Barclays 2009 Annual Report Download - page 17

www.barclays.com/annualreport09 Barclays PLC Annual Report 2009 15
Summary
Our primary objective is generating returns for shareholders. But we
recognise that we can, and should, in ways consistent with that objective,
contribute to the well-being of society by conducting our business
responsibly and by performing well, on behalf of our customers, our core
functions of payments and money transmission, safe storage of deposits,
maturity transformation and lending, and the provision of advice and
execution in underwriting and trading. These activities lie at the heart
of economic activity in a modern economy, and if economies are to grow
– and reap all the beneficial consequences that flow from that growth –
then banks must help those they serve take appropriate risks. Getting this
balance between our obligation to create returns for our owners and our
need to do that in a responsible way has never been more important.
Economic slowdown last year impacted most parts of the world in
which we operate. But despite that, I am pleased with the way we have
performed both in 2009 and in the two tumultuous years which preceded
it. That performance allows us to enter 2010 with confidence.
During 2009, we increased our income substantially. Barclays Capital had
a very strong year across all global franchises, in particular as its businesses in
North America started to reap the benefits of the acquisition of the Lehman
Brothers North American business and integration. We have invested during
2009 in building out our equities and advisory platforms in Europe and Asia,
which will be sources of income growth in Barclays Capital in the years ahead.
Barclaycard also produced good income growth. The steadiness of our profit
performance over the past three years, even after absorbing the impact of
higher impairments and the continued legacy of credit market writedowns,
is attributable to the diversification of income that we have built during
recent years.
It was clear as we came into 2009 that the regulatory balance sheet
should be an area of considerable focus during the year. So we have
strengthened our capital position, reduced leverage and added to our
liquidity buffer. We are, by consequence, both well prepared for any future
economic weakness and also able to continue to execute on our strategy
as opportunities arise.
In March, we decided not to participate in the UK Government’s Asset
Protection Scheme, following the application of a detailed stress test by
the UK Financial Services Authority to determine our resilience to stressed
credit risk, market risk and economic conditions. This test confirmed our
expectation that we would continue to be able to meet our regulatory
capital obligations.
In April, we announced our intention to sell the iShares business of
Barclays Global Investors (BGI). Following unsolicited interest for the whole
of BGI, and strategic analysis of the optimal ownership structure within the
future asset management industry given the direction of regulation, we
agreed in June to sell the whole of BGI to BlackRock, Inc. (BlackRock). We
completed this transaction in December for an aggregate consideration of
$15.2bn (£9.5bn), realising a profit on disposal of £6.3bn. Our shareholders
will be able to participate in the institutional asset management sector
through our continuing holding of 37.567 million new BlackRock shares. This
gives us an economic interest of 19.9% in the enlarged BlackRock group, and
also provides a strong basis for a new commercial relationship between
Barclays and BlackRock, which will be particularly relevant to Barclays Capital
as a provider, and Barclays Wealth as a consumer. Bob Diamond and I look
forward to contributing to the progress of this new global leader in asset
management as members of the BlackRock Board of Directors.
Across our retail and commercial banking activities we continued
to consolidate our position in our core markets through organic revenue,
cost and risk management measures. We took advantage of inorganic
opportunities as they arose. In September, we established a long-term life
insurance joint venture with CNP Assurances (CNP) in Spain, Italy and
Portugal. In the same month, we agreed to acquire the Portuguese credit
card business of Citibank International plc, adding some 400,000 new credit
card customers to our Portuguese business as we continued to invest in the
expansion of our GRCB – Western European retail operations. And in October
we agreed to acquire Standard Life Bank Plc from Standard Life Plc, adding
an attractive mortgage and savings book to our UK Retail business. This
acquisition completed in early January 2010.
2009 priorities
In my review a year ago, I said that we had three priorities for 2009: staying
close to customers and clients; managing our risks and maintaining
strategic momentum. How did we fare in these areas?
Staying Close to Customers and Clients: In the dense fog that was
brought down on the industry by the credit crunch, it was clear that we
needed a powerful magnetic north – customers. The rapid economic
slowdown of 2008 and 2009 has complicated the lives of many of those
that we serve. Our job in 2009 was to stay close to them as they sought to
navigate the risks and the opportunities thrown up by the crisis. The income
line is a good proxy for customer activity levels and customer relationships.
And our income generation in 2009 achieved record levels.
I am pleased with the number of new mortgage, savings, Premier
accounts and Local Business customers we have added in UK Retail Banking
and with the increase in customer account balances.
In Barclays Commercial Bank, we were able to increase average asset
and deposit balances in a difficult business environment.
In Barclaycard, we rolled out a number of initiatives to offer support to
customers in financial difficulties whilst limiting our exposure to the most at
risk segments of the market.