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barclays.com/annualreport08
Annual Report 2008
51° 30' 36"N
London, UK 12pm GMT
We thank our customers and clients for the business
they directed to Barclays in 2008. High levels of
activity on their behalf have enabled us to report
substantial profit generation in difficult conditions.
Our priorities in 2008 were (and remain): to stay
close to customers and clients; to manage our risks;
and to progress strategy.
John Varley
Group Chief Executive
www.barclays.com/annualreport08
“
”

Table of contents

  • Page 1
    ... clients for the business they directed to Barclays in 2008. High levels of activity on their behalf have enabled us to report substantial profit generation in difficult conditions. Our priorities in 2008 were (and remain): to stay close to customers and clients; to manage our risks; and to progress...

  • Page 2
    ... Business review Barclays today Key performance indicators Group Chairman's statement Group Chief Executive's review Financial review Corporate sustainability Our people Risk management 3 4 6 10 12 15 66 68 69 Governance Board and Executive Committee Directors' report Corporate governance report...

  • Page 3
    ...to supporting customers through the current economic climate, running over 800 savings seminars for customers in 2008. We increased lending to social housing projects by over £2 billion. £2bn 51° 30' 16"N London, UK 12pm GMT 50° 48' 00"N Portsmouth, UK 12pm GMT Barclays PLC Annual Report 2008 1

  • Page 4
    ... own credit of £1,663m Global Retail and Commercial Banking profit before tax increased 6% to £4,367m - UK lending increased to both retail and corporate customers - Strengthened international presence in Barclaycard, Western Europe and Emerging Markets Investment Banking and Investment Management...

  • Page 5
    Business review 1 Business review 4 6 10 12 15 66 68 69 Barclays today Key performance indicators Group Chairman's statement Group Chief Executive's review Financial review Corporate sustainability Our people Risk management Building the best bank in the UK Barclaycard contactless technology In ...

  • Page 6
    ...Chris Lucas Group Finance Director Robert E Diamond Jr President, Barclays PLC Chief Executive, Investment Banking and Investment Management Global Retail and Commercial Banking UK Retail Banking One of the largest retail banks in the UK with over 1,700 branches, 15 million personal customers and...

  • Page 7
    ...the global product leader in exchange traded funds (iShares). Barclays Wealth Barclays Wealth serves clients worldwide, providing international and private banking, fiduciary services, investment management and brokerage. It is the UK's leading wealth manager by client assets and has offices across...

  • Page 8
    ... framework governing how banks and depository institutions are managed. Capital ratios express a bank's capital as a percentage of its risk weighted assets. Tier 1 capital is defined by the UK FSA with Equity Tier 1 broadly being tangible shareholders' funds within Tier 1.The 2008 pro-forma ratios...

  • Page 9
    ... improvements to our service and innovations in our product offerings. 66% 64% 67% 06 07 08 Net new lending in Barclays Commercial Bank The net new lending percentage represents the increase in our loans and advances to customers during the year. Building the best bank in the UK means...

  • Page 10
    ... our business base by geography over time to achieve higher growth. Barclays PLC Annual Report 2008 32% 29% 38% 8 06 07 08 Strategic KPIs Enhance operational excellence Definition Risk management Loan loss rate The loan loss rate represents the impairment charge on loans and advances...

  • Page 11
    ... Global Retail and Commercial Banking and Group Centre A survey of employees, the results of which give demographic and diversity information as well as an indication of employee perceptions in four key areas: Barclays Top Leadership, Business Unit Leadership, Customer Focus and Employee Engagement...

  • Page 12
    ...Despite these, market confidence remains extremely fragile. As a Board, we very much regret what has happened to the banking sector in general and to Barclays share price in particular. We fully recognise that banks must review their internal governance systems and remuneration structures to ensure...

  • Page 13
    ...a new non-executive Director. Simon held a number of positions during his career at Fidelity International, including President of Fidelity's European and UK institutional business and Global Chief Investment Officer. He will bring valuable fund management and institutional shareholder experience to...

  • Page 14
    ... at the year end; whilst we expect there will be further charges as we work down these assets, we also expect that gross write-downs in 2009 will be lower than the levels of 2008. In progressing strategy in 2008, we have announced a number of acquisitions - Lehman Brothers North American businesses...

  • Page 15
    ... and Commercial Banking in 2008 were again observable in its performance in January. Conclusion I end this review by recording the Board's appreciation of the dedication and hard work of our 150,000 people. We are doing more business with more customers and clients than at any time in our history...

  • Page 16
    14 Barclays PLC Annual Report 2008 | Find out more at www.barclays.com/annualreport08

  • Page 17
    ... commentary Capital management Additional financial disclosure Deposits and short-term borrowings Commitments and contractual obligations Securities Average balance sheet Off-balance sheet arrangements Critical accounting estimates Analysis of results by business Barclays PLC Annual Report 2008 15

  • Page 18
    ...per share Dividends per ordinary share Dividend payout ratio Profit attributable to the equity holders of the parent as a percentage of: average shareholders' equity average total assets Cost:income ratio Cost:net income ratio Average United States Dollar exchange rate used in preparing the accounts...

  • Page 19
    ...: £267m). Head office reflects £101m due to the cost of the contribution to the UK Financial Services Compensation Scheme. Underlying cost growth was well controlled. The Group cost:income ratio deteriorated by five percentage points to 62%. 1 Business review Barclays PLC Annual Report 2008 17

  • Page 20
    ... Barclays Capital due to strong results from global loans and money markets. Group net interest income includes the impact of structural hedges which function to reduce the impact of the volatility of short-term interest rate movements on equity and customer balances that do not re-price with market...

  • Page 21
    ...due to changes in the product mix. Barclays Commercial Bank liabilities margin remained broadly stable at 1.49% (2006: 1.46%). Barclaycard assets margin decreased 54 basis points to 6.51% (2006: 7.05%) due to higher average base rates across core markets and an increased weighting to secured lending...

  • Page 22
    ... 2008 £m 2007 £m 2006 £m Rates related business Credit related business Net trading income 4,751 (3,422) 1,329 4,162 (403) 3,759 2,848 766 3,614 Net gain from disposal of available for sale assets Dividend income Net gain from financial instruments designated at fair value Other investment...

  • Page 23
    ... conservative loan to value ratios meant that the impairment charges and amounts charged off remained low at £24m (2007: £3m release). Impairment charges in Consumer Lending increased 3%, reflecting the current economic environment and loan growth. The impairment charge in Barclays Commercial Bank...

  • Page 24
    ... with Group capital raisings, the cost of the Financial Services Compensation Scheme as well as continued investment in the Global Retail and Commercial Banking distribution network. In addition, Barclays Global Investors' selective support of liquidity products increased to £263m in the year (2007...

  • Page 25
    ... 30 592 8,169 UK Retail Banking Barclays Commercial Bank Barclaycard GRCB - Western Europe GRCB - Emerging Markets GRCB - Absa Barclays Capital Barclays Global Investors Barclays Wealth Head office functions and other operations Total Group permanent and fixedterm contract staff worldwide 30,400...

  • Page 26
    ...front office, systems development and control functions to support continued business expansion. The majority of organic growth was in Asia Pacific. Barclays Global Investors staff numbers increased 700 to 3,400 (2006: 2,700). Headcount increased in all geographical regions and across product groups...

  • Page 27
    ... review Gains on acquisitions 2008/07 The gains on acquisitions in 2008 relate to the acquisition of Lehman Brothers North American businesses (£2,262m) on 22nd September 2008, Goldfish credit card UK business (£92m) on 31st March 2008 and Macquarie Bank Limited Italian residential mortgage...

  • Page 28
    ... to banks Loans and advances to customers Available for sale financial investments Reverse repurchase agreements and cash collateral on securities borrowed Other assets Total assets Liabilities Deposits and items in the course of collection due to banks Customer accounts Trading portfolio and...

  • Page 29
    ... year on year. This reflected foreign exchange movements in foreign currency net investments which are largely economically hedged through preference share capital (denominated in US Dollars and Euros) that is not revalued for accounting purposes. 1 Business review Barclays PLC Annual Report 2008...

  • Page 30
    ... 80,515 15,023 7,096 996,787 UK Retail Banking Barclays Commercial Bank Barclaycard GRCB - Western Europe GRCB - Emerging Markets GRCB - Absa Barclays Capital Barclays Global Investors Barclays Wealth Head office functions and other operations Total risk weighted assets 30,491 63,081 27,316 36,480...

  • Page 31
    ...(2006: £43.0bn) with growth in mortgages partially offset by an increase in securitised balances and other reductions. Barclays Commercial Bank total assets grew 13% to £74.6bn (2006: £66.2bn) driven by good growth across lending products. Risk weighted assets increased 8% to £54.3bn (2006: £50...

  • Page 32
    ...Barclays Bank PLC Group Called up share capital Share premium account Available for sale reserve Cash flow hedging reserve Currency translation reserve Other reserves Other shareholders' equity Retained earnings Shareholders' equity excluding minority interests Minority interests Total shareholders...

  • Page 33
    ...1 Business review Capital ratios Basel II 2008 Barclays PLC Group Barclays Bank PLC Group Basel II 2007 Barclays PLC Group Barclays Bank PLC Group Basel I 2007 Barclays PLC Group Barclays Bank PLC Group Basel I 2006 Barclays PLC Group Barclays Bank PLC Group Capital ratios Tier 1 ratio Risk asset...

  • Page 34
    .... 2008 £m 2007 £m 2006 £m Customer accounts 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 - wholesale Total repayable in offices in the United Kingdom...

  • Page 35
    ... Guarantees and letters of credit pledged as collateral security Securities lending arrangements Other contingent liabilities Documentary credits and other short-term trade related transactions Forward asset purchases and forward deposits placed Standby facilities, credit lines and other 576 7,272...

  • Page 36
    ...for sale Debt securities: United Kingdom government Other government Other public bodies Mortgage and asset backed securities Bank and building society certificates of deposit Corporate and other issuers Equity securities Investment securities - available for sale Other securities - held for trading...

  • Page 37
    ... (year ended 31st December) 2008 Average balance a £m Interest £m Average rate % Average balance a £m 2007 Interest £m Average rate % Average balance a £m 2006 Interest £m Average rate % 1 Business review Assets Loans and advances to banks b: - in offices in the United Kingdom - in offices...

  • Page 38
    ...in offices outside the United Kingdom Customer accounts: other time deposits - wholesale: - in offices in the United Kingdom - in offices outside the United Kingdom Debt securities in issue: - in offices in the United Kingdom - in offices outside the United Kingdom Dated and undated loan capital and...

  • Page 39
    ...1,923 2,761 4,684 1,195 2,062 3,257 549 341 890 2,396 2,929 5,325 Trading portfolio assets: - in offices in the UK - in offices outside the UK (978) 2,088 1,110 Total interest receivable: - in offices in the UK - in offices outside the UK (1,175) 3,505 2,330 Barclays PLC Annual Report 2008 37

  • Page 40
    ... Debt securities in issue: - in offices in the UK - in offices outside the UK (133) (1,321) (1,454) Dated and undated loan capital and other subordinated liabilities principally in offices in the UK Repurchase agreements and cash collateral on securities lent: - in offices in the UK - in offices...

  • Page 41
    ... experiences future funding difficulties. - Direct investment in the notes issued by SPEs. Depending on the nature of the Group's resulting exposure, it may consolidate the SPE on to the Group's balance sheet. The consolidation of SPEs is considered at inception, based on the arrangements in place...

  • Page 42
    ...number of investors. These funds are not consolidated because the Group does not own either a significant portion of the equity or the risks and rewards inherent in the assets. During 2008, Group operating expenses included charges of £263m related to selective support of liquidity products managed...

  • Page 43
    ... of the work-out process. The level of the impairment allowance is the difference between the value of the discounted expected future cash flows (discounted at the loan's original effective interest rate), and its carrying amount. Subjective 1 Business review Barclays PLC Annual Report 2008 41

  • Page 44
    ...: the higher of the asset's or the cash-generating unit's net selling price and its value in use. Net selling price is calculated by reference to the amount at which the asset could be disposed of in a binding sale agreement in an arm's length 42 Barclays PLC Annual Report 2008 | Find out more at...

  • Page 45
    ...a market-based discount rate on a pre-tax basis. The most significant amounts of intangible assets relate to the GRCB - Absa and Lehman Brothers North American businesses. Retirement benefit obligations The Group provides pension plans for employees in most parts of the world. Arrangements for staff...

  • Page 46
    ... rates and increased customer indebtedness resulting in higher delinquency levels in the retail portfolios. Analysis of results by business For the year ended 31st December 2008 UK Barclays Retail Commercial Banking Bank Barclaycard £m £m £m GRCB - Western Europe £m GRCB - Emerging Markets...

  • Page 47
    ... the general widening of credit spreads on structured notes issued by Barclays Capital. There were record performances in interest rate products, currency products, emerging markets, prime services and commodities. Equities, credit products, mortgages and asset backed securities and private equity...

  • Page 48
    ... 2008 2007 2006 £4,482m £1 ,369m Income Profit before tax Performance indicators Customer deposits £bn Mortgages - Net new lending market share % b 87.1 89.6 82.3 36 Personal Customers Number of UK current accounts a Number of UK savings accounts Total UK mortgage balances Local Business Number...

  • Page 49
    ... strong and active management of expense lines, including back-office consolidation and process efficiencies, funded increased investment in product development and distribution channels. The cost:income ratio improved one percentage point to 56% (2007: 57%). 2007/06 UK Retail Banking profit before...

  • Page 50
    .... What we do Barclays Commercial Bank provides banking services to more than 81,000 customers in the UK via a network of relationship, regional, industry-sector and product specialists. Working closely with our clients to understand their needs, we deliver financing, risk management, trade and cash...

  • Page 51
    ... tax Balance sheet information Loans and advances to customers Loans and advances to customers including those designated at fair value Customer accounts Total assets Performance ratios Return on average economic capital Cost:income ratio Cost:net income ratio Other financial measures Risk Tendency...

  • Page 52
    ... processing business, Barclaycard Business, processes card payments for 89,000 retailers and merchants, and issues credit and charge cards to corporate customers and the UK Government. It is Europe's number one issuer of Visa Commercial Cards with over 132,000 corporate customers. Performance 2008...

  • Page 53
    ...expenses Share of post-tax results of associates and joint ventures Gain on acquisition Profit before tax Balance sheet information Loans and advances to customers Total assets Performance ratios Return on average economic capital Cost:income ratio Cost:net income ratio Other financial measures Risk...

  • Page 54
    ... a variety of products and services including retail mortgages, current and deposit accounts, commercial lending, unsecured lending, credit cards, investments and insurance products, serving the needs of Barclays retail, mass affluent and corporate customers. Performance 2008/07 GRCB - Western...

  • Page 55
    ... of post-tax results of associates and joint ventures Profit on disposal of subsidiaries, associates and joint ventures Gain on acquisition Profit before tax Balance sheet information Loans and advances to customers Customer accounts Total assets Performance ratios Return on average economic capital...

  • Page 56
    ... than 830 distribution points and 1,440 ATMs, we provide 4.2m customers and clients with a full range of products and services. This includes current accounts, savings, investments, mortgages and secured and unsecured lending. Performance 2008/07 GRCB - Emerging Markets profit before tax increased...

  • Page 57
    ... expenses Share of post-tax results of associates and joint ventures Profit on disposal of subsidiaries, associates and joint ventures Profit before tax Balance sheet information Loans and advances to customers Customer accounts Total assets Performance ratios Return on average economic capital Cost...

  • Page 58
    ... Stock Exchange Limited. GRCB - Absa offers a complete range of banking products and services, including current accounts, savings products, bancassurance, mortgages, instalment finance and wealth management. It also offers customised business solutions for commercial and large corporate customers...

  • Page 59
    ... expenses Share of post-tax results of associates and joint ventures Profit on disposal of subsidiaries, associates and joint ventures Profit before tax Balance sheet information Loans and advances to customers Customer accounts Total assets Performance ratios Return on average economic capital Cost...

  • Page 60
    ...review Analysis of results by business Investment Banking and Investment Management Barclays Capital Barclays Capital is a leading global investment bank providing large corporate, government and institutional clients with a full spectrum of solutions to their strategic advisory, financing and risk...

  • Page 61
    ... expenses Share of post-tax results of associates and joint ventures Gain on acquisition Profit before tax Balance sheet information Total assets Performance ratios Return on average economic capital Cost:income ratio Cost:net income ratio Compensation:net income ratio Other financial measures Risk...

  • Page 62
    ... as indexing, global asset allocation and risk controlled active products including hedge funds and provides related investment services such as securities lending, cash management and portfolio transition services. BGI collaborates with the other Barclays businesses, particularly Barclays Capital...

  • Page 63
    ... (2006: £951m) as a result of significant investment in key product and channel growth initiatives and in infrastructure as well as growth in the underlying business. Operating expenses included charges of £80m (2006: £nil) related to selective support of liquidity products managed in the US. The...

  • Page 64
    ... total client assets of £145bn. We have offices across the Americas following the acquisition of Lehman Brothers Private Investment Management in 2008. What we do Barclays Wealth provides international and private banking, fiduciary services, investment management, and brokerage. We work closely...

  • Page 65
    ... information Loans and advances to customers Customer accounts Total assets Performance ratios Return on average economic capital Cost:income ratio Cost:net income ratio Other financial measures Risk Tendency Economic profit Risk weighted assets a Average net income generated per member of staff...

  • Page 66
    ...: - Head office and central support functions - Businesses in transition - Inter-segment adjustments What we do Head office and central support functions comprises the following areas: Executive Management, Finance, Treasury, Corporate Affairs, Human Resources, Strategy and Planning, Internal Audit...

  • Page 67
    1 Business review Head office functions and other operations 2008 £m 2007 £m 2006 £m Income statement information Net interest income Net fee and commission income Net trading (loss)/income Net investment income/(expense) Principal transactions Net premiums from insurance contracts Other income ...

  • Page 68
    ..., encouraged to develop, and rewarded on the basis of individual performance. Barclays Capital has traded more than 1billion tonnes of carbon credits with a notional value of over £20bn £52.2m invested in our communities globally Over 57,000 employees received direct support for fundraising...

  • Page 69
    ... a founder member, and United Nations Environment Programme Finance Initiative (UNEP FI), for which we co-chair the Human Rights Workstream. We extended the guidance provided to our employees on human rights in 2008 to include access to an online tool for front-line lending managers, which assists...

  • Page 70
    ...FTE by business unit UK Retail Banking Barclays Commercial Bank Barclaycard GRCB - Western Europe GRCB - Emerging Markets GRCB - Absa Barclays Capital Barclays Global Investors Barclays Wealth Head office and other operations Total Global employment statistics FTE Total employee headcount Percentage...

  • Page 71
    ... and structure Key elements Credit risk management Organisation and structure Measurement, reporting and internal ratings Credit risk mitigation Analysis of total assets and credit risk exposures Loans and advances Debt securities and other bills Derivatives Barclays Capital credit market exposures...

  • Page 72
    ... lack of credit, lack of confidence in the financial sector, increased volatility in the financial markets and reduced business activity could continue to materially and adversely affect the Group's business, financial condition and results of operations. 70 Barclays PLC Annual Report 2008 | Find...

  • Page 73
    ... rates. Market risk has increased due to the volatility of the current financial markets. The main market risk arises from trading activities. Barclays is also exposed to market risk through non-traded interest rate risk and the pension fund. The Group's market risk governance structure, management...

  • Page 74
    ...may decide to hold assets rather than securitising, syndicating or disposing of them. This could affect the Group's ability to originate new loans or support other customer transactions as both capital and liquidity are consumed by existing or legacy assets. The Group's liquidity risk management and...

  • Page 75
    ... be transferred to a commercial purchaser or Bank of England entity, all or some of the securities issued by a bank. The share transfer order can extend to a wide range of 'securities' including shares and bonds issued by a UK Bank (including Barclays Bank PLC) or its holding company (Barclays PLC...

  • Page 76
    ... as part of the Group's formal governance processes and are reviewed by the Executive Committee, Group Finance Director and the Board Risk Committee; - the tax charge is also reviewed by the Board Audit Committee; - the tax risks of proposed transactions or new areas of business are fully considered...

  • Page 77
    ...-Term Plan creates a risk profile that meets our Risk Appetite (page 78). Barclays Risk Methodologies include systems that enable the Group to measure, aggregate and report risk for internal and regulatory purposes. As an example, our credit grading models produce Internal Ratings through internally...

  • Page 78
    ... a concise quarterly risk report. Internal Audit supports both Committees by attendance and/or the provision of quarterly reports resulting from its work on governance, risk and control issues of significance. The Board Audit Committee reviews and approves Internal Audit's plans and resources...

  • Page 79
    ... and impact of operational promptly to emerging measurement and issues risk events setting of position limits - Drive forward law - Facilitate business enforcement and other growth within controlled government initiatives and transparent risk management framework Barclays PLC Annual Report 2008 77

  • Page 80
    ... six-monthly review of assurance information. These reviews support the regulatory requirement for the Group to make a statement about its system of internal control (the 'Turnbull' statement), in the Annual Report and Accounts. Risk Appetite Risk Appetite is the level of risk the Board of Barclays...

  • Page 81
    ...a sudden rise in global interest rates on Barclays Capital's market exposures). Model Governance Barclays has a large number of models in place across the Group, covering all risk types. To minimise the risk of loss through model failure, a Group Model Risk Policy (GMRP) has been developed. This has...

  • Page 82
    ...our assets in accordance with accounting principles. In the review of Barclays credit risk management that follows, we first explain how the Group meets its credit risk management objectives through its organisation, structure and governance, its measurement, reporting and system of internal ratings...

  • Page 83
    ... sectors - underwriting criteria for personal loans and maximum loan-to-value ratios for home loans Within Group Risk, the Credit Risk function provides Group-wide direction of credit risk-taking. This functional team manages the resolution of all significant credit policy issues and runs the Credit...

  • Page 84
    ... as internal and external models, rating agency ratings, and for wholesale assets market information such as credit spreads. For smaller credits, a single source may suffice such as the result from an internal rating model. Barclays recognises the need for 82 Barclays PLC Annual Report 2008 | Find...

  • Page 85
    ... 'ratings process' refers to the use of PD, EAD and LGD across the Group. In Barclays, the rating process is defined by each business. For central government and banks, institutions and corporate customers many of the models used in the rating process are shared across businesses as the models are...

  • Page 86
    ... Our retail banking operations have long and extensive experience of using credit models in assessing and managing risk in their businesses and as a result models play an integral role in customer approval and management processes. Models used include PD models, mostly in the form of application...

  • Page 87
    ..., modelling and credit measurement methodologies. Through their day-to-day activities, key senior management in Group Credit Risk, the businesses and the business risk teams have a good understanding of the operation and design of the rating systems used. For example: - The respective Business Risk...

  • Page 88
    ... example, between sovereign governments, banks and corporations. Excesses to maximum exposure guidelines are considered individually at the time of credit sanctioning, are reviewed regularly, and are reported to the Risk Oversight Committee and the Board Risk Committee. 'Wrong way risk' in a trading...

  • Page 89
    ... bond marketing and syndication - Provider of securitisation trade servicing, including data management, investor payments and reporting. As at the end 2008 Barclays has securitised its own originated retail and commercial mortgages, credit cards and corporate loans across both funded traditional...

  • Page 90
    ... Credit market exposures e £m Assets Cash and balances at central banks Items in the course of collection from other banks Treasury and other eligible bills Debt securities Equity securities f Traded loans Commodities g Total Trading portfolio assets Financial assets designated at fair value Loans...

  • Page 91
    ... classifications. Barclays largest sectoral exposure is to home loans which, combined with other personal and business services sectors ,comprise 48% of total loans and advances (2007: 53%). These categories are generally comprised of small loans, have low volatility of credit risk outcomes, and...

  • Page 92
    ...of Credit risk gross loans loans and advances £m % Impairment charge £m Loan loss rates basis points As at 31st December 2008 Barclays Commercial Bank Barclaycard GRCB - Western Europe GRCB - Emerging Markets GRCB - Absa Barclays Capital Barclays Global Investors Barclays Wealth Head office Total...

  • Page 93
    ...assets are primarily made up of US RMBS whole loans and commercial real estate loans, £14,429m of which is discussed within the credit market exposures. Table 3: Analysis of wholesale loans and advances net of impairment allowances Corporate Government 2007 £m 2008 £m 2007 £m Settlement balance...

  • Page 94
    ... value. Loans and advances held at fair value were £12,966m as at 31st December 2008. Of these, £12,360m related to government, local authority and social housing. Fair value exceeds amortised cost by £3,018m. Fair value is calculated using a valuation model with reference to observable market...

  • Page 95
    ... finance loans in Barclays Commercial Bank was £2,445m, of which £1,875m related to drawn amounts recorded in loans and advances. Table 6: Barclays Commercial Bank financial sponsor leveraged finance Leveraged finance exposure by region As at 31st December 2008 UK Europe Other Total lending...

  • Page 96
    ...% of Credit risk gross loans loans and advances £m % Impairment charge £m Loan loss rates basis points As at 31st December 2008 UK Retail Banking Barclaycard GRCB - Western Europe GRCB - Emerging Markets GRCB - Absa Barclays Wealth Total As at 31st December 2007 UK Retail Banking Barclaycard GRCB...

  • Page 97
    ... stock. Impairment charges rose across the home loan portfolios, reflecting the impact of lower house prices as well as some increase in arrears rates. Three-month arrears as at 31st December 2008 were 0.91% for UK mortgages, 0.76% for Spain and 2.11% for South Africa. To support the Group's risk...

  • Page 98
    ... of IAS 39 required interest to be recognised on the remaining balance of an impaired financial asset (or group of financial assets) at the effective interest rate for that asset. As a result, interest is credited to the income statement 96 Barclays PLC Annual Report 2008 | Find out more at www...

  • Page 99
    ... inclusion of US-located ABS CDO Super Senior positions and other credit market exposures. Credit Risk Loans In 2008, CRLs rose 63% to £15,700m (2007: £9,641m). Balances were higher in all businesses as credit conditions deteriorated across Barclays areas of operations and total loans and advances...

  • Page 100
    ... Absa Commercial and Banking Business as corporate credit conditions deteriorated, particularly in the last quarter of 2008. CRLs on ABS CDO Super Senior positions increased £773m (23%) to £4,117m (2007: £3,344m). The majority of this increase resulted from a migration of assets, totalling £801m...

  • Page 101
    ...calculation are the valuation of all security and collateral, as well as the timing of all asset realisations, after allowing for all attendant costs. This method applies in the corporate portfolios - Barclays Commercial Bank, Barclays Capital and certain areas within GRCB's international portfolios...

  • Page 102
    ... Lending increased 3% reflecting the current economic environment and loan growth. Fig. 13: Impairment/provisions charges over five years £m 5,419 Table 13: Impairment Charges and Other Credit Provisions Year Ended 31.12.08 £m Year Ended 31.12.07 £m UK Retail Banking Barclays Commercial Bank...

  • Page 103
    ... Banking and Investment Management Barclays Capital impairment charges of £2,423m (2007: £846m) included a charge of £1,763m (2007: £782m) against ABS CDO Super Senior and other credit market positions. Further impairment charges of £241m were incurred in respect of available for sale assets...

  • Page 104
    ... of new business acquisitions (£260m) as well as asset growth, exchange rate movements, and the economic conditions in the US. Risk Tendency in the UK Cards portfolio remained stable as improvements in portfolio quality were offset by deterioration in the UK economic environment. Risk Tendency...

  • Page 105
    ... issued by: - governments and other public bodies - US agency - mortgage and asset-backed securities - corporate and other issuers - bank and building society certificates of deposit Total Of which classified as: - trading portfolio assets - financial instruments designated at fair value - available...

  • Page 106
    ... equity prices as part of its asset and liability 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...

  • Page 107
    ... managed on a daily basis. The methodology encompasses all relevant factors to enable the current value to be calculated and the future value to be estimated, for example: current market rates, market volatility and legal documentation (including collateral rights). Barclays PLC Annual Report 2008...

  • Page 108
    ...2008 as a result of declines in the fair value of the underlying assets. Analysis of Barclays Capital credit market exposures by asset class RMBS Commercial CMBS wrapped by Commercial mortgage wrapped by monoline real estate backed monoline Leveraged Alt-A insurers loans securities insurers finance...

  • Page 109
    ... other credit market exposures. Fair Value Losses £m Impairment Charge £m Gross Losses £m ABS CDO super senior Other US sub-prime Alt-A US RMBS wrapped by monoline insurers Total US residential mortgages US Europe Total commercial real estate Commercial mortgage-backed securities CMBS wrapped...

  • Page 110
    ...super senior positions is based on cash flow methodology using standard market assumptions such as default curves and remittance data to calculate the net present value of the future losses for the collateral pool over time. As a result, future potential impairment charges depend on changes in these...

  • Page 111
    ... Non-investment Grade Alt-A RMBS Ratings AAA/AA A/BBB Non-investment Grade Total US RMBS Ratings AAA/AA A/BBB Non-investment Grade 50% 13% 37% 63% 31% 6% 14% 70% 16% 50% 41% 9% 66% 7% 27% 89% 8% 3% 47% 45% 8% 85% 12% 3% 42% 21% 37% 43% 51% 6% 2% 82% 16% 30% 60% 10% Barclays PLC Annual Report 2008...

  • Page 112
    ... management Credit risk management Barclays Capital credit market exposures A2. Other US Sub-Prime As at 31.12.08 £m As at 31.12.07 £m Marks at 31.12.08 Marks at 31.12.07 Whole loans - performing Whole loans - more than 60 days past due Total whole loans AAA securities Other sub-prime securities...

  • Page 113
    ... the balance principally relates to the decline in interest rates globally and the 37% depreciation of Sterling relative to the US Dollar, especially in the second half of 2008. The majority of this exposure was the most senior obligation of the vehicle. A4. US Residential Mortgage Backed Securities...

  • Page 114
    Risk management Credit risk management Barclays Capital credit market exposures The notional value of the assets, split by the current rating of the monoline insurer, is shown below. Rating of Monoline Insurers - As at 31.12.08 NonInvestment Grade £m AAA/AA £m A/BBB £m Total £m 2005 and ...

  • Page 115
    ... by loan covenants and periodic LTV retests, which cover 90% of the portfolio. 47% of the German exposure relates to one transaction secured on multifamily residential assets. Exposure to the Spanish market represents less than 1% of global exposure at 31st December 2008. Commercial Real Estate...

  • Page 116
    ...mortgage market has resulted in exposure to monoline insurers and other financial guarantors that provide credit protection. The table below shows Commercial Mortgage Backed Security (CMBS) assets where we held protection from monoline insurers at 31st December 2008. These are measured at fair value...

  • Page 117
    ...(31st December 2007: £9,217m). Barclays Capital expects to hold these leveraged finance positions until redemption. Material movements since 31st December 2007 reflect exchange rate changes rather than changes in loan positions. The net exposure relating to leverage finance loans of £10,391m (31st...

  • Page 118
    ... 2008 exposure was broadly in line with the prior year. C3. CDPC exposure Credit derivative product companies ('CDPCs') are specialist providers of credit protection principally on corporate exposures in the form of credit derivatives. The Group has purchased protection from CDPCs against a number...

  • Page 119
    1 Business review C4. CLO and other exposure wrapped by monoline insurers The table below shows Collateralised Loan Obligations (CLOs) and other assets where we held protection from monoline insurers at 31st December 2008. The deterioration in markets for these assets has resulted in exposure to ...

  • Page 120
    Risk management Credit risk management Barclays Capital credit market exposures The notional value of the assets split by the current rating of the underlying asset is shown below. All of the underlying assets had investment grade ratings as at 31st December 2008. Rating of Underlying Asset - As at...

  • Page 121
    ... Framework. Oversight and Overview of the business control structure Risk type Traded ...managed by Barclays Capital and reviewed by Group Market Risk and...- Traded Products Risk Review Meeting Non-traded - Banking book interest rate risk - Foreign exchange risk Global Retail and Commercial...

  • Page 122
    ... testing. Book limits such as foreign exchange and interest rate delta limits are also in place. Daily Value at Risk is an estimate of the potential loss arising from unfavourable market movements, if the current positions were to be held unchanged for one business day. Barclays Capital uses the...

  • Page 123
    ... due to extreme market volatility following the failure of several financial intuitions and a material deterioration in the global economic outlook. Barclays changes to 95% DVaR to improve management, transparency and control of the market risk profile. 90+ Barclays PLC Annual Report 2008 5 121

  • Page 124
    ...non-traded interest rate risk is given in Note 48. Other market risks Barclays maintains a number of defined benefit pension schemes for past and current employees. The ability of the Pension Fund to meet the projected pension payments is maintained through investments and regular Bank contributions...

  • Page 125
    ..., coal, freight, emission credits, structured products and other related commodities. This service offering continues to expand, as market conditions allow, through the addition of new products and markets. The Group offers both over the counter (OTC) and exchange traded derivatives, including swaps...

  • Page 126
    ...and control process that covers all of the Group's liquidity risk management activities. Businesses assist Barclays Treasury in policy formation and limit setting by providing relevant and expert input for their local markets and customers. Execution of the Group's liquidity risk management strategy...

  • Page 127
    ... fluctuations. Such accounts form a stable funding base for the Group's operations and liquidity needs. The Group policy is to fund the balance sheet of the Retail and Commercial Bank together with Wealth and Head office functions on a global basis with customer deposits and capital without recourse...

  • Page 128
    ... have improved access to term funding, and helped moderate money market rates. For the Group, loans and advances to customers and banks are more than covered by the combination of customer deposits and longer term debt at 112% at 31st December 2008 (2007: 125%). Global Retail and Commercial Banking...

  • Page 129
    ... to foreign exchange rate movements - Ensuring local entity regulatory capital adequacy - Allocating capital to the Group's strategic medium-term plan - Economic capital management In addition to the processes above, the Risk Oversight Committee and the Board Risk Committee annually review and set...

  • Page 130
    ... medium-term plan. Treasury Committee reviews the limits on capital demand on a monthly basis taking into account actual performance. Economic capital management Economic capital is an internal measure of the minimum equity and preference capital required for the Group to maintain its credit rating...

  • Page 131
    ... Global Investors Barclays Wealth Head office functions and other operations e 07 1,250 08 Other risks g 1,700 Barclays PLC Annual Report 2008 50 07 08 07 08 07 08 07 08 07 08 07 08 UK Retail Barclays Barclaycard Banking Commercial Bank GRCB - Western Europe GRCB - Emerging Markets...

  • Page 132
    ... business units. They service and support these areas, assisting line managers in managing these risks. Business Risk Directors in each business are responsible for overseeing the implementation of and compliance with Group policies. Governance and Control Committees in each business monitor control...

  • Page 133
    ... database and reported monthly to the Group Operational Risk Executive Committee. Barclays also uses a database of external public risk events and is a member of the Operational Risk Data Exchange (ORX), an association of international banks that share anonymised loss data information to assist...

  • Page 134
    ..., Barclays Bank PLC Pakistan, Barclays Investment and Loans India Limited, Barclays Bank LLC Russia and the Cash Equity, Municipal Bonds and M&A business acquired from Lehman Brothers. In certain joint ventures and associates, Barclays may not be able to apply the Advanced Operational Risk Framework...

  • Page 135
    ...share intelligence, develop and agree controls, and discuss emerging themes and the implementation status of policies and procedures. All businesses contribute towards the Group Money Laundering Reporting Officers Annual Report, which is provided to Group senior executive management and is available...

  • Page 136
    ... risk team gathers and shares current threat assessments across business areas, using intelligence from security and government agencies and in-country teams. It ensures that suitable policies and control systems are in place to protect Group business and high-risk personnel. Barclays has developed...

  • Page 137
    ... 80 to 118). Credit risk management Table 1: Risk Tendency by business 2008 £m 2007 £m 1 Business review UK Retail Banking Barclays Commercial Bank Barclaycard GRCB - Western Europe GRCB - Emerging Markets GRCB - Absa Barclays Capital Barclays Wealth Head office functions and other operations...

  • Page 138
    ... leisure Transport Postal and communication Business and other services Home loans b Other personal Finance lease receivables Loans and advances to customers excluding reverse repurchase agreements Reverse repurchase agreements Loans and advances to customers 2008 £m 2007 £m 2006 £m 2005 £m 2004...

  • Page 139
    ...Transport Postal and communication Business and other services Home loans b Other personal Finance lease receivables Loans and advances to customers in the UK 2008 £m 2007 £m... excludes reverse repurchase agreements. b Excludes commercial property mortgages. Barclays PLC Annual Report 2008 137

  • Page 140
    ...communication Business and other services Home loans b Other personal Finance lease receivables Loans and advances to customers in the United States See note under Table 6. 2008... agreements. b Excludes commercial property mortgages. 138 Barclays PLC Annual Report 2008 | Find out more at www...

  • Page 141
    ... years £m Over three years but not more than five years £m Over five years but not more than ten years £m On demand £m Not more than three months £m Over ten years £m Total £m At 31st December 2008 United Kingdom Corporate lending Other lending to customers in the United Kingdom Total United...

  • Page 142
    ...31st December 2008 £m 2007 £m 2006 £m Off-balance sheet exposures Contingent liabilities Commitments On-balance sheet exposures Trading portfolio assets Financial assets designated at fair value held on own account Derivative financial instruments Available for sale financial investments 66,310...

  • Page 143
    1 Business review Table 16: Credit risk loans At 31st December Impaired loans: b United Kingdom Other European Union United States Africa Rest of the World Total Non-accrual loans: United Kingdom Other European Union United States Africa Rest of the World Total Accruing loans where interest is being...

  • Page 144
    ...Impairment on loans and advances Impairment on available for sale assets Impairment on reverse repurchase agreements Impairment charge Total net specific provisions charge General provisions (release)/charge Other credit provisions charge/(release) Impairment/provision charges 2008 £m 2007 £m 2006...

  • Page 145
    1 Business review Table 20: Impairment/provisions charges ratios ('Loan loss ratios') 2008 % 2007 % 2006 % 2005 % 2004 a % Impairment/provisions charges as a percentage of average loans and advances for the year: Specific provisions charge General provisions charge Impairment charge Total Amounts ...

  • Page 146
    ... a Does not reflect the application of IAS 32, IAS 39 and IFRS 4 which became effective from 1st January 2005. b Does not reflect the impairment of available for sale assets or other credit risk provisions. 144 Barclays PLC Annual Report 2008 | Find out more at www...

  • Page 147
    ... and leisure Transport Postal and communication Business and other services Home loans Other personal Finance lease receivables Overseas Impairment/specific provision charges The category 'Other personal' now includes credit cards, personal loans, second liens and personal overdrafts. The industry...

  • Page 148
    ...% United Kingdom: Financial services Agriculture, forestry and fishing Manufacturing Construction Property Energy and water Wholesale and retail distribution and leisure Transport Postal and communication Business and other services Home loans Other personal Finance lease receivables Overseas Total...

  • Page 149
    ... in these ratios reflected a change in the mix of credit risk loans and potential credit risk loans: unsecured retail exposures, where the recovery outlook is relatively low, decreased as a proportion of the total as the collections and underwriting processes were improved. Secured retail and...

  • Page 150
    ... International Organisation of Securities Commissions. They also reflect requirements derived from EU directives. In the UK, the FSA is the independent body responsible for the regulation of deposit taking, life insurance, home mortgages, general insurance and investment business. Barclays Bank PLC...

  • Page 151
    ... be transferred to a commercial purchaser or Bank of England entity, all or some of the securities issued by a bank. The share transfer order can extend to a wide range of 'securities' including shares and bonds issued by a UK Bank (including Barclays Bank PLC) or its holding company (Barclays PLC...

  • Page 152
    150 Barclays PLC Annual Report 2008 | Find out more at www.barclays.com/annualreport08

  • Page 153
    ..., debt capital markets, mergers and acquisitions, commodities trading and foreign exchange. For Barclays Wealth, the acquisition gives us a strong platform from which to extend our wealth management offering in the Americas. All-American Equity Business Research Team No.1 40° 45' 39"N New York 7am...

  • Page 154
    ... has experience of both the private and public sector having worked in high-level banking roles and the Civil Service. He was the Executive Chairman of HM Customs and Excise from 2000 to 2003 and was formerly a member of the Group Executive Committee of Schroders PLC and a non-executive Director of...

  • Page 155
    ...of the Board HR and Remuneration Committee since July 2005. 15. Christopher Lucas Group Finance Director Executive Director and member of Executive Committee (Age 48) Chris has worked across financial services for most of his career, including three years in New York as Head of the US Banking Audit...

  • Page 156
    ...The issue of new ordinary shares or certain other securities and rights of the Company, at any time during the period commencing on 27th November 2008 and ending on the date on which a holder exercises its optional conversion right or on the mandatory conversion date, at a price (the 'Future Placing...

  • Page 157
    ... 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. Barclays PLC Annual Report...

  • Page 158
    ... Board HR and Remuneration Committee receives annual reports on health and safety performance from the Human Resources Director. As part of its Partnership Agreement with Unite (Amicus section), Barclays currently funds full time Health and Safety Representatives. Creditors' Payment Policy Barclays...

  • Page 159
    ... US companies listed on the NYSE. As our main listing is on the London Stock Exchange, we follow the UK's Combined Code. Key differences between the Code and NYSE Rules are set out later in this report. 2 Governance Marcus Agius Group Chairman 5th March 2009 Barclays PLC Annual Report 2008 157

  • Page 160
    ...for the benefit of the shareholders as a whole. In doing so, the Directors must have regard (amongst other matters) to: - the likely consequences of any decision in the long term; - the interests of Barclays employees; Corporate governance framework Board Audit Committee Board (Group Chairman, four...

  • Page 161
    ...Director remuneration - Major changes in employee share schemes - Approval of Board and Board Committees performance evaluation process - Determination of independence of non-executive Directors - Approval of corporate governance framework - Approval of division of responsibilities between the Group...

  • Page 162
    ... Capital, Barclaycard, Brand & Marketing, UK Retail Banking, Investment Banking and Investment Management in Asia Pacific and GRCB - Emerging Markets; - approved the full year and half-year results for the Group; - received a report on the effectiveness of the Board following the performance review...

  • Page 163
    ... challenge and debate, the Board expects to reach clear decisions and to provide a framework of support for the executive Directors in their management of the Group's business. The Charter of Expectations, including role profiles for key Board positions, is available from: www.aboutbarclays.com...

  • Page 164
    ... the organisation's business and affairs to enable them to properly evaluate the information and responses provided by management. The Board considers non-executive Director independence on an annual basis, as part of each Director's performance review. The Board Corporate Governance and Nominations...

  • Page 165
    ... terms of reference are available from the Corporate Governance section at: www.aboutbarclays.com. In addition to the members of the Committee, there are a number of regular attendees at each meeting. The Group Chief Executive, Group Finance Director, Barclays Internal Audit Director, Group Risk...

  • Page 166
    ...changes in financial markets and economic conditions and the impact on the areas of focus for the Committee; - reviewed the Annual Report and Accounts and half-year Results and Interim Management Statements; - reviewed in detail the valuations of Barclays Capital's credit market exposures, reviewing...

  • Page 167
    ... and the Annual Report, subject to Board and Board Audit Committee approval - Group Chief Executive Officer and Group Finance Director take opportunity to challenge Executive Committee members - Receives a report on the review of Group internal controls - Reviews the financial statements prior to...

  • Page 168
    ... The Board Risk Committee terms of reference are available from the Corporate Governance section at: www.aboutbarclays.com. In addition to the Members of the Committee, all meetings are usually attended by the Group Finance Director and Group Risk Director. Barclays Internal Audit Director, Group...

  • Page 169
    ... funding for 2008 for each main business area; - reviewed, current and future, Group and business long-term incentive arrangements; and - held discussions with external advisers to the Committee on a range of issues, including obtaining market data on remuneration levels in specified markets...

  • Page 170
    ... the Company Secretary, Group General Counsel, Director, Investor Relations, Group Risk Director, Barclays Corporate Affairs Director, Group Financial Controller and Barclays Treasurer. The Committee: - considers and reviews the preliminary and half-year results, Annual Report/Annual Report on Form...

  • Page 171
    ... use this service to get immediate access to information relating to their personal shareholding and dividend history. E-view participants can also change their details and dividend mandates online and receive dividend tax vouchers electronically. 2 Governance Barclays PLC Annual Report 2008 169

  • Page 172
    ... day. 52.9% of the shares in issue were voted and all resolutions were approved. All Directors are encouraged to attend the AGM and are available to answer shareholder questions. All Directors attended the 2008 AGM, with the exception of Dr Danie Cronjé, who was retiring from the Board on that day...

  • Page 173
    Corporate governance Remuneration Report Statement from the Chairman of the Board HR and Remuneration Committee Context The disruption in the capital markets that commenced in 2007 deepened in 2008 resulting in one of the most challenging years ever for the global financial services sector. As 2008...

  • Page 174
    ..., information technology risk, pensions , corporate finance and consulting services to the Barclays Group. The Group Chief Executive, the Human Resources Director and, as necessary, members of the Executive Committee, also advise the Committee, supported by their teams. No employee of Barclays Group...

  • Page 175
    ... frameworks for the governance of remuneration in the Global Retail and Commercial Banking and Investment Banking and Investment Management businesses and for the Group as a whole. These frameworks will be reviewed in 2009. The current frameworks set out key financial ratios achieved by Barclays...

  • Page 176
    ...during year accommodation overseas when required for business purposes, use of company owned vehicle or cash equivalent and tax advice Sub-total in accordance with Companies Act 1985 Total of Salary, Annual Cash Bonus, Other Benefits and Pension Cash Allowance 174 Barclays PLC Annual Report 2008...

  • Page 177
    ... 9% of the maximum value of the number of shares that could vest at the share price at award. Table 1b: Executive Directors' annual remuneration John Varley 2008 £000 2007 £000 After consultation with the Remuneration Committee, the executive Directors intend to write to the PSP trustee...

  • Page 178
    ...are shown on pages 183 to 186. Table 3: Long-term plans and deferred share plans Number of shares under award/option 1st January 2008 (maximum) Awarded in year (maximum) Market price on award date Adjusted weighted average exercise price Number released/ exercised John Varley PSP 2005-2007 PSP...

  • Page 179
    ... dividends (net of withholding) in respect of shares under award. During 2008 Barclays highest share price was £5.06 and the lowest was £1.27. The share price at year end was £1.53. Cash released Market price on release/ exercise date Number lapsed in 2008 Adjustment due to open offer...

  • Page 180
    ... at the prescribed rate of 5% (UK)). Pensions paid from the UK final salary section of the applicable fund are reviewed annually and increase by a minimum of the increase in the retail prices index (capped at 5%), subject to the scheme rules. The transfer values have been calculated in a manner...

  • Page 181
    ...2 Governance Table 9: Contract terms Effective date of contract Notice period from the Company Potential compensation for loss of office Executive Directors John Varley 1st September 2004 12 months 12 months base salary, bonus and continuation of medical and pension benefits whilst an employee...

  • Page 182
    ... Board Independent Member Director £000 £000 Chairman £000 Deputy Chairman £000 Board Corporate Board HR Governance and and Audit Remuneration Nominations Committee Committee Committee £000 £000 £000 Board Risk Committee Benefits £000 £000 Total 2008 £000 Total 2007 £000 Full-year...

  • Page 183
    ...,577 ordinary shares in Absa Bank Limited at 31st January 2008 and 24th April 2008. Mr Hoffman participates in the UK closed defined benefit pension scheme providing a pension at the normal retirement age of 60 at an accrual rate of 1/60th of pensionable salary for each year of pensionable service...

  • Page 184
    Corporate governance Remuneration Report Table 19: Executive Share Award Scheme (ESAS) Number at beginning Awarded of year in year (maximum) (maximum) Market price on award date Market price on release date Adjusted Adjustment number at Number due to 31/08/08 lapsed open offer (maximum) First ...

  • Page 185
    ... On a change of control awards may vest, pro rated for time to the date of change of control, subject to the discretion of the trustee. - Incentive shares is not an HMRC approved plan. 2 Governance Executive Share Award Scheme (ESAS) Yes Incentive shares No Barclays PLC Annual Report 2008 183

  • Page 186
    ... normally forfeit any outstanding amounts. For categories of eligible leavers an award will vest, pro rated for time in service. - On a change of control awards may vest at the discretion of the Committee. Long Term Cash Plan (LTCP) No 184 Barclays PLC Annual Report 2008 | Find out more at www...

  • Page 187
    ...particular, BGI's key investment talent in the United States, who could expect to participate in the equity of their employer. Under the terms of the BGI EOP, options were granted at fair value to key BGI employees over shares in Barclays Global Investors UK Holdings Limited (BGI Holdings) within an...

  • Page 188
    ... by the exercise price. Any subsequent purchase of shares offered for sale by employees is treated as a purchase of an additional investment in a subsidiary entity. The cash flows relating to these capital transactions are included in the consolidated cash flow statement and disclosed, along...

  • Page 189
    ...Framework (GICAF) describes the Group's approach to internal control and details Group policies and processes. The GICAF is reviewed and approved on behalf of the Group Chief Executive by the Group Governance and Control Committee. Quarterly risk reports are made to the Board covering risks of Group...

  • Page 190
    ... specified in the US Securities and Exchange Commission's rules and forms. As of the date of the evaluation, the Group Chief Executive and Group Finance Director concluded that the design and operation of these disclosure controls and procedures were effective. The Directors confirm to the best...

  • Page 191
    ... to the Members of Barclays PLC Report of the Independent Registered Public Accounting Firm to the Board of Directors and Shareholders of Barclays PLC Consolidated accounts Barclays PLC Accounting policies Accounting developments Consolidated income statement Consolidated balance sheet Consolidated...

  • Page 192
    ... 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 relating...

  • Page 193
    ... of the Group's corporate governance procedures or its risk and control procedures. We read other information contained in the Annual Report and consider whether it is consistent with the audited financial statements. The other information comprises only the Barclays Today, Key Performance...

  • Page 194
    ...American investment banking and capital markets businesses, acquired from Lehman Brothers Holdings Inc from our audit of internal control over financial reporting. These businesses represented approximately 1.1% of group income and 0.2% of the total Group assets for the year ended 31st December 2008...

  • Page 195
    ... Group is a major global financial services provider engaged in retail and commercial banking, credit cards, investment banking, wealth management and investment management services. In addition, individual financial statements have been prepared for the holding company, Barclays PLC ('the Company...

  • Page 196
    ... and exchange rates, equity prices and other market variables. Trading positions are held at fair value and the resulting gains and losses are included in the income statement, together with interest and dividends arising from long and short positions and funding costs relating to trading activities...

  • Page 197
    ... availability of observable inputs and these may vary from product to product and change over time. Factors include for example, the depth of activity in the relevant market, the type of product, whether the product is new and not widely traded in the market place, the maturity of market modelling...

  • Page 198
    ... interest rate. The amount of the loss is recognised using an allowance account and recognised in the income statement. Where appropriate, the calculation of the present value of the estimated future cash flows of a collateralised loan and receivable asset reflect the cash flows that may result from...

  • Page 199
    ... as house price indices and retail price indices related to non-trading positions. Where derivatives are held for risk management purposes, and when transactions meet the required criteria, the Group applies fair value hedge accounting, cash flow hedge accounting, or hedging of a net investment in...

  • Page 200
    Consolidated accounts Barclays PLC Accounting policies The Group uses the following annual rates in calculating depreciation: Freehold buildings and long-leasehold property (more than 50 years to run) Leasehold property (less than 50 years to run) Costs of adaptation of freehold and leasehold ...

  • Page 201
    ... and payment protection insurance products to customers that take the form of long- and short-term insurance contracts. The Group classifies its wealth management and other products as insurance contracts where these transfer significant insurance risk, generally where the benefits payable on the...

  • Page 202
    ... Barclays PLC Accounting policies Reinsurance Short- and long-term insurance business is ceded to reinsurers under contracts to transfer part or all of one or more of the following risks: mortality, investment and expenses. All such contracts are dealt with as insurance contracts. The benefits...

  • Page 203
    ...the holding or placing of assets on behalf of individuals, trusts, retirement benefit plans and other institutions. These assets and income arising thereon are excluded from these financial statements, as they are not assets of the Group. 3 Financial statements Barclays PLC Annual Report 2008 201

  • Page 204
    ... are expected as a result of the amendment. - 'Improvements to IFRS' was issued in May 2008 and contains numerous amendments to IFRS which the IASB consider non-urgent but necessary. No changes to accounting policies are expected as a result of these amendments. 202 Barclays PLC Annual Report 2008...

  • Page 205
    ... to transfers of assets from customers received on or after 1st July 2009. This interpretation is not expected to result in any changes to the Group's accounting policies. Acquisitions 2008 On 31st March 2008, Barclays completed the acquisition of Discover Financial Services' UK credit card business...

  • Page 206
    ... on insurance contracts Total income net of insurance claims Impairment charges and other credit provisions Net income Staff costs Administration and general expenses Depreciation of property, plant and equipment Amortisation of intangible assets Operating expenses Share of post-tax results of...

  • Page 207
    ... banks Customer accounts Trading portfolio liabilities Financial liabilities designated at fair value Liabilities to customers under investment contracts Derivative financial instruments Debt securities in issue Repurchase agreements and cash collateral on securities lent Other liabilities Current...

  • Page 208
    Consolidated accounts Barclays PLC Consolidated statement of recognised income and expense For the year ended 31st December 2008 £m 2007 £m 2006 £m Available for sale reserve: - Net (losses)/gains from changes in fair value - Losses transferred to net profit due to impairment - Net gains ...

  • Page 209
    ... acquisitions Other non-cash movements Changes in operating assets and liabilities: Net increase in loans and advances to banks and customers Net increase in deposits and debt securities in issue Net (increase)/decrease in derivative financial instruments Net decrease/(increase) in trading portfolio...

  • Page 210
    ... Barclays PLC Parent company accounts Income statement For the year ended 31st December 2008 £m 2007 £m 2006 £m Dividends received from subsidiary Interest income Trading gain/(loss) Other income Management charge from subsidiary Profit before tax Tax Profit after tax The Company had no staff...

  • Page 211
    ... equivalents at end of year Cash and cash equivalents comprise: Cash and balances at central banks Net cash from operating activities includes: Dividends received Interest received The parent company's main activity is to hold the investment in its wholly-owned subsidiary, Barclays Bank PLC. 1,194...

  • Page 212
    ... the year ending 31st December 2008. 2 Net interest income 2008 £m 2007 £m 2006 £m Cash and balances with central banks Available for sale investments Loans and advances to banks Loans and advances to customers Other Interest income Deposits from banks Customer accounts Debt securities in issue...

  • Page 213
    4 Principal transactions 2008 £m 2007 £m 2006 £m Rates related business Credit related business Net trading income Net gain from disposal of available for sale assets Dividend income Net gain from financial instruments designated at fair value Other investment income Net investment income ...

  • Page 214
    ... Services relating to corporate finance transactions entered into or proposed to be entered into by or on behalf of the Company or any of its associates Other Total auditors' remuneration 12 20 - - - - 32 - - 2 - - 4 6 - - 10 - - 10 - - - 3 1 4 12 20 2 10 3 5 52 212 Barclays PLC Annual Report...

  • Page 215
    ... related to transactions and other work in connection with such transactions. 3 Financial statements 10 Tax The charge for tax is based upon the UK corporation tax rate of 28.5% (2007: 30%, 2006: 30%) and comprises: 2008 £m 2007 £m 2006 £m Current tax charge/(credit) Current year Adjustment...

  • Page 216
    ... within Absa Group Limited and Barclays Global Investors UK Holdings Limited. The weighted average number of ordinary shares excluding own shares held in employee benefit trusts and shares held for trading, is adjusted for the effects of all dilutive potential ordinary shares, totalling 188 million...

  • Page 217
    ... inherent risks and rewards in the investments are borne by the investors. In the normal course of business, the Group's financial interest in such investments is restricted to fees for investment management services. Due to the nature of these contracts, the carrying value of the assets is always...

  • Page 218
    ... Interest rate derivatives Interest rate 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 Interest rate derivatives Credit derivatives Swaps Equity and stock index...

  • Page 219
    ... in issue, fixed rate loans to banks and customers and investments in fixed rate debt securities held. Currency derivatives are primarily designated as hedges of the foreign currency risk of net investments in foreign operations. The Group's total derivative asset and liability position as reported...

  • Page 220
    Notes to the accounts For the year ended 31st December 2008 14 Derivative financial instruments (continued) The Group has hedged the following forecast cash flows, which primarily vary with interest rates. These cash flows are expected to impact the income statement in the following periods, ...

  • Page 221
    ... loans receivable. The related securities purchased or borrowed subject to an agreement with the counterparty to repurchase them are not recognised on balance sheet where the risks and rewards of ownership remain with the counterparty. 2008 £m 2007 £m Banks Customers Reverse repurchase agreements...

  • Page 222
    ... be available against which the Group can utilise benefits. The unused tax losses include amounts relating to non-UK branches of Barclays Bank PLC where the future tax benefit might be restricted to the amount in excess of the UK rate. The amount of temporary differences associated with investments...

  • Page 223
    ...31 41 (17) 3 27 The Group has investments in two associates listed on the Johannesburg Stock Exchange. The fair value of the Group's investment in Ambit Properties Limited is £51m (2007: £42m) and in Pinnacle Point Group Limited, acquired during 2008, is £60m. Acquisitions of joint ventures and...

  • Page 224
    ... purposes of the calculations, cash flows beyond that period have been extrapolated using a steady 3% growth rate. The growth rate does not exceed the long-term average growth rate for the market in which UK Retail Banking operates. Management believes that any reasonable possible change in the key...

  • Page 225
    ...assets 2008 Internally generated software £m Other software £m Core deposit intangibles £m Customer lists £m Mortgage servicing rights £m Licences and other £m Brands £m Total £m Cost At 1st January 2008 Acquisitions Additions/disposals Exchange and other adjustments At 31st December 2008...

  • Page 226
    ... 5,859 (2,456) (8) (467) (2) 95 9 (34) (2,863) 2,996 Operating leased assets represent assets such as plant and equipment leased to customers under operating leases. Certain of the Group's equipment is held on finance leases. See Note 37. 224 Barclays PLC Annual Report 2008 | Find out more at www...

  • Page 227
    ... 12 months after the balance sheet date. Accruals and deferred income included £nil (2007: £102m) in relation to deferred income from investment contracts and £nil (2007: £677m) in relation to deferred income from insurance contracts. 3 Financial statements Barclays PLC Annual Report 2008 225

  • Page 228
    ... to the accounts For the year ended 31st December 2008 26 Insurance assets and liabilities Insurance assets Reinsurance assets are £123m (2007: £157m) and relate principally to the Group's long-term business. Reinsurers' share of provisions relating to the Group's short-term business are £32m...

  • Page 229
    ...reinsurance programmes are in place to restrict the amount of cover on any single life.The reinsurance cover is spread across highly rated companies to diversify the risk of reinsurer solvency. Net insurance reserves include a margin to reflect reinsurer credit risk. Barclays PLC Annual Report 2008...

  • Page 230
    ...period of five years. i These Notes bear a fixed rate of interest until 2015. After that date, in the event that the Notes are not redeemed, the coupon will be reset to a fixed margin over a reference gilt rate for a further period of five years. 228 Barclays PLC Annual Report 2008 | Find out more...

  • Page 231
    ...interest. Any repayments require the prior notification to the FSA. All issues of undated loan capital have been made in the eurocurrency market and/or under Rule 144A, and no issues have been registered under the US Securities Act of 1933. Barclays PLC Annual Report 2008 229 3 Financial statements

  • Page 232
    ...accounts For the year ended 31st December 2008 27 Subordinated liabilities (continued) (b) 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, by Barclays Bank Spain SA (Barclays Spain), Barclays Bank...

  • Page 233
    ...its retained earnings and other capital surplus accounts. n The dividends are compounded and payable semi-annually in arrears on 30th September and 31st March of each year. The shares were issued by Absa Group Limited on 1st July 2004 and the redemption dates commence on the first business day after...

  • Page 234
    Notes to the accounts For the year ended 31st December 2008 27 Subordinated liabilities (continued) The 7.4% Subordinated Notes 2009 (the '7.4% Notes') issued by the Bank have been registered under the US Securities Act of 1933. All other issues of dated loan capital by the Bank, Barclays Spain, BBG...

  • Page 235
    ... Associated liabilities £m Loans and advances to customers Residential mortgage loans Credit card receivables Other personal lending Wholesale and corporate loans and advances Total Assets designated at fair value through profit or loss Retained interest in residential mortgage loans 12,754 1,888...

  • Page 236
    ... employees recruited before July 1997 are members of this non-contributory defined benefit scheme. Pensions are calculated by reference to service and pensionable salary and are normally subject to a deduction from State pension age. The Retirement Investment Scheme (RIS) A defined contribution plan...

  • Page 237
    ...of defined benefit obligation and fair value of plan assets for all the Group's pension schemes and post-retirement benefits (the latter are unfunded) and present the amounts recognised in the income statement including those related to post-retirement health care. Income statement charge 2008 Other...

  • Page 238
    ... valued using the projected unit credit method. Under this method, where a defined benefit scheme is closed to new members, such as in the case of the 1964 Pension Scheme, the current service cost expressed as a percentage of salary is expected to increase in the future, although this higher rate...

  • Page 239
    ... health care trend rates, assuming all other assumptions remain constant would have the following effects for 2008: 1% increase 1% decrease £m £m Effect on total of service and interest cost components Effect on post-retirement benefit obligation 1 17 (1) (14) Assets A long-term strategy has...

  • Page 240
    ... and market factors such as inflation, credit spreads and equity risk premiums. The Group actual return on plan assets was a decrease of £3,480m (2007: £731m increase.) Note a Excludes £675m (2007: £782m) representing the money purchase assets of the UKRF. 238 Barclays PLC Annual Report 2008...

  • Page 241
    ...9 2% Total UK and Overseas schemes 2008 £m 2007 £m 2006 £m 2005 £m 2004 £m Present value of obligations Fair value of plan assets Net (deficit)/surplus in the plans Experience losses on plan liabilities - amount - as percentage of plan liabilities Difference between actual and expected return...

  • Page 242
    ... agreement forms the basis of the Group's commitment that the fund has sufficient assets to make payments to members in respect of their accrued benefits as and when they fall due. This funding valution uses a discount rate that reflects a prudent expectation of long-term future investment returns...

  • Page 243
    ... to close of business 31st October 2013. The fair value (net of transaction costs) of the warrants have been included in retained earnings (see Note 32). Shares under option The Group has four schemes that give employees rights to subscribe for new shares in Barclays PLC. A summary of the key terms...

  • Page 244
    ... accounts For the year ended 31st December 2008 31 Ordinary shares, share premium, and other equity (continued) 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...

  • Page 245
    ... allocated to employees. These schemes are described in Note 45. The total number of Barclays shares held in Group employee benefit trusts at 31st December 2008 was 217.9 million (2007: 211.4 million). Dividend rights have been waived on nil (2007: nil) of these shares. The total market value of the...

  • Page 246
    Notes to the accounts For the year ended 31st December 2008 33 Minority interests 2008 £m 2007 £m At beginning of year Share of profit after tax Dividend and other payments Equity issued by subsidiaries Available for sale reserve: net (loss)/gain from changes in fair value Cash flow hedges: net ...

  • Page 247
    ... repurchase agreements and securities lending transactions. The following table summarises the nature and carrying amount of the assets pledged as security against these liabilities: 2008 £m 2007 £m Trading portfolio assets Loans and advances Available for sale investments Other Assets pledged...

  • Page 248
    ... of sale; a prohibition on the sale of single premium PPI; mandatory personal PPI quotes to customers; annual statements for all regular premium policies, including the back book (for example credit card and mortgage protection policies); measures to ensure that improved information is available to...

  • Page 249
    ... on the Group balance sheet and income statement is as follows: (a) As Lessor Finance lease receivables The Group specialises in asset-based lending and works with a broad range of international technology, industrial equipment and commercial companies to provide customised finance programmes to...

  • Page 250
    ... year ended 31st December 2008 37 Leasing (continued) The carrying amount of assets held under finance leases at the balance sheet date was: 2008 £m 2007 £m Cost Accumulated depreciation Net book value 87 (67) 20 94 (24) 70 Operating lease commitments The Group leases various offices, branches...

  • Page 251
    ... American businesses after the acquisition, details of the purchase price and the gain on acquisition arising were as follows: Fair values £m Assets Cash and balances at central banks Trading portfolio assets Loans and advances to customers Available-for-sale financial investments Other assets...

  • Page 252
    ...acquisition results of Lehman Brothers that relates to the business acquired by the Group. (b) Macquarie Bank Limited Italian residential mortgage businesses and Goldfish credit card UK businesses On 6th November 2008, the Group purchased the Italian residential mortgage businesses of Macquarie Bank...

  • Page 253
    ... Fair value adjustments £m Fair values £m Assets Cash and balances at central banks Trading portfolio assets Loans and advances to customers Other assets Intangible assets Property, plant and equipment Total assets Liabilities Deposits from banks Customer accounts Debt securities in issue Other...

  • Page 254
    ... Corporation Barclays Global Investors, National Association Barclays Group USA Inc. Barclays Bank of Zimbabwe Limited Banking Banking Banking, holding company Loans and advances including leases to customers Holding company Investment management Banking, securities industries and trust services...

  • Page 255
    ... with our accounting policies, for the purpose of inclusion in the consolidated financial statements of Barclays PLC, entities with different reporting dates are made up until 31st December. Entities may have restrictions placed on their ability to transfer funds, including payment of dividends and...

  • Page 256
    ... current accounts to these entities as well as other services. Group companies, principally within Barclays Global Investors, also provide investment management and custodian services to the Group pension schemes. The Group also provides banking services for unit trusts and investment funds managed...

  • Page 257
    ... year ended and as at 31st December 2007 a Entities under common directorships £m Pension funds unit trusts and investment funds £m Associates £m Joint ventures £m Total £m Income statement: Interest received Interest paid Fees received for services rendered (including investment management...

  • Page 258
    ... of Barclays PLC and the Officers of the Group, certain direct reports of the Group Chief Executive and the heads of major business units. In the ordinary course of business, the Bank makes loans to companies where a Director or other member of Key Management Personnel (or any connected person) is...

  • Page 259
    ... as defined in the Companies Act 2006, and for Managers, within the meaning of the Financial Services and Markets Act 2000, of Barclays Bank PLC were: Number of Directors or Managers Number of connected persons 3 Financial statements Amount £m Directors Loans Quasi-loans and credit card accounts...

  • Page 260
    ... 2002. It is an HM Revenue & Customs approved all-employee share plan. The plan is open to all eligible UK employees, including executive Directors. Under the plan, participants are able to purchase up to £1,500 worth of Barclays PLC ordinary shares per tax year, which, if kept in trust for five...

  • Page 261
    ... Plan was extended to key employees of BGI. The exercise price of the options was determined by the Remuneration Committee of Barclays PLC based on the fair value of BGI as determined by an independent appraiser. The options were granted over shares in Barclays Global Investors UK Holdings Limited...

  • Page 262
    ... holding period of options between grant and exercise dates. The risk-free rate on the AGLSIT scheme represents the yield, recorded on date of option grant, on South African government zero coupon bond of a term commensurate to the expected life of the option. 260 Barclays PLC Annual Report 2008...

  • Page 263
    ... of year/acquisition date Granted in the year Exercised/released in the year Less: forfeited in the year Less: expired in the year Outstanding at end of year Of which exercisable: Notes a Options/award granted over Barclays PLC shares. b Options/award granted over Absa Group Limited shares. c Nil...

  • Page 264
    ... 9.52 n/a 7.31 7.26 7.24 Notes a Options/award granted over Barclays PLC shares. b Options/award granted over Barclays Global Investors UK Holdings Limited shares. c Options/award granted over Absa Group Limited shares. d Nil cost award. 262 Barclays PLC Annual Report 2008 | Find out more at www...

  • Page 265
    ... made for any other capital raising during 2008. Notes a Options/award granted over Barclays PLC shares. b Options/award granted over Barclays Global Investors UK Holdings Limited shares. c Options/award granted over Absa Group Limited shares. d Nil cost award. Barclays PLC Annual Report 2008 263

  • Page 266
    ... to the accounts For the year ended 31st December 2008 46 Financial risks Financial risk management Barclays PLC is a major global financial services provider engaged in retail and commercial banking, credit cards, investment banking, wealth management and investment management services. Financial...

  • Page 267
    ... securities Other financial assets Total financial assets designated at fair value held on own account Derivative financial instruments Loans and advances to banks Loans and advances to customers: Residential mortgage loans Credit card receivables Other personal lending Wholesale and corporate loans...

  • Page 268
    ... securities Other financial assets Total financial assets designated at fair value held on own account Derivative financial instruments Loans and advances to banks Loans and advances to customers: Residential mortgage loans Credit card receivables Other personal lending Wholesale and corporate loans...

  • Page 269
    ... banks Trading portfolio Financial assets designated at fair value held on own account Derivative financial instruments Loans and advances to banks Loans and advances to customers Available for sale financial investments Reverse repurchase agreements Other assets Total on-balance sheet Off-balance...

  • Page 270
    ... banks Trading portfolio Financial assets designated at fair value held on own account Derivative financial instruments Loans and advances to banks Loans and advances to customers Available for sale financial investments Reverse repurchase agreements Other assets Total on-balance sheet Off-balance...

  • Page 271
    ... banks Trading portfolio Financial assets designated at fair value held on own account Derivative financial instruments Loans and advances to banks Loans and advances to customers Available for sale financial investments Reverse repurchase agreements Other assets Total on-balance sheet Off-balance...

  • Page 272
    ... fair value. For the purposes of historical and business unit comparison, loan loss rates are defined as total credit impairment charge (excluding available for sale assets and reverse repurchase agreements) divided by gross loans and advances to customers and banks (at amortised cost). Credit risk...

  • Page 273
    ... % Trading portfolio: Traded loans Financial assets designated at fair value held on own account: Loans and advances Other financial assets Loans and advances to banks Loans and advances to customers: Residential mortgage loans Credit card receivables Other personal lending Wholesale and corporate...

  • Page 274
    ...£m Trading portfolio: Traded loans Financial assets designated at fair value held on own account: Loans and advances Other financial assets Loans and advances to banks Loans and advances to customers: Residential mortgage loans Credit card receivables Other personal lending Wholesale and corporate...

  • Page 275
    ... which Credit Risk Loans £m Total £m Financial assets designated at fair value held on own account: Loans and advances Loans and advances to banks Loans and advances to customers: Residential mortgage loans Credit card receivables Other personal lending Wholesale and corporate loans and advances...

  • Page 276
    ...income statement £m Balance at 31st December £m Loans and advances to banks Loans and advances to customers: Residential mortgage loans Credit card receivables Other personal lending Wholesale and corporate loans and advances Finance lease receivables Total loans and advances to customers 4 124...

  • Page 277
    ... are mainly corporate loans, residential mortgage loans and finance lease receivables. Credit card receivables and other personal lending are generally unsecured (although in some instances a charge over the borrowers property of other assets may be sought). Corporate loans Security is...

  • Page 278
    ... bills Debt securities Total trading portfolio Financial assets designated at fair value held on own account: Debt securities Available for sale financial investments: Treasury and other eligible bills Debt securities Total available for sale financial investments Total debt securities % 4,491 141...

  • Page 279
    ... is limited credit risk in relation to items in the course of collection through the clearing system from other banks. Other financial assets Other financial assets comprise £3,096m (2007: £3,966m) of other assets and £609m (2007: £548m) of assets held at fair value. Off-balance sheet The Group...

  • Page 280
    ... Barclays market risk exposures against agreed limits. This daily report is sent to the Group Risk Director, the Market Risk Director, the Group Finance Director and the appropriate Business Risk Directors. The head of each business, assisted by the business risk management team, is accountable...

  • Page 281
    ...are calculated at least fortnightly and the results are included in the Traded Positions Risk Review meeting information pack. Analysis of traded market risk exposures Barclays Capital market risk exposure, as measured by average total DVaR (95%), increased by 64% to £53.4m in 2008. This was mainly...

  • Page 282
    ... Global Retail and Commercial Banking . Risk measurement and control The techniques used to measure and control non-traded interest rate risk include Annual Earnings at Risk, DVaR and Stress Testing. Book limits such as foreign exchange and interest position limits are also in place. Annual Earnings...

  • Page 283
    ... on banking assets and liabilities, denominated in currencies other than the functional currency of the transacting entity. The Group's risk management policies prevent the holding of significant open positions in foreign currencies outside the trading portfolio managed by Barclays Capital which...

  • Page 284
    .... Such accounts form a stable funding base for the Group's operations and liquidity needs. The Group policy is to fund the balance sheet assets of the Retail and Commercial Bank together with Wealth and Head office functions on a global basis with customer deposits and capital without recourse...

  • Page 285
    .... These facilities have improved access to term funding, and helped moderate money market rates. Global Retail and Commercial Banking The sum of liabilities in Global Retail and Commercial Banking, Barclays Wealth and Head office functions exceeds assets in those businesses. As a result they have no...

  • Page 286
    ...designated for risk management Loans and advances to banks Loans and advances to customers Available for sale financial investments Reverse repurchase agreements and cash collateral on securities borrowed Total financial assets Other assets Total assets Liabilities Deposits from other banks Items in...

  • Page 287
    ...designated for risk management Loans and advances to banks Loans and advances to customers Available for sale financial investments Reverse repurchase agreements and cash collateral on securities borrowed Total financial assets Other assets Total assets Liabilities Deposits from other banks Items in...

  • Page 288
    ...collection due to other banks Customer accounts Trading portfolio liabilities Financial liabilities designated at fair value: - held on own account Derivative financial instruments: - held for trading - designated for risk management Debt securities in issue Repurchase agreements and cash collateral...

  • Page 289
    ... assets designated at fair value Derivative financial instruments Loans and advances to banks Loans and advances to customers - Residential mortgage loans - Credit card receivables - Other personal lending - Wholesale and corporate loans and advances - Finance lease receivables Available for sale...

  • Page 290
    ... accounts and other deposits and short term debt securities. Fair values of other debt securities in issue are based on quoted prices where available, or where these are unavailable, are estimated using a valuation model. Fair values for dated and undated convertible and non-convertible loan capital...

  • Page 291
    ... asset portfolio are generally valued using similar cash flow models. The fair value of home equity loan bonds are determined using models which use scenario analysis with significant inputs including age, rating, internal grade, and index prices. 3 Financial statements Barclays PLC Annual Report...

  • Page 292
    ... dividend rates, volatility of underlying interest rates, equity prices or foreign exchange rates and, in some cases, correlation between these inputs. These inputs are determined with reference to quoted prices, recently executed trades, independent market quotes and consensus data. New, long dated...

  • Page 293
    ... obligations that reference asset backed securities and loans, primarily by changing the spreads to discount rates by +/-20%. Private equity The sensitivity amounts are calculated by stressing the key valuation inputs to each individual valuation - generally either price:earnings ratios or EBITDA...

  • Page 294
    ... those trading assets, comprising portfolios of bank-issued fixed rate notes and mortgage and other asset backed securities, for which it had a clear change of intent to hold for the foreseeable future or until maturity rather than to trade in the short term. At the time of the transfer, the Group...

  • Page 295
    ... a variety of products including retail mortgages, current and deposit accounts, commercial lending, unsecured lending, credit cards, investments, and insurance serving the needs of Barclays retail, mass affluent, and corporate customers. 3 Financial statements Barclays PLC Annual Report 2008 293

  • Page 296
    ...banking services, including current and deposit accounts, mortgages, instalment finance, credit cards, bancassurance products and wealth management services. It also offers customised business solutions for commercial and large corporate customers. Barclays Capital Barclays Capital is the investment...

  • Page 297
    53 Segmental reporting (continued) As at 31st December 2008 UK Barclays Retail Commercial Banking Bank Barclaycard £m £m £m GRCB - Western Europe £m GRCB - Emerging Markets £m GRCB - Absa £m Barclays Capital £m Barclays Global Investors £m Head office functions Barclays and other Wealth ...

  • Page 298
    ... year ended 31st December 2008 53 Segmental reporting (continued) As at 31st December 2007 UK Barclays Retail Commercial Banking Bank Barclaycard £m £m £m GRCB - Western Europe £m GRCB - Emerging Markets £m GRCB - Absa £m Barclays Capital £m Barclays Global Investors £m Head office functions...

  • Page 299
    ... by product or service is presented below: As at 31st December 2008 £m 2007 £m 2006 £m Net interest income Cash and balances with central banks Available for sale investments Loans and advances to banks Loans and advances to customers Other Interest income Deposits from banks Customer accounts...

  • Page 300
    Notes to the accounts For the year ended 31st December 2008 53 Segmental reporting (continued) Principal transactions Rates and Credit related business consists of profits and losses arising both on the purchase and sale of trading instruments and from the revaluation to market value together with ...

  • Page 301
    Barclays Bank PLC data Consolidated income statement Consolidated balance sheet Consolidated statement of recognised income and expense Consolidated cash flow statement Notes to the accounts Financial data 300 301 302 303 304 313 3 Financial statements Barclays PLC Annual Report 2008 299

  • Page 302
    ...PLC data Consolidated income statement For the year ended 31st December Notes 2008 £m 2007 £m 2006 £m Continuing operations Interest income Interest expense Net interest income Fee and commission income Fee and commission expense Net fee and commission income Net trading income Net investment...

  • Page 303
    ... banks Customer accounts Trading portfolio liabilities Financial liabilities designated at fair value Liabilities to customers under investment contracts Derivative financial instruments Debt securities in issue Repurchase agreements and cash collateral on securities lent Other liabilities Current...

  • Page 304
    Barclays Bank PLC data Consolidated statement of recognised income and expense For the year ended 31st December 2008 £m 2007 £m 2006 £m Available for sale reserve: - Net (losses)/gains from changes in fair value - Losses transferred to net profit due to impairment - Net gains transferred to ...

  • Page 305
    ... acquisitions Other non-cash movements Changes in operating assets and liabilities: Net increase in loans and advances to banks and customers Net increase in deposits and debt securities in issue Net (increase)/decrease in derivative financial instruments Net decrease/(increase) in trading portfolio...

  • Page 306
    ... transactions 2008 £m 2007 £m 2006 £m Rates related business Credit related business Net trading income Net gain from disposal of available for sale assets Dividend income Net gain from financial instruments designated at fair value Other investment income Net investment income Principal...

  • Page 307
    ... services £m Other services £m Total £m Audit of the Group's annual accounts Other services: Fees payable for the audit of the Bank's associates pursuant to legislation Other services supplied pursuant to such legislation Other services relating to taxation Services relating to corporate finance...

  • Page 308
    ... Bank PLC Group accounts are not separately identifiable from Barclays PLC, therefore there is no difference in the amounts reported in both Annual Reports. In addition, other services include Section 404 advisory, reporting accountant work for capital raising, securitisations and services relating...

  • Page 309
    ... Equity securities Available for sale financial investments 58,831 4,003 2,182 65,016 38,673 2,723 1,860 43,256 3 Financial statements Movement in available for sale financial investments 2008 £m 2007 £m At beginning of year Exchange and other adjustments Acquisitions and transfers Disposals...

  • Page 310
    ... 12 months after the balance sheet date. Accruals and deferred income included £nil (2007: £102m) in relation to deferred income from investment contracts and £nil (2007: £677m) in relation to deferred income from insurance contracts for the Group. k Called up share capital Ordinary Shares The...

  • Page 311
    ...of distributable profits of Barclays Bank PLC, semi-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...

  • Page 312
    ... dividend restriction will mean that neither Barclays Bank PLC nor Barclays PLC may (a) declare or pay a dividend (other than payment by Barclays PLC of a final dividend declared by its shareholders prior to the relevant dividend payment date, or a dividend paid by Barclays Bank PLC to Barclays PLC...

  • Page 313
    ... case, at the option of the Bank, in whole on any interest payment date. The Bank is not obliged to make a payment of interest on its capital notes if, in the preceding six months, a dividend has not been declared or paid on any class of shares of Barclays PLC. Barclays PLC Annual Report 2008 311

  • Page 314
    ...(2007: £31m) between Barclays PLC and Barclays Bank PLC is included in Head office functions and other operations. - the difference in total assets of £49m (2007: £222m) is represented by holdings of Barclays PLC shares held by the businesses. 312 Barclays PLC Annual Report 2008 | Find out more...

  • Page 315
    ... 13,880 (7,047) 8,543 (8,536) (1,093) 56 45 - 4,589 3,263 £m £m £m £m £m Total shareholders' equity Subordinated liabilities Deposits from banks, customer accounts and debt securities in issue Loans and advances to banks and customers Total assets 43,574 29,842 603,869 509,522 2,053,029...

  • Page 316
    ...Barclays Bank PLC 2008 2007 2006 2005 2004 a (in £m except for ratios) Ratio of earnings to fixed charges IFRS/UK GAAP: Fixed charges Interest expense Rental expense Total fixed charges Earnings Income before taxes and minority interests Less: Unremitted pre-tax income of associated companies...

  • Page 317
    ... Barclays Local Business Manager, Susan Cadd, when a permanent solution was negotiated and secured. This is just one of many examples of Barclays staying close to our small business customers in the difficult economic environment. "I have never known anyone spend their own time helping a business...

  • Page 318
    ... trading market for Barclays PLC ordinary shares is the London Stock Exchange. Ordinary share listings were also obtained on the Tokyo Stock Exchange with effect from 1st August 1986 and the New York Stock Exchange (NYSE) with effect from 9th September 1986. During the year, the Company de-listed...

  • Page 319
    ... to future performance. Shareholdings at 31st December 2008 a Number of shareholders Percentage of holders Shares held (millions) Percentage of capital Classification of shareholders Personal holders Banks and nominees Other companies Insurance companies Pensions funds Totals Shareholding range...

  • Page 320
    ...appointed holds office until the next AGM, when he/she may offer himself/herself for re-election. He/she is not taken into account in determining the number of Directors retiring by rotation. (vi) The Board may appoint any Director to any executive position or employment in the Company on such terms...

  • Page 321
    ... it currently does not), with the approval of an ordinary resolution of the Company, offer shareholders the right to choose to receive an allotment of additional fully paid Ordinary Shares instead of cash in respect of all or part of any dividend. (ii) Voting Every member who is present in person or...

  • Page 322
    ... from time to time) by current UK laws which relate only to non-residents of the UK and which limit the rights of such nonresidents to hold or (when entitled to do so) vote the Company's Ordinary Shares. Notices A document or information may be sent by the Company in hard copy form, electronic form...

  • Page 323
    ... Taxation of dividends In accordance with UK law, Barclays PLC and the Bank pay dividends on ordinary shares and preference shares without any deduction or withholding tax in respect of any taxes imposed by the UK government or any UK taxing authority. If the shareholder is a UK resident individual...

  • Page 324
    ... reference rooms and their copy charges. Filings with the US Securities and Exchange Commission are also available to the public from commercial document retrieval services, and from the website maintained by the US Securities and Exchange Commission at www.sec.gov. 322 Barclays PLC Annual Report...

  • Page 325
    ... in general, may write to the Director, Investor Relations at our head office as follows: Director, Investor Relations Barclays PLC 1 Churchill Place London E14 5HP or, in the United States of America, The Corporate Communications Department Barclays Bank PLC 200 Park Avenue New York, NY 10166, USA...

  • Page 326
    ...Directors' report Dividends Earnings per share Economic capital Economic profit Emerging Markets business analysis business description Employees equality and diversity involvement Events after the balance sheet date Executive management structure Fair value of financial instruments Financial assets...

  • Page 327
    ... of business by geographical segments Share-based payments Shareholder information Short-term borrowings Statement of recognised income and expense consolidated consolidated (Barclays Bank) Subordinated liabilities Taxation notes to the accounts shareholder information Total assets Trading portfolio...

  • Page 328
    ...Absa' refers to the results for Absa Group Limited as consolidated into the results of Barclays PLC; translated into Sterling with adjustments for amortisation of intangible assets, certain head office adjustments, transfer pricing and minority interests. 'Global Retail and Commercial Banking - Absa...

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    ... Cover: Produced using 50% recycled fibre and pulp bleached using Elemental Chlorine Free (ECF) process. Report Text: Produced from 100% post consumer waste. Both mills are certified to the ISO 14001 environmental management standard. © Barclays Bank PLC 2009 Registered office: 1 Churchill Place...