Pricing Agreement
Exhibit 1.2
EXECUTION VERSION
Pricing Agreement
March 9, 2015
Barclays Capital Inc.
As representative of the several Underwriters
named in Schedule I (the “Representative”)
Ladies and Gentlemen:
Barclays PLC (the “Company”) proposes to issue US$1,000,000,000 aggregate principal amount of 2.00% Fixed Rate Senior Notes due 2018 (the “2018 Notes”) and US$2,000,000,000 aggregate principal amount of 3.65% Fixed Rate Senior Notes due 2025 (the “2025 Notes” and, together with the 2018 Notes, the “Notes”). Each of the Underwriters hereby undertakes to purchase at the subscription price set forth in Schedule II hereto, the amount of Notes set forth opposite the name of such Underwriter in Schedule I hereto, such payment to be made at the Time of Delivery set forth in Schedule II hereto. The obligations of the Underwriters hereunder are several but not joint.
Each of the provisions of the Underwriting Agreement—Standard Provisions, dated September 4, 2014 (the “Underwriting Agreement”), is incorporated herein by reference in its entirety, and shall be deemed to be a part of this Agreement to the same extent as if such provisions had been set forth in full herein; and each of the representations and warranties set forth therein shall be deemed to have been made at and as of the date of this Agreement, except that each representation and warranty with respect to the Prospectus in Section 2 of the Underwriting Agreement shall be deemed to be a representation and warranty as of the date of the Prospectus and also a representation and warranty as of the date of this Agreement in relation to the Prospectus as amended or supplemented relating to the Notes. Each reference to the Representatives herein and in the provisions of the Underwriting Agreement so incorporated by reference shall be deemed to refer to you. Unless otherwise defined herein, terms defined in the Underwriting Agreement are used herein as therein defined. The Representative designated to act on behalf of each of the Underwriters of Designated Securities pursuant to Section 14 of the Underwriting Agreement and the address referred to in such Section 14 is set forth in Schedule II hereto.
An amendment to the Registration Statement, or a supplement to the Prospectus, as the case may be, relating to the Designated Securities, in the form heretofore delivered to you, is now proposed to be filed with the Commission.
The Applicable Time for purposes of this Pricing Agreement is 5:15 PM New York time on March 9, 2015. Each “free writing prospectus” as defined in Rule 405 under the Securities Act for which each party hereto has received consent to use in accordance with Section 7 of the Underwriting Agreement is listed in Schedule III hereto and is attached as Exhibit A and Exhibit B hereto.
If the foregoing is in accordance with your understanding, please sign and return to us the counterpart hereof, and upon acceptance hereof by you, on behalf of each of the Underwriters, this letter and such acceptance hereof, including the provisions of the Underwriting Agreement incorporated herein by reference, shall constitute a binding agreement between each of the Underwriters on the one hand and the Company on the other.
| Very truly yours, | ||
| BARCLAYS PLC | ||
| /s/ Xxx Xxxxx | ||
| Name: | Xxx Xxxxx | |
| Title: | Director, Capital Markets Execution | |
| Accepted as of the date hereof at New York, New York | ||
| On behalf of itself and each of the other Underwriters | ||
| BARCLAYS CAPITAL INC. | ||
| /s/ Xxxxx Xxxxx | ||
| Name: | Xxxxx Xxxxx | |
| Title: | Managing Director | |
[Signature Page to Pricing Agreement]
SCHEDULE I
| Principal Amount of the 2018 Notes |
Principal Amount of the 2025 Notes |
|||||||
| Underwriter |
||||||||
| Barclays Capital Inc. |
$ | 820,000,000 | $ | 1,640,000,000 | ||||
| Academy Securities, Inc. |
$ | 10,000,000 | $ | 20,000,000 | ||||
| ANZ Securities, Inc. |
$ | 10,000,000 | $ | 20,000,000 | ||||
| BMO Capital Markets Corp. |
$ | 10,000,000 | $ | 20,000,000 | ||||
| Capital One Securities, Inc. |
$ | 10,000,000 | $ | 20,000,000 | ||||
| CastleOak Securities, L.P. |
$ | 10,000,000 | $ | 20,000,000 | ||||
| CIBC World Markets Corp. |
$ | 10,000,000 | $ | 20,000,000 | ||||
| Xxxxxx Xxxxxxxx, LLC |
$ | 10,000,000 | $ | 20,000,000 | ||||
| Fifth Third Securities, Inc. |
$ | 10,000,000 | $ | 20,000,000 | ||||
| Lebenthal & Co, LLC |
$ | 10,000,000 | $ | 20,000,000 | ||||
| Mizuho Securities USA Inc. |
$ | 10,000,000 | $ | 20,000,000 | ||||
| National Bank of Abu Dhabi P.J.S.C. |
$ | 10,000,000 | $ | 20,000,000 | ||||
| PNC Capital Markets LLC |
$ | 10,000,000 | $ | 20,000,000 | ||||
| Scotia Capital (USA) Inc. |
$ | 10,000,000 | $ | 20,000,000 | ||||
| SMBC Nikko Securities America, Inc. |
$ | 10,000,000 | $ | 20,000,000 | ||||
| TD Securities (USA) LLC |
$ | 10,000,000 | $ | 20,000,000 | ||||
| The Xxxxxxxx Capital Group, L.P. |
$ | 10,000,000 | $ | 20,000,000 | ||||
| U.S. Bancorp Investments, Inc. |
$ | 10,000,000 | $ | 20,000,000 | ||||
| Xxxxx Fargo Securities, LLC |
$ | 10,000,000 | $ | 20,000,000 | ||||
|
|
|
|
|
|||||
| Total |
$ | 1,000,000,000 | $ | 2,000,000,000 | ||||
SCHEDULE II
Title of Designated Securities:
US$ 1,000,000,000 2.00% Fixed Rate Senior Notes due 2018
US$ 2,000,000,000 3.65% Fixed Rate Senior Notes due 2025
Price to Public:
99.991% of principal amount (for the 2018 Notes)
99.685% of principal amount (for the 2025 Notes)
Subscription Price by Underwriters:
99.766% of principal amount (for the 2018 Notes)
99.235% of principal amount (for the 2025 Notes)
Form of Designated Securities:
Each of the 2018 Notes and the 2025 Notes will be represented by one or more global notes registered in the name of Cede & Co., as nominee of The Depository Trust Company issued pursuant to the Senior Debt Securities Indenture dated November 10, 2014 between the Company and The Bank of New York Mellon acting through its London Branch, as trustee (the “Trustee”)
Securities Exchange, if any:
The New York Stock Exchange
Maturity Date:
The stated maturity of the principal of the 2018 Notes will be March 16, 2018.
The stated maturity of the principal of the 2025 Notes will be March 16, 2025.
Interest Rate:
Interest will accrue on the 2018 Notes from the date of their issuance. Interest will accrue on the 2018 Notes at a rate of 2.00% per year from and including the date of issuance.
Interest will accrue on the 2025 Notes from the date of their issuance. Interest will accrue on the 2025 Notes at a rate of 3.65% per year from and including the date of issuance.
Interest Payment Dates:
Interest will be payable on the Notes semi-annually in arrear on March 16 and September 16 of each year, commencing on September 16, 2015 and ending on the relevant Maturity Date.
Record Dates:
The Business Day immediately preceding each Interest Payment Date (or, if the Notes are held in definitive form, the 15th Business Day preceding each Interest Payment Date).
Sinking Fund Provisions:
No sinking fund provisions.
Redemption Provisions for Notes:
The 2018 Notes and the 2025 Notes are redeemable, at the option of the Company, in the event of various tax law changes that have specified consequences, as described further in, and subject to the conditions specified in, the prospectus supplement dated March 9, 2015 relating to the Notes.
Time of Delivery:
March 16, 2015 by 9:30 AM New York time.
Specified Funds for Payment of Subscription Price of Designated Securities:
By wire transfer to a bank account specified by the Company in same day funds.
Value Added Tax:
(a) If the Company is obliged to pay any sum to the Underwriters under this Agreement and any value added tax (“VAT”) is properly charged on such amount, the Company shall pay to the Underwriters an amount equal to such VAT on receipt of a valid VAT invoice;
(b) If the Company is obliged to pay a sum to the Underwriters under this Agreement for any fee, cost, charge or expense properly incurred under or in connection with this Agreement (the “Relevant Cost”) and no VAT is payable by the Company in respect of the Relevant Cost under paragraph (a) above, the Company shall pay to the Underwriters an amount which:
(i) if for VAT purposes the Relevant Cost is consideration for a supply of goods or services made to the Underwriters, is equal to any input VAT incurred by the Underwriters on that supply of goods and services, but only if and to the extent that the Underwriters are unable to recover such input VAT from HM Revenue & Customs (whether by repayment or credit) provided, however, that the Underwriters shall reimburse the Company for any amount paid by the Company in respect of irrecoverable input VAT pursuant to this paragraph (i) if and to the extent such input VAT is subsequently recovered from HM Revenue & Customs (whether by repayment or credit);
(ii) if for VAT purposes the Relevant Cost is a disbursement properly incurred by the Underwriters under or in connection with this Agreement as agent on behalf of the Company, is equal to any VAT paid on the Relevant Cost by the Underwriters provided, however, that the Underwriters shall use best endeavors to procure that the actual supplier of the goods or services which the Underwriters received as agent issues a valid VAT invoice to the Company.
Closing Location: Linklaters LLP, Xxx Xxxx Xxxxxx, Xxxxxx XX0X 0XX, Xxxxxx Xxxxxxx.
Name and address of Representative:
Designated Representative: Barclays Capital Inc.
Address for Notices:
Barclays Capital Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Syndicate Registration
Selling Restrictions:
Each Underwriter of Designated Securities has represented, warranted and agreed that:
| a) | it has only communicated or caused to be communicated, and will only communicate or cause to be communicated, any invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Xxx 0000 (the “FSMA”)) received by it in connection with the issue or sale of any Designated Securities in circumstances in which Section 21(1) of the FSMA does not apply to the Company; and |
| b) | it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the Designated Securities in, from or otherwise involving the United Kingdom. |
With respect to sales of the Designated Securities in Canada, each Underwriter of Designated Securities represents to and agrees with the Company that, directly or indirectly, it shall sell the Designated Securities only to purchasers purchasing as principal that are both “accredited investors” as defined in National Instrument 45-106 Prospectus and Registration Exemptions and “permitted clients” as defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations.
Other Terms and Conditions:
As set forth in the prospectus supplement dated March 9, 2015 relating to the Notes, incorporating the Prospectus dated May 2, 2014 relating to the Notes.
SCHEDULE III
Issuer Free Writing Prospectus:
Final Term Sheet for the 2018 Notes, dated March 9, 2015, attached hereto as Exhibit A.
Final Term Sheet for the 2025 Notes, dated March 9, 2015, attached hereto as Exhibit B.
Barclays PLC Fixed Income Investor Presentation: 2014 Full Year Results, dated March 3, 2015, attached hereto as Exhibit C.
Exhibit A
Final Term Sheet for the 2018 Notes, dated March 9, 2015
Free Writing Prospectus
Filed Pursuant to Rule 433
Reg. Statement No. 333-195645
USD 1bn 2.00% Fixed Rate Senior Notes due 2018
Pricing Term Sheet
| Issuer: | Barclays PLC | |
| Notes: | USD 1bn 2.00% Fixed Rate Senior Notes due 2018 | |
| Expected Issue Ratings1: | A3 (Xxxxx’x) / BBB (S&P) / A (Fitch) | |
| Status: | Senior Debt / Unsecured | |
| Legal Format: | SEC registered | |
| Principal Amount: | USD 1,000,000,000 | |
| Trade Date: | Xxxxx 0, 0000 | |
| Xxxxxxxxxx Date: | March 16, 2015 (T+5) | |
| Maturity Date: | Xxxxx 00, 0000 | |
| Xxxxxx: | 2.00% | |
| Interest Payment Dates: | Semi-annually in arrear on March 16 and September 16 in each year, commencing on September 16, 2015 and ending on the Maturity Date | |
| Coupon Calculation: | 30/360, following, unadjusted | |
| Business Days: | New York, London | |
| U.K. Bail-in Power Acknowledgement: | Yes. See section entitled “Description of Senior Notes—Agreement with Respect to the Exercise of U.K. Bail-in Power” in the Preliminary Prospectus Supplement dated March 9, 2015 (the “Preliminary Prospectus Supplement”) | |
| Tax Redemption | If there is a Tax Event (as defined in the Preliminary Prospectus Supplement), the Issuer may, at its option, at any time, redeem the Notes, in whole but not in part, at a redemption price equal to 100% of their principal amount, together with any accrued but unpaid interest to (but excluding) the date fixed for redemption, as further described and subject to the conditions specified in the Preliminary Prospectus Supplement | |
| Benchmark Treasury: | T 1 02/15/18 | |
| Spread to Benchmark: | 90bps | |
| Reoffer Yield: | 2.003% | |
| Issue Price: | 99.991% | |
| Underwriting Discount: | 0.225% | |
| Net Proceeds: | USD 997,660,000 | |
| 1 | Note: A securities rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time. |
| Sole Bookrunner: | Barclays Capital Inc. | |
| Co-managers: | Academy Securities, Inc., ANZ Securities, Inc., BMO Capital Markets Corp., Capital One Securities, Inc., CastleOak Securities, L.P., CIBC World Markets Corp., Xxxxxx Xxxxxxxx, LLC, Fifth Third Securities, Inc., Lebenthal & Co, LLC, Mizuho Securities USA Inc., National Bank of Abu Dhabi P.J.S.C., PNC Capital Markets LLC, Scotia Capital (USA) Inc., SMBC Nikko Securities America, Inc., TD Securities (USA) LLC, The Xxxxxxxx Capital Group, L.P., U.S. Bancorp Investments, Inc., Xxxxx Fargo Securities, LLC | |
| Risk Factors: | An investment in the Notes involves risks. See “Risk Factors” section beginning on page S-8 of the Preliminary Prospectus Supplement | |
| Denominations: | USD 200,000 and integral multiples of USD 1,000 in excess thereof | |
| ISIN/CUSIP: | US06738EAF25 / 06738E AF2 | |
| Settlement: | DTC; Book-entry; Transferable | |
| Documentation: | To be documented under the Issuer’s shelf registration statement on Form F-3 (No. 333-195645) and to be issued pursuant to the Senior Debt Indenture dated November 10, 2014 between the Issuer and The Bank of New York Mellon acting through its London Branch, as trustee | |
| Listing: | We will apply to list the Notes on the New York Stock Exchange | |
| Governing Law: | New York law | |
| Definitions: | Unless otherwise defined herein, all capitalized terms have the meaning set forth in the Preliminary Prospectus Supplement | |
The Issuer has filed a registration statement (including a prospectus dated May 2, 2014 (the “Prospectus”) and the Preliminary Prospectus Supplement) with the U.S. Securities and Exchange Commission (“SEC”) for this offering. Before you invest, you should read the Prospectus and the Preliminary Prospectus Supplement for this offering in that registration statement, and other documents the Issuer has filed with the SEC for more complete information about the issuer and this offering. You may get these documents for free by searching the SEC online database (XXXXX®) at xxx.xxx.xxx. Alternatively, you may obtain a copy of the Prospectus and the Preliminary Prospectus Supplement from Barclays Capital Inc. by calling 0-000-000-0000.
-2-
Exhibit B
Final Term Sheet for the 2025 Notes, dated March 9, 2015
Free Writing Prospectus
Filed Pursuant to Rule 433
Reg. Statement No. 333-195645
USD 2bn 3.65% Fixed Rate Senior Notes due 2025
Pricing Term Sheet
| Issuer: | Barclays PLC | |
| Notes: | USD 2bn 3.65% Fixed Rate Senior Notes due 2025 | |
| Expected Issue Ratings1: | A3 (Xxxxx’x) / BBB (S&P) / A (Fitch) | |
| Status: | Senior Debt / Unsecured | |
| Legal Format: | SEC registered | |
| Principal Amount: | USD 2,000,000,000 | |
| Trade Date: | Xxxxx 0, 0000 | |
| Xxxxxxxxxx Date: | March 16, 2015 (T+5) | |
| Maturity Date: | Xxxxx 00, 0000 | |
| Xxxxxx: | 3.65% | |
| Interest Payment Dates: | Semi-annually in arrear on March 16 and September 16 in each year, commencing on September 16, 2015 and ending on the Maturity Date | |
| Coupon Calculation: | 30/360, following, unadjusted | |
| Business Days: | New York, London | |
| U.K. Bail-in Power Acknowledgement: | Yes. See section entitled “Description of Senior Notes—Agreement with Respect to the Exercise of U.K. Bail-in Power” in the Preliminary Prospectus Supplement dated March 9, 2015 (the “Preliminary Prospectus Supplement”) | |
| Tax Redemption | If there is a Tax Event (as defined in the Preliminary Prospectus Supplement), the Issuer may, at its option, at any time, redeem the Notes, in whole but not in part, at a redemption price equal to 100% of their principal amount, together with any accrued but unpaid interest to (but excluding) the date fixed for redemption, as further described and subject to the conditions specified in the Preliminary Prospectus Supplement | |
| Benchmark Treasury: | T 2 02/15/25 | |
| Spread to Benchmark: | 150bps | |
| Reoffer Yield: | 3.688% | |
| Issue Price: | 99.685% | |
| Underwriting Discount: | 0.45% | |
| Net Proceeds: | USD 1,984,700,000 | |
| 1 | Note: A securities rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time. |
| Sole Bookrunner: | Barclays Capital Inc. | |
| Co-managers: | Academy Securities, Inc., ANZ Securities, Inc., BMO Capital Markets Corp., Capital One Securities, Inc., CastleOak Securities, L.P., CIBC World Markets Corp., Xxxxxx Xxxxxxxx, LLC, Fifth Third Securities, Inc., Lebenthal & Co, LLC, Mizuho Securities USA Inc., National Bank of Abu Dhabi P.J.S.C., PNC Capital Markets LLC, Scotia Capital (USA) Inc., SMBC Nikko Securities America, Inc., TD Securities (USA) LLC, The Xxxxxxxx Capital Group, L.P., U.S. Bancorp Investments, Inc., Xxxxx Fargo Securities, LLC | |
| Risk Factors: | An investment in the Notes involves risks. See “Risk Factors” section beginning on page S-8 of the Preliminary Prospectus Supplement | |
| Denominations: | USD 200,000 and integral multiples of USD 1,000 in excess thereof | |
| ISIN/CUSIP: | US06738EAE59 / 06738E AE5 | |
| Settlement: | DTC; Book-entry; Transferable | |
| Documentation: | To be documented under the Issuer’s shelf registration statement on Form F-3 (No. 333-195645) and to be issued pursuant to the Senior Debt Indenture dated November 10, 2014 between the Issuer and The Bank of New York Mellon acting through its London Branch, as trustee | |
| Listing: | We will apply to list the Notes on the New York Stock Exchange | |
| Governing Law: | New York law | |
| Definitions: | Unless otherwise defined herein, all capitalized terms have the meaning set forth in the Preliminary Prospectus Supplement | |
The Issuer has filed a registration statement (including a prospectus dated May 2, 2014 (the “Prospectus”) and the Preliminary Prospectus Supplement) with the U.S. Securities and Exchange Commission (“SEC”) for this offering. Before you invest, you should read the Prospectus and the Preliminary Prospectus Supplement for this offering in that registration statement, and other documents the Issuer has filed with the SEC for more complete information about the issuer and this offering. You may get these documents for free by searching the SEC online database (XXXXX®) at xxx.xxx.xxx. Alternatively, you may obtain a copy of the Prospectus and the Preliminary Prospectus Supplement from Barclays Capital Inc. by calling 0-000-000-0000.
-2-
 Fixed Income Investor Presentation
2014 Full Year Results
3 March 2015
Free Writing Prospectus
Filed Pursuant to Rule 433
Reg. Statement No. 333-195645
Exhibit C |
 Financial highlights
1
Including Spain disposal |
Barclays Full Year 2014 Fixed Income Investor Presentation
2
Increased
adjusted
pre-tax
profits
by
12%
–
Core
up
3%,
Non-Core
losses
down 24%
Costs excluding CTA £16.9bn, ahead of £17bn guidance
Building
capital:
CET1
ratio
10.5%
and
BCBS
leverage
ratio
3.8%
1
Core business performed well with PBT of £6.7bn and XxX of 9.2% (10.9%
ex-CTA)
Strong progress on shrinking Non-Core and releasing capital
|
 Performance Overview
ASSET QUALITY
CREDIT RATING
APPENDIX
PERFORMANCE
OVERVIEW
LIQUIDITY &
FUNDING
CAPITAL &
LEVERAGE |
 Financial performance
•
Adjusted profit before tax increased by 12% to £5.5bn as PCB
and Barclaycard continued to grow profits. This was partly
offset by reduced income in the Investment Bank, which made
progress on its origination-led strategy whilst driving cost
savings and RWA efficiencies
•
Adjusted income decreased 8% while impairment reduced by
29% due to a £732m reduction in Non-Core to £168m and 8%
reduction in the Core business
•
Total adjusted operating expenses decreased 9% to £18.1bn
driven by savings from Transform programmes and favourable
currency movements. Operating expenses excluding CTA
were £16.9bn, down from £18.7bn in 2013 and ahead of the
£17bn 2014 target
•
Adjusted attributable profit was £2.8bn, resulting in EPS of
17.3p
•
Core
XxX
was
9.2%
(or
10.9%
excluding
CTA)
–
Group XxX
was 5.1%
•
Barclays Non-Core attributable loss reduced by 43% to
£1.1bn, and XxX drag fell to 4.1%
Summary Group financials: Adjusted profits up 12%
1
EPS and XxX calculations are based on adjusted attributable profit, also taking into
account tax credits on AT1 coupons | PERFORMANCE
OVERVIEW
Barclays Full Year 2014 Fixed Income Investor Presentation
4
ASSET QUALITY
CREDIT RATING
APPENDIX
LIQUIDITY &
FUNDING
CAPITAL &
LEVERAGE
Year ended
–
December (£m)
2013
2014
Income
27,896
25,728
Impairment
(3,071)
(2,168)
Total operating expenses
(19,893)
(18,069)
–
Costs to achieve Transform (CTA)
(1,209)
(1,165)
Adjusted profit before tax
4,908
5,502
Tax
(1,963)
(1,704)
NCI and other equity interests
(757)
(1,019)
Adjusted attributable profit
2,188
2,779
–
Provisions for PPI and IRH redress
(2,000)
(1,110)
–
Gain on US Xxxxxx acquisition
assets
259
461
–
Provision for ongoing investigations
and litigation relating to Foreign
Exchange
–
(1,250)
–
Loss on announced sale of the
Spanish business
–
(446)
–
ESHLA valuation revision
–
(935)
–
Own credit and goodwill impairment
(299)
34
Statutory profit before tax
2,868
2,256
Statutory attributable profit/(loss)
540
(174)
Basic EPS
1
15.3p
17.3p
Return
on average equity
1
4.1%
5.1% |
 |
(£bn)
Dec-13
Sep-14
Dec-14
Balance
Sheet
Total assets
1,344
1,366
1,358
Leverage exposure
1
n/a
1,324
1,233
Leverage ratio
1
n/a
3.5%
3.7%
Capital
2
Fully loaded CET1 ratio
9.1%
10.2%
10.3%
Fully loaded CET1
capital
40.4
42.0
41.5
Risk-weighted assets
442
413
402
Liquidity
Liquidity coverage
ratio
3
96%
115%
124%
Liquidity pool
127
146
149
Funding
Loan to Deposit Ratio
4
91%
90%
89%
Wholesale funding
5
186
178
171
NSFR
3
94%
n/a
102%
•
Continued strengthening of all key balance sheet metrics
•
Good progress on capital position with fully loaded CRD
IV CET1 ratio of 10.3% and BCBS leverage ratio of
3.7%, both well on track towards 2016 Transform targets
•
Liquidity pool increased to £149bn, 82% of which in cash
and deposits with central banks and high quality
government bonds
•
Solid LCR with a £30bn surplus above 100% future
requirement
•
Funding profile remained conservative with Loan to
Deposit Ratio of 89% in retail and corporate businesses
•
Wholesale funding outstanding was £171bn, of which
£75bn matures in <1 year
•
NSFR exceeded 100% well ahead of implementation
date
Strengthening key financial metrics
Highlights
PERFORMANCE
OVERVIEW
Barclays Full Year 2014 Fixed Income Investor Presentation
5
ASSET QUALITY
CREDIT RATING
APPENDIX
LIQUIDITY &
FUNDING
CAPITAL &
LEVERAGE
1
Estimates
based
on
current
understanding
of
the
BCBS
270
standards
and
the
requirements
contained
in
the
European
Commission
delegated
act
|
2
Based
on
Barclays
interpretation
of
the
final
CRD
IV
text
and
latest
EBA
technical
standards
|
3
LCR
based
on
CRD
IV
rules
as
per
the
EU
Delegated
Act
and
the
NSFR
based
on
the
final
guidelines
published
by
the
BCBS
in
October
2014.
NSFR
disclosed
semi-annually
|
4
LDR
calculated
for
PCB,
Africa
Banking,
Barclaycard
and
Non-Core
retail
|
5
Excludes
repurchase
agreements
| |
 |
Highlights
Financial performance
•
PBT up 3% at £6.7bn:
–
PCB and Barclaycard profits up 29% and 13%
respectively
–
Africa Banking profits down 6%, but up 13% on a
constant currency basis
–
Investment Bank profits down 32% in a year of
transition
•
Income fell 4% to £24.7bn
•
Impairment improved by 8% to £2.0bn, reflecting the
improving UK economic environment benefitting PCB
and reduced impairment in Africa Banking South Africa
mortgages portfolio
•
Operating expenses down 6% to £16.1bn reflecting
Transform savings across the businesses, partially offset
by an increase in CTA spend, including restructuring of
the branch network and technology improvements to
increase automation in PCB
•
Core attributable profit was £3.9bn with Core EPS of 24p
•
Core XxX was 9.2% (10.9% excluding CTA) on average
allocated equity of £42bn, up £6bn from 2013
Core business performing well
Year
ended
–
December
(£m)
2013
2014
Income
25,603
24,678
Impairment
(2,171)
(2,000)
Total operating expenses
(17,048)
(16,058)
–
Costs to achieve Transform (CTA)
(671)
(953)
Adjusted profit before tax
6,470
6,682
Tax
(1,754)
(1,976)
NCI and other equity interests
(638)
(842)
Adjusted attributable profit
4,078
3,864
Adjusted financial performance
measures
Average allocated equity
£36bn
£42bn
Return on average tangible equity
14.4%
11.3%
Return on average equity
11.3%
9.2%
Cost: income ratio
67%
65%
Basic EPS contribution
28.5p
24.0p
Dec-13
Dec-14
CRD IV RWAs
£333bn
£327bn
Leverage exposure
1
n/a
£956bn
1
BCBS
270
leverage
exposure.
All
references
to
leverage
exposure
in
this
document
is
on
this
basis
|
PERFORMANCE
OVERVIEW
Barclays Full Year 2014 Fixed Income Investor Presentation
6
ASSET QUALITY
CREDIT RATING
APPENDIX
LIQUIDITY &
FUNDING
CAPITAL &
LEVERAGE |
 |
ASSET QUALITY
CREDIT RATING
APPENDIX
LIQUIDITY &
FUNDING
CAPITAL &
LEVERAGE
Year
ended
–
December
(£m)
2013
2014
–
Businesses
1,498
1,101
–
Securities and Loans
642
117
–
Derivatives
153
(168)
Income
2,293
1,050
Impairment
(900)
(168)
Total operating expenses
(2,845)
(2,011)
–
Costs to achieve Transform (CTA)
(538)
(212)
Loss before tax
(1,562)
(1,180)
Tax
(209)
272
NCI and other equity interests
(119)
(177)
Attributable profit/(loss)
(1,890)
(1,085)
Financial performance measures
Average
allocated
equity
1
£17bn
£13bn
Period end allocated equity
£15bn
£11bn
Return on average tangible equity drag
(9.6%)
(5.4%)
Return on average equity drag
(7.2%)
(4.1%)
Basic EPS contribution
(13.2p)
(6.7p)
Highlights
•
Loss before tax reduced by 24% to £1,180m as
improvements in impairments and costs were partially
offset by significant declines in income due to sales and
rundown of businesses, securities and loans and the
non-recurrence of favourable fair value movements on
derivatives
•
2013 CTA spend primarily reflects restructuring in
Europe, with the subsequent savings flowing through
2014 operating expenses
•
The income and costs relating to Spain will exit on
completion, with a c.£280m reduction in annualised
income, offset by c.£240m saving in gross costs
•
Period end equity reduced by £4.1bn to £11.0bn
•
Reduced loss and lower allocated equity reduced drag
on Group XxX to 4.1%, well within the 6% to 3% drag
guidance
Continued shrinkage and capital return in Non-Core
PERFORMANCE
OVERVIEW
Barclays Full Year 2014 Fixed Income Investor Presentation
7 |
 ASSET QUALITY
CREDIT RATING
APPENDIX
PERFORMANCE
OVERVIEW
LIQUIDITY &
FUNDING
Capital & Leverage
CAPITAL &
LEVERAGE |
 |
Fully
loaded
(FL)
CRD
IV
CET1
ratio
progression
1
RWA reduction (£bn)
Good progress on CET1 ratio towards 2016 Transform
target
•
FL CRD IV CET1 ratio up 120bps, or c.140bps if including the
sale of the Spanish businesses, demonstrating good progress
towards 2016 Transform target of greater than 11%
•
Continued capital build as FL CRDIV CET1 capital grew by
£1.1bn to £41.5bn, after absorbing £3.3bn of adjusting items
•
Confident that our planned trajectory positions us well to meet
future regulatory requirements
•
RWAs reduced by £41bn, or £46bn including the sale of
the Spanish businesses, reflecting excellent progress on
the run-down of Non-Core to £75bn
•
Increases due to model updates largely offset by
methodology and policy driven decreases
Spain
c.16bps
2
40
42
41
CET1
Capital
(9%)
o/w
Spain
(£5bn)
2
1
Based
on
Barclays
interpretation
of
the
final
CRD
IV
text
and
latest
EBA
technical
standards.
Following
the
full
implementation
of
CRD
IV
reporting
in
2014,
the
previously
reported
31
December
2013
RWAs
were
revised
by
£6.9bn
to
£442bn
and
fully
loaded
CET1
ratio
by
(0.2%)
to
9.1%
|
2
As
announced
on
2
January
2015
|
CAPITAL &
LEVERAGE
Barclays Full Year 2014 Fixed Income Investor Presentation
9
ASSET QUALITY
CREDIT RATING
APPENDIX
PERFORMANCE
OVERVIEW
LIQUIDITY &
FUNDING
9.1%
10.2%
10.3%
>11%
Dec-13
Sep-14
Dec-14
2016
442
413
402
c.400
Dec-13
Sep-13
Dec-14
2016
Target
Guidance
+120bps |
 ASSET QUALITY
CREDIT RATING
APPENDIX
PERFORMANCE
OVERVIEW
LIQUIDITY &
FUNDING
RWAs (£bn)
Highlights
•
RWAs reduced by £40.6bn, or £46bn including the sale
of the Spanish businesses, reflecting excellent progress
on the rundown of Non-Core, allowing for growth in Core
businesses
•
Non-Core RWAs reduced £35bn to £75bn reflecting the
disposal of businesses, rundown and exit of securities
and loans, and derivative risk reductions
•
If excluding the impact of methodology and model
changes, Investment Bank RWAs reduced by £11bn
driven principally by trading book risk reductions
•
Increases due to model updates largely offset by
methodology and policy driven decreases
RWAs: Well managed to support business growth and
returns
1
Excludes
model
and
methodology
driven
movements
|
2
Includes
foreign
exchange
movements
of
£(1.5)bn.
This
does
not
include
movements
for
modelled
counterparty
risk
or
modelled
market
risk
|
1
402
1
Spain
1
1
442
2
CAPITAL &
CAPITAL &
LEVERAGE
LEVERAGE
Barclays Full Year 2014 Fixed Income Investor Presentation
10
2013
Core
business
growth
(ex. IB)
BNC
run-down
IB
reduction
Net model
and
methodology
updates
Other
2014
9
5
34
11
1
3 |
 Barclays Non-Core:
Outperforming on RWA Spain
2
1
Derivatives
figure
for
Sep-14
has
been
adjusted
following
reclassification
of
assets
previously
reported
in
securities
and
loans
|
2
Portion
of
Spain
within
Barclays
Non-Core
|
3
2016
target
amended
to
reflect
the
impact
of
Spain
|
Target = 80
Barclays Full Year 2014 Fixed Income Investor Presentation
11
Dec-13
Disposals
Efficiencies
Maturities
and other
Dec-14
110
75
19
11
5
Xxx-00
Xxx-00
Xxx-00
0000
Xxxxxxx
Operational risk and DTA
Securities and loans
Xxxxxxxxxxx
0
Xxxxxxxxxx
000
00
9
9
22
16
31
31
19
13
5
Revised
Target
75
ASSET QUALITY
CREDIT RATING
APPENDIX
PERFORMANCE
OVERVIEW
LIQUIDITY &
FUNDING
CAPITAL &
LEVERAGE
RWA reduction bridge (£bn)
RWA by type (£bn)
81 |
 Continued progress on the transition towards our
‘target’
end-state capital structure
Evolution of capital structure
Fully loaded CRD IV capital position
•
Fully loaded CRD IV CET1 ratio at 10.3% (10.2% on PRA transitional
basis) on track to meet our target of > 11% in 2016. The ratio was
well in excess of the 7% PRA regulatory target
•
Robust buffers to contingent capital triggers
–
AT1 contingent capital: c.330bps or £13.3bn
–
T2
contingent
capital:
c.530bps
or
£21.5bn
•
As
we
build
CET1
capital
over
the
transitional
period,
we
expect
to
reach a range of 11.5-12% in end-state reflecting our intention to
hold an internal management buffer of up to 150bps over
future
minimum
requirements
•
Transitional total capital ratio increased to 16.5% (2013: 15.0%), and
fully loaded total capital ratio increased to 15.4% (2013: 13.9%)
•
Further clarity required on Total Loss Absorbing Capacity (TLAC)
quantum and composition. In the interim, we continue to build
towards our ‘target’
end-state capital structure which assumes at
least 17% of total capital; final requirements subject to PRA
discretion
•
Barclays 2015 Pillar 2A requirement as per the PRA’s Individual Capital
Guidance (ICG) is 2.8%. The ICG is subject to at least annual review
–
CET1 of 1.6% (assuming 56%)
–
AT1 of 0.5% (assuming 19%)
–
T2 of 0.7% (assuming 25%)
•
The PRA consultation on the Pillar 2 framework (CP1/15), and Basel
Committee consultations and reviews of approaches to Pillar 1 and Pillar 2
risk might further impact the Pillar 2A requirement in the future
1.8% (£7.4bn)
Legacy T1
3.5%
(£14.3bn)
T2
17%
Total capital ratio
CCCB/
Sectoral
buffers
16.5%
Total capital ratio
1.6% P2A
Pillar
2A
requirement
6
4.5%
CET1
1.7% (£6.9bn)
Legacy T1
1
Difference
to
fully
loaded
ratio
of
10.3%
arises
from
a
regulatory
adjustment
relating
to
unrealised
gains
|
2
Being
the
higher
of
7%
PRA
expectation
and
CRD
IV
capital
requirements
|
3
CRD
IV
rules
on
mandatory
distribution
restrictions
apply
from
1
January 2016
onwards
based
on
transitional
CET1
requirements
|
4
Based
on
the
CRD
IV
CET1
transitional
(FSA
October
2012
statement)
the
ratio
was
12.3%
as
at
31
December
2014
|
5
Barclays
current
regulatory
target
is
to
meet
a
FL
CRD
IV
CET1
ratio
of
9%
by 2019,
plus
a
Pillar
2A
add-on.
Pillar
2A
requirements
for
2015
held
constant
out
to
end-state
for
illustrative
purposes.
The
PRA
buffer
is
assumed
to
be
below
the
combined
buffer
requirement
of
4.5%
in
end-
state
albeit
this
might
not
be
the
case.
CCCB,
other
systemic
and
sectoral
buffer
assumed
to
be
zero
|
6
Point
in
time
assessment
made
at
least
annually,
by
the
PRA,
to
reflect
idiosyncratic
risks
not
fully
captured
under
Pillar
1
|
2.5%
Capital
Conservation buffer
Max 1.5%
Internal buffer
2.0%
AT1 (incl. P2A)
2.9%
T2 (incl. P2A)
2.0%
G-SII
Barclays Full Year 2014 Fixed Income Investor Presentation
12
ASSET QUALITY
CREDIT RATING
APPENDIX
PERFORMANCE
OVERVIEW
LIQUIDITY &
FUNDING
CAPITAL &
LEVERAGE
10.2%
1
(£40.9bn)
CET1
1.1% (£4.3bn) AT1
Barclays FY 14
capital structure
(PRA Transitional)
Barclays'
'target' end-state
capital structure
2
3
5
4 |
 ASSET QUALITY
CREDIT RATING
APPENDIX
PERFORMANCE
OVERVIEW
LIQUIDITY &
FUNDING
CAPITAL &
LEVERAGE
13
We intend to manage our CET1 capital ratio to mitigate
against the risk of mandatory distribution restrictions
•
Mandatory restrictions to discretionary
distributions
2
will apply to all European
banks, under CRD IV, from 1 January 2016
(Art. 162.2 of CRD)
•
As outlined in Art. 141 of CRD, mandatory
distribution restrictions apply if an
institution fails to meet the combined buffer
requirement (CBR)
3
at which point a
Maximum Distributable Amount (MDA) is
calculated on a reducing scale
•
CBR is phased in from 2016. In end state,
we intend to hold an internal management
buffer of up to 150bps above CBR
providing prudent headroom to the
mandatory distribution restriction point
•
As at 1 January 2016, mandatory
distribution restrictions on interest payment
would apply at 7.2%, stepping up to 10.6%
by 2019 when the CRD IV transitional rules
are fully phased in
1
•
Barclays expects to have full discretion in
the allocation of permitted distributions
within the MDA
To AT1
7% trigger
c.£13bn
c.£15bn
>16bn
c.£17bn
c.£18bn
To MDA
restriction
n/a
n/a
>15bn
c.£12bn
c.£9bn
c.£4-6bn
CET1 requirements
1
(as at 1 January except FY14)
Capital conservation buffer (CET1)
G-SII buffer (CET1)
Trajectory of fully loaded CET1 ratio, assuming >11% target
is met
after
which
we
build
towards
11.5-12%
in
end
state
3
Distributions subject to mandatory distribution restrictions
Minimum CET1 ratio
Estimated
buffers
1
(fully
loaded
CET1
ratio
vs.
AT1
7%
trigger
and
vs.
MDA
restrictions)
Sliding scale of restrictions
Pillar 2A
1
This
analysis
is
presented
for
illustrative
purposes
only
and
is
not
a
forecast
of
Barclays’
results
of
operations
or
capital
position
or
otherwise.
The
analysis
is
based
on
certain
assumptions
(including
a
straight
line
progress
towards
meeting
the
>11%
CET1
ratio
target
in
2016,
and
11.5-12%
in
end-state,
and
that
the
P2A
requirement
for
2015
is
constant
out
to
2019
which
may
not
be
the
case
as
the
requirement
is
subject
to
at
least
annual
review)
which
cannot
be
assured
and
are
subject
to
change.
This
illustration
does
not
consider
proposals
in
the
FSB
Consultative
Document
on
the
adequacy
of
loss-absorbing
capacity
of
global
systemically
important
banks
in
resolution
|
2
Dividends
on
ordinary
shares,
interest
payments
in
respect
of
AT1
securities
and
variable
compensation
|
3
As
per
Art.
128(6)
of
CRD:
total
CET1
capital
required
to
meet
the
requirement
for
the
capital
conservation
buffer,
as
well
as
an
institution
specific
countercyclical
buffer
(CCCB),
G-SII
buffer,
O-SII
buffer
and
systemic
risk
buffer
as
applicable.
For
Barclays
this
is
currently
the
2.5%
Capital
Conservation
Buffer
and
2%
G-SII
buffer
while
the
CCCB
and
other
systemic
risk
and
sectoral
buffers
are
assumed
to
be
zero
|
CAPITAL &
LEVERAGE
Barclays Full Year 2014 Fixed Income Investor Presentation
|
10.6%
8.4%
7.2%
9.5%
4.0%
4.5%
4.5%
4.5%
4.5%
4.5%
1.4%
1.6%
1.6%
1.6%
1.6%
1.6%
0.6%
1.3%
1.9%
2.5%
0.5%
1.0%
1.5%
2.0%
10.3%
>11.0%
11.5-12%
0%
2%
4%
6%
8%
10%
12%
FY 14
2015
2016
2017
2018
2019
c.£18-20bn |
 |
ASSET QUALITY
CREDIT RATING
APPENDIX
PERFORMANCE
OVERVIEW
LIQUIDITY &
FUNDING
Leverage
ratio
progression
1
Leverage
exposure
reduction
(£trn)
1
•
Significant reduction in leverage exposure, driven
principally by reductions in Non-Core and in the Core
Investment Bank
•
Leverage exposure decreased by £91bn in Q4 2014
driven mainly by a £35bn reduction in SFT exposure,
£16bn reduction in PFE, and a seasonal £28bn
reduction in settlement balances
+30bps
41
45
46
T1
Capital
1
(9%)
BCBS 270
impact
1
Dec-13 not comparable to the estimates as of Jun-14 onwards due to different
basis of preparation. Dec-13 estimated ratio and T1 capital based on PRA leverage ratio calculated as fully loaded CRD IV T1 capital adjusted for certain
PRA defined deductions, and a PRA adjusted leverage exposure measure. From
Jun-14 onwards, estimated ratios based on current understanding of the BCBS 270 standards and the requirements contained in the European
Commission
delegated
act.
|
2
As
announced
on
2
January
2015
Barclays Full Year 2014 Fixed Income Investor Presentation
14
Leverage ratio progression ahead of plan
Dec-00
Xxx-00
Xxx-00
0000
Xxxxxx
0.0%
3.4%
3.7%
>4%
Dec-13
Jun-14
Sep-14
Dec-14
1.36
1.35
1.32
1.23
CAPITAL &
LEVERAGE
•
Leverage ratio up significantly to 3.7%, or 3.8% if
reflecting
the
sale
of
the
Spanish
businesses
2
,
well
on track
to meet 2016 Transform target of in excess of 4%
•
Improvement over the year driven by T1 capital growth,
including £2.3bn of AT1 issuance, and leverage exposure
reduction
•
Leverage ratio already in line with expected minimum end-
state requirement of 3.7% as outlined by the Financial Policy
Committee |
 |
ASSET QUALITY
CREDIT RATING
APPENDIX
PERFORMANCE
OVERVIEW
LIQUIDITY &
FUNDING
BCBS
leverage
exposure
1
(£bn)
Highlights
•
Leverage exposures during Q4 14 decreased by £91bn to
£1,233bn
•
Loans and advances and other assets decreased by £52bn to
£713bn primarily due to a seasonal reduction in settlement
balances of £28bn and a £13bn reduction in cash balances
•
SFTs decreased £35bn to £157bn driven by a £26bn reduction
in IFRS reverse repurchase agreements and £9bn in SFT
adjustments, reflecting deleveraging in BNC and a seasonal
reduction in trading volumes
•
Total derivative exposures decreased £8bn due to a £16bn
reduction in the potential future exposure (PFE), partially offset
by an increase in IFRS derivatives and cash collateral
PFE on derivatives decreased £16bn to £179bn mainly
due to reductions in business activity and optimisations,
including trade compressions and tear-ups. This was
partially offset by an increase relating to sold options
driven by a change to the basis of calculation
Other derivatives exposures (excluding PFE) increased
£8bn to £92bn driven by an increase in IFRS derivatives
of £57bn to £440bn and cash collateral £13bn to £73bn.
This was broadly offset by increases in allowable
derivatives netting
Steady progression on leverage ratio
1,353
1,324
L&A and other assets
SFTs
Undrawn commitments
Derivatives
BCBS leverage
ratio
1
1
Current
understanding
of
the
BCBS
270
standards
and
the
requirements
contained
in
the
European
Commission
delegated
act
|
2
Loans
and
advances
and
other
assets
net
of
regulatory
deductions
and
other
adjustments
|
1,233
CAPITAL &
LEVERAGE
Barclays Full Year 2014 Fixed Income Investor Presentation
15
3.4%
3.5%
3.7%
732
743
690
288
279
271
228
192
157
105
110
115
Jun-14
Sep-14
Dec-14
–
–
2 |
 ASSET QUALITY
CREDIT RATING
APPENDIX
PERFORMANCE
OVERVIEW
CAPITAL &
LEVERAGE
Liquidity & Funding
LIQUIDITY &
FUNDING |
 |
17
•
Losses arise at OpCo, and are transmitted to HoldCo through write-
down of intercompany instruments
•
Losses at HoldCo are limited to its investment in the OpCo
•
Losses should be allocated in accordance with the insolvency
hierarchy, meaning pari passu treatment of equal-ranked internal and
external claims
•
‘No creditor worse off’
than in insolvency safeguard expected to apply
for senior unsecured debt
Expected
creditor
hierarchy
during
transition
1
Barclays position
•
Barclays has started to issue capital and term senior unsecured debt
out of Barclays PLC, the Holding Company
•
To better align the credit proposition between investors in HoldCo and
OpCo securities during the transition period, proceeds raised by
Barclays PLC have been used to subscribe for capital and senior
unsecured term debt in Barclays Bank PLC with corresponding ranking
•
As the HoldCo is a creditor of the OpCo alongside OpCo external
creditors, respecting the creditor hierarchy should require pari passu
treatment between internally and externally OpCo issued capital and
debt of the same rank
1
•
Maturing
capital
and
term
senior
unsecured
debt
to
be
refinanced
out of HoldCo during the transition period, making the external creditor
hierarchy simpler post transition
Transition towards a holding company capital and
funding model
Barclays Bank
PLC (OpCo)
External capital
External equity
External senior
Subscription of internal OpCo
issued equity, capital and
debt
2
1
st
OpCo Equity
2
nd
OpCo external
& intercompany
AT1
3
rd
OpCo external
& intercompany
T2
4
th
OpCo external
& intercompany
senior
unsecured debt
External OpCo
senior
External OpCo
capital
1
Based
on
Barclays
expectations
of
the
creditor
hierarchy
in
a
resolution
scenario;
assumes
internal
subordination
not
imposed
during
transition
|
2
Internal
issuance
in
each
case
currently
with
ranking
corresponding
to
external
HoldCo
issuance.
Detailed
disclosure
can
be
found
in
the
Barclays
PLC
and
Barclays
Bank
PLC
2014
annual
reports
|
3
Total
loss
absorbing
capacity
(TLAC)
as
proposed
in
the
FSB
Consultative
Document
on
the
adequacy
of
loss-absorbing
capacity
of
global
systemically
important
banks
in
resolution
I
Barclays Full Year 2014 Fixed Income Investor Presentation
LIQUIDITY &
FUNDING
ASSET QUALITY
CREDIT RATING
APPENDIX
PERFORMANCE
OVERVIEW
CAPITAL &
LEVERAGE
(HoldCo)
When required to qualify as TLAC
3
in a material subsidiary,
senior obligations with >1 year residual maturity would need
to be downstreamed in subordinated form to its “excluded
liabilities”
Investment at HoldCo gives exposure to diversified businesses
post ring-fencing, comparable to the position of OpCo investors
today
–
–
•
Evolving regulation, including the implementation of MREL beginning
1 Jan 2016 and any subsequent regulatory policy interpretations,
may require a change to the current approach. Any change would be
communicated to the market |
 |
ASSET QUALITY
CREDIT RATING
APPENDIX
PERFORMANCE
OVERVIEW
LIQUIDITY &
FUNDING
CAPITAL &
LEVERAGE
Balance sheet
2014
2013
As at 31 December
Notes
£m
£m
Assets
Investment in subsidiary
46
33,743
30,059
Loans and advances to subsidiary
46
2,866
-
Derivative financial instrument
46
313
271
Other assets
174
812
Total assets
37,096
31,142
Liabilities
Deposits from banks
528
400
Subordinated liabilities
46
810
-
Debt securities in issue
46
2,056
-
Other liabilities
10
-
Total liabilities
3,404
400
Called up share capital
31
4,125
4,028
Share premium account
31
16,684
15,859
Other equity instruments
31
4,326
2,063
Capital redemption reserve
394
394
Retained earnings
8,163
8,398
33,692
30,742
37,096
31,142
Barclays PLC Parent Company Balance Sheet
Extract from notes to Parent Company Balance Sheet
46 Barclays PLC (the Parent Company)
Investment in subsidiary
The investment in subsidiary of £33,743m (2013: £30,059m) represents
investments made into Barclays Bank PLC, including £4,326m (2013:
£2,063m) of Additional Tier 1 (AT1) securities. The increase of
£3,684m during the year was due to a £2,263m increased holding in
Barclays Bank PLC issued securities and a further cash contribution of
£1,421m. Loans and advances to subsidiary and debt securities in
issue During the period, Barclays PLC issued £810m equivalent of Fixed
Rate Subordinated Notes (Tier 2) and £2,056m equivalent of Fixed Rate
Senior Notes accounted for as subordinated liabilities and debt securities
in issue respectively. The proceeds raised through these transactions were
used, respectively, to subscribe for £810m equivalent of Fixed Rate
Subordinated Notes (Tier 2) issued by Barclays Bank PLC, and to make
£2,056m equivalent of Fixed Rate Senior Loans to Barclays Bank PLC, in
each case with a ranking corresponding to the notes issued by Barclays
PLC.
Barclays PLC Parent company accounts
LIQUIDITY &
FUNDING
Barclays Full Year 2014 Fixed Income Investor Presentation
18
Total liabilities and shareholders’ equity
Total shareholders’ equity
Shareholders’ equity
|
 |
ASSET QUALITY
CREDIT RATING
APPENDIX
PERFORMANCE
OVERVIEW
CAPITAL &
LEVERAGE
19
•
Proactive transition towards a HoldCo funding and
capital model positions us well to meet potential future
TLAC requirements
•
While requirements remain to be set, Barclays current
expectation is a multi-year conformance period
•
Good portion of OpCo term senior unsecured debt
maturing before 2019 which can be refinanced from
HoldCo
•
Based on Barclays current interpretation of TLAC
requirements,
proxy
TLAC
ratio
at
24%
4
on
the
assumption that Barclays Bank PLC term non-
structured senior unsecured debt is refinanced from
HoldCo and subordinated to OpCo excluded liabilities
•
Currently do not intend to use HoldCo senior
unsecured debt proceeds to subscribe for OpCo
liabilities on a subordinated basis until required to do
so
•
The future TLAC-ratio will further benefit from CET1
capital growth and AT1 issuance towards end-state
expectations
•
As TLAC rules are finalised and as we approach
implementation date, we will assess the appropriate
composition and quantum of our future TLAC stack
Proxy
Total
Loss
Absorbing
Capacity
(TLAC)
1
(£bn)
Dec-14
PRA transitional Common Equity Tier 1 capital
41
PRA transitional Additional Tier 1 regulatory capital
11
Barclays PLC (HoldCo)
4
Barclays Bank PLC (OpCo)
7
PRA transitional Tier 2 regulatory capital
14
Barclays PLC (HoldCo)
1
Barclays Bank PLC (OpCo)
13
PRA transitional total regulatory capital
66
HoldCo
term
non-structured
senior
unsecured
debt
2
2
OpCo
term
non-structured
senior
unsecured
debt
3
29
Total term non-structured senior unsecured debt
97
CRD IV RWAs
402
BCBS leverage exposure
1,233
Proxy risk-weighted TLAC ratio
~ 24%
Proxy leverage based TLAC ratio
~ 8%
1
For
illustrative
purposes
only
reflecting
Barclays
interpretation
of
the
FSB
Consultative
Document
on
“Adequacy
of
loss-absorbing
capacity
of
global
systemically
important
banks
in
resolution”,
including
certain
assumptions
on
the
inclusion
or
exclusion
of
certain
liabilities
where
further
regulatory
guidance
is
necessary.
Evolving
regulation,
including
the
implementation
of
MREL
beginning
1
Jan
2016
and
any
subsequent
regulatory
policy
interpretations,
may
require
a
change
to
the
current
approach
|
2
Barclays
PLC
issued
senior
unsecured
term
debt
assumed
to
qualify
for
consolidated
TLAC
purposes
I
3
Comprise
all
outstanding
Barclays
Bank
PLC
issued
public
and
private
term
senior
unsecured
debt,
regardless
of
residual
maturity.
This
excludes
£35bn
of
notes
issued
under
the
structured
notes
programmes
|
4
Including
the
4.5%
combined
buffer
requirement
which
needs
to
be
met
in
CET1.
The
combined
buffer
requirement
comprises
a
2%
G-SII
buffer
and
2.5%
capital
conservation
buffer
a
fully
phased
in
basis.
Barclays Full Year 2014 Fixed Income Investor Presentation
LIQUIDITY &
FUNDING |
 |
ASSET QUALITY
CREDIT RATING
APPENDIX
PERFORMANCE
OVERVIEW
LIQUIDITY &
FUNDING
CAPITAL &
LEVERAGE
Balance sheet is conservatively funded
20
Trading portfolio assets and reverse repurchase
agreements are largely funded in wholesale markets by
repurchase agreements and trading portfolio liabilities
Customer loans and advances largely funded by
customer deposits
Decreasing reliance on wholesale funding (£171bn as at
31 December 2014, down £15bn since 31 December
2013)
Liquidity pool predominantly funded through wholesale
markets, and well in excess of short-term wholesale
funds
Derivative assets and liabilities matched
1
Matched
cash
collateral
and
settlement
balances
|
2
The
Group
Loan
to
Deposit
Ratio
(LDR)
includes
BAGL,
cash
collateral
and
settlement
balances
|
3
Including
L&A
to
banks,
financial
assets
at
fair
value,
AFS
securities
(excluding
liquidity
pool),
unencumbered
trading
portfolio
assets,
and
excess
derivative
assets
|
4
Including
excess
cash
collateral
and
settlement
balances
|
LIQUIDITY &
FUNDING
Barclays Full Year 2014 Fixed Income Investor Presentation
Derivatives, 438
Reverse repo, 132
Matched
funding
£709bn
Trading portfolio assets, 37
Other
matched
assets¹,
102
Other
assets³,
135
Customer loans & advances, 311
Liquidity pool, 149
100%
Group
LDR
2
Customer deposits, 332
Other
liabilities,
31
4
>1 year wholesale funds, 96
<1 year wholesale funds, 75
Other
matched
liabilities¹,
102
Trading portfolio liabilities, 45
Repo, 124
Derivatives, 438
Total assets
Total Liabilities and Equity
Balance sheet structure -
£1.3tn (excluding BAGL), 31 Dec 14
Equity, 61 |
 |
High quality liquidity pool (£bn)
Key messages
•
Further strengthened liquidity position with the Group
liquidity pool up by £22bn to £149bn, building a larger
surplus to the internal Liquidity Risk Appetite
•
Quality of the pool remains high:
82% held in cash, deposits with central banks and high
quality government bonds
Over 95% of government bonds are securities issued by
UK, US, Japanese, French, German, Danish, Swiss and
Dutch sovereigns
•
Even though not a regulatory requirement, the size of
our liquidity pool is almost double that of wholesale debt
maturing in less than a year
•
Additional significant sources of contingent funding in
the form of high quality assets pre-positioned with
central banks globally
•
Continued strengthening of estimated CRD IV/Basel 3
liquidity ratios:
Estimated LCR increased to 124%, mainly due to the
increase in the size of the liquidity pool, resulting in a
£30bn surplus above the future 100% requirement
Estimated NSFR strengthened to 102%, primarily driven
by the progress on run-down of Non-Core
Maintaining a robust liquidity position, with pool well in
excess of internal and external minimum requirements
Estimated
CRD IV/Basel 3 liquidity ratios
Metric
2013
2014
Expected 100%
requirement date
LCR
2
96%
124%
1 January 2018
Surplus
-
£30bn
NSFR
3
94%
102%
1 January 2018
Surplus to 30-day Barcxxxx-xxxxxxxx XXX
0000
0000
XXX
000%
124%
Surplus
£5bn
£29bn
127
150
1
Barclays
interpretation
of
current
rules
and
guidance
|
2
LCR
estimated
based
on
the
EU
delegated
act
|
3
Estimated
based
on
the
final
BCBS
rules
published
in
October
2014
|
Barclays Full Year 2014 Fixed Income Investor Presentation
21
85
43
37
46
62
85
19
22
27
2012
2013
2014
Cash & Deposits at Central Banks
Government Bonds
Other Available Liquidity
149
PERFORMANCE
ASSET QUALITY
CREDIT RATING
APPENDIX
LEVERAGE
OVERVIEW
FUNDING
CAPITAL &
LIQUIDITY &
1 |
 |
ASSET QUALITY
CREDIT RATING
APPENDIX
PERFORMANCE
OVERVIEW
LIQUIDITY &
FUNDING
CAPITAL &
LEVERAGE
22
Continue to access diverse wholesale funding sources
across multiple products, currencies and maturities
Key Messages
By
currency
1
USD
EUR
GBP
Others
As at 31 December 2014
35%
32%
25%
8%
As at 31 December 2013
35%
36%
19%
10%
Wholesale funding by product (as at 31 December 2014)
By
remaining
maturity
1
:
WAM
net
of
liquidity
pool
105
months
1
Given
different
accounting
treatments,
AT1
capital
is
not
included
in
outstanding
subordinated
liabilities,
while
T2
contingent
capital
notes
are
included
|
2
Primarily
comprised
of
fair
valued
deposits
(£5bn)
and
secured
financing of
physical
gold
(£5bn)
|
2
1
2
LIQUIDITY &
FUNDING
Barclays Full Year 2014 Fixed Income Investor Presentation
10%
16%
3%
13%
26%
13%
12%
7%
Depostis from banks
CDs and CPs
ABCPs
Public benchmark MTNs
Privateley place MTNs
Covered bonds / ABS
Suborindated liabilities
Other
10%
14%
8%
8%
4%
8%
21%
27%
1 month
> 1 mth but <
3 mths
> 3 mths but
6 mths
> 6 mths but
9 mths
> 9 mths but
12 mths
> 1 year but
2 years
> 2 years but
> 5 years
•
Overall stock of wholesale funding continues to fall as we
de-lever the balance sheet, with total wholesale funding
(excluding repurchase agreements) of £171bn as at
31 December 2014, a reduction of £69bn since 2012
(31 December 2013: £186bn)
£75bn matures in less than one year, while £17bn
matures within one month (31 December 2013: £82bn
and £20bn respectively)
•
£15bn of term funding (net of early redemptions) issued in
2014. Activity includes:
£8bn public benchmark senior unsecured debt, £2bn
of which issued by Barclays PLC
£0.8bn Tier 2 deal issued by Barclays PLC
£1.5bn of Covered bonds, as well as £3bn US and UK
credit card backed securities, issued by Barclays
Bank PLC
<
<
<
<
>
<
1
5 years
1
•
We have £23bn of term funding maturing 2015 and £13bn
maturing in 2016
•
We expect to issue a gross amount of £10-15bn in 2015
across public and private senior unsecured, secured and
subordinated debt and to maintain a stable and diverse
funding base by type, currency and distribution channel
<
–
–
–
– |
 Asset quality
PERFORMANCE
LIQUIDITY &
ASSET QUALITY
CREDIT RATING
APPENDIX
LEVERAGE
CAPITAL &
OVERVIEW
FUNDING |
 |
Continued strong asset quality
1
Africa Banking impairment was down 14% on a constant currency basis | •
Credit impairment charges improved 8% to £2bn, reflecting
lower impairments in PCB and Africa Banking
•
PCB benefitted from the improving economic environment in
the UK, particularly for Corporate which benefited from one-off
releases and lower defaults from large UK Corporate clients
•
Africa Banking saw improvements in the South Africa
mortgages portfolio and business banking
•
Barclaycard increased 8% due to asset growth and enhanced
coverage for forbearance. Delinquency rates remained broadly
stable and the loan loss rate reduced 24bps to 308bps
Barclays Full Year 2014 Fixed Income Investor Presentation
24
2,171
2,000
FY13
FY14
8%
Impairment charge (£m)
Highlights
Personal and Corporate Banking
Barclaycard
Africa Banking
1
Impairment (£m)
22%
621
482
FY13
FY14
(8%)
27%
1,096
1,183
FY13
FY14
479
349
FY13
FY14
PERFORMANCE
LIQUIDITY &
ASSET QUALITY
CREDIT RATING
APPENDIX
CAPITAL &
OVERVIEW
LEVERAGE
FUNDING |
 |
CREDIT RATING
APPENDIX
PERFORMANCE
OVERVIEW
LIQUIDITY &
FUNDING
CAPITAL &
LEVERAGE
•
Declining Loan Loss Rate (LLR) trend
across the Group reflecting Barclays’
well-managed and conservative risk
profile
•
The Group LLR of 46bps remains
significantly below the longer term
average of 88bps
•
Group impairment charges improved
29% year-on-year to £2.2bn
(31 December 2013: £3.1bn), principally
reflecting lower charges in Personal &
Corporate Banking, Africa Banking and
Non-Core
•
Group LLRs declining in both retail and
wholesale in line with improving macro
economic conditions
Retail loan loss rate (bps)
Group impairment improved 29%, with positive trends
across businesses
LLR
Annualised impairment charge
Gross loans and advances
Wholesale loan loss rate (bps)
Highlights
25
ASSET QUALITY
Barclays Full Year 2014 Fixed Income Investor Presentation
25
180
332
94
78
91
18
138
308
85
75
84
Personal &
Corporate
Banking
Africa
Banking
Barclaycard
Core
Barclays
Non-Core
Group
Dec-13
Dec-14
(3)
34
56
16
133
37
(0)
00
00
00
00
00
Investment
Bank
Personal &
Corporate
Banking
Africa Banking
Core
Barclays
Non-Core
Group
Dec-13
Dec-14 |
 |
ASSET QUALITY
CREDIT RATING
APPENDIX
PERFORMANCE
OVERVIEW
LIQUIDITY &
FUNDING
CAPITAL &
LEVERAGE
•
The vast majority of the exposures to Spain have been
disposed of as of 2 January 2015
•
Exposure to Spain, Italy, Portugal and Ireland reduced
further, down 18% to £43.2bn in December 2014 in line
with Non-Core strategy
•
£1bn of outstanding ECB LTRO as at 31 December 2014
•
Local net funding mismatches decreased
Portugal: €1.9bn funding gap (2013: €3bn)
Italy: €9.9bn funding gap (2013: €11.6bn)
•
We continue to explore options to exit our other
European retail and corporate exposures or materially
reduce the capital they consume
Reduced exposure to Eurozone periphery
Exposures by geography (£bn)¹
Exposures by asset class (£bn)
59.2
53.1
43.2
59.0
52.8
Key Messages
43.2
26
1
Net on balance sheet|
Barclays Full Year 2014 Fixed Income Investor Presentation
5.4
2.2
2.0
5.7
6.5
17.7
9.3
7.1
4.3
32.5
31.4
16.6
6.3
5.9
2.6
2012
2013
2014
Sovereign
Financial institutions
Corporate
Residential mortgages
Other retail lending
23.5
19.2
15.6
22.7
20.6
18.0
7.9
6.3
4.8
4.9
6.7
4.8
2012
2013
2014
Spain
Italy
Portugal
Ireland
ASSET QUALITY |
 |
CREDIT RATING
APPENDIX
PERFORMANCE
OVERVIEW
LIQUIDITY &
FUNDING
CAPITAL &
LEVERAGE
Managing country exposures
Passing stress tests –
stressed CET1 ratios
Risk –
Minimising potential headwinds
Managing sector exposures (£bn)
•
No material operations in Russia,
with <£2bn exposure in relation to
financing and trading counterparties
•
Barclays has always maintained internal stress tests
•
Barclays passed both the PRA and EBA stress tests in 2014,
with stressed CET1 ratios ahead of UK peers
•
Under the PRA test, the 7.0% represents pre-management
actions, and significantly above the 4.5% minimum threshold
•
Total net exposure of £27m in Greece
•
Investment grade makes up c.90%
of limits in oil and gas
1
Total on and off balance sheet |
1
1
Barclays Full Year 2014 Fixed Income Investor Presentation
27
ASSET QUALITY
All other
exposure
Oil majors
Exploration
and
production
Midstream
(pipelines)
Refining
Oilfield
services
PRA stress test
EBA stress test
Barclays CET1
stressed ratio
UK Peers CET1
stressed ratio
Oil and gas |
 |
|
APPENDIX
ASSET QUALITY
CREDIT RATING
PERFORMANCE
OVERVIEW
LIQUIDITY &
FUNDING
CAPITAL &
LEVERAGE
Credit ratings
28
Barclays Full Year 2014 Fixed Income Investor Presentation
|
 |
ASSET QUALITY
CREDIT RATING
APPENDIX
PERFORMANCE
OVERVIEW
LIQUIDITY &
FUNDING
CAPITAL &
LEVERAGE
Barclays’
credit ratings remain strong and in line with
peers’
As at 3 March 2015
Barclays PLC
Barclays Bank
PLC
Standard & Poor’s
Long Term
BBB (Stable)
A
(Credit Watch Negative)
Short Term
A-2
A-1
(Credit Watch Negative)
Stand-Alone Credit Profile
(SACP)
n/a
bbb+ (Stable)
Moody’s
Long Term
A3 (Negative)
A2 (Negative)
Short Term
P-2
P-1
Bank Financial Strength (BFS)
n/a
C-
(Stable)
Fitch
Long Term
A (Stable)
A (Stable)
Short Term
F1
F1
Viability Rating
a
a
DBRS
Long Term
n/a
AA low (Stable)
Short Term
n/a
R-1 middle (Stable)
•
Current ratings reflect Barclays’
“strong franchise”,
“diverse revenue streams”, “good asset quality
relative to peers”, “historically less volatile earnings
than peers”
and “sounds financial profile”
•
S&P’s Barclays PLC rating reflects 3 February
2015 decision to remove sovereign support notches
from UK and Swiss Bank Non-Operating Holding
Company (NOHC) ratings to reflect their view that
NOHCs in these jurisdictions are unlikely to receive
sovereign support. Barclays PLC benefitted from 2
notches of support previously
•
Negative outlook from Moody’s reflect the expected
removal of sovereign support notches
•
The outlooks on Barclays standalone credit profile
remains stable by all rating agencies
Key Messages
29
CREDIT RATING
Barclays Full Year 2014 Fixed Income Investor Presentation
|
 |
ASSET QUALITY
CREDIT RATING
APPENDIX
PERFORMANCE
OVERVIEW
LIQUIDITY &
FUNDING
CAPITAL &
LEVERAGE
Rating agencies evolving approach to bank ratings
•
3
February
2015
announcement
placed
the
OpCo
ratings
of
most
UK,
German
and
Austrian
banks
on
‘CreditWatch
with
Negative
implications’
to reflect their view that, with the implementation of BRRD bail-in powers in
these jurisdictions as of 1 January 2015, sovereign support ‘has become
less predictable’, but that they ‘continue to see unresolved questions about how the legislation may operate in practice’
•
S&P
expect
to
resolve
the
CWN
on
affected
banks
by
‘early
May
2015’,
which
could
see
sovereign
support
notches
removed
for
bank
OpCos
and
their
rated
subsidiaries
and
branches,
in
the
same
way
as
they
have
been
removed
for
NOHCs.
Barclays
Bank
PLC’s
rating
currently benefit from two sovereign support notches
•
Concurrently,
S&P
are
considering
changes
to
their
bank
rating
methodology
to
account
for
the
impact
that
additional
loss
absorbing
capacity (ALAC) instruments have on OpCo senior unsecured debt. This ALAC proposal
has the potential to partially or completely mitigate
the
impact
of
sovereign
support
notch
removal
from
some
bank
Operating
Companies,
if
implemented
in
the
current
draft
form
S&P
•
Barclays ratings currently include 3 notches of sovereign support, the negative
outlook expressly references their publically stated intent to remove (in
part or full) support notches from bank ratings •
In parallel, Xxxxx’x is expected to implement their new proposed bank rating
methodology which explicitly seeks to capture the impact of changing
bank
regulation
and
gives
benefit
to
some
asset
classes
from
loss
absorbing
capacity,
and
a
proposed
methodology
for
rating
counterparty risk
•
Moody’s have indicated to the market that they seek to avoid rating volatility
by announcing the implications of these changes in a co-ordinated manner
during H1 15 •
While difficult to predict precisely, methodology changes could partially or fully
offset any contemplated removal of sovereign support for some
liabilities
Moody’s
•
In March 2014 Fitch revised the outlook on long term ratings to negative for banks
in the US, EU and elsewhere that benefit from sovereign support floors
•
The agency is expected to take further action on sovereign support in H1 15,
however as Barclays standalone credit rating does not benefit from sovereign
support uplift at its current level, no rating implications are expected from any action as a consequence
Fitch
30
CREDIT RATING
Barclays Full Year 2014 Fixed Income Investor Presentation
|
 |
ASSET QUALITY
CREDIT RATING
APPENDIX
PERFORMANCE
OVERVIEW
LIQUIDITY &
FUNDING
CAPITAL &
LEVERAGE
Barclays manages and reserves for potential rating
actions in the liquidity pool
Contractual credit rating downgrade exposure
(as at 31 December 2014)
Total cumulative cash
outflow (£bn)
One-notch
Two-notch
Securitisation derivatives
5
6
Contingent liabilities
8
8
Derivatives margining
-
1
Liquidity facilities
1
2
Total
14
17
1
These numbers do not include the potential liquidity impact from loss of unsecured
funding, such as from money market funds or loss of secured funding capacity |
Key messages
31
CREDIT RATING
Barclays Full Year 2014 Fixed Income Investor Presentation
•
Potential outflows related to a multiple-notch credit
downgrade are included in the liquidity risk appetite
(LRA)
•
The table on the left hand side shows contractual
collateral requirements and contingent obligations
following potential future one and two notch long-term
and associated short-term simultaneous downgrades
across all credit rating agencies
1
•
During the year the Group strengthened its liquidity
position, building a larger surplus to its liquidity risk
appetite
•
This positions the Group well for any potential
contractual or behavioural outflows as a consequence
of the potential loss of A-1/P-1 short term ratings for
Barclays Bank PLC as credit rating agencies assess
sovereign support notches in their ratings
Behavioural outflows
Contractual outflows |
 |
ASSET QUALITY
CREDIT RATING
APPENDIX
PERFORMANCE
OVERVIEW
LIQUIDITY &
FUNDING
CAPITAL &
LEVERAGE
32
Summary
•
Diversified international bank focused on delivering improved and more
sustainable returns
•
Concentrating on high growth opportunities where we have competitive
advantage, eliminating marginal businesses and sharpening our focus on
costs
Business model
•
Strengthened capital position with fully loaded CRD IV CET1 ratio of 10.3%
as at 31 December 2014, on track to deliver a ratio of greater than 11% in
2016
•
Building on good track record in reducing RWAs as we run-down Barclays
Non-Core and reinvest in Core businesses outside of the Investment Bank
Capital
•
Diversified funding base, combining customer deposits and wholesale
funding, in multiple currencies and different maturities
•
Robust liquidity position, well positioned to meet anticipated future
regulatory requirements
Liquidity & funding
•
Proactive and practical approach to managing regulatory changes
•
Established track record of adapting to regulatory developments.
Regulation
•
BCBS leverage ratio of 3.7% as at 31 December 2014, close to our
target of greater than 4% in 2016
•
Planned reduction in leverage exposure by 2016 mainly through
reduction in Barclays Non-Core and the Core Investment Bank
Leverage
CREDIT RATING
Barclays Full Year 2014 Fixed Income Investor Presentation
|
 Appendix
APPENDIX
ASSET QUALITY
CREDIT RATING
PERFORMANCE
OVERVIEW
LIQUIDITY &
FUNDING
CAPITAL &
LEVERAGE |
 |
34
Delivering a structurally lower cost base
Allocating capital to growth businesses
Establishing a dedicated Non-Core unit and a
new Personal and Corporate Banking business
Rightsizing and focusing the Investment Bank
Generating higher and more sustainable returns
APPENDIX
Barclays Full Year 2014 Fixed Income Investor Presentation
ASSET QUALITY
CREDIT RATING
PERFORMANCE
OVERVIEW
LIQUIDITY &
FUNDING
CAPITAL &
LEVERAGE
Repositioning and simplifying Barclays |
 |
ASSET QUALITY
CREDIT RATING
APPENDIX
PERFORMANCE
OVERVIEW
LIQUIDITY &
FUNDING
CAPITAL &
LEVERAGE
2016 Transform targets
Returns
Cost
Barclays Core
Adjusted XxX >12%
Adjusted operating expenses
<£14.5bn
Leverage
Dividend
Capital
Group
Leverage ratio >4.0%
Payout ratio 40-50%
CRD IV FL CET1 ratio >11.0%
Returns
Barclays Non-
Core
Drag on adjusted XxX <(3%)
10.9%
£15.1bn
3.8%
38%
10.5%
(4.1%)
2014
1
Including Spain disposal |
Excluding CTA. XxX 9.2% including CTA |
2016 Target
Barclays Full Year 2014 Fixed Income Investor Presentation
35
2
2
1
1
2 |
 |
ASSET QUALITY
CREDIT RATING
APPENDIX
PERFORMANCE
OVERVIEW
LIQUIDITY &
FUNDING
CAPITAL &
LEVERAGE
Simpler, focused and balanced structure
Barclaycard
Personal and
Corporate Banking
Africa
Banking
Investment
Bank
Barclays Group
XxX drag
(4.1%)
1
Includes Head Office as part of Core, representing £5.6bn RWAs and £97m
profit before tax | All figures for year ended
December 2014 Barclays Full Year 2014 Fixed Income Investor
Presentation 36
1
LBT £1,180m
RWAs £75.3bn
PBT £1,377m
RWAs £122.4bn
PBT £984m
RWAs £38.5bn
PBT £1,339m
RWAs £39.9bn
PBT £2,885m
RWAs £120.2bn
Barclays Non-Core
(BNC)
Income
Impairment
Operating expenses
Profit before tax
£24.7bn
(£2.0bn)
(£16.1bn)
£6.7bn
Risk weighted assets (RWA)
Average allocated equity
Return on average equity (XxX)
Return on tangible equity (RoTE)
Adjusted results
£327bn
£42bn
9.2%
11.3% |
 |
ASSET QUALITY
CREDIT RATING
PERFORMANCE
OVERVIEW
LIQUIDITY &
FUNDING
CAPITAL &
LEVERAGE
Reducing and reallocating RWAs to drive growth and
returns
Investment
Bank
222
2013 post-resegmentation estimate
(£bn)
2016 guidance (£bn)
2013 pre-resegmentation (£bn)
49%
51%
Retail and
Commercial
214
RWAs
£436bn
BNC
c.115
Core IB
c.120
Core
(excl. IB)
c.200
£436bn
c.£400bn
+15%
c.55%
26%
28%
46%
Maintained
Core
(excl. IB)
c.230
Core IB
c.120
BNC
c.50
<15%
c.55%
30%
Leverage exposure
£1.4tn
£1.4tn
c.£1.1tn
1
The Core Investment Bank will represent no more than 30% of the Group’s
RWAs 1
2016 leverage exposure estimated on the basis of calculation methodology set out in
BCBS Jan-14 proposals. All other regulatory metrics calculated on a CRD IV basis
37
Preliminary
numbers
as
presented
at
the
Group
Strategy
Update
on
8
May
Barclays Full Year 2014 Fixed Income Investor Presentation
APPENDIX
th |
 |
ASSET QUALITY
CREDIT RATING
PERFORMANCE
OVERVIEW
LIQUIDITY &
FUNDING
CAPITAL &
LEVERAGE
38
Global credit
Right-sized macro
•
Foreign exchange
•
Rates
•
Cash equities
•
Equity derivatives
•
Equity prime
•
Credit products
•
Securitised products
•
Municipals
Fixed income secondary trading to be standard, cleared
and collateralised, short term and executed on the
electronic flow platform where relevant
Global equities
RWAs: c.£120bn
Leverage exposure: c.£490bn
•
Build
on
leading
positions
in
our
home
markets
of
the
UK
and
the
US,
where
we
are already well positioned
•
Exit those products with low returns under new regulatory rules
•
Structurally lower the cost base through infrastructure efficiencies and refining
the client proposition
•
Improve capital efficiency of Markets businesses
DCM
Advisory
ECM
Origination led
1
CRD IV basis |
Core Investment Bank
Core Investment Bank:
Building on competitive advantages
Barclays Full Year 2014 Fixed Income Investor Presentation
APPENDIX
Markets
•
Exit Quadrant Assets
•
Most physical commodities
•
Certain Emerging Markets
products
•
Capital intensive Macro
transactions
Principal Businesses
•
Investments
•
Credit
Banking
•
Front-to-back efficiency driven
headcount reductions
RWAs: c.£90bn
Leverage exposure: c.£340bn
Non-Core Investment Bank
th
Preliminary
numbers
as
presented
at
the
Group
Strategy
Update
on
8
May |
 |
ASSET QUALITY
CREDIT RATING
PERFORMANCE
OVERVIEW
LIQUIDITY &
FUNDING
CAPITAL &
LEVERAGE
Profit
before
tax
of
Core
business:
FY14
1
Retail and Corporate
Investment
Bank
Barclaycard
Personal
and
Corporate
Banking
Africa
Banking
Investment
Bank
Barclaycard
Personal
and
Corporate
Banking
Africa
Banking
1
Excluding
Head
Office
|
2
Includes
Head
Office
|
3
Costs
exclude
CTA
and
bank
levy
|
Year
ended
–
December
(£m)
2
2013
2014
Income
17,007
17,090
Adjusted profit before tax
4,450
5,305
Cost:
Income
ratio
58%
53%
+19%
PBT
CIR = 53%
69%
79%
Retail and Corporate
APPENDIX
Barclays Full Year 2014 Fixed Income Investor Presentation
39
Profit
before
tax
of
Core
business:
FY13
1
3 |
 |
ASSET QUALITY
CREDIT RATING
PERFORMANCE
OVERVIEW
LIQUIDITY &
FUNDING
CAPITAL &
LEVERAGE
APPENDIX
Year
ended
–
December
(£m)
2013
2014
Income
8,723
8,828
Impairment
(621)
(482)
Total operating expenses
(5,910)
(5,475)
–
Costs to achieve Transform
(384)
(400)
Profit before tax
2,233
2,885
Financial performance measures
Average allocated equity
£17.3bn
£17.5bn
Return on average tangible equity
12.7%
15.8%
Return on average equity
9.7%
11.9%
Cost: income ratio
68%
62%
Loan loss rate
28bps
21bps
Net interest margin
2.91%
3.00%
Dec-13
Dec-14
Loans and advances to customers
£212.2bn
£217.0bn
Customer deposits
£295.9bn
£299.2bn
CRD IV RWAs
£118.3bn
£120.2bn
Financial performance
•
Total income increased 1% to £8.8bn due to balance growth
and improved savings margins in Personal
•
Net interest margin improved by 9bps to 300bps driven
primarily by personal savings
•
Credit impairment charges improved 22% due to the improving
economic environment in the UK
Corporate benefitted from one-off releases and lower
defaults from large UK Corporate clients
•
Costs fell 7% due to savings from Transform programme,
including branch optimisation (net branch closure of 72) and
increased automation from technology improvements
•
Positive jaws contributed to an increased XxX of 11.9%, while
RoTE improved to 15.8%
•
Continue to lead the UK banking market in technology:
3.6 million customers of mobile banking
2.2 million customers of Pingit
Payment volume through our Pingit app grew almost
threefold in 2014
The number of personal unsecured loans originating
through digital channels increased by over 80% year-on-
year, and this now accounts for c. 35% of all personal
unsecured lending
•
UK mortgage market stock share was 10.1%
PCB: Profits up 29%
1
2014 CIR excluding CTA was 57% |
Bank of England lending statistics (December 2014)
| Barclays Full Year 2014 Fixed Income Investor
Presentation 40
2
1
2 |
 |
ASSET QUALITY
CREDIT RATING
PERFORMANCE
OVERVIEW
LIQUIDITY &
FUNDING
CAPITAL &
LEVERAGE
APPENDIX
Financial performance
•
Strong customer number and asset growth across all
geographies
•
Income increased 6%, reflecting growth in the UK
consumer and merchant, Germany and US businesses,
partially offset by depreciation of average USD against
GBP
•
NII increased 8% to £3bn driven by volume growth; NIM
decreased to 8.75% from 8.99% due to a change in
product mix and impact of promotional offers
•
Impairment increased 8% due to asset growth and
enhanced coverage for forbearance. Delinquency rates
remained broadly stable and the loan loss rate reduced
24bps to 308bps
•
Costs broadly flat despite continued investment in the
business
•
XxX increased to 16%
•
Net L&A increased 16% reflecting growth across all
geographies, including the impact of promotional offers
and the acquisition of portfolios in the US
•
14% growth in customers and 9% increase in payments
processed
Barclaycard: Profits up 13%
Barclays Full Year 2014 Fixed Income Investor Presentation
41
2013
2014
Income
4,103
4,356
Impairment
(1,096)
(1,183)
Total operating expenses
(1,857)
(1,874)
–
Costs to achieve Transform
(49)
(118)
Profit before tax
1,183
1,339
Financial performance measures
Average allocated equity
£5.3bn
£5.9bn
Return on average tangible equity
19.9%
19.9%
Return on average equity
15.5%
16.0%
Cost: income ratio
45%
43%
Loan loss rate
332bps
308bps
Net interest margin
8.99%
8.75%
Dec-13
Dec-14
Loans and advances to customers
£31.5bn
£36.6bn
Customer deposits
£5.1bn
£7.3bn
CRD IV RWAs
£35.7bn
£39.9bn
Year ended –
December (£m) |
 |
ASSET QUALITY
CREDIT RATING
PERFORMANCE
OVERVIEW
LIQUIDITY &
FUNDING
CAPITAL &
LEVERAGE
Financial performance
Constant currency basis
•
PBT increased by 13%, driven by 7% income
growth and a 14% reduction in credit
impairment charges
NII benefitted from increased NIM driven by
higher deposit margins in RBB South Africa
in addition to strong growth in Corporate
and Investment Banking loans
•
Impairment reduced 14% and the LLR
improved by 35bps to 93bps driven by South
Africa mortgages and business banking,
partially offset by an increase in the card
portfolio
•
Costs were up 8% due to inflationary
increases resulting in higher staff costs.
There was also increased CTA and spend on
other key initiatives
•
XxX increased to 9.3% while RoTE was 12.9%
Africa Banking: Constant currency profits up 13%
Year
ended
1
–
December
(£m)
2013
2013
Constant
Currency
2014
Income
4,039
3,435
3,664
Impairment
(479)
(406)
(349)
Total operating expenses
(2,519)
(2,163)
(2,342)
–
Costs to achieve Transform
(26)
(23)
(51)
Profit before tax
1,049
873
984
Financial performance measures
Average
allocated
equity
£4.4bn
£3.9bn
Return
on
average
tangible
equity
11.3%
12.9%
Return
on
average
equity
8.1%
9.3%
Cost: income ratio
62%
64%
Loan loss rate
128bps
93bps
Net interest margin
5.81%
5.95%
Dec-13
Dec-13
Constant
Currency
Dec-14
Loans and advances to customers
£34.9bn
£33.6bn
£35.2bn
Customer deposits
£34.6bn
£33.3bn
£35.0bn
CRD IV RWAs
£38.0bn
£38.5bn
1
Africa
Banking
business
unit
performance
based
on
BAGL
results,
including
Egypt
and
Zimbabwe
|
2
Barclays
share
of
the
statutory
equity
of
the
BAGL
entity
(together
with
that
of
the
Barclays
Egypt
and
Zimbabwe
businesses
which
remain
outside
the
BAGL
corporate
entity),
as
well
as
the
Barclays’
goodwill
on
acquisition
of
these
businesses.
The
tangible
equity
for
RoTE
uses
the
same
basis
but
excludes
both
the
Barclays’
goodwill
on
acquisition
and
the
goodwill
and
intangibles
held
within
the
BAGL
statutory
equity
|
APPENDIX
Barclays Full Year 2014 Fixed Income Investor Presentation
42
2
2
2 |
 |
ASSET QUALITY
CREDIT RATING
PERFORMANCE
OVERVIEW
LIQUIDITY &
FUNDING
CAPITAL &
LEVERAGE
Year ended –
December (£m)
2013
2014
–
Banking
2,485
2,528
–
Markets
6,134
5,040
–
Other
(23)
20
Income
8,596
7,588
Impairment release
22
14
Total operating expenses
(6,598)
(6,225)
–
Costs to achieve Transform
(190)
(374)
Profit before tax
2,020
1,377
Financial performance measures
Average allocated equity
£15.9bn
£15.4bn
Return on average tangible equity
8.5%
2.8%
Return on average equity
8.2%
2.7%
Cost: income ratio
77%
82%
Dec-13
Dec-14
CRD IV RWAs
£124.4bn
£122.4bn
Q4 13
Q4 14
% Change
639
638
–
1,146
1,028
(10%)
(3)
-
1,782
1,666
(7%)
Q4 14 vs. Q4 13
•
Banking is in line with prior year at £638m. Decrease in
Investment Banking fees was offset by an increase in Lending
income
•
Markets income decreased 10%
Credit down 25% to £173m
Equities up 2% to £431m
Macro down 14% to £424m
FY14 vs. FY13
•
Income decreased 12%
•
Operating expenses decreased 6% reflecting a 9% reduction in
compensation costs, as well as Transform savings
•
FY14 highlights
#2
in
All
International
Bonds
Banking strength in dual home markets with #2 position in
total
UK
fees
and
#6
in
the
US
Investment Bank: New strategy underpinning Q4
performance
Financial performance
1
Source: Dealogic |
APPENDIX
Barclays Full Year 2014 Fixed Income Investor Presentation
43
1
1 |
 Group cost targets
Group cost guidance (£bn)
Core cost targets
(£bn)
1
Excludes provisions for PPI, IRHP and FX redress, goodwill impairment and CTA | ²
2016
CTA
target
of
c.£0.2bn
|
Costs to
achieve
Transform
(CTA)
£1.2bn
c.£0.7bn
£1.22bn
Revised Guidance =
£17bn
Original Guidance = £17.5bn
10%
Core cost target
2
8%
APPENDIX
Barclays Full Year 2014 Fixed Income Investor Presentation
44
18.7
16.9
c.16.3
FY13
FY14
FY15 Target
16.4
15.1
<14.5
FY13
FY14
FY16
APPENDIX
ASSET QUALITY
CREDIT RATING
PERFORMANCE
OVERVIEW
LIQUIDITY &
FUNDING
CAPITAL &
LEVERAGE
1
1 |
 |
ASSET QUALITY
CREDIT RATING
PERFORMANCE
OVERVIEW
LIQUIDITY &
FUNDING
CAPITAL &
LEVERAGE
Operating expenses significantly reduced
Operating
expenses
progress
–
excluding
CTA
(£bn)
•
Transform saves:
FTE reductions from
Investment Bank front
office restructuring,
branch network
transformation in UK and
Africa and restructuring of
the European business
Optimisation of IT
platforms, consolidation of
middle office functions in
the Investment Bank and
process improvements
•
Reduction of performance
costs mainly in the Investment
Bank and PCB
•
Favourable currency moves
from a cost perspective in
Africa Banking, the Investment
Bank and Barclaycard
Highlights
APPENDIX
Barclays Full Year 2014 Fixed Income Investor Presentation
45
18.7
16.9
16.3
0.6
0.5
0.5
0.2
0.1 |
 Core operating expenses (£bn)
Core operating costs
Highlights
Personal and Corporate
Banking
Barclaycard
Africa Banking
1
Investment Bank
Operating costs (excluding CTA and bank levy) (£bn)
1
Africa Banking operating expenses were up 7% on a constant currency basis, due to
local inflationary pressures and investment |
8%
•
Core costs (excluding CTA) decreased by 8% year-on-year
driven by Transform saves as well as currency movements
•
Transform initiatives delivered significant and sustainable cost
reductions across all businesses driven by restructuring,
industrialisation and automation
•
Saving were partially offset by increased costs of litigation and
conduct charges and associated legal fees
•
Net headcount reduced by 6,200 (5%) driven by voluntary
redundancies through branch rationalisation and front office
restructuring in the Investment Bank which was partially offset
by in-sourcing in Barclaycard
•
CTA increased by £300m year-on-year primarily reflecting
further restructuring in the Investment Bank
3%
8%
9%
APPENDIX
Barclays Full Year 2014 Fixed Income Investor Presentation
46
FY13
FY14
Staff costs
Other operating costs
Costs to achieve Transform
17.0
16.1
5.46
5.00
FY13
FY14
1.79
1.73
FY13
FY14
2.45
2.25
FY13
FY14
6.17
5.63
FY13
FY14
10.4
9.6
6.0
5.5
0.7
1.0
8%
excl. CTA
ASSET QUALITY
CREDIT RATING
PERFORMANCE
OVERVIEW
LIQUIDITY &
FUNDING
CAPITAL &
LEVERAGE |
 |
ASSET QUALITY
CREDIT RATING
PERFORMANCE
OVERVIEW
LIQUIDITY &
FUNDING
CAPITAL &
LEVERAGE
•
Headcount down by 2,100 net
•
Incentive awards down 24%
•
Role based pay introduced and charged in 2014
•
Deferred bonus brought forward of £854m, but on downward trend
Investment
Bank
–
Compensation
actions
Investment Bank: Downward trend in compensation
charge
Investment
Bank
operating
expenses
(£m)
Role based pay
3,978
3,620
Down
c.£160m
Deferred bonuses
brought forward
Other
compensation
costs
6,598
CTA
1
Bank levy
Compensation
Non-
compensation
2
Down
9%
1
Excludes
compensation
related
CTA
of
£37m
|
2
Excludes
CTA
and
bank
levy
|
3
The
actual
amount
charged
depends
upon
whether
conditions
have
been
met
and
will
vary
compared
with
the
above
expectation
|
1
APPENDIX
Barclays Full Year 2014 Fixed Income Investor Presentation
47
7%
Other
costs
8%
ex-
CTA
3,045
2,566
c.200
933
854
c.700
FY13
FY14
FY15E
3
2,194
2,050
3,978
3,620
190
337
6,225
236
218
FY13
FY14 |
 |
ASSET QUALITY
CREDIT RATING
PERFORMANCE
OVERVIEW
LIQUIDITY &
FUNDING
CAPITAL &
LEVERAGE
Core income –
growth in NII
•
Improved performance in PCB and Barclaycard income
PCB grew NII 7% driven by lending and deposit growth
and margin improvement
Barclaycard grew NII 8% driven by volume growth
•
Africa Banking income was up 7% on a constant currency
basis, with NII up 9% on the same basis
Average
customer
assets
and
liabilities
2
(£bn)
•
NIM increased from 402bps to 408bps, measured across PCB,
Barclaycard and Africa Banking
Net interest margin
2
(bps)
•
Average customer assets increased 2.7% to £280bn, with
growth in PCB and Barclaycard, and in Africa Banking on a
constant currency basis
Core
income
year
ended
–
December
(£m)
2013
2014
Personal and Corporate Banking
8,723
8,828
Barclaycard
4,103
4,356
Africa Banking
4,039
3,664
Investment Bank
8,596
7,588
Total Core
1
25,603
24,678
NII
for
these
businesses
2
grew
4%,
reflecting
an
increase
in
customer
assets
and
NIM
APPENDIX
Barclays Full Year 2014 Fixed Income Investor Presentation
48
402
408
FY13
FY14
273
280
317
334
FY13
FY14
Customer assets
Customer liabilities
1
Includes
Head
Office
income
|
2
For
Personal
and
Corporate
Banking,
Barclaycard
and
Africa Banking
| |
 |
ASSET QUALITY
CREDIT RATING
PERFORMANCE
OVERVIEW
LIQUIDITY &
FUNDING
CAPITAL &
LEVERAGE
Wholesale
funding
composition
as
at
December
2014
1
As at 31 December 2014 (£bn)
1 month
>1 month
but
3
months
>3 months
but
6
months
>6 months
but
12
months
>9 months
but
12
months
Total
1 year
>1 year but
2 years
>2 years
but
5
years
>5 years
Total
Barclays PLC
Senior unsecured MTNs
(public benchmark)
-
-
-
-
-
-
-
1.3
0.8
2.1
Subordinated liabilities
-
-
-
-
-
-
-
-
0.8
0.8
Barclays Bank PLC
Deposits from banks
9.2
5.7
0.9
0.5
0.3
16.6
0.2
0.1
0.2
17.1
Certificates of deposit and
commercial paper
0.8
5.6
7.8
6.0
4.0
24.2
0.6
2.0
0.6
27.4
Asset backed commercial
paper
1.0
4.4
0.2
-
-
5.6
-
-
-
5.6
Senior unsecured MTNs
(public benchmark)
-
2.0
0.7
1.1
-
3.8
2.7
7.9
5.1
19.5
Senior unsecured MTNs
(private placement)
2
0.6
1.8
3.3
3.8
2.0
11.5
7.2
13.3
12.6
44.6
Covered bonds / ABS
2.7
2.0
0.7
1.6
0.2
7.2
2.2
7.5
6.0
22.9
Subordinated liabilities
-
0.1
-
-
-
0.1
-
2.9
16.7
19.7
Other
3
2.5
1.6
0.8
0.5
1.0
6.4
1.1
1.6
2.6
11.7
Total
16.8
23.2
14.4
13.5
7.5
75.4
14.0
36.6
45.4
171.4
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
1
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
£1bn
of
liabilities
drawn
in
the
European
Central
Bank’s
3
year
LTRO.
|
2
Includes
structured
notes
of
£35bn,
£9bn
of
which
matures
within
one
year
|
3
Primarily
comprised
of
fair
value
deposits
£5bn
and
secured
financing
of
physical
gold
£5bn
|
49
APPENDIX
Barclays Full Year 2014 Fixed Income Investor Presentation
|
 |
ASSET QUALITY
CREDIT RATING
PERFORMANCE
OVERVIEW
LIQUIDITY &
FUNDING
CAPITAL &
LEVERAGE
Reduced exposure to the Eurozone
As at 31 December 2014 (£m)
Spain
Italy
Portugal
Ireland
Total
Sovereign
108
1,716
105
37
1,966
Financial institutions
14,043
485
7
3,175
17,710
Corporate
1,149
1,128
531
1,453
4,261
Residential mortgages
12
13,530
2,995
43
16,580
Other retail lending
248
1,114
1,207
50
2,619
Total
1
15,559
17,973
4,845
4,758
43,135
Total as at 31 December 2013
19,245
20,628
6,262
6,656
52,791
1
Total net on-balance sheet exposure as at 31 December 2014 for Cyprus and Greece
was £123m (2013: £175m) and £27m respectively (2013: £82m)
50
APPENDIX
Barclays Full Year 2014 Fixed Income Investor Presentation
|
 |
ASSET QUALITY
CREDIT RATING
PERFORMANCE
OVERVIEW
LIQUIDITY &
FUNDING
CAPITAL &
LEVERAGE
In line with the European Bank Recovery & Resolution
Directive the UK Banking Act now includes a statutory
bail-in power
51
•
Under Depositor Preference, the BRRD introduces seniority of
deposits from natural persons and SMEs over wholesale
liabilities
•
The scope of the UK bail-in power extends to include all
outstanding unsecured wholesale liabilities of original tenor
greater than 7 days
•
Liabilities issued prior to the introduction of the statutory bail-in
power, including those issued under non-EEA governing laws,
may be subject to bail-in upon its introduction irrespective of
issuance date, unless they are ‘excluded liabilities’
(i.e. all
outstanding unsecured liabilities with an original tenor greater
than 7 days may be subject to bail-in Guiding principle is that
the ordinary creditor hierarchy should be respected and that
creditors holding eligible liabilities of equal rank should be
treated equally
•
In light of Article 55 of the BRRD, and as requested by the
PRA, Barclays has begun the process of including in the terms
of its wholesale term debt securities, governed by non-EEA
laws, a provision acknowledging the scope of the UK bail-in
power
•
Note, the inclusion of such an acknowledgement is not intended
to change the ranking or treatment of such non-EEA law
governed instruments relative to EEA law governed instruments
in respect of a UK bail-in, rather it clarifies that all such
instruments should be treated equally in the event of a UK bail-
in
Barclays Full Year 2014 Fixed Income Investor Presentation
APPENDIX
•
Statutory bail-in of debt is a key part of the regulatory response
to the financial crisis,
aimed at avoiding the bail-out of failing
financial institutions with tax-payer funds
•
European Bank Recovery and Resolution Directive
(“BRRD”):
a
European-wide framework for the recovery and
resolution of credit institutions and investment firms:
•
UK Banking Act:
in line with the BRRD, the UK Banking Act
was amended in January 2015 to include a “bail-in option”
available to the UK resolution authority, enabling it recapitalise
a failed institution by allocating losses to its shareholders and
unsecured creditors by writing down and/or converting their
claims to equity:
–
Certain liabilities excluded from scope, such as insured
deposits, secured liabilities (Section 48B(8))
–
Powers to be exercised broadly in a manner that respects
the hierarchy of claims in liquidation
–
Principle that at least senior creditors should receive no
less favourable treatment than they would have received in
an insolvency
–
Statutory “bail-in”
power in respect of eligible liabilities, to
be implemented in home state legislation by no later than
1 January 2016 (Article 130)
–
Requirement for eligible liabilities governed by non-EEA
laws to include a contractual recognition by creditors that
they are bound by any exercise of the statutory bail-in
power (Article 55)
Considerations for Bondholders
Overview |
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Xxxxxxx Xxxxx
x00 (0)00 0000 0000
xxxxxxx.xxxxx@xxxxxxxx.xxx
Website:
xxxxxxxx.xxx/xxxxxxxx-xxxxxxxx-xxxxxxxxx.xxxx
Contact –
Debt Investor Relations Team
Sofia Lonnqvist
x00 (0)00 0000 0000
xxxxx.xxxxxxxxx@xxxxxxxx.xxx
52
Barclays Full Year 2014 Fixed Income Investor Presentation
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Disclaimer
Barclays Full Year 2014 Fixed Income Investor Presentation
53
Important Notice
The information, statements and opinions contained in this document do not constitute a public offer
under any applicable legislation or an offer to sell or solicitation of any offer to buy any
securities or financial instruments or any advice or recommendation with respect to such securities or other financial
instruments.
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 or savings, original and revised commitments and
targets in connection with the Transform Programme and Group Strategy Update, run-down of
assets and businesses within Barclays Non-Core, estimates of capital expenditures and plans and objectives for future
operations, projected employee numbers 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, US, 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 impact of EU and US sanctions
on Russia; 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 2014 (“2014
20-F”), which are available on the SEC’s website at xxxx://xxx.xxx.xxx.
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 (the 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, including the 2014 20-F.
|
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Disclaimer (continued)
Barclays Full Year 2014 Fixed Income Investor Presentation
54
Barclays has filed a registration statement (including a prospectus) and has filed,
or will file, a prospectus supplement with the U.S. Securities and Exchange
Commission
(“SEC”)
for
the
offering
of
securities
to
which
this
document
relates.
Before
you
invest,
you
should
read
the
prospectus
in
that
registration
statement,
the
prospectus
supplement
relating
to
the
offering
of
the
Securities
(when
filed)
and
other
documents
that
Barclays
will
file
with
the
SEC.
You
may
get these documents for free by searching the SEC online database (XXXXX®) at
xxx.xxx.xxx. Alternatively, you may obtain a copy of the prospectus from
Barclays Capital Inc. by calling 0-000-000-0000.
Certain non-IFRS Measures
Barclays management believes that the non-International Financial Reporting
Standards (non-IFRS) measures included in this document provide valuable
information
to
readers
of
its
financial
statements
because
they
enable
the
reader
to
identify
a
more
consistent
basis
for
comparing
the
business’
performance
between
financial
periods,
and
provide
more
detail
concerning
the
elements
of
performance
which
the
managers
of
these
businesses
are
most
directly
able
to
influence or are relevant for an assessment of the Group. They also reflect an
important aspect of the way in which operating targets are defined and
performance is monitored by Barclays management. However, any non-IFRS measures
in this document are not a substitute for IFRS measures and readers
should
consider
the
IFRS
measures
as
well.
As
management
reviews
the
adjusting
items
described
below
at
a
Group
level,
segmental
results
are
presented
excluding these items in accordance with IFRS 8; "Operating
Segments". Statutory and adjusted performance is reconciled at a Group
level only. Key non- IFRS measures included in this document and
the most directly comparable IFRS measures are described below. Quantitative reconciliations of these
measures to the relevant IFRS measures are included in Barclays’
2014 20-F filed with the SEC on March 3, 2015 (available at
and
such
quantitative
reconciliations
are
incorporated
by
reference
into
this
document.
•
•
•
Adjusted profit before tax is the non-IFRS equivalent of profit before tax as
it excludes the impact of own credit; provisions for Payment Protection
Insurance
(PPI)
and
claims
management
costs
and
interest
rate
hedging
redress;
gain
on
US
Xxxxxx
acquisition
assets;
provision
for
ongoing
investigations and litigation relating to Foreign Exchange; loss
on announced sale of the Spanish business; Education, Social Housing, and Local
Authority (ESHLA) valuation revision and goodwill impairment. A
reconciliation to IFRS is presented on page 198 of the 2014 20-F;
Adjusted profit after tax represents profit after tax excluding the post-tax
impact of own credit; provisions for PPI and interest rate hedging redress; the
gain on US Xxxxxx acquisition assets; provision for ongoing investigations and
litigation relating to Foreign Exchange; loss on announced sale of the
Spanish business; ESHLA valuation revision and goodwill impairment. A
reconciliation to IFRS is presented on page 198 of the 2014 20-F;
Adjusted attributable profit represents adjusted profit after tax less profit
attributable to non-controlling interests. The comparable IFRS measure is
attributable profit;
•
Adjusted income and adjusted total income net of insurance claims represents total
income net of insurance claims excluding the impact of own credit; the
gain
on
US
Xxxxxx
acquisition
assets
and
ESHLA
valuation
revision.
A
reconciliation
to
IFRS
is
presented
on
page
198
of
the
2014
20-F; |
 |
Disclaimer (continued)
Barclays Full Year 2014 Fixed Income Investor Presentation
55
•
•
•
•
•
•
•
Adjusted total operating expenses represents operating expenses excluding the provisions for PPI and
interest rate hedging redress; provision for ongoing investigations and litigation relating to
Foreign Exchange; and goodwill impairment. A reconciliation to IFRS is presented on page 198 of
the 2014 20-F; Adjusted cost: income ratio represents cost: income ratio excluding the impact of own credit; the
provisions for PPI and interest rate hedging redress; gain on US Xxxxxx acquisition assets; and
provision for ongoing investigations and litigation relating to Foreign Exchange and ESHLA
valuation revision. The comparable IFRS measure is cost: income ratio, which represents operating expenses to income net of
insurance claims. A reconciliation to IFRS is presented on page 198 of the 2014 20-F;
Adjusted basic earnings per share represents adjusted attributable profit (page 212 of the 2014
20-F) divided by the basic weighted average number of shares in issue. The comparable IFRS
measure is basic earnings per share, which represents profit after tax and non-controlling
interests, divided by the basic weighted average number of shares in issue;
Adjusted return on average shareholders’ equity represents adjusted attributable profit (page 212
of the 2014 20-F) divided by adjusted average equity, excluding non-controlling
interests. The comparable IFRS measure is return on average shareholder’s equity, which
represents profit attributable to equity holders of the parent divided by average equity, excluding
non-controlling interests; Adjusted return on average tangible shareholders’ equity represents adjusted attributable profit
(page 212 of the 2014 20-F) divided by average adjusted tangible equity, excluding
non-controlling interests. The comparable IFRS measure is return on average tangible
shareholders’ equity, which represents profit after tax and non-controlling interests,
divided by average tangible equity (page 212 of the 2014 20-F);
Barclays Core results are non-IFRS measures because they represent the sum of five Operating
Segments, each of which is prepared in accordance with IFRS 8; “Operating Segments”:
Personal and Corporate Banking, Barclaycard, Africa Banking, Investment Bank and Head Office. A
reconciliation to the corresponding statutory Group measures are provided on pages 197 and 198 of the 2014 20-F;
Constant currency results in Africa Banking are calculated by converting ZAR results into GBP using
the average exchange rate for the year ended 31 December 2014 for the income statement and the
31 December 2014 closing exchange rate for the balance sheet and applying those rates to the
results as of and for the year ended 31 December 2013, in order to eliminate the impact of movement in exchange rates
between the two periods. See page 205 of the 2014 20-F for the corresponding statutory Group
measures; |
 |
Disclaimer (continued)
Barclays Full Year 2014 Fixed Income Investor Presentation
56
•
•
•
•
•
•
Liquidity Coverage Ratio (LCR) is calculated according to the Commission Delegated Regulation of
October 2014 that supplements Regulation (EU) 575/2013 (CRDIV) published by the European
Commission in June 2013. The metric is a ratio that is not yet fully implemented in local regulations and
as such, represents a non-IFRS measure
Net Stable Funding Ratio (NSFR) is calculated according to the definition and methodology detailed in
the standard provided by the Basel Committee on Banking Supervision. The original guidelines
released in December 2010 (‘Basel III: International Framework for Liquidity Risk Measurement,
Standards and Monitoring’, December 2010) were revised for in January 2014 (‘Basel III: The
Net Stable Funding Ratio’, January 2014). The metric is a regulatory ratio that is not yet
finalised in local regulations and, as such, represent a non-IFRS measure. This definition and the methodology used to
calculate this metric is subject to further revisions ahead of the implementation date and
Barclays’ interpretation of this calculation may not be consistent with that of other
financial institutions; Transitional CET1 ratio according to FSA October 2012. This measure is calculated by taking into
account the statement of the Financial Services Authority, the predecessor of the Prudential
Regulation Authority, on CRD IV transitional provisions in October 2012, assuming such provisions were
applied as at 1 January 2014. This ratio is used as the relevant measure starting 1 January 2014 for
purposes of determining whether the automatic write-down trigger (specified as a
Transitional CET1 ratio according to FSA October 2012 of less than 7.00%) has occurred under the terms of the
Contingent Capital Notes issued by Barclays Bank PLC on November 21, 2012 (CUSIP: 00000X0X0) and April
10, 2013 (CUSIP: 00000XXX0). Please refer to page 155 of the 2014 20-F for a reconciliation
of this measure to CRD IV CET1 ratio; BCBS 270 leverage exposure makes certain adjustments to Total assets under IFRS in accordance with
Barclays’ understanding of the latest requirements that are expected to be included in the
revised CRD IV text and guidance from regulators. The “Leverage” table on page 158 of the 2014
20-F shows a reconciliation of BCBS 270 leverage exposure to total assets under IFRS;
BCBS 270 leverage ratio represents CRD IV Tier 1 capital divided by BCBS 270 leverage exposure. See
the “Leverage” table on page 158 of the 2014 20-F for a reconciliation of BCBS
270 leverage exposure to Total assets under IFRS; and The estimate of “Proxy Total Loss Absorbing Capacity (TLAC) ratio” reflects Barclays’
current understanding of how the Financial Stability Board’s Consultative Document on
“Adequacy of loss-absorbing capacity of global systemically important banks in resolution” may be implemented in the
United Kingdom. The estimate reflects certain assumptions on the inclusion or exclusion of
certain liabilities where further regulatory guidance is necessary. Evolving regulation,
including the implementation of MREL beginning 1 Jan 2016 and any subsequent regulatory policy interpretations,
may require a change to the current approach. As such metric is subject to further regulatory guidance
and it is not yet implemented in local regulations, the estimate of this metric represents a
non-IFRS measure and is presented in this document for illustrative purposes only.
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