their useful life, as follows:

Owner-occupied properties	Not exceeding 50 years
Office fixtures and equipment	3 to 15 years
Computer software	3 to 7 years

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Segments (Tables)

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Summary of Results by Segment

Results by segment

2017	Retail Banking £m			Commercial Banking £m			Global Corporate Banking £m			Corporate Centre £m			Total £m
Net interest income		3,302			395			74			32			3,803
Non-interest income		615			74			364			56			1,109
Total operating income		3,917			469			438			88			4,912
Operating expenses before impairment losses, provisions and charges		(1,871	)		(223	)		(304	)		(101	)		(2,499	)
Impairment (losses)/releases on loans and advances		(36	)		(13	)		(174	)		20			(203	)
Provisions for other liabilities and charges		(342	)		(55	)		(11	)		15			(393	)
Total operating impairment losses, provisions and (charges)/releases		(378	)		(68	)		(185	)		35			(596	)
Profit/(loss) before tax		1,668			178			(51	)		22			1,817
Revenue from external customers		4,505			631			506			(730	)		4,912
Inter-segment revenue		(588	)		(162	)		(68	)		818			–
Total operating income		3,917			469			438			88			4,912
Customer loans		168,991			19,391			6,037			5,905			200,324
Total assets(1)		174,524			19,391			51,078			69,772			314,765
Customer deposits		149,315			18,697			4,546			3,363			175,921
Total liabilities		150,847			18,697			45,603			83,413			298,560

(1) Includes customer loans, net of impairment loss allowances.

2016	Retail Banking(2) £m			Commercial Banking £m			Global Corporate Banking £m			Corporate Centre £m			Total £m
Net interest income/(expense)		3,140			383			73			(14	)		3,582
Non-interest income		562			76			312			263			1,213
Total operating income		3,702			459			385			249			4,795
Operating expenses before impairment losses, provisions and charges		(1,800	)		(215	)		(280	)		(119	)		(2,414	)
Impairment (losses)/releases on loans and advances		(20	)		(29	)		(21	)		3			(67	)
Provisions for other liabilities and charges		(338	)		(26	)		(12	)		(21	)		(397	)
Total operating impairment losses, provisions and charges		(358	)		(55	)		(33	)		(18	)		(464	)
Profit before tax		1,544			189			72			112			1,917
Revenue from external customers		4,369			644			466			(684	)		4,795
Inter-segment revenue		(667	)		(185	)		(81	)		933			–
Total operating income		3,702			459			385			249			4,795
Customer loans		168,638			19,381			5,659			6,478			200,156
Total assets(1)		175,100			19,381			39,777			68,253			302,511
Customer deposits		148,063			17,203			4,054			3,031			172,351
Total liabilities		149,793			17,203			36,506			83,556			287,058
2015
Net interest income		3,097			399			52			27			3,575
Non-interest income		526			91			303			78			998
Total operating income		3,623			490			355			105			4,573
Operating expenses before impairment losses, provisions and (charges)/releases		(1,898	)		(217	)		(287	)		2			(2,400	)
Impairment (losses)/releases on loans and advances		(90	)		(25	)		13			36			(66	)
Provisions for other liabilities and (charges)/releases		(728	)		(23	)		(14	)		3			(762	)
Total operating impairment losses, provisions and (charges)/releases		(818	)		(48	)		(1	)		39			(828	)
Profit before tax		907			225			67			146			1,345
Revenue/(charges) from external customers		4,529			626			437			(1,019	)		4,573
Inter-segment revenue		(906	)		(136	)		(82	)		1,124			–
Total operating income		3,623			490			355			105			4,573
Customer loans		167,093			18,680			5,470			7,391			198,634
Total assets(1)		173,479			18,680			36,593			52,023			280,775
Customer deposits		140,358			15,076			3,013			3,808			162,255
Total liabilities		143,157			15,076			32,290			75,224			265,747

(1) Includes customer loans, net of impairment loss allowances.

(2) Restated to reflect the change in accounting policy relating to business combinations between entities under common control, as described in Note 1.

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Net Interest Income (Tables)

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Summary of Net Interest Income

	Group
	2017 £m			2016 £m			2015 £m
Interest and similar income:
Loans and advances to banks		184			127			115
Loans and advances to customers		5,494			6,198			6,491
Other		227			142			89
Total interest and similar income		5,905			6,467			6,695
Interest expense and similar charges:
Deposits by banks		(46	)		(56	)		(63	)
Deposits by customers		(1,330	)		(1,891	)		(1,979	)
Debt securities in issue		(590	)		(771	)		(926	)
Subordinated liabilities		(134	)		(143	)		(138	)
Other		(2	)		(24	)		(14	)
Total interest expense and similar charges		(2,102	)		(2,885	)		(3,120	)
Net interest income		3,803			3,582			3,575

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Net Fee and Commission Income (Tables)

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Summary of Net Fee and Commission Income

	Group
	2017 £m			2016 £m			2015 £m
Fee and commission income:
Retail and corporate products		1,167			1,123			1,043
Insurance products		55			65			72
Total fee and commission income		1,222			1,188			1,115
Fee and commission expense:
Retail and corporate products		(406	)		(408	)		(392	)
Other		(9	)		(10	)		(8	)
Total fee and commission expense		(415	)		(418	)		(400	)
Net fee and commission income		807			770			715

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Net Trading and Other Income (Tables)

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Summary of Net Trading and Other Income

	Group
	2017 £m			2016 £m			2015 £m
Net trading and funding of other items by the trading book		205			75			252
Net income from operating lease assets		44			35			46
Net gains on assets designated at fair value through profit or loss		80			253			33
Net (losses)/gains on liabilities designated at fair value through profit or loss		(97	)		28			(65	)
Net (losses)/gains on derivatives managed with assets/liabilities held at fair value through profit or loss		(17	)		(135	)		26
Hedge ineffectiveness		5			28			(20	)
Net profit on sale of available-for-sale assets		54			115			–
Other		28			44			11
		302			443			283

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Operating Expenses Before Impairment Losses, Provisions and Charges (Tables)

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Summary of Operating Expenses Before Impairment Losses, Provisions and Charges

	Group
	2017 £m		2016 £m		2015 £m
Staff costs:
Wages and salaries		743		728		723
Performance-related payments		157		157		163
Social security costs		93		94		92
Pensions costs – defined contribution plans		54		52		50
– defined benefit plans		32		26		29
Other share-based payments		10		3		(5	)
Other personnel costs		45		62		63
		1,134		1,122		1,115
Other administration expenses		1,011		970		990
Depreciation, amortisation and impairment		354		322		295
		2,499		2,414		2,400

Summary of Deferred Performance Awards

	Costs recognised in 2017			Costs expected to be recognised in 2018 or later
	Arising from awards in current year £m	Arising from awards in prior year £m	Total  £m	Arising from awards in current year £m	Arising from awards in prior year £m	Total  £m
Cash	5	8	13	10	7	17
Shares	3	13	16	8	10	18
	8	21	29	18	17	35

Summary of Amount of Bonus Awarded to Employees

The following table shows the amount of bonus awarded to employees for the performance year 2017. In the case of deferred cash and share awards, the final amount paid to an employee is influenced by forfeiture provisions and any performance conditions to which these awards are subject. The deferred share award amount is based on the fair value of these awards at the date of grant.

	Expenses charged in the year				Expenses deferred to future periods				Total
	2017 £m		2016 £m		2017 £m		2016 £m		2017 £m		2016 £m
Cash award – not deferred		116		118		–		–		116		118
– deferred		13		15		17		18		30		33
Shares award – not deferred		12		11		–		–		12		11
– deferred		16		13		18		14		34		27
Total discretionary bonus		157		157		35		32		192		189

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Audit and Other Services (Tables)

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Summary of Audit and Other Services

	Group
	2017 £m		2016 £m		2015 £m
Audit fees:
Fees payable to the Company’s auditor(1) and its associates for the audit of the Santander UK group’s annual accounts		7.4		4.6		3.6
Fees payable to the Company’s auditor(1) and its associates for other services to the Santander UK group:
– Audit of the Santander UK group’s subsidiaries		1.4		1.1		1.8
Total audit fees(2)		8.8		5.7		5.4
Non-audit fees:
Audit-related assurance services(3)		0.7		0.6		2.7
Taxation compliance services		–		0.1		0.2
Other assurance services		0.1		–		–
Other non-audit services		0.4		1.9		1.7
Total non-audit fees		1.2		2.6		4.6

(1) PricewaterhouseCoopers LLP became the Santander UK group’s principal auditor in 2016. Deloitte LLP was the principal auditor during 2015. Excluded from 2016 fees are amounts of £0.2m payable to Deloitte LLP in relation to the 2015 statutory audit.

(2) The 2017 audit fees included £0.6m (2016: £nil) which related to the prior year.

(3) The 2017 audit-related assurance services included £0.1m (2016: £nil) which related to the prior year.

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Impairment Losses and Provisions (Tables)

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Summary of Impairment Losses and Provisions

	Group
	2017 £m			2016 £m			2015 £m
Impairment losses on loans and advances:
Loans and advances to customers (See Note 15)		257			132			156
Recoveries of loans and advances, net of collection costs (See Note 15)		(54	)		(65	)		(90	)
		203			67			66
Provisions for other liabilities and charges (See Note 27)		385			397			762
Provisions for residual value and voluntary termination (See Note 15)		8			–			–
		393			397			762
		596			464			828

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Taxation (Tables)

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Disclosure of Tax on Profit

	Group
	2017 £m			2016 £m			2015 £m
Current tax:
UK corporation tax on profit for the year		556			611			346
Adjustments in respect of prior years		(27	)		(13	)		(16	)
Total current tax		529			598			330
Deferred tax:
Charge/(credit) for the year		23			(11	)		54
Adjustments in respect of prior years		9			11			(3	)
Total deferred tax		32			–			51
Tax on profit		561			598			381

Schedule of Tax on Profit Before Tax Differs from Theoretical Amount that Arise Using Basic Corporation Tax Rate

The Santander UK group’s effective tax rate for 2017, based on profit before tax, was 30.9% (2016: 31.2%, 2015: 28.3%). The tax on profit before tax differs from the theoretical amount that would arise using the basic corporation tax rate of the Company as follows:

	Group
	2017 £m			2016 £m			2015 £m
Profit before tax		1,817			1,917			1,345
Tax calculated at a tax rate of 19.25% (2016: 20.00%, 2015: 20.25%)		350			384			272
Bank surcharge on profits		132			134			–
Non-deductible preference dividends paid		9			8			6
Non-deductible UK Bank Levy		25			30			20
Non-deductible conduct remediation		35			39			90
Other non-equalised items		30			8			8
Effect of non-UK profits and losses		–			(1	)		(1	)
Utilisation of capital losses for which credit was not previously recognised		–			–			(4	)
Effect of change in tax rate on deferred tax provision		(2	)		(2	)		9
Adjustment to prior year provisions		(18	)		(2	)		(19	)
Tax charge		561			598			381

Disclosure of Movements in Current Tax Assets and Liabilities

Current tax assets and liabilities

Movements in current tax assets and liabilities during the year were as follows:

	Group
	2017  £m	2016   £m
Assets	–		49
Liabilities	(54)		(1)
At 1 January	(54)		48
Income statement charge	(529)		(598)
Other comprehensive income credit/(charge)	44		(49)
Corporate income tax paid	484		507
Other movements	52		38
	(3)		(54)
Assets	–		–
Liabilities	(3)		(54)
At 31 December	(3)		(54)

Disclosure of Deferred Tax Assets and Liabilities Including Movement in Deferred Tax Account

The table below shows the deferred tax assets and liabilities including the movement in the deferred tax account during the year:

	Group
	Fair value of    financial    instruments    £m		Pension    remeasurement    £m		Cash flow    hedges    £m		Available-    for-sale    £m		Tax losses    carried    forward    £m		Accelerated    tax    depreciation    £m		Other    temporary    differences    £m		Total  £m
At 1 January 2017		(31)		(35)		(50)		(27)		5		(5)		15	(128)
Income statement (charge)/credit		(10)		(32)		–		–		20		1		(11)	(32)
Transfers/reclassifications		–		–		–		7		–		–		(7)	–
Credited/(charged) to other comprehensive income		–		26		53		(6)		–		–		(1)	72
At 31 December 2017		(41)		(41)		3		(26)		25		(4)		(4)	(88)
At 1 January 2016		(76)		(115)		(27)		(11)		8		3		(5)	(223)
Income statement (charge)/credit		44		(53)		–		–		(3)		(8)		20	–
Credited/(charged) to other comprehensive income		1		133		(23)		(16)		–		–		–	95
At 31 December 2016		(31)		(35)		(50)		(27)		5		(5)		15	(128)

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Dividends on Ordinary Shares (Tables)

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Disclosure of Dividends on Ordinary Shares Declared and Paid

Dividends on ordinary shares declared and paid during the year were as follows:

	Group						Group
	2017     Pence per   share		2016     Pence per   share		2015     Pence per   share		2017   £m		2016   £m		2015   £m
In respect of current year – first interim		1.04		1.02		1.05		323		317		325
– second interim		0.74		0.89		0.33		230		276		102
		1.78		1.91		1.38		553		593		427

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Trading Assets (Tables)

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Disclosure of Trading Assets

	Group
	2017   £m		2016   £m
Securities purchased under resale agreements		8,870		10,712
Debt securities		5,156		6,248
Equity securities		9,662		5,986
Cash collateral		6,156		6,169
Short-term loans		711		920
		30,555		30,035

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Derivative Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Summary of Activities Undertaken, Related Risks Associated with Such Activities and Types of Derivatives Used in Managing Such Risks

The following table summarises the activities undertaken, the related risks associated with such activities and the types of derivatives used in managing such risks. These risks may also be managed using on-balance sheet instruments as part of an integrated approach to risk management.

Activity	Risk	Type of derivative
Management of the return on variable rate assets financed by shareholders’ funds and net non-interest-bearing liabilities.	Reduced profitability due to falls in interest rates.	Receive fixed interest rate swaps.
Management of the basis between administered rate assets and liabilities and wholesale market rates.	Reduced profitability due to adverse changes in the basis spread.	Basis swaps.
Management of repricing profile of wholesale funding.	Reduced profitability due to adverse movement in wholesale interest rates when large volumes of wholesale funding are repriced.	Forward rate agreements.
Fixed rate lending and investments.	Sensitivity to increases in interest rates.	Pay fixed interest rate swaps.
Fixed rate retail and wholesale funding.	Sensitivity to falls in interest rates.	Receive fixed interest rate swaps.
Equity-linked retail funding.	Sensitivity to increases in equity market indices.	Receive equity swaps.
Management of other net interest income on retail activities.	Sensitivity of income to changes in interest rates.	Interest rate swaps.
Issuance of products with embedded equity options.	Sensitivity to changes in underlying index and index volatility causing option exercise.	Interest rate swaps combined with equity options.
Lending and investments.	Sensitivity to weakening credit quality.	Purchase credit default swaps and total return swaps.
Borrowing funds in foreign currencies.	Sensitivity to changes in foreign exchange rates.	Cross currency swaps.
Lending and issuance of products with embedded interest rate options.	Sensitivity to changes in underlying rate and rate volatility causing option exercise.	Interest rate swaps plus caps/floors.
Investment in, and issuance of, bonds with put/call features.	Sensitivity to changes in rates causing option exercise.	Interest rate swaps combined with swaptions(1) and other matched options.
Management of the cost of offering sharesave schemes to employees.	Reduced profitability due to increases in the Banco Santander SA share price.	Equity options and equity forwards.

(1) A swaption is an option on a swap that gives the holder the right but not the obligation to buy or sell a swap.

Notional Amounts and Fair Values of Derivative Financial Instruments

The contract/notional amounts of derivatives in the tables below indicate the nominal value of transactions outstanding at the balance sheet date; they do not represent actual exposures.

	Group
	2017						2016
			Fair value						Fair value
	Notional amount £m		Assets £m		Liabilities £m		Notional amount £m		Assets £m		Liabilities £m
Derivatives held for trading:
Exchange rate contracts		144,160		2,559		4,130		165,521		3,664		6,022
Interest rate contracts		863,151		11,612		11,140		942,798		14,117		14,341
Equity and credit contracts		19,814		888		693		15,325		1,321		860
Total derivatives held for trading		1,027,125		15,059		15,963		1,123,644		19,102		21,223
Derivatives held for hedging
Designated as fair value hedges:
Exchange rate contracts		2,641		312		6		3,819		751		–
Interest rate contracts		59,610		1,272		1,470		70,849		1,578		1,790
Equity derivative contracts		16		–		4		74		4		–
		62,267		1,584		1,480		74,742		2,333		1,790
Designated as cash flow hedges:
Exchange rate contracts		23,117		3,206		55		23,786		3,907		8
Interest rate contracts		12,884		84		115		12,683		120		82
Equity derivative contracts		26		9		–		24		9		–
		36,027		3,299		170		36,493		4,036		90
Total derivatives held for hedging		98,294		4,883		1,650		111,235		6,369		1,880
Total derivative financial instruments		1,125,419		19,942		17,613		1,234,879		25,471		23,103

Analysis of the Notional and Fair Values of Derivatives by Trading and Settlement Method

The table below analyses the notional and fair values of derivatives by trading and settlement method.

	Notional
			Traded over the counter						Asset				Liability
2017	Traded on     recognised exchanges £m		Settled by central counterparties £m		Not settled by central counterparties £m		Total £m		Traded on     recognised exchanges £m		Traded over the counter £m		Traded on recognised exchanges £m		Traded over the counter £m
Exchange rate contracts		–		–		169,918		169,918		–		6,077		–		4,191
Interest rate contracts		71,618		626,600		237,427		935,645		–		12,968		–		12,725
Equity and credit contracts		30		–		19,826		19,856		–		897		1		696
		71,648		626,600		427,171		1,125,419		–		19,942		1		17,612
2016
Exchange rate contracts		–		–		193,126		193,126		–		8,322		–		6,030
Interest rate contracts		69,501		725,626		231,203		1,026,330		1		15,814		–		16,213
Equity and credit contracts		34		–		15,389		15,423		–		1,334		1		859
		69,535		725,626		439,718		1,234,879		1		25,470		1		23,102

Summary of Analysis of Derivatives Designated as Hedges

Net gains or losses arising from fair value and cash flow hedges included in net trading and other income

	Group
	2017 £m			2016 £m			2015 £m
Fair value hedging:
Gains/(losses) on hedging instruments		56			(274	)		(26	)
(Losses)/gains on hedged items attributable to hedged risks		(2	)		335			87
Fair value hedging ineffectiveness		54			61			61
Cash flow hedging ineffectiveness		(49	)		(33	)		(81	)
		5			28			(20	)

Summary of When Hedged Cash Flows are Expected to Affect the Income Statement

The following table shows when the hedged cash flows are expected to affect the income statement for designated cash flow hedges.

	Group
2017	Up to 1 year £m			1 to 2     years £m			2 to 3     years £m			3 to 4     years £m			4 to 5     years £m			Over 5     years £m			Total £m
Forecast receivable cash flows		275			280			262			197			160			668			1,842
Forecast payable cash flows		(3,486	)		(5,288	)		(3,912	)		(3,572	)		(2,224	)		(7,364	)		(25,846	)
2016
Forecast receivable cash flows		240			220			217			202			146			668			1,693
Forecast payable cash flows		(4,059	)		(3,392	)		(3,681	)		(2,998	)		(2,274	)		(5,611	)		(22,015	)

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Financial Assets Designated at Fair Value (Tables)

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Disclosure of Financial Assets Designated at Fair Value

	Group
	2017  £m		2016  £m
Loans and advances to customers:
Loans to housing associations		1,034		1,215
Other loans		515		516
		1,549		1,731
Debt securities		547		409
		2,096		2,140

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Loans and Advances to Banks (Tables)

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Summary of Loans and Advances to Banks

	Group
	2017  £m		2016  £m
Securities purchased under resale agreements		2,464		1,462
Placements with other banks		3,463		2,886
		5,927		4,348

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Loans and Advances to Customers (Tables)

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Summary of Net Loans and Advances to Customers

	Group
	2017 £m			2016  £m
Loans secured on residential properties		155,355			154,727
Corporate loans		31,006			31,978
Finance leases		6,710			6,730
Secured advances		–			10
Other unsecured loans		6,230			6,165
Amounts due from fellow Banco Santander subsidiaries and joint ventures		1,199			1,112
Amounts due from Santander UK Group Holdings plc		8			5
Loans and advances to customers		200,508			200,727
Impairment loss allowances		(940	)		(921)
Residual value and voluntary termination provisions(1)		(78	)		(68)
Net loans and advances to customers		199,490			199,738

(1) In the first half of 2017, we reclassified our provisions for residual value and voluntary termination from the consumer finance impairment loss allowance. In order to facilitate comparison with the current period, prior year comparatives were amended.

Summary of Movement in Impairment Loss Allowances

Movement in impairment loss allowances:

	Group
	Loans secured on residential properties £m			Corporate loans £m			Finance leases £m			Other unsecured loans £m			Total  £m
At 1 January 2017		279			382			45			215			921
(Release)/charge to the income statement		(37	)		172			20			102			257
Write-offs and other items(1)		(17	)		(64	)		(19	)		(138	)		(238)
At 31 December 2017		225			490			46			179			940
Of which:
– Observed		105			433			12			59			609
– Incurred but not yet observed		120			57			34			120			331
		225			490			46			179			940
Recoveries, net of collection costs		3			1			6			44			54
At 1 January 2016		424			395			20			269			1,108
(Release)/charge to the income statement		(116	)		59			47			142			132
Write-offs and other items(1)		(29	)		(72	)		(22	)		(196	)		(319)
At 31 December 2016		279			382			45			215			921
Of which:
– Observed		130			287			13			73			503
– Incurred but not yet observed		149			95			32			142			418
		279			382			45			215			921
Recoveries, net of collection costs		4			3			2			56			65

(1) Mortgage write-offs exclude the effect of the unwind over time of the discounting in estimating losses, as described in the accounting policy ‘Impairment of financial assets’ in Note 1. Mortgage write-offs including this effect were £22m (2016: £33m, 2015: £40m).

Summary of Finance Lease and Hire Purchase Contract Receivables

Finance lease and hire purchase contract receivables may be analysed as follows:

													Group
	2017							2016
	Gross     investment £m		Unearned finance income £m			Net     investment £m		Gross     investment £m		Unearned finance income £m			Net      investment  £m
Not later than one year		3,633		(177	)		3,456		3,047		(183	)		2,864
Later than one year and not later than five years		3,316		(226	)		3,090		3,906		(236	)		3,670
Later than five years		214		(50	)		164		264		(68	)		196
		7,163		(453	)		6,710		7,217		(487	)		6,730

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Securitisations and Covered Bonds (Tables)

12 Months Ended

Dec. 31, 2017

Summary of Gross Asset Securitised

The gross assets securitised at 31 December 2017 and 2016 under the structures described below were:

	2017 £m		2016 £m
Master trust structures:
– Holmes		4,299		5,560
– Fosse		5,732		7,182
– Langton		3,893		5,211
		13,924		17,953
Other securitisation structures:
– Motor		1,318		1,117
– Auto ABS UK Loans		1,498		1,260
		2,816		2,377
Total gross assets securitised		16,740		20,330

Summary of Outstanding Balances of Loans and Advances assigned to Covered Bond Programme

Outstanding balances of loans and advances assigned to the covered bond programme at 31 December 2017 and 2016 were:

	2017			2016
	Gross assets assigned £m		Notes in issue £m	Gross assets assigned £m		Notes in issue £m
Euro 35bn Global Covered Bond Programme		19,772	16,866		20,263		17,941
Less: Held by the Santander UK group			(1,067)				(1,313	)
Total covered bonds (See Note 25)			15,799				16,628

Holmes [member]

Summary of Outstanding Balances of Assets Securitised and Notes in Issue (Non-recourse Finance)

Outstanding balances of assets securitised and notes in issue (non-recourse finance) at 31 December 2017 and 2016 were:

2017

2016

Securitisation company

Closing date of securitisation

Gross assets securitised £m

Notes in issue £m

Issued to Santander UK plc as collateral £m

Gross assets securitised £m

Notes in issue £m

Issued to Santander UK plc as collateral £m

Holmes Master Issuer plc – 2010/1

12 November 2010

–

–

–

318

383

–

Holmes Master Issuer plc – 2011/3

21 September 2011

534

561

–

512

618

–

Holmes Master Issuer plc – 2012/1

24 January 2012

–

–

–

98

118

–

Holmes Master Issuer plc – 2012/2

17 April 2012

–

–

–

585

706

–

Holmes Master Issuer plc – 2012/3

7 June 2012

–

–

–

426

514

–

Holmes Master Issuer plc – 2013/1

30 May 2013

–

–

–

28

–

34

Holmes Master Issuer plc – 2016/1

26 May 2016

694

340

389

1,017

644

584

Holmes Master Issuer plc – 2017/1

16 October 2017

474

499

–

–

–

–

Beneficial interest in mortgages held by Holmes Trustees Ltd

2,597

–

–

2,576

–

–

4,299

1,400

389

5,560

2,983

618

Less: Held by the Santander UK group

–

–

Total securitisations (SeeNote 25)

1,400

2,983

Fosse [member]

Summary of Outstanding Balances of Assets Securitised and Notes in Issue (Non-recourse Finance)

Outstanding balances of assets securitised and notes in issue (non-recourse finance) at 31 December 2017 and 2016 were:

			2017					2016
Securitisation company	Closing date of securitisation		Gross assets securitised £m	Notes in issue £m		Issued to Santander UK plc as collateral £m		Gross assets securitised £m	Notes in issue £m		Issued to Santander UK plc as collateral £m
Fosse Master Issuer plc – 2010/1		12 March 2010	–		–		–	446		535		–
Fosse Master Issuer plc – 2011/2		6 December 2011	176		191		34	204		211		34
Fosse Master Issuer plc – 2012/1		22 May 2012	–		–		–	700		738		105
Fosse Master Issuer plc – 2014/1		19 June 2014	–		–		–	366		441		–
Fosse Master Issuer plc – 2015/1		24 March 2015	333		425		–	559		673		–
Beneficial interest in mortgages held by Fosse Master Trust Ltd			5,223		–		–	4,907		–		–
			5,732		616		34	7,182		2,598		139
Less: Held by the Santander UK group					–					–
Total securitisations (See Note 25)					616					2,598

Langton [member]

Summary of Outstanding Balances of Assets Securitised and Notes in Issue (Non-recourse Finance)

Outstanding balances of assets securitised and notes in issue (non-recourse finance) at 31 December 2017 and 2016 were:

			2017					2016
Securitisation company	Closing date of securitisation		Gross assets securitised £m	Notes in issue £m		Issued to Santander UK plc as collateral £m		Gross assets securitised £m	Notes in issue £m		Issued to Santander UK plc as collateral £m
Langton Securities (2010-1) plc (1)		1 October 2010	986		–		984	987		–		984
Langton Securities (2008-1) plc (2)		23 March 2011	1,373		–		1,371	1,376		–		1,372
Beneficial interest in mortgages held by Langton Master Trust Ltd			1,534		–		–	2,848		–		–
			3,893		–		2,355	5,211		–		2,356

Motor [member]

Summary of Outstanding Balances of Assets Securitised and Notes in Issue (Non-recourse Finance)

Outstanding balances of assets securitised and notes in issue (non-recourse finance) at 31 December 2017 and 2016 were:

			2017				2016
Securitisation company	Closing date of securitisation		Gross assets securitised £m	Notes in issue £m		Issued to Santander Consumer (UK) plc as collateral £m	Gross assets securitised £m	Notes in issue £m		Issued to  Santander  Consumer  (UK) plc  as collateral  £m
Motor 2014-1 plc		16 April 2014	–		–	–	125		–	136
Motor 2015-1 plc		2 March 2015	164		38	136	436		352	136
Motor 2016-1 plc		15 December 2016	578		300	300	556		298	300
Motor 2017-1 plc		20 September 2017	576		514	78	–		–	–
			1,318		852	514	1,117		650	572
Less: Held by the Santander UK group					–				–
Total securitisations (See Note 25)					852				650

Auto ABS UK Loans [member]

Summary of Outstanding Balances of Assets Securitised and Notes in Issue (Non-recourse Finance)

Outstanding balances of assets securitised and notes in issue (non-recourse finance) at 31 December 2017 and 2016 were:

		2017				2016
Securitisation company	Closing date  of securitisation	Gross assets securitised £m	Notes in issue £m		Issued to PSA Finance UK Limited as collateral £m	Gross assets securitised £m	Notes in issue £m		Issued to PSA  Finance UK  Limited  as collateral  £m
Auto ABS UK Loans plc	30 April 2017	1,111		925	221	1,260		1,275	113
Auto ABS UK Loans 2017 plc	15 November 2017	387		315	85	–		–	–
		1,498		1,240	306	1,260		1,275	113
Less: Held by the Santander UK group				–				–
Total securitisations (See Note 25)				1,240				1,275

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Transfers of Financial Assets Not Qualifying for Derecognition (Tables)

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Carrying Amount of Financial Assets that Did Not Qualify for Derecognition and their Associated Financial Liabilities

The following table analyses the carrying amount of financial assets that did not qualify for derecognition and their associated financial liabilities:

	Group
Nature of transaction	2017 £m		2017 £m			2016 £m		2016 £m
Sale and repurchase agreements		10,808		(7,734	)		5,600		(3,831	)
Securities lending agreements		302		(235	)		244		(117	)
Securitisations (See Notes 16 and 25)		12,847		(4,108	)		15,066		(7,434	)
		23,957		(12,077	)		20,910		(11,382	)

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Financial Investments (Tables)

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Summary of Financial Investments

	Group
	2017 £m		2016 £m
Loans and receivables securities		2,180		257
Debt securities:
– Available-for-sale		8,772		10,449
– Held-to-maturity		6,578		6,648
Available-for-sale equity securities		81		112
		17,611		17,466

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Interests in Other Entities (Tables)

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Schedule of Interests in Other Entities

	Group
	2017    £m	2016    £m
Joint ventures	73	61
	73	61

Schedule of Subsidiaries With Significant Non-Controlling Interests

	2017    £m	2016    £m
Profit attributable to non-controlling interests	21	27
Accumulated non-controlling interests of the subsidiary	152	150
Dividends paid to non-controlling interests	19	12
Summarised financial information:
– Total assets	3,215	3,450
– Total liabilities	2,909	3,417
– Profit for the year	43	55
– Total comprehensive income for the year	43	55

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Intangible Assets (Tables)

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Schedule of Goodwill

a) Goodwill

	Group
	Cost £m		Accumulated    impairment    £m		Net book value    £m
At 31 December 2016(1), 1 January 2017(1) and 31 December 2017		1,285		(82)		1,203

(1) Comparative periods restated to reflect the change in accounting policy relating to business combinations between entities under common control, as described in Note 1.

Schedule of Goodwill for Cash Generating Units

The following CGUs (all within Retail Banking) include in their carrying values goodwill that comprises the goodwill reported by Santander UK. The CGUs do not carry on their balance sheets any other intangible assets with indefinite useful lives. The calculations have been based on value in use using cash flows based on the five-year plan.

	Goodwill				Discount rate				Growth rate(2)
CGU	2017 £m		2016(1) £m		2017 %		2016 %		2017 %		2016 %
Personal financial services		1,169		1,169		10.8		11.4		1		2
Private banking		30		30		10.8		11.4		1		1
Other		4		4		10.8		11.4		1		2
		1,203		1,203

(1) Restated to reflect the change in accounting policy relating to business combinations between entities under common control, as described in Note 1.

(2) Average growth rate based on the five-year plan for the first five years and a growth rate of 1.5% (2016: 2.0%) applied thereafter.

Schedule of Other Intangibles

b) Other intangibles

	Group
	Cost £m			Accumulated amortisation/ impairment £m			Net book value £m
At 1 January 2017		760			(278	)		482
Additions		205			–			205
Disposals		(3	)		3			–
Charge		–			(116	)		(116	)
Impairment		–			(32	)		(32	)
At 31 December 2017		962			(423	)		539
At 1 January 2016		601			(204	)		397
Additions		213			–			213
Disposals		(54	)		47			(7	)
Charge		–			(76	)		(76	)
Impairment		–			(45	)		(45	)
At 31 December 2016		760			(278	)		482

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Deposits by Banks (Tables)

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Schedule of Deposits by Banks

	Group
	2017		2016
	£m		£m
Items in the course of transmission		303		308
Securities sold under repurchase agreements		1,076		2,384
Deposits held as collateral		1,760		778
Other deposits(1)		10,645		6,299
		13,784		9,769

(1) Includes drawdown from the TFS of £8.5bn (2016: £4.5bn).

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Deposits by Customers (Tables)

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Schedule of Deposits by Customers

	Group
	2017 £m		2016 £m
Current and demand accounts – interest-bearing		85,749		85,967
– non-interest-bearing		2		67
Savings accounts(1)		70,461		58,305
Time deposits		19,951		27,203
Securities sold under repurchase agreements		502		502
Amounts due to Santander UK Group Holdings plc(2)		6,256		4,464
Amounts due to fellow Banco Santander subsidiaries		727		664
		183,648		177,172

(1) Includes equity index-linked deposits of £1,301m (2016: £1,618m). The capital amount guaranteed/protected and the amount of return guaranteed in respect of the equity index-linked deposits were £1,301m and £67m (2016: £1,618m and £129m) respectively.

(2) Includes downstreamed funding from our immediate parent company Santander UK Group Holdings plc.

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Trading Liabilities (Tables)

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Schedule of Trading Liabilities

	Group
	2017 £m		2016 £m
Securities sold under repurchase agreements		25,504		8,798
Short positions in securities and unsettled trades		3,694		2,801
Cash collateral		1,911		3,535
Short-term deposits		–		426
		31,109		15,560

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Financial Liabilities Designated at Fair Value (Tables)

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Summary of Financial Liabilities Designated at Fair Value

	Group
	2017 £m		2016 £m
US$10bn Euro Commercial Paper Programmes		387		454
US$30bn Euro Medium Term Note Programme		169		184
Structured Notes Programmes		932		1,137
Warrants programme		–		2
Eurobonds		147		137
Structured deposits		680		526
		2,315		2,440

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Debt Securities in Issue (Tables)

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Summary of Debt Securities in Issue

	Group
	2017 £m		2016 £m
Medium-term notes:
– US$30bn Euro Medium Term Note Programme		8,816		10,818
– US SEC-registered – Santander UK plc		6,280		7,499
– US$20bn Commercial Paper Programmes		2,906		2,678
		18,002		20,995
Euro 35bn Global Covered Bond Programme (See Note 16)		15,799		16,628
Certificates of deposit		4,681		5,217
Credit Linked Notes		43		–
Securitisation programmes (See Note 16)		4,108		7,506
		42,633		50,346

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Subordinated Liabilities (Tables)

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Schedule of Subordinated Liabilities

	Group
	2017 £m		2016 £m
£325m Sterling Preference Shares		344		344
£175m Fixed/Floating Rate Tier One Preferred Income Capital Securities		2		2
Undated subordinated liabilities		584		768
Dated subordinated liabilities		2,863		3,189
		3,793		4,303

Summary of Undated Subordinated Liabilities

Undated subordinated liabilities

	Group
	Call date		2017 £m		2016 £m
10.0625% Exchangeable subordinated capital securities		Any interest payment date		205		205
7.375% 20 Year Step-up perpetual callable subordinated notes		2020		17		198
7.125% 30 Year Step-up perpetual callable subordinated notes		2030		362		365
				584		768

Summary of Dated Subordinated Liabilities

Dated subordinated liabilities

			Group
	Maturity		2017 £m		2016 £m
11.50% Subordinated guaranteed bond		2017		–		58
10.125% Subordinated guaranteed bond		2023		78		84
9.625% Subordinated notes		2023		129		134
5% Subordinated notes (US$1,500m)		2023		1,103		1,208
4.75% Subordinated notes (US$1,000m)		2025		745		816
7.95% Subordinated notes (US$1,000m)		2029		275		307
6.50% Subordinated notes		2030		40		40
8.963% Subordinated notes (US$1,000m)		2030		113		126
5.875% Subordinated notes		2031		9		10
5.625% Subordinated notes (US$500m)		2045		371		406
				2,863		3,189

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Provisions (Tables)

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Summary of Provisions Reconciliation

	Group
	Conduct remediation
	PPI £m			Wealth and Investment £m			Other products £m			Regulatory- related £m			Vacant property £m			Other £m			Total £m
At 1 January 2017		457			22			14			96			47			64			700
Additional provisions		109			–			35			93			4			144			385
Utilisation		(210	)		(29	)		(5	)		(132	)		(12	)		(149	)		(537	)
Transfers		–			10			–			–			–			–			10
At 31 December 2017		356			3			44			57			39			59			558
To be settled:
– Within 12 months		167			3			35			57			23			59			344
– In more than 12 months		189			–			9			–			16			–			214
		356			3			44			57			39			59			558
At 1 January 2016		465			146			26			93			68			72			870
Additional provisions		144			–			2			141			(6	)		116			397
Utilisation		(152	)		(124	)		(14	)		(138	)		(15	)		(124	)		(567	)
At 31 December 2016		457			22			14			96			47			64			700
To be settled:
– Within 12 months		294			22			4			96			25			59			500
– In more than 12 months		163			–			10			–			22			5			200
		457			22			14			96			47			64			700

Summary of Key Drivers of PPI Provision Balance and Forecast Assumptions Used in Calculating Provision

The table below sets out the key drivers of the provision balance and forecast assumptions used in calculating the provision, as well as the sensitivity of the provision to changes in the assumptions. It reflects a blended view across all our retail products and portfolios and includes redress for Plevin-related claims.

	Cumulative to 31 December 2017		Future expected (unaudited)		Sensitivity analysis Increase/decrease in provision
Inbound complaints(1) (‘000)		1,623		660		25 = £9m
Outbound contact (‘000)		487		127		25 = £5m
Response rate to outbound contact		54%		100%		1% = £0.3m
Average uphold rate per claim(2)		47%		68%		1% = £2.6m
Average redress per claim(3)		£1,378		£564		£100 = £50m

(1) Includes all claims received regardless of whether we expect to make a payment; i.e. regardless of the likelihood of the Santander UK group incurring a liability. Excludes claims where the complainant has not held a PPI policy.

(2) Claims include inbound and responses to outbound contact.

(3) The average redress per claim reduced from the cumulative average value at 31 December 2017 of £1,378m to a future average value of £564 due to the inclusion of Plevin cases in the provision, as well as a shift in the complaint mix to a greater proportion of storecards, which typically held lower average balances.

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Retirement Benefit Plans (Tables)

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Summary of Retirement Benefit Plans

The amounts recognised in the balance sheet were as follows:

	Group
	2017 £m			2016 £m
Assets/(liabilities)
Funded defined benefit pension scheme – surplus		449			398
Funded defined benefit pension scheme – deficit		(245	)		(223	)
Unfunded defined benefit pension scheme		(41	)		(39	)
Total net assets		163			136

Summary of Pension Remeasurement (Gains)/Losses Recognised In Other Comprehensive Income

Remeasurement (gains)/losses recognised in other comprehensive income during the year were as follows:
	Group
	2017 £m		2016 £m		2015 £m
Pension remeasurement		103		528		(319	)

Total defined benefit plan amount charged to the income statement

The total amount charged to the Income Statement, including any amounts classified as redundancy costs was as follows:

	Group
	2017 £m			2016 £m			2015 £m
Net interest income		(5	)		(18	)		(4	)
Current service cost		31			33			37
Past service cost		1			1			2
Administration costs		8			8			6
		35			24			41

Summary of Amounts Recognised in Other Comprehensive Income

The amounts recognised in other comprehensive income during the year were as follows:
	Group
	2017 £m			2016 £m			2015 £m
Return on plan assets (excluding amounts included in net interest expense)		(435	)		(1,447	)		164
Actuarial (gains)/losses arising from changes in demographic assumptions		(151	)		30			(67	)
Actuarial gains arising from experience adjustments		(11	)		(80	)		(202	)
Actuarial losses/(gains) arising from changes in financial assumptions		700			2,025			(211	)
Cumulative actuarial reserve acquired with subsidiary		–			–			(3	)
Pension remeasurement		103			528			(319	)

Disclosure of Movements in Present Value of Defined Benefit Obligations

Movements in the present value of defined benefit obligations during the year were as follows:
	Group
	2017 £m			2016 £m
At 1 January		(11,082	)		(9,004	)
Current service cost paid by Santander UK plc		(30	)		(23	)
Current service cost paid by subsidiaries		(1	)		(2	)
Current service cost paid by fellow Banco Santander subsidiaries		(12	)		(8	)
Interest cost		(305	)		(333	)
Employer salary sacrifice contributions		(6	)		(7	)
Past service cost		(1	)		(1	)
Remeasurement:
– Actuarial movements arising from changes in demographic assumptions		151			(30	)
– Actuarial movements arising from experience adjustments		11			80
– Actuarial movements arising from changes in financial assumptions		(700	)		(2,025	)
Benefits paid		392			271
At 31 December		(11,583	)		(11,082	)

Movements in the fair value of scheme assets

Movements in the fair value of scheme assets during the year were as follows:
	Group
	2017 £m			2016 £m
At 1 January		11,218			9,450
Interest income		310			351
Contributions paid by employer and scheme members		171			236
Contributions paid by fellow Banco Santander subsidiaries		12			13
Administration costs paid		(8	)		(8	)
Return on plan assets (excluding amounts included in net interest expense)		435			1,447
Benefits paid		(392	)		(271	)
At 31 December		11,746			11,218

Summary of Composition and Fair Value of Plan Assets

The following tables provide information on the composition and fair value of the plan assets by category at 31 December 2017 and 2016.

	Group
	Quoted prices in     active markets				Prices not quoted in     active markets				Total
2017	£m		%		£m		%		£m		%
UK equities		187		1		–		–		187		1
Overseas equities		2,204		19		706		6		2,910		25
Corporate bonds		1,665		14		209		2		1,874		16
Government fixed interest bonds		255		2		–		–		255		2
Government index-linked bonds		3,506		30		–		–		3,506		30
Property		–		–		1,547		13		1,547		13
Cash		–		–		206		2		206		2
Other		–		–		1,261		11		1,261		11
		7,817		66		3,929		34		11,746		100
2016
UK equities		148		1		–		–		148		1
Overseas equities		2,064		19		597		5		2,661		24
Corporate bonds		1,778		16		162		1		1,940		17
Government fixed interest bonds		226		2		–		–		226		2
Government index-linked bonds		3,294		29		–		–		3,294		29
Property		–		–		1,361		12		1,361		12
Cash		–		–		197		2		197		2
Other		–		–		1,391		13		1,391		13
		7,510		67		3,708		33		11,218		100

Summary of Principal Actuarial Assumptions Used for Defined Benefit Schemes

The principal actuarial assumptions used for the defined benefit schemes were as follows:

	Group
	2017   %	2016   %	2015   %
To determine benefit obligations:
– Discount rate for scheme liabilities	2.5	2.8	3.7
– General price inflation	3.2	3.1	3.0
– General salary increase	1.0	1.0	1.0
– Expected rate of pension increase	2.9	2.9	2.8
	Years	Years	Years
Longevity at 60 for current pensioners, on the valuation date:
– Males	27.4	27.8	27.7
– Females	30.1	30.3	30.2
Longevity at 60 for future pensioners currently aged 40, on the valuation date:
– Males	28.9	30.0	29.9
– Females	31.7	32.2	32.2

Summary of Actuarial Assumption Sensitivities

The sensitivity analyses below have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant.

		Increase/(decrease)
		2017  £m	2016 £m
Discount rate	Change in pension obligation at year-end from a 25 bps increase	(550)		(593	)
	Change in pension cost for the year from a 25 bps increase	(19)		(21	)
General price inflation	Change in pension obligation at year-end from a 25 bps increase	365		405
	Change in pension cost for the year from a 25 bps increase	12		13
General salary increase	Change in pension obligation at year-end from a 25 bps increase	n/a		n/a
Mortality	Change in pension obligation at year-end from each additional year of longevity assumed	367		369

Disclosure of Benefits Expected To Be Paid

The benefits expected to be paid in each of the next five years, and in the aggregate for the five years thereafter are:

Year ending 31 December	£m
2018		252
2019		253
2020		270
2021		290
2022		313
Five years ending 2027		1,836

Summary of Average Duration of Defined Benefit Obligation

The average duration of the defined benefit obligation at 31 December 2017 was 20.1 years (2016: 21.0 years) and comprised:

	2017  years	2016  years
Active members	26.5		26.8
Deferred members	24.4		25.7
Retired members	13.9		14.6

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Contingent Liabilities and Commitments (Tables)

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Summary of Contingent Liabilities and Commitments

	Group
	2017 £m		2016 £m
Guarantees given to third parties		1,557		1,859
Formal standby facilities, credit lines and other commitments with original term to maturity of:
– One year or less		10,664		9,462
– Later than one year		31,278		32,154
		43,499		43,475

Operating Lease Commitments

Operating lease commitments

	Group
Rental commitments under non-cancellable operating leases	2017 £m		2016 £m
Not later than one year		73		82
Later than one year and not later than five years		160		252
Later than five years		70		134
		303		468

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Share Capital (Tables)

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Schedule of Share Capital Issued and Fully Paid

	Group
	Ordinary shares of £0.10 each				£300m Preference shares   of £1,000 each					Total
Issued and fully paid share capital	No.		£m		No.			£m		£m
At 1 January 2016		31,051,768,866		3,105		13,797			14		3,119
Repurchases		–		–		(17	)		–		–
At 31 December 2016, 1 January 2017 and 31 December 2017		31,051,768,866		3,105		13,780			14		3,119

Summary of Share Premium

	Group
Share premium	2017 £m		2016   £m
At 1 January and 31 December		5,620		5,620

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Other Equity Instruments (Tables)

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Summary of other equity instruments

	Group
	2017 £m		2016   £m
£300m Step-up Callable Perpetual Reserve Capital Instruments		235	235
AT1 securities:
– £500m Perpetual Capital Securities		496	–
– £750m Perpetual Capital Securities		750	750
– £300m Perpetual Capital Securities		300	300
– £500m Perpetual Capital Securities		500	500
		2,281	1,785

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Non-Controlling Interests (Tables)

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Schedule of Amounts Attributable to Non-Controlling Interests

	Group
	2017   £m		2016   £m
PSA Finance UK Limited		152		150
		152		150

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Assets Charged as Security for Liabilities and Collateral Accepted as Security for Assets (Tables)

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Financial Assets Charged as Security Under On-Balance Sheet and Off-Balance

a) Assets charged as security for liabilities

The financial assets below are analysed between those assets accounted for on-balance sheet and off-balance sheet in accordance with IFRS.

	Group
	2017  £m	2016  £m
On-balance sheet:
Treasury bills and other eligible securities	12,576	6,491
Cash	3,658	4,123
Loans and advances to customers – securitisations and covered bonds (See Note 16)	35,421	40,230
Loans and advances to customers	15,047	10,601
Debt securities	130	755
Equity securities	8,629	5,637
Total on-balance sheet	75,461	67,837
Off-balance sheet:
Treasury bills and other eligible securities	30,220	15,013
Debt securities	850	331
Equity securities	1,943	1,557
Total off-balance sheet	33,013	16,901

Schedule of Collateral Held as Security For Assets

The collateral held as security for assets below are analysed between those liabilities accounted for on the balance sheet and off-balance sheet in accordance with IFRS.

	Group
	2017  £m	2016  £m
On-balance sheet:
Trading liabilities	1,911	3,535
Deposits by banks	1,760	785
Deposits by customers	8	–
Total on-balance sheet	3,679	4,320
Off-balance sheet:
Trading liabilities	36,230	26,980
Deposits by banks	2,425	1,167
Total off-balance sheet	38,655	28,147

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Share-Based Compensation (Tables)

12 Months Ended

Dec. 31, 2017

Summary of Assumptions Used to Estimate Fair Value of Each Share Save Option

The fair value of each Sharesave option for 2017, 2016 and 2015 has been estimated at the date of acquisition or grant using a Partial Differentiation Equation model with the following assumptions:

	2017		2016		2015
Risk free interest rate		0.89% – 1.08%		0.31% – 0.41%		1.06% – 1.37%
Dividend yield		5.48% – 5.51%		6.28% – 6.46%		6.91% – 7.36%
Expected volatility of underlying shares based on implied volatility to maturity date of each scheme		26.16% – 26.31%		31.39% – 32.00%		28.54% – 29.11%
Expected lives of options granted under 3 and 5 year schemes		3 and 5 years		3 and 5 years		3 and 5 years

Summary of Movement in Share Options

The following table summarises movements in the number of share options during the year, and changes in weighted average exercise price over the same period.

	2017					2016					2015
	Number of options ‘000			Weighted average exercise price £		Number of options ‘000			Weighted average exercise price £		Number of options ‘000			Weighted average exercise price £
Outstanding at 1 January		28,916			3.08		24,762			3.53		19,122			4.19
Granted		3,916			4.02		17,296			4.91		14,074			3.13
Exercised		(1,918	)		3.77		(338	)		3.67		(1,839	)		3.75
Forfeited/expired		(3,713	)		3.40		(12,804	)		3.51		(6,595	)		4.50
Outstanding at 31 December		27,201			3.12		28,916			3.08		24,762			3.53
Exercisable at 31 December		5,200			3.17		2,334			4.30		2,807			3.76

Summary of Range of Exercise Prices and Weighted Average Remaining Contractual Life of the Options Outstanding

The following table summarises the range of exercise prices and weighted average remaining contractual life of the options outstanding at 31 December 2017 and 2016.

	2017				2016
Range of exercise prices	Weighted average remaining contractual life Years		Weighted average exercise price £		Weighted average remaining contractual life Years		Weighted average exercise price £
£2 to £ 3		3		2.75		4		2.75
£3 to £4		1		3.17		3		3.28
£4 to £5		3		4.21		2		4.82

Summary of Percentage of Maximum Shares in Tranche to Be Delivered based on Banco Santander SA's ranking

Banco Santander SA’s place in the EPS ranking	Maximum shares in that tranche to be delivered  %
1st to 5th	100
6th	87.5
7th	75
8th	62.5
9th	50
10th and below	–
Banco Santander SA’s RoTE	Maximum shares in that tranche to be delivered  %
12% or above	100
11% to 12%	75
Below 11%	–

2015 LTIP [member]

Summary of Movement in Value of Conditional Awards

The following table summarises the movement in the value of conditional awards in the 2015 LTIP during 2017, 2016 and 2015:

	2017 £000			2016 £000			2015 £000
Outstanding at 1 January		6,718			6,769			–
Granted		–			–			6,769
Forfeited/cancelled		(215) (1	)		(51	)		–
Outstanding at 31 December		6,503			6,718			6,769

(1) The outstanding shares have been updated to compensate for the equity dilution caused by the shares issued by Banco Santander SA in July 2017.

2014 LTIP [member]

Summary of Movement in Value of Conditional Awards

The following table summarises the movement in the value of conditional awards in the 2014 LTIP during 2017, 2016 and 2015:

	2017 £000			2016 £000			2015 £000
Outstanding at 1 January		3,193			5,102			5,355
Forfeited/cancelled		(1,283)  (1	)		(1,909	)		(253	)
Outstanding at 31 December		1,910			3,193			5,102

(1) The outstanding shares have been updated to compensate for the equity dilution caused by the shares issued by Banco Santander SA in July 2017.

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Transactions With Directors and Other Key Management Personnel (Tables)

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Summary of Remuneration of the Directors and Other Key Management Personnel

The remuneration of the Directors and Other Key Management Personnel of the Santander UK group is set out in aggregate below.

Directors’ remuneration	2017 £		2016 £		2015 £
Salaries and fees		4,406,908		3,604,999		4,694,260
Performance-related payments(1)		3,685,464		2,330,000		2,607,407
Other fixed remuneration (pension and other allowances & non-cash benefits)		1,580,321		635,493		1,002,320
Expenses		96,358		120,302		115,382
Total remuneration		9,769,051		6,690,794		8,419,369
Directors’ and Other Key Management Personnel compensation	2017 £		2016 £		2015 £
Short-term employee benefits(2)		24,642,085		24,757,161		19,950,608
Post-employment benefits		2,292,857		1,918,144		1,825,688
Share-based payments		–		–		400,948
Total compensation		26,934,942		26,675,305		22,177,244

(1) In line with the Code, a proportion of the performance-related payment was deferred. Further details can be found in Note 34.

(2) Excludes grants of shares in Banco Santander SA made as buy-outs of deferred performance-related payments in 2017 of 603,614 shares in connection with previous employment for four individuals (2016: nil 2015: nil). Excludes payments made as buy-outs of deferred performance-related payments of £52,100 in connection with previous employment for one individual (2016: £2,732,357 for five individuals; 2015: £3,453,956 for five individuals)

Summary of Transactions With Directors, Other Key Management Personnel

Directors, Other Key Management Personnel (Defined as the Board of the Company and the Executive Committee of Santander UK plc who served during the year) and their connected persons have undertaken the following transactions with the Santander UK group in the course of normal banking business.

	2017						2016
Secured loans, unsecured loans and overdrafts	No.			£000			No.			£000
At 1 January		17			5,195			18			5,492
Net movements		(10	)		(3,979	)		(1	)		(297	)
At 31 December		7			1,216			17			5,195
Deposit, bank and instant access accounts and investments
At 1 January		26			9,138			26			14,678
Net movements		(1	)		4,046			–			(5,540	)
At 31 December		25			13,184			26			9,138

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Related Party Disclosures (Tables)

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Summary of Transactions With Related Parties

Transactions with related parties during the year and balances outstanding at the year-end:

																							Group
	Interest, fees and other income received									Interest, fees and other expenses paid						Amounts owed by related parties				Amounts owed to related parties
	2017 £m			2016 £m			2015 £m			2017 £m		2016 £m		2015 £m		2017 £m		2016 £m		2017 £m			2016 £m
Ultimate parent		(60	)		(81	)		(76	)		321		188		99		4,398		2,148		(5,079	)		(2,882	)
Immediate parent		(3	)		(3	)		(3	)		207		139		19		8		5		(7,374	)		(5,962	)
Fellow subsidiaries		(76	)		(271	)		(439	)		491		653		743		102		363		(981	)		(1,101	)
Associates & joint ventures		(20	)		(27	)		(24	)		–		1		–		1,175		1,090		(33	)		(37	)
		(159	)		(382	)		(542	)		1,019		981		861		5,683		3,606		(13,467	)		(9,982	)

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Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Measurement Basis of Financial Assets and Liabilities

The following tables analyse financial instruments into those measured at fair value and those measured at amortised cost in the balance sheet:

	Group
	2017						2016(1)
	Held at    fair value    £m		Held at    amortised    cost    £m		Total   £m		Held at    fair value    £m		Held at    amortised cost    £ m		Total   £m
Assets
Cash and balances at central banks		–		32,771		32,771		–		17,107		17,107
Trading assets		30,555		–		30,555		30,035		–		30,035
Derivative financial instruments		19,942		–		19,942		25,471		–		25,471
Financial assets designated at fair value		2,096		–		2,096		2,140		–		2,140
Loans and advances to banks		–		5,927		5,927		–		4,348		4,348
Loans and advances to customers		–		199,490		199,490		–		199,738		199,738
Financial investments		8,853		8,758		17,611		10,561		6,905		17,466
		61,446		246,946		308,392		68,207		228,098		296,305
Non-financial assets						6,373						6,206
Total assets						314,765						302,511
Liabilities
Deposits by banks		–		13,784		13,784		–		9,769		9,769
Deposits by customers		–		183,648		183,648		–		177,172		177,172
Trading liabilities		31,109		–		31,109		15,560		–		15,560
Derivative financial instruments		17,613		–		17,613		23,103		–		23,103
Financial liabilities designated at fair value		2,315		–		2,315		2,440		–		2,440
Debt securities in issue		–		42,633		42,633		–		50,346		50,346
Subordinated liabilities		–		3,793		3,793		–		4,303		4,303
		51,037		243,858		294,895		41,103		241,590		282,693
Non-financial liabilities						3,665						4,365
Total liabilities						298,560						287,058

(1) Restated to reflect the change in accounting policy relating to business combinations between entities under common control, as described in Note 1.

Fair Values of Financial Instruments Carried at Amortised Cost

																			Group
									2017										2016
	Fair value								Carrying		Fair value								Carrying
	Level 1 £m		Level 2 £m		Level 3 £m		Total £m		value £m		Level 1 £m		Level 2 £m		Level 3 £m		Total £m		value £m
Assets
Loans and advances to banks		–		5,358		556		5,914		5,927		–		3,737		478		4,215		4,348
Loans and advances to customers – unimpaired		–		6,481		194,551		201,032		198,629		–		6,739		195,673		202,412		198,788
– impaired		–		–		784		784		861		–		–		824		824		950
Financial investments		6,435		2,211		–		8,646		8,758		6,436		272		–		6,708		6,905
		6,435		14,050		195,891		216,376		214,175		6,436		10,748		196,975		214,159		210,991
Liabilities
Deposits by banks		–		13,249		557		13,806		13,784		–		9,360		438		9,798		9,769
Deposits by customers		–		564		183,226		183,790		183,648		–		582		176,883		177,465		177,172
Debt securities in issue		–		44,296		–		44,296		42,633		–		51,053		1,196		52,249		50,346
Subordinated liabilities		–		4,256		–		4,256		3,793		–		4,562		–		4,562		4,303
		–		62,365		183,783		246,148		243,858		–		65,557		178,517		244,074		241,590

Fair Values of Financial Instruments Measured at Fair Value on a Recurring Basis

The following tables summarise the fair values of the financial assets and liabilities accounted for at fair value at 31 December 2017 and 2016, analysed by their levels in the fair value hierarchy – Level 1, Level 2 and Level 3.

																		Group
								2017								2016
		Level 1 £m		Level 2 £m		Level 3 £m		Total £m		Level 1 £m		Level 2 £m		Level 3 £m		Total £m		Valuation technique
Assets
Trading assets	Loans and advances to banks		–		6,897		–		6,897		–		7,478		–		7,478		A
	Loans and advances to customers		656		8,184		–		8,840		762		9,561		–		10,323		A
	Debt securities		5,156		–		–		5,156		6,248		–		–		6,248		–
	Equity securities		9,662		–		–		9,662		5,986		–		–		5,986		–
			15,474		15,081		–		30,555		12,996		17,039		–		30,035
Derivative financial instruments	Exchange rate contracts		–		6,061		16		6,077		–		8,300		22		8,322		A
	Interest rate contracts		–		12,956		12		12,968		1		15,795		19		15,815		A & C
	Equity and credit contracts		–		861		36		897		–		1,272		62		1,334		B & D
			–		19,878		64		19,942		1		25,367		103		25,471
Financial assets designated at fair value	Loans and advances to customers		–		1,485		64		1,549		–		1,668		63		1,731		A
	Debt securities		184		187		176		547		–		208		201		409		A & B
			184		1,672		240		2,096		–		1,876		264		2,140
Financial investments	Available-for-sale equity securities		19		9		53		81		17		63		32		112		B
	Available-for-sale debt securities		8,770		2		–		8,772		10,449		–		–		10,449		C
			8,789		11		53		8,853		10,466		63		32		10,561
Total assets at fair value			24,447		36,642		357		61,446		23,463		44,345		399		68,207
Liabilities
Trading liabilities	Deposits by banks		–		1,885		–		1,885		–		4,200		–		4,200		A
	Deposits by customers		–		25,530		–		25,530		–		8,559		–		8,559		A
	Short positions		3,694		–		–		3,694		2,801		–		–		2,801		–
			3,694		27,415		–		31,109		2,801		12,759		–		15,560
Derivative financial	Exchange rate contracts		–		4,176		15		4,191		–		6,009		21		6,030		A
instruments	Interest rate contracts		–		12,720		5		12,725		–		16,202		11		16,213		A & C
	Equity and credit contracts		1		653		43		697		1		817		42		860		B & D
			1		17,549		63		17,613		1		23,028		74		23,103
Financial liabilities	Debts securities in issue		–		1,629		6		1,635		–		1,908		6		1,914		A
designated at fair value	Structured deposits		–		680		–		680		–		526		–		526		A
			–		2,309		6		2,315		–		2,434		6		2,440
Total liabilities at fair value			3,695		47,273		69		51,037		2,802		38,221		80		41,103

Summary of Fair Value Adjustment

The magnitude and types of fair value adjustment adopted by Global Corporate Banking are listed in the following table:

	2017 £m		2016 £m
Risk-related:
– Bid-offer and trade specific adjustments		34		37
– Uncertainty		43		49
– Credit risk adjustment		36		50
– Funding fair value adjustment		6		20
		119		156
Model-related		8		1
Day One profit		1		4
		128		161

Analysis of Financial Instruments Valued Using Internal Models Based on Information Other Than Market Data

The table below provides an analysis of financial instruments valued using internal models based on information other than market data together with the subsequent valuation technique used for each type of instrument. Each instrument is initially valued at transaction price:

			Balance sheet value						Fair value movements recognised in profit/(loss)
Balance sheet line item	Category	Financial instrument product type	2017 £m			2016 £m			2017 £m			2016 £m			2015 £m
1. Derivative assets	Exchange rate contracts	Cross-currency swaps		1			1			–			1			3
2. Derivative assets	Exchange rate contracts	Securitisation cross currency swaps		15			21			(11	)		12			–
3. Derivative assets	Interest rate contracts	Bermudan swaptions		6			7			(1	)		(3	)		(9	)
4. Derivative assets	Interest rate contracts	Securitisation swaps		6			12			(8	)		–			–
5. Derivative assets	Equity and credit contracts	Reversionary property interests		31			36			(6	)		12			2
6. Derivative assets	Credit contracts	Credit default swaps		–			5			(5	)		1			(2	)
7. Derivative assets	Equity contracts	Property-related options and forwards		5			21			(1	)		(5	)		(4	)
8. FVTPL	Loans and advances to customers	Roll-up mortgage portfolio		64			63			2			4			2
9. FVTPL	Debt securities	Reversionary property securities		176			201			(18	)		–			17
10. Financial investments	Available-for-sale equity securities	Unlisted equity shares		53			32			–			–(1)			–(1)
11. Derivative liabilities	Exchange rate contracts	Securitisation cross currency swaps		(15	)		(21	)		11			(12	)		–
12. Derivative liabilities	Interest rate contracts	Bermudan swaptions		(1	)		(2	)		1			2			–
13. Derivative liabilities	Interest rate contracts	Securitisation swaps		(4	)		(9	)		7			–			–
14. Derivative liabilities	Equity contracts	Property-related options and forwards		(43	)		(42	)		(5	)		(5	)		(3	)
15. FVTPL	Debt securities in issue	Non-vanilla debt securities		(6	)		(6	)		–			–			(4	)
Total net assets				288			319
Total (expense)/income										(34	)		7			2

(1) Gains and losses arising from changes in the fair value of securities classified as available-for–sale are recognised in ‘Other comprehensive income’.

Reconciliation of Fair Value Measurements in Level 3 of the Fair Value Hierarchy

The following table provides a reconciliation of the movement between opening and closing balances of Level 3 financial instruments, measured at fair value using a valuation technique with significant unobservable inputs:

	Group
	Assets												Liabilities
	Derivatives £m			Fair value through profit and loss £m			Financial investments £m			Total £m			Derivatives  £m	Fair value through profit and loss £m			Total £m
At 1 January 2017		103			264			32			399		(74)		(6	)		(80	)
Total (losses)/gains recognised in profit/(loss):
– Fair value movements		(32	)		(16	)		–			(48	)	14		–			14
– Foreign exchange and other movements		32			–			–			32		(32)		–			(32	)
Gains recognised in other comprehensive income		–			–			21			21		–		–			–
Additions		9			–			–			9		(2)		–			(2	)
Sales		–			(8	)		–			(8	)	–		–			–
Settlements		(48	)		–			–			(48	)	31		–			31
At 31 December 2017		64			240			53			357		(63)		(6	)		(69	)
(Losses)/gains recognised in profit/(loss) relating to assets and liabilities held at the end of the year		–			(16	)		–			(16	)	(18)		–			(18	)
At 1 January 2016		188			267			100			555		(105)		(5	)		(110	)
Total gains/(losses) recognised in profit/(loss):
– Fair value movements		18			4			–			22		(15)		–			(15	)
– Foreign exchange and other movements		(32	)		–			–			(32	)	32		(1	)		31
Gains recognised in other comprehensive income		–			–			26			26		–		–			–
Additions		4			–			25			29		(3)		–			(3	)
Sales		–			(7	)		(119	)		(126	)	–		–			–
Settlements		(75	)		–			–			(75	)	17		–			17
At 31 December 2016		103			264			32			399		(74)		(6	)		(80	)
(Losses)/gains recognised in profit/(loss) relating to assets and liabilities held at the end of the year		(14	)		4			–			(10	)	17		(1	)		16

Effects of Changes in Significant Unobservable Assumptions to Reasonably Possible Alternatives (Level 3)

Favourable and unfavourable changes are determined on the basis of changes in the value of the instrument as a result of varying the levels of the unobservable input as described in the table below. The potential effects do not take into effect any hedged positions.

				Significant unobservable input							Sensitivity
					Assumption value						Favourable		Unfavourable
2017	Fair value £m			Assumption description	Range(1)		Weighted average		Shift		changes £m		changes £m
3. Derivative assets – Interest rate contracts:		6		Mean reversion		(2)% – 2%		0%		(2)%		1		(1	)
– Bermudan swaptions
5. Derivative assets – Equity and credit contracts:		31		HPI Forward growth rate		0% – 5%		2.42%		1%		10		(10	)
– Reversionary property derivatives				HPI Spot rate		n/a		773(2)		10%		8		(8	)
7. Derivative assets – Equity contracts:		5		HPI Forward growth rate		0% – 5%		2.32%		1%		1		(1	)
– Property-related options and forwards				HPI Spot rate		n/a		727(2)		10%		2		–
8. FVTPL – Loans and advances to customers:		64		HPI Forward growth rate		0% – 5%		2.57%		1%		2		(2	)
– Roll-up mortgage portfolio
9. FVTPL – Debt securities:		176		HPI Forward growth rate		0% – 5%		2.42%		1%		3		(3	)
– Reversionary property securities				HPI Spot rate		n/a		773(2)		10%		11		(11	)
10. Financial investments – AFS equity securities:		53		Contingent litigation risk		0% – 100%		35%		20%		6(3		(6)(3
– Unlisted equity shares
12. Derivative liabilities – Interest rate contracts:		(1	)	Mean reversion		(2)% – 2%		0%		(2)%		1		(1	)
– Bermudan swaptions
14. Derivative liabilities – Equity contracts:		(43	)	HPI Forward growth rate		0% – 5%		2.32%		1%		3		(3	)
– Property-related options and forwards				HPI Spot rate		n/a		727(2)		10%		7		(8	)
2016
3. Derivative assets – Interest rate contracts:		7		Mean reversion		(2)% – 2%		0%		(2)%		1		(1	)
– Bermudan swaptions
5. Derivative assets – Equity and credit contracts:		36		HPI Forward growth rate		0% – 5%		2.79%		1%		11		(11	)
– Reversionary property derivatives				HPI Spot rate		n/a		748(2)		10%		9		(9	)
6. Derivative assets – Credit contracts:		5		Probability of default		0% – 5%		0.39%		20%		1		(1	)
– Credit default swaps
7. Derivative assets – Equity contracts:		21		HPI Forward growth rate		0% – 5%		2.71%		1%		1		(1	)
– Property-related options and forwards				HPI Spot rate		n/a		702(2)		10%		1		(1	)
8. FVTPL – Loans and advances to customers:		63		HPI Forward growth rate		0% – 5%		2.84%		1%		2		(2	)
– Roll-up mortgage portfolio
9. FVTPL – Debt securities:		201		HPI Forward growth rate		0% – 5%		2.79%		1%		12		(12	)
– Reversionary property securities				HPI Spot rate		n/a		748(2)		10%		18		(18	)
10. Financial investments – AFS equity securities:		32		Contingent litigation risk		0% – 100%		48%		20%		7(3)		(7)(3)
– Unlisted equity shares
12. Derivative liabilities – Interest rate contracts:		(2	)	Mean reversion		(2)% – 2%		0%		(2)%		1		(1	)
– Bermudan swaptions
14. Derivative liabilities – Equity contracts:		(42	)	HPI Forward growth rate		0% – 5%		2.71%		1%		4		(4	)
– Property-related options and forwards				HPI Spot rate		n/a		702(2)		10%		8		(9	)

(1) The range of actual assumption values used to calculate the weighted average disclosure.

(2) Represents the HPI spot rate index level at 31 December 2017 and 2016.

(3) Gains and losses arising from changes in the fair value of securities classified as available-for-sale are recognised in ‘Other comprehensive income’; for all other assets and liabilities shown in the tables above, gains and losses arising from changes in their fair value are recognised in the Consolidated Income Statement.

Maturities of Undiscounted Cash Flows for Financial Liabilities and Off Balance Sheet Commitments

This table is not intended to show the liquidity of the Santander UK group.

	Group
2017	On demand £m		Not later than three months £m		Later than three months and not later than one year £m		Later than one year and not later than five years £m		Later than five years £m		Total £m
Liabilities
Deposits by banks		2,452		1,466		914		8,874		208		13,914
Deposits by customers		154,114		4,764		13,869		6,720		4,604		184,071
Trading liabilities		1,520		26,914		152		161		2,580		31,327
Derivative financial instruments:
– Held for trading		9		620		1,203		2,505		12,701		17,038
– Held for hedging(1)		6		11		27		420		1,300		1,764
Financial liabilities designated at fair value		7		545		222		789		814		2,377
Debt securities in issue		–		8,395		4,821		22,927		7,933		44,076
Subordinated liabilities		–		289		147		783		5,571		6,790
Total financial liabilities		158,108		43,004		21,355		43,179		35,711		301,357
Off-balance sheet commitments given		2,082		6,874		1,844		12,399		18,860		42,059
2016
Liabilities
Deposits by banks		2,366		916		677		5,833		96		9,888
Deposits by customers		145,810		4,996		13,420		11,077		2,390		177,693
Trading liabilities		3,535		10,042		21		602		1,474		15,674
Derivative financial instruments:
– Held for trading		41		904		1,569		4,352		15,494		22,360
– Held for hedging(1)		–		14		38		575		1,357		1,984
Financial liabilities designated at fair value		9		404		229		1,117		759		2,518
Debt securities in issue		–		9,189		7,010		21,889		14,775		52,863
Subordinated liabilities		–		450		554		1,739		6,054		8,797
Total financial liabilities		151,761		26,915		23,518		47,184		42,399		291,777
Off-balance sheet commitments given		1,692		5,128		2,642		23,584		8,570		41,616

(1) Comprises the derivatives liabilities for which contractual maturities are essential for an understanding of the timing of the cash flows.

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Offsetting Financial Assets and Liabilities (Tables)

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Summary of Information about Impact of Offsetting of Financial Assets and Liabilities

The Santander UK group engages in a variety of counterparty credit mitigation strategies in addition to netting and collateral arrangements. Therefore, the net amounts presented in the tables below do not purport to represent the Santander UK group’s actual credit exposure.

	Group
	Amounts subject to enforceable netting arrangements
	Effects of offsetting on balance sheet							Related amounts not offset
2017	Gross amounts £m		Amounts offset £m			Net amounts reported on the balance sheet £m		Financial  instruments  £m	Financial collateral(1) £m			Net amount £m		Assets not subject to enforceable netting arrangements(2) £m		Balance sheet total(3) £m
Assets
Derivative financial instruments		30,155		(10,479	)		19,676	(14,772)		(2,785	)		2,119		266		19,942
Reverse repurchase, securities borrowing & similar agreements:
– Trading assets		15,224		(6,354	)		8,870	(355)		(8,515	)		–		–		8,870
– Loans and advances to banks		2,464		–			2,464	–		(2,464	)		–		–		2,464
Loans and advances to customers and banks(4)		6,121		(1,459	)		4,662	–		–			4,662		198,291		202,953
		53,964		(18,292	)		35,672	(15,127)		(13,764	)		6,781		198,557		234,229
Liabilities
Derivative financial instruments		27,839		(10,479	)		17,360	(14,772)		(1,951	)		637		253		17,613
Repurchase, securities lending & similar agreements:
– Trading liabilities		31,858		(6,354	)		25,504	(355)		(25,149	)		–		–		25,504
– Deposits by banks and customers		1,578		–			1,578	–		(1,578	)		–		–		1,578
Deposits by customers and banks(4)		8,440		(1,459	)		6,981	–		–			6,981		188,873		195,854
		69,715		(18,292	)		51,423	(15,127)		(28,678	)		7,618		189,126		240,549
2016
Assets
Derivative financial instruments		34,125		(8,819	)		25,306	(17,417)		(2,384	)		5,505		165		25,471
Reverse repurchase, securities borrowing & similar agreements:
– Trading assets		12,607		(1,895	)		10,712	(2,113)		(8,599	)		–		–		10,712
– Loans and advances to banks		1,462		–			1,462	–		(1,462	)		–		–		1,462
Loans and advances to customers and banks(4)		5,494		(1,491	)		4,003	–		–			4,003		198,621		202,624
		53,688		(12,205	)		41,483	(19,530)		(12,445	)		9,508		198,786		240,269
Liabilities
Derivative financial instruments		31,635		(8,819	)		22,816	(17,417)		(2,565	)		2,834		287		23,103
Repurchase, securities lending & similar agreements:
– Trading liabilities		10,693		(1,895	)		8,798	(2,113)		(6,685	)		–		–		8,798
– Deposits by banks and customers		2,886		–			2,886	–		(2,886	)		–		–		2,886
Deposits by customers and banks(4)		6,643		(1,491	)		5,152	–		–			5,152		178,903		184,055
		51,857		(12,205	)		39,652	(19,530)		(12,136	)		7,986		179,190		218,842

(1) Financial collateral is reflected at its fair value, but has been limited to the net balance sheet exposure so as not to include any over-collateralisation.

(2) This column includes contractual rights of set-off that are subject to uncertainty under the laws of the relevant jurisdiction.

(3) The balance sheet total is the sum of ‘Net amounts reported on the balance sheet’ that are subject to enforceable netting arrangements and ‘Amounts not subject to enforceable netting arrangements’.

(4) The amounts offset within loans and advances to customers/banks or deposits by customers/banks relate to offset mortgages which are classified as either and that are subject to netting.

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Changes to Comparative Data (Tables)

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Summary of Changes to Comparative Data

Consolidated Statement of Changes in Equity

For the year ended 31 December 2015

	Retained earnings £m			Total shareholders’ equity £m			Total equity £m
At 1 January 2015 – as reported in 2015		4,056			14,193			14,193
Adjustment		(631	)		(631	)		(631	)
At 1 January 2015 – as reported in 2017		3,425			13,562			13,562
At 31 December 2015 – as reported in 2015		4,679			15,524			15,659
Adjustment		(631	)		(631	)		(631	)
At 31 December 2015 – as reported in 2017		4,048			14,893			15,028

Summary of Changes to Note (2) Segments

Note 2. Segments

	Retail Banking									Commercial Banking
2015	As reported in 2017 £m			Adjustment £m			As reported in 2015 £m			As reported in 2017 £m			Adjustment £m			As reported in 2015 £m
Net interest income		3,097			112			2,985			399			(61	)		460
Non-interest income		526			5			521			91			(18	)		109
Total operating income		3,623			117			3,506			490			(79	)		569
Operating expenses before impairment losses, provisions and charges		(1,898	)		(115	)		(1,783	)		(217	)		115			(332	)
Impairment (losses)/releases on loans and advances		(90	)		(14	)		(76	)		(25	)		14			(39	)
Provisions for other liabilities and (charges)/releases		(728	)		(1	)		(727	)		(23	)		1			(24	)
Total operating impairment losses, provisions and (charges)/releases		(818	)		(15	)		(803	)		(48	)		15			(63	)
Profit before tax		907			(13	)		920			225			51			174
Revenue from external customers		4,529			94			4,435			626			(94	)		720
Inter-segment revenue		(906	)		23			(929	)		(136	)		(15	)		(151	)
Total operating income		3,623			117			3,506			490			(79	)		569
Customer loans		167,093			2,263			164,830			18,680			(2,263	)		20,943
Total assets		173,479			1,632			171,847			18,680			(2,263	)		20,943
Customer deposits		140,358			3,026			137,332			15,076			(3,026	)		18,102
Total liabilities		143,157			3,026			140,131			15,076			(3,026	)		18,102

	Global Corporate Banking									Corporate Centre									Total
2015	As reported in 2017 £m			Adjustment £m			As reported in 2015 £m			As reported in 2017 £m			Adjustment £m			As reported in 2015 £m			As reported in 2017 £m			Adjustment £m			As reported in 2015 £m
Net interest income		52			(20	)		72			27			(31	)		58			3,575			–			3,575
Non-interest income		303			(4	)		307			78			17			61			998			–			998
Total operating income		355			(24	)		379			105			(14	)		119			4,573			–			4,573
Operating expenses before impairment losses, provisions and (charges)/releases		(287	)		–			(287	)		2			–			2			(2,400	)		–			(2,400	)
Impairment releases/(losses) on loans and advances		13			–			13			36			–			36			(66	)		–			(66	)
Provisions for other liabilities and (charges)/releases		(14	)		–			(14	)		3			–			3			(762	)		–			(762	)
Total operating impairment losses, provisions and (charges)/releases		(1	)		–			(1	)		39			–			39			(828	)		–			(828	)
Profit before tax		67			(24	)		91			146			(14	)		160			1,345			–			1,345
Revenue from external customers		437			–			437			(1,019	)		–			(1,019	)		4,573			–			4,573
Inter-segment revenue		(82	)		(24	)		(58	)		1,124			(14	)		1,138			–			–			–
Total operating income		355			(24	)		379			105			(14	)		119			4,573			–			4,573
Customer loans		5,470			–			5,470			7,391			–			7,391			198,634			–			198,634
Total assets		36,593			–			36,593			52,023			–			52,023			280,775			(631	)		281,406
Customer deposits		3,013			–			3,013			3,808			–			3,808			162,255			–			162,255
Total liabilities		32,290			–			32,290			75,224			–			75,224			265,747			–			265,747

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Credit Risk - Summary of Exposures to Credit Risk in Business Segments (Detail) - Credit Risk [member]	12 Months Ended
	Dec. 31, 2017
Retail Banking [member]
Disclosure of credit risk exposure [line items]
Description of exposure to risk in business segments	Residential mortgages, business banking, consumer (auto) finance and other unsecured lending (personal loans, credit cards, and overdrafts). We provide these to individuals and small businesses.
Commercial Banking [member]
Disclosure of credit risk exposure [line items]
Description of exposure to risk in business segments	Loans, bank accounts, treasury services, invoice discounting, cash transmission, trade finance and asset finance. We provide these to SMEs and mid corporates, as well as Commercial Real Estate customers and Social Housing associations.
Global Corporate Banking [member]
Disclosure of credit risk exposure [line items]
Description of exposure to risk in business segments	Loans, treasury products, and treasury markets activities. We provide these to large corporates, and financial institutions, as well as sovereigns and other international organisations.
Corporate Centre [member]
Disclosure of credit risk exposure [line items]
Description of exposure to risk in business segments	Asset and liability management of our balance sheet, as well as our non-core and Legacy Portfolios being run down. Exposures include sovereign and other international organisation assets that we hold for liquidity.

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Credit Risk - Summary of Key Metrics to Measure and Control Credit Risk (Detail) - Credit Risk [member]	12 Months Ended
	Dec. 31, 2017
Expected Loss [member]
Disclosure of credit risk exposure [line items]
Metric	EL
Description	EL tells us what credit risk is likely to cost us. It is the product of: - Probability of default (PD) - how likely customers are to default. We estimate this using customer ratings or the transaction credit scores - Exposure at default (EAD) - how much customers will owe us if they default. We calculate this by comparing how much of their agreed credit (such as an overdraft) customers have used when they default with how much they normally use. This allows us to estimate the final extent of use of credit in the event of default - Loss given default (LGD) - how much we lose when customers actually default. We work this out using the actual losses on loans that default. We take into account the income we receive, including the collateral we held, the costs we incur and the recovery process timing. PD, EAD and LGD are calculated in accordance with CRD IV, and include direct and indirect costs. We base them on our own risk models and our assessment of each customer's credit quality. For the rest of our Risk review, impairments, impairment losses and impairment loss allowances refer to calculations in accordance with IFRS, unless we specifically say they relate to CRD IV. For our IFRS accounting policy on impairment, see Note 1 to the Consolidated Financial Statements. The way we calculate impairment under IFRS changed from 1 January 2018 when IFRS 9 took effect. It uses an expected credit loss (ECL) model rather than an incurred loss model used by IAS 39. There are also differences between the ECL approach used by IFRS 9 and the EL approach used by CRD IV. For more, see 'Future accounting developments' in Note 1 to the Consolidated Financial Statements.
Non Performing Loans [member]
Disclosure of credit risk exposure [line items]
Metric	NPLs
Description	We use NPLs - and related write-offs and recoveries - to monitor how our portfolios behave. We classify loans as NPLs where customers do not make a payment for three months or more, or if we have data to make us doubt they can keep up with their payments. The data we have on customers varies across our business segments. It typically includes where: Retail Banking - They have been reported bankrupt or insolvent - Their loan term has ended, but they still owe us money more than three months later - They have had forbearance as an NPL, but have not caught up with the payments they had missed before that - They have had multiple forbearance - We have suspended their fees and interest because they are in financial difficulties - We have repossessed the property. Other segments: Commercial Banking, Global Corporate Banking and Corporate Centre - They have had a winding up notice issued, or something happens that is likely to trigger insolvency - such as, another lender calls in a loan - Something happens that makes them less likely to be able to pay us - such as they lose an important client or contract - They have regularly missed or delayed payments, even though they have not gone over the three-month limit for NPLs - Their loan is unlikely to be refinanced or repaid in full on maturity - Their loan has an excessive LTV and it is unlikely that it will be resolved, such as by a change in planning policy, pay-downsfrom rental income, or increases in market values.

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Credit Risk - Summary of Difference Between Maximum and Net Exposure to Credit Risk (Detail) - GBP (£) £ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of credit risk exposure [line items]
Collateral cash	£ 28,678	£ 12,136
Netting	15,127	19,530
Net exposure	346,500	336,100
Credit Risk [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to balance sheet	298,700	290,100
Collateral cash	(2,900)	(2,500)
Collateral non-cash	(207,700)	(205,600)
Netting	(15,200)	(19,500)
Net exposure	116,400	106,000
Credit Risk [member] | Off-Balance Sheet [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to balance sheet	43,500	43,500
Credit Risk [member] | Cash and Balances at Central Banks [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to balance sheet	32,800	17,100
Net exposure	32,800	17,100
Credit Risk [member] | Trading Assets [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to balance sheet	21,000	24,000
Collateral non-cash	(8,500)	(8,600)
Netting	(400)	(2,100)
Net exposure	12,100	13,300
Credit Risk [member] | Trading Assets [member] | Securities Repurchased Under Resale Agreements [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to balance sheet	8,900	10,700
Collateral non-cash	(8,500)	(8,600)
Netting	(400)	(2,100)
Credit Risk [member] | Trading Assets [member] | Debt Securities [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to balance sheet	5,200	6,200
Net exposure	5,200	6,200
Credit Risk [member] | Trading Assets [member] | Cash Collateral [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to balance sheet	6,200	6,200
Net exposure	6,200	6,200
Credit Risk [member] | Trading Assets [member] | Short-term Loans [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to balance sheet	700	900
Net exposure	700	900
Credit Risk [member] | Derivative Financial Instruments [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to balance sheet	19,900	25,500
Collateral cash	(2,800)	(2,400)
Netting	(14,800)	(17,400)
Net exposure	2,300	5,700
Credit Risk [member] | Financial Assets Designated at Fair Value [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to balance sheet	2,100	2,100
Collateral non-cash	(1,600)	(1,800)
Net exposure	500	500
Credit Risk [member] | Financial Assets Designated at Fair Value [member] | Debt Securities [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to balance sheet	500	400
Net exposure	500	400
Credit Risk [member] | Financial Assets Designated at Fair Value [member] | Loans and Advances to Customers [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to balance sheet	1,600	1,700
Collateral non-cash	(1,600)	(1,800)
Net exposure		100
Credit Risk [member] | Financial Assets Designated at Fair Value [member] | Off-Balance Sheet [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to balance sheet		200
Credit Risk [member] | Financial Assets Designated at Fair Value [member] | Off-Balance Sheet [member] | Loans and Advances to Customers [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to balance sheet		200
Credit Risk [member] | Loans and Advances to Banks [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to balance sheet	5,900	4,400
Collateral non-cash	(2,500)	(1,500)
Net exposure	5,000	4,800
Credit Risk [member] | Loans and Advances to Banks [member] | Off-Balance Sheet [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to balance sheet	1,600	1,900
Credit Risk [member] | Loans and Advances to Customers [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to balance sheet	199,500	199,700
Collateral cash	(100)	(100)
Collateral non-cash	(195,100)	(193,700)
Net exposure	45,500	45,700
Credit Risk [member] | Loans and Advances to Customers [member] | Advances Secured on Residential Property [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to balance sheet	155,200	154,400
Collateral non-cash	(167,400)	(164,900)
Net exposure	200	300
Credit Risk [member] | Loans and Advances to Customers [member] | Corporate Loans [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to balance sheet	30,500	31,600
Collateral non-cash	(21,800)	(23,100)
Net exposure	25,800	25,600
Credit Risk [member] | Loans and Advances to Customers [member] | Finance leases [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to balance sheet	6,600	6,600
Collateral cash	(100)	(100)
Collateral non-cash	(5,800)	(5,700)
Net exposure	1,300	1,200
Credit Risk [member] | Loans and Advances to Customers [member] | Other Unsecured Advances [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to balance sheet	6,000	6,000
Collateral non-cash	(100)
Net exposure	17,000	17,500
Credit Risk [member] | Loans and Advances to Customers [member] | Amounts Due from Fellow Banco Santander Group Subsidiaries and Joint Ventures [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to balance sheet	1,200	1,100
Net exposure	1,200	1,100
Credit Risk [member] | Loans and Advances to Customers [member] | Off-Balance Sheet [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to balance sheet	41,200	39,800
Credit Risk [member] | Loans and Advances to Customers [member] | Off-Balance Sheet [member] | Advances Secured on Residential Property [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to balance sheet	12,400	10,800
Credit Risk [member] | Loans and Advances to Customers [member] | Off-Balance Sheet [member] | Corporate Loans [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to balance sheet	17,100	17,100
Credit Risk [member] | Loans and Advances to Customers [member] | Off-Balance Sheet [member] | Finance leases [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to balance sheet	600	400
Credit Risk [member] | Loans and Advances to Customers [member] | Off-Balance Sheet [member] | Other Unsecured Advances [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to balance sheet	11,100	11,500
Credit Risk [member] | Financial Investments [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to balance sheet	17,500	17,300
Net exposure	18,200	18,900
Credit Risk [member] | Financial Investments [member] | Loans and Receivables Securities [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to balance sheet	2,200	300
Net exposure	2,900	1,900
Credit Risk [member] | Financial Investments [member] | Available-for-Sale Debt Securities [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to balance sheet	8,800	10,400
Net exposure	8,800	10,400
Credit Risk [member] | Financial Investments [member] | Held-to-Maturity Debt Securities [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to balance sheet	6,500	6,600
Net exposure	6,500	6,600
Credit Risk [member] | Financial Investments [member] | Off-Balance Sheet [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to balance sheet	700	1,600
Credit Risk [member] | Financial Investments [member] | Off-Balance Sheet [member] | Loans and Receivables Securities [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to balance sheet	700	1,600
Credit Risk [member] | Cost [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to balance sheet	299,700	291,100
Credit Risk [member] | Cost [member] | Cash and Balances at Central Banks [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to balance sheet	32,800	17,100
Credit Risk [member] | Cost [member] | Trading Assets [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to balance sheet	21,000	24,000
Credit Risk [member] | Cost [member] | Trading Assets [member] | Securities Repurchased Under Resale Agreements [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to balance sheet	8,900	10,700
Credit Risk [member] | Cost [member] | Trading Assets [member] | Debt Securities [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to balance sheet	5,200	6,200
Credit Risk [member] | Cost [member] | Trading Assets [member] | Cash Collateral [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to balance sheet	6,200	6,200
Credit Risk [member] | Cost [member] | Trading Assets [member] | Short-term Loans [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to balance sheet	700	900
Credit Risk [member] | Cost [member] | Derivative Financial Instruments [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to balance sheet	19,900	25,500
Credit Risk [member] | Cost [member] | Financial Assets Designated at Fair Value [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to balance sheet	2,100	2,100
Credit Risk [member] | Cost [member] | Financial Assets Designated at Fair Value [member] | Debt Securities [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to balance sheet	500	400
Credit Risk [member] | Cost [member] | Financial Assets Designated at Fair Value [member] | Loans and Advances to Customers [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to balance sheet	1,600	1,700
Credit Risk [member] | Cost [member] | Loans and Advances to Banks [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to balance sheet	5,900	4,400
Credit Risk [member] | Cost [member] | Loans and Advances to Customers [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to balance sheet	200,500	200,700
Credit Risk [member] | Cost [member] | Loans and Advances to Customers [member] | Advances Secured on Residential Property [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to balance sheet	155,400	154,700
Credit Risk [member] | Cost [member] | Loans and Advances to Customers [member] | Corporate Loans [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to balance sheet	31,000	32,000
Credit Risk [member] | Cost [member] | Loans and Advances to Customers [member] | Finance leases [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to balance sheet	6,700	6,700
Credit Risk [member] | Cost [member] | Loans and Advances to Customers [member] | Other Unsecured Advances [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to balance sheet	6,200	6,200
Credit Risk [member] | Cost [member] | Loans and Advances to Customers [member] | Amounts Due from Fellow Banco Santander Group Subsidiaries and Joint Ventures [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to balance sheet	1,200	1,100
Credit Risk [member] | Cost [member] | Financial Investments [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to balance sheet	17,500	17,300
Credit Risk [member] | Cost [member] | Financial Investments [member] | Loans and Receivables Securities [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to balance sheet	2,200	300
Credit Risk [member] | Cost [member] | Financial Investments [member] | Available-for-Sale Debt Securities [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to balance sheet	8,800	10,400
Credit Risk [member] | Cost [member] | Financial Investments [member] | Held-to-Maturity Debt Securities [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to balance sheet	6,500	6,600
Credit Risk [member] | Accumulated Impairment [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to balance sheet	(1,000)	(1,000)
Credit Risk [member] | Accumulated Impairment [member] | Loans and Advances to Customers [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to balance sheet	(1,000)	(1,000)
Credit Risk [member] | Accumulated Impairment [member] | Loans and Advances to Customers [member] | Advances Secured on Residential Property [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to balance sheet	(200)	(300)
Credit Risk [member] | Accumulated Impairment [member] | Loans and Advances to Customers [member] | Corporate Loans [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to balance sheet	(500)	(400)
Credit Risk [member] | Accumulated Impairment [member] | Loans and Advances to Customers [member] | Finance leases [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to balance sheet	(100)	(100)
Credit Risk [member] | Accumulated Impairment [member] | Loans and Advances to Customers [member] | Other Unsecured Advances [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to balance sheet	£ (200)	£ (200)

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Credit Risk - Summary of Credit Rating of Financial Assets Subject to Credit Risk (Detail) - GBP (£) £ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of internal credit grades [line items]
Financial assets	£ 308,392	£ 296,305
Financial Assets Designated at Fair Value [Member]
Disclosure of internal credit grades [line items]
Financial assets	61,446	68,207
Credit Risk [member]
Disclosure of internal credit grades [line items]
Financial assets	298,700	290,100
Credit Risk [member] | Past Due But Not Impaired [member]
Disclosure of internal credit grades [line items]
Financial assets	2,500	2,700
Credit Risk [member] | Impaired [member]
Disclosure of internal credit grades [line items]
Financial assets	1,300	1,400
Credit Risk [member] | Cost [member]
Disclosure of internal credit grades [line items]
Financial assets	299,700	291,100
Credit Risk [member] | Cost [member] | Trading Assets [member]
Disclosure of internal credit grades [line items]
Financial assets	21,000	24,000
Credit Risk [member] | Cost [member] | Trading Assets [member] | Debt Securities [member]
Disclosure of internal credit grades [line items]
Financial assets	5,200	6,200
Credit Risk [member] | Cost [member] | Financial Assets Designated at Fair Value [Member]
Disclosure of internal credit grades [line items]
Financial assets	2,100	2,100
Credit Risk [member] | Cost [member] | Financial Assets Designated at Fair Value [Member] | Debt Securities [member]
Disclosure of internal credit grades [line items]
Financial assets	500	400
Credit Risk [member] | Cost [member] | Cash and Balances at Central Banks [member]
Disclosure of internal credit grades [line items]
Financial assets	32,800	17,100
Credit Risk [member] | Cost [member] | Securities Repurchased Under Resale Agreements [member] | Trading Assets [member]
Disclosure of internal credit grades [line items]
Financial assets	8,900	10,700
Credit Risk [member] | Cost [member] | Cash Collateral [member] | Trading Assets [member]
Disclosure of internal credit grades [line items]
Financial assets	6,200	6,200
Credit Risk [member] | Cost [member] | Short-term Loans [member] | Trading Assets [member]
Disclosure of internal credit grades [line items]
Financial assets	700	900
Credit Risk [member] | Cost [member] | Derivative Financial Instruments [member]
Disclosure of internal credit grades [line items]
Financial assets	19,900	25,500
Credit Risk [member] | Cost [member] | Loans and Advances to Customers [member] | Financial Assets Designated at Fair Value [Member]
Disclosure of internal credit grades [line items]
Financial assets	1,600	1,700
Credit Risk [member] | Cost [member] | Loans and Advances to Customers [member]
Disclosure of internal credit grades [line items]
Financial assets	5,900	4,400
Credit Risk [member] | Cost [member] | Loans and Advances to Customers [member]
Disclosure of internal credit grades [line items]
Financial assets	200,500	200,700
Credit Risk [member] | Cost [member] | Loans and Advances to Customers [member] | Advances Secured on Residential Property [member]
Disclosure of internal credit grades [line items]
Financial assets	155,400	154,700
Credit Risk [member] | Cost [member] | Loans and Advances to Customers [member] | Corporate Loans [member]
Disclosure of internal credit grades [line items]
Financial assets	31,000	32,000
Credit Risk [member] | Cost [member] | Loans and Advances to Customers [member] | Finance leases [member]
Disclosure of internal credit grades [line items]
Financial assets	6,700	6,700
Credit Risk [member] | Cost [member] | Loans and Advances to Customers [member] | Other Unsecured Advances [member]
Disclosure of internal credit grades [line items]
Financial assets	6,200	6,200
Credit Risk [member] | Cost [member] | Loans and Advances to Customers [member] | Amounts Due from Fellow Banco Santander Group Subsidiaries and Joint Ventures [member]
Disclosure of internal credit grades [line items]
Financial assets	1,200	1,100
Credit Risk [member] | Cost [member] | Financial Investments [member]
Disclosure of internal credit grades [line items]
Financial assets	17,500	17,300
Credit Risk [member] | Cost [member] | Financial Investments [member] | Loans and Receivables Securities [member]
Disclosure of internal credit grades [line items]
Financial assets	2,200	300
Credit Risk [member] | Cost [member] | Financial Investments [member] | Available-for-Sale Debt Securities [member]
Disclosure of internal credit grades [line items]
Financial assets	8,800	10,400
Credit Risk [member] | Cost [member] | Financial Investments [member] | Held-to-Maturity Debt Securities [member]
Disclosure of internal credit grades [line items]
Financial assets	6,500	6,600
Credit Risk [member] | Accumulated Impairment [member]
Disclosure of internal credit grades [line items]
Financial assets	(1,000)	(1,000)
Credit Risk [member] | Internal Grade Nine [member] | Cost [member]
Disclosure of internal credit grades [line items]
Financial assets	56,000	43,900
Credit Risk [member] | Internal Grade Nine [member] | Cost [member] | Trading Assets [member]
Disclosure of internal credit grades [line items]
Financial assets	2,000	3,600
Credit Risk [member] | Internal Grade Nine [member] | Cost [member] | Trading Assets [member] | Debt Securities [member]
Disclosure of internal credit grades [line items]
Financial assets	1,200	2,800
Credit Risk [member] | Internal Grade Nine [member] | Cost [member] | Financial Assets Designated at Fair Value [Member]
Disclosure of internal credit grades [line items]
Financial assets	700	600
Credit Risk [member] | Internal Grade Nine [member] | Cost [member] | Financial Assets Designated at Fair Value [Member] | Debt Securities [member]
Disclosure of internal credit grades [line items]
Financial assets	400
Credit Risk [member] | Internal Grade Nine [member] | Cost [member] | Cash and Balances at Central Banks [member]
Disclosure of internal credit grades [line items]
Financial assets	31,800	15,900
Credit Risk [member] | Internal Grade Nine [member] | Cost [member] | Cash Collateral [member] | Trading Assets [member]
Disclosure of internal credit grades [line items]
Financial assets	100
Credit Risk [member] | Internal Grade Nine [member] | Cost [member] | Short-term Loans [member] | Trading Assets [member]
Disclosure of internal credit grades [line items]
Financial assets	700	800
Credit Risk [member] | Internal Grade Nine [member] | Cost [member] | Derivative Financial Instruments [member]
Disclosure of internal credit grades [line items]
Financial assets	400	1,100
Credit Risk [member] | Internal Grade Nine [member] | Cost [member] | Loans and Advances to Customers [member] | Financial Assets Designated at Fair Value [Member]
Disclosure of internal credit grades [line items]
Financial assets	300	600
Credit Risk [member] | Internal Grade Nine [member] | Cost [member] | Loans and Advances to Customers [member]
Disclosure of internal credit grades [line items]
Financial assets	1,300	1,700
Credit Risk [member] | Internal Grade Nine [member] | Cost [member] | Loans and Advances to Customers [member]
Disclosure of internal credit grades [line items]
Financial assets	4,900	6,500
Credit Risk [member] | Internal Grade Nine [member] | Cost [member] | Loans and Advances to Customers [member] | Advances Secured on Residential Property [member]
Disclosure of internal credit grades [line items]
Financial assets	3,200	2,100
Credit Risk [member] | Internal Grade Nine [member] | Cost [member] | Loans and Advances to Customers [member] | Corporate Loans [member]
Disclosure of internal credit grades [line items]
Financial assets	1,700	3,300
Credit Risk [member] | Internal Grade Nine [member] | Cost [member] | Loans and Advances to Customers [member] | Amounts Due from Fellow Banco Santander Group Subsidiaries and Joint Ventures [member]
Disclosure of internal credit grades [line items]
Financial assets		1,100
Credit Risk [member] | Internal Grade Nine [member] | Cost [member] | Financial Investments [member]
Disclosure of internal credit grades [line items]
Financial assets	14,900	14,500
Credit Risk [member] | Internal Grade Nine [member] | Cost [member] | Financial Investments [member] | Loans and Receivables Securities [member]
Disclosure of internal credit grades [line items]
Financial assets	1,900	100
Credit Risk [member] | Internal Grade Nine [member] | Cost [member] | Financial Investments [member] | Available-for-Sale Debt Securities [member]
Disclosure of internal credit grades [line items]
Financial assets	6,500	7,800
Credit Risk [member] | Internal Grade Nine [member] | Cost [member] | Financial Investments [member] | Held-to-Maturity Debt Securities [member]
Disclosure of internal credit grades [line items]
Financial assets	6,500	6,600
Credit Risk [member] | Internal Grade Eight [member] | Cost [member]
Disclosure of internal credit grades [line items]
Financial assets	56,500	49,700
Credit Risk [member] | Internal Grade Eight [member] | Cost [member] | Trading Assets [member]
Disclosure of internal credit grades [line items]
Financial assets	9,700	8,400
Credit Risk [member] | Internal Grade Eight [member] | Cost [member] | Trading Assets [member] | Debt Securities [member]
Disclosure of internal credit grades [line items]
Financial assets	3,100	1,500
Credit Risk [member] | Internal Grade Eight [member] | Cost [member] | Financial Assets Designated at Fair Value [Member]
Disclosure of internal credit grades [line items]
Financial assets	1,300	600
Credit Risk [member] | Internal Grade Eight [member] | Cost [member] | Financial Assets Designated at Fair Value [Member] | Debt Securities [member]
Disclosure of internal credit grades [line items]
Financial assets	100	100
Credit Risk [member] | Internal Grade Eight [member] | Cost [member] | Securities Repurchased Under Resale Agreements [member] | Trading Assets [member]
Disclosure of internal credit grades [line items]
Financial assets	5,700	5,400
Credit Risk [member] | Internal Grade Eight [member] | Cost [member] | Cash Collateral [member] | Trading Assets [member]
Disclosure of internal credit grades [line items]
Financial assets	900	1,500
Credit Risk [member] | Internal Grade Eight [member] | Cost [member] | Derivative Financial Instruments [member]
Disclosure of internal credit grades [line items]
Financial assets	9,900	10,400
Credit Risk [member] | Internal Grade Eight [member] | Cost [member] | Loans and Advances to Customers [member] | Financial Assets Designated at Fair Value [Member]
Disclosure of internal credit grades [line items]
Financial assets	1,200	500
Credit Risk [member] | Internal Grade Eight [member] | Cost [member] | Loans and Advances to Customers [member]
Disclosure of internal credit grades [line items]
Financial assets	1,700	1,500
Credit Risk [member] | Internal Grade Eight [member] | Cost [member] | Loans and Advances to Customers [member]
Disclosure of internal credit grades [line items]
Financial assets	31,900	27,000
Credit Risk [member] | Internal Grade Eight [member] | Cost [member] | Loans and Advances to Customers [member] | Advances Secured on Residential Property [member]
Disclosure of internal credit grades [line items]
Financial assets	26,700	23,800
Credit Risk [member] | Internal Grade Eight [member] | Cost [member] | Loans and Advances to Customers [member] | Corporate Loans [member]
Disclosure of internal credit grades [line items]
Financial assets	5,100	3,200
Credit Risk [member] | Internal Grade Eight [member] | Cost [member] | Loans and Advances to Customers [member] | Other Unsecured Advances [member]
Disclosure of internal credit grades [line items]
Financial assets	100
Credit Risk [member] | Internal Grade Eight [member] | Cost [member] | Financial Investments [member]
Disclosure of internal credit grades [line items]
Financial assets	2,000	1,800
Credit Risk [member] | Internal Grade Eight [member] | Cost [member] | Financial Investments [member] | Loans and Receivables Securities [member]
Disclosure of internal credit grades [line items]
Financial assets	100
Credit Risk [member] | Internal Grade Eight [member] | Cost [member] | Financial Investments [member] | Available-for-Sale Debt Securities [member]
Disclosure of internal credit grades [line items]
Financial assets	1,900	1,800
Credit Risk [member] | Internal Grade Seven [member] | Cost [member]
Disclosure of internal credit grades [line items]
Financial assets	95,400	96,900
Credit Risk [member] | Internal Grade Seven [member] | Cost [member] | Trading Assets [member]
Disclosure of internal credit grades [line items]
Financial assets	7,500	8,800
Credit Risk [member] | Internal Grade Seven [member] | Cost [member] | Trading Assets [member] | Debt Securities [member]
Disclosure of internal credit grades [line items]
Financial assets	900	300
Credit Risk [member] | Internal Grade Seven [member] | Cost [member] | Financial Assets Designated at Fair Value [Member]
Disclosure of internal credit grades [line items]
Financial assets	100	600
Credit Risk [member] | Internal Grade Seven [member] | Cost [member] | Securities Repurchased Under Resale Agreements [member] | Trading Assets [member]
Disclosure of internal credit grades [line items]
Financial assets	1,500	4,200
Credit Risk [member] | Internal Grade Seven [member] | Cost [member] | Cash Collateral [member] | Trading Assets [member]
Disclosure of internal credit grades [line items]
Financial assets	5,100	4,300
Credit Risk [member] | Internal Grade Seven [member] | Cost [member] | Derivative Financial Instruments [member]
Disclosure of internal credit grades [line items]
Financial assets	7,600	9,900
Credit Risk [member] | Internal Grade Seven [member] | Cost [member] | Loans and Advances to Customers [member] | Financial Assets Designated at Fair Value [Member]
Disclosure of internal credit grades [line items]
Financial assets	100	600
Credit Risk [member] | Internal Grade Seven [member] | Cost [member] | Loans and Advances to Customers [member]
Disclosure of internal credit grades [line items]
Financial assets	1,100	500
Credit Risk [member] | Internal Grade Seven [member] | Cost [member] | Loans and Advances to Customers [member]
Disclosure of internal credit grades [line items]
Financial assets	78,500	76,200
Credit Risk [member] | Internal Grade Seven [member] | Cost [member] | Loans and Advances to Customers [member] | Advances Secured on Residential Property [member]
Disclosure of internal credit grades [line items]
Financial assets	75,200	74,000
Credit Risk [member] | Internal Grade Seven [member] | Cost [member] | Loans and Advances to Customers [member] | Corporate Loans [member]
Disclosure of internal credit grades [line items]
Financial assets	2,100	1,600
Credit Risk [member] | Internal Grade Seven [member] | Cost [member] | Loans and Advances to Customers [member] | Finance leases [member]
Disclosure of internal credit grades [line items]
Financial assets	400	400
Credit Risk [member] | Internal Grade Seven [member] | Cost [member] | Loans and Advances to Customers [member] | Other Unsecured Advances [member]
Disclosure of internal credit grades [line items]
Financial assets	800	200
Credit Risk [member] | Internal Grade Seven [member] | Cost [member] | Financial Investments [member]
Disclosure of internal credit grades [line items]
Financial assets	600	900
Credit Risk [member] | Internal Grade Seven [member] | Cost [member] | Financial Investments [member] | Loans and Receivables Securities [member]
Disclosure of internal credit grades [line items]
Financial assets	200	200
Credit Risk [member] | Internal Grade Seven [member] | Cost [member] | Financial Investments [member] | Available-for-Sale Debt Securities [member]
Disclosure of internal credit grades [line items]
Financial assets	400	700
Credit Risk [member] | Internal Grade Six [member] | Cost [member]
Disclosure of internal credit grades [line items]
Financial assets	46,400	57,900
Credit Risk [member] | Internal Grade Six [member] | Cost [member] | Trading Assets [member]
Disclosure of internal credit grades [line items]
Financial assets	1,800	2,900
Credit Risk [member] | Internal Grade Six [member] | Cost [member] | Trading Assets [member] | Debt Securities [member]
Disclosure of internal credit grades [line items]
Financial assets		1,600
Credit Risk [member] | Internal Grade Six [member] | Cost [member] | Financial Assets Designated at Fair Value [Member]
Disclosure of internal credit grades [line items]
Financial assets		300
Credit Risk [member] | Internal Grade Six [member] | Cost [member] | Financial Assets Designated at Fair Value [Member] | Debt Securities [member]
Disclosure of internal credit grades [line items]
Financial assets		300
Credit Risk [member] | Internal Grade Six [member] | Cost [member] | Securities Repurchased Under Resale Agreements [member] | Trading Assets [member]
Disclosure of internal credit grades [line items]
Financial assets	1,700	900
Credit Risk [member] | Internal Grade Six [member] | Cost [member] | Cash Collateral [member] | Trading Assets [member]
Disclosure of internal credit grades [line items]
Financial assets	100	400
Credit Risk [member] | Internal Grade Six [member] | Cost [member] | Derivative Financial Instruments [member]
Disclosure of internal credit grades [line items]
Financial assets	1,500	3,400
Credit Risk [member] | Internal Grade Six [member] | Cost [member] | Loans and Advances to Customers [member]
Disclosure of internal credit grades [line items]
Financial assets	400	200
Credit Risk [member] | Internal Grade Six [member] | Cost [member] | Loans and Advances to Customers [member]
Disclosure of internal credit grades [line items]
Financial assets	42,700	51,100
Credit Risk [member] | Internal Grade Six [member] | Cost [member] | Loans and Advances to Customers [member] | Advances Secured on Residential Property [member]
Disclosure of internal credit grades [line items]
Financial assets	35,200	37,800
Credit Risk [member] | Internal Grade Six [member] | Cost [member] | Loans and Advances to Customers [member] | Corporate Loans [member]
Disclosure of internal credit grades [line items]
Financial assets	4,600	10,500
Credit Risk [member] | Internal Grade Six [member] | Cost [member] | Loans and Advances to Customers [member] | Finance leases [member]
Disclosure of internal credit grades [line items]
Financial assets	1,300	1,300
Credit Risk [member] | Internal Grade Six [member] | Cost [member] | Loans and Advances to Customers [member] | Other Unsecured Advances [member]
Disclosure of internal credit grades [line items]
Financial assets	1,600	1,500
Credit Risk [member] | Internal Grade Five [member] | Past Due But Not Impaired [member]
Disclosure of internal credit grades [line items]
Financial assets	100	100
Credit Risk [member] | Internal Grade Five [member] | Cost [member]
Disclosure of internal credit grades [line items]
Financial assets	19,800	19,500
Credit Risk [member] | Internal Grade Five [member] | Cost [member] | Trading Assets [member]
Disclosure of internal credit grades [line items]
Financial assets		300
Credit Risk [member] | Internal Grade Five [member] | Cost [member] | Securities Repurchased Under Resale Agreements [member] | Trading Assets [member]
Disclosure of internal credit grades [line items]
Financial assets		200
Credit Risk [member] | Internal Grade Five [member] | Cost [member] | Short-term Loans [member] | Trading Assets [member]
Disclosure of internal credit grades [line items]
Financial assets		100
Credit Risk [member] | Internal Grade Five [member] | Cost [member] | Derivative Financial Instruments [member]
Disclosure of internal credit grades [line items]
Financial assets	400	600
Credit Risk [member] | Internal Grade Five [member] | Cost [member] | Loans and Advances to Customers [member]
Disclosure of internal credit grades [line items]
Financial assets	19,400	18,600
Credit Risk [member] | Internal Grade Five [member] | Cost [member] | Loans and Advances to Customers [member] | Advances Secured on Residential Property [member]
Disclosure of internal credit grades [line items]
Financial assets	6,200	6,800
Credit Risk [member] | Internal Grade Five [member] | Cost [member] | Loans and Advances to Customers [member] | Corporate Loans [member]
Disclosure of internal credit grades [line items]
Financial assets	9,600	7,400
Credit Risk [member] | Internal Grade Five [member] | Cost [member] | Loans and Advances to Customers [member] | Finance leases [member]
Disclosure of internal credit grades [line items]
Financial assets	2,000	2,000
Credit Risk [member] | Internal Grade Five [member] | Cost [member] | Loans and Advances to Customers [member] | Other Unsecured Advances [member]
Disclosure of internal credit grades [line items]
Financial assets	1,600	2,400
Credit Risk [member] | Internal Grade Four [member] | Past Due But Not Impaired [member]
Disclosure of internal credit grades [line items]
Financial assets		100
Credit Risk [member] | Internal Grade Four [member] | Cost [member]
Disclosure of internal credit grades [line items]
Financial assets	12,100	11,800
Credit Risk [member] | Internal Grade Four [member] | Cost [member] | Loans and Advances to Customers [member]
Disclosure of internal credit grades [line items]
Financial assets	12,100	11,800
Credit Risk [member] | Internal Grade Four [member] | Cost [member] | Loans and Advances to Customers [member] | Advances Secured on Residential Property [member]
Disclosure of internal credit grades [line items]
Financial assets	4,500	5,300
Credit Risk [member] | Internal Grade Four [member] | Cost [member] | Loans and Advances to Customers [member] | Corporate Loans [member]
Disclosure of internal credit grades [line items]
Financial assets	5,100	3,700
Credit Risk [member] | Internal Grade Four [member] | Cost [member] | Loans and Advances to Customers [member] | Finance leases [member]
Disclosure of internal credit grades [line items]
Financial assets	1,800	1,900
Credit Risk [member] | Internal Grade Four [member] | Cost [member] | Loans and Advances to Customers [member] | Other Unsecured Advances [member]
Disclosure of internal credit grades [line items]
Financial assets	700	900
Credit Risk [member] | Internal Grade Three To One [member] | Past Due But Not Impaired [member]
Disclosure of internal credit grades [line items]
Financial assets	2,400	2,500
Credit Risk [member] | Internal Grade Three To One [member] | Impaired [member]
Disclosure of internal credit grades [line items]
Financial assets	1,300	1,400
Credit Risk [member] | Internal Grade Three To One [member] | Cost [member]
Disclosure of internal credit grades [line items]
Financial assets	7,500	7,200
Credit Risk [member] | Internal Grade Three To One [member] | Cost [member] | Loans and Advances to Customers [member]
Disclosure of internal credit grades [line items]
Financial assets	7,500	7,200
Credit Risk [member] | Internal Grade Three To One [member] | Cost [member] | Loans and Advances to Customers [member] | Advances Secured on Residential Property [member]
Disclosure of internal credit grades [line items]
Financial assets	4,400	4,900
Credit Risk [member] | Internal Grade Three To One [member] | Cost [member] | Loans and Advances to Customers [member] | Corporate Loans [member]
Disclosure of internal credit grades [line items]
Financial assets	1,500	900
Credit Risk [member] | Internal Grade Three To One [member] | Cost [member] | Loans and Advances to Customers [member] | Finance leases [member]
Disclosure of internal credit grades [line items]
Financial assets	1,100	1,000
Credit Risk [member] | Internal Grade Three To One [member] | Cost [member] | Loans and Advances to Customers [member] | Other Unsecured Advances [member]
Disclosure of internal credit grades [line items]
Financial assets	500	400
Credit Risk [member] | Other [member] | Cost [member]
Disclosure of internal credit grades [line items]
Financial assets	6,000	4,200
Credit Risk [member] | Other [member] | Cost [member] | Cash and Balances at Central Banks [member]
Disclosure of internal credit grades [line items]
Financial assets	1,000	1,200
Credit Risk [member] | Other [member] | Cost [member] | Derivative Financial Instruments [member]
Disclosure of internal credit grades [line items]
Financial assets	100	100
Credit Risk [member] | Other [member] | Cost [member] | Loans and Advances to Customers [member]
Disclosure of internal credit grades [line items]
Financial assets	1,400	500
Credit Risk [member] | Other [member] | Cost [member] | Loans and Advances to Customers [member]
Disclosure of internal credit grades [line items]
Financial assets	3,500	2,300
Credit Risk [member] | Other [member] | Cost [member] | Loans and Advances to Customers [member] | Corporate Loans [member]
Disclosure of internal credit grades [line items]
Financial assets	1,300	1,400
Credit Risk [member] | Other [member] | Cost [member] | Loans and Advances to Customers [member] | Finance leases [member]
Disclosure of internal credit grades [line items]
Financial assets	100	100
Credit Risk [member] | Other [member] | Cost [member] | Loans and Advances to Customers [member] | Other Unsecured Advances [member]
Disclosure of internal credit grades [line items]
Financial assets	900	800
Credit Risk [member] | Other [member] | Cost [member] | Loans and Advances to Customers [member] | Amounts Due from Fellow Banco Santander Group Subsidiaries and Joint Ventures [member]
Disclosure of internal credit grades [line items]
Financial assets	1,200
Credit Risk [member] | Other [member] | Cost [member] | Financial Investments [member]
Disclosure of internal credit grades [line items]
Financial assets		100
Credit Risk [member] | Other [member] | Cost [member] | Financial Investments [member] | Available-for-Sale Debt Securities [member]
Disclosure of internal credit grades [line items]
Financial assets		100
Credit Risk [member] | Neither Past Due nor Impaired [member]
Disclosure of internal credit grades [line items]
Financial assets	295,900	287,000
Credit Risk [member] | Neither Past Due nor Impaired [member] | Trading Assets [member]
Disclosure of internal credit grades [line items]
Financial assets	21,000	24,000
Credit Risk [member] | Neither Past Due nor Impaired [member] | Cash and Balances at Central Banks [member]
Disclosure of internal credit grades [line items]
Financial assets	32,800	17,100
Credit Risk [member] | Neither Past Due nor Impaired [member] | Loans and Advances to Customers [member]
Disclosure of internal credit grades [line items]
Financial assets	196,700	196,600
Credit Risk [member] | Neither Past Due nor Impaired [member] | Financial Investments [member]
Disclosure of internal credit grades [line items]
Financial assets	17,500	17,300
Credit Risk [member] | Neither Past Due nor Impaired [member] | Derivative Financial Instruments [member]
Disclosure of internal credit grades [line items]
Financial assets	19,900	25,500
Credit Risk [member] | Neither Past Due nor Impaired [member] | Financial Assets Designated at Fair Value [member]
Disclosure of internal credit grades [line items]
Financial assets	2,100	2,100
Credit Risk [member] | Neither Past Due nor Impaired [member] | Loans and Advances to Banks [member]
Disclosure of internal credit grades [line items]
Financial assets	5,900	4,400
Credit Risk [member] | Neither Past Due nor Impaired [member] | Internal Grade Nine [member]
Disclosure of internal credit grades [line items]
Financial assets	56,000	43,900
Credit Risk [member] | Neither Past Due nor Impaired [member] | Internal Grade Nine [member] | Trading Assets [member]
Disclosure of internal credit grades [line items]
Financial assets	2,000	3,600
Credit Risk [member] | Neither Past Due nor Impaired [member] | Internal Grade Nine [member] | Cash and Balances at Central Banks [member]
Disclosure of internal credit grades [line items]
Financial assets	31,800	15,900
Credit Risk [member] | Neither Past Due nor Impaired [member] | Internal Grade Nine [member] | Loans and Advances to Customers [member]
Disclosure of internal credit grades [line items]
Financial assets	4,900	6,500
Credit Risk [member] | Neither Past Due nor Impaired [member] | Internal Grade Nine [member] | Financial Investments [member]
Disclosure of internal credit grades [line items]
Financial assets	14,900	14,500
Credit Risk [member] | Neither Past Due nor Impaired [member] | Internal Grade Nine [member] | Derivative Financial Instruments [member]
Disclosure of internal credit grades [line items]
Financial assets	400	1,100
Credit Risk [member] | Neither Past Due nor Impaired [member] | Internal Grade Nine [member] | Financial Assets Designated at Fair Value [member]
Disclosure of internal credit grades [line items]
Financial assets	700	600
Credit Risk [member] | Neither Past Due nor Impaired [member] | Internal Grade Nine [member] | Loans and Advances to Banks [member]
Disclosure of internal credit grades [line items]
Financial assets	1,300	1,700
Credit Risk [member] | Neither Past Due nor Impaired [member] | Internal Grade Eight [member]
Disclosure of internal credit grades [line items]
Financial assets	56,500	49,700
Credit Risk [member] | Neither Past Due nor Impaired [member] | Internal Grade Eight [member] | Trading Assets [member]
Disclosure of internal credit grades [line items]
Financial assets	9,700	8,400
Credit Risk [member] | Neither Past Due nor Impaired [member] | Internal Grade Eight [member] | Loans and Advances to Customers [member]
Disclosure of internal credit grades [line items]
Financial assets	31,900	27,000
Credit Risk [member] | Neither Past Due nor Impaired [member] | Internal Grade Eight [member] | Financial Investments [member]
Disclosure of internal credit grades [line items]
Financial assets	2,000	1,800
Credit Risk [member] | Neither Past Due nor Impaired [member] | Internal Grade Eight [member] | Derivative Financial Instruments [member]
Disclosure of internal credit grades [line items]
Financial assets	9,900	10,400
Credit Risk [member] | Neither Past Due nor Impaired [member] | Internal Grade Eight [member] | Financial Assets Designated at Fair Value [member]
Disclosure of internal credit grades [line items]
Financial assets	1,300	600
Credit Risk [member] | Neither Past Due nor Impaired [member] | Internal Grade Eight [member] | Loans and Advances to Banks [member]
Disclosure of internal credit grades [line items]
Financial assets	1,700	1,500
Credit Risk [member] | Neither Past Due nor Impaired [member] | Internal Grade Seven [member]
Disclosure of internal credit grades [line items]
Financial assets	95,400	96,900
Credit Risk [member] | Neither Past Due nor Impaired [member] | Internal Grade Seven [member] | Trading Assets [member]
Disclosure of internal credit grades [line items]
Financial assets	7,500	8,800
Credit Risk [member] | Neither Past Due nor Impaired [member] | Internal Grade Seven [member] | Loans and Advances to Customers [member]
Disclosure of internal credit grades [line items]
Financial assets	78,500	76,200
Credit Risk [member] | Neither Past Due nor Impaired [member] | Internal Grade Seven [member] | Financial Investments [member]
Disclosure of internal credit grades [line items]
Financial assets	600	900
Credit Risk [member] | Neither Past Due nor Impaired [member] | Internal Grade Seven [member] | Derivative Financial Instruments [member]
Disclosure of internal credit grades [line items]
Financial assets	7,600	9,900
Credit Risk [member] | Neither Past Due nor Impaired [member] | Internal Grade Seven [member] | Financial Assets Designated at Fair Value [member]
Disclosure of internal credit grades [line items]
Financial assets	100	600
Credit Risk [member] | Neither Past Due nor Impaired [member] | Internal Grade Seven [member] | Loans and Advances to Banks [member]
Disclosure of internal credit grades [line items]
Financial assets	1,100	500
Credit Risk [member] | Neither Past Due nor Impaired [member] | Internal Grade Six [member]
Disclosure of internal credit grades [line items]
Financial assets	46,400	57,900
Credit Risk [member] | Neither Past Due nor Impaired [member] | Internal Grade Six [member] | Trading Assets [member]
Disclosure of internal credit grades [line items]
Financial assets	1,800	2,900
Credit Risk [member] | Neither Past Due nor Impaired [member] | Internal Grade Six [member] | Loans and Advances to Customers [member]
Disclosure of internal credit grades [line items]
Financial assets	42,700	51,100
Credit Risk [member] | Neither Past Due nor Impaired [member] | Internal Grade Six [member] | Derivative Financial Instruments [member]
Disclosure of internal credit grades [line items]
Financial assets	1,500	3,400
Credit Risk [member] | Neither Past Due nor Impaired [member] | Internal Grade Six [member] | Financial Assets Designated at Fair Value [member]
Disclosure of internal credit grades [line items]
Financial assets		300
Credit Risk [member] | Neither Past Due nor Impaired [member] | Internal Grade Six [member] | Loans and Advances to Banks [member]
Disclosure of internal credit grades [line items]
Financial assets	400	200
Credit Risk [member] | Neither Past Due nor Impaired [member] | Internal Grade Five [member]
Disclosure of internal credit grades [line items]
Financial assets	19,700	19,400
Credit Risk [member] | Neither Past Due nor Impaired [member] | Internal Grade Five [member] | Trading Assets [member]
Disclosure of internal credit grades [line items]
Financial assets		300
Credit Risk [member] | Neither Past Due nor Impaired [member] | Internal Grade Five [member] | Loans and Advances to Customers [member]
Disclosure of internal credit grades [line items]
Financial assets	19,300	18,500
Credit Risk [member] | Neither Past Due nor Impaired [member] | Internal Grade Five [member] | Derivative Financial Instruments [member]
Disclosure of internal credit grades [line items]
Financial assets	400	600
Credit Risk [member] | Neither Past Due nor Impaired [member] | Internal Grade Four [member]
Disclosure of internal credit grades [line items]
Financial assets	12,100	11,700
Credit Risk [member] | Neither Past Due nor Impaired [member] | Internal Grade Four [member] | Loans and Advances to Customers [member]
Disclosure of internal credit grades [line items]
Financial assets	12,100	11,700
Credit Risk [member] | Neither Past Due nor Impaired [member] | Internal Grade Three To One [member]
Disclosure of internal credit grades [line items]
Financial assets	3,800	3,300
Credit Risk [member] | Neither Past Due nor Impaired [member] | Internal Grade Three To One [member] | Loans and Advances to Customers [member]
Disclosure of internal credit grades [line items]
Financial assets	3,800	3,300
Credit Risk [member] | Neither Past Due nor Impaired [member] | Other [member]
Disclosure of internal credit grades [line items]
Financial assets	6,000	4,200
Credit Risk [member] | Neither Past Due nor Impaired [member] | Other [member] | Cash and Balances at Central Banks [member]
Disclosure of internal credit grades [line items]
Financial assets	1,000	1,200
Credit Risk [member] | Neither Past Due nor Impaired [member] | Other [member] | Loans and Advances to Customers [member]
Disclosure of internal credit grades [line items]
Financial assets	3,500	2,300
Credit Risk [member] | Neither Past Due nor Impaired [member] | Other [member] | Financial Investments [member]
Disclosure of internal credit grades [line items]
Financial assets		100
Credit Risk [member] | Neither Past Due nor Impaired [member] | Other [member] | Derivative Financial Instruments [member]
Disclosure of internal credit grades [line items]
Financial assets	100	100
Credit Risk [member] | Neither Past Due nor Impaired [member] | Other [member] | Loans and Advances to Banks [member]
Disclosure of internal credit grades [line items]
Financial assets	£ 1,400	£ 500

XML

Credit Risk - Summary of Credit Rating of Financial Assets Subject to Credit Risk (Parenthetical) (Detail) - GBP (£) £ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of internal credit grades [line items]
Loans individually assessed for impairment	£ 308,392	£ 296,305
Impaired [member]
Disclosure of internal credit grades [line items]
Loans individually assessed for impairment	£ 713	£ 578

XML

Credit Risk - Additional Information (Detail)	12 Months Ended
	Dec. 31, 2017 GBP (£) MortgageLoan Clients	Dec. 31, 2016 GBP (£) MortgageLoan
Disclosure of internal credit grades [line items]
Commercial Real Estate portfolio	£ 199,490,000,000	£ 199,738,000,000
Advances and flexible mortgage drawdowns	£ 1,300,000,000	£ 1,200,000,000
Loan to income multiple of mortgage lending	3.16	3.16
Other mortgages on the balance sheet had been modified	£ 4,700,000,000	£ 5,100,000,000
Average loan to value	33.00%	35.00%
Percentage of accounts which made contractual payments	95.00%	94.00%
Average retail loan size	£ 12,500,000,000	£ 12,000,000,000
NPL ratio	1.21%	1.37%
Average unsecured loan	£ 9,300,000,000	£ 9,400,000,000
Credit card balances	£ 1,200,000,000	1,300,000,000
Percenatage of reverse repos to exposure	100.00%
Cash collateral held against portfolio	£ 28,678,000,000	12,136,000,000
Past Due But Not Impaired [member]
Disclosure of internal credit grades [line items]
Commercial Real Estate portfolio	2,500,000,000	2,700,000,000
Past Due But Not Impaired [member] | Not Later Than One Month [member]
Disclosure of internal credit grades [line items]
Commercial Real Estate portfolio	100,000,000	100,000,000
Past Due But Not Impaired [member] | Later Than 1 Month and Not Later Than 2 Months [member]
Disclosure of internal credit grades [line items]
Commercial Real Estate portfolio	700,000,000	800,000,000
Past Due But Not Impaired [member] | Later Than 2 Months And Not Later Than 3 Months [member]
Disclosure of internal credit grades [line items]
Commercial Real Estate portfolio	400,000,000	500,000,000
Past Due But Not Impaired [member] | Greater Than 3 and Less Than 6 Months [member]
Disclosure of internal credit grades [line items]
Commercial Real Estate portfolio	700,000,000	700,000,000
Past Due But Not Impaired [member] | Later Than 6 Months [member]
Disclosure of internal credit grades [line items]
Commercial Real Estate portfolio	£ 600,000,000	£ 600,000,000
Average Retail Loan Size [member]
Disclosure of internal credit grades [line items]
NPL ratio	0.49%	0.47%
Legacy Portfolios in Run-Off [member]
Disclosure of internal credit grades [line items]
Percentage of collateral held against impaired loans	100.00%	100.00%
Cash collateral held against portfolio	£ 348,000,000	£ 457,000,000
Development Loans [member]
Disclosure of internal credit grades [line items]
Loan percentage	3.00%	2.00%
Commercial Real Estate [member]
Disclosure of internal credit grades [line items]
Commercial Real Estate portfolio	£ 8,144,000,000	£ 9,043,000,000
NPL ratio	100.00%	100.00%
Loan percentage	100.00%	100.00%
Average loan balance	£ 4,700,000	£ 4,800,000
Average loan percentage	10.00%	8.00%
Commercial Real Estate [member] | Pre Two Thousand Nine Loans [member]
Disclosure of internal credit grades [line items]
Loans written down	£ 380,000,000	£ 543,000,000
Commercial Real Estate [member] | Corporate Loans [member]
Disclosure of internal credit grades [line items]
Loan percentage	30.00%	33.00%
Commercial Real Estate [member] | Customer Loans [member]
Disclosure of internal credit grades [line items]
Loan percentage	4.00%	4.00%
Global Corporate Banking [member]
Disclosure of internal credit grades [line items]
Percentage of collateral held against impaired loans	0.00%	0.00%
Number of clients | Clients	20
Rate of derivative exposure with client	65.00%	69.00%
Weighted-average credit rating percent	7.20%	7.30%
Not Later Than 1 Year [member] | Commercial Real Estate [member]
Disclosure of internal credit grades [line items]
Commercial Real Estate portfolio	£ 1,090,000,000	£ 1,408,000,000
Loans and advances to customers with higher LTV ratio	£ 59,000,000	£ 161,000,000
Percentage of maximum acceptable LTV ratio	5.00%	11.00%
Later Than 90 Days [Member]
Disclosure of internal credit grades [line items]
Percentage of accounts which were in arrears	1.52%	1.57%
Non Performing Loans [member] | Not Later Than 1 Year [member] | Commercial Real Estate [member]
Disclosure of internal credit grades [line items]
Commercial Real Estate portfolio	£ 53,000,000	£ 149,000,000
Impairment loss allowance	27,000,000	31,000,000
Non-Performing [member]
Disclosure of internal credit grades [line items]
Increase in carrying value of mortgages classified as multiple forbearance	£ 123,000,000	£ 128,000,000
Commercial Banking [member]
Disclosure of internal credit grades [line items]
Percentage of collateral held against impaired loans	15.00%	42.00%
Credit Risk [member]
Disclosure of internal credit grades [line items]
Commercial Real Estate portfolio	£ 12,135,000,000	£ 12,037,000,000
Residential mortgage loans maximum size	2,000,000	2,000,000
Impairment of loan loss allowance	£ 223,000,000	£ 285,000,000
NPL ratio	1.00%	1.01%
Cash collateral held against portfolio	£ (2,900,000,000)	£ (2,500,000,000)
Credit Risk [member] | Global Corporate Banking [member]
Disclosure of internal credit grades [line items]
Commercial Real Estate portfolio	£ 6,037,000,000	£ 5,659,000,000
NPL ratio	5.63%	1.11%
Internal Remortgages [Member]
Disclosure of internal credit grades [line items]
Internal remortgages	£ 26,000,000,000	£ 18,100,000,000
Bottom of Range [member]
Disclosure of internal credit grades [line items]
Percentage of loan balance to implied market value	25.00%
Top of Range [member]
Disclosure of internal credit grades [line items]
NPL ratio	100.00%
Percentage of loan balance to implied market value	50.00%
Top of Range [member] | Credit Risk [member]
Disclosure of internal credit grades [line items]
NPL ratio		100.00%
Greater Than 2.0m [member] | Credit Risk [member]
Disclosure of internal credit grades [line items]
Number of individual mortgage loans | MortgageLoan	64	65
New business number of individual mortgage loans | MortgageLoan	13	13
Less Than 70% [member]
Disclosure of internal credit grades [line items]
Commercial Real Estate portfolio	£ 7,181,000,000	£ 7,886,000,000
Loan percentage	70.00%

XML

Credit Risk - Summary of Credit Performance (Detail) - GBP (£) £ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure of credit risk exposure [line items]
Customer loans	£ 199,490	£ 199,738
NPLs	£ 1,868	£ 2,110
NPL ratio	1.21%	1.37%
Commercial Banking [member]
Disclosure of credit risk exposure [line items]
Gross write-offs	£ (35)
Corporate Centre [member]
Disclosure of credit risk exposure [line items]
Gross write-offs	(23)
Loans to Customers [member]
Disclosure of credit risk exposure [line items]
Customer loans	200,300	£ 200,200
NPLs	£ 2,848	£ 2,994
NPL ratio	1.42%	1.50%
NPL coverage	33.00%	31.00%
Gross write-offs	£ 253	£ 271
Impairment loss allowances	940	921
Loans to Customers [member] | Corporate Loans [member]
Disclosure of credit risk exposure [line items]
Customer loans	27,300	27,400
NPLs	£ 838	£ 689
NPL ratio	3.07%	2.51%
NPL coverage	58.00%	48.00%
Gross write-offs	£ 56	£ 34
Impairment loss allowances	485	334
Loans to Customers [member] | Mortgages [member]
Disclosure of credit risk exposure [line items]
Customer loans	154,900	154,300
NPLs	£ 1,868	£ 2,110
NPL ratio	1.21%	1.37%
NPL coverage	12.00%	13.00%
Gross write-offs	£ 22	£ 33
Impairment loss allowances	225	279
Loans to Customers [member] | Retail Banking [member]
Disclosure of credit risk exposure [line items]
Customer loans	169,000	168,600
NPLs	£ 2,105	£ 2,340
NPL ratio	1.25%	1.39%
NPL coverage	23.00%	25.00%
Gross write-offs	£ 195	£ 210
Impairment loss allowances	491	583
Loans to Customers [member] | Commercial Banking [member]
Disclosure of credit risk exposure [line items]
Customer loans	19,400	19,400
NPLs	£ 383	£ 518
NPL ratio	1.97%	2.67%
NPL coverage	51.00%	42.00%
Gross write-offs	£ 35	£ 10
Impairment loss allowances	195	220
Loans to Customers [member] | Global Corporate Banking [member]
Disclosure of credit risk exposure [line items]
Customer loans	6,000	5,700
NPLs	£ 340	£ 63
NPL ratio	5.67%	1.11%
NPL coverage	69.00%	90.00%
Impairment loss allowances	£ 236	£ 57
Loans to Customers [member] | Corporate Centre [member]
Disclosure of credit risk exposure [line items]
Customer loans	5,900	6,500
NPLs	£ 20	£ 73
NPL ratio	0.34%	1.12%
NPL coverage	90.00%	84.00%
Gross write-offs	£ 23	£ 51
Impairment loss allowances	£ 18	£ 61

XML

Credit Risk - Summary of Credit Performance (Parenthetical) (Detail)	12 Months Ended
	Dec. 31, 2017
Disclosure of credit risk exposure [abstract]
Description on impairment loss allowances as a percentage	Impairment loss allowances as a percentage of NPLs. Impairment loss allowances relate to early arrears and performing assets (i.e. the incurred but not observed provision) as well as NPLs, so the ratio can exceed 100%.

XML

Credit Risk - Summary of Country Risk Exposure (Detail) - GBP (£) £ in Billions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of credit risk exposure [line items]
Risk exposures	£ 346.5	£ 336.1
Governments [member]
Disclosure of credit risk exposure [line items]
Risk exposures	55.0	42.9
Government Guaranteed [member]
Disclosure of credit risk exposure [line items]
Risk exposures	0.4	0.9
Banks [member]
Disclosure of credit risk exposure [line items]
Risk exposures	29.0	34.9
Other Financial Institutions [member]
Disclosure of credit risk exposure [line items]
Risk exposures	19.4	20.2
Retail [member]
Disclosure of credit risk exposure [line items]
Risk exposures	191.3	189.1
Corporate counterparty [member]
Disclosure of credit risk exposure [line items]
Risk exposures	51.4	48.1
Eurozone Countries [member]
Disclosure of credit risk exposure [line items]
Risk exposures	15.6	13.8
Eurozone Countries [member] | Ireland [member]
Disclosure of credit risk exposure [line items]
Risk exposures	2.1	1.4
Eurozone Countries [member] | Italy [member]
Disclosure of credit risk exposure [line items]
Risk exposures	0.6	1.3
Eurozone Countries [member] | Spain (excl. Banco Santander) [member]
Disclosure of credit risk exposure [line items]
Risk exposures	0.5	0.6
Eurozone Countries [member] | Portugal [member]
Disclosure of credit risk exposure [line items]
Risk exposures	0.1	0.1
Eurozone Countries [member] | France [member]
Disclosure of credit risk exposure [line items]
Risk exposures	4.7	2.5
Eurozone Countries [member] | Germany [member]
Disclosure of credit risk exposure [line items]
Risk exposures	2.9	2.5
Eurozone Countries [member] | Luxembourg [member]
Disclosure of credit risk exposure [line items]
Risk exposures	1.7	2.6
Eurozone Countries [member] | Other [member]
Disclosure of credit risk exposure [line items]
Risk exposures	3.0	2.8
Eurozone Countries [member] | Governments [member]
Disclosure of credit risk exposure [line items]
Risk exposures	0.7	1.4
Eurozone Countries [member] | Governments [member] | Italy [member]
Disclosure of credit risk exposure [line items]
Risk exposures	0.4	1.0
Eurozone Countries [member] | Governments [member] | France [member]
Disclosure of credit risk exposure [line items]
Risk exposures		0.1
Eurozone Countries [member] | Governments [member] | Other [member]
Disclosure of credit risk exposure [line items]
Risk exposures	0.3	0.3
Eurozone Countries [member] | Government Guaranteed [member]
Disclosure of credit risk exposure [line items]
Risk exposures	0.3	0.3
Eurozone Countries [member] | Government Guaranteed [member] | France [member]
Disclosure of credit risk exposure [line items]
Risk exposures	0.3	0.3
Eurozone Countries [member] | Banks [member]
Disclosure of credit risk exposure [line items]
Risk exposures	6.5	6.3
Eurozone Countries [member] | Banks [member] | Ireland [member]
Disclosure of credit risk exposure [line items]
Risk exposures	0.2	0.5
Eurozone Countries [member] | Banks [member] | Spain (excl. Banco Santander) [member]
Disclosure of credit risk exposure [line items]
Risk exposures	0.3	0.3
Eurozone Countries [member] | Banks [member] | Portugal [member]
Disclosure of credit risk exposure [line items]
Risk exposures	0.1	0.1
Eurozone Countries [member] | Banks [member] | France [member]
Disclosure of credit risk exposure [line items]
Risk exposures	2.0	1.8
Eurozone Countries [member] | Banks [member] | Germany [member]
Disclosure of credit risk exposure [line items]
Risk exposures	2.8	2.5
Eurozone Countries [member] | Banks [member] | Other [member]
Disclosure of credit risk exposure [line items]
Risk exposures	1.1	1.1
Eurozone Countries [member] | Other Financial Institutions [member]
Disclosure of credit risk exposure [line items]
Risk exposures	3.0	3.4
Eurozone Countries [member] | Other Financial Institutions [member] | Ireland [member]
Disclosure of credit risk exposure [line items]
Risk exposures	1.1	0.4
Eurozone Countries [member] | Other Financial Institutions [member] | Italy [member]
Disclosure of credit risk exposure [line items]
Risk exposures	0.1	0.1
Eurozone Countries [member] | Other Financial Institutions [member] | Spain (excl. Banco Santander) [member]
Disclosure of credit risk exposure [line items]
Risk exposures	0.1	0.1
Eurozone Countries [member] | Other Financial Institutions [member] | France [member]
Disclosure of credit risk exposure [line items]
Risk exposures	0.2	0.2
Eurozone Countries [member] | Other Financial Institutions [member] | Luxembourg [member]
Disclosure of credit risk exposure [line items]
Risk exposures	1.3	2.3
Eurozone Countries [member] | Other Financial Institutions [member] | Other [member]
Disclosure of credit risk exposure [line items]
Risk exposures	0.2	0.3
Eurozone Countries [member] | Corporate counterparty [member]
Disclosure of credit risk exposure [line items]
Risk exposures	5.1	2.4
Eurozone Countries [member] | Corporate counterparty [member] | Ireland [member]
Disclosure of credit risk exposure [line items]
Risk exposures	0.8	0.5
Eurozone Countries [member] | Corporate counterparty [member] | Italy [member]
Disclosure of credit risk exposure [line items]
Risk exposures	0.1	0.2
Eurozone Countries [member] | Corporate counterparty [member] | Spain (excl. Banco Santander) [member]
Disclosure of credit risk exposure [line items]
Risk exposures	0.1	0.2
Eurozone Countries [member] | Corporate counterparty [member] | France [member]
Disclosure of credit risk exposure [line items]
Risk exposures	2.2	0.1
Eurozone Countries [member] | Corporate counterparty [member] | Germany [member]
Disclosure of credit risk exposure [line items]
Risk exposures	0.1
Eurozone Countries [member] | Corporate counterparty [member] | Luxembourg [member]
Disclosure of credit risk exposure [line items]
Risk exposures	0.4	0.3
Eurozone Countries [member] | Corporate counterparty [member] | Other [member]
Disclosure of credit risk exposure [line items]
Risk exposures	1.4	1.1
All Other Countries [member] | Other [member]
Disclosure of credit risk exposure [line items]
Risk exposures	5.2	5.6
All Other Countries [member] | UK [member]
Disclosure of credit risk exposure [line items]
Risk exposures	301.0	289.9
All Other Countries [member] | US [member]
Disclosure of credit risk exposure [line items]
Risk exposures	17.0	18.2
All Other Countries [member] | Japan [member]
Disclosure of credit risk exposure [line items]
Risk exposures	6.6	7.5
All Other Countries [member] | Switzerland [member]
Disclosure of credit risk exposure [line items]
Risk exposures	0.6	0.5
All Other Countries [member] | Denmark [member]
Disclosure of credit risk exposure [line items]
Risk exposures	0.5	0.5
All Other Countries [member] | Russia [member]
Disclosure of credit risk exposure [line items]
Risk exposures		0.1
All Other Countries [member] | Governments [member] | Other [member]
Disclosure of credit risk exposure [line items]
Risk exposures	0.1	0.1
All Other Countries [member] | Governments [member] | UK [member]
Disclosure of credit risk exposure [line items]
Risk exposures	44.7	33.6
All Other Countries [member] | Governments [member] | US [member]
Disclosure of credit risk exposure [line items]
Risk exposures	6.3	4.8
All Other Countries [member] | Governments [member] | Japan [member]
Disclosure of credit risk exposure [line items]
Risk exposures	3.0	2.8
All Other Countries [member] | Governments [member] | Switzerland [member]
Disclosure of credit risk exposure [line items]
Risk exposures	0.2	0.2
All Other Countries [member] | Government Guaranteed [member] | UK [member]
Disclosure of credit risk exposure [line items]
Risk exposures		0.4
All Other Countries [member] | Government Guaranteed [member] | US [member]
Disclosure of credit risk exposure [line items]
Risk exposures	0.1	0.2
All Other Countries [member] | Banks [member] | Other [member]
Disclosure of credit risk exposure [line items]
Risk exposures	2.3	2.6
All Other Countries [member] | Banks [member] | UK [member]
Disclosure of credit risk exposure [line items]
Risk exposures	9.1	12.0
All Other Countries [member] | Banks [member] | US [member]
Disclosure of credit risk exposure [line items]
Risk exposures	8.2	10.6
All Other Countries [member] | Banks [member] | Japan [member]
Disclosure of credit risk exposure [line items]
Risk exposures	2.6	3.2
All Other Countries [member] | Banks [member] | Switzerland [member]
Disclosure of credit risk exposure [line items]
Risk exposures	0.2	0.1
All Other Countries [member] | Banks [member] | Denmark [member]
Disclosure of credit risk exposure [line items]
Risk exposures	0.1	0.1
All Other Countries [member] | Other Financial Institutions [member] | Other [member]
Disclosure of credit risk exposure [line items]
Risk exposures	0.9	0.6
All Other Countries [member] | Other Financial Institutions [member] | UK [member]
Disclosure of credit risk exposure [line items]
Risk exposures	13.0	13.5
All Other Countries [member] | Other Financial Institutions [member] | US [member]
Disclosure of credit risk exposure [line items]
Risk exposures	2.3	2.5
All Other Countries [member] | Other Financial Institutions [member] | Japan [member]
Disclosure of credit risk exposure [line items]
Risk exposures	0.2	0.1
All Other Countries [member] | Other Financial Institutions [member] | Russia [member]
Disclosure of credit risk exposure [line items]
Risk exposures		0.1
All Other Countries [member] | Retail [member] | UK [member]
Disclosure of credit risk exposure [line items]
Risk exposures	191.3	189.1
All Other Countries [member] | Corporate counterparty [member] | Other [member]
Disclosure of credit risk exposure [line items]
Risk exposures	1.9	2.3
All Other Countries [member] | Corporate counterparty [member] | UK [member]
Disclosure of credit risk exposure [line items]
Risk exposures	42.9	41.3
All Other Countries [member] | Corporate counterparty [member] | US [member]
Disclosure of credit risk exposure [line items]
Risk exposures	0.1	0.1
All Other Countries [member] | Corporate counterparty [member] | Japan [member]
Disclosure of credit risk exposure [line items]
Risk exposures	0.8	1.4
All Other Countries [member] | Corporate counterparty [member] | Switzerland [member]
Disclosure of credit risk exposure [line items]
Risk exposures	0.2	0.2
All Other Countries [member] | Corporate counterparty [member] | Denmark [member]
Disclosure of credit risk exposure [line items]
Risk exposures	0.4	0.4
All Countries Excluding Eurozone Countries [member]
Disclosure of credit risk exposure [line items]
Risk exposures	330.9	322.3
All Countries Excluding Eurozone Countries [member] | Governments [member]
Disclosure of credit risk exposure [line items]
Risk exposures	54.3	41.5
All Countries Excluding Eurozone Countries [member] | Government Guaranteed [member]
Disclosure of credit risk exposure [line items]
Risk exposures	0.1	0.6
All Countries Excluding Eurozone Countries [member] | Banks [member]
Disclosure of credit risk exposure [line items]
Risk exposures	22.5	28.6
All Countries Excluding Eurozone Countries [member] | Other Financial Institutions [member]
Disclosure of credit risk exposure [line items]
Risk exposures	16.4	16.8
All Countries Excluding Eurozone Countries [member] | Retail [member]
Disclosure of credit risk exposure [line items]
Risk exposures	191.3	189.1
All Countries Excluding Eurozone Countries [member] | Corporate counterparty [member]
Disclosure of credit risk exposure [line items]
Risk exposures	£ 46.3	£ 45.7

XML

Credit Risk - Summary of Country Risk Exposure (Parenthetical) (Detail) - GBP (£)	Dec. 31, 2017	Dec. 31, 2016
Disclosure of credit risk exposure [line items]
Risk exposures	£ 346,500,000,000	£ 336,100,000,000
Eurozone Countries [member] | Netherlands [member]
Disclosure of credit risk exposure [line items]
Risk exposures	1,800,000,000	1,400,000,000
Eurozone Countries [member] | Cyprus [member]
Disclosure of credit risk exposure [line items]
Risk exposures	0	28,000,000
Eurozone Countries [member] | Greece [member]
Disclosure of credit risk exposure [line items]
Risk exposures	£ 0	£ 0

XML

Credit Risk - Summary of Balances with Other Banco Santander Companies (Detail) - GBP (£) £ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of detailed information about financial instruments [line items]
Financial assets	£ 308,392	£ 296,305
Financial liabilities	294,895	282,693
Santander UK Group Holdings plc [member]
Disclosure of detailed information about financial instruments [line items]
Financial assets	5,700	3,500
Financial liabilities	13,500	10,100
Santander UK Group Holdings plc [member] | Spain (excl. Banco Santander) [member]
Disclosure of detailed information about financial instruments [line items]
Financial assets	4,400	2,100
Financial liabilities	5,500	3,200
Santander UK Group Holdings plc [member] | UK [member]
Disclosure of detailed information about financial instruments [line items]
Financial assets	1,300	1,100
Financial liabilities	7,800	6,300
Santander UK Group Holdings plc [member] | Chile [member]
Disclosure of detailed information about financial instruments [line items]
Financial assets		100
Financial liabilities		100
Santander UK Group Holdings plc [member] | Other [member]
Disclosure of detailed information about financial instruments [line items]
Financial assets		200
Financial liabilities	100	300
Santander UK Group Holdings plc [member] | Uruguay [member]
Disclosure of detailed information about financial instruments [line items]
Financial liabilities	100	200
Banks [member] | Santander UK Group Holdings plc [member]
Disclosure of detailed information about financial instruments [line items]
Financial assets	4,400	2,400
Financial liabilities	5,300	3,400
Banks [member] | Santander UK Group Holdings plc [member] | Spain (excl. Banco Santander) [member]
Disclosure of detailed information about financial instruments [line items]
Financial assets	4,400	2,100
Financial liabilities	5,100	2,900
Banks [member] | Santander UK Group Holdings plc [member] | UK [member]
Disclosure of detailed information about financial instruments [line items]
Financial liabilities	100
Banks [member] | Santander UK Group Holdings plc [member] | Chile [member]
Disclosure of detailed information about financial instruments [line items]
Financial assets		100
Financial liabilities		100
Banks [member] | Santander UK Group Holdings plc [member] | Other [member]
Disclosure of detailed information about financial instruments [line items]
Financial assets		200
Financial liabilities		200
Banks [member] | Santander UK Group Holdings plc [member] | Uruguay [member]
Disclosure of detailed information about financial instruments [line items]
Financial liabilities	100	200
Other Financial Institutions [member] | Santander UK Group Holdings plc [member]
Disclosure of detailed information about financial instruments [line items]
Financial assets	1,300	1,100
Financial liabilities	8,000	6,500
Other Financial Institutions [member] | Santander UK Group Holdings plc [member] | Spain (excl. Banco Santander) [member]
Disclosure of detailed information about financial instruments [line items]
Financial liabilities	300	200
Other Financial Institutions [member] | Santander UK Group Holdings plc [member] | UK [member]
Disclosure of detailed information about financial instruments [line items]
Financial assets	1,300	1,100
Financial liabilities	7,600	6,200
Other Financial Institutions [member] | Santander UK Group Holdings plc [member] | Other [member]
Disclosure of detailed information about financial instruments [line items]
Financial liabilities	100	100
Corporate counterparty [member] | Santander UK Group Holdings plc [member]
Disclosure of detailed information about financial instruments [line items]
Financial liabilities	200	200
Corporate counterparty [member] | Santander UK Group Holdings plc [member] | Spain (excl. Banco Santander) [member]
Disclosure of detailed information about financial instruments [line items]
Financial liabilities	100	100
Corporate counterparty [member] | Santander UK Group Holdings plc [member] | UK [member]
Disclosure of detailed information about financial instruments [line items]
Financial liabilities	£ 100	£ 100

XML

Credit Risk - Summary of Balances with Other Banco Santander Companies (Parenthetical) (Detail) - Santander UK Group Holdings plc [member] - Top of Range [member]	12 Months Ended
	Dec. 31, 2016 GBP (£)
Disclosure of detailed information about financial instruments [line items]
Financial assets allocated to other countries	£ 100,000,000,000
Financial liabilities allocated to other countries	£ 100,000,000,000

XML

Credit Risk - Summary of Types of Credit Risk Mitigation (Detail)	12 Months Ended
	Dec. 31, 2017
Residential Mortgages [member]
Disclosure of credit risk exposure [line items]
Business banking	Collateral is in the form of a first legal charge over the property. Before we grant a mortgage, we get an approved surveyor to value the property. We have our own guidelines for valuations, which build on guidance from the Royal Institution of Chartered Surveyors (RICS). For remortgages and some loans where the LTV is 75% or less, we might use an automated valuation instead.
Business Banking [member]
Disclosure of credit risk exposure [line items]
Business banking	Includes secured and unsecured lending. We can take mortgage debentures as collateral if the business is incorporated. These are charges over a company's assets. We can also take guarantees, but we do not treat them as collateral, and we do not put a cash value on them unless they are secured against a tangible asset. We base our lending decision on the customer's trading cash flow. If a customer defaults, we work with them to consider debt restructuring options. We generally do not enforce our security over their assets except as a last resort. In which case we might appoint an administrator or receiver.
Consumer Finance [member]
Disclosure of credit risk exposure [line items]
Business banking	Collateral is in the form of legal ownership of the vehicle for most consumer (auto) finance loans, with the customer being the registered keeper. Only a very small proportion of the consumer (auto) finance business is underwritten as a personal loan. In these cases there is no collateral or security tied to the loan. We use a leading vehicle valuation company to assess the LTV at the proposal stage.
Unsecured Lending [member]
Disclosure of credit risk exposure [line items]
Business banking	Unsecured lending means there is no collateral or security tied to the loan that can be used to mitigate any potential loss if the customer does not pay us back.

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Credit Risk - Summary of Residential Mortgages by Borrower Profile (Detail) - Credit Risk [member] - GBP (£) £ in Millions	Dec. 31, 2017	Dec. 31, 2016
Stock [member]
Disclosure of credit risk exposure [line items]
Residential mortgage loans	£ 154,944	£ 154,274
Percentage of residential mortgage loans	100.00%	100.00%
Stock [member] | First-Time Buyers [member]
Disclosure of credit risk exposure [line items]
Residential mortgage loans	£ 28,768	£ 29,143
Percentage of residential mortgage loans	19.00%	19.00%
Stock [member] | Home Movers [member]
Disclosure of credit risk exposure [line items]
Residential mortgage loans	£ 68,901	£ 68,158
Percentage of residential mortgage loans	44.00%	44.00%
Stock [member] | Remortgagers [member]
Disclosure of credit risk exposure [line items]
Residential mortgage loans	£ 50,473	£ 50,325
Percentage of residential mortgage loans	33.00%	33.00%
Stock [member] | Buy-To-Let [member]
Disclosure of credit risk exposure [line items]
Residential mortgage loans	£ 6,802	£ 6,648
Percentage of residential mortgage loans	4.00%	4.00%
New Business [member]
Disclosure of credit risk exposure [line items]
Residential mortgage loans	£ 24,218	£ 24,569
Percentage of residential mortgage loans	100.00%	100.00%
New Business [member] | First-Time Buyers [member]
Disclosure of credit risk exposure [line items]
Residential mortgage loans	£ 4,046	£ 4,193
Percentage of residential mortgage loans	17.00%	17.00%
New Business [member] | Home Movers [member]
Disclosure of credit risk exposure [line items]
Residential mortgage loans	£ 10,730	£ 11,072
Percentage of residential mortgage loans	44.00%	45.00%
New Business [member] | Remortgagers [member]
Disclosure of credit risk exposure [line items]
Residential mortgage loans	£ 8,071	£ 7,092
Percentage of residential mortgage loans	33.00%	29.00%
New Business [member] | Buy-To-Let [member]
Disclosure of credit risk exposure [line items]
Residential mortgage loans	£ 1,371	£ 2,212
Percentage of residential mortgage loans	6.00%	9.00%

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Credit Risk - Summary of Residential Mortgages by Interest Rate Profile (Detail) - Credit Risk [member] - Stock [member] - GBP (£) £ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of credit risk exposure [line items]
Residential mortgage loans	£ 154,944	£ 154,274
Percentage of residential mortgage loans	100.00%	100.00%
Fixed Rate [member]
Disclosure of credit risk exposure [line items]
Residential mortgage loans	£ 102,268	£ 91,817
Percentage of residential mortgage loans	66.00%	59.00%
Variable Rate [member]
Disclosure of credit risk exposure [line items]
Residential mortgage loans	£ 29,370	£ 33,627
Percentage of residential mortgage loans	19.00%	22.00%
Standard Variable Rate [member]
Disclosure of credit risk exposure [line items]
Residential mortgage loans	£ 23,306	£ 28,830
Percentage of residential mortgage loans	15.00%	19.00%

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Credit Risk - Summary of Residential Mortgages by Geographical Distribution (Detail) - Credit Risk [member] - GBP (£) £ in Millions	Dec. 31, 2017	Dec. 31, 2016
Stock [member]
Disclosure of credit risk exposure [line items]
Residential mortgage loans	£ 154,944	£ 154,274
Stock [member] | London [member]
Disclosure of credit risk exposure [line items]
Residential mortgage loans	37,600	37,200
Stock [member] | Midlands and East Anglia [member]
Disclosure of credit risk exposure [line items]
Residential mortgage loans	20,600	20,600
Stock [member] | North UK [member]
Disclosure of credit risk exposure [line items]
Residential mortgage loans	22,200	22,800
Stock [member] | Northern Ireland [member]
Disclosure of credit risk exposure [line items]
Residential mortgage loans	3,600	3,800
Stock [member] | Scotland [member]
Disclosure of credit risk exposure [line items]
Residential mortgage loans	6,800	7,000
Stock [member] | South East Excluding London [member]
Disclosure of credit risk exposure [line items]
Residential mortgage loans	47,200	46,100
Stock [member] | South West and Wales and Other [member]
Disclosure of credit risk exposure [line items]
Residential mortgage loans	16,900	16,800
New Business [member]
Disclosure of credit risk exposure [line items]
Residential mortgage loans	24,218	24,569
New Business [member] | London [member]
Disclosure of credit risk exposure [line items]
Residential mortgage loans	5,800	6,700
New Business [member] | Midlands and East Anglia [member]
Disclosure of credit risk exposure [line items]
Residential mortgage loans	3,400	3,200
New Business [member] | North UK [member]
Disclosure of credit risk exposure [line items]
Residential mortgage loans	3,000	3,000
New Business [member] | Northern Ireland [member]
Disclosure of credit risk exposure [line items]
Residential mortgage loans	200	200
New Business [member] | Scotland [member]
Disclosure of credit risk exposure [line items]
Residential mortgage loans	1,000	900
New Business [member] | South East Excluding London [member]
Disclosure of credit risk exposure [line items]
Residential mortgage loans	8,200	8,100
New Business [member] | South West and Wales and Other [member]
Disclosure of credit risk exposure [line items]
Residential mortgage loans	£ 2,600	£ 2,500

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Credit Risk - Summary of Residential Mortgages by Loan Size (Detail) - Credit Risk [member] - GBP (£) £ in Millions	Dec. 31, 2017	Dec. 31, 2016
South East Including London [member]
Disclosure of credit risk exposure [line items]
Residential mortgage loans	£ 84,751	£ 83,089
South East Including London [member] | Less Than 0.25m [member]
Disclosure of credit risk exposure [line items]
Residential mortgage loans	46,766	48,355
South East Including London [member] | 0.25m-0.50m[member]
Disclosure of credit risk exposure [line items]
Residential mortgage loans	27,562	25,040
South East Including London [member] | 0.50m-1.0m [member]
Disclosure of credit risk exposure [line items]
Residential mortgage loans	9,214	8,438
South East Including London [member] | 1.0m-2.0m [member]
Disclosure of credit risk exposure [line items]
Residential mortgage loans	1,046	1,099
South East Including London [member] | Greater Than 2.0m [member]
Disclosure of credit risk exposure [line items]
Residential mortgage loans	163	157
UK [member]
Disclosure of credit risk exposure [line items]
Residential mortgage loans	154,944	154,274
UK [member] | Less Than 0.25m [member]
Disclosure of credit risk exposure [line items]
Residential mortgage loans	107,050	110,415
UK [member] | 0.25m-0.50m[member]
Disclosure of credit risk exposure [line items]
Residential mortgage loans	36,083	32,871
UK [member] | 0.50m-1.0m [member]
Disclosure of credit risk exposure [line items]
Residential mortgage loans	10,535	9,668
UK [member] | 1.0m-2.0m [member]
Disclosure of credit risk exposure [line items]
Residential mortgage loans	1,111	1,161
UK [member] | Greater Than 2.0m [member]
Disclosure of credit risk exposure [line items]
Residential mortgage loans	£ 165	£ 159

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Credit Risk - Summary of Residential Mortgages by Average Loan Size for New Business (Detail) - GBP (£) £ in Thousands	Dec. 31, 2017	Dec. 31, 2016
South East Including London [member]
Disclosure of credit risk exposure [line items]
New business residential mortgage loans average size	£ 260	£ 264
Rest of UK [member]
Disclosure of credit risk exposure [line items]
New business residential mortgage loans average size	146	144
UK [member]
Disclosure of credit risk exposure [line items]
New business residential mortgage loans average size	£ 196	£ 198

XML

Credit Risk - Summary of Residential Mortgages by Loan to Value (Detail) - Credit Risk [member] - GBP (£) £ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of credit risk exposure [line items]
Percentage of loan to value, Stock	100.00%	100.00%
Collateral value of residential properties, Stock	£ 154,721	£ 153,989
Percentage of loan to value, NPL stock	100.00%	100.00%
Collateral value of residential properties, NPL stock	£ 1,824	£ 2,043
Percentage of loan to value, New business	100.00%	100.00%
Collateral value of residential properties, New business	£ 24,218	£ 24,569
Up to 50% [member]
Disclosure of credit risk exposure [line items]
Percentage of loan to value, Stock	48.00%	46.00%
Percentage of loan to value, NPL stock	44.00%	39.00%
Percentage of loan to value, New business	19.00%	17.00%
50 - 75% [member]
Disclosure of credit risk exposure [line items]
Percentage of loan to value, Stock	39.00%	41.00%
Percentage of loan to value, NPL stock	34.00%	36.00%
Percentage of loan to value, New business	43.00%	43.00%
75 - 85% [member]
Disclosure of credit risk exposure [line items]
Percentage of loan to value, Stock	8.00%	8.00%
Percentage of loan to value, NPL stock	8.00%	9.00%
Percentage of loan to value, New business	19.00%	23.00%
85 - 100% [member]
Disclosure of credit risk exposure [line items]
Percentage of loan to value, Stock	4.00%	4.00%
Percentage of loan to value, NPL stock	7.00%	8.00%
Percentage of loan to value, New business	19.00%	17.00%
Greater Than 100% [member]
Disclosure of credit risk exposure [line items]
Percentage of loan to value, Stock	1.00%	1.00%
Percentage of loan to value, NPL stock	7.00%	8.00%
Simple Average [member]
Disclosure of credit risk exposure [line items]
Percentage of loan to value, Stock	42.00%	43.00%
Percentage of loan to value, NPL stock	44.00%	46.00%
Percentage of loan to value, New business	62.00%	65.00%
Valuation Weighted Average LTV [member]
Disclosure of credit risk exposure [line items]
Percentage of loan to value, Stock	38.00%	39.00%
Percentage of loan to value, NPL stock	38.00%	40.00%
Percentage of loan to value, New business	58.00%	60.00%

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Credit Risk - Summary of Residential Mortgages by Loan to Value (Parenthetical) (Detail) - GBP (£) £ in Millions	Dec. 31, 2017	Dec. 31, 2016
Credit Risk [member]
Disclosure of credit risk exposure [line items]
Collateral against loans in negative equity	£ 1,248	£ 1,588

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Credit Risk - Summary of Residential Mortgages by Credit Performance (Detail) - GBP (£) £ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure of credit risk exposure [line items]
Loans and advances to customers	£ 199,490	£ 199,738
Non performing loans	£ 1,868	£ 2,110
NPL ratio	1.21%	1.37%
Mortgage Loans [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers	£ 154,944	£ 154,274
Credit Risk [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers	12,135	12,037
Impairment loss allowances	£ 212	£ 315
NPL ratio	1.00%	1.01%
Coverage ratio	174.00%	258.00%
Credit Risk [member] | Mortgage Loans [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers	£ 1,128	£ 1,269
Non performing loans	1,868	2,110
Impairment loss allowances	£ 225	£ 279
Early arrears ratio(3)	0.73%	0.82%
NPL ratio	1.21%	1.37%
Coverage ratio	12.00%	13.00%
Credit Risk [member] | Mortgage Loans [member] | Mortgage Loans [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers	£ 154,944	£ 154,274
Credit Risk [member] | Mortgage Loans [member] | Performing Loans [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers	151,948	150,895
Credit Risk [member] | Mortgage Loans [member] | Non Performing Loans by Arrears [member]
Disclosure of credit risk exposure [line items]
Non performing loans	1,427	1,578
Credit Risk [member] | Mortgage Loans [member] | Non Performing Loans by Bankruptcy [member]
Disclosure of credit risk exposure [line items]
Non performing loans	14	21
Credit Risk [member] | Mortgage Loans [member] | Non Performing Loans by Maturity Default [member]
Disclosure of credit risk exposure [line items]
Non performing loans	303	316
Credit Risk [member] | Mortgage Loans [member] | Non-Performing [member]
Disclosure of credit risk exposure [line items]
Non performing loans	95	160
Credit Risk [member] | Mortgage Loans [member] | Non Performing Loans by Properties in Possession [member]
Disclosure of credit risk exposure [line items]
Non performing loans	29	35
Later Than 1 Month and Not Later Than 2 Months [member]
Disclosure of credit risk exposure [line items]
Non performing loans	2,661	2,959
Later Than 1 Month and Not Later Than 2 Months [member] | Credit Risk [member] | Mortgage Loans [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers	702	793
Later Than 2 Months And Not Later Than 3 Months [member] | Credit Risk [member] | Mortgage Loans [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers	£ 426	£ 476

XML

Credit Risk - Summary of Residential Mortgages by Credit Performance (Parenthetical) (Detail) - GBP (£) £ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of credit risk exposure [line items]
Non performing loans	£ 1,868	£ 2,110
Later Than 1 Month and Not Later Than 2 Months [member]
Disclosure of credit risk exposure [line items]
Non performing loans	£ 2,661	£ 2,959

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Credit Risk - Summary of NPL Movements (Detail) £ in Millions	12 Months Ended
	Dec. 31, 2017 GBP (£)
Residential Mortgages [member]
Disclosure of credit risk exposure [line items]
Beginning balance	£ 2,110
Entries	817
Exits (including repayments)	(66)
Exits	(993)
Ending balance	1,868
Commercial Banking [member]
Disclosure of credit risk exposure [line items]
Beginning balance	518
Entries	194
Exits (including repayments)	(294)
Exits	(35)
Ending balance	383
Global Corporate Banking [member]
Disclosure of credit risk exposure [line items]
Beginning balance	63
Entries	328
Exits (including repayments)	(51)
Ending balance	340
Corporate Centre [member]
Disclosure of credit risk exposure [line items]
Beginning balance	73
Entries	18
Exits (including repayments)	(48)
Exits	(23)
Ending balance	£ 20

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Credit Risk - Summary of Residential Mortgages by Forbearance Applied (Detail) - GBP (£) £ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure of credit risk exposure [line items]
Capitalisation	£ 652	£ 759
Term extension	241	300
Interest-only	582	707
Total	1,475	1,766
Impairments allowances	£ 27	£ 31
Loans capitalisation forbearance Percentage	0.40%	0.50%
Loans term extension forbearance percentage	0.20%	0.20%
Loans interest only forbearance percentage	0.40%	0.40%
Loans forbearance percentage	1.00%	1.10%
Forbearance in Arrears [member]
Disclosure of credit risk exposure [line items]
Capitalisation	£ 260	£ 293
Term extension	63	78
Interest-only	175	226
Total	498	597
Impairments allowances	22	24
Performing [member]
Disclosure of credit risk exposure [line items]
Capitalisation	392	466
Term extension	178	222
Interest-only	407	481
Total	977	1,169
Impairments allowances	£ 5	£ 7

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Credit Risk - Summary of Residential Mortgages Portfolios of Particular Interest by Credit Performance (Detail) - GBP (£) £ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure of credit risk exposure [line items]
Loans and advances to customers	£ 199,490	£ 199,738
NPLs	£ 1,868	£ 2,110
NPL ratio	1.21%	1.37%
PIPs	£ 29	£ 35
Later Than 1 Month and Not Later Than 2 Months [member]
Disclosure of credit risk exposure [line items]
NPLs	2,661	2,959
Mortgage Loans [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers	154,944	154,274
Performing Loans [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers	151,948	150,895
Early Arrear Loans [member] | Later Than 1 Month and Not Later Than 2 Months [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers	702	793
Early Arrear Loans [member] | Later Than 2 Months And Not Later Than 3 Months [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers	426	476
Interest Only Loan [member]
Disclosure of credit risk exposure [line items]
NPLs	£ 868	£ 938
NPL ratio	2.23%	2.25%
PIPs	£ 17	£ 15
Interest Only Loan [member] | Mortgage Loans [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers	38,893	41,707
Interest Only Loan [member] | Performing Loans [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers	37,505	40,185
Interest Only Loan [member] | Early Arrear Loans [member] | Later Than 1 Month and Not Later Than 2 Months [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers	317	360
Interest Only Loan [member] | Early Arrear Loans [member] | Later Than 2 Months And Not Later Than 3 Months [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers	203	224
Part Interest Only Part Repayment [member]
Disclosure of credit risk exposure [line items]
NPLs	£ 263	£ 288
NPL ratio	1.91%	1.98%
PIPs	£ 5	£ 7
Part Interest Only Part Repayment [member] | Mortgage Loans [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers	13,794	14,535
Part Interest Only Part Repayment [member] | Performing Loans [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers	13,379	14,066
Part Interest Only Part Repayment [member] | Early Arrear Loans [member] | Later Than 1 Month and Not Later Than 2 Months [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers	94	111
Part Interest Only Part Repayment [member] | Early Arrear Loans [member] | Later Than 2 Months And Not Later Than 3 Months [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers	58	70
Flexible Interest Loan [member]
Disclosure of credit risk exposure [line items]
NPLs	£ 245	£ 265
NPL ratio	1.66%	1.57%
PIPs	£ 3	£ 4
Flexible Interest Loan [member] | Mortgage Loans [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers	14,787	16,853
Flexible Interest Loan [member] | Performing Loans [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers	14,440	16,472
Flexible Interest Loan [member] | Early Arrear Loans [member] | Later Than 1 Month and Not Later Than 2 Months [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers	67	71
Flexible Interest Loan [member] | Early Arrear Loans [member] | Later Than 2 Months And Not Later Than 3 Months [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers	35	45
Loan To Value Greater Than 100% Loan [member]
Disclosure of credit risk exposure [line items]
NPLs	£ 132	£ 157
NPL ratio	8.97%	8.38%
PIPs	£ 10	£ 13
Loan To Value Greater Than 100% Loan [member] | Mortgage Loans [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers	1,472	1,873
Loan To Value Greater Than 100% Loan [member] | Performing Loans [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers	1,303	1,661
Loan To Value Greater Than 100% Loan [member] | Early Arrear Loans [member] | Later Than 1 Month and Not Later Than 2 Months [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers	22	33
Loan To Value Greater Than 100% Loan [member] | Early Arrear Loans [member] | Later Than 2 Months And Not Later Than 3 Months [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers	15	22
Buy To Let Loan [member]
Disclosure of credit risk exposure [line items]
NPLs	£ 21	£ 18
NPL ratio	0.31%	0.27%
PIPs	£ 1	£ 1
Buy To Let Loan [member] | Mortgage Loans [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers	6,802	6,648
Buy To Let Loan [member] | Performing Loans [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers	6,768	6,621
Buy To Let Loan [member] | Early Arrear Loans [member] | Later Than 1 Month and Not Later Than 2 Months [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers	9	7
Buy To Let Loan [member] | Early Arrear Loans [member] | Later Than 2 Months And Not Later Than 3 Months [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers	4	2
Other [member]
Disclosure of credit risk exposure [line items]
NPLs	£ 543	£ 582
NPL ratio	0.57%	0.64%
PIPs	£ 6	£ 9
Other [member] | Mortgage Loans [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers	95,779	90,570
Other [member] | Performing Loans [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers	94,772	89,483
Other [member] | Early Arrear Loans [member] | Later Than 1 Month and Not Later Than 2 Months [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers	296	314
Other [member] | Early Arrear Loans [member] | Later Than 2 Months And Not Later Than 3 Months [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers	£ 168	£ 191

XML

Credit Risk - Summary of Residential Mortgages Portfolios of Particular Interest by Forbearance Applied (Detail) - GBP (£) £ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of credit risk exposure [line items]
Total value	£ 1,475	£ 1,766
Interest Only Loan [member]
Disclosure of credit risk exposure [line items]
Total value	208	322
Flexible Interest Loan [member]
Disclosure of credit risk exposure [line items]
Total value	34	56
Buy To Let Loan [member]
Disclosure of credit risk exposure [line items]
Total value	£ 8	£ 9

XML

Credit Risk - Summary of Business Banking by Credit Performance (Detail) - GBP (£) £ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure of credit risk exposure [line items]
Loans and advances to customers	£ 199,490	£ 199,738
NPL ratio(3)	1.21%	1.37%
Performing Loans [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers	£ 151,948	£ 150,895
Credit Risk [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers	12,135	12,037
Impairment loss allowances	£ 212	£ 315
NPL ratio(3)	1.00%	1.01%
Coverage ratio(4)	174.00%	258.00%
Gross write-offs	£ 152	£ 153
Credit Risk [member] | Business Banking [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers	1,912	2,327
Impairment loss allowances	£ 54	£ 57
NPL ratio(3)	6.01%	4.64%
Coverage ratio(4)	47.00%	53.00%
Gross write-offs	£ 21	£ 24
Credit Risk [member] | Business Banking [member] | Performing Loans [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers	1,793	2,216
Credit Risk [member] | Business Banking [member] | Early Arrear Loans [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers	4	3
Credit Risk [member] | Business Banking [member] | Non Performing Loans [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers	£ 115	£ 108

XML

Credit Risk - Summary of Business Banking by Forbearance (Detail) - GBP (£) £ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of credit risk exposure [line items]
Total value	£ 1,475	£ 1,766
Business Banking [member]
Disclosure of credit risk exposure [line items]
Total value	£ 85	£ 94

XML

Credit Risk - Summary of Consumer (Auto) Finance and Other Unsecured Lending by Credit Performance (Detail) - GBP (£) £ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure of credit risk exposure [line items]
Loans and advances to customers	£ 199,490	£ 199,738
NPL ratio	1.21%	1.37%
Credit Risk [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers	£ 12,135	£ 12,037
Impairment loss allowances	£ 212	£ 315
NPL ratio	1.00%	1.01%
Coverage ratio	174.00%	258.00%
Gross write-offs	£ 152	£ 153
Credit Risk [member] | Performing Loans [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers	11,883	11,793
Credit Risk [member] | Early Arrear Loans [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers	130	122
Credit Risk [member] | Non Performing Loans [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers	122	122
Credit Risk [member] | Consumer Finance [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers	6,957	6,764
Impairment loss allowances	£ 77	£ 78
NPL ratio	0.49%	0.47%
Coverage ratio	226.00%	244.00%
Gross write-offs	£ 32	£ 30
Credit Risk [member] | Consumer Finance [member] | Performing Loans [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers	6,861	6,682
Credit Risk [member] | Consumer Finance [member] | Early Arrear Loans [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers	62	50
Credit Risk [member] | Consumer Finance [member] | Non Performing Loans [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers	34	32
Credit Risk [member] | Consumer Loans [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers	2,169	2,229
Impairment loss allowances	44	55
Credit Risk [member] | Consumer Loans [member] | Performing Loans [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers	2,129	2,188
Credit Risk [member] | Consumer Loans [member] | Early Arrear Loans [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers	24	24
Credit Risk [member] | Consumer Loans [member] | Non Performing Loans [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers	16	17
Credit Risk [member] | Credit Card [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers	2,444	2,493
Impairment loss allowances	62	77
Credit Risk [member] | Credit Card [member] | Performing Loans [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers	2,377	2,422
Credit Risk [member] | Credit Card [member] | Early Arrear Loans [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers	19	23
Credit Risk [member] | Credit Card [member] | Non Performing Loans [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers	48	48
Credit Risk [member] | Overdrafts [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers	565	551
Impairment loss allowances	29	37
Credit Risk [member] | Overdrafts [member] | Performing Loans [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers	516	501
Credit Risk [member] | Overdrafts [member] | Early Arrear Loans [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers	25	25
Credit Risk [member] | Overdrafts [member] | Non Performing Loans [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers	24	25
Credit Risk [member] | Other Unsecured Advances [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers	5,178	5,273
Impairment loss allowances	£ 135	£ 169
NPL ratio	1.69%	1.71%
Coverage ratio	153.00%	188.00%
Gross write-offs	£ 120	£ 123
Credit Risk [member] | Other Unsecured Advances [member] | Performing Loans [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers	5,022	5,111
Credit Risk [member] | Other Unsecured Advances [member] | Early Arrear Loans [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers	68	72
Credit Risk [member] | Other Unsecured Advances [member] | Non Performing Loans [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers	£ 88	£ 90

XML

Credit Risk - Summary of Consumer (Auto) Finance and Other Unsecured Lending by Credit Performance (Parenthetical) (Detail)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure of credit risk exposure [line items]
Non performing assets ratio	1.21%	1.37%
Credit Risk [member]
Disclosure of credit risk exposure [line items]
Non performing assets ratio	1.00%	1.01%
Top of Range [member]
Disclosure of credit risk exposure [line items]
Non performing assets ratio	100.00%
Top of Range [member] | Credit Risk [member]
Disclosure of credit risk exposure [line items]
Non performing assets ratio		100.00%

XML

Credit Risk - Summary of Consumer (Auto) Finance and Other Unsecured Lending by Forbearance (Detail) - GBP (£) £ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of credit risk exposure [line items]
Forbearance	£ 1,475	£ 1,766
Forbearance other unsecured [member]
Disclosure of credit risk exposure [line items]
Forbearance	77	75
Consumer Loans [member] | Forbearance other unsecured [member]
Disclosure of credit risk exposure [line items]
Forbearance	1	1
Credit Card [member] | Forbearance other unsecured [member]
Disclosure of credit risk exposure [line items]
Forbearance	48	46
Overdrafts [member] | Forbearance other unsecured [member]
Disclosure of credit risk exposure [line items]
Forbearance	28	28
Other Unsecured Advances [member] | Forbearance other unsecured [member]
Disclosure of credit risk exposure [line items]
Forbearance	£ 77	£ 75

XML

Credit Risk - Summary of Other Segments Exposures by Credit Rating (Detail) - GBP (£) £ in Millions	Dec. 31, 2017	Dec. 31, 2016
Social Housing [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	£ 9,250	£ 9,680
Commercial Banking [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	24,510	23,922
Commercial Banking [member] | SME and Mid Corporate [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	12,630	11,328
Commercial Banking [member] | Commercial Real Estate [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	8,606	9,525
Commercial Banking [member] | Social Housing [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	3,274	3,069
Commercial Banking [member] | (AAA to AA-) [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	499	1,377
Commercial Banking [member] | (AAA to AA-) [member] | SME and Mid Corporate [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk		22
Commercial Banking [member] | (AAA to AA-) [member] | Social Housing [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	499	1,355
Commercial Banking [member] | (A + to A) [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	2,600	1,611
Commercial Banking [member] | (A + to A) [member] | SME and Mid Corporate [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk		112
Commercial Banking [member] | (A + to A) [member] | Social Housing [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	2,600	1,499
Commercial Banking [member] | (A -to - BBB+) [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	430	861
Commercial Banking [member] | (A -to - BBB+) [member] | SME and Mid Corporate [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	259	344
Commercial Banking [member] | (A -to - BBB+) [member] | Commercial Real Estate [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk		302
Commercial Banking [member] | (A -to - BBB+) [member] | Social Housing [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	171	215
Commercial Banking [member] | (BBB to BBB -) [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	2,578	8,678
Commercial Banking [member] | (BBB to BBB -) [member] | SME and Mid Corporate [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	2,183	2,826
Commercial Banking [member] | (BBB to BBB -) [member] | Commercial Real Estate [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	395	5,852
Commercial Banking [member] | (BB + to BB - ) [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	11,537	6,973
Commercial Banking [member] | (BB + to BB - ) [member] | SME and Mid Corporate [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	5,402	4,219
Commercial Banking [member] | (BB + to BB - ) [member] | Commercial Real Estate [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	6,135	2,754
Commercial Banking [member] | (B + to B) [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	5,588	3,640
Commercial Banking [member] | (B + to B) [member] | SME and Mid Corporate [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	3,574	3,142
Commercial Banking [member] | (B + to B) [member] | Commercial Real Estate [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	2,014	498
Commercial Banking [member] | (B - to D) [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	1,062	651
Commercial Banking [member] | (B - to D) [member] | SME and Mid Corporate [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	998	533
Commercial Banking [member] | (B - to D) [member] | Commercial Real Estate [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	60	118
Commercial Banking [member] | (B - to D) [member] | Social Housing [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	4
Commercial Banking [member] | Other [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	216	131
Commercial Banking [member] | Other [member] | SME and Mid Corporate [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	214	130
Commercial Banking [member] | Other [member] | Commercial Real Estate [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	2	1
Global Corporate Banking [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	32,249	34,488
Global Corporate Banking [member] | Sovereign And Supranational [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	4,355	5,113
Global Corporate Banking [member] | Large Corporate [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	21,439	21,500
Global Corporate Banking [member] | Financial Institutions [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	6,455	7,875
Global Corporate Banking [member] | (AAA to AA-) [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	3,212	1,668
Global Corporate Banking [member] | (AAA to AA-) [member] | Sovereign And Supranational [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	590	1,025
Global Corporate Banking [member] | (AAA to AA-) [member] | Large Corporate [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	260	204
Global Corporate Banking [member] | (AAA to AA-) [member] | Financial Institutions [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	2,362	439
Global Corporate Banking [member] | (A + to A) [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	7,763	9,016
Global Corporate Banking [member] | (A + to A) [member] | Sovereign And Supranational [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	3,321	3,111
Global Corporate Banking [member] | (A + to A) [member] | Large Corporate [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	2,979	2,028
Global Corporate Banking [member] | (A + to A) [member] | Financial Institutions [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	1,463	3,877
Global Corporate Banking [member] | (A -to - BBB+) [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	11,329	9,237
Global Corporate Banking [member] | (A -to - BBB+) [member] | Sovereign And Supranational [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	444	977
Global Corporate Banking [member] | (A -to - BBB+) [member] | Large Corporate [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	8,391	5,347
Global Corporate Banking [member] | (A -to - BBB+) [member] | Financial Institutions [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	2,494	2,913
Global Corporate Banking [member] | (BBB to BBB -) [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	8,912	10,090
Global Corporate Banking [member] | (BBB to BBB -) [member] | Large Corporate [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	8,879	9,493
Global Corporate Banking [member] | (BBB to BBB -) [member] | Financial Institutions [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	33	597
Global Corporate Banking [member] | (BB + to BB - ) [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	676	4,345
Global Corporate Banking [member] | (BB + to BB - ) [member] | Large Corporate [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	573	4,296
Global Corporate Banking [member] | (BB + to BB - ) [member] | Financial Institutions [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	103	49
Global Corporate Banking [member] | (B + to B) [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	2	56
Global Corporate Banking [member] | (B + to B) [member] | Large Corporate [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	2	56
Global Corporate Banking [member] | (B - to D) [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	355	75
Global Corporate Banking [member] | (B - to D) [member] | Large Corporate [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	355	75
Global Corporate Banking [member] | Other [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk		1
Global Corporate Banking [member] | Other [member] | Large Corporate [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk		1
Corporate Centre [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	56,087	46,953
Corporate Centre [member] | Social Housing [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	5,976	6,611
Corporate Centre [member] | Sovereign And Supranational [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	44,495	34,474
Corporate Centre [member] | Structured Products [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	4,379	4,006
Corporate Centre [member] | Derivative Financial Instruments [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	212	487
Corporate Centre [member] | Legacy Portfolios in Run-Off [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	1,025	1,375
Corporate Centre [member] | (AAA to AA-) [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	48,805	39,386
Corporate Centre [member] | (AAA to AA-) [member] | Social Housing [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	1,841	3,313
Corporate Centre [member] | (AAA to AA-) [member] | Sovereign And Supranational [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	44,477	34,474
Corporate Centre [member] | (AAA to AA-) [member] | Structured Products [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	2,487	1,597
Corporate Centre [member] | (AAA to AA-) [member] | Legacy Portfolios in Run-Off [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk		2
Corporate Centre [member] | (A + to A) [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	5,431	4,638
Corporate Centre [member] | (A + to A) [member] | Social Housing [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	3,641	2,707
Corporate Centre [member] | (A + to A) [member] | Sovereign And Supranational [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	18
Corporate Centre [member] | (A + to A) [member] | Structured Products [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	1,560	1,755
Corporate Centre [member] | (A + to A) [member] | Derivative Financial Instruments [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	212	175
Corporate Centre [member] | (A + to A) [member] | Legacy Portfolios in Run-Off [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk		1
Corporate Centre [member] | (A -to - BBB+) [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	752	1,519
Corporate Centre [member] | (A -to - BBB+) [member] | Social Housing [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	451	548
Corporate Centre [member] | (A -to - BBB+) [member] | Structured Products [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	300	654
Corporate Centre [member] | (A -to - BBB+) [member] | Derivative Financial Instruments [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk		312
Corporate Centre [member] | (A -to - BBB+) [member] | Legacy Portfolios in Run-Off [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	1	5
Corporate Centre [member] | (BBB to BBB -) [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	434	583
Corporate Centre [member] | (BBB to BBB -) [member] | Social Housing [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	43	43
Corporate Centre [member] | (BBB to BBB -) [member] | Structured Products [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	32
Corporate Centre [member] | (BBB to BBB -) [member] | Legacy Portfolios in Run-Off [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	359	540
Corporate Centre [member] | (BB + to BB - ) [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	104	215
Corporate Centre [member] | (BB + to BB - ) [member] | Legacy Portfolios in Run-Off [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	104	215
Corporate Centre [member] | (B + to B) [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	124	69
Corporate Centre [member] | (B + to B) [member] | Legacy Portfolios in Run-Off [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	124	69
Corporate Centre [member] | (B - to D) [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	37	63
Corporate Centre [member] | (B - to D) [member] | Legacy Portfolios in Run-Off [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	37	63
Corporate Centre [member] | Other [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	400	480
Corporate Centre [member] | Other [member] | Legacy Portfolios in Run-Off [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	£ 400	£ 480

XML

Credit Risk - Summary of Other Segments Exposures by Geographical Distribution (Detail) - GBP (£) £ in Millions	Dec. 31, 2017	Dec. 31, 2016
Social Housing [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	£ 9,250	£ 9,680
Commercial Banking [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	24,510	23,922
Commercial Banking [member] | SME and Mid Corporate [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	12,630	11,328
Commercial Banking [member] | Commercial Real Estate [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	8,606	9,525
Commercial Banking [member] | Social Housing [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	3,274	3,069
Global Corporate Banking [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	32,249	34,488
Global Corporate Banking [member] | Sovereign And Supranational [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	4,355	5,113
Global Corporate Banking [member] | Large Corporate [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	21,439	21,500
Global Corporate Banking [member] | Financial Institutions [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	6,455	7,875
Corporate Centre [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	56,087	46,953
Corporate Centre [member] | Social Housing [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	5,976	6,611
Corporate Centre [member] | Sovereign And Supranational [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	44,495	34,474
Corporate Centre [member] | Structured Products [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	4,379	4,006
Corporate Centre [member] | Derivative Financial Instruments [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	212	487
Corporate Centre [member] | Legacy Portfolios in Run-Off [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	1,025	1,375
UK [member] | Commercial Banking [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	24,393	23,782
UK [member] | Commercial Banking [member] | SME and Mid Corporate [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	12,513	11,188
UK [member] | Commercial Banking [member] | Commercial Real Estate [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	8,606	9,525
UK [member] | Commercial Banking [member] | Social Housing [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	3,274	3,069
UK [member] | Global Corporate Banking [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	20,532	22,407
UK [member] | Global Corporate Banking [member] | Sovereign And Supranational [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk		332
UK [member] | Global Corporate Banking [member] | Large Corporate [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	17,430	17,793
UK [member] | Global Corporate Banking [member] | Financial Institutions [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	3,102	4,282
UK [member] | Corporate Centre [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	44,630	36,173
UK [member] | Corporate Centre [member] | Social Housing [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	5,976	6,611
UK [member] | Corporate Centre [member] | Sovereign And Supranational [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	35,659	26,693
UK [member] | Corporate Centre [member] | Structured Products [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	2,086	1,352
UK [member] | Corporate Centre [member] | Derivative Financial Instruments [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk		312
UK [member] | Corporate Centre [member] | Legacy Portfolios in Run-Off [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	909	1,205
Europe [Member] | Commercial Banking [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	116	83
Europe [Member] | Commercial Banking [member] | SME and Mid Corporate [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	116	83
Europe [Member] | Global Corporate Banking [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	6,852	6,628
Europe [Member] | Global Corporate Banking [member] | Sovereign And Supranational [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	1,032	1,643
Europe [Member] | Global Corporate Banking [member] | Large Corporate [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	3,699	3,356
Europe [Member] | Global Corporate Banking [member] | Financial Institutions [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	2,121	1,629
Europe [Member] | Corporate Centre [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	2,794	3,110
Europe [Member] | Corporate Centre [member] | Sovereign And Supranational [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	1,514	1,569
Europe [Member] | Corporate Centre [member] | Structured Products [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	1,217	1,529
Europe [Member] | Corporate Centre [member] | Derivative Financial Instruments [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	63	12
US [member] | Commercial Banking [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	1	57
US [member] | Commercial Banking [member] | SME and Mid Corporate [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	1	57
US [member] | Global Corporate Banking [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	726	1,248
US [member] | Global Corporate Banking [member] | Sovereign And Supranational [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	1
US [member] | Global Corporate Banking [member] | Large Corporate [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	111	73
US [member] | Global Corporate Banking [member] | Financial Institutions [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	614	1,175
US [member] | Corporate Centre [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	6,240	4,933
US [member] | Corporate Centre [member] | Sovereign And Supranational [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	6,091	4,770
US [member] | Corporate Centre [member] | Derivative Financial Instruments [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	149	163
Rest Of World [member] | Global Corporate Banking [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	4,139	4,205
Rest Of World [member] | Global Corporate Banking [member] | Sovereign And Supranational [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	3,322	3,138
Rest Of World [member] | Global Corporate Banking [member] | Large Corporate [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	199	278
Rest Of World [member] | Global Corporate Banking [member] | Financial Institutions [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	618	789
Rest Of World [member] | Corporate Centre [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	2,423	2,737
Rest Of World [member] | Corporate Centre [member] | Sovereign And Supranational [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	1,231	1,442
Rest Of World [member] | Corporate Centre [member] | Structured Products [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	1,076	1,125
Rest Of World [member] | Corporate Centre [member] | Legacy Portfolios in Run-Off [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	£ 116	£ 170

XML

Credit Risk - Summary of Other Segments Exposures by Credit Performance (Detail) - GBP (£) £ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure of credit risk exposure [line items]
Observed impairment loss allowances	£ 449	£ 338
Social Housing [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	9,250	9,680
Observed Impairment Loss Allowances [Member]
Disclosure of credit risk exposure [line items]
Observed impairment loss allowances	397	247
Allowance for IBNO [Member]
Disclosure of credit risk exposure [line items]
Observed impairment loss allowances	52	91
Commercial Banking [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	24,510	23,922
Observed impairment loss allowances	155	183
Commercial Banking [member] | SME and Mid Corporate [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	12,630	11,328
Observed impairment loss allowances	128	139
Commercial Banking [member] | Commercial Real Estate [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	8,606	9,525
Observed impairment loss allowances	27	44
Commercial Banking [member] | Social Housing [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	3,274	3,069
Commercial Banking [member] | Committed Facilities And Derivatives Exposure [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	24,510	23,922
Commercial Banking [member] | Committed Facilities And Derivatives Exposure [member] | Performing Exposure [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	22,713	21,810
Commercial Banking [member] | Committed Facilities And Derivatives Exposure [member] | Enhanced Monitoring [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	975	1,192
Commercial Banking [member] | Committed Facilities And Derivatives Exposure [member] | Proactive Management [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	429	380
Commercial Banking [member] | Committed Facilities And Derivatives Exposure [member] | Non-Performing Exposure [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	393	540
Commercial Banking [member] | Committed Facilities And Derivatives Exposure [member] | SME and Mid Corporate [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	12,630	11,328
Commercial Banking [member] | Committed Facilities And Derivatives Exposure [member] | SME and Mid Corporate [member] | Performing Exposure [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	11,185	9,744
Commercial Banking [member] | Committed Facilities And Derivatives Exposure [member] | SME and Mid Corporate [member] | Enhanced Monitoring [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	815	892
Commercial Banking [member] | Committed Facilities And Derivatives Exposure [member] | SME and Mid Corporate [member] | Proactive Management [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	296	331
Commercial Banking [member] | Committed Facilities And Derivatives Exposure [member] | SME and Mid Corporate [member] | Non-Performing Exposure [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	334	361
Commercial Banking [member] | Committed Facilities And Derivatives Exposure [member] | Commercial Real Estate [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	8,606	9,525
Commercial Banking [member] | Committed Facilities And Derivatives Exposure [member] | Commercial Real Estate [member] | Performing Exposure [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	8,254	9,136
Commercial Banking [member] | Committed Facilities And Derivatives Exposure [member] | Commercial Real Estate [member] | Enhanced Monitoring [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	160	161
Commercial Banking [member] | Committed Facilities And Derivatives Exposure [member] | Commercial Real Estate [member] | Proactive Management [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	133	49
Commercial Banking [member] | Committed Facilities And Derivatives Exposure [member] | Commercial Real Estate [member] | Non-Performing Exposure [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	59	179
Commercial Banking [member] | Committed Facilities And Derivatives Exposure [member] | Social Housing [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	3,274	3,069
Commercial Banking [member] | Committed Facilities And Derivatives Exposure [member] | Social Housing [member] | Performing Exposure [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	3,274	2,930
Commercial Banking [member] | Committed Facilities And Derivatives Exposure [member] | Social Housing [member] | Enhanced Monitoring [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk		139
Global Corporate Banking [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	32,249	34,488
Observed impairment loss allowances	236	33
Global Corporate Banking [member] | Sovereign And Supranational [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	4,355	5,113
Global Corporate Banking [member] | Large Corporate [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	21,439	21,500
Observed impairment loss allowances	236	33
Global Corporate Banking [member] | Financial Institutions [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	6,455	7,875
Global Corporate Banking [member] | Committed Facilities And Derivatives Exposure [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	32,249	34,488
Global Corporate Banking [member] | Committed Facilities And Derivatives Exposure [member] | Performing Exposure [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	31,466	33,486
Global Corporate Banking [member] | Committed Facilities And Derivatives Exposure [member] | Enhanced Monitoring [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	285	861
Global Corporate Banking [member] | Committed Facilities And Derivatives Exposure [member] | Proactive Management [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	108	72
Global Corporate Banking [member] | Committed Facilities And Derivatives Exposure [member] | Non-Performing Exposure [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	390	69
Global Corporate Banking [member] | Committed Facilities And Derivatives Exposure [member] | Sovereign And Supranational [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	4,355	5,113
Global Corporate Banking [member] | Committed Facilities And Derivatives Exposure [member] | Sovereign And Supranational [member] | Performing Exposure [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	4,355	5,113
Global Corporate Banking [member] | Committed Facilities And Derivatives Exposure [member] | Large Corporate [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	21,439	21,500
Global Corporate Banking [member] | Committed Facilities And Derivatives Exposure [member] | Large Corporate [member] | Performing Exposure [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	20,757	20,702
Global Corporate Banking [member] | Committed Facilities And Derivatives Exposure [member] | Large Corporate [member] | Enhanced Monitoring [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	284	659
Global Corporate Banking [member] | Committed Facilities And Derivatives Exposure [member] | Large Corporate [member] | Proactive Management [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	8	70
Global Corporate Banking [member] | Committed Facilities And Derivatives Exposure [member] | Large Corporate [member] | Non-Performing Exposure [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	390	69
Global Corporate Banking [member] | Committed Facilities And Derivatives Exposure [member] | Financial Institutions [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	6,455	7,875
Global Corporate Banking [member] | Committed Facilities And Derivatives Exposure [member] | Financial Institutions [member] | Performing Exposure [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	6,354	7,671
Global Corporate Banking [member] | Committed Facilities And Derivatives Exposure [member] | Financial Institutions [member] | Enhanced Monitoring [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	1	202
Global Corporate Banking [member] | Committed Facilities And Derivatives Exposure [member] | Financial Institutions [member] | Proactive Management [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	100	2
Corporate Centre [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	56,087	46,953
Observed impairment loss allowances	6	31
Corporate Centre [member] | Social Housing [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	5,976	6,611
Corporate Centre [member] | Sovereign And Supranational [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	44,495	34,474
Corporate Centre [member] | Structured Products [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	4,379	4,006
Corporate Centre [member] | Derivative Financial Instruments [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	212	487
Corporate Centre [member] | Legacy Portfolios in Run-Off [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	1,025	1,375
Observed impairment loss allowances	6	31
Corporate Centre [member] | Committed Facilities And Derivatives Exposure [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	56,087	46,953
Corporate Centre [member] | Committed Facilities And Derivatives Exposure [member] | Performing Exposure [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	56,035	46,687
Corporate Centre [member] | Committed Facilities And Derivatives Exposure [member] | Enhanced Monitoring [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	26	184
Corporate Centre [member] | Committed Facilities And Derivatives Exposure [member] | Proactive Management [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	6	9
Corporate Centre [member] | Committed Facilities And Derivatives Exposure [member] | Non-Performing Exposure [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	20	73
Corporate Centre [member] | Committed Facilities And Derivatives Exposure [member] | Social Housing [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	5,976	6,611
Corporate Centre [member] | Committed Facilities And Derivatives Exposure [member] | Social Housing [member] | Performing Exposure [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	5,972	6,447
Corporate Centre [member] | Committed Facilities And Derivatives Exposure [member] | Social Housing [member] | Enhanced Monitoring [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	4	164
Corporate Centre [member] | Committed Facilities And Derivatives Exposure [member] | Sovereign And Supranational [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	44,495	34,474
Corporate Centre [member] | Committed Facilities And Derivatives Exposure [member] | Sovereign And Supranational [member] | Performing Exposure [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	44,495	34,474
Corporate Centre [member] | Committed Facilities And Derivatives Exposure [member] | Structured Products [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	4,379	4,006
Corporate Centre [member] | Committed Facilities And Derivatives Exposure [member] | Structured Products [member] | Performing Exposure [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	4,379	4,006
Corporate Centre [member] | Committed Facilities And Derivatives Exposure [member] | Derivative Financial Instruments [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	212	487
Corporate Centre [member] | Committed Facilities And Derivatives Exposure [member] | Derivative Financial Instruments [member] | Performing Exposure [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	212	487
Corporate Centre [member] | Committed Facilities And Derivatives Exposure [member] | Legacy Portfolios in Run-Off [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	1,025	1,375
Corporate Centre [member] | Committed Facilities And Derivatives Exposure [member] | Legacy Portfolios in Run-Off [member] | Performing Exposure [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	977	1,273
Corporate Centre [member] | Committed Facilities And Derivatives Exposure [member] | Legacy Portfolios in Run-Off [member] | Enhanced Monitoring [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	22	20
Corporate Centre [member] | Committed Facilities And Derivatives Exposure [member] | Legacy Portfolios in Run-Off [member] | Proactive Management [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	6	9
Corporate Centre [member] | Committed Facilities And Derivatives Exposure [member] | Legacy Portfolios in Run-Off [member] | Non-Performing Exposure [member]
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	£ 20	£ 73

XML

Credit Risk - Summary of Other Segments Non Performing Loans and Advances (Detail) - GBP (£) £ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of credit risk exposure [line items]
Loans and advances to customers of which:	£ 199,490	£ 199,738
NPLs	1,868	2,110
Impairment loss allowances	£ 940	£ 921	£ 1,108
NPL ratio	1.21%	1.37%
Bottom of Range [member]
Disclosure of credit risk exposure [line items]
Coverage ratio	100.00%
Credit Risk [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers of which:	£ 12,135	£ 12,037
NPL ratio	1.00%	1.01%
Coverage ratio	174.00%	258.00%
Credit Risk [member] | Commercial Banking [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers of which:	£ 19,391	£ 19,381
NPLs	383	518
Impairment loss allowances	£ 195	£ 220
NPL ratio	1.98%	2.67%
Coverage ratio	51.00%	42.00%
Credit Risk [member] | Global Corporate Banking [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers of which:	£ 6,037	£ 5,659
NPLs	340	63
Impairment loss allowances	£ 236	£ 57
NPL ratio	5.63%	1.11%
Coverage ratio	69.00%	90.00%
Credit Risk [member] | Corporate Centre [member]
Disclosure of credit risk exposure [line items]
Loans and advances to customers of which:	£ 5,905	£ 6,478
NPLs	20	73
Impairment loss allowances	£ 18	£ 61
NPL ratio	0.34%	1.12%
Coverage ratio	90.00%	84.00%

XML

Credit Risk - Summary of Other Segments by Forbearance Applied (Detail) - GBP (£) £ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure Of Forbearance [Line Items]
Term extension	£ 241	£ 300
Interest-only	582	707
Other payment rescheduling	652	759
Loans forbearance	1,475	1,766
Performing [member]
Disclosure Of Forbearance [Line Items]
Term extension	178	222
Interest-only	407	481
Other payment rescheduling	392	466
Loans forbearance	977	1,169
Commercial Banking [member]
Disclosure Of Forbearance [Line Items]
Term extension	136	168
Interest-only	152	158
Other payment rescheduling	127	208
Loans forbearance	£ 415	£ 534
Proportion of portfolio	1.70%	2.20%
Commercial Banking [member] | Non-Performing [member]
Disclosure Of Forbearance [Line Items]
Loans forbearance	£ 273	£ 344
Commercial Banking [member] | Performing [member]
Disclosure Of Forbearance [Line Items]
Loans forbearance	142	190
Global Corporate Banking [member]
Disclosure Of Forbearance [Line Items]
Term extension	55	11
Other payment rescheduling	299	10
Loans forbearance	£ 354	£ 21
Proportion of portfolio	1.10%	0.10%
Global Corporate Banking [member] | Non-Performing [member]
Disclosure Of Forbearance [Line Items]
Loans forbearance	£ 347	£ 10
Global Corporate Banking [member] | Performing [member]
Disclosure Of Forbearance [Line Items]
Loans forbearance	7	11
Corporate Centre [member]
Disclosure Of Forbearance [Line Items]
Term extension		1
Interest-only	14	20
Other payment rescheduling	13	16
Loans forbearance	£ 27	£ 37
Proportion of portfolio	2.60%	2.70%
Corporate Centre [member] | Non-Performing [member]
Disclosure Of Forbearance [Line Items]
Loans forbearance	£ 11	£ 15
Corporate Centre [member] | Performing [member]
Disclosure Of Forbearance [Line Items]
Loans forbearance	£ 16	£ 22

XML

Credit Risk - Summary of Commercial Real Estate by Credit Performance (Detail) - GBP (£) £ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure of performance obligations [line items]
Customer loans	£ 199,490	£ 199,738
NPLs	1,868	2,110
Commercial Banking Segment [member]
Disclosure of performance obligations [line items]
Customer loans	8,100	9,000
NPLs	£ 69	£ 180
NPL ratio %	0.85%	2.00%
NPL coverage %	78.00%	32.00%
Gross write-offs	£ 11	£ 1
Impairment loss allowances	£ 54	£ 58

XML

Credit Risk - Summary of Commercial Real Estate by Credit Performance (Parenthetical) (Detail) - GBP (£) £ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure of performance obligations [line items]
IBNO provision flexible limit range	100.00%
Commercial Banking Segment [member]
Disclosure of performance obligations [line items]
Consumer loans	£ 7,886	£ 8,678
Retail Banking Segment [member]
Disclosure of performance obligations [line items]
Consumer loans	£ 257	£ 365

XML

Credit Risk - Summary of Commercial Real Estate by Loan to Value (Detail) - GBP (£) £ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure Of Loan To Value [Line Items]
Loans and advances to customers	£ 199,490	£ 199,738
NPLs	£ 1,868	£ 2,110
Non performing loans ratio	1.21%	1.37%
Commercial Real Estate [member]
Disclosure Of Loan To Value [Line Items]
Loans and advances to customers	£ 8,144	£ 9,043
Percentage of loan to value	100.00%	100.00%
NPLs	£ 69	£ 180
Non performing loans ratio	100.00%	100.00%
Commercial Real Estate [member] | Less Than Or Equal To Fifty Percentage [Member]
Disclosure Of Loan To Value [Line Items]
Loans and advances to customers	£ 4,146	£ 3,879
Percentage of loan to value	51.00%	44.00%
NPLs	£ 6	£ 7
Non performing loans ratio	9.00%	4.00%
Commercial Real Estate [member] | Greater than fifty percentage to seventy percentage [member]
Disclosure Of Loan To Value [Line Items]
Loans and advances to customers	£ 3,035	£ 4,007
Percentage of loan to value	37.00%	44.00%
NPLs	£ 2	£ 2
Non performing loans ratio	3.00%	1.00%
Commercial Real Estate [member] | Greater Than 70-100% [member]
Disclosure Of Loan To Value [Line Items]
Loans and advances to customers	£ 36	£ 194
Percentage of loan to value		2.00%
NPLs	£ 1	£ 74
Non performing loans ratio	1.00%	41.00%
Commercial Real Estate [member] | Greater Than 100% [member]
Disclosure Of Loan To Value [Line Items]
Loans and advances to customers	£ 52	£ 88
Percentage of loan to value	1.00%	1.00%
NPLs	£ 48	£ 74
Non performing loans ratio	70.00%	41.00%
Commercial Real Estate [member] | Standardised Portfolio [member]
Disclosure Of Loan To Value [Line Items]
Loans and advances to customers	£ 629	£ 652
Percentage of loan to value	8.00%	7.00%
NPLs	£ 12	£ 5
Non performing loans ratio	17.00%	3.00%
Commercial Real Estate [member] | Total With Collateral [member]
Disclosure Of Loan To Value [Line Items]
Loans and advances to customers	£ 7,898	£ 8,820
Percentage of loan to value	97.00%	98.00%
NPLs	£ 69	£ 162
Non performing loans ratio	100.00%	90.00%
Commercial Real Estate [member] | Development Loans [member]
Disclosure Of Loan To Value [Line Items]
Loans and advances to customers	£ 246	£ 223
Percentage of loan to value	3.00%	2.00%
NPLs		£ 18
Non performing loans ratio		10.00%

XML

Credit Risk - Summary of Commercial Real Estate by Sector (Detail) - GBP (£) £ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure Of Loans And Advances By Industry Sector [Line Items]
Loans and advances to customers	£ 199,490	£ 199,738
Commercial Real Estate [member]
Disclosure Of Loans And Advances By Industry Sector [Line Items]
Loans and advances to customers	£ 8,144	£ 9,043
Percentage of loan to value	100.00%	100.00%
Commercial Real Estate [member] | Office [member]
Disclosure Of Loans And Advances By Industry Sector [Line Items]
Loans and advances to customers	£ 2,181	£ 2,359
Percentage of loan to value	27.00%	26.00%
Commercial Real Estate [member] | Retail [member]
Disclosure Of Loans And Advances By Industry Sector [Line Items]
Loans and advances to customers	£ 1,389	£ 1,739
Percentage of loan to value	17.00%	19.00%
Commercial Real Estate [member] | Industrial [member]
Disclosure Of Loans And Advances By Industry Sector [Line Items]
Loans and advances to customers	£ 1,176	£ 1,274
Percentage of loan to value	14.00%	14.00%
Commercial Real Estate [member] | Residential [member]
Disclosure Of Loans And Advances By Industry Sector [Line Items]
Loans and advances to customers	£ 1,001	£ 1,016
Percentage of loan to value	12.00%	11.00%
Commercial Real Estate [member] | Mixed Use [member]
Disclosure Of Loans And Advances By Industry Sector [Line Items]
Loans and advances to customers	£ 1,146	£ 1,184
Percentage of loan to value	14.00%	13.00%
Commercial Real Estate [member] | Student Accommodation [member]
Disclosure Of Loans And Advances By Industry Sector [Line Items]
Loans and advances to customers	£ 133	£ 224
Percentage of loan to value	2.00%	3.00%
Commercial Real Estate [member] | Hotels and Leisure [member]
Disclosure Of Loans And Advances By Industry Sector [Line Items]
Loans and advances to customers	£ 304	£ 389
Percentage of loan to value	4.00%	5.00%
Commercial Real Estate [member] | Other [member]
Disclosure Of Loans And Advances By Industry Sector [Line Items]
Loans and advances to customers	£ 185	£ 206
Percentage of loan to value	2.00%	2.00%
Commercial Real Estate [member] | Standardised Portfolio [member]
Disclosure Of Loans And Advances By Industry Sector [Line Items]
Loans and advances to customers	£ 629	£ 652
Percentage of loan to value	8.00%	7.00%

XML

Credit Risk - Summary of Social Housing Exposure (Detail) - GBP (£) £ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure Of Social Housing Exposure [Line Items]
Drawn	£ 199,490	£ 199,738
Commercial Banking [member]
Disclosure Of Social Housing Exposure [Line Items]
Total	24,510	23,922
Corporate Centre [member]
Disclosure Of Social Housing Exposure [Line Items]
Total	56,087	46,953
Social Housing [member]
Disclosure Of Social Housing Exposure [Line Items]
Drawn	7,178	7,339
Total	9,250	9,680
Social Housing [member] | Commercial Banking [member]
Disclosure Of Social Housing Exposure [Line Items]
Drawn	2,118	1,897
Total	3,274	3,069
Social Housing [member] | Corporate Centre [member]
Disclosure Of Social Housing Exposure [Line Items]
Drawn	5,060	5,442
Total	£ 5,976	£ 6,611

XML

Market Risk - Summary of Balance Sheet Allocation by Market Risk Classification (Detail) - GBP (£) £ in Millions	Dec. 31, 2017	Dec. 31, 2016		Dec. 31, 2015
Market Risk [Line Items]
Cash and balances at central banks	£ 32,771	£ 17,107		£ 16,842
Trading assets	30,555	30,035
Derivative financial instruments	19,942	25,471
Financial assets designated at fair value	2,096	2,140
Loans and advances to banks	5,927	4,348
Loans and advances to customers	199,490	199,738
Financial investments	17,611	17,466
Retirement benefit assets	449	398
Total assets	314,765	302,511	[1]	280,775
Deposits by banks	13,784	9,769
Deposits by customers	183,648	177,172
Trading liabilities	31,109	15,560
Derivative financial instruments	17,613	23,103
Financial liabilities designated at fair value	2,315	2,440
Debt securities in issue	42,633	50,346
Subordinated liabilities	3,793	4,303
Retirement benefit obligations	286	262
Total liabilities	298,560	287,058		£ 265,747
Trading Market Risk [member]
Market Risk [Line Items]
Trading assets	30,555	30,035
Derivative financial instruments	14,744	18,101
Financial assets designated at fair value		516
Total assets	45,299	48,652
Trading liabilities	31,109	15,560
Derivative financial instruments	16,891	20,018
Financial liabilities designated at fair value	1,612	1,665
Total liabilities	49,612	37,243
Banking Market Risk [member]
Market Risk [Line Items]
Cash and balances at central banks	32,771	17,107
Derivative financial instruments	5,198	7,370
Financial assets designated at fair value	2,096	1,624
Loans and advances to banks	5,927	4,348
Loans and advances to customers	199,490	199,738
Financial investments	17,611	17,466
Macro hedge of interest rate risk(1)	833	1,098
Retirement benefit assets	449	398
Total assets	264,375	249,149
Deposits by banks	13,784	9,769
Deposits by customers	183,648	177,172
Derivative financial instruments	722	3,085
Financial liabilities designated at fair value	703	775
Debt securities in issue	42,633	50,346
Subordinated liabilities	3,793	4,303
Macro hedge of interest rate risk(2)		350
Retirement benefit obligations	286	262
Total liabilities	245,569	246,062
Market Risk [member]
Market Risk [Line Items]
Cash and balances at central banks	32,771	17,107
Trading assets	30,555	30,035
Derivative financial instruments	19,942	25,471
Financial assets designated at fair value	2,096	2,140
Loans and advances to banks	5,927	4,348
Loans and advances to customers	199,490	199,738
Financial investments	17,611	17,466
Macro hedge of interest rate risk(1)	833	1,098
Retirement benefit assets	449	398
Total assets	309,674	297,801
Deposits by banks	13,784	9,769
Deposits by customers	183,648	177,172
Trading liabilities	31,109	15,560
Derivative financial instruments	17,613	23,103
Financial liabilities designated at fair value	2,315	2,440
Debt securities in issue	42,633	50,346
Subordinated liabilities	3,793	4,303
Macro hedge of interest rate risk(2)		350
Retirement benefit obligations	286	262
Total liabilities	£ 295,181	£ 283,305

[1] Restated to reflect the change in accounting policy relating to business combinations between entities under common control, as described in Note 1.

XML

Market Risk - Summary of Balance Sheet Allocation by Market Risk Classification (Parenthetical) (Detail) - GBP (£) £ in Millions	Dec. 31, 2017	Dec. 31, 2016
Other Liabilities [member]
Market Risk [Line Items]
Macro hedge of interest rate risk including other liabilities	£ 2,730	£ 3,221
Other [member]
Market Risk [Line Items]
Macro hedge of interest rate risk including other assets	£ 2,511	£ 2,571

XML

Market Risk - Summary of Internal VaR for Exposure to Main Classes of Risk (Detail) - GBP (£) £ in Millions	Dec. 31, 2017	Dec. 31, 2016
Market Risk [Line Items]
Risk exposure	£ 2.5	£ 3.5
Interest Rate Risks [member]
Market Risk [Line Items]
Risk exposure	2.6	2.9
Equity Risks [member]
Market Risk [Line Items]
Risk exposure	0.3	1.4
Currency Risk [member]
Market Risk [Line Items]
Risk exposure	0.3	1.5
Diversification Offsets [member]
Market Risk [Line Items]
Risk exposure	(0.7)	(2.3)
Weighted average [member]
Market Risk [Line Items]
Risk exposure	2.7	2.8
Weighted average [member] | Interest Rate Risks [member]
Market Risk [Line Items]
Risk exposure	2.5	2.5
Weighted average [member] | Equity Risks [member]
Market Risk [Line Items]
Risk exposure	0.6	0.9
Weighted average [member] | Currency Risk [member]
Market Risk [Line Items]
Risk exposure	0.4	1.4
Weighted average [member] | Diversification Offsets [member]
Market Risk [Line Items]
Risk exposure	(0.8)	(2.0)
Top of Range [member]
Market Risk [Line Items]
Risk exposure	3.7	3.6
Top of Range [member] | Interest Rate Risks [member]
Market Risk [Line Items]
Risk exposure	3.5	3.6
Top of Range [member] | Equity Risks [member]
Market Risk [Line Items]
Risk exposure	2.0	1.5
Top of Range [member] | Currency Risk [member]
Market Risk [Line Items]
Risk exposure	1.6	2.2
Bottom of Range [member]
Market Risk [Line Items]
Risk exposure	2.0	1.7
Bottom of Range [member] | Interest Rate Risks [member]
Market Risk [Line Items]
Risk exposure	1.8	1.7
Bottom of Range [member] | Equity Risks [member]
Market Risk [Line Items]
Risk exposure	£ 0.2	0.6
Bottom of Range [member] | Currency Risk [member]
Market Risk [Line Items]
Risk exposure		£ 0.1

XML

Market Risk - Summary of NIM and EVE Sensitivity of Interest Rate Risk (Detail) - GBP (£) £ in Millions	Dec. 31, 2017	Dec. 31, 2016
+50bps [member]
Disclosure Of Sensitivity Limit Of Risk [Line Items]
NIM sensitivity	£ 212	£ 240
EVE sensitivity (unaudited)	95	54
-50bps [member]
Disclosure Of Sensitivity Limit Of Risk [Line Items]
NIM sensitivity	(125)	(82)
EVE sensitivity (unaudited)	£ (213)	£ (30)

XML

Market Risk - Summary of NIM and EVE Sensitivity of Interest Rate Risk (Parenthetical) (Detail)	Dec. 31, 2017	Dec. 31, 2016
+50bps [member]
Disclosure Of Sensitivity Limit Of Risk [Line Items]
Shift in basis point	0.50%	0.50%
-50bps [member]
Disclosure Of Sensitivity Limit Of Risk [Line Items]
Shift in basis point	0.50%	0.50%

XML

Liquidity Risk - Summary of Reconciliation of Wholesale Funding to Balance Sheet (Detail) - GBP (£) £ in Millions	Dec. 31, 2017	Dec. 31, 2016
Reconciliation Of Wholesale Funding To Balance Sheet [Line Items]
Deposits by banks	£ 13,784	£ 9,769
Deposits by customers	183,648	177,172
Trading liabilities	31,109	15,560
Financial liabilities at fair value	2,315	2,440
Debt securities in issue	42,633	50,346
Subordinated liabilities	3,793	4,303
Liquidity risk [member]
Reconciliation Of Wholesale Funding To Balance Sheet [Line Items]
Funding analysis	102,700	89,200
Deposits by banks	13,800	9,800
Deposits by customers	6,800	5,000
Trading liabilities	31,100	15,600
Financial liabilities at fair value	2,300	2,400
Debt securities in issue	42,600	50,300
Subordinated liabilities	3,800	4,300
Other equity and non-controlling interests	2,300	1,800
Liquidity risk [member] | Repurchase Agreement [member]
Reconciliation Of Wholesale Funding To Balance Sheet [Line Items]
Funding analysis	25,600	8,800
Deposits by banks	100
Trading liabilities	25,500	8,800
Liquidity risk [member] | Foreign Exchange And Hedge Accounting [member]
Reconciliation Of Wholesale Funding To Balance Sheet [Line Items]
Funding analysis	3,900	5,400
Deposits by customers	300	400
Debt securities in issue	3,000	4,100
Subordinated liabilities	600	900
Liquidity risk [member] | Other Borrowing [Member]
Reconciliation Of Wholesale Funding To Balance Sheet [Line Items]
Funding analysis	10,300	9,800
Deposits by banks	4,000	2,900
Trading liabilities	5,600	6,400
Financial liabilities at fair value	700	500
Liquidity risk [member] | Wholesale Funding [member]
Reconciliation Of Wholesale Funding To Balance Sheet [Line Items]
Funding analysis	62,900	65,200
Deposits by banks	9,700	6,900
Deposits by customers	6,500	4,600
Trading liabilities		400
Financial liabilities at fair value	1,600	1,900
Debt securities in issue	39,600	46,200
Subordinated liabilities	3,200	3,400
Other equity and non-controlling interests	2,300	1,800
Liquidity risk [member] | Wholesale Funding [member] | Deposits by Banks [member]
Reconciliation Of Wholesale Funding To Balance Sheet [Line Items]
Funding analysis	300	700
Deposits by banks	200	300
Trading liabilities		400
Financial liabilities at fair value	100
Liquidity risk [member] | Wholesale Funding [member] | Certificates of Deposit and Commercial Paper [member]
Reconciliation Of Wholesale Funding To Balance Sheet [Line Items]
Funding analysis	8,000	8,400
Financial liabilities at fair value	400	500
Debt securities in issue	7,600	7,900
Liquidity risk [member] | Wholesale Funding [member] | Senior Unsecured - Public Benchmark [member]
Reconciliation Of Wholesale Funding To Balance Sheet [Line Items]
Funding analysis	17,800	16,700
Deposits by customers	6,000	4,100
Debt securities in issue	11,800	12,600
Liquidity risk [member] | Wholesale Funding [member] | Senior Unsecured - Privately Placed [member]
Reconciliation Of Wholesale Funding To Balance Sheet [Line Items]
Funding analysis	3,100	4,900
Financial liabilities at fair value	1,100	1,400
Debt securities in issue	2,000	3,500
Liquidity risk [member] | Wholesale Funding [member] | Covered Bonds [member]
Reconciliation Of Wholesale Funding To Balance Sheet [Line Items]
Funding analysis	14,200	15,200
Debt securities in issue	14,200	15,200
Liquidity risk [member] | Wholesale Funding [member] | Securitisation and Structured Issuance [member]
Reconciliation Of Wholesale Funding To Balance Sheet [Line Items]
Funding analysis	5,500	9,600
Deposits by banks	1,000	2,100
Deposits by customers	500	500
Debt securities in issue	4,000	7,000
Liquidity risk [member] | Wholesale Funding [member] | Term Funding Scheme [member]
Reconciliation Of Wholesale Funding To Balance Sheet [Line Items]
Funding analysis	8,500	4,500
Deposits by banks	8,500	4,500
Liquidity risk [member] | Wholesale Funding [member] | Subordinated Liabilities and Equity [member]
Reconciliation Of Wholesale Funding To Balance Sheet [Line Items]
Funding analysis	5,500	5,200
Subordinated liabilities	3,200	3,400
Other equity and non-controlling interests	£ 2,300	£ 1,800

XML

Liquidity Risk - Summary of Reconciliation of Wholesale Funding to Balance Sheet (Parenthetical) (Detail) - GBP (£) £ in Millions	Dec. 31, 2017	Dec. 31, 2016
Reconciliation Of Wholesale Funding To Balance Sheet [Line Items]
Deposit from customers	£ 183,648	£ 177,172
Other equity and non-controlling interests	2,281	1,785
Liquidity risk [member]
Reconciliation Of Wholesale Funding To Balance Sheet [Line Items]
Deposit from customers	6,800	5,000
Fixed/Floating Rate Non-Cumulative Callable Preference Shares [member] | Liquidity risk [member]
Reconciliation Of Wholesale Funding To Balance Sheet [Line Items]
Other equity and non-controlling interests	14	14
Step-Up Callable Perpetual Reserve Capital Instruments [member] | Liquidity risk [member]
Reconciliation Of Wholesale Funding To Balance Sheet [Line Items]
Other equity and non-controlling interests	235	235
Perpetual Capital Securities [member] | Liquidity risk [member]
Reconciliation Of Wholesale Funding To Balance Sheet [Line Items]
Other equity and non-controlling interests	£ 2,046	£ 1,550

XML

Liquidity Risk - Summary of Sources of Wholesale Funding by Maturity (Detail) - GBP (£) £ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of Maturity of Wholesale Funding [Line Items]
Deposits by banks	£ 13,784	£ 9,769
Subordinated liabilities	3,793	4,303
Wholesale fund amount	62,900	65,200
Of which: - secured	28,200	29,300
Of which: - unsecured	34,700	35,900
Downstreamed From Santander UK Group Holdings Plc to Santander UK Plc [member]
Disclosure of Maturity of Wholesale Funding [Line Items]
Senior unsecured - public benchmark	5,900	4,000
Senior unsecured - privately placed	100	100
Subordinated liabilities and equity (incl. AT1)	3,000	2,500
Wholesale fund amount	9,000	6,600
Other Santander UK Plc [member]
Disclosure of Maturity of Wholesale Funding [Line Items]
Deposits by banks	100	100
Certificates of deposit and commercial paper	1,600
Senior unsecured - public benchmark	11,900	12,700
Senior unsecured - privately placed	3,000	3,700
Covered bonds	14,200	15,200
Securitisation and structured issuance	3,200	7,100
Term Funding Scheme	8,500	4,500
Subordinated liabilities	2,500	2,700
Wholesale fund amount	45,000	46,000
Other Group Entities [member]
Disclosure of Maturity of Wholesale Funding [Line Items]
Deposits by banks	200	600
Certificates of deposit and commercial paper	6,400	8,400
Senior unsecured - privately placed		1,100
Securitisation and structured issuance	2,300	2,500
Wholesale fund amount	8,900	12,600
Not Later Than One Month [member]
Disclosure of Maturity of Wholesale Funding [Line Items]
Wholesale fund amount	4,800	6,500
Of which: - secured	900	2,100
Of which: - unsecured	3,900	4,400
Not Later Than One Month [member] | Other Santander UK Plc [member]
Disclosure of Maturity of Wholesale Funding [Line Items]
Deposits by banks		100
Certificates of deposit and commercial paper	200
Senior unsecured - public benchmark	800
Senior unsecured - privately placed		900
Covered bonds	900	1,000
Securitisation and structured issuance		800
Subordinated liabilities	100	100
Wholesale fund amount	2,000	2,900
Not Later Than One Month [member] | Other Group Entities [member]
Disclosure of Maturity of Wholesale Funding [Line Items]
Deposits by banks	100	400
Certificates of deposit and commercial paper	2,700	2,900
Securitisation and structured issuance		300
Wholesale fund amount	2,800	3,600
Greater Than 1 and Less Than 3 Months [member]
Disclosure of Maturity of Wholesale Funding [Line Items]
Wholesale fund amount	3,900	4,600
Of which: - secured		600
Of which: - unsecured	3,900	4,000
Greater Than 1 and Less Than 3 Months [member] | Other Santander UK Plc [member]
Disclosure of Maturity of Wholesale Funding [Line Items]
Deposits by banks	100
Certificates of deposit and commercial paper	600
Senior unsecured - public benchmark		900
Senior unsecured - privately placed	700
Securitisation and structured issuance		300
Wholesale fund amount	1,400	1,200
Greater Than 1 and Less Than 3 Months [member] | Other Group Entities [member]
Disclosure of Maturity of Wholesale Funding [Line Items]
Deposits by banks	100
Certificates of deposit and commercial paper	2,400	3,100
Securitisation and structured issuance		300
Wholesale fund amount	2,500	3,400
Greater Than 3 and Less Than 6 Months [member]
Disclosure of Maturity of Wholesale Funding [Line Items]
Wholesale fund amount	3,300	3,400
Of which: - secured	1,400	2,100
Of which: - unsecured	1,900	1,300
Greater Than 3 and Less Than 6 Months [member] | Other Santander UK Plc [member]
Disclosure of Maturity of Wholesale Funding [Line Items]
Certificates of deposit and commercial paper	600
Covered bonds	1,000	800
Securitisation and structured issuance	400	1,100
Wholesale fund amount	2,000	1,900
Greater Than 3 and Less Than 6 Months [member] | Other Group Entities [member]
Disclosure of Maturity of Wholesale Funding [Line Items]
Certificates of deposit and commercial paper	1,300	1,300
Securitisation and structured issuance		200
Wholesale fund amount	1,300	1,500
Greater Than 6 and Less Than 9 Months [member]
Disclosure of Maturity of Wholesale Funding [Line Items]
Wholesale fund amount	1,400	3,800
Of which: - secured		1,600
Of which: - unsecured	1,400	2,200
Greater Than 6 and Less Than 9 Months [member] | Other Santander UK Plc [member]
Disclosure of Maturity of Wholesale Funding [Line Items]
Certificates of deposit and commercial paper	100
Senior unsecured - public benchmark	1,300	900
Senior unsecured - privately placed		400
Securitisation and structured issuance		1,400
Wholesale fund amount	1,400	2,700
Greater Than 6 and Less Than 9 Months [member] | Other Group Entities [member]
Disclosure of Maturity of Wholesale Funding [Line Items]
Deposits by banks		200
Certificates of deposit and commercial paper		700
Securitisation and structured issuance		200
Wholesale fund amount		1,100
Greater Than 9 and Less Than 12 Months [member]
Disclosure of Maturity of Wholesale Funding [Line Items]
Wholesale fund amount	1,500	3,100
Of which: - secured	1,300	2,500
Of which: - unsecured	200	600
Greater Than 9 and Less Than 12 Months [member] | Other Santander UK Plc [member]
Disclosure of Maturity of Wholesale Funding [Line Items]
Certificates of deposit and commercial paper	100
Senior unsecured - privately placed		200
Covered bonds		1,400
Securitisation and structured issuance	900	900
Subordinated liabilities	100
Wholesale fund amount	1,100	2,500
Greater Than 9 and Less Than 12 Months [member] | Other Group Entities [member]
Disclosure of Maturity of Wholesale Funding [Line Items]
Certificates of deposit and commercial paper		400
Securitisation and structured issuance	400	200
Wholesale fund amount	400	600
Not Later Than 1 Year [member]
Disclosure of Maturity of Wholesale Funding [Line Items]
Wholesale fund amount	14,900	21,400
Of which: - secured	3,600	8,900
Of which: - unsecured	11,300	12,500
Not Later Than 1 Year [member] | Other Santander UK Plc [member]
Disclosure of Maturity of Wholesale Funding [Line Items]
Deposits by banks	100	100
Certificates of deposit and commercial paper	1,600
Senior unsecured - public benchmark	2,100	1,800
Senior unsecured - privately placed	700	1,500
Covered bonds	1,900	3,200
Securitisation and structured issuance	1,300	4,500
Subordinated liabilities	200	100
Wholesale fund amount	7,900	11,200
Not Later Than 1 Year [member] | Other Group Entities [member]
Disclosure of Maturity of Wholesale Funding [Line Items]
Deposits by banks	200	600
Certificates of deposit and commercial paper	6,400	8,400
Securitisation and structured issuance	400	1,200
Wholesale fund amount	7,000	10,200
Later Than 1 Year and Not Later Than 2 Years [member]
Disclosure of Maturity of Wholesale Funding [Line Items]
Wholesale fund amount	7,900	7,000
Of which: - secured	2,900	4,000
Of which: - unsecured	5,000	3,000
Later Than 1 Year and Not Later Than 2 Years [member] | Downstreamed From Santander UK Group Holdings Plc to Santander UK Plc [member]
Disclosure of Maturity of Wholesale Funding [Line Items]
Subordinated liabilities and equity (incl. AT1)	800
Wholesale fund amount	800
Later Than 1 Year and Not Later Than 2 Years [member] | Other Santander UK Plc [member]
Disclosure of Maturity of Wholesale Funding [Line Items]
Senior unsecured - public benchmark	2,900	2,100
Senior unsecured - privately placed	1,300	600
Covered bonds	1,300	1,800
Securitisation and structured issuance	600	1,300
Subordinated liabilities		200
Wholesale fund amount	6,100	6,000
Later Than 1 Year and Not Later Than 2 Years [member] | Other Group Entities [member]
Disclosure of Maturity of Wholesale Funding [Line Items]
Senior unsecured - privately placed		100
Securitisation and structured issuance	1,000	900
Wholesale fund amount	1,000	1,000
Later Than 2 Year and Not Later Than 5 Years [member]
Disclosure of Maturity of Wholesale Funding [Line Items]
Wholesale fund amount	28,900	24,000
Of which: - secured	18,300	11,700
Of which: - unsecured	10,600	12,300
Later Than 2 Year and Not Later Than 5 Years [member] | Downstreamed From Santander UK Group Holdings Plc to Santander UK Plc [member]
Disclosure of Maturity of Wholesale Funding [Line Items]
Senior unsecured - public benchmark	3,800	2,700
Subordinated liabilities and equity (incl. AT1)	800	800
Wholesale fund amount	4,600	3,500
Later Than 2 Year and Not Later Than 5 Years [member] | Other Santander UK Plc [member]
Disclosure of Maturity of Wholesale Funding [Line Items]
Senior unsecured - public benchmark	5,400	6,700
Senior unsecured - privately placed	600	1,400
Covered bonds	7,700	6,100
Securitisation and structured issuance	1,200	700
Term Funding Scheme	8,500	4,500
Subordinated liabilities		200
Wholesale fund amount	23,400	19,600
Later Than 2 Year and Not Later Than 5 Years [member] | Other Group Entities [member]
Disclosure of Maturity of Wholesale Funding [Line Items]
Senior unsecured - privately placed		500
Securitisation and structured issuance	900	400
Wholesale fund amount	900	900
In More Than 5 Years [member]
Disclosure of Maturity of Wholesale Funding [Line Items]
Wholesale fund amount	11,200	12,800
Of which: - secured	3,400	4,700
Of which: - unsecured	7,800	8,100
In More Than 5 Years [member] | Downstreamed From Santander UK Group Holdings Plc to Santander UK Plc [member]
Disclosure of Maturity of Wholesale Funding [Line Items]
Senior unsecured - public benchmark	2,100	1,300
Senior unsecured - privately placed	100	100
Subordinated liabilities and equity (incl. AT1)	1,400	1,700
Wholesale fund amount	3,600	3,100
In More Than 5 Years [member] | Other Santander UK Plc [member]
Disclosure of Maturity of Wholesale Funding [Line Items]
Senior unsecured - public benchmark	1,500	2,100
Senior unsecured - privately placed	400	200
Covered bonds	3,300	4,100
Securitisation and structured issuance	100	600
Subordinated liabilities	2,300	2,200
Wholesale fund amount	£ 7,600	9,200
In More Than 5 Years [member] | Other Group Entities [member]
Disclosure of Maturity of Wholesale Funding [Line Items]
Senior unsecured - privately placed		500
Wholesale fund amount		£ 500

XML

Liquidity Risk - Summary of Wholesale Funding by Currency (Detail) - Liquidity risk [member]	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
United Kingdom, Pounds
Currency Composition Of Wholesale Funds [Line Items]
Percentage of wholesale funding by major currencies	45.00%	39.00%
United Kingdom, Pounds | Santander UK Group Holdings Plc to Santander UK Plc [member]
Currency Composition Of Wholesale Funds [Line Items]
Percentage of wholesale funding by major currencies	28.00%	31.00%
United Kingdom, Pounds | Santander UK Group Holdings Plc to Santander UK Plc [member] | Senior Unsecured - Public Benchmark [member]
Currency Composition Of Wholesale Funds [Line Items]
Percentage of wholesale funding by major currencies	9.00%	12.00%
United Kingdom, Pounds | Santander UK Group Holdings Plc to Santander UK Plc [member] | Subordinated Liabilities and Equity [member]
Currency Composition Of Wholesale Funds [Line Items]
Percentage of wholesale funding by major currencies	68.00%	61.00%
United Kingdom, Pounds | Santander UK Plc [member]
Currency Composition Of Wholesale Funds [Line Items]
Percentage of wholesale funding by major currencies	49.00%	39.00%
United Kingdom, Pounds | Santander UK Plc [member] | Senior Unsecured - Public Benchmark [member]
Currency Composition Of Wholesale Funds [Line Items]
Percentage of wholesale funding by major currencies	9.00%	12.00%
United Kingdom, Pounds | Santander UK Plc [member] | Senior Unsecured - Privately Placed [member]
Currency Composition Of Wholesale Funds [Line Items]
Percentage of wholesale funding by major currencies	7.00%	3.00%
United Kingdom, Pounds | Santander UK Plc [member] | Deposits by Banks [member]
Currency Composition Of Wholesale Funds [Line Items]
Percentage of wholesale funding by major currencies	27.00%	33.00%
United Kingdom, Pounds | Santander UK Plc [member] | Certificates of Deposit and Commercial Paper [member]
Currency Composition Of Wholesale Funds [Line Items]
Percentage of wholesale funding by major currencies	89.00%
United Kingdom, Pounds | Santander UK Plc [member] | Covered Bonds [member]
Currency Composition Of Wholesale Funds [Line Items]
Percentage of wholesale funding by major currencies	47.00%	41.00%
United Kingdom, Pounds | Santander UK Plc [member] | Securitisation and Structured Issuance [member]
Currency Composition Of Wholesale Funds [Line Items]
Percentage of wholesale funding by major currencies	80.00%	59.00%
United Kingdom, Pounds | Santander UK Plc [member] | Term Funding Scheme [member]
Currency Composition Of Wholesale Funds [Line Items]
Percentage of wholesale funding by major currencies	100.00%	100.00%
United Kingdom, Pounds | Santander UK Plc [member] | Subordinated liabilities [member]
Currency Composition Of Wholesale Funds [Line Items]
Percentage of wholesale funding by major currencies	52.00%	55.00%
United Kingdom, Pounds | Other Group Entities [member]
Currency Composition Of Wholesale Funds [Line Items]
Percentage of wholesale funding by major currencies	47.00%	41.00%
United Kingdom, Pounds | Other Group Entities [member] | Senior Unsecured - Privately Placed [member]
Currency Composition Of Wholesale Funds [Line Items]
Percentage of wholesale funding by major currencies		22.00%
United Kingdom, Pounds | Other Group Entities [member] | Deposits by Banks [member]
Currency Composition Of Wholesale Funds [Line Items]
Percentage of wholesale funding by major currencies		7.00%
United Kingdom, Pounds | Other Group Entities [member] | Certificates of Deposit and Commercial Paper [member]
Currency Composition Of Wholesale Funds [Line Items]
Percentage of wholesale funding by major currencies	34.00%	31.00%
United Kingdom, Pounds | Other Group Entities [member] | Securitisation and Structured Issuance [member]
Currency Composition Of Wholesale Funds [Line Items]
Percentage of wholesale funding by major currencies	91.00%	87.00%
United States of America, Dollars
Currency Composition Of Wholesale Funds [Line Items]
Percentage of wholesale funding by major currencies	28.00%	30.00%
United States of America, Dollars | Santander UK Group Holdings Plc to Santander UK Plc [member]
Currency Composition Of Wholesale Funds [Line Items]
Percentage of wholesale funding by major currencies	54.00%	53.00%
United States of America, Dollars | Santander UK Group Holdings Plc to Santander UK Plc [member] | Senior Unsecured - Public Benchmark [member]
Currency Composition Of Wholesale Funds [Line Items]
Percentage of wholesale funding by major currencies	67.00%	63.00%
United States of America, Dollars | Santander UK Group Holdings Plc to Santander UK Plc [member] | Subordinated Liabilities and Equity [member]
Currency Composition Of Wholesale Funds [Line Items]
Percentage of wholesale funding by major currencies	32.00%	39.00%
United States of America, Dollars | Santander UK Plc [member]
Currency Composition Of Wholesale Funds [Line Items]
Percentage of wholesale funding by major currencies	19.00%	21.00%
United States of America, Dollars | Santander UK Plc [member] | Senior Unsecured - Public Benchmark [member]
Currency Composition Of Wholesale Funds [Line Items]
Percentage of wholesale funding by major currencies	49.00%	49.00%
United States of America, Dollars | Santander UK Plc [member] | Senior Unsecured - Privately Placed [member]
Currency Composition Of Wholesale Funds [Line Items]
Percentage of wholesale funding by major currencies	19.00%	1.00%
United States of America, Dollars | Santander UK Plc [member] | Deposits by Banks [member]
Currency Composition Of Wholesale Funds [Line Items]
Percentage of wholesale funding by major currencies	73.00%	67.00%
United States of America, Dollars | Santander UK Plc [member] | Certificates of Deposit and Commercial Paper [member]
Currency Composition Of Wholesale Funds [Line Items]
Percentage of wholesale funding by major currencies	10.00%
United States of America, Dollars | Santander UK Plc [member] | Securitisation and Structured Issuance [member]
Currency Composition Of Wholesale Funds [Line Items]
Percentage of wholesale funding by major currencies	20.00%	29.00%
United States of America, Dollars | Santander UK Plc [member] | Subordinated liabilities [member]
Currency Composition Of Wholesale Funds [Line Items]
Percentage of wholesale funding by major currencies	48.00%	45.00%
United States of America, Dollars | Other Group Entities [member]
Currency Composition Of Wholesale Funds [Line Items]
Percentage of wholesale funding by major currencies	50.00%	55.00%
United States of America, Dollars | Other Group Entities [member] | Senior Unsecured - Privately Placed [member]
Currency Composition Of Wholesale Funds [Line Items]
Percentage of wholesale funding by major currencies		59.00%
United States of America, Dollars | Other Group Entities [member] | Deposits by Banks [member]
Currency Composition Of Wholesale Funds [Line Items]
Percentage of wholesale funding by major currencies	100.00%	93.00%
United States of America, Dollars | Other Group Entities [member] | Certificates of Deposit and Commercial Paper [member]
Currency Composition Of Wholesale Funds [Line Items]
Percentage of wholesale funding by major currencies	65.00%	68.00%
United States of America, Dollars | Other Group Entities [member] | Securitisation and Structured Issuance [member]
Currency Composition Of Wholesale Funds [Line Items]
Percentage of wholesale funding by major currencies		5.00%
Euro Member Countries, Euro
Currency Composition Of Wholesale Funds [Line Items]
Percentage of wholesale funding by major currencies	25.00%	30.00%
Euro Member Countries, Euro | Santander UK Group Holdings Plc to Santander UK Plc [member]
Currency Composition Of Wholesale Funds [Line Items]
Percentage of wholesale funding by major currencies	14.00%	13.00%
Euro Member Countries, Euro | Santander UK Group Holdings Plc to Santander UK Plc [member] | Senior Unsecured - Public Benchmark [member]
Currency Composition Of Wholesale Funds [Line Items]
Percentage of wholesale funding by major currencies	22.00%	21.00%
Euro Member Countries, Euro | Santander UK Plc [member]
Currency Composition Of Wholesale Funds [Line Items]
Percentage of wholesale funding by major currencies	32.00%	39.00%
Euro Member Countries, Euro | Santander UK Plc [member] | Senior Unsecured - Public Benchmark [member]
Currency Composition Of Wholesale Funds [Line Items]
Percentage of wholesale funding by major currencies	42.00%	39.00%
Euro Member Countries, Euro | Santander UK Plc [member] | Senior Unsecured - Privately Placed [member]
Currency Composition Of Wholesale Funds [Line Items]
Percentage of wholesale funding by major currencies	70.00%	93.00%
Euro Member Countries, Euro | Santander UK Plc [member] | Covered Bonds [member]
Currency Composition Of Wholesale Funds [Line Items]
Percentage of wholesale funding by major currencies	52.00%	58.00%
Euro Member Countries, Euro | Santander UK Plc [member] | Securitisation and Structured Issuance [member]
Currency Composition Of Wholesale Funds [Line Items]
Percentage of wholesale funding by major currencies		12.00%
Euro Member Countries, Euro | Other Group Entities [member]
Currency Composition Of Wholesale Funds [Line Items]
Percentage of wholesale funding by major currencies	3.00%	4.00%
Euro Member Countries, Euro | Other Group Entities [member] | Senior Unsecured - Privately Placed [member]
Currency Composition Of Wholesale Funds [Line Items]
Percentage of wholesale funding by major currencies		19.00%
Euro Member Countries, Euro | Other Group Entities [member] | Certificates of Deposit and Commercial Paper [member]
Currency Composition Of Wholesale Funds [Line Items]
Percentage of wholesale funding by major currencies	1.00%	1.00%
Euro Member Countries, Euro | Other Group Entities [member] | Securitisation and Structured Issuance [member]
Currency Composition Of Wholesale Funds [Line Items]
Percentage of wholesale funding by major currencies	9.00%	8.00%
Other [Member]
Currency Composition Of Wholesale Funds [Line Items]
Percentage of wholesale funding by major currencies	2.00%	1.00%
Other [Member] | Santander UK Group Holdings Plc to Santander UK Plc [member]
Currency Composition Of Wholesale Funds [Line Items]
Percentage of wholesale funding by major currencies	4.00%	3.00%
Other [Member] | Santander UK Group Holdings Plc to Santander UK Plc [member] | Senior Unsecured - Public Benchmark [member]
Currency Composition Of Wholesale Funds [Line Items]
Percentage of wholesale funding by major currencies	2.00%	4.00%
Other [Member] | Santander UK Group Holdings Plc to Santander UK Plc [member] | Senior Unsecured - Privately Placed [member]
Currency Composition Of Wholesale Funds [Line Items]
Percentage of wholesale funding by major currencies	100.00%	100.00%
Other [Member] | Santander UK Plc [member]
Currency Composition Of Wholesale Funds [Line Items]
Percentage of wholesale funding by major currencies		1.00%
Other [Member] | Santander UK Plc [member] | Senior Unsecured - Privately Placed [member]
Currency Composition Of Wholesale Funds [Line Items]
Percentage of wholesale funding by major currencies	4.00%	3.00%
Other [Member] | Santander UK Plc [member] | Certificates of Deposit and Commercial Paper [member]
Currency Composition Of Wholesale Funds [Line Items]
Percentage of wholesale funding by major currencies	1.00%
Other [Member] | Santander UK Plc [member] | Covered Bonds [member]
Currency Composition Of Wholesale Funds [Line Items]
Percentage of wholesale funding by major currencies	1.00%	1.00%

XML

Liquidity Risk - Summary of External Term Issuance (Sterling Equivalent) (Detail) - Liquidity risk [member] - GBP (£) £ in Billions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of detailed information about borrowings [line items]
Borrowings	£ 11.8	£ 12.9
Santander UK Group Holdings Plc to Santander UK Plc [member]
Disclosure of detailed information about borrowings [line items]
Borrowings	2.6	3.2
Santander UK Group Holdings Plc to Santander UK Plc [member] | Senior Unsecured - Public Benchmark [member]
Disclosure of detailed information about borrowings [line items]
Borrowings	2.0	3.1
Santander UK Group Holdings Plc to Santander UK Plc [member] | Senior Unsecured - Privately Placed [member]
Disclosure of detailed information about borrowings [line items]
Borrowings	0.1	0.1
Santander UK Group Holdings Plc to Santander UK Plc [member] | Subordinated Liabilities and Equity [member]
Disclosure of detailed information about borrowings [line items]
Borrowings	0.5
Santander UK Plc [member]
Disclosure of detailed information about borrowings [line items]
Borrowings	8.0	5.7
Santander UK Plc [member] | Senior Unsecured - Privately Placed [member]
Disclosure of detailed information about borrowings [line items]
Borrowings	1.1
Santander UK Plc [member] | Subordinated Liabilities and Equity [member]
Disclosure of detailed information about borrowings [line items]
Borrowings	0.1
Santander UK Plc [member] | Securitisations [member]
Disclosure of detailed information about borrowings [line items]
Borrowings	0.5	0.6
Santander UK Plc [member] | Covered Bonds [member]
Disclosure of detailed information about borrowings [line items]
Borrowings	2.3	0.6
Santander UK Plc [member] | Term Funding Scheme [member]
Disclosure of detailed information about borrowings [line items]
Borrowings	4.0	4.5
Other Group Entities [member]
Disclosure of detailed information about borrowings [line items]
Borrowings	1.2	4.0
Other Group Entities [member] | Senior Unsecured - Public Benchmark [member]
Disclosure of detailed information about borrowings [line items]
Borrowings		1.4
Other Group Entities [member] | Senior Unsecured - Privately Placed [member]
Disclosure of detailed information about borrowings [line items]
Borrowings		1.0
Other Group Entities [member] | Securitisations [member]
Disclosure of detailed information about borrowings [line items]
Borrowings	1.2	0.8
Other Group Entities [member] | Covered Bonds [member]
Disclosure of detailed information about borrowings [line items]
Borrowings		£ 0.8
United Kingdom, Pounds
Disclosure of detailed information about borrowings [line items]
Borrowings	8.3
United Kingdom, Pounds | Santander UK Group Holdings Plc to Santander UK Plc [member]
Disclosure of detailed information about borrowings [line items]
Borrowings	0.5
United Kingdom, Pounds | Santander UK Group Holdings Plc to Santander UK Plc [member] | Subordinated Liabilities and Equity [member]
Disclosure of detailed information about borrowings [line items]
Borrowings	0.5
United Kingdom, Pounds | Santander UK Plc [member]
Disclosure of detailed information about borrowings [line items]
Borrowings	6.9
United Kingdom, Pounds | Santander UK Plc [member] | Subordinated Liabilities and Equity [member]
Disclosure of detailed information about borrowings [line items]
Borrowings	0.1
United Kingdom, Pounds | Santander UK Plc [member] | Securitisations [member]
Disclosure of detailed information about borrowings [line items]
Borrowings	0.5
United Kingdom, Pounds | Santander UK Plc [member] | Covered Bonds [member]
Disclosure of detailed information about borrowings [line items]
Borrowings	2.3
United Kingdom, Pounds | Santander UK Plc [member] | Term Funding Scheme [member]
Disclosure of detailed information about borrowings [line items]
Borrowings	4.0
United Kingdom, Pounds | Other Group Entities [member]
Disclosure of detailed information about borrowings [line items]
Borrowings	0.9
United Kingdom, Pounds | Other Group Entities [member] | Securitisations [member]
Disclosure of detailed information about borrowings [line items]
Borrowings	0.9
United States of America, Dollars
Disclosure of detailed information about borrowings [line items]
Borrowings	3.0
United States of America, Dollars | Santander UK Group Holdings Plc to Santander UK Plc [member]
Disclosure of detailed information about borrowings [line items]
Borrowings	1.6
United States of America, Dollars | Santander UK Group Holdings Plc to Santander UK Plc [member] | Senior Unsecured - Public Benchmark [member]
Disclosure of detailed information about borrowings [line items]
Borrowings	1.6
United States of America, Dollars | Santander UK Plc [member]
Disclosure of detailed information about borrowings [line items]
Borrowings	1.1
United States of America, Dollars | Santander UK Plc [member] | Senior Unsecured - Privately Placed [member]
Disclosure of detailed information about borrowings [line items]
Borrowings	1.1
United States of America, Dollars | Other Group Entities [member]
Disclosure of detailed information about borrowings [line items]
Borrowings	0.3
United States of America, Dollars | Other Group Entities [member] | Securitisations [member]
Disclosure of detailed information about borrowings [line items]
Borrowings	0.3
Euro Member Countries, Euro
Disclosure of detailed information about borrowings [line items]
Borrowings	0.4
Euro Member Countries, Euro | Santander UK Group Holdings Plc to Santander UK Plc [member]
Disclosure of detailed information about borrowings [line items]
Borrowings	0.4
Euro Member Countries, Euro | Santander UK Group Holdings Plc to Santander UK Plc [member] | Senior Unsecured - Public Benchmark [member]
Disclosure of detailed information about borrowings [line items]
Borrowings	0.4
Other [Member]
Disclosure of detailed information about borrowings [line items]
Borrowings	0.1
Other [Member] | Santander UK Group Holdings Plc to Santander UK Plc [member]
Disclosure of detailed information about borrowings [line items]
Borrowings	0.1
Other [Member] | Santander UK Group Holdings Plc to Santander UK Plc [member] | Senior Unsecured - Privately Placed [member]
Disclosure of detailed information about borrowings [line items]
Borrowings	£ 0.1

XML

Capital Risk - Summary of Regulatory Capital Resources (Detail) - GBP (£) £ in Millions	Dec. 31, 2017	Dec. 31, 2016
Capital Risk [Abstract]
CET1 capital	£ 10,620	£ 10,201
AT1 capital	2,762	2,271
Tier 1 capital	13,382	12,472
Tier 2 capital	3,741	3,772
Total regulatory capital	£ 17,123	£ 16,244

XML

Accounting Policies - Additional information (Detail) - GBP (£) £ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of changes in accounting estimates [line items]
Gains and losses on financial liabilities relating to own credit in other comprehensive income	£ 18
Emergence period	6 months
Emergence period	12 months
Impairment allowances against loans and advances	£ 940	£ 921
Impairment losses on loans and advances	203	67	£ 66
Provision charge for conduct remediation	385	397	762
Provisions	558	700	870
Defined benefit pension schemes in net asset having surplus	449	398
Defined benefit pension schemes in net liabilities having deficit	286	262
Surplus (deficit) in plan	150
Payment protection insurance [member]
Disclosure of changes in accounting estimates [line items]
Provision charge for conduct remediation	109	144	450
Provisions	356	457	465
Other Insurance Product [member]
Disclosure of changes in accounting estimates [line items]
Provision charge for conduct remediation	£ 35	2	50
180 Days [member] | Unsecured Debt [member]
Disclosure of changes in accounting estimates [line items]
Written off period for past due	180 days
Conduct Remediation [member]
Disclosure of changes in accounting estimates [line items]
Provision charge for conduct remediation	£ 144	146	500
Provisions	403	493	637
Bottom of Range [member]
Disclosure of changes in accounting estimates [line items]
Decrease in impairment loss with a consequential increase in profit before tax	£ 162	193	221
Bottom of Range [member] | Other Intangibles [member]
Disclosure of changes in accounting estimates [line items]
Useful economic life of intangible assets	3 years
Bottom of Range [member] | Computer Software [member]
Disclosure of changes in accounting estimates [line items]
Useful economic life of intangible assets	3 years
Top of Range [member]
Disclosure of changes in accounting estimates [line items]
Increase in impairment loss with a consequential decrease in profit before tax	£ 229	£ 223	£ 167
Top of Range [member] | Other Intangibles [member]
Disclosure of changes in accounting estimates [line items]
Useful economic life of intangible assets	7 years
Top of Range [member] | Computer Software [member]
Disclosure of changes in accounting estimates [line items]
Useful economic life of intangible assets	7 years
Deficit [member]
Disclosure of changes in accounting estimates [line items]
Surplus (deficit) in plan	£ 125
Increase (decrease) due to changes in accounting policy [member]
Disclosure of changes in accounting estimates [line items]
Goodwill reduction due to change in accounting policy	631
Application of IFRS 9 [member]
Disclosure of changes in accounting estimates [line items]
Decreases in shareholders' equity	192
Decrease arising from application of new classification and measurement requirements for financial assets	49
Decrease arising from application of new ECL impairment methodology	211
Deferred tax asset recognised	£ 68

XML

Accounting Policies - Schedule of Useful Lives or Depreciation Rates Used for Property, Plant and Equipment (Detail)	12 Months Ended
	Dec. 31, 2017
Bottom of Range [member] | Office Fixtures and Equipment [member]
Disclosure of detailed information about property, plant and equipment [line items]
Useful lives or depreciation rates, property, plant and equipment	3 years
Bottom of Range [member] | Computer Software [member]
Disclosure of detailed information about property, plant and equipment [line items]
Useful lives or depreciation rates, property, plant and equipment	3 years
Top of Range [member] | Owner-Occupied Properties [member]
Disclosure of detailed information about property, plant and equipment [line items]
Useful lives or depreciation rates, property, plant and equipment	50 years
Top of Range [member] | Office Fixtures and Equipment [member]
Disclosure of detailed information about property, plant and equipment [line items]
Useful lives or depreciation rates, property, plant and equipment	15 years
Top of Range [member] | Computer Software [member]
Disclosure of detailed information about property, plant and equipment [line items]
Useful lives or depreciation rates, property, plant and equipment	7 years

XML

Segments - Additional Information (Detail)	12 Months Ended
	Dec. 31, 2017 GBP (£)
Retail Banking [member]
Disclosure of operating segments [line items]
Turnover from Small business customers	£ 6,500,000
Commercial Banking [member]
Disclosure of operating segments [line items]
Turnover from Small business customers	6,500,000
Global Corporate Banking [member]
Disclosure of operating segments [line items]
Turnover from Small business customers	£ 500,000,000

XML

Segments - Summary of Results by Segment (Detail) - GBP (£) £ in Millions	3 Months Ended	12 Months Ended
	Jun. 30, 2017	Dec. 31, 2017	Dec. 31, 2016		Dec. 31, 2015
Disclosure of operating segments [line items]
Net interest income		£ 3,803	£ 3,582		£ 3,575
Non-interest income		1,109	1,213		998
Inter-segment revenue		4,912	4,795		4,573
Operating expenses before impairment losses, provisions and (charges)/releases		(2,499)	(2,414)		(2,400)
Impairment (losses)/releases on loans and advances		(203)	(67)		(66)
Provisions for other liabilities and (charges)/releases	£ (35)	(393)	(397)		(762)
Total operating impairment losses, provisions and (charges)/releases		(596)	(464)		(828)
Profit before tax		1,817	1,917		1,345
Revenue from external customers		4,912	4,795		4,573
Total operating income		4,912	4,795		4,573
Customer loans		200,324	200,156		198,634
Total assets		314,765	302,511	[1]	280,775
Customer deposits		175,921	172,351		162,255
Total liabilities		298,560	287,058		265,747
Retail Banking [member]
Disclosure of operating segments [line items]
Net interest income		3,302	3,140		3,097
Non-interest income		615	562		526
Inter-segment revenue		3,917	3,702		3,623
Operating expenses before impairment losses, provisions and (charges)/releases		(1,871)	(1,800)		(1,898)
Impairment (losses)/releases on loans and advances		(36)	(20)		(90)
Provisions for other liabilities and (charges)/releases		(342)	(338)		(728)
Total operating impairment losses, provisions and (charges)/releases		(378)	(358)		(818)
Profit before tax		1,668	1,544		907
Revenue from external customers		4,505	4,369		4,529
Total operating income		3,917	3,702		3,623
Customer loans		168,991	168,638		167,093
Total assets		174,524	175,100		173,479
Customer deposits		149,315	148,063		140,358
Total liabilities		150,847	149,793		143,157
Retail Banking [member] | Elimination of Intersegment Amounts [member]
Disclosure of operating segments [line items]
Inter-segment revenue		(588)	(667)		(906)
Commercial Banking [member]
Disclosure of operating segments [line items]
Net interest income		395	383		399
Non-interest income		74	76		91
Inter-segment revenue		469	459		490
Operating expenses before impairment losses, provisions and (charges)/releases		(223)	(215)		(217)
Impairment (losses)/releases on loans and advances		(13)	(29)		(25)
Provisions for other liabilities and (charges)/releases		(55)	(26)		(23)
Total operating impairment losses, provisions and (charges)/releases		(68)	(55)		(48)
Profit before tax		178	189		225
Revenue from external customers		631	644		626
Total operating income		469	459		490
Customer loans		19,391	19,381		18,680
Total assets		19,391	19,381		18,680
Customer deposits		18,697	17,203		15,076
Total liabilities		18,697	17,203		15,076
Commercial Banking [member] | Elimination of Intersegment Amounts [member]
Disclosure of operating segments [line items]
Inter-segment revenue		(162)	(185)		(136)
Global Corporate Banking [member]
Disclosure of operating segments [line items]
Net interest income		74	73		52
Non-interest income		364	312		303
Inter-segment revenue		438	385		355
Operating expenses before impairment losses, provisions and (charges)/releases		(304)	(280)		(287)
Impairment (losses)/releases on loans and advances		(174)	(21)		13
Provisions for other liabilities and (charges)/releases		(11)	(12)		(14)
Total operating impairment losses, provisions and (charges)/releases		(185)	(33)		(1)
Profit before tax		(51)	72		67
Revenue from external customers		506	466		437
Total operating income		438	385		355
Customer loans		6,037	5,659		5,470
Total assets		51,078	39,777		36,593
Customer deposits		4,546	4,054		3,013
Total liabilities		45,603	36,506		32,290
Global Corporate Banking [member] | Elimination of Intersegment Amounts [member]
Disclosure of operating segments [line items]
Inter-segment revenue		(68)	(81)		(82)
Corporate Centre [member]
Disclosure of operating segments [line items]
Net interest income		32	(14)		27
Non-interest income		56	263		78
Inter-segment revenue		88	249		105
Operating expenses before impairment losses, provisions and (charges)/releases		(101)	(119)		2
Impairment (losses)/releases on loans and advances		20	3		36
Provisions for other liabilities and (charges)/releases		15	(21)		3
Total operating impairment losses, provisions and (charges)/releases		35	(18)		39
Profit before tax		22	112		146
Revenue from external customers		(730)	(684)		(1,019)
Total operating income		88	249		105
Customer loans		5,905	6,478		7,391
Total assets		69,772	68,253		52,023
Customer deposits		3,363	3,031		3,808
Total liabilities		83,413	83,556		75,224
Corporate Centre [member] | Elimination of Intersegment Amounts [member]
Disclosure of operating segments [line items]
Inter-segment revenue		£ 818	£ 933		£ 1,124

[1] Restated to reflect the change in accounting policy relating to business combinations between entities under common control, as described in Note 1.

XML

Net Interest Income - Summary of Net Interest Income (Detail) - GBP (£) £ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Interest and similar income:
Loans and advances to banks	£ 184	£ 127	£ 115
Loans and advances to customers	5,494	6,198	6,491
Other	227	142	89
Total interest and similar income	5,905	6,467	6,695
Interest expense and similar charges:
Deposits by banks	(46)	(56)	(63)
Deposits by customers	(1,330)	(1,891)	(1,979)
Debt securities in issue	(590)	(771)	(926)
Subordinated liabilities	(134)	(143)	(138)
Other	(2)	(24)	(14)
Total interest expense and similar charges	(2,102)	(2,885)	(3,120)
Net interest income	£ 3,803	£ 3,582	£ 3,575

XML

Net Interest Income - Additional Information (Detail) - GBP (£) £ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Interest And Similar Income [Abstract]
Interest and similar income on impaired loans	£ 66	£ 79	£ 81

XML

Net Fee and Commission Income - Summary of Net Fee and Commission Income (Detail) - GBP (£) £ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Net Fee And Commission Income [Line Items]
Fee and commission income	£ 1,222	£ 1,188	£ 1,115
Fee and commission expense	(415)	(418)	(400)
Net fee and commission income	807	770	715
Retail and Corporate Products [member]
Net Fee And Commission Income [Line Items]
Fee and commission income	1,167	1,123	1,043
Fee and commission expense	(406)	(408)	(392)
Insurance Products [member]
Net Fee And Commission Income [Line Items]
Fee and commission income	55	65	72
Other products [member]
Net Fee And Commission Income [Line Items]
Fee and commission expense	£ (9)	£ (10)	£ (8)

XML

Net Trading and Other Income - Summary of Net Trading and Other Income (Detail) - GBP (£) £ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Net Trading And Other Income [Abstract]
Net trading and funding of other items by the trading book	£ 205	£ 75	£ 252
Net income from operating lease assets	44	35	46
Net gains on assets designated at fair value through profit or loss	80	253	33
Net (losses)/gains on liabilities designated at fair value through profit or loss	(97)	28	(65)
Net (losses)/gains on derivatives managed with assets/liabilities held at fair value through profit or loss	(17)	(135)	26
Hedge ineffectiveness	5	28	(20)
Net profit on sale of available-for-sale assets	54	115
Other	28	44	11
Net trading and other income	£ 302	£ 443	£ 283

XML

Net Trading and Other Income - Additional Information (Detail) - GBP (£) £ in Millions	1 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of detailed information about financial instruments [line items]
Fair value losses on embedded derivatives bifurcated from equity index-linked		£ 27	£ 50	£ 5
Gain on overall positions of equity derivatives		28	51	7
Gain on net fair value movements recognised on the equity index-linked deposits		1	1	2
Exchange rate differences recognised		(109)	(4,051)	477
Principally offset from cash flow hedge reserve		£ 94	£ 4,076	£ (305)
7.375% 20 Year Step-up Perpetual Callable Subordinated Notes [member]
Disclosure of detailed information about financial instruments [line items]
Percentage of notes purchased	91.00%
Interest rate	7.375%	7.375%	7.375%
Maturity period	20 Year	2020	2020
Vocalink Holdings Limited [member]
Disclosure of detailed information about financial instruments [line items]
Gain on sale of shares		£ 48
Visa Europe Ltd [member]
Disclosure of detailed information about financial instruments [line items]
Gain on sale of shares			£ 119

XML

Operating Expenses Before Impairment Losses, Provisions and Charges - Summary of Operating Expenses Before Impairment Losses, Provisions and Charges (Detail) - GBP (£) £ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Staff costs:
Wages and salaries	£ 743	£ 728	£ 723
Performance-related payments	157	157	163
Social security costs	93	94	92
Pensions costs - defined contribution plans	54	52	50
Pensions costs - defined benefit plans	32	26	29
Other share-based payments	10	3	(5)
Other personnel costs	45	62	63
Employee benefits expense	1,134	1,122	1,115
Other administration expenses	1,011	970	990
Depreciation, amortisation and impairment	354	322	295
Total operating expenses before impairment losses, provisions and charges	£ 2,499	£ 2,414	£ 2,400

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Operating Expenses Before Impairment Losses, Provisions and Charges - Summary of Deferred Performance Awards (Detail) - GBP (£) £ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure of deferred performance awards [line Items]
Cash	£ 30	£ 33
Shares	34	27
Not Later Than 1 Year [member]
Disclosure of deferred performance awards [line Items]
Cash	13	15
Shares	16	13
Deferred performance awards	29
Not Later Than 1 Year [member] | Arising From Awards in Current Year [member]
Disclosure of deferred performance awards [line Items]
Cash	5
Shares	3
Deferred performance awards	8
Not Later Than 1 Year [member] | Arising From Awards in Prior Year [member]
Disclosure of deferred performance awards [line Items]
Cash	8
Shares	13
Deferred performance awards	21
More than One Year [member]
Disclosure of deferred performance awards [line Items]
Cash	17	18
Shares	18	£ 14
Deferred performance awards	35
More than One Year [member] | Arising From Awards in Current Year [member]
Disclosure of deferred performance awards [line Items]
Cash	10
Shares	8
Deferred performance awards	18
More than One Year [member] | Arising From Awards in Prior Year [member]
Disclosure of deferred performance awards [line Items]
Cash	7
Shares	10
Deferred performance awards	£ 17

XML

Operating Expenses Before Impairment Losses, Provisions and Charges - Summary of Amount of Bonus Awarded to Employees (Detail) - GBP (£) £ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure of amount of bonus awarded to employees [line items]
Cash award - not deferred	£ 116	£ 118
- deferred	30	33
Shares award - not deferred	12	11
- deferred	34	27
Total discretionary bonus	192	189
Not Later Than 1 Year [member]
Disclosure of amount of bonus awarded to employees [line items]
Cash award - not deferred	116	118
- deferred	13	15
Shares award - not deferred	12	11
- deferred	16	13
Total discretionary bonus	157	157
More than One Year [member]
Disclosure of amount of bonus awarded to employees [line items]
- deferred	17	18
- deferred	18	14
Total discretionary bonus	£ 35	£ 32

XML

Operating Expenses Before Impairment Losses, Provisions and Charges - Additional Information (Detail) £ in Millions	12 Months Ended
	Dec. 31, 2017 GBP (£) Employee	Dec. 31, 2016 GBP (£) Employee	Dec. 31, 2015 Employee
Classes of employee benefits expense [abstract]
Average number of full-time equivalent staff | Employee	19,559	19,863	20,405
Impairment charge | £	£ 32	£ 45

XML

Audit and Other Services - Summary of Audit and Other Services (Detail) - GBP (£) £ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Audit fees:
Fees payable to the Company's auditor(1) and its associates for the audit of the Santander UK group's annual accounts	£ 7.4	£ 4.6	£ 3.6
- Audit of the Santander UK group's subsidiaries	1.4	1.1	1.8
Total audit fees	8.8	5.7	5.4
Non-audit fees:
Audit-related assurance services	0.7	0.6	2.7
Taxation compliance services		0.1	0.2
Other assurance services	0.1
Other non-audit services	0.4	1.9	1.7
Total non-audit fees	£ 1.2	£ 2.6	£ 4.6

XML

Audit and Other Services - Summary of Audit and Other Services (Parenthetical) (Detail) - GBP (£)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of audit fees and non audit fees [Line Items]
Auditors fees payable	£ 8,800,000	£ 5,700,000	£ 5,400,000
Audit-related assurance services	700,000	600,000	£ 2,700,000
Prior year audit services [member]
Disclosure of audit fees and non audit fees [Line Items]
Auditors fee	600,000	0
Audit-related assurance services	£ 100,000	0
Deloitte LLP [member] | Prior year audit services [member]
Disclosure of audit fees and non audit fees [Line Items]
Auditors fees payable		£ 200,000

XML

Audit and Other Services - Additional Information (Detail) - GBP (£) £ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of audit fees and non audit fees [Line Items]
Audit fees payable for statutory audit	£ 8,800	£ 5,700	£ 5,400
Audit-related services related to services performed in connection with the statutory and regulatory filings	100	100	1,200
Audit-related services related to services performed in connection with securitisation, debt issuance and related work and reporting to prudential and conduct regulators	600	500	£ 1,500
Application of IFRS9 [member]
Disclosure of audit fees and non audit fees [Line Items]
Audit fees payable for statutory audit	1,600
Corporate and Other Borrowers [member]
Disclosure of audit fees and non audit fees [Line Items]
Audit fees payable for statutory audit	£ 45	£ 893

XML

Impairment Losses and Provisions - Summary of Impairment Losses and Provisions (Detail) - GBP (£) £ in Millions	3 Months Ended	12 Months Ended
	Jun. 30, 2017	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure Of Impairment Loss And Provisions [Abstract]
Loans and advances to customers (See Note 15)		£ 257	£ 132	£ 156
Recoveries of loans and advances, net of collection costs (See Note 15)		(54)	(65)	(90)
Impairment loss on financial assets		203	67	66
Provisions for other liabilities and charges (See Note 27)		385	397	762
Provisions for residual value and voluntary termination (See Note 15)		8
Provisions for other liabilities and charges	£ 35	393	397	762
Total operating impairment losses, provisions and charges		£ 596	£ 464	£ 828

XML

Impairment Losses and Provisions - Additional Information (Detail) - GBP (£)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure Of Impairment Loss And Provisions [Abstract]
Impairment losses on loans and advances to banks	£ 0	£ 0	£ 0
Impairment losses on financial investments	0	0	0
Increase in impairment losses on loans and advances	136,000,000
Impairment losses on loans and advances	£ 203,000,000	£ 67,000,000	£ 66,000,000

XML

Taxation - Disclosure of Tax on Profit (Detail) - GBP (£) £ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Current tax:
UK corporation tax on profit for the year	£ 556	£ 611	£ 346
Adjustments in respect of prior years	(27)	(13)	(16)
Total current tax	529	598	330
Deferred tax:
Charge/(credit) for the year	23	(11)	54
Adjustments in respect of prior years	9	11	(3)
Total deferred tax	32		51
Tax on profit	£ 561	£ 598	£ 381

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Taxation - Additional Information (Detail) $ in Millions	12 Months Ended
	Dec. 31, 2017 GBP (£)	Dec. 31, 2017 USD ($)	Dec. 31, 2016 GBP (£)	Dec. 31, 2016 USD ($)	Dec. 31, 2015
Income Tax Expense Benefits [line items]
Applicable tax rate	19.25%	19.25%	20.00%	20.00%	20.25%
Bank corporation tax surcharge	8.00%	8.00%	8.00%	8.00%
Effective tax rate	30.90%	30.90%	31.20%	31.20%	28.30%
Deferred tax asset	£ 4,000,000		£ 5,000,000
Unrecognised capital losses carried forward	£ 0		£ 0
Net operating losses carried forward | $		$ 76		$ 80
Banking Entities [member]
Income Tax Expense Benefits [line items]
Applicable tax rate	27.25%	27.25%	28.00%	28.00%
Non-banking Entities [member]
Income Tax Expense Benefits [line items]
Applicable tax rate	19.25%	19.25%	20.00%	20.00%
Deferred Tax Assets That Rely on Future Profitability Excluding Timing Differences [member]
Income Tax Expense Benefits [line items]
Recognised capital losses carried forward	£ 21,000,000		£ 0
Bottom of Range [member]
Income Tax Expense Benefits [line items]
Applicable tax rate	19.00%	19.00%
Finance (No.2) Act 2015 [member] | Top of Range [member] | Corporation Tax Rate in 2020 [member]
Income Tax Expense Benefits [line items]
Applicable tax rate	18.00%	18.00%
Finance (No.2) Act 2016 [member] | Bottom of Range [member] | Corporation Tax Rate in 2020 [member]
Income Tax Expense Benefits [line items]
Applicable tax rate	17.00%	17.00%

XML

Taxation - Schedule of Tax on Profit Before Tax Differs from Theoretical Amount that Arise Using Basic Corporation Tax Rate (Detail) - GBP (£) £ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Reconciliation of accounting profit multiplied by applicable tax rates [abstract]
Profit before tax	£ 1,817	£ 1,917	£ 1,345
Tax calculated at a tax rate of 19.25% (2016: 20.00%, 2015: 20.25%)	350	384	272
Bank surcharge on profits	132	134
Non-deductible preference dividends paid	9	8	6
Non-deductible UK Bank Levy	25	30	20
Non-deductible conduct remediation	35	39	90
Other non-equalised items	30	8	8
Effect of non-UK profits and losses		(1)	(1)
Utilisation of capital losses for which credit was not previously recognised			(4)
Effect of change in tax rate on deferred tax provision	(2)	(2)	9
Adjustment to prior year provisions	(18)	(2)	(19)
Tax charge	£ 561	£ 598	£ 381

XML

Taxation - Schedule of Tax on Profit Before Tax Differs from Theoretical Amount that Arise Using Basic Corporation Tax Rate (Parenthetical) (Detail)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Reconciliation of accounting profit multiplied by applicable tax rates [abstract]
Standard tax rate	19.25%	20.00%	20.25%

XML

Taxation - Disclosure of Movements in Current Tax Assets and Liabilities (Detail) - GBP (£) £ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Current Tax Assets and Liabilities [Abstract]
Assets		£ 49
Liabilities	£ (54)	(1)
Beginning Balance	(54)	48
Income statement charge	(529)	(598)	£ (330)
Other comprehensive income credit/(charge)	44	(49)
Corporate income tax paid	484	507	419
Other movements	52	38
Ending Balance	(3)	(54)	48
Assets			49
Liabilities	(3)	(54)	(1)
Ending Balance	£ (54)	£ 48	£ 48

XML

Taxation - Disclosure of Deferred Tax Assets and Liabilities Including Movement in Deferred Tax Account (Detail) - GBP (£) £ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Beginning Balance	£ (128)	£ (223)
Income statement (charge)/credit	(32)
Credited/(charged) to other comprehensive income	72	95
Ending Balance	(88)	(128)
Fair Value of Financial Instruments [member]
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Beginning Balance	(31)	(76)
Income statement (charge)/credit	(10)	44
Credited/(charged) to other comprehensive income		1
Ending Balance	(41)	(31)
Pension Remeasurement [member]
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Beginning Balance	(35)	(115)
Income statement (charge)/credit	(32)	(53)
Credited/(charged) to other comprehensive income	26	133
Ending Balance	(41)	(35)
Cash Flow Hedges [member]
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Beginning Balance	(50)	(27)
Credited/(charged) to other comprehensive income	53	(23)
Ending Balance	3	(50)
Available-for-Sale [member]
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Beginning Balance	(27)	(11)
Transfers/reclassifications	7
Credited/(charged) to other comprehensive income	(6)	(16)
Ending Balance	(26)	(27)
Tax Losses Carried Forward [member]
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Beginning Balance	5	8
Income statement (charge)/credit	20	(3)
Ending Balance	25	5
Accelerated Tax Depreciation [member]
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Beginning Balance	(5)	3
Income statement (charge)/credit	1	(8)
Ending Balance	(4)	(5)
Other temporary differences [member]
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Beginning Balance	15	(5)
Income statement (charge)/credit	(11)	20
Transfers/reclassifications	(7)
Credited/(charged) to other comprehensive income	(1)
Ending Balance	£ (4)	£ 15

XML

Dividends on Ordinary Shares - Disclosure of Dividends on Ordinary Shares Declared and Paid (Detail) - GBP (£) £ / shares in Units, £ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of Dividends on Ordinary Shares [Line Items]
Dividend per share	£ 1.78	£ 1.91	£ 1.38
Dividends paid	£ 553	£ 593	£ 427
First Interim [Member]
Disclosure of Dividends on Ordinary Shares [Line Items]
Dividend per share	£ 1.04	£ 1.02	£ 1.05
Dividends paid	£ 323	£ 317	£ 325
Second Interim [Member]
Disclosure of Dividends on Ordinary Shares [Line Items]
Dividend per share	£ 0.74	£ 0.89	£ 0.33
Dividends paid	£ 230	£ 276	£ 102

XML

Trading Assets - Disclosure of Trading Assets (Detail) - GBP (£) £ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of financial assets held for trading [line items]
Total trading assets	£ 30,555	£ 30,035
Securities Purchased Under Resale Agreements [member]
Disclosure of financial assets held for trading [line items]
Total trading assets	8,870	10,712
Debt Securities [member]
Disclosure of financial assets held for trading [line items]
Total trading assets	5,156	6,248
Trading equity securities [member]
Disclosure of financial assets held for trading [line items]
Total trading assets	9,662	5,986
Cash Collateral [member]
Disclosure of financial assets held for trading [line items]
Total trading assets	6,156	6,169
Short-term Loans [member]
Disclosure of financial assets held for trading [line items]
Total trading assets	£ 711	£ 920

XML

Derivative Financial Instruments - Notional Amounts and Fair Values of Derivative Financial Instruments (Detail) - GBP (£) £ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of detailed information about hedges [line items]
Notional amount	£ 1,125,419	£ 1,234,879
Fair value assets	19,942	25,471
Fair value liabilities	17,613	23,103
Derivatives Held for Trading [member]
Disclosure of detailed information about hedges [line items]
Notional amount	1,027,125	1,123,644
Derivatives Held for Hedging [member]
Disclosure of detailed information about hedges [line items]
Notional amount	98,294	111,235
Fair Value Hedges [member] | Derivatives Held for Hedging [member]
Disclosure of detailed information about hedges [line items]
Notional amount	62,267	74,742
Cash Flow Hedges [member] | Derivatives Held for Hedging [member]
Disclosure of detailed information about hedges [line items]
Notional amount	36,027	36,493
Exchange Rate Contracts [member]
Disclosure of detailed information about hedges [line items]
Notional amount	169,918	193,126
Exchange Rate Contracts [member] | Derivatives Held for Trading [member]
Disclosure of detailed information about hedges [line items]
Notional amount	144,160	165,521
Exchange Rate Contracts [member] | Fair Value Hedges [member] | Derivatives Held for Hedging [member]
Disclosure of detailed information about hedges [line items]
Notional amount	2,641	3,819
Exchange Rate Contracts [member] | Cash Flow Hedges [member] | Derivatives Held for Hedging [member]
Disclosure of detailed information about hedges [line items]
Notional amount	23,117	23,786
Interest Rate Contracts [member]
Disclosure of detailed information about hedges [line items]
Notional amount	935,645	1,026,330
Interest Rate Contracts [member] | Derivatives Held for Trading [member]
Disclosure of detailed information about hedges [line items]
Notional amount	863,151	942,798
Interest Rate Contracts [member] | Fair Value Hedges [member] | Derivatives Held for Hedging [member]
Disclosure of detailed information about hedges [line items]
Notional amount	59,610	70,849
Interest Rate Contracts [member] | Cash Flow Hedges [member] | Derivatives Held for Hedging [member]
Disclosure of detailed information about hedges [line items]
Notional amount	12,884	12,683
Equity and Credit Contracts [member]
Disclosure of detailed information about hedges [line items]
Notional amount	19,856	15,423
Equity and Credit Contracts [member] | Derivatives Held for Trading [member]
Disclosure of detailed information about hedges [line items]
Notional amount	19,814	15,325
Equity Investments [Member] | Fair Value Hedges [member] | Derivatives Held for Hedging [member]
Disclosure of detailed information about hedges [line items]
Notional amount	16	74
Equity Investments [Member] | Cash Flow Hedges [member] | Derivatives Held for Hedging [member]
Disclosure of detailed information about hedges [line items]
Notional amount	26	24
Fair Value [member]
Disclosure of detailed information about hedges [line items]
Fair value assets	19,942	25,471
Fair value liabilities	17,613	23,103
Fair Value [member] | Derivatives Held for Trading [member]
Disclosure of detailed information about hedges [line items]
Fair value assets	15,059	19,102
Fair value liabilities	15,963	21,223
Fair Value [member] | Derivatives Held for Hedging [member]
Disclosure of detailed information about hedges [line items]
Fair value assets	4,883	6,369
Fair value liabilities	1,650	1,880
Fair Value [member] | Fair Value Hedges [member] | Derivatives Held for Hedging [member]
Disclosure of detailed information about hedges [line items]
Fair value assets	1,584	2,333
Fair value liabilities	1,480	1,790
Fair Value [member] | Cash Flow Hedges [member] | Derivatives Held for Hedging [member]
Disclosure of detailed information about hedges [line items]
Fair value assets	3,299	4,036
Fair value liabilities	170	90
Fair Value [member] | Exchange Rate Contracts [member] | Derivatives Held for Trading [member]
Disclosure of detailed information about hedges [line items]
Fair value assets	2,559	3,664
Fair value liabilities	4,130	6,022
Fair Value [member] | Exchange Rate Contracts [member] | Fair Value Hedges [member] | Derivatives Held for Hedging [member]
Disclosure of detailed information about hedges [line items]
Fair value assets	312	751
Fair value liabilities	6
Fair Value [member] | Exchange Rate Contracts [member] | Cash Flow Hedges [member] | Derivatives Held for Hedging [member]
Disclosure of detailed information about hedges [line items]
Fair value assets	3,206	3,907
Fair value liabilities	55	8
Fair Value [member] | Interest Rate Contracts [member] | Derivatives Held for Trading [member]
Disclosure of detailed information about hedges [line items]
Fair value assets	11,612	14,117
Fair value liabilities	11,140	14,341
Fair Value [member] | Interest Rate Contracts [member] | Fair Value Hedges [member] | Derivatives Held for Hedging [member]
Disclosure of detailed information about hedges [line items]
Fair value assets	1,272	1,578
Fair value liabilities	1,470	1,790
Fair Value [member] | Interest Rate Contracts [member] | Cash Flow Hedges [member] | Derivatives Held for Hedging [member]
Disclosure of detailed information about hedges [line items]
Fair value assets	84	120
Fair value liabilities	115	82
Fair Value [member] | Equity and Credit Contracts [member] | Derivatives Held for Trading [member]
Disclosure of detailed information about hedges [line items]
Fair value assets	888	1,321
Fair value liabilities	693	860
Fair Value [member] | Equity Investments [Member] | Fair Value Hedges [member] | Derivatives Held for Hedging [member]
Disclosure of detailed information about hedges [line items]
Fair value assets		4
Fair value liabilities	4
Fair Value [member] | Equity Investments [Member] | Cash Flow Hedges [member] | Derivatives Held for Hedging [member]
Disclosure of detailed information about hedges [line items]
Fair value assets	£ 9	£ 9

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Derivative Financial Instruments - Analysis of the Notional and Fair Values of Derivatives by Trading and Settlement Method (Detail) - GBP (£) £ in Millions	Dec. 31, 2017	Dec. 31, 2016
Analysis of notional and fair values of derivatives by trading and settlement method [line item]
Notional traded over the counter Not settled by central counterparties	£ 1,125,419	£ 1,234,879
Exchange Rate Contracts [member]
Analysis of notional and fair values of derivatives by trading and settlement method [line item]
Notional traded over the counter Not settled by central counterparties	169,918	193,126
Interest Rate Contracts [member]
Analysis of notional and fair values of derivatives by trading and settlement method [line item]
Notional traded over the counter Not settled by central counterparties	935,645	1,026,330
Equity and Credit Contracts [member]
Analysis of notional and fair values of derivatives by trading and settlement method [line item]
Notional traded over the counter Not settled by central counterparties	19,856	15,423
Traded on Recognised Exchanges [member]
Analysis of notional and fair values of derivatives by trading and settlement method [line item]
Notional traded over the counter Not settled by central counterparties	71,648	69,535
Asset traded on recognised exchanges		1
Liability traded on recognised exchanges	1	1
Traded on Recognised Exchanges [member] | Interest Rate Contracts [member]
Analysis of notional and fair values of derivatives by trading and settlement method [line item]
Notional traded over the counter Not settled by central counterparties	71,618	69,501
Asset traded on recognised exchanges		1
Traded on Recognised Exchanges [member] | Equity and Credit Contracts [member]
Analysis of notional and fair values of derivatives by trading and settlement method [line item]
Notional traded over the counter Not settled by central counterparties	30	34
Liability traded on recognised exchanges	1	1
Settled by Central Counterparties [member]
Analysis of notional and fair values of derivatives by trading and settlement method [line item]
Notional traded over the counter Not settled by central counterparties	626,600	725,626
Settled by Central Counterparties [member] | Interest Rate Contracts [member]
Analysis of notional and fair values of derivatives by trading and settlement method [line item]
Notional traded over the counter Not settled by central counterparties	626,600	725,626
Not Settled by Central Counterparties [member]
Analysis of notional and fair values of derivatives by trading and settlement method [line item]
Notional traded over the counter Not settled by central counterparties	427,171	439,718
Not Settled by Central Counterparties [member] | Exchange Rate Contracts [member]
Analysis of notional and fair values of derivatives by trading and settlement method [line item]
Notional traded over the counter Not settled by central counterparties	169,918	193,126
Not Settled by Central Counterparties [member] | Interest Rate Contracts [member]
Analysis of notional and fair values of derivatives by trading and settlement method [line item]
Notional traded over the counter Not settled by central counterparties	237,427	231,203
Not Settled by Central Counterparties [member] | Equity and Credit Contracts [member]
Analysis of notional and fair values of derivatives by trading and settlement method [line item]
Notional traded over the counter Not settled by central counterparties	19,826	15,389
Traded Over the Counter [member]
Analysis of notional and fair values of derivatives by trading and settlement method [line item]
Asset traded on recognised exchanges	19,942	25,470
Liability traded on recognised exchanges	17,612	23,102
Traded Over the Counter [member] | Exchange Rate Contracts [member]
Analysis of notional and fair values of derivatives by trading and settlement method [line item]
Asset traded on recognised exchanges	6,077	8,322
Liability traded on recognised exchanges	4,191	6,030
Traded Over the Counter [member] | Interest Rate Contracts [member]
Analysis of notional and fair values of derivatives by trading and settlement method [line item]
Asset traded on recognised exchanges	12,968	15,814
Liability traded on recognised exchanges	12,725	16,213
Traded Over the Counter [member] | Equity and Credit Contracts [member]
Analysis of notional and fair values of derivatives by trading and settlement method [line item]
Asset traded on recognised exchanges	897	1,334
Liability traded on recognised exchanges	£ 696	£ 859

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Derivative Financial Instruments - Summary of Analysis of Derivatives Designated as Hedges (Detail) - GBP (£) £ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of detailed information about hedges [line items]
Hedge ineffectiveness	£ 5	£ 28	£ (20)
Fair Value and Cash Flow Hedges [member]
Disclosure of detailed information about hedges [line items]
Gains/(losses) on hedging instruments	56	(274)	(26)
(Losses)/gains on hedged items attributable to hedged risks	(2)	335	87
Fair value hedging ineffectiveness	54	61	61
Cash flow hedging ineffectiveness	(49)	(33)	(81)
Hedge ineffectiveness	£ 5	£ 28	£ (20)

XML

Derivative Financial Instruments - Summary of When Hedged Cash Flows are Expected to Affect the Income Statement (Detail) - GBP (£) £ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of nature and extent of risks arising from financial instruments [line items]
Forecast receivable cash flows	£ 1,842	£ 1,693
Forecast payable cash flows	(25,846)	(22,015)
Not Later Than 1 Year [member]
Disclosure of nature and extent of risks arising from financial instruments [line items]
Forecast receivable cash flows	275	240
Forecast payable cash flows	(3,486)	(4,059)
Later Than 1 Year and Not Later Than 2 Years [member]
Disclosure of nature and extent of risks arising from financial instruments [line items]
Forecast receivable cash flows	280	220
Forecast payable cash flows	(5,288)	(3,392)
2 - 3 years [member]
Disclosure of nature and extent of risks arising from financial instruments [line items]
Forecast receivable cash flows	262	217
Forecast payable cash flows	(3,912)	(3,681)
3 - 4 years [member]
Disclosure of nature and extent of risks arising from financial instruments [line items]
Forecast receivable cash flows	197	202
Forecast payable cash flows	(3,572)	(2,998)
4 - 5 years [member]
Disclosure of nature and extent of risks arising from financial instruments [line items]
Forecast receivable cash flows	160	146
Forecast payable cash flows	(2,224)	(2,274)
In More Than 5 Years [member]
Disclosure of nature and extent of risks arising from financial instruments [line items]
Forecast receivable cash flows	668	668
Forecast payable cash flows	£ (7,364)	£ (5,611)

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Derivative Financial Instruments - Additional Information (Detail) £ in Millions	12 Months Ended
	Dec. 31, 2017 GBP (£)	Dec. 31, 2016 GBP (£)	Dec. 31, 2015 GBP (£)
Disclosure Of Derivative Financial Instruments [Abstract]
Number of cash flow hedge of equity price risk			1
Net gain arising from gains and losses transferred from the cash flow hedging reserve to net interest income	£ 183	£ 167	£ 157
Net gain arising from gains and losses transferred from the cash flow hedging reserve to net net trading and other income	£ (89)	£ 3,909	£ (462)

XML

Financial Assets Designated at Fair Value - Disclosure of Financial Assets Designated at Fair Value (Detail) - GBP (£) £ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of fair value measurement of assets [line items]
Financial assets designated at fair value	£ 2,096	£ 2,140
Loans and Advances to Customers [member]
Disclosure of fair value measurement of assets [line items]
Financial assets designated at fair value	1,549	1,731
Loans and Advances to Customers [member] | Loans to Housing Associations [member]
Disclosure of fair value measurement of assets [line items]
Financial assets designated at fair value	1,034	1,215
Loans and Advances to Customers [member] | Other Loans [member]
Disclosure of fair value measurement of assets [line items]
Financial assets designated at fair value	515	516
Debt Securities [member]
Disclosure of fair value measurement of assets [line items]
Financial assets designated at fair value	£ 547	£ 409

XML

Financial Assets Designated at Fair Value - Additional Information (Detail) - GBP (£) £ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Financial assets designated as measured at fair value through profit or loss [abstract]
Net gain attributable to changes in credit risk for loans and advances	£ 49	£ 40	£ 39
Cumulative net loss attributable to changes in credit risk for loans and advances	£ 120	£ 169

XML

Loans and Advances to Banks - Summary of Loans and Advances to Banks (Detail) - GBP (£) £ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of loans and advances to banks [line items]
Loans and advances to banks	£ 5,927	£ 4,348
Securities Purchased Under Resale Agreements [member]
Disclosure of loans and advances to banks [line items]
Securities purchased under resale agreements	2,464	1,462
Placements with Other Banks [member]
Disclosure of loans and advances to banks [line items]
Placements with other banks	£ 3,463	£ 2,886

XML

Loans and Advances to Customers - Summary of Net Loans and Advances to Customers (Detail) - GBP (£) £ in Millions	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of loans and advances to customers [line items]
Loans secured on residential properties	£ 155,355	£ 154,727
Corporate loans	31,006	31,978
Finance leases	6,710	6,730
Secured advances		10
Other unsecured loans	6,230	6,165
Loans and advances to customers	200,508	200,727
Impairment loss allowances	(940)	(921)	£ (1,108)
Residual value and voluntary termination provisions	(78)	(68)
Net loans and advances to customers	199,490	199,738
Fellow Banco Santander subsidiaries and joint ventures [member]
Disclosure of loans and advances to customers [line items]
Amounts due from related parties	1,199	1,112
Santander UK Group Holdings plc [member]
Disclosure of loans and advances to customers [line items]
Amounts due from related parties	£ 8	£ 5

XML

Loans and Advances to Customers - Summary of Movement in Impairment Loss Allowances (Detail) - GBP (£) £ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2017	Dec. 31, 2016
Movement in impairment loss allowances for loan and advances to customers [line items]
Beginning Balance	£ 921	£ 1,108
(Release)/charge to the income statement	257	132	£ 156
Write-offs and other items	(238)	(319)
Ending Balance	940	921	1,108
- Observed				£ 609	£ 503
- Incurred but not yet observed				331	418
Ending Balance	921	1,108	1,108	940	921
Recoveries, net of collection costs	54	65
Advances Secured on Residential Property [member]
Movement in impairment loss allowances for loan and advances to customers [line items]
Beginning Balance	279	424
(Release)/charge to the income statement	(37)	(116)
Write-offs and other items	(17)	(29)
Ending Balance	225	279	424
- Observed				105	130
- Incurred but not yet observed				120	149
Ending Balance	279	424	424	225	279
Recoveries, net of collection costs	3	4
Corporate Loans [member]
Movement in impairment loss allowances for loan and advances to customers [line items]
Beginning Balance	382	395
(Release)/charge to the income statement	172	59
Write-offs and other items	(64)	(72)
Ending Balance	490	382	395
- Observed				433	287
- Incurred but not yet observed				57	95
Ending Balance	382	395	395	490	382
Recoveries, net of collection costs	1	3
Finance leases [member]
Movement in impairment loss allowances for loan and advances to customers [line items]
Beginning Balance	45	20
(Release)/charge to the income statement	20	47
Write-offs and other items	(19)	(22)
Ending Balance	46	45	20
- Observed				12	13
- Incurred but not yet observed				34	32
Ending Balance	45	20	20	46	45
Recoveries, net of collection costs	6	2
Other Unsecured Advances [member]
Movement in impairment loss allowances for loan and advances to customers [line items]
Beginning Balance	215	269
(Release)/charge to the income statement	102	142
Write-offs and other items	(138)	(196)
Ending Balance	179	215	269
- Observed				59	73
- Incurred but not yet observed				120	142
Ending Balance	215	269	£ 269	£ 179	£ 215
Recoveries, net of collection costs	£ 44	£ 56

XML

Loans and Advances to Customers - Summary of Movement in Impairment Loss Allowances (Parenthetical) (Detail) - GBP (£) £ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of impairment loss recognised or reversed [abstract]
Mortgage write-offs of financial assets	£ 22	£ 33	£ 40

XML

Loans and Advances to Customers - Summary of Finance Lease and Hire Purchase Contract Receivables (Detail) - GBP (£) £ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of finance lease and hire purchase contract receivables [line items]
Gross investment	£ 7,163	£ 7,217
Unearned finance income	(453)	(487)
Net investment	6,710	6,730
Not Later Than 1 Year [member]
Disclosure of finance lease and hire purchase contract receivables [line items]
Gross investment	3,633	3,047
Unearned finance income	(177)	(183)
Net investment	3,456	2,864
In more than 1 year but not more than 5 years [member]
Disclosure of finance lease and hire purchase contract receivables [line items]
Gross investment	3,316	3,906
Unearned finance income	(226)	(236)
Net investment	3,090	3,670
In More Than 5 Years [member]
Disclosure of finance lease and hire purchase contract receivables [line items]
Gross investment	214	264
Unearned finance income	(50)	(68)
Net investment	£ 164	£ 196

XML

Loans and Advances To Customers - Additional Information (Detail) - GBP (£) £ in Millions	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of finance lease and hire purchase contract receivables [abstract]
Unguaranteed residual value of leases	£ 886	£ 748
Contingent rent income	£ 5	£ 4	£ 4

XML

Securitisations and Covered Bonds - Summary of Gross Asset Securitised (Detail) - GBP (£) £ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of gross asset securitised [line items]
Gross asset securitised	£ 16,740	£ 20,330
Master Trust Structures [member]
Disclosure of gross asset securitised [line items]
Gross asset securitised	13,924	17,953
Other Securitisation Structures [member]
Disclosure of gross asset securitised [line items]
Gross asset securitised	2,816	2,377
Holmes [member]
Disclosure of gross asset securitised [line items]
Gross asset securitised	4,299	5,560
Holmes [member] | Master Trust Structures [member]
Disclosure of gross asset securitised [line items]
Gross asset securitised	4,299	5,560
Fosse [member]
Disclosure of gross asset securitised [line items]
Gross asset securitised	5,732	7,182
Fosse [member] | Master Trust Structures [member]
Disclosure of gross asset securitised [line items]
Gross asset securitised	5,732	7,182
Langton [member]
Disclosure of gross asset securitised [line items]
Gross asset securitised	3,893	5,211
Langton [member] | Master Trust Structures [member]
Disclosure of gross asset securitised [line items]
Gross asset securitised	3,893	5,211
Motor [member]
Disclosure of gross asset securitised [line items]
Gross asset securitised	1,318	1,117
Motor [member] | Other Securitisation Structures [member]
Disclosure of gross asset securitised [line items]
Gross asset securitised	1,318	1,117
Auto ABS UK Loans [member]
Disclosure of gross asset securitised [line items]
Gross asset securitised	1,498	1,260
Auto ABS UK Loans [member] | Other Securitisation Structures [member]
Disclosure of gross asset securitised [line items]
Gross asset securitised	£ 1,498	£ 1,260

XML

Securitisations and Covered Bonds - Summary of Outstanding Balances of Assets Securitised and Notes in Issue (Non-Recourse Finance) (Detail) - GBP (£) £ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure of outstanding balances of assets securitised and notes in issue [line items]
Gross assets securitised	£ 16,740	£ 20,330
Holmes Master Issuer plc - 2010/1 [member]
Disclosure of outstanding balances of assets securitised and notes in issue [line items]
Closing date of securitisation	12 November 2010
Gross assets securitised		318
2017 Notes in issue		383
Holmes Master Issuer Plc - 2011/3 [member]
Disclosure of outstanding balances of assets securitised and notes in issue [line items]
Closing date of securitisation	21 September 2011
Gross assets securitised	£ 534	512
2017 Notes in issue	£ 561	618
Holmes Master Issuer Plc - 2012/1 [member]
Disclosure of outstanding balances of assets securitised and notes in issue [line items]
Closing date of securitisation	24 January 2012
Gross assets securitised		98
2017 Notes in issue		118
Holmes Master Issuer Plc - 2012/2 [member]
Disclosure of outstanding balances of assets securitised and notes in issue [line items]
Closing date of securitisation	17 April 2012
Gross assets securitised		585
2017 Notes in issue		706
Holmes Master Issuer Plc - 2012/3 [member]
Disclosure of outstanding balances of assets securitised and notes in issue [line items]
Closing date of securitisation	7 June 2012
Gross assets securitised		426
2017 Notes in issue		514
Holmes Master Issuer Plc - 2013/1 [member]
Disclosure of outstanding balances of assets securitised and notes in issue [line items]
Closing date of securitisation	30 May 2013
Gross assets securitised		28
Issued to PSA Finance UK Limited as collateral		34
Holmes Master Issuer Plc - 2016/1 [member]
Disclosure of outstanding balances of assets securitised and notes in issue [line items]
Closing date of securitisation	26 May 2016
Gross assets securitised	£ 694	1,017
2017 Notes in issue	340	644
Issued to PSA Finance UK Limited as collateral	£ 389	584
Holmes Master Issuer plc - 2017/1 [member]
Disclosure of outstanding balances of assets securitised and notes in issue [line items]
Closing date of securitisation	16 October 2017
Gross assets securitised	£ 474
2017 Notes in issue	499
Holmes Trustees Ltd [member]
Disclosure of outstanding balances of assets securitised and notes in issue [line items]
Gross assets securitised	2,597	2,576
Holmes [member]
Disclosure of outstanding balances of assets securitised and notes in issue [line items]
Gross assets securitised	4,299	5,560
2017 Notes in issue	1,400	2,983
Issued to PSA Finance UK Limited as collateral	389	618
Less: Held by the Santander UK group	0	0
Total securitisations (See Note 25)	£ 1,400	2,983
Fosse Master Issuer Plc - 2010/1 [member]
Disclosure of outstanding balances of assets securitised and notes in issue [line items]
Closing date of securitisation	12 March 2010
Gross assets securitised		446
2017 Notes in issue		535
Fosse Master Issuer Plc - 2011/2 [member]
Disclosure of outstanding balances of assets securitised and notes in issue [line items]
Closing date of securitisation	6 December 2011
Gross assets securitised	£ 176	204
2017 Notes in issue	191	211
Issued to PSA Finance UK Limited as collateral	£ 34	34
Fosse Master Issuer Plc - 2012/1 [member]
Disclosure of outstanding balances of assets securitised and notes in issue [line items]
Closing date of securitisation	22 May 2012
Gross assets securitised		700
2017 Notes in issue		738
Issued to PSA Finance UK Limited as collateral		105
Fosse Master Issuer Plc - 2014/1 [member]
Disclosure of outstanding balances of assets securitised and notes in issue [line items]
Closing date of securitisation	19 June 2014
Gross assets securitised		366
2017 Notes in issue		441
Fosse Master Issuer Plc - 2015/1 [member]
Disclosure of outstanding balances of assets securitised and notes in issue [line items]
Closing date of securitisation	24 March 2015
Gross assets securitised	£ 333	559
2017 Notes in issue	425	673
Fosse Master Trust Ltd [member]
Disclosure of outstanding balances of assets securitised and notes in issue [line items]
Gross assets securitised	5,223	4,907
Fosse [member]
Disclosure of outstanding balances of assets securitised and notes in issue [line items]
Gross assets securitised	5,732	7,182
2017 Notes in issue	616	2,598
Issued to PSA Finance UK Limited as collateral	34	139
Less: Held by the Santander UK group	0	0
Total securitisations (See Note 25)	£ 616	2,598
Langton Securities (2010-1) Plc [member]
Disclosure of outstanding balances of assets securitised and notes in issue [line items]
Closing date of securitisation	1 October 2010
Gross assets securitised	£ 986	987
Issued to PSA Finance UK Limited as collateral	£ 984	984
Langton Securities (2008-1) Plc [member]
Disclosure of outstanding balances of assets securitised and notes in issue [line items]
Closing date of securitisation	23 March 2011
Gross assets securitised	£ 1,373	1,376
Issued to PSA Finance UK Limited as collateral	1,371	1,372
Langton Master Trust Ltd [member]
Disclosure of outstanding balances of assets securitised and notes in issue [line items]
Gross assets securitised	1,534	2,848
Langton [member]
Disclosure of outstanding balances of assets securitised and notes in issue [line items]
Gross assets securitised	3,893	5,211
Issued to PSA Finance UK Limited as collateral	2,355	2,356
Motor [member]
Disclosure of outstanding balances of assets securitised and notes in issue [line items]
Gross assets securitised	1,318	1,117
2017 Notes in issue	852	650
Issued to PSA Finance UK Limited as collateral	514	572
Less: Held by the Santander UK group	0	0
Total securitisations (See Note 25)	£ 852	650
Motor 2014-1 Plc [member]
Disclosure of outstanding balances of assets securitised and notes in issue [line items]
Closing date of securitisation	16 April 2014
Gross assets securitised		125
Issued to PSA Finance UK Limited as collateral		136
Motor 2015-1 Plc [member]
Disclosure of outstanding balances of assets securitised and notes in issue [line items]
Closing date of securitisation	2 March 2015
Gross assets securitised	£ 164	436
2017 Notes in issue	38	352
Issued to PSA Finance UK Limited as collateral	£ 136	136
Motor 2016-1 Plc [member]
Disclosure of outstanding balances of assets securitised and notes in issue [line items]
Closing date of securitisation	15 December 2016
Gross assets securitised	£ 578	556
2017 Notes in issue	300	298
Issued to PSA Finance UK Limited as collateral	£ 300	300
Motor 2017-1 Plc [member]
Disclosure of outstanding balances of assets securitised and notes in issue [line items]
Closing date of securitisation	20 September 2017
Gross assets securitised	£ 576
2017 Notes in issue	514
Issued to PSA Finance UK Limited as collateral	78
Auto ABS UK Loans [member]
Disclosure of outstanding balances of assets securitised and notes in issue [line items]
Gross assets securitised	1,498	1,260
2017 Notes in issue	1,240	1,275
Issued to PSA Finance UK Limited as collateral	306	113
Less: Held by the Santander UK group	0	0
Total securitisations (See Note 25)	£ 1,240	1,275
Auto ABS UK Loans Plc [member]
Disclosure of outstanding balances of assets securitised and notes in issue [line items]
Closing date of securitisation	30 April 2017
Gross assets securitised	£ 1,111	1,260
2017 Notes in issue	925	1,275
Issued to PSA Finance UK Limited as collateral	£ 221	£ 113
Auto ABS UK loans 2017 Plc [member]
Disclosure of outstanding balances of assets securitised and notes in issue [line items]
Closing date of securitisation	15 November 2017
Gross assets securitised	£ 387
2017 Notes in issue	315
Issued to PSA Finance UK Limited as collateral	£ 85

XML

Securitisations and Covered Bonds - Additional Information (Detail) - GBP (£)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure of gross asset securitised [line items]
Covered bonds issued	£ 2,300,000,000	£ 2,200,000,000
Covered bonds redeemed	3,300,000,000	800,000,000
Holmes Trustees Ltd [member]
Disclosure of gross asset securitised [line items]
Cash deposit	0	231,000,000
Holmes Funding Ltd [member]
Disclosure of gross asset securitised [line items]
Beneficial interest in residential mortgage loan	1,700,000,000	3,000,000,000
Holmes Master Issuer Plc [member]
Disclosure of gross asset securitised [line items]
Issue of notes, mortgaged-backed	500,000,000	1,200,000,000
Redemption of securities, mortgaged-backed	2,000,000,000	3,700,000,000
Fosse [member]
Disclosure of gross asset securitised [line items]
Cash deposit	24,000,000	260,000,000
Issue of notes, mortgaged-backed	0	0
Redemption of securities, mortgaged-backed	1,900,000,000	2,900,000,000
Auto ABS UK Loans Plc [member]
Disclosure of gross asset securitised [line items]
Issue of notes, mortgaged-backed	500,000,000	500,000,000
Redemption of securities, mortgaged-backed	700,000,000	400,000,000
Auto ABS UK loans 2017 Plc [member]
Disclosure of gross asset securitised [line items]
Issue of notes, mortgaged-backed	400,000,000	0
Motor [member]
Disclosure of gross asset securitised [line items]
Issue of notes, mortgaged-backed	500,000,000	600,000,000
Redemption of securities, mortgaged-backed	300,000,000	500,000,000
Amount borrowed under senior loan facility	£ 0	£ 200,000,000

XML

Securitisations and Covered Bonds - Summary of Outstanding Balances of Loans and Advances assigned to Covered Bond Programme (Detail) - GBP (£) £ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of outstanding balances of assets securitised and notes in issue [line items]
Gross assets assigned	£ 16,740	£ 20,330
Euro 35bn Global Covered Bond Programme [member]
Disclosure of outstanding balances of assets securitised and notes in issue [line items]
Gross assets assigned	19,772	20,263
Notes in issue	16,866	17,941
Less: Held by the Santander UK group	(1,067)	(1,313)
Total covered bonds (See Note 25)	£ 15,799	£ 16,628

XML

Transfers of Financial Assets Not Qualifying for Derecognition - Additional Information (Detail)	Dec. 31, 2017 GBP (£)
Disclosure of transferred financial assets that are not derecognised in their entirety [abstract]
Assets subject to partial derecognition	£ 0

XML

Transfers of Financial Assets Not Qualifying for Derecognition - Carrying Amount of Financial Assets that Did Not Qualify for Derecognition and their Associated Financial Liabilities (Detail) - GBP (£) £ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of continuing involvement in derecognised financial assets [line items]
Carrying amount of financial assets not derecognised in their entirety	£ 23,957	£ 20,910
Carrying amount of associated financial liabilities	(12,077)	(11,382)
Sale and Repurchase Agreements [member]
Disclosure of continuing involvement in derecognised financial assets [line items]
Carrying amount of financial assets not derecognised in their entirety	10,808	5,600
Carrying amount of associated financial liabilities	(7,734)	(3,831)
Securities Lending [member]
Disclosure of continuing involvement in derecognised financial assets [line items]
Carrying amount of financial assets not derecognised in their entirety	302	244
Carrying amount of associated financial liabilities	(235)	(117)
Securitisations [member]
Disclosure of continuing involvement in derecognised financial assets [line items]
Carrying amount of financial assets not derecognised in their entirety	12,847	15,066
Carrying amount of associated financial liabilities	£ (4,108)	£ (7,434)

XML

Financial Investments - Summary of Financial Investments (Detail) - GBP (£) £ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of financial investments [line items]
Financial investments	£ 17,611	£ 17,466
Loans and Receivables Securities [member] | Asset-backed Securities [member]
Disclosure of financial investments [line items]
Financial investments	2,180	257
Available-for-Sale Debt Securities [member] | Debt Securities [member]
Disclosure of financial investments [line items]
Financial investments	8,772	10,449
Available-for-Sale Debt Securities [member] | Equity Securities [member]
Disclosure of financial investments [line items]
Financial investments	81	112
Held-to-Maturity Debt Securities [member] | Debt Securities [member]
Disclosure of financial investments [line items]
Financial investments	£ 6,578	£ 6,648

XML

Interests in Other Entities - Schedule of Interests in Other Entities (Detail) - GBP (£) £ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of interest in other entities [Abstract]
Joint ventures	£ 73	£ 61
Total	£ 73	£ 61

XML

Interests In Other Entities - Additional Information (Detail) - GBP (£) £ in Millions		12 Months Ended
	Jan. 01, 2018	Jan. 31, 2017	Jan. 31, 2016
Santander UK Operations Ltd [member] | Events After Reporting Period [member]
Disclosure of information about unconsolidated subsidiaries [line items]
Percentage of ownership in subsidiaries	100.00%
Santander UK Technology Ltd [member] | Events After Reporting Period [member]
Disclosure of information about unconsolidated subsidiaries [line items]
Cash consideration	£ 55
Produban servicios informaticos generales SI [member] | Events After Reporting Period [member]
Disclosure of information about unconsolidated subsidiaries [line items]
Cash consideration	£ 17
Subsidiaries with material non-controlling interests [member]
Disclosure of information about unconsolidated subsidiaries [line items]
Percentage of ownership in subsidiaries		50.00%	50.00%

XML

Interests in Other Entities - Schedule of Subsidiaries With Significant Non-Controlling Interests (Detail) - GBP (£) £ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016		Dec. 31, 2015
Disclosure of subsidiaries [line items]
Profit attributable to non-controlling interests	£ 21	£ 27		£ 25
Accumulated non-controlling interests of the subsidiary	152	150
Total assets	314,765	302,511	[1]	280,775
Total liabilities	298,560	287,058		265,747
Profit for the year	1,256	1,319		964
Total comprehensive income for the year	934	1,134		£ 1,235
Subsidiaries with material non-controlling interests [member]
Disclosure of subsidiaries [line items]
Profit attributable to non-controlling interests	21	27
Accumulated non-controlling interests of the subsidiary	152	150
Dividends paid to non-controlling interests	19	12
Total assets	3,215	3,450
Total liabilities	2,909	3,417
Profit for the year	43	55
Total comprehensive income for the year	£ 43	£ 55

[1] Restated to reflect the change in accounting policy relating to business combinations between entities under common control, as described in Note 1.

XML

Interests In Other Entities - Interests in Consolidated Structured Entities - Additional Information (Detail) - GBP (£) £ in Millions	Dec. 31, 2017	Dec. 31, 2016
Santander UK Foundation Limited [member]
Disclosure of information about consolidated structured entities [line items]
Available for sale securities	£ 16	£ 15

XML

Interests In Other Entities - Interests in Joint Ventures - Additional Information (Detail) - GBP (£) £ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure of information about unconsolidated subsidiaries [line items]
Carrying value of interest in joint venture	£ 73	£ 61
Joint ventures [member]
Disclosure of information about unconsolidated subsidiaries [line items]
Profit after tax	12	13
Carrying value of interest in joint venture	73	61
Commitments and contingent liabilities	£ 0	£ 0

XML

Interests In Other Entities - Interests in Unconsolidated Structured Entities - Additional Information (Detail) £ in Millions		12 Months Ended
	Feb. 07, 2000 USD ($)	Dec. 31, 2017 GBP (£)	Dec. 31, 2016 GBP (£)
Disclosure of information about unconsolidated subsidiaries [line items]
Non-cumulative trust preferred securities issued | $	$ 1,000,000,000
Non-cumulative trust preferred securities interest rate	8.963%
Number of credit protection vehicles		2
Credit Linked Notes issued		£ 43
Grafton [member]
Disclosure of information about unconsolidated subsidiaries [line items]
Credit Linked Notes issued		100
Red 1 [member]
Disclosure of information about unconsolidated subsidiaries [line items]
Credit Linked Notes issued		87
Santander (UK) Common Investment Fund [member]
Disclosure of information about unconsolidated subsidiaries [line items]
Defined benefit assets and obligations		£ 11,626	£ 11,125
Name of subsidiary		Santander (UK) Common Investment Fund
Abbey National Capital Trust I [member]
Disclosure of information about unconsolidated subsidiaries [line items]
Name of subsidiary		Abbey National Capital Trust I
Ownership interest in trust preferred entities by Santander UK plc		100.00%
Abbey National Capital LP [member]
Disclosure of information about unconsolidated subsidiaries [line items]
Name of subsidiary		Abbey National Capital LP
Ownership interest in trust preferred entities by Santander UK plc		100.00%

XML

Intangible Assets - Schedule of Goodwill (Detail) - GBP (£) £ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of goodwill [line items]
Net book value	£ 1,203	£ 1,203
Cost [member]
Disclosure of goodwill [line items]
Net book value	1,285	1,285
Accumulated Impairment [member]
Disclosure of goodwill [line items]
Net book value	£ (82)	£ (82)

XML

Intangible Assets - Additional Information (Detail) - GBP (£)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure of detailed information about intangible assets [abstract]
Goodwill impairment recognised	£ 0	£ 0
Increase/(decrease) in discount rate percentage	0.60%
Discount rate percentage	10.80%	11.40%

XML

Intangible Assets - Schedule of Goodwill for Cash Generating Units (Detail) - GBP (£) £ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of information for cash-generating units [line items]
Goodwill	£ 1,203	£ 1,203
Discount rate	10.80%	11.40%
Personal Financial Services [member]
Disclosure of information for cash-generating units [line items]
Goodwill	£ 1,169	£ 1,169
Discount rate	10.80%	11.40%
Growth rate	1.00%	2.00%
Private Banking [member]
Disclosure of information for cash-generating units [line items]
Goodwill	£ 30	£ 30
Discount rate	10.80%	11.40%
Growth rate	1.00%	1.00%
Other [member]
Disclosure of information for cash-generating units [line items]
Goodwill	£ 4	£ 4
Discount rate	10.80%	11.40%
Growth rate	1.00%	2.00%

XML

Intangible Assets - Schedule of Goodwill for Cash Generating Units (Parenthetical) (Detail)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure of information for cash-generating units [abstract]
Terminal growth rate	1.50%	2.00%

XML

Intangible Assets - Schedule of Other Intangibles (Detail) - GBP (£) £ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure of detailed information about intangible assets [line items]
Beginning balance	£ 482	£ 397
Additions	205	213
Disposals		(7)
Charge	(116)	(76)
Impairment	(32)	(45)
Ending balance	539	482
Cost [member]
Disclosure of detailed information about intangible assets [line items]
Beginning balance	760	601
Additions	205	213
Disposals	(3)	(54)
Ending balance	962	760
Accumulate Amortisation / Impairment [member]
Disclosure of detailed information about intangible assets [line items]
Beginning balance	(278)	(204)
Disposals	3	47
Charge	(116)	(76)
Impairment	(32)	(45)
Ending balance	£ (423)	£ (278)

XML

Deposits by Banks - Schedule of Deposits by Banks (Detail) - GBP (£) £ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of deposits from banks [line items]
Deposits from banks	£ 13,784	£ 9,769
Items in Course of Transmission [member]
Disclosure of deposits from banks [line items]
Deposits from banks	303	308
Securities Sold Under Repurchase Agreements [member]
Disclosure of deposits from banks [line items]
Deposits from banks	1,076	2,384
Deposits Held as Collateral [member]
Disclosure of deposits from banks [line items]
Deposits from banks	1,760	778
Other Deposits [member]
Disclosure of deposits from banks [line items]
Deposits from banks	£ 10,645	£ 6,299

XML

Deposits by Banks - Schedule of Deposits by Banks (Parenthetical) (Detail) - GBP (£) £ in Billions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of deposits from banks [abstract]
Drawdown from TFS	£ 8.5	£ 4.5

XML

Deposits by Customers - Schedule of Deposits by Customers (Detail) - GBP (£) £ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of deposits from customers [line items]
Deposits from customers	£ 183,648	£ 177,172
Current and Demand Accounts - Interest Bearing [member]
Disclosure of deposits from customers [line items]
Deposits from customers	85,749	85,967
Current and Demand Accounts - Non-interest Bearing [member]
Disclosure of deposits from customers [line items]
Deposits from customers	2	67
Savings Accounts [member]
Disclosure of deposits from customers [line items]
Deposits from customers	70,461	58,305
Time Deposits [member]
Disclosure of deposits from customers [line items]
Deposits from customers	19,951	27,203
Securities Sold Under Repurchase Agreements [member]
Disclosure of deposits from customers [line items]
Deposits from customers	502	502
Amounts Due to Fellow Banco Santander Subsidiaries [member]
Disclosure of deposits from customers [line items]
Deposits from customers	727	664
Santander UK Group Holdings plc [member]
Disclosure of deposits from customers [line items]
Deposits from customers	£ 6,256	£ 4,464

XML

Deposits by Customers - Schedule of Deposits by Customers (Parenthetical) (Detail) - GBP (£) £ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure of deposits from customers [line items]
Equity index-linked deposits	£ 183,648	£ 177,172
Equity Index Linked Deposits [member]
Disclosure of deposits from customers [line items]
Equity index-linked deposits	1,301	1,618
Capital amount guaranteed or protected	1,301	1,618
Capital amount of return guaranteed	£ 67	£ 129

XML

Trading Liabilities - Schedule of Trading Liabilities (Detail) - GBP (£) £ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of financial liabilities held for trading [line items]
Trading liabilities	£ 31,109	£ 15,560
Securities Sold Under Repurchase Agreements [member]
Disclosure of financial liabilities held for trading [line items]
Trading liabilities	25,504	8,798
Short Positions in Securities and Unsettled Trades [member]
Disclosure of financial liabilities held for trading [line items]
Trading liabilities	3,694	2,801
Cash Collateral [member]
Disclosure of financial liabilities held for trading [line items]
Trading liabilities	£ 1,911	3,535
Short-term Deposits [member]
Disclosure of financial liabilities held for trading [line items]
Trading liabilities		£ 426

XML

Financial Liabilities Designated at Fair Value - Summary of Financial Liabilities Designated at Fair Value (Detail) - GBP (£) £ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of financial liabilities designated at fair value [line items]
Financial liabilities designated at fair value	£ 2,315	£ 2,440
US$10bn Euro Commercial Paper Programmes [member]
Disclosure of financial liabilities designated at fair value [line items]
Financial liabilities designated at fair value	387	454
US$30bn Euro Medium Term Note Programme [member]
Disclosure of financial liabilities designated at fair value [line items]
Financial liabilities designated at fair value	169	184
Structured Notes Programmes [member]
Disclosure of financial liabilities designated at fair value [line items]
Financial liabilities designated at fair value	932	1,137
Warrants Programme [member]
Disclosure of financial liabilities designated at fair value [line items]
Financial liabilities designated at fair value		2
Eurobonds [member]
Disclosure of financial liabilities designated at fair value [line items]
Financial liabilities designated at fair value	147	137
Structured Deposits [member]
Disclosure of financial liabilities designated at fair value [line items]
Financial liabilities designated at fair value	£ 680	£ 526

XML

Financial Liabilities Designated at Fair Value - Additional Information (Detail) - GBP (£) £ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of financial liabilities designated at fair value [line items]
Net gain (loss) on financial liabilities designated at fair value, attributable to changes in credit risk	£ (29)	£ (6)	£ 23
Accumulated gain (loss) on financial liabilities designated at fair value, attributable to changes in credit risk	(7)	22
Difference between carrying amount of financial liability and amount contractually required to pay at maturity to holder of obligation	4	£ 35
Financial Liabilities at Fair Value, Class [member]
Disclosure of financial liabilities designated at fair value [line items]
Net gain (loss) on financial liabilities designated at fair value, attributable to changes in credit risk	37
Cash changes	(263)
Non-cash changes	138
Unrealised foreign exchange differences	(46)
Other changes	£ 147

XML

Debt Securities In Issue - Summary of Debt Securities in Issue (Detail) - GBP (£) £ in Millions	Dec. 31, 2017	Dec. 31, 2016
Debt securities in issue [line items]
Debt Securities	£ 42,633	£ 50,346
Credit Linked Notes	43
Medium Term Notes [member]
Debt securities in issue [line items]
Debt Securities	18,002	20,995
Euro 35bn Global Covered Bond Programme [member]
Debt securities in issue [line items]
Debt Securities	15,799	16,628
Certificates of Deposit [member]
Debt securities in issue [line items]
Debt Securities	4,681	5,217
Securitisation Programmes [member]
Debt securities in issue [line items]
Debt Securities	4,108	7,506
US$30bn Euro Medium Term Note Programme [member]
Debt securities in issue [line items]
Debt Securities	8,816	10,818
US SEC - Registered - Santander UK Plc [member]
Debt securities in issue [line items]
Debt Securities	6,280	7,499
US$20bn Commercial Paper Programmes [member]
Debt securities in issue [line items]
Debt Securities	£ 2,906	£ 2,678

XML

Debt Securities In Issue - Summary of Debt Securities in Issue (Parenthetical) (Detail) £ in Millions, € in Billions, $ in Billions	Dec. 31, 2017 GBP (£)	Dec. 31, 2017 EUR (€)	Dec. 31, 2017 USD ($)	Dec. 31, 2016 GBP (£)	Dec. 31, 2016 EUR (€)	Dec. 31, 2016 USD ($)
Debt securities in issue [line items]
Notional amount | £	£ 1,125,419			£ 1,234,879
US$30bn Euro Medium Term Note Programme [member]
Debt securities in issue [line items]
Notional amount			$ 30			$ 30
US$20bn Commercial Paper Programmes [member]
Debt securities in issue [line items]
Notional amount			$ 20			$ 20
Euro 35bn Global Covered Bond Programme [member]
Debt securities in issue [line items]
Notional amount | €		€ 35			€ 35

XML

Debt Securities In Issue - Additional Information (Detail) £ in Millions	12 Months Ended
	Dec. 31, 2017 GBP (£)
PSA Finance UK Limited [member]
Debt securities in issue [line items]
Percentage of losses in portfolio having credit protection	7.60%
Debt Securities [member]
Debt securities in issue [line items]
Cash changes	£ (6,688)
Non-cash changes	(1,025)
Unrealised foreign exchange differences	(929)
Other changes	£ (96)

XML

Subordinated Liabilities - Schedule of Subordinated Liabilities (Detail) - GBP (£) £ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of Subordinated Liabilities [Abstract]
325m Sterling Preference Shares	£ 344	£ 344
175m Fixed/Floating Rate Tier One Preferred Income Capital Securities	2	2
Undated subordinated liabilities	584	768
Dated subordinated liabilities	2,863	3,189
Subordinated liabilities	£ 3,793	£ 4,303

XML

Subordinated Liabilities - Schedule of Subordinated Liabilities (Parenthetical) (Detail) - GBP (£) £ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of Subordinated Liabilities [Abstract]
325m Sterling Preference Shares, Notional amount	£ 325	£ 325
175m Fixed/Floating Rate Tier One Preferred Income Capital Securities, Notional amount	£ 175	£ 175

XML

Subordinated Liabilities - Additional Information (Detail) - GBP (£)	12 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Dec. 31, 2016
Disclosure of subordinated liabilities [line items]
Notional amount	£ 175,000,000		£ 175,000,000
Defaults of principal, interest or other breaches with respect to subordinated liabilities	0		£ 0
Subordinated liabilities [member]
Disclosure of subordinated liabilities [line items]
Cash changes	(52,000,000)
Non-cash changes	(458,000,000)
Unrealised foreign exchange differences	(235,000,000)
Other changes	£ (223,000,000)
7.375% 20 Year Step-up Perpetual Callable Subordinated Notes [member]
Disclosure of subordinated liabilities [line items]
Interest rate	7.375%	7.375%	7.375%
7.375% 20 Year Step-up Perpetual Callable Subordinated Notes [member] | Santander UK Plc [member]
Disclosure of subordinated liabilities [line items]
Interest rate	7.375%
Redemption percentage	91.00%
10.125% Subordinated Guaranteed Bond 2023 [member]
Disclosure of subordinated liabilities [line items]
Interest rate	10.125%		10.125%
175m Sterling Fixed/Floating Rate Tier One Preferred Income Capital Securities [member]
Disclosure of subordinated liabilities [line items]
Notional amount	£ 175,000,000
300m Fixed/Floating Rate Non-Cumulative Callable Preference Shares [member]
Disclosure of subordinated liabilities [line items]
Notional amount	300,000,000
300m Step-up Callable Perpetual Reserve Capital Instruments [member]
Disclosure of subordinated liabilities [line items]
Notional amount	£ 300,000,000

XML

Subordinated Liabilities - Summary of Undated Subordinated Liabilities (Detail) - GBP (£) £ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure of subordinated liabilities [line items]
Undated subordinated liabilities	£ 584	£ 768
10.0625% Exchangeable Subordinated Capital Securities [member]
Disclosure of subordinated liabilities [line items]
Undated subordinated liabilities	£ 205	205
Call date	Any interest payment date
7.375% 20 Year Step-up Perpetual Callable Subordinated Notes [member]
Disclosure of subordinated liabilities [line items]
Undated subordinated liabilities	£ 17	198
Call date	2020
7.125% 30 Year Step-up Perpetual Callable Subordinated Notes [member]
Disclosure of subordinated liabilities [line items]
Undated subordinated liabilities	£ 362	£ 365
Call date	2030

XML

Subordinated Liabilities - Summary of Undated Subordinated Liabilities (Parenthetical) (Detail)	1 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2017	Dec. 31, 2016
10.0625% Exchangeable Subordinated Capital Securities [member]
Disclosure of subordinated liabilities [line items]
Interest rate		10.0625%	10.0625%
7.375% 20 Year Step-up Perpetual Callable Subordinated Notes [member]
Disclosure of subordinated liabilities [line items]
Interest rate	7.375%	7.375%	7.375%
Notes maturity, year		20 years
Maturity period	20 Year	2020	2020
7.125% 30 Year Step-up Perpetual Callable Subordinated Notes [member]
Disclosure of subordinated liabilities [line items]
Interest rate		7.125%	7.125%
Notes maturity, year		30 years
Maturity period		2030	2030

XML

Subordinated Liabilities - Summary of Dated Subordinated Liabilities (Detail) - GBP (£) £ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure of subordinated liabilities [line items]
Dated subordinated liabilities	£ 2,863	£ 3,189
11.50% Subordinated Guaranteed Bond 2017 [member]
Disclosure of subordinated liabilities [line items]
Dated subordinated liabilities		£ 58
Maturity period	2017	2017
10.125% Subordinated Guaranteed Bond 2023 [member]
Disclosure of subordinated liabilities [line items]
Dated subordinated liabilities	£ 78	£ 84
Maturity period	2023	2023
9.625% Subordinated Notes 2023 [member]
Disclosure of subordinated liabilities [line items]
Dated subordinated liabilities	£ 129	£ 134
Maturity period	2023	2023
5% Subordinated Notes 2023 [member]
Disclosure of subordinated liabilities [line items]
Dated subordinated liabilities	£ 1,103	£ 1,208
Maturity period	2023	2023
4.75% Subordinated Notes 2025 [member]
Disclosure of subordinated liabilities [line items]
Dated subordinated liabilities	£ 745	£ 816
Maturity period	2025	2025
7.95% Subordinated Notes 2029 [member]
Disclosure of subordinated liabilities [line items]
Dated subordinated liabilities	£ 275	£ 307
Maturity period	2029	2029
6.50% Subordinated Notes 2030 [member]
Disclosure of subordinated liabilities [line items]
Dated subordinated liabilities	£ 40	£ 40
Maturity period	2030	2030
8.963% Subordinated Notes 2030 [member]
Disclosure of subordinated liabilities [line items]
Dated subordinated liabilities	£ 113	£ 126
Maturity period	2030	2030
5.875% Subordinated Notes 2031 [member]
Disclosure of subordinated liabilities [line items]
Dated subordinated liabilities	£ 9	£ 10
Maturity period	2031	2031
5.625% Subordinated Notes 2045 [member]
Disclosure of subordinated liabilities [line items]
Dated subordinated liabilities	£ 371	£ 406
Maturity period	2045	2045

XML

Subordinated Liabilities - Summary of Dated Subordinated Liabilities (Parenthetical) (Detail) - USD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016
11.50% Subordinated Guaranteed Bond 2017 [member]
Disclosure of subordinated liabilities [line items]
Interest rate	11.50%	11.50%
10.125% Subordinated Guaranteed Bond 2023 [member]
Disclosure of subordinated liabilities [line items]
Interest rate	10.125%	10.125%
9.625% Subordinated Notes 2023 [member]
Disclosure of subordinated liabilities [line items]
Interest rate	9.625%	9.625%
5% Subordinated Notes 2023 [member]
Disclosure of subordinated liabilities [line items]
Interest rate	5.00%	5.00%
Notional amount	$ 1,500	$ 1,500
4.75% Subordinated Notes 2025 [member]
Disclosure of subordinated liabilities [line items]
Interest rate	4.75%	4.75%
Notional amount	$ 1,000	$ 1,000
7.95% Subordinated Notes 2029 [member]
Disclosure of subordinated liabilities [line items]
Interest rate	7.95%	7.95%
Notional amount	$ 1,000	$ 1,000
6.50% Subordinated Notes 2030 [member]
Disclosure of subordinated liabilities [line items]
Interest rate	6.50%	6.50%
8.963% Subordinated Notes 2030 [member]
Disclosure of subordinated liabilities [line items]
Interest rate	8.963%	8.963%
Notional amount	$ 1,000	$ 1,000
5.875% Subordinated Notes 2031 [member]
Disclosure of subordinated liabilities [line items]
Interest rate	5.875%	5.875%
5.625% Subordinated Notes 2045 [member]
Disclosure of subordinated liabilities [line items]
Interest rate	5.625%	5.625%
Notional amount	$ 500	$ 500

XML

Provisions - Summary of Provisions Reconciliation (Detail) - GBP (£) £ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of other provisions [line items]
Beginning balance	£ 700	£ 870
Additional provisions	385	397	£ 762
Utilisation	(537)	(567)
Transfers	10
Ending balance	558	700	870
To be settled:
Ending balance	700	870	870
Not Later Than 1 Year [member]
Disclosure of other provisions [line items]
Beginning balance	500
Ending balance	344	500
To be settled:
Ending balance	500	500
More than One Year [member]
Disclosure of other provisions [line items]
Beginning balance	200
Ending balance	214	200
To be settled:
Ending balance	200	200
PPI [member]
Disclosure of other provisions [line items]
Beginning balance	457	465
Additional provisions	109	144
Utilisation	(210)	(152)
Ending balance	356	457	465
To be settled:
Ending balance	457	465	465
PPI [member] | Not Later Than 1 Year [member]
Disclosure of other provisions [line items]
Beginning balance	294
Ending balance	167	294
To be settled:
Ending balance	294	294
PPI [member] | More than One Year [member]
Disclosure of other provisions [line items]
Beginning balance	163
Ending balance	189	163
To be settled:
Ending balance	163	163
Wealth and Investment [member]
Disclosure of other provisions [line items]
Beginning balance	22	146
Utilisation	(29)	(124)
Transfers	10
Ending balance	3	22	146
To be settled:
Ending balance	22	146	146
Wealth and Investment [member] | Not Later Than 1 Year [member]
Disclosure of other provisions [line items]
Beginning balance	22
Ending balance	3	22
To be settled:
Ending balance	22	22
Other products [member]
Disclosure of other provisions [line items]
Beginning balance	14	26
Additional provisions	35	2
Utilisation	(5)	(14)
Ending balance	44	14	26
To be settled:
Ending balance	14	26	26
Other products [member] | Not Later Than 1 Year [member]
Disclosure of other provisions [line items]
Beginning balance	4
Ending balance	35	4
To be settled:
Ending balance	4	4
Other products [member] | More than One Year [member]
Disclosure of other provisions [line items]
Beginning balance	10
Ending balance	9	10
To be settled:
Ending balance	10	10
Regulatory-Related [member]
Disclosure of other provisions [line items]
Beginning balance	96	93
Additional provisions	93	141
Utilisation	(132)	(138)
Ending balance	57	96	93
To be settled:
Ending balance	96	93	93
Regulatory-Related [member] | Not Later Than 1 Year [member]
Disclosure of other provisions [line items]
Beginning balance	96
Ending balance	57	96
To be settled:
Ending balance	96	96
Vacant Property [member]
Disclosure of other provisions [line items]
Beginning balance	47	68
Additional provisions	4	(6)
Utilisation	(12)	(15)
Ending balance	39	47	68
To be settled:
Ending balance	47	68	68
Vacant Property [member] | Not Later Than 1 Year [member]
Disclosure of other provisions [line items]
Beginning balance	25
Ending balance	23	25
To be settled:
Ending balance	25	25
Vacant Property [member] | More than One Year [member]
Disclosure of other provisions [line items]
Beginning balance	22
Ending balance	16	22
To be settled:
Ending balance	22	22
Miscellaneous other provisions [member]
Disclosure of other provisions [line items]
Beginning balance	64	72
Additional provisions	144	116
Utilisation	(149)	(124)
Ending balance	59	64	72
To be settled:
Ending balance	64	72	£ 72
Miscellaneous other provisions [member] | Not Later Than 1 Year [member]
Disclosure of other provisions [line items]
Beginning balance	59
Ending balance	59	59
To be settled:
Ending balance	59	59
Miscellaneous other provisions [member] | More than One Year [member]
Disclosure of other provisions [line items]
Beginning balance	5
Ending balance		5
To be settled:
Ending balance	£ 5	£ 5

XML

Provisions - Summary of Key Drivers of PPI Provision Balance and Forecast Assumptions Used in Calculating Provision (Detail) - PPI [member]	12 Months Ended
	Dec. 31, 2017 GBP (£)
Average Redress Per Claim [member]
Disclosure of other provisions [line items]
Cumulative to 31 December 2017	£ 1,378
Future expected (unaudited)	564
Sensitivity analysis amount	100
Sensitivity analysis decrease in provision	£ 50,000,000
Inbound Complaints [member]
Disclosure of other provisions [line items]
Cumulative to 31 December 2017	1,623,000
Future expected (unaudited)	660,000
Sensitivity analysis decrease in provision	£ 9,000,000
Sensitivity analysis number	25
Outbound Complaints [member]
Disclosure of other provisions [line items]
Cumulative to 31 December 2017	487,000
Future expected (unaudited)	127,000
Sensitivity analysis decrease in provision	£ 5,000,000
Sensitivity analysis number	25
Response Rate to Outbound Contact [member]
Disclosure of other provisions [line items]
Cumulative to 31 December 2017	54.00%
Future expected (unaudited)	100.00%
Sensitivity analysis decrease in provision	£ 300,000
Sensitivity analysis rate	1.00%
Average Uphold Rate Per Claim [member]
Disclosure of other provisions [line items]
Cumulative to 31 December 2017	47.00%
Future expected (unaudited)	68.00%
Sensitivity analysis decrease in provision	£ 2,600,000
Sensitivity analysis rate	1.00%

XML

Provisions - Summary of Key Drivers of PPI Provision Balance and Forecast Assumptions Used in Calculating Provision (Parenthetical) (Detail)	12 Months Ended
	Dec. 31, 2017 GBP (£)
Disclosure of other provisions [abstract]
Cumulative average value	£ 1,378
Future average value	£ 564

XML

Provisions - Additional Information (Detail) - GBP (£)		3 Months Ended	12 Months Ended
	Apr. 25, 2017	Jun. 30, 2017	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Apr. 24, 2017
Disclosure of other provisions [line items]
Provisions			£ 558,000,000	£ 700,000,000	£ 870,000,000
Additional provision charge			385,000,000	397,000,000	762,000,000
Provisions for other liabilities and charges		£ 35,000,000	393,000,000	397,000,000	762,000,000
Reduction in amount that FSCS owes to HM Treasury	£ 4,700,000,000					£ 15,700,000,000
Purchase of securities issued by UK Asset Resolution	£ 1,500,000,000
PPI [member]
Disclosure of other provisions [line items]
Provisions			356,000,000	457,000,000	465,000,000
Additional provision charge			109,000,000	144,000,000
Specific Portfolio [member]
Disclosure of other provisions [line items]
Additional provision charge				30,000,000
Wealth and Investment [member]
Disclosure of other provisions [line items]
Provisions			3,000,000	22,000,000	146,000,000
Regulatory Related | Financial Services Compensation Scheme [member]
Disclosure of other provisions [line items]
Regulatory costs related to Financial Services Compensation Scheme (FSCS)			1,000,000	34,000,000	76,000,000
Effect of adjustments related to Financial Services Compensation Scheme (FSCS)			12,000,000
Regulatory Related Uk Bank Levy [member]
Disclosure of other provisions [line items]
Provisions			£ 44,000,000	£ 60,000,000
Bank levy rate			0.17%	0.18%
Non taxable limit of chargeable equity and liabilities				£ 20,000,000,000
Cost of UK Bank Levy Incurred			£ 92,000,000	107,000,000	£ 101,000,000
Amount paid as UK Bank Levy			£ 109,000,000	101,000,000
Regulatory Related Uk Bank Levy [member] | Top of Range [member]
Disclosure of other provisions [line items]
UK Bank Levy			0.21%
Regulatory Related Uk Bank Levy [member] | Bottom of Range [member]
Disclosure of other provisions [line items]
UK Bank Levy			0.10%
Provision for Past Business Review [member]
Disclosure of other provisions [line items]
Additional provision charge				32,000,000
August 2016 FCA Papers [member]
Disclosure of other provisions [line items]
Additional provision charge				£ 114,000,000

XML

Retirement Benefit Plans - Summary of Retirement Benefit Plans (Detail) - GBP (£) £ in Millions	Dec. 31, 2017	Dec. 31, 2016
Assets/(liabilities)
Surplus (deficit) in plan	£ 150
Total net assets	163	£ 136
Unfunded Defined Benefit Pension Scheme [member]
Assets/(liabilities)
Surplus (deficit) in plan	(41)	(39)
Surplus [member] | Funded Defined Benefit Pension Scheme [member]
Assets/(liabilities)
Surplus (deficit) in plan	449	398
Deficit [member]
Assets/(liabilities)
Surplus (deficit) in plan	125
Deficit [member] | Funded Defined Benefit Pension Scheme [member]
Assets/(liabilities)
Surplus (deficit) in plan	£ (245)	£ (223)

XML

Retirement Benefit Plans - Summary of Remeasurement (Gains)/Losses Recognised In Other Comprehensive Income (Detail) - GBP (£) £ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of net defined benefit liability (asset) [abstract]
Pension remeasurement	£ 103	£ 528	£ (319)

XML

Retirement Benefit Plans - Additional Information (Detail)	12 Months Ended
	Dec. 31, 2017 GBP (£) Directors	Dec. 31, 2016 GBP (£)	Dec. 31, 2015 GBP (£)	Mar. 01, 2015
Disclosure of defined benefit plans [line items]
Defined contribution expense	£ 54,000,000	£ 52,000,000	£ 50,000,000
Percentage of employee covered defined benefit pension schemes	17.00%	18.00%
Number of directors selected | Directors	7
Number of directors nominated | Directors	7
Salary increase cap	1.00%	1.00%	1.00%
Equity securities hold	£ 0	£ 0
Property occupied	0	0
Other assets occupied	0	0
Contribution to scheme based on agreement	£ 163,000,000	£ 199,000,000
Probability of death of male	104.00%	108.00%
Probability of death of female	82.00%	86.00%
Improvements to life expectancy of male employees	1.25%	1.50%
Improvements to life expectancy of female employees	1.25%	1.25%
Assumed retiring age	60 years
Average retiring age of male employee	27 years 4 months 24 days	27 years 9 months 18 days
Average retiring age of female employee	30 years 1 month 6 days	30 years 3 months 19 days
Average age for retirement	40 years
Surplus (deficit) in plan	£ 150,000,000
Accounting surplus	£ 163,000,000	£ 136,000,000
Average duration of defined benefit obligation	20 years 1 month 6 days	21 years
Deficit [member]
Disclosure of defined benefit plans [line items]
Surplus (deficit) in plan	£ 125,000,000
Top of Range [member] | Quoted Equities [member]
Disclosure of defined benefit plans [line items]
Strategic asset allocation target	20.00%
Top of Range [member] | Property and Alternatives [member]
Disclosure of defined benefit plans [line items]
Strategic asset allocation target	30.00%
Bottom of Range [member] | Debt Instruments [member]
Disclosure of defined benefit plans [line items]
Strategic asset allocation target	50.00%
Santander CF Trustee Limited [member]
Disclosure of defined benefit plans [line items]
Number of trustee directors | Directors	5
Santander UK Group [member]
Disclosure of defined benefit plans [line items]
Number of trustee directors | Directors	2
Interest Rate Contracts [member]
Disclosure of defined benefit plans [line items]
Gross notional value	£ 2,116,000,000	£ 1,945,000,000
Inflation Rate Swaps [member]
Disclosure of defined benefit plans [line items]
Gross notional value	1,030,000,000	1,030,000,000
Equity collar [member]
Disclosure of defined benefit plans [line items]
Gross notional value	£ 2,000,000,000
Santander UK Plc [member]
Disclosure of defined benefit plans [line items]
Number of trustee directors | Directors	3
Santander UK Group [member]
Disclosure of defined benefit plans [line items]
Salary increase cap				1.00%
Actuarial gains on scheme assets	£ 746,000,000	1,798,000,000	£ 177,000,000
Deficit Repair Contributions [member]
Disclosure of defined benefit plans [line items]
Contribution to scheme based on agreement	123,000,000	£ 101,000,000
Deficit Repair Contributions [member] | Santander UK Group [member]
Disclosure of defined benefit plans [line items]
Contributions to defined contribution plans	£ 119,000,000
Annual increase in contribution	5.00%
Maturity date for contribution	31 March 2026
Deficit Repair Group Section Contributions [member] | Santander UK Group [member]
Disclosure of defined benefit plans [line items]
Contributions to defined contribution plans	£ 28,000,000
Annual increase in contribution	5.00%
Maturity date for contribution	1 April 2021 to 31 March 2023
Deficit Group Section Contributions Plan [member] | Santander UK Group [member]
Disclosure of defined benefit plans [line items]
Contributions to defined contribution plans	£ 66,000,000
Annual increase in contribution	5.00%
Maturity date for contribution	1 April 2023 to 31 March 2026

XML

Retirement Benefit Plans - Total Defined Benefit Plan Amount Charged to Income Statement (Detail) - GBP (£) £ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of net defined benefit liability (asset) [abstract]
Net interest income	£ (5)	£ (18)	£ (4)
Current service cost	31	33	37
Past service cost	1	1	2
Administration costs	8	8	6
Total	£ 35	£ 24	£ 41

XML

Retirement Benefit Plans - Summary of Amounts Recognised in Other Comprehensive Income (Detail) - GBP (£) £ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of net defined benefit liability (asset) [abstract]
Return on plan assets (excluding amounts included in net interest expense)	£ (435)	£ (1,447)	£ 164
Actuarial (gains)/losses arising from changes in demographic assumptions	(151)	30	(67)
Actuarial gains arising from experience adjustments	(11)	(80)	(202)
Actuarial losses/(gains) arising from changes in financial assumptions	700	2,025	(211)
Cumulative actuarial reserve acquired with subsidiary			(3)
Pension remeasurement	£ 103	£ 528	£ (319)

XML

Retirement Benefit Plans - Disclosure of Movements in Present Value of Defined Benefit Obligations (Detail) - GBP (£) £ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of net defined benefit liability (asset) [line items]
Current service cost	£ 31	£ 33	£ 37
Interest cost	(5)	(18)	(4)
Past service cost	1	1	2
Remeasurement:
- Actuarial movements arising from changes in demographic assumptions	151	(30)	67
- Actuarial movements arising from experience adjustments	11	80	202
- Actuarial movements arising from changes in financial assumptions	(700)	(2,025)	211
Present Value of Defined Benefit Obligation [member]
Disclosure of net defined benefit liability (asset) [line items]
Beginning balance	(11,082)	(9,004)
Current service cost	(30)	(23)
Interest cost	(305)	(333)
Employer salary sacrifice contributions	(6)	(7)
Past service cost	(1)	(1)
Remeasurement:
- Actuarial movements arising from changes in demographic assumptions	151	(30)
- Actuarial movements arising from experience adjustments	11	80
- Actuarial movements arising from changes in financial assumptions	(700)	(2,025)
Benefits paid	392	271
Ending balance	(11,583)	(11,082)	£ (9,004)
Present Value of Defined Benefit Obligation [member] | Other Subsidiaries [member]
Disclosure of net defined benefit liability (asset) [line items]
Current service cost	(1)	(2)
Present Value of Defined Benefit Obligation [member] | Fellow Banco Santander Subsidiaries [member]
Disclosure of net defined benefit liability (asset) [line items]
Current service cost	£ (12)	£ (8)

XML

Retirement Benefit Plans - Disclosure of Movements in Fair Value of Scheme Assets (Detail) - GBP (£) £ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of net defined benefit liability (asset) [line items]
Interest income	£ (5)	£ (18)	£ (4)
Return on plan assets (excluding amounts included in net interest expense)	435	1,447	(164)
Scheme Assets [member]
Disclosure of net defined benefit liability (asset) [line items]
Beginning balance	11,218	9,450
Interest income	310	351
Contributions paid by employer and scheme members	171	236
Administration costs paid	(8)	(8)
Return on plan assets (excluding amounts included in net interest expense)	435	1,447
Benefits paid	(392)	(271)
Ending balance	11,746	11,218	£ 9,450
Scheme Assets [member] | Fellow Banco Santander Subsidiaries [member]
Disclosure of net defined benefit liability (asset) [line items]
Contributions paid by fellow Banco Santander subsidiaries	£ 12	£ 13

XML

Retirement Benefit Plans - Summary of Composition and Fair Value of Plan Assets (Detail) - GBP (£) £ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of net defined benefit liability (asset) [line items]
UK equities	1.00%	1.00%
Overseas equities	25.00%	24.00%
Corporate bonds	16.00%	17.00%
Government fixed interest bonds	2.00%	2.00%
Government index-linked bonds	30.00%	29.00%
Property	13.00%	12.00%
Cash	2.00%	2.00%
Other	11.00%	13.00%
Total	100.00%	100.00%
UK equities	£ 187	£ 148
Overseas equities	2,910	2,661
Corporate bonds	1,874	1,940
Government fixed interest bonds	255	226
Government index-linked bonds	3,506	3,294
Property	1,547	1,361
Cash	206	197
Other	1,261	1,391
Total	£ 11,746	£ 11,218
Quoted Prices in Active Markets [member]
Disclosure of net defined benefit liability (asset) [line items]
UK equities	1.00%	1.00%
Overseas equities	19.00%	19.00%
Corporate bonds	14.00%	16.00%
Government fixed interest bonds	2.00%	2.00%
Government index-linked bonds	30.00%	29.00%
Total	66.00%	67.00%
UK equities	£ 187	£ 148
Overseas equities	2,204	2,064
Corporate bonds	1,665	1,778
Government fixed interest bonds	255	226
Government index-linked bonds	3,506	3,294
Total	£ 7,817	£ 7,510
Prices Not Quoted in Active Markets [member]
Disclosure of net defined benefit liability (asset) [line items]
Overseas equities	6.00%	5.00%
Corporate bonds	2.00%	1.00%
Property	13.00%	12.00%
Cash	2.00%	2.00%
Other	11.00%	13.00%
Total	34.00%	33.00%
Overseas equities	£ 706	£ 597
Corporate bonds	209	162
Property	1,547	1,361
Cash	206	197
Other	1,261	1,391
Total	£ 3,929	£ 3,708

XML

Retirement Benefit Plans - Summary of Principal Actuarial Assumptions Used for Defined Benefit Schemes (Detail)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of sensitivity analysis for actuarial assumptions [abstract]
- Discount rate for scheme liabilities	2.50%	2.80%	3.70%
- General price inflation	3.20%	3.10%	3.00%
- General salary increase	1.00%	1.00%	1.00%
- Expected rate of pension increase	2.90%	2.90%	2.80%
Longevity at 60 for current pensioners, on the valuation date:
- Males	27 years 4 months 24 days	27 years 9 months 18 days	27 years 8 months 12 days
- Females	30 years 1 month 6 days	30 years 3 months 19 days	30 years 2 months 12 days
Longevity at 60 for future pensioners currently aged 40, on the valuation date:
- Males	28 years 10 months 25 days	30 years	29 years 10 months 25 days
- Females	31 years 8 months 12 days	32 years 2 months 12 days	32 years 2 months 12 days

XML

Retirement Benefit Plans - Summary of Actuarial Assumption Sensitivities (Detail) - GBP (£) £ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Actuarial Assumption of Discount Rates [member]
Disclosure of sensitivity analysis for actuarial assumptions [line items]
Increase decrease in defined benefit obligation	£ (550)	£ (593)
Increase decrease in defined benefit obligation	£ (19)	(21)
Description of changes in methods and assumptions	25 bps increase
Actuarial Assumption of Expected Rates of Inflation [member]
Disclosure of sensitivity analysis for actuarial assumptions [line items]
Increase decrease in defined benefit obligation	£ 365	405
Increase decrease in defined benefit obligation	£ 12	13
Description of changes in methods and assumptions	25 bps increase
Actuarial assumption of expected rates of salary increases [member]
Disclosure of sensitivity analysis for actuarial assumptions [line items]
Increase decrease in defined benefit obligation	£ 0	0
Description of changes in methods and assumptions	25 bps increase
Actuarial Assumption of Expected Rates of Mortality [member]
Disclosure of sensitivity analysis for actuarial assumptions [line items]
Increase decrease in defined benefit obligation	£ 367	£ 369
Description of changes in methods and assumptions	Additional year of longevity assumed

XML

Retirement Benefit Plans - Disclosure of Benefits Expected To Be Paid (Detail) £ in Millions	Dec. 31, 2017 GBP (£)
Not Later Than 1 Year [member]
Disclosure of net defined benefit liability (asset) [line items]
Benefits expected to be paid	£ 252
Later Than 1 Year and Not Later Than 2 Years [member]
Disclosure of net defined benefit liability (asset) [line items]
Benefits expected to be paid	253
2 - 3 years [member]
Disclosure of net defined benefit liability (asset) [line items]
Benefits expected to be paid	270
3 - 4 years [member]
Disclosure of net defined benefit liability (asset) [line items]
Benefits expected to be paid	290
4 - 5 years [member]
Disclosure of net defined benefit liability (asset) [line items]
Benefits expected to be paid	313
Five Years Ending 2027 [member]
Disclosure of net defined benefit liability (asset) [line items]
Benefits expected to be paid	£ 1,836

XML

Retirement Benefit Plans - Summary of Average Duration of Defined Benefit Obligation (Detail)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure of sensitivity analysis for actuarial assumptions [abstract]
Active members	26 years 6 months	26 years 9 months 18 days
Deferred members	24 years 4 months 24 days	25 years 8 months 12 days
Retired members	13 years 10 months 25 days	14 years 7 months 6 days

XML

Contingent Liabilities and Commitments - Summary of Contingent Liabilities and Commitments (Detail) - GBP (£) £ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of contingent liabilities and commitments [Line Items]
Guarantees and formal standby facilities, credit lines and other commitments	£ 43,499	£ 43,475
Contingent Liability for Guarantees [Member]
Disclosure of contingent liabilities and commitments [Line Items]
Guarantees given to third parties	1,557	1,859
Loan commitments [member] | Not Later Than 1 Year [member]
Disclosure of contingent liabilities and commitments [Line Items]
Formal standby facilities, credit lines and other commitments	10,664	9,462
Loan commitments [member] | More than One Year [member]
Disclosure of contingent liabilities and commitments [Line Items]
Formal standby facilities, credit lines and other commitments	£ 31,278	£ 32,154

XML

Contingent Liabilities and Commitments - Additional Information (Detail)		12 Months Ended
	Nov. 02, 2015	Dec. 31, 2017 GBP (£)	Dec. 31, 2017 EUR (€)	Dec. 31, 2016 GBP (£)	Dec. 31, 2015 GBP (£)
Disclosure of contingent liabilities and commitments [Line Items]
Amount of preferred stock upon indemnity more than one billion | €			€ 0
Description of material leasing arrangements by lessee classified as operating lease		Under the terms of these leases, the Santander UK group has the opportunity to extend its occupation of properties by a minimum of three years subject to 12 months' notice and lease renewal being available from external landlords during the term of the lease. At expiry, the Santander UK group has the option to reacquire the freehold of certain properties.	Under the terms of these leases, the Santander UK group has the opportunity to extend its occupation of properties by a minimum of three years subject to 12 months' notice and lease renewal being available from external landlords during the term of the lease. At expiry, the Santander UK group has the option to reacquire the freehold of certain properties.
Minimum lease extension period		3 years	3 years
Terms of notice period		12 months	12 months
Rental expense		£ 61,000,000		£ 61,000,000	£ 61,000,000
Sub-lease rental income		0
Contingent rent expense		£ 0
Bottom of Range [member]
Disclosure of contingent liabilities and commitments [Line Items]
Losses on litigation settlements | €			€ 1,000,000,000
Visa Europe Ltd [member]
Disclosure of contingent liabilities and commitments [Line Items]
Sale of share capital	100.00%

XML

Contingent Liabilities and Commitments - Operating Lease Commitments (Detail) - GBP (£) £ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of finance lease and operating lease by lessee [line items]
Lease payments	£ 303	£ 468
Not Later Than 1 Year [member]
Disclosure of finance lease and operating lease by lessee [line items]
Lease payments	73	82
In more than 1 year but not more than 5 years [member]
Disclosure of finance lease and operating lease by lessee [line items]
Lease payments	160	252
In More Than 5 Years [member]
Disclosure of finance lease and operating lease by lessee [line items]
Lease payments	£ 70	£ 134

XML

Share Capital - Schedule of Share Capital Issued and Fully Paid (Detail) - GBP (£) £ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of Classes of Share Capital [Line Items]
Issued and fully paid share capital	£ 3,119	£ 3,119	£ 3,119
Ordinary shares [member]
Disclosure of Classes of Share Capital [Line Items]
Beginning balance	31,051,768,866	31,051,768,866
Repurchases	0	0
Ending Balance	31,051,768,866	31,051,768,866
Issued and fully paid share capital	£ 3,105	£ 3,105	3,105
300m Preference Shares [Member]
Disclosure of Classes of Share Capital [Line Items]
Beginning balance	13,780	13,797
Repurchases	0	(17)
Ending Balance	13,780	13,780
Issued and fully paid share capital	£ 14	£ 14	£ 14

XML

Share Capital - Schedule of Share Capital Issued and Fully Paid (Parenthetical) (Detail) - GBP (£) £ / shares in Units, £ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of Classes of Share Capital [Line Items]
Notional amount	£ 1,125,419	£ 1,234,879
Ordinary shares [member]
Disclosure of Classes of Share Capital [Line Items]
Price per share	£ 0.10
300m Preference Shares [Member]
Disclosure of Classes of Share Capital [Line Items]
Price per share	£ 1,000.00
Notional amount	£ 300

XML

Share Capital - Summary of Share Premium (Detail) - GBP (£) £ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of classes of share capital [abstract]
Share premium	£ 5,620	£ 5,620

XML

Share Capital - Additional Information (Detail) - GBP (£) £ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure of Classes of Share Capital [Line Items]
Notional amount	£ 1,125,419	£ 1,234,879
300m Fixed/Floating Rate Non-Cumulative Callable Preference Shares [member]
Disclosure of Classes of Share Capital [Line Items]
Notional amount	£ 300
Annual fixed non-cumulative dividend percentage	6.22%
Quarterly fixed non-cumulative dividend percentage	1.13%

XML

Other Equity Instruments - Summary of Other Equity Instruments (Detail) - GBP (£) £ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of other equity instruments [line items]
Other equity instruments	£ 2,281	£ 1,785
300m Step-up Callable Perpetual Reserve Capital Instruments [member]
Disclosure of other equity instruments [line items]
Other equity instruments	235	235
500m Perpetual Capital Securities [member]
Disclosure of other equity instruments [line items]
Other equity instruments	496
750m Perpetual Capital Securities [member]
Disclosure of other equity instruments [line items]
Other equity instruments	750	750
300m Perpetual Capital Securities [member]
Disclosure of other equity instruments [line items]
Other equity instruments	300	300
500m Perpetual Capital Securities [member]
Disclosure of other equity instruments [line items]
Other equity instruments	£ 500	£ 500

XML

Other Equity Instruments - Additional Information (Detail) - GBP (£)					12 Months Ended
	Apr. 10, 2017	Jun. 10, 2015	Dec. 02, 2014	Jun. 24, 2014	Dec. 31, 2017	Dec. 31, 2015	Dec. 31, 2014
Disclosure of other equity instruments [line items]
Perpetual Capital Securities issued					£ 500,000,000
300m Step-up Callable Perpetual Reserve Capital Instruments [member]
Disclosure of other equity instruments [line items]
Notional amount					£ 300,000,000
Reserve Capital Instruments annual bear interest rate					7.037%
Reserve Capital Instruments bear interest rate					3.75%
Reserve Capital Instruments bear interest rate reset period					5 years
Reserve Capital Instruments benchmark gilt rate period					5 years
500m Perpetual Capital Securities [member]
Disclosure of other equity instruments [line items]
Perpetual Capital Securities issued				£ 500,000,000			£ 500,000,000
Distribution rate				6.475%
Increase in distribution rate in every five year				4.291%
Common equity tier 1 capital ratio minimum				7.00%
500m Perpetual Capital Securities [member] | Banco Santander SA [member]
Disclosure of other equity instruments [line items]
Issuance subscribed by Company				100.00%
300m Perpetual Capital Securities [member]
Disclosure of other equity instruments [line items]
Perpetual Capital Securities issued			£ 300,000,000				£ 300,000,000
Distribution rate			7.60%
Increase in distribution rate in every five year			6.066%
Common equity tier 1 capital ratio minimum			7.00%
300m Perpetual Capital Securities [member] | Banco Santander SA [member]
Disclosure of other equity instruments [line items]
Issuance subscribed by Company			100.00%
750m Perpetual Capital Securities [member]
Disclosure of other equity instruments [line items]
Perpetual Capital Securities issued		£ 750,000,000				£ 750,000,000
Distribution rate		7.375%
Increase in distribution rate in every five year		5.543%
Common equity tier 1 capital ratio minimum		7.00%
750m Perpetual Capital Securities [member] | Santander UK Group Holdings plc [member]
Disclosure of other equity instruments [line items]
Issuance subscribed by Company		100.00%
500m Perpetual Capital Securities [member]
Disclosure of other equity instruments [line items]
Perpetual Capital Securities issued	£ 500,000,000
Distribution rate	6.75%
Increase in distribution rate in every five year	5.792%
Common equity tier 1 capital ratio minimum	7.00%

XML

Non-Controlling Interests - Schedule of Amounts Attributable to Non-Controlling Interests (Detail) - GBP (£) £ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of noncontrolling interests [line items]
Non-controlling interests	£ 152	£ 150
PSA Finance UK Limited [member]
Disclosure of noncontrolling interests [line items]
Non-controlling interests	£ 152	£ 150

XML

Assets Charged as Security for Liabilities and Collateral Accepted as Security for Assets - Financial Assets Charged as Security Under On-Balance Sheet and Off-Balance (Detail) - GBP (£) £ in Millions	Dec. 31, 2017	Dec. 31, 2016
On-Balance Sheet [member]
Disclosure of assets pledged as security [line items]
Assets charged as security for liabilities	£ 75,461	£ 67,837
On-Balance Sheet [member] | Treasury Bills and Other Eligible Securities [member]
Disclosure of assets pledged as security [line items]
Assets charged as security for liabilities	12,576	6,491
On-Balance Sheet [member] | Cash [member]
Disclosure of assets pledged as security [line items]
Assets charged as security for liabilities	3,658	4,123
On-Balance Sheet [member] | Loans and Advances to Customers [member]
Disclosure of assets pledged as security [line items]
Assets charged as security for liabilities	15,047	10,601
On-Balance Sheet [member] | Loans and Advances to Customers [member] | Securitisations and Covered Bonds [member]
Disclosure of assets pledged as security [line items]
Assets charged as security for liabilities	35,421	40,230
On-Balance Sheet [member] | Debt Securities [member]
Disclosure of assets pledged as security [line items]
Assets charged as security for liabilities	130	755
On-Balance Sheet [member] | Equity Securities [member]
Disclosure of assets pledged as security [line items]
Assets charged as security for liabilities	8,629	5,637
Off-Balance Sheet [member]
Disclosure of assets pledged as security [line items]
Assets charged as security for liabilities	33,013	16,901
Off-Balance Sheet [member] | Treasury Bills and Other Eligible Securities [member]
Disclosure of assets pledged as security [line items]
Assets charged as security for liabilities	30,220	15,013
Off-Balance Sheet [member] | Debt Securities [member]
Disclosure of assets pledged as security [line items]
Assets charged as security for liabilities	850	331
Off-Balance Sheet [member] | Equity Securities [member]
Disclosure of assets pledged as security [line items]
Assets charged as security for liabilities	£ 1,943	£ 1,557

XML

Assets Charged as Security for Liabilities and Collateral Accepted as Security for Assets - Additional Information (Detail) - GBP (£) £ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of assets pledged as security [line items]
Collateral accepted as security for assets	£ 16,356	£ 15,483
Securities Lending [member]
Disclosure of assets pledged as security [line items]
Assets charged as security for liabilities	38,016	27,975
Collateral accepted as security for assets	22,299	12,664
Mortgage Loans and Other Loans [member] | Securitisations and Covered Bonds [member]
Disclosure of assets pledged as security [line items]
Assets charged as security for liabilities	19,907	24,134
Gross assets charged as security for liabilities	3,980	2,771
Redemption of assets charged as security for liabilities	10,030	6,844
Internally Retained [member] | Securitisations and Covered Bonds [member]
Disclosure of assets pledged as security [line items]
Assets charged as security for liabilities	4,359	4,998
Third Party Bilateral Secured Funding Transactions [member] | Securitisations and Covered Bonds [member]
Disclosure of assets pledged as security [line items]
Assets charged as security for liabilities	1,834	2,764
Derivative Financial Instruments [member] | Cash [member]
Disclosure of assets pledged as security [line items]
Assets charged as security for liabilities	3,658	3,523
Collateral accepted as security for assets	3,679	4,320
Fellow Subsidiaries [member]
Disclosure of assets pledged as security [line items]
Assets charged as security for liabilities	34,310	17,359
Fellow Subsidiaries [member] | Securitisations and Covered Bonds [member]
Disclosure of assets pledged as security [line items]
Assets charged as security for liabilities	2,931	4,949
Santander UK Plc [member] | Mortgage Loans and Other Loans [member] | Securitisations [member]
Disclosure of assets pledged as security [line items]
Assets charged as security for liabilities	1,091	363
Santander UK Plc [member] | Mortgages [member] | Covered Bonds [member]
Disclosure of assets pledged as security [line items]
Assets charged as security for liabilities	£ 19,772	£ 20,263

XML

Assets Charged as Security for Liabilities and Collateral Accepted as Security for Assets - Schedule of Collateral Held as Security for Assets (Detail) - GBP (£) £ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of assets pledged as security [line items]
Collateral accepted as security for assets	£ 16,356	£ 15,483
On-Balance Sheet [member]
Disclosure of assets pledged as security [line items]
Collateral accepted as security for assets	3,679	4,320
On-Balance Sheet [member] | Trading Liabilities [member]
Disclosure of assets pledged as security [line items]
Collateral accepted as security for assets	1,911	3,535
On-Balance Sheet [member] | Deposits by Banks [member]
Disclosure of assets pledged as security [line items]
Collateral accepted as security for assets	1,760	785
On-Balance Sheet [member] | Deposits by customers [member]
Disclosure of assets pledged as security [line items]
Collateral accepted as security for assets	8
Off-Balance Sheet [member]
Disclosure of assets pledged as security [line items]
Collateral accepted as security for assets	38,655	28,147
Off-Balance Sheet [member] | Trading Liabilities [member]
Disclosure of assets pledged as security [line items]
Collateral accepted as security for assets	36,230	26,980
Off-Balance Sheet [member] | Deposits by Banks [member]
Disclosure of assets pledged as security [line items]
Collateral accepted as security for assets	£ 2,425	£ 1,167

XML

Share-Based Compensation - Additional Information (Detail)	12 Months Ended			96 Months Ended
	Dec. 31, 2017 GBP (£) Institutions Customer Country shares	Dec. 31, 2016 GBP (£) shares	Dec. 31, 2015 GBP (£) award	Dec. 31, 2015 GBP (£) Scheme
Disclosure of terms and conditions of share-based payment arrangement [line items]
Liabilities arising from share-based payment transactions	£ 16,700,000	£ 4,400,000
Liabilities arising from share-based payment transactions, vested liabilities	0	0
Cash received from the exercise of share options	£ 2,300,000	0	£ 0
Number of sharesave schemes launched | Scheme				9
Discount percent on share price under share based compensation plan	20.00%
Weighted average grant-date fair value	£ 1.02	0.65	0.50	£ 0.50
Weighted average share price	£ 4.96	£ 3.79	£ 3.79
Vesting requirements for sharebased payment arrangement	On a country level, 100% vests if Banco Santander SA is rated a top 3 best bank to work for and top 3 in customer satisfaction. 100% vests if the target for loyal customers is met by December 2018 weighted equally between retail and corporate customers. For full vesting at the Banco Santander group level, at least 6 of the 10 core countries for Banco Santander should get the top 3 best bank to work for, must be top 3 in customer satisfaction in all 10 countries, must have 17 million retail and 1.1 million corporate loyal customers. A sliding scale applies below this threshold with 50% vesting if there are 15 million retail and 1 million corporate loyal customers, any less would lead to no vesting
Number of shares outstanding | shares	2,147,399	2,110,617
UK Employee [member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Deferred shares description	Any deferred awards, including those in Banco Santander SA shares, are dependent on future service. For 2016 and 2017 bonus awards, deferral of the award is over a three, five or seven-year period, dependent on Code Staff categorisation or Senior Manager Function designation, with delivery of equal tranches of shares taking place on or around the anniversary of the initial award. Deferred awards in shares are subject to an additional one-year retention period from the point of delivery.
Cash [member] | UK Employee [member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Annual bonus percentage	50.00%
Shares [member] | UK Employee [member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Annual bonus percentage	50.00%
Long-Term Incentive Plan (LTIP) [member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
LTIP awarded | award			0
2015 LTIP [member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Vesting requirements for sharebased payment arrangement	Non-financial measures such as Top 3 best bank to work for, Top 3 in customer satisfaction and loyal customers as well as continuing employment.
2015 LTIP [member] | Earnings per Share [member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Vesting requirements for sharebased payment arrangement	Three-year period from 2015 to 2017
Number of financial institutions which growth measured | Institutions	17
2015 LTIP [member] | Return on Tangible Equity [member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Vesting requirements for sharebased payment arrangement	Three-year period from 2015 to 2017
2015 LTIP [member] | After Deferral Period [member] | Top 3 Best Bank to Work [member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Percent of other equity instruments vested	20.00%
2015 LTIP [member] | After Deferral Period [member] | Top 3 Bank in Customer Satisfaction [member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Percent of other equity instruments vested	15.00%
2015 LTIP [member] | After Deferral Period [member] | Loyal Customers [member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Percent of other equity instruments vested	15.00%
2015 LTIP [member] | After Deferral Period [member] | Earnings per Share [member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Percent of other equity instruments vested	25.00%
2015 LTIP [member] | After Deferral Period [member] | Return on Tangible Equity [member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Percent of other equity instruments vested	25.00%
2015 LTIP [member] | Vesting Period One [member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Vesting percentage	100.00%
Number of top customers | Customer	3
Number of least countries | Country	6
Number of core countries | Country	10
2015 LTIP [member] | Vesting Period One [member] | Retail Customer [member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Number of customers | Customer	17,000,000
2015 LTIP [member] | Vesting Period One [member] | Corporate Customer [member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Number of customers | Customer	1,100,000
2015 LTIP [member] | Vesting Period Two [member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Vesting percentage	50.00%
2015 LTIP [member] | Vesting Period Two [member] | Retail Customer [member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Number of customers | Customer	15,000,000
2015 LTIP [member] | Vesting Period Two [member] | Corporate Customer [member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Number of customers | Customer	1,000,000
Share Incentive Plans [member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Vesting requirements for sharebased payment arrangement	No vesting conditions attached to these shares, and no restrictions as to when the shares can be removed from the trust. However, if a participant chooses to sell the shares before the end of five years, they will be liable for the taxable benefit received when the shares are taken out of the trust. The shares can be released from trust after five years free of income tax and national insurance contributions.
Maximum investment value per tax year	£ 1,800
Percentage of maximum salary that can be invested	10.00%
2014 LTIP [member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Vesting requirements for sharebased payment arrangement	Three years and payable in equal tranches in 2016, 2017 and 2018 subject to Banco Santander SA's continuing relative TSR performance to comparators and continuing employment.
2014 LTIP [member] | Total Shareholders Return [member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Percent of other equity instruments vested	100.00%
Bottom of Range [member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Year of grant of share-based payment arrangement	2008
Employee saving on share based compensation	£ 5,000,000
Terms of options	3 years
Top of Range [member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Year of grant of share-based payment arrangement	2016
Employee saving on share based compensation	£ 500,000,000
Terms of options	5 years
Variable Pay of Less Than 500,000 [member] | UK Employee [member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Percentage of defer annual bonus	40.00%
Variable Pay at or Above 500,000 [member] | UK Employee [member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Percentage of defer annual bonus	60.00%

XML

Share-Based Compensation - Summary of Assumptions Used to Estimate Fair Value of Each Share Save Option (Detail) - Sharesave Schemes [member]	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Bottom of Range [member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Risk free interest rate	0.89%	0.31%	1.06%
Dividend yield	5.48%	6.28%	6.91%
Expected volatility of underlying shares based on implied volatility to maturity date of each scheme	26.16%	31.39%	28.54%
Expected lives of options granted under 3 and 5 year schemes	3 years	3 years	3 years
Top of Range [member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Risk free interest rate	1.08%	0.41%	1.37%
Dividend yield	5.51%	6.46%	7.36%
Expected volatility of underlying shares based on implied volatility to maturity date of each scheme	26.31%	32.00%	29.11%
Expected lives of options granted under 3 and 5 year schemes	5 years	5 years	5 years

XML

Share-Based Compensation - Summary of Movement in Share Options (Detail) - Sharesave Schemes [member] pure in Thousands	12 Months Ended
	Dec. 31, 2017 GBP (£)	Dec. 31, 2016 GBP (£)	Dec. 31, 2015 GBP (£)
Disclosure of terms and conditions of share-based payment arrangement [line items]
Number of options outstanding beginning balance	28,916	24,762	19,122
Number of options granted	3,916	17,296	14,074
Number of options exercised	(1,918)	(338)	(1,839)
Number of options forfeited/expired	(3,713)	(12,804)	(6,595)
Number of options outstanding ending balance	27,201	28,916	24,762
Number of options exercisable	5,200	2,334	2,807
Weighted average exercise price outstanding beginning balance	£ 3.08	£ 3.53	£ 4.19
Weighted average exercise price granted	4.02	4.91	3.13
Weighted average exercise price exercised	3.77	3.67	3.75
Weighted average exercise price forfeited/expired	3.40	3.51	4.50
Weighted average exercise price outstanding ending balance	3.12	3.08	3.53
Weighted average exercise price exercisable ending balance	£ 3.17	£ 4.30	£ 3.76

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Share-Based Compensation - Summary of Range of Exercise Prices and Weighted Average Remaining Contractual Life of the Options Outstanding (Detail) - Sharesave Schemes [member] - GBP (£)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Disclosure of number and weighted average remaining contractual life of outstanding share options [line items]
Option outstanding, Weighted average exercise price	£ 3.12	£ 3.08	£ 3.53	£ 4.19
2 to 3 [member]
Disclosure of number and weighted average remaining contractual life of outstanding share options [line items]
Options outstanding , Weighted average remaining contractual life years	3 years	4 years
Option outstanding, Weighted average exercise price	£ 2.75	£ 2.75
3 to 4 [member]
Disclosure of number and weighted average remaining contractual life of outstanding share options [line items]
Options outstanding , Weighted average remaining contractual life years	1 year	3 years
Option outstanding, Weighted average exercise price	£ 3.17	£ 3.28
4 to 5 [member]
Disclosure of number and weighted average remaining contractual life of outstanding share options [line items]
Options outstanding , Weighted average remaining contractual life years	3 years	2 years
Option outstanding, Weighted average exercise price	£ 4.21	£ 4.82

XML

Share-Based Compensation - Summary of Range of Exercise Prices and Weighted Average Remaining Contractual Life of the Options Outstanding (Parenthetical) (Detail) - Sharesave Schemes [member]	Dec. 31, 2017 GBP (£)
2 to 3 [member] | Bottom of Range [member]
Disclosure of number and weighted average remaining contractual life of outstanding share options [line items]
Range of exercise prices	£ 2
2 to 3 [member] | Top of Range [member]
Disclosure of number and weighted average remaining contractual life of outstanding share options [line items]
Range of exercise prices	3
3 to 4 [member] | Bottom of Range [member]
Disclosure of number and weighted average remaining contractual life of outstanding share options [line items]
Range of exercise prices	3
3 to 4 [member] | Top of Range [member]
Disclosure of number and weighted average remaining contractual life of outstanding share options [line items]
Range of exercise prices	4
4 to 5 [member] | Bottom of Range [member]
Disclosure of number and weighted average remaining contractual life of outstanding share options [line items]
Range of exercise prices	4
4 to 5 [member] | Top of Range [member]
Disclosure of number and weighted average remaining contractual life of outstanding share options [line items]
Range of exercise prices	£ 5

XML

Share-Based Compensation - Summary of Movement in Value of Conditional Awards (Detail) - GBP (£) £ in Thousands	12 Months Ended
	Dec. 31, 2017		Dec. 31, 2016	Dec. 31, 2015
2015 LTIP [member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Conditional awards at the beginning of the year	£ 6,718		£ 6,769
Conditional awards granted				£ 6,769
Conditional awards forfeited or cancelled	(215)		(51)
Conditional awards outstanding at the end of the year	6,503		6,718	6,769
2014 LTIP [member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Conditional awards at the beginning of the year	3,193		5,102	5,355
Conditional awards forfeited or cancelled	(1,283)	[1]	(1,909)	(253)
Conditional awards outstanding at the end of the year	£ 1,910		£ 3,193	£ 5,102

[1] The outstanding shares have been updated to compensate for the equity dilution caused by the shares issued by Banco Santander SA in July 2017.

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Share-Based Compensation - Summary of Percentage of Maximum Shares in Tranche to Be Delivered based on Banco Santander SA's Ranking (Detail) - 2015 LTIP [member]	12 Months Ended
	Dec. 31, 2017
1st to 5th [member] | Earnings per Share [member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Percentage of maximum shares in that tranche to be delivered	100.00%
6th [member] | Earnings per Share [member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Percentage of maximum shares in that tranche to be delivered	87.50%
7th [member] | Earnings per Share [member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Percentage of maximum shares in that tranche to be delivered	75.00%
8th [member] | Earnings per Share [member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Percentage of maximum shares in that tranche to be delivered	62.50%
9th [member] | Earnings per Share [member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Percentage of maximum shares in that tranche to be delivered	50.00%
10th and below [member] | Earnings per Share [member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Percentage of maximum shares in that tranche to be delivered	0.00%
12% or Above [member] | Return on Tangible Equity [member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Percentage of maximum shares in that tranche to be delivered	100.00%
11-12% [member] | Return on Tangible Equity [member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Percentage of maximum shares in that tranche to be delivered	75.00%
Below 11% [member] | Return on Tangible Equity [member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Percentage of maximum shares in that tranche to be delivered	0.00%

XML

Transactions With Directors and Other Key Management Personnel - Summary of Remuneration of the Directors and Other Key Management Personnel (Detail) - GBP (£)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure Of Remuneration Of Directors And Other Key Management Personnel [abstract]
Salaries and fees	£ 4,406,908	£ 3,604,999	£ 4,694,260
Performance-related payments	3,685,464	2,330,000	2,607,407
Other fixed remuneration (pension and other allowances & non-cash benefits)	1,580,321	635,493	1,002,320
Expenses	96,358	120,302	115,382
Total remuneration	9,769,051	6,690,794	8,419,369
Short-term employee benefits	24,642,085	24,757,161	19,950,608
Post-employment benefits	2,292,857	1,918,144	1,825,688
Share-based payments			400,948
Total compensation	£ 26,934,942	£ 26,675,305	£ 22,177,244

XML

Transactions With Directors and Other Key Management Personnel - Summary of Remuneration of the Directors and Other Key Management Personnel (Parenthetical) (Detail)	12 Months Ended
	Dec. 31, 2017 GBP (£) Individuals shares	Dec. 31, 2016 GBP (£) Individuals	Dec. 31, 2015 GBP (£) Individuals
Disclosure of directors and key management remuneration [Line Items]
Payments made as buy-outs of deferred performance-related payment | £	£ 52,100	£ 2,732,357	£ 3,453,956
Number of previously employed individuals for buy-out of deferred performance related payment	1	5	5
Banco Santander SA London Branch [member]
Disclosure of directors and key management remuneration [Line Items]
Number of shares made as buy-outs of deferred performance-related payment | shares	603,614
Number of previously employed individuals for buy-out of deferred performance related payment	4	0	0

XML

Transactions With Directors and Other Key Management Personnel - Additional Information (Detail)	12 Months Ended
	Dec. 31, 2017 GBP (£) Director SecurityLoan	Dec. 31, 2016 GBP (£) Director SecurityLoan	Dec. 31, 2015 GBP (£) Director
Disclosure of transactions between related parties [line items]
Remuneration excluding pension contribution	£ 4,714,578	£ 4,535,756
Remuneration excluding pension contribution performance related	2,425,000	2,330,000
Deferred pension benefit accruing under a defined benefit scheme	15,450	15,450
Ex gratia pensions paid to former Directors	2,482	14,893	£ 14,893
Sharedealing transactions through the Santander UK group's	£ 0	£ 10,080
Number of Directors undertook sharedealing transactions | Director	0	2
Directors who held any interest in the shares | Director	0	0
Directors who exercised or were granted any rights to subscribe for shares | Director	0	0
Loans made to directors	£ 53,452	£ 25,560
Number of loan made to directors | SecurityLoan	2	5
Long-Term Incentive Plan (LTIP) [member]
Disclosure of transactions between related parties [line items]
Number of executive directors granted conditional awards | Director	0	0	0
Number of key management personnel granted conditional awards | Director	0	0	13
Other key management personnel [member]
Disclosure of transactions between related parties [line items]
Loans made to key management personnel	£ 1,162,384	£ 5,169,234
Number of loan made to key management personnel | SecurityLoan	5	12
Banco Santander SA [member]
Disclosure of transactions between related parties [line items]
Directors who exercised or were granted any rights to subscribe for shares | Director	0	0

XML

Transactions With Directors and Other Key Management Personnel - Summary of Transactions With Directors, Other Key Management Personnel (Detail) - Key management personnel of entity or parent [member] £ in Thousands	12 Months Ended
	Dec. 31, 2017 GBP (£) Loans Deposits	Dec. 31, 2016 GBP (£) Loans Deposits
Disclosure of directors and key management remuneration [Line Items]
Number of secured loans, unsecured loans and overdrafts, beginning balance | Loans	17	18
Number of secured loans, unsecured loans and overdrafts, net movements | Loans	(10)	(1)
Number of secured loans, unsecured loans and overdrafts, ending balance | Loans	7	17
Number of deposit, bank and instant access accounts and investments, beginning balance | Deposits	26	26
Number of deposit, bank and instant access accounts and investments, net movements | Deposits	(1)
Number of deposit, bank and instant access accounts and investments, ending balance | Deposits	25	26
Beginning balance	£ 5,195	£ 5,492
Net movements	(3,979)	(297)
Ending balance	1,216	5,195
Beginning balance	9,138	14,678
Net movements	4,046	(5,540)
Ending balance	£ 13,184	£ 9,138

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Related Party Disclosures - Summary of Transactions With Related Parties (Detail) - GBP (£) £ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of transactions between related parties [line items]
Interest, fees and other income received	£ (159)	£ (382)	£ (542)
Interest, fees and other expenses paid	1,019	981	861
Amounts owed by related parties	5,683	3,606
Amounts owed to related parties	(13,467)	(9,982)
Ultimate Parent [Member]
Disclosure of transactions between related parties [line items]
Interest, fees and other income received	(60)	(81)	(76)
Interest, fees and other expenses paid	321	188	99
Amounts owed by related parties	4,398	2,148
Amounts owed to related parties	(5,079)	(2,882)
Fellow Subsidiaries [member]
Disclosure of transactions between related parties [line items]
Interest, fees and other income received	(76)	(271)	(439)
Interest, fees and other expenses paid	491	653	743
Amounts owed by related parties	102	363
Amounts owed to related parties	(981)	(1,101)
Associates and Joint Ventures [Member]
Disclosure of transactions between related parties [line items]
Interest, fees and other income received	(20)	(27)	(24)
Interest, fees and other expenses paid		1
Amounts owed by related parties	1,175	1,090
Amounts owed to related parties	(33)	(37)
Santander UK Group Holdings plc [member]
Disclosure of transactions between related parties [line items]
Interest, fees and other income received	(3)	(3)	(3)
Interest, fees and other expenses paid	207	139	£ 19
Amounts owed by related parties	8	5
Amounts owed to related parties	£ (7,374)	£ (5,962)

XML

Financial Instruments - Measurement Basis of Financial Assets and Liabilities (Detail) - GBP (£) £ in Millions	Dec. 31, 2017	Dec. 31, 2016		Dec. 31, 2015
Disclosure of detailed information about financial instruments [line items]
Cash and balances at central banks	£ 32,771	£ 17,107		£ 16,842
Trading assets	30,555	30,035
Derivative financial instruments	19,942	25,471
Financial assets designated at fair value	2,096	2,140
Loans and advances to banks	5,927	4,348
Loans and advances to customers	199,490	199,738
Financial investments	17,611	17,466
Financial assets	308,392	296,305
Non-financial assets	6,373	6,206
Total assets	314,765	302,511	[1]	280,775
Deposits by banks	13,784	9,769
Deposits by customers	183,648	177,172
Trading liabilities	31,109	15,560
Derivative financial instruments	17,613	23,103
Financial liabilities designated at fair value	2,315	2,440
Debt securities in issue	42,633	50,346
Subordinated liabilities	3,793	4,303
Financial liabilities	294,895	282,693
Non-financial liabilities	3,665	4,365
Total liabilities	298,560	287,058		£ 265,747
Financial Liabilities at Fair Value, Class [member]
Disclosure of detailed information about financial instruments [line items]
Trading liabilities	31,109	15,560
Derivative financial instruments	17,613	23,103
Financial liabilities designated at fair value	2,315	2,440
Financial liabilities	51,037	41,103
Financial Liabilities at Amortised Cost, Category [Member]
Disclosure of detailed information about financial instruments [line items]
Deposits by banks	13,784	9,769
Deposits by customers	183,648	177,172
Debt securities in issue	42,633	50,346
Subordinated liabilities	3,793	4,303
Financial liabilities	243,858	241,590
Financial Assets Designated at Fair Value [Member]
Disclosure of detailed information about financial instruments [line items]
Trading assets	30,555	30,035
Derivative financial instruments	19,942	25,471
Financial assets designated at fair value	2,096	2,140
Financial investments	8,853	10,561
Financial assets	61,446	68,207
Financial Assets at Amortised Cost, Category [Member]
Disclosure of detailed information about financial instruments [line items]
Cash and balances at central banks	32,771	17,107
Loans and advances to banks	5,927	4,348
Loans and advances to customers	199,490	199,738
Financial investments	8,758	6,905
Financial assets	£ 246,946	£ 228,098

[1] Restated to reflect the change in accounting policy relating to business combinations between entities under common control, as described in Note 1.

XML

Financial Instruments - Analysis of Fair Value of Financial Instruments Carried at Amortised (Detail) - GBP (£) £ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure Of Fair Values Of Financial Instruments Carried At Amortised Cost [Line Items]
Carrying value	£ 308,392	£ 296,305
Deposits by banks	13,784	9,769
Deposits by customers	183,648	177,172
Debt securities in issue	42,633	50,346
Subordinated liabilities	3,793	4,303
Financial liabilities	294,895	282,693
Financial assets at amortised cost, class [member]
Disclosure Of Fair Values Of Financial Instruments Carried At Amortised Cost [Line Items]
Carrying value	214,175	210,991
Financial Liabilities at Amortised Cost, Category [Member]
Disclosure Of Fair Values Of Financial Instruments Carried At Amortised Cost [Line Items]
Deposits by banks	13,784	9,769
Deposits by customers	183,648	177,172
Debt securities in issue	42,633	50,346
Subordinated liabilities	3,793	4,303
Financial liabilities	243,858	241,590
Loans and Advances to Banks [member] | Financial assets at amortised cost, class [member]
Disclosure Of Fair Values Of Financial Instruments Carried At Amortised Cost [Line Items]
Carrying value	5,927	4,348
Loans and advances to customers - unimpaired [Member] | Financial assets at amortised cost, class [member]
Disclosure Of Fair Values Of Financial Instruments Carried At Amortised Cost [Line Items]
Carrying value	198,629	198,788
Loans and advances to customers - impaired [Members] | Financial assets at amortised cost, class [member]
Disclosure Of Fair Values Of Financial Instruments Carried At Amortised Cost [Line Items]
Carrying value	861	950
Financial Investments [member] | Financial assets at amortised cost, class [member]
Disclosure Of Fair Values Of Financial Instruments Carried At Amortised Cost [Line Items]
Carrying value	8,758	6,905
Level 1 [Member] | Financial assets at amortised cost, class [member]
Disclosure Of Fair Values Of Financial Instruments Carried At Amortised Cost [Line Items]
Fair value	6,435	6,436
Level 1 [Member] | Financial Investments [member] | Financial assets at amortised cost, class [member]
Disclosure Of Fair Values Of Financial Instruments Carried At Amortised Cost [Line Items]
Fair value	6,435	6,436
Level 2 [Member] | Financial assets at amortised cost, class [member]
Disclosure Of Fair Values Of Financial Instruments Carried At Amortised Cost [Line Items]
Fair value	14,050	10,748
Level 2 [Member] | Financial Liabilities at Amortised Cost, Category [Member]
Disclosure Of Fair Values Of Financial Instruments Carried At Amortised Cost [Line Items]
Deposits by banks	13,249	9,360
Deposits by customers	564	582
Debt securities in issue	44,296	51,053
Subordinated liabilities	4,256	4,562
Financial liabilities	62,365	65,557
Level 2 [Member] | Loans and Advances to Banks [member] | Financial assets at amortised cost, class [member]
Disclosure Of Fair Values Of Financial Instruments Carried At Amortised Cost [Line Items]
Fair value	5,358	3,737
Level 2 [Member] | Loans and advances to customers - unimpaired [Member] | Financial assets at amortised cost, class [member]
Disclosure Of Fair Values Of Financial Instruments Carried At Amortised Cost [Line Items]
Fair value	6,481	6,739
Level 2 [Member] | Financial Investments [member] | Financial assets at amortised cost, class [member]
Disclosure Of Fair Values Of Financial Instruments Carried At Amortised Cost [Line Items]
Fair value	2,211	272
Level 3 [Member] | Financial assets at amortised cost, class [member]
Disclosure Of Fair Values Of Financial Instruments Carried At Amortised Cost [Line Items]
Fair value	195,891	196,975
Level 3 [Member] | Financial Liabilities at Amortised Cost, Category [Member]
Disclosure Of Fair Values Of Financial Instruments Carried At Amortised Cost [Line Items]
Deposits by banks	557	438
Deposits by customers	183,226	176,883
Debt securities in issue		1,196
Financial liabilities	183,783	178,517
Level 3 [Member] | Loans and Advances to Banks [member] | Financial assets at amortised cost, class [member]
Disclosure Of Fair Values Of Financial Instruments Carried At Amortised Cost [Line Items]
Fair value	556	478
Level 3 [Member] | Loans and advances to customers - unimpaired [Member] | Financial assets at amortised cost, class [member]
Disclosure Of Fair Values Of Financial Instruments Carried At Amortised Cost [Line Items]
Fair value	194,551	195,673
Level 3 [Member] | Loans and advances to customers - impaired [Members] | Financial assets at amortised cost, class [member]
Disclosure Of Fair Values Of Financial Instruments Carried At Amortised Cost [Line Items]
Fair value	784	824
Fair Value [member] | Financial assets at amortised cost, class [member]
Disclosure Of Fair Values Of Financial Instruments Carried At Amortised Cost [Line Items]
Fair value	216,376	214,159
Fair Value [member] | Financial Liabilities at Amortised Cost, Category [Member]
Disclosure Of Fair Values Of Financial Instruments Carried At Amortised Cost [Line Items]
Deposits by banks	13,806	9,798
Deposits by customers	183,790	177,465
Debt securities in issue	44,296	52,249
Subordinated liabilities	4,256	4,562
Financial liabilities	246,148	244,074
Fair Value [member] | Loans and Advances to Banks [member] | Financial assets at amortised cost, class [member]
Disclosure Of Fair Values Of Financial Instruments Carried At Amortised Cost [Line Items]
Fair value	5,914	4,215
Fair Value [member] | Loans and advances to customers - unimpaired [Member] | Financial assets at amortised cost, class [member]
Disclosure Of Fair Values Of Financial Instruments Carried At Amortised Cost [Line Items]
Fair value	201,032	202,412
Fair Value [member] | Loans and advances to customers - impaired [Members] | Financial assets at amortised cost, class [member]
Disclosure Of Fair Values Of Financial Instruments Carried At Amortised Cost [Line Items]
Fair value	784	824
Fair Value [member] | Financial Investments [member] | Financial assets at amortised cost, class [member]
Disclosure Of Fair Values Of Financial Instruments Carried At Amortised Cost [Line Items]
Fair value	£ 8,646	£ 6,708

XML

Financial Instruments - Additional Information (Detail) - GBP (£)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure of financial assets [line items]
Loans and advances to banks	£ 5,927,000,000	£ 4,348,000,000
Financial investments	17,611,000,000	17,466,000,000
Fair value of financial instruments transferred from Level 2 to Level 3	0	0
Exposure to wrong-way risk	0	0
Impaired [member]
Disclosure of financial assets [line items]
Loans and advances to banks	0
Financial investments	0
Available for sale debt securities [Member]
Disclosure of financial assets [line items]
Fair value of debt securities transferred from Level 1 to Level 2	£ 0	£ 25,000,000

XML

Financial Instruments - Fair Values of Financial Instruments Measured at Fair Value on a Recurring Basis (Detail) - GBP (£) £ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure of fair value measurement of assets and liabilities [Line Items]
Assets at fair value	£ 61,446	£ 68,207
Liabilities at fair value	51,037	41,103
Trading Liabilities [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Liabilities at fair value	31,109	15,560
Derivative Financial Liabilities [Member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Liabilities at fair value	17,613	23,103
Financial Liabilities Designated at Fair Value [Member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Liabilities at fair value	2,315	2,440
Trading Assets [Member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Assets at fair value	30,555	30,035
Derivative Financial Instruments [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Assets at fair value	19,942	25,471
Financial Assets Designated at Fair Value [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Assets at fair value	2,096	2,140
Financial Investments [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Assets at fair value	8,853	10,561
Level 1 [Member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Assets at fair value	24,447	23,463
Liabilities at fair value	3,695	2,802
Level 1 [Member] | Trading Liabilities [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Liabilities at fair value	3,694	2,801
Level 1 [Member] | Derivative Financial Liabilities [Member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Liabilities at fair value	1	1
Level 1 [Member] | Trading Assets [Member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Assets at fair value	15,474	12,996
Level 1 [Member] | Derivative Financial Instruments [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Assets at fair value		1
Level 1 [Member] | Financial Assets Designated at Fair Value [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Assets at fair value	184
Level 1 [Member] | Financial Investments [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Assets at fair value	8,789	10,466
Level 2 [Member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Assets at fair value	36,642	44,345
Liabilities at fair value	47,273	38,221
Level 2 [Member] | Trading Liabilities [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Liabilities at fair value	27,415	12,759
Level 2 [Member] | Derivative Financial Liabilities [Member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Liabilities at fair value	17,549	23,028
Level 2 [Member] | Financial Liabilities Designated at Fair Value [Member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Liabilities at fair value	2,309	2,434
Level 2 [Member] | Trading Assets [Member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Assets at fair value	15,081	17,039
Level 2 [Member] | Derivative Financial Instruments [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Assets at fair value	19,878	25,367
Level 2 [Member] | Financial Assets Designated at Fair Value [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Assets at fair value	1,672	1,876
Level 2 [Member] | Financial Investments [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Assets at fair value	11	63
Level 3 [Member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Assets at fair value	357	399
Liabilities at fair value	69	80
Level 3 [Member] | Derivative Financial Liabilities [Member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Liabilities at fair value	63	74
Level 3 [Member] | Financial Liabilities Designated at Fair Value [Member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Liabilities at fair value	6	6
Level 3 [Member] | Derivative Financial Instruments [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Assets at fair value	64	103
Level 3 [Member] | Financial Assets Designated at Fair Value [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Assets at fair value	240	264
Level 3 [Member] | Financial Investments [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Assets at fair value	53	32
Loans and Advances to Banks [member] | Trading Assets [Member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Assets at fair value	£ 6,897	7,478
Valuation technique	A
Loans and Advances to Banks [member] | Level 2 [Member] | Trading Assets [Member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Assets at fair value	£ 6,897	7,478
Loans and Advances to Customers [member] | Trading Assets [Member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Assets at fair value	£ 8,840	10,323
Valuation technique	A
Loans and Advances to Customers [member] | Financial Assets Designated at Fair Value [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Assets at fair value	£ 1,549	1,731
Valuation technique	A
Loans and Advances to Customers [member] | Level 1 [Member] | Trading Assets [Member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Assets at fair value	£ 656	762
Loans and Advances to Customers [member] | Level 2 [Member] | Trading Assets [Member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Assets at fair value	8,184	9,561
Loans and Advances to Customers [member] | Level 2 [Member] | Financial Assets Designated at Fair Value [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Assets at fair value	1,485	1,668
Loans and Advances to Customers [member] | Level 3 [Member] | Financial Assets Designated at Fair Value [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Assets at fair value	64	63
Debt Securities [member] | Trading Assets [Member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Assets at fair value	£ 5,156	6,248
Valuation technique	-
Debt Securities [member] | Financial Assets Designated at Fair Value [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Assets at fair value	£ 547	409
Valuation technique	A & B
Debt Securities [member] | Level 1 [Member] | Trading Assets [Member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Assets at fair value	£ 5,156	6,248
Debt Securities [member] | Level 1 [Member] | Financial Assets Designated at Fair Value [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Assets at fair value	184
Debt Securities [member] | Level 2 [Member] | Financial Assets Designated at Fair Value [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Assets at fair value	187	208
Debt Securities [member] | Level 3 [Member] | Financial Assets Designated at Fair Value [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Assets at fair value	176	201
Trading equity securities [member] | Trading Assets [Member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Assets at fair value	£ 9,662	5,986
Valuation technique	-
Trading equity securities [member] | Level 1 [Member] | Trading Assets [Member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Assets at fair value	£ 9,662	5,986
Exchange Rate Contracts [Member] | Derivative Financial Liabilities [Member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Valuation technique	A
Liabilities at fair value	£ 4,191	6,030
Exchange Rate Contracts [Member] | Derivative Financial Instruments [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Assets at fair value	£ 6,077	8,322
Valuation technique	A
Exchange Rate Contracts [Member] | Level 2 [Member] | Derivative Financial Liabilities [Member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Liabilities at fair value	£ 4,176	6,009
Exchange Rate Contracts [Member] | Level 2 [Member] | Derivative Financial Instruments [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Assets at fair value	6,061	8,300
Exchange Rate Contracts [Member] | Level 3 [Member] | Derivative Financial Liabilities [Member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Liabilities at fair value	15	21
Exchange Rate Contracts [Member] | Level 3 [Member] | Derivative Financial Instruments [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Assets at fair value	£ 16	22
Interest Rate Contracts [member] | Derivative Financial Liabilities [Member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Valuation technique	A & C
Liabilities at fair value	£ 12,725	16,213
Interest Rate Contracts [member] | Derivative Financial Instruments [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Assets at fair value	£ 12,968	15,815
Valuation technique	A & C
Interest Rate Contracts [member] | Level 1 [Member] | Derivative Financial Instruments [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Assets at fair value		1
Interest Rate Contracts [member] | Level 2 [Member] | Derivative Financial Liabilities [Member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Liabilities at fair value	£ 12,720	16,202
Interest Rate Contracts [member] | Level 2 [Member] | Derivative Financial Instruments [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Assets at fair value	12,956	15,795
Interest Rate Contracts [member] | Level 3 [Member] | Derivative Financial Liabilities [Member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Liabilities at fair value	5	11
Interest Rate Contracts [member] | Level 3 [Member] | Derivative Financial Instruments [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Assets at fair value	12	19
Equity and Credit Contracts [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Assets at fair value	£ 31	36
Equity and Credit Contracts [member] | Derivative Financial Liabilities [Member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Valuation technique	B & D
Liabilities at fair value	£ 697	860
Equity and Credit Contracts [member] | Derivative Financial Instruments [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Assets at fair value	£ 897	1,334
Valuation technique	B & D
Equity and Credit Contracts [member] | Level 1 [Member] | Derivative Financial Liabilities [Member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Liabilities at fair value	£ 1	1
Equity and Credit Contracts [member] | Level 2 [Member] | Derivative Financial Liabilities [Member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Liabilities at fair value	653	817
Equity and Credit Contracts [member] | Level 2 [Member] | Derivative Financial Instruments [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Assets at fair value	861	1,272
Equity and Credit Contracts [member] | Level 3 [Member] | Derivative Financial Liabilities [Member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Liabilities at fair value	43	42
Equity and Credit Contracts [member] | Level 3 [Member] | Derivative Financial Instruments [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Assets at fair value	36	62
Available for sale equity securities [Member] | Financial Investments [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Assets at fair value	£ 81	112
Valuation technique	B
Available for sale equity securities [Member] | Level 1 [Member] | Financial Investments [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Assets at fair value	£ 19	17
Available for sale equity securities [Member] | Level 2 [Member] | Financial Investments [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Assets at fair value	9	63
Available for sale equity securities [Member] | Level 3 [Member] | Financial Investments [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Assets at fair value	53	32
Available for sale debt securities [Member] | Financial Investments [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Assets at fair value	£ 8,772	10,449
Valuation technique	C
Available for sale debt securities [Member] | Level 1 [Member] | Financial Investments [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Assets at fair value	£ 8,770	10,449
Available for sale debt securities [Member] | Level 2 [Member] | Financial Investments [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Assets at fair value	£ 2
Deposits by Banks [member] | Trading Liabilities [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Valuation technique	A
Liabilities at fair value	£ 1,885	4,200
Deposits by Banks [member] | Level 2 [Member] | Trading Liabilities [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Liabilities at fair value	£ 1,885	4,200
Deposits by Customers [Member] | Trading Liabilities [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Valuation technique	A
Liabilities at fair value	£ 25,530	8,559
Deposits by Customers [Member] | Level 2 [Member] | Trading Liabilities [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Liabilities at fair value	£ 25,530	8,559
Short Term Position [Member] | Trading Liabilities [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Valuation technique	-
Liabilities at fair value	£ 3,694	2,801
Short Term Position [Member] | Level 1 [Member] | Trading Liabilities [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Liabilities at fair value	3,694	2,801
Debt Securities [Member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Assets at fair value	£ 5	21
Debt Securities [Member] | Financial Liabilities Designated at Fair Value [Member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Valuation technique	A
Liabilities at fair value	£ 1,635	1,914
Debt Securities [Member] | Level 2 [Member] | Financial Liabilities Designated at Fair Value [Member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Liabilities at fair value	1,629	1,908
Debt Securities [Member] | Level 3 [Member] | Financial Liabilities Designated at Fair Value [Member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Liabilities at fair value	£ 6	6
Structured Deposits [member] | Financial Liabilities Designated at Fair Value [Member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Valuation technique	A
Liabilities at fair value	£ 680	526
Structured Deposits [member] | Level 2 [Member] | Financial Liabilities Designated at Fair Value [Member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Liabilities at fair value	£ 680	£ 526

XML

Financial Instruments - Summary of Fair Value Adjustment (Detail) - GBP (£) £ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure of financial assets [line items]
Fair value adjustments	£ 128	£ 161
Bid-Offer and Trade Specific Adjustments [Member]
Disclosure of financial assets [line items]
Fair value adjustments	34	37
Uncertainty [Member]
Disclosure of financial assets [line items]
Fair value adjustments	43	49
Credit Risk Adjustment [Member]
Disclosure of financial assets [line items]
Fair value adjustments	36	50
Funding Fair Value Adjustment [Member]
Disclosure of financial assets [line items]
Fair value adjustments	6	20
Risk Related Adjustments [Member]
Disclosure of financial assets [line items]
Fair value adjustments	119	156
Model-Related [Member]
Disclosure of financial assets [line items]
Fair value adjustments	8	1
Day One Profit [Member]
Disclosure of financial assets [line items]
Fair value adjustments	£ 1	£ 4

XML

Financial Instruments - Analysis of Financial Instruments Valued Using Internal Models Based on Information Other Than Market Data (Detail) - GBP (£) £ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of financial assets [line items]
Derivative assets	£ 308,392	£ 296,305
Derivative liabilities	(294,895)	(282,693)
Financial investments	30,555	30,035
Total net assets	288	319
Total (expense)/income	(34)	7	£ 2
Cross-Currency Swaps [Member] | Exchange Rate Contracts [Member]
Disclosure of financial assets [line items]
Derivative assets	1	1
Derivative assets		1	3
Securitisation Cross Currency Swaps [Member] | Exchange Rate Contracts [Member]
Disclosure of financial assets [line items]
Derivative assets	15	21
Derivative liabilities	(15)	(21)
Derivative assets	(11)	12
Financial investments	11	(12)
Bermudan Swaptions [member] | Interest Rate Contracts [member]
Disclosure of financial assets [line items]
Derivative assets	6	7
Derivative liabilities	(1)	(2)
Derivative assets	(1)	(3)	(9)
Financial investments	1	2
Securitisation Swaps [Member] | Interest Rate Contracts [member]
Disclosure of financial assets [line items]
Derivative assets	6	12
Derivative liabilities	(4)	(9)
Derivative assets	(8)
Financial investments	7
Reversionary Property Securities [Member] | Equity and Credit Contracts [member]
Disclosure of financial assets [line items]
Derivative assets	31	36
Derivative assets	(6)	12	2
Reversionary Property Securities [Member] | Debt Securities [Member]
Disclosure of financial assets [line items]
FVTPL	176	201
Derivative assets	(18)		17
Credit Default Swaps [member] | Credit Contracts [Member]
Disclosure of financial assets [line items]
Derivative assets		5
Derivative assets	(5)	1	(2)
Property Related Options and Forwards [Member] | Equity Securities [member]
Disclosure of financial assets [line items]
Derivative assets	5	21
Derivative liabilities	(43)	(42)
Derivative assets	(1)	(5)	(4)
Financial investments	(5)	(5)	(3)
Roll-up Mortgage Portfolio [member] | Loans and Advances to Customers [member]
Disclosure of financial assets [line items]
FVTPL	64	63
Derivative assets	2	4	2
Unlisted Equity Shares [member] | Equity Securities [member]
Disclosure of financial assets [line items]
Financial investments	53	32
Non Vanilla Debt Securitiess [Member] | Debt Securities [Member]
Disclosure of financial assets [line items]
FVTPL	£ (6)	£ (6)
Financial investments			£ (4)

XML

Financial Instruments - Reconciliation of Fair Value Measurements in Level 3 of the Fair Value Hierarchy (Detail) - GBP (£) £ in Millions	12 Months Ended
	Dec. 31, 2017		Dec. 31, 2016
Disclosure of financial assets [line items]
Beginning balance	£ (287,058)		£ (265,747)
Ending Balance	(298,560)		(287,058)
Beginning balance	302,511	[1]	280,775
Ending Balance	314,765		302,511	[1]
Level 3 [Member]
Disclosure of financial assets [line items]
Beginning balance	(80)		(110)
Additions	(2)		(3)
Settlements	31		17
Ending Balance	(69)		(80)
(Losses)/gains recognised in profit/(loss) relating to assets and liabilities held at the end of the year	(18)		16
Beginning balance	399		555
Gains recognised in other comprehensive income	21		26
Additions	9		29
Sales	(8)		(126)
Settlements	(48)		(75)
Ending Balance	357		399
(Losses)/gains recognised in profit/(loss) relating to assets and liabilities held at the end of the year	(16)		(10)
Level 3 [Member] | Fair Value Through P&L [member]
Disclosure of financial assets [line items]
Beginning balance	(6)		(5)
Ending Balance	(6)		(6)
(Losses)/gains recognised in profit/(loss) relating to assets and liabilities held at the end of the year			(1)
Level 3 [Member] | Fair Value Through P&L [Member]
Disclosure of financial assets [line items]
Beginning balance	264		267
Sales	(8)		(7)
Ending Balance	240		264
(Losses)/gains recognised in profit/(loss) relating to assets and liabilities held at the end of the year	(16)		4
Level 3 [Member] | Derivative Liabilities [Member]
Disclosure of financial assets [line items]
Beginning balance	(74)		(105)
Additions	(2)		(3)
Settlements	31		17
Ending Balance	(63)		(74)
(Losses)/gains recognised in profit/(loss) relating to assets and liabilities held at the end of the year	(18)		17
Level 3 [Member] | Fair Value Movements [member]
Disclosure of financial assets [line items]
Total gains/(losses) recognised in profit/(loss	14		(15)
Total gains/(losses) recognised in profit/(loss	(48)		22
Level 3 [Member] | Fair Value Movements [member] | Fair Value Through P&L [Member]
Disclosure of financial assets [line items]
Total gains/(losses) recognised in profit/(loss	(16)		4
Level 3 [Member] | Fair Value Movements [member] | Derivative Liabilities [Member]
Disclosure of financial assets [line items]
Total gains/(losses) recognised in profit/(loss	14		(15)
Level 3 [Member] | Foreign Exchange and Other Movements [member]
Disclosure of financial assets [line items]
Total gains/(losses) recognised in profit/(loss	(32)		31
Total gains/(losses) recognised in profit/(loss	32		(32)
Level 3 [Member] | Foreign Exchange and Other Movements [member] | Fair Value Through P&L [member]
Disclosure of financial assets [line items]
Total gains/(losses) recognised in profit/(loss			(1)
Level 3 [Member] | Foreign Exchange and Other Movements [member] | Derivative Liabilities [Member]
Disclosure of financial assets [line items]
Total gains/(losses) recognised in profit/(loss	(32)		32
Level 3 [Member] | Derivative Financial Instruments [member]
Disclosure of financial assets [line items]
Beginning balance	103		188
Additions	9		4
Settlements	(48)		(75)
Ending Balance	64		103
(Losses)/gains recognised in profit/(loss) relating to assets and liabilities held at the end of the year			(14)
Level 3 [Member] | Derivative Financial Instruments [member] | Fair Value Movements [member]
Disclosure of financial assets [line items]
Total gains/(losses) recognised in profit/(loss	(32)		18
Level 3 [Member] | Derivative Financial Instruments [member] | Foreign Exchange and Other Movements [member]
Disclosure of financial assets [line items]
Total gains/(losses) recognised in profit/(loss	32		(32)
Level 3 [Member] | Financial Investments [member]
Disclosure of financial assets [line items]
Beginning balance	32		100
Gains recognised in other comprehensive income	21		26
Additions			25
Sales			(119)
Ending Balance	£ 53		£ 32

[1] Restated to reflect the change in accounting policy relating to business combinations between entities under common control, as described in Note 1.

XML

Financial Instruments - Effects of Changes in Significant Unobservable Assumptions to Reasonably Possible Alternatives (Level 3) (Detail) £ in Millions	12 Months Ended
	Dec. 31, 2017 GBP (£) Index	Dec. 31, 2016 GBP (£) Index
Effect of changes in significant unobservable assumptions to reasonably possible alternatives - Level 3 [Line Items]
Fair value	£ 61,446	£ 68,207
Property Related Options and Forwards [Member]
Effect of changes in significant unobservable assumptions to reasonably possible alternatives - Level 3 [Line Items]
HPI spot rate index level | Index		702
Equity and Credit Contracts [member]
Effect of changes in significant unobservable assumptions to reasonably possible alternatives - Level 3 [Line Items]
Fair value	£ 31	£ 36
Assumption description	HPI Forward growth rate HPI Spot rate	HPI Forward growth rate HPI Spot rate
Shift	1.00%	1.00%
Favourable changes	£ 10	£ 11
Unfavourable changes	£ (10)	£ (11)
Equity and Credit Contracts [member] | Reversionary Property Securities [Member]
Effect of changes in significant unobservable assumptions to reasonably possible alternatives - Level 3 [Line Items]
Shift	10.00%	10.00%
Favourable changes	£ 8	£ 9
Unfavourable changes	£ (8)	£ (9)
HPI spot rate index level | Index	773	748
Debt Securities [Member]
Effect of changes in significant unobservable assumptions to reasonably possible alternatives - Level 3 [Line Items]
Fair value	£ 5	£ 21
Assumption description	HPI Forward growth rate HPI Spot rate	HPI Forward growth rate HPI Spot rate
Shift	1.00%	1.00%
Favourable changes	£ 1	£ 1
Unfavourable changes	£ (1)	£ (1)
Debt Securities [Member] | Reversionary Property Securities [Member]
Effect of changes in significant unobservable assumptions to reasonably possible alternatives - Level 3 [Line Items]
HPI spot rate index level | Index	773	748
Debt Securities [Member] | Property Related Options and Forwards [Member]
Effect of changes in significant unobservable assumptions to reasonably possible alternatives - Level 3 [Line Items]
Shift	10.00%	10.00%
Favourable changes	£ 2	£ 1
Unfavourable changes		(1)
HPI spot rate index level | Index	727
Interest Rate Contracts [member] | Bermudan Swaptions [member]
Effect of changes in significant unobservable assumptions to reasonably possible alternatives - Level 3 [Line Items]
Fair value	£ 6	£ 7
Assumption description	Mean reversion	Mean reversion
Shift	(2.00%)	(2.00%)
Favourable changes	£ 1	£ 1
Unfavourable changes	(1)	(1)
Credit Contracts [Member] | Credit Default Swaps [member]
Effect of changes in significant unobservable assumptions to reasonably possible alternatives - Level 3 [Line Items]
Fair value		£ 5
Assumption description		Probability of default
Shift		20.00%
Favourable changes		£ 1
Unfavourable changes		(1)
Fair Value Through P&L [Member] | Debt Securities [Member]
Effect of changes in significant unobservable assumptions to reasonably possible alternatives - Level 3 [Line Items]
Fair value	£ 176	£ 201
Assumption description	HPI Forward growth rate HPI Spot rate	HPI Forward growth rate HPI Spot rate
Shift	1.00%	1.00%
Favourable changes	£ 3	£ 12
Unfavourable changes	£ (3)	£ (12)
Fair Value Through P&L [Member] | Debt Securities [Member] | Reversionary Property Securities [Member]
Effect of changes in significant unobservable assumptions to reasonably possible alternatives - Level 3 [Line Items]
Shift	10.00%	10.00%
Favourable changes	£ 11	£ 18
Unfavourable changes	(11)	(18)
Fair Value Through P&L [Member] | Loans and Advances to Customers [member] | Roll-up Mortgage Portfolio [member]
Effect of changes in significant unobservable assumptions to reasonably possible alternatives - Level 3 [Line Items]
Fair value	£ 64	£ 63
Assumption description	HPI Forward growth rate	HPI Forward growth rate
Shift	1.00%	1.00%
Favourable changes	£ 2	£ 2
Unfavourable changes	(2)	(2)
Available-for-Sale [member] | Equity Securities [member] | Unlisted Equity Shares [member]
Effect of changes in significant unobservable assumptions to reasonably possible alternatives - Level 3 [Line Items]
Fair value	£ 53	£ 32
Assumption description	Contingent litigation risk	Contingent litigation risk
Shift	20.00%	20.00%
Favourable changes	£ 6	£ 7
Unfavourable changes	(6)	(7)
Equity Securities [member]
Effect of changes in significant unobservable assumptions to reasonably possible alternatives - Level 3 [Line Items]
Fair value	£ (43)	£ (42)
Assumption description	HPI Forward growth rate HPI Spot rate	HPI Forward growth rate HPI Spot rate
Shift	1.00%	1.00%
Favourable changes	£ 3	£ 4
Unfavourable changes	£ (3)	£ (4)
Property Related Options and Forwards [Member]
Effect of changes in significant unobservable assumptions to reasonably possible alternatives - Level 3 [Line Items]
HPI spot rate index level | Index	727	702
Property Related Options and Forwards [Member] | Equity Securities [member]
Effect of changes in significant unobservable assumptions to reasonably possible alternatives - Level 3 [Line Items]
Shift	10.00%	10.00%
Favourable changes	£ 7	£ 8
Unfavourable changes	(8)	(9)
Bermudan Swaptions [member] | Interest Rate Contracts [member]
Effect of changes in significant unobservable assumptions to reasonably possible alternatives - Level 3 [Line Items]
Fair value	£ (1)	£ (2)
Assumption description	Mean reversion	Mean reversion
Shift	(2.00%)	(2.00%)
Favourable changes	£ 1	£ 1
Unfavourable changes	£ (1)	£ (1)
Bottom of Range [member] | Equity and Credit Contracts [member]
Effect of changes in significant unobservable assumptions to reasonably possible alternatives - Level 3 [Line Items]
Assumption value	0.00%	0.00%
Bottom of Range [member] | Debt Securities [Member]
Effect of changes in significant unobservable assumptions to reasonably possible alternatives - Level 3 [Line Items]
Assumption value	0.00%	0.00%
Bottom of Range [member] | Interest Rate Contracts [member] | Bermudan Swaptions [member]
Effect of changes in significant unobservable assumptions to reasonably possible alternatives - Level 3 [Line Items]
Assumption value	(2.00%)	(2.00%)
Bottom of Range [member] | Credit Contracts [Member] | Credit Default Swaps [member]
Effect of changes in significant unobservable assumptions to reasonably possible alternatives - Level 3 [Line Items]
Assumption value		0.00%
Bottom of Range [member] | Fair Value Through P&L [Member] | Debt Securities [Member]
Effect of changes in significant unobservable assumptions to reasonably possible alternatives - Level 3 [Line Items]
Assumption value	0.00%	0.00%
Bottom of Range [member] | Fair Value Through P&L [Member] | Loans and Advances to Customers [member] | Roll-up Mortgage Portfolio [member]
Effect of changes in significant unobservable assumptions to reasonably possible alternatives - Level 3 [Line Items]
Assumption value	0.00%	0.00%
Bottom of Range [member] | Available-for-Sale [member] | Equity Securities [member] | Unlisted Equity Shares [member]
Effect of changes in significant unobservable assumptions to reasonably possible alternatives - Level 3 [Line Items]
Assumption value	0.00%	0.00%
Bottom of Range [member] | Equity Securities [member]
Effect of changes in significant unobservable assumptions to reasonably possible alternatives - Level 3 [Line Items]
Assumption value	0.00%	0.00%
Bottom of Range [member] | Bermudan Swaptions [member] | Interest Rate Contracts [member]
Effect of changes in significant unobservable assumptions to reasonably possible alternatives - Level 3 [Line Items]
Assumption value	(2.00%)	(2.00%)
Top of Range [member] | Equity and Credit Contracts [member]
Effect of changes in significant unobservable assumptions to reasonably possible alternatives - Level 3 [Line Items]
Assumption value	5.00%	5.00%
Top of Range [member] | Debt Securities [Member]
Effect of changes in significant unobservable assumptions to reasonably possible alternatives - Level 3 [Line Items]
Assumption value	5.00%	5.00%
Top of Range [member] | Interest Rate Contracts [member] | Bermudan Swaptions [member]
Effect of changes in significant unobservable assumptions to reasonably possible alternatives - Level 3 [Line Items]
Assumption value	2.00%	2.00%
Top of Range [member] | Credit Contracts [Member] | Credit Default Swaps [member]
Effect of changes in significant unobservable assumptions to reasonably possible alternatives - Level 3 [Line Items]
Assumption value		5.00%
Top of Range [member] | Fair Value Through P&L [Member] | Debt Securities [Member]
Effect of changes in significant unobservable assumptions to reasonably possible alternatives - Level 3 [Line Items]
Assumption value	5.00%	5.00%
Top of Range [member] | Fair Value Through P&L [Member] | Loans and Advances to Customers [member] | Roll-up Mortgage Portfolio [member]
Effect of changes in significant unobservable assumptions to reasonably possible alternatives - Level 3 [Line Items]
Assumption value	5.00%	5.00%
Top of Range [member] | Available-for-Sale [member] | Equity Securities [member] | Unlisted Equity Shares [member]
Effect of changes in significant unobservable assumptions to reasonably possible alternatives - Level 3 [Line Items]
Assumption value	100.00%	100.00%
Top of Range [member] | Equity Securities [member]
Effect of changes in significant unobservable assumptions to reasonably possible alternatives - Level 3 [Line Items]
Assumption value	5.00%	5.00%
Top of Range [member] | Bermudan Swaptions [member] | Interest Rate Contracts [member]
Effect of changes in significant unobservable assumptions to reasonably possible alternatives - Level 3 [Line Items]
Assumption value	2.00%	2.00%
Weighted average [member] | Equity and Credit Contracts [member]
Effect of changes in significant unobservable assumptions to reasonably possible alternatives - Level 3 [Line Items]
Assumption value	2.42%	2.79%
Weighted average [member] | Debt Securities [Member]
Effect of changes in significant unobservable assumptions to reasonably possible alternatives - Level 3 [Line Items]
Assumption value	2.32%	2.71%
Weighted average [member] | Interest Rate Contracts [member] | Bermudan Swaptions [member]
Effect of changes in significant unobservable assumptions to reasonably possible alternatives - Level 3 [Line Items]
Assumption value	0.00%	0.00%
Weighted average [member] | Credit Contracts [Member] | Credit Default Swaps [member]
Effect of changes in significant unobservable assumptions to reasonably possible alternatives - Level 3 [Line Items]
Assumption value		0.39%
Weighted average [member] | Fair Value Through P&L [Member] | Debt Securities [Member]
Effect of changes in significant unobservable assumptions to reasonably possible alternatives - Level 3 [Line Items]
Assumption value	2.42%	2.79%
Weighted average [member] | Fair Value Through P&L [Member] | Loans and Advances to Customers [member] | Roll-up Mortgage Portfolio [member]
Effect of changes in significant unobservable assumptions to reasonably possible alternatives - Level 3 [Line Items]
Assumption value	2.57%	2.84%
Weighted average [member] | Available-for-Sale [member] | Equity Securities [member] | Unlisted Equity Shares [member]
Effect of changes in significant unobservable assumptions to reasonably possible alternatives - Level 3 [Line Items]
Assumption value	35.00%	48.00%
Weighted average [member] | Equity Securities [member]
Effect of changes in significant unobservable assumptions to reasonably possible alternatives - Level 3 [Line Items]
Assumption value	2.32%	2.71%
Weighted average [member] | Bermudan Swaptions [member] | Interest Rate Contracts [member]
Effect of changes in significant unobservable assumptions to reasonably possible alternatives - Level 3 [Line Items]
Assumption value	0.00%	0.00%

XML

Financial Instruments - Maturities of Undiscounted Cash Flows for Financial Liabilities and Off Balance Sheet Commitments (Detail) - GBP (£) £ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure Of Maturity Analysis For Financial Liabilities [Line Items]
Deposits by banks	£ 13,784	£ 9,769
Deposits by customers	183,648	177,172
Trading liabilities	31,109	15,560
Financial liabilities designated at fair value	2,315	2,440
Debt securities in issue	42,633	50,346
Subordinated liabilities	3,793	4,303
Total financial liabilities	294,895	282,693
Undiscounted Cash Flow [Member]
Disclosure Of Maturity Analysis For Financial Liabilities [Line Items]
Deposits by banks	13,914	9,888
Deposits by customers	184,071	177,693
Trading liabilities	31,327	15,674
- Held for trading	17,038	22,360
- Held for hedging(1)	1,764	1,984
Financial liabilities designated at fair value	2,377	2,518
Debt securities in issue	44,076	52,863
Subordinated liabilities	6,790	8,797
Total financial liabilities	301,357	291,777
Off-balance sheet commitments given	42,059	41,616
Undiscounted Cash Flow [Member] | On Demand [member]
Disclosure Of Maturity Analysis For Financial Liabilities [Line Items]
Deposits by banks	2,452	2,366
Deposits by customers	154,114	145,810
Trading liabilities	1,520	3,535
- Held for trading	9	41
- Held for hedging(1)	6
Financial liabilities designated at fair value	7	9
Total financial liabilities	158,108	151,761
Off-balance sheet commitments given	2,082	1,692
Undiscounted Cash Flow [Member] | In No More Than 3 Months [member]
Disclosure Of Maturity Analysis For Financial Liabilities [Line Items]
Deposits by banks	1,466	916
Deposits by customers	4,764	4,996
Trading liabilities	26,914	10,042
- Held for trading	620	904
- Held for hedging(1)	11	14
Financial liabilities designated at fair value	545	404
Debt securities in issue	8,395	9,189
Subordinated liabilities	289	450
Total financial liabilities	43,004	26,915
Off-balance sheet commitments given	6,874	5,128
Undiscounted Cash Flow [Member] | In More Than 3 Months But Not More Than 1 Year [Member]
Disclosure Of Maturity Analysis For Financial Liabilities [Line Items]
Deposits by banks	914	677
Deposits by customers	13,869	13,420
Trading liabilities	152	21
- Held for trading	1,203	1,569
- Held for hedging(1)	27	38
Financial liabilities designated at fair value	222	229
Debt securities in issue	4,821	7,010
Subordinated liabilities	147	554
Total financial liabilities	21,355	23,518
Off-balance sheet commitments given	1,844	2,642
Undiscounted Cash Flow [Member] | In more than 1 year but not more than 5 years [member]
Disclosure Of Maturity Analysis For Financial Liabilities [Line Items]
Deposits by banks	8,874	5,833
Deposits by customers	6,720	11,077
Trading liabilities	161	602
- Held for trading	2,505	4,352
- Held for hedging(1)	420	575
Financial liabilities designated at fair value	789	1,117
Debt securities in issue	22,927	21,889
Subordinated liabilities	783	1,739
Total financial liabilities	43,179	47,184
Off-balance sheet commitments given	12,399	23,584
Undiscounted Cash Flow [Member] | In More Than 5 Years [member]
Disclosure Of Maturity Analysis For Financial Liabilities [Line Items]
Deposits by banks	208	96
Deposits by customers	4,604	2,390
Trading liabilities	2,580	1,474
- Held for trading	12,701	15,494
- Held for hedging(1)	1,300	1,357
Financial liabilities designated at fair value	814	759
Debt securities in issue	7,933	14,775
Subordinated liabilities	5,571	6,054
Total financial liabilities	35,711	42,399
Off-balance sheet commitments given	£ 18,860	£ 8,570

XML

Offsetting Financial Assets and Liabilities - Summary of Information about Impact of Offsetting of Financial Assets and Liabilities (Detail) - GBP (£) £ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of offsetting of financial liabilities [line items]
Gross amounts, Assets	£ 53,964	£ 53,688
Amounts offset, Assets	(18,292)	(12,205)
Net amounts reported on the balance sheet, Assets	35,672	41,483
Financial instruments, Assets	(15,127)	(19,530)
Financial collateral, Assets	(13,764)	(12,445)
Net amount, Assets	6,781	9,508
Assets not subject to enforceable netting arrangements, Assets	198,557	198,786
Balance sheet total, Assets	234,229	240,269
Gross amounts, Liabilities	69,715	51,857
Amounts offset, Liabilities	(18,292)	(12,205)
Net amounts reported on the balance sheet, Liabilities	51,423	39,652
Financial instruments, Liabilities	(15,127)	(19,530)
Financial collateral, Liabilities	(28,678)	(12,136)
Net amount, Liabilities	7,618	7,986
Assets not subject to enforceable netting arrangements, Liabilities	189,126	179,190
Balance sheet total, Liabilities	240,549	218,842
Derivative Financial Liabilities [Member]
Disclosure of offsetting of financial liabilities [line items]
Gross amounts, Liabilities	27,839	31,635
Amounts offset, Liabilities	(10,479)	(8,819)
Net amounts reported on the balance sheet, Liabilities	17,360	22,816
Financial instruments, Liabilities	(14,772)	(17,417)
Financial collateral, Liabilities	(1,951)	(2,565)
Net amount, Liabilities	637	2,834
Assets not subject to enforceable netting arrangements, Liabilities	253	287
Balance sheet total, Liabilities	17,613	23,103
Trading Liabilities [member]
Disclosure of offsetting of financial liabilities [line items]
Gross amounts, Liabilities	31,858	10,693
Amounts offset, Liabilities	(6,354)	(1,895)
Net amounts reported on the balance sheet, Liabilities	25,504	8,798
Financial instruments, Liabilities	(355)	(2,113)
Financial collateral, Liabilities	(25,149)	(6,685)
Balance sheet total, Liabilities	25,504	8,798
Deposits by Banks and Customers [Member]
Disclosure of offsetting of financial liabilities [line items]
Gross amounts, Liabilities	1,578	2,886
Net amounts reported on the balance sheet, Liabilities	1,578	2,886
Financial collateral, Liabilities	(1,578)	(2,886)
Balance sheet total, Liabilities	1,578	2,886
Deposits by Customers and Banks [Member]
Disclosure of offsetting of financial liabilities [line items]
Gross amounts, Liabilities	8,440	6,643
Amounts offset, Liabilities	(1,459)	(1,491)
Net amounts reported on the balance sheet, Liabilities	6,981	5,152
Net amount, Liabilities	6,981	5,152
Assets not subject to enforceable netting arrangements, Liabilities	188,873	178,903
Balance sheet total, Liabilities	195,854	184,055
Derivative Financial Instruments [member]
Disclosure of offsetting of financial liabilities [line items]
Gross amounts, Assets	30,155	34,125
Amounts offset, Assets	(10,479)	(8,819)
Net amounts reported on the balance sheet, Assets	19,676	25,306
Financial instruments, Assets	(14,772)	(17,417)
Financial collateral, Assets	(2,785)	(2,384)
Net amount, Assets	2,119	5,505
Assets not subject to enforceable netting arrangements, Assets	266	165
Balance sheet total, Assets	19,942	25,471
Trading Assets [Member]
Disclosure of offsetting of financial liabilities [line items]
Gross amounts, Assets	15,224	12,607
Amounts offset, Assets	(6,354)	(1,895)
Net amounts reported on the balance sheet, Assets	8,870	10,712
Financial instruments, Assets	(355)	(2,113)
Financial collateral, Assets	(8,515)	(8,599)
Balance sheet total, Assets	8,870	10,712
Loans and Advances to Banks [member]
Disclosure of offsetting of financial liabilities [line items]
Gross amounts, Assets	2,464	1,462
Net amounts reported on the balance sheet, Assets	2,464	1,462
Financial collateral, Assets	(2,464)	(1,462)
Balance sheet total, Assets	2,464	1,462
Loans and Advances to Customers [member]
Disclosure of offsetting of financial liabilities [line items]
Gross amounts, Assets	6,121	5,494
Amounts offset, Assets	(1,459)	(1,491)
Net amounts reported on the balance sheet, Assets	4,662	4,003
Net amount, Assets	4,662	4,003
Assets not subject to enforceable netting arrangements, Assets	198,291	198,621
Balance sheet total, Assets	£ 202,953	£ 202,624

XML

Ring-Fencing - Additional Information (Detail) - GBP (£) £ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of transfers of financial assets liabilities [line items]
Non-prohibited trading assets	£ 30,555	£ 30,035
Non-prohibited trading liabilities	31,109	15,560
Derivative assets	19,942	25,471
Derivative liabilities	17,613	23,103
Loans and advances to customers	199,490	199,738
Deposits by customers	183,648	177,172
Financial liabilities designated at fair value	2,315	2,440
Debt securities in issue	42,633	£ 50,346
Banco Santander SA London Branch [member]
Disclosure of transfers of financial assets liabilities [line items]
Non-prohibited trading assets	31,000
Non-prohibited trading liabilities	31,000
Derivative assets	20,000
Derivative liabilities	18,000
Loans and advances to customers	8,000
Banco Santander SA London Branch [member] | Financial Institutions [member]
Disclosure of transfers of financial assets liabilities [line items]
Derivative assets	15,000
Derivative liabilities	17,000
Abbey National Treasury Services plc [Member]
Disclosure of transfers of financial assets liabilities [line items]
Non-prohibited trading assets	31,000
Non-prohibited trading liabilities	31,000
Derivative assets	20,000
Derivative liabilities	18,000
Financial liabilities designated at fair value	1,000
Debt securities in issue	6,000
Abbey National Treasury Services plc [Member] | Financial Institutions [member]
Disclosure of transfers of financial assets liabilities [line items]
Derivative assets	1,000
Derivative liabilities	1,000
Abbey National Treasury Services plc [Member]
Disclosure of transfers of financial assets liabilities [line items]
Loans and advances to customers	£ 8,000
Abbey National Treasury Services plc [Member]
Disclosure of transfers of financial assets liabilities [line items]
Percentage of acquiring ordinery shares	100.00%
Crown Dependency branch [Member]
Disclosure of transfers of financial assets liabilities [line items]
Deposits by customers	£ 6,000
Top of Range [member] | Banco Santander SA London Branch [member]
Disclosure of transfers of financial assets liabilities [line items]
Loans and advances to customers	£ 1,000

XML

Events After the Balance Sheet Date - Additional Information (Detail)	12 Months Ended
	Dec. 31, 2017
Disclosure of non-adjusting events after reporting period [abstract]
Description of nature of Non adjusting event after reporting period	There have been no significant events between 31 December 2017 and the date of approval of these financial statements which would require a change to or additional disclosure in the financial statements.

XML

Changes To Comparative Data - Additional Information (Detail) - GBP (£)	3 Months Ended		12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2017
Disclosure of reclassifications or changes in presentation [line items]
Customer loans	£ 200,156,000,000	£ 198,634,000,000	£ 200,324,000,000
Customer deposits	172,351,000,000	162,255,000,000	175,921,000,000
Goodwill	1,203,000,000		1,203,000,000
Transfer from Commercial Banking to Retail Banking [member]
Disclosure of reclassifications or changes in presentation [line items]
Customer loans	2,200,000,000	2,300,000,000
Customer deposits	3,200,000,000	3,000,000,000
Increase (decrease) due to changes in accounting policy [member]
Disclosure of reclassifications or changes in presentation [line items]
Goodwill			631,000,000
Retail Banking [member]
Disclosure of reclassifications or changes in presentation [line items]
Turnover from Small business customers			6,500,000
Customer loans	168,638,000,000	167,093,000,000	168,991,000,000
Customer deposits	148,063,000,000	140,358,000,000	£ 149,315,000,000
Top of Range [member] | Retail Banking [member]
Disclosure of reclassifications or changes in presentation [line items]
Turnover from Small business customers	£ 6,500,000	£ 250,000

XML

Changes to Comparative Data - Summary of Changes to Comparative Data (Consolidated Statement of Changes in Equity) (Detail) - GBP (£) £ in Millions		Dec. 31, 2017		Dec. 31, 2016		Dec. 31, 2015
Disclosure of reclassifications or changes in presentation [line items]
Beginning balance		£ 15,453	[1]	£ 15,028		£ 13,562
Ending balance		16,205		15,453	[1]	15,028
Retained Earnings [member]
Disclosure of reclassifications or changes in presentation [line items]
Beginning balance	[1],[2]	4,255	[3]	4,048		3,425
Ending balance	[1],[2]	4,732		4,255	[3]	4,048
Total [member]
Disclosure of reclassifications or changes in presentation [line items]
Beginning balance		15,303		14,893		13,562
Ending balance		£ 16,053		15,303		14,893
Previously Reported [member]
Disclosure of reclassifications or changes in presentation [line items]
Beginning balance				15,659		14,193
Ending balance						15,659
Previously Reported [member] | Retained Earnings [member]
Disclosure of reclassifications or changes in presentation [line items]
Beginning balance				4,679		4,056
Ending balance						4,679
Previously Reported [member] | Total [member]
Disclosure of reclassifications or changes in presentation [line items]
Beginning balance				15,524		14,193
Ending balance						15,524
Adjusted [member]
Disclosure of reclassifications or changes in presentation [line items]
Beginning balance				(631)		(631)
Ending balance						(631)
Adjusted [member] | Retained Earnings [member]
Disclosure of reclassifications or changes in presentation [line items]
Beginning balance				(631)		(631)
Ending balance						(631)
Adjusted [member] | Total [member]
Disclosure of reclassifications or changes in presentation [line items]
Beginning balance				£ (631)		(631)
Ending balance						£ (631)

[1] Restated to reflect the change in accounting policy relating to business combinations between entities under common control, as described in Note 1.

[2] Includes capital redemption reserve of £nil (2016: £nil, 2015: £21m) arising from the purchase of £300m fixed/floating rate non-cumulative callable preference shares in 2017, 2016 and 2015.

[3] The impact of the early adoption of IFRS 9 requirements for the presentation of gains and losses on such financial liabilities relating to own credit in other comprehensive income as described in Note 1, was £18m (net of tax).

XML

Changes To Comparative Data - Summary of Changes to Comparative Data (Detail) - GBP (£) £ in Millions	3 Months Ended	12 Months Ended
	Jun. 30, 2017	Dec. 31, 2017	Dec. 31, 2016		Dec. 31, 2015
Disclosure of reclassifications or changes in presentation [line items]
Net interest income		£ 3,803	£ 3,582		£ 3,575
Non-interest income		1,109	1,213		998
Total operating income		4,912	4,795		4,573
Operating expenses before impairment losses, provisions and (charges)/releases		(2,499)	(2,414)		(2,400)
Impairment (losses)/releases on loans and advances		(203)	(67)		(66)
Provisions for other liabilities and (charges)/releases	£ (35)	(393)	(397)		(762)
Total operating impairment losses, provisions and (charges)/releases		(596)	(464)		(828)
Profit before tax		1,817	1,917		1,345
Revenue from external customers		4,912	4,795		4,573
Customer loans		200,324	200,156		198,634
Total assets		314,765	302,511	[1]	280,775
Customer deposits		175,921	172,351		162,255
Total liabilities		298,560	287,058		265,747
Adjusted [member]
Disclosure of reclassifications or changes in presentation [line items]
Total assets					(631)
Previously Stated [member]
Disclosure of reclassifications or changes in presentation [line items]
Net interest income					3,575
Non-interest income					998
Total operating income					4,573
Operating expenses before impairment losses, provisions and (charges)/releases					(2,400)
Impairment (losses)/releases on loans and advances					(66)
Provisions for other liabilities and (charges)/releases					(762)
Total operating impairment losses, provisions and (charges)/releases					(828)
Profit before tax					1,345
Revenue from external customers					4,573
Customer loans					198,634
Total assets					281,406
Customer deposits					162,255
Total liabilities					265,747
Retail Banking [member]
Disclosure of reclassifications or changes in presentation [line items]
Net interest income		3,302	3,140		3,097
Non-interest income		615	562		526
Total operating income		3,917	3,702		3,623
Operating expenses before impairment losses, provisions and (charges)/releases		(1,871)	(1,800)		(1,898)
Impairment (losses)/releases on loans and advances		(36)	(20)		(90)
Provisions for other liabilities and (charges)/releases		(342)	(338)		(728)
Total operating impairment losses, provisions and (charges)/releases		(378)	(358)		(818)
Profit before tax		1,668	1,544		907
Revenue from external customers		4,505	4,369		4,529
Customer loans		168,991	168,638		167,093
Total assets		174,524	175,100		173,479
Customer deposits		149,315	148,063		140,358
Total liabilities		150,847	149,793		143,157
Retail Banking [member] | Adjusted [member]
Disclosure of reclassifications or changes in presentation [line items]
Net interest income					112
Non-interest income					5
Total operating income					117
Operating expenses before impairment losses, provisions and (charges)/releases					(115)
Impairment (losses)/releases on loans and advances					(14)
Provisions for other liabilities and (charges)/releases					(1)
Total operating impairment losses, provisions and (charges)/releases					(15)
Profit before tax					(13)
Revenue from external customers					94
Customer loans					2,263
Total assets					1,632
Customer deposits					3,026
Total liabilities					3,026
Retail Banking [member] | Previously Stated [member]
Disclosure of reclassifications or changes in presentation [line items]
Net interest income					2,985
Non-interest income					521
Total operating income					3,506
Operating expenses before impairment losses, provisions and (charges)/releases					(1,783)
Impairment (losses)/releases on loans and advances					(76)
Provisions for other liabilities and (charges)/releases					(727)
Total operating impairment losses, provisions and (charges)/releases					(803)
Profit before tax					920
Revenue from external customers					4,435
Customer loans					164,830
Total assets					171,847
Customer deposits					137,332
Total liabilities					140,131
Retail Banking [member] | Elimination of Intersegment Amounts [member]
Disclosure of reclassifications or changes in presentation [line items]
Total operating income		(588)	(667)		(906)
Retail Banking [member] | Elimination of Intersegment Amounts [member] | Adjusted [member]
Disclosure of reclassifications or changes in presentation [line items]
Total operating income					23
Retail Banking [member] | Elimination of Intersegment Amounts [member] | Previously Stated [member]
Disclosure of reclassifications or changes in presentation [line items]
Total operating income					(929)
Commercial Banking [member]
Disclosure of reclassifications or changes in presentation [line items]
Net interest income		395	383		399
Non-interest income		74	76		91
Total operating income		469	459		490
Operating expenses before impairment losses, provisions and (charges)/releases		(223)	(215)		(217)
Impairment (losses)/releases on loans and advances		(13)	(29)		(25)
Provisions for other liabilities and (charges)/releases		(55)	(26)		(23)
Total operating impairment losses, provisions and (charges)/releases		(68)	(55)		(48)
Profit before tax		178	189		225
Revenue from external customers		631	644		626
Customer loans		19,391	19,381		18,680
Total assets		19,391	19,381		18,680
Customer deposits		18,697	17,203		15,076
Total liabilities		18,697	17,203		15,076
Commercial Banking [member] | Adjusted [member]
Disclosure of reclassifications or changes in presentation [line items]
Net interest income					(61)
Non-interest income					(18)
Total operating income					(79)
Operating expenses before impairment losses, provisions and (charges)/releases					115
Impairment (losses)/releases on loans and advances					14
Provisions for other liabilities and (charges)/releases					1
Total operating impairment losses, provisions and (charges)/releases					15
Profit before tax					51
Revenue from external customers					(94)
Customer loans					(2,263)
Total assets					(2,263)
Customer deposits					(3,026)
Total liabilities					(3,026)
Commercial Banking [member] | Previously Stated [member]
Disclosure of reclassifications or changes in presentation [line items]
Net interest income					460
Non-interest income					109
Total operating income					569
Operating expenses before impairment losses, provisions and (charges)/releases					(332)
Impairment (losses)/releases on loans and advances					(39)
Provisions for other liabilities and (charges)/releases					(24)
Total operating impairment losses, provisions and (charges)/releases					(63)
Profit before tax					174
Revenue from external customers					720
Customer loans					20,943
Total assets					20,943
Customer deposits					18,102
Total liabilities					18,102
Commercial Banking [member] | Elimination of Intersegment Amounts [member]
Disclosure of reclassifications or changes in presentation [line items]
Total operating income		(162)	(185)		(136)
Commercial Banking [member] | Elimination of Intersegment Amounts [member] | Adjusted [member]
Disclosure of reclassifications or changes in presentation [line items]
Total operating income					(15)
Commercial Banking [member] | Elimination of Intersegment Amounts [member] | Previously Stated [member]
Disclosure of reclassifications or changes in presentation [line items]
Total operating income					(151)
Global Corporate Banking [member]
Disclosure of reclassifications or changes in presentation [line items]
Net interest income		74	73		52
Non-interest income		364	312		303
Total operating income		438	385		355
Operating expenses before impairment losses, provisions and (charges)/releases		(304)	(280)		(287)
Impairment (losses)/releases on loans and advances		(174)	(21)		13
Provisions for other liabilities and (charges)/releases		(11)	(12)		(14)
Total operating impairment losses, provisions and (charges)/releases		(185)	(33)		(1)
Profit before tax		(51)	72		67
Revenue from external customers		506	466		437
Customer loans		6,037	5,659		5,470
Total assets		51,078	39,777		36,593
Customer deposits		4,546	4,054		3,013
Total liabilities		45,603	36,506		32,290
Global Corporate Banking [member] | Adjusted [member]
Disclosure of reclassifications or changes in presentation [line items]
Net interest income					(20)
Non-interest income					(4)
Total operating income					(24)
Profit before tax					(24)
Global Corporate Banking [member] | Previously Stated [member]
Disclosure of reclassifications or changes in presentation [line items]
Net interest income					72
Non-interest income					307
Total operating income					379
Operating expenses before impairment losses, provisions and (charges)/releases					(287)
Impairment (losses)/releases on loans and advances					13
Provisions for other liabilities and (charges)/releases					(14)
Total operating impairment losses, provisions and (charges)/releases					(1)
Profit before tax					91
Revenue from external customers					437
Customer loans					5,470
Total assets					36,593
Customer deposits					3,013
Total liabilities					32,290
Global Corporate Banking [member] | Elimination of Intersegment Amounts [member]
Disclosure of reclassifications or changes in presentation [line items]
Total operating income		(68)	(81)		(82)
Global Corporate Banking [member] | Elimination of Intersegment Amounts [member] | Adjusted [member]
Disclosure of reclassifications or changes in presentation [line items]
Total operating income					(24)
Global Corporate Banking [member] | Elimination of Intersegment Amounts [member] | Previously Stated [member]
Disclosure of reclassifications or changes in presentation [line items]
Total operating income					(58)
Corporate Centre [member]
Disclosure of reclassifications or changes in presentation [line items]
Net interest income		32	(14)		27
Non-interest income		56	263		78
Total operating income		88	249		105
Operating expenses before impairment losses, provisions and (charges)/releases		(101)	(119)		2
Impairment (losses)/releases on loans and advances		20	3		36
Provisions for other liabilities and (charges)/releases		15	(21)		3
Total operating impairment losses, provisions and (charges)/releases		35	(18)		39
Profit before tax		22	112		146
Revenue from external customers		(730)	(684)		(1,019)
Customer loans		5,905	6,478		7,391
Total assets		69,772	68,253		52,023
Customer deposits		3,363	3,031		3,808
Total liabilities		83,413	83,556		75,224
Corporate Centre [member] | Adjusted [member]
Disclosure of reclassifications or changes in presentation [line items]
Net interest income					(31)
Non-interest income					17
Total operating income					(14)
Profit before tax					(14)
Corporate Centre [member] | Previously Stated [member]
Disclosure of reclassifications or changes in presentation [line items]
Net interest income					58
Non-interest income					61
Total operating income					119
Operating expenses before impairment losses, provisions and (charges)/releases					2
Impairment (losses)/releases on loans and advances					36
Provisions for other liabilities and (charges)/releases					3
Total operating impairment losses, provisions and (charges)/releases					39
Profit before tax					160
Revenue from external customers					(1,019)
Customer loans					7,391
Total assets					52,023
Customer deposits					3,808
Total liabilities					75,224
Corporate Centre [member] | Elimination of Intersegment Amounts [member]
Disclosure of reclassifications or changes in presentation [line items]
Total operating income		£ 818	£ 933		1,124
Corporate Centre [member] | Elimination of Intersegment Amounts [member] | Adjusted [member]
Disclosure of reclassifications or changes in presentation [line items]
Total operating income					(14)
Corporate Centre [member] | Elimination of Intersegment Amounts [member] | Previously Stated [member]
Disclosure of reclassifications or changes in presentation [line items]
Total operating income					£ 1,138

[1] Restated to reflect the change in accounting policy relating to business combinations between entities under common control, as described in Note 1.