Barclays 2008 Annual Report Download - page 33

1
Business review
Barclays PLC Annual Report 2008 31
Financial review
Capital management
Capital resources
Tier 1 capital increased by £10.5bn during the year, driven by issues of
ordinary shares (£5.2bn), other capital issuances (£4.3bn), retained
profits (£2.0bn) and exchange rate movements (£3.2bn). These
movements were partially offset by an increase in intangible assets
(£1.3bn), innovative Tier 1 capital in excess of regulatory limits being
reclassified as Tier 2 capital (£1.3bn) and the reversal of gains on own
credit, net of tax (£1.2bn).
Tier 2 capital increased by £8.5bn due to issuance of loan capital
(£3.6bn) net of redemptions (£1.1bn), inclusion of innovative capital in
excess of the Tier 1 limits (£1.3bn), increases in collective impairment
(£1.2bn) and exchange rate movements (£3.9bn).
The Mandatorily Convertible Notes (MCNs) issued during the year
(£4.1bn) will qualify as equity capital from the date of their conversion,
on or before 30th June 2009.
All capital issuance referred to above is stated gross of issue costs.
Basel I transitional floor
Barclays commenced calculating capital requirements under the Basel II
capital framework from 1st January 2008. The Group manages its
businesses and reports capital requirements on a Basel II basis. During the
transition period for the adoption of Basel II, banks’ capital requirements
may not fall below a transitional floor. In 2008 this floor was 90% of
adjusted Basel I capital requirements. As at 31st December 2008, the
Group had additional capital requirements under the transitional floor
rules of £1.5bn. The Group’s total capital resources of £58.7bn exceeded
its capital requirements taking into account the transitional floor by
£22.5bn. On 1st January 2009, the transitional floor reduced to 80% of
adjusted Basel I capital requirements and there were no additional capital
requirements resulting from its application.
Capital ratios
Basel II Basel II Basel I Basel I
2008 2007 2007 2006
Barclays Barclays Barclays Barclays Barclays Barclays Barclays Barclays
PLC Bank PLC PLC Bank PLC PLC Bank PLC PLC Bank PLC
Group Group Group Group Group Group Group Group
Capital ratios %%%%%%%%
Tier 1 ratio 8.6 8.6 7.6 7.3 7.8 7.5 7.7 7.5
Risk asset ratio 13.6 13.5 11.2 11.0 12.1 11.8 11.7 11.5
Risk weighted assets £m £m £m £m £m £m £m £m
Credit risk 266,912 266,912 244,474 244,469 265,264 265,259 233,630 233,630
Counterparty risk 70,902 70,902 41,203 41,203 51,947 51,947 33,912 33,912
Market risk 65,372 65,372 39,812 39,812 36,265 36,265 30,291 30,291
Operational risk 30,116 30,116 28,389 28,389 n/a n/a n/a n/a
Total risk weighted assets 433,302 433,302 353,878 353,873 353,476 353,471 297,833 297,833
Total net capital resources
Capital resources (as defined for regulatory purposes)
£m £m £m £m £m £m £m £m
Tier 1
Called up share capital 2,093 2,338 1,651 2,382 1,651 2,382 1,634 2,363
Eligible reserves 31,156 36,639 22,939 26,028 22,526 25,615 19,608 21,700
Minority interests 13,915 8,038 10,551 5,857 10,551 5,857 7,899 4,528
Tier One Notes 1,086 1,086 899 899 899 899 909 909
Less: Intangible assets (9,964) (9,964) (8,191) (8,191) (8,191) (8,191) (7,045) (7,045)
Less: Deductions from Tier 1 capital (1,036) (1,036) (1,106) (1,106) (28) (28) ––
Total qualifying Tier 1 capital 37,250 37,101 26,743 25,869 27,408 26,534 23,005 22,455
Tier 2
Revaluation reserves 26 26 26 26 26 26 25 25
Available for sale equity 122 122 295 295 295 295 221 221
Collectively assessed impairment allowances 1,654 1,654 440 440 2,619 2,619 2,556 2,556
Minority interests 607 607 442 442 442 442 451 451
Qualifying subordinated liabilities
Undated loan capital 6,745 6,768 3,191 3,191 3,191 3,191 3,180 3,180
Dated loan capital 14,215 14,215 10,578 10,578 10,578 10,578 7,603 7,603
Less: Deductions from Tier 2 capital (1,036) (1,036) (1,106) (1,106) (28) (28) ––
Total qualifying Tier 2 capital 22,333 22,356 13,866 13,866 17,123 17,123 14,036 14,036
Less: Regulatory deductions
Investments not consolidated
for supervisory purposes (403) (403) (633) (633) (633) (633) (982) (982)
Other deductions (453) (561) (193) (193) (1,256) (1,256) (1,348) (1,348)
Total deductions (856) (964) (826) (826) (1,889) (1,889) (2,330) (2,330)
Total net capital resources 58,727 58,493 39,783 38,909 42,642 41,768 34,711 34,161