Barclays 2008 Annual Report Download - page 131

1
Business review
Barclays PLC Annual Report 2008 129
Risk management
Capital risk management
Barclays Commercial Bank economic capital allocation increased
£300m to £3,500m (2007: £3,200m), primarily as a consequence of asset
growth with some mitigation from portfolio management activity.
Barclaycard economic capital allocation increased £650m to £2,700m
(2007: £2,050m), driven by acquisitions, the redemption of securitisation
deals and exposure growth, predominantly in the US.
GRCB – Western Europe economic capital allocation increased £650m
to £1,900m (2007: £1,250m), primarily reflecting the weakening of
Sterling and underlying lending growth.
GRCB – Emerging Markets economic capital allocation increased
£650m to £1,100m (2007: £450m), reflecting broad-based retail and
wholesale asset growth across the business, especially in India, UAE and
the new markets of Russia and Pakistan.
Average economic capital allocation by business £md
Average economic capital allocation by risk type £m
Notes
aAverages for the period will not correspond to period-end balances disclosed in the balance
sheet. Numbers are rounded to the nearest £50m for presentational purposes only.
bAveragegoodwillrelatestopurchasedgoodwillandintangibleassetsfrombusinessacquisitions.
c
Availablefundsforeconomiccapitalasat31stDecember2008stoodat£40,150m(2007:£29,200m).
0708 07 08 07 08 07 08 07 08 07 08 07 08
Fixed asset
risk
Other
risksg
Operational
risk
Market
risk
Wholesale
credit riskf
2,350
Business
risk
900
1,000
1,700
8,350
1,900
Retail
credit risk
7,250
1,250
800
600
1,250
6,050
1,800
5,650
The average supply of capital to support the economic capital frameworka2008 2007
£m £m
Shareholders’ equity excluding minority interests less goodwillb17,650 14,150
Retirement benefits liability 1,050 1,150
Cash flow hedging reserve 100 250
Available for sale reserve 400 (150)
Gains on own credit (1,250) (100)
Preference shares 5,500 3,700
Available funds for economic capital excluding goodwill 23,450 19,000
Average historic goodwill and intangible assetsb9,450 8,400
Available funds for economic capital including goodwillc32,900 27,400
GRCB –
Western
Europe
07 08
400
200
GRCB –
Absa
07 08
500
500
Barclays
Global
Investors
07 08
Barclays
Wealth
Head office
functions
and other
operationse
07 08
50
1,850
UK Retail
Banking
07 08
3,950
3,400
Barclaycard
07 08
8,250
5,200
Barclays
Commercial
Bank
07 08
3,500
3,200
0708
1,900
1,250
GRCB –
Emerging
Markets
Barclays
Capital
2,050
2,700
07 08
1,100
900
07 08
1,100
450
dAverage EC charts exclude the EC calculated for pension risk (average pension risk for
2008 is £650m compared with £500m in 2007).
eIncludes Transition Businesses and capital for central function risks.
fIncludes credit risk loans.
gIncludes investments in associates, private equity risk, insurance risk and residual value.
GRCB – Absa economic capital allocation increased £200m to
£1,100m (2007: £900m), reflecting balance sheet growth.
Barclays Capital economic capital allocation increased £3,050m to
£8,250m (2007: £5,200m). This was driven by growth in the investment
portfolio, deterioration in credit quality, exposure to drawn leveraged
finance underwriting positions and an increase in market volatility.
Barclays Global Investors economic capital allocation increased
£200m to £400m (2007: £200m). This was primarily driven by an
increase in the support for selected cash funds and some increase in
proprietary investments.
Barclays Wealth economic capital allocation in 2008 remained
unchanged at £500m, despite strong growth on the balance sheet.
This was due to the impact of greater geographical diversification and
increased levels of collateralisation.