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Barclays PLC
Annual
Report
2004

Table of contents

  • Page 1
    Annual Report 2004 Barclays PLC

  • Page 2
    ... to analysts, investors, representatives of the media and others. In particular, among other statements, certain statements in the Financial Review and Business Description with regard to management objectives, trends in results of operations, margins, costs, return on equity, risk management, and...

  • Page 3
    ... Executive's statement 9 Group Finance Director's review 12 Corporate responsibility Section 2 - Impact 16 Directors and Officers of Barclays PLC 19 Directors' report 21 Corporate governance report 27 Barclays report on remuneration 40 Accountability and audit 41 Presentation of information 42 Risk...

  • Page 4
    ...financial services companies in the world by market capitalisation. Operating in over 60 countries and employing over 78,000 people, we move, lend, invest and protect money for over 18 million customers and clients worldwide. Our primary goal To deliver top quartile total shareholder return relative...

  • Page 5
    ...; and Credit, which includes origination, sales, trading and research relating to loans, debt capital markets, structured capital markets, commercial mortgage backed securities, private equity and large asset leasing. Barclays Global Investors (BGI) One of the world's largest asset managers and...

  • Page 6
    ..."A very successful year for Barclays. Record pre-tax profits, first in our peer group of international banks for total shareholder return, and a seamless transition to a new management team." Matthew W Barrett, Chairman 2002 2003 2004 Over 11,500 Barclays staff volunteered their time and skills...

  • Page 7
    ... the London Business School and a non-executive Director of the Bank of England. Sir Andrew brings considerable accounting and financial expertise to the Board and Board Audit Committee. Leigh Clifford is Chief Executive of Rio Tinto and brings a wealth of global operational management and business...

  • Page 8
    ... high growth global product businesses and selected retail and commercial banking businesses outside the UK. You can see our approach at work in how we performed during 2004. We saw earnings surge in businesses with strong overseas exposure such as Barclays Capital and Barclays Global Investors, and...

  • Page 9
    Barclays PLC Annual Report 2004 20 % Increase in profit before tax Our efforts in 2004 were directed at advancing our four strategic priorities. These are: building the best bank in the UK; growing our global product businesses (credit cards, investment banking, institutional money management ...

  • Page 10
    Group Chief Executive's statement In 2004, we received widespread recognition for our policies in a range of areas, including financial inclusion, community involvement, staff pensions, outsourcing, partnership with our trade union partner, Amicus, and disability. This recognition is important ...

  • Page 11
    ... review Barclays PLC Annual Report 2004 Profit before tax at £4,603m was up 20%. Return on average shareholders' funds was 19% and the total dividend payout rose 17%. Earnings per share increased 21%. Economic profit1 was up 32%, well ahead of our goal and a reflection of tight capital management...

  • Page 12
    ... growth was funded by the business and reflected in costs which grew 37%. Approximately 50% of the cost base is variable and despite the significant growth in staff numbers, income per head remained broadly flat. Barclays Global Investors (BGI) had another excellent year with profit before tax...

  • Page 13
    Barclays PLC Annual Report 2004 position enhances our ability to pay dividends and invest confidently in business growth. When we look at the balance sheet, we focus capital management on five areas: maintaining our double A credit rating; generating sufficient capital to support weighted risk ...

  • Page 14
    ... into our operations worldwide. The Corporate Responsibility Director is accountable to the Board for the operation of the standard, and the standard is subject to annual review by the Board Risk Committee. The standard sets out our definition of corporate responsibility - 'business behaviour that...

  • Page 15
    ... banking through our Cash Card account to over 300,000 UK customers under our programme to tackle financial inclusion; made more than £1bn of new loan commitments to Housing Associations for the regeneration of social housing; extended our application of the Equator Principles to project finance...

  • Page 16
    ... Loan Servicing Centre during a cultural celebration day held during 2004. In 2005, around 5,000 employees in 12 London offices will move to Barclays new global headquarters in London's Canary Wharf. The building was designed to meet high environmental standards, and has been rated 'excellent...

  • Page 17
    ... PLC 19 Directors' report 21 Corporate governance report 27 Barclays report on remuneration 40 Accountability and audit 41 Presentation of information 55 56 57 61 65 68 69 Risk management 42 44 49 52 53 Risk factors Risk management and control - overview Credit risk management Loans and advances...

  • Page 18
    ... and Audit and Head of the Government Accountancy Service at HM Treasury. He is Professor of Management Practice in Accounting at the London Business School and a non-executive Director of the Bank of England and MORI Group Limited. He is a member of the Board Audit and Board Risk Committees. 16

  • Page 19
    ...Zech is Chairman of Denkwerk GmbH. He retired as Chief Executive of Gerling-Konzern, the general insurance arm of Gerling, at the end of 2001. He is a non-executive Director of Misys PLC and Partner, Re Limited. He is a member of the Board Audit Committee. 10 John Silvester Varley(b)(c), Group Chief...

  • Page 20
    ... Committee John Varley Roger Davis Robert Diamond Group Chief Executive Chief Executive, UK Banking 1996 2003 Chief Executive, Barclays Capital Chairman, Barclays Global Investors Chief Executive, Private Clients 1997 Chief Executive, Barclaycard Chief Operating Officer Group Finance Director...

  • Page 21
    ...accounts. Activities Barclays PLC Group is a major global financial services provider engaged in retail and commercial banking, credit cards, investment banking, wealth management and investment management services. The Group operates through branches, offices and subsidiaries in the UK and overseas...

  • Page 22
    .... The Board HR and Remuneration Committee will receive regular reports on Health and Safety from the Human Resources Director. Creditors' Payment Policy Barclays policy follows the DTI's Better Payment Practice Code, copies of which can be obtained from the Better Payment Practice Group's website at...

  • Page 23
    ... which to build. Barclays PLC Annual Report 2004 Statement from Barclays PLC Board of Directors The Combined Code on Corporate Governance As a UK listed Company, Barclays is required to state whether it has complied with the provisions set out in section 1 of the UK Listing Authority's Combined...

  • Page 24
    ... the Group Finance Director's Report reviewing monthly financial information, the Group Chief Executive's Report on the key issues affecting the Group and its businesses, strategy updates from the Group's main businesses and Reports from the Chairmen of the Board Audit, Risk, Corporate Governance...

  • Page 25
    ... benefits plans applicable to senior executives and governs employee share schemes. Details of the Committee's role in governing Directors' rewards are set out in Barclays Report on Remuneration on pages 27 to 39. The Committee also reviews strategic HR issues including, but not limited to, employee...

  • Page 26
    ... responsibilities. Board Risk Committee Chairman's Statement The Committee met three times during the year, but will normally meet four times a year. The purpose of the Committee is to approve the Group's overall risk appetite, including limits for individual types of risk, including credit, market...

  • Page 27
    Barclays PLC Annual Report 2004 Attendance at Board and Board Committee Meetings Details of the attendance of Directors at meetings of the Board and of Board Committees of which they were members during 2004 are as follows: Board Corporate Governance and Nominations Committee Director Sir Peter ...

  • Page 28
    ... The Group aims to provide a first class service to private shareholders to help them in the effective and efficient management of their shareholding in Barclays. The main methods of communicating with private shareholders are the Annual Report, the Annual Review and the AGM. Barclays e-view enables...

  • Page 29
    ... as employee reward, pensions and employee communication. In addition, Towers Perrin gave actuarial and other advice to the Barclays UK life assurance companies and Barclays Private Clients. The Chairman of the Board, the Group Chief Executive, the Human Resources Director and, as necessary, members...

  • Page 30
    ... of shareholders. This includes benchmarking against other leading international banks and financial services organisations, and other companies of similar size to Barclays in the FTSE 100 Index. The sections that follow explain how each of the elements of remuneration listed above is structured...

  • Page 31
    ... shareholder voting, in respect of the Barclays shares held in trust. Pensions A pension is payable on retirement at contractual retirement date (normally 60), and is calculated either by reference to an executive Director's length of service and pensionable salary or to a money purchase arrangement...

  • Page 32
    .... Details of non-executive Directors standing for re-election at the 2005 AGM are set out on page 19. Future Policy The Committee intends to continue to review the existing remuneration arrangements, as detailed in this Report during 2005 and will seek to ensure that Barclays reward programmes...

  • Page 33
    ... five years. (d) Matthew W Barrett's remuneration reflects his role as Group Chief Executive up to and including 31st August 2004. (e) Matthew W Barrett is a member of the Advisory Committee, Federal Reserve Bank of New York, and receives no fee in respect of this position. John Varley is a Director...

  • Page 34
    ... the year for Mr Hoffman, Mr Roberts and Mr Varley are the values if the Director left service on that date. (e) Chris Lendrum ceased to be a Director on 31st December 2004. The accrued pension was the value at this date. He accrued benefits in the closed non-contributory Pension Scheme. (f ) Roger...

  • Page 35
    ...The register of Directors' interests, which shows full details of Directors' current share awards and options, is available for public inspection at the Group's Head office in London. (b) The number shown includes shares held under Sharepurchase. (c) Executive Share Award Scheme includes the maximum...

  • Page 36
    Corporate governance Barclays report on remuneration Executive Directors: shares provisionally allocated and shares under option under Executive Share Award Scheme (ESAS)(a) During 2004 Number at 1st January 2004 Awarded in respect of the results for 2003 Market price at release date £ Market ...

  • Page 37
    Barclays PLC Annual Report 2004 Executive Directors: shares under option under Incentive Share Option Plan (ISOP)(a)(b)(c) Number held as at 1st January 2004 Maximum number over which potentially exercisable 000 During the year Granted Exercised Lapsed Number held as at 31st December 2004 Date from...

  • Page 38
    ... The Register of Directors' interests, which shows full details of Directors' current share awards and options, is available for inspection at the Group's Head office in London. (b) The 2002 grant is due to vest on 20th March 2005. The number of shares due to vest represents the number over which an...

  • Page 39
    Barclays PLC Annual Report 2004 Executive Directors: shares under option under Sharesave(a) During 2004 Number held at 1st January 2004 Number at 31st December 2004 Information as at 31st December 2004 Exercise price per share £ Weighted average exercise price £ Market price on date of exercise ...

  • Page 40
    Corporate governance Barclays report on remuneration Directors: awards under closed Group incentive schemes(a)(d) Number at 1st January 2004 year(b) Lapsed Number at 31st December 2004 Exercise price per share £ Market price on exercise date £ Weighted average exercise price £ Date from which ...

  • Page 41
    Barclays PLC Annual Report 2004 Directors: interests in ordinary shares of Barclays PLC(a) At 1st January 2004(b) Beneficial Nonbeneficial At 31st December 2004 Beneficial Nonbeneficial Chairman MW Barrett Executive Directors JS Varley(c) RJ Davis GA Hoffman(c) N Kheraj CJ Lendrum(d) DL Roberts(c)...

  • Page 42
    ... periodically reviewed within the business areas. Quarterly risk reports are made to the Board covering risks of Group significance including credit risk, market risk, operational risk, and legal and compliance risk. Regular reports are made to the Board Audit Committee by management, Internal Audit...

  • Page 43
    ... public limited company and its name was changed from Barclays Bank International Limited to Barclays Bank PLC. All of the issued ordinary share capital of Barclays Bank PLC is owned by Barclays PLC. The Annual Report for Barclays PLC also contains the consolidated accounts of, and other information...

  • Page 44
    ... General Economy The profitability of Barclays businesses could be adversely affected by a worsening of general economic conditions in the United Kingdom or globally. Factors such as the liquidity of the global financial markets, the level and volatility of equity prices and interest rates, investor...

  • Page 45
    ... general changes in government or regulatory policy that may significantly influence investor decisions in particular markets in which the Group operates; Impact of Strategic Decisions taken by the Group The Group devotes substantial management and planning resources to the development of strategic...

  • Page 46
    ...uses advanced analyses, and is informed by comprehensive reporting. Responsibility for risk resides at all levels of management, from the Board down through the organisation to individuals in offices around the world. Each business manager is accountable for managing risk in his or her business area...

  • Page 47
    ...Heads Group Finance Director Risk Director Risk-type Heads Business Risk Directors UK Banking Barclaycard Barclays Capital Private Clients International Retail and Commercial Banking Barclays Global Investors Retail Credit risk Wholesale Credit risk Market risk Operational risk The internal...

  • Page 48
    ... Board Governance Standards. • Approves overall Group risk appetite. • Reviews the Group risk profile. Management performance ASSURANCE Group Chief Executive Group Executive Committee • Monitors and manages risk adjusted performance of strategic business units. • Approves economic capital...

  • Page 49
    Barclays PLC Annual Report 2004 Risk Appetite In 2004, Barclays adopted an improved approach to the setting of risk appetite across the Group, using a more formal, quantitative methodology based on advanced risk analytics. Risk Appetite is the Group's chosen balance of return and risk employed as ...

  • Page 50
    ... for the Group and each of the businesses. Economic capital is fully embedded in the management culture of the Group via risk adjusted performance management (e.g. economic profit), effective targeting of resources to value creating areas, pricing tools, compensation and remuneration schemes and is...

  • Page 51
    ... Responsibility In managing credit risk, the Group applies the five-step risk management process and internal control framework described previously (page 44). The credit risk management teams in each business are accountable to the Business Risk Directors in those businesses who, in turn, report...

  • Page 52
    ... loan level many of the models take current conditions into account while others are based on conditions over several years. RT is thus to a considerable degree a point-in-time risk measure. This contrasts with a through-the-credit-cycle measure which would provide an estimate of the average loss...

  • Page 53
    ... Transition Businesses UK Retail Banking UK Business Banking Private Clients International Barclaycard Barclays Capital Credit Risk Mitigation Barclays employs a range of policies and practices to mitigate credit risk. The most traditional of these is the taking of security for funds advanced...

  • Page 54
    ... - including credit losses - are absorbed in trading profits and are regarded as market risk, the management of which is described later. The next part of the credit section is thus devoted to exposures on the banking book, particularly customer exposures. For details of exposures to banks refer to...

  • Page 55
    ...and thus includes some international risk. Geographical analysis of loans and advances to customers on the banking book 100 80 60 40 20 10 0 % Barclays PLC Annual Report 2004 The country exposures shown are the sum of customer limits and unused but available product limits. Both domestic and cross...

  • Page 56
    ... book Loans and advances to customers by industry - banking book (% of total) Home loans Other personal Business & other Financial institutions Wholesale & retail Overseas Property Manufacturing Finance lease Transport Construction Energy & water Agriculture Communications Barclays loan loss rates...

  • Page 57
    ... rates. Losses arising from exposures held for trading (derivatives, debt securities) are accounted for as trading losses, rather than credit charges, even though the fall in value causing the loss may be attributable to credit deterioration. Barclays PLC Annual Report 2004 • Further details...

  • Page 58
    ...loans and potential problem loans as a percentage of Loans and Advances (Gross Banking Book) NPLs/Loans and Advances Ratio 3.0 2.5 2.3 2.0 1.5 1.0 0.5 0 % 2000 2.5 2.7 2.3 1.8 2001 2002 2003 2004 3,000 2,000 1,000 0 £m 2000 2001 2002 2003 2004 PPLs/Loans and Advances Ratio Foreign offices UK...

  • Page 59
    ... quarterly and revised as new information becomes available in the course of each work-out. Barclays PLC Annual Report 2004 General Provisions reflect losses that, although not specifically identified, are known from experience to be present in the lending portfolio at the balance sheet date...

  • Page 60
    ...on page 80.) During 2004, £198m was transferred from the general provisions stock to specific provisions stock. These transfers are included in the release of general provisions and increase the new and increased specific provisions. The transfers reflect enhancements to provisioning models and the...

  • Page 61
    ... 500 0 £m Balance Adjustments(a) Write-offs at Dec 03 Recoveries and other Provisions charges Balance at Dec 04 Note (a) Includes effects of acquisitions and exchange rate movements. (See also Table 24 on page 81.) Coverage Ratios The coverage of non-performing loans by the Group's stock of...

  • Page 62
    ...predominantly of secured residential mortgage loans. It declined further in 2004 following transfers to specific provisions. Write-offs Debts are written off to the extent that there is no realistic prospect of a change in the customers' condition, or where local conditions dictate, and the whole or...

  • Page 63
    ... Risk Management team that operates independently of the trading areas. Daily market risk reports are produced for the main Barclays Capital business areas covering the five main risk factor categories, namely interest rate, credit spread, foreign exchange, equity and commodity risk. A more detailed...

  • Page 64
    ... process. Other market risks • Pension Fund. • Asset management. Other • Barclays Pension Governance Group. Market Risk Measurement The measurement techniques used to measure and control market risk include Daily Value at Risk; Stress Tests; Annual Earnings at Risk; Economic capital. The...

  • Page 65
    Barclays PLC Annual Report 2004 Outside Barclays Capital, stress testing is carried out by the business centres and is reviewed by the senior management and business-level asset and liability committees. The stress testing is tailored to the business and is typically scenario analysis and ...

  • Page 66
    ... Investors. The risk is controlled and managed by the respective businesses and Barclays Market Risk. Analysis of Trading Revenue The histograms below show the distribution of daily trading revenue for Barclays Capital in 2004 and 2003. It includes dealing profits, net interest income and net fees...

  • Page 67
    ... control frameworks and a policy and assurance structure to ensure that capital and liquidity risks are managed in accordance with the requirements of the Board Standards. Policies are set by the Treasury Committee which is chaired by the Group Finance Director. Capital Risk Management See page 113...

  • Page 68
    ... corporate scandals contributed to a short-term flight to quality in financial markets from which Barclays benefited. An important source of structural liquidity is provided by our core retail deposits in the UK and Europe, mainly current accounts and savings accounts. Although current accounts...

  • Page 69
    Barclays PLC Annual Report 2004 Table A: Contractual Obligations Payments due by period Less than one year £m One to three years £m Four to five years £m After five years £m Total £m Long-term debt Capital lease obligations Operating lease obligations Purchase obligations Other long-term ...

  • Page 70
    ... responsibility for each Board Governance Standard, agrees policy and provides advice to business managers Group-wide. Each monitors and reports upon the application of their Standard. In the corporate centre, the Operational Risk Director oversees the range of operational risks across the Group...

  • Page 71
    ... parameter based on sale price or subsequent traded levels. Barclays PLC Annual Report 2004 Discounting of expected cash flows back to present value is achieved by constructing discount curves from the market price of observable interest rate products, such as deposits, interest rate futures and...

  • Page 72
    ... value by counterparty credit risk rating Total value 2004 £m Total value 2003 £m A- to AAA BBB- to BBB+ BB+ and below Total 1,004 538 215 1,757 792 280 46 1,118 All credit exposures are actively managed by the Group. Refer to page 49 for more information on the Group's approach to credit risk...

  • Page 73
    ... management activities. Barclays Capital manages the trading derivatives book as part of the market risk book. This includes foreign exchange, interest rate, equity, commodity and credit derivatives. The policies regarding market risk management are outlined in the market risk management section...

  • Page 74
    ...refer to the preceding text (pages 42 to 71). Credit Risk Management Table 1: Risk Tendency by Business Cluster 2004 £m 2003 £m UK Banking UK Retail Banking UK Business Banking Private Clients and International Private Clients International Barclaycard Barclays Capital Transition Businesses Total...

  • Page 75
    ...PLC Annual Report 2004 Table 4: Maturity analysis of loans and advances to banks Over three months but not more than one year £m Over one year but not more than five years £m At 31st December 2004 Banking business: United Kingdom Other European Union United States Rest of the World Total banking...

  • Page 76
    Risk management Statistical information Table 6: Interest rate sensitivity of loans and advances to customers 2004 Fixed rate £m Variable rate £m Total £m Fixed rate £m 2003 Variable rate £m Total £m At 31st December Banking business: United Kingdom Other European Union United States Rest of...

  • Page 77
    ... and other services Home loans Other personal Overseas customers Finance lease receivables Total See note under table 7. Table 10: Loans and advances to customers booked in offices in the rest of the world - banking business At 31st December Loans and advances Finance lease receivables Total 2004...

  • Page 78
    ... 2004 Banking business: United Kingdom Corporate lending(a) Other lending from United Kingdom offices Total United Kingdom Other European Union United States Rest of World Total banking business Total trading business Total On demand £m Not more than three months £m Over five years £m Total...

  • Page 79
    Barclays PLC Annual Report 2004 Table 13: Loans and advances to borrowers in currencies other than the local currency of the borrower for countries where this exceeds 1% of total Group assets Banks and other Governments financial and official institutions institutions £m £m Commercial industrial ...

  • Page 80
    ... information Table 15: Notional principal amounts of credit derivatives at 31st December 2004 £m 2003 £m 2002 £m Credit derivatives held or issued for trading purposes Credit derivatives held for the purpose of managing non-trading exposures Total Table 16: Non-performing loans summary 2004...

  • Page 81
    Barclays PLC Annual Report 2004 Table 17: Non-performing loans 2004 £m 2003 £m 2002 £m 2001 £m 2000 £m Non-accrual loans: United Kingdom Other European Union United States Rest of the World Total Accruing loans where interest is being suspended with or without provisions: United Kingdom Other...

  • Page 82
    ...20: Analysis of the provisions charge for bad and doubtful debts Year ended 31st December 2004 £m 2003 £m 2002 £m 2001 £m 2000 £m Net specific provisions charge/(release) United Kingdom Other European Union United States Rest of the World Total net specific provisions charge General provisions...

  • Page 83
    Barclays PLC Annual Report 2004 Table 22: Analysis of provision balances for bad and doubtful debts As at 31st December 2004 £m 2003 £m 2002 £m 2001 £m 2000 £m Specific provisions United Kingdom Other European Union United States Rest of the World Total specific provision balances General ...

  • Page 84
    Risk management Statistical information Table 25: Amounts written off 2004 £m 2003 £m 2002 £m 2001 £m 2000 £m United Kingdom Other European Union United States Rest of the World Total amounts written off Table 26: Recoveries (1,411) (58) (71) (55) (1,595) (1,175) (54) (215) (30) (1,474) (...

  • Page 85
    ...United Kingdom: Banks and other financial institutions Agriculture, forestry and fishing Manufacturing Construction Property Energy and water Wholesale and retail distribution and leisure Transport Communications Business and other services Home loans Other personal Overseas customers Finance lease...

  • Page 86
    ...United Kingdom: Banks and other financial institutions Agriculture, forestry and fishing Manufacturing Construction Property Energy and water Wholesale and retail distribution and leisure Transport Communications Business and other services Home loans Other personal Overseas customers Finance lease...

  • Page 87
    Barclays PLC Annual Report 2004 Table 33: Ratios of general and specific provision balances 2004 % 2003 % 2002 % 2001 % 2000 % Specific provisions balances coverage of non-performing loans General provisions balances coverage of performing loans (excluding trading book) General provisions coverage...

  • Page 88
    ... capital resources Deposits and short-term borrowings Securities Life assurance business Off balance sheet arrangements 225 SEC Form 20-F cross reference and other information 227 Glossary 228 Barclays Bank PLC data 239 US GAAP financial data 240 Reconciliation of economic profit 241 Shareholder...

  • Page 89
    ... data Barclays PLC Barclays PLC Annual Report 2004 Consolidated profit and loss account summary(a) 2004 £m 2003 £m 2002 £m 2001 £m 2000 £m Interest receivable Interest payable Profit on redemption/repurchase of loan capital Net interest income Fees and commissions receivable Less: fees and...

  • Page 90
    ... capital ratios Weighted risk assets Tier 1 ratio Risk asset ratio Selected financial statistics Average shareholders' funds as a percentage of average total assets (Note (b)) Net asset value per ordinary share Year-end United States Dollar exchange rate used in preparing the accounts Year-end euro...

  • Page 91
    ... investment products to UK Retail Banking. Private Clients also includes the closed life assurance activities. International International provides a range of banking services, including current accounts, savings, investments, mortgages and consumer loans to personal and corporate customers across...

  • Page 92
    Business description Barclays Global Investors Barclays Global Investors (BGI) is one of the world's largest asset managers and a leading global provider of investment management products and services. BGI offers structured investment strategies such as indexing, global asset allocation and risk ...

  • Page 93
    ... Federal Reserve Board (FRB), the State of New York Banking Department (NYSB) and the Office of the Comptroller of the Currency (OCC). The deposits of Barclays Bank PLC branch are insured by the FDIC and subject to its regulations. The Investment Banking and Asset Management operations are subject...

  • Page 94
    ... of Barclays businesses could be adversely affected by a worsening of general economic conditions in the UK or abroad. Factors such as the liquidity of the global financial markets, the level and volatility of equity prices and interest rates, investor sentiment, inflation, and the availability and...

  • Page 95
    ...BGI continued to diversify its product range and in particular made significant advances in the exchange traded funds (iShares) where it is the market leader. Capital Strength Our capital position and strong credit rating are sources of competitive advantage. At the end of 2004, our risk asset ratio...

  • Page 96
    ... the analyses to individual or groups of customers, current information, and the general economic and environmental factors mentioned above. Further information on credit risk provisioning is set out on page 57. Fair Value of Financial Instruments Some of the Bank's financial instruments are carried...

  • Page 97
    ... profit and loss account represents the contributions payable to the scheme. The majority of UK staff are members of The Barclays Bank UK Retirement Fund (the UK Fund) which comprises four sections. These are a defined benefit scheme (the 1964 Pension Scheme) and a defined contribution scheme (the...

  • Page 98
    ... policies to be applied, are set out on pages 124 to 130. In calculating the pension expense for the UK schemes and in determining the expected rate of return, the Group uses the value of assets at the start of the year. The UK Schemes' assets were allocated 48% to equities, 12% to corporate...

  • Page 99
    ... which more than offset a 2 basis points fall in the Group net interest margin to 2.59%. United Kingdom: Barclays Bank PLC base rate London Inter-Bank Offered Rate (LIBOR): three-month Sterling three-month US dollar United States prime rate 4.38 3.69 4.00 4.64 1.62 4.34 3.74 1.21 4.12 4.06...

  • Page 100
    ... the United Kingdom Lease receivables: in offices in the United Kingdom in offices outside the United Kingdom Debt securities: in offices in the United Kingdom in offices outside the United Kingdom Average assets of banking business Average assets of trading business Total average interest earning...

  • Page 101
    ... in offices in the United Kingdom Internal funding of trading business Average liabilities of banking business Average liabilities of trading business Total average interest bearing liabilities Interest free customer deposits: in offices in the United Kingdom in offices outside the United Kingdom...

  • Page 102
    ...) Loans and advances to banks: in offices in the United Kingdom in offices outside the United Kingdom 117 (15) 102 Loans and advances to customers: in offices in the United Kingdom in offices outside the United Kingdom 997 126 1,123 Lease receivables: in offices in the United Kingdom in offices...

  • Page 103
    Barclays PLC Annual Report 2004 Changes in net interest income - volume and rate analysis 2004/2003 Change due to increase/(decrease) in: Total change £m Volume £m Rate £m 2003/2002 Change due to increase/(decrease) in: Total change £m Volume £m Rate £m Interest payable Deposits by banks: in...

  • Page 104
    ... and wholesale activities. The foreign exchange income earned on customer transactions by UK Banking, Private Clients and International and Barclaycard, both externally and within Barclays Capital, is reported in those business units, within fees and commissions. Dealing profits in 2003 grew 27% to...

  • Page 105
    ...'s main UK pension schemes. Staff numbers 2004 2003 2002 By class of business UK Banking UK Retail Banking UK Business Banking Private Clients & International Private Clients International Barclaycard Barclays Capital Barclays Global Investors Head office functions and other operations Total Group...

  • Page 106
    ... in UK Business Banking. Profit on disposal of Group and associated undertakings Loss on termination of Group activities 45 - 45 4 - 4 8 (11) (3) The profit on disposal relates mainly to the disposal of its shareholding in Edotech, an investment in a management buy-out of the former Barclays in...

  • Page 107
    ... by capital losses brought forward Goodwill Other items Overall tax charge Effective tax rate % UK GAAP compared with US GAAP The Group also provides results on the basis of accounting principles generally accepted in the United States (US GAAP). The impact on net income and shareholders' equity of...

  • Page 108
    ... Customer average current account balances increased 10%. There was strong growth in UK Premier with average deposits up 15%, and in Small Business where average deposit balances were 7% higher. Retail average savings balances increased by 1% in a highly competitive market. UK Banking managed...

  • Page 109
    ... the UK mortgage business following a review of the portfolio and the current loss experience. The exceptional item of £42m was predominantly in respect of the profit on the sale of a shareholding in Edotech, a former Barclays in-house statement printing operation. UK Retail Banking profit before...

  • Page 110
    ... deposits and loans in International and Private Banking reflected the benefit of investment in relationship managers and internet-based offerings, partially offset by adverse exchange rate movements. Deposit margins improved slightly and were partially offset by lower lending margins. Net fees...

  • Page 111
    ... Europe enabled increased investment in product development and customer service in International and Private Banking and in Wealth Solutions. Total customer funds, comprising customer deposits and assets under management, increased to £77bn (2003: £75bn). Growth in new business and the impact of...

  • Page 112
    ... margins in UK cards decreased, reflecting higher funding costs and the impact of increased balance transfer activity at promotional rates. Net fees and commissions increased 14% (£91m) to £764m (2003: £673m) as a result of the continued growth in the credit card and consumer lending businesses...

  • Page 113
    ... has expanded the scope of the product offering, building new income streams from commercial and residential mortgage backed securities and home equity loans. Existing offerings in commodities trading and equity related products were extended to the US and client channels continued to be extended in...

  • Page 114
    ... improvements in the quality of the loan book and the recovery in the large corporate credit environment. Barclays Global Investors 2004 £m 2003 £m 2002 £m innovation continued as a number of iShare (Exchange Traded Funds) products were launched during 2004. There was significant growth in...

  • Page 115
    ... of £611m, exchange rate movements of £224m and amortisation of issue expenses of £1m. 2004 £m 2003 £m 2002 £m Barclays Bank PLC Group Shareholders' funds: equity Shareholders' funds: non-equity Minority interests: equity Undated loan capital Dated loan capital Total capital resources 17,581...

  • Page 116
    ... tables set out the calculated capital ratios and the weighted risk assets and regulatory capital resources on which they were based as at 31st December: Capital ratios 2004 Barclays PLC Group Barclays Bank PLC Group Barclays PLC Group £m 2003 Barclays Bank PLC Group £m Barclays PLC Group £m 2002...

  • Page 117
    Barclays PLC Annual Report 2004 2004 Barclays PLC Group Barclays Bank PLC Group Barclays PLC Group £m 2003 Barclays Bank PLC Group £m Barclays PLC Group £m 2002 Barclays Bank PLC Group £m Capital resources (as defined for regulatory purposes) Tier 1 Called up share capital Eligible reserves ...

  • Page 118
    ... the Group's money market operations. These deposits are of fixed maturity and bear interest rates which relate to the London inter-bank money market rates. 'Other time deposits' includes commercial paper and inter-bank funds. Although the types of deposit products offered through offices located...

  • Page 119
    ... £m 2003 Book value £m Barclays PLC Annual Report 2004 2002 Valuation £m Book value £m Valuation £m Investment securities Debt securities: United Kingdom government Other government Other public bodies Mortgage-backed securities Corporate issuers Other issuers Equity shares Other securities...

  • Page 120
    Financial review Securities In addition to UK government securities shown above, at 31st December 2004 and 2003 the Group held the following government securities which exceeded 10% of shareholders' funds. 2004 Book value £m Valuation £m 2003 Book value £m Valuation £m United States government...

  • Page 121
    ... publication of FRS 27 in December 2004. Options and Guarantees The Group's life contracts do not contain options or guarantees that could confer material risk upon the company. Capital position statement Available capital resources for life business: Total shareholders' funds in the life business...

  • Page 122
    ... to funding markets being restricted. Further details of these transactions are provided in Note 52 on pages 216 and 217. Credit structuring business The Group structures investments with specific risk profiles which are attractive to investors. This business involves the sale by the Group of credit...

  • Page 123
    ... basis and at market terms and prices. The majority of these entities are investment funds that are owned by a large and diversified number of investors. In addition, there are various partnerships, funds and open-ended investment companies that are used by a limited number of independent third...

  • Page 124
    ... only the Chairman's Statement, Group Chief Executive Statement, Group Finance Director's Review, Corporate Governance Report, the unaudited part of the Barclays Report on Remuneration, Accountability and Audit, Presentation of information, Risk Management, Financial Data, Business Description and...

  • Page 125
    Barclays PLC Annual Report 2004 US Audit Report of the Independent Registered Public Accounting Firm to the Board of Directors and Shareholders of Barclays PLC and Barclays Bank PLC We have audited the accompanying consolidated financial statements of Barclays PLC and its subsidiary undertakings on...

  • Page 126
    ... 2003 Annual Report are set out on page 129. (b) Consolidation and format The consolidated accounts have been prepared in compliance with Sections 230, 255, 255A and 255B of, and Schedule 9 to, the Companies Act 1985 (the Act). The profit and loss account and balance sheet of Barclays PLC have been...

  • Page 127
    ... in the profit and loss account when the related services are performed and when considered recoverable. Income arises from the margins which are achieved through marketmaking and customer business and from changes in market value caused by movements in interest and exchange rates, equity prices and...

  • Page 128
    ... and loss account through dealing profits. Listed securities are valued based on market prices, with long positions at bid and short positions at offer price. Unlisted securities are valued based on the Directors' estimate, which takes into consideration discounted cash flows, price earnings ratios...

  • Page 129
    ...customs. For defined contribution schemes, the pension cost recognised in the profit and loss account represents the contributions payable to the scheme. The majority of UK staff are members of The Barclays Bank UK Retirement Fund (the UKRF) which comprises five sections. These are a defined benefit...

  • Page 130
    ... by calculating the expected cash flows under the terms of each specific contract, discounted back to a present value. The expected cash flows for each contract are determined either directly by reference to actual cash flows implicit in observable market prices or through modelling cash flows...

  • Page 131
    ... at a future date at an agreed price. A reverse repo is the same transaction from the opposite viewpoint. The cash legs of these transactions are included within loans and advances to banks, loans and advances to customers, deposits by banks and customer accounts. The Group aims to earn net interest...

  • Page 132
    ...programme is following normal project controls and change management and the Group is on track to meet all requirements for financial reporting in 2005. Barclays held briefings and issued a presentation in December 2004 that set out the main impacts of the conversion to IFRS and explained the policy...

  • Page 133
    ..., and the change in accounting policy discussed above. US GAAP Significant differences exist between accounting principles generally accepted in the UK and those generally accepted in the US. The effect of US GAAP on attributable profit and shareholders' funds of Barclays PLC is set out in Note 52...

  • Page 134
    ... after tax Minority interests (including non-equity interests) Profit for the financial year attributable to the members of Barclays PLC Dividends Profit retained for the financial year Basic earnings per 25p ordinary share Diluted earnings per 25p ordinary share 11 11 15 3 5 6 6 2,414 11,251...

  • Page 135
    ...accounts Barclays PLC Statement of total recognised gains and losses Statement of total recognised gains and losses For the year ended 31st December Barclays PLC Annual Report 2004 2004 £m 2003 £m 2002 £m Profit for the financial year attributable to the members of Barclays PLC Exchange rate...

  • Page 136
    ... 4,406 1,790 19,736 3,921 Retail life-fund assets attributable to policyholders Total assets The accompanying notes form an integral part of the Consolidated Accounts. Matthew W Barrett Chairman John Varley Group Chief Executive Naguib Kheraj Group Finance Director 22 513,711 8,378 522,089 435...

  • Page 137
    Barclays PLC Annual Report 2004 Consolidated balance sheet As at 31st December 2004 ˆ 2003 £m £m £m Note £m Liabilities Deposits by banks - banking - trading 23 Customer accounts - banking - trading Debt securities in issue Items in course of collection due to other banks Other liabilities...

  • Page 138
    ... At end of year Profit and loss account At beginning of year Exchange rate translation differences Repurchase of ordinary shares Transfer to capital redemption reserve Goodwill written back on disposals Shares issued to the 2003 QUEST in relation to share option schemes for staff Gain/(loss) arising...

  • Page 139
    ...December 2004 ˆ Barclays PLC Annual Report 2004 2003 2002 Note £m £m £m £m £m £m Net cash inflow/(outflow) from operating activities Dividends received from joint ventures and associated undertakings Returns on investments and servicing of finance: Interest paid on loan capital and...

  • Page 140
    ... continuing operations. For each of the years reported above, there was no material difference between profit before tax and profit retained and profit on an historical cost basis. The accompanying notes form an integral part of the Consolidated Accounts. Matthew W Barrett Chairman John Varley Group...

  • Page 141
    ... long-term assurance fund, was 63 (2003: 208, 2002: 370). Post-retirement benefits Some 11,000 UK and US pensioners are provided with private health care on similar terms to current employees. In addition, 4,000 members of staff and a further 1,000 Barclays Bank PLC pensioners who have retired since...

  • Page 142
    ...created from 1st July 2001 to provide benefits for certain employees of Barclays Capital. 10% of pay is credited to members' retirement accounts. afterwork Combines a contributory cash balance element with a voluntary defined contribution element. New employees since 1st October 2003 are eligible to...

  • Page 143
    ... of Career Average in the UKRF was less than £1m. Total pension costs of the Group are summarised as follows: 2004 £m 2003 £m 2002 £m The UK Retirement Fund Other UK pension schemes Overseas pension schemes 112 6 42 160 131 17 32 180 (69) 20 22 (27) The Bank also operates a defined benefit...

  • Page 144
    ... tax planning and advice. Transaction support service includes due diligence related to transactions and accounting consultations and audits in connection with transactions. Other services primarily include general process reviews and training programmes. For US reporting purposes, Audit Fees would...

  • Page 145
    ... to the date of sale, the businesses sold in 2004 contributed £nil to Group profit before tax (2003: £29m, 2002: £3m). 8 Tax The charge for tax is based upon the effective UK corporation tax rate of 30% (2003: 30%, 2002: 30%) and comprises: 2004 £m 2003 £m 2002 £m Current tax: United Kingdom...

  • Page 146
    ...2m) are payable on the staff shares, which carry a fixed dividend of 20% per annum unless no dividend is paid for the year on the ordinary shares. The total dividend of £1,538m stated in the Barclays PLC Group profit and loss account excludes £9m payable on shares held by employee benefit trusts...

  • Page 147
    ... term in maturity with a book value not materially different from market value. The total amount of treasury bills and other eligible bills included above, which are subject to sale and repurchase agreements, was £3,438m at 31st December 2004 (2003: £1,665m). 13 Loans and advances to banks 2004...

  • Page 148
    Notes to the accounts For the year ended 31st December 2004 13 Loans and advances to banks (continued) 2004 £m 2003 £m By geographical area Banking business: United Kingdom Other European Union United States Rest of the World Less: Provisions Total banking business Total trading business 21,351...

  • Page 149
    Barclays PLC Annual Report 2004 14 Loans and advances to customers 2004 £m £m 2003 £m £m Repayable on demand not more than three months over three months but not more than one year over one year but not more than five years over five years Less: Provisions Interest in suspense 18,845 80,748 ...

  • Page 150
    Notes to the accounts For the year ended 31st December 2004 14 Loans and advances to customers (continued) Loans and advances to customers booked in offices outside the UK - banking business At 31st December Financial institutions Agriculture, forestry and fishing Manufacturing Construction ...

  • Page 151
    Barclays PLC Annual Report 2004 14 Loans and advances to customers (continued) Securitised transactions Loans and advances to customers include balances which have been securitised. These balances are either accounted for on the basis of linked presentation or separate recognition of the gross ...

  • Page 152
    ...318m (2003: £2,508m). At 31st December 2004, the Group's net exposure to this securitisation, after taking into account the limited recourse financing, was £40m (2003: £nil). The total portfolio is included within gross loans and advances and the funding giving rise to the noteholders interest is...

  • Page 153
    Barclays PLC Annual Report 2004 15 Provision balances for bad and doubtful debts (continued) 2004 £m 2003 £m Non-accrual loans Accruing loans where interest is being suspended with or without provisions Other accruing loans against which provisions have been made Sub total Accruing loans 90 days...

  • Page 154
    ... in the total above, with the financing reported in Deposits by banks and Debt securities in issue. At 31st December 2004, the Group's net exposure to these investment debt securities, after taking into account the limited recourse financing, was £1,149m (2003: £1,203m). Barclays PLC holds, as...

  • Page 155
    ... of year Exchange and other adjustments New investments/acquisitions Disposals Profit/(loss) retained At end of year Interest in FirstCaribbean International Bank - share of gross assets - share of gross liabilities - goodwill Other associates - share of net assets - goodwill Total 2004 £m 370...

  • Page 156
    ... International Total Bank £m £m 2003 Other associates £m Joint ventures £m Total £m Fixed assets Debt and equity securities Loans to banks and customers Other assets Total assets Deposits from banks and customers Other liabilities Shareholders' funds Total liabilities Profit/(loss...

  • Page 157
    ...House and North and South Colonnade, Canary Wharf, all located in London, together with administrative buildings in Northampton, Knutsford, Coventry and Poole. Outside the UK Barclays largest branch network lies in Spain. The most significant office premises are in New York, San Francisco and Madrid...

  • Page 158
    ...from the long-term assurance business has been recognised in the year. The principal economic assumptions used in calculating the value of the shareholders' interest were as follows: 2004 % 2003 % Risk discount rate (net of tax) Gross United Kingdom equities returns for unit linked business (net of...

  • Page 159
    ...: £1,438m) due to associated undertakings and joint ventures. Deposits by banks are mostly over £50,000. The average interest rate during 2004 for deposits by banks (excluding trading business) was 2.4% (2003: 2.3%, 2002: 2.9%). 24 Customer accounts 2004 £m 2003 £m Repayable on demand not more...

  • Page 160
    ... accounts For the year ended 31st December 2004 24 Customer accounts (continued) 2004 £m 2003 £m By type In offices in the United Kingdom: current and demand accounts - interest free current and demand accounts - interest bearing savings accounts other time deposits - retail other time deposits...

  • Page 161
    ... Charge to profit and loss account At end of year Deferred tax at 31st December: Leasing transactions Other timing differences 646 5 87 738 759 (21) 738 461 (9) 194 646 739 (93) 646 No tax (2003: £nil) has been calculated on capital gains that might arise on the disposal of Barclays Bank PLC at...

  • Page 162
    ... balances, where fair values are recognised in the financial statements and mark to market movements included in the profit and loss account, the gains and losses are subject to current tax and no deferred tax arises. In the case of derivatives used for asset and liability management purposes, tax...

  • Page 163
    Barclays PLC Annual Report 2004 29 Undated loan capital Undated loan capital, issued by the Bank for the development and expansion of the Group's business and to strengthen its capital base comprised: Notes 2004 £m 2003 £m The Bank 6% Callable Perpetual Core Tier One Notes 6.86% Callable ...

  • Page 164
    ... on any such undated loan capital may be made unless the Bank satisfies a specified solvency test. The Bank may elect to defer any payment of interest on the RCIs for any period of time. Whilst such deferral is continuing, neither the Bank nor Barclays PLC may declare or pay a dividend, subject to...

  • Page 165
    Barclays PLC Annual Report 2004 30 Dated loan capital Dated loan capital, issued by the Bank for the development and expansion of the Group's business and to strengthen its capital base, and by Barclays Spain, Barclays Bank of Botswana Ltd ('BBB') and Barclays Bank Zambia PLC ('Barclays Zambia') to...

  • Page 166
    ...Preference Shares of Barclays Zambia, having a total par value equal in sum to the principal amount of Notes outstanding at the time of conversion, should Barclays Zambia experience pre-tax losses in excess of its retained earnings and other capital surplus accounts. Interest payable on loan capital...

  • Page 167
    Barclays PLC Annual Report 2004 30 Dated loan capital (continued) Repayment terms Unless otherwise indicated, the Group's dated loan capital outstanding at 31st December 2004 is redeemable only on maturity, subject in particular cases, to provisions allowing an early redemption in the event of ...

  • Page 168
    ... staff to subscribe for ordinary shares between 2005 and 2014 at prices ranging from 176p to 562p. In addition to the above, the independent trustee of the Barclays Group (ESAS) Employees' Benefit Trust (ESAS Trust), established by Barclays Bank PLC in 1996, operates the Executive Share Award Scheme...

  • Page 169
    ... in Barclays Bank PLC. The decrease in consolidated shareholders' funds of £58m (2003: decrease £29m) arising from exchange rate translation differences is net of a related tax credit of £2m (2003: credit £2m). Treasury shares are carried at £11m (2003: £12m). The number of treasury shares in...

  • Page 170
    ...2004 £m 2003 £m Amount of liability secured Deposits by banks Customer accounts Debt securities in issue Other liabilities Total... 59,091 2004 £m 2003 £m Amount of assets pledged Treasury bills and other eligible securities Loans and advances to customers Debt securities Other Total 5,807 4,...

  • Page 171
    ...Current year credit card commitments to lend have been calculated on a contractual basis rather than a modelled basis. Had this method been applied in 2003, reported commitments would have been increased by £5,899m to £120,746m. As an active participant in international banking markets, the Group...

  • Page 172
    ... accounts For the year ended 31st December 2004 36 Contingent liabilities and commitments (continued) UK obligations to purchase goods and services The table below gives details of the Group's obligations to purchase goods and services at 31st December 2004: 2004 £m 2003 £m Obligations payable...

  • Page 173
    ... and advances to customers Debt securities and equity shares Other assets Total assets Liabilities: Deposits by banks Customer accounts Debt securities in issue Other liabilities Loan capital and other subordinated liabilities Minority interests and shareholders' funds Internal funding of trading...

  • Page 174
    ... £m Not more than three months £m Over ten years £m Noninterest bearing £m Trading balances £m Total £m Assets: Treasury bills and other eligible bills Loans and advances to banks Loans and advances to customers Debt securities and equity shares Other assets Total assets 592 2,632 104...

  • Page 175
    Barclays PLC Annual Report 2004 37 Derivatives and other financial instruments (continued) Daily Value at Risk The Daily Value at Risk (DVaR) methodology of estimating potential losses arising from the Group's exposure to market risk is explained on pages 61 to 64. The models used in estimating ...

  • Page 176
    ...traded futures - bought and sold Total Interest rate derivatives Swaps Forward rate agreements OTC options bought and sold OTC derivatives Exchange traded futures - bought and sold Exchange traded options - bought and sold Exchange traded - swaps Total Credit derivatives Swaps Equity and stock index...

  • Page 177
    ... and sold Exchange traded swaps Total Interest rate derivatives Swaps Forward rate agreements OTC options bought and sold OTC derivatives Exchange traded futures - bought and sold Exchange traded options - bought and sold Exchange traded - swaps Total Credit derivatives Swaps Equity and stock index...

  • Page 178
    ...: 2004 Over one year but not more than five years £m 2003 Over one year but not more than five years £m . One year or less £m Over five years £m Total £m One year or less £m Over five years £m Total £m £/euro £/Yen £/United States Dollar United States Dollar/euro United States...

  • Page 179
    ... traded futures - bought and sold Total Interest rate derivatives Swaps Forward rate agreements OTC options bought and sold OTC derivatives Exchange traded futures - bought and sold Exchange traded options - bought and sold Exchange traded swaps Total Credit derivatives Swaps Equity and stock index...

  • Page 180
    ...sold Exchange traded options - bought and sold Total Interest rate derivatives Swaps Forward rate agreements OTC options bought and sold OTC derivatives Exchange traded futures - bought and sold Exchange traded options - bought and sold Exchange traded swaps Total Credit derivatives Swaps Equity and...

  • Page 181
    ... which that contract could be exchanged in an arm's-length transaction, calculated at market rates current at the balance sheet date. The totals of positive and negative fair values arising on trading derivatives at the balance sheet date have been netted where the Group has a legal right of offset...

  • Page 182
    ... agreements) Loans and advances to customers (including reverse repurchase agreements) Debt securities Equity shares Derivatives (see analysis in Note 37) London Metal Exchange warrants and other metals trading positions (see Note 21) Liabilities Deposits by Banks and customers accounts (including...

  • Page 183
    ...(c) Within this calculation, the fair value for loans and advances to banks was estimated using discounted cash flows, applying either market rates, where practicable, or rates currently offered by other financial institutions for placings with similar characteristics. (d) The Group provides lending...

  • Page 184
    ... Date Barclays Bank Egypt (acquired remaining 40%) Juniper Financial Corporation 40% 100% 11/03/04 1/12/04 Book value and Fair value £m Net assets acquired Cash and balances at central banks Loans and advances to banks Loans and advances to customers Other assets Deposits by banks Customer...

  • Page 185
    ... 42 Sale of Group undertakings during the year Net cash outflow from formation of FirstCaribbean International Bank Ltd Advances and other accounts Deposits and other borrowings Net assets disposed of Balance transferred to associated undertaking Profit on disposal reflected in statement of total...

  • Page 186
    ...balances outstanding of £63.2m (2003: £53.2m, 2002: £6.9m) are included in trade creditors. Global Home Loans Limited (GHL) is an associated undertaking of the Group. Mortgage origination and processing activities are outsourced to GHL and its subsidiaries. The fees payable to GHL during the year...

  • Page 187
    ... and awards is given in the Barclays report on remuneration on pages 27 to 39. In the ordinary course of business, the Bank makes loans to companies where a Director or officer is also a Director of Barclays. With the exception of an interest free loan of £0.5m to the Charity Bank Limited (part...

  • Page 188
    ... meaning of the Financial Services and Markets Act 2000, of Barclays Bank PLC were: Number of Directors or managers Number of connected persons Amount £000 Directors Loans Quasi-loans and credit card accounts Managers Loans Quasi-loans and credit card accounts 3 4 5 11 - 1 n/a n/a 2,031 25 193...

  • Page 189
    ... Percentage of ordinary Equity Retained share shareholders' profit/(loss) capital held funds for the year % £m £m UK UK UK Cayman Islands Cayman Islands Oak Dedicated Limited Oak Dedicated Two Limited Oak Dedicated Three Limited Gallaher (C.I) Limited Core Investments (Cayman) Limited 100 100...

  • Page 190
    ... Clients - closed life assurance activities International Barclaycard Barclays Capital Barclays Global Investors Head office functions and other operations income(c) 5,646 3,415 2,231 1,729 839 (4) 894 2,364 3,381 893 (68) 13,945 Profit/(loss) on ordinary activities before tax(d)(e) UK Banking UK...

  • Page 191
    Barclays PLC Annual Report 2004 48 Segmental analysis (continued) 2004 2003 % £m % 2002 £m % By class of business(a)(c) Total assets UK Banking UK Retail Banking UK Business Banking Private Clients and International Private Clients - ongoing Private Clients - closed life assurance activities ...

  • Page 192
    Notes to the accounts For the year ended 31st December 2004 48 Segmental analysis (continued) 2004 2003 % £m % 2002 £m % By geographical segments (a) Interest receivable United Kingdom Other European Union United States Rest of the World £m 11,889 921 270 585 13,665 87 7 2 4 100 73 7 14 6 ...

  • Page 193
    ...Global Investors (£2m) (2003: (£1m)). (e) Goodwill amortisation included in the profit/(loss) on ordinary activities before tax, by class of business, is shown in the Analysis of Results by Business on pages 106 to 112. 49 Retirement benefits As disclosed in Note 4, Barclays accounts for pensions...

  • Page 194
    ... Real rate of return % 2003 Overseas schemes Real rate of return % UK schemes Real rate of return % 2002 Overseas schemes Real rate of return % Value £m Value £m Value £m Value £m Value £m Value £m United Kingdom equities 5.1 US equities 5.1 Other equities 5.1 United Kingdom corporate...

  • Page 195
    ...in the profit and loss account and statement of total recognised gains and losses in respect of pension schemes and post-retirement health care in 2004 were as follows: Analysis of amounts which would have been charged to operating profit Current service cost(a) Past service cost Gains and losses on...

  • Page 196
    ...Overseas pension schemes £m Postretirement health care £m Analysis of movements in pension scheme and post-retirement health care surpluses/(deficits) during 2004 Deficit in the schemes at beginning of year Contributions Current service cost Past service cost Settlements and curtailments Exchange...

  • Page 197
    ... SAE Barclays Bank PLC Barclays Private Bank Limited Barclays Mercantile Business Finance Limited Barclays Global Investors UK Holdings Limited Barclays Global Investors Limited Barclays Life Assurance Company Limited Barclays Bank Trust Company Limited Barclays Stockbrokers Limited Barclays Capital...

  • Page 198
    ... service lives of current employees. For defined contribution schemes, the net pension cost recognised in the profit and loss account represents the contributions payable along with an allowance for risk and expense costs. In respect of defined benefit schemes, the same actuarial calculation...

  • Page 199
    ... the date of grant. Shareholders' interest in the retail long-term assurance fund The value of the shareholders' interest in the retail long-term assurance fund represents an estimate of the net present value of the profits inherent in the in-force policies. Leases are classified as capital leases...

  • Page 200
    ...and Staff Accounting Bulletin (SAB) 100 set out specific conditions which must be met to enable liabilities relating to restructuring, sale or involuntary terminations to be recognised in the period management approve the termination plan. In respect of costs other than employee termination benefits...

  • Page 201
    ... foreign currency exchange rates is reflected in shareholders' equity. Loan origination Fee income relating to the origination of loans is recognised in the profit and loss account to match the cost over the period in which the service is provided, together with a reasonable profit margin. The cost...

  • Page 202
    ... US GAAP accounting principles (continued) UK GAAP Consolidation Entities should be consolidated when they are under the control of the reporting entity. Under FRS 2, control is the ability to direct the financial and operating policies of the entity with a view to gaining economic benefit and may...

  • Page 203
    Barclays PLC Annual Report 2004 52 Differences between UK GAAP and US GAAP accounting principles (continued) UK GAAP Taxation Profit before tax and the tax charge for the year includes tax at the effective rate on certain transactions including the shareholders' interest in the long-term assurance ...

  • Page 204
    ...) Dividends received Dividends paid - equity Tax paid Net change in loans and advances, including finance lease receivables Net change in deposits and debt securities in issue Returns on investment and servicing of finance Equity dividends paid Taxation Operating activities Operating activities...

  • Page 205
    ... Pensions and Other Post-Retirement Benefits.' SFAS No. 132 revises employers' disclosures about pension plans and other post-retirement benefits by requiring additional disclosures such as descriptions of the types of plan assets, investment strategies, measurement dates, plan obligations, cash...

  • Page 206
    ... Intangible assets Pensions Post-retirement benefits Leasing - lessor Compensation arrangements Shareholders' interest in the long-term assurance fund Extinguishment of liabilities Revaluation of property Internal use software Derivatives Fair value of securities Dividend payable Loan origination...

  • Page 207
    ... Reallocation between clusters £m Exchange and other £m Additions £m Disposals £m Impairment £m 2004 £m UK Retail Banking UK Business Banking Private Clients International Barclaycard Barclays Capital Barclays Global Investors Head office functions and other operations 2,692 63 546 461...

  • Page 208
    ... accounts For the year ended 31st December 2004 52 Differences between UK GAAP and US GAAP accounting principles (continued) (b) Intangible assets Core deposit intangible £m Purchased Customer credit card lists relationship £m £m Licences and other contracts £m Merchant credit card partnerships...

  • Page 209
    ... 2004 year-end as in the US (5.6% annual rate as at the end of 2003). A one percentage point change in assumed health care trend rates would have the following effects for 2004: 1% increase 1% decrease £m £m Effect on total of service and interest cost components Effect on post-retirement benefit...

  • Page 210
    .... Asset class returns are estimated using current and projected economic and market factors such as inflation, credit spreads and equity risk premiums. Employer cash contributions for the year to 31st December 2005 for the UKRF scheme is expected to be £352m. Estimated future benefit payments The...

  • Page 211
    ...long-term return on plan assets The weighted-average assumptions used to determine benefit obligations for pensions are as follows: 5.4 4.1 6.8 5.3 3.8 6.8 6.0 4.0 7.5 As at 31st December 2004 % 2003 % 2002 % Discount rate Rate of compensation increase Details of the post-retirement health care...

  • Page 212
    ... Save As You Earn (SAYE), Incentive Share Option Plan (ISOP), the BGI Equity Ownership Plan (BGI EOP), Executive Share Award Scheme (ESAS), the Woolwich Executive Share Option Plan (Woolwich ESOP) and the Woolwich SAYE scheme fall within the scope of SFAS 123. Analysis of the movement in the number...

  • Page 213
    Barclays PLC Annual Report 2004 52 Differences between UK GAAP and US GAAP accounting principles (continued) (e) Compensation arrangements (continued) The range of exercise prices, weighted average fair values at the date of grant and the weighted average remaining contractual life for options ...

  • Page 214
    ...the BGI Equity Ownership Plan enabling certain members of staff to subscribe for shares in BGI UK Holdings Limited between 2005 and 2014 at prices between £6.11 and £20.11. For certain employees of the Group an element of their annual bonus is in the form of a deferred award of Barclays PLC shares...

  • Page 215
    ... to ordinary shareholders Effect of dilutive securities: - Employee share options - Other schemes Diluted EPS 3,032 6,381 34 65 47.5 1,740 6,483 26 61 26.8 2,476 6,626 40 (6) 37.4 3,032 6,480 46.8 1,740 6,570 26.5 2,476 6,660 37.2 Of the total number of shares under option at year...

  • Page 216
    ...through the Statement of Total Recognised Gains and Losses for UK GAAP under UITF 31 but in the income statement account under US GAAP (APB 29 and EITF 01-02). The net assets of the business transferred by Barclays to the new entity were not materially different under US GAAP. In 2004, an adjustment...

  • Page 217
    Barclays PLC Annual Report 2004 52 Differences between UK GAAP and US GAAP accounting principles (continued) (m) Internal use software 2004 £m £m 2003 £m £m 2002 £m £m Additional US GAAP shareholders' funds brought forward Expenditure to be capitalised under US GAAP Amortisation Write-offs ...

  • Page 218
    ... basis and at market terms and prices. The majority of these entities are investment funds that are owned by a large and diversified number of investors. In addition, there are various partnerships, funds and open-ended investment companies that are used by a limited number of independent third...

  • Page 219
    ... Credit card securitisations The Group transfers portfolios of credit card receivable assets to Gracechurch Receivables Trustee Limited. Barclaycard Funding PLC, a subsidiary of Barclays Bank, has an equitable interest in the cash flows arising from the securitised assets and has issued Loan...

  • Page 220
    ...the time of the securitisation were as follows: 2004 Mortgage loans 2003 Mortgage loans 2004 Credit card receivables 2003 Credit card receivables Fair value of interest only strip at inception of new securitisations Constant prepayment rate per annum Credit losses per annum(a) Discount rate £270m...

  • Page 221
    ... are calculated independently of changes in the other key variables. The following tables present information about principal balances of managed and securitised receivables as of and for the year ended 31st December 2004. 2004 Credit card receivables Total loans £m Delinquent Net loans(a) write...

  • Page 222
    ... year ended 31st December 2004 52 Differences between UK GAAP and US GAAP accounting principles (continued) (q) Securitisations (continued) 2004 Mortgages Total loans £m Delinquent loans £m Net write-offs £m Total receivables managed Less: receivables securitised(c) Assets on US GAAP Balanced...

  • Page 223
    Barclays PLC Annual Report 2004 52 Differences between UK GAAP and US GAAP accounting principles (continued) (t) Guarantees An element of Barclays normal banking business is to issue guarantees on behalf of its customers. In almost all cases, Barclays will hold collateral against the exposure, have...

  • Page 224
    ... Cash collateral held against derivatives Loans and deposits Total 18,572 21,824 (7,250) 14,787 17,572 65,505 9,684 18,743 (6,030) 7,964 14,916 45,277 Gross assets and liabilities have been increased by £60,400m (2003: £49,099m) due to inclusion of certain BGI insurance products. The legal form...

  • Page 225
    ... for calculating eligible capital resources are described under capital ratios on page 114. The following tables summarises capital resources and capital ratios, as defined for supervisory purposes: Barclays PLC Group and Barclays Bank PLC Group As at 31st December 2004 Total net capital resources...

  • Page 226
    ... credit exposure to borrowers on the banking book in the UK (based on the location of the office recording the transaction) was £159bn at 31st December 2004 (2003: £144bn). In the UK, the Group's collateral policy differs by line of business and product but is broadly consistent with UK market...

  • Page 227
    ... Form 20-F item number Barclays PLC Annual Report 2004 Page reference in this document 1 Identity of Directors, Senior Management and Advisors Not applicable Offer Statistics and Expected Timetable Not applicable Key Information Risk factors Currency of presentation Financial data Dividends...

  • Page 228
    .... For the months indicated, the high and low noon buying rates in New York City for cable transfers in pounds Sterling, as certified for customs purposes by the Federal Reserve Bank of New York (the noon buying rate), were: (US Dollars per pound Sterling) 2005 February January December 2004 November...

  • Page 229
    Barclays PLC Annual Report 2004 Glossary Term used in Annual Report Accounts Allotted Attributable profit Called up share capital Capital allowances Cash at bank and in hand Class of business Fees and commissions receivable Fees and commissions payable Finance lease Freehold Interest receivable ...

  • Page 230
    ... activities before tax Tax on profit on ordinary activities Profit on ordinary activities after tax Minority interests - equity Profit attributable to the members of Barclays Bank PLC Profit attributable to non-equity shareholders Dividends payable to Barclays PLC Profit retained for the financial...

  • Page 231
    ... Bank PLC data Statement of total recognised gains and losses Statement of total recognised gains and losses For the year ended 31st December Barclays PLC Annual Report 2004 2004 £m 2003 £m 2002 £m Profit for the financial year attributable to the members of Barclays Bank PLC Exchange rate...

  • Page 232
    ... 58 370 4,406 1,790 19,835 3,921 Retail life-fund assets attributable to policyholders Total assets The Note numbers refer to the Notes on pages 139 to 224. 22 513,875 8,378 522,253 435,296 8,077 443,373 Equity shares for Barclays Bank PLC differ from Barclays PLC by £11m (2003: £12m) due to...

  • Page 233
    Barclays PLC Annual Report 2004 Consolidated balance sheet As at 31st December 2004 Note £m £m 2003 £m £m Liabilities Deposits by banks - banking - trading 23 Customer accounts - banking - trading Debt securities in issue Items in course of collection due to other banks Other liabilities ...

  • Page 234
    ... a minimum level of capital. The current policy of the Group is that local capital requirements are met, as far as possible, by the retention of profit. Certain countries operate exchange control regulations which limit the amount of dividends that can be remitted to non-resident shareholders. It is...

  • Page 235
    ...31st December 2004 Note £m £m 2003 £m Barclays PLC Annual Report 2004 2002 £m £m £m Net cash inflow/(outflow) from operating activities Dividends received from joint ventures and associated undertakings Returns on investments and servicing of finance: Interest paid on loan capital and other...

  • Page 236
    ...-annually at a rate reset semi-annually equal to the sterling interbank offered rate for six-month sterling deposits. Barclays Bank PLC shall be obliged to pay such dividends if (1) it has profits available for the purpose of distribution under the Companies Act 1985 as at each dividend payment date...

  • Page 237
    ...euro non-cumulative cash dividends out of distributable profits of Barclays Bank PLC, annually at a fixed rate of 4.875% per annum until 15th December 2014, and thereafter quarterly at a rate reset quarterly equal to 1.05% per annum above the euro interbank offered rate for three-month euro deposits...

  • Page 238
    ... Nonrecourse financing £m Undated loan capital £m Dated loan capital £m Ordinary shares £m Preference Shares £m Share premium £m Minority interests £m Barclays Bank PLC At beginning of year Exchange rate and other movements Net cash inflow from financing At end of year (g) Segmental analysis...

  • Page 239
    ... Group Goodwill Intangible assets Pensions Post-retirement benefits Leasing - lessor Compensation arrangements Shareholders' interest in the long-term assurance fund Extinguishment of liabilities Revaluation of property Internal use software Derivatives Fair value on securities Dividend payable Loan...

  • Page 240
    ... (Loss)/profit from joint ventures Profit/(loss) from associated undertakings Exceptional items Profit before tax Profit attributable to members of BB Plc Selected balance sheet data Shareholders' funds - equity - non-equity Dated and undated loan capital Deposits by banks, customer accounts...

  • Page 241
    ... the noon buying rate for cable transfers in New York City, payable in pounds Sterling, at 31st December 2004. (b) Net income and shareholders' equity have been adjusted to reflect significant differences between UK and US GAAP, as shown on pages 237 and 238 to the accounts. Total assets have been...

  • Page 242
    ...) on disposal recognised in the statement of total recognised gains and losses Average shareholders' funds including average historical goodwill Post-tax cost of equity Cost of average shareholders' funds including average historical goodwill Economic profit 3,268 299 (11) 7 - 3,563 13 3,576 18,237...

  • Page 243
    ... Dollars are translated at the noon buying rates in New York City for cable transfers in pounds Sterling as certified for customs purposes by the Federal Reserve Bank of New York (the 'noon buying rate') for the days on which dividends are paid, except for the 2004 final dividend, payable in the UK...

  • Page 244
    Shareholder information Trading Market for Ordinary Shares of Barclays PLC The nominal capital of Barclays PLC is divided into 9,996,000,000 ordinary shares of 25p each (ordinary shares) and 1,000,000 staff shares of £1 each (staff shares). At the close of business on 31st December 2004, 6,453,561...

  • Page 245
    ... PLC Annual Report 2004 Shareholdings at 31st December 2004(a) Shares held as a percentage Number of of issued shares held ordinary (millions) shares Shareholders Percentage of total holders Number Classification of shareholders Personal holders Banks and nominees Other companies Insurance...

  • Page 246
    ... Director is interested as an officer or creditor or shareholder, but only if he owns less than 1% of either the issued equity share capital or of the voting rights of that company; (vii) concerning any superannuation fund or retirement, death or disability benefits scheme or employees' share scheme...

  • Page 247
    Barclays PLC Annual Report 2004 (d) Redemption provisions Subject to the Companies Act 1985, any share may be issued on terms that it is, at the option of the Company or the holder of such share, redeemable. The Company has no redeemable shares in issue. (e) Calls on capital The Directors may make ...

  • Page 248
    ...consult their personal financial adviser if further information regarding a possible tax liability in respect of their holdings of Barclays PLC shares is required. Stamp duty On the purchase of shares, stamp duty or stamp duty reserve tax at the rate of 0.5% is normally payable on the purchase price...

  • Page 249
    ...about Barclays in general, may write to the Director, Investor Relations at our Head office as follows: Director, Investor Relations Barclays PLC 54 Lombard Street London EC3P 3AH or, in the United States of America, The Corporate Communications Department Barclays Bank PLC 222 Broadway New York, NY...

  • Page 250
    ... John Varley Group Chief Executive Group Executive Committee John Varley Group Chief Executive Naguib Kheraj Group Finance Director Paul Idzik Chief Operating Officer Roger Davis Chief Executive, UK Banking Robert E Diamond Jr Chief Executive, Barclays Capital, Chairman, Barclays Global Investors...

  • Page 251
    ... Head of Rates and Private Equity, Regional Head of Europe Roger Jenkins Head of Structured Capital Markets Thomas L Kalaris Head of Distribution and Research and Chief Executive, Americas Grant Kvalheim Head of Investment Banking and Credit Products Robert Morrice Chairman and Chief Executive, Asia...

  • Page 252
    ...11 1 Michael Morley Chief Executive Officer Barclays Bank Tanzania Limited, Tanzania PO Box 5137, TDFL Building Ohio Street, Dar es Salaam Tanzania Tel: +25 5 22 2129381 Karl Stumke Country Managing Director Barclays Bank PLC and Barclays Capital, Americas 200 Park Avenue New York, NY 10166 USA Tel...

  • Page 253
    ... data Barclays Bank PLC Barclays PLC Financial highlights Financial overview Glossary (UK/US) Goodwill Group Chief Executive's statement Group Finance Director's review Group senior management and principal offices Head office functions and other operations business analysis business description...

  • Page 254
    ...SEC Form 20-F Securitisation UK disclosure US disclosure Segmental analysis by class of business by geographical segments Share capital called up Shareholder information Shareholders' funds Short-term borrowings Statement of total recognised gains and losses consolidated consolidated (Barclays Bank...

  • Page 255

  • Page 256
    ... Please note with effect from 31st May 2005 our Registered office will move to: 1 Churchill Place, London E14 5HP. Registered in England. Registered No: 48839 9902966 The paper used throughout this report is produced from Totally Chlorine Free (TCF) pulps. The wood for these is sourced from fully...