Barclays 2009 Annual Report Download

Download and view the complete annual report

Please find the complete 2009 Barclays annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 348

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164
  • 165
  • 166
  • 167
  • 168
  • 169
  • 170
  • 171
  • 172
  • 173
  • 174
  • 175
  • 176
  • 177
  • 178
  • 179
  • 180
  • 181
  • 182
  • 183
  • 184
  • 185
  • 186
  • 187
  • 188
  • 189
  • 190
  • 191
  • 192
  • 193
  • 194
  • 195
  • 196
  • 197
  • 198
  • 199
  • 200
  • 201
  • 202
  • 203
  • 204
  • 205
  • 206
  • 207
  • 208
  • 209
  • 210
  • 211
  • 212
  • 213
  • 214
  • 215
  • 216
  • 217
  • 218
  • 219
  • 220
  • 221
  • 222
  • 223
  • 224
  • 225
  • 226
  • 227
  • 228
  • 229
  • 230
  • 231
  • 232
  • 233
  • 234
  • 235
  • 236
  • 237
  • 238
  • 239
  • 240
  • 241
  • 242
  • 243
  • 244
  • 245
  • 246
  • 247
  • 248
  • 249
  • 250
  • 251
  • 252
  • 253
  • 254
  • 255
  • 256
  • 257
  • 258
  • 259
  • 260
  • 261
  • 262
  • 263
  • 264
  • 265
  • 266
  • 267
  • 268
  • 269
  • 270
  • 271
  • 272
  • 273
  • 274
  • 275
  • 276
  • 277
  • 278
  • 279
  • 280
  • 281
  • 282
  • 283
  • 284
  • 285
  • 286
  • 287
  • 288
  • 289
  • 290
  • 291
  • 292
  • 293
  • 294
  • 295
  • 296
  • 297
  • 298
  • 299
  • 300
  • 301
  • 302
  • 303
  • 304
  • 305
  • 306
  • 307
  • 308
  • 309
  • 310
  • 311
  • 312
  • 313
  • 314
  • 315
  • 316
  • 317
  • 318
  • 319
  • 320
  • 321
  • 322
  • 323
  • 324
  • 325
  • 326
  • 327
  • 328
  • 329
  • 330
  • 331
  • 332
  • 333
  • 334
  • 335
  • 336
  • 337
  • 338
  • 339
  • 340
  • 341
  • 342
  • 343
  • 344
  • 345
  • 346
  • 347
  • 348

Barclays PLC Annual Report 2009
barclays.com/annualreport09

Table of contents

  • Page 1
    Barclays PLC Annual Report 2009 barclays.com/annualreport09

  • Page 2
    ... not limited to, UK domestic and global economic and business conditions, the effects of continued volatility in credit markets, market related risks such as changes in interest rates and exchange rates, effects of changes in valuation of credit market exposures, changes in valuation of issued notes...

  • Page 3
    About Barclays 02 03 04 06 10 About Barclays Our performance in brief Barclays at a glance Group Chairman's statement Leadership and governance

  • Page 4
    02 Barclays PLC Annual Report 2009 www.barclays.com/annualreport09 About Barclays Listed in London and New York, Barclays is a major global financial services provider engaged in retail banking, credit cards, corporate and investment banking, and wealth management with an extensive international...

  • Page 5
    www.barclays.com/annualreport09 Barclays PLC Annual Report 2009 03 Our performance in brief - Group profit before tax was £11,642m, 92% up on 2008, including the £6,331m gain on sale from the disposal of Barclays Global Investors (BGI) - Global Retail and Commercial Banking generated good ...

  • Page 6
    ... support customers and clients. The 2009 Annual Report and Accounts reflects the Group's reporting structure in place during 2009. Global Retail and Commercial Banking (GRCB) UK Retail Banking UK Retail Banking provides a wide range of products, investment and banking services to small businesses...

  • Page 7
    ...of banking products and services, including current accounts, savings products, bancassurance, mortgages, instalment finance as well as customised business solutions for commercial and large corporate customers. Barclays Capital Barclays Capital is a global investment bank, which offers clients the...

  • Page 8
    06 Barclays PLC Annual Report 2009 www.barclays.com/annualreport09 Group Chairman's statement Marcus Agius Barclays recognises the vital economic and social purpose that banks play, and we are committed to meeting our responsibilities to stakeholders and society in general."

  • Page 9
    ... new regulation will be effective, but it must not be so heavy-handed as to restrict the banking industry's ability to support economic growth or to limit its ability to attract new capital in the future. Barclays own focus in 2009 was to maintain strategic momentum despite the difficult environment...

  • Page 10
    ...finance the increase in global trade that has led to such an increase in living standards in both developed and developing economies. At Barclays, we are committed to meeting our responsibilities to stakeholders. These include customers and clients, shareholders, employees, government and regulators...

  • Page 11
    ... customers and clients, employees, shareholders, regulators, politicians and society in general - Barclays focus in 2009 was to maintain strategic momentum despite the difficult environment Board changes There have been a number of Board changes during the year with five Directors leaving the Board...

  • Page 12
    ...: Member of Board Risk Committee since January 2010. Sir Andrew is Chairman of the National Audit Office, having held a number of public roles in the financial services sector, including Managing Director, Financial Management, Reporting and Audit and Head of the Government Accountancy Service at...

  • Page 13
    ... and Capital Markets. He was Global Relationship Partner for Barclays for the 1999-2004 financial years and subsequently held similar roles for other global financial services organisations. Term of office: Chris was appointed Group Finance Director and became a member of the Executive Committee in...

  • Page 14
    ...in the capital markets, fixed income, emerging market and credit areas in New York and London. Maria is the Group Chief Executive of Absa Group Ltd, which is majority owned by Barclays. Prior to joining Absa on 1st March 2009, she was Group Chief Executive of Transnet Limited, the state-owned South...

  • Page 15
    Strategy 14 20 22 24 Group Chief Executive's review The role of banks and banking in society Sustainability Our people

  • Page 16
    14 Barclays PLC Annual Report 2009 www.barclays.com/annualreport09 Group Chief Executive's review John Varley Our key output goal is to produce top quartile total shareholder returns over time. We achieved that goal for 2009."

  • Page 17
    ... in 2009 achieved record levels. I am pleased with the number of new mortgage, savings, Premier accounts and Local Business customers we have added in UK Retail Banking and with the increase in customer account balances. In Barclays Commercial Bank, we were able to increase average asset and deposit...

  • Page 18
    ... by investment banks'. Barclays Capital no more gambles in the work it does on behalf of its clients than the clients do themselves. Its work is the work of risk management and financing. Its job is to help governments, companies and investors around the world raise money, stimulate economic growth...

  • Page 19
    ...on the Executive Committee by the leaders of a number of Barclays business units and control and governance functions. We have also regrouped our activities to form: - Global Retail Banking (GRB), comprising UK Retail Banking, Barclaycard and the former Western Europe and Emerging Markets businesses...

  • Page 20
    ...continued Barclays PLC Annual Report 2009 www.barclays.com/annualreport09 Group Chief Executive's review The overall quantum of compensation we pay is designed to ensure that we exceed the FSA's minimum capital requirements at all times. We understand how important it is to our shareholders that...

  • Page 21
    ...on Barclays Capital is available at www.barclays.com/annualreport09 Notes a On consistent year end loans and advances balances and impairment at average 2008 foreign exchange rates. b The following have been promoted to the Group Executive Committee: Antony Jenkins, Chief Executive of Global Retail...

  • Page 22
    .... History shows that healthy global GDP growth requires funding support from the capital markets. I'll illustrate. A list of some clients on whose behalf Barclays Capital, our own investment bank, has been active recently (a matter of public record) does not reveal names that you would associate...

  • Page 23
    ... Barclays PLC Annual Report 2009 21 Key points Banks provide: - Reliable and efficient payment systems - Safe storage for deposits and savings - Maturity transformation - Asset management - Investment banking thousands of mid-sized companies as well - manufacturing and service businesses...

  • Page 24
    ... businesses 3.2m entry-level bank accounts opened across our global operations to date 3.5bn tonnes of carbon has been traded to date with a notional value of £45bn 24% of Barclays senior managers are female £55m invested in communities globally £87.9bn total UK mortgage lending at the end...

  • Page 25
    ... online Further information on our Sustainability policies and performance is available at www.barclays.com/sustainability Barclays PLC Annual Report 2009 23 Key points - £35bn gross new lending to UK households and businesses - More than 58,000 employees received direct support for fundraising...

  • Page 26
    .... Headcount by business unit - full time equivalent 000s UK Retail Banking Barclays Commercial Bank Barclaycard GRCB - Western Europe GRCB - Emerging Markets GRCB - Absa Barclays Capital Barclays Wealth Head Office Functions - 2008 - 2009 Global employment statistics % % of female employees % of...

  • Page 27
    ... 40 41 45 47 58 Key performance indicators Consolidated summary income statement Income statement commentary Five-year consolidated summary income statement Consolidated summary balance sheet Balance sheet commentary Capital management Additional financial disclosure Analysis of results by business

  • Page 28
    ... the UK FSA and the US requirements that a financial holding company be 'well capitalised' - Maintain sufficient capital resources to support the Group's Risk Appetite and economic capital requirements - Support the Group's credit rating - Ensure locally regulated subsidiaries can meet their minimum...

  • Page 29
    ... our product offerings. 72% 67% 64% 07 08 09 UK Retail Banking Cost:Income Ratio is included within the cost management strategic KPI Net lending in Barclays Commercial Bank Net lending represents the change in our loans and advances to customers during the year. Building the best bank means we...

  • Page 30
    ...low cost option for testing demand for banking services in small towns and remote areas, and also augment branch distribution in larger cities. These sites are reviewed periodically to assess benefits to customers and the franchise as a whole. In 2009, the number of sales centres in Emerging Markets...

  • Page 31
    ... the business and management Barclays community investment programme aims to engage and support colleagues around the world to get involved with our main partnerships, as well as the local causes they care about. Harnessing their energy, time and skills delivers real benefit to local communities, to...

  • Page 32
    30 Barclays PLC Annual Report 2009 www.barclays.com/annualreport09 Financial review Consolidated summary income statement Year ended 31st December Continuing operations £m 2009 Discontinued operations £m Total £m 2008 Continuing Discontinued operations operations £m £m Total £m 2007 ...

  • Page 33
    ...on acquisition of Lehman Brothers North American businesses; profit on disposal of Barclays Closed UK Life assurance business of £326m; gains on Visa IPO and sales of shares in MasterCard of £291m; and gross credit market losses and impairment of £8,053m. Total income net of insurance claims grew...

  • Page 34
    ... exchange, derivative and debt fees in Barclays Commercial Bank. 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 Debt securities in issue...

  • Page 35
    ... the Group's net trading income arose in Barclays Capital. There was growth in fixed income, prime services, foreign exchange, commodities and emerging markets. There were net losses from credit market dislocation partially offset by the benefits of widening credit spreads on structured notes issued...

  • Page 36
    ... of unit linked insurance contracts in Barclays Wealth, explained by falls in equity markets and the disposal of closed life business in October 2008. This was partially offset by the growth in GRCB - Western Europe. Impairment charges and other credit provisions 2009/08 Impairment charges on loans...

  • Page 37
    ...acquisitions made during 2008, the costs of servicing an expanded distribution network across Global Retail and Commercial Banking, and expenses relating to the Financial Services Compensation Scheme. Operating expenses increased due to a £119m decrease in gains from sale of property to £29m (2008...

  • Page 38
    ... 70,600) internationally. UK Retail Banking staff numbers increased 700 to 32,600 (2007: 31,900). Barclays Commercial Bank staff numbers increased 200 to 9,500 (2007: 9,300), reflecting investment in product expertise, sales and risk capability and associated support areas. Barclaycard staff numbers...

  • Page 39
    ...International PLC in December 2009. 2008/07 The gains on acquisitions in 2008 related 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 40
    ... charged on acquired intangible assets b Profit for economic profit purposes Average shareholders' equity for economic profit purposes c,d (rounded to nearest £50m) Post-tax cost of equity Capital charge a Economic profit 2009 £m 2008 £m 2007 £m 4,585 5,136 6,223 6,777 2009 £m 604 2008...

  • Page 41
    ... 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 Average United States Dollar exchange rate used in preparing the accounts Average Euro exchange rate used...

  • Page 42
    ... Risk asset ratio Selected financial statistics Net asset value per ordinary share Number of ordinary shares of Barclays PLC (in millions) Year-end United States Dollar exchange rate used in preparing the accounts Year-end Euro exchange rate used in preparing the accounts Year-end Rand exchange rate...

  • Page 43
    ... at the end of 2008. Whilst funding markets were difficult, particularly in the first half of 2009, the Group were able to increase available liquidity and the Group extended the average term of unsecured liabilities from 14 months to 26 months. The Group issued £15bn equivalent in public senior...

  • Page 44
    ... growth in loans and advances. Total assets by business 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 assets 2009 £m 2008...

  • Page 45
    ... mortgages, unsecured lending, commercial lending and a 31% appreciation over the year in the value of the Euro against Sterling. Risk weighted assets increased 48% to £37bn (2007: £25.0bn), primarily reflecting underlying lending growth and the appreciation of the Euro. GRCB - Emerging Markets...

  • Page 46
    ... shares Shareholders' equity excluding non-controlling interests Non-controlling interests Total shareholders' equity 2009 £m 2008 £m 2007 £m Total shareholders' equity Barclays Bank PLC Group Called up share capital Share premium account Available for sale reserve Cash flow hedging reserve...

  • Page 47
    ... Basel II Barclays PLC Group 2009 Barclays Bank PLC Group Barclays PLC Group 2008 Barclays Bank PLC Group Barclays PLC Group 2007 Barclays Bank PLC Group Capital ratios Core Tier 1 ratio Tier 1 ratio Risk asset ratio Risk weighted assets Credit risk Counterparty risk Market risk - Modelled - VaR...

  • Page 48
    ...equity Cash flow hedging reserve Defined benefit pension scheme Adjustments for scope of regulatory consolidation Foreign exchange on RCIs and upper Tier 2 loan stock Adjustment for own credit Other adjustments Equity non-controlling interest Less: Intangible assets Less: Net excess of expected loss...

  • Page 49
    ... Barclays PLC Annual Report 2009 47 Financial review Additional financial disclosure Deposits and short-term borrowings Deposits Deposits include deposits from banks and customers accounts. Averagea for the year ended 31st December 2009 £m 2008 £m 2007 £m Short-term borrowings Short-term...

  • Page 50
    ...170,756 The long-term debt does not include undated loan capital of £8,148m (2008: £13,673m). Further information on the contractual maturity of the Group's assets and liabilities is given in Note 49. Note a Securities lending arrangements are fully collateralised, and are not expected to result...

  • Page 51
    ... value £m 2008 Amortised cost £m Book value £m 2007 Amortised cost £m Investment securities - available for sale Debt securities: United Kingdom government Other government Other public bodies and US Agencies Mortgage and asset backed securities Bank and building society certificates of deposit...

  • Page 52
    ... (year ended 31st December) 2009 Average balance a £m Interest £m Average rate % Average balance a £m 2008 Interest £m Average rate % Average balance a £m 2007 Interest £m Average rate % Assets Loans and advances to banksb: - in offices in the United Kingdom - in offices outside the United...

  • Page 53
    ...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 54
    ... Rate £m Interest receivable Loans and advances to banks: - in offices in the UK - in offices outside the UK Loans and advances to customers: - in offices in the UK - in offices outside the UK Lease receivables: - in offices in the UK - in offices outside the UK Financial investments: - in offices...

  • Page 55
    ... - other time deposits - retail: - in offices in the UK - in offices outside the UK Customer accounts - other time deposits - wholesale: - in offices in the UK - in offices outside the UK Debt securities in issue: - in offices in the UK - in offices outside the UK Dated and undated loan capital and...

  • Page 56
    ... PLC Annual Report 2009 www.barclays.com/annualreport09 Financial review Additional financial disclosure continued Margins and Balances For commentary on business margins please refer to the Analysis of Results by Business on pages 58 to 79. Net interest margin UK Retail Banking UK Commercial...

  • Page 57
    ... the financial statements. Management has discussed the accounting policies and critical accounting estimates with the Board Audit Committee. Fair value of financial instruments Some of the Group's financial instruments are carried at fair value through profit or loss, such as those held for trading...

  • Page 58
    ... The Group provides pension plans for employees in most parts of the world. Arrangements for staff retirement benefits vary from country to country and are made in accordance with local regulations and customs. For defined contribution schemes, the pension cost recognised in the profit and loss

  • Page 59
    ... losses of £3,248m (Note 30) (2008: £5m gains). The net recognised liabilities comprised retirement benefit liabilities of £769m (2008: £1,357m) and assets of £71m (2008: £65m). The Group's IAS 19 pension deficit in respect of the main UK scheme as at 31st December 2009 was £3,534m (2008...

  • Page 60
    ... the international and UK businesses. Cost growth of 5% was largely driven by appreciation of the average value of the US Dollar and the Euro against Sterling and growth in the card portfolios including acquisitions made in 2008. Global Retail and Commercial Banking - Western Europe profit before...

  • Page 61
    ... Barclays PLC Annual Report 2009 59 income in India. Impairment charges increased £306m to £471m with significant increases in India and the UAE, reflecting the impact of the economic recession across the business with continued pressure on liquidity, rising default rates and lower asset values...

  • Page 62
    ...closure of the UK final salary pension scheme to existing members, offset by a year on year increase in pension costs of £115m and the non-recurrence of gains of £75m from the sale of property. Performance indicators Customer deposits £bn 92.5 89.6 Market share of mortgage balances % 7.4 09 87...

  • Page 63
    ... ventures Profit before tax Balance sheet 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 Economic profit Risk weighted assets b 2009 £m 2008 £m 2007...

  • Page 64
    ... banking solutions to business customers and clients with an annual turnover of more than £1m. What we do Barclays Commercial Bank provides banking services to customers via a network of relationship, regional, industry-sector and product speacialists across the UK. Working closely with our clients...

  • Page 65
    ...pensions scheme partially offset by an incremental increase in pension costs of £69m and the non-recurrence of property credits. The number of customers fell 6% primarily as a result of reductions in exposures to high risk sectors within Barclays Asset and Sales Finance. 2008/07 Barclays Commercial...

  • Page 66
    ... PLC Annual Report 2009 www.barclays.com/annualreport09 Financial review Analysis of results by business continued Global Retail and Commercial Banking Barclaycard Barclaycard is a multi-brand international payment services provider for consumer and business customers including credit cards...

  • Page 67
    ... 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 Economic profit Risk weighted assets 2009 £m 2008 £m 2007...

  • Page 68
    ... 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 2009/08 Global Retail and Commercial Banking - Western Europe...

  • Page 69
    ... 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 a Cost:income ratio a Cost:net income ratio a Other financial measures Economic profit a, b Risk weighted assets 2009...

  • Page 70
    ...7m customers and clients with a full range of products and services. This includes current accounts, savings, investments, mortgages and secured and unsecured lending. Performance 2009/08 Global Retail and Commercial Banking - Emerging Markets made a loss before tax of £254m in 2009 versus a profit...

  • Page 71
    ... ventures Profit before tax Balance sheet 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 Economic (loss)/profit Risk weighted assets 2009 £m 2008a...

  • Page 72
    ... accounts, savings products, bancassurance, mortgages, instalment finance and wealth management. It also offers customised business solutions for commercial and large corporate customers. Absa's business is conducted primarily in South Africa. In addition to this, the Group has equity holdings...

  • Page 73
    ... ventures Profit before tax Balance sheet 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 Economic profit Risk weighted assets 2009 £m 2008 £m 2007...

  • Page 74
    72 Barclays PLC Annual Report 2009 www.barclays.com/annualreport09 Financial review Analysis of results by business continued Investment Banking and Investment Management Barclays Capital Barclays Capital is a leading global investment bank providing large corporate, government and institutional...

  • Page 75
    ... Share of post-tax results of associates and joint ventures Gain on acquisition Profit before tax Balance sheet information Loans and advances to banks and customers at amortised cost Total assets Assets contributing to adjusted gross leverage Performance ratios Return on average economic capital...

  • Page 76
    ...in BlackRock. This investment is accounted for as an available for sale equity investment, with no dividends being received during 2009. Profit before tax on continuing operations for 2009 increased by £368m to £22m (2008: £346m loss) primarily due to lower liquidity support charges. Total assets...

  • Page 77
    ...annualreport09 Barclays PLC Annual Report 2009 75 £1,903m total income net of insurance claims £7 ,079m profit before tax Key points - Gain on sale £6,331m 2008/07 Barclays Global Investors profit before tax decreased 19% (£139m) to £595m (2007: £734m). Profit was impacted by the cost of...

  • Page 78
    ... quality products and services from Barclays Capital and Barclays Commercial Bank. Performance 2009/08 Barclays Wealth profit before tax reduced 78% (£526m) to £145m (2008: £671m). The reduction in profit was principally due to the sale of the closed life assurance business in 2008 (2008: profit...

  • Page 79
    ... tax Balance sheet information Loans and advances to customers Customer accounts Total assets Performance ratios Return on average economic capital Cost:income ratio Other financial measures Economic profit Risk weighted assets Average net income generated per member of staff ('000) 2009 £m 2008...

  • Page 80
    ... for hedging purposes. Operating expenses increased £217m to £451m (2007: £234m). The main drivers of this increase were: a £101m charge for the Group's share of levies that will be raised by the UK Financial Services Compensation Scheme; £64m increase in costs relating to an internal review of...

  • Page 81
    www.barclays.com/annualreport09 Barclays PLC Annual Report 2009 79 Head office functions and other operations 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...

  • Page 82
    80 Barclays PLC Annual Report 2009 www.barclays.com/annualreport09

  • Page 83
    ...Risk factors Barclays risk management strategy Credit risk management Market risk management Capital risk management Liquidity risk management Operational risk management Statistical information Supervision and regulation 147 Directors' report 151 Corporate governance report 170 Remuneration report...

  • Page 84
    ... Group's customers and counterparties may be unable to meet their obligations. In addition, declines in residential and commercial property prices have reduced the value of collateral and caused mark to market losses in some of the Group's trading portfolios. The business conditions facing the Group...

  • Page 85
    ...; - support its credit rating. A weaker credit rating would increase the Group's cost of funds; and - support its growth and strategic options. Regulators assess the Group's capital position and target levels of capital resources on an ongoing basis. Targets may increase in the future, and rules...

  • Page 86
    ... PLC Annual Report 2009 www.barclays.com/annualreport09 Risk management Risk factors continued During periods of market dislocation the Group's ability to manage liquidity requirements may be impacted by a reduction in the availability of wholesale term funding as well as an increase in the cost...

  • Page 87
    .../annualreport09 Barclays PLC Annual Report 2009 85 Financial reporting risk Financial reporting risk arises from a failure or inability to comply fully with the laws, regulations or codes in relation to the disclosure of financial information. Non-compliance could lead to fines, public reprimands...

  • Page 88
    ... of business decisions and activities on the community and the environment, covering the following themes: customers and clients, inclusive banking, the environment, diversity and responsible global citizenship. For more information, see page 22. Brand management risk Barclays defines brand risk as...

  • Page 89
    ... management are reviewed to ensure that the BRC is comfortable with them. After each meeting, the Chair of the BRC prepares a report for the next meeting of the Board. Barclays first established a separate Board Risk Committee in 1999 and all members are non-executive directors. The Finance Director...

  • Page 90
    ... Board Committees are available from the Corporate Governance section at: www.aboutbarclays.com. The Chief Risk Officer is a member of the Executive Committee and has overall day to day accountability for risk management under delegated authority from the Finance Director. The Finance Director...

  • Page 91
    ... Group Risk function and the business risk directors within the business units report to the Chief Risk Officer and are members of the Group Risk Oversight Committee. Governance structure by risk type Board Internal Audit Group Chief Executive Divisional Chief Executive Officers Group Finance...

  • Page 92
    ... Credit Market Capital Liquidity Operations Financial Crime Technology People Regulatory Financial Reporting Legal Taxation Other Level 1 Risks Strategic Change Corporate Sustainability Brand Management Risk Appetite concepts (diagram not to scale) Mean Loss Expected Loss Economic capital...

  • Page 93
    ... work in tandem with clearly defined lending criteria for specific sectors, industries and products, in order to maintain asset quality. For example, in the UK mortgage business a series of explicit mandate and scale limits have kept the average loan to value of the portfolio at conservative levels...

  • Page 94
    ... Modelling risk Risk taking on any meaningful scale requires quantification. Barclays uses risk models in an extensive range of decisions, from credit grading, pricing and approval to portfolio management, risk appetite setting, economic capital allocation and regulatory capital calculations...

  • Page 95
    ...Barclays uses stress testing techniques at Group, portfolio and product level and across a range of risk types. For example, portfolio management in the US cards business employs stressed assumptions of unemployment to determine profitability hurdles for new accounts. And in the UK mortgage business...

  • Page 96
    ... and define appetite in risk sensitive areas of the portfolio such as commercial property finance (see page 91). Group Risk also provides technical support, review and validation of credit risk measurement models across the Group. The principal Committees that review credit risk management, approve...

  • Page 97
    ... economic conditions that may determine, for example, the prices that can be realised for assets, whether a business can readily be refinanced or the availability of a repayment source for personal customers. For the purposes of regulatory capital an adjustment is made to the modelled LGD to account...

  • Page 98
    ...loan commitments and debt securities. Barclays risk management policies and processes are designed to identify and analyse risk, to set appropriate risk appetite, limits and controls, and to monitor the risks and adherence to limits by means of reliable and timely data. One area of particular review...

  • Page 99
    ... functions deal with clients in default, collection or insolvency. Their mandate is to maximise shareholder value via the orderly and timely recovery of impaired debts. Accounts can stay in Recoveries for up to two years unless a longer-term strategy has been agreed. Within the retail portfolios...

  • Page 100
    98 Barclays PLC Annual Report 2009 www.barclays.com/annualreport09 Risk management Credit risk management continued strong chance that they will be able to meet their contractual obligations in the foreseeable future. For the majority of products, the standard period for charging off accounts is...

  • Page 101
    ... to the Credit Committee for agreement. Monitoring the loan loss rate (LLR) provides Barclays with one way of measuring the trends in the quality of the loan portfolio at the Group, business and product levels. At Barclays, the LLR represents the annualised impairment charges on loans and advances...

  • Page 102
    100 Barclays PLC Annual Report 2009 www.barclays.com/annualreport09 Risk management Credit risk management continued Total assets and Barclays Capital credit market assets Analysis of Total Assets Total assets £m Accounting basis Fair value £m Cost based measure £m Loans and advancesa £m ...

  • Page 103
    ... business units, notably in UK Retail Bank due to growth in the UK Home Finance portfolio. Loans and advances held at fair value Barclays Capital loans and advances held at fair value were £12,835m (31st December 2008: £19,630m). Included within this balance is £6,941m relating to credit market...

  • Page 104
    ...419 Impairment Charges by Business Loans and advances £m Available for sale assets £m Reverse repurchase agreements £m Total £m Year Ended 31.12.2009 Global Retail and Commercial Banking UK Retail Banking Barclays Commercial Bank Barclaycard GRCB - Western Europe GRCB - Emerging Markets GRCB...

  • Page 105
    ... Retail Home Loans, Retail Unsecured and Other and Corporate and Wholesale exposures reflecting the deterioration in credit conditions in the past year across Barclays areas of operations. The most notable increases were in the international businesses in Global Retail and Commercial Banking, with...

  • Page 106
    ... Sterling during 2009. In Rand terms, balances were stable. In the wholesale portfolios, the impairment charge against loans and advances rose by £861m (33%) to £3,441m (2008: £2,580m) mainly due to increases in: - Barclays Commercial Bank, reflecting rising default rates and lower asset values...

  • Page 107
    ... economic deterioration in Spain which has impacted the commercial, construction and SME portfolios in particular, together with the appreciation of the average value of the Euro against Sterling; and - GRCB - Emerging Markets as credit conditions continued to deteriorate resulting in a small number...

  • Page 108
    ...Barclays PLC Annual Report 2009 www.barclays.com/annualreport09 Risk management Credit risk management continued Retail Credit Risk Loans and advances to customers in the retail portfolios increased by £11,261m (6%) to £212,849m. Balances grew in most businesses with the largest increase in UK...

  • Page 109
    ...the economic downturn. Repayment Plan balances grew to support government initiatives to supply relief to customers experiencing financial difficulty. As a percentage of the portfolio, three-month arrears rates rose during 2009 to 2.74% for UK Loans (31st December 2008: 2.28%) and 3.31% for US Cards...

  • Page 110
    ... 3 disclosures, available at the end of March 2010. Total EL on IRB portfolios As at 31.12.09 £m As at 31.12.08 £m UK Retail Banking Barclays Commercial Bank Barclaycard GRCB - Western Europe GRCB - Emerging Markets a GRCB - Absa Barclays Capital Barclays Wealth Head Office Functions & Other...

  • Page 111
    ... Barclays PLC Annual Report 2009 109 Barclays Capital credit market exposures Barclays Capital's credit market exposures as at 31st December 2009 primarily relate to commercial real estate and leveraged finance. These include positions subject to fair value movements in the income statement...

  • Page 112
    110 Barclays PLC Annual Report 2009 www.barclays.com/annualreport09 Risk management Credit risk management continued Analysis of Barclays Capital credit market assets by asset class Financial assets designated at fair value - loans and advances £m Trading portfolio assets - debt securities £m...

  • Page 113
    ...£1,931m (31st December 2008: £3,104m). Positions are stated after writedowns and charges of £714m incurred in 2009 (2008: £1,461m). There was a decline of £290m resulting from depreciation in the value of the US Dollar against Sterling and amortisation of £169m in the year. Note a Marks above...

  • Page 114
    ... Mortgage Backed Securities Wrapped by Monoline Insurers The table below shows RMBS assets where Barclays Capital held protection from monoline insurers at 31st December 2009. These are measured at fair value through profit or loss. By rating of the monoline Fair Value of Underlying Notional Asset...

  • Page 115
    ... mortgage-backed securities of £471m (31st December 2008: £735m). Commercial Real Estate Loans and Properties In the year ended 31st December 2009, the commercial real estate loans and properties balance reduced by £3,844m to £7,734m (31st December 2008: £11,578m). There were gross losses...

  • Page 116
    114 Barclays PLC Annual Report 2009 www.barclays.com/annualreport09 Risk management Credit risk management continued B1. Commercial Real Estate and Mortgage-Backed Securities continued Commercial Real Estate Loans by Industry US £m Germany £m As at 31.12.09 Other Europe £m UK £m Asia £m ...

  • Page 117
    ... Barclays PLC Annual Report 2009 115 B2. CMBS Wrapped by Monoline Insurers The table below shows commercial mortgage backed security assets where Barclays Capital held protection from monoline insurers at 31st December 2009. These are measured at fair value through profit and loss. By rating...

  • Page 118
    116 Barclays PLC Annual Report 2009 www.barclays.com/annualreport09 Risk management Credit risk management continued C. Other Credit Market C1. Leveraged Finance Leveraged Finance Loans by Region As at 31.12.09 £m As at 31.12.08 £m UK Europe Asia US Total lending and commitments Impairment ...

  • Page 119
    ... whole loans and real estate Other US sub-prime securities Total other US sub-prime Alt-A Monoline wrapped US RMBS Commercial Mortgages Monoline wrapped CMBS Other Credit market Monoline wrapped CLO and other Credit market related exposure Fair value of underlying assets wrapped by monoline insurers...

  • Page 120
    118 Barclays PLC Annual Report 2009 www.barclays.com/annualreport09 Risk management Credit risk management continued DBRS Inc. (DBRS), a nationally recognised statistical rating organisation, was engaged to provide a private, point-in-time rating reflecting the specific terms and conditions of ...

  • Page 121
    ... 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 122
    ... to purchase or sell a specified stock, basket of stocks or stock index at a specified price or level on or before a specified date. The Group also enters into fund-linked derivatives, being swaps and options whose underlyings include mutual funds, hedge funds, indices and multi-asset portfolios...

  • Page 123
    www.barclays.com/annualreport09 Barclays PLC Annual Report 2009 121 The tables below set out the fair values of the derivative assets together with the value of those assets subject to enforceable counterparty netting arrangements for which the Group holds offsetting liabilities and eligible ...

  • Page 124
    ... business control structure Market Risk Director Risk type Traded Non-traded - Banking book interest rate risk - Foreign exchange risk - Pension risk - Investment risk - Asset management risk ...managed by Barclays Capital Global Retail and Commercial Banking Barclays Wealth Group Treasury...

  • Page 125
    ... model is consistent with a good working DVaR model and is achieved for models that have four or less back-testing exceptions in a 12-month period. For Barclays Capital's trading book, green model status was maintained for 2009 and 2008. Expected Shortfall is the average of all hypothetical losses...

  • Page 126
    ... business line level e.g. Emerging Markets. Book limits such as foreign exchange and interest rate sensitivity limits are also in place. Risk exposures are monitored by Barclays Capital's risk managers with oversight provided by Group Market Risk. The total DVaR limit is approved by the Board. Risk...

  • Page 127
    ... limits and was not material as at 31st December 2009. Other non-Barclays capital foreign exchange exposure is covered in Note 48. Asset management structural risk arises where the fee and commission income earned by asset management products and businesses is affected by a change in market levels...

  • Page 128
    126 Barclays PLC Annual Report 2009 www.barclays.com/annualreport09 Risk management Market risk management continued Disclosures about certain trading activities including non-exchange traded commodity contracts The Group provides a fully integrated service to clients for base metals, precious ...

  • Page 129
    ... Barclays PLC Annual Report 2009 127 Risk management Capital risk management Capital risk is the risk that the Group has insufficient capital resources to: - Meet minimum regulatory requirements in the UK and in other jurisdictions such as the United States and South Africa where regulated...

  • Page 130
    ... risk types. Average economic capital Average year ended 31.12.09 £m Average year ended 31.12.08 £m 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...

  • Page 131
    ... Barclays PLC Annual Report 2009 129 The average supply of capital to support the economic capital framework a Shareholders' equity excluding non-controlling interests less goodwill b Retirement benefits liability Cash flow hedging reserve Available for sale reserve Cumulative gains on own credit...

  • Page 132
    ... governance 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...

  • Page 133
    .... The Barclays Capital and Absa businesses are funded through the wholesale secured and unsecured funding markets. The ratio of customer loans to customer deposits and long-term funding has improved to 81% at 31st December 2009, from 93% at 31st December 2008. Global Retail and Commercial Banking...

  • Page 134
    132 Barclays PLC Annual Report 2009 www.barclays.com/annualreport09 Risk management Liquidity risk management continued Group policy is to ensure that the assets of the retail, wealth and corporate bank, together with Head Office functions, on a global basis, do not exceed customer deposits and ...

  • Page 135
    ... 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 136
    ... levels. Operational risk events A high proportion of Barclays operational risk events have a low financial cost associated with them and a very small proportion of operational risk events have a material impact. In 2009, 73.3% of reported operational losses had a value of £50,000 or less (2008...

  • Page 137
    www.barclays.com/annualreport09 Barclays PLC Annual Report 2009 135 Risk management Statistical information Statistical and other risk information This section of the report contains supplementary information that is more detailed or contains longer histories than the data presented in the ...

  • Page 138
    ... Property Government Energy and water Wholesale and retail distribution and leisure Transport Postal and communication Business and other services Home loans Other personal Finance lease receivables Loans and advances to customers in the UK 2009 £m 2008 £m 2007 £m 2006 £m 2005 £m 2009 £m 2008...

  • Page 139
    ... Property Government Energy and water Wholesale and retail distribution and leisure Transport Postal and communication Business and other services Home loans Other personal Finance lease receivables Loans and advances to customers in Africa 2009 £m 2008 £m 2007 £m 2006 £m 2005 £m 2009 £m 2008...

  • Page 140
    138 Barclays PLC Annual Report 2009 www.barclays.com/annualreport09 Risk management Statistical information continued Table 8: Loans and advances to customers in the Rest of the World At 31st December Loans and advances Finance lease receivables Loans and advances to customers in the Rest of the...

  • Page 141
    ... Financial assets designated at fair value held on own account Derivative financial instruments Available for sale financial investments Table 12: Notional principal amounts of credit derivatives as at 31st December Credit derivatives held or issued for trading purposes a Table 13: Credit risk loans...

  • Page 142
    ...PLC Annual Report 2009 www.barclays.com/annualreport09 Risk management Statistical information continued Table 15: Potential problem loans At 31st December United Kingdom Other European Union United States Africa Rest of the World Potential problem loans Table 16: Interest foregone on credit risk...

  • Page 143
    ...charged against profit Allowance for impairment/provision balance at end of year Table 22: Amounts written off United Kingdom Other European Union United States Africa Rest of the World Amounts written off 2009 £m 2008... the impairment of available for sale assets or other credit risk provisions.

  • Page 144
    142 Barclays PLC Annual Report 2009 www.barclays.com/annualreport09 Risk management Statistical information continued Table 23: Recoveries United Kingdom Other European Union United States Africa Rest of the World Recoveries Table 24: Impairment allowances/provision charged against profit a New ...

  • Page 145
    ... 2009 £m % £m 2008 % £m 2007 % £m 2006 % £m 2005 % 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...

  • Page 146
    ...Barclays PLC Annual Report 2009 www.barclays.com/annualreport09 Risk management Statistical information continued Table 28: Total impairment allowance/(provision) coverage of credit risk loans United Kingdom Other European Union United States Africa Rest of the World Total coverage of credit risk...

  • Page 147
    ...or some of the property, rights and liabilities of the UK bank to a purchaser or Bank of England entity. A 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) and warrants for...

  • Page 148
    ... to deal with issues related to financial stability and systemic risk. It will also place a duty on the FSA to make rules requiring financial institutions to create and maintain Recovery and Resolution plans, require the FSA to make general rules about remuneration policies of regulated firms, give...

  • Page 149
    ... Annual General Meeting, shareholders approved the creation of Sterling, Dollar, Euro and Yen preference shares (preference shares) in order to provide the Group with more flexibility in managing its capital resources. As at 5th March 2010 (the latest practicable date for inclusion in this report...

  • Page 150
    ...000 employees and pensioners worldwide taking part in Barclays-supported volunteering, giving and fundraising activities. Further information on Holder Number of warrants BlackRock, Inc.b Qatar Holding LLC Nexus Capital Investing Ltd Legal & General Group Plc Appleby Trust (Jersey) Limited c 805...

  • Page 151
    ... PLC 2010 AGM. Employee Involvement Barclays is committed to ensuring that employees share in the success of the Group. Staff are encouraged to participate in share option and share purchase schemes and have a substantial sum invested in Barclays shares. Employees are kept informed of matters...

  • Page 152
    ... business of the Group. Contracts of Significance Under the terms of a stock purchase agreement dated 16th June 2009 which was entered into by and among Barclays Bank PLC, Barclays PLC and BlackRock, Inc. (BlackRock), Barclays agreed to sell BGI to BlackRock. The sale completed on 1st December 2009...

  • Page 153
    ... losses from both credit market exposures and the global economic downturn. In Barclays case, the share price was extremely weak during January and the Board took its first key decision in deciding to issue an open letter from the Group Chief Executive and myself on 26th January 2009 to address...

  • Page 154
    ...-term success of the Company for the benefit of shareholders. The Board also ensures that management achieves an appropriate balance between promoting long-term growth and delivering short-term objectives. Board meetings The Board has eight Board meetings scheduled each year. Strategy is reviewed...

  • Page 155
    ... Barclays PLC Annual Report 2009 153 and their views were sought and considered. There were also 12 meetings of the Board Finance Committee, to which the Board delegated authority to review and approve certain aspects of the iShares, BGI and credit market exposure transactions. The Board Finance...

  • Page 156
    ..., Barclays Global Investors, Barclays Wealth, Barclays Commercial Bank, Barclays Capital (including an update on the integration of the Lehman Brothers North American business), Barclaycard, UK Retail Bank and Absa; - reports on the following key issues: Brand and Marketing, Corporate Sustainability...

  • Page 157
    ...and subsequent sale of Barclays Global Investors; and - consideration and approval of the restructuring of our credit market exposures. Corporate Governance - reports on governance issues and updates on the changes in company law, including approval of non-executive Director appointments, updates on...

  • Page 158
    ... 8 9 Financial services Accountancy/financial background Retail/marketing Government experience Business School Corporate Finance International (Europe) International (US) International (Rest of World) 4 3 1 3 1 2 1 2 2 Fig 3: Balance of non-executive and executive Directors 2009 1 2 3 1 Chairman...

  • Page 159
    .../annualreport09 Barclays PLC Annual Report 2009 157 Directors may retain fees paid in connection with an external appointment and details of any fees received by executive Directors may be found in the Remuneration Report on page 170. Conflicts of Interest Under UK company law, all Directors must...

  • Page 160
    158 Barclays PLC Annual Report 2009 www.barclays.com/annualreport09 Go online The Charter of Expectations, including role profiles for key Board positions, is available from www.aboutbarclays.com Corporate governance Corporate governance report continued and Sir Michael Rake will also offer ...

  • Page 161
    ... Remuneration Committee Sets the policy for executive Directors' and senior executives' remuneration. Approves individual remuneration awards. Agrees changes to senior executive incentive plans. Governs employee share schemes. Looks at strategic HR issues. Board Risk Committee Recommends total level...

  • Page 162
    ... to impairment model outputs; - Barclays position relative to peer banks; and - input from the Group's external auditor. The Committee continues to review closely the fair value of the Barclays Capital credit market exposures (including asset backed securities, commercial property exposure and...

  • Page 163
    ...the control environments in each of the following businesses or functions: UK Retail Banking, Barclays Commercial Bank, Barclays Wealth (Americas), Barclays Capital (including an update on the integration of the Lehman Brothers North American business), Barclaycard, Emerging Markets, Barclays Wealth...

  • Page 164
    ... PLC Annual Report 2009 www.barclays.com/annualreport09 Go online The Board Corporate Governance and Nominations Committee terms of reference are available from the corporate governance section of our website at: www.barclays.com/corporategovernance Corporate governance Corporate governance report...

  • Page 165
    ... in the Remuneration Report on pages 170 to 186. The Committee's terms of reference have been updated to reflect the changes to its role and the recent developments in Corporate Governance and regulation. Board HR and Remuneration Committee Activities in 2009 The Committee met 14 times in 2009 and...

  • Page 166
    ... 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 20-F and the Annual Review; - considers Interim Management Statements released to the Stock Exchange...

  • Page 167
    ...Committee level; and - improving the format of strategy presentations to the Board. I held private meetings with the non-executive Directors in early 2010 so that individual and general results could be discussed. Bespoke development plans are then agreed with each non-executive Director in relation...

  • Page 168
    ... Barclays PLC Annual Report 2009 www.barclays.com/annualreport09 Go online The Board Risk Committee terms of reference are available from the corporate governance section of our website at: www.barclays.com/corporategovernance Corporate governance Corporate governance report continued Governance...

  • Page 169
    ...the Commodities business in Barclays Capital; - the Emerging Markets business in GRCB; and - the US equities business. The Committee also received regular reports on the Group's exposures to the asset backed securities (ABS) and leveraged credit market exposures and how these were being managed down...

  • Page 170
    ... Board Risk Committee allocation of time 2009 % 5 4 3 2 1 1 Risk Profile/Risk Appetite (including capital management) 2 Key Risk Issues (including ABS and Leveraged Credit Markets) 3 Internal Control/Risk Policies 4 Regulatory Frameworks 5 Other (including remuneration and governance issues) 2008...

  • Page 171
    ... a Board Risk Committee, comprised of independent non-executive Directors, which considers and discusses policies with respect to risk assessment and risk management. Corporate Governance Guidelines The NYSE Rules require domestic US companies to adopt and disclose corporate governance guidelines...

  • Page 172
    ... the coming year. The Committee retains independent advisers to support it in its work. 2009 The performance of Barclays during 2009 is described in detail in the Group Chief Executive's business review. Barclays delivered profit before tax of £11.6bn, 92% up on 2008. The underlying profits of the...

  • Page 173
    ...and all members of Barclays Capital Executive Committee will be delivered over a three-year period and subject to clawback. Long-term awards take the form of equity or cash, paid over three years. 73% of the long-term awards from the 2009 pay review are in the form of equity. Two new plans have been...

  • Page 174
    ... continued Board HR and Remuneration Committee remit and membership The Committee provides governance and strategic oversight of executive and all other employee remuneration, Barclays Human Resources activities and senior management development. The Committee's terms of reference are available in...

  • Page 175
    .... The Global Retirement Fund Governance Framework is operated to ensure best practice in respect of regulatory compliance, governance, investment and administration. In the second half of 2009, Barclays announced the closure of its UK final salary pension schemes to future accrual in order to reduce...

  • Page 176
    .... ESAS is a deferred share award plan operated in conjunction with various Group bonus plans for executive Directors and certain other employees, subject to trustee discretion. For 2009, the use of ESAS was significantly scaled back as the new Share Value Plan and Cash Value Plan are being operated...

  • Page 177
    ... Member of pension scheme See page 178 Member of pension scheme See page 178 Member of pension scheme See page 178 163 159 Other benefits 23 23 134 66 19 18 Sub-total in accordance with Schedule 8 of the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008...

  • Page 178
    ... share plans operated by Barclays are shown on pages 183 to 186. For PSP, at the end of each performance period, independent Table 3: Long-term plans and deferred share plans Number of shares under award/option at 1st January 2009 (maximum) Awarded in year (maximum) Market price on award date...

  • Page 179
    ... 2009 Barclays highest share price was £3.84 and the lowest was £0.51. The share price at year end was £2.76. Market price on release/ exercise date Number lapsed in 2009 Number of shares under award/option at 31st December 2009 (maximum) Vested number of shares under option Value of release...

  • Page 180
    ...Barclays PLC Annual Report 2009 www.barclays.com/annualreport09 Corporate governance Remuneration report continued Pensions Chris Lucas receives a cash allowance of 25% of base salary in lieu of joining a Group pension scheme. John Varley is a member of the Group's 1964 UK defined benefit pension...

  • Page 181
    ... PLC Annual Report 2009 179 Shareholding guideline The Committee guideline provides that executive Directors should hold Barclays PLC shares worth, as a minimum, the higher of two times base salary or average of total remuneration over the last three years. Executive Directors have five years...

  • Page 182
    ...'s fee is used to purchase Barclays PLC shares. These shares, together with reinvested dividends, are retained on behalf of the non-executive Directors until they retire from the Board. Marcus Agius, Group Chairman, has a minimum time commitment Table 11: 2009 fees to Barclays equivalent to 60% of...

  • Page 183
    www.barclays.com/annualreport09 Barclays PLC Annual Report 2009 181 Letters of appointment The Group Chairman, Deputy Chairman and non-executive Directors have individual letters of appointment. Each non-executive Director appointment is for an initial six-year term, renewable for a single term ...

  • Page 184
    182 Barclays PLC Annual Report 2009 www.barclays.com/annualreport09 Corporate governance Remuneration report continued Former Directors continued Table 17: Executive Share Award Scheme (ESAS) Number at 1st January 2009 (maximum) Market price on award date Market price on release date Number at ...

  • Page 185
    ... PLC Annual Report 2009 183 Share and long-term incentive plans Barclays operates a number of Group-wide plans. Summaries of the principal plans are set out below. Barclays has a number of employee benefit trusts which operate with these plans. In some cases, the trustees grant awards and purchase...

  • Page 186
    ... Barclays PLC Annual Report 2009 www.barclays.com/annualreport09 Corporate governance Remuneration report continued Share and long-term incentive plans continued Table 20: Plans under which awards made in 2009 continued Executive Directors eligible? Plan name Description Long Term Cash Plan...

  • Page 187
    www.barclays.com/annualreport09 Barclays PLC Annual Report 2009 185 Share and long-term incentive plans continued Table 21: New plans under which awards to be made in 2010 Executive Directors eligible? Plan name Description Share Value Plan (SVP) No - The SVP is a new share incentive plan to...

  • Page 188
    ...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 overall cap of 20% of the issued ordinary share capital of BGI Holdings. - Employees who were executive Directors of Barclays PLC at...

  • Page 189
    ...on Barclays Bank PLC's internal control over financial reporting. Barclays Bank PLC's internal control over financial reporting is not subject to assessment by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit Barclays Bank PLC to...

  • Page 190
    ... filed or submitted under the US Securities Exchange Act of 1934 is recorded, processed, summarised and reported within the time periods 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...

  • Page 191
    Financial statements 190 Presentation of information 191 Independent Auditors' Report 192 Independent Registered Public Accounting Firm's report 193 Consolidated accounts Barclays PLC 193 Accounting policies 203 Accounting developments 204 Consolidated income statement 205 Consolidated statement of...

  • Page 192
    ... public limited 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...

  • Page 193
    ... with the financial statements; and - the information given in the Corporate Governance Statement with respect to internal control and risk management systems and about share capital structures is consistent with the financial statements. Matters on which we are required to report by exception...

  • Page 194
    ... on these financial statements and on the Company's internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform...

  • Page 195
    ... policies 1. Reporting entity These financial statements are prepared for the Barclays PLC Group under Section 399 of the Companies Act 2006. The Group is a major global financial services provider engaged in retail and commercial banking, credit cards, investment banking, wealth management...

  • Page 196
    194 Barclays PLC Annual Report 2009 www.barclays.com/annualreport09 Consolidated accounts Barclays PLC Accounting policies continued share of the post-acquisition profit (or loss), or other movements reflected directly in the other comprehensive income of the associated or jointly controlled ...

  • Page 197
    ... on trade date, being the date on which the Group commits to purchase or sell the asset. The fair value option is used in the following circumstances: a) financial assets backing insurance contracts and financial assets backing investment contracts are designated at fair value through profit or loss...

  • Page 198
    ... PLC Annual Report 2009 www.barclays.com/annualreport09 Consolidated accounts Barclays PLC Accounting policies continued Regular way purchases of held to maturity financial assets are recognised on trade date, being the date on which the Group commits to purchase the asset. Available for sale...

  • Page 199
    ... order to achieve an orderly realisation are accounted for as a disposal of the loan and an acquisition of equity securities or investment properties. Where control is obtained over an entity as a result of the transaction, the entity is consolidated. Any further impairment of the assets or business...

  • Page 200
    198 Barclays PLC Annual Report 2009 www.barclays.com/annualreport09 Consolidated accounts Barclays PLC Accounting policies continued In the case of available for sale equity securities, a significant or prolonged decline in the fair value of the security below its cost is also considered in ...

  • Page 201
    ...at each balance sheet date reflecting market conditions at the reporting date. The fair value of investment property is determined by reference to current market prices for similar properties, adjusted as necessary for condition and location, or by reference to recent transactions updated to reflect...

  • Page 202
    ... PLC Annual Report 2009 www.barclays.com/annualreport09 Consolidated accounts Barclays PLC Accounting policies continued 14. Intangible assets Goodwill Goodwill arises on the acquisition of subsidiaries and associates and joint ventures, and represents the excess of the fair value of the purchase...

  • Page 203
    ...Annual Report 2009 201 Dividends on ordinary shares Dividends on ordinary shares are recognised in equity in the period in which they are paid or, if earlier, approved by the Barclays PLC (the Company) shareholders. Treasury shares Where the Company or any member of the Group purchases the Company...

  • Page 204
    ... PLC Annual Report 2009 www.barclays.com/annualreport09 Consolidated accounts Barclays PLC Accounting policies continued 21. Employee benefits The Group provides employees worldwide with post-retirement benefits mainly in the form of pensions. The Group operates a number of pension schemes...

  • Page 205
    www.barclays.com/annualreport09 Barclays PLC Annual Report 2009 203 Consolidated accounts Barclays PLC Accounting developments Changes to Accounting Policy The Group has continued to apply the accounting policies used for the 2008 Annual Report and has adopted the following: - The 2008 ...

  • Page 206
    204 Barclays PLC Annual Report 2009 www.barclays.com/annualreport09 Consolidated accounts Barclays PLC Consolidated income statement For the year ended 31st December Notes 2009 £m 2008 £m 2007 £m Continuing operations Interest income Interest expense Net interest income Fee and commission...

  • Page 207
    ...Annual Report 2009 205 Consolidated accounts Barclays PLC Consolidated statement of comprehensive income For the year ended 31st December Net profit for the year Other comprehensive income: Continuing operations Currency translation differences Available for sale financial assets Cash flow hedges...

  • Page 208
    206 Barclays PLC Annual Report 2009 www.barclays.com/annualreport09 Consolidated accounts Barclays PLC Consolidated balance sheet As at 31st December Notes 2009 £m 2008 £m Assets Cash and balances at central banks Items in the course of collection from other banks Trading portfolio assets ...

  • Page 209
    ... Available for sale financial assets Cash flow hedges Tax relating to components of other comprehensive income Other comprehensive income net of tax from discontinued operations Total comprehensive income Issue of new ordinary shares Issue of shares under employee share schemes Net purchase...

  • Page 210
    ...in loans and advances to banks and customers Net (decrease)/increase in deposits and debt securities in issue Net decrease/(increase) in derivative financial instruments Net decrease/(increase) in trading assets Net decrease in trading liabilities Net increase/(decrease) in financial investments Net...

  • Page 211
    ...annualreport09 Barclays PLC Annual Report 2009 209 Accounts of Barclays PLC Parent company accounts Income statement For the year ended 31st December Dividends received from subsidiary Interest income Trading gain/(loss) Other income Management charge from subsidiary Profit before tax Tax Profit...

  • Page 212
    ... equity £m Balance at 1st January 2009 Total comprehensive income: Net profit for the year and total comprehensive income Issue of new ordinary shares Issue of shares under employee share schemes Issue of warrants Mandatorily Convertible Notes issued Repurchase of shares Dividends Other Balance...

  • Page 213
    ...Barclays Bank PLC. Dividends received are treated as operating income. The Company was not exposed at 31st December 2009 or 2008 to significant risks arising from the financial instruments it holds; which comprised cash, balances with central banks and other assets which had no credit or market risk...

  • Page 214
    ... 2009 interim dividend of £113m. 2 Net interest income Interest arising from: Cash and balances with central banks Available for sale investments Loans and advances to banks Loans and advances to customers Other interest income Interest income Deposits from banks Customer accounts Debt securities...

  • Page 215
    ....barclays.com/annualreport09 Barclays PLC Annual Report 2009 213 4 Principal transactions 2009 £m 2008 £m 2007 £m Net trading income Net gain from disposal of available for sale assets Dividend income Net (loss)/gain from financial instruments designated at fair value Other investment (losses...

  • Page 216
    ... PLC Annual Report 2009 www.barclays.com/annualreport09 Notes to the accounts For the year ended 31st December 2009 continued 7 Impairment charges and other credit provisions 2009 £m 2008 £m 2007 £m Impairment charges on loans and advances New and increased impairment allowances Releases...

  • Page 217
    ... services in relation to statutory and regulatory filings. These include audit services for the review of the interim financial information under the Listing Rules of the UK listing authority and fees paid for reporting under Section 404 of the US Sarbanes-Oxley Act (Section 404). In 2009 and 2008...

  • Page 218
    ... tax rates applied to taxable profits and losses outside the UK, disallowed expenditure and adjustments in respect of prior years. The low effective tax rate of 8.8% on continuing operations in 2008 mainly resulted from the Lehman Brothers North American business acquisition. Tax effects relating to...

  • Page 219
    ... balance sheet date, the Group continued to make on-market purchases of treasury shares for the purposes of satisfying its various employee share schemes. No adjustment has been made to earnings per share in respect of these purchases. 12 Trading portfolio 2009 £m 2008 £m Trading portfolio assets...

  • Page 220
    ... Barclays PLC Annual Report 2009 www.barclays.com/annualreport09 Notes to the accounts For the year ended 31st December 2009 continued 13 Financial assets designated at fair value Held on own account 2009 £m 2008 £m Loans and advances Debt securities Equity securities Other financial assets...

  • Page 221
    www.barclays.com/annualreport09 Barclays PLC Annual Report 2009 219 14 Derivative financial instruments The Group's objectives and policies on managing the risks that arise in connection with derivatives, including the policies for hedging, are included in Notes 46 to 49. The fair values and ...

  • Page 222
    ... rate loans to banks and customers, variable rate debt securities held and highly probable forecast financing transactions and reinvestments. Interest rate derivatives designated as fair value hedges primarily hedge the interest rate risk of fixed rate borrowings in issue, fixed rate loans to banks...

  • Page 223
    www.barclays.com/annualreport09 Barclays PLC Annual Report 2009 221 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 224
    222 Barclays PLC Annual Report 2009 www.barclays.com/annualreport09 Notes to the accounts For the year ended 31st December 2009 continued 16 Available for sale financial investments 2009 £m 2008 £m Debt securities Treasury bills and other eligible bills Equity securities Available for sale ...

  • Page 225
    ... investments £m Pensions and other retirement benefits £m Allowance for impairment on loans £m Tax losses carried forward £m Cash flow hedges £m Other provisions £m Share based payments £m Other £m Total £m Liabilities Assets At 1st January 2009 Income statement Equity Acquisitions...

  • Page 226
    ... ventures £m Associates £m 2008 Joint ventures £m . Property, plant and equipment Financial investments Trading portfolio assets Loans to banks and customers Other assets Total assets Deposits from banks and customers Trading portfolio liabilities Other liabilities Shareholders' equity Total...

  • Page 227
    ... Global Investors has been disposed of following the sale of this business to BlackRock, Inc on 1st December 2009. The value of the goodwill was recovered in full as a result of the transaction. Note a Figures have been restated for the transfer of Barclays Russia from GRCB - Emerging Markets...

  • Page 228
    226 Barclays PLC Annual Report 2009 www.barclays.com/annualreport09 Notes to the accounts For the year ended 31st December 2009 continued 22 Intangible assets Internally generated software £m Other software £m Core deposit intangibles £m Customer lists £m Mortgage servicing rights £m ...

  • Page 229
    ...Barclays PLC Annual Report 2009 227 23 Property, plant and equipment Investment property £m Property £m Equipment £m Leased assets £m Total £m 2009 Cost At 1st January 2009 Acquisitions and disposals of subsidiaries Disposal of discontinued operations Additions/disposals Change in fair value...

  • Page 230
    ...Group's long-term business. Reinsurers' share of provisions relating to the Group's short-term business are £7m (2008: £32m). The reinsurance assets expected to be recovered after more than one year are £85m (2008: £91m). Insurance contract liabilities including unit-linked liabilities Insurance...

  • Page 231
    ...of fixed costs on the UK closed life book of business. The inflation assumption is set by adding a margin to the market rate of inflation implied by index-linked gilt yields. Short-term business Short-term business - for single premium policies the proportion of unearned premiums is calculated based...

  • Page 232
    ... financial statements is according to the type of cover offered and the location of insured risk. The following table shows the maximum amounts payable under all of the Group's insurance products. It ignores the probability of insured events occurring and the contribution from investments backing...

  • Page 233
    www.barclays.com/annualreport09 Barclays PLC Annual Report 2009 231 27 Subordinated liabilities continued Security and subordination None of the undated loan capital is secured. The Junior Undated Floating Rate Notes (the Junior Notes) rank behind the claims against the Bank of depositors and ...

  • Page 234
    ... the Bank nor Barclays PLC may (i) declare or pay a dividend, subject to certain exceptions, on any of their respective ordinary shares or Preference Shares, or make payments of interest in respect of the Bank's Reserve Capital Instruments and (ii) certain restrictions on the redemption, purchase or...

  • Page 235
    ... Barclays PLC Annual Report 2009 233 27 Subordinated liabilities continued Dated loan capital Dated loan capital is 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 236
    ... Fixed Rate Capital Notes 2014 (BWP 190m) Barclays Bank Zambia PLC (Barclays Zambia) Subordinated Unsecured Floating Rate Capital Notes 2015 (ZMK 49,086m) Absa Redeemable cumulative option-holding preference shares (ZAR 147m) Dated loan capital convertible Total dated loan capital j,k) j,l) 18...

  • Page 237
    www.barclays.com/annualreport09 Barclays PLC Annual Report 2009 235 27 Subordinated liabilities continued The 7.4% Subordinated Notes 2009 (the '7.4% Notes') issued by the Bank were registered under the US Securities Act of 1933. All other issues of dated loan capital by the Bank, Barclays Spain,...

  • Page 238
    ... The 1964 Pension Scheme Most 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...

  • Page 239
    ...PLC Annual Report 2009 237 30 Retirement benefit obligations continued Governance The UKRF operates under trust law and is managed and administered on behalf of the members in accordance with the terms of the Trust Deed and all relevant legislations. The Corporate Trustee is Barclays Pension Funds...

  • Page 240
    ... on the balance sheet are as follows: 2009 Pensions UK £m Overseas £m Post-retirement benefits UK £m Overseas £m Total £m UK £m Pensions Overseas £m 2008 Post-retirement benefits UK £m Overseas £m Total £m Benefit obligation at end of period Fair value of plan assets at end of period...

  • Page 241
    ... 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 242
    ... the investment risk profile of the plan. This involved a partial sale of physical equities and purchase of index-linked gilts. The value of the assets of the schemes, their percentage in relation to total scheme assets, and their expected rate of return at 31st December 2009 and 31st December 2008...

  • Page 243
    www.barclays.com/annualreport09 Barclays PLC Annual Report 2009 241 30 Retirement benefit obligations continued The UKRF plan assets include £58m relating to UK private equity investments (2008: £27m) and £921m relating to overseas private equity investments (2008: £735m). These are disclosed...

  • Page 244
    ... scheme's funding level. 31 Ordinary shares, share premium, and other equity Ordinary shares and share premium Number of shares m Ordinary shares £m Share premium £m Total £m At 1st January 2009 Issued under the Incentive Share Option Plan a Issued to staff under the Share Incentive Plan Issue...

  • Page 245
    ... staff to subscribe for ordinary shares between 2009 and 2017 at prices ranging from 144p to 547p. 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 Award Scheme...

  • Page 246
    ... in 2009 is open to all eligible non UK employees, excluding executive Directors. The key terms of the Global Sharepurchase scheme are described in Note 44. 32 Reserves Other reserves Capital redemption reserve £m Other capital reserve £m Available for sale reserve £m Cash flow hedging reserve...

  • Page 247
    ... The total number of Barclays shares held in Group employee benefit trusts at 31st December 2009 was 125.1 million (2008: 217.9 million). No dividend rights have been waived on these shares. The total market value of the shares held in trust, based on the year-end share price of £2.75 (2008: £1.53...

  • Page 248
    ... PLC Annual Report 2009 www.barclays.com/annualreport09 Notes to the accounts For the year ended 31st December 2009 continued 33 Non-controlling interests 2009 £m 2008 £m At beginning of year Share of profit after tax Dividend and other payments Equity issued by subsidiaries Available for sale...

  • Page 249
    ... the United States District Court for the Southern District of New York. The consolidated amended complaint, dated 12th February 2010, alleges that the registration statements relating to American Depositary Shares representing Preferred Stock, Series 2, 3, 4 and 5 (ADS) offered by Barclays Bank PLC...

  • Page 250
    ... included an examination of other retail banking products, in particular savings accounts, credit cards, personal loans and mortgages in order to take into account the competitive dynamics of UK retail banking. In 2008, the OFT published its market study report, in which it concluded that certain...

  • Page 251
    ... of international technology, industrial equipment and commercial companies to provide customised finance programmes to assist manufacturers, dealers and distributors of assets. Finance lease receivables are included within loans and advances to customers. The Group's net investment in finance lease...

  • Page 252
    ... Barclays PLC Annual Report 2009 www.barclays.com/annualreport09 Notes to the accounts For the year ended 31st December 2009 continued 37 Leasing continued b) As Lessee Finance lease commitments The Group leases items of property, plant and equipment on terms that meet the definition of finance...

  • Page 253
    ... Barclays PLC Annual Report 2009 251 38 Disposal of subsidiaries During the year, the Group disposed of Barclays Global Investors (BGI), 50% of Barclays Vida y Pensiones Compañía de Seguros and 7% of the GRCB - Emerging Markets Botswana business. BGI 2009 £m Other 2009 £m Total 2009...

  • Page 254
    .... For the year ended 31st December 2009 the results are for the 11 month period up to the date of disposal. 2009 £m 2008 £m 2007 £m Net interest income Net fee and commission income Net trading income/(loss) Other income Total income Operating expenses excluding amortisation of intangible assets...

  • Page 255
    ... Barclays PLC Annual Report 2009 253 40 Acquisition of subsidiaries a) Crescent Real Estate On 19th November 2009, Barclays formed Crescent Real Estate Holdings LLC a joint venture with Goff Capital, Inc., to assume 99.7% ownership of Crescent Real Estate Equities Limited partnership...

  • Page 256
    ... 2009. Ongoing legal proceedings related to the acquisition, including in respect of assets not yet received, are discussed in Note 35. In addition, in 2008 the Group acquired Macquarie Bank Limited's residential mortgage businesses, Goldfish credit card UK businesses and 100% of the ordinary shares...

  • Page 257
    ... Financial Corporation Barclays Group US Inc. Barclays Bank of Zimbabwe Limited Banking Banking Banking, holding company Loans and advances including leases to customers Banking, securities industries and trust services Stockbroking Securities dealing Secured loan provider Investment management...

  • Page 258
    ... information in relation to such entities as required by the Companies Act 2006 Section 410(2)(b). Percentage of ordinary share capital held % Equity shareholders' funds £m Retained loss for the year £m Country of registration or incorporation Name UK Cayman Islands Fitzroy Finance Limited...

  • Page 259
    ... PLC Annual Report 2009 257 42 Related party transactions and Directors' remuneration continued Amounts included in the accounts, in aggregate, by category of related party entity are as follows: Entities under Joint common ventures directorships £m £m Pension funds, unit trusts and investment...

  • Page 260
    ... the Directors of Barclays PLC and the Officers of the Group, certain direct reports of the Group Chief Executive and the heads of major business units. There were no material related party transactions with Entities under common directorship where a Director or other member of Key Management...

  • Page 261
    ...money purchase schemes were £nil (2008: £nil). As at 31st December 2009, two Directors were accruing retirement benefits under a defined benefit scheme (2008: two Directors). One Director (Frits Seegers) agreed to waive his fees as non-executive Director of Absa Group Limited and Absa Bank Limited...

  • Page 262
    ... 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 years, can be...

  • Page 263
    ... was open by invitation to the employees and Directors of Barclays PLC. Options were granted at the market price at the date of grant calculated in accordance with the rules of the plan, and are normally exercisable between three and ten years from that date. The final number of shares over which...

  • Page 264
    ... PLC Annual Report 2009 www.barclays.com/annualreport09 Notes to the accounts For the year ended 31st December 2009 continued 44 Share-based payments continued At the balance sheet date the following cash-settled schemes operated within the Group: Absa Group Limited Phantom Performance Share Plan...

  • Page 265
    ... average ex. price (£) 2008 2009 2008 2009 Number (000s) 2008 Weighted average ex. price (£) 2009 2008 2009 Outstanding at beginning of year/ acquisition date Granted in the year Adjustment in grants for open offer Exercised/released in the year Less: repurchased in the year Less: forfeited...

  • Page 266
    ...550) (368) - 6,584 3,631 78.50 - 78.16 91.54 - - - 75.66 - 34.55 86.57 - 78.50 69.29 Notes a Options/award granted over Barclays PLC shares. b Options/award granted over Absa Group Limited shares. c Nil cost award. d Options/award granted over Barclays Global Investors UK Holdings Limited shares.

  • Page 267
    ...BGI business on 1st December 2009. The options were all exercised during December 2009. Notes a Options/award granted over Barclays PLC shares. b Options/award granted over Absa Group Limited shares. c Nil cost award. d Options/award granted over Barclays Global Investors UK Holdings Limited shares...

  • Page 268
    ...sell consumer or trade receivables to the conduit, which then issues commercial paper to investors to fund the purchase. The conduits have sufficient collateral, credit enhancements and liquidity support to maintain an investment grade rating for the commercial paper. Asset securitisations The Group...

  • Page 269
    ... assets (most common in the property industry). Credit structuring The Group structures investments to provide specific risk profiles to investors. This may involve the sale of credit exposures, often by way of derivatives, to an entity which subsequently funds those exposures by issuing securities...

  • Page 270
    ... Mortgage Back Securities (RMBS) assets. As at the balance sheet date these facilities had been drawn and were included in loans and advances. 46 Financial risks Financial risk management The Group is a major global financial services provider engaged in retail and commercial banking, credit cards...

  • Page 271
    ... Barclays PLC Annual Report 2009 269 47 Credit risk Credit risk is the risk of suffering financial loss, should any of the Group's customers, clients or market counterparties fail to fulfil their contractual obligations to the Group. Credit risk arises mainly from commercial and consumer loans...

  • Page 272
    ... 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 273
    ... 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 274
    ... 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 275
    ... 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 276
    ... 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 277
    ... value. For the purposes of historical and business unit comparison, loan loss rates are defined as total annualised 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...

  • Page 278
    ...2009 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 279
    ... Satisfactory £m 2008 Higher risk £m Total £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...

  • Page 280
    ... Of which Credit Risk Loans £m Total £m 2009 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...

  • Page 281
    ... £m Exchange and other adjustments £m Amounts written off £m Recoveries £m Amounts charged to income statement £m Balance at 31st December £m 2009 Loans and advances to banks Loans and advances to customers: Residential mortgage loans Credit card receivables Other personal lending...

  • Page 282
    ...excess funds are available after repayment in full of the outstanding loan, they are offered to any other, lower ranked, secured lenders. Any additional funds are returned to the customer. Barclays does not, as a rule, occupy repossessed properties for its business use. The Group does not use assets...

  • Page 283
    ...com/annualreport09 Barclays PLC Annual Report 2009 281 47 Credit risk continued Debt securities Trading portfolio assets, financial assets designated at fair value and available for sale assets are measured on a fair value basis. The fair value will reflect, among other things, the credit risk of...

  • Page 284
    ... 2009, Barclays Capital sold assets of £7,454m, including £5,087m in credit market assets, to Protium Finance LP (Protium), a newly established fund. As part of the transaction, Barclays extended a £7,669m 10-year loan to Protium Finance LP. At 31st December 2009, this loan had a carrying value...

  • Page 285
    ... the market risk profile across Barclays including risk appetite, limits and utilisation. The Committee meets monthly and is chaired by the Market Risk Director. Attendees include the Chief Risk Officer, respective business risk managers and Group Market Risk. Traded market risk Barclays policy is...

  • Page 286
    ... deposits. Daily Value at Risk and stress testing is calculated using a Barclays Capital consistent approach. Both these metrics are calculated by each respective business area with oversight provided by Group Market Risk. Risk exposures are monitored by respective business risk managers with...

  • Page 287
    ... mainly reflects the reduced spread generated on retail and commercial banking liabilities in the lower interest rate environment. If the interest rate hedges had not been in place then the AEaR risk for 2009 would have been £704m (2008: £670m). DVaR is also used to control market risk in Global...

  • Page 288
    ... 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 289
    www.barclays.com/annualreport09 Barclays PLC Annual Report 2009 287 48 Market risk continued The economic hedges represent the US Dollar and Euro Preference Shares and Reserve Capital Instruments in issue that are treated as equity under IFRS, and do not qualify as hedges for accounting purposes....

  • Page 290
    ... Global Retail and Commercial Banking, Barclays Wealth and Head Office Functions are structured to be self-funded through customer deposits and Barclays equity and other long-term capital. The Barclays Capital and Absa businesses are funded through the wholesale secured and unsecured funding markets...

  • Page 291
    ... Barclays PLC Annual Report 2009 289 49 Liquidity risk continued Global retail and commercial banking, Barclays Wealth and Head Office functions An important source of structural liquidity is provided by our core retail deposits in the UK, Europe and Africa; mainly current accounts and savings...

  • Page 292
    ... other banks Trading portfolio assets Financial assets designated at fair value: - held on own account Derivative financial instruments: - held for trading - designated for risk management Loans and advances to banks Loans and advances to customers Available for sale financial investments Reverse...

  • Page 293
    ... other banks Trading portfolio assets Financial assets designated at fair value: - held on own account Derivative financial instruments: - held for trading - designated for risk management Loans and advances to banks Loans and advances to customers Available for sale financial investments Reverse...

  • Page 294
    ... December 2009 Deposits from other banks Items in the course of 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...

  • Page 295
    ... under investment contracts held under own account: - Equity securities - Loans and advances - Debt securities - Other financial assets designated at fair value Derivative financial instruments Loans and advances to banks Loans and advances to customers - Residential mortgage loans - Credit card...

  • Page 296
    ... 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 297
    ... market prices Level 2 Level 3 Level 1 £m £m £m Commercial real estate loans Asset backed products Other credit products Derivative exposure to Monoline insurers Non-asset backed debt instruments Equity products Private equity Funds and fund-linked products FX products Interest rate products...

  • Page 298
    ...value £m Derivatives Net derivative financial instrumentsa £m Commercial real estate loans Asset backed products Other credit products Derivative exposure to Monoline insurers Non-asset backed debt instruments Equity products Private equity Funds and fund-linked products FX products Interest rate...

  • Page 299
    ... levels takes account of a range of factors such as deal vintage, underlying asset composition (historical losses; borrower characteristics; various loan attributes such as loan-to-value and debt-to-income ratios and geographic concentration), credit ratings (original and current), home price...

  • Page 300
    ... reference assets or sector averages are applied as a proxy. Fixed and floating rate notes issued, in certain emerging markets, are valued using models that discount expected future cash flows. These proprietary models calculate fair value based on observable interest rates and unobservable funding...

  • Page 301
    ... The main adjustments to model or system balances to arrive at a fair value are described below: Bid-Offer valuation adjustments Portfolios are valued to reflect the most advantageous market price to which Barclays has immediate access. For assets and liabilities where the firm is not a market maker...

  • Page 302
    ... Barclays PLC Annual Report 2009 www.barclays.com/annualreport09 Notes to the accounts For the year ended 31st December 2009 continued 50 Fair value of financial instruments continued Model valuation adjustments New models used for valuing the firm's positions are reviewed under the firm's Model...

  • Page 303
    ...change Profit and loss £m Equity £m 2009 £m 2008 £m 128 39 (68) 99 154 77 (103) 128 Commercial real estate loans Asset backed products Other credit products Derivative exposure to Monoline insurers Non-asset backed debt instruments Equity products Private equity Funds and fund-linked products...

  • Page 304
    302 Barclays PLC Annual Report 2009 www.barclays.com/annualreport09 Notes to the accounts For the year ended 31st December 2009 continued 50 Fair value of financial instruments continued Other credit products Sensitivity of synthetic CDOs is determined by using valuations based on different ...

  • Page 305
    ... assets contributed £192m (2008: £4m) to interest income. 52 Capital Management Barclays operates a centralised capital management model, considering both regulatory and economic capital. The capital management strategy is to continue to maximise shareholder value through optimising both the level...

  • Page 306
    ... - Emerging Markets - GRCB - Absa Investment Banking and Investment Management - Barclays Capital - Barclays Global Investors - Barclays Wealth Head Office Functions and Other Operations UK Retail Banking UK Retail Banking comprises Personal Customers, Home Finance, Local Business, Consumer Lending...

  • Page 307
    ... 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 banking division of Barclays that...

  • Page 308
    ... to the accounts For the year ended 31st December 2009 continued 53 Segmental reporting continued As at 31st December 2009 UK Retail Banking £m Barclays Commercial Bank £m GRCB - Western Europe £m GRCB - Emerging Markets £m Barclays Global Investorsa £m Head office functions Barclays and other...

  • Page 309
    www.barclays.com/annualreport09 Barclays PLC Annual Report 2009 307 53 Segmental reporting continued As at 31st December 2008 UK Retail Banking £m Barclays Commercial Bank £m GRCB - GRCB - Western Emerging b Marketsb Europe £m £m Barclays Global Investorsa £m Head office functions Barclays ...

  • Page 310
    ... to the accounts For the year ended 31st December 2009 continued 53 Segmental reporting continued As at 31st December 2007 UK Retail Banking £m Barclays Commercial Bank £m GRCB - Western Europe £m GRCB - Emerging Markets £m Barclays Global Investorsa £m Head office functions Barclays and other...

  • Page 311
    ... PLC Annual Report 2009 309 Barclays Bank PLC data 310 Consolidated income statement 311 Consolidated statement of comprehensive income 312 Consolidated balance sheet 313 Consolidated statement of changes in equity 314 Consolidated cash flow statement 315 Notes to the accounts 324 Financial...

  • Page 312
    310 Barclays PLC Annual Report 2009 www.barclays.com/annualreport09 Barclays Bank PLC data Consolidated income statement For the year ended 31st December Notes 2009 £m 2008 £m 2007 £m Continuing operations Interest income Interest expense Net interest income Fee and commission income Fee ...

  • Page 313
    ... PLC Annual Report 2009 311 Barclays Bank PLC data Consolidated statement of comprehensive income For the year ended 31st December Net profit for the year Other comprehensive income: Continuing operations Currency translation differences Available for sale financial assets Cash flow hedges...

  • Page 314
    ...com/annualreport09 Barclays Bank PLC data Consolidated balance sheet As at 31st December Notes 2009 £m 2008 £m Assets Cash and balances at central banks Items in the course of collection from other banks Trading portfolio assets Financial assets designated at fair value: - held on own account...

  • Page 315
    ... non-controlling interest arising on acquisitions, disposals and capital issuances Other Balance at 31st December 2009 Balance at 1st January 2008 Net profit for the year Other comprehensive income: Currency translation differences Available for sale financial assets Cash flow hedges Tax relating to...

  • Page 316
    ... Repayments of borrowings and redemption of debt securities Net issue of shares and other equity instruments Capital injection from Barclays PLC Net issues of shares to non-controlling interests Net cash from financing activities Effect of exchange rates on cash and cash equivalents Net cash...

  • Page 317
    ... Annual Report 2009 315 Barclays Bank PLC data Notes to the accounts a Net interest income 2009 £m 2008 £m 2007 £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...

  • Page 318
    ... Barclays PLC Annual Report 2009 www.barclays.com/annualreport09 Barclays Bank PLC data Notes to the accounts continued d Administration and general expenses 2009 £m 2008 £m 2007 £m Administrative expenses Impairment charges/(releases): - property and equipment (Note 23) - intangible assets...

  • Page 319
    ... services in relation to statutory and regulatory filings. These includes audit services for the review of the interim financial information under the Listing Rules of the UK listing authority and fees paid for reporting under Section 404 of the US Sarbanes-Oxley Act (Section 404). In 2008 and 2009...

  • Page 320
    ... for sale financial investments 2009 £m 2008 £m Debt securities Treasury bills and other eligible bills Equity securities Available for sale financial investments Movement in available for sale financial investments At beginning of year Exchange and other adjustments Acquisitions and transfers...

  • Page 321
    ... profits of Barclays Bank PLC, semiannually 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 Companies...

  • Page 322
    ... the London interbank offered rate for three-month Sterling deposits. The 6.0% Preference Shares are redeemable at the option of Barclays Bank PLC, in whole but not in part only, on 15th December 2017, and on each dividend payment date thereafter at £10,000 per share plus any dividends accrued for...

  • Page 323
    ... 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 or to a wholly owned subsidiary) on any of their respective ordinary shares, other preference shares or other share capital or (b) redeem, purchase...

  • Page 324
    ... PLC Annual Report 2009 www.barclays.com/annualreport09 Barclays Bank PLC data Notes to the accounts continued j Reserves Other reserves Available for sale reserve £m Cash flow hedging reserve £m Translation reserve £m Total £m At 1st January 2009 Net gains from changes in fair value...

  • Page 325
    ... are investments in Barclays PLC ordinary shares, dealt with as trading portfolio equity assets, debt securities and available for sale financial investments as appropriate. There consequently are no significant differences in exposures to market risk, credit risk, liquidity risk and the fair value...

  • Page 326
    ... attributable to equity holders of the Parent from: Continuing operations Discontinued operations Selected balance sheet data Total shareholders' equity Subordinated liabilities Deposits from banks, customer accounts and debt securities in issue Loans and advances to banks and customers Total assets...

  • Page 327
    www.barclays.com/annualreport09 Barclays PLC Annual Report 2009 325 Ratio of earnings to fixed charges - Barclays Bank PLC 2009 2008 2007 (in £m except for ratios) 2006 2005 Ratio of earnings to fixed charges Fixed charges Interest expense Rental expense Total fixed charges Earnings Income ...

  • Page 328
    326 Barclays PLC Annual Report 2009 www.barclays.com/annualreport09

  • Page 329
    Shareholder information 328 Shareholder information 335 Shareholder enquiries 336 Annual Report Index 338 Glossary of terms

  • Page 330
    ... staff shares of £1 each. At the close of business on 31st December 2009, 11,411,577,230 ordinary shares were outstanding. The principal trading market for Barclays PLC ordinary shares is the London Stock Exchange. Ordinary share listings were also obtained on the New York Stock Exchange (NYSE...

  • Page 331
    www.barclays.com/annualreport09 Barclays PLC Annual Report 2009 329 The following table shows the high and low sales price for the ordinary shares during the periods indicated, based on mid-market prices at close of business on the London Stock Exchange and the high and low sale price for ADSs as...

  • Page 332
    ... Barclays PLC Annual Report 2009 www.barclays.com/annualreport09 Shareholder information Articles of Association The Company was incorporated in England on 20th July 1896 under the Companies Acts 1862 to 1890 as a company limited by shares and was reregistered in 1982 as a public limited company...

  • Page 333
    ... by their terms of issue, a redemption or purchase by the Company of any of its issued shares, or a reduction of share capital), the right to receive out of the surplus assets of the Company available for distribution amongst the members and in priority to the holders of the Ordinary Shares and any...

  • Page 334
    ... Turner Company Secretary Group Financial Controller Joint Secretary,Barclays Bank PLC Group General Counsel Chief Executive of Global Retail Banking Chief Executive of Barclays Wealth Group Risk Officer President of Barclays Capital and Co-Chief Executive of Corporate and Investment Banking Group...

  • Page 335
    ... of by open market sale, a capital gain may result if the disposal proceeds exceed the sum of the base cost of the shares sold and any other allowable deductions such as share dealing costs and indexation relief (up to 5th April 1998). To arrive at the total base cost of any Barclays PLC shares held...

  • Page 336
    ... income or loss from sources within the United States for foreign tax credit limitation purposes. Taxation of premium on redemption or purchase of shares No refund of tax will be available under the Treaty in respect of any premium paid on a redemption of preference shares by Barclays Bank PLC or on...

  • Page 337
    ...investment in Barclays, or about Barclays 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...

  • Page 338
    ... 26 Dividends Earnings per share Economic profit Auditors 191 reports 222 Available for sale investments Balance sheet 50 average 206 consolidated 312 consolidated (Barclays Bank) Barclaycard 65 business analysis 64 business description Barclays Bank PLC 310 consolidated accounts 324 financial data...

  • Page 339
    ... Barclays PLC Annual Report 2009 337 Investment Banking and Investment Management 58-59 business analysis 224 26-29 247 Investment in associates and joint ventures Key performance indicators Legal proceedings 176-186 Remuneration report 244-245 Reserves 58-79 82-86 Results by business Risk...

  • Page 340
    ... PLC Annual Report 2009 www.barclays.com/annualreport09 Glossary of terms Term used in Annual Report Accounts Allotted Attributable profit Called up share capital Capital allowances Cash at bank and in hand Class of business Finance lease Freehold Loans and advances Loan capital Net asset value...

  • Page 341
    ... housing buildings, warehouses, garages, and industrial properties. Commercial real estate loans are those backed by a package of commercial real estate assets. See Risk Management section - Credit Market Exposures. 'Commercial Paper' An unsecured promissory note issued to finance short-term credit...

  • Page 342
    ... bank to meet cash outflows in the event of stressed market conditions. 'Loan loss rate' 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). 'Loan to deposit...

  • Page 343
    ... This includes both secured and unsecured loans such as mortgages and credit card balances. 'Return on average economic capital' Profit for the year attributable to equity holders of the Parent divided by average economic capital. 'Return on average shareholders' equity' Calculated as profit for the...

  • Page 344
    ...SIV and the funding cost. See Risk Management section - Credit Market Exposures. 'Structural liquidity' The liquidity available from current positions - principally unpledged marketable assets and holdings of term liabilities with long remaining lives. 'Structured finance/notes' A structured note is...

  • Page 345
    www.barclays.com/annualreport09 Barclays PLC Annual Report 2009 343 Notes

  • Page 346
    344 Barclays PLC Annual Report 2009 www.barclays.com/annualreport09 Notes

  • Page 347

  • Page 348
    ... Elemental Chlorine Free (ECF) process. Report Text: Produced from 100% de-inked post consumer waste. The printer and both mills are certified to the ISO 14001 environmental management standard. © Barclays Bank PLC 2010 Registered office: 1 Churchill Place, London E14 5HP Registered in England...