Barclays 2010 Annual Report Download - page 129

Allocating capital in the Group’s strategic medium-term plan
Capital adequacy and returns on regulatory and economic capital form
a key part of the Group’s annual strategic medium-term planning process.
Amongst other strategic objectives, the Group seeks to optimise returns
on economic and regulatory capital through the planning process. To
achieve this, executive management consider returns on risk weighted
assets and economic capital when setting limits for business capital
demand. Executive management will also review the forecast capital ratios
to ensure internal targets continue to be met over the medium-term plan.
The Treasury Committee reviews the limits on capital demand on
a monthly basis taking into account actual performance.
Capital resources
Core Tier 1 capital increased by £4.4bn during 2010. £3.6bn of this
increase was a result of attributable profit. In addition £1.5bn of equity was
issued following the exercise of warrants and £0.7bn additional Core Tier 1
was reflected in the currency translation reserve. These were offset by net
losses on available for sale equity positions, of which BlackRock, Inc. was
£0.9bn, and dividends paid of £0.5bn.
Total qualifying Tier 1 Capital increased by £3.9bn during 2010 as the
increase in Core Tier 1 capital was offset by the redemption of Reserve
Capital Instruments of £0.7bn.
Total net capital resources Basel II
2010
£m
2009
£m
2008
£m
Ordinary shareholders’ funds 50,858 47,277 36,618
Regulatory adjustments:
MCNs not yet converted –– (3,652)
Available for sale reserve – debt 340 83 372
Available for sale reserve – equity –(309) (122)
Cash flow hedging reserve (152) (252) (132)
Defined benefit pension scheme 99 431 849
Adjustments for scope of regulatory consolidation 99 196 847
Foreign exchange on RCIs and upper Tier 2 loan stock 209 25 (231)
Adjustment for own credit (621) (340) (1,650)
Other adjustments (40) 144 305
Equity non-controlling interests 2,923 2,351 1,981
Less: Intangible assets (8,326) (8,345) (9,964)
Less: Net excess of expected loss over impairment at 50% (168) (25) (159)
Less: Securitisation positions at 50% (2,360) (2,799) (704)
Less: Non Core Tier 1 capital issues included in shareholders’ funds –– –
Core Tier 1 Capital 42,861 38,437 24,358
Preference shares 6,317 6,256 6,191
Reserve Capital Instruments 6,098 6,724 5,743
Tier One Notesa1,046 1,017 1,086
Tax on the net excess of expected loss over impairment (100) 8 46
Less: Material holdings in financial companies at 50% (2,676) (2,805) (174)
Total qualifying Tier 1 capital 53,546 49,637 37,250
Revaluation reserves 29 26 26
Available for sale reserve – equity –309 122
Collectively assessed impairment allowances 2,409 2,443 1,654
Tier 2 non-controlling interests 572 547 607
Qualifying subordinated liabilities:
Undated loan capital 1,648 1,350 6,745
Dated loan capital 16,565 15,657 14,215
Less: Net excess of expected loss over impairment at 50% (168) (25) (158)
Less: Securitisation positions at 50% (2,360) (2,799) (704)
Less: Material holdings in financial companies at 50% (2,676) (2,805) (174)
Total qualifying Tier 2 capital 16,019 14,703 22,333
Less: Other regulatory deductions (2,250) (880) (856)
Total net capital resources 67,315 63,460 58,727
Capital Ratios %% %
Core Tier 1 ratio 10.8% 10.0% 5.6%
Tier 1 ratio 13.5% 13.0% 8.6%
Risk asset ratio 16.9% 16.6% 13.6%
Note
a Tier One Notes are included in subordinated liabilities in the consolidated balance sheet.
Barclays PLC Annual Report 2010 www.barclays.com/annualreport10 127
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