Barclays 2008 Annual Report Download - page 83

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Business review
Barclays PLC Annual Report 2008 81
Barclays has structured the responsibilities of credit risk management
so that decisions are taken as close as possible to the business, whilst
ensuring robust review and challenge of performance, risk infrastructure
and strategic plans.
The credit risk management teams in each business are accountable
to the Business Risk Directors in those businesses who, in turn, report to
the heads of their businesses and also to the Risk Director. These credit
risk management teams assist Group Risk in the formulation of Group Risk
policy and its implementation across the businesses. Examples include:
– maximum exposure guidelines to limit the exposures to an individual
customer or counterparty
– country risk policies to specify risk appetite by country and avoid
excessive concentration of credit risk in individual countries
– policies to limit lending to certain industrial 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
Committee, which approves major credit decisions.
The principal Committees that review credit risk management,
formulate overall Group credit policy and resolve all significant credit policy
issues are the Group Wholesale Credit Risk Management Committee, the
Group Retail Credit Risk Management Committee, the Risk Oversight
Committee and the Board Risk Committee. The Board Audit Committee
also reviews the impairment allowance as part of financial reporting.
The Group Credit Risk Impairment Committee (GCRIC), on a semi-
annual basis, obtains assurance on behalf of the Group that all businesses
are recognising impairment in their portfolios accurately and promptly in
their recommendations and in accordance with policy, accounting
standards and established governance.
GCRIC exercises the authority of the Group Risk Director, as delegated
by the Group Chief Executive, and is chaired by Barclays Credit Risk
Director. GCRIC reviews the movements to impairment in the businesses,
including those already agreed at Credit Committee, as well as Potential
Credit Risk Loans, loan loss rates, asset quality metrics and Risk Tendency.
These committees are supported by a number of Group policies
including:
– Group Retail and Wholesale Impairment and Provisioning Policies
– Group Retail and Wholesale Expected Loss Policies
– Group Model Policy
GCRIC makes twice-yearly recommendations to the Board Audit
Committee on the adequacy of Group impairment allowances.
Impairment allowances are reviewed relative to the risk in the portfolio,
business and economic trends, current policies and methodologies, and
our position against peer banks.
GCRIC has delegated the detailed review of loan impairment in the
businesses to the Retail and Wholesale Credit Risk Management Committees.
Risk management
Credit risk management
Organisation and structure