Pricing Agreement
Exhibit 1.2
June 1, 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 2.875% Fixed Rate Senior Notes due 2020 (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 4:40 PM New York time on June 1, 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 | |
SCHEDULE I
| Principal Amount of the Notes |
||||
| Underwriter |
||||
| Barclays Capital Inc. |
$ | 802,500,000 | ||
| BMO Capital Markets Corp. |
$ | 10,000,000 | ||
| Capital One Securities, Inc. |
$ | 10,000,000 | ||
| CAVU Securities, LLC |
$ | 7,500,000 | ||
| CIBC World Markets Corp. |
$ | 10,000,000 | ||
| Commerz Markets LLC |
$ | 10,000,000 | ||
| Danske Markets Inc |
$ | 10,000,000 | ||
| Xxxxxx & Company |
$ | 10,000,000 | ||
| ING Financial Markets LLC |
$ | 10,000,000 | ||
| Loop Capital Markets LLC |
$ | 10,000,000 | ||
| MFR Securities, Inc. |
$ | 10,000,000 | ||
| Mizuho Securities USA Inc. |
$ | 10,000,000 | ||
| nabSecurities, LLC |
$ | 10,000,000 | ||
| PNC Capital Markets LLC |
$ | 10,000,000 | ||
| Santander Investment Securities Inc. |
$ | 10,000,000 | ||
| Scotia Capital (USA) Inc. |
$ | 10,000,000 | ||
| Xxxxxxx Xxxxxxxxx Shank & Co., L.L.C. |
$ | 10,000,000 | ||
| SMBC Nikko Securities America, Inc. |
$ | 10,000,000 | ||
| TD Securities (USA) LLC |
$ | 10,000,000 | ||
| U.S. Bancorp Investments, Inc. |
$ | 10,000,000 | ||
| Xxxxx Fargo Securities, LLC |
$ | 10,000,000 | ||
| Total |
$ | 1,000,000,000 | ||
SCHEDULE II
Title of Designated Securities:
US$ 1,000,000,000 2.875% Fixed Rate Senior Notes due 2020
Price to Public:
99.575% of principal amount
Subscription Price by Underwriters:
99.250% of principal amount
Form of Designated Securities:
The 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 Notes will be June 8, 2020
Interest Rate:
Interest will accrue on the Notes from the date of their issuance. Interest will accrue on the Notes at a rate of 2.875% per year from and including the date of issuance.
Interest Payment Dates:
Interest will be payable on the Notes semi-annually in arrear on June 8 and December 8 of each year, commencing on December 8, 2015 and ending on the 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 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 June 1, 2015 relating to the Notes.
Time of Delivery:
June 8, 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 June 1, 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 Notes, dated June 1, 2015, attached hereto as Exhibit A.
Barclays PLC Fixed Income Investor Presentation: Q1 2015 Interim Management Statement, dated April 29, 2015, attached hereto as Exhibit B.
Exhibit A
Final Term Sheet for the Notes, dated June 1, 2015
Free Writing Prospectus
Filed Pursuant to Rule 433
Reg-Statement No.
333-195645
USD 1bn 2.875% Fixed Rate Senior Notes due 2020
Pricing Term Sheet
| Issuer: | Barclays PLC | |
| Notes: | USD 1bn 2.875% Fixed Rate Senior Notes due 2020 | |
| Expected Issue Ratings1: | Baa3 (Xxxxx’x) / BBB (S&P) / A (Fitch) | |
| Status: | Senior Debt / Unsecured | |
| Legal Format: | SEC registered | |
| Principal Amount: | USD 1,000,000,000 | |
| Trade Date: | June 1, 2015 | |
| Settlement Date: | June 8, 2015 (T+5) | |
| Maturity Date: | June 8, 2020 | |
| Coupon: | 2.875% | |
| Interest Payment Dates: | Semi-annually in arrear on June 8 and December 8 in each year, commencing on December 8, 2015 and ending on the Maturity Date | |
| Coupon Calculation: | 30/360, following, unadjusted | |
| Business Days: | New York, London | |
| U.K. Bail-in Power Acknowedgement: | 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 June 1, 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 1⁄2 05/31/20 | |
| Spread to Benchmark: | 142bps | |
| Reoffer Yield: | 2.967% | |
| Issue Price: | 99.575% | |
| Underwriting Discount: | 0.325% | |
| Net Proceeds: | USD 992,500,000 | |
| Sole Bookrunner: | Barclays Capital Inc. | |
| 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. |
| Co-managers: | BMO Capital Markets Corp., Capital One Securities, Inc., CAVU Securities, LLC, CIBC World Markets Corp., Commerz Markets LLC, Danske Markets Inc., Xxxxxx & Company, ING Financial Markets LLC, Loop Capital Markets LLC, MFR Securities, Inc., Mizuho Securities USA Inc., nabSecurities, LLC, PNC Capital Markets LLC, Santander Investment Securities Inc., Scotia Capital (USA) Inc., Xxxxxxx Xxxxxxxxx Shank & Co., L.L.C., SMBC Nikko Securities America, Inc., TD Securities (USA) LLC, 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-9 of the Preliminary Prospectus Supplement. | |
| Denominations: | USD 200,000 and integral multiples of USD 1,000 in excess thereof | |
| ISIN/CUSIP: | XX00000XXX00 / 00000XXX0 | |
| Xxxxxxxxxx: | 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 (the “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.
-10-
Exhibit B
 Q1 2015
Interim Management Statement 29 April 2015
Fixed Income Investor Presentation Free Writing Prospectus Filed Pursuant to Rule 433 Reg. Statement No. 333-195645 |
 | Barclays Q1 2015 Fixed Income Investor Presentation Q1 financial highlights 2 LIQUIDITY & FUNDING CREDIT RATING APPENDIX PERFORMANCE OVERVIEW HOLDING COMPANY TRANSITION CAPITAL & LEVERAGE ASSET QUALITY Increased adjusted pre-tax profits by 9% – Core up 14% Core business continued to performed well with PBT of £2.1bn and XxX of 10.9%
Further progress on shrinking Non-Core and releasing capital; RWAs down to
£65bn Building capital: CET1 ratio increased to 10.6% and leverage
ratio maintained at 3.7%
Group adjusted costs of £4.1bn, down 7%, delivering positive jaws
|
 LIQUIDITY & FUNDING CREDIT RATING APPENDIX PERFORMANCE OVERVIEW HOLDING COMPANY TRANSITION CAPITAL & LEVERAGE ASSET QUALITY Performance Overview |
 | Barclays Q1 2015 Fixed Income Investor Presentation LIQUIDITY & FUNDING CREDIT RATING APPENDIX PERFORMANCE OVERVIEW HOLDING COMPANY TRANSITION CAPITAL & LEVERAGE ASSET QUALITY Financial performance • Adjusted profit before tax increased 9% • Adjusted income decreased 3%, due to Non-Core run-down, while impairment reduced 13% • Total adjusted operating expenses decreased 7% to £4.1bn driven by savings from Transform programmes and lower costs to achieve Transform • Adjusted attributable profit was £1.1bn, resulting in EPS of 6.5p • Group XxX was 7.6%, with Core XxX of 10.9% • Dilution on Group XxX from Barclays Non-Core was 3.3% • Statutory attributable profit was £465m: Further provisions of £800m for investigations and litigation primarily relating to Foreign Exchange Additional PPI redress provision of £150m Gain of £429m recognised as valuation of a component of the defined retirement benefit liability was aligned to statutory provisions Loss of £118m relating to completion of the Spanish business sale Summary Group financials: Adjusted profits up 9% 1 EPS and XxX calculations are based on adjusted attributable profit, also taking into account tax credits on AT1 coupons
| 4
Adjustments Three months ended – March (£m) 2014 2015 % change Income 6,650 6,430 (3%) Impairment (548) (477) 13% Total operating expenses (4,435) (4,124) 7% – Costs to achieve Transform (CTA) (240) (120) 50% Adjusted profit before tax 1,693 1,848 9% Tax (561) (529) 6% NCI and other equity interests (250) (260) (4%) Adjusted attributable profit 882 1,059 20% – Provisions for investigations and litigation primarily relating to Foreign Exchange – (800) – Provisions for PPI redress – (150) – Gain on valuation of a component of the defined retirement benefit – 429 – Loss on sale of Spanish business – (118) – Own credit 119 128 Statutory profit before tax 1,812 1,337 (26%) Statutory attributable profit/(loss) 965 465 (52%) Basic earnings per share 1 5.5p 6.5p Return on average equity 1 6.5% 7.6% Dividend per share 1.0p 1.0p |
 | Barclays Q1 2015 Fixed Income Investor Presentation LIQUIDITY & FUNDING CREDIT RATING APPENDIX PERFORMANCE OVERVIEW HOLDING COMPANY TRANSITION CAPITAL & LEVERAGE ASSET QUALITY (£bn) Dec-14 Mar-15 Balance Sheet Total assets 1,358 1,416 Leverage exposure 1 1,233 1,255 Leverage ratio 1 3.7% 3.7% Capital 2 Fully loaded CET1 ratio 10.3% 10.6% Fully loaded CET1 capital 41.5 41.8 Risk-weighted assets 402 396 Liquidity Liquidity coverage ratio 3 124% 122% Liquidity pool 149 148 Funding Loan to Deposit Ratio 4 89% 89% Wholesale funding 5 171 178 NSFR 3 102% n/a Strengthening key financial metrics 1 Mar-15 based on end-point CRR definition of Tier 1 capital for the numerator and the CRR definition of leverage exposure as adopted by the European Union delegated act. This is broadly consistent with the BCBS 270 definition, which was the basis of Dec-14 comparatives | 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 | 6 Based on certain assumptions – refer to slide 19 for more details 5 • Progressive strengthening of key balance sheet metrics • CET1 capital has increased to £42bn and RWAs reduced to £396bn improving the CET1 ratio to 10.6% • Leverage exposure increased slightly to £1.255trn (Dec 2014: £1.233trn), mainly as a result of seasonal effects, but the leverage ratio was maintained at 3.7% • Liquidity position remains robust with liquidity pool of £148bn and LCR of 122% • Funding profile remain conservative and well diversified • Overall funding requirements reducing as Non-Core is run-down • Further progress on proactive transition towards Holding Company capital and funding model • With a proxy TLAC ratio of 24% 6 , we are well positioned to meet future TLAC requirement Highlights • Raised £2bn of senior unsecured debt at Barclays PLC which was used to subscribe for senior unsecured debt at Barclays Bank PLC. |
 | Barclays Q1 2015 Fixed Income Investor Presentation LIQUIDITY & FUNDING CREDIT RATING APPENDIX PERFORMANCE OVERVIEW HOLDING COMPANY TRANSITION CAPITAL & LEVERAGE ASSET QUALITY • PBT up 14% at £2.1bn: PCB profits up 14% Investment Bank profits up 37% Africa Banking profits up 23% Barclaycard profits were down 1% • Income increased 2% to £6.4bn, with non-investment banking businesses up 4% • Impairment improved 7%, principally reflecting the improving UK economic environment benefitting PCB • Operating expenses reduced 2% to £3.9bn reflecting Transform savings across the businesses • Attributable profit was £1.3bn with EPS of 7.7p • XxX excluding CTA was 11.6% on average allocated equity of £47bn, up £7bn year on year Core business performing well: Positive jaws and PBT up 14% Three months ended – March (£m) 2014 2015 % change Income 6,277 6,420 2% Impairment (481) (448) 7% Total operating expenses (3,969) (3,885) 2% – Costs to achieve Transform (CTA) (216) (109) 50% Adjusted profit before tax 1,847 2,104 14% Tax (589) (615) (4%) NCI and other equity interests (205) (231) (13%) Adjusted attributable profit 1,053 1,258 19% Adjusted financial performance measures Average allocated equity £40bn £47bn Return on average tangible equity 13.2% 13.2% Return on average equity 10.7% 10.9% Cost:income ratio 63% 61% Basic EPS contribution 6.6p 7.7p Dec-14 Mar-15 CRD IV RWAs £327bn £331bn
Leverage exposure £956bn £1,019bn 6 Financial performance |
 | Barclays Q1 2015 Fixed Income Investor Presentation LIQUIDITY & FUNDING CREDIT RATING APPENDIX PERFORMANCE OVERVIEW HOLDING COMPANY TRANSITION CAPITAL & LEVERAGE ASSET QUALITY • Period end equity reduced by £5.2bn to £9.7bn, including a £1.3bn reduction in Q1 • RWAs reduced £41bn to £65bn, with a reduction of £10bn in Q1, including the completion of the sale of the Spanish business • Income reduced £363m to £10m, reflecting sale of income generating assets • Credit impairment improved to £29m, driven by the impact of sale of the Spanish business and improved performance in European retail • Costs reduced 49% to £239m due to savings from Transform programmes, including non-retail headcount reductions, and savings from the sale of the Spanish and UAE businesses • Attributable loss was £199m, but with the reduction in allocated equity, the Non-Core dilution on Group XxX was 3.3% Barclays Non-Core: Continued shrinkage and capital recycling Three months ended – March (£m) 2014 2015 – Businesses 301 122 – Securities and Loans 87 (73) – Derivatives (15) (39) Income 373 10 Impairment (67) (29) Total operating expenses (466) (239) – Costs to achieve Transform (CTA) (24) (11) Loss before tax (154) (256) Tax credit 28 86 NCI and other equity interests (45) (29) Attributable loss (171) (199) Financial performance measures Average allocated equity £15.2bn £10.3bn Period end allocated equity £14.9bn £9.7bn Return on average equity drag 1 (4.2%) (3.3%) Basic EPS contribution (1.1p) (1.2p) CRD IV RWAs £75bn £65bn Highlights 1 Return on average equity and average tangible equity for Barclays Non-Core represents its impact on the Group, being the difference between
Barclays Group returns and Barclays Core returns. This does not represent the return on average equity and average tangible equity of the Non-Core business |
7 |
 LIQUIDITY & FUNDING CREDIT RATING APPENDIX PERFORMANCE OVERVIEW HOLDING COMPANY TRANSITION CAPITAL & LEVERAGE ASSET QUALITY Capital & Leverage |
 | Barclays Q1 2015 Fixed Income Investor Presentation LIQUIDITY & FUNDING CREDIT RATING APPENDIX PERFORMANCE OVERVIEW HOLDING COMPANY TRANSITION CAPITAL & LEVERAGE ASSET QUALITY Fully loaded (FL) CRD IV CET1 ratio progression 1 RWA reduction (£bn) 1 Continued progress on CET1 ratio despite adjusting items • FL CRD IV CET1 ratio up 30bps demonstrating good progress towards 2016 Transform target of greater than 11%, absorbing significant litigation provisions • Continued capital build as FL CRD IV CET1 capital grew by £0.4bn to £41.8bn, despite absorbing net adjusting items of £0.6bn • Confident that our planned trajectory positions us well to meet future regulatory requirements • RWAs reduced by £6bn, mainly driven by a £10bn reduction in Non-Core to £65bn including the sale of the Spanish business and the run-down of legacy structured and credit products • Decreases in Non-Core were recycled into Core business growth +30bps 40 41 42 CET1 Capital (1%) 9 9.1% 10.3% 10.6% >11% Xxx-00 Xxx-00 Xxx-00 0000 Xxxxxx Xxx-00 Xxx-00 Xxx-00 0000 Xxxxxxxx 442 402 396 c.400 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% |
1 |
 | LIQUIDITY & FUNDING CREDIT RATING APPENDIX PERFORMANCE OVERVIEW CAPITAL & LEVERAGE ASSET QUALITY Barclays Q1 2015 Fixed Income Investor Presentation HOLDING COMPANY TRANSITION RWAs (£bn) Highlights • RWAs reduced by £6bn reflecting continued progress on the run-down of Non-Core, and growth in Core businesses • Core business growth of £7bn driven by growth in PCB due to increased corporate and mortgage lending • Net Non-Core run-down of £10bn, reflecting the sale of the Spanish business and reduction in legacy structures and credit products • Model and methodology driven updates resulted in a net £5bn reduction in RWAs driven by improved market risk diversification methodology and a credit and counterparty risk model update RWAs: Closely managed to support business growth and capital ratio accretion 1 Excludes model and methodology driven movements | 2 Includes foreign exchange movements of £0.5bn. This does not include movements for modelled counterparty risk or modelled market risk | 396 1 402 10 7 1 9 5 Dec-14 Core business growth BNC run-down Net model and methodology updates Other 2 Mar-15 1 1 |
 | Barclays Q1 2015 Fixed Income Investor Presentation LIQUIDITY & FUNDING CREDIT RATING APPENDIX PERFORMANCE OVERVIEW HOLDING COMPANY TRANSITION CAPITAL & LEVERAGE ASSET QUALITY Barclays Non-Core: Further RWA reduction 278 236 1 Operational risk includes DTAs 1 2 382 110 45 75 65 11 RWA reduction bridge (£bn) Leverage exposure by type (£bn) Operational risk Securities and loans Derivatives Businesses 9 8 16 15 31 31 18 11 Dec-13 Dec-14 Mar-15 39 23 107 99 114 101 18 13 180 Jun-14 Xxx-00 Xxx-00 0000 Xxxxxx Businesses Securities and loans Derivatives Other Total reflects rounding 2 2016 Target |
 | Barclays Q1 2015 Fixed Income Investor Presentation LIQUIDITY & FUNDING CREDIT RATING APPENDIX PERFORMANCE OVERVIEW HOLDING COMPANY TRANSITION CAPITAL & LEVERAGE ASSET QUALITY Continued progress on the transition towards our ‘target’ end-state capital structure • Fully loaded CRD IV CET1 ratio at 10.6% on track to meet our target of > 11% in 2016. The ratio was well in excess of the 7% PRA regulatory target¹
• Robust buffers to contingent capital triggers²
AT1 contingent capital: c.360bps or £14.1bn
T2 contingent capital: c.530bps or
£20.8bn³
• As we build CET1 capital over the transitional period, we currently expect to hold an internal management buffer of up to c.150bps over minimum requirements in end state4 • Transitional total capital ratio increased to 16.8% (Dec 2014: 16.5%), and fully loaded total capital ratio increased to 15.6% (Dec 2014 : 15.4%) • 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 3.5% (£13.7bn) T2 >17% Total capital ratio CCCB/ Sectoral buffers 16.8% Total capital ratio 1.6% P2A Pillar 2A requirement 5 4.5% CET1 1.7% (£6.8bn) Legacy T1 2.5% Capital Conservation buffer Max 1.5% Internal buffer 2.0% AT1 (incl. P2A) 2.9% T2 (incl. P2A) 2.0% G-SII 12 Evolution of capital structure 1.1% (£4.2bn) AT1 10.6% (£41.8bn) CET1 Barclays' 'target' end-state capital structure Barclays Q1 15 capital structure (PRA Transitional) Fully loaded CRD IV capital position – – – – – 1 Being the higher of 7% PRA expectation and CRD IV capital requirements | 2 CRD IV rules on mandatory distribution restrictions apply from 1 January 2016 onwards based on transitional CET1 requirements | 3 Based on the CRD IV CET1 transitional (FSA October 2012 statement) the ratio was 12.3% as at 31 March 2015 based on £48.5bn of transitional CRD IV CET1 capital and £396bn of RWAs | 4 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 | 5 Point in time assessment made at least annually, by the PRA, to reflect idiosyncratic risks not fully captured under Pillar 1 | |
 | Barclays Q1 2015 Fixed Income Investor Presentation LIQUIDITY & FUNDING CREDIT RATING APPENDIX PERFORMANCE OVERVIEW HOLDING COMPANY TRANSITION CAPITAL & LEVERAGE ASSET QUALITY 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 c.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.£14bn >£16bn c.£17bn c.£18bn c.£20bn To MDA restriction n/a >£15bn c.£12bn c.£9bn c.£6bn Capital conservation buffer (CET1) G-SII buffer (CET1) Trajectory of fully loaded CET1 ratio, assuming >11% target is met after which we build towards c.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 10.6% 8.4% 7.2% 9.5% 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, which cannot be assured and are subject to change, including: straight line progress towards meeting our CET1 ratio targets; holding the 2015 P2A requirement constant (which may not be the case as the requirement is subject to at least annual review); and CET1 resources are not required to meet the AT1 or T2 components of the minimum capital requirement. 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
| 13 CET1 requirements 1 (as at 1 January except Q115) 4.5% 4.5% 4.5% 4.5% 4.5% 1.6% 1.6% 1.6% 1.6% 1.6% 1.3% 1.9% 2.5% 1.0% 1.5% 2.0% 10.6% >11.0 % c.12% 0% 2% 4% 6% 8% 10% 12% Q1 15 2016 2017 2018 2019 0.6% 0.5% |
 | Barclays Q1 2015 Fixed Income Investor Presentation LIQUIDITY & FUNDING CREDIT RATING APPENDIX PERFORMANCE OVERVIEW HOLDING COMPANY TRANSITION CAPITAL & LEVERAGE ASSET QUALITY Leverage ratio progression 1 Leverage exposure (£trn) 1 Leverage ratio on track for 2016 target • Leverage ratio at 3.7% well on track to meet 2016 Transform target of in excess of 4% • The ratio was maintained as £0.3bn of T1 capital growth was offset by a £22bn increase in leverage exposure • Leverage ratio already in line with expected minimum end-state requirement of 3.7% as outlined by the Financial Policy Committee • Leverage exposure increased by £22bn in X0 0000, mainly due to fluctuations in settlement balances • Non-Core leverage exposure reduced by £41bn to £236bn primarily driven by the sale of the Spanish business, as well as continued reduction in derivatives exposure reflecting maturities and trade compressions • Core leverage exposure increased by £63bn driven by an increase in loans and advances and other assets due to the seasonal increase in settlement balances 41 46 46 T1 Capital 1 BCBS 270 impact 14 3.0% 3.7% 3.7% >4% Xxx-00 Xxx-00 Xxx-00 0000 Xxxxxx 1.36 1.35 1.23 1.26 Dec-13 Jun-14 Xxx-00 Xxx-00 0 Xxx-00 based on end-point CRR definition of Tier 1 capital for the numerator and the CRR definition of leverage exposure as adopted by the European Union delegated act. This is broadly consistent with the BCBS 270 definition, which was the basis of Jun-14 and Dec-14 comparatives. Dec-13 not comparable to the estimates as of Jun-14 onwards due to different basis of preparation: 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. | |
 | Barclays Q1 2015 Fixed Income Investor Presentation LIQUIDITY & FUNDING CREDIT RATING APPENDIX PERFORMANCE OVERVIEW HOLDING COMPANY TRANSITION CAPITAL & LEVERAGE ASSET QUALITY Leverage exposure 1 (£bn) Highlights Leverage ratio maintained at 3.7% 1,353 1,233 L&A and other assets 2 SFTs Undrawn commitments Derivatives Leverage ratio 1 1,255 • Leverage exposures during Q1 15 increased by £22bn to £1,255bn • Loans and advances and other assets increased by £19bn to £709bn primarily due to a seasonal increase in settlement balances, partly offset by a decrease in cash balances • Net derivatives exposures decreased £9bn due to offsetting
moves between IFRS derivatives and allowable netting
• Trade compressions and tear-ups continued to benefit PFE, but reductions achieved during the quarter were largely offset by new activity • SFT exposure was impacted by reduced netting 1 Mar-15 based on end-point CRR definition of Tier 1 capital for the numerator and the CRR definition of leverage exposure as adopted by the European Union delegated act. This is broadly consistent with the BCBS 270 definition, which was the basis of Jun-14 and Dec-14 comparatives | 2 Loans and advances and other assets net of regulatory deductions and other adjustments | 15 732 690 709 288 271 262 228 157 170 105 115 114 Jun-14 Dec-14 Mar-15 3.4% 3.7% 3.7% |
 LIQUIDITY & FUNDING CREDIT RATING APPENDIX PERFORMANCE OVERVIEW CAPITAL & LEVERAGE ASSET QUALITY Holding company transition HOLDING COMPANY TRANSITION |
 • Losses arise at OpCo, and are transmitted to HoldCo through write-down of intercompany instruments • Holdco’s losses are limited to its investments (equity and debt) 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 Better aligning credit proposition during transition towards a holding company capital and funding model (HoldCo) Barclays Bank PLC (OpCo) External capital External equity External senior Subscription of internal OpCo issued equity, capital and debt² 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 | Internal issuance in each case currently with ranking corresponding to external HoldCo issuance. Further detail on Barclays PLC parent company balance sheet on slide 18 |3
Assumes equivalent loss absorption and recapitalisation at HoldCo and OpCo | 4 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 dated 10 November 2014 I Expected creditor hierarchy during transition Barclays position Barclays Q1 2015 Fixed Income Investor Presentation 17 HOLDING COMPANY TRANSITION LIQUIDITY & FUNDING CREDIT RATING APPENDIX PERFORMANCE OVERVIEW CAPITAL & LEVERAGE XXXXX XXXXXXX 0 0 0 0 xx OpCo external & intercompany senior unsecured debt 3 rd OpCo external & intercompany T2 2 nd OpCo external & intercompany AT1 1 st OpCo Equity • Barclays is committed to issuing most of its 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 When required to qualify as TLAC 4 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 |
 | LIQUIDITY & FUNDING CREDIT RATING APPENDIX PERFORMANCE OVERVIEW CAPITAL & LEVERAGE ASSET QUALITY Barclays Q1 2015 Fixed Income Investor Presentation Balance sheet 2014 Q1 15 Notes £m £m Assets Investment in subsidiary 33,743 33,743 Loans and advances to subsidiary 2,866 4,927 Derivative financial instrument 313 232 Other assets 174 1,221 Total assets 37,096 40,123 Liabilities Deposits from banks 528 561 Subordinated liabilities 810 839 Debt securities in issue 2,056 4,088 Other liabilities 10 453 Total liabilities 3,404 5,941 Called up share capital 4,125 4,179 Share premium account 16,684 17,202 Other equity instruments 4,326 4,326 Capital redemption reserve 394 394 Retained earnings 8,163 8,081 33,692 34,182 37,096 40,123 • Barclays PLC is the holding company (HoldCo) of the Barclays Group • The HoldCo’s primary assets currently are its investments in, and loans and advances made to, its sole subsidiary, Barclays Bank PLC, the operating company (OpCo) • As Barclays is committed to issuing most capital and term senior unsecured debt out of the HoldCo going forward, the HoldCo balance sheet is expected to increase Barclays PLC parent company accounts Notes to the parent company balance sheet Investment in subsidiary The investment in subsidiary of £33,743m (2014: £33,743m) represents
investments made into Barclays Bank PLC, including £4,326m (2014:
£4,326m) of Additional Tier 1 (AT1) securities.
Loans and advances to subsidiary and debt securities in issue
During the quarter, Barclays PLC issued £2,032m equivalent of Fixed
Rate Senior Notes accounted for as debt securities in issue. The proceeds
raised through these transactions were used to make £2,032m
equivalent of Fixed Rate Senior Loans to Barclays Bank PLC, with a
ranking corresponding to the notes issued by Barclays PLC.
HOLDING COMPANY TRANSITION 18 Barclays PLC parent company balance sheet Notes Shareholders’ equity Total shareholders’
equity Total liabilities and shareholders’ equity |
 | LIQUIDITY & FUNDING CREDIT RATING APPENDIX PERFORMANCE OVERVIEW CAPITAL & LEVERAGE ASSET QUALITY Barclays Q1 2015 Fixed Income Investor Presentation HOLDING COMPANY TRANSITION • 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 • Majority 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 is 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) Mar-15 PRA transitional Common Equity Tier 1 capital 42 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 67 HoldCo term non-structured senior unsecured debt 2 4 OpCo term non-structured senior unsecured debt 3 26 Total term non-structured senior unsecured debt 97 RWAs 396 Leverage exposure 1,255 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”, published 10 November 2014, 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 on a fully phased in basis. 19 |
 CREDIT
RATING APPENDIX
PERFORMANCE OVERVIEW CAPITAL & LEVERAGE ASSET QUALITY LIQUIDITY & FUNDING HOLDING COMPANY TRANSITION Liquidity & Funding |
 | CREDIT RATING APPENDIX PERFORMANCE OVERVIEW HOLDING COMPANY TRANSITION CAPITAL & LEVERAGE ASSET QUALITY Barclays Q1 2015 Fixed Income Investor Presentation • Stable liquidity position with the Group liquidity pool maintained at £148bn, providing a surplus to internal and external minimum requirements • Quality of the pool remains high: 81% held in cash, deposits with central banks and high quality government bonds 94% 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 over 1.8x 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 Maintaining a robust liquidity position, with pool well in excess of internal and external minimum requirements Estimated CRD IV/Basel 3 liquidity ratios Metric Dec-14 Mar-15 Expected 100% requirement date LCR 1 124% 122% 1 January 2018 Surplus £30bn £28bn NSFR 2 102% n/a 1 January 2018 Surplus to 30-day Barclays-specific LRA (as at 31 December14) 2013 2014 LRA 104% 124% Surplus £5bn £29bn 149 127 LIQUIDITY & FUNDING 21 High quality liquidity pool (£bn) Key messages 1 LCR estimated based on the EU delegated act | 2 Estimated based on the final BCBS rules published in October 2014 | 43 37 31 62 85 88 22 27 29 Dec-13 Dec-14 Mar-15 Cash & Deposits at Central Banks Government Bonds Other Available Liquidity 148 |
 | CREDIT RATING APPENDIX PERFORMANCE OVERVIEW CAPITAL & LEVERAGE ASSET QUALITY Barclays Q1 2015 Fixed Income Investor Presentation Total funding (excluding BAGL, as at 31 December 14) • We guided to issuance of a gross amount of £10-15bn in 2015 across public and private senior unsecured, secured and subordinated debt. This is materially below term maturities of £23bn in 2015, of which £14bn remaining this year • In Q1 15, we issued £4bn publicly against this plan, including $3bn of senior unsecured debt from the HoldCo in two transactions, a £1bn covered bond from Barclays Bank PLC, and a $500m US cards securitisation from Barclays Bank Delaware • We intend to maintain access to diverse sources of wholesale funding, through different products, currencies, maturities and channels • We expect to be a regular issuer of AT1 securities over the next few years We maintain access to stable and diverse sources of funding, across customer deposits and wholesale debt 2015 Funding Plan £508bn £522bn £521bn Customer deposits Sub. debt Secured term funding Short-term debt and other deposits Unsecured term funding 1 LDR for PCB, Barclaycard, Africa Banking and Non-Core retail |
LIQUIDITY & FUNDING 22 Broadly self-funded retail businesses (£bn) Key messages 351 349 347 321 309 310 Dec-13 Dec-14 Mar-15 Deposits from customers 91% 89% 89% 62% 61% 62% 4% 4% 4% 7% 7% 8% 14% 14% 13% 14% 13% 13% 2013 H1 14 2014 HOLDING COMPANY TRANSITION L&A to customers • Group Loan to Deposit Ratio (LDR) and the LDR for PCB, Barclaycard and Africa Banking at 101% and 89% respectively • Excess customer deposits in PCB, Barclaycard and Africa Banking predominantly used to fund the liquidity buffer requirements for these businesses, making them broadly self funded • Overall funding requirements for the Group reducing as Non- Core assets are run down Retail LDR
1 1 |
|
PERFORMANCE OVERVIEW
CAPITAL & LEVERAGE
HOLDING COMPANY TRANSITION
LIQUIDITY & FUNDING
ASSET QUALITY
CREDIT RATING
APPENDIX
Continue to access diverse wholesale funding sources across multiple products, currencies and maturities
Wholesale funding by product (as at 31 December 2014)
Key messages
Overall funding requirements for the Group reducing as we de-lever the balance sheet. However, total wholesale funding (excluding repurchase agreements) increased in Q1 15 to
178bn, an increase of 7bn from 31 December 2014
82bn matures in less than one year, while 22bn matures within one month (31 December 2013: 82bn and 20bn
respectively)
4bn of term funding (net of early redemptions) issued in 2015. Activity includes:
$3bn public benchmark senior unsecured debt issued by Barclays PLC
1bn of Covered bonds issued
by Barclays Bank PLC
We have 23bn of term funding maturing in 2015 (14bn remaining for April to December) 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
Depostis from banks CDs and CPs ABCPs Public benchmark MTNs Privately placed MTNs Covered bonds / ABS Suborindated liabilities1 Other2
By remaining maturity1: WAM net of liquidity pool 105 months
7% 10%
12%
16%
13% 3%
13%
26%
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 years1
> 5 years2
10%
27% 14%
8%
21% 8%
8% 4%
By currency1 USD EUR GBP Others
As at 31 December 2014 35% 32% 25% 8%
As at 31 December 2013 35% 36% 19% 10%
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) |
23 | Barclays Q1 2015 Fixed Income Investor Presentation
 Asset
quality LIQUIDITY &
FUNDING CREDIT RATING APPENDIX PERFORMANCE OVERVIEW CAPITAL & LEVERAGE ASSET QUALITY HOLDING COMPANY TRANSITION |
|
PERFORMANCE HOLDING COMPANY
CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX
OVERVIEW
TRANSITION
Continued strong asset quality
Impairment charge (m) Highlights
Credit impairment improved 7% to 448m, principally reflecting lower impairments in PCB
PCB benefitted from the improving economic environment in the UK, resulting in lower default rates and charges in corporate
Barclaycard impairment increased 8% and was accompanied by loans and advances growth of 15%. The loan loss rate reduced 20bps to 305bps
Africa Banking impairment improved 6% to 90m principally due to reduced charges in South Africa mortgages
7%
481 448
Q1 14 Q1 15
Personal and Corporate Banking Barclaycard Africa Banking
Impairment (m)
41% (8%) 6%
135
79 269 290 96 90
Q1 14 Q1 15 Q1 14 Q1 15 Q1 14 Q1 15
25 | Barclays Q1 2015 Fixed Income Investor Presentation
 | Barclays Q1 2015 Fixed Income Investor Presentation LIQUIDITY & FUNDING CREDIT RATING APPENDIX PERFORMANCE OVERVIEW HOLDING COMPANY TRANSITION CAPITAL & LEVERAGE ASSET QUALITY • 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 LLRs declining in both retail and wholesale in line with improving macro economic conditions Group impairment stable (31 December 2014) LLR Annualised impairment charge Gross loans and advances Wholesale loan loss rate (bps) 26 Retail loan loss rate (bps) Highlights 00 00 (0) 00 000 00 28 33 (1) 13 12 12 Personal & Corporate Banking Africa Banking Investment Bank Core Barclays Group Dec-13 Dec-14 25 180 332 94 78 91 18 138 308 85 75 84 Personal & Corporate Banking Africa Banking Barclaycard Core Barclays Group Dec-13 Dec-14 Non-Core Non-Core |
|
PERFORMANCE HOLDING COMPANY
CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX
OVERVIEW
TRANSITION
Reduced exposure to Eurozone periphery (31 December 14)
Exposures
by geography (bn)1
Spain Italy Portugal Ireland
59.0
4.9 52.8
7.9 6.7 43.2
6.3 4.8
22.7 4.8
20.6
18.0
23.5 19.2 15.6
2012 2013 2014
Exposures by asset class (bn)
Sovereign Financial institutions Corporate
Residential mortgages Other retail lending
59.2
6.3 53.1
5.9 43.2
2.6
32.5 31.4 16.6
4.3
9.3
5.4 5.7 6.5 7.1 2.2 17.7 2.0
2012 2013 2014
1 Net on balance sheet |
Key Messages
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
27 | Barclays Q1 2015 Fixed Income Investor Presentation
|
Risk – Minimising potential headwinds Passing stress tests – stressed CET1 ratios 7.0% 7.1% 7.0% 5.4% PRA stress test EBA stress test Barclays CET1 stressed ratio UK Peers CET1 stressed ratio 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 Managing sector exposures (bn) (as at 31 December 2014) 1 Oil and gas All other exposure1 2% 11.4 9.8 Exposure limits 4.1 3.4 4.7 Oil majors Exploration Midstream Refining Oilfield and (pipelines) services production Investment grade makes up c.90% of limits in oil and gas Total net exposure of 27m in Greece Managing country exposures (as at 31 December 2014) No material operations in Russia, with <2bn exposure in relation to financing and trading counterparties 1 Total on and off balance sheet | 28 | Barclays Q1 2015 Fixed Income Investor Presentation
 LIQUIDITY & FUNDING APPENDIX PERFORMANCE OVERVIEW HOLDING COMPANY TRANSITION CAPITAL & LEVERAGE ASSET QUALITY CREDIT RATING Credit ratings |
|
PERFORMANCE HOLDING COMPANY
CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW TRANSITION
Recent industry-wide credit rating agency (CRA) action reflects evolving resolution frameworks
Ratings (29 May 15)1 S&P Xxxxx’x Fitch
Standalone rating bbb+ Baa2 a
Barclays PLC (B PLC - HoldCo)
Senior long-term BBB / Stable Baa3 / Stable A /
Stable
Senior short-term A-2 P-3 F1
Tier 2 BB+ Xxx0 X-
XX0 B - BB+
Barclays Bank PLC (BB PLC - OpCo)
Senior long-term A (CWN2) A2 / Stable A / Stable
Senior short-term A-1 (CWN2) P-1 F1
T2 CoCos BB+ - BBB-
UT2 BB+ Ba1 BBB
XX0 XXX- Xxx0/Xx0 A-
Tier 1 BB Ba1/Ba2 BBB-/BB+
Rating action Certain UK, German, Austrian and Swiss non- Bank rating actions globally following Took action on
YTD 2015 – operating holding companies downgraded implementation of new bank rating sovereign support
Industry wide Ratings of most UK, German and Austrian methodology and reassessment of the on 19 May 2015
bank operating companies put on negative likelihood of sovereign support
watch
Rating action 3 Feb 2015: 28 May 2015: No impact on
YTD 2015 – B PLC’s long-term
senior ratings B PLC’s long-term senior rating Barclays as the
Barclays specific downgraded by two notches to BBB downgraded by 3 notches to Baa3 due
standalone credit
BB PLC’s senior ratings put on CWN to removal of sovereign support rating did not
B PLC’s subordinate ratings upgraded benefit from
by 1 notch to Baa3 due to application
sovereign support
of “loss given failure” analysis uplift
17 Mar
15: BB PLC’s senior rating
affirmed and outlook changed to Stable
Next
steps & CWN likely to be resolved by “early June - -
potential impact on Potential downgrade 3 of BB PLC’s senior
Barclays ratings ratings due to removal of 2 sovereign support
notches, potentially partially
offset by S&Ps
criteria for “Additional Loss Absorbing
Capacity”
Action on banks domiciled in countries that
implement BRRD bail-in powers in Jan-16
expected late 2015 the earliest
Recent industry-wide CRA announcements driven by evolving resolution frameworks:
Reassessment
of the likelihood of sovereign support for senior creditors resulting in downward pressure on senior credit ratings
Ratings methodology updates and changes to
reflect cushion of junior debt that would absorb losses ahead of senior bank creditors may partially or fully offset sovereign support notch removal There has been no impact on Barclays standalone credit ratings which carries a stable outlook by all
credit rating agencies Action on bank HoldCos more punitive:
No uplift for loss absorbing capacity provided to senior creditors to offset sovereign support notch
removal, and/or
Expected increase in thickness of the senior layer which will benefit LGD over time not taken into account As implementation of bank resolution
frameworks are progressing at different pace across jurisdictions, timelines for CRA action may differ
1 Definitions of securities classes for comparison purposes
and not necessarily in line with the respective CRAs own definitions CreditWatch with negative implications | Potential impact based on Barclays interpretation of S&Ps public announcements. Actual ratings changes may be different as the outcome
of the CWN review is at the discretion of S&P
30 Barclays Q1 2015 Fixed Income Investor Presentation
 | Barclays Q1 2015 Fixed Income Investor Presentation LIQUIDITY & FUNDING CREDIT RATING APPENDIX PERFORMANCE OVERVIEW HOLDING COMPANY TRANSITION CAPITAL & LEVERAGE ASSET QUALITY Contractual outflows Barclays manages and reserves for potential rating actions in the liquidity pool (31 December 2014) Contractual credit rating downgrade exposure 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 | 31
Key Messages • Potential outflows related to a multiple-notch credit downgrade of Barclays Bank PLC 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 of Barclays Bank PLC across all credit rating agencies1 Behavioural outflows • During 2014 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 the A-1 short term rating for Barclays Bank PLC by S&P as the credit rating agency assess sovereign support notches in its ratings |
 | LIQUIDITY & FUNDING CREDIT RATING APPENDIX PERFORMANCE OVERVIEW HOLDING COMPANY TRANSITION CAPITAL & LEVERAGE ASSET QUALITY Barclays Q1 2015 Fixed Income Investor Presentation 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 10.6% as at 31 March 2015, 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 • Leverage ratio maintained at 3.7% as at 31 March 2015, close to our target of greater than 4% in 2016 • Additional planned reductions in leverage exposure by 2016 mainly through reduction in Barclays Non-Core and the Core Investment Bank Leverage 32 |
 LIQUIDITY & FUNDING CREDIT RATING PERFORMANCE OVERVIEW HOLDING COMPANY TRANSITION CAPITAL & LEVERAGE ASSET QUALITY APPENDIX Appendix |
 | LIQUIDITY & FUNDING CREDIT RATING PERFORMANCE OVERVIEW HOLDING COMPANY TRANSITION CAPITAL & LEVERAGE ASSET QUALITY Barclays Q1 2015 Fixed Income Investor Presentation APPENDIX 34 Repositioning and simplifying Barclays 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 As presented at the Group Strategy Update on 8 th May 2014 |
 | LIQUIDITY & FUNDING CREDIT RATING PERFORMANCE OVERVIEW HOLDING COMPANY TRANSITION CAPITAL & LEVERAGE ASSET QUALITY Barclays Q1 2015 Fixed Income Investor Presentation APPENDIX 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%) 11.6% 2 £3.8bn 3 3.7% 1p 1 10.6% (3.3%) Q1 2015 1 Dividend per share paid for the quarter - payout ratio is not meaningful at Q1 | 2 Excluding CTA. Adjusted XxX including CTA is 10.9% | 3 Excluding CTA. Bank Levy is accounted for in Q4 each year | 2016 Target 35 |
 | LIQUIDITY & FUNDING CREDIT RATING APPENDIX PERFORMANCE OVERVIEW HOLDING COMPANY TRANSITION CAPITAL & LEVERAGE ASSET QUALITY Barclays Q1 2015 Fixed Income Investor Presentation Simpler, focused and balanced structure Barclays Non-Core LBT £256m RWAs £65bn Barclaycard PBT £366m RWAs £40bn Personal and Corporate Banking PBT £787m RWAs £123bn Africa Banking PBT £295m RWAs £39bn Investment Bank PBT £675m RWAs £123bn Barclays Group Adjusted results 1 Income £6.4bn Risk weighted assets (RWA) £331bn Impairment £(0.4bn) Average allocated equity £47bn Operating expenses £(3.9bn) Return on average equity (XxX) 10.9% Profit before tax £2.1bn Return on tangible equity (RoTE) 13.2% XxX drag (3.3%) 1 Includes Head Office as part of Core, representing £6bn RWAs and £19m loss before tax |
All figures for quarter ended Q1 0000
XXXXXXXX 36 |
 | LIQUIDITY & FUNDING CREDIT RATING APPENDIX PERFORMANCE OVERVIEW HOLDING COMPANY TRANSITION CAPITAL & LEVERAGE ASSET QUALITY Barclays Q1 2015 Fixed Income Investor Presentation Reducing and reallocating RWAs to drive growth and returns <15% Investment Bank 222 49% 51% Retail and Commercial 214 RWAs £436bn Non-Core 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 Non-Core c.50 <15% c.55% 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 th May 2014 APPENDIX 2013 pre-resegmentation (£bn) 2013 post-resegmentation estimate (£bn) 2016 guidance (£bn) 30% |
 | LIQUIDITY & FUNDING CREDIT RATING APPENDIX PERFORMANCE OVERVIEW HOLDING COMPANY TRANSITION CAPITAL & LEVERAGE ASSET QUALITY Barclays Q1 2015 Fixed Income Investor Presentation 38 Banking Markets 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 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 FY 2013 1 1 CRD IV basis | Core Investment Bank Non-Core Investment Bank Core Investment Bank: Building on competitive advantages APPENDIX Preliminary numbers as presented at the Group Strategy Update on 8 th May 2014 |
 | LIQUIDITY & FUNDING CREDIT RATING APPENDIX PERFORMANCE OVERVIEW HOLDING COMPANY TRANSITION CAPITAL & LEVERAGE ASSET QUALITY Barclays Q1 2015 Fixed Income Investor Presentation PCB: Profits up 14% 1 Q1 15 CIR excluding CTA was 58% | • Income was in line at £2,174m: Personal income reduced 2% driven by a reduction in fee income and mortgage margin pressure from existing customer rate switching, partially offset by improved deposit margins Corporate income increased 3% due to improved deposit margins and balance growth in both lending and deposits, partially offset by reduced margins in the lending business Wealth income reduced 4% to £258m • Net interest margin improved to 3.02% primarily due to the revised overdraft proposition and higher savings and deposit margins in personal and corporate businesses, partially offset by margin compression in mortgages and the corporate lending business • Credit impairment charges improved 41% due to the positive economic environment in the UK resulting in lower default rates and charges in corporate, with a resulting loan loss rate of 14bps • Costs reduced 3% reflecting savings from Transform programmes, including headcount reductions and branch network rationalisation • Positive jaws contributed to an increased XxX of 12.9%, while RoTE improved to 17.1% Three months ended – March (£m) 2014 2015 % change – Personal 1,026 1,009 (2%) – Corporate 879 907 3% – Wealth 268 258 (4%) Income 2,173 2,174 - Impairment (135) (79) 41% Total operating expenses (1,355) (1,310) 3% – Costs to achieve Transform (57) (42) 26% Profit before tax 688 787 14% Financial performance measures Average allocated equity £17.4bn £18.1bn Return on average tangible equity 14.7% 17.1% Return on average equity 11.1% 12.9% Cost:income ratio1 62% 60% Loan loss rate 25bps 14bps Net interest margin 2.99% 3.02% Xxx-00 Xxx-00 Loans and advances to customers £215.5bn £219.0bn Customer deposits £297.2bn £298.1bn CRD IV RWAs £116.1bn £122.5bn Financial performance APPENDIX 39 |
 | LIQUIDITY & FUNDING CREDIT RATING APPENDIX PERFORMANCE OVERVIEW HOLDING COMPANY TRANSITION CAPITAL & LEVERAGE ASSET QUALITY Barclays Q1 2015 Fixed Income Investor Presentation • Income increased 9% to £1,135m driven by US cards and Barclaycard Business Solutions Net interest margin reduced to 8.78% (Q1 14: 9.19%) due to change in product mix with relatively stronger growth in the lower margin US cards and Barclays Partner Finance businesses, but strongly up from 8.13% reported for Q4 14 Non-interest income increased 6% to £314m due to growth in US cards and Barclaycard Business Solutions, partially offset by the impact of interchange fee reductions in Europe • Credit impairment charges increased 8% to £290m and was accompanied by loans and advances growth of 15%. The loan loss rate reduced 20bps to 305bps • Costs increased 18% primarily reflecting business growth • PBT decreased slightly to £366m and attributable profit rose to £259m (2014: £254m) Barclaycard: Income up 9% and XxX of nearly 17% Three months ended – March (£m) 2014 2015 % change Income 1,042 1,135 9% Impairment (269) (290) (8%) Total operating expenses (415) (490) (18%) – Costs to achieve Transform (13) (25) (92%) Profit before tax 368 366 (1%) Financial performance measures Average allocated equity £5.6bn £6.3bn Return on average tangible equity 22.6% 21.0% Return on average equity 18.2% 16.6% Cost:income ratio 40% 43% Loan loss rate 325bps 305bps Net interest margin 9.19% 8.78% Xxx-00 Xxx-00 Loans and advances to customers £31.9bn £36.8bn Customer deposits £5.8bn £8.0bn CRD IV RWAs £36.4bn £39.9bn Financial performance APPENDIX 40 |
 | Barclays Q1 2015 Fixed Income Investor Presentation LIQUIDITY & FUNDING CREDIT RATING PERFORMANCE OVERVIEW HOLDING COMPANY TRANSITION CAPITAL & LEVERAGE ASSET QUALITY APPENDIX Currency movements had a limited effect on Q1 year on year comparisons. Discussion of business performance is therefore based on reported results in GBP: • PBT increased 23%, driven by 8% income growth exceeding 3% cost growth • Net interest income increased 6% to £533m, driven by higher loans to customers in Corporate and Investment Banking (CIB) and customer deposits in Retail and Business Banking • Non-interest income increased 11% to £415m, reflecting transactional income growth in South Africa and trading income in CIB • Credit impairment charges decreased 6% to £90m, driven by reduced impairments in the South Africa mortgages portfolio and business banking • Costs increased 3% reflecting inflationary pressures, resulting in higher staff costs, partially offset by the benefits of Transform programmes • XxX was 10.8% and RoTE was 14.7% Africa Banking: Profits up 23% 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 | Three months ended – March (£m) 2014 2015 % change Income 878 948 8% Impairment (96) (90) 6% Total operating expenses (546) (565) (3%) – Costs to achieve Transform (9) (6) 33% Profit before tax 240 295 23% Financial performance measures Average allocated equity 2 £3.7bn £4.1bn Return on average tangible equity 2 15.5% 14.7% Return on average equity 2 11.1% 10.8% Cost:income ratio 62% 60% Loan loss rate 104bps 94bps Net interest margin 5.91% 5.91% Xxx-00 Xxx-00 Loans and advances to customers £35.0bn £35.7bn Customer deposits £34.0bn £35.0bn CRD IV RWAs £36.6bn £39.3bn Financial performance 1 41 |
 | Barclays Q1 2015 Fixed Income Investor Presentation LIQUIDITY & FUNDING CREDIT RATING PERFORMANCE OVERVIEW HOLDING COMPANY TRANSITION CAPITAL & LEVERAGE ASSET QUALITY APPENDIX Q4 14 % change 638 (1)% 1,028 48% • PBT rose 37% driven by income up 2% and costs down 9% • XxX improved to 9.1%, or 9.6% excluding CTA • Income increased 2% to £2,149m: Banking increased 3% driven by higher debt and equity underwriting fees, partially offset by a decrease in advisory fees and lending Macro increased 13% due to higher income in rates and currency products, reflecting increased client activity and market volatility Credit decreased 21% driven by lower income in distressed credit, but recovered strongly from Q4 14 due to increased client activity Equities increased 5% driven by cash equities and equity financing, partially offset by equity derivatives • Costs decreased 9% due to lower CTA and compensation costs, as well as savings from Transform programmes, including business restructuring and operational streamlining Investment Bank: Profits up 37% Three months ended – March (£m) 2014 2015 % change Banking 616 632 3% Markets 1,489 1,517 2% – Credit 346 274 (21%) – Equities 591 619 5% – Macro 552 624 13% Income 1 2,103 2,149 2% Impairment release 19 11 (42%) Total operating expenses (1,631) (1,485) 9% – Costs to achieve Transform (130) (31) 76% Profit before tax 491 675 37% Financial performance measures Average allocated equity £15.4bn £15.4bn Return on average tangible equity 6.4% 9.7% Return on average equity 6.1% 9.1% Cost:income ratio 78% 69% Xxx-00 Xxx-00 CRD IV RWAs £125.2bn £123.0bn
Financial performance – Q1 15 vs. Q1 14 1 Includes ‘Other’ income | 42 |
 | Barclays Q1 2015 Fixed Income Investor Presentation LIQUIDITY & FUNDING CREDIT RATING PERFORMANCE OVERVIEW HOLDING COMPANY TRANSITION CAPITAL & LEVERAGE ASSET QUALITY APPENDIX Core income: growth in net interest income and margin • Improved performance in income across all businesses • NII for our retail and corporate businesses 2 grew 6%, reflecting an increase in customer assets and NIM: PCB grew NII 5% driven by lending and deposit growth and margin improvement Barclaycard grew NII 10% driven by volume growth Africa Banking income was up 8%, with NII up 6% 1 Includes Head Office income | 2 For Personal and Corporate Banking, Barclaycard and Africa Banking |
Average customer assets and liabilities 2 (£bn) • NIM increased to 414bps, measured across PCB, Barclaycard and Africa Banking PCB NIM improved to 3.02% (Q1 14: 2.99%) Net interest margin 2 (bps) • Average customer assets increased 5% to £289bn, with growth in PCB, Barclaycard, and Africa Banking • Average customer liabilities increased 2% to £333bn, with growth in all three businesses Total income NII Three months ended – March 0000 0000 0000 2015 Personal and Corporate Banking 2,173 2,174 1,528 1,601 5% Barclaycard 1,042 1,135 746 821 10% Africa Banking 878 948 503 533 6% Investment Bank 2,103 2,149 Total Core 1 6,277 6,420 43 Core income (£m) |
 | Barclays Q1 2015 Fixed Income Investor Presentation LIQUIDITY & FUNDING CREDIT RATING PERFORMANCE OVERVIEW HOLDING COMPANY TRANSITION CAPITAL & LEVERAGE ASSET QUALITY APPENDIX Group and Core cost targets 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 2 £1.2bn Original Guidance = £17.5bn 44 Group cost guidance 1 (£bn) Core cost target 1 (£bn) 18.7 16.9 c.16.3 FY13 FY14 FY15 Target 16.4 15.1 <14.5 FY13 FY14 FY16 Target Revised Guidance = £17bn |
|
PERFORMANCE HOLDING COMPANY
CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX
Core
operating costs
Core operating expenses1 (bn)
Staff costs Other operating
costs Costs to achieve Transform
4.0 2% 3.9
0.2 0.1
1.2 1.3
2.5 2.4
Q1 14 Q1 15
Highlights
Core operating expenses decreased by 2% year on year driven by savings from Transform programmes principally in the Investment Bank and PCB, as well as lower CTA spend. This was
partially offset by adverse FX movements Transform initiatives continued to drive significant and sustainable cost reductions by focusing on restructuring, business exits, industrialisation, innovation and property exits Investment Bank reduced
operating expenses year on year predominately driven by front office restructuring and operational streamlining Barclaycard operating expenses increased primarily reflecting business growth
Personal and Corporate Banking Barclaycard Africa Banking Investment Bank
Operating costs (bn)
3% (18%) (3%) 9%
1.36 1.31 0.42 0.49 0.55 0.57 1.63 1.49
Q1 14 Q1 15 Q1 14 Q1 15 Q1 14 Q1 15 Q1 14 Q1 15
1
1 Totals in graph reflect rounding |
45 | Barclays Q1 2015 Fixed Income Investor Presentation
 | Barclays Q1 2015 Fixed Income Investor Presentation LIQUIDITY & FUNDING CREDIT RATING PERFORMANCE OVERVIEW HOLDING COMPANY TRANSITION CAPITAL & LEVERAGE ASSET QUALITY APPENDIX Investment Bank: Downward trend in compensation charge (31 December 2014) 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 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 | 46 Investment Bank operating expenses (£m) Investment Bank – Compensation actions 2,194 2,050 3,978 3,620 236 190 FY13 FY14 7% Other costs 3,045 2,566 c.200 933 854 c.700 FY13 FY14 FY15E 3 218 337 1 6,225 8% ex- CTA c.700 3 • 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 Down 9% |
|
PERFORMANCE HOLDING COMPANY
CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX
Wholesale
funding composition1
>1 month >3 months >6 months >9 months Total >1 year but >2 years
As at 31 March 2015 (bn) 1 month but 3 but 6 but 12 but 12 1 year 2 years but 5 years >5 years Total
months months months months
Barclays PLC
Senior unsecured MTNs - - - - - - - 2.0 2.1 4.1
(public benchmark)
Subordinated liabilities - - - - - - - - 0.8 0.8
Barclays Bank PLC
Deposits from banks 10.8 6.1 2.1 0.7 0.4 20.1 0.5 0.1 0.4 21.1
Certificates of deposit and 2.7
11.0 6.8 5.5 3.8 29.8 1.0 2.1 0.6 33.5
commercial paper
Asset backed
commercial paper 4.5 1.5 0.6 - - 6.6 - - - 6.6
Senior unsecured MTNs 0.7 - 1.1 - 1.3 3.1 3.4 6.6 4.6 17.7
(public benchmark)
Senior unsecured MTNs 0.9 2.5 3.8 1.8 2.2 11.2 7.2 13.6 11.4 43.4
(private placement)2
Covered bonds / ABS 0.2 0.6 1.7 0.2 0.9 3.6 3.2 8.2 4.1
19.1
Subordinated liabilities - 0.1 - - - 0.1 - 4.2 15.7 20.0
Other3 2.1 1.4
1.7 1.0 0.8 7.0 1.0 1.5 2.2 11.7
Total 21.9 23.2 17.8 9.2 9.4 81.5 16.3 38.3 41.9 178.0
Total as at 31 December 2014 16.8 23.2 14.4 13.5 7.5 75.4 14.0 36.6 45.4 171.4
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 Englands Funding for Lending Scheme. Included within deposits from banks are 1bn of liabilities
drawn in the European Central Banks 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 |
47 | Barclays Q1 2015 Fixed Income Investor Presentation
|
PERFORMANCE HOLDING COMPANY
CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX
In line
with the European Bank Recovery & Resolution Directive the UK Banking Act now includes a statutory bail-in power
Overview
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:
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)
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 to 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
Considerations for Bondholders
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 accordance with rules made by the PRA (reflecting Article 55 of the BRRD), Barclays has begun including in the terms of its wholesale term debt securities, governed by non-EEA laws, a provision whereby investors acknowledge the scope of, and
agree to be bound by, 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
48 | Barclays Q1 2015 Fixed Income Investor
Presentation
 | Barclays Q1 2015 Fixed Income Investor Presentation Xxxx Xxxxxxx x00 (0)00 0000 0000 xxxx.xxxxxxx@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 49 Xxx Xxxxxx x00 (0)00 0000 0000 xxxxxx.xxxxxx@xxxxxxxx.xxx |
 | Barclays Q1 2015 Fixed Income Investor Presentation Legal Disclaimer 50 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 |
 | Disclaimer (continued) Barclays Full Year 2014 Fixed Income Investor Presentation 51 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 Exhibit 99.1 of the Barclays’ Form 6-K filed with the SEC on April 29, 2015 (Film No. 15811411) (the “April 29 Form 6-K”) (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 investigations and litigation primarily relating to Foreign Exchange; loss on sale of the Spanish business; Education, Social Housing, and Local Authority (ESHLA) valuation revision, gain on valuation of a component of the defined retirement benefit liability, and goodwill impairment. A reconciliation to IFRS is presented on page 9 of the April 29 Form 6-K; • Adjusted profit after tax represents profit after tax excluding the post-tax impact of own credit; provisions for PPI redress; provision for investigations and litigation primarily relating to Foreign Exchange; loss on sale of the Spanish business; and gain on valuation of a component of the defined retirement benefit liability. A reconciliation to IFRS is presented on page 5 of the April 29 Form 6-K; • 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. A reconciliation to IFRS is presented on page 9 of the April 29 Form 6-K; |
 | Disclaimer (continued) Barclays Full Year 2014 Fixed Income Investor Presentation 52 • Adjusted total operating expenses represents operating expenses excluding the provisions for PPI redress; provision for investigations and litigation primarily relating to Foreign Exchange; and gain on valuation of a component of the defined retirement benefit liability. A reconciliation to IFRS is presented on page 9 of the April 29 Form 6-K; • Adjusted litigation and conduct represents litigation and conduct excluding the provisions for PPI redress; and the provision for investigations and litigation primarily relating to Foreign Exchange. A reconciliation to IFRS is presented on page 9 of the April 29 Form 6-K; • Adjusted cost: income ratio represents cost: income ratio excluding the impact of own credit; the provisions for PPI redress; gain on US Xxxxxx acquisition assets; provision for investigations and litigation primarily relating to Foreign Exchange and gain on valuation of a component of the defined retirement benefit liability. 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 9 of the April 29 Form 6-K; • Adjusted basic earnings per share represents adjusted attributable profit 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 annualised adjusted profit after tax for the period attributable to ordinary shareholders, including an adjustment for the tax credit in reserves in respect of other equity instruments, as a proportion of average shareholders’ equity, excluding non-controlling interests and other equity instruments. The comparable IFRS measure is return on average shareholders’ equity which represents annualised profit after tax for the period attributable to ordinary shareholders, including an adjustment for the tax credit in reserves in respect of other equity instruments, as a proportion of average shareholders’ equity, excluding non-controlling interests and other equity instruments; • Adjusted return on average tangible shareholders’ equity represents annualised adjusted profit after tax for the period attributable to ordinary shareholders, including an adjustment for the tax credit in reserves in respect of other equity instruments, as a proportion of average shareholders’ equity excluding non-controlling interests and other equity instruments adjusted for the deduction of intangible assets and goodwill. The comparable IFRS measure is return on average tangible shareholders’ equity which represents annualised profit after tax for the period attributable to ordinary shareholders, including an adjustment for the tax credit in reserves in respect of other equity instruments, as a proportion of average shareholders’ equity excluding non-controlling interests and other equity instruments adjusted for the deduction of intangible assets and goodwill; • 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 page 10 of the April 29 Form 6-K; • Constant currency results in Africa Banking are calculated by converting ZAR results into GBP using the average exchange rate for the three months ended 31 March 2015 for the income statement and the 31 March 2015 closing exchange rate for the balance sheet and applying those rates to the results as of and for the three months ended 31 March 2014, in order to eliminate the impact of movement in exchange rates between the two periods; |
 | Disclaimer (continued) Barclays Full Year 2014 Fixed Income Investor Presentation 53 • 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 20 of the April 29 Form 6-K for a reconciliation of this measure to CRD IV CET1 ratio; 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. |
