Barclays 2004 Annual Report Download - page 93

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Barclays PLC Annual Report 2004
allow it to continue insurance business in accordance with the rules of
the Scheme. Most deposits made with branches of Barclays Bank PLC
within the European Economic Area (EEA) which are denominated in
sterling or other EEA currencies (including the euro) are covered by
the Scheme. Most claims made in respect of designated investment
business will also be protected claims if the business was carried on
from the UK or from a branch of the bank or investment firm in
another EEA member state. The Scheme establishes the maximum
amounts of compensation payable in respect of protected claims: for
eligible protected deposit claims, this is £31,700 (100% of the first
£2,000 and 90% of the next £33,000) and for protected investment
business, this is £48,000 (100% of the first £30,000 and 90% of the
next £20,000). There is no maximum limit for protected insurance
claims. The first £2,000 of a valid claim is paid in full together with
90% of the remaining loss.
Outside of the UK, the Group has operations (and main regulators)
located in continental Europe in particular, France, Germany,
Spain, Portugal and Italy (local central banks and other regulatory
authorities); Asia Pacific (various regulatory authorities including the
Hong Kong Monetary Authority, the Japanese FSA and the Monetary
Authority of Singapore); Africa, where the Group’s operations are
headquartered in Johannesburg, South Africa (The South African
Reserve Bank) and the United States of America (the Federal Reserve
Board and the Securities and Exchange Commission).
In the United States, Barclays PLC, Barclays Bank PLC and certain
US subsidiary undertakings, branches and agencies of the Bank are
subject to a comprehensive regulatory structure, involving numerous
statutes, rules and regulations, including the International Banking Act
of 1978, the Bank Holding Company Act of 1956, as amended, the
Foreign Bank Supervision Enhancement Act of 1991 and the USA
PATRIOT Act of 2001. Such laws and regulations impose limitations on
the types of businesses, and the ways in which they may be conducted,
in the United States and on the location and expansion of banking
business there. The Bank’s operations are subject to extensive federal
and state supervision and regulation by the 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 to ongoing supervision and regulation by
the Securities and Exchange Commission (SEC) as well as a
comprehensive scheme of regulation under the US federal securities
laws, as enforced by, for example, the National Association of
Securities Dealers (NASD) and the OCC.
The UK has implemented the various requirements imposed by the
European Union Directives on such matters as the carrying on the
business of credit institutions and investment firms, capital adequacy,
own funds and large exposures. These form part of the European
Single Market programme, an important feature of which is the
framework for the regulation of authorised firms. This framework is
designed to enable a credit institution or investment firm authorised
in one European Union member state to conduct banking or
investment business through the establishment of branches or by the
provision of services on a cross-border basis in other member states
without the need for local authorisation. A number of other European
Community Directives are being introduced, for example the Market
Abuse Directive and the Markets in Financial Instruments Directive
which once in effect, will further shape and influence the UK
regulatory agenda. Formal consultation is a key aspect of the UK
Government’s reform programme and the Group has been reviewing
and, where relevant, commenting on proposals both directly and
through industry associations.
The Basel Committee on Banking Supervision and the European
Commission have also issued a revised framework for the allocation
of regulatory capital for credit risk and to introduce a capital adequacy
requirement for operational risk. These bodies recognise that a more
sophisticated approach is required to address both financial innovation
and the increasingly complex risks faced by financial institutions. The
revised Basel Capital Accord and the EU Capital Requirements Directive
are expected to be phased in from the end of 2006.
Recent Developments
As announced on 23rd September 2004, Barclays is in discussion
with Absa Group Limited (‘Absa’), a leading South African bank, in
connection with a possible partial offer for a majority stake in Absa.
A due diligence exercise has been completed and Barclays has
submitted applications to the South African regulators to approve the
possible transaction. It is not known how long the approval process will
take. The discussions may or may not lead to an offer being made.
On 20th January 2005 Barclays announced that it had made an offer to
acquire the wealth business of ING Securities Bank (France), consisting
of ING Ferri and ING Private Banking, subject to consultation with
employee representative bodies and finalising terms.
On 3rd February 2005, Barclays announced its plans to consolidate its
core general insurance business from two suppliers to one and that
discussions are well advanced with Norwich Union to provide services
across the home, motor and travel insurance portfolio. Barclays also
announced that it has agreed in principle to purchase 90% of Gresham
Insurance from Legal & General. Barclays currently owns the remaining
10%. At the same time negotiations are under way for the sale of
Gresham Insurance to Norwich Union.
On 4th February 2005, Barclays announced it had signed an
agreement with ForeningsSparbanken (also known as Swedbank)
to form a joint venture to provide credit cards in the Nordic market,
subject to confirmatory due diligence and regulatory approvals.
On 17th February 2005, BSkyB and Barclaycard signed an agreement
to launch a Sky-branded credit card which will be fully integrated with
interactive television.