Wrap Text
BAR001; BAR002 and BAR003 - Financial Results for the year ended 31 December 2013
Barclays Bank PLC
Results Announcement
31st December 2013
Bond Code: BAR001
ISIN No: ZAG000106360
Bond Code: BAR002
ISIN No: ZAG000111063
Bond Code: BAR003
ISIN No: ZAG000112103
Table of Contents
Results Announcement Page
Basis of Preparation 1
Consolidated Income Statement 3
Consolidated Statement of Comprehensive Income 4
Consolidated Balance Sheet 5
Consolidated Statement of Changes in Equity 6
Consolidated Cash Flow Statement 7
Financial Statement Notes 8
Appendix
Barclays PLC Results Announcement 10
BARCLAYS BANK PLC, 1 CHURCHILL PLACE, LONDON, E14 5HP, UNITED KINGDOM. TELEPHONE: +44 (0) 20 7116 1000.
COMPANY NO. 1026167
The term „Barclays PLC Group' or the „Group' means Barclays PLC together with its subsidiaries and the
term „Barclays Bank PLC Group' means Barclays Bank PLC together with its subsidiaries.
Unless otherwise stated, the income statement analysis compares the twelve months to 31 December 2013
to the corresponding twelve months of 2012 and balance sheet analysis as at 31 December with
comparatives relating to 31 December 2012.
The abbreviations '£m' and '£bn' represent millions and thousands of millions of Pounds Sterling
respectively; the abbreviations '$m' and '$bn' represent millions and thousands of millions of US Dollars
respectively; '€m' and '€bn' represent millions and thousands of millions of Euros respectively
The comparatives have been restated to reflect the implementation of IFRS 10 Consolidated Financial
Statements and IAS 19 Employee Benefits (Revised 2011), the reallocation of elements of the Head Office
results to businesses and portfolio restatements between businesses, as detailed in the Barclays PLC
announcement on 16 April 2013. The consolidated financial statements of the Group included in the joint
Annual Report on Form 20-F of Barclays PLC and Barclays Bank PLC for the year ended 31 December
2012 were restated to show the effects of the adoption of IFRS 10 Consolidated Financial Statements and
IAS 19 Employee Benefits (Revised 2011) on 1 January 2013 in accordance with their transition guidance
and not to reflect events subsequent to 5 March 2013, the date of the approval of the 31 December 2012
financial statements. The Group's segmental disclosures required by IFRS 8 Operating Segments were also
restated. The restated consolidated financial statements of the Group were filed with the SEC on Form 6-K
on 6 September 2013.
Relevant terms that are used in this document but are not defined under applicable regulatory guidance or
International Financial Reporting Standards (IFRS) are explained in the Results glossary that can be
accessed at www.Barclays.com/results.
In accordance with Barclays' policy to provide meaningful disclosures that help investors and other
stakeholders understand the financial position, performance and changes in the financial position of the
Group, and having regard to the British Bankers' Association Disclosure Code and the Enhanced Disclosure
Task Force recommendations, the information provided in this report goes beyond minimum requirements.
Barclays continues to develop its financial reporting considering best practice and welcomes feedback from
investors, regulators and other stakeholders on the disclosures that they would find most useful.
The Listing Rules of the UK Listing Authority (LR 9.7A.1) require that preliminary statements of annual
results must be agreed with the listed company's auditors prior to publication, even though an audit opinion
has not yet been issued. In addition, the Listing Rules require such statements to give details of the nature of
any likely modification or emphasis of matter that may be contained in the auditors' report to be included with
the annual report and accounts. Barclays PLC confirms that it has agreed this preliminary statement of
annual results with PricewaterhouseCoopers LLP and that the Board of Directors has not been made aware
of any likely modification or emphasis of matter to the auditors' report to be included with the annual report
and accounts for the year ended 31 December 2013.
The information in this announcement, which was approved by the Board of Directors on 10 February 2014
does not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006.
Statutory accounts for the year ended 31 December 2012, which included certain information required for the
Joint Annual Report on Form 20-F of Barclays PLC and Barclays Bank PLC to the SEC and which contained
an unqualified audit report under Section 495 of the Companies Act 2006 and which did not make any
statements under Section 498 of the Companies Act 2006, have been delivered to the Registrar of
Companies in accordance with Section 441 of the Companies Act 2006. These results will be furnished as a
Form 6-K to the SEC as soon as practicable following their publication. Once filed with the SEC, copies of
the Form 6-K will also be available from the Barclays Investor Relations website
www.barclays.com/investorrelations and from the SEC's website (www.sec.gov).
Basis of Preparation
Barclays Bank PLC is a wholly owned subsidiary of Barclays PLC, which is the Group's ultimate parent
company. The consolidated financial statements of Barclays Bank PLC and Barclays PLC are materially the
same, with the key differences being that, in accordance with IFRS:
- Preference shares issued by Barclays Bank PLC are included within share capital and share premium in
Barclays Bank PLC but represent non-controlling interests in Barclays PLC.
- Certain issuances of capital notes by Barclays Bank PLC are included within other shareholders' equity
in Barclays Bank PLC, but represent non-controlling interests in Barclays PLC.
- Barclays PLC shares held for the purposes of employee share schemes and for trading are recognised
as available for sale investments and trading portfolio assets respectively within Barclays Bank PLC.
Barclays PLC deducts these treasury shares from shareholders equity.
- Shares issued by Barclays PLC to fund share awards for employee share schemes are held as a liability
within Barclays Bank PLC, payable to Barclays PLC until settled. These are recorded as share capital
and share premium in Barclays PLC.
- Other equity instruments issued by Barclays PLC held for trading purposes are recognised as trading
portfolio assets within Barclays Bank PLC. Barclays PLC deducts these instruments from shareholders
equity.
- There have been two issuances of contingent convertible capital securities (CCSs) and two issuances of
contingent capital notes (CCNs) within the Group. The CCNs create differences between Barclays PLC
and Barclays Bank PLC. The CCNs both made by Barclays Bank PLC pay interest and principal to the
holder unless the consolidated CET 1 ratio of Barclays PLC falls below 7%, in which case they are
cancelled from the consolidated perspective. The coupon payable on the CCNs is higher than a market
rate of interest for a similar note without this risk. The accounting for these instruments differs in the
consolidated financial statements of Barclays PLC and Barclays Bank PLC as follows:
- In the case of the first CCN issuance which took place in Q4 2012, the cancellation is effected by an
automatic legal transfer from the holder to Barclays PLC. In these circumstances, Barclays Bank
PLC remains liable to Barclays PLC. Barclays Bank PLC does not benefit from the cancellation
feature although it pays a higher than market rate for a similar note, and therefore the initial fair value
of the note recognised was higher than par. The difference between fair value and par is amortised
to the income statement over time.
- In the case of the second CCN issuance which took place in Q2 2013, the cancellation is directly
effected in Barclays Bank PLC. To Barclays Bank PLC, the cancellation feature is separately valued
from the host liability as an embedded derivative with changes in fair value reported in the income
statement. The initial fair value of the host liability recognised was higher than par by the amount of
the initial fair value of the derivative and the difference is amortised to the income statement over
time.
More extensive disclosures are contained in the Barclays PLC Results Announcement for the year ended
31 December 2013 attached in the appendix, including risk exposures and business performance, which are
materially the same as those for Barclays Bank PLC.
Accounting Policies
The Results Announcement has been prepared using the same accounting policies and methods of
computation as those used in the 2012 Annual Report, except for the following accounting standards which
were adopted by the Barclays Bank PLC Group on 1 January 2013:
IFRS 10 Consolidated Financial Statements
IFRS 10 replaced requirements in IAS 27 Consolidated and Separate Financial Statements and SIC 12
Consolidation – Special Purpose Entities. This introduced new criteria to determine whether entities in which
the Barclays Bank PLC Group has interests should be consolidated. The implementation of IFRS 10 resulted
in the Barclays Bank PLC Group consolidating some entities that were previously not consolidated and
deconsolidating some entities that were previously consolidated, principally impacting the consolidation of
additional entities in the Investment Bank with credit market exposures.
Basis of Preparation
IAS 19 (Revised 2011) Employee Benefits
IAS 19 (Revised 2011), amongst other changes, requires actuarial gains and losses arising from defined
benefit pension schemes to be recognised in full. Previously the Barclays Bank PLC Group deferred these
over the remaining average service lives of the employees (known as the 'corridor' approach).
Comparatives have been fully restated for IFRS 10 and IAS 19 standards in accordance with transition
requirements. IFRS 10 only requires the presentation of restated comparatives immediately prior to the first
period of application. The Group published a restatement document on 16 April 2013 describing the financial
impacts of IFRS 10 and IAS 19.
The financial impact on Barclays Bank PLC Group for the year ended 31 December 2012 had IFRS 10 and
IAS 19 been adopted is shown in the table below:
Impact of Accounting Restatements Restatement Adjustments
2012 as 2012 as
Published IFRS 10 IAS 19 Restated
Income Statement £m £m £m £m
Profit/(loss) before tax 99 573 (22) 650
Tax (483) (134) - (617)
(Loss)/profit after tax (384) 439 (22) 33
Balance Sheet
Total assets 1,490,747 (144) (1,842) 1,488,761
Total liabilities 1,427,853 333 652 1,428,838
Total shareholders' equity 62,894 (477) (2,494) 59,923
IFRS 13 Fair Value Measurement
IFRS 13 provides comprehensive guidance on how to calculate the fair value of financial and non-financial
assets. The adoption of IFRS 13 did not have a material financial impact on the Barclays Bank PLC Group.
Future accounting developments
IFRS 9 Financial Instruments
IFRS 9 will change the classification and therefore the measurement of the Barclays Bank PLC Group's
financial assets, the recognition of impairment and hedge accounting. In addition to these changes, the effect
of changes in the Barclays Bank PLC Group's own credit risk on the fair value of financial liabilities that the
Barclays Bank PLC Group designates at fair value through profit and loss will be included in other
comprehensive income rather than the income statement. A number of the significant proposals have yet to
be finalised and it is therefore not yet possible to estimate the financial effects. The effective date of IFRS 9
is still to be determined.
IFRS 32 Financial Instruments: Presentation
IAS 32, Amendments to Offsetting Financial Assets and Financial Liabilities, is effective from 1 January
2014. The circumstances in which netting is permitted have been clarified; in particular what constitutes a
currently legally enforceable right of set-off and the circumstances in which gross settlement systems may be
considered equivalent to net settlement. The amendments are expected to gross up certain financial assets
and financial liabilities in the balance sheet that were previously reported net, but will have no impact on
shareholders equity, profit or loss, other comprehensive income, or cash flows, and no significant impact on
the Common equity Tier 1 ratio or CRD IV leverage ratio.
Going Concern
Barclays Bank PLC Group's business activities and financial position, the factors likely to affect its future
development and performance, and its objectives and policies in managing the financial risks to which it is
exposed and its capital are discussed in the Results by Business, Performance Management and Risk
Management sections of the Barclays PLC Results Announcement. The Directors confirm they are satisfied
that the Barclays Bank PLC Group has adequate resources to continue in business for the foreseeable
future. For this reason, they continue to adopt the going concern basis for preparing accounts.
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Condensed Consolidated Income Statement
Year Year
Ended Ended
Continuing Operations 31.12.13 31.12.12
Notes
1 £m £m
Net interest income 11,653 11,650
Net fee and commission income 8,752 8,536
Net trading income 6,548 3,350
Net investment income 680 690
Net premiums from insurance contracts 732 896
Other income 98 335
Total income 28,463 25,457
Net claims and benefits incurred on insurance contracts (509) (600)
Total income net of insurance claims 27,954 24,857
Credit impairment charges and other provisions (3,071) (3,340)
Net operating income 24,883 21,517
Staff costs (12,155) (11,467)
Administration and general expenses (7,819) (7,090)
Operating expenses excluding provisions for PPI and
(19,974) (18,557)
interest rate hedging products redress
Provision for PPI redress (1,350) (1,600)
Provision for interest rate hedging products redress (650) (850)
Operating expenses (21,974) (21,007)
(Loss)/profit on disposals of undertakings and share of results of
(50) 138
associates and joint ventures
Gains on acquisitions 26 2
Profit before tax 2,885 650
Tax (1,577) (617)
Profit after tax 1,308 33
Attributable to:
Equity holders of the parent 963 (306)
Non-controlling interest 1 345 339
Profit after tax 1,308 33
1 For notes specific to Barclays Bank PLC see page 8 and for those that also relate to Barclays
PLC see pages 99 to 122 in the Barclays PLC Results Announcement.
Condensed Consolidated Statement of Comprehensive Income
Year Year
Ended Ended
31.12.13 31.12.12
£m £m
Profit after tax 1,308 33
Other Comprehensive (loss)/income that may be recycled to
profit or loss:
Currency translation differences (1,767) (1,548)
Available for sale investments (378) 700
Cash flow hedges (1,890) 662
Other (37) 96
Other comprehensive loss that may be recycled to profit and loss
(4,072) (90)
Other comprehensive loss not recycled to profit or loss:
Retirement benefit remeasurements (515) (1,235)
Total comprehensive income for the period (3,279) (1,292)
Attributable to:
Equity holders of the parent (2,979) (1,422)
Non-controlling interests (300) 130
Total comprehensive income for the period (3,279) (1,292)
Condensed Consolidated Balance Sheet
As at As at
31.12.13 31.12.12
Notes
Assets 1 £m £m
Cash and balances at central banks 45,687 86,191
Items in the course of collection from other banks 1,282 1,473
Trading portfolio assets 133,089 146,352
Financial assets designated at fair value 38,968 46,629
Derivative financial instruments 324,495 469,156
Available for sale financial investments 91,788 75,133
Loans and advances to banks 38,253 40,871
Loans and advances to customers 430,411 423,906
Reverse repurchase agreements and other similar secured
186,779 176,522
lending
Prepayments, accrued income and other assets 4,413 4,362
Investments in associates and joint ventures 653 633
Property, plant and equipment 4,216 5,754
Goodwill and intangible assets 7,685 7,915
Current tax assets 181 3,559
Deferred tax assets 4,807 252
Retirement benefit assets 133 53
Total assets 1,312,840 1,488,761
Liabilities
Deposits from banks 54,834 77,012
Items in the course of collection due to other banks 1,359 1,587
Customer accounts 427,936 385,500
Repurchase agreements and other similar secured borrowing 196,748 217,178
Trading portfolio liabilities 53,464 44,794
Financial liabilities designated at fair value 64,796 78,561
Derivative financial instruments 320,634 462,721
Debt securities in issue 86,693 119,525
Subordinated liabilities 22,249 24,422
Accruals, deferred income and other liabilities 13,673 12,532
Provisions 3,886 2,766
Current tax liabilities 1,042 617
Deferred tax liabilities 348 341
Retirement benefit liabilities 1,958 1,282
Total liabilities 1,249,620 1,428,838
Shareholders' equity
Called up share capital and share premium 3 14,494 14,494
Other equity instruments 2,078 -
Other reserves (233) 3,329
Retained earnings 44,670 39,244
Shareholders' equity excluding non-controlling interests 61,009 57,067
Non-controlling interests 1 2,211 2,856
Total shareholders' equity 63,220 59,923
Total liabilities and shareholders' equity 1,312,840 1,488,761
1 For notes specific to Barclays Bank PLC see page 8 and for those that also relate to
Barclays PLC see pages 99 to 122 in the Barclays PLC Results Announcement.
Condensed Consolidated Statement of Changes in Equity
Called up
Share Capital Non-
and Share Other Equity Other Retained controlling Total
Premium1 Instruments Reserves Earnings Total Interests1 Equity
£m £m £m £m £m £m £m
Balance at 1 January 2013 14,494 - 3,329 39,244 57,067 2,856 59,923
Profit after tax - - - 963 963 345 1,308
Currency translation
movements - - (1,201) - (1,201) (566) (1,767)
Available for sale
investments - - (375) - (375) (3) (378)
Cash flow hedges - - (1,826) - (1,826) (64) (1,890)
Retirement benefit
remeasurements - - - (503) (503) (12) (515)
Other - - - (37) (37) - (37)
Total comprehensive
loss/(income) for the year - - (3,402) 423 (2,979) (300) (3,279)
Issue of other equity
instruments - 2,078 - - 2,078 - 2,078
Equity settled share
schemes - - - 689 689 - 689
Vesting of Barclays PLC - - - (1,047) (1,047) - (1,047)
shares under share-based
payment schemes
Dividends on ordinary - - - (734) (734) (342) (1,076)
shares1
Dividends on preference - - - (471) (471) - (471)
shares and other
shareholders' equity
Redemption of Reserve
Capital Instruments - - (100) - (100) - (100)
Capital contribution from -
Barclays PLC 1 - - 6,553 6,553 - 6,553
Other reserve movements - - (60) 13 (47) (3) (50)
Balance at 31 December
2013 14,494 2,078 (233) 44,670 61,009 2,211 63,220
Balance at 1 January 2012 14,494 - 3,308 42,093 59,895 3,092 62,987
(Loss)/profit after tax - - - (306) (306) 339 33
Currency translation
movements - - (1,289) - (1,289) (259) (1,548)
Available for sale
investments - - 656 - 656 44 700
Cash flow hedges - - 657 - 657 5 662
Retirement benefit
remeasurements - - - (1,235) (1,235) - (1,235)
Other - - 1 94 95 1 96
Total comprehensive
income/(loss) for the year - - 25 (1,447) (1,422) 130 (1,292)
Equity settled share - - - 717 717 717
schemes
Vesting of Barclays PLC - - - (946) (946) (946)
shares under share-based
payment schemes
Dividends on ordinary - - - (696) (696) (229) (925)
shares 1
Dividends on preference - - - (465) (465) (465)
shares and other -
shareholders' equity
Redemption of Reserve - - - - - - -
Capital Instruments
Other reserve movements - - (4) (12) (16) (137) (153)
Balance at 31 December
2012 14,494 - 3,329 39,244 57,067 2,856 59,923
1 Refer to notes shown on page 8.
Condensed Consolidated Cash Flow Statement
Year Ended Year Ended
Continuing Operations 31.12.13 31.12.12
£m £m
Profit before tax 2,885 650
Adjustment for non-cash items 5,713 12,150
Changes in operating assets and liabilities (32,554) (26,405)
Corporate income tax paid (1,558) (1,516)
Net cash from operating activities (25,514) (15,121)
Net cash from investing activities (22,655) (6,718)
Net cash from financing activities 6,260 (1,923)
Effect of exchange rates on cash and cash equivalents 198 (4,111)
Net decrease in cash and cash equivalents (41,711) (27,873)
Cash and cash equivalents at beginning of the period 121,896 149,769
Cash and cash equivalents at end of the period 80,185 121,896
Notes
1. Non-controlling Interests
Profit Attributable Equity Attributable
to Non-controlling to Non-controlling
Interest Interest
Year Year Year Year
Ended Ended Ended Ended
31.12.13 31.12.12 31.12.13 31.12.12
£m £m £m £m
Barclays Africa Group Limited 343 304 2,204 2,737
Other non-controlling interests 2 35 7 119
Total 345 339 2,211 2,856
The decrease in Barclays Africa Group Limited equity attributable to non-controlling interest to £2,204m
(2012: £2,737m) is principally due to £566m depreciation of African currencies against Sterling and £342m of
dividends paid, offset by retained profits of £343m.
2. Dividends on Ordinary Shares
Year Ended Year Ended
31.12.13 31.12.12
Dividends paid during the year £m £m
Final dividend paid during year 373 344
Interim dividends paid during year 361 352
Total 734 696
Ordinary dividends were paid to enable Barclays PLC to fund its dividend to shareholders.
3. Called Up Share Capital
Ordinary Shares
At 31 December 2013 the issued ordinary share capital of Barclays Bank PLC, comprised 2,342m ordinary
shares of £1 each (2012: 2,342m).
Preference Shares
At 31 December 2013 the issued preference share capital of Barclays Bank PLC, comprised 1,000 Sterling
Preference Shares of £1 each (2012: 1,000); 240,000 Euro Preference Shares of €100 each (2012:240,000);
75,000 Sterling Preference Shares of £100 each (2012: 75,000); 100,000 US Dollar Preference
Shares of US$100 each (2012: 100,000); and 237m US Dollar Preference Shares of US$0.25 each (2012:237m).
4. Capital Contribution from Barclays PLC
Subsequent to the Barclays PLC rights issue in Q4 2013, Barclays PLC invested £5,803m into Barclays
Bank PLC. A further £750m was invested subsequent to the conversion of warrants in Barclays PLC in Q2 2013.
Barclays PLC
Results Announcement
31 December 2013
Table of Contents
Results Announcement Page
Performance Highlights 2
Group Chief Executive's Statement 6
Group Finance Director's Review 8
Condensed Consolidated Financial Statements 12
Results by Business
- Retail and Business Banking
1. UK 18
2. Europe 20
3. Africa 22
- Barclaycard 24
- Investment Bank 26
- Corporate Banking 29
- Wealth and Investment Management 32
- Head Office and Other Operations 34
Barclays Results by Quarter 36
Business Results by Quarter 37
Performance Management
- Remuneration 40
- Returns and Equity by Business 44
- Cost to Achieve Transform 45
- Margins and Balances 47
Risk Management
- Funding Risk - Capital 52
- Funding Risk - Liquidity 61
- Credit Risk 67
- Market Risk 98
Financial Statement Notes 99
One Africa 123
Shareholder Information 124
Index 126
BARCLAYS PLC, 1 CHURCHILL PLACE, LONDON, E14 5HP, UNITED KINGDOM. TELEPHONE: +44 (0) 20 7116 1000.
COMPANY NO. 48839
Notes
The term Barclays or Group refers to Barclays PLC together with its subsidiaries. Unless otherwise stated,
the income statement analysis compares the twelve months to 31 December 2013 to the corresponding
twelve months of 2012 and balance sheet analysis as at 31 December with comparatives relating to 31 December 2012.
The abbreviations '£m' and '£bn' represent millions and thousands of millions of Pounds
Sterling respectively; the abbreviations '$m' and '$bn' represent millions and thousands of millions of US
Dollars respectively; '€m' and '€bn' represent millions and thousands of millions of Euros respectively; and
'C$m' and 'C$bn' represent millions and thousands of millions of Canadian Dollars respectively.
The comparatives have been restated to reflect the implementation of IFRS 10 Consolidated Financial
Statements and IAS 19 Employee Benefits (Revised 2011), the reallocation of elements of the Head Office
results to businesses and portfolio restatements between businesses, as detailed in our announcement on
16 April 2013. The consolidated financial statements of the Group included in the joint Annual Report on
Form 20-F of Barclays PLC and Barclays Bank PLC for the year ended 31 December 2012 were restated to
show the effects of the adoption of IFRS 10 Consolidated Financial Statements and IAS 19 Employee
Benefits (Revised 2011) on 1 January 2013 in accordance with their transition guidance and not to reflect
events subsequent to 5 March 2013, the date of the approval of the 31 December 2012 financial statements.
The Group's segmental disclosures required by IFRS 8 Operating Segments were also restated. The
restated consolidated financial statements of the Group were filed with the SEC on Form 6-K on 6 September 2013.
Adjusted profit before tax and adjusted performance metrics have been presented to provide a more
consistent basis for comparing business performance between periods. Adjusting items are considered to be
significant and not representative of the underlying business performance. Items excluded from the adjusted
measures are: the impact of own credit; disposal of the investment in BlackRock, Inc.; the provision for
Payment Protection Insurance redress payments and claims management costs (PPI redress); the provision
for interest rate hedging products redress and claims management costs (interest rate hedging products
redress); and goodwill impairment.
Relevant terms that are used in this document but are not defined under applicable regulatory guidance or
International Financial Reporting Standards (IFRS) are explained in the Results glossary that can be
accessed at www.Barclays.com/results.
In accordance with Barclays' policy to provide meaningful disclosures that help investors and other
stakeholders understand the financial position, performance and changes in the financial position of the
Group, and having regard to the British Bankers' Association Disclosure Code and the Enhanced Disclosure
Task Force recommendations, the information provided in this report goes beyond minimum requirements.
Barclays continues to develop its financial reporting considering best practice and welcomes feedback from
investors, regulators and other stakeholders on the disclosures that they would find most useful.
The Listing Rules of the UK Listing Authority (LR 9.7A.1) require that preliminary statements of annual
results must be agreed with the listed company's auditors prior to publication, even though an audit opinion
has not yet been issued. In addition, the Listing Rules require such statements to give details of the nature of
any likely modification or emphasis of matter that may be contained in the auditors' report to be included with
the annual report and accounts. Barclays PLC confirms that it has agreed this preliminary statement of
annual results with PricewaterhouseCoopers LLP and that the Board of Directors has not been made aware
of any likely modification or emphasis of matter to the auditors' report to be included with the annual report
and accounts for the year ended 31 December 2013.
The information in this announcement, which was approved by the Board of Directors on 10 February 2014
does not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006.
Statutory accounts for the year ended 31 December 2012, which included certain information required for the
Joint Annual Report on Form 20-F of Barclays PLC and Barclays Bank PLC to the SEC and which contained
an unqualified audit report under Section 495 of the Companies Act 2006 and which did not make any
statements under Section 498 of the Companies Act 2006, have been delivered to the Registrar of
Companies in accordance with Section 441 of the Companies Act 2006.
These results will be furnished as a Form 6-K to the SEC as soon as practicable following their publication.
Once filed with the SEC, copies of the Form 6-K will also be available from the Barclays Investor Relations
website www.barclays.com/investorrelations and from the SEC's website (www.sec.gov).
Forward-looking statements
This document contains certain forward-looking statements within the meaning of Section 21E of the US
Securities Exchange Act of 1934, as amended, and Section 27A of the US Securities Act of 1933, as
amended, with respect to certain of the Group's plans and its current goals and expectations relating to its
future financial condition and performance. Barclays cautions readers that no forward-looking statement is a
guarantee of future performance and that actual results could differ materially from those contained in the
forward-looking statements. These forward-looking statements can be identified by the fact that they do not
relate only to historical or current facts. Forward-looking statements sometimes use words such as “may”,
“will”, “seek”, “continue”, “aim”, “anticipate”, “target”, “projected”, “expect”, “estimate”, “intend”, “plan”, “goal”,
“believe”, “achieve” or other words of similar meaning. Examples of forward-looking statements include,
among others, statements regarding the Group's future financial position, income growth, assets, impairment
charges and provisions, business strategy, capital, leverage and other regulatory ratios, payment of
dividends (including dividend pay-out ratios), projected levels of growth in the banking and financial markets,
projected costs, original and revised commitments and targets in connection with the Transform Programme,
deleveraging actions, estimates of capital expenditures and plans and objectives for future operations and
other statements that are not historical fact. By their nature, forward-looking statements involve risk and
uncertainty because they relate to future events and circumstances. These may be affected by changes in
legislation, the development of standards and interpretations under International Financial Reporting
Standards (IFRS), evolving practices with regard to the interpretation and application of accounting and
regulatory standards, the outcome of current and future legal proceedings and regulatory investigations,
future levels of conduct provisions, the policies and actions of governmental and regulatory authorities,
geopolitical risks and the impact of competition. In addition, factors including (but not limited to) the following
may have an effect: capital, leverage and other regulatory rules (including with regard to the future structure
of the Group) applicable to past, current and future periods; UK, United States, Africa, Eurozone and global
macroeconomic and business conditions; the effects of continued volatility in credit markets; market related
risks such as changes in interest rates and foreign exchange rates; effects of changes in valuation of credit
market exposures; changes in valuation of issued securities; volatility in capital markets; changes in credit
ratings of the Group; the potential for one or more countries exiting the Eurozone; the implementation of the
Transform Programme; and the success of future acquisitions, disposals and other strategic transactions. A
number of these influences and factors are beyond the Group's control. As a result, the Group's actual future
results, dividend payments, and capital and leverage ratios may differ materially from the plans, goals, and
expectations set forth in the Group's forward-looking statements. Additional risks and factors are identified in
our filings with the SEC including our Annual Report on Form 20-F for the fiscal year ended 31 December
2012, and in the Form 6-K (Film No. 131097818) dated 16 September 2013, both of which are available on
the SEC's website at http://www.sec.gov.
Any forward-looking statements made herein speak only as of the date they are made and it should not be
assumed that they have been revised or updated in the light of new information or future events. Except as
required by the Prudential Regulation Authority, the Financial Conduct Authority, the London Stock
Exchange plc (LSE) or applicable law, Barclays expressly disclaims any obligation or undertaking to release
publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in
Barclays' expectations with regard thereto or any change in events, conditions or circumstances on which
any such statement is based. The reader should, however, consult any additional disclosures that Barclays
has made or may make in documents it has published or may publish via the Regulatory News Service of
the LSE and/or has filed or may file with the SEC.
Performance Highlights
“2013 has been a year of considerable change for Barclays. I am pleased with the progress we made in
starting to rebuild trust, defining and implementing a common culture, repositioning the business for the
future, and strengthening our balance sheet.
A year on from launching our plan to transform Barclays into the Go-To bank for all our stakeholders, we are
in a significantly better position and I feel confident about our prospects.
Despite challenging conditions, our underlying performance has been resilient and momentum is building, as
evidenced by the results we are reporting this morning.
Our UK Retail and Corporate Banking businesses delivered good results, alongside the continued strong
growth of Barclaycard. Within the Investment Bank, an impressive performance in Equities and in Investment
Banking has helped to partially offset lower income from our Fixed Income, Currencies and Commodities
business. We have also started to make important progress in repositioning our African, European and
Wealth businesses to improve returns. This performance has translated into income of £28.2bn in the year,
and adjusted profit before tax of £5.2bn.
However, profits have been impacted by the restructuring and de-risking activity we completed during the
year. This included withdrawing from certain lines of business, investing to transform our operations and
resolving legacy conduct and litigation issues. The cost of these actions suppressed statutory profits to
£2.9bn in the year but was in the long term interest of our shareholders.
Additionally, we have made significant progress with strengthening of our capital base year over year,
through the rights issue and issuance of Additional Tier 1 securities. Combined with our substantial
deleveraging actions in the second half of the year, we are ahead of our schedule to achieve the PRA
leverage ratio expectation in June 2014.
While we have more work to do to achieve our goal of becoming the Go-To bank, I believe that we begin
2014 in a better position than we have been for many years.”
Antony Jenkins, Group Chief Executive
Performance Highlights
Income Statement
- Adjusted profit before tax was down 32% to £5,167m due to costs to achieve Transform and a 4%
reduction in income. Q413 adjusted profit before tax was down £1,194m against Q313 to £191m,
including the impact of £331m of charges for litigation and regulatory penalties in the Investment Bank,
UK bank levy of £504m (Q313: £nil), and £468m of costs to achieve Transform (Q313: £101m)
- Statutory profit before tax improved to £2,868m (2012: £797m), reflecting a reduced own credit charge of
£220m (2012: £4,579m)
Income Performance
- Adjusted income decreased 4% to £28,155m, reflecting a reduction of £1,042m in the Investment Bank
and £480m in the Head Office
- Investment Bank income was down 9% to £10,733m driven by a decrease in FICC and Exit Quadrant
assets income, including a current year reversal of £111m income relating to a litigation matter in Q413.
These decreases were partially offset by increases in Equities and Prime Services, and Investment
Banking
Credit Impairment
- Credit impairment charges improved 8% to £3,071m, with a loan loss rate of 64bps (2012: 70bps),
principally reflecting lower impairments in Corporate Banking and Africa RBB. This was partially offset by
higher impairments in Barclaycard and UK RBB, partly due to provision releases in 2012, and acquisitions
in Barclaycard
Cost Performance
- Adjusted operating expenses increased £1,331m to £19,893m, reflecting £1,209m of costs to achieve
Transform, £220m provisions for litigation and regulatory penalties in Q413 in the Investment Bank,
mainly relating to the US residential mortgage-related business, and UK bank levy
- Total compensation costs decreased 1% to £9,616m. Total compensation costs in the Investment Bank
were broadly flat at £4,634m (2012: £4,667m). The Investment Bank compensation to income ratio rose
to 43.2% (2012: 39.6%) primarily due to a decrease in income
Balance Sheet, Leverage and Capital Management
- The estimated Prudential Regulation Authority (PRA) leverage exposure reduced £196bn from 30 June
2013 to £1,363bn. Approximately £55bn of the reduction in PRA leverage exposure relates to foreign
exchange movements
- CRD IV risk weighted assets (RWAs) reduced £32bn during the year and £12bn during Q413 to £436bn,
primarily driven by reductions in Exit Quadrant RWAs
- CRD IV fully loaded Common Equity Tier 1 (CET1) capital increased £3.0bn from 30 September 2013 to
£40.4bn, principally due to the issuance of additional shares through the rights issue, partially offset by
foreign currency movements of £0.8bn and increased regulatory deductions including new deductions
related to foreseeable dividends
- CRD IV CET1 ratio fully loaded was 9.3% (30 September 2013: 8.4% or 9.6% on a proforma post rights
issue basis)
- The estimated PRA leverage ratio increased to just under 3.0% (30 June 2013: 2.2%), reflecting a
reduction in the PRA leverage exposure of £196bn and an increase in eligible PRA adjusted Tier 1
Capital to £40.5bn (30 June 2013: £34.2bn). The increase included £5.8bn share capital through the
rights issue, £2.1bn of Additional Tier 1 (AT1) securities and a £1.9bn reduction in PRA adjustments to
CET1 capital to £2.2bn, largely driven by a reduction in the additional PRA add-on for prudential valuation
adjustment (PVA). The estimated CRD IV fully loaded leverage ratio increased to 3.1% (30 June 2013: 2.5%)
- Net asset value per share was 331p (2012: 414p) and net tangible asset value per share was 283p
(2012: 349p). This decrease was mainly attributable to the issuance of shares as part of the rights issue,
and decreases in the cash flow hedging reserve and currency translation reserve
Returns
- Adjusted return on average shareholders' equity decreased to 4.5% (2012: 9.0%) principally reflecting the
decrease in profit before tax, a £440m write down of deferred tax assets relating to Spain and the £5.8bn
of equity raised from the rights issue in Q413. Adjusted return on average tangible shareholders' equity
decreased to 5.3% (2012: 10.6%). Statutory return on average shareholders' equity improved to 1.0%
(2012: negative 1.2%)
Performance Highlights
Barclays Unaudited Results 1
Adjusted Statutory
31.12.13 31.12.12 31.12.13 31.12.12
% %
£m £m Change £m £m Change
Total income net of insurance claims 28,155 29,361 (4) 27,935 25,009 12
Credit impairment charges and other
provisions (3,071) (3,340) (8) (3,071) (3,340) (8)
Net operating income 25,084 26,021 (4) 24,864 21,669 15
Operating expenses (excluding UK bank
levy and costs to achieve Transform) (18,180) (18,217) - (20,259) (20,667) (2)
UK bank levy (504) (345) 46 (504) (345) 46
Costs to achieve Transform (1,209) - (1,209) -
Operating expenses (19,893) (18,562) 7 (21,972) (21,012) 5
Other net (expense)/ income (24) 140 (24) 140
Profit before tax 5,167 7,599 (32) 2,868 797
Tax charge (2,015) (2,159) (7) (1,571) (616)
Profit after tax 3,152 5,440 (42) 1,297 181
Non-controlling interests (757) (805) (6) (757) (805) (6)
Attributable Profit 2 2,395 4,635 (48) 540 (624)
Performance Measures
Return on average tangible
shareholders' equity 5.3% 10.6% 1.2% (1.4%)
Return on average shareholders' equity 4.5% 9.0% 1.0% (1.2%)
Return on average risk weighted assets 0.8% 1.4% 0.3% -
Cost: income ratio 71% 63% 79% 84%
Loan loss rate 64bps 70bps 64bps 70bps
Basic earnings per share 16.7p 35.5p 3.8p 4.8p)
Dividend per share 6.5p 6.5p 6.5p 6.5p
Balance Sheet and Leverage 31.12.13 31.12.12
Net asset value per share 3 331p 414p (20)
Net tangible asset value per share 3 283p 349p (19)
Estimated PRA leverage exposure £1,363bn
Capital Management 31.12.13 31.12.12
CRD III
Core tier 1 ratio 13.2% 10.8%
Core tier 1 capital £46.8bn £41.7bn 12
Risk weighted assets £355bn £387bn (8)
CRD IV fully loaded
Common equity tier 1 ratio 9.3%
Common equity tier 1 capital £40.4bn
Risk weighted assets £436bn £468bn (7)
Estimated leverage ratio 3.1%
Estimated PRA leverage ratio 3.0%
Funding and Liquidity 31.12.13 31.12.12
Group liquidity pool £127bn £150bn
Loan: deposit ratio 101% 110%
Estimated liquidity coverage ratio 4 102% 126%
Estimated net stable funding ratio 4 110% 112%
Adjusted Profit Reconciliation 31.12.13 31.12.12
Adjusted profit before tax 5,167 7,599
Own credit (220) (4,579)
Gain on disposal of investment in
BlackRock Inc. - 227
Provision for PPI redress (1,350) (1,600)
Provision for interest rate hedging
products redress (650) (850)
Goodwill impairment (79) -
Statutory profit before tax 2,868 797
1 The comparatives on pages 3 to 49 have been restated to reflect the implementation of IFRS 10
Consolidated Financial Statements and IAS 19 Employee Benefits (Revised 2011), the reallocation of
elements of Head Office results to businesses and portfolio restatements between businesses, as
detailed in our announcement on 16 April 2013, accessible at http://group.barclays.com/about-
barclays/investor-relations/investor-news.
2 Attributable profit includes profit after tax and non-controlling interests.
3 Net asset value per share is calculated by dividing shareholders equity, excluding non-controlling and
other equity interests, by the number of issued ordinary shares. Net tangible asset value per share is
calculated by dividing shareholders equity, excluding non-controlling and other equity interests, less
goodwill and intangible assets, by the number of issued ordinary shares.
4 Refer to page 61 for basis of calculation.
Peformance Highlights
Adjusted Statutory
Income by Business 31.12.13 31.12.12 31.12.13 31.12.12
% %
£m £m Change £m £m Change
UK RBB 4,523 4,384 3 4,523 4,384 3
Europe RBB 666 708 (6) 666 708 (6)
Africa RBB 2,617 2,928 (11) 2,617 2,928 (11)
Barclaycard 4,786 4,344 10 4,786 4,344 10
Investment Bank 10,733 11,775 (9) 10,733 11,775 (9)
Corporate Banking 3,115 3,046 2 3,115 3,046 2
Wealth and Investment
Management 1,839 1,820 1 1,839 1,820 1
Head Office and Other Operations (124) 356 (344) (3,996) (91)
Total income 28,155 29,361 (4) 27,935 25,009 12
Adjusted Statutory
Profit/(Loss) Before Tax by 31.12.13 31.12.12 31.12.13 31.12.12
Business % %
£m £m Change £m £m Change
UK RBB 1,195 1,225 (2) 535 45
Europe RBB (996) (343) (996) (343)
Africa RBB 404 322 25 404 322 25
Barclaycard 1,507 1,482 2 817 1,062 (23)
Investment Bank 2,523 3,990 (37) 2,523 3,990 (37)
Corporate Banking 801 460 74 151 (390)
Wealth and Investment
Management (19) 274 (98) 274
Head Office and Other Operations (248) 189 (468) (4,163) (89)
Total profit before tax 5,167 7,599 (32) 2,868 797
Chief Executive’s Statement
It is now twelve months since we set out our Transform programme, which began the process of making
Barclays the 'Go-To' bank for all of our stakeholders. In that time we have taken measures to strengthen our
capital base and manage risk which places Barclays in a good position to deliver competitive advantage for
the bank in the years to come, resulting in higher and more sustainable returns for our shareholders.
In 2013, UK Retail and Business Banking delivered good results, supported by higher income from our
mortgage business. Barclaycard also had another good year both in the UK and internationally, delivering
attractive returns while still holding further growth potential. The output from our UK business within
Corporate Banking, which delivered profit before tax of nearly £1bn for the year as the turnaround continued
in the overall business unit. In the Investment Bank, our Equities business saw impressive income growth.
Combined with continued improved results in Investment Banking, this partly offset lower income from our
Fixed Income Currencies and Commodities business.
Beyond these franchises, we also completed a lot of work during 2013 in repositioning our African,
European, and Wealth businesses. These units are in transition, with clear plans being implemented across
all three to improve returns, and I am encouraged by the progress I'm seeing.
In aggregate, this performance translated into income of approximately of £28.2bn in the year, and adjusted
profit before tax of £5.2bn. This is a resilient performance, though profits have clearly been impacted by the
amount of investment and de-risking activity we executed in the period.
We continue to de-risk the business for reputation and conduct risk. In June we took a further £2bn of
charges in relation to Payment Protection Insurance and interest rate hedging products redress. We have
also exited businesses which are incompatible with Barclays' purpose and values, or where we cannot
generate attractive returns for our investors. In late December 2013, we incurred £331m of charges for
litigation and regulatory penalties which impacted income and costs, the latter of which drove operating
expenses higher than the £18.5bn guidance excluding the cost to achieve Transform, we provided earlier.
Supported by the £5.8bn Rights Issue, we reached a CRD IV fully loaded CET1 ratio of 9.3% at the end of
2013. We remain on track to meet our target of 10.5% during 2015. Alongside the other measures set out in
our Leverage Plan in July 2013, including rigorous control around leverage exposure reduction and £2.1bn of
AT1 issuance, our estimated CRD IV fully loaded leverage ratio is 3.1% and our PRA leverage ratio is almost
3%, the expectation we were set to meet by June 2014.
Leverage will continue to be a focus for regulators and investors, and today we are setting out important
plans to further reduce our exposure and better prepare Barclays for regulatory requirements in the future.
At Barclays we believe in paying for performance and paying competitively. Ensuring that we have the right
people in the right roles serving our customers and clients effectively in a highly competitive global
environment is vital to our ability to generate sustainable shareholder returns. After careful consideration, we
determined that an increase of £210m over the prior year in the incentive pool was required in 2013 in order
to build our franchise in the long term interests of shareholders. Notwithstanding this increase we remain
committed to our goal of reducing the compensation to net income ratio over the medium term to the mid 30s.
One year on we are making good progress against the Transform financial and non-financial commitments
we set out last year, although clearly we have more to do to execute on our plans.
On CRD IV RWAs we are already operating within the £440bn level we targeted for 2015 and our CRD IV
fully loaded CET1 ratio is in a strong position. On cost, we remain confident we will reduce operating
expenses to £16.8bn excluding costs to achieve Transform in 2015. Our Cost to Income Ratio rose in 2013
mainly as a consequence of reduced income, but we remain committed to achieving a ratio in the mid-50s by
2015. On dividends we expect to target a 40% payout ratio from 2014 as we also focus on capital accretion.
All of this progress on our financial commitments, plus additional work on de-leveraging, means we remain
convinced of our ability to deliver a Return on Equity for the Group in excess of the cost of equity during 2016.
On our non-financial commitments there is also progress to report.
Cultural change, particularly embedding our purpose and values throughout the organisation, was a major
Transform priority for 2013. As well as every colleague completing a mandatory training programme, we
have also now integrated our purpose and values into the day to day management processes covering
recruitment, talent management, performance assessment and reward. In the case of our Managing Director
population, their 2013 performance has been formally assessed against whether they have exhibited the
right values and behaviours, as well as producing the business outcomes we want. These criteria will apply
to all employees in 2014. Critically, we have developed and published our new Code of Conduct which every
colleague must abide by and attest to annually.
Chief Executive’s Statement
Today, and in fulfilment of our second non-financial commitment, we are publishing our balanced scorecard,
the final component in the leadership system which will help us to drive cultural change and measure holistic
performance in Barclays. It contains eight specific commitments which we will report on annually going
forward. The commitments we have set are intentionally stretching, but we believe achievable. The personal
objectives of all colleagues will align to the scorecard.
Finally, looking externally once more, I am proud to say that Barclays continues to play a key role in the UK
economy. As a major employer a particular highlight in 2013 was that we have taken on approximately 1,000
apprentices, helping young people into work and addressing an acute social need. Being a strong bank
allows Barclays to support the UK economy through lending to our customers and clients. An estimated
£88bn of Funding for Lending eligible gross new lending was made to UK households and businesses by us in 2013.
In closing, the plans and targets we have for Barclays are certainly ambitious, and as we deal with
unexpected challenges and the wider economic conditions, progress may not always be linear. However,
through the disciplined focus of my management team, I am confident we will deliver on our goal of
becoming the 'Go-To' bank.
Antony Jenkins, Group Chief Executive
Group Finance Director’s Review
“Reflecting on the 2013 financial results for Barclays, I believe progress has been made and momentum is
building around the Transform programme. This was the first year of the programme, which necessitated a
substantial investment in future cost reduction and repositioning of our balance sheet and capital base.
Within the results, there are two areas that I felt were particularly noteworthy. First, the breadth and diversity
of income in the Group, underpinned by our traditional consumer and commercial banking franchises.
Similarly, within the Investment Bank, growth in Equities and Investment Banking income provided an offset
to the market-led weakness in certain FICC businesses. Second, demonstration of strong financial
fundamentals across funding and liquidity, capital, credit risk management and margins should stand the
bank in good stead for generating sustainable returns going forward.
In October, I began conducting a detailed balance sheet review, specifically focused on meeting leverage
ratio requirements as a priority. We have made strong and quick progress on this. PRA leverage exposure
reduced by nearly £200bn from June 2013 which, combined with the £5.8bn rights issue and issuance of
£2.1bn of AT1 securities, strengthened our PRA leverage ratio to just under 3%. Our focus on RWA
management continued throughout the year, resulting in a 7%, or over £30bn, reduction in CRD IV RWAs.
Looking ahead, the balance sheet review will continue but with increased focus on optimising the balance
sheet, considering both risk weights and leverage, in order to generate improved returns. I will provide
updates on this going forward.
Regulation remains a key variable and, while we have gained clarity in certain areas, there remain a number
of outstandings which we will continue to anticipate as best we can in order to 'future proof' the bank.
As I look forward, 2014 will likely be another year of transition, with greater focus on balance sheet
optimisation, particularly in the Investment Bank, combined with strict cost control in order to generate higher
and more sustainable returns in the future.”
Tushar Morzaria, Group Finance Director
Group Finance Director’s Review
Income Statement
- Adjusted profit before tax was down 32% to £5,167m driven by costs to achieve Transform and a
reduction in income. Q413 adjusted profit before tax was down £1,194m against Q313 to £191m,
including the impact of £331m of charges against litigation and regulatory penalties in the Investment
Bank, UK bank levy of £504m (Q313: £nil), and £468m of costs to achieve Transform (Q313: £101m)
- Statutory profit before tax improved to £2,868m (2012: £797m), reflecting a reduced own credit charge of
£220m (2012: £4,579m)
Income Performance
- Adjusted income decreased 4% to £28,155m, reflecting reductions in the Investment Bank, the Head
Office and Africa RBB, partially offset by growth in Barclaycard and UK RBB
- Investment Bank income was down 9% to £10,733m driven by a decrease in FICC income of £1,141m,
partially offset by increases in Equities and Prime Services of £489m, and Investment Banking of £63m.
Income from Exit Quadrant assets also decreased £309m due to accelerated disposals and a £111m
reversal of income relating to a litigation matter in Q413. Income in Q413 increased 2% on Q313 to
£2,149m due to higher activity in Macro Products, particularly in the Currency business, and Investment
Banking, offset by a reduced performance in Credit Products, and Equities and Prime Services
- Total net interest income was broadly stable at £11,600m, with lower net interest income in Head Office,
Africa RBB and the Investment Bank offset by increases in Barclaycard, UK RBB and Corporate Banking.
Customer net interest income for RBB, Barclaycard, Corporate Banking and Wealth and Investment
Management increased to £10,365m (2012: £9,839m) driven by growth in customer assets, partially
offset by contributions from Group structural hedging activities
Credit Impairment
- Credit impairment charges improved 8% to £3,071m, with a loan loss rate of 64bps (2012: 70bps)
- This reflected lower impairments in the wholesale businesses, mainly Corporate Banking in Europe
and UK
- In the RBB and Barclaycard businesses, Africa RBB arrears rates improved, particularly for South
Africa home loans, however, impairment was higher in UK RBB and Barclaycard partly due to the
non-recurrence of provision releases in 2012, and the Edcon acquisition in Barclaycard
- Higher impairment in Europe reflected exposure to the renewable energy sector in Spain and
weaker performance in European mortgages
Cost Performance
- Adjusted operating expenses increased £1,331m to £19,893m, reflecting £1,209m of costs to achieve
Transform, £220m provisions for litigation and regulatory penalties in Q413 in the Investment Bank,
mainly relating to the US residential mortgage-related business and UK bank levy of £504m (2012: £345m).
The Group's cost target for 2015 remains at £16.8bn excluding costs to achieve Transform
- Total compensation costs decreased 1% to £9,616m. Total compensation costs in the Investment Bank
were broadly flat at £4,634m (2012: £4,667m). The Investment Bank compensation to income ratio rose
to 43.2% (2012: 39.6%) primarily due to a decrease in income
Taxation
- The effective tax rate on adjusted profit before tax increased to 39.0% (2012: 28.4%), mainly due to a
charge of £440m reflecting the write down of deferred tax assets in Spain. The adjusted effective tax rate
excluding the write down was 30.5% (2012: 28.4%), which primarily reflected profits outside of the UK
taxed at local statutory tax rates that are higher than the UK statutory tax rate of 23.25% (2012: 24.5%)
and the impact of the increase in the non deductible UK bank levy to £504m (2012: £345m). The effective
tax rate on statutory profit before tax decreased to 54.8% (2012: 77.3%)
Returns
- Adjusted return on average shareholders' equity decreased to 4.5% (2012: 9.0%) principally reflecting the
decrease in profit before tax, £440m write down of deferred tax assets relating to Spain and the rights
issue equity raised of £5.8bn. Adjusted return on average tangible shareholders' equity decreased to
5.3% (2012: 10.6%). Statutory return on average shareholders' equity improved to 1.0% (2012: negative 1.2%)
Group Finance Director’s Review
Balance Sheet and Leverage
Balance Sheet
- Total assets decreased by 12% to £1,312bn from 31 December 2012, primarily reflecting decreases in
derivative assets, due to increases in forward interest rates and exposure reduction initiatives with central
clearing parties and a reduction in cash and balances at central banks due to a decrease in the liquidity
pool
- Total loans and advances were £468bn (2012: £464bn) with an increase of £8.4bn in UK RBB including
those acquired through Barclays Direct (previously ING Direct UK, acquired during Q113), £1.8bn growth
within Barclaycard across the UK and international business and a £1.8bn increase within Wealth and
Investment Management. These were offset by a £5.7bn decrease within Africa RBB primarily due to the
depreciation of ZAR against GBP, with growth of 2% on a constant currency basis
- Customer accounts increased by 11% to £428bn due to a £19.5bn increase in UK RBB deposits, a
£9.6bn increase within Wealth and Investment Management, primarily reflected in the High Net Worth
business, and a £9.1bn increase in Corporate Banking, from UK deposit growth
- Total shareholders' equity including non-controlling interests, was £64bn (2012: £60bn). Excluding non-
controlling interests, shareholders' equity increased £4.8bn to £55bn, reflecting a £7.4bn increase in
share capital and share premium including £5.8bn from the issuance of 3.2bn additional shares through
the rights issue and the issuance of £2.1bn equity accounted AT1 securities. These increases were
partially offset by decreases in the cash flow hedging reserve of £1.8bn, due to increases in forward
interest rates, the currency translation reserve of £1.2bn, driven by strengthening of GBP against USD
and ZAR, dividends paid of £0.9bn, and a £0.5bn reduction due to an increase in retirement benefit
liabilities
- Net asset value per share was 331p (2012: 414p) and net tangible asset value per share was 283p
(2012: 349p). This decrease was mainly attributable to the issuance of shares, as part of the rights issue,
and decreases in the cash flow hedging reserve and currency translation reserve
- As at 31 December 2013 the provision held for PPI redress was £971m (2012: £986m) and for interest
rate hedging products redress was £1,169m (2012: £814m). There has been no significant change to the
estimates of future expected costs since June 2013
Leverage
- Estimated PRA leverage exposure reduced £196bn from 30 June 2013 to £1,363bn driven by a reduction
in derivative replacement costs, potential future exposures on derivatives and cash and balances at
central banks. Approximately £55bn of the reduction in PRA leverage exposure, related to foreign
exchange movements
Capital Management
- CRD IV fully loaded CET1 capital increased £3.0bn from 30 September 2013 to £40.4bn, principally due
to the issuance of additional shares through the rights issue, partially offset by foreign currency
movements of £0.8bn and increased regulatory deductions related to foreseeable dividends. CRD III Core
Tier 1 capital was £46.8bn (30 September 2013: £42.0bn)
- CRD IV RWAs reduced £32bn during the year and £12bn during Q413 to £436bn, primarily driven by
reductions in Exit Quadrant RWAs of £39bn and reductions in trading book exposures, partially offset by
methodology changes. This reduction was primarily in the Investment Bank, where Exit Quadrant RWAs
reduced £37bn to £42bn. CRD III RWAs reduced £32bn to £355bn during the year
- CRD IV CET1 ratio on a fully loaded basis was 9.3% (30 September 2013: 8.4% or 9.6% on a proforma
post rights issue basis). This movement was mainly as a result of the rights issue and a decrease in
RWAs offset by new regulatory deductions primarily related to foreseeable dividends. CRD III Core Tier 1
ratio strengthened to 13.2% (30 September 2013: 11.3%)
- The estimated PRA leverage ratio increased to just under 3.0% (30 June 2013: 2.2%), reflecting a
reduction in the PRA leverage exposure of £196bn and an increase in eligible PRA adjusted Tier 1
Capital to £40.5bn (30 June 2013: £34.2bn). The increase included £2.1bn of AT1 securities and a
£1.9bn reduction in PRA adjustments to CET1 to £2.2bn largely driven by an elimination of the additional
PRA add-on for PVA. Refer to page 55 for further details. The estimated CRD IV fully loaded leverage
ratio increased to 3.1% (30 June 2013: 2.5%)
Funding and Liquidity
- In 2013, we reduced the liquidity pool by £23bn to £127bn. This was consistent with reducing the large
Liquidity Risk Appetite (LRA) and Liquidity Coverage Ratio (LCR) surpluses to support the leverage plan
and to optimise the cost of liquidity, while maintaining compliance with internal liquidity risk appetite and
external regulatory requirements.
- The liquidity pool consists of cash and deposits with central banks and high quality government bonds,
which together accounted for 83% (2012: 87%) of the pool
- The estimated LCR was 102% (2012: 126%) based upon the latest standards published by the Basel
Committee. This is equivalent to a surplus of £2bn above the 100% ratio (2012: £32bn)
- The estimated Net Stable Funding Requirement (NSFR) was 110% (2012: 112%), resulting in a £40bn
(2012: £49bn) excess above the 100% ratio requirement
- The loan to deposit ratio for the Group decreased to 101% (2012: 110%) as a result of strong growth in
customer deposits in UK RBB, Corporate Banking and Wealth and Investment Management
- Total wholesale funding outstanding (excluding repurchase agreements) was £186bn (2012: £240bn), of
which £82bn (2012: £102bn) matures in less than one year and £20bn matures within one month (2012: £29bn)
- The Group issued £1bn of net term funding during 2013, including $1bn of CRD IV compliant Tier 2
capital. Barclays has £24bn of term funding maturing in 2014 and £22bn in 2015. We expect to issue
more public wholesale debt in 2014 than in 2013, albeit at lower levels than amounts maturing
Dividends
- A final dividend for 2013 of 3.5p per share will be paid on 28 March 2014 resulting in a total 6.5p dividend
per share for the year. Total dividends paid to ordinary shareholders were £859m (2012: £733m),
reflecting the additional shares issues as part of the rights issue
Outlook
- 2014 will be another year of transition, as we continue to make investments and focus on balance sheet
optimisation and cost reduction.
Updated guidance on capital, leverage and dividends
- Barclays' current regulatory target is to meet a fully loaded CET1 ratio of 9% by 2019, plus a Pillar 2A
add-on. Under current PRA guidance, Pillar 2A will need to be met with 56% CET1 from 2015, which
would equate to approximately 1.4% of RWAs if the requirement were to be applied today. The Pillar 2A
add-on would be expected to vary over time according to the PRA's individual capital guidance
- The Group expects to achieve a 10.5% CRD IV CET1 ratio on a fully loaded basis in 2015. As Barclays
builds capital over the transitional period to its end state structure, the Group would estimate reaching a
range of 11.5-12.0% for the CRD IV CET1 ratio, once an internal management buffer, Pillar 2A and other
regulatory considerations are taken into account. This indication is based on certain assumptions (refer
page 55 for details) and does not include any Counter-Cyclical Capital Buffer, additional Sectoral Capital
Requirement or Systemic Risk Buffer
- The Group estimates reaching a PRA leverage ratio of at least 3.5% by the end of 2015 and a range of
3.5% to 4% beyond 2015, with an expected net reduction in leverage exposure of approximately £60bn,
excluding foreign currency effects. Barclays expects the reduction in leverage exposure to below
£1,300bn by 2015 to result in a minimal impact on current revenues but result in foregone revenue of
around £300m in 2015
- Based on an initial high level impact analysis of the January 2014 Basel Committee on Banking
Supervision (BCBS) proposal, we have estimated the changes could decrease the PRA leverage ratio by
approximately 20 basis points, prior to management actions and any further rule changes
- The Group remains committed to a 40-50% dividend payout ratio over time, calculated as a proportion of
adjusted earnings per share as determined by the Board. We expect to be at 40% from 2014 to allow
focus on capital accretion
Tushar Morzaria, Group Finance Director
Condensed Consolidated Financial Statements
Condensed Consolidated Income Statement (Unaudited)
Year Ended Year Ended
Continuing Operations 31.12.13 31.12.12
Notes
1 £m £m
Net interest income 2 11,600 11,654
Net fee and commission income 8,731 8,536
Net trading income 6,553 3,347
Net investment income 680 844
Net premiums from insurance contracts 732 896
Other income 148 332
Total income 28,444 25,609
Net claims and benefits incurred on insurance contracts (509) (600)
Total income net of insurance claims 27,935 25,009
Credit impairment charges and other provisions (3,071) (3,340)
Net operating income 24,864 21,669
Staff costs (12,155) (11,467)
Administration and general expenses 3 (7,817) (7,095)
Operating expenses excluding provisions for PPI and interest
rate hedging products redress (19,972) (18,562)
Provision for PPI redress 13 (1,350) (1,600)
Provision for interest rate hedging products redress 13 (650) (850)
Operating expenses (21,972) (21,012)
(Loss)/profit on disposal of undertakings and share of results of
associates and joint ventures (24) 140
Profit before tax 2,868 797
Tax 4 (1,571) (616)
Profit after tax 1,297 181
Attributable to:
Equity holders of the parent 540 (624)
Non-controlling interests 5 757 805
Profit after tax 1,297 181
Earnings per Share from Continuing Operations
Basic earnings/(loss) per ordinary share 6 3.8p (4.8p)
Diluted earnings/(loss) per ordinary share 6 3.7p (4.8p)
1 For notes to the Financial Statements see pages 99 to 122.
Condensed Consolidated Statement of Profit or Loss and other Comprehensive Income (Unaudited)
Year Ended Year Ended
Continuing Operations 31.12.13 31.12.12
Notes
1 £m £m
Profit after tax 1,297 181
Other comprehensive (loss)/profit that may be recycled to profit
or loss:
Currency translation reserve 17 (1,767) (1,548)
Available for sale reserve 17 (382) 546
Cash flow hedge reserve 17 (1,890) 662
Other (37) 96
Total comprehensive loss that may be recycled to profit or loss (4,076) (244)
Other comprehensive loss not recycled to profit or loss:
Retirement benefit remeasurements 17 (515) (1,235)
Other comprehensive loss for the period (4,591) (1,479)
Total comprehensive loss for the period (3,294) (1,298)
Attributable to:
Equity holders of the parent (3,406) (1,894)
Non-controlling interests 112 596
Total comprehensive loss for the period (3,294) (1,298)
1 For notes, see pages 99 to 122.
Condensed Consolidated Balance Sheet (Unaudited)
As at As at
Assets 31.12.13 31.12.12
Notes 1 £m £m
Cash and balances at central banks 45,687 86,191
Items in the course of collection from other banks 1,282 1,473
Trading portfolio assets 133,069 146,352
Financial assets designated at fair value 38,968 46,629
Derivative financial instruments 8 324,335 469,156
Loans and advances to banks 37,853 40,462
Loans and advances to customers 430,411 423,906
Reverse repurchase agreements and other similar secured lending 186,779 176,522
Available for sale investments 91,756 75,109
Current and deferred tax assets 4 5,026 3,815
Prepayments, accrued income and other assets 4,414 4,365
Investments in associates and joint ventures 653 633
Goodwill and intangible assets 11 7,685 7,915
Property, plant and equipment 4,216 5,754
Retirement benefit assets 14 133 53
Total assets 1,312,267 1,488,335
Liabilities
Deposits from banks 54,834 77,012
Items in the course of collection due to other banks 1,359 1,587
Customer accounts 427,902 385,411
Repurchase agreements and other similar secured borrowing 196,748 217,178
Trading portfolio liabilities 53,464 44,794
Financial liabilities designated at fair value 64,796 78,561
Derivative financial instruments 8 320,634 462,721
Debt securities in issue 86,693 119,525
Accruals, deferred income and other liabilities 12,934 12,532
Current and deferred tax liabilities 4 1,415 962
Subordinated liabilities 12 21,695 24,018
Provisions 13 3,886 2,766
Retirement benefit liabilities 14 1,958 1,282
Total liabilities 1,248,318 1,428,349
Shareholders' Equity
Called up share capital and share premium 15 19,887 12,477
Other equity instruments 16 2,063 -
Other reserves 17 249 3,674
Retained earnings 33,186 34,464
Shareholders' equity excluding non-controlling interests 55,385 50,615
Non-controlling interests 5 8,564 9,371
Total shareholders' equity 63,949 59,986
Total liabilities and shareholders' equity 1,312,267 1,488,335
1 For notes, see pages 99 to 122.
Condensed Consolidated Statement of Changes in Equity (Unaudited)
Called up
Share
Capital and Other Non-
Share Equity Other Retained Controlling Total
Year Ended 31.12.13 Premium 1 Instruments 1 Reserves 1 Earnings Total Interests 2 Equity
£m £m £m £m £m £m £m
Balance at 1 January 2013 12,477 - 3,674 34,464 50,615 9,371 59,986
Profit after tax - - - 540 540 757 1,297
Currency translation
movements - - (1,201) - (1,201) (566) (1,767)
Available for sale investments - - (379) - (379) (3) (382)
Cash flow hedges - - (1,826) - (1,826) (64) (1,890)
Retirement benefit
remeasurements - - - (503) (503) (12) (515)
Other - - - (37) (37) - (37)
Total comprehensive
(loss)/income for the year - - (3,406) - (3,406) 112 (3,294)
Issue of new ordinary shares 6,620 - - - 6,620 - 6,620
Issue of shares under
employee share schemes 790 - - 689 1,479 - 1,479
Issue of other equity
instruments - 2,063 - - 2,063 - 2,063
Increase in treasury shares - - (1,066) - (1,066) - (1,066)
Vesting of shares under
employee share schemes - - 1,047 (1,047) - - -
Dividends paid - - - (859) (859) (813) (1,672)
Other reserve movements - - - (61) (61) (106) (167)
Balance at 31 December 2013 19,887 2,063 249 33,186 55,385 8,564 63,949
Year Ended 31.12.12
Balance at 1 January 2012 12,380 - 3,837 37,189 53,406 9,607 63,013
(Loss)/profit after tax - - - (624) (624) 805 181
Currency translation
movements - - (1,289) - (1,289) (259) (1,548)
Available for sale investments - - 502 - 502 44 546
Cash flow hedges - - 657 - 657 5 662
Retirement benefit
remeasurements - - - (1,235) (1,235) - (1,235)
Other - - - 95 95 1 96
Total comprehensive
income for the period - - (130) (1,764) (1,894) 596 (1,298)
Issue of shares under
employee share schemes 97 - - 717 814 - 814
Increase in treasury shares - - (979) - (979) - (979)
Vesting of shares under
employee share schemes - - 946 (946) - - -
Dividends paid - - - (733) (733) (694) (1,427)
Other reserve movements - - - 1 1 (138) (137)
Balance at 31 December 2012 12,477 - 3,674 34,464 50,615 9,371 59,986
1 Details of Share Capital, Other Equity Instruments and Other Reserves are shown on page 112.
2 Details of Non-controlling Interests are shown on page 102.
Condensed Consolidated Financial Statements
Condensed Consolidated Cash Flow Statement (Unaudited)
Year Ended Year Ended
Continuing Operations 31.12.13 31.12.12
£m £m
Profit before tax 2,868 797
Adjustment for non-cash items 6,581 12,425
Changes in operating assets and liabilities (33,065) (25,529)
Corporate income tax paid (1,558) (1,516)
Net cash from operating activities (25,174) (13,823)
Net cash from investing activities (22,645) (7,097)
Net cash from financing activities 5,910 (2,842)
Effect of exchange rates on cash and cash equivalents 198 (4,111)
Net decrease in cash and cash equivalents (41,711) (27,873)
Cash and cash equivalents at beginning of the period 121,896 149,769
Cash and cash equivalents at end of the period 80,185 121,896
Results by Business
UK Retail and Business Banking
Year Ended Year Ended
Income Statement Information 31.12.13 31.12.12 YoY
£m £m %
Change
Net interest income 3,395 3,190 6
Net fee and commission income 1,098 1,154 (5)
Net premiums from insurance contracts 46 74 (38)
Other income/(expense) 1 (1)
Total income 4,540 4,417 3
Net claims and benefits incurred under insurance
contracts (17) (33) (48)
Total income net of insurance claims 4,523 4,384 3
Credit impairment charges and other provisions (347) (269) 29
Net operating income 4,176 4,115 1
Operating expenses (excluding UK bank levy,
provision for PPI redress and Costs to achieve (2,812) (2,877) (2)
Transform)
UK bank levy (21) (17) 24
Provision for PPI redress (660) (1,180) (44)
Costs to achieve Transform (175) -
Operating expenses (3,668) (4,074) (10)
Other net income 27 4
Profit before tax 535 45
1
Adjusted profit before tax 1,195 1,225 (2)
Adjusted attributable profit 1,2 917 875 5
Balance Sheet Information and Key Facts
Loans and advances to customers at amortised cost £136.5bn £128.1bn 7
Customer deposits £135.5bn £116.0bn 17
Total assets 3 £152.9bn £134.6bn 14
Risk weighted assets - CRD III 3 £44.1bn £39.1bn 13
Risk weighted assets - CRD IV fully loaded 3 £44.1bn
90 day arrears rates - Personal loans 1.2% 1.3%
90 day arrears rates - Home loans 0.3% 0.3%
Average LTV of mortgage portfolio 4 56% 59%
Average LTV of new mortgage lending 4 64% 65%
Number of customers 16.7m 15.8m
Number of branches 1,560 1,593
Number of employees (full time equivalent) 32,900 33,000
Adjusted 1 Statutory
Performance Measures 31.12.13 31.12.12 31.12.13 31.12.12
Return on average tangible equity 20.0% 22.9% 8.5% (0.6%)
Return on average equity 11.5% 12.3% 4.9% (0.3%)
Return on average risk weighted assets 2.2% 2.5% 1.0% 0.0%
Cost: income ratio 67% 66% 81% 93%
Loan loss rate (bps) 25 21 25 21
1 Adjusted profit before tax, adjusted attributable profit and adjusted performance measures excludes the
impact of the provision for PPI redress of £660m (2012: £1,180m).
2 Adjusted attributable profit includes profit after tax and non-controlling interests.
3 2013 total assets and risk weighted assets include an allocation of liquidity pool assets previously held
centrally.
4 Average LTV of mortgage portfolio and new mortgage lending calculated on the balance weighted basis.
The comparative figure was restated following a detailed review of the LTV's post migration to a new data
management system.
Results by Business
UK Retail and Business Banking
UK RBB performed well in 2013, growing at a faster rate than the market in key products, including
increasing its stock share of mortgages. UK RBB continued to support the UK economy; advancing £1.8bn
of gross new term lending to small businesses and helping 120,000 start-ups. The number of customers
using digital channels grew substantially in 2013; mobile banking usage increased by 150% to 2.3 million
customers and Pingit users doubled to over 1 million customers.
UK RBB continued to restructure and invest in the business as part of the Transform strategy. During the
year the business incurred £175m of costs to achieve Transform, relating to a reduction in operational sites,
the announcement of staff redundancies in the Retail Bank and of the introduction of small format branches
into Asda stores. The business also continued to contribute to the communities in which it operates; our
apprentice programme offered 1,000 apprenticeships across Barclays this year, with a commitment to
double that figure by 2015. Lifeskills, our programme designed to give young people access to the skills,
information and opportunities they need to help them gain employment, has so far reached out to 276,000
young people.
Income Statement – 2013 compared to 2012
- Net interest income increased 6% to £3,395m driven by strong mortgage growth and contribution from
Barclays Direct (previously ING Direct UK, acquired during Q113). Net interest margin was down 6bps to
129bps primarily reflecting reduced contributions from structural hedges, however, customer generated
margin increased from 102bps to 106bps
- Customer asset margin increased 15bps to 122bps driven by lower funding costs and increased
customer rates on new mortgage lending
- Customer liability margin decreased 8bps to 89bps reflecting lower funding rates
- Net fee and commission income declined 5% to £1,098m primarily due to lower fees from customers
- Credit impairment charges increased £78m to £347m primarily due to the non-recurrence of provision
releases in 2012 relating to unsecured lending and mortgages. Excluding this, impairment was broadly in
line with prior year
- Adjusted operating expenses increased 4% to £3,008m due to costs to achieve Transform of £175m.
Statutory operating expenses decreased 10% to £3,668m due to the lower charge for PPI redress of
£660m (2012: £1,180m)
- Adjusted profit before tax decreased 2% to £1,195m, while statutory profit before tax was £535m (2012:
£45m)
Income Statement – Q413 compared to Q313
- Profit before tax decreased 40% to £212m due to costs to achieve Transform of £119m (Q313: £29m)
and the UK bank levy of £21m (Q313: £nil)
Balance Sheet – 31 December 2013 compared to 31 December 2012
- Loans and advances to customers increased 7% to £136.5bn due to Barclays Direct, which added
£4.4bn, and other mortgage growth
- Mortgage balances increased to £122.8bn (2012: £114.7bn), giving an increase in share of UK stock
balance to 9.9% (2012: 9.4%). Gross new mortgage lending was £17.1bn (2012: £18.2bn) and
mortgage repayments were £14.4bn (2012: £10.6bn)
- Portfolio quality continued to improve with an average balance weighted Loan to Value (LTV) ratio on
the mortgage portfolio (including Buy to Let) of 56% (2012: 59%). Average balance weighted LTV of
new mortgage lending was 64% (2012: 65%)
- Customer deposits increased 17% to £135.5bn driven by growth in savings and Barclays Direct, which
added £6.2bn
- Total assets increased 14% to £152.9bn driven by the allocation of liquidity pool assets previously held
centrally, and growth in loans and advances to customers
- CRD III RWAs increased 13% to £44.1bn primarily driven by Barclays Direct and mortgage asset growth
Results by Business
Europe Retail and Business Banking
Year Ended Year Ended YoY
Income Statement Information 31.12.13 31.12.12 %
£m £m Change
Net interest income 420 428 (2)
Net fee and commission income 187 248 (25)
Net investment income 78 52 50
Net premiums from insurance contracts 276 331 (17)
Other income 13 8 63
Total income 974 1,067 (9)
Net claims and benefits incurred under insurance
contracts (308) (359) (14)
Total income net of insurance claims 666 708 (6)
Credit impairment charges and other provisions (287) (257) 12
Net operating income 379 451 (16)
Operating expenses (excluding UK bank levy and
costs to achieve Transform) (813) (787) 3
UK bank levy (26) (20) 30
Costs to achieve Transform (403) -
Operating expenses (1,242) (807) 54
Other net (expense)/income (133) 13
Loss before tax (996) (343)
Attributable loss 1 (964) (277)
Balance Sheet Information and Key Facts
Loans and advances to customers at amortised cost £37.0bn £39.2bn (6)
Customer deposits £16.3bn £17.6bn (7)
Total assets 2 £45.0bn £46.1bn (2)
Risk weighted assets - CRD III 2 £15.9bn £15.8bn 1
Risk weighted assets - CRD IV fully loaded 2 £16.2bn
90 day arrears rate - Home loans 0.8% 0.8%
Average LTV of mortgage portfolio - Spain 3 63% 65%
Average LTV of mortgage portfolio - Italy 3 60% 60%
Average LTV of mortgage portfolio - Portugal 3 76% 78%
Number of customers 1.8m 2.0m
Number of branches 572 923
Number of sales centres 61 219
Number of distribution points 633 1,142
Number of employees (full time equivalent) 5,900 7,500
EUR/£ - Period end 1.20 1.23
EUR/£ - Average 1.18 1.23
Adjusted Statutory
Performance Measures 31.12.13 31.12.12 31.12.13 31.12.12
Return on average tangible equity (49.6%) (14.2%) (49.6%) (14.2%)
Return on average equity (45.2%) (12.9%) (45.2%) (12.9%)
Return on average risk weighted assets (5.7%) (1.7%) (5.7%) (1.7%)
Cost: income ratio 186% 114% 186% 114%
Loan loss rate (bps) 75 64 75 64
1 Attributable loss includes profit after tax and non-controlling interests.
2 2013 total assets and risk weighted assets include an allocation of liquidity pool assets previously held
centrally.
3 Average LTV of mortgage portfolio and new mortgage lending calculated on the balance weighted basis.
Results by Business
Europe Retail and Business Banking
Europe RBB continued to focus on restructuring the cost base of its European business in 2013, as part of
the Transform strategy. During the year the business reduced full time equivalent employees by 1,600 and
closed over 500 distribution points. Europe RBB also rolled out a new Premier customer proposition,
targeting profitable growth from the mass affluent segment, in a drive to increase margins.
Risk has been a focus in the face of challenging economic conditions across Europe and a dedicated asset
optimisation team was established to reduce redenomination risk and accelerate run off of the £21.3bn
(2012: £22.9bn) low margin Exit Quadrant assets.
Income Statement – 2013 compared to 2012
- Income declined 6% to £666m, reflecting actions taken to reduce assets, particularly in Spain and Italy, to
address the continuing economic challenges across Europe, partially offset by an increase due to foreign
currency movements
- Net interest income declined 2% to £420m due to the decline in average customer balances. Net interest
margin remained broadly in line at 79bps (2012: 78bps) with improved pricing offset by higher funding
costs
- Net fee and commission income declined 25% to £187m, reflecting reduced business volumes
- Net premiums from insurance contracts declined 17% to £276m due to reduced business volumes,
following rationalisation of product offerings, leading to a corresponding 14% decline in net claims and
benefits to £308m
- Credit impairment charges increased 12% to £287m due to exposure to the renewable energy sector in
Spain, foreign currency movements and increased coverage for high risk mortgage customers. This was
offset in part by improvement in collections performance
- Operating expenses increased by £435m to £1,242m, almost entirely reflecting costs to achieve
Transform of £403m. These related to restructuring costs to significantly downsize the distribution
network, with the remaining increase driven by foreign currency movements partially offset by cost
savings resulting from restructuring
- Other net expense increased by £146m to £133m due to a valuation adjustment relating to contractual
obligations to trading partners, based in locations affected by our restructuring plans
- Loss before tax increased £653m to £996m, including costs to achieve Transform of £403m and an
increase in other net expenses
- Attributable loss increased to £964m (2012: £277m), including the impact of a deferred tax assets write
down relating to Spain and the increase in loss before tax
Income Statement – Q413 compared to Q313
- Loss before tax of £181m (Q313: £106m), mainly reflects an increase in operating expenses, including
restructuring costs to achieve Transform of £46m, UK bank levy of £26m and higher impairment charges
of £11m, primarily in Spain
Balance Sheet – 31 December 2013 compared to 31 December 2012
- Loans and advances to customers fell by 6% to £37.0bn, driven by asset reduction activity as part of the
Transform strategy, partially offset by foreign currency movements
- Mortgage balances decreased to £33.6bn (2012: £34.8bn)
- The average balance weighted LTV ratio on the Spain mortgage portfolio was 63% (2012: 65%), on
the Italy mortgage portfolio was 60% (2012: 60%) and the Portugal mortgage portfolio was 76% (2012:
78%)
- Customer deposits reduced by 7% to £16.3bn with customer attrition partially offset by foreign currency
movements
- Total assets reduced by 2% to £45.0bn driven by the reduction in loans and advances to customers
- CRD III RWAs remained broadly flat at £15.9bn (2012: £15.8bn), with a reduction in Exit Quadrant RWAs
offset by changes due to the treatment of forbearance
Results by Business
Africa Retail and Business Banking
Income Statement Year Ended Year Ended YoY Year Ended Year Ended YoY
Information 31.12.13 31.12.12 % 31.12.13 31.12.12 %
Change Constant currency Change
£m £m £m £m
Net interest income 1,437 1,654 (13) 1,689 1,654 2
Net fee and commission
income 924 1,065 (13) 1,082 1,065 2
Net premiums from insurance
contracts 359 417 (14) 419 417 -
Other income/(expense) 81 (1) 96 (1)
Total income 2,801 3,135 (11) 3,286 3,135 5
Net claims and benefits
incurred under insurance (184) (207) (11) (215) (207) 4
contracts
Total income net of insurance
claims 2,617 2,928 (11) 3,071 2,928 5
Credit impairment charges
and other provisions (324) (632) (49) (374) (632) (41)
Net operating income 2,293 2,296 2,697 2,296 17
Operating expenses (excluding UK
bank levy and costs to achieve (1,842) (1,960) (6) (2,145) (1,960) 9
Transform)
UK bank levy (28) (24) 17 (28) (24) 17
Costs to achieve
Transform (26) - (26) -
Operating expenses (1,896) (1,984) (4) (2,199) (1,984) 11
Other net income 7 10 (30) 8 10 (20)
Profit before tax 404 322 25 506 322 57
Attributable profit/(loss) 1 9 (4) 41 (4)
Balance Sheet Information and Key Facts
Loans and advances to
customers at amortised £24.2b £29.9b (19) £30.6b £29.9b 2
cost n n n n
Customer deposits £16.9b £19.5b (13) £21.1b £19.5b 8
n n n n
Total assets 2 £33.5b £42.2b (21) £41.9b £42.2b (1)
n n n n
Risk weighted assets - £22.4b £24.5b (9)
CRD III 2 n n
Risk weighted assets - £22.8b
CRD IV 2 n
90 day arrears rate - Home
loans 0.7% 1.6%
90 day arrears rate -
unsecured lending 2.6% 3.1%
Average LTV of mortgage
portfolio 3 62% 66%
Average LTV of new mortgage
lending 3 75% 76%
Number of customers 12.1m 13.5m
Number of branches 1,268 1,339
Number of sales centres 128 112
Number of distribution
points 1,396 1,451
Number of employees (full time 41,300 40,500
equivalent)
ZAR/£ - Period end 17.37 13.74
ZAR/£ - Average 15.10 13.03
Adjusted Statutory
31.12.13 31.12.12 31.12.13 31.12.12
Performance Measures
Return on average tangible
equity 4 0.8% (0.2%) 0.8% (0.2%)
Return on average equity 0.4% (0.1%) 0.4% (0.1%)
Return on average risk
weighted assets 0.9% 0.7% 0.9% 0.7%
Cost: income ratio 72% 68% 72% 68%
Loan loss rate (bps) 128 202 128 202
1 Attributable profit includes profit after tax and non-controlling interests.
2 2013 total assets and risk weighted assets include an allocation of liquidity pool assets previously held
centrally.
3 Average LTV of mortgage portfolio and new mortgage lending calculated on the balance weighted basis.
4 Return on average tangible equity for 2012 has been revised to exclude amounts relating to Absa
Group's non-controlling interests.
Results by Business
Africa Retail and Business Banking
During 2013, Africa RBB embarked on a three year turnaround programme under a new leadership team,
aimed at aligning the business to the Transform objectives, while focusing on customer growth and cost
efficiencies.
2013 results were affected by increased competition, a changing regulatory environment and foreign
exchange movements, as average ZAR depreciated 16% against GBP. However, on a constant currency
basis, PBT was up 57%, largely as a result of lower impairment provisions on the South African home loans
recovery book. The business incurred £26m of costs to achieve Transform which supported the re-shaping
of the branch network and ongoing work on digitalisation of customer channels and products.
While 2013 saw a good start to the turnaround programme in Africa RBB, there remains more work to be
done to generate sustainable returns going forward.
Income Statement – 2013 compared to 2012
- Income declined 11% to £2,617m driven by foreign currency movements, partially offset by the non-
recurrence of fair value adjustments in the commercial property finance portfolio in the prior year. On a
constant currency basis, income improved 5%, despite continued pressure on transaction volumes in a
competitive environment
- Net interest income declined 13% to £1,437m. On a constant currency basis, net interest income
improved 2%. Net interest margin was down 3bps to 316bps
- Customer asset margin remained stable at 310bps, with continued focus on competitive pricing of key
products including home loans, personal loans and vehicle and asset finance
- Customer liability margin decreased 2bps to 273bps driven by increased competition and a change in
product mix towards lower margin savings products
- Net fee and commission income declined 13% to £924m. On a constant currency basis, income
increased 2%
- Credit impairment charges decreased 49% to £324m. On a constant currency basis, credit impairment
charges decreased 41% due to lower provisions on the South African home loans recovery book and
business banking portfolio. This decrease was partly offset by deterioration in the South African
unsecured lending portfolio due to the challenging economic environment. This fall in impairment resulted
in a loan loss rate of 128bps (2012: 202bps)
- Operating expenses decreased 4% to £1,896m. On a constant currency basis, costs increased 11%
driven by a combination of increased investment spend on infrastructure and inflation increases in South
Africa
- Profit before tax increased 25% to £404m, primarily due to lower credit impairment charges in the South
African home loans recovery book and business banking portfolio, along with the non-recurrence of fair
value adjustments on the commercial property finance portfolio in the prior year
Income Statement – Q413 compared to Q313
- Profit before tax of £60m (Q313: £132m) was lower due to the UK bank levy in Q413 and higher costs to
achieve Transform, in addition to further depreciation of ZAR
Balance Sheet – 31 December 2013 compared to 31 December 2012
- Period end ZAR depreciated against GBP by 26%. The deterioration was a significant contributor to the
movement in the reported results. Currency movements in other African countries did not have a material
impact
- Loans and advances to customers decreased 19% to £24.2bn as depreciation of ZAR against GBP offset
growth of 2%, particularly in vehicle and asset finance
- Average balance weighted LTV ratio on the mortgage portfolio was 62% (2012: 66%). Average
balance weighted LTV of new mortgage lending was 75% (2012: 76%)
- Customer deposits decreased 13% to £16.9bn. On a constant currency basis, deposits increased 8%
reflecting growth in individual deposits, particularly in investment products
- Total assets decreased 21% to £33.5bn driven by depreciation of ZAR against GBP. On a constant
currency basis, total assets were broadly in line
- CRD III RWAs decreased 9% to £22.4bn, primarily due to the depreciation of ZAR against GBP, partially
offset by balance sheet growth
Results by Business
Barclaycard
Year Ended Year Ended YoY
Income Statement Information 31.12.13 31.12.12 %
£m £m Change
Net interest income 3,318 3,009 10
Net fee and commission income 1,435 1,292 11
Net premiums from insurance contracts 26 36 (28)
Other income 7 7 -
Total income net of insurance claims 4,786 4,344 10
Credit impairment charges and other provisions (1,264) (1,049) 20
Net operating income 3,522 3,295 7
Operating expenses (excluding UK bank levy,
provision for PPI redress and costs to achieve (1,975) (1,826) 8
Transform)
UK bank levy (24) (16) 50
Provision for PPI redress (690) (420) 64
Costs to achieve Transform (49) -
Operating expenses (2,738) (2,262) 21
Other net income 33 29 14
Profit before tax 817 1,062 (23)
Adjusted profit before tax 1 1,507 1,482 2
Adjusted attributable profit 1,2 1,006 975 3
Balance Sheet Information and Key Facts
Loans and advances to customers at amortised cost £35.6bn £33.8bn 5
Customer deposits £5.2bn £2.8bn 86
Total assets 3 £38.9bn £38.2bn 2
Risk weighted assets - CRD III 3 £41.1bn £37.8bn 9
Risk weighted assets - CRD IV fully loaded 3 £40.5bn
30 day arrears rates - UK cards 2.4% 2.5%
30 day arrears rates - US cards 2.1% 2.4%
30 day arrears rates - South Africa cards 4 8.1% 7.4%
Total number of Barclaycard customers 35.5m 32.8m
Total number of Barclaycard clients 350,200 315,500
Value of payments processed £254bn £235bn
Number of employees (full time equivalent) 12,100 11,100
Adjusted 1 Statutory
Performance Measures 31.12.13 31.12.12 31.12.13 31.12.12
Return on average tangible equity 24.5% 26.9% 11.1% 18.0%
Return on average equity 18.4% 19.8% 8.3% 13.3%
Return on average risk weighted assets 2.8% 3.1% 1.4% 2.2%
Cost: income ratio 43% 42% 57% 52%
Loan loss rate (bps) 337 294 337 294
1 Adjusted profit before tax, adjusted attributable profit and adjusted performance measures excludes the
impact of the provision for PPI redress of £690m (2012: £420m).
2 Adjusted attributable profit includes profit after tax and non-controlling interests.
3 2013 total assets and risk weighted assets include an allocation of liquidity pool assets previously held
centrally.
4 2012 30 day arrears rates on South Africa cards restated to reflect the Edcon portfolio acquisition.
Results by Business
Barclaycard
Barclaycard continued to grow in all markets, delivering 10% income growth, with a net increase of nearly
three million new customers in 2013. The business continued to innovate, including working with Transport
for London on their acceptance of contactless cards for over six and a half million bus journeys in the UK and
launching Bespoke, a digital offers product, with over 800,000 registered customers, more than half being
new customers to Barclays. Barclaycard continued to deliver adjusted profit growth and strong return on
average equity.
The business incurred £49m of costs to achieve Transform, as it continued to seek to become the 'Go-To'
bank for consumer payments, by providing customers with solutions that are simple and offer clear value.
The business looked to improve customer service through operational enhancements, including the
implementation of one credit card management platform across continental Europe.
Barclaycard continued to support the UK economy, offering £15.8bn in new lending to businesses and
households in 2013.
Income Statement – 2013 compared to 2012
- Income improved 10% to £4,786m reflecting continued net lending growth and contributions from 2012
portfolio acquisitions
– UK income increased by 6% to £2,747m reflecting net lending growth and lower funding costs
– International income improved 17% to £2,039m reflecting contributions from 2012 portfolio
acquisitions and higher customer asset balances in the US and Germany
- Net interest income increased by 10% to £3,318m driven by volume growth and a lower impact from
structural hedges
– Customer asset margin remained broadly stable at 9.39% with average customer assets increasing
8% to £36.3bn due to 2012 portfolio acquisitions and business growth
– Customer liability margin was negative 0.29% reflecting deposit funding initiatives in the US and
Germany
- Net fee and commission income improved 11% to £1,435m due to increased payment volumes,
predominantly in the US and UK
- Credit impairment charges increased 20% to £1,264m primarily driven by the impact of portfolio
acquisitions, and non-recurrence of provision releases in 2012
– Impairment loan loss rates on consumer credit cards remained broadly stable at 366bps (2012:
359bps) in the UK, remained flat at 268bps in the US, and increased by 421bps to 581bps in South
Africa due to the Edcon acquisition driving a change in product mix
– 30 day arrears rates for consumer cards in the UK were down 10bps to 2.4%, in the US were down
30bps to 2.1% and in South Africa were up 70bps to 8.1%
- Adjusted operating expenses increased 11% to £2,048m reflecting increased costs from 2012 portfolio
acquisitions, net lending growth, higher operating losses and costs to achieve Transform. Statutory
operating expenses increased 21% to £2,738m due to the increased charge for PPI redress of £690m
(2012: £420m)
- Adjusted profit before tax improved 2% to £1,507m driven by the US and UK card portfolios, while
statutory profit before tax decreased to £817m (2012: £1,062m) due to the increased charge for PPI
redress
Income Statement – Q413 compared to Q313
- Profit before tax decreased 16% to £335m driven by the UK bank levy, costs to achieve Transform and
depreciation of USD and ZAR against GBP
Balance Sheet – 31 December 2013 compared to 31 December 2012
- Total assets increased 2% to £38.9bn primarily driven by the increase in loans and advances to
customers across the UK and international businesses
- Customer deposits increased by £2.4bn to £5.2bn due to funding initiatives in the US and Germany
- CRD III RWAs increased 9% to £41.1bn primarily driven by asset growth and model changes in order to
meet changes in regulatory guidance
Results by Business
Investment Bank
Year Ended Year Ended YoY
Income Statement Information 31.12.13 31.12.12 %
£m £m Change
Net interest income 349 530 (34)
Net fee and commission income 3,236 3,029 7
Net trading income 6,610 7,688 (14)
Net investment income 530 521 2
Other income 8 7 14
Total income 10,733 11,775 (9)
Credit impairment charges and other provisions (220) (204) 8
Net operating income 10,513 11,571 (9)
Operating expenses (excluding UK bank levy and (7,417) (7,425) -
costs to achieve Transform)
UK bank levy (333) (206) 62
Costs to achieve Transform (262) -
Operating expenses (8,012) (7,631) 5
Other net income 22 50 (56)
Profit before tax 2,523 3,990 (37)
Attributable profit 1 1,548 2,680 (42)
Balance Sheet Information and Key Facts
Loans and advances to banks and customers at
amortised cost 2 £143.8bn £143.5bn -
Customer deposits 2 £81.9bn £75.9bn 8
Total assets 3 £863.8bn £1,073.7bn (20)
Risk weighted assets - CRD III 3 £142.6bn £177.9bn (20)
Risk weighted assets - CRD IV fully loaded 3 £221.6bn
Average DVaR (95%) £29m £38m
Number of employees (full time equivalent) 26,200 25,600
Adjusted Statutory
Performance Measures 31.12.13 31.12.12 31.12.13 31.12.12
Return on average tangible equity 8.5% 13.1% 8.5% 13.1%
Return on average equity 8.2% 12.7% 8.2% 12.7%
Return on average risk weighted assets 1.0% 1.6% 1.0% 1.6%
Cost: income ratio 75% 65% 75% 65%
Compensation: income ratio 43.2% 39.6% 43.2% 39.6%
Loan loss rate (bps) 14 13 14 13
1 Attributable profit includes profit after tax and non-controlling interests.
2 As at 31 December 2013 loans and advances included £112bn of loans and advances to customers
(including settlement balances of £35.4bn and cash collateral of £36bn) and loans and advances to banks
of £31.8bn (including settlement balances of £5.2bn and cash collateral of £14.7bn). Customer deposits
included £34.5bn relating to settlement balances and £27bn relating to cash collateral.
3 2013 total assets and risk weighted assets reflect a reallocation of liquidity pool assets to other
businesses.
Results by Business
Investment Bank
The Investment Bank continued to make progress in delivering part of the Transform strategy in 2013, with a
focus on driving cost and capital efficiency, strengthening the control environment, and capitalising on the
build out of Equities and Investment Banking. The business incurred costs to achieve Transform of £262m,
primarily related to restructuring across Europe, Asia and America.
CRD IV RWAs reduced to £221.6bn (30 June 2013: £254.1bn) through accelerated sell down of the Exit
Quadrant assets and continued focus on driving efficiency in the ongoing business.
While industry FICC revenues reduced in 2013, strong growth was seen in the Equities franchise, which
continued to outperform the market.
Income Statement – 2013 compared to 2012
Year Ended Year Ended
Analysis of Total Income 31.12.13 31.12.12 3 YoY
£m £m % Change
Macro Products 1 3,110 4,024 (23)
Credit Products 1 2,427 2,654 (9)
FICC 5,537 6,678 (17)
Equities and Prime Services 2,672 2,183 22
Investment Banking 2,200 2,137 3
Principal Investments 62 206 (70)
Exit Quadrant 2 262 571 (54)
Total income 10,733 11,775 (9)
- Total income decreased 9% to £10,733m, including a reduction of £309m relating to the Exit Quadrant
– FICC income decreased 17% to £5,537m
- Macro Products and Credit Products income decreased 23% to £3,110m and 9% to £2,427m
respectively driven by Rates and Securitised products, as market uncertainty around central
banks' tapering of quantitative easing programmes impacted activity. Europe and the US were
particularly impacted, whilst Asia benefitted from improved currency income. The prior year
benefitted from the European Long Term Refinancing Operation (LTRO) in H112, the ECB bond
buying programme and reduced benchmark interest rates in H212
– Equities and Prime Services income increased 22% to £2,672m reflecting higher commission income
and increased client volumes
– Investment Banking income increased 3% to £2,200m driven by increased equity underwriting fees,
partly offset by declines in financial advisory activity
– Principal Investments income declined to £62m (2012: £206m) due to disposals and lower private
equity income
– Exit Quadrant income reduced £309m to £262m due to accelerated disposals throughout 2013 and
the prior year benefitting from higher gains on US residential mortgage assets and sale of, and gains
on, US commercial real estate assets. 2013 included a gain of £259m as a result of greater certainty
regarding the recoverability of certain assets not yet received from the 2008 US Lehman acquisition
and current year reversal of £111m income relating to a litigation matter
- Net credit impairment charges of £220m (2012: £204m) were driven by a charge against a single name
exposure in Q213
- Operating expenses increased 5% to £8,012m
– Costs to achieve Transform of £262m primarily related to restructuring initiatives across Europe, Asia
and America
– UK bank levy increased 62% to £333m primarily due to an increase in the rate
– Other costs include £325m (2012: £221m) relating to infrastructure improvement, including increased
costs to meet the requirement of the Dodd-Frank Act, CRD IV and other regulatory reporting change
projects. There were provisions for litigation and regulatory penalties of £220m in Q413, mainly
relating to US residential mortgage-related business. 2012 was impacted by a £193m penalty relating
to the setting of inter-bank offered rates
- Including costs to achieve Transform, the cost: income ratio increased 10% to 75%. Compensation:
income ratio increased to 43.2% (2012: 39.6%) with compensation costs broadly in line with prior year at
£4,634m (2012: £4,667m). For further details refer to the Remuneration disclosure on page 40
- Profit before tax decreased 37% to £2,523m
1 Macro Products represent Rates, Currency and Commodities income. Credit Products represent Credit
and Securitised Products income.
2 The Exit Quadrant consist of the Investment Bank Exit Quadrant business units as detailed on page 46,
income regarding the recoverability of certain assets not yet received from the 2008 US Lehman
acquisition and relevant litigation items.
3 2012 FICC and Exit Quadrant amounts restated to appropriately reflect the Exit Quadrant portfolio.
Results by Business
Income Statement – Q413 compared to Q412
- Income decreased 17% to £2,149m, including a reduction of £256m relating to the Exit Quadrant
– FICC income decreased 16% to £1,085m, reflecting lower activity across a number of FICC
businesses due to a less favourable trading environment
– Equities and Prime Services income increased 9% to £496m driven by stronger performances in cash
equities and equity derivatives due to improved market confidence and higher client activity
– Investment Banking income reduced 5% to £590m as declines in financial advisory and debt
underwriting activity were partially offset by improved fee income in equity underwriting
– Exit Quadrant income reduced £256m to £(54)m, due to a £111m current year reversal of income
relating to a litigation matter. The prior year benefitted from higher gains on US residential mortgage
assets
- Operating expenses increased 33% to £2,464m
– £87m (Q412: nil) costs to achieve Transform were incurred in Q413, primarily related to restructuring
costs
– UK bank levy increased 62% to £333m
– Provisions for litigation and regulatory penalties of £220m in Q413, mainly relating to US residential
mortgage-related business
– Compensation costs increased to meet full year incentive awards. For further details refer to the
Remuneration disclosure on page 40
- Loss before tax has reduced from a profit of £760m to a loss of £329m
Income Statement – Q413 compared to Q313
- Income increased 2% to £2,149m
– FICC income increased 12% to £1,085m reflecting higher income in Macro Products driven by the
rates, commodities and currency businesses, offset by a decline in Credit Products due to lower
trading activity in credit positions
– Equities and Prime Services income decreased 23% to £496m as performance in both cash and
equity derivatives was impacted by reduced market volume and moderate volatility seen in Q413.
This was partially offset by higher income from Prime Services as client balances and activity
increased
– Investment Banking income increased 12% to £590m driven by improved performance across
financial advisory and equity underwriting, as a result of increased activity, with debt underwriting in
line with the prior quarter
- Operating expenses increased 51% to £2,464m
– £87m (Q313: £6m) costs to achieve Transform
– UK bank levy of £333m (Q313: nil)
– Provisions for litigation and regulatory penalties of £220m in Q413, mainly relating to US residential
mortgage-related business
– Compensation costs increased to meet full year incentive awards. For further details refer to the
Remuneration disclosure on page 40
Balance Sheet – 31 December 2013 compared to 31 December 2012
- Total assets decreased £209.9bn to £863.8bn, primarily reflecting decreases in derivative financial
instruments, cash and balances at central banks, and trading portfolio assets
- CRD III RWAs decreased 20% to £142.6bn primarily driven by a reduction of sovereign exposures in the
trading book, risk reductions in the trading book and Exit Quadrant RWAs
Corporate Banking
Year Ended Year Ended
Income Statement Information 31.12.13 31.12.12 YoY
%
£m £m Change
Net interest income 1,987 1,911 4
Net fee and commission income 992 998 (1)
Net trading income 97 87 11
Net investment income 12 23 (48)
Other income 27 27 -
Total income 3,115 3,046 2
Credit impairment charges and other provisions (510) (885) (42)
Net operating income 2,605 2,161 21
Operating expenses (excluding UK bank levy,
provision for interest rate hedging products redress (1,641) (1,672) (2)
and costs to achieve Transform)
UK bank levy (51) (39) 31
Provision for interest rate hedging products redress (650) (850) (24)
Costs to achieve Transform (114) -
Operating expenses (2,456) (2,561) (4)
Other net income 2 10 (80)
Profit/(loss) before tax 151 (390)
Adjusted profit before tax 1 801 460 74
Adjusted attributable profit 1,2 247 228 8
Balance Sheet Information and Key Facts
Loans and advances to customers at amortised cost £61.1bn £64.3bn (5)
Loans and advances to customers at fair value £15.7bn £17.6bn (11)
Customer deposits £108.7bn £99.6bn 9
Total assets 3 £113.9bn £87.8bn 30
Risk weighted assets - CRD III 3 £68.9bn £70.9bn (3)
Risk weighted assets - CRD IV fully loaded 3 £70.5bn
Number of employees (full time equivalent) 12,800 13,000
Adjusted 1 Statutory
Performance Measures 31.12.13 31.12.12 31.12.13 31.12.12
Return on average tangible equity 3.3% 3.1% (3.6%) (5.7%)
Return on average equity 3.1% 2.9% (3.5%) (5.4%)
Return on average risk weighted assets 0.5% 0.5% (0.2%) (0.4%)
Loan loss rate (bps) 77 127 77 127
Cost: income ratio 58% 56% 79% 84%
1 Adjusted profit before tax, adjusted attributable profit and adjusted performance measures exclude the
provision for interest rate hedging products redress of £650m (2012: £850m).
2 Adjusted attributable profit includes profit after tax and non-controlling interests.
3 2013 total assets and risk weighted assets include an allocation of liquidity pool assets previously held
centrally.
Corporate Banking
Year Ended 31 December 2013 UK Europe RoW Total
Income Statement Information £m £m £m £m
Income 2,330 250 535 3,115
Credit impairment charges and other provisions (174) (318) (18) (510)
Operating expenses (excluding UK bank levy, provision for
interest rate hedging products redress and costs to achieve (1,114) (146) (381) (1,641)
Transform)
UK bank levy (39) (6) (6) (51)
Provision for interest rate hedging products redress (650) - - (650)
Costs to achieve Transform (56) (23) (35) (114)
Other net income 1 - 1 2
Profit/(loss) before tax 298 (243) 96 151
1
Adjusted profit/(loss) before tax 948 (243) 96 801
1,2
Adjusted attributable profit/(loss) 731 (510) 26 247
Balance Sheet Information
Loans and advances to customers at amortised cost £50.0bn £4.8bn £6.3bn £61.1bn
Loans and advances to customers at fair value £15.7bn - - £15.7bn
Customer deposits £88.0bn £9.1bn £11.6bn £108.7bn
Total assets 3 £99.1bn £5.5bn £9.3bn £113.9bn
Risk weighted assets - CRD III 3 £52.2bn £7.7bn £9.0bn £68.9bn
Performance Measures
Adjusted return on average equity 12.3% (51.1%) 2.9% 3.1%
Statutory return on average equity 3.7% (51.1%) 2.9% (3.5%)
Year Ended 31 December 2012
Income Statement Information
Income 2,220 300 526 3,046
Credit impairment charges and other provisions (284) (542) (59) (885)
Operating expenses (excluding UK bank levy and provision
for interest rate hedging products redress) (1,082) (156) (434) (1,672)
UK bank levy 4 (26) (7) (6) (39)
Provision for interest rate hedging products redress (850) - - (850)
Other net income 2 - 8 10
(Loss)/profit before tax (20) (405) 35 (390)
Adjusted profit/(loss) before tax 1 830 (405) 35 460
Adjusted attributable profit/(loss) 1,2 545 (281) (36) 228
Balance Sheet Information
Loans and advances to customers at amortised cost £51.5bn £6.5bn £6.3bn £64.3bn
Loans and advances to customers at fair value £17.6bn - - £17.6bn
Customer deposits £79.0bn £8.2bn £12.4bn £99.6bn
Total assets 3 £70.9bn £7.9bn £9.0bn £87.8bn
Risk weighted assets - CRD III 3 £49.9bn £10.5bn £10.5bn £70.9bn
Performance Measures
Adjusted return on average equity 10.3% (20.8%) (4.4%) 2.9%
Return on statutory average equity (1.8%) (20.8%) (4.4%) (5.4%)
1 Adjusted profit before tax excludes the provision for interest rate hedging products redress of £650m
(2012: £850m)
2 Adjusted attributable profit includes profit after tax and non-controlling interests..
3 2013 total assets and risk weighted assets include an allocation of liquidity pool assets previously held
centrally.
4 2012 UK bank levy of £39m previously reported in UK has been allocated across the regions.
Corporate Banking
Corporate Banking continued to make good progress in pursuing its turnaround strategy, which gained
momentum in 2013. During the year it rationalised its geographic footprint in Rest of World, increased
sustainable returns from its ongoing business and continued to reduce Exit Quadrant assets in Europe. All
of these actions improved the risk profile, resulted in income generation from higher quality assets.
Performance improved across all regions in 2013, with the UK franchise continuing to deliver strong returns,
generating 2013 adjusted return on average equity of 12.3% (2012: 10.3%). This was complemented by an
increased contribution from Africa within Rest of World. Europe returns were adversely impacted by a write
down of deferred tax assets relating to Spain. Costs to achieve Transform were incurred to further invest in
the ongoing client business, as well as rationalise the offering within Europe and Rest of World.
Income Statement – 2013 compared to 2012
- Total income increased 2% to £3,115m reflecting an increase in UK income, partially offset by non-
recurring income from a reduction in Exit Quadrant assets in Europe and previously exited businesses
- Net interest margin remained broadly flat at 121bps (2012: 124bps) as reduced funding rates offset
between assets and liabilities
– Customer asset margin increased 16bps to 133bps and customer liability margin reduced 14bps to
97bps following the reduction in funding rates
- Credit impairment charges declined 42% to £510m largely driven by Europe, which saw charges reduce
by £224m to £318m following ongoing action to reduce exposure to the property and construction sector
in Spain. Charges were also lower against large Corporate clients in the UK
- Adjusted operating expenses increased 6% to £1,806m including costs to achieve Transform of £114m,
which primarily related to restructuring across all regions and the UK bank levy of £51m (2012: £39m).
Statutory operating expenses improved 4% to £2,456m, due to a lower charge for interest rate hedging
products redress of £650m (2012: £850m)
- Adjusted profit before tax improved 74% to £801m
– UK adjusted profit before tax improved 14% to £948m driven by lower credit impairment charges and
higher income
– Europe adjusted loss before tax improved 40% to £243m principally due to lower credit impairment
charges, partially offset by reduced income from exited businesses and costs to achieve Transform
– Rest of the World adjusted profit before tax improved £61m to £96m due to lower impairment and prior
year costs reflecting the impact of exited businesses
- Statutory profit before tax was £151m (2012: loss of £390m) reflecting the reduced charge for interest
rate hedging products redress
- Adjusted attributable profit of £247m (2012: £228m) was impacted by a write down of deferred tax assets
relating to Spain
Income Statement – Q413 compared to Q313
- Adjusted profit before tax decreased 55% to £123m reflecting the impact of increased costs to achieve
Transform from £13m to £60m and UK bank levy of £51m in Q413
Balance Sheet – 31 December 2013 compared to 31 December 2012
- Loans and advances to customers decreased 5% to £61.1bn driven by the rundown of Exit Quadrant
portfolios in Europe and a reduction in client demand as working capital deposits increased in the UK
- Loans and advances to customers at fair value which consists of the Education, Social Housing and Local
Authority (ESHLA) portfolio decreased 11% to £15.7bn from fair value adjustments reflecting rising long
term interest rates and paydowns
- Customer deposits increased 9% to £108.7bn primarily due to the growth of UK deposits
- Total assets increased £26.1bn to £113.9bn reflecting a reallocation of liquidity pool assets previously
held centrally
- CRD III RWAs decreased 3% to £68.9bn driven primarily by improvements in book quality and a
reduction in Exit Quadrant RWAs, offset by the reallocation of liquidity pool assets previously held
centrally
Wealth and Investment Management
Year Ended Year Ended YoY
Income Statement Information 31.12.13 31.12.12 %
£m £m Change
Net interest income 859 856 -
Net fee and commission income 968 948 2
Net trading and investment income 18 16 13
Other expense (6) -
Total income 1,839 1,820 1
Credit impairment charges and other provisions (121) (38)
Net operating income 1,718 1,782 (4)
Operating expenses (excluding UK bank levy,
goodwill impairment and costs to achieve Transform) (1,586) (1,505) 5
UK bank levy (6) (4) 50
Goodwill impairment (79) -
Costs to achieve Transform (158) -
Operating expenses (1,829) (1,509) 21
Other net income 13 1
(Loss)/profit before tax (98) 274
Adjusted (loss)/profit before tax 1 (19) 274
Adjusted attributable (loss)/profit 2 (24) 222
Balance Sheet Information and Key Facts
Loans and advances to customers at amortised cost £23.1bn £21.3bn 8
Customer deposits £63.4bn £53.8bn 18
Total assets 3 £37.6bn £24.5bn 53
Risk weighted assets - CRD III 3 £16.7bn £16.1bn 4
Risk weighted assets - CRD IV 3 £17.3bn
Client assets £204.8bn £186.0bn 10
Number of employees (full time equivalent) 8,300 8,300
Adjusted 1 Statutory
Performance Measures 31.12.13 31.12.12 31.12.13 31.12.12
Return on average tangible equity (1.4%) 15.5% (5.9%) 15.5%
Return on average equity (1.0%) 11.2% (4.5%) 11.2%
Return on average risk weighted assets (0.1%) 1.7% (0.5%) 1.7%
Cost: income ratio 95% 83% 99% 83%
Loan loss rate (bps) 51 17 51 17
1 Adjusted profit before tax, adjusted attributable profit and adjusted performance measures exclude the
impact of the provision for goodwill impairment of £79m (2012: £nil).
2 Attributable profit includes profit after tax and non-controlling interests.
3 2013 total assets and risk weighted assets include an allocation of liquidity pool assets previously held
centrally.
Wealth and Investment Management
Wealth and Investment Management continued to implement its strategic programme to build on its
strengths, focus on target markets and simplify how it operates. The purpose of this transformation is to put
Wealth and Investment Management on a solid trajectory to deliver sustainable returns over the long term.
In 2013, the business incurred significant costs to achieve Transform. A significant portion of these costs
were the direct result of initiatives taken to drive greater efficiency, to de-risk in an increasingly complex
regulatory environment, to streamline target markets and to consolidate client propositions.
Business growth remained robust with strong growth in client assets, customer deposits and loans and
advances to customers.
Income Statement – 2013 compared to 2012
- Total income of £1,839m remained broadly in line with the prior year
- Net interest income of £859m was in line with the prior year, as growth in deposit and lending balances,
primarily in the High Net Worth business, was offset by a 19bps decrease in net interest margin to 104bps
reflecting a change in product mix and reduced contributions from structural hedges
– Customer asset margin increased 21bps to 86bps due to lower funding rates. Average customer
assets increased 14% to £22.4bn
– Customer liability margin decreased 15bps to 97bps reflecting a change in product mix and lower
funding rates. Average customer liabilities increased 21% to £60.6bn
- Net fees and commission income increased 2% to £968m
- Credit impairment charges increased £83m to £121m, largely reflecting the impact of deterioration in
recovery values from property held as security, primarily in Europe. Q213 included a charge of £15m
relating to secured lending on Spanish property
- Adjusted operating expenses increased £241m to £1,750m largely reflecting costs to achieve Transform
of £158m and a £23m customer remediation provision. Statutory operating expenses increased £320m to
£1,829m including goodwill impairment of £79m (2012: nil). For further details refer to Note 11 Goodwill
and Intangible Assets on page 108
- Adjusted loss before tax of £19m moved from a profit of £274m in 2012 primarily driven by costs to
achieve Transform, increased credit impairment charges and the customer remediation provision. An
adjusting item of £79m relating to the impairment of goodwill was also included in the statutory loss
before tax of £98m (2012: profit of £274m)
Income Statement – Q413 compared to Q313
- Adjusted loss before tax of £73m moved from a profit of £7m in Q313 primarily driven by an increase in
costs to achieve Transform of £37m to £81m. An adjusting item of £79m relating to the impairment of
goodwill was also included in the statutory loss before tax of £152m (Q313: profit of £7m)
Balance Sheet – 31 December 2013 compared to 31 December 2012
- Loans and advances to customers increased 8% to £23.1bn and customer deposits increased 18% to
£63.4bn primarily driven by growth in the High Net Worth business
- CRD III RWAs increased 4% to £16.7bn driven by reallocation of liquidity pool assets previously held
centrally, offset by improvements to the application of collateral to credit exposures
- Client assets increased 10% to £204.8bn driven by growth in the High Net Worth business and favourable
equity market movements
Head Office and Other Operations
Year Ended Year Ended
Income Statement Information 31.12.13 31.12.12
£m £m
Net interest (expense)/income (165) 76
Net fee and commission expense (109) (198)
Net trading income 35 117
Net investment income 57 267
Net premiums from insurance contracts 25 38
Other income 33 56
Adjusted total (expense)/income net of insurance
claims (124) 356
Own credit (220) (4,579)
Gain on disposal of investment in BlackRock, Inc. - 227
Total expense net of insurance claims (344) (3,996)
Credit impairment release/(charges) and other
provisions 2 (6)
Net operating expense (342) (4,002)
Operating expenses (excluding UK bank levy and
costs to achieve Transform) (94) (165)
UK bank levy (15) (19)
Costs to achieve Transform (22) -
Operating expenses (131) (184)
Other net income 5 23
Loss before tax (468) (4,163)
Adjusted (loss)/profit before tax 1 (248) 189
Adjusted attributable loss 1,2 (344) (64)
Balance Sheet Information and Key Facts
Total assets 3 £26.7bn £41.3bn
Risk weighted assets - CRD III 3 £3.0bn £5.3bn
Risk weighted assets - CRD IV 3 £2.5bn
Number of employees (full time equivalent) 100 200
1 Adjusted (loss)/profit before tax and adjusted attributable loss exclude the impact of an own credit loss
£220m (2012: loss of £4,579m) and £nil (2012: £227m) gain on disposal of strategic investment in
BlackRock, Inc.
2 Attributable profit includes profit after tax and non-controlling interests.
3 2013 total assets and risk weighted assets reflect a reduction in the liquidity pool and a reallocation to
businesses of liquidity pool assets previously held centrally.
Head Office and Other Operations
Income Statement – 2013 compared to 2012
- Adjusted income declined to a net expense of £124m (2012: income of £356m), predominately due to the
non-recurrence of gains related to hedges of employee share awards in Q112 of £235m and the residual
net expense from treasury operations including an adjustment to the carrying amount of subordinated
liabilities
- Operating expenses decreased £53m to £131m, mainly due to the non-recurrence of the £97m penalty
arising from the industry wide investigation into the setting of inter-bank offered rates recognised in H112,
partially offset by costs to achieve Transform of £22m and regulatory investigation and legal costs
- Adjusted loss before tax of £248m moved from a profit of £189m in 2012. Statutory loss before tax
improved to £468m (2012: £4,163m) including an own credit charge of £220m (2012: £4,579m), partially
offset by the non-recurrence of the £227m gain on disposal of investment in BlackRock, Inc. in 2012
Income Statement – Q413 compared to Q313
- Adjusted profit before tax of £44m (Q313: loss of £135m)
- Total income net of insurance claims of £122m moved from an expense of £112m in Q313, principally
due to an adjustment to the carrying amount of subordinated liabilities
- Operating expenses increased £65m to £86m, including costs to achieve Transform of £22m and UK
bank levy of £15m
- Statutory loss before tax of £51m (Q313: £346m) included an own credit charge of £95m (Q313: £211m)
Balance Sheet – 31 December 2013 compared to 31 December 2012
- Total assets decreased 35% to £26.7bn primarily reflecting a reduction of group liquidity pool assets and
a reallocation to the businesses
- CRD III RWAs decreased £2.3bn to £3.0bn primarily driven by the reallocation of liquidity pool assets to
the businesses
Barclays Results by Quarter Q413 Q313 Q213 Q113 Q412 Q312 Q212 Q112
£m £m £m £m £m £m £m £m
Adjusted basis
Total income net of insurance claims 6,639 6,445 7,337 7,734 6,867 7,002 7,384 8,108
Credit impairment charges and other
provisions (718) (722) (925) (706) (825) (805) (926) (784)
Net operating income 5,921 5,723 6,412 7,028 6,042 6,197 6,458 7,324
Operating expenses (excluding UK bank
levy and costs to achieve Transform) (4,777) (4,262) (4,359) (4,782) (4,345) (4,353) (4,555) (4,965)
UK bank levy (504) - - - (345) - - -
Costs to achieve Transform (468) (101) (126) (514) - - - -
Operating expenses (5,749) (4,363) (4,485) (5,296) (4,690) (4,353) (4,555) (4,965)
Other net income 19 25 (122) 54 43 21 41 36
Adjusted profit before tax 191 1,385 1,805 1,786 1,395 1,865 1,944 2,395
Adjusting items
Own credit (95) (211) 337 (251) (560) (1,074) (325) (2,620)
Gain on disposal of BlackRock Inc.
investment - - - - - - 227 -
Provision for PPI redress - - (1,350) - (600) (700) - (300)
Provision for interest rate hedging
products redress - - (650) - (400) - (450) -
Goodwill impairment (79) - - - - - - -
Statutory profit/(loss) before tax 17 1,174 142 1,535 (165) 91 1,396 (525)
Statutory (loss)/profit after tax (514) 728 39 1,044 (364) (13) 943 (385)
Attributable to:
Equity holders of the parent (642) 511 (168) 839 (589) (183) 746 (598)
Non-controlling interests and other
equity holders 128 217 207 205 225 170 197 213
Adjusted basic earnings per share 1 (3.9p) 5.4p 7.7p 7.5p 6.7p 7.8p 8.7p 12.3p
Adjusted cost: income ratio 87% 68% 61% 68% 68% 62% 62% 61%
Basic earnings per share (5.0p) 3.7p (1.2p) 6.3p (4.5p) (1.4p) 5.7p (4.6p)
Cost: income ratio 89% 70% 85% 71% 90% 85% 69% 96%
Adjusted Profit/(Loss) Before Tax Q413 Q313 Q213 Q113 Q412 Q312 Q212 Q112
by Business £m £m £m £m £m £m £m £m
UK RBB 212 351 333 299 275 358 360 232
Europe RBB (181) (106) (247) (462) (114) (81) (76) (72)
Africa RBB 60 132 131 81 105 34 51 132
Barclaycard 335 397 412 363 335 396 404 347
Investment Bank (329) 463 1,074 1,315 760 988 1,060 1,182
Corporate Banking 123 276 219 183 61 88 108 203
Wealth and Investment Management (73) 7 (13) 60 105 70 49 50
Head Office and Other Operations 44 (135) (104) (53) (132) 12 (12) 321
Total (loss)/profit before tax 191 1,385 1,805 1,786 1,395 1,865 1,944 2,395
1 Adjusted basic and basic earnings per share has been restated to reflect the impact of the rights issue.
Q413 Q313 Q213 Q113 Q412 Q312 Q212 Q112
UK Retail and Business Banking £m £m £m £m £m £m £m £m
Adjusted basis
Total income net of insurance claims 1,149 1,172 1,135 1,067 1,077 1,123 1,118 1,066
Credit impairment charges and other
provisions (88) (81) (89) (89) (71) (76) (46) (76)
Net operating income 1,061 1,091 1,046 978 1,006 1,047 1,072 990
Operating expenses (excluding UK bank (709) (710) (689) (704) (718) (689) (713) (757)
levy and costs to achieve Transform)
UK bank levy (21) - - - (17) - - -
Costs to achieve Transform (119) (29) (27) - - - - -
Operating expenses (849) (739) (716) (704) (735) (689) (713)(757)
Other net (expense)/income - (1) 3 25 4 - 1 (1)
Adjusted profit before tax 212 351 333 299 275 358 360 232
Adjusting items
Provision for PPI redress - - (660) - (330) (550) - (300)
Statutory profit/(loss) before tax 212 351 (327) 299 (55) (192) 360 (68)
Europe Retail and Business Banking
Adjusted and statutory basis
Total income net of insurance claims 154 160 176 176 161 168 191 188
Credit impairment charges and other
provisions (78) (67) (72) (70) (74) (58) (71) (54)
Net operating income 76 93 104 106 87 110 120 134
Operating expenses (excluding UK bank (188) (203) (207) (215) (185) (193) (200) (209)
levy and costs to achieve Transform)
UK bank levy (26) - - - (20) - - -
Costs to achieve Transform (46) (1) - (356) - - - -
Operating expenses (260) (204) (207) (571) (205) (193) (200) (209)
Other net income/(expense) 3 5 (144) 3 4 2 4 3
Adjusted and statutory loss before
tax (181) (106) (247) (462) (114) (81) (76) (72)
Africa Retail and Business Banking
Adjusted and statutory basis
Total income net of insurance claims 622 643 684 668 721 714 729 764
Credit impairment charges and other
provisions (59) (57) (94) (114) (142) (176) (208) (106)
Net operating income 563 586 590 554 579 538 521 658
Operating expenses (excluding UK bank (462) (454) (452) (474) (455) (506) (471) (528)
levy and costs to achieve Transform)
UK bank levy (28) - - - (24) - - -
Costs to achieve Transform (15) (2) (9) - - - - -
Operating expenses (505) (456) (461) (474) (479) (506) (471) (528)
Other net income 2 2 2 1 5 2 1 2
Adjusted and statutory profit before
tax 60 132 131 81 105 34 51 132
Q413 Q313 Q213 Q113 Q412 Q312 Q212 Q112
Barclaycard £m £m £m £m £m £m £m £m
Adjusted basis
Total income net of insurance claims 1,220 1,223 1,190 1,153 1,140 1,092 1,079 1,033
Credit impairment charges and other
provisions (314) (334) (313) (303) (286) (271) (242) (250)
Net operating income 906 889 877 850 854 821 837 783
Operating expenses (excluding UK bank
levy and costs to achieve Transform) (514) (498) (467) (496) (508) (432) (441) (445)
UK bank levy (24) - - - (16) - - -
Costs to achieve Transform (38) (6) (5) - - - - -
Operating expenses (576) (504) (472) ( 496) (524) (432) (441) (445)
Other net income 5 12 7 9 5 7 8 9
Adjusted profit before tax 335 397 412 363 335 396 404 347
Adjusting items
Provision for PPI redress - - (690) - (270) (150) - -
Statutory profit/(loss) before tax 335 397 (278) 363 65 246 404 347
Investment Bank 1
Adjusted and statutory basis
Macro Products 625 472 900 1,113 800 748 1,040 1,436
Credit Products 460 494 513 960 492 701 665 796
FICC 1,085 966 1,413 2,073 1,292 1,449 1,705 2,232
Equities and Prime Services 496 645 825 706 454 523 615 591
Investment Banking 590 525 528 557 620 493 509 515
Principal Investments 32 1 20 9 26 30 139 11
Exit Quadrant (54) (26) 224 118 202 226 56 87
Total income 2,149 2,111 3,010 3,463 2,594 2,721 3,024 3,436
Credit impairment (charges)/releases
and other provisions (14) (25) (195) 14 1 (3) (121) (81)
Net operating income 2,135 2,086 2,815 3,477 2,595 2,718 2,903 3,355
Operating expenses (excluding UK bank
levy and costs to achieve Transform) (2,044) (1,622) (1,697) (2,054) (1,644) (1,737) (1,849) (2,195)
UK bank levy (333) - - - (206) - - -
Costs to achieve Transform (87) (6) (53) (116) - - - -
Operating expenses (2,464) (1,628) (1,750) (2,170) (1,850) (1,737) (1,849) (2,195)
Other net income - 5 9 8 15 7 6 22
Adjusted and statutory (loss)/profit
before tax (329) 463 1,074 1,315 760 988 1,060 1,182
Corporate Banking
Adjusted basis
Total income net of insurance claims 764 799 780 772 746 717 734 849
Credit impairment charges and other
provisions (134) (118) (128) (130) (240) (214) (223) (208)
Net operating income 630 681 652 642 506 503 511 641
Operating expenses (excluding UK bank
levy and costs to achieve Transform) (396) (393) (430) (422) (412) (421) (402) (437)
UK bank levy (51) - - - (39) - - -
Costs to achieve Transform (60) (13) (4) (37) - - - -
Operating expenses (507) (406) (434) (459) (451) (421) (402) (437)
Other net income/(expenses) - 1 1 - 6 6 (1) (1)
Adjusted profit before tax 123 276 219 183 61 88 108 203
Adjusting items
Provision for interest rate hedging
products redress - - (650) - (400) - (450) -
Statutory profit/(loss) before tax 123 276 (431) 183 (339) 88 (342) 203
1 2012 FICC and Exit Quadrant amounts restated to appropriately reflect the Exit Quadrant portfolio.
Wealth and Investment Management Q413 Q313 Q213 Q113 Q412 Q312 Q212 Q112
£m £m £m £m £m £m £m £m
Adjusted basis
Total income net of insurance claims 459 449 462 469 483 443 442 452
Credit impairment charges and other
provisions (33) (39) (35) (14) (13) (6) (12) (7)
Net operating income 426 410 427 455 470 437 430 445
Operating expenses (excluding UK bank
levy and costs to achieve Transform) (415) (361) (410) (400) (361) (369) (380) (395)
UK bank levy (6) - - - (4) - - -
Costs to achieve Transform (81) (44) (33) - - - - -
Operating expenses (502) (405) (443) (400) (365) (369) (380) (395)
Other net income/(expense) 3 2 3 5 - 2 (1) -
Adjusted (loss)/profit before tax (73) 7 (13) 60 105 70 49 50
Adjusting items
Goodwill impairment (79) - - - - - - -
Statutory (loss)/profit before tax (152) 7 (13) 60 105 70 49 50
Head Office and Other Operations
Adjusted basis
Total income/(expense) net of insurance
claims 122 (112) (100) (34) (55) 24 68 319
Credit impairment releases/(charges)
and other provisions 2 (1) 1 - - (1) (3) (2)
Net operating income/(expense) 124 (113) (99) (34) (55) 23 65 317
Operating expenses (excluding UK bank
levy and costs to achieve Transform) (49) (21) (7) (17) (61) (6) (99) 1
UK bank levy (15) - - - (19) - - -
Costs to achieve Transform (22) - 5 (5) - - - -
Operating expenses (86) (21) (2) (22) (80) (6) (99) 1
Other net income/(expense) 6 (1) (3) 3 3 (5) 23 2
Adjusted profit/(loss) before tax 44 (135) (104) (53) (132) 12 (11) 320
Adjusting items
Own credit (95) (211) 337 (251) (560)(1,074) (325)(2,620)
Gain on disposal of investment in
BlackRock Inc. - - - - - - 227 -
Statutory (loss)/profit before tax (51) (346) 233 (304) (692)(1,062) (109)(2,300)
Performance Management
Remuneration
Ensuring that Barclays has the right people in the right roles serving our customers and clients effectively in
a highly competitive global banking environment is vital to our ability to generate sustainable shareholder
returns. This requires that the way in which we reward employees is competitive.
When considering the appropriate level of incentive awards for 2013, the Board Remuneration Committee
has had to establish the right balance between ensuring that the progress on repositioning compensation,
which began in 2011, was not undone, whilst also ensuring Barclays remains competitive in this area and
compensation continues to reflect performance.
In 2013, there was good performance in the UK Retail and Corporate Banking businesses, along with
continued strong growth in Barclaycard. The European, African and Wealth businesses performed less well,
and are in a process of transition to improve returns. Within the Investment Bank, Equities saw very good
growth and continued to outperform the market. Improved performance in Investment Banking was driven by
increased deal issuance. Income in FICC, reflecting market trends, was more subdued in 2013. Incentive
awards for 2013 reflect the relative performance of these key sectors, together with the on-going
strengthening of the control environment as part of the Transform strategy.
As set out in the 2012 Remuneration Report, the Board Remuneration Committee and management took
measured risks while granting the 2012 incentive awards by significantly driving down the total incentives
awarded. In making the 2013 incentives decisions, the Board Remuneration Committee has intended to
protect the health of the franchise with the aim that Barclays remains true to its policy of paying competitively
and paying for performance.
These considerations, together with the impacts of business mix referred to above, led to total incentive
awards granted increasing from £2,168m in 2012 to £2,378m in 2013. However, they were £1.1bn lower
than 2010 which demonstrated the impact of the repositioning work over the last three years.
As in 2012, the total incentive awards in 2013 were determined after making appropriate risk adjustments to
reflect significant risk events. Total risk adjustments of £290m were made in 2013 (2012: £1,160m). Of this,
£176m (2012: £300m) of adjustments were made through reductions in incentive awards that were granted
in previous years and £114m (2012: £860m) of reductions were made from total incentive awards granted in
2013. Whilst the overall incentive awards granted in 2013 were up on 2012, it is important to note that on a
pre-risk adjusted basis, the 2013 incentive awards of £2,492m have reduced 18% from 2012.
Barclays continues to have constructive engagement and dialogue with its shareholders and other key
stakeholders in respect of remuneration and remains committed to its intention of paying no more than is
necessary to maximise the long-term value and health of the bank.
Incentive awards
- Total incentive awards granted increased to £2,378m (2012: £2,168m) and incentive awards in the
Investment Bank increased to £1,574m (2012: £1,394m)
- For the Group the incentive awards granted were 32% (£1,106m) below 2010. In the Investment Bank
incentive awards granted were 41% (£1,086m) below 2010
- Within compensation there has been strong differentiation on the basis of individual performance to allow
the Group to manage compensation costs but also to remain competitive
- Average value of incentive awards granted per Group employee is £17,000 (2012: £15,600) with the
average value of incentive awards granted per Investment Bank employee of £60,100 (2012: £54,500).
Average value of incentive awards granted per Group employee excluding the Investment Bank is £7,100
(2012: £6,800)
- The proportion of the bonus pool that is deferred continues to significantly exceed the PRA's
Remuneration Code's minimum requirements and is expected to remain amongst the highest deferral
levels globally. 2013 bonuses awarded to Managing Directors in the Investment Bank were 100%
deferred
Total Incentive Awards Granted - Current Year and Deferred
Barclays Group Investment Bank
Year Year Year Year
Ended Ended Ended Ended
31.12.13 31.12.12 31.12.13 31.12.12
£m £m % Change £m £m % Change
Current year cash bonus 942 852 11 477 399 20
Current year share bonus 15 15 - 5 6 (17)
Total current year bonus 957 867 10 482 405 19
Deferred cash bonus 564 489 15 521 447 17
Deferred share bonus 576 498 16 521 446 17
Total deferred bonus 1,140 987 16 1,042 893 17
Commissions, commitments
and other incentives 281 314 (11) 50 96 (48)
Total incentive awards granted 2,378 2,168 10 1,574 1,394 13
Proportion of bonus that is
deferred 1 54% 53% 68% 69%
Total employees (full time
equivalent) 139,600 139,200 - 26,200 25,600 2
Average incentive award granted
per employee £17,000 £15,600 9 £60,100 £54,500 10
Deferred bonuses are payable only once an employee meets certain conditions, including a specified period
of service. This creates a timing difference between the communication of the bonus pool and the charges that appear
in the income statement which are reconciled in the table below:
Reconciliation of Total Incentive Awards Granted to Income Statement Charge
Barclays Group Investment Bank
Year Year Year Year
Ended Ended Ended Ended
31.12.13 31.12.12 31.12.13 31.12.12
£m £m % Change £m £m % Change
Total incentive awards for 2013 2,378 2,168 10 1,574 1,394 13
Less: deferred bonuses awarded
in 2013 (1,140) 987) 16 (1,042) (893) 17
Add: current year charges for
deferred bonuses from previous 1,147 1,223 (6) 1,042 1,117 (7)
years
Other 2 169 21 144 75 92
Income statement charge for
performance costs 2,554 2,425 5 1,718 1,693 1
- Employees only become eligible to receive payment from a deferred bonus once all of the relevant
conditions have been fulfilled, including the provision of services to the Group
- The income statement charge for performance costs reflects the charge for employees' actual services
provided to the Group during the relevant calendar year (including where those services fulfil performance
conditions attached to previously deferred bonuses). It does not include charges for deferred bonuses
where performance conditions have not been met
- As a consequence, while the 2013 incentive awards granted increased 10% compared to 2012, the
income statement charge for performance costs increased 5%
1 Calculated as total deferred bonus divided by the sum of total current year bonus and total deferred
bonus.
2 Difference between incentive awards granted and income statement charge for commissions,
commitments and other long-term incentives.
Income Statement Charge
Barclays Group Investment Bank
Year Year Year Year
Ended Ended Ended Ended
31.12.13 31.12.12 31.12.13 31.12.12
£m £m %Change £m £m %Change
Deferred bonus charge 1,147 1,223 (6) 1,042 1,117 (7)
Current year bonus charges 957 867 10 482 405 19
Commissions, commitments and other
incentives 450 335 34 194 171 13
Performance costs 2,554 2,425 5 1,718 1,693 1
Salaries 4,981 5,254 (5) 2,092 2,203 (5)
Social security costs 715 685 4 305 297 3
Post retirement benefits 688 612 12 161 147 10
Allowances and trading incentives 211 262 (19) 88 123 (28)
Other compensation costs 1 467 521 (10) 270 204 32
Total compensation costs 2 9,616 9,759 (1) 4,634 4,667 (1)
Other resourcing costs
Outsourcing 1,084 999 9 26 31 (16)
Redundancy and restructuring 687 68 186 41
Temporary staff costs 551 481 15 255 227 12
Other 217 160 36 77 68 13
Total other resourcing costs 2,539 1,708 49 544 367 48
Total staff costs 12,155 11,467 6 5,178 5,034 3
Compensation as % of adjusted net
income 38.3% 37.5% 44.1% 40.3%
Compensation as % of adjusted
income 34.2% 33.2% 43.2% 39.6%
- Total staff costs increased 6% to £12,155m, principally reflecting a £619m increase in redundancy and
restructuring charges, a 5% increase in performance costs and a 9% increase in outsourcing
- Performance costs increased 5% to £2,554m, reflecting a 10% increase to £957m in charges for current
year cash and share bonuses and a 34% increase in commissions, commitments and other incentives to
£450m. This was offset by a 6% decrease in the charge for deferred bonuses to £1,147m
- Redundancy and restructuring charges increased £619m to £687m, due to a number of Transform
initiatives
Number of employees (full time equivalent) by Business 31.12.13 31.12.12
UK RBB 32,900 33,000
Europe RBB 5,900 7,500
Africa RBB 41,300 40,500
Barclaycard 12,100 11,100
Investment Bank 26,200 25,600
Corporate Banking 12,800 13,000
Wealth and Investment Management 8,300 8,300
Head Office and Other Operations 100 200
Total 139,600 139,200
1 Investment Bank other compensation costs include allocations from Head Office and net recharges
relating to compensation costs incurred in the Investment Bank but charged to other businesses and
charges from other businesses to the Investment Bank.
2 In addition, £346m of Group compensation (2012: £44m) was capitalised as internally generated
software.
Deferred bonuses awarded are expected to be charged to the income statement in the years outlined in the
table that follows
Year in which Income Statement charge is expected to be taken for Deferred Bonuses awarded to
date 1
Actual Expected 2
Year Year Year
Ended Ended Ended 2015 and
31.12.12 31.12.13 31.12.14 beyond
Barclays Group £m £m £m £m
Deferred bonuses from 2010 and earlier bonus pools 557 192 21 -
Deferred bonuses from 2011 bonus pool 666 429 157 25
Deferred bonuses from 2012 bonus pool - 526 299 155
Deferred bonuses from 2013 bonus pool - - 616 492
Income statement charge for deferred bonuses 1,223 1,147 1,093 672
Investment Bank
Deferred bonuses from 2010 and earlier bonus pools 517 178 19 -
Deferred bonuses from 2011 bonus pool 600 384 143 22
Deferred bonuses from 2012 bonus pool - 480 272 143
Deferred bonuses from 2013 bonus pool - - 570 452
Income statement charge for deferred bonuses 1,117 1,042 1,004 617
Year(s) in which
Bonus Pool Income Statement
Component Expected Grant Date Expected Payment Date(s) 3 Charge Arises 4
Current year cash
bonus • February 2014 • February 2014 • 2013
Current year share
bonus • February/March 2014 • February 2014 to September • 2013
2014
Deferred cash bonus • March 2014 • March 2015 (33.3%) • 2014 (48%)
• March 2016 (33.3%) • 2015 (35%)
• March 2017 (33.3%) • 2016 (15%)
• 2017 (2%)
Deferred share
bonus • March 2014 • March 2015 (33.3%) • 2014 (48%)
• March 2016 (33.3%) • 2015 (35%)
• March 2017 (33.3%) • 2016 (15%)
• 2017 (2%)
1 The actual amount charged depends upon whether conditions have been met and will vary compared
with the above expectation. Charges for deferred bonuses include amounts for other incentives, such as
commitments, which are awarded on a deferred basis.
2 Does not include the impact of grants which will be made in 2014 and 2015.
3 Payments are subject to all conditions being met prior to the expected payment date. In addition,
employees receiving a deferred cash bonus may be awarded a service credit of 10% of the initial value of
the award at the time that the final instalment is made, subject to continued employment.
4 The income statement charge is based on the period over which conditions are met.
Returns and Equity by Business
Returns on average equity and average tangible equity are calculated as profit for the period attributable to
ordinary equity holders of the parent divided by average allocated equity or average allocated tangible equity
for the period as appropriate, excluding non-controlling and other equity interests. Average allocated equity
has been calculated as 10.5% of average risk weighted assets for each business, adjusted for capital
deductions, including goodwill and intangible assets, reflecting the assumptions the Group uses for capital
planning purposes. The higher capital level currently held, reflecting Core Tier 1 capital ratio of 13.2% as at
31 December 2013, is allocated to Head Office and Other Operations. Average allocated tangible equity is
calculated using the same method but excludes goodwill and intangible assets.
Adjusted Statutory
Year Year Year Year
Ended Ended Ended Ended
Perfor 31.12.13 31.12.12 31.12.13 31.12.12
Return on Average Equity % % % %
UK RBB 11.5 12.3 4.9 (0.3)
Europe RBB (45.2) (12.9) (45.2) (12.9)
Africa RBB 0.4 (0.1) 0.4 (0.1)
Barclaycard 18.4 19.8 8.3 13.3
Investment Bank 8.2 12.7 8.2 12.7
Corporate Banking 3.1 2.9 (3.5) (5.4)
Wealth and Investment Management (1.0) 11.2 (4.5) 11.2
Group excluding Head Office and Other Operations 5.8 9.8 2.3 5.9
Head Office and Other Operations impact (1.3) (0.8) (1.3) (7.1)
Total 4.5 9.0 1.0 (1.2)
Return on Average Tangible Equity
UK RBB 20.0 22.9 8.5 (0.6)
Europe RBB (49.6) (14.2) (49.6) (14.2)
Africa RBB 1 0.8 (0.2) 0.8 (0.2)
Barclaycard 24.5 26.9 11.1 18.0
Investment Bank 8.5 13.1 8.5 13.1
Corporate Banking 3.3 3.1 (3.6) (5.7)
Wealth and Investment Management (1.4) 15.5 (5.9) 15.5
Group excluding Head Office and Other Operations 7.0 11.8 2.7 7.1
Head Office and Other Operations impact (1.7) (1.2) (1.5) (8.5)
Total 5.3 10.6 1.2 (1.4)
Attributable profit/(loss) £m £m £m £m
UK RBB 917 875 389 (21)
Europe RBB (964) (277) (964) (277)
Africa RBB (4)
Barclaycard 1,006 (4) 975 9 454 653
Investment Bank 2,680 2,680
Corporate Banking 247 228 (273) (419)
Wealth and Investment Management (24) 222 (103) 222
Head Office and Other Operations 2 (344) (64) (520) (3,458)
Total 2,395 4,635 540 (624)
Average Equity 3 Average Tangible
Equity 3
UK RBB 7,984 7,121 4,581 3,815
Europe RBB 2,133 2,143 1,943 1,957
Africa RBB 2,327 2,658 1,087 1,234
Barclaycard 5,468 4,924 4,106 3,623
Investment Bank 18,966 21,173 18,264 20,468
Corporate Banking 7,854 7,739 7,481 7,369
Wealth and Investment Management 2,306 1,981 1,746 1,436
Head Office and Other Operations 2 5,130 4,313 5,110 4,311
Total 2 52,168 52,052 44,318 44,213
1 The return on average tangible equity for Africa RBB for 2012 has been revised to exclude amounts
relating to Absa Group's non-controlling interests.
2 Includes risk weighted assets and capital deductions in Head Office and Other Operations, plus the
residual balance of average ordinary shareholders' equity and tangible ordinary shareholders' equity.
3 Group average ordinary shareholders' equity and average tangible ordinary shareholders' equity exclude
the cumulative impact of own credit on retained earnings for the calculation of adjusted performance
measures.
Costs to achieve Transform
- On 12 February 2013 the Group announced the Strategic Review which included reducing operating
expenses by £1.7bn to £16.8bn by 2015
- Costs to achieve Transform totalled £1,209m in 2013. Major restructuring initiatives of £852m principally
related to the cost of reducing the scale of activities and redundancies in Europe RBB, the Investment
Bank, across Europe, Asia and America, and UK RBB. Other Transform costs of £356m were primarily
driven by investment in technology and process improvements that will reduce future operating costs
and enhance customer and client propositions
Costs to achieve Transform by business Year Ended 31.12.13
Major Other Total costs
Restructuring Transform to achieve
Initiatives costs Transform
£m £m £m
UK RBB 129 46 175
Europe RBB 356 47 403
Africa RBB - 26 26
Barclaycard 1 48 49
Investment Bank 191 71 262
Corporate Banking 94 20 114
Wealth and Investment Management 82 76 158
Head Office and Other Operations - 22 22
Total costs to achieve Transform 853 356 1,209
Adjusted performance measures by
business excluding costs to achieve Return Cost:
Transform on average income
Adjusted profit before tax equity 1 ratio
Year Year Year Year
Ended Ended Ended Ended
31.12.13 31.12.12 31.12.13 31.12.13
£m £m % Change % %
UK RBB 1,370 1,225 1 13.2% 63%
Europe RBB (593) (343) 73 (32.0%) 126%
Africa RBB 430 322 34 1.2% 71%
Barclaycard 1,556 1,482 5 19.0% 42%
Investment Bank 2,785 3,990 (30) 9.1% 72%
Corporate Banking 915 460 99 4.2% 54%
Wealth and Investment Management 139 274 (49) 3.8% 87%
Head Office and Other Operations (226) 189 (1.5%)
Total profit before tax 6,376 7,599 (16) 6.1% 66%
1 Return on average equity for Head Office and Other Operations represents the dilution for the Group.
Exit Quadrant Assets
- On 12 February 2013, the Group announced as part of its Strategic Review that, following a rigorous
bottom-up analysis of each of its businesses based on the attractiveness of the sectors they operate in
and their ability to generate sustainable returns on equity above cost of equity, it would be exiting assets
- The table below presents selected financial data for these Exit Quadrant assets
Balance Sheet
CRD IV RWAs 1 Assets Year Ended 31.12.13
Net
operating
As at As at As at As at Income/ Impairment income/
31.12.13 31.12.12 31.12.13 31.12.12 Expense) release (expense)
Investment bank £bn £bn £bn £bn £m £m £m
US Residential Mortgages 1.1 5.3 0.5 2.2 478 - 478
Commercial Mortgages and
Real Estate 1.6 3.1 2.0 4.0 182 - 182
Leveraged and Other Loans 9.7 10.1 6.0 11.5 (88) 11 (77)
CLOs and Other Insured
Assets 3.2 5.9 11.7 16.3 (281) - (281)
Structured Credit and other 3.8 9.4 5.2 8.6 (128) - (128)
Monoline Derivatives 2.2 3.1 0.3 0.6 (21) - (21)
Corporate Derivatives 1.9 8.3 2.2 3.6 - - -
Portfolio Assets 23.5 45.2 27.9 46.8 142 11 153
Pre-CRD IV Rates Portfolio 18.7 33.9
Total Investment Bank 42.2 79.1
Corporate Banking
European assets 3.2 5.0 2.6 3.9 80 (321) (241)
Europe RBB assets 9.0 9.7 21.3 22.9 118 (187) (69)
Total 54.4 93.8
- Exit Quadrant income shown on page 46 differs from the income above due to revenues relating to
associated litigation matters and recoverability of certain assets not yet received from the 2008 US
Lehman acquisition
- The CRD IV RWAs of the Exit Quadrant businesses decreased £39.4bn to £54.4bn including reductions
of £36.9bn in the Investment Bank. This reflects reductions in Investment Bank portfolio assets of
£21.7bn to £23.5bn, relating to US Residential, Structured Credit Portfolios and optimisation initiatives
within the derivatives portfolio. Pre-CRD IV Rates derivatives RWAs decreased £15.2bn to £18.7bn.
RWAs in Corporate Banking and Europe RBB Exit Quadrant portfolios decreased due to continued asset
run down
- Portfolio Assets balance sheet assets decreased £18.9bn to £27.9bn driven by net sales and paydowns
across asset classes. Income of £142m was primarily driven by gains relating to US Residential
Mortgage exposures, partially offset by funding charges on Collateralised Loan Obligations and Other
Insured Assets and the acceleration of disposals. Portfolio Assets income reduced to £142m (2012:£389m),
largely driven by a reduction in fair value gains on US Residential Mortgages and sale of
Commercial Real Estate loans
- Corporate Banking Exit Quadrant balance sheet assets in Europe decreased £1.3bn to £2.6bn largely
driven by
reductions in Spain and Portugal
- Europe RBB Exit Quadrant balance sheet assets decreased £1.6bn to £21.3bn largely driven by
mortgage reductions in Spain and Italy, partially offset by foreign currency movements
1 The table above provides an indication of the CRD IV RWAs that are currently allocated to the Exit
Quadrant businesses.
Margins and Balances
Year Year
Ended Ended
Analysis of Net Interest Income 31.12.13 31.12.12
£m £m
RBB, Corporate Banking and Wealth and Investment Management
Customer Income:
- Customer assets 7,144 6,654
- Customer liabilities 3,221 3,185
Total 10,365 9,839
RBB, Corporate Banking and Wealth and Investment Management Non-
customer Income:
- Product structural hedge 1 843 962
- Equity structural hedge 2 337 317
- Other (129) (69)
Total RBB, Corporate Banking and Wealth and Investment Management 11,416 11,049
Net Interest Income
Investment Bank 349 530
Head Office and Other Operations (165) 75
Group net interest income 11,600 11,654
RBB, Corporate Banking and Wealth and Investment Management Net Interest Income (NII)
Barclays distinguishes the relative net interest contribution from customer assets and customer liabilities,
and separates this from the contribution delivered by non-customer income, which principally arises from
Group hedging activities.
Customer interest income
- Customer NII increased to £10,365m (2012: £9,839m) driven by growth of 2% in average customer
assets to £326bn and a 10bps increase in the customer asset margin to 2.19%. Customer liability
interest income remained broadly constant; the result of a 14% increase in average liabilities to
£322bn offset by a 12bps reduction to 100bps in the customer liability margin
- The customer asset margin increased to 2.19% (2012: 2.09%) primarily due to reduced funding
costs
- The customer liability margin decreased to 1.00% (2012: 1.12%) driven by increased customer rates
paid on deposits accounts in Corporate Banking, a change in product mix within Wealth towards
lower margin products and reduced funding rates
Non-customer interest income
- Non-customer NII decreased to £1,051m (2012: £1,210m) reflecting a reduction in the non-customer
generated margin of 5bps to 0.16%. Group hedging activities continue to utilise structural interest
rate hedges to mitigate the impact of the low interest environment on customer liabilities and the
Group's equity
- Product structural hedges generated a lower contribution of £843m (2012: £962m), as hedges were
maintained in this period of continued low interest rates. Based on the current interest rate curves
and the on-going hedging strategy, fixed rate returns on product structural hedges are expected to
make a significant contribution in 2014
- The contribution from equity structural hedges RBB, Barclaycard, Corporate Banking and Wealth
and Investment Management remained broadly constant at £337m (2012: £317m)
Other Group interest income
- Head office NII decreased £240m to a net expense of £165m reflecting the cost of funding surplus
liquidity due to growth in customer deposits across the group offset by an adjustment to the carrying
value of subordinated liabilities
- Investment Bank NII decreased to £349m (2012: £530m) primarily due to a reduction in interest
income from Exit Quadrant assets
Total contribution to Group net interest income from structural hedge income is down £140m to £1.6bn
(2012: £1.7bn).
1 Product structural hedges convert short term interest margin volatility on product balances (such as non-
interest bearing current accounts and managed rate deposits) into a more stable medium term rate and
are built on a monthly basis to achieve a targeted maturity profile.
2 Equity structural hedges are in place to manage the volatility in net earnings generated by businesses on
the Group's equity, with the impact allocated to businesses in line with their capital usage.
Net Interest Margin
- The net interest margin for RBB, Corporate Banking and Wealth and Investment Management
decreased 8bps to 1.76% (2012: 1.84%) reflecting the reduction in contribution from customer
liabilities and Group hedging activities, combined with a reduced contribution from the higher
margins in Africa RBB as ZAR depreciated against GBP. The net interest margin is expressed as a
percentage of the sum of average customer assets and liabilities to reflect the impact of the margin
generated on retail and commercial banking liabilities
- The net interest margin expressed as a percentage of average customer assets actually increased
from 3.47% to 3.50% in 2013
- Net interest margin and customer asset and liability margins reflect movements in the Group's
internal funding rates which are based on the cost to the Group of alternative funding in wholesale
markets. The Group's internal funding rate prices intra-group funding and liquidity to appropriately
give credit to businesses with net surplus liquidity and to charge those businesses in need of
wholesale funding at a rate that is driven by prevailing market rates and includes a term premium.
The objective is to price internal funding for assets and liabilities in line with the cost of alternative
funding, which ensures there is a consistency between retail and wholesale sources
Analysis of Net Interest Margin
Wealth
and Total
Invest- RBB,
Corpo- ment Corpo-
UK Europe Africa Barclay rate Manage- rate and
RBB RBB RBB card Banking ment Wealth
Year Ended 31.12.13 % % % % % % %
Customer asset margin 1.22 0.43 3.10 9.39 1.33 0.86 2.19
Customer liability
margin 0.89 0.40 2.73 (0.29) 0.97 0.97 1.00
Customer generated
margin 1.06 0.43 2.95 8.48 1.12 0.94 1.60
Non-customer
generated margin 0.23 0.36 0.21 (0.19) 0.09 0.10 0.16
Net interest margin 1.29 0.79 3.16 8.29 1.21 1.04 1.76
Average customer
assets (£m) 134,297 39,387 27,330 36,276 66,724 22,418 326,432
Average customer
liabilities (£m) 128,310 13,887 18,093 3,741 97,558 60,596 322,185
Year Ended 31.12.12
Customer asset margin 1.07 0.46 3.10 9.56 1.17 0.65 2.09
Customer liability
margin 0.97 0.38 2.75 (0.60) 1.11 1.12 1.12
Customer generated
margin 1.02 0.44 2.97 9.18 1.14 0.99 1.63
Non-customer
generated margin 0.33 0.34 0.22 (0.52) 0.10 0.24 0.21
Net interest margin 1.35 0.78 3.19 8.66 1.24 1.23 1.84
Average customer
assets (£m) 124,275 39,996 32,155 33,470 69,041 19,670 318,607
Average customer
liabilities (£m) 111,753 14,824 19,610 1,286 85,620 50,083 283,176
Analysis of Net Interest Margin-Quarterly
Wealth
and Total
Invest- RBB,
Corpo- ment Corporate
Europe Africa Barclay- rate Manage- and
UK RBB RBB RBB card Banking ment Wealth
Quarter Ended 31.12.13 % % % % % % %
Customer asset margin 1.27 0.43 3.16 9.19 1.34 0.98 2.20
Customer liability margin 0.92 0.38 2.64 (0.27) 0.88 0.97 0.97
Customer generated margin 1.10 0.42 2.95 8.17 1.06 0.97 1.58
Non-customer generated
margin 0.22 0.35 0.30 (0.10) 0.07 0.05 0.16
Net interest margin 1.32 0.77 3.25 8.07 1.13 1.02 1.74
Average customer assets (£m)136,100 37,884 24,854 36,640 66,098 22,765 324,341
Average customer liabilities
(£m) 133,019 13,466 17,014 4,404 98,973 63,114 329,990
Quarter Ended 30.09.13
Customer asset margin 1.26 0.37 3.07 9.56 1.41 0.87 2.25
Customer liability margin 0.89 0.42 2.85 (0.24) 0.94 0.99 0.99
Customer generated margin 1.08 0.39 2.98 8.57 1.13 0.96 1.62
Non-customer generated
margin 0.23 0.36 0.25 (0.18) 0.12 0.04 0.16
Net interest margin 1.31 0.75 3.23 8.39 1.25 1.00 1.78
Average customer assets (£m)13 39,432 26,658 36,380 66,251 22,259 326,463
Average customer liabilities
(£m) 131,465 13,842 17,892 4,084 96,918 59,740 323,941
Quarter Ended 30.06.13
Customer asset margin 1.25 0.47 3.19 9.34 1.34 0.75 2.19
Customer liability margin 0.80 0.40 2.71 (0.30) 1.10 0.97 1.00
Customer generated margin 1.03 0.45 3.00 8.46 1.20 0.91 1.60
Non-customer generated
margin 0.23 0.36 0.15 (0.22) 0.07 0.15 0.15
Net interest margin 1.26 0.81 3.15 8.24 1.27 1.06 1.75
Average customer assets (£m)134,986 39,767 27,925 36,069 66,869 22,351 327,967
Average customer liabilities
(£m) 129,843 3,943 18,405 3,629 95,178 60,670 321,668
Quarter Ended 31.03.13
Customer asset margin 1.10 0.45 2.92 9.49 1.24 0.85 2.12
Customer liability margin 0.96 0.42 2.73 (0.35) 1.02 1.02 1.06
Customer generated margin 1.03 0.44 2.85 8.77 1.11 0.97 1.62
Non-customer generated
margin 0.25 0.37 0.18 (0.28) 0.12 0.14 0.17
Net interest margin 1.28 0.81 3.03 8.49 1.23 1.11 1.79
Average customer assets (£m)130,546 40,494 30,451 35,887 66,741 22,221 326,340
Average customer liabilities
(£m) 118,721 14,307 18,925 2,822 93,423 55,642 303,840
Risk Management
Overview
Barclays Risk management responsibilities are laid out in the Enterprise Risk Management Framework
(ERMF). This framework, which was introduced in 2013, creates clear ownership and accountability, ensures
the Group's most significant risk exposures are understood and managed in accordance with agreed risk
appetite, and ensures regular reporting of both risk exposures and the operating effectiveness of controls. It
includes those risks incurred by Barclays that are foreseeable, continuous, and material enough to merit
establishing specific bank-wide control frameworks. These are known as Key Risks and are grouped into six
Principal Risks. Conduct and Reputation Risks were reclassified as Principal Risks in 2013. Further detail on
how these risks are managed will be available in the 2013 Annual Report and Accounts.
The topics and associated key risks, by Principal Risk, covered in this report are described below:
Principal Risks and Key Specific Risks Topics Covered Page
Funding Risk
- Increasing capital requirements or changes to what is - Capital resources, risk weighted 52
defined to constitute capital may constrain planned assets, balance sheet leverage
activities and increase costs and contribute to adverse and significant regulatory
impacts on earnings changes
- A material adverse deterioration in the Group's - Liquidity pool and funding 61
financial performance can affect the Group's capacity structure
to support further capital deployment - Eurozone balance sheet 97
- Changes in funding availability and costs may impact redenomination risk
the Group's ability to support normal business activity - Impact of CRD IV 55
and meet liquidity regulatory requirements
- Whilst the text for CRD IV has now been issued,
uncertainty remains both to its implementation and the
additional variations applied to each country, e.g. early
implementation of leverage ratios
Credit Risk
- Near term economic performance across major - Total assets by valuation basis 67
geographies is expected to remain subdued, which and underlying asset class
may adversely impact the Group. The possibility of a - Loans and advances to 68
slowing of monetary stimulus by one or more customers and banks
governments has increased the uncertainty
- Impairment, potential credit risk 70
- The Group could be adversely impacted by loans and coverage ratios
deterioration in a country/region as a result of political
instability or economic uncertainty - Retail credit risk 72
- Wholesale credit risk 86
- Possibility of falls in residential property prices in the
UK, South Africa and Western Europe. - Group exposures to Eurozone
countries 92
- Impact of increased unemployment, rising inflation and
potential interest rate rises in a number of countries in
which the Group operates could adversely impact
consumer debt affordability and corporate profitability
- Possibility of a Eurozone crisis remains with the risk of
one or more countries reverting to a locally
denominated currency. This could directly impact the
Group should the value of assets and liabilities be
affected differently
- Impact of potentially deteriorating sovereign credit
quality, particularly debt servicing and refinancing
capability
- Large single name losses and deterioration in specific
sectors and geographies and deterioration in the Exit
Quadrant portfolio
Market Risk
- A significant reduction in client volumes or market - Analysis Investment Bank's DVaR 98
liquidity could result in lower fees and commission - Analysis of interest margins 47
income and a longer time period between executing a
client trade, closing out a hedge, or exiting a position - Retirement benefit liabilities 112
arising from that trade
- Uncertain interest and exchange rate environment
could adversely impact the Group, for example interest
rate volatility can impact Barclays net interest margin
- Adverse movements between pension assets and
liabilities for defined benefit pension schemes could
contribute to a pension deficit
Operational Risk
- The industry continues to be subject to unprecedented - Legal, competition and regulatory 114
levels of regulatory change and scrutiny in many of the matters
countries in which the Group operates with past - Costs to achieve Transform
business reviews and the new legislation/regulatory 45
frameworks driving heightened risk exposure
- The Group is subject to a comprehensive range of
legal obligations and is operating in an increasingly
litigious environment
- Increasing risk of cyber attacks to IT systems both in
quantity and sophistication, and risk to the ongoing
resilience and security of the Group's infrastructure
- The Transform agenda is driving a period of significant
strategic and organisational change, which in the short
term, during implementation, may heighten operational
risk exposure
Reputation Risk
- The reputation of the Group may be adversely affected - Legal, competition and regulatory 114
by failure or perceived failure to comply with matters
required/stated standards or to behave in accordance - Provisions
with Barclays' purpose and values. This may impact 109
negatively on trust among stakeholders, make
engagement with them more difficult and result in a
more hostile businesses environment
- Failure to identify and mitigate or manage proactively
reputation risks associated with business decisions
and emerging issues or events affecting Barclays and
the financial sector
- Stakeholder perceptions continue to be impacted by
historical controversies
Conduct Risk
- Adverse impacts on customers and markets of current - Legal, competition and regulatory 114
and future business model and strategy not being matters
robust, resilient or sustainable - Provisions 109
- Governance and culture fail to ensure that our
business is run in the right way for our customers
- Products and services offered are not designed
properly for customer purpose and/or not sold to the
right customers in the right way
- New and existing customer expectations are not
serviced appropriately
- Failing to protect our business, our clients and market
integrity against financial crime
The comparatives on page 52 to 98 have been restated to reflect the implementation of IFRS 10
Consolidated Financial Statements and IAS 19 Employee Benefits (Revised 2011), the reallocation of
elements of Head Office results to businesses and portfolio restatements between businesses, as detailed in
our announcement on 16 April 2013.
Funding Risk - Capital
CRD III Capital Ratios As at As at
31.12.13 31.12.12
Core Tier 1 13.2% 10.8%
Tier 1 15.7% 13.2%
Total capital 19.9% 17.0%
Capital Resources £m £m
Shareholders' equity (excluding non-controlling interests) per balance sheet 55,385 50,615
- Less: CRD IV additional Tier 1 equity 1 (2,063) -
Own credit cumulative loss 2 806 804
Unrealised losses/(gains) on available for sale debt securities 2 3 (417)
Unrealised gains on available for sale equity (recognised as tier 2 capital) 2 (151) (110)
Cash flow hedging reserve2 (273) (2,099)
Non-controlling interests per balance sheet 8,564 9,371
- Less: Other Tier 1 capital - preference shares (6,131) (6,203)
- Less: Non-controlling Tier 2 capital (478) (547)
Other regulatory adjustments to non-controlling interests (23) (171)
Other regulatory adjustments and deductions:
Defined benefit pension adjustment 2 195 49
Goodwill and intangible assets 2 (7,618) (7,622)
50% excess of expected losses over impairment 2 (787) (648)
50% of securitisation positions (503) (997)
Other regulatory adjustments (142) (303)
Core Tier 1 capital 46,784 41,722
Other Tier 1 capital:
Preference shares 6,131 6,203
Tier 1 notes 3 500 509
Reserve Capital Instruments 3 2,858 2,866
Regulatory adjustments and deductions:
50% of material holdings (459) (241)
50% of the tax on excess of expected losses over impairment 6 176
Total Tier 1 capital 55,820 51,235
Tier 2 capital:
Undated subordinated liabilities 1,522 1,625
Dated subordinated liabilities 13,626 14,066
Non-controlling Tier 2 capital 478 547
Reserves arising on revaluation of property 2 7 39
Unrealised gains on available for sale equity2 153 110
Collectively assessed impairment allowances 1,875 2,002
Tier 2 deductions:
50% of material holdings (459) (241)
50% excess of expected losses over impairment (gross of tax) (793) (824)
50% of securitisation positions (503) (997)
Total capital regulatory adjustments and deductions:
Investments that are not material holdings or qualifying holdings (768) (1,139)
Other deductions from total capital (288) (550)
Total regulatory capital 70,670 65,873
1 Additional Tier 1 instruments that are not eligible for CRD III capital but are
eligible under CRD IV rules
2 The capital impacts of these items are net of tax
3 Tier 1 notes and reserve capital instruments are included in subordinated liabilities in the consolidated
balance sheet
Movement in Core Tier 1 Capital
2013 2012
£m £m
Core Tier 1 capital as at 1 January 41,722 42,093
Profit for the period 1,297 181
Removal of own credit 1 2 3,484
Dividends paid (1,672) (1,427)
Retained regulatory capital generated from earnings (373) 2,238
Rights issue 5,830 -
Movement in reserves - impact of ordinary shares and share schemes 1,203 (165)
Movement in currency translation reserves (1,767) (1,548)
Movement in retirement benefit reserves (515) (1,235)
Other reserves movements 17 33
Movement in other qualifying reserves 4,768 (2,915)
Movement in regulatory adjustments and deductions:
Defined benefit pension adjustment 1 146 53
Goodwill and intangible asset balances 1 4 (62)
50% excess of expected losses over impairment 1 (139) (142)
50% of securitisation positions 494 320
Other regulatory adjustments 162 137
Core Tier 1 capital as at 31 December 46,784 41,722
- The Core Tier 1 ratio increased to 13.2% (2012: 10.8%) reflecting an increase in Core Tier 1 capital of
£5.1bn to £46.8bn
Barclays generated £1.3bn Core Tier 1 capital from earnings after absorbing the impact of provisions for
PPI and interest rate hedging product redress. After deducting £1.7bn of dividends paid during 2013,
retained regulatory capital generated from earnings decreased Core Tier 1 capital by £0.4bn. Other
material movements in Core Tier 1 capital were:
– £5.8bn increase in share capital and share premium due to the rights issue
– £0.8bn increase in share capital and share premium due to warrants exercised
– £1.8bn decrease due to foreign currency movements, primarily due to the strengthening of
GBP against USD and ZAR
– £0.5bn decrease in securitisation deductions due to rundown of legacy assets
- Total Capital Resources increased overall by £4.8bn to £70.7bn
The increases in Core Tier 1 capital were partially reduced by decreases in Tier 2 capital as a result of
£1.4bn of redemptions of dated subordinated liabilities offset by £0.7bn of new issuances and a further
£0.5bn decrease in securitisation deductions at a total capital level
1 The capital impacts of these items are net of tax.
Risk Weighted Assets by Risk Type and Business
Opera-
Credit Counterparty Market tional Total
Risk Credit Risk Risk Risk RWAs
STD F-IRB A-IRB IMM Non STD Charges
Model Modelled Add-on
Method - VaR and
Non-
VaR
Modelled
As at 31.12.13 £m £m £m £m £m £m £m £m £m £m
UK RBB 2,639 - 34,765 - - - - - 6,680 44,084
Europe RBB 4,206 - 9,568 - 4 - - - 2,128 15,906
Africa RBB 5,196 4,820 8,400 - 3 - - - 3,965 22,384
Barclaycard 18,070 - 16,479 - - - - - 6,594 41,143
Investment Bank 7,306 3,142 41,031 20,847 6,120 16,957 14,932 7,490 24,807 142,632
Corporate Banking 22,582 2,846 36,132 649 2 - - - 6,717 68,928
Wealth and
Investment 11,209 225 1,796 - 230 - - - 3,261 16,721
Management
Head Office
Functions and 168 - 2,684 - - - - - 159 3,011
Other Operations
Total RWAs 71,376 11,033 150,85 21,496 6,359 16,957 14,932 7,490 54,311 354,809
As at 31.12.12
UK RBB 1,163 - 31,401 - - - - - 6,524 39,088
Europe RBB 5,051 - 8,786 - 3 - - - 1,955 15,795
Africa RBB 3,801 5,778 10,602 - 7 - - - 4,344 24,532
Barclaycard 17,326 - 13,957 - - - - - 6,553 37,836
Investment Bank 9,386 3,055 48,000 25,127 4,264 25,396 22,497 15,429 24,730 177,884
Corporate Banking 28,295 3,430 31,897 500 - - - - 6,736 70,858
Wealth and
Investment 11,647 317 707 - 199 - - - 3,184 16,054
Management
Head Office
Functions and 205 - 4,961 - - - - - 160 5,326
Other Operations
Total RWAs 76,874 12,580 150,31 25,627 4,473 25,396 22,497 15,429 54,186 387,373
Movement in RWAs
Counterparty
Credit Credit Market Operational
Risk Risk Risk Total
Risk weighted assets £bn £bn £bn £bn £bn
As at 1 January 2013 239.8 30.1 63.3 54.2 387.4
Book size 6.0 (2.1) (17.9) 0.1 (13.9)
Acquisitions and disposals (including exit
(7.7) (0.2) (3.6) 0.1 (11.4)
quadrant)
Book quality (4.5) 0.2 (0.1) (4.4)
Model updates 2.6 0.8 (0.1) 3.3
Methodology and policy 1.6 (0.2) - 1.4
1
Foreign exchange movement (4.6) (0.3) (0.2) (0. (5.2)
Other 0.1 (0.4) (2.1) (2.4)
As at 31 December 2013 233.3 27.9 39.3 54 354.8
1 Foreign exchange movement does not include movements for IMM, Modelled Market Risk or Exit Quadrant.
RWAs decreased by £32.6bn, reflecting:
- Reductions in book size decreased RWAs by £13.9bn, primarily driven by reduced sovereign
exposure and risk reductions in the trading book, offset by asset growth in UK RBB and Barclaycard
- Acquisitions and disposals decreased RWAs by £11.4bn, primarily driven by Exit Quadrant
reductions, offset by the acquisition of Barclays Direct
- Book quality improved resulting in a RWA reduction of £4.4bn, primarily driven by changing risk
profile within UK RBB, Corporate Bank and the Investment Bank
- Model updates increased RWAs by £3.3bn, primarily driven by model changes within Barclaycard in
order to meet changes in regulatory guidance
- Methodology and policy changes increased RWAs by £1.4bn, driven by changes to the treatment of
forbearance, offset by improvements to the application of collateral to credit exposures
- Foreign exchange movements decreased RWAs by £5.2bn, primarily driven by the appreciation of
GBP against ZAR
- Other decreased RWAs by £2.4bn, primarily driven by changes in measurement within the trading
book
CRD IV as implemented by the Prudential Regulation Authority
The new Capital Requirements Regulation and amended Capital Requirements Directive have implemented
Basel 3 within the EU (collectively known as CRD IV) with effect from 1 January 2014. However, certain
aspects of CRD IV are dependent on final technical standards to be issued by the European Banking
Authority (EBA) and adopted by the European Commission as well as UK implementation of the rules.
Barclays has calculated RWAs, Capital and Leverage ratios reflecting our interpretation of the current rules
and guidance. Further changes to the impact of CRD IV may emerge as the requirements are finalised and
implemented within Barclays
Capital ratios
- Barclays continues to be in excess of minimum CRD IV capital ratios on both a transitional and fully
loaded basis
- As at 31 December 2013 Barclays exceeded the PRA target fully loaded CET1 ratio of 7%. On a
transitional basis the PRA has implemented a minimum requirement CET1 ratio of 4%, Tier 1 ratio of
5.5% (in 2014) and Total Capital ratio of 8%
- Barclays' current regulatory target is to meet a fully loaded CET1 ratio of 9% by 2019, plus a Pillar
2A add-on. The 9% comprises the required 4.5% minimum CET1 ratio and, phased in from 2016, a
Combined Buffer Requirement made up of a Capital Conservation Buffer (CCB) of 2.5% and an
expected Globally Systemically Important Institution (G-SII) buffer of 2%
- Under current PRA guidance, the Pillar 2A add-on will need to be met with 56% CET1 from 2015,
which would equate to approximately 1.4% (1) of RWAs if the requirement were to be applied today.
The Pillar 2A add-on would be expected to vary over time according to the PRA's individual capital
guidance
- In addition, a Counter-Cyclical Capital Buffer (CCCB) and/or additional sectoral capital requirements
(SCR) may be required by the Bank of England to protect against perceived threats to financial
stability. CRD IV also includes the potential for a Systemic Risk Buffer (SRB). These buffers could be
applied at the Group level or at a legal entity, sub-consolidated or portfolio level. No CCCB, SCR or
SRB has currently been set by the Bank of England
Capital resources
- The PRA has announced the acceleration of transitional provisions relating to CET1 deductions and
filters so the fully loaded requirements are applicable from 1 January 2014, with the exception of
unrealised gains on available for sale debt and equity. As a result, transitional capital ratios are now
closely aligned to fully loaded ratios
- Following the issuance of the EBA's final draft technical standard on own funds, a deduction has
been recognised for foreseeable dividends. As at 31 December 2013, this represents an accrual for
the final dividend for 2013, calculated at 3.5p per share, and the coupons on other equity accounted
instruments
- Grandfathering limits on capital instruments, previously qualifying as Tier 1 and Tier 2, are
unchanged under the PRA transitional rules
1 Based on a point in time assessment made by the PRA, at least annually. The PRA is developing
proposals to reform its Pillar 2 framework and, as noted in PS7/13 (PRA policy statement PS7/13 on
strengthening capital standards published in December 2013), it expects to consult on those proposals
during the course of 2014. The EBA is also developing guidelines on the Supervisory Review and
Evaluation Process (SREP) and on Pillar 2 capital, which are likely to affect how the PRA approaches
Pillar 2.
- The Prudential Valuation Adjustment (PVA) is shown as fully deducted from CET1 upon adoption of
CRD IV. PVA is subject to a technical standard being drafted by the EBA and the impact is currently
based on methodology agreed with the PRA. The PVA deduction as at 31 December 2013 was £2.5bn
- Barclays continues to recognise minority interests in eligible subsidiaries within African operations as
CET1 (subject to regulatory haircuts prescribed in CRD IV) in accordance with our application of
regulatory requirements on own funds
- As a result of the application of the EBA's final draft technical standard, PRA guidance and
management actions taken during 2013, net long non-significant holdings in financial entities amount
to £3.5bn and are below the 10% CET1 threshold that would require a capital deduction
RWAs
- The PRA has confirmed Barclays model approvals under CRD IV, with certain provisions reflecting
relevant changes to the rules and guidance; the impact of which has been reflected in our CRD IV
disclosures where applicable. Barclays models are subject to continuous monitoring, update and
regulatory review, which may result in future changes to CRD IV capital requirements
- It is assumed that corporates, pension funds and sovereigns that meet the eligibility conditions are
exempt from CVA volatility charges
- Under CRD IV rules, all Central Clearing Counterparties (CCPs) are deemed to be 'Qualifying' on a
transitional basis. The final determination of Qualifying status will be made by the European
Securities and Markets Authority (ESMA)
- RWAs include 1250% risk weighting of securitisation positions that were previously deducted from
Core Tier 1 and Tier 2 capital. The RWA increases are reflected in Credit Risk, Counterparty Credit
Risk and Market Risk
- Securitisation RWAs include the impact of CRDIV on applying either standardised or advanced
methods for securitisation exposures dependent on the character of the underlying assets
Impact of CRD IV - Capital CRD IV
Fully-loaded
31.12.13
£bn
Core Tier 1 capital (CRD III) 46.8
RWAs (CRD III) 354.8
Core Tier 1 ratio (CRD III) 13.2%
CRD IV impact on Core Tier 1 capital:
Conversion from securitisation deductions to RWAs 0.5
Prudential Valuation Adjustment (PVA) (2.5)
Debit Valuation Adjustment (DVA) (0.2)
Expected losses over impairment (1.3)
Deferred tax assets deduction (1.0)
Excess minority interest (0.6)
Pensions (0.2)
Foreseeable dividends (0.7)
Gains on available for sale equity and debt 0.2
Other (0.6)
CET1 capital 40.4
Tier 1 capital 42.7
Total Capital 61.6
RWAs (CRD III) 354.8
CRD IV impact to RWAs:
Credit Valuation Adjustment (CVA) 17.3
Securitisation 19.3
Other Counterparty Credit Risk (including Central Counterparty Clearing) 30.6
1
Other 13.6
RWA impact 80.8
CRD IV RWAs 435.6
CET1 ratio 9.3%
Tier 1 ratio 9.8%
Total Capital Ratio 14.1%
As at 31 December 2013, assuming 2013 was the first year of application under the PRA's transitional rules,
which reflect the maximum pace of transition, Barclays CET1 ratio would be 9.2% 2,3, the Tier 1 ratio would
be 11.5% and the total capital ratio would be 15.3%.
1 Other CRD IV impacts to RWAs include deferred tax asset, significant holdings in financial institutions
and other items.
2 Difference to fully loaded ratio arises from an additional capital deduction for unrealised gains on
available for sale debt and equity of £0.2bn.
3 The transitional CET1 ratio according to the FSA October 2012 transitional statement would be 11.3%.
CRD IV – RWA by risk type and business
Total CRD IV
Risk
As at 31.12.13 Counterparty Operational Weighted
Credit Risk Credit Risk Market Risk risk Assets
£m £m £m £m £m
UK RBB 37,456 - - 6,680 44,136
Europe RBB 14,084 4 2 2,128 16,218
Africa RBB 18,838 3 - 3,965 22,806
Barclaycard 33,859 - - 6,594 40,453
Investment Bank 69,621 58,188 69,029 24,807 221,645
Corporate Bank 63,101 651 - 6,717 70,469
Wealth and Investment
13,714 231 74 3,261 17,280
Management
Head Office Functions and
2,389 - - 159 2,548
Other Operations
Total CRD IV Risk Weighted
253,062 59,077 69,105 54,311 435,555
Assets
Leverage ratio requirements
CRD IV introduces a non-risk based leverage ratio that is intended to act as a supplementary back stop to
the risk based capital measures. The CRD IV leverage ratio is calculated as CRD IV Tier 1 capital divided
by CRD IV leverage exposure. Under CRD IV, banks are required to report their leverage ratio for
supervisory review purposes from 2014 and from 2015 banks are required to publish their leverage ratios in
Pillar 3 disclosures, with the expectation that a binding Pillar I requirement will be introduced across the EU
from 2018. The EBA is tasked with monitoring banks submissions with regard to the leverage ratio by end
2016 which may result in further changes to the leverage ratio.
The PRA has communicated its expectation that Barclays meets a 3% estimated PRA leverage ratio by June
2014. The estimated PRA leverage ratio is calculated on the fully loaded CRD IV Tier 1 capital base adjusted
for certain PRA defined deductions, and a PRA adjusted 1CRD IV leverage exposure measure.
Barclays expects to meet the leverage expectation of 3% communicated by the PRA.
Barclays has disclosed an estimated leverage ratio based on our understanding of the requirements and
guidance of CRD IV as currently published and is subject to further change as the rules are fully
implemented. The estimated ratio does not take account of the finalisation of the Basel 3 leverage ratio
framework issued by the Basel Committee on 12 January 2014.
CRD IV Leverage ratio calculation
In calculating the CRD IV leverage ratio the IFRS balance sheet is taken as a starting point and the following
key adjustments to total assets have been applied:
- Derivatives netting adjustment: regulatory netting applied across asset and liability mark-to-market
derivative positions pursuant to legally enforceable bilateral netting agreements and meeting the
requirements of CRD IV
- Potential Future Exposure (PFE) on derivatives: regulatory add on for potential future credit
exposures, calculated in accordance with the CRD IV mark-to-market method by assigning
standardised percentages to the notional values on derivative contracts
- Securities Financing Transactions (SFTs) adjustments: under CRD IV, the IFRS measure of SFTs is
replaced with the Financial Collateral Comprehensive Method (FCCM) measure, calculated as an
add on equal to exposure less collateral, taking into account master netting agreements and
adjusting for volatility haircuts
- Undrawn Commitments: regulatory add-ons relating to off balance sheet undrawn commitments are
based on a standardised credit conversion factor of 10% for unconditionally cancellable
commitments and 100% for all other commitments. The rules specify relief to be applied to trade
finance related undrawn commitments which are deemed to be medium/low risk (20%) and medium
risk (50%)
1 Adjusted to avoid creating disincentives to facilitate central clearing for customers and cash variation
margin received and posted (as specified under SS3/132).
- Regulatory deductions: items (comprising goodwill and intangibles, deferred tax asset permanent
losses, own paper, cash flow hedge reserve, pension assets and PVA) that are deducted from the
capital measure are also deducted from total leverage exposure to ensure consistency between the
numerator and denominator
- Other adjustments: includes adjustments required to change from an IFRS scope of consolidation to
a regulatory scope of consolidation, adjustments for significant investments in financial sector
entities that are consolidated for accounting purposes but not for regulatory purposes, and the
removal of IFRS reduction in assets for the recognition of Credit Risk Mitigation and the netting of
loans with deposits
- In addition, in accordance with SS3/13 1 the estimated PRA adjusted leverage exposure allows for
further adjustments that reduce leverage exposure by £14bn. These adjustments:
- Exclude potential future exposure on the qualifying central clearing counterparties (QCCPs)
legs of client clearing transactions where Barclays does not guarantee the performance of
the QCCP to the client
- Allow for the netting of assets with cash collateral received for variation margin in relation to
derivatives trades to facilitate customer central clearing as well as cash collateral received
and posted on Barclays own derivative transactions with QCCPs
Basel Committee Leverage Ratio
On 12 January 2014, the Basel Committee announced the finalisation of its revised rules for calculating the
Basel 3 leverage ratio. These included a number of elements that would require amendments to CRD IV if
adopted in the EU, although implementation timeframes within the EU are not yet clear. Compared to the
current CRD IV implementation, the revised rules contain elements that will increase leverage exposure;
including capturing a calculation for net written credit derivatives based upon their notional value and the
inclusion of netted cash legs of SFTs. The revised rules also include elements that will reduce leverage
exposure including, the removal of volatility haircuts in relation to the SFTs add-on, the ability to net down
derivative MTM exposures with eligible cash collateral (this element includes the impact of the PRA rule
changes, and expands upon them), and more favourable credit conversion factors for undrawn
commitments. Based on an initial high level impact analysis we have estimated the changes would
decrease the CRD IV leverage ratio by approximately 20 basis points prior to management actions.
1 PRA Supervisory Statement SS3/13 on Capital and leverage ratios for major UK banks and building
societies published in November 2013.
Estimated CRD IV- Leverage
IFRS
balance Leverage Leverage
sheet exposure exposure
As at As at As at
31.12.13 31.12.13 30.06.13
Fully loaded Leverage Exposure £bn £bn £bn
Derivatives
IFRS derivative financial instruments 324 324 403
Additional netting adjustments for derivatives (260) (324)
Potential Future Exposure on derivatives 256 308
Total derivatives 320 387
Securities Financing Transaction (SFTs)
Reverse repurchase agreements and other similar secured
lending 187 187 223
Remove IFRS reverse repurchase agreements and other similar
secured lending (187) (223)
Add leverage exposure measures for SFTs 92 93
Total securities financing transactions 92 93
Other assets and adjustments
Loans and advances and other assets 801 801 907
Undrawn commitments 179 190
Regulatory deductions and other adjustments (15) (18)
Total other assets and adjustments 965 1,079
Total exposure 1,312 1,377 1,559
PRA adjustment to CRD IV leverage exposure (14) -
PRA adjusted leverage exposure 1,363 1,559
Leverage Ratio Leverage Leverage
ratio ratio
As at As at
31.12.13 30.06.13
£bn £bn
CET1 capital 40.4 38.1
Additional Tier 1 capital 2.3 0.2
Tier 1 capital 42.7 38.3
1
PRA deductions to CET1 1 capital (2.2) (4.1)
PRA adjusted Tier 1 capital 40.5 34.2
Fully loaded CRD IV leverage ratio 3.1% 2.5%
PRA leverage ratio 3.0% 2.2%
- The estimated PRA leverage exposure decreased to £1,363bn (June 2013: £1,559bn). Excluding the
impact of movements in foreign currency, leverage exposure reduced approximately £140bn driven by
reductions in loans and advances, trading portfolio assets and potential future exposure on derivatives
- Applying the Basel 3 2010 text for the calculation of leverage would result in an estimated leverage
exposure of £1,521bn (June 2013: £1,665bn), reflecting an increase of £144bn in the SFT exposure
calculation from the CRD IV exposure. The estimated fully loaded leverage ratio would be 2.8% (June
2013: 2.3%) on this basis
1 The PRA adjustment to CET1 capital as at 30 June 2013 included incremental expected loss charges on
specific portfolios deemed vulnerable by the PRA and a deduction relating to the calculation of PVA. No
adjustment for PVA was applied as at 31 December 2013 as the underlying calculation of CET1 capital
has been updated to reflect the agreed change in methodology.
Funding Risk - Liquidity
Funding & Liquidity
Barclays has a comprehensive Liquidity Risk Management Framework (the Liquidity Framework) for
managing the Group's liquidity risk. The Liquidity Framework meets the PRA's standards and is designed to
ensure that the Group maintains sufficient financial resources of appropriate quality for the Group's funding
profile. This is achieved via a combination of policy formation, review and governance, analysis, stress
testing, limit setting and monitoring. Together, these meet internal and regulatory requirements.
Liquidity risk is managed separately at Barclays Africa Group Limited (BAGL) due to local currency and
funding requirements. Unless stated otherwise, all disclosures in this section exclude BAGL and they are
reported on a stand-alone basis. Adjusting for local requirements, BAGL liquidity risk is managed on a
consistent basis to Barclays Group.
Liquidity stress testing
Under the Liquidity Framework, the Group has established a Liquidity Risk Appetite (LRA), which is
measured with reference to the liquidity pool compared to anticipated stressed net contractual and
contingent outflows under a variety of stress scenarios. These scenarios are aligned to the PRA's prescribed
stresses and cover a market-wide stress event, a Barclays-specific stress event and a combination of the
two. Under normal market conditions, the liquidity pool is managed to be at least 100% of 90 days of
anticipated outflows for a market-wide stress and 30 days of anticipated outflows for each of the Barclays-
specific and combined stresses. Of these, the 30 day Barclays-specific scenario requires the largest liquidity
pool to meet its stress outflows.
Since June 2010 the Group has reported its liquidity position against Individual Liquidity Guidance (ILG)
provided by the PRA. The Group also monitors its position against anticipated Basel 3 metrics, including the
Liquidity Coverage Ratio (LCR) and the Net Stable Funding Ratio (NSFR). As at 31 December 2013
Barclays ratios were in excess of 100% for both of these metrics, with an estimated LCR of 102% (2012:
126%) and an estimated NSFR of 110% (2012: 112%)1 .
As at 31 December 2013, the Group held eligible liquid assets in excess of 100% of net stress outflows for
each of the 30 day Barclays-specific LRA scenario and the Basel 3 LCR:
Barclays' LRA
(30 day
Barclays
specific Estimated
Compliance with internal and regulatory stress tests requirement)2 Basel 3 LCR 1
£bn £bn
Eligible liquidity buffer 127 130
Net stress outflows 122 128
Surplus 5 2
Liquidity pool as a percentage of anticipated net outflows as at 31
December 2013 104% 102%
Liquidity pool as a percentage of anticipated net outflows as at 31
December 2012 129% 126%
In 2013, Barclays Group right sized its liquidity pool to reduce the large LRA and LCR surpluses to support
the leverage plan and reduce the costs of surplus liquidity, whilst maintaining compliance with its internal
liquidity risk appetite and external regulatory requirements.
Barclays plans to maintain its surplus to the internal and regulatory stress requirements at an efficient level.
Barclays will continue to monitor the money markets closely, in particular for early indications of the
tightening of available funding. In these conditions, the nature and severity of the stress scenarios are
reassessed and appropriate action taken with respect to the liquidity pool. This may include further
increasing the size of the pool or monetising the pool to meet stress outflows.
1 The methodology for estimating the LCR and NSFR is based on an interpretation of the Basel standards
published in January 2013 and January 2014 respectively and includes a number of assumptions which
are subject to change prior to the implementation of the CRD IV.
2 Of the three stress scenarios monitored as part of the LRA, the 30 day Barclays specific scenario results
in the lowest ratio at 104% (2012: 129%). This compares to 127% (2012: 141%) under the 90 day
market-wide scenario and 112% (2012: 145%) under the 30 day combined scenario.
Liquidity pool
The Group liquidity pool as at 31 December 2013 was £127bn (2012: £150bn). During 2013, the month-end
liquidity pool ranged from £127bn to £157bn (2012: £150bn to £173bn), and the month-end average balance
was £144bn (2012: £162bn). The liquidity pool is held unencumbered and is not used to support payment or
clearing requirements. Such requirements are treated as part of our regular business funding. The liquidity
pool is intended to offset stress outflows and comprises the following cash and unencumbered assets. The
decrease of the size of the liquidity pool during 2013 is consistent with Group plans to optimise the size of
the liquidity pool, within our established liquidity risk appetite framework, while maintaining compliance with
regulatory requirements. The change in the composition of the liquidity pool, from cash and deposits with
central banks to government bonds, was done to reduce the overall cost of the liquidity pool.
Composition of the Group Liquidity Pool
Liquidity
pool of
Liquidity which Liquidity pool of Liquidity
Pool PRA which Basel III LCR- Pool
31.12.2013 eligible 1 eligible 2 31.12.2012
Level 1 Level 2A
As at 31.12.2013 £bn £bn £bn £bn £bn
Cash and deposits with central banks 3 43 42 41 - 85
Government bonds 4
AAA rated 52 51 52 - 40
AA+ to AA- rated 9 8 8 - 5
Other government bonds 1 - - - 1
Total Government bonds 62 59 60 - 46
Other
Supranational bonds and multilateral
development banks 3 3 3 - 4
Agencies and agency mortgage-backed
securities 10 - 5 5 7
Covered bonds (rated AA- and above) 6 - - 6 5
Other 3 - - - 3
Total other 22 3 8 11 19
Total as at 31 December 2013 127 104 109 11
Total as at 31 December 2012 150 129 136 8
Barclays manages the liquidity pool on a centralised basis. As at 31 December 2013, 90% of the liquidity
pool was located in Barclays Bank PLC (2012: 90%) and was available to meet liquidity needs across the
Barclays Group. The residual liquidity pool is held predominantly within Barclays Capital Inc (BCI). The
portion of the liquidity pool outside of Barclays Bank PLC is held against entity-specific stressed outflows and
regulatory requirements.
1 £104bn of the liquidity pool is PRA eligible as per BIPRU 12.7. In addition, there are £9bn of Level 2
assets available, as per PRA's announcement in August 2013 that certain assets specified by PRA as
Level 2 assets can be used on a transitional basis.
2 The LCR-eligible assets presented in this table represent only those assets which are also eligible for the
Group liquidity pool and do not include any Level 2B assets as defined by the Basel Committee on
Banking Supervision.
3 Of which over 95% (2012: over 95%) was placed with the Bank of England, US Federal Reserve,
European Central Bank, Bank of Japan and Swiss National Bank.
4 Of which over 85% (2012: over 80%) are comprised of UK, US, Japanese, French, German, Danish,
Swiss and Dutch securities.
Deposit Funding
As at
As at 31.12.2013 31.12.12
Loans and Loan to Loan to
Funding of Loans and Advances to Advances to Customer Deposit Deposit
Customers 1 Customers Deposits Ratio Ratio
£bn £bn % %
RBB & Barclaycard 234 174
2
Corporate Banking 61 109
Wealth and Investment Management 23 63
Total funding excluding secured 318 346 92 102
Secured funding 3 41
Sub-total including secured funding 318 387 82 88
RBB & Barclaycard, Corporate Banking &
Wealth and Investment Management 2 318 346 92 102
Investment Bank 41 20
Head Office and Other Operations 1 -
Trading settlement balances and cash
collateral 70 62
Total 430 428 101 110
Retail, Corporate Banking and Wealth and Investment Management activities are largely funded by customer
deposits with the remaining funding secured against customer loans and advances. The loan to deposit ratio
for these businesses was 92% (2012: 102%).
The excess of the Investment Bank's loans and advances over customer deposits is funded with long-term
debt and equity. The Investment Bank does not rely on customer deposit funding from Retail, Corporate
Banking and Wealth and Investment Management.
As at 31 December 2013, £122bn (2012: £112bn) of total customer deposits were insured through the UK
Financial Services Compensation Scheme and other similar schemes. In addition to these customer
deposits, there were £3bn (2012: £3bn) of other liabilities insured or guaranteed by governments.
Wholesale Funding
Funding of Other Assets as at 31 December 2013
Assets £bn Liabilities £bn
Trading Portfolio Assets 63 Repurchase agreements 196
Reverse repurchase agreements 133
Reverse repurchase agreements 53 Trading Portfolio Liabilities 53
Derivative Financial Instruments 323 Derivative Financial Instruments 319
Liquidity pool 127 Less than 1 year wholesale debt 82
Greater than 1 year wholesale debt and
Other assets 4 119 equity 164
Included within RBB, Barclaycard, Corporate Banking, Wealth and Investment Management and the
Investment Bank are BAGL related balances totalling £32bn of loans and advances to customers funded
by £30bn of customer deposits. (£7.3bn of which is BAGL Investment Bank).
In addition, Corporate Banking holds £15.7bn (2012: £17.6bn) loans and advances as financial assets
held at fair value.
Secured funding includes covered bonds, public securitisations, bilateral repos and central bank
borrowings. These are not included within customer deposits.
Predominantly available for sale investments, trading portfolio assets, financial assets designated at fair
value and loans and advances to banks.
- Trading portfolio assets are largely funded by repurchase agreements with 63% (2012: 74%) secured
against highly liquid assets1. The weighted average maturity of these repurchase agreements secured
against less liquid assets was 69 days (31 December 2012: 84 days)
- The majority of reverse repurchase agreements are matched by repurchase agreements. As at 31
December 2013, 76% (2012: 75%) of matched book activity was secured against highly liquid assets 1.
The remainder of reverse repurchase agreements are used to settle trading portfolio liabilities
- Derivative assets and liabilities are largely matched. A substantial proportion of balance sheet derivative
positions qualify for counterparty netting and the remaining portions are largely offset once netted against
cash collateral received and paid (see Note 12 „Offsetting financial assets and liabilities' for further detail
on netting)
- The liquidity pool is primarily funded by wholesale debt
- Other assets are largely matched by term wholesale debt and equity
Composition of wholesale funding
As at 31 December 2013 total wholesale funding outstanding (excluding repurchase agreements) was
£186bn (2012: £240bn). £82bn of wholesale funding matures in less than one year (2012: £102bn) of which
£23bn relates to term funding (2012: £18bn)2 . Maturing wholesale liabilities have been replaced with
customer deposits to increase the resilience and sustainability of its funding structure, while meeting future
regulatory requirements.
Outstanding wholesale funding comprised of £35bn secured funding (2012: £40bn) and £151bn unsecured
funding (2012: £199bn).
3
Maturity profile
Over Over
Over Over Over one two
one O ver six nine year years
month three months months Sub- but but
Not but not months but not but not total not not
more more but not more more less more more
than than more than than than than than Over
one three than six nine one one two five five
month months months months year year years years years Total
£bn £bn £bn £bn £bn £bn £bn £bn £bn £bn
Deposits from Banks 9.4 5.7 0.7 1.0 0.3 17.1 4.4 0.2 - 21.7
Certificates of Deposit and
Commercial Paper 2.1 10.8 6.8 5.4 2.6 27.7 0.6 0.6 0.4 29.3
Asset Backed Commercial
Paper 2.7 2.1 - - - 4.8 - - - 4.8
Senior unsecured (Public
benchmark) 2.5 0.8 2.6 1.6 0.1 7.6 3.9 6.0 3.9 21.4
Senior unsecured (Privately
placed) 1.0 2.6 3.5 4.2 2.4 13.7 9.4 15.6 11.5 50.2
Covered bonds/ABS 0.3 0.4 0.4 3.3 0.6 5.0 6.9 6.0 7.1 25.0
Subordinated liabilities - 0.2 - - - 0.2 0.1 2.9 17.6 20.8
Other 4 2.3 1.4 1.5 0.4 0.3 5.9 1.8 2.5 2.1 12.3
Total as at 31 December
2013 20.3 24.0 15.5 15.9 6.3 82.0 27.1 33.8 42.6 185.5
Of which secured 4.6 3.7 1.4 3.5 0.7 13.9 7.3 6.5 7.2 34.9
Of which unsecured 15.7 20.3 14.1 12.4 5.6 68.1 19.8 27.3 35.4 150.6
Total as at 31 December
2012 29.4 39.4 17.5 8.2 7.2 101.7 28.3 56.2 53.5 239.7
Of which secured 5.9 4.0 2.4 0.8 0.5 13.6 5.2 13.8 7.8 40.4
Of which unsecured 23.5 35.4 15.1 7.4 6.7 88.1 23.1 42.4 45.7 199.3
1 Highly liquid assets are limited to government bonds, US agency securities and US agency mortgage-
backed securities.
2 Term funding maturities comprise public benchmark and privately placed senior unsecured notes,
covered bonds/asset-backed securities (ABS) and subordinated debt where the original maturity of the
instrument was more than 1 year. In addition, at 31 December 2013, £3bn of these instruments were not
counted towards term financing as they had an original maturity of less than 1 year.
3 The composition of wholesale funds comprises the balance sheet reported Deposits from Banks,
Financial liabilities at Fair Value, Debt Securities in Issue and Subordinated Liabilities, excluding cash
collateral and settlement balances. It does not include collateral swaps, including participation in the Bank
of England's Funding for Lending Scheme. Included within deposits from banks are £4.1bn of liabilities
drawn in the European Central Bank's 3 year LTRO.
4 Primarily comprised of fair value deposits £4.6bn and secured financing of physical gold £5.0bn.
Outstanding wholesale funding includes £50bn (2012: £63bn) of privately placed senior unsecured notes in
issue. These notes are issued through a variety of distribution channels including intermediaries and private
banks. A large proportion of end users of these products are individual retail investors.
In 2013, Barclays repaid €3bn of funding raised through the European Central Bank's 3 year LTRO, leaving
€5bn outstanding as at 31 December 2013 (2012: €8bn).
The liquidity risk of wholesale funding is carefully managed primarily through the LRA stress tests, against
which the liquidity pool is held. Although not a requirement, the liquidity pool exceeded wholesale funding
maturing in less than one year by £45bn (2012: £48bn).
The average maturity of wholesale funding net of the liquidity pool was at least 69 months (2012: 61
months).
Currency profile
The proportion of wholesale funding by major currency was as follows:
USD EUR GBP Other
Currency composition of wholesale funds % % % %
Deposits from Banks 14 55 24 7
Certificates of Deposit and Commercial Paper 64 19 16 1
Asset Backed Commercial Paper 87 6 7 -
Senior unsecured 30 34 16 20
Covered bonds/ABS 22 61 16 1
Subordinated Liabilities 37 28 34 1
Total as at 31 December 2013 35 36 19 10
Total as at 31 December 2012 31 38 22 9
To manage cross-currency refinancing risk Barclays manages to foreign currency cash-flow limits, which limit
the risk at specific maturities. Across wholesale funding, the composition is materially unchanged.
Term financing
In 2013, term funding maturities were mostly offset by growth in customer deposits and run-off of Exit
Quadrant, while a significant portion of the Group's 2013 funding needs were pre-funded in 2012.
The Group issued £1bn of net term funding in 2013, including $1bn of CRD IV compliant Tier 2 capital. This
issuance was a transitional step towards Barclays end state CRD IV capital structure.
1
The Group has £24bn of term debt maturing in 2014 and a further £22bn maturing in 2015 . The Group
expects to issue more public wholesale debt in 2014 than in 2013 in order to maintain a stable and diverse
funding base by type, currency and distribution channel.
Credit Rating
Barclays Bank PLC Standard & Moody's Fitch DBRS
Poor's
Long Term (Outlook) A (Stable) A2 (Negative) A (Stable) AA
(Low)(Stable)
Short Term A-1 P-1 F1 R-1 (mid)
Standalone rating 2 bbb+ C-/baa2 a A (high)
Barclays PLC Standard & Moody's Fitch DBRS
Poor's
Long Term (Outlook) A- (Stable) A3 (Negative) A (Stable) n/a
Short Term A-2 P-2 F1 n/a
1 Includes £0.3bn of bilateral secured funding in 2014 and £2bn in 2015.
2 Refers to Standard & Poor's Stand-Alone Credit Profile (SACP), Moody's Bank Financial Strength Ratio
(BFSR) / Baseline Credit Assessment (BCA), Fitch Viability Rating (VR) and DBRS Intrinsic Assessment
(IA).
During 2013, Barclays was downgraded one notch by Standard & Poor's, as the rating agency views
increased risk for some large European banks operating in investment banking due to tightening regulation
and uncertain market conditions. As a result Barclays Bank PLC's rating moved to A/A-1 from A+/A-1, and
Barclays PLC's to A-/A-2 from A/A-1. Similarly, DBRS downgraded Barclays Bank PLC, to AA (low)/R-1
(mid) from AA/R-1 (high), mainly driven by the changing regulatory environment. The downgrades were fully
reserved for in the liquidity pool and there was no significant change in deposit funding or wholesale funding.
Fitch and Moody's affirmed Barclays Bank PLC and Barclays PLC ratings.
Barclays' ratings currently benefit from sovereign support assumptions made by rating agencies. Levels of
sovereign supports are reflected in the difference between the standalone rating and Barclays Bank PLC's
long-term rating. As regulation evolves, rating agencies have communicated their intention to remove all or
part of this support over time. As a consequence, Moody's put Barclays' long-term and short-term ratings on
a Negative outlook.
The table below shows contractual collateral requirements and contingent obligations following one and two
notch long-term and associated short-term simultaneous downgrades across all credit rating agencies, which
were fully reserved for in the liquidity pool. These numbers do not assume any management or restructuring
actions that could be taken to reduce posting requirements.
Contractual Credit Rating Downgrade Exposure (cumulative cash
flow) One-notch Two-notch
£bn £bn
Securitisation derivatives 7 8
Contingent liabilities 6 6
Derivatives margining - 1
Liquidity facilities 1 2
Total as at 31 December 2013 14 17
Total as at 31 December 2012 13 17
Beyond these contractual requirements, these outflows do not include the potential liquidity impact from loss
of unsecured funding, such as from money market funds or loss of secured funding capacity. However,
unsecured and secured funding stresses are included in the LRA stress scenarios and a portion of the
liquidity pool is held against these risks.
Barclays Africa Group Limited
- Liquidity risk is managed separately at BAGL due to local currency, funding and regulatory requirements
- In addition to the Group liquidity pool, BAGL held £4bn (2012: £5bn) of liquidity pool assets against
BAGL-specific anticipated stressed outflows. The liquidity pool consists of South African government
bonds and Treasury bills
- The BAGL loan to deposit ratio was 105% (2012: 113%)
- As at 31 December 2013, BAGL had £9bn of wholesale funding outstanding (2012: £12bn), of which
£6bn matures in less than 12 months (2012: £6bn)
Credit Risk
Analysis of Total Assets by Valuation Basis
Accounting Basis
Cost Based
Assets as at 31.12.13 Total Assets Measure Fair Value
£m £m £m
Cash and balances at central banks 45,687 45,687 -
Items in the course of collection from other banks 1,282 1,282 -
Debt securities 84,560 - 84,560
Equity securities 42,659 - 42,659
Traded loans 1,647 - 1,647
Commodities 1 4,203 - 4,203
Trading portfolio assets 133,069 - 133,069
Loans and advances 18,695 - 18,695
Debt securities 842 - 842
Equity securities 11,824 - 11,824
Other financial assets 2 6,001 - 6,001
Held in respect of linked liabilities to customers under
investment contracts 1,606 - 1,606
Financial assets designated at fair value 38,968 - 38,968
Derivative financial instruments 324,335 - 324,335
Loans and advances to banks 37,853 37,853 -
Loans and advances to customers 430,411 430,411 -
Banks 67,889 67,889 -
Customers 118,890 118,890 -
Reverse repurchase agreements and other similar
secured lending 186,779 186,779 -
Debt securities 91,298 - 91,298
Equity securities 458 - 458
Available for sale investments 91,756 - 91,756
Other assets 22,127 21,562 565
Total assets as at 31.12.13 1,312,267 723,574 588,693
Total assets as at 31.12.12 1,488,335 749,403 738,932
1 Commodities primarily consist of physical inventory positions.
2 Primarily consists of reverse repurchase agreements designated at fair value.
Analysis of Loans and Advances to Customers and Banks
Loans and Advances at Amortised Cost Net of Impairment Allowances, by Industry Sector and Geography
Africa
and
United Middle
As at 31st December 2013 Kingdom Europe Americas East Asia Total
£m £m £m £m £m £m
Banks 5,718 11,322 10,141 2,318 6,239 35,738
Other financial institutions 21,142 18,359 45,963 6,117 7,774 99,355
Manufacturing 5,306 1,916 1,297 1,218 606 10,343
Construction 3,133 417 19 347 27 3,943
Property 15,022 1,985 937 1,941 123 20,008
Government 1,546 1,739 685 1,325 1,808 7,103
Energy and water 1,715 3,035 1,489 735 478 7,452
Wholesale and retail distribution and
leisure 9,609 1,296 464 1,320 175 12,864
Business and other services 12,826 2,656 2,220 1,926 434 20,062
Home loans 129,591 34,752 782 14,051 351 179,527
Cards, unsecured loans and other
personal lending 28,168 6,792 12,630 3,842 1,283 52,715
Other 8,373 1,871 1,295 6,996 619 19,154
Net loans and advances to customers
and banks 242,149 86,140 77,922 42,136 19,917 468,264
Impairment allowance (2,980) (2,486) (654) (1,079) (59) (7,258)
As at 31st December 2012
Banks 7,134 14,447 12,050 1,806 3,405 38,842
Other financial institutions 17,113 20,812 40,884 4,490 3,031 86,330
Manufacturing 6,041 2,533 1,225 1,232 487 11,518
Construction 3,077 476 1 699 21 4,274
Property 15,167 2,411 677 3,101 247 21,603
Government 558 2,985 1,012 1,600 253 6,408
Energy and water 2,286 2,365 1,757 821 393 7,622
Wholesale and retail distribution and
leisure 9,567 2,463 734 1,748 91 14,603
Business and other services 15,754 2,754 2,360 2,654 630 24,152
Home loans 119,653 36,659 480 14,931 270 171,993
Cards, unsecured loans and other
personal lending 29,716 5,887 11,725 7,170 1,147 55,645
Other 9,448 2,390 1,232 7,788 520 21,378
Net loans and advances to customers
and banks 235,514 96,182 74,137 48,040 10,495 464,368
Impairment allowance (3,270) (2,606) (472) (1,381) (70) (7,799)
Impairment Allowance
Year Year
Ended Ended
31.12.13 31.12.12
£m £m
At beginning of period 7,799 8,896
Acquisitions and disposals (5) (80)
Exchange and other adjustments (260) (206)
Unwind of discount (179) (211)
Amounts written off (3,343) (4,119)
Recoveries 201 212
Amounts charged against profit 3,045 3,307
At end of period 7,258 7,799
Loans and Advances Held at Fair Value, by Industry Sector and Geography
Africa
and
United Middle
As at 31st December 2013 Kingdom Europe Americas East Asia Total
£m £m £m £m £m £m
Banks - 150 72 273 1 496
1
Other financial institutions 12 782 409 24 42 1,269
Manufacturing 21 41 98 - 6 166
Construction 148 1 - 11 - 160
Property 7,595 766 164 3 - 8,528
Government 5,288 8 - 98 1 5,395
Energy and water 12 65 465 48 - 590
Wholesale and retail distribution and
leisure 40 75 97 53 - 265
Business and other services 2,865 59 261 127 1 3,313
Other 11 27 51 63 8 160
Net loans and advances to customers
and banks 15,992 1,974 1,617 700 59 20,342
Africa
and
United Middle
As at 31st December 2012 Kingdom Europe Americas East Asia Total
£m £m £m £m £m £m
Banks - 493 120 422 - 1,035
Other financial institutions 1 13 611 622 8 39 1,293
Manufacturing 6 38 601 16 15 676
Construction 161 1 - 28 4 194
Property 8,671 830 295 121 - 9,917
Government 5,762 6 314 17 5 6,104
Energy and water 10 73 41 46 3 173
Wholesale and retail distribution and
leisure 33 2 220 72 1 328
Business and other services 3,404 20 685 14 - 4,123
Other 105 132 46 224 56 563
Net loans and advances to customers
and banks 18,165 2,206 2,944 968 123 24,406
Credit impairment charges and other provisions by business
Year Year
Ended Ended
31.12.13 31.12.12
£m £m
Loan impairment
UK RBB 347 269
Europe RBB 287 257
Africa RBB 324 632
Barclaycard 1,264 1,049
Investment Bank 209 192
Corporate Banking 512 864
Wealth and Investment Management 121 38
Head Office and Other Operations (2) 2
2
Total loan impairment charge 3,062 3,303
Impairment charges on available for sale investments 1 40
Impairment of reverse repurchase agreements 8 (3)
Total credit impairment charges and other provisions 3,071 3,340
- Impairment charges on loans and advances decreased 7% reflecting lower charges in Corporate
Banking and Africa RBB, partially offset by increased charges across the rest of the Group
- Further detail can be found in the Retail and Wholesale Credit Risk sections on pages 72 and 86
respectively
1 Included within Other financial institutions (Americas) are £250m (2012: £427m) of loans backed by retail
mortgage collateral.
2 Includes charges of £17m (2012: £4m write back) in respect of undrawn facilities and guarantees.
Potential Credit Risk Loans and Coverage Ratios
CRLs PPLs PCRLs
As at As at As at As at As at As at
31.12.13 31.12.12 31.12.13 31.12.12 31.12.13 31.12.12
£m £m £m £m £m £m
Retail 1 7,567 8,722 708 758 8,275 9,480
Wholesale 5,731 6,303 1,100 1,102 6,831 7,405
Group 13,298 15,025 1,808 1,860 15,106 16,885
Impairment
Allowance CRL Coverage PCRL Coverage
As at As at As at As at As at As at
31.12.13 31.12.12 31.12.13 31.12.12 31.12.13 31.12.12
£m £m % £m % £m
Retail 4,372 4,635 57.8 53.1 52.8 48.9
Wholesale 2,886 3,164 50.4 50.2 42.2 42.7
Group 7,258 7,799 54.6 51.9 48.0 46.2
- Further detail can be found in the Retail and Wholesale Credit Risk sections on pages 72 and 86
respectively
Forbearance
Balances Impairment Stock Coverage
As at As at As at As at As at As at
31.12.13 31.12.12 31.12.13 31.12.12 31.12.13 31.12.12
£m £m £m £m % %
Retail 5,002 5,447 581 575 11.6 10.6
Wholesale 3,385 4,254 891 1,149 26.3 27.0
Group 8,387 9,701 1,472 1,724 17.5 17.8
- Further detail can be found in the Retail and Wholesale Credit Risk sections on pages 72 and 86
respectively
1 2012 PCRL balances in Africa RBB have been restated to better reflect their PCRL categorisation. As a
result CRLs decreased by £99m and PPLs increased by £102m.
Retail and Wholesale Loans and Advances to Customers and Banks
CRLs % Loan Loan
Gross Impairment L&A Net of Credit of Gross Impairment Loss
As at 31.12.13 L&A Allowance Impairment Risk Loans L&A Charges Rates
£m £m £m £m % £m bps
Total retail 236,219 4,372 231,847 7,567 3.2 2,161 91
Wholesale - 201,998 2,876 199,122 5,713 2.8 918 45
customers
Wholesale - banks 37,305 10 37,295 18 - (17) (5)
Total wholesale 239,303 2,886 236,417 5,731 2.4 901 38
Loans and advances 475,522 7,258 468,264 13,298 2.8 3,062 64
at
amortised cost
Traded Loans 1,647 n/a 1,647
Loans and advances 18,695 n/a 18,695
designated at fair
value
Loans and advances 20,342 n/a 20,342
held at fair value
Total loans and 495,864 7,258 488,606
advances
As at 31.12.12
Total retail 1 232,672 4,635 228,037 8,722 3.7 2,075 89
Wholesale - 199,423 3,123 196,300 6,252 3.1 1,251 63
customers
Wholesale - banks 40,072 41 40,031 51 0.1 (23) (6)
Total wholesale 239,495 3,164 236,331 6,303 2.6 1,228 51
Loans and advances 472,167 7,799 464,368 15,025 3.2 3,303 70
at
amortised cost
Traded Loans 2,410 n/a 2,410
Loans and advances 21,996 n/a 21,996
designated at fair
value
Loans and advances 24,406 n/a 24,406
held at fair value
Total loans and 496,573 7,799 488,774
advances
- Loans and advances to customers and banks at amortised cost net of impairment remained stable at
£468.3bn (2012: 464.4bn). This reflected a £3.8bn increase to £231.8bn in the retail portfolios, driven by
increased mortgage lending and the acquisition of Barclays Direct in UK RBB. This was offset by
reductions in Africa RBB, largely reflecting currency movements
- This growth, combined with lower impairment charges on loans and advances resulted in a lower loan
loss rate of 64bps (2012: 70bps)
- Further detail can be found in the Retail and Wholesale Credit Risk sections on pages 72 and 86
respectively
1 2012 CRL balances in Africa RBB have been revised to better reflect their PCRL categorisation. As a
result CRLS decreased by £99m.
Exposure to UK Commercial Real Estate
Loans and advances Impairment
at amortised cost Balances Past Due Allowances
As at As at As at
31.12.13 31.12.12 31.12.13 31.12.12 31.12.13 31.12.12
£m £m £m £m £m £m
Wholesale 9,842 10,036 361 469 110 106
Retail 1,593 1,534 103 123 16 20
Group 11,435 11,570 464 592 126 126
- Further detail can be found in the Retail and Wholesale Credit Risk sections on pages 72 and 86
respectively
Retail Credit Risk
Retail Loans and Advances at Amortised Cost
Credit Loan
Impairment L&A Net of Risk CRLs % of Impairment Loan Loss
As at 31.12.13 Gross L&A Allowance Impairment Loans Gross L&A Charges Rates
£m £m £m £m % £m bps
UK RBB 138,056 1,308 136,748 2,664 1.9 347 25
Europe RBB 38,016 660 37,356 1,801 4.7 287 75
Africa RBB 19,363 491 18,872 1,026 5.3 259 134
Barclaycard 37,468 1,856 35,612 1,992 5.3 1,264 337
Corporate
Banking 1 488 39 449 45 9.2 (5) (102)
Wealth and
Investment 2,828 18 2,810 39 1.4 9 32
Management
Total 236,219 4,372 231,847 7,567 3.2 2,161 91
As at 31.12.12
UK RBB 129,682 1,369 128,313 2,883 2.2 269 21
Europe RBB 39,997 560 39,437 1,734 4.3 257 64
Africa RBB 23,987 700 23,287 1,691 7.0 472 197
Barclaycard 35,732 1,911 33,821 2,288 6.4 1,050 294
Corporate
Banking 1 739 79 660 92 12.4 27 365
Wealth and
Investment 2,535 16 2,519 34 1.3 - -
Management
Total 232,672 4,635 228,037 8,722 3.7 2,075 89
- Gross loans and advances to customers and banks in the retail portfolios increased 2% to £236.2bn
principally reflecting movements in UK RBB, where a 6% increase to £138bn reflected the acquisition of
Barclays Direct and growth in home loans. This was partially offset by reductions in Africa RBB,
principally reflecting currency movements
- The loan impairment charge increased 4% to £2,161m principally as a result of:
– UK RBB increased 29% to £347m primarily due to the non-recurrence of releases in 2012 impacting
unsecured lending and mortgages. Excluding these, impairment was broadly in line with prior year
– Barclaycard increased 20% to £1,264m primarily driven by higher assets, including the impact of the
acquisition of the Edcon portfolio in late 2012, and the non-recurrence of releases in 2012. Impairment
loan loss rates in consumer credit cards remained stable at 356bps (2012: 358bps) in the UK and at
268bps (2012: 268bps) in the US, but increased to 560bps (2012: 160bps) in South Africa
– Europe RBB increased 12% to £287m due in part to additional charges resulting from exposure to the
renewable energy sector in Spain, foreign currency movements and an increase in home loan
balances in recoveries. This was partially offset by improvements in underlying collections
performance
1 Primarily comprises UAE retail portfolios in 2013. Includes India portfolios in 2012.
– Africa RBB decreased 45% to £259m driven by lower charges in the South African home loans
portfolios and foreign currency movements
– Wealth and Investment Management increased to £9m (2012: nil) driven primarily by losses on
Spanish residential property
– Corporate Banking decreased to a £5m release (2012: £27m charge) driven by a sharp improvement
in residential property values
- Higher overall impairment charges led to an increase in the retail loan loss rate to 91bps (2012: 89bps)
Analysis of Retail Gross Loans & Advances to Customers
Credit Cards,
Overdrafts and Other
Unsecured Secured
Secured Home Home Retail Business
As at 31.12.13 Loans 1 Loans Lending 2 Lending Total Retail
£m £m £m £m £m
UK RBB 122,879 6,854 - 8,323 138,056
Europe RBB 33,615 2,870 - 1,531 38,016
Africa RBB 13,664 2,469 2,584 646 19,363
Barclaycard - 34,276 2,487 705 37,468
Corporate Banking 252 199 30 7 488
Wealth and
Investment 2,575 91 162 - 2,828
Management
Total 172,985 46,759 5,263 11,212 236,219
As at 31.12.12
UK RBB 114,766 6,863 - 8,053 129,682
Europe RBB 34,825 3,430 - 1,742 39,997
Africa RBB 17,422 2,792 3,086 687 23,987
Barclaycard - 32,432 2,730 570 35,732
Corporate Banking 274 336 117 12 739
Wealth and
Investment 2,267 63 205 - 2,535
Management
Total 169,554 45,916 6,138 11,064 232,672
- Secured home loans and credit cards, overdrafts and unsecured loans are analysed on pages 77 and 83
respectively
1 All portfolios under Secured Home Loans are primarily first lien mortgages. Other Secured Retail Lending
under Barclaycard is a second lien mortgage portfolio.
2 Other Secured Lending includes auto loan financing in Africa RBB and UK Secured Lending in
Barclaycard.
Analysis of Potential Credit Risk Loans and Coverage
Ratios
CRLs PPLs PCRLs
As at As at As at As at As at As at
31.12.13 31.12.12 31.12.13 31.12.12 31.12.13 31.12.12
£m £m £m £m £m £m
Home loans 2,803 3,321 316 321 3,119 3,642
Credit cards and unsecured lending 3,468 3,954 279 295 3,747 4,249
Other retail lending and business banking 1,296 1,447 113 142 1,409 1,589
Total retail 1 7,567 8,722 708 758 8,275 9,480
Impairment
allowance CRL coverage PCRL coverage
As at As at As at As at As at As at
31.12.13 31.12.12 31.12.13 31.12.12 31.12.13 31.12.12
£m £m % % % %
Home loans 776 849 27.7 25.6 24.9 23.3
Credit cards and unsecured lending 3,026 3,212 87.3 81.2 80.8 75.6
Other retail lending and business banking 570 574 44.0 39.7 40.5 36.1
Total retail 4,372 4,635 57.8 53.1 52.8 48.9
Potential Credit Risk Loans and Coverage Ratios by business
CRLs PPLs PCRLs
As at As at As at As a As at As at
31.12.13 31.12.12 31.12.13 31.12.12 31.12.13 31.12.12
£m £m £m £m £m £m
UK RBB 2,664 2,883 239 283 2,903 3,166
Europe RBB 1,801 1,734 73 98 1,874 1,832
Africa RBB 1 1,026 1,691 153 163 1,179 1,854
Barclaycard 1,992 2,288 239 208 2,231 2,496
Corporate Banking 45 92 2 5 47 97
Wealth and Investment Management 39 34 2 1 41 35
Total retail 7,567 8,722 708 758 8,275 9,480
Impairment
allowance CRL coverage PCRL coverage
As at As at As at As at As at As at
31.12.13 31.12.12 31.12.13 31.12.12 31.12.13 31.12.12
£m £m % % % %
UK RBB 1,308 1,369 49.1 47.5 45.1 43.2
Europe RBB 660 560 36.6 32.3 35.2 30.6
Africa RBB 1 491 700 47.9 41.4 41.6 37.8
Barclaycard 1,856 1,911 93.2 83.5 83.2 76.6
Corporate Banking 39 79 86.7 85.9 83.0 81.4
Wealth and Investment Management 18 16 46.2 47.1 43.9 45.7
Total retail 4,372 4,635 57.8 53.1 52.8 48.9
- CRL balances in retail portfolios decreased 13.2% to £7,567m, primarily in:
– Africa RBB, due to depreciation of ZAR against GBP and a reduction in the recovery book in South
Africa home loans
– UK RBB, where reductions reflected higher cash recoveries in Business Banking and lower flows into
recovery in Consumer Lending
– Barclaycard, where the reductions reflected lower balances in recovery across the principal portfolios
– This was partially offset by higher balances in Europe RBB primarily due to appreciation of EUR
against GBP and an increase in recovery balances across all home loans portfolios
1 2012 PCRL balances in Africa RBB have been restated to better reflect their PCRL categorisation. As a
result PCRL balances increased by £3m; CRLs decreased by £99m and PPLs to increased by £102m.
This has been allocated between Home Loans (CRL: £76m and PPL: £59m) and Other Retail Lending
(CRL: £23m and PPL: £43m).
Retail forbearance programmes
Forbearance programmes on principal retail portfolios
- Retail forbearance is available to customers experiencing financial difficulties. Forbearance solutions may
take a number of forms depending on the extent of their financial dislocation. Short term solutions
normally focus on temporary reductions to contractual payments and switches from capital and interest
payments to interest only. For customers with longer term financial difficulties, term extensions may be
offered, which may also include interest rate concessions and fully amortising balances for card portfolios
- Forbearance on the Group's principal retail portfolios in the US, UK, Eurozone and South Africa is
presented below. The principal portfolios listed below account for 91% (2012: 92%) of total retail
forbearance balances
Marked to Impairment
Forbearance Marked to market LTV allowances
programmes market LTV of of marked
Gross L&A proportion forbearance forbearance against Forbearance
subject to of balances: balances: balances on Programmes
Principal Retail forbearance outstanding balance valuation forbearance Coverage
Portfolios programmes balances weighted weighted programmes Ratio
As at 31.12.13 £m % % % £m %
Home Loans
UK 2,364 1.9 63.4 51.6 23 1.0
South Africa 248 2.1 74.4 60.5 17 6.9
Spain 171 1.4 68.3 52.3 8 4.9
Italy 307 2.0 62.2 50.9 10 3.2
Credit Cards,
Overdrafts and
Unsecured Loans
UK cards 912 5.6 n/a n/a 333 36.5
UK personal loans 142 2.9 n/a n/a 34 23.7
US cards 106 1.1 n/a n/a 10 9.8
Business Lending
UK 278 3.3 n/a n/a 32 11.5
As at 31.12.12
Home Loans
UK 2,536 2.2 67.7 56.1 24 0.9
South Africa 404 2.6 78.3 64.7 16 4.0
Spain 174 1.3 68.9 53.3 10 5.7
Italy 426 2.6 62.6 52.2 7 1.7
Credit Cards,
Overdrafts and
Unsecured Loans
UK cards 991 6.3 n/a n/a 350 35.3
UK personal loans 168 3.4 n/a n/a 44 26.2
US cards 116 1.3 n/a n/a 15 12.9
Business Lending
UK 203 2.5 n/a n/a 28 13.8
- Loans in forbearance in the principal home loans portfolios decreased 13% to £3,090m, primarily due to
reductions in UK, South Africa and Italy
- The UK home loans under forbearance programmes decreased 7% to £2,364m. In H213, the
definition was expanded to include customers who are up to date on their mortgage but have either
been granted a term extension or have drawn against their Mortgage Current Account and displayed
other indicators of financial stress. 2012 forbearance balances were restated from £1,596m to
£2,536m in line with the new definition
- As a result of the restatement, Mortgage Current Account balances (see page 81) now account for
71% of the total forbearance balances, the majority of the remainder being term extensions which
account for 17%
- In South Africa, the reduction in forbearance balances was due to the implementation of enhanced
qualification criteria which results in a more appropriate and sustainable programme for the
customer, and a depreciation of ZAR against GBP
- In Italy, the majority of the balances relate to specific schemes required by the government in
response to natural disasters and amendments are weighted towards payment holidays and interest
suspensions. The decrease of 28% to £307m was in part due to customers exiting such government
forbearance schemes after recommencing payments. The coverage for forbearance accounts
remain low, reflecting the underlying quality of customers on these government schemes, with 85%
of customers being up to date upon entering the forbearance scheme
- Forbearance balances on principal credit cards, overdrafts and unsecured loan portfolios decreased by
9% to £1,160m. Forbearance programmes as a proportion of outstanding balances reduced in UK and
US cards due to an improved credit environment and an enhancement to the forbearance policy in 2012
- Impairment allowances against UK cards forbearance decreased following a review of the
qualification criteria in 2012, the impacts of which become evident from Q213. This included a
reduction of balances on forbearance programmes and better performance resulting in a decrease in
impairment coverage ratio
- US cards forbearance programme coverage ratio was lower than the UK due to a higher proportion
of partnership accounts and long term forbearance plans. These plans have lower loss rates
compared to the UK as payment amount and annual percentage rate is higher in the US portfolio
- Business Lending forbearance balances increased 37% to £278m due to a longer period of monitoring
undertaken for customers under forbearance before they are re-categorised as performing. In addition,
there has been an increase in customers being granted forbearance whilst a review of their derivative
position is being undertaken
Secured home loans
- Total home loans to retail customers increased 2% to £173bn (2012: £170bn)
- The principal home loan portfolios listed below account for 97% (2012: 96%) of total home loans in the
Group's retail portfolios
1
Home loans principal portfolios
> 90 Day Annualised Recoveries Recoveries
arrears, gross proportion of impairment
As at Gross loans > 90 Day including charge-off outstanding coverage
31.12.13 and advances arrears recoveries 2 rates 3 balances ratio
£m % % % % %
UK 122,880 0.3 0.8 0.5 0.5 14.7
South Africa 12,172 0.7 6.2 2.6 5.6 34.7
Spain 12,748 0.7 3.0 1.1 2.4 36.0
Italy 15,518 1.1 3.5 0.7 2.4 25.8
Portugal 3,641 0.5 3.9 1.1 3.4 31.9
As at
31.12.12
UK 114,766 0.3 0.8 0.6 0.5 13.4
South Africa 15,773 1.6 8.4 3.9 6.9 34.6
Spain 13,551 0.7 2.6 1.1 1.9 34.0
Italy 15,529 1.0 2.9 0.8 1.8 25.4
Portugal 3,710 0.7 3.4 1.4 2.8 25.6
- Arrears rates remained steady in the UK due to a conservative credit policy and stable economic
conditions including the continued low base rate environment. The recoveries impairment coverage ratio
increased reflecting higher impairment allowances held as 31 December 2013 reflecting the external
environment.
- In the UK, gross loans and advances increased 7% to £123bn which includes the £5.4bn mortgage
portfolio acquired through Barclays Direct, in February 2013. Within the total home loans portfolio:
– Owner-occupied 4 interest only balances of £44.5bn (2012: £45.7bn) represented 36% of total home
loan balances (see page 80 for more detail). The average balance weighted LTV for interest only
balances remained low at 54.2% (2012: 58.8%) and 90 day arrears rates remained stable at 30bps
(2012: 30bps) which was in line with the overall portfolio performance
– Buy to let 5 home loans comprised 8% (2012: 7%) of the total balances. For buy to let home loans, 90
day arrears rates improved marginally from 0.2% to 0.1% while balance weighted portfolio LTV
remained broadly stable at 62.9% (2012: 65.7%)
- Gross loans and advances in South Africa of £12.2bn (2012: £15.8bn) were broadly unchanged in local
currency. The improvement in the arrears and charge-off rates was driven by the continued strong
performance of new lending and improvements in collections capabilities. The decrease in recoveries
balances was driven by revised strategies in the recoveries environment to reduce this portfolio, and
lower charge-off rates
- In the principal European home loans portfolios, gross loans and advances reduced 3% to £31.9bn
reflecting the amortisation of existing balances and reduced new business flows following the realignment
of the target customer profile. 90 day arrears rates and charge-off rates have remained broadly stable in
Spain and Italy, but have reduced in Portugal due to improved collections performance
– Balances in recoveries and recovery impairment coverage rates have increased in Spain in part
due to an increase in the legal recovery timescales following introduction of new Spanish
mortgage protection laws. The lengthy legal process in Europe and difficult property market
conditions have contributed to the increased recovery balances and higher impairment coverage
ratios
1 Excluded from the above analysis are Wealth International home loans, which are managed on an
individual customer exposure basis, France home loans and other small home loans portfolios. All
portfolios under Secured Home Loans are primarily first lien mortgages. Other Secured Retail Lending
under Barclaycard is a second lien mortgage portfolio.
2 90 days arrears including recoveries is the sum of balances greater than 90 days arrears and
balances charged off to recoveries, expressed as a percentage of total outstanding balances.
3 Gross charge-off rates are calculated over average monthly outstanding balances through the year.
4 Owner-occupied refers to mortgages where the intention of the customer was to occupy the property
at origination.
5 Buy to let refers to mortgages where the intention of the customer (investor) was to let the property at
origination.
1
Home loans principal portfolios - distribution of balances by Loan to Value
As at 31 December UK South Africa Spain Italy Portugal
2013 2012 2013 2012 2013 2012 2013 2012 2013 2012
% % % % % % % % % %
<=75% 84.2 76.1 69.6 62.8 65.9 64.2 74.9 74.3 42.3 40.3
>75% and <=80% 6.9 9.2 8.8 9.0 6.6 6.5 14.2 16.0 8.6 8.3
>80% and <=85% 3.4 5.4 7.1 8.2 6.1 6.1 6.0 5.5 11.7 10.6
>85% and <=90% 2.1 3.3 4.8 6.4 5.5 5.5 1.8 1.4 12.1 11.1
>90% and <=95% 1.3 2.2 3.3 4.0 4.5 4.4 0.9 0.9 9.0 10.2
>95% and <=100% 0.8 1.4 1.9 2.8 3.3 3.3 0.6 0.6 7.3 7.6
>100% 1.3 2.4 4.5 6.8 8.1 10.0 1.6 1.3 9.0 11.9
Portfolio Marked To
Market LTV :
Balance weighted % 56.3 59.1 62.3 65.6 63.4 64.6 60.0 59.6 76.4 77.6
Portfolio Marked To
Market LTV :
Valuation weighted
% 43.6 45.5 42.1 44.2 44.8 45.4 46.5 46.7 66.2 67.7
For > 100% LTV:
Balances £m 1,596 2,698 540 1,064 1,027 1,343 244 203 324 440
Marked to market
collateral £m 1,411 2,478 452 898 864 1,136 191 167 294 405
Average LTV:
Balance weighted % 120.5 112.3 123.1 121.7 118.0 118.1 151.1 137.0 113.7 110.7
Average LTV:
Valuation weighted
% 113.2 108.9 119.5 118.4 118.8 118.2 128.2 121.1 110.1 108.5
% Balances in
Recovery Book 3.2 2.6 45.6 46.2 18.6 12.0 62.1 51.2 20.8 12.5
- Credit quality of the principal home loan portfolios reflected relatively conservative levels of high LTV
new lending and moderate LTV on existing portfolios
- During 2013, the average balanced weighted portfolio LTV in the UK decreased to 56.3% (2012: 59.1%)
primarily due to appreciating house prices
- For >100% LTV, with the exception of Italy, balances decreased during 2013:
- In the UK balances were 41% lower at £1,596m, partly driven by appreciating house prices.
However, the average balance weighted LTV for the same period increased due to the remaining
balances having higher LTVs than those paid down
- In South Africa, the 49% reduction in the balances to £540m (2012: £1,064m) was driven by a
reduction in the recoveries book and an appreciation in house prices
- In Spain and Portugal, the balances decreased by 24% and 26%, respectively due to the increasing
levels of repossessions where the assets are now held as „Other Real Estate Owned' (see section
„foreclosures in process and properties in possession')
- In Italy, the balances increased by 20% due to the falling property prices and court set auction
valuations for properties going through the lengthy repossession process (see section Foreclosures
in process and properties in possession)
1 Portfolio marked to market based on the most updated valuation including recoveries balances. Updated
valuations reflect the application of the latest house price index available in the country as at 31
December 2013. Valuation weighted LTV is the ratio between total outstanding balances and the value of
total collateral held against these balances. Balance weighted LTV approach is derived by calculating
individual LTVs at account level and weighting by the individual loan balances to arrive at the average
position.
Home loans principal portfolios - new lending
UK South Africa Spain Italy Portugal 1
As at 31 December 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012
New Bookings £m 17,100 18,170 1,209 1,186 277 284 494 848 20 83
New Mortgages
Proportion Above 85%
LTV (%) 2 3.8 3.9 30.4 36.8 1.8 4.1 - - 15.6 4.9
Average LTV on New
Mortgages: Balance 64.2 64.6 74.9 76.1 61.7 62.8 59.8 62.8 64.8 60.8
weighted (%)
Average LTV on New
Mortgages: Valuation
weighted (%) 2 57.1 57.4 64.9 64.7 52.9 55.8 52.2 55.4 54.2 56.7
- New bookings in UK decreased 6% to £17.1bn. The decrease in average balance weighted LTV in the
UK to 64.2% (2012: 64.6%) was driven by an increased proportion of lower LTV originations
- In South Africa, new home loans above 85% LTV decreased to 30.4% (2012: 36.8%) due to an increase
of new bookings in the 80-85% LTV band. The average LTV decreased to 74.9% (2012: 76.1%)
- New bookings in Spain, Italy and Portugal reduced 35% to £791m due to changes to business strategy, a
tightening of the standard LTV credit criteria and active management to reduce funding mismatch and
redenomination risk. Average balance weighted LTV on new mortgages remained stable across these
jurisdictions reflecting this credit criteria
- The proportion of new home loans above 85% LTV in Spain has decreased, and now primarily reflects
lending to customers to finance the purchase of properties which were previously repossessed by the
Bank and held as Other Real Estate Owned' (see section on Foreclosures in process and properties in
possession)
1 The proportion of new home loans above 85% LTV in Portugal includes home loans to restructure
customer existing home loans, with no increase in exposure.
2 UK figures were restated following a detailed review of the LTV's post migration to a new data
management system.
Exposures to interest only home loans
- The Group provides interest only mortgages to customers, mainly in the UK. Under the terms of these
loans, the customer makes payments of interest only for the entire term of the mortgage, although
customers may make early repayments of the principal within the terms of their agreement
- Subject to such early repayments, the entire principal remains outstanding until the end of the loan term
and the customer is responsible for repaying this on maturity. The means of repayment may include the
sale of the mortgaged property
- Interest only lending is subject to bespoke underwriting criteria that includes: a maximum size of loan,
maximum LTV ratios, affordability and maximum loan term amongst other criteria. Borrowers on interest
only terms must have a repayment strategy in place to repay the loan at maturity and a customer contact
strategy has been developed to ensure ongoing communications are in place with interest only customers
at various points during the term of the mortgage. The contact strategy is varied dependent on our view of
the risk of the customer
Exposure to interest only owner-occupied home loans As at As at
31.12.13 31.12.12
1
Interest only balances (£m) 44,543 45,746
90 days arrears (%) 0.3 0.3
Total Impairment Coverage (bps) 2 3
Marked to market LTV: Balance weighted % 54.2 58.8
Marked to market LTV: Valuation weighted % 42.4 45.1
Interest only home loans maturity years:
2014 812 877
2015 875 985
2016 1,183 1,324
2017 1,582 1,707
2018 1,659 1,763
2019-2023 8,815 9,138
Post 2023 29,466 29,057
- Interest only mortgages comprise £53bn (2012: £53bn) of the total £123bn (2012: £115bn) UK home
loans portfolio. Of these, £45bn (2012: £46bn) are owner-occupied with the remaining £8bn (2012: £7bn)
buy-to-let
- The average balance weighted LTV for interest only owner-occupied balances reduced to 54.2% (2012:
58.8%) driven by appreciating property prices
- Total impairment coverage at 2bps (2012: 3bps) is broadly in line with overall portfolio performance and
highlights improvement year on year as a result of portfolio quality
1 Includes forborne interest-only loans. 2013 balances include the impact of the acquisition of Barclays
Direct.
Exposures to Mortgage Current Accounts (MCA) Reserves
- MCA Reserve is a secured overdraft facility available to home loan customers which allows them to
borrow against the equity in their home. It allows draw-down up to an agreed available limit on a
separate but connected account to the main mortgage loan facility. The balance drawn must be repaid
on redemption of the mortgage
- Of total 953,000 home loan customers in the UK, 573,000 have MCA reserves, with total reserve limits of
£18.3bn
Exposure to Mortgage Current Accounts Reserves (UK) As at As at
31.12.13 31.12.12
Total outstanding of home loans with MCA reserve balances (£bn) 72.7 82.2
Home loan customers with active reserves (000s) 573 638
Proportion of outstanding UK home loan balances (%) 59.2 71.6
Total reserve limits (£bn) 18.3 18.5
Utilisation rate (%) 31.9 30.9
Marked To Market LTV : Balance weighted (%) 53.9 57.7
- While the MCA reserve was withdrawn from sale in December 2012, existing customers can continue to
draw down against their available reserve limit (£12.5bn of undrawn limits as at December 2013)
- The total overall home loans balances for customers who have a current account reserve has reduced
by 12% to £72.7bn primarily due to amortising payments on the main mortgage account. The average
marked to market LTV has reduced to 53.9% (2012: 57.7%) reflecting increasing house prices and
paydown of the main mortgage loan
Foreclosures in process and properties in possession
- Foreclosure is the process by which the bank initiates legal action against a customer with the intention of
terminating a loan agreement whereby the bank may repossess the property subject to local law and
recover amounts it is owed. This process can be initiated by the bank independent of the impairment
treatment and it is therefore possible that the foreclosure process may be initiated whilst the account is
still in Collections (delinquent) or in Recoveries (post charge-off) where the customer has not agreed a
satisfactory repayment schedule with the bank
- Properties in possession include properties held as 'Loans and Advances to Customers' and properties
held as 'Other Real Estate Owned'
- Held as 'Loans and Advances to Customers' (UK and Italy) refers to properties where the customer
continues to retain legal title but where the bank has enforced the possession order as part of the
foreclosure process to allow for the disposal of the asset, or the court has ordered the auction of the
property
- Held as 'Other Real Estate Owned' (South Africa, Spain and Portugal) refers to properties where the bank
has taken legal ownership of the title as a result of purchase at an auction or similar and treated as 'Other
Real Estate Owned' within other assets on the bank's balance sheet
Home loans principal portfolios
Foreclosures in process Properties in possession
Number of Number of
As at 31.12.13 properties £m properties £m
UK 1,835 254 1 57 22
South Africa 10,161 484 398 5
Spain 1,560 236 1,305 93
1
Italy 3,782 371 504 64
Portugal 2,086 137 540 50
As at 31.12.12
UK 1,612 203 234 33
South Africa 12,145 778 1,314 27
Spain 1,396 194 945 117
1
Italy 2,888 283 436 58
Portugal 1,506 110 336 45
- In UK home loans, foreclosures in process increased 14% to 1,835 in 2013. This increase includes
customers where contact and formal agreement of payment plans for arrears is still to be achieved. On
average, 22% of customers in foreclosures in process made a monthly repayment which was less than
the monthly contractual payment. 31% of customers in Recovery have recommenced full contractual
payments as a minimum, and the foreclosure process for these customers is in temporary suspension
pending agreement on the arrears
- The properties in possession portfolio in South Africa is comprised entirely of „Other Real Estate Owned'.
The reduction in 2013 is due to a more cautious approach adopted for taking ownership of properties at
auction when the reserve price is not met, and improved sale processes for existing properties
- Foreclosures in process in the European mortgage portfolios increased driven by the continuing charge
off rates increasing new flow into recovery. Foreclosures in process and property in possession stocks
are increasing and are impacted by the increasing time to repossess and sell property
1 In Italy, customers continue to retain legal title of the property after the court has ordered an auction.
These are classified as properties in possession and excluded from foreclosures in process.
Credit cards, overdrafts and unsecured loans
- The principal portfolios listed below account for 91% (2012: 90%) of total credit cards, overdrafts and
unsecured loans in the Group's retail portfolios
Annualised Recoveries Recoveries
Gross Gross Proportion of Impairment
Principal Portfolios Loans and 30 Day 90 Day Charge-off Outstanding Coverage
As at 31.12.13 Advances Arrears Arrears Rates 3 Balances Ratio
£m % % % % %
UK cards 15,937 2.4 1.1 4.4 4.6 86.2
US cards 10,301 2.1 1.0 4.0 1.8 86.6
UK personal loans 4,958 2.7 1.2 4.6 15.8 79.4
Barclays Partner Finance 2,499 1.6 0.8 2.9 3.2 83.2
1
South Africa cards 2,224 8.1 4.3 7.3 5.1 70.7
Germany cards 2,169 2.5 1.0 3.7 2.9 81.9
UK overdrafts 1,307 4.8 3.3 7.6 14.5 94.5
Italy salary advance
2
loans 1,008 2.2 1.0 7.9 13.8 18.8
Iberia cards 1,139 5.3 2.3 9.9 9.2 84.6
South Africa personal
loans 906 5.4 2.6 7.9 7.4 70.4
As at 31.12.12
UK cards 15,434 2.5 1.1 4.9 6.2 80.4
US cards 9,296 2.4 1.1 5.0 2.3 90.7
UK personal loans 4,861 3.0 1.3 5.1 17.4 78.9
Barclays Partner Finance 2,323 1.9 1.0 3.9 4.8 78.1
1
South Africa cards 2,511 7.4 3.9 4.7 4.7 70.9
Germany cards 1,778 2.5 0.9 3.6 3.2 79.4
UK overdrafts 1,382 5.3 3.5 8.2 14.6 92.7
Italy salary advance
2
loans 1,354 2.3 0.9 8.4 9.4 12.5
Iberia cards 1,140 7.5 3.5 9.6 12.4 88.2
South Africa personal
loans 1,061 5.6 3.1 8.5 7.6 72.3
- Gross loans and advances in credit cards, overdrafts and unsecured loans increased 2% to £47bn with
increases in UK and US card portfolios, Germany cards and Barclays Partner Finance being offset by
decreases in Italy salary advance loans, South Africa cards and UK overdrafts
- With the exception of South Africa cards, arrears rates remained broadly stable
- Recovery coverage increased significantly for UK cards, whilst the proportion of recovery balances was
lower. This was driven by increased debt sale activity which also resulted in a lower recovery expectation
across the remaining recovery book, thereby resulting in a higher impairment requirement
- Significant improvement in US Cards arrears rates was driven by a targeted strategy focused on
growth in high quality customers and low-risk partnerships
- In UK personal loans arrears rates reduced due to the improved performance of new bookings following
changes to credit criteria
- In South Africa cards, deterioration in delinquency and charge-off rates reflected the change in product
mix following the acquisition of the Edcon portfolio in late 2012. Charge-off rates excluding Edcon would
be 4.9% for 2013 (2012: 4.2%)
- The Italy salary advance loans portfolio was closed to new business in August 2012, and the increasing
proportion of outstanding balances in recovery primarily reflects the reduction in loans and advances
- Iberia cards portfolios showed improved arrears rates, notably during H213 reflecting the tightening of
credit risk strategies through the recessionary period, combined with the non-recurrence of one-off
events in 2012 which included challenges in migrating to a new card management system and
enhancing collections tools
1 South Africa Cards now includes the acquired Edcon portfolio in both 2012 (figures reflect only the last 2
months of 2012) and 2013 figures. The outstanding acquired balances have been excluded from the
recoveries impairment coverage ratio on the basis that the portfolio has been recognised on acquisition at
fair value during 2012 (with no related impairment allowance). Impairment allowances have been
recognised as appropriate where these relate to the period post acquisition.
2 The recoveries impairment coverage ratio for Italy salary advance loans is lower than unsecured
portfolios as these loans are extended to customers where the repayment is made via a salary deduction
at source by qualifying employers often through 3rd party payment collection companies and Barclays is
insured in the event of termination of employment or death.
3 Gross charge-off rates are calculated over average monthly outstanding balances through the year.
Other Secured Retail Lending
- The principal portfolio listed below accounts for 48% (2012: 50%) of total Other Secured Retail Lending
Loans in the Group's retail portfolios
Gross Annualised Recoveries Recoveries
Loans Gross Proportion of Impairment
and 30 Day 90 Day Charge-off Outstanding Coverage
Principal portfolio Advances Arrears Arrears Rates 1 Balances Ratio
South Africa auto loans £m % % % % %
As at 31.12.13 2,546 1.6 0.4 3.2 1.9 51.6
As at 31.12.12 3,081 2.0 0.7 3.6 3.0 57.6
- The reduction in arrears and charge-off rates in South Africa was driven by improvements in collections
capabilities and stable performance of the existing portfolio
Business Lending
- Business lending primarily relates to small and medium enterprises typically with exposures up to £3m or
with a turnover up to £5m
- The portfolio is managed in two ways: arrears managed and early warning list (EWL) managed
– Arrears Managed accounts are principally customers with an exposure limit less than £50,000 in the
UK and €100,000 in Europe, with processes designed to manage a homogeneous set of assets.
Arrears Balances reflects the total balances of accounts which are past due on payments
– EWL Managed accounts are customers that exceed the Arrears Managed limits and are monitored
with standard processes that record heightened levels of risk through an EWL grading. EWL balances
comprise of a list of three categories graded in line with the perceived severity of the risk attached to
the lending, and can include customers that are up to date with contractual payments or subject to
forbearance as appropriate
Principal Portfolios
Early Warning
Arrears Managed List Managed Recoveries
Of which Of which Early Loan Annualised Proportion of Recoveries
Drawn Arrears Drawn Warning List Loss Gross-off Outstanding Coverage
As at 31.12.13 balances balances balances Balances Rates Rates 1 Balances Ratio
£m % £m % bps % % %
UK 629 4.0 7,424 7.7 134 2.0 3.3 47.0
Spain 82 11.1 875 33.9 608 3.0 6.9 47.7
Portugal 157 4.6 268 25.1 691 6.6 9.2 65.4
As at 31.12.12
UK 713 6.0 7,122 9.2 140 2.5 4.3 34.9
Spain 95 11.3 993 60.4 210 3.8 6.6 45.0
Portugal 185 6.4 393 17.8 503 5.7 6.7 65.9
1 Gross charge-off rates are calculated over average monthly outstanding balances through the year.
- While UK business lending balances increased by 3%, closer management of the portfolio has reduced
the level of arrears and EWL balances leading to a reduction in recoveries balances
- The reduction in business lending balances in Spain and Portugal was primarily due to the tightening of
credit policy and a reduction in new business volumes
- The loan loss rates in Spain increased to 608bps (2012: 210bps) primarily due to the impact of
changes in the renewable energy sector impacting the cash flow of customers in this sector and the
difficult macro environment. EWL balances in Spain as a percentage of drawn balances reduced
significantly following the review of cases and identification of performing assets that were moved to
the performing book
- The loan loss rates in Portugal increased to 691bps (2012: 503bps) driven by increasing charge-off
rates and recovery balances due to the macro-economic environment
UK Commercial Real Estate (UK CRE)
- The UK CRE portfolio includes property investment, development, trading and housebuilders
UK Commercial Real Estate
As at As at
31.12.13 31.12.12
UK CRE Loans and Advances (£m) 1,593 1,534
Past due balances (£m) 103 123
Balances past due as % of UK CRE total loans and advances 6.5 8.0
Impairment allowances (£m) 16 20
Past due coverage ratio 15.7 16.1
Marked to market LTV : Balance weighted (%) 54.9 57.5
Marked to market LTV : Valuation weighted (%) 50.7 53.5
31.12.13 31.12.12
Impairment Charge (£m) 18.4 16.5
- During 2013 the gross loans and advances increased 4% to £1,593m in line with the overall Business
Banking growth, whereas past due balances reduced to 6.5% (2012: 8.0%) due to continued focus by a
dedicated team with early engagement of distressed customers and developments reducing new flows
into delinquency. The balance weighted LTV reduced marginally to 54.9% (2012: 57.5%)
Wholesale Credit Risk
Wholesale Loans and Advances to Customers and Banks at Amortised Cost
CRLs % Loan
Gross Impairment L&A net of Credit of gross impairment Loan loss
As at 31.12.13 L&A allowance impairment risk loans L&A charges rates
£m £m £m £m % £m bps
1
Investment Bank 144,312 468 143,844 753 0.5 209 14
Corporate Banking 66,246 1,991 64,255 3,694 5.6 517 78
- UK 51,805 369 51,436 1,175 2.3 173 33
- Europe 6,327 1,494 4,833 2,343 37.0 321 507
- Rest of World 8,114 128 7,986 176 2.2 23 28
Wealth and
Investment 20,995 192 20,803 704 3.4 112 53
Management
Africa RBB 5,875 235 5,640 580 9.9 65 111
Head Office and
Other Operations 1,875 - 1,875 - - (2) (11)
Total 239,303 2,886 236,417 5,731 2.4 901 38
As at 31.12.12
Investment Bank 1 144,143 586 143,557 768 0.5 192 13
Corporate Banking 67,337 2,171 65,166 4,232 6.3 838 124
- UK 52,667 428 52,239 1,381 2.6 279 53
- Europe 8,122 1,536 6,586 2,607 32.1 527 649
- Rest of World 6,548 207 6,341 244 3.7 32 49
Wealth and
Investment 19,236 141 19,095 603 3.1 38 20
Management
Africa RBB 7,313 250 7,063 681 9.3 160 219
Head Office and
Other Operations 1,466 16 1,450 19 1.3 - -
Total 239,495 3,164 236,331 6,303 2.6 1,228 51
- The total of gross loans and advances to customers and banks in the wholesale customer portfolios has
remained stable at £239.3bn. This reflects currency movements in Africa RBB offset by an increase in
Wealth and Investment Management, primarily reflecting growth in the home loans portfolio
- The loan impairment charge decreased 27% to £901m principally due to lower charges in Corporate
Banking, mainly as a result of lower charges in Europe, reflecting actions to reduce exposure to the
Spanish property and construction sectors and, in the UK, against large corporate clients. Impairment in
Investment Bank was 9% higher than 2012 and was principally driven by a charge against a single name
exposure in Q213
- The lower impairment charge coupled with the lower loan balances resulted in a loan loss rate of 38bps
(2012: 51bps)
1 Investment Bank gross loans and advances include cash collateral and settlement balances of £91,305m
as at 31 December 2013 and £85,116m as at 31 December 2012. Excluding these balances CRLs as a
proportion of gross loans and advances was 3.9% and the loan loss rate was 61 bps.
Potential Credit Risk Loans and Coverage Ratios
CRLs PPLs PCRLs
As at As at As at As at As at As at
31.12.13 31.12.12 31.12.13 31.12.12 31.12.13 31.12.12
£m £m £m £m £m £m
Investment Bank 753 768 173 327 926 1,095
Corporate Banking 3,694 4,232 718 624 4,412 4,856
Wealth and Investment Management 704 603 159 74 863 677
Africa RBB 580 681 50 77 630 758
Head Office and Other Operations - 19 - - - 19
Total wholesale 5,731 6,303 1,100 1,102 6,831 7,405
Impairment
allowance CRL coverage PCRL coverage
As at As at As at As at As at As at
31.12.13 31.12.12 31.12.13 31.12.12 31.12.13 31.12.12
£m £m % % % %
Investment Bank 468 586 62.2 76.3 50.5 53.5
Corporate Banking 1,991 2,171 53.9 51.3 45.1 44.7
Wealth and Investment Management 192 141 27.3 23.4 22.2 20.8
Africa RBB 235 250 40.5 36.7 37.3 33.0
Head Office and Other Operations - 16 - 84.2 - 84.2
Total wholesale 2,886 3,164 50.4 50.2 42.2 42.7
- CRL balances decreased 9% to £5,731m primarily due to Corporate Banking where lower balances
reflected a reduction in Europe, most notably Spain, following write-offs and a debt sale
- This decrease was partially offset by a higher balance in Wealth and Investment Management, principally
reflecting the inclusion of balances against two individual names
- The CRL coverage ratio increased to 50.4% (2012: 50.2%)
Analysis of Investment Bank Wholesale Loans and advances at amortised Cost
Credit CRLs % Loan
Gross Impairment L&A net of risk of gross impairment Loan loss
As at 31.12.13 L&A allowance impairment loans L&A Charges rates
£m £m £m £m % £m bps
Loans and advances to
banks
Interbank lending 11,975 10 11,965 18 0.2 - -
Cash collateral and
settlement balances 19,892 - 19,892 - - - -
Loans and advances to
customers
Corporate lending 27,503 85 27,418 137 0.5 19 7
Government lending 1,149 - 1,149 - - - -
Other wholesale lending 12,380 373 12,007 598 4.8 190 153
Cash collateral and
settlement balances 71,413 - 71,413 - - - -
Total 144,31 468 143,844 753 0.5 209 14
As at 31.12.12
Loans and advances to
banks
Interbank lending 13,763 41 13,722 51 0.4 41 30
Cash collateral and
settlement balances 23,350 - 23,350 - - - -
Loans and advances to
customers
Corporate lending 29,546 205 29,341 349 1.2 160 54
Government lending 1,369 - 1,369 - - - -
Other wholesale lending 14,349 340 14,009 368 2.6 (9) (6)
Cash collateral and
settlement balances 61,766 - 61,766 - - - -
Total 144,14 586 143,557 768 0.5 192 13
- Investment Bank wholesale loans and advances remained stable at £144,312m with higher cash
collateral and settlement balances offset by a reduction in other wholesale lending, corporate and
interbank lending
- Excluding settlement and cash collateral balances from total loans and advances, the loan loss rate for
the Investment Bank was 39bps (2012: 33bps)
- Included within corporate lending and other wholesale lending portfolios are £1,001m (2012: £1,336m) of
loans backed by retail mortgage collateral
Wholesale Forbearance programmes
- Wholesale client relationships are individually managed and lending and forbearance decisions are made
with reference to specific circumstances and on bespoke terms
- Forbearance takes place when a concession is made on the contractual terms of a loan in response to an
obligor's financial difficulties
- Forbearance occurs when Barclays grants a concession:
- below current Barclays standard terms (i.e. lending criteria below our current lending terms); and
- for reasons relating to the actual or perceived financial difficulty of a client
- This includes all troubled debt restructures granted below our standard rates but excludes loans that have
been renegotiated for commercial reasons that are not indicative of increased credit risk
- Personal and Trusts include Wealth and Investment Management clients that are, at the time of
origination, high net worth individuals who use funds and trusts to organise their personal financial affairs
Wholesale forbearance reporting split by exposure class
Personal
Financial and
As at 31.12.13 Sovereign Institutions Corporate Trusts Total
£m £m £m £m £m
Restructure: reduced contractual cashflows - - 281 - 281
Restructure: maturity date extension 5 50 1,164 65 1,284
Restructure: changed cashflow profile (other
than extension) 5 - 579 25 609
Restructure: payment other than cash - - 23 1 24
Change in security - - 27 - 27
Adjustments or non-enforcement of
covenants - - 410 96 506
Other (e.g. capital repayment holiday;
restructure pending) 1 - 546 107 654
Total 11 50 3,030 294 3,385
As at 31.12.12
Restructure: reduced contractual cashflows 4 16 405 - 425
Restructure: maturity date extension 5 107 1,412 33 1,557
Restructure: changed cashflow profile (other
than extension) 5 46 876 26 953
Restructure: payment other than cash - - 71 1 72
Change in security - - 76 8 84
Adjustments or non-enforcement of
covenants 10 7 626 128 771
Other (e.g. capital repayment holiday;
restructure pending) - - 318 74 392
Total 24 176 3,784 270 4,254
Wholesale forbearance reporting split by business unit
Wealth &
As at 31.12.13 Corporate Investment Investment Africa
Banking Bank Management RBB Total
£m £m £m £m £m
Restructure: reduced contractual
cashflows 272 1 - 8 281
Restructure: maturity date extension 671 377 133 103 1,284
Restructure: changed cashflow profile
(other than extension) 467 25 73 44 609
Restructure: payment other than cash
(e.g. debt to equity) 23 - 1 - 24
Change in security 22 - 4 1 27
Adjustments or non-enforcement of
covenants 247 45 213 1 506
Other (e.g. capital repayment holiday;
restructure pending) 301 47 304 2 654
Total 2,003 495 728 159 3,385
As at 31.12.12
Restructure: reduced contractual
cashflows 258 138 - 29 425
Restructure: maturity date extension 952 408 112 85 1,557
Restructure: changed cashflow profile
(other than extension) 624 152 70 107 953
Restructure: payment other than cash
(e.g. debt to equity) 64 7 1 - 72
Change in security 45 26 12 1 84
Adjustments or non-enforcement of
covenants 377 115 277 2 771
Other (e.g. capital repayment holiday;
restructure pending) 162 - 211 19 392
Total 2,482 846 683 243 4,254
- Total impairment allowances held against forbearance balances reduced by 22% to £891m representing
a coverage of 26.3% (2012: 27.0%)
- Corporate borrowers accounted for 90% (2012: 89%) of balances and 94% (2012: 95%) of impairment
booked to forbearance exposures, with impairment representing 28% (2012: 29%) of forbearance
balances
- Corporate Banking accounted for 59% (2012: 58%) of overall Wholesale forbearance with forbearance
exposures in Corporate Banking in the UK accounting for 23% (2012: 16%) of total Wholesale
forbearance balances and Corporate Banking in Spain accounting for 20% (2012: 29%). Corporate
Banking in Spain accounted for 42% (2012: 45%) of total impairment booked to forbearance exposures
- The overall reduction in forbearance balances was driven primarily by full and partial repayments and
balances written off or moved to recoveries
- The 19% reduction in Corporate Banking forbearance to £2,003m was driven primarily by
reductions in Spain, which is predominantly property and construction exposure. This reflects the
overall strategic drive to reduce exposure in the Spanish Corporate portfolio, including a small
number of write offs taken as a result of debt sales
- Wealth forbearance increased 7% to £728m driven by a combination of current EWL cases moving
into forbearance, specifically due to a large number of property deals, along with newly reported
cases booked in USA, Spain and Jersey. The increase was partially offset by balance reductions
as a result of repayments or cases returned to performing, as well as balances that moving to full
legal recovery or being written off in the year
- Reductions in Investment Bank forbearance balances were primarily driven by repayment by
clients and the sale of debt/assets
- Movements into forbearance were principally in Corporate Banking and Wealth and Investment
Management, which accounted for 62% and 19% respectively of balances added to forbearance
UK Commercial Real Estate (UK CRE)
- The UK CRE portfolio includes property investment, development, trading and housebuilders but
excludes social housing contractors
As at As at
31.12.13 31.12.12 2
UK CRE loans and advances (£m) 1 9,842 10,036
Past due balances (£m) 361 469
Balances past due as % of UK CRE total loans and advances 3.7% 4.7%
Impairment allowance (£m) 110 106
Past due coverage ratio (%) 30% 23%
31.12.13 31.12.12
Impairment charge (£m) 62 69
- The Wholesale businesses operate to specific lending criteria and the portfolio of assets is
continually monitored through a range of mandate and scale limits
- Total loans and advances at amortised cost remained broadly stable with new lending limited to high
quality assets
- The impairment charge of £62m (2012: £69m) was almost entirely in UK Corporate Banking
1 Includes £83m (2012: £270m) of UK CRE exposure held at fair value.
2 2012 numbers restated to reflect inclusion of a small number of assets now classified as UK
CRE exposure.
Group exposures to Eurozone countries
- The Group recognises the credit and market risk resulting from the ongoing volatility in the Eurozone and
continues to monitor events closely while taking coordinated steps to mitigate the risks associated with
the challenging economic environment
- During 2013 the Group's net on-balance sheet exposures to Spain, Italy, Portugal, Ireland, Cyprus and
Greece reduced by 11% to £53bn, principally due to Sovereign exposure decreasing 60% to £2.2bn with
a reduction in Spanish and Italian government bonds held as available for sale
- As at 31 December 2013, the local net funding deficit in Italy was €11.6bn (2012: €11.8bn) and the deficit
in Portugal was €3.0bn (2012: €4.1bn). The net funding surplus in Spain was €3.1bn (2012: €2.3bn).
Barclays continues to monitor the potential impact of the Eurozone volatility on local balance sheet
funding and will consider actions as appropriate to manage the risk
Summary of Group exposures
- The following table shows Barclays exposure to Eurozone countries monitored internally as being higher
risk and thus being the subject of particular management focus. Detailed analysis on the exposures within
Spain, Italy and Portugal are on pages 93 to 96 (1). The basis of preparation is consistent with that
described in the 2012 Annual Report
- The net exposure provides the most appropriate measure of the credit risk to which the Group is
exposed. The gross exposure is also presented below, alongside off-balance sheet contingent liabilities
and commitments
Net Gross
Other on-balance on-balance Contingent
Financial Residential retail Sheet sheet liabilities and
Sovereign Institutions Corporate Mortgages lending exposure exposure commitments
As at 31.12.13 £m £m £m £m £m £m £m £m
Spain 184 1,029 3,203 1 2,537 2,292 19,245 26,338 3,253
Italy 1,556 417 1,479 15,295 1,881 20,628 27,455 3,124
Portugal 372 38 891 3,413 1,548 6,262 6,609 2,288
Ireland 67 5,030 1,356 103 100 6,656 10,033 2,047
Cyprus - 7 106 19 43 175 256 66
Greece 8 5 51 6 12 82 903 3
As at 31.12.12
Spain 2,067 1,525 4,138 13,305 2,428 23,463 32,374 3,301
Italy 2,669 567 1,962 15,591 1,936 22,725 33,029 3,082
Portugal 637 48 1,958 3,474 1,783 7,900 8,769 2,588
Ireland 21 3,585 1,127 112 83 4,928 10,078 1,644
Cyprus 8 - 106 44 26 184 300 131
Greece 1 - 61 8 9 79 1,262 5
- During 2013 the Group's sovereign exposure to Spain, Italy, Portugal, Ireland, Cyprus and Greece
reduced by 60% to £2.2bn due to disposals of available for sale government bonds
- Residential mortgages and other retail lending decreased by 4% to £31.4bn and 6% to £5.9bn
respectively, reflecting lower new originations across Spain, Italy and Portugal, partially offset by foreign
exchange movements
- Corporate exposure reduced 24% to £7.1bn, largely reflecting reduced lending in Italy and Portugal,
partially offset by increased trading assets in Spain
- Exposures to financial institutions increased by 14% to £6.5bn, with increased exposure in Ireland relating
to securitised lending offset predominately by reductions in exposures for Spain and Italy
1 Detailed analysis is not provided for Ireland as there is no redenomination risk due to local funding and /
or due to the risk relating to the underlying assets residing in an alternative country. The exposures for
Cyprus and Greece are deemed immaterial to the Group.
Spain
Fair Value Designated
through Trading Portfolio Derivatives at FV Total Total
Profit and Cash through as at as at
Loss Assets Liabilities Net Assets Liabilities Collateral Net P&L 31.12.13 31.12.12
£m £m £m £m £m £m £m £m £m £m
Sovereign 1,020 (1,011) 9 28 (4) - 24 107 140 476
Financial
institutions 612 (114) 498 5,572 (5,572) - - 359 857 788
Corporate 479 (187) 292 398 (206) - 192 421 905 817
Total
Available for Sale Assets as at 31.12.13 as at
Fair Value through OCI Cost 1 AFS Reserve Total 31.12.12
£m £m £m £m
Sovereign 22 1 23 1,562
Financial institutions 159 4 163 480
Corporate 7 1 8 10
Loans and Advances as at 31.12.13 Total
Impairment as at
Held at Amortised Cost Gross Allowances Total 31.12.12
£m £m £m £m
Sovereign 21 - 21 29
Financial institutions 24 (15) 9 257
Residential mortgages 12,670 (133) 12,537 13,305
Corporate 3,224 (934) 2,290 3,311
Other retail lending 2,453 (161) 2,292 2,428
Contingent Liabilities and Total Total
Commitments as at as at
31.12.13 31.12.12
£m £m
Financial institutions 283 88
Residential mortgages 7 12
Corporate 1,831 1,938
Other retail lending 1,132 1,263
- Sovereign
- £184m (2012: £2,067m) largely consisting of holdings in government bonds held at fair value through
profit and loss. During the period Spanish sovereign exposure reduced due to the disposal of AFS
government bonds
- Financial institutions
– £857m (2012: £788m) held at fair value through profit and loss, predominantly debt securities held
by the Investment Bank to support trading and market making activities
– £163m (2012: £480m) AFS assets with £4m (2012: £11m loss) cumulative gain held in AFS reserve
- Residential mortgages
– £12,537m (2012: £13,305m) fully secured on residential property with average balance weighted
marked to market LTV of 63% (2012: 65%). CRL coverage remains stable at 37%
– 90 day arrears rates and gross charge off rates have remained stable at 0.7% and 1.1% respectively
- Corporate
– Net lending to corporates of £2,290m (2012: £3,311m) with CRLs of £1,651m (2012: £1,887),
impairment allowance of £934m (2012: £1,060m) and CRL coverage of 57% (2012: 56%). Balances
on EWL peaked in November 2010
1 'Cost' refers to the fair value of the asset at recognition, less any impairment booked. 'AFS Reserve' is
the cumulative fair value gain or loss on the assets that is held in equity. 'Total' is the fair value of the
assets at the balance sheet date.
– The portfolio is kept under close review. EWL balances remain on a reducing trend seen since the
peak in H110. Over this period, EWL balances have more than halved
– Net lending to property and construction industry of £774m (2012: £1,188m) largely secured on real
estate collateral, with CRLs of £1,112m (2012: £1,429m), impairment allowance of £659m (2012:
£820m) and CRL coverage of 59% (2012: 57%)
– Corporate impairment in Spain was at its highest level during H110 when commercial property
declines were reflected earlier in the cycle
– £284m (2012: £359m) lending to multinational and large national corporates, which continues to
perform
- Other retail lending
– £961m (2012: £1,052m) credit cards and unsecured loans. 30 day arrears marginally improved while
90 days arrears rates increased. Gross charge off rates in credit cards and unsecured loans were
stable during the year
– £933m (2012: £1,045m) lending to small and medium enterprises, largely secured against
residential or commercial property
Italy
Trading Portfolio Derivatives
Fair Value Designated
through at FV Total Total
Profit and Cash through as at as at
Loss Assets Liabilities Net Assets Liabilities Collateral Net P&L 31.12.13 31.12.12
£m £m £m £m £m £m £m £m £m £m
Sovereign 2,403 (2,324) 79 1,542 (224) - 1,318 2 1,399 1,123
Financial
institutions 210 (145) 65 3,777 (2,831) (946) - 239 304 391
Corporate 302 (144) 158 312 (107) (107) 98 336 592 699
Total
Available for Sale Assets as at 31.12.13 as at
Fair Value through OCI Cost 1 AFS Reserve Total 31.12.12
£m £m £m £m
Sovereign 154 3 157 1,537
Financial institutions 60 3 63 138
Corporate 27 2 29 29
Loans and Advances as at 31.12.13
Total
Impairment as at
Held at Amortised Cost Gross Allowances Total 31.12.12
£m £m £m £m
Sovereign - - - 9
Financial institutions 50 - 50 38
Residential
mortgages 15,433 (138) 15,295 15,591
Corporate 997 (139) 858 1,234
Other retail lending 1,978 (97) 1,881 1,936
Contingent Liabilities and Total Total
Commitments as at as at
31.12.13 31.12.12
£m £m
Financial institutions 361 90
Residential
mortgages 25 45
Corporate 2,069 2,158
Other retail lending 669 789
- Sovereign
– £1,399m (2012: £1,123m) predominantly of government bonds held at fair value through profit and
loss and AFS government bonds of £157m (2012: £1,537m). AFS government bonds have a
cumulative fair value gain of £3m (2012: £28m) held in the AFS reserve
- Residential mortgages
– £15,295m (2012: £15,591m) secured on residential property with average balance weighted marked
to market LTVs of 60% (2012: 60%). CRL coverage of 24% (2012: 23%) marginally increased
– 90 day arrears at 1.1% (2012: 1.0%) were broadly stable, however gross charge off rates improved
to 0.7% (2012: 0.8%)
- Corporate
– £858m (2012: £1,234m) focused on large corporate clients with limited exposure to property sector
– Balances on EWL increased in 2013 due to the inclusion of a single counterparty. Excluding this
counterparty, balances on early warning list have been broadly stable
- Other retail lending
– £982m (2012: £1,337m) Italian salary advance loans (repayment deducted at source by qualifying
employers and Barclays is insured in the event of termination of employment or death). Arrears rates
on salary loans deteriorated during 2013 while charge-off rates improved
– £394m (2012: £434m) of credit cards and other unsecured loans. Arrears rates (both 30 and 90
days) in cards and unsecured loans slightly increased while gross charge-off rates have improved
1 'Cost' refers to the fair value of the asset at recognition, less any impairment booked. 'AFS Reserve' is
the cumulative fair value gain or loss on the assets that is held in equity. 'Total' is the fair value of the
assets at the balance sheet date.
Portugal
Trading Portfolio Derivatives
Fair Value Designated
through at FV Total Total
Profit and Cash through as at as at
Loss Assets Liabilities Net Assets Liabilities Collateral Net P&L 31.12.13 31.12.12
£m £m £m £m £m £m £m £m £m £m
Sovereign 88 (67) 21 87 (87) - - - 21 8
Financial
institutions 18 (5) 13 129 (120) (9) - - 13 18
Corporate 45 (18) 27 75 (37) (4) 34 - 61 252
Total
Available for Sale Assets as at 31.12.13 as at
Fair Value through OCI Cost 1 AFS Reserve Total 31.12.12
£m £m £m £m
Sovereign 307 3 310 594
Financial institutions 2 - 2 2
Corporate 65 - 65 331
Loans and Advances as at 31.12.13
Total
Impairment as at
Held at Amortised Cost Gross Allowances Total 31.12.12
£m £m £m £m
Sovereign 42 (1) 41 35
Financial institutions 23 - 23 28
Residential
mortgages 3,460 (47) 3,413 3,474
Corporate 1,117 (352) 765 1,375
Other retail lending 1,714 (166) 1,548 1,783
Contingent Liabilities and Total Total
Commitments as at as at
31.12.13 31.12.12
£m £m
Financial institutions 1 1
Residential
mortgages 11 25
Corporate 627 889
Other retail lending 1,649 1,673
- Sovereign
– £372m (2012: £637m) of largely AFS government bonds. No impairment and £3m (2012: £4m loss)
cumulative fair value gain held in the AFS reserve
- Residential mortgages
– Secured on residential property with average balance weighted LTVs of 76% (2012: 78%). CRL
coverage of 34% (2012: 29%) marginally increased
– 90 day arrears rates improved to 0.5% (2012: 0.7%) while recoveries impairment coverage
increased to 31.9% (2012: 25.6%) driven by an increase in loss given default rates
- Corporate
– Net lending to corporates of £764m (2012: £1,375m), with CRLs of £548m (2012: £501m),
impairment allowance of £352m (2012: £296m) and CRL coverage of 64% (2012: 59%)
– Net lending to the property and construction industry of £217m (2012: £364m) secured, in part,
against real estate collateral, with CRLs of £281m (2012: £275m), impairment allowance of £183m
(2012: £149m) and CRL coverage of 65% (2012: 54%)
- Other retail lending
– £890m (2012: £950m) credit cards and unsecured loans. During 2013, arrears rates in cards
portfolio deteriorated while charge-off rates remained stable
– CRL coverage of 87% (2012: 74%) driven by credit cards and unsecured loans exposure
1 'Cost' refers to the fair value of the asset at recognition, less any impairment booked. 'AFS Reserve' is
the cumulative fair value gain or loss on the assets that is held in equity. 'Total' is the fair value of the
assets at the balance sheet date.
Credit derivatives referencing Eurozone sovereign debt
- The Group enters into credit mitigation arrangements (principally credit default swaps and total return
swaps) for which the reference asset is government debt. For Spain, Italy and Portugal, these have the
net effect of reducing the Group's exposure in the event of sovereign default
As at 31.12.13 Spain Italy Portugal Ireland Cyprus Greece
£m £m £m £m £m £m
Fair value
- Bought 31 88 72 (10) 1 -
- Sold (23) (66) (69) 2 (1) -
Net derivative fair value 8 22 3 (8) - -
Contract notional amount
- Bought (2,468) (4,273) (1,068) (800) (4) -
- Sold 2,442 3,718 1,042 870 4 -
Net derivative notional amount (26) (555) (26) 70 - -
Net (protection from) /exposure to credit (18) (533) (23) 62 - -
derivatives in the event of sovereign
default (notional less fair value)
As at 31.12.12
Net (protection from)/exposure to credit (122) (307) (88) 44 - -
derivatives in the event of sovereign
default (notional less fair value)
- Credit derivatives are contracts whereby the default risk of an asset (reference asset) is transferred from
the buyer to the seller of the credit derivative contract
- Credit derivatives referencing sovereign assets are bought and sold to support client transactions and for
risk management purposes
- The contract notional amount represents the size of the credit derivative contracts that have been bought
or sold, while the fair value represents the change in the value of the reference asset
- The net protection or exposure from credit derivatives in the event of sovereign default amount represents
a net purchase or sale of insurance by the Group. This insurance reduces or increases the Group's total
exposure and should be considered alongside the direct exposures disclosed in the preceding pages
Eurozone balance sheet redenomination risk
- Redenomination risk is the risk of financial loss to the Group should one or more countries exit the Euro,
leading to the devaluation of local balance sheet assets and liabilities. The Group is directly exposed to
redenomination risk where there is a mismatch between the level of locally denominated assets and
liabilities
- Within Barclays, retail banking, corporate banking and wealth management activities in the Eurozone are
generally booked locally within each country. Locally booked customer assets and liabilities, primarily
loans and advances to customers and customer deposits, are predominantly denominated in Euros. The
remaining funding need is met through local funding secured against customer loans and advances, with
any residual need funded through the Group
- During 2013, the net funding mismatch decreased €0.2bn to €11.6bn in Italy and €1.1bn to €3.0bn in
Portugal. The surplus in Spain increased €0.8bn to €3.1bn
- Barclays continues to monitor the potential impact of the Eurozone volatility on local balance sheet
funding and will consider actions as appropriate to manage the risk
- Direct exposure to Greece is very small with negligible net funding required from Group. For Ireland there
is no local balance sheet funding requirement by the Group as total liabilities in this country exceed total
assets
Market Risk
Analysis of the Investment Bank’s market risk exposure
- Investment Bank is exposed to traded market risk as a result of facilitating client transactions in
wholesale financial markets. This involves providing risk management solutions, syndication facilities
and market making activities globally
- Daily Value at Risk (DVaR) is one of the primary risk metrics used at the Investment Bank to measure
and control market risk exposure. This measure is further supplemented with additional metrics used to
manage the firm's trading exposures such as market risk stress testing
- Investment Bank's management DVaR is calculated at a 95% confidence level, assuming a one day
holding period. The calculation is based on historical simulation of the most recent two years of data.
This is supplemented with add-ons if necessary to ensure risk is adequately represented. DVaR is
calculated and reported internally on a daily basis against set limits
- DVaR models and methodology are continually tested, validated and improved
Year Ended 31.12.13 Year Ended 31.12.12
Management DVaR Daily Avg High 1 Low 1 Daily Avg High 1 Low 1
(95%) £m £m £m £m £m £m
Credit risk 18 25 12 26 44 18
Interest rate risk 13 24 6 14 23 7
Spread risk 11 21 5 23 31 17
Basis risk 11 17 7 11 21 5
Equity risk 11 21 5 9 19 4
Commodity risk 5 8 2 6 9 4
Foreign exchange risk 4 7 2 6 10 2
Inflation risk 3 8 2 3 7 2
Diversification effect 1 (47) na na (60) na na
Total DVaR 29 39 21 38 75 27
- Average Management DVaR reduced in 2013 due to a combination of risk reduction and improved
market conditions, notably, tightening of credit spreads
- The three main contributors to total DVaR were credit, interest rate and spread risks. From average 2012
levels, average DVaR for credit risk fell by £8m (31%), interest rate risk fell by £1m (7%) and spread risk
fell by £12m (52%). Average DVaR for the Investment Bank fell by £9m (24%)
- The business remained within the Management DVaR limits approved by the Board Financial Risk
Committee throughout 2013 for both risk type VaR and total DVaR
- Barclays Investment Bank's market risk models are approved by the PRA to calculate regulatory capital
for designated trading book portfolios. The measures are Daily Value at Risk, Stressed Value at Risk,
Incremental Risk Charge and the All Price Risk measure
- For regulatory market risk capital calculations, DVaR is calculated at the 99% level. The model is subject
to daily back-testing, where it is compared to profit and loss figures during the year. The DVaR model
has performed well in back-testing and maintains its Green categorisation, as defined by the PRA
1 The high and low DVaR figures reported for each category did not necessarily occur on the same day as
the high and low total DVaR. Consequently a diversification effect balance for the high and low DVaR
balances would not be meaningful.
Financial Statement Notes
1. Basis of preparation
The Results Announcement has been prepared using the same accounting policies and methods of
computation as those used in the 2012 Annual Report, except for the following accounting standards which
were adopted by the Group on 1 January 2013:
IFRS 10 Consolidated Financial Statements
IFRS 10 replaced requirements in IAS 27 Consolidated and Separate Financial Statements and SIC 12
Consolidation – Special Purpose Entities. This introduced new criteria to determine whether entities in which
the Group has interests should be consolidated. The implementation of IFRS 10 resulted in the Group
consolidating some entities that were previously not consolidated and deconsolidating some entities that
were previously consolidated, principally impacting the consolidation of additional entities in the Investment
Bank with credit market exposures.
IAS 19 (Revised 2011) Employee Benefits
IAS 19 (Revised 2011), amongst other changes, requires actuarial gains and losses arising from defined
benefit pension schemes to be recognised in full. Previously the Group deferred these over the remaining
average service lives of the employees (known as the 'corridor' approach).
Comparatives have been fully restated for IFRS 10 and IAS 19 standards in accordance with their transition
requirements.
The Group published a restatement document on 16 April 2013 describing the financial impacts of IFRS 10
and IAS 19.
The financial impact on the Group for the year ended 31 December 2012 had IFRS 10 and IAS 19 been
adopted is shown in the table below:
Impact of Accounting Restatements Restatement Adjustments
2012 as 2012 as
Published IFRS 10 IAS 19 Restated
Income Statement £m £m £m £m
Profit before tax 246 573 (22) 797
Tax (482) (134) - (616)
Profit after tax (236) 439 (22) 181
Balance Sheet
Total assets 1,490,321 (144) (1,842) 1,488,335
Total liabilities 1,427,364 333 652 1,428,349
Total shareholders' equity 62,957 (477) (2,494) 59,986
IFRS 13 Fair Value Measurement
IFRS 13 provides comprehensive guidance on how to calculate the fair value of financial and non-financial
assets. The adoption of IFRS 13 did not have a material financial impact on the Group.
Future accounting developments
IFRS 9 Financial Instruments
IFRS 9 will change the classification and therefore the measurement of the Group's financial assets, the
recognition of impairment and hedge accounting. In addition to these changes, the effect of changes in the
Group's own credit risk on the fair value of financial liabilities that the group designates at fair value through
profit and loss will be included in other comprehensive income rather than the income statement. A number
of the significant proposals have yet to be finalised and it is therefore not yet possible to estimate the
financial effects. The effective date of IFRS 9 is still to be determined.
IAS 32 Financial Instruments: Presentation
IAS 32, Amendments to Offsetting Financial Assets and Financial Liabilities, is effective from 1 January
2014. The circumstances in which netting is permitted have been clarified; in particular what constitutes a
currently legally enforceable right of set-off and the circumstances in which gross settlement systems may be
considered equivalent to net settlement. The amendments are expected to gross up certain financial assets
and financial liabilities in the balance sheet that were previously reported net, but will have no impact on
shareholders equity, profit or loss, other comprehensive income, or cash flows, and no significant impact on
the Common equity Tier 1 ratio or CRD IV leverage ratio.
Going Concern
The Group's business activities and financial position, the factors likely to affect its future development and
performance, and its objectives and policies in managing the financial risks to which it is exposed and its
capital are discussed in the Results by Business, Performance Management and Risk Management
sections.
The Directors confirm they are satisfied that the Group has adequate resources to continue in business for
the foreseeable future. For this reason, they continue to adopt the going concern basis for preparing
accounts.
2. Net Interest Income
Year Year
Ended Ended
31.12.13 31.12.12
£m £m
Cash and balances with central banks 219 253
Available for sale investments 1,804 1,736
Loans and advances to banks 468 376
Loans and advances to customers 15,613 16,448
Other 211 398
Interest income 18,315 19,211
Deposits from banks (201) (257)
Customer accounts (2,656) (2,485)
Debt securities in issue (2,176) (2,921)
Subordinated liabilities (1,572) (1,632)
Other (110) (262)
Interest expense (6,715) (7,557)
Net interest income 11,600 11,654
3. Administration and General Expenses
Year Year
Ended Ended
31.12.13 31.12.12
£m £m
Infrastructure costs
Property and equipment 1,610 1,656
Depreciation of property, plant and equipment 647 669
Operating lease rentals 645 622
Amortisation of intangible assets 480 435
Impairment of property, equipment and intangible assets 149 17
Total infrastructure costs 3,531 3,399
Other costs
Consultancy, legal and professional fees 1,253 1,182
Subscriptions, publications, stationery and communications 869 727
Marketing, advertising and sponsorship 583 572
Travel and accommodation 307 324
UK bank levy 504 345
Goodwill impairment 79 -
Other administration and general expenses 691 546
Total other costs 4,286 3,696
Total administration and general expenses 7,817 7,095
Administration and general expenses have increased 10% to £7,817m. This was driven by increased
infrastructure costs due to the Transform programme and costs to meet new regulatory requirements such
as Dodd-Frank Act and CRD IV and an increase in the UK bank levy reflecting the increased rate. Increases
in provisions for litigation and regulatory penalties were offset by the non-recurrence of the £290m penalty
incurred in 2012 arising from the industry wide investigation into the setting of inter-bank offered rates.
1 The Group has realigned outsourcing costs from administration and general expenses to staff costs in
order to more appropriately reflect the nature and internal management of these costs. The net effect of
these movements is to reduce administration and general expenses and increase staff costs by £1,084m
in 2013 and £999m in 2012.
4. Tax
Year Year
Ended Ended
31.12.13 31.12.12
Tax Charge £m £m
Current tax charge 2,153 775
Deferred tax credit (582) (159)
Tax charge 1,571 616
The tax charge of £1,571m (2012: £616m) represented an effective tax rate of 54.8% (2012: 77.3%) on profit
before tax of £2,868m (2012: £797m). The effective tax rate decreased mainly due to the non-recurrence of
the factors that increased the rate in 2012, principally the combination of significant losses in the UK (with
relief at the UK statutory rate of 24.5%) and profits outside the UK taxed at higher rates.
The effective tax rate is higher than the UK statutory tax rate of 23.25% (2012: 24.5%) mainly due to profits
outside of the UK taxed at higher local statutory tax rates, a write down of the deferred tax assets in Spain,
other deferred tax assets not recognised, non creditable taxes and non deductible items including the UK
bank levy, partially offset by non taxable income, adjustments in respect of prior years and deferred tax asset
measurement adjustments.
Assets Liabilities
Current and Deferred Tax Assets and Liabilities 31.12.13 31.12.12 31.12.13 31.12.12
£m £m £m £m
Current tax 219 252 (1,042) (621)
Deferred tax 4,807 3,563 (373) (341)
Total 5,026 3,815 (1,415) (962)
The deferred tax asset of £4,807m (2012: £3,563m) mainly relates to amounts in the UK, US and Spain. The
deferred tax asset has increased mainly due to movements in temporary differences relating to cash flow
hedging in the UK and an increase in the deferred tax asset in the US mainly due to adjustments in respect
of prior years and measurement adjustments, partially offset by the write down of the deferred tax asset in
Spain.
A change in Spanish law in December 2013 resulted in the protection of certain deferred tax assets, mainly
relating to pensions and impairments, whilst the remaining deferred tax assets (that are not protected by the
change in law) continue to be reliant on future profits. Based on the current assessment of business
forecasts there is insufficient evidence that future profits will be available to utilise unprotected deferred tax
assets for accounting purposes. As such only the protected deferred tax assets continue to be recognised
resulting in a write down of £440m.
5. Non-controlling Interests
Profit Attributable Equity Attributable
to Non-controlling to Non-controlling
Interest Interest
Year Year
Ended Ended As at As at
31.12.13 31.12.12 31.12.13 31.12.12
£m £m £m £m
Barclays Bank PLC Issued:
- Preference shares 410 462 5,868 5,927
- Upper Tier 2 instruments 2 4 485 591
Barclays Africa Group Limited 343 304 2,204 2,737
Other non-controlling interests 2 35 7 116
Total 757 805 8,564 9,371
The decrease in Barclays Africa Group Limited equity attributable to non-controlling interest to £2,204m
(2012: £2,737m) is principally due to £566m depreciation of African currencies against GBP and £342m of
dividends paid, offset by retained profits of £343m.
6. Earnings Per Share
As at As at
31.12.13 31.12.12
£m £m
Profit/(loss) attributable to ordinary equity holders of the parent 540 (624)
Dilutive impact of convertible options 1 -
Profit/(loss) attributable to ordinary equity holders of parent from continuing 541 (624)
operations including dilutive impact of convertible options
Basic weighted average number of shares in issue 1 14,308 13,045
Number of potential ordinary shares 360 389
Diluted weighted average number of shares 14,668 13,434
Basic earnings/(loss) per ordinary share 3.8p (4.8p)
Diluted earnings/(loss) per ordinary share 3.7p (4.8p)
7. Dividends on Ordinary Shares
It is Barclay's policy to declare and pay dividends on a quarterly basis. A final dividend in respect of 2013 of
3.5p per ordinary share will be paid on 28 March 2014 to shareholders on the Share Register on 21 February
2014 and accounted for as a distribution of retained earnings in the year ending 31 December 2014. The
financial statements for 2013 include the following dividends paid during the year.
Year Ended 31.12.13 Year Ended 31.12.12
Dividends Paid During the Period Per Share Total Per Share Total
Pence £m Pence £m
Final dividend paid during period 3.5p 441 3.0p 366
Interim dividends paid during period 3.0p 418 3.0p 367
Total 6.5p 859 6.0p 733
For qualifying US and Canadian resident ADR holders, the final dividend of 3.5p per ordinary share becomes
14p per ADS (representing four shares). The ADR depositary will post the final dividend on 28 March 2014 to
ADR holders on the record at close of business on 21 February 2014.
1 The basic weighted average number of shares excludes Treasury shares held in employee benefit trusts
or held for trading. The rights issue in October 2013 resulted in the issue of an additional 3,219m shares.
In accordance with IAS 33, a retrospective adjustment has been applied to the basic weighted average
number of shares in issue for the prior period which has resulted in a movement from a loss per share of
5.1p to a loss per share of 4.8p.
8. Derivative Financial Instruments
Contract
Notional Fair Value
As at 31.12.13 Amount Assets Liabilities
£m £m £m
Foreign exchange derivatives 4,633,460 59,500 (64,657)
Interest rate derivatives 34,347,916 216,178 (203,260)
Credit derivatives 1,576,184 21,923 (21,634)
Equity and stock index and commodity derivatives 936,803 23,989 (29,810)
Derivative assets/(liabilities) held for trading 41,494,363 321,590 (319,361)
Derivatives in Hedge Accounting Relationships
Derivatives designated as cash flow hedges 160,809 899 (500)
Derivatives designated as fair value hedges 123,459 1,278 (752)
Derivatives designated as hedges of net investments 19,377 568 (21)
Derivative assets/(liabilities) designated in hedge accounting
relationships 303,645 2,745 (1,273)
Total recognised derivative assets/(liabilities) 41,798,008 324,335 (320,634)
As at 31.12.12
Foreign exchange derivatives 4,423,737 59,299 (63,821)
Interest rate derivatives 32,995,831 351,381 (336,625)
Credit derivatives 1,768,180 29,797 (29,208)
Equity and stock index and commodity derivatives 1,005,366 24,880 (29,933)
Derivative assets/(liabilities) held for trading 40,193,114 465,357 (459,587)
Derivatives in Hedge Accounting Relationships
Derivatives designated as cash flow hedges 177,122 2,043 (1,097)
Derivatives designated as fair value hedges 108,240 1,576 (1,984)
Derivatives designated as hedges of net investments 17,460 180 (53)
Derivative assets/(liabilities) designated in hedge accounting
relationships 302,822 3,799 (3,134)
Total recognised derivative assets/(liabilities) 40,495,936 469,156 (462,721)
The fair value of gross derivative assets decreased by 31% to £324bn reflecting increases in the major
interest rate forward curves and the impact of optimisation initiatives to reduce gross derivative exposures.
Contract notional amounts increased by 3% to £41,798bn reflecting an increase in clearing services to
clients.
Information on further netting of derivative financial instruments is included within note 10, Offsetting financial
assets and financial liabilities.
9. Assets and Liabilities Held at Fair Value
The following table shows the Group's assets and liabilities that are held at fair value disaggregated by fair
value hierarchy and balance sheet classification:
Valuations based on
Quoted Significant
market Observable unobservable
prices inputs inputs
(Level 1) (Level 2) (Level 3) Total
As at 31.12.13 £m £m £m £m
Trading portfolio assets 54,363 72,285 6,421 133,069
Financial assets designated at fair value 11,188 9,010 18,770 38,968
Derivative financial assets 3,353 315,969 5,013 324,335
Available for sale assets 36,050 53,561 2,145 91,756
Investment property - - 451 451
Non current assets held for sale - - 114 114
Total assets 104,954 450,825 32,914 588,693
Trading portfolio liabilities (29,450) (24,014) - (53,464)
Financial liabilities designated at fair value (98) (63,058) (1,640) (64,796)
Derivative financial liabilities (3,952) (312,363) (4,319) (320,634)
Total liabilities (33,500) (399,435) (5,959) (438,894)
As at 31.12.12
Trading portfolio assets 51,639 86,199 8,514 146,352
Financial assets designated at fair value 14,518 26,025 6,086 46,629
Derivative financial assets 2,863 460,076 6,217 469,156
Available for sale assets 28,949 43,280 2,880 75,109
Investment property - - 1,686 1,686
Non current assets held for sale - - - -
Total assets 97,969 615,580 25,383 738,932
Trading portfolio liabilities (20,294) (24,498) (2) (44,794)
Financial liabilities designated at fair value (182) (76,024) (2,355) (78,561)
Derivative financial liabilities (2,666) (455,068) (4,987) (462,721)
Total liabilities (23,142) (555,590) (7,344) (586,076)
Level 3 assets increased by £7.5bn from £25.4bn to £32.9bn. The significant movements in the Level 3
positions during the year ended 31 December 2013 are as follows:
- Transfers in amounting to £15.7bn arising primarily from the transfer of the Education, Social
Housing and Local Authority („ESHLA') loan portfolio from Level 2 to Level 3 following reassessment
of the significance of unobservable loan spreads on valuation. The valuation of the ESHLA portfolio
continues to be based on internally modelled spreads. Valuation uncertainty arises mainly from the
long dated nature of the portfolio, the lack of active secondary market in the loans and the lack of
observable loan spreads
- Sales of £10.0bn of which £3.9bn was related to Exit Quadrant disposals, £2.9bn in asset backed
securities and £1.7bn in commercial real estate loans were largely driven by securitisation activity
- Purchases of £6.0bn of which £2.8bn in asset backed securities and £1.5bn in commercial real
estate loans were largely driven by securitisation activity
- Settlements of £1.9bn and a reduction in derivative assets of £1.2bn due to fair value movements
and trade maturities
Sensitivity analysis
Sensitivity analysis is performed on products with significant unobservable parameters (Level 3) to generate
a range of reasonably possible alternative valuations. The sensitivity methodologies applied take account of
the nature of valuation techniques used, as well as the availability and reliability of observable proxy and
historical data and the impact of using alternative models. Sensitivities are calculated without reflecting the
impact of any diversification in the portfolio.
The effect of stressing unobservable inputs to a range of reasonably possible alternatives alongside
considering the impact of using alternative models would be to increase fair values by up to £1.3bn (2012:
£2.0bn 1) or to decrease fair values by up to £2.4bn (2012: £2.0bn 1; ESHLA transfer contributed £1.0bn to the
change in decrease) with substantially all the potential effect impacting profit and loss rather than other
comprehensive income.
Fair value adjustments
Key balance sheet valuation adjustments that may be of interest from a financial statement user perspective
are quantified below:
31.12.13 31.12.12
£m £m
Bid-offer valuation adjustments (406) (452)
Other exit adjustments (208) (294)
Uncollateralised derivative funding (67) (101)
Derivative credit valuation adjustments:
- Monolines (62) (235)
- Other counterparties (322) (693)
Derivative debit valuation adjustments 310 442
- Bid offer and other exit adjustments have reduced by £46m to £406m and by £86m to £208m respectively
during 2013 as a result of movements in market bid offer spreads
- Uncollateralised derivative funding adjustments have reduced by £34m to £67m as a result of reductions
in Barclays funding costs and a reduction in exposure
- Derivative credit valuation adjustments reduced by £544m to £384m primarily as a result of a reduction in
monoline exposure and improvements in counterparty credit
- Derivative debit valuation adjustments have reduced by £132m to £310m primarily as a result of
improvements in Barclays credit
10. Offsetting financial assets and financial liabilities
In accordance with IAS 32 Financial Instruments: Presentation, the Group reports financial assets and
financial liabilities 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 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; and
- all derivative financial instruments and reverse repurchase 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 of IAS 32 described above.
The 'Net amounts' presented below are not intended to represent the Group's actual exposure to credit risk,
as a variety of credit mitigation strategies are employed in addition to netting and collateral arrangements.
1 The sensitivity analysis for 2012 has been revised to reflect the inclusion of investment property. This
amounted to £0.1bn.
Amounts subject to enforceable netting arrangements
Effects of offsetting on
balance sheet Related amounts not offset 3
Net Amounts
balance amounts not subject
reported to enforceable Balance
Gross Amounts on the Financial Financial Net netting sheet 5
amounts offset 1 sheet 2 instruments collateral amount arrangements 4 total
As at 31.12.13 £m £m £m £m £m £m £m £m
Derivative
financial assets 608,696 (295,793) 312,903 (258,528) (41,397) 12,978 11,432 324,335
Reverse
repurchase
agreements and
other similar
secured lending 246,281 (93,508) 152,773 - (151,833) 940 34,006 186,779
Total Assets 854,977 (389,301) 465,676 (258,528) (193,230) 13,918 45,438 511,114
Derivative
financial liabilities (603,580) 296,273 (307,307) 258,528 36,754 (12,025) (13,327) (320,634)
Repurchase
agreements and
other similar
secured borrowing (253,966) 93,508 (160,458) - 159,686 (772) (36,290) (196,748)
Total Liabilities (857,546) 389,781 (467,765) 258,528 196,440 (12,797) (49,617) (517,382)
As at 31.12.12
Derivative
financial assets 879,082 (420,741) 458,341 (387,672) (53,183) 17,486 10,815 469,156
Reverse
repurchase
agreements and
other similar
secured lending 6 244,272 (100,989) 143,283 - (142,009) 1,274 33,239 176,522
Total Assets 1,123,354 (521,730) 601,624 (387,672) (195,192) 18,760 44,054 645,678
Derivative
financial liabilities (869,514) 419,192 (450,322) 387,672 52,163 (10,487) (12,399) (462,721)
Repurchase
agreements and
other similar
secured
borrowing 6 (259,078) 100,989 (158,089) - 157,254 (835) (59,089) (217,178)
Total Liabilities (1,128,592) 520,181 (608,411) 387,672 209,417 (11,322) (71,488) (679,899)
1 Amounts offset for Derivative financial assets includes cash collateral netted of £1,965m (2012:
£6,506m). Amounts offset for Derivative liabilities includes cash collateral netted of £2,445m (2012:
£4,957m). Settlements assets and liabilities have been offset amounting to £6,967m (2012: £9,879m). No
other significant recognised financial assets and liabilities were offset in the balance sheet. Therefore,
the only balance sheet categories necessary for inclusion in the table are those shown above.
2 The table excludes Reverse repurchase agreements designated at fair value which are subject to
enforceable master netting arrangements of £2bn (2012: £3bn).
3 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.
4 This column includes contractual rights of set-off that are subject to uncertainty under the laws of the
relevant jurisdiction.
5 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'.
6 Comparative figures have been revised to reflect the identification of additional contracts with enforceable
netting arrangements. Net Amounts reported on the balance sheet have increased £12,795m and
£27,049m for Reverse repurchase agreements and Repurchase agreements respectively. A
corresponding decrease was noted within Amounts not subject to enforceable netting arrangements.
Financial collateral increased £12,293m for Reverse repurchase agreements and £26,810m for
Repurchase agreements. Net Amount increased £502m for Reverse repurchase agreements and £239m
for Repurchase agreements.
Related amounts not offset
Derivative assets and liabilities
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.
These categories are not mutually exclusive. For example, derivatives included in the „Financial instruments'
column may also be covered by collateral arrangements.
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.
As with derivative assets and liabilities above, these categories are not mutually exclusive.
11. Goodwill and Intangible Assets
As at As at
31.12.13 31.12.12
£m £m
Goodwill 4,878 5,206
Intangible assets 2,807 2,709
Total 7,685 7,915
At 31 December 2013, goodwill carried on the Group's balance sheet amounted to £4,878m (2012:
£5,206m). The goodwill principally comprises £3,142m in UK RBB (2012: £3,144m), £690m in Africa RBB
(2012: £863m), £482m in Barclaycard (2012: £514m) and £312m in Wealth and Investment Management
(2012: £391m).
Goodwill is reviewed for indicators of impairment quarterly and tested for impairment on an annual basis by
comparing the carrying value to its recoverable amount.
During 2013, the Group recognised an impairment charge of £79m (2012: nil) in respect of goodwill
attributable to businesses acquired in a previous period by Wealth and Investment Management. Following a
streamlining of operations within Wealth and Investment Management, the forecast future cashflows from
these businesses have been revised and no longer support the carrying value of the goodwill. As a result the
attributable goodwill balances have been fully impaired.
The remaining £249m goodwill decrease was driven by currency translation differences, largely due to the
impact of the depreciation of ZAR against GBP on the goodwill arising from the acquisition of Absa.
12. Subordinated Liabilities
As at As at
31.12.13 31.12.12
£m £m
Opening balance as at 1 January 24,018 24,870
Issuances 700 2,258
Redemptions (1,426) (2,680)
Other (1,597) (430)
Total dated and undated subordinated liabilities as at period end 21,695 24,018
During 2013 redemptions comprised: Fixed Rates Subordinated Notes of £647m ($1,000m) and £636m
(€750m), CPI-linked Callable Notes of £135m (ZAR1,886m), and Junior Guaranteed Undated Floating Rate
Notes of £8m ($12m). 7.75% Contingent Capital Notes of £652m ($1,000m) and Dated Subordinated Notes
of £48m (JPY8,500m) were issued.
Other movements in the period include reduction of £1,262m in the fair values of hedged subordinated
liabilities, driven by increases in interest rates from December 2012. Other movements also include
reductions of £296m due to changes in foreign exchange rates, primarily arising from the strengthening of
GBP against USD and ZAR.
13. Provisions
As at As at
31.12.13 31.12.12
£m £m
Conduct Remediation
- Payment Protection Insurance redress 971 986
- Interest rate hedging product redress 1,169 814
- Other conduct 388 213
Litigation 485 200
Redundancy and restructuring 388 71
Undrawn contractually committed facilities and guarantees 165 159
Onerous contracts 100 104
Sundry provisions 220 219
Total 3,886 2,766
Conduct Remediation
Conduct provisions comprise the estimated cost of making redress payments to customers for losses or
damages associated with inappropriate judgement in the execution of our business activities. Conduct
remediation largely relates to payment protection insurance and interest rate hedging products but also
includes other smaller provisions across the retail and corporate businesses which are likely to be utilised
within the next 18 months.
Payment Protection Insurance Redress
Following the conclusion of the 2011 Judicial Review, Barclays has raised provisions totalling £3.95bn
against the cost of PPI redress and complaint handling costs. As at 31 December 2013 £2.98bn of the
provision had been utilised, leaving a residual provision of £0.97bn.
Through to 31 December 2013, 1.0m (2012: 0.6m) customer initiated claims 1 had been received and
processed. The monthly volume of claims received has declined by 59% since the peak in May 2012,
although the rate of decline has been less than previously expected. As a result an additional provision of
£1.35bn was recognised in June 2013 to reflect this increased expectation of claims, a corresponding
increase in cases referred to the Financial Ombudsman Service (FOS) and associated operational costs.
1 Total claims received to date excluding those for which no PPI policy exists and excluding responses to
proactive mailing. The volume for 31 December 2012 has been restated to exclude cases where there
was no PPI policy: previously 1.1m.
In August 2012, in accordance with regulatory standards, Barclays commenced a proactive mailing of the
holders of approximately 750,000 policies. Of this population approximately 660,000 (2012: 100,000) had
been contacted by 31 December 2013 and it is anticipated that the remainder will be contacted by 31 March 2014.
To date Barclays has upheld 74% (2012: 70%) of all claims received 2, excluding payment of gestures of
goodwill and claims for which no PPI policy exists. The average redress per valid policy 3 to date is £1,763
(2012: £1,705), comprising, where applicable, the refund of premium, compound interest charged and
compensatory interest of 8%.
The current provision is calculated using a number of key assumptions which continue to involve significant
management judgement:
- Customer initiated claim volumes – claims received but not yet processed as at 31 December 2013 and
an estimate of future claims initiated by customers where the volume is anticipated to decline over time
- Proactive response rate – volume of claims in response to proactive mailing
- Uphold rate – the percentage of claims that are upheld as being valid upon review
- Average claim redress - the expected average payment to customers for upheld claims based on the type
and age of the policy/policies.
These assumptions remain subjective; in particular due to the uncertainty associated with future claims
levels. The resulting provision represents Barclays' best estimate of all future expected costs of PPI redress.
However, it is possible the eventual outcome may differ from the current estimate and if this were to be
material and adverse a further provision will be made, otherwise it is expected that any residual costs will be
handled as part of normal operations. The provision also includes an estimate of our claims handling costs
and those costs associated with claims that are subsequently referred to the FOS.
The following table details, by key assumption, actual data through to 31 December 2013, forecast
assumptions used in the provision calculation and a sensitivity analysis illustrating the impact on the
provision if the future expected assumptions prove too high or too low.
Sensitivity
Cumulative Analysis Cumulative
Assumption actual Future increase/decrease actual
to 31.12.13 Expected in provision to 31.12.12
Customer initiated claims 1 received and 970 K 190 K 50 K = £90m 570 K
Proactive mailing processed 660 K 90 K 100 K
Response rate to proactive mailing 26% 25% 1% = £1m 27%
Average uphold rate per claim 2 74% 73% 1% = £4m 70%
Average redress per valid claim 3 £1,763 £1,726 £100 = £23m £1,705
During 2013, 45% (2012: 44%) of monthly average complaints received had no PPI associated with them.
Furthermore, of the complaints received in 2013, 54% (2012: 43%) were from Claims Management
Companies (CMC's), with this proportion rising to 70% in December 2013.
1 Total claims received to date excluding those for which no PPI policy exists and excluding responses to
proactive mailing. The volume for 31 December 2012 has been restated to exclude cases where there
was no PPI policy: previously 1.1m.
2 Average uphold rate per claim excluding those for which no PPI policy exists. The average uphold rate
for 31 December 2012 has been restated to exclude cases where there was no PPI policy: previously 39%.
3 Average redress stated on a per policy basis. The average redress for December 2012 has been
restated on a policy basis: previously £2,750 (per valid claim basis).
Interest Rate Hedging Product Redress
£m
As at 31 December 2012 814
Increase in provision in period 650
Utilisation of provision in period (295)
As at 31 December 2013 1,169
On 29 June 2012, the FSA announced that a number of UK banks, including Barclays, would conduct a
review and redress exercise in respect of interest rate hedging products sold on or after 1 December 2001 to
retail clients or private customers categorised as being „non-sophisticated' under the terms of the agreement.
Barclays sold interest rate hedging products to approximately 4,000 retail clients or private customers within
the relevant timeframe, of which approximately 2,900 have been categorised as non-sophisticated.
As at 31 December 2012, a provision of £850m had been recognised, reflecting management's best estimate
of future redress to customers categorised as non-sophisticated and related costs. The estimate was based
on an extrapolation of the results of an initial pilot exercise across the population. The provision recognised
in the balance sheet as at 31 December 2012 was £814m, after utilisation of £36m, primarily related to
administrative costs.
During 2013, additional cases have been reviewed and further guidance has been provided by the FCA
providing additional information upon which to estimate the provision. As a result, an additional provision of
£650m was recognised in June 2013, bringing the cumulative expense to £1,500m. The provision
recognised as at 31 December 2013 was £1,169m, after cumulative utilisation of £331m, primarily relating to
administrative costs and £87m of redress costs incurred. An initial redress outcome had been
communicated to nearly 30% of customers categorised as non-sophisticated that are being covered by the review.
The form of redress for each non-sophisticated customer is uncertain. It may result in a full refund, as
though the product had never been purchased, or an alternative product such as a cap. In addition, not all
customers will be entitled to redress because some sales will have complied with relevant regulatory
requirements at the time of sale.
The ultimate redress cost is also dependent on:
- The fair value of the underlying product and is therefore variable if interest rates move significantly;
- The administrative costs of completing the review and redress exercise;
- The length of time taken to complete the exercise, since an 8% p.a. interest charge is payable on product
refund amounts.
No provision has been recognised in relation to claims from customers categorised as sophisticated, which
are not covered by the redress exercise, or incremental consequential loss claims (above the 8% p.a.
interest charge) from customers categorised as non-sophisticated. As at 31 December 2013, no significant
incremental consequential loss claims from customers categorised as non-sophisticated had been agreed.
These items will be monitored and future provisions will be recognised to the extent an obligation resulting in
a probable outflow is identified.
While the Group expects that the provision as at 31 December 2013 will be sufficient to cover the full cost of
completing the redress, the appropriate provision level will be kept under review and it is possible that the
eventual costs could materially differ to the extent experience is not in line with current estimates.
Litigation
The Group is engaged in various legal proceedings, both in the UK and a number of other overseas
jurisdictions, including the US. For further information in relation to legal proceedings and discussion of the
associated uncertainties please see Note 19 - Legal, Competition and Regulatory Matters.
Redundancy & Restructuring
The provision relates to the cost of redundancy and organisational restructuring initiatives undertaken by the
Group. During 2013 the provision increased to £317m to £388m largely due to the Transform programme
and will likely be utilised within the next 12 months.
14. Retirement Benefits
As at 31 December 2013, the Group's IAS 19 (Revised) pension deficit across all schemes was £1.8bn
(2012: £1.2bn). The UK Retirement Fund (UKRF), which is the Group's main scheme, had a deficit of
£1.4bn (2012: £0.8bn).
The movement for the UKRF is largely due to an increase in the UK inflation rate assumption to 3.42%
(2012: 2.93%), partially offset by an increase in UK discount rate to 4.46% (2012: 4.31%). From December
2013, the rate is taken based on the single equivalent discount rate implied by the Towers Watson RATE
Link model. In 2012, an average rate derived from the AA corporate bond yield curve and the Towers
Watson RATE link model was used. The impact of this change on the UKRF Defined Benefit Obligation was
a £0.4bn decrease with no impact on current year profit.
The triennial funding valuation of the UKRF is currently underway with an effective date of 30 September
2013. Contribution requirements, including any deficit recovery plans, will be agreed between the Bank and
Trustee by the end of 2014. The previous triennial funding valuation at 30 September 2010 showed a deficit
of £5.0bn. Under the agreed recovery plan, deficit contributions of £1.8bn were paid to the fund in December
2011 and a further £0.5bn paid in April 2012. Further deficit contributions are payable from 2017 to 2021
starting at £0.7bn in 2017 and increasing by approximately 3.5% per annum until 2021. These deficit
contributions are in addition to the regular contributions to meet the Group's share of the cost of benefits
accruing over each year.
In non-valuation years the Scheme Actuary prepares an annual update of the funding position. The latest
annual update was carried out as at 30 September 2012 and showed a deficit of £3.6bn.
15. Called Up Share Capital
Called up share capital comprises 16,113m (2012: 12,243m) ordinary shares of 25p each. The increase was
primarily due to the Barclays PLC rights issue in Q4 2013 under which 3,219m new shares were issued.
As at 31 December 2013, there were no unexercised warrants (2012: 379.2m).
16. Other Equity Instruments
Other equity instruments include issuances during Q4 2013 of Additional Tier 1 (“AT1”) securities, which
consisted of Fixed Rate Resetting Perpetual Subordinated Contingent Convertible Securities with an
aggregate principal amount of $2bn and €1bn. The securities are perpetual securities with no fixed maturity
or redemption date.
17. Other Reserves
Currency Translation Reserve
As at 31 December 2013 there was a debit balance of £1,142m (2012: £59m credit) on the currency
translation reserve. The decrease of £1,201m (2012: £1,289m decrease) principally reflected the
depreciation of ZAR and USD against Sterling. The currency translation reserve associated with non-
controlling interests decreased by £566m (2012: £259m) due to the depreciation of ZAR against Sterling.
During the period, a £5m net gain (2012: £24m gain) from the currency translation reserve was recognised in
the income statement.
Available for Sale Reserve
As at 31 December 2013 there was a credit balance of £148m in the available for sale reserve (2012: £527m
credit). The decrease of £379m (2012: £502m increase) principally reflected the £2.7bn losses from changes
in fair value on Government Bonds offset by £2.4bn gains transferred to the income statement due to fair
value hedging.
Cash Flow Hedging Reserve
The cash flow hedging reserve represents the cumulative gains and losses on effective cash flow hedging
instruments that will be recycled to the income statement when the hedged transactions affect profit or loss.
As at 31 December 2013 there was a credit balance of £273m (2012: £2,099m credit) in the cash flow
hedging reserve. The decrease of £1,826m (2012: £657m increase) principally reflected £1,881m decreases
in the fair value of interest rate swaps held for hedging purposes as interest rate forward curves increased
and £509m gains transferred to net profit, partly offset by a deferred tax credit of £553m.
Financial Statement Notes
Treasury Shares
As at 31 December 2013 there was a debit balance of £41m (2012: £22m debit) in other reserves relating to
treasury shares. The increase principally reflected £1,066m (2012: £979m) of net purchases of treasury
shares held for the purposes of employee share schemes, partially offset by £1,047m (2012: £946m)
transferred to retained earnings reflecting the vesting of deferred share based payments.
18. Contingent Liabilities and Commitments
As at As at
31.12.13 31.12.12
£m £m
Guarantees and letters of credit pledged as collateral security 15,226 15,855
Performance guarantees, acceptances and endorsements 5,958 6,406
Contingent liabilities 21,184 22,261
Documentary credits and other short-term trade related transactions 780 1,027
Forward starting reverse repurchase agreements 1 19,936 23,549
Standby facilities, credit lines and other commitments 254,855 247,816
The Financial Services Compensation Scheme (FSCS)
The FSCS is the UK's Government backed compensation scheme for customers of authorised institutions
that are unable to pay claims. It provides compensation to depositors in the event that UK licensed deposit
taking institutions are unable to meet their claims. The FSCS raises levies on UK licensed deposit taking
institutions to meet such claims based on their share of UK deposits on 31 December of the year preceding
the scheme year (which runs from 1 April to 31 March).
Compensation has previously been paid out by the FSCS funded by loan facilities totalling approximately
£18bn provided by HM Treasury to FSCS in support of FSCS's obligations to the depositors of banks
declared in default. The interest rate chargeable on the loan and levied to the industry, is subject to a floor
equal to the HM Treasury's own cost of borrowing, based on the relevant gilt rate (FSCS advises financial
institutions to apply the 2024 UK Gilt rate published by the Debt Management Office to the Bradford &
Bingley portion of the loan). The majority of the facility is expected to be recovered, with the exception of an
estimated shortfall of £1bn which the FSCS intends to recover by levying the industry in three instalments
across 2013, 2014 and 2015. In November 2013 HM Treasury communicated via the FSCS an additional
expected shortfall in recoveries from Dunfermline Building Society, to be collected starting with an interim
levy of £100m in 2014. Barclays has included an accrual of £148m in other liabilities (2012: £156m) in
respect of the Barclays portion of the total levies raised by the FSCS.
Further details on contingent liabilities relating to legal, competition and regulatory matters can be found in
Note 19.
1 Loan commitments have been revised to incorporate forward starting reverse repurchase agreements.
19. Legal, Competition and Regulatory Matters
Barclays PLC (BPLC), Barclays Bank PLC (BBPLC) and the Group face legal, competition and regulatory
challenges, many of which are beyond our control. The extent of the impact on BPLC, BBPLC and the Group
of the legal, competition and regulatory matters in which BPLC, BBPLC and the Group are or may in the
future become involved cannot always be predicted but may materially impact our operations, financial
results and condition and prospects.
Lehman Brothers
Background Information
In September 2009, motions were filed in the United States Bankruptcy Court for the Southern District of
New York (Bankruptcy Court) by Lehman Brothers Holdings Inc. (LBHI), the SIPA Trustee for Lehman
Brothers Inc. (Trustee) and the Official Committee of Unsecured Creditors of Lehman Brothers Holdings Inc.
(Committee). All three motions challenged certain aspects of the transaction pursuant to which Barclays
Capital Inc. (BCI) and other companies in the Group acquired most of the assets of Lehman Brothers Inc.
(LBI) in September 2008, as well as the court order approving the sale (Sale). The claimants sought an order
voiding the transfer of certain assets to BCI, requiring BCI to return to the LBI estate any excess value BCI
allegedly received, and declaring that BCI is not entitled to certain assets that it claims pursuant to the Sale
documents and order approving the Sale (Rule 60 Claims). In January 2010, BCI filed its response to the
motions and also filed a motion seeking delivery of certain assets that LBHI and LBI had failed to deliver as
required by the Sale documents and the court order approving the Sale (together with the Trustee's
competing claims to those assets, Contract Claims).
Status
In February 2011, the Bankruptcy Court issued an Opinion rejecting the Rule 60 Claims and deciding some
of the Contract Claims in the Trustee's favour and some in favour of the Group. In July 2011, the Bankruptcy
Court entered final Orders implementing its Opinion. The Group and the Trustee each appealed the
Bankruptcy Court's adverse rulings on the Contract Claims to the US District Court for the Southern District
of New York (SDNY). LBHI and the Committee did not appeal the Bankruptcy Court's ruling on the Rule 60
Claims. After briefing and argument, the SDNY issued an Opinion in June 2012, reversing one of the
Bankruptcy Court's rulings on the Contract Claims that had been adverse to the Group and affirming the
Bankruptcy Court's other rulings on the Contract Claims. In July 2012, the SDNY issued an amended
Opinion, correcting certain errors but not otherwise modifying the rulings, along with an agreed judgement
implementing the rulings in the Opinion (Judgement). Under the Judgement, the Group is entitled to receive:
(i) $1.1bn (£0.7bn) from the Trustee in respect of “clearance box” assets (Clearance Box Assets); and (ii)
property held at various institutions in respect of the exchange traded derivatives accounts transferred to BCI
in the Sale (ETD Margin). The Trustee has appealed the SDNY's adverse rulings to the US Court of Appeals
for the Second Circuit (Second Circuit). The current Judgement is stayed pending resolution of the Trustee's
appeal.
Approximately $4.3bn (£2.6bn) of the assets to which the Group is entitled as part of the acquisition had not
been received by 31 December 2013, approximately $2.7bn (£1.6bn) of which have been recognised as a
receivable on the balance sheet as at that date. The unrecognised amount, approximately $1.6bn (£1.0bn)
as of 31 December 2013 effectively represents a provision against the uncertainty inherent in the litigation
and potential post-appeal proceedings and issues relating to the recovery of certain assets held by an
institution outside the US. To the extent the Group ultimately receives in the future assets with a value in
excess of the approximately $2.7bn (£1.6bn) recognised on the balance sheet as of 31 December 2013, it
would result in a gain in income equal to such excess. It appears that the Trustee may dispute the Group's
entitlement to certain of the ETD Margin even in the event the Group prevails in the pending Second Circuit
appeal proceedings. Moreover, there is uncertainty regarding recoverability of a portion of the ETD Margin
not yet delivered to the Group that is held by an institution outside the US. Thus, the Group cannot reliably
estimate how much of the ETD Margin the Group is ultimately likely to receive. Nonetheless, if the SDNY's
rulings are unaffected by future proceedings, but conservatively assuming the Group does not receive any
ETD Margin that the Group believes may be subject to a post-appeal challenge by the Trustee or to
uncertainty regarding recoverability, the Group will receive assets in excess of the $2.7bn (£1.6bn)
recognised as a receivable on the Group's balance sheet as at 31 December 2013. In a worst case scenario
in which the Second Circuit reverses the SDNY's rulings and determines that the Group is not entitled to any
of the Clearance Box Assets or ETD Margin, the Group estimates that, after taking into account its effective
provision, its total losses would be approximately $6bn (£3.6 bn). Approximately $3.3bn (£2bn) of that loss
would relate to Clearance Box Assets and ETD Margin previously received by the Group and prejudgement
and post-judgement interest on such Clearance Box Assets and ETD Margin that would have to be returned
or paid to the Trustee. In this context, the Group is satisfied with the valuation of the asset recognised on its
balance sheet and the resulting level of effective provision.
Other
In May 2013 Citibank N.A. (Citi) filed an action against BBPLC in the SDNY alleging breach of an indemnity
contract. In November 2008, BBPLC provided an indemnity to Citi in respect of losses incurred by Citi
between 17 and 19 September 2008 in performing foreign exchange settlement services for LBI as LBI's
designated settlement member with CLS Bank International. Citi did not make a demand for payment under
this indemnity until 1 February 2013 when it submitted a demand that included amounts which Barclays
concluded it was not obligated to pay. Citi proceeded to file the action in May 2013, in which it claimed that
Barclays was responsible for a "principal loss" of $90.7m, but also claimed that BBPLC was obligated to pay
Citi for certain alleged "funding losses" from September 2008 to December 2012. In a June 2013 filing with
the Court, Citi claimed that, in addition to the $90.7 million principal loss claim, it was also claiming funding
losses in an amount of at least $93.5 million, consisting of alleged interest losses of over $55 million and
alleged capital charges of $38.5 million. Both parties filed motions for partial summary judgement, and in
November 2013 the SDNY ruled that: (i) Citi may only claim statutory prejudgment interest from 1 February
2013, the date upon which it made its indemnification demand on BBPLC; (ii) to the extent that Citi can prove
it incurred actual funding losses in the form of interest and capital charges between September 2008 and
December 2012, it is entitled to recover these losses under the indemnity provided by BBPLC; and (iii)
BBPLC is entitled under the contract to demonstrate, as a defence to the funding loss claim, that Citi had no
funding losses between September 2008 and December 2012 due to the fact that it held LBI deposits during
that period in an amount greater than the principal amount Citi claims it lost in performing CLS services for
LBI between 17 and 19 September 2008.
American Depositary Shares
Background Information
BPLC, BBPLC and various current and former members of BPLC's Board of Directors have been named as
defendants in five proposed securities class actions consolidated in the SDNY. The consolidated amended
complaint, filed in February 2010, asserted claims under Sections 11, 12(a)(2) and 15 of the Securities Act of
1933, alleging that registration statements relating to American Depositary Shares representing preferred
stock, series 2, 3, 4 and 5 (Preferred Stock ADS) offered by BBPLC at various times between 2006 and
2008 contained misstatements and omissions concerning (amongst other things) BBPLC's portfolio of
mortgage-related (including US subprime-related) securities, BBPLC's exposure to mortgage and credit
market risk, and BBPLC's financial condition.
Status
In January 2011, the SDNY granted the defendants' motion to dismiss the complaint in its entirety, closing
the case. In February 2011, the plaintiffs filed a motion asking the SDNY to reconsider in part its dismissal
order, and, in May 2011, the SDNY denied in full the plaintiffs' motion for reconsideration. The plaintiffs
appealed both the dismissal and the denial of the motion for reconsideration to the Second Circuit.
In August 2013, the Second Circuit upheld the dismissal of the plaintiffs' claims related to the series 2, 3 and
4 offerings, finding that they were time barred. However, the Second Circuit ruled that the plaintiffs should
have been permitted to file a second amended complaint in relation to the series 5 offering claims, and
remanded the action to the SDNY for further proceedings consistent with the Second Circuit's decision. In
September 2013, the plaintiffs filed a second amended complaint, which purports to assert claims
concerning the series 5 offering as well as dismissed claims concerning the series 2, 3 and 4 offerings, and
the defendants have moved to dismiss.
BBPLC considers that these Preferred Stock ADS-related claims against it are without merit and is defending
them vigorously.
Mortgage-Related Activity and Litigation
The Group's activities within the US residential mortgage sector during the period of 2005 through 2008
included sponsoring and underwriting approximately $39bn of private-label securitisations; economic
underwriting exposure of approximately $34bn for other private-label securitisations; sales of approximately
$0.2bn of loans to government sponsored enterprises (GSEs); and sales of approximately $3bn of loans to
others. In addition, during this time period, approximately $19.4bn of loans (net of approximately $500m of
loans sold during this period and subsequently repurchased) were also originated and sold to third parties by
mortgage originator affiliates of an entity that the Group acquired in 2007 (Acquired Subsidiary).
In connection with the Group's loan sales and sponsored private-label securitisations, the Group provided
certain loan level representations and warranties (R&Ws) generally relating to the underlying mortgages, the
property, mortgage documentation and/or compliance with law. The Group was the sole provider of R&Ws
with respect to approximately $5bn of Group sponsored securitizations, approximately $0.2bn of sales of
loans to GSEs, and the approximately $3bn of loans sold to others. In addition, the Acquired Subsidiary was
the sole provider of R&Ws on all of the loans it sold to third parties. Other than approximately $1bn of loans
sold to others for which R&Ws expired prior to 2012, there are no stated expiration provisions applicable to
the R&Ws made by the Group or the Acquired Subsidiary. The Group's R&Ws with respect to the $3bn of
loans sold to others are related to loans that were generally sold at significant discounts and contained more
limited R&Ws than loans sold to GSEs, the loans sold by the Acquired Subsidiary or those provided by the
Group on approximately $5bn of the Group's sponsored securitisations discussed above. R&Ws on the
remaining approximately $34bn of the Group's sponsored securitisations were primarily provided by third
party originators directly to the securitisation trusts with a Group subsidiary, as depositor to the securitisation
trusts, providing more limited R&Ws. Under certain circumstances, the Group and/or the Acquired Subsidiary
may be required to repurchase the related loans or make other payments related to such loans if the R&Ws
are breached. The unresolved repurchase requests received on or before 31 December 2013 associated
with all R&Ws made by the Group or the Acquired Subsidiary on loans sold to GSEs and others and private-
label activities had an original unpaid principal balance of approximately $1.7bn at the time of such sale.
Repurchase Claims
Substantially all of the unresolved repurchase requests discussed above relate to civil actions that have
been commenced by the trustees for certain residential mortgage-backed securities (RMBS) securitisations,
in which the trustees allege that the Group and/or the Acquired Subsidiary must repurchase loans that
violated the operative R&Ws. The trustees in these actions have alleged that the operative R&Ws may have
been violated with respect to a greater (but unspecified) amount of loans than the amount of loans previously
stated in specific repurchase requests made by such trustees.
Residential Mortgage-Backed Securities Claims
The US Federal Housing Finance Agency (FHFA), acting for two US government-sponsored enterprises,
Fannie Mae and Freddie Mac, filed lawsuits against 17 financial institutions in connection with Fannie Mae's
and Freddie Mac's purchases of RMBS. The lawsuits allege, amongst other things, that the RMBS offering
materials contained materially false and misleading statements and/or omissions. BBPLC and/or certain of
its affiliates or former employees are named in two of these lawsuits, relating to sales between 2005 and
2007 of RMBS in which a Group subsidiary was lead or co-lead underwriter.
Both complaints demand, amongst other things: rescission and recovery of the consideration paid for the
RMBS; and recovery for Fannie Mae's and Freddie Mac's alleged monetary losses arising out of their
ownership of the RMBS. The complaints are similar to a number of other civil actions filed against BBPLC
and/or certain of its affiliates by a number of other plaintiffs relating to purchases of RMBS. The Group
considers that the claims against it are without merit and intends to defend them vigorously.
The original face amount of RMBS related to the claims against the Group in the FHFA actions and the other
civil actions referred to above against the Group totalled approximately $9bn, of which approximately $2.6bn
was outstanding as at 31 December 2013. Cumulative losses reported on these RMBS as at 31 December
2013 were approximately $0.5bn. If the Group were to lose these actions the Group believes it could incur a
loss of up to the outstanding amount of the RMBS at the time of judgement (taking into account further
principal payments after 31 December 2013), plus any cumulative losses on the RMBS at such time and any
interest, fees and costs, less the market value of the RMBS at such time and less any reserves taken to
date. The Group has estimated the total market value of these RMBS as at 31 December 2013 to be
approximately $1.6bn. The Group may be entitled to indemnification for a portion of such losses.
Regulatory Inquiries
The Group has received inquiries, including subpoenas, from various regulatory and governmental
authorities regarding its mortgage-related activities, and is cooperating with such inquiries.
Devonshire Trust
Background Information
In January 2009, BBPLC commenced an action in the Ontario Superior Court seeking an order that its early
terminations of two credit default swaps under an ISDA Master Agreement with the Devonshire Trust
(Devonshire), an asset-backed commercial paper conduit trust, were valid. On the same day that Barclays
terminated the swaps, Devonshire purported to terminate the swaps on the ground that BBPLC had failed to
provide liquidity support to Devonshire's commercial paper when required to do so.
Status
In September 2011, the Ontario Superior Court ruled that BBPLC's early terminations were invalid,
Devonshire's early terminations were valid and, consequently, Devonshire was entitled to receive back from
BBPLC cash collateral of approximately C$533m together with accrued interest. BBPLC appealed the
Ontario Superior Court's decision to the Court of Appeal for Ontario. In July 2013, the Court of Appeal
delivered its decision dismissing BBPLC's appeal. In September 2013, BBPLC sought leave to appeal the
decision to the Supreme Court of Canada. In January 2014, the Supreme Court of Canada denied BBPLC's
application for leave to appeal the decision of the Court of Appeal. BBPLC is considering its continuing
options with respect to this matter. If the Court of Appeal's decision is unaffected by any future proceedings,
BBPLC estimates that its loss would be approximately C$500m, less any impairment provisions recognised
to date. These provisions take full account of the Court of Appeal's decision.
LIBOR and other Benchmarks Civil Actions
Following the settlements of the investigations referred to below in “Investigations into LIBOR, ISDAfix, other
benchmarks and foreign exchange rates”, a number of individuals and corporates in a range of jurisdictions
have threatened or brought civil actions against the Group in relation to LIBOR and/or other benchmarks.
The majority of the USD LIBOR cases, which have been filed in various US jurisdictions, have been
consolidated for pre-trial purposes in the US District Court for the Southern District of New York (MDL Court).
The complaints are substantially similar and allege, amongst other things, that BBPLC and the other banks
individually and collectively violated provisions of the US Sherman Act, the US Commodity Exchange Act
(CEA), the US Racketeer Influenced and Corrupt Organizations Act (RICO) and various state laws by
manipulating USD LIBOR rates. The lawsuits seek unspecified damages with the exception of three lawsuits,
in which the plaintiffs are seeking a combined total of approximately $910m in actual damages against all
defendants, including BBPLC, plus punitive damages. Some of the lawsuits seek trebling of damages under
the US Sherman Act and RICO. Certain of the civil actions are proposed class actions that purport to be
brought on behalf of (amongst others) plaintiffs that (i) engaged in USD LIBOR-linked over-the-counter
transactions (OTC Class); (ii) purchased USD LIBOR-linked financial instruments on an exchange
(Exchange-Based Class); (iii) purchased USD LIBOR-linked debt securities (Debt Securities Class); (iv)
purchased adjustable-rate mortgages linked to USD LIBOR; or (v) issued loans linked to USD LIBOR.
In March 2013, the MDL Court issued a decision dismissing the majority of claims against BBPLC and the
other banks in three lead proposed class actions (Lead Class Actions) and three lead individual actions
(Lead Individual Actions). Following the decision, plaintiffs in the Lead Class Actions sought permission to
either file an amended complaint or appeal an aspect of the March 2013 decision. In August 2013, the MDL
Court denied the majority of the motions presented in the Lead Class Actions. As a result, the Debt
Securities Class has been dismissed entirely; the claims of the Exchange-Based Class have been limited to
claims under the CEA; and the claims of the OTC Class have been limited to claims for unjust enrichment
and breach of the implied covenant of good faith and fair dealing. Subsequent to the MDL Court's March
2013 decision, the plaintiffs in the Lead Individual Actions filed a new action in California state court (since
moved to the MDL Court) based on the same allegations as those initially alleged in the proposed class
action cases discussed above. Various plaintiffs may attempt to bring appeals of some or all of the MDL
Court's decisions in the future.
Additionally, a number of other actions before the MDL Court remain stayed, pending further proceedings in
the Lead Class Actions.
Until there are further decisions, the ultimate impact of the MDL Court's decisions will be unclear, although it
is possible that the decisions will be interpreted by courts to affect other litigation, including the actions
described below, some of which concern different benchmark interest rates.
BBPLC and other banks also have been named as defendants in other individual and proposed class actions
filed in other US District Courts in which plaintiffs allege, similar to the plaintiffs in the USD LIBOR cases
referenced above, that in various periods defendants either individually or collectively manipulated the USD
LIBOR, Yen LIBOR, Euroyen TIBOR and/or EURIBOR rates. Plaintiffs generally allege that they transacted
in loans, derivatives and/or other financial instruments whose values are affected by changes in USD LIBOR,
Yen LIBOR, Euroyen TIBOR and/or EURIBOR, and assert claims under federal and state law. In October
2012, the US District Court for the Central District of California dismissed a proposed class action on behalf
of holders of adjustable rate mortgages linked to USD LIBOR. Plaintiffs have appealed, and briefing of the
appeal is complete.
In addition, BPLC has been granted conditional leniency from the Antitrust Division of the US Department of
Justice (DOJ-AD) in connection with potential US antitrust law violations with respect to financial instruments
that reference EURIBOR. As a result of that grant of conditional leniency, BPLC is eligible for (i) a limit on
liability to actual rather than treble damages if damages were to be awarded in any civil antitrust action under
US antitrust law based on conduct covered by the conditional leniency and (ii) relief from potential joint-and-
several liability in connection with such civil antitrust action, subject to BPLC satisfying the DOJ-AD and the
court presiding over the civil litigation of its satisfaction of its cooperation obligations.
BPLC, BBPLC and BCI have also been named as defendants along with four former officers and directors of
BBPLC in a proposed securities class action pending in the SDNY in connection with BBPLC's role as a
contributor panel bank to LIBOR. The complaint asserts claims under Sections 10(b) and 20(a) of the US
Securities Exchange Act 1934, principally alleging that BBPLC's Annual Reports for the years 2006 to 2011
contained misstatements and omissions concerning (amongst other things) BBPLC's compliance with its
operational risk management processes and certain laws and regulations. The complaint also alleges that
BBPLC's daily USD LIBOR submissions constituted false statements in violation of US securities law. The
complaint was brought on behalf of a proposed class consisting of all persons or entities that purchased
BPLC-sponsored American Depositary Receipts on a US securities exchange between 10 July 2007 and 27 June 2012.
In May 2013, the court granted BBPLC's motion to dismiss the complaint in its entirety. Plaintiffs
have appealed, and briefing of the appeal is complete.
In addition to US actions, legal proceedings have been brought or threatened against the Group in
connection with alleged manipulation of LIBOR and EURIBOR, in a number of jurisdictions. The first of
which in England and Wales, brought by Graiseley Properties Limited, is set down for trial in the High Court
of Justice in April 2014. The number of such proceedings, the benchmarks to which they relate, and the
jurisdictions in which they may be brought are anticipated to increase over time.
Civil Actions in Respect of Foreign Exchange Trading
Since November 2013, a number of civil actions have been filed in the SDNY on behalf of proposed classes
of plaintiffs alleging manipulation of foreign exchange markets under the US Sherman Antitrust Act and New
York state law and naming several international banks as defendants, including BBPLC.
Please see below “Investigations into LIBOR, ISDAfix, other benchmarks and foreign exchange rates” for a
discussion of competition and regulatory matters connected to “LIBOR and other Benchmark Civil Actions”.
Investigations into LIBOR, ISDAfix, other Benchmarks and Foreign Exchange Rates
The Financial Conduct Authority (FCA), the US Commodity Futures Trading Commission (CFTC), the
Securities Exchange Commission (SEC), the US Department of Justice (DOJ) Fraud Section (DOJ-FS) and
Antitrust Division (DOJ-AD), the European Commission (Commission), the United Kingdom (UK) Serious
Fraud Office (SFO), the Monetary Authority of Singapore, the Japan Financial Services Agency, the
prosecutors' office in Trani, Italy and various US state attorneys general are amongst various authorities
conducting investigations (Investigations) into submissions made by BBPLC and other financial institutions to
the bodies that set or compile various financial benchmarks, such as LIBOR and EURIBOR.
On 27 June 2012, BBPLC announced that it had reached settlements with the Financial Services Authority
(FSA) (as predecessor to the FCA), the CFTC and the DOJ-FS in relation to their Investigations and BBPLC
agreed to pay total penalties of £290m, which were reflected in operating expenses for 2012. The
settlements were made by entry into a Settlement Agreement with the FSA, a Non-Prosecution Agreement
(NPA) with the DOJ-FS and a Settlement Order Agreement with the CFTC (CFTC Order). In addition,
BBPLC was granted conditional leniency from the DOJ-AD in connection with potential US antitrust law
violations with respect to financial instruments that reference EURIBOR.
The terms of the Settlement Agreement with the FSA are confidential. However, the Final Notice of the FSA,
which imposed a financial penalty of £59.5m, is publicly available on the website of the FCA. This sets out
the FSA's reasoning for the penalty, references the settlement principles and sets out the factual context and
justification for the terms imposed. Summaries of the NPA and the CFTC Order are set out below. The full
text of the NPA and the CFTC Order are publicly available on the websites of the DOJ and the CFTC,
respectively.
In addition to a $200m civil monetary penalty, the CFTC Order requires BBPLC to cease and desist from
further violations of specified provisions of the US Commodity Exchange Act and take specified steps to
ensure the integrity and reliability of its benchmark interest rate submissions, including LIBOR and
EURIBOR, and improve related internal controls. Amongst other things, the CFTC Order requires BBPLC to:
- make its submissions based on certain specified factors, with BBPLC's transactions being given the
greatest weight, subject to certain specified adjustments and considerations;
- implement firewalls to prevent improper communications including between traders and submitters;
- prepare and retain certain documents concerning submissions and retain relevant communications;
- implement auditing, monitoring and training measures concerning its submissions and related processes;
- make regular reports to the CFTC concerning compliance with the terms of the CFTC Order;
- use best efforts to encourage the development of rigorous standards for benchmark interest rates; and
- continue to cooperate with the CFTC's ongoing investigation of benchmark interest rates.
As part of the NPA, BBPLC agreed to pay a $160m penalty. In addition, the DOJ agreed not to prosecute
BBPLC for any crimes (except for criminal tax violations, as to which the DOJ cannot and does not make any
agreement) related to BBPLC's submissions of benchmark interest rates, including LIBOR and EURIBOR,
contingent upon BBPLC's satisfaction of specified obligations under the NPA. In particular, under the NPA,
BBPLC agreed for a period of two years from 26 June 2012, amongst other things, to:
- commit no US crime whatsoever;
- truthfully and completely disclose non-privileged information with respect to the activities of BBPLC, its
officers and employees, and others concerning all matters about which the DOJ inquires of it, which
information can be used for any purpose, except as otherwise limited in the NPA;
- bring to the DOJ's attention all potentially criminal conduct by BBPLC or any of its employees that relates
to fraud or violations of the laws governing securities and commodities markets; and
- bring to the DOJ's attention all criminal or regulatory investigations, administrative proceedings or civil
actions brought by any governmental authority in the US by or against BBPLC or its employees that
alleges fraud or violations of the laws governing securities and commodities markets.
BBPLC also agreed to cooperate with the DOJ and other government authorities in the US in connection
with any investigation or prosecution arising out of the conduct described in the NPA, which commitment
shall remain in force until all such investigations and prosecutions are concluded. BBPLC also continues to
cooperate with the other ongoing investigations.
Following the settlements announced in June 2012, 31 US state attorneys general commenced their own
investigations into LIBOR, EURIBOR and the Tokyo Interbank Offered Rate. The New York Attorney
General, on behalf of this coalition of attorneys general, issued a subpoena in July 2012 to BBPLC (and
subpoenas to a number of other banks) to produce wide-ranging information and has since issued additional
information requests to BBPLC for both documents and transactional data. BBPLC is responding to these
requests on a rolling basis. In addition, following the settlements the SFO announced in July 2012 that it had
decided to investigate the LIBOR matter, in respect of which BBPLC has received and continues to respond
to requests for information.
The Commission has also been conducting investigations into the manipulation of, among other things,
EURIBOR. On 4 December 2013, the Commission announced that it has reached a settlement with the
Group and a number of other banks in relation to anti-competitive conduct concerning EURIBOR. The
Group had voluntarily reported the EURIBOR conduct to the Commission and cooperated fully with the
Commission's investigation. In recognition of this cooperation, the Group was granted full immunity from the
financial penalties that would otherwise have applied.
The CFTC and the FCA are also conducting separate investigations into historical practices with respect to
ISDAfix, amongst other benchmarks. BBPLC has received and continues to respond to subpoenas and
requests for information.
Various regulatory and enforcement authorities, including the FCA in the UK, the CFTC and the DOJ in the
US and the Hong Kong Monetary Authority have indicated that they are investigating foreign exchange
trading, including possible attempts to manipulate certain benchmark currency exchange rates or engage in
other activities that would benefit their trading positions. Certain of these investigations involve multiple
market participants in various countries. BBPLC has received enquiries from certain of these authorities
related to their particular investigations, and from other regulators interested in foreign exchange issues. The
Group is reviewing its foreign exchange trading covering a several year period through October 2013 and is
cooperating with the relevant authorities in their investigations.
For a discussion of litigation arising in connection with these investigations see “LIBOR and other
Benchmarks Civil Actions” and “Civil Actions in Respect of Foreign Exchange Trading” above.
FERC
Background Information
The US Federal Energy Regulatory Commission (FERC) Office of Enforcement investigated the Group's
power trading in the western US with respect to the period from late 2006 through 2008. In October 2012,
FERC issued an Order to Show Cause and Notice of Proposed Penalties (Order and Notice) against BBPLC
and four of its former traders in relation to this matter. In the Order and Notice, FERC asserted that BBPLC
and its former traders violated FERC's Anti-Manipulation Rule by manipulating the electricity markets in and
around California from November 2006 to December 2008, and proposed civil penalties and profit
disgorgement to be paid by BBPLC. In July 2013, FERC issued an Order Assessing Civil Penalties in which
it assessed a $435m civil penalty against BBPLC and ordered BBPLC to disgorge an additional $34.9m of
profits plus interest (both of which are consistent with the amounts proposed in the Order and Notice).
Status
In October 2013, FERC filed a civil action against BBPLC and its former traders in the US District Court in
California seeking to collect the penalty and disgorgement amount. FERC's complaint in the civil action
reiterates the allegations previously made by FERC in its October 2012 Order and Notice and its July 2013
Order Assessing Civil Penalties. BBPLC is vigorously defending this action. BBPLC and its former traders
have filed a motion to dismiss the action for improper venue or, in the alternative, to transfer it to the SDNY,
and a motion to dismiss the complaint for failure to state a claim. In September 2013, BBPLC was contacted
by the criminal division of the US Attorney's Office in the Southern District of New York and advised that
such office is looking at the same conduct at issue in the FERC matter.
BDC Finance L.L.C.
Background Information
In October 2008, BDC Finance L.L.C. (BDC) filed a complaint in the Supreme Court of the State of New York
(NY Supreme Court) alleging that BBPLC breached an ISDA Master Agreement and a Total Return Loan
Swap Master Confirmation (Agreement) governing a total return swap transaction when it failed to transfer
approximately $40m of alleged excess collateral in response to BDC's October 2008 demand (Demand).
BDC asserts that under the Agreement BBPLC was not entitled to dispute the Demand before transferring
the alleged excess collateral and that even if BBPLC was entitled to do so, it failed to dispute the Demand.
BDC demands damages totalling $297m plus attorneys' fees, expenses, and prejudgement interest.
Status
In August 2012, the NY Supreme Court granted partial summary judgement for BBPLC, ruling that BBPLC
was entitled to dispute the Demand, before transferring the alleged excess collateral, but determining that a
trial was required to determine whether BBPLC actually did so. The parties cross-appealed to the Appellate
Division of the NY Supreme Court (Appellate Division). In October 2013, the Appellate Division reversed the
NY Supreme Court's grant of partial summary judgement to BBPLC, and instead granted BDC's motion for
partial summary judgement, holding that BBPLC breached the Agreement. The Appellate Division did not
rule on the amount of BDC's damages, which has not yet been determined by the NY Supreme Court. On 25
November 2013, BBPLC filed a motion with the Appellate Division for reargument or, in the alternative, for
leave to appeal to the New York Court of Appeals. In January 2014, the Appellate Division issued an order
denying the motion for reargument and granting the motion for leave to appeal to the New York Court of
Appeals. In September 2011, BDC's investment advisor, BDCM Fund Adviser, L.L.C. and its parent
company, Black Diamond Capital
Holdings, L.L.C. also sued BBPLC and BCI in Connecticut state court for unspecified damages allegedly
resulting from BBPLC's conduct relating to the Agreement, asserting claims for violation of the Connecticut
Unfair Trade Practices Act and tortious interference with business and prospective business relations. The
parties have agreed to a stay of that case.
Interchange Investigations
The Office of Fair Trading, as well as other competition authorities elsewhere in Europe, continues to
investigate Visa and MasterCard credit and debit interchange rates. BPLC receives interchange fees, as a
card issuer, from providers of card acquiring services to merchants. The key risks arising from the
investigations comprise the potential for fines imposed by competition authorities, litigation and proposals for
new legislation. BPLC may be required to pay fines or damages and could be affected by legislation
amending interchange rules.
Interest Rate Hedging Products
See Note 13.
Credit Default Swap (CDS) Antitrust Investigations
Both the Commission and the DOJ-AD have commenced investigations in the CDS market (in 2011 and
2009, respectively). In July 2013 the Commission addressed a Statement of Objections to BBPLC and 12
other banks, Markit and ISDA. The case relates to concerns that certain banks took collective action to delay
and prevent the emergence of exchange traded credit derivative products. If the Commission does reach a
decision in this matter it has indicated that it intends to impose sanctions. The Commission's sanctions can
include fines. The DOJ-AD's investigation is a civil investigation and relates to similar issues. Proposed class
actions alleging similar issues have also been filed in the US. The timing of these cases is uncertain.
Swiss / US Tax Programme
In August 2013, the DOJ and the Swiss Federal Department of Finance announced the Programme for Non-
Prosecution Agreements or Non-Targeted letters for Swiss Banks (Programme). This agreement is the
consequence of a long-running dispute between the US and Switzerland regarding tax obligations of US
Related Accounts held in Swiss banks.
Barclays Bank (Suisse) SA and Barclays Bank plc Geneva Branch are participating in the Programme, which
requires a structured review of US accounts. This review is ongoing and the outcome of the review will
determine whether any agreement will be entered into or sanction applied to Barclays Bank (Suisse) SA and
Barclays Bank plc Geneva Branch. The deadline for completion of the review is 30 April 2014.
Investigations into Certain Agreements
The FCA has investigated certain agreements, including two advisory services agreements entered into by
BBPLC with Qatar Holding LLC (Qatar Holding) in June and October 2008 respectively, and whether these
may have related to BPLC's capital raisings in June and November 2008.
The FCA issued warning notices (Warning Notices) against BPLC and BBPLC in September 2013. The
existence of the advisory services agreement entered into in June 2008 was disclosed but the entry into the
advisory services agreement in October 2008 and the fees payable under both agreements, which amount to
a total of £322m payable over a period of five years, were not disclosed in the announcements or public
documents relating to the capital raisings in June and November 2008. While the Warning Notices consider
that BPLC and BBPLC believed at the time that there should be at least some unspecified and undetermined
value to be derived from the agreements, they state that the primary purpose of the agreements was not to
obtain advisory services but to make additional payments, which would not be disclosed, for the Qatari
participation in the capital raisings. The Warning Notices conclude that BPLC and BBPLC were in breach of
certain disclosure-related listing rules and BPLC was also in breach of Listing Principle 3 (the requirement to
act with integrity towards holders and potential holders of the company's shares). In this regard, the FCA
considers that BPLC and BBPLC acted recklessly. The financial penalty in the Warning Notices against the
group is £50m. BPLC and BBPLC continue to contest the findings.
The FCA proceedings are now subject to a stay pending progress in an investigation by the SFO's Fraud
Office into the same agreements. The SFO's investigation is at an earlier stage and the Group has received
and has continued to respond to requests for further information.
The DOJ and the SEC are undertaking an investigation into whether the Group's relationships with third
parties who assist BPLC to win or retain business are compliant with the United States Foreign Corrupt
Practices Act. They are also investigating the agreements referred to above including the two advisory
services agreements. The US Federal Reserve has requested to be kept informed.
General
The outcomes of the matters disclosed in this note are difficult to predict. The Group has not disclosed an
estimate of the potential financial effect on the Group of contingent liabilities arising from these matters
where it is not practicable to do so or, in cases where it is practicable, where disclosure could prejudice
conduct of the matters. Provisions have been recognised for those cases where the Group is able reliably to
estimate probable losses. The Group may incur significant expense in connection with these matters,
regardless of the ultimate outcome; furthermore these matters could expose the Group to any of the
following: substantial monetary damages and fines; other penalties and injunctive relief; potential for
additional civil or private litigation; potential for criminal prosecution in certain circumstances; potential
regulatory restrictions on the Group's business; and/or a negative effect on the Group's reputation. There is
also a risk that such investigations or proceedings may give rise to changes in law or regulation as part of a
wider response by relevant law makers and regulators. Any of these risks, should they materialise, could
have an adverse impact on the Group's operations, financial results and condition and prospects.
As mentioned above, the Group is subject to a NPA entered into with the DOJ in connection with the LIBOR
investigations. Under the NPA, the Group has agreed that, for a period of two years from 26 June 2012, it
will, amongst other things, commit no US crime whatsoever and will comply with certain obligations to
provide information to and co-operate with US authorities. A breach of any of the NPA provisions could lead
to prosecutions in relation to the Group's benchmark interest rate submissions and could have significant
consequences for the Group's current and future business operations in the US.
The Group is engaged in various other legal, competition and regulatory matters both in the UK and a
number of overseas jurisdictions. It is subject to legal proceedings by and against the Group which arise in
the ordinary course of business from time to time, including (but not limited to) disputes in relation to
contracts, securities, debt collection, consumer credit, fraud, trusts, client assets, competition, data
protection, money laundering, employment, environmental and other statutory and common law issues.
The Group is also subject to enquiries and examinations, requests for information, audits, investigations and
legal and other proceedings by regulators, governmental and other public bodies in connection with (but not
limited to) consumer protection measures, compliance with legislation and regulation, wholesale trading
activity and other areas of banking and business activities in which the Group is or has been engaged.
At the present time, the Group does not expect the ultimate resolution of any of these other matters not
disclosed in this note to which it is a party to have a material adverse effect on its financial position. The
Group has not disclosed an estimate of the potential financial effect on the Group of contingent liabilities
where it is not practicable to do so or, in cases where it is practicable, where disclosure could prejudice
conduct of matters. However, in light of the uncertainties involved in such matters, there can be no
assurance that the outcome of a particular matter or matters will not be material to the Group's results of
operations or cash flow for a particular period, depending on, among other things, the amount of the loss
resulting from the matter(s) and the amount of income otherwise reported for the reporting period.
20. Related Party Transactions
Related party transactions in the year ended 31 December 2013 were similar in nature to those disclosed in
the Group's 2012 Annual Report. No related party transactions that have taken place in 2013 have materially
affected the financial position or the performance of the Group during this period and there were no changes
in the related parties transactions described in the 2012 Annual Report that could have a material effect on
the financial position or performance of the Group in the current financial year.
One Africa
One Africa includes Barclays Africa Group Limited, Barclays Bank Egypt SAE, Barclays Bank of Zimbabwe
Limited, Barclays Bank PLC income and expense derived in Africa and Africa related management
recharges.
During 2013, ownership of eight separate country operations across Africa was successfully combined with
Absa to create Barclays Africa Group Limited. The combination of these businesses should allow the Group
to combine a strong local presence in different countries with the benefits of being part of a global banking
group. As a part of the Transform strategy, it will help reduce the cost of business, bring global relationships,
products and expertise to African customers, and give African clients access to global financial markets. In
addition, these changes are intended to make it easier for global clients to access African market expertise.
The income statement information presented below has been provided to give a view of the Group's
operations in Africa in addition to the Africa RBB segment. The proforma income statement is a summation
of the results of the Group's retail and business banking, cards, corporate and investment banking and
wealth management operations across Africa, in addition to Group consolidation adjustments.
Note, the disclosure is not an operating segment under the definitions in IFRS 8 Operating Segments.
Year Year Year Year
Ended Ended Ended Ended
Income Statement Information 31.12.13 31.12.12 31.12.13 31.12.12
YoY Constant currency YoY
£m £m %Change £m £m %Change
Africa RBB 2,801 3,135 (11) 3,286 3,135 5
Africa Cards 496 398 25 583 398 46
Africa Investment Bank 368 429 (14) 433 429 1
Africa Corporate Banking 374 348 7 436 348 25
Africa Wealth Management 29 36 (19) 34 36 (6)
Head Office (30) - (38) -
Total income 4,038 4,346 (7) 4,734 4,346 9
Net claims and benefits
incurred under insurance (185) (209) (11) (216) (209) 3
contracts
Total income net of insurance
claims 3,853 4,137 (7) 4,518 4,137 9
Credit impairment charges
and other provisions (478) (695) (31) (554) (695) (20)
Net operating income 3,375 3,442 (2) 3,964 3,442 15
Operating expenses (excluding
UK bank levy and costs to (2,519) (2,632) (4) (2,932) (2,632) 11
achieve Transform)
UK bank levy (34) (28) 21 (35) (28) 25
Costs to achieve Transform (26) - (26) -
Operating expenses (2,579) (2,660) (3) (2,993) (2,660) 13
Other net income 9 18 (50) 10 18 (44)
Profit before tax 2 805 800 1 981 800 23
Attributable profit 1 143 165 (13) 201 165 22
Africa RBB 404 322 25 505 322 57
Africa Cards 183 216 (15) 216 216
Africa Investment Bank 115 158 (27) 137 158 (13)
Africa Corporate Banking 107 96 11 128 96 33
Africa Wealth Management 3 7 (57) 4 7 (43)
Head Office (7) 1 (9) 1
Profit before tax 2 805 800 1 981 800 23
Balance Sheet Information
Risk weighted assets - CRD III £36.0bn £38.9bn
Adjusted Statutory
Performance Measures 31.12.13 31.12.12 31.12.13 31.12.12
Return on average tangible
equity 7.5% 10.4% 7.5% 10.4%
Return on average equity 4.0% 4.7% 4.0% 4.7%
Return on average risk weighted
assets 1.3% 1.3% 1.3% 1.3%
Cost: income ratio 67% 64% 67% 64%
1 Attributable profit includes profit after tax and non-controlling interests. Attributable profit excluding
management recharges is £380m (2012: £388m).
2 Profit before tax excluding management recharges is £1,095m (2012: £1,068m).
Shareholder Information
Results Timetable 1 Date
Ex-dividend date 19 February 2014
Dividend Record date 21 February 2014
Scrip reference share price set and made available to shareholders 26 February 2014
Cut off time of 4.30 pm (London time) for the receipt of Mandate Forms or 7 March 2014
Revocation Forms (as applicable)
Dividend Payment date /first day of dealing in New Shares 28 March 2014
Q1 2014 Interim Management Statement 30 April 2014
For qualifying US and Canadian resident ADR holders, the final dividend of 3.5p per ordinary share becomes
14p per ADS (representing four shares). The ADR depositary will post the final dividend on 28 March 2014 to
ADR holders on the record at close of business on 21 February 2014.
Full Full
Year Year
Ended Ended Change
Exchange Rates 2 31.12.13 31.12.12 31.12.12 3
Period end - US$/£ 1.65 1.62 2%
Average - US$/£ 1.56 1.59 (2%)
3 month average - US$/£ 1.62 1.61 1%
Period end - €/£ 1.20 1.23 (2%)
Average - €/£ 1.18 1.23 (4%)
3 month average - €/£ 1.19 1.24 (4%)
Period end - ZAR/£ 17.37 13.74 26%
Average - ZAR/£ 15.10 13.03 16%
3 month average - ZAR/£ 16.43 13.96 18%
Share Price Data 31.12.13 31.12.12
Barclays PLC (p) 271.95 262.40
Barclays Africa Group Limited (formerly Absa Group Limited) (ZAR) 132.25 164.00
For Further Information Please Contact
Investor Relations Media Relations
Charlie Rozes +44 (0) 20 7116 5752 Giles Croot +44 (0) 20 7116 6132
More information on Barclays can be found on our website: Barclays.com
Registered Office
1 Churchill Place, London, E14 5HP, United Kingdom. Tel: +44 (0) 20 7116 1000. Company number: 48839
Registrar
The Registrar to Barclays, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA United Kingdom.
Tel: 0871 384 2055 (4) from the UK or +44 121 415 7004 from overseas.
1 Note that these announcement dates are provisional and subject to change. Any changes to the Scrip
Dividend Programme dates will be made available at Barclays.com/dividends
2 The average rates shown above are derived from daily spot rates during the year used to convert foreign
currency transactions into Sterling for accounting purposes.
3 The change is the impact to Sterling reported information.
4 Calls cost 8p per minute plus network extras. Lines open 8.30am to 5.30pm UK time, Monday to Friday
excluding UK public holidays.
Shareholder Information
Listing
The principal trading market for Barclays PLC ordinary shares is the London Stock Exchange. Trading on the
New York Stock Exchange is in the form of ADSs under the ticker symbol 'BCS'. Each ADS represents four
ordinary shares of 25p each and is evidenced by an ADR. The ADR depositary is JP Morgan Chase Bank,
whose international telephone number is +1-651-453-2128, domestic telephone number is 1-800-990-1135
and address is JPMorgan Chase Bank, PO Box 64504, St. Paul, MN 55164-0504, USA.
Barclays PLC Scrip Dividend Programme
Shareholders may have their dividends reinvested in Barclays shares by joining the Barclays PLC Scrip
Dividend Programme (the Programme). At the Barclays 2013 Annual General Meeting, shareholders
approved the introduction of the Programme to replace the Barclays Dividend Reinvestment Plan. The
Programme enables shareholders, if they wish, to receive new fully paid ordinary shares in Barclays PLC
instead of a cash dividend, without incurring dealing costs or stamp duty. The Programme was initially
offered for the second interim dividend, paid on 13 September 2013, and will also be offered for any future
dividends (subject to the Directors making the Programme available for each dividend).
For further details, including the full Terms and Conditions and information about how to join or leave the
Programme, please visit Barclays.com/dividends or alternatively contact: The Registrar to Barclays,
Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA United Kingdom, or by telephoning 0871
384 2055 (1) from the UK or +44 121 415 7004 from overseas.
1 Calls cost 8p per minute plus network extras. Lines open 8.30am to 5.30pm UK time, Monday to Friday
excluding UK public holidays.
Index
Africa Retail and Business Banking 22 Liquidity pool 62
Accounting policies 99 Loans and advances to customers and banks 68
Administration and general expenses 101 Margins and balances 47
Balance sheet 14 Market risk 98
Balance sheet leverage 60 Net interest income 101
Barclaycard 24 Non-controlling interests 102
Capital ratios 52 Other reserves 112
Capital resources 53 Performance highlights 2
Cash flow statement 16 Principal risks 50
Contingent liabilities and commitments 113 Provisions 109
Corporate Banking 29 Remuneration 40
Cost to Achieve Transform 45 Results by quarter 36
Country exposures (selected Eurozone) 92 Results timetable 124
Credit impairment charges and other
69 Retail credit risk 72
provisions
Exit Quadrant Asssets 46 Retail forbearance programmes 75
Credit risk 67 Retirement benefits 112
Credit risk loans 68 Returns and equity by business 44
Derivative financial instruments 104 Risk weighted assets 54
Dividends on ordinary shares 103 Share capital 112
Earnings per share 103 Share price data 124
Statement of profit or loss and other
Europe Retail and Business Banking 20 13
comprehensive income
Assets and Liabilities held at fair value 105 Statement of changes in equity 15
Finance Director's review 8 Taxation 102
Funding and liquidity 52 Tier 1 capital ratio 52
Head Office and Other Operations 34 Total assets 67
Income statement 12 UK Retail and Business Banking 18
Investment Bank 26 Wealth and Investment Management 32
Legal, competition and regulatory matters 114 Wholesale credit risk 86
The glossary of terms can be found on:
http://group.barclays.com/about-barclays/investor-relations#institutional-investors
Debt Sponsor
Absa Bank Limited (acting through its Corporate and Investment Banking division)
Date: 12/02/2014 02:27:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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