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Building the

‘Go-To’ bank

Barclays PLC

Annual Report 2013

Page 1
Building thu 'Go-To' bank Barclays PLC Annual Report 2013

Page 2
... Group's future financial position, income growth, assets, impairment charges and provisions, business strategy, capital, leverage and other regulatory ratios, payment of dividends (including dividend pay-out ratios), projected levels of growth in the banking and financial markets, projected costs...

Page 3
... Scorecard Group Finance Director's review Strategic risk overview UK Retail and Business Banking (UK RBB) Europe Retail and Business Banking (Europe RBB) Africa Barclaycard Investment Bank Corporate Banking Wealth and Investment Management Chairman's governance overview Summary remuneration report...

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... financial services provider engaged in personal banking, credit cards, corporate and investment banking, and wealth and investment management with an extensive international presence in Europe, the Americas, Africa and Asia. With over 300 years of history and expertise in banking, Barclays operates...

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... institutions, governments and institutional investors with financial advisory, capital-raising, financing and risk management services Financial review Corporate Banking Â£3,115m A leading provider of cash management, lending and trade financing to corporate clients in the UK and South Africa, and...

Page 6
...'s strategic review 2013 has been a year of significant change for Barclays. A year ago we set out the outcome of our strategic review and our Transform plan to make Barclays the 'Go-To' bank for all our stakeholders. We continue to take steps to de-risk the business, strengthen the balance sheet...

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... overview Chief Executive's strategic review Strategy and operating environment Business model/Value creation Balanced Scorecard Group Finance Director's review Strategic Risk overview Performance review by division Chairman's governance overview Summary remuneration report 02 04 06 08 10 12 14...

Page 8
..., the developing needs of our customers and clients. Transform: delivering our strategy The quality and commitment of the people at Barclays, combined with our underlying financial strength, means we start our transformation from a good position. The Barclays Strategic Review, commenced in Q4 2012...

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... customers and clients. As they become increasingly technology savvy we have worked to embed technology across our product offering. This ranges from payment innovations such as PingIt to expanding our Investment Bank's electronic trading platform BARX. The Strategic Report Governance Risk review...

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... customers. Payment processing and working capital facilities for small and large businesses alike, helping them receive money and pay staff and suppliers. A full global suite of investment bank services from corporate finance to macroeconomic research, and capital markets execution to risk...

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... lease finance, trade and supplier finance and working capital solutions Global capital markets Large corporate and inter-bank lending Management of business and ï¬nancial risks Financial and business support Foreign exchange rate hedging Risk management Shareholder information Fixed rate loans...

Page 12
... to meet clients' needs We act with integrity in everything we do We create sustainable returns above the cost of equity We understand and effectively manage our risks, and continuously improve control Colleague Citizenship â- â- â- Conduct Company 10 Barclays PLC Annual Report 2013...

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...48 Che Balanced Scorecard defines what we need to achieve over the next five years to be well on the way to becoming the 'Go-Co' bank. It clearly shows what success looks like across the 5Cs: Customer & Client, Colleague, Citizenship, Conduct, and Company. The Strategic Report Metrics and targets...

Page 14
... in the medium term. Importantly, the resilience of the underlying customer and client franchises across the Group allowed us to maintain dividends of 6.5p per share for full year 2013 despite a 25% increase in the total number of shares following the rights issue. Balance sheet review In October...

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... returns in the future. Ultimately, increasing the Group's RoE will help to reduce the market valuation discount and increase total shareholder returns. Financial review Financial statements Risk management Shareholder information barclays.com/annualreport Barclays PLC Annual Report 2013 13

Page 16
...market areas of business. Revised Risk Management Structure In 2013, the Group also introduced the Enterprise Risk Management Framework (ERMF), which sets out a framework and approach that is applicable to the whole bank, all colleagues and to all types of risk. To strengthen the governance relating...

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... significand acdual or podendial risk exposures, which are known as Principal Risks (see dable on dhe following pages). Financial review Financial statements Robert Le Blanc Chief Risk Officer Risk management Shareholder information barclays.com/annualreport Barclays PLC Annual Repord 2013 15

Page 18
... continued Example of a related strategic objective and associated risks Principal Risk Objecdive Example of a significand risk daken in pursuid of dhe objecdive Credit risk The suffering of financial loss should any of our cusdomers nod fulfil dheir condracdual obligadions do dhe Group. We...

Page 19
... aims do provide dhe cusdomer widh a susdainable programme do help redurn dhem do good financial healdh. Customers & Clients Citizenship Company Risk review We have build a business cendred on cliend needs as opposed do dhe pursuid of profids from price changes and our well embedded sdress desding...

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... Support of Government (access to) lending schemes â- â- The safe use of data to improve and tailor offers to customers Personal and Premier Small businesses â- â- Personal and Business banking (including current accounts, savings and payments) Lending (secured and unsecured) - mortgages, loans...

Page 21
... customer experiences and outcomes Reduction in processing times and associated errors positively influencing complaint rates and costs Tailored services, usually at good margins Support and access to lending/capital We deliver a sustainable contribution to Group revenue through offering long term...

Page 22
... Bank site where everyone (not just Barclays customers) can tell us what products and services will make their lives easier. UK RBB continued to support the UK economy; advancing Â£1.8bn of gross new term lending to small businesses and helping over 120,000 start-ups. We also organise small business...

Page 23
.... 6. We are going to allow our mobile banking customers to set up new payees on their mobiles. This will extend the app meaning that customers can really do much more on the move. Financial statements Risk management Shareholder information 7. To further extend our services to a wider range of...

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... managers delivering investment advice and creating strong customer relationships Innovation in products and technology â- â- Day-to-day transactional banking (e.g. current accounts, debit/deferred debit cards) Lending (e.g. lines of credit, personal loans, mortgages) Savings and investments...

Page 25
... from us Financial review â- â- â- â- â- â- Contributing to strategy Our international footprint and brand, investment services and advice, and skilled relationship managers differentiate Barclays in our European retail banking markets. In tough economic times, transforming our cost base...

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..., to address the continuing economic challenges across Europe. During the year the business reduced full time equivalent employees by 1,600 and closed over 500 distribution points. Operating expenses increased by Â£435m to Â£1,242m, almost entirely reflecting costs to achieve Transform of Â£403m...

Page 27
... our relationship by providing products and services to that business - in doing so help our client achieve his ambitions across both his professional and personal life. Financial statements Risk management Shareholder information barclays.com/annualreport Barclays PLC Annual Report 2013 25

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... including small and medium enterprises and commercial ventures Large corporates, public sector bodies and ï¬nancial institutions Retail, commercial and corporate customers and clients seeking wealth, investment management and insurance solutions Full suite of retail banking products and services...

Page 29
... diverse benefits Sustaining business by Risk management â- â- Better customer and client experiences and outcomes Reduction in processing times and associated errors Tailored services Support and access to lending / capital A gateway to the best of Barclays advice and services Interest income...

Page 30
... our African plan. Over the year our activities ranged from funding renewable energy projects to increasing access to financial services for individuals and small businesses. We continued to invest our community investment spend in targeted skills development programmes with proven job creation...

Page 31
..., we hope to tackle the challenges of last mile delivery and create a model that could be scaled across Africa to help more people gain access to affordable healthcare. Financial statements Risk management Shareholder information barclays.com/annualreport Barclays PLC Annual Report 2013 29

Page 32
... close to 14m new customers in the past three years.' Valerie Soranno Keating CEO, Barclaycard The Barclaycard business model Our social purpose The ability to buy and sell goods or services easily and securely is an important human need - and essential to create the right environment for economic...

Page 33
...those that credit is suitable for. Because of our role as a trusted international payments company and by responding to customer and market needs, Barclaycard has maintained its position as the 8th largest consumer payment company in the world. Barclays PLC Annual Report 2013 31 â- â- Shareholder...

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...for both our Balance Transfer rate (3rd year in a row) and Standard rate products in the UK, being ranked 2nd among Visa/MasterCard issuers in the 2013 JD Power industry customer service rankings in the US and winning the 'Best Corporate Card Provider' at the Business Travel Awards. Colleague We are...

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... another one was flown immediately from Scotland to London. "It arrived 15 minutes before the event started," says Marco, "You just can't put a value on service like that." Financial statements Risk management Shareholder information barclays.com/annualreport Barclays PLC Annual Report 2013 33

Page 36
...and account servicing and reporting Multi-asset class and macroeconomic research delivering actionable ideas to help our clients make informed investment decisions Global footprint with unique dual home markets in the UK and US A market leading ï¬,ow franchise across all core Fixed Income, Currency...

Page 37
...the products and services they need to invest, grow and manage risk. Through our client focused flow business model we provide diversity of income and diversity of risk to Barclays, and are able to deliver market execution services for retail, wealth, institutional and corporate customers. Financial...

Page 38
... client volumes. Investment Banking income increased 3% to Â£2,200m driven by increased equity underwriting fees, partly offset by declines in financial advisory activity. The Investment Bank continued to make progress in delivering part of the Transform strategy in 2013. The business incurred costs...

Page 39
...what we mean by 'Go-To': building long term client relationships and combining strategic advice and deep financing expertise to help our clients achieve their business goals. Financial statements Risk management Shareholder information barclays.com/annualreport Barclays PLC Annual Report 2013 37

Page 40
... clients' payments and receipts Financing global trade and providing foreign exchange Protecting larger companies from the risk of adverse market changes Introducing products and services from other parts of the group, such as Barclaycard, Wealth, Investment Management and Investment Bank...

Page 41
... through responsible lending and supporting clients back to financial health A stable banking partner for the long-term Secure place for deposits Competitive financing Enhanced client experience Tailored financial solutions Access to innovative banking products and services Reliable payments and...

Page 42
... day Corporate Banking employees make a real difference; helping individuals, communities and businesses grow. Primarily, we support businesses by lending money prudently. In 2013, we provided loans and advances of Â£61.1bn. Over 1,600 SME clients benefitted from the Cashback for Business scheme...

Page 43
... industry. As Simon Spinks, MD, says, "It's good to have someone who knows your business and where you're trying to go...Barclays actually allows you to move forward." Financial statements Risk management Shareholder information barclays.com/annualreport Barclays PLC Annual Report 2013 41

Page 44
... of client service and experience An open architecture approach to discretionary and advisory portfolio management Investment in underlying technology and processes Leveraging Barclays' global scope and scale Global research and investment solutions 42 Barclays PLC Annual Report 2013 barclays.com...

Page 45
... solutions Simplifying how we operate, meaning greater clarity and transparency for clients. â- â- â- â- â- â- Interest income (for example, lending) â- â- Shareholder information â- â- A gateway to the best of Barclays' advice and services, thereby providing access to banking, credit...

Page 46
...more information on performance, please see pages 237 to 268 Future priorities Wealth and Investment Management continues to be a key area of growth within Barclays. Examples of how we will achieve our strategy: â- â- Building on our strengths : a new direct to consumer offering for 'DIY' Buy and...

Page 47
... their identity fall from 1.5 minutes to less than 10 seconds. 94% of clients scored at least nine out of 10 for the speed, ease of use and security of voice authentication. Financial statements Risk management Shareholder information barclays.com/annualreport Barclays PLC Annual Report 2013 45

Page 48
... for the company to meet its objectives and review management performance. The right strategy As a Board, we set direction and risk appetite and provide oversight and control of management in the day-to-day running of the business. As Chairman, I seek to ensure that adequate time is set aside at...

Page 49
... statements Board Conduct, Reputation and Operational Risk Committee Board Financial Risk Committee â- â- â- â- Risk management Board Remuneration Committee Shareholder information Board Corporate Governance and Nominations Committee barclays.com/annualreport Barclays PLC Annual Report...

Page 50
... 10% on 2012, reflecting the lower level of risk and conduct adjustment for 2013. A significant part of the Committee's work in 2013 was reviewing how to restructure executive Director and senior executive remuneration for compliance with new EU regulation, the Capital Requirements Directive IV and...

Page 51
... Investment Bank overall was down 9% driven by a decrease in FICC Adjusted profit before tax was down 32% year on year due to reduced income and costs to achieve Transform Successful execution of Rights Issue Strong financial fundamentals across funding and liquidity, capital, credit risk management...

Page 52
... service during 2013. The resulting award of Â£500,000 will be 100% deferred through a Share Value Plan award vesting over three years, each annual release of shares being subject to an additional six month holding period. LTIP The LTIP amount included in the 2013 single total figure of remuneration...

Page 53
...' remuneration policy Annual report on Directors' remuneration Additional remuneration disclosures 78 83 85 86 89 89 91 93 95 96 100 111 122 Risk review Financial review Financial statements Risk management Shareholder information barclays.com/annualreport Barclays PLC Annual Report 2013 51

Page 54
...and the right people in place to create long-term value for shareholders. Our role as the Board is to set direction and risk appetite and to provide oversight and control of management in running the business on a day-to-day basis. We rely on management for timely and relevant information, to distil...

Page 55
... Board Diversity Policy. You can find our Board Diversity Policy in the corporate governance section of Barclays' website, Barclays.com. Sir David Walker Chairman 3 March 2014 Financial statements Risk management Shareholder information barclays.com/annualreport Barclays PLC Annual Report 2013...

Page 56
...Barclays and approves remuneration arrangements for executive directors and senior executives and individual remuneration awards Makes recommendations on Board and Board Committee composition and effectiveness, Board and executive succession plans, talent management strategy and corporate governance...

Page 57
... within the Board, the Board Committees and between the Directors and senior management Barclays PLC Annual Report 2013 55 Group Chief Executive Risk management Non-executive Director â- â- Deputy Chairman and Senior Independent Director Shareholder information Company Secretary...

Page 58
...the Board as a non-executive Director on 19 September 2013, bringing valuable direct banking experience, in depth knowledge of banking in Africa and a good understanding of Conduct risk. Wendy is chairman of Barclays Africa Group, which is majority owned by Barclays. The UK Corporate Governance Code...

Page 59
... Finance Group overview Internal Audit function Tax function Treasury function Investor Relations HR function Strategy and Corporate development Balance of non-executive and executive Directors 1 Male Chairman 2 Executive Directors 12 Risk review Non-executive Directors Board gender balance...

Page 60
... of 30-36 days. The expected time commitments for Board committee members are set out in Barclays' Charter of Expectations, which is available at Barclays.com. In practice, Directors typically commit in excess of the minimum requirements; Developed a programme for non-executive Directors to engage...

Page 61
... internal teams. The rights issue was launched in mid-September 2013 and closed in early October 2013, with acceptances representing 94.63% of the new shares offered to shareholders. June July August September Governance Risk review Mid June: Board debated indications from the PRA of the capital...

Page 62
...Board has greater line of sight into the views of key stakeholders Given the changes in Board and Executive Committee composition, a programme has been developed for 2014 that will allow the non-executive Directors to spend more time with business CEOs and their management teams. In addition, Board...

Page 63
...of Employee Opinion Surveys are reported to the Board by the Chief Executive. This helps us understand our colleagues' views and concerns when shaping future organisational direction. Financial statements Risk management Shareholder information barclays.com/annualreport Barclays PLC Annual Report...

Page 64
... Board Audit Committee Allocation of Time (%) 6 5 1 1 Control Issues 2 Financial Results 3 Internal Audit Matters 4 External Audit Matters 5 Business Control Environment 6 Other (including Governance and Compliance) 2 2013 16 40 8 11 16 8 2012 13 31 14 6 14 22 4 3 62 Barclays PLC Annual Report...

Page 65
... to write down the DTA in Spain. Full details of the tax rate and tax provision for 2013 can be found on page 294; Risk review â- â- Financial review Financial statements â- â- Risk management â- â- Shareholder information barclays.com/annualreport Barclays PLC Annual Report 2013 63

Page 66
... the trends in data supported the assumptions in its review of the interim management statement for the third quarter of 2013. In connection with the 2013 full-year results the Committee assessed the amount of unutilised provisions against key assumptions for potential future claims experience, FOS...

Page 67
...Business Banking, Investment Bank, Africa, Operations & Technology and Wealth, hearing directly from the heads of those businesses and functions. The Committee's aim is to review each business area over an 18 month to 2 year cycle. In addition to understanding management's view of any control issues...

Page 68
...as a result of the Transform programme and the additional strain that both an audit tender and a change of audit firm would involve. In addition, the Committee noted that both the Group Finance Director and the Committee Chairman are new in role, the latter having previously been a senior partner in...

Page 69
...for non-audit services of Â£250,000 over and above which the Committee will be required to approve such requests. The Strategic Report Governance Risk review Financial review Financial statements Risk management Shareholder information barclays.com/annualreport Barclays PLC Annual Report 2013 67

Page 70
..., Board Financial Risk Committee) joined the Committee with effect from 1 January 2014. Board Enterprise Wide Risk Committee Allocation of Time (%) 4 3 1 Risk Profile/Risk Appetite 2 Key Risk Issues 3 Internal Control/Risk Policies 4 Other 1 2013 61 16 10 13 2 68 Barclays PLC Annual Report 2013...

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... for 2014. Quantitative Easing Sir David Walker Chairman, Board Enterprise Wide Risk Committee 3 March 2014 Financial review Leverage/Regulatory Rules Financial statements Internal Controls Risk management Shareholder information barclays.com/annualreport Barclays PLC Annual Report 2013 69

Page 72
...of Time (%) 5 4 3 1 2013 1 Risk Profile/Risk Appetite (including capital and liquidity management) 2 Key Risk Issues 3 Internal Control/Risk Policies 4 Regulatory Frameworks 5 Other (including remuneration and governance issues) 48 22 12 4 15 2012 61 18 6 5 10 2 70 Barclays PLC Annual Report 2013...

Page 73
... Risk Committee and the Board the total level of financial risk the Group is prepared to take (risk appetite) to achieve the creation of long-term shareholder value; Monitoring financial risk appetite, including setting limits for individual types of financial risk, e.g. credit, market and funding...

Page 74
... review were shared more widely with senior management across the Group. Further details of the Group's system of internal control and risk management are included in the Directors' Report on pages 80 and 81 and in the Risk Management Report on pages 377 to 422. 72 Barclays PLC Annual Report 2013...

Page 75
...met four times in 2013. The chart opposite shows how the Committee allocated its time during 2013. Barclays PLC Annual Report 2013 73 Financial statements Risk management â- Did not attend lâ- Attended * unable to attend 1 meeting owing to a prior business commitment Board Conduct, Reputation and...

Page 76
.... The processes are described in 'Corporate Governance in Barclays' available on our website Barclays.com. During 2012 the Board Risk Committee (now the Board Financial Risk Committee) had identified that Technology Risk is a key area of risk for Barclays, as it is likely to be for other banks. In...

Page 77
... Committee Allocation of Time (%) 5 4 1 1 Corporate Governance Matters 2 Board & Committee Composition 3 Succession planning and Talent 4 Board Effectiveness 5 Other 2 3 2013 22 19 43 13 4 2012 21 32 29 14 4 Shareholder information barclays.com/annualreport Barclays PLC Annual Report 2013...

Page 78
... that career options are not confined to a particular business or function. Both management and the Committee recognise that increasing diversity and developing talent are long-term objectives and we will continue to scrutinise progress closely in 2014. 76 Barclays PLC Annual Report 2013 barclays...

Page 79
...-F filing, which can be accessed from the Securities and Exchange Commission's (SEC) EDGAR database or via our website, Barclays.com. Sir David Walker Chairman 3 March 2014 Financial statements Risk management Shareholder information barclays.com/annualreport Barclays PLC Annual Report 2013 77

Page 80
... Group in the year Rights and obligations attaching to shares Restrictions on the transfer of securities Restrictions on voting rights 52-77 86-88 87 89-125 Section 414A of the Companies Act 2006 requires the Directors to present a Strategic Report in the Annual Report and Accounts. The information...

Page 81
... 1 company cars) covers UK and South Africa where this type of transport is material and data is available. Risk review Financial review Research and development In the ordinary course of business the Group develops new products and services in each of its business divisions. Share capital Share...

Page 82
... with the guidance 'Internal Control: Revised Guidance for Directors on the UK Corporate Governance Code' published by the Financial Reporting Council (the Turnbull Guidance). Person interested Number of Barclays Shares Qatar Holding LLCb BlackRock, Incc The Capital Group Companies Incd 813,964...

Page 83
... affected or are reasonably likely to materially affect the Group's internal control over financial reporting. The Strategic Report Governance Risk review Financial review Financial statements Risk management Shareholder information barclays.com/annualreport Barclays PLC Annual Report 2013 81

Page 84
... and its objectives and policies in managing the financial risk to which it is exposed and its capital are discussed in the Strategic Report and in the Risk Review and Management section. The Directors have assessed, in the light of current and anticipated economic conditions, the Group's ability to...

Page 85
... Board Audit Committee Board Conduct, Reputation and Operational Risk Committee Board Corporate Governance and Nominations Committee Board Remuneration Committee Board Enterprise Wide Risk Committee Financial review Financial statements Mike Ashley (59) Non-Executive Director Skills and experience...

Page 86
... Board Enterprise Wide Risk Committee Board Financial Risk Committee Tushar Morzaria â- (45) Group Finance Director Skills and experience Tushar joined the Board and Executive Committee of Barclays in October 2013 as Group Finance Director. Prior to this, he was CFO, Corporate and Investment Bank...

Page 87
...Investment Banking Hugh (Skip) E. McGee III Chief Executive, Americas Darryl West Interim Chief Operations and Technology Officer Risk management Irene McDermott Brown Group Human Resources Director Shareholder information Tushar Morzaria Group Finance Director Barclays PLC Annual Report 2013...

Page 88
... increasingly integrated over the course of 2013. In line with the firm-wide strategy, we presented a more unified proposition to applicants and have offered students and graduates the opportunity to work across Barclays. Additionally, our new 'Grow with Barclays' framework presents clear pathways...

Page 89
.... Financial statements Multigenerational 62+ (Traditionalists) 43 to 61 (Baby Boomers) 27 to 42 (Generation X) 26 and below (Gen Y/Millennials) 1% 1% 26% 25% 59% 59% 14% 15% 2013 2012 Risk management Shareholder information barclays.com/annualreport Barclays PLC Annual Report 2013 87

Page 90
... religious calendar dates and our UK canteens offer both halal and kosher food. There are also quiet rooms available for prayer in many of our larger sites. This year, Barclays launched its first ever multicultural holiday e-card, which was available to send to all clients and customers, and donated...

Page 91
...2014) Financial statements Contents Annual statement Remuneration questions and answers Remuneration policy for all employees Remuneration and CRD IV. This section sets out our plans for remuneration compliance with CRD IV in respect of the CRD IV pay ratio. 2013 incentives Directors' remuneration...

Page 92
...rated 2013 bonus award of Â£500,000 to Chris Lucas which will be fully deferred in shares. Tushar Morzaria was appointed as Group Finance Director on a salary of Â£800,000 commensurate with market pay levels and being the same as his predecessor. The rest of his pay is in line with Barclays' policy...

Page 93
... in three equal instalments over a period of three years. Any shares released will be subject to a further six month holding period from the date on which they are released. Financial statements Risk management Shareholder information barclays.com/annualreport Barclays PLC Annual Report 2013 91

Page 94
... 2013 2012 2011 Notes a Calculated as dividend per share divided by adjusted EPS. b Taxes borne are the Company's own tax contribution, representing taxes paid by the Company in the year. c Taxes collected are those collected from employees and customers on behalf of governments. 92 Barclays PLC...

Page 95
... in this way promotes the delivery of sustainable individual and business performance and establishes clear alignment between remuneration policy and Barclays' strategy. Financial statements Risk management Shareholder information barclays.com/annualreport Barclays PLC Annual Report 2013 93

Page 96
...share plans (HMRC approved for UK participants). The cost of providing the benefits is defined and controlled. Following its launch in 2012 in the UK, 'My Rewards' will be rolled out globally over the next few years. fole Based Pay Pension and benefits â- â- â- â- Variable remuneration Annual...

Page 97
...a result of implementing RBP with a ratio of 2:1 we expect a small increase in fixed costs (and decrease in variable costs) for 2014. RBP will represent a relatively small proportion of total compensation costs. Shareholder information barclays.com/annualreport Barclays PLC Annual Report 2013 95

Page 98
... year. Profits were also impacted by the withdrawal from certain lines of business which were incompatible with Barclays' Purpose and Values, investing to transform our operations and resolving legacy conduct and litigation issues The UK Retail and Corporate Banking businesses delivered good results...

Page 99
... to 2012 Barclays total incentive awards granted - current year and deferred (audited) Barclays Group Year ended 31.12.13 Â£m Year ended 31.12.12 Â£m % Change Year ended 31.12.13 Â£m Investment Bank Year ended 31.12.12 Â£m % Change Financial statements Current year cash bonus Current year share...

Page 100
... awards granted to income statement charge (audited) Barclays Group Year ended 31.12.13 Â£m Year ended 31.12.12 Â£m % Change Year ended 31.12.13 Â£m Investment Bank Year ended 31.12.12 Â£m % Change Total incentive awards for 2013 Less: deferred bonuses awarded in 2013 Add: current year charges...

Page 101
... the award at the time that the final instalment is made, subject to continued employment. d The income statement charge is based on the period over which conditions are met. Financial statements Risk management Shareholder information barclays.com/annualreport Barclays PLC Annual Report 2013 99

Page 102
... beginning on the date of the 2014 AGM, subject to shareholder approval. This remuneration policy sets out the framework for how the Committee's remuneration strategy will be executed for the Directors over the next three years. This is to be achieved by having a remuneration policy that seeks to...

Page 103
... costs and relocation flights. Barclays will pay the executive Director's tax on the relocation costs but will not tax equalise and will also not pay the tax on his or her other employment income. Risk management Shareholder information barclays.com/annualreport Barclays PLC Annual Report 2013...

Page 104
... initiatives relating to the role of the Director or in support of Barclays' strategic objectives. The Balanced Scorecard is set out on page 10 and may be updated from time to time in line with the Group's strategy. In making its assessment of any bonus, the Committee will consider financial factors...

Page 105
Remuneration policy for executive Directors continued Element and purpose Operation Maximum value and performance measures The Strategic Report B. Variable Pay continued Long Term Incentive Plan (LTIP) award To reward execution of Barclays' strategy and growth in shareholder value over a multi-...

Page 106
...Remuneration policy for executive Directors continued Element and purpose Operation Maximum value and performance measures C. Other All employee share plans To provide an opportunity for Directors to voluntarily invest in the Company Executive Directors are entitled to participate in: (i) Barclays...

Page 107
... uses the all employee data to compare remuneration and ensure consistency throughout the Group. Employees are not consulted directly on the Directors' remuneration policy. Financial statements Risk management Shareholder information barclays.com/annualreport Barclays PLC Annual Report 2013 105

Page 108
.... Benefits Pension In line with policy. 33% of salary (Group Chief Executive), 25% of salary (Group Finance Director) and 25% if another executive Director is appointed. 80% of fixed pay. 120% of fixed pay. Annual Bonus Long Term Incentive Plan Buy out In line with policy. In line with policy...

Page 109
... release date unless the Committee determines otherwise in exceptional circumstances. After release, the awards may be subject to an additional holding period of six months. Financial statements Risk management Shareholder information barclays.com/annualreport Barclays PLC Annual Report 2013 107

Page 110
... Total 5,285 40% 6 In the above illustrative scenarios, benefits include regular contractual benefits. Additional ad hoc benefits may arise, for example, overseas relocation of executive Directors, but will always be provided in line with policy. 108 Barclays PLC Annual Report 2013 barclays...

Page 111
... a Director, plus fees for their participation on and/or chairing of any Board committees, time apportioned in the first year as necessary. No sign-on payments are offered to non-executive Directors. Risk management Shareholder information barclays.com/annualreport Barclays PLC Annual Report 2013...

Page 112
...its duties (including those discretions set out in the Company's share plans), the Committee reserves the right to make either minor or administrative amendments to the policy to benefit its operation or to make more material amendments in order to comply with new laws, regulations and/or regulatory...

Page 113
... Group and personal, financial and non-financial measures. Financial review Financial statements (i) Shared objectives The executive Directors share collective responsibility for progress, as at the year end, against the Transform commitments set out at the start of 2013 and in the Rights Issue...

Page 114
... Investment Bank overall was down 9% driven by a decrease in FICC Adjusted profit before tax was down 32% year on year due to reduced income and costs to achieve Transform Successful execution of Rights Issue Strong financial fundamentals across funding and liquidity, capital, credit risk management...

Page 115
... 2013. i Alison Carnwath resigned from the Board as a non-executive Director with effect from 24 July 2012. j Marcus Agius stepped down as Chairman and as a non-executive Director on 2 July 2012. Risk management Shareholder information barclays.com/annualreport Barclays PLC Annual Report 2013...

Page 116
... to be determined on the scheduled release date in May 2015. (ii) LTIP awards granted during 2013 Awards were made in March 2013 under the 2013-2015 LTIP cycle in accordance with our remuneration policy to the executive Directors. % of salary Number of shares Face value at grant Performance period...

Page 117
... on the scheduled release date in March 2016. Risk review Total pension entitlements Antony Jenkins left the UK pension scheme in April 2012, and started receiving cash in lieu of pension. He has benefits in both the final salary 1964 section and in the cash balance Afterwork section. The accrued...

Page 118
... minimum shareholding requirement of as a minimum Barclays' shares worth four times salary. Executive Directors have five years from the later of (i) 2013 and (ii) date of appointment to meet this requirement. At close of business on 28 February 2014, the market value of Barclays ordinary shares was...

Page 119
... companies. Total shareholder return Â£ 250 200 150 143 100 50 2008 2009 2010 2011 2012 2013 127 120 FTSE 100 Index Barclays PLC 180 183 174 140 154 210 183 The Strategic Report Year ended 31 December Governance In addition, the table below provides a five-year summary of the total remuneration...

Page 120
... and Income generation Cost management Balance sheet Leverage Capital management Progress on the Transform programme financial commitments will continue to be assessed in 2014. Progress towards the five year Balanced Scorecard targets will be assessed by the Committee at the year end. Each...

Page 121
... that with effect from 1 January 2014, Sir Michael Rake will be paid the Deputy Chairman's fee of Â£250,000. He does not receive any other fees. Risk review Financial review Financial statements Risk management Shareholder information barclays.com/annualreport Barclays PLC Annual Report 2013 119

Page 122
... the Committee. Towers Watson is available to advise and meet with the Committee members separate from management. Towers Watson also provides remuneration data to the Group and pensions advice and administration services to the Barclays Bank UK Retirement Fund. Fees are charged on a time/cost basis...

Page 123
... 2013 salary Final 2012 incentive funding Approved proposals for executive Director and senior executive 2012 bonuses and 2013 LTIP awards â- â- â- â- Risk adjustment and malus review Review reward communications strategy Barclays Transform project and remuneration Finance and Risk update Risk...

Page 124
... of remuneration of employees in the Barclays Group and Barclays Code Staff. 2013 total remuneration of the eight highest paid senior executive officers below Board level The table below shows remuneration for the eight highest paid senior executive officers below Board level who were Key Management...

Page 125
... the Group's risk profile. A total of 530 individuals were Code Staff in 2013 (2012: 393). Code Staff aggregate 2013 remuneration by business Investment Bank Corporate Banking Wealth and Investment Management Retail Banking (UK and Europe) Barclaycard Barclays Africa The Strategic Report Â£m Group...

Page 126
...2013 (maximum) Number of shares awarded in year (maximum) Rights Issue Adjustment (maximum) Market price on award date Weighted average exercise price Antony Jenkins Executive Share Award Scheme 2007 Barclays LTIP 2012-2014 Barclays LTIP 2012-2014 Barclays LTIP 2013-2015 Share Value Plan 2010 Share...

Page 127
...05/2012 18/03/2013 31/12/2013 31/12/2014 31/12/2015 - 30/04/2015 30/04/2016 - 16/03/2015 06/05/2014 16/03/2015 06/05/2014 25/05/2015 07/03/2016 Risk review Financial review Financial statements Risk management Shareholder information barclays.com/annualreport Barclays PLC Annual Report 2013 125

Page 128
... and build on customer feedback such as 'YourBank'- an online forum in the UK that allows people to submit, share and vote on ideas for improving Barclays' everyday banking services. To date we have received more than 3,500 ideas. Internally, we have enriched our complaints reporting to management...

Page 129
...inform a robust debate. To support this, Group functional teams have taken increased responsibility for providing balanced and timely oversight of papers that business units intend to present to the Board. Noard effectiveness The methodology and results of our 2013 Board annual effectiveness review...

Page 130
... 90 days of joining Barclays. 24 Long-term awards Our Long Term Incentive Plans (LTIPs) are now restricted to Group ExCo only and will be further limited to Executive Directors in 2014. The new LTIP is a Group-wide plan that is calibrated to financial performance adjusted for risk on a group wide...

Page 131
...and operational risks into business decisions and governance. Further, the Strategic Risk Assessment piloted in 2013 provides a top down view of business unit strategy integrating strategic planning activity, appetite setting and the assessment and management of material risks. Financial statements...

Page 132
130 Barclays PLC Annual Report 2013 barclays.com/annualreport

Page 133
... our risk exposures, consolidated policy-based qualitative information is available under Risk management. The Strategic Report Governance Risk review Financial review Financial statements Risk management Shareholder information barclays.com/annualreport Barclays PLC Annual Report 2013 131

Page 134
... inappropriate or unethical. Conduct risk Conduct risk is the risk that detriment is caused to our customers, clients, counterparties or Barclays and its employees because of inappropriate judgement in the execution of our business activities. 132 Barclays PLC Annual Report 2013 415 100 100 99...

Page 135
... Report Governance Risk review Business conditions and the general economy Weak or deteriorating economic conditions or political instability in the Group's main countries of operation could adversely affect the Group's trading performance The Group offers a broad ravge of services to retail...

Page 136
... relatiovs avd the fulfilhevt of obligatiovs by the Group avd/or its custohers. Market risk The Group's financial position may be adversely affected by changes in both the level and volatility of prices Barclays is at risk froh its earvivgs or capital beivg reduced due to: (i) chavges iv the...

Page 137
... the Group's results of operatiovs, fivavcial covditiov avd prospects. The Strategic Report Governance Risk review Funding risk The ability of the Group to achieve its business plans may be adversely impacted if it does not effectively manage its capital, liquidity and leverage ratios Fuvdivg risk...

Page 138
Risk review Risk factors continued Operational risk The operational risk profile of the Group may change as a result of human factors, inadequate or failed internal processes and systems, and external events Barclays is exposed to havy types of operatioval risk, ivcludivg fraudulevt avd other ...

Page 139
... of significant regulatory change and scrutiny which may adversely affect the Group's business, financial performance capital and risk management strategies Regulatory risk arises froh a failure or ivability to cohply fully with the laws, regulatiovs or codes applicable specifically to the fivavcial...

Page 140
Risk review Risk factors continued Regulatory change The Group, iv cohhov with huch of the fivavcial services ivdustry, covtivues to be subject to sigvificavt levels of regulatory chavge avd ivcreasivg scrutivy iv havy of the couvtries iv which it operates (ivcludivg, iv particular, the UK avd the ...

Page 141
... iv order to evhavce recovery or resolvability. These ivclude, ahovgst others, the powers to require the group to: hake chavges to its legal or operatioval barclays.com/annualreport Financial review Financial statements Risk management Shareholder information Barclays PLC Avvual Report 2013 139

Page 142
... vegatively ihpact the Group's operatiovs, fivavcial covditiov avd prospects. Conduct risk Conduct risk: detriment is caused to our customers, clients, counterparties or Barclays and its employees because of inappropriate judgement in the execution of our business activities Iveffective havagehevt...

Page 143
... Group's fravchise, which iv turv could vegatively affect the Group's operatiovs, fivavcial covditiov avd prospects. The Strategic Report Governance Risk review Financial review Financial statements Risk management Shareholder information barclays.com/annualreport Barclays PLC Avvual Report 2013...

Page 144
...are categorised as Credit Risk Loans, balances in forbearance, as well as exposure to and performance metrics for specific portfolios and assets types, including, for example, residential home loans, interest-only home loans, cards and other unsecured lending UK commercial retail estate and exposure...

Page 145
...retail lending Corporate loans Total loans and advances to customers Reverse repurchase agreements and other similar secured lending Available for sale debt securities Other assets Total on-balance sheet Off-balance sheet: Contingent liabilities Documentary credits and other short-term trade related...

Page 146
...retail lending Corporate loans Total loans and advances to customers Reverse repurchase agreements and other similar secured lending Available for sale debt securities Other assets Total on-balance sheet Off-balance sheet: Contingent liabilities Documentary credits and other short-term trade related...

Page 147
... banks Loans and advances to customers Reverse repurchase agreements and other similar secured lending Available for sale debt securities Other assets Total on-balance sheet Off-balance sheet: Contingent liabilities Documentary credits and other short-term trade related transactions Forward starting...

Page 148
... banks Loans and advances to customers Reverse repurchase agreements and other similar secured lending Available for sale debt securities Other assets Total on-balance sheet Off-balance sheet: Contingent liabilities Documentary credits and other short-term trade related transactions Forward starting...

Page 149
... Â£m Wholesale and retail distrib- Business ution and and other leisure services Â£m Â£m Cards, unsecured loans and other Home personal loans lending Â£m Â£m The Strategic Report As at Banks facturing 31 December 2013 Â£m Â£m On-balance sheet: Cash and balances at central banks - - - Items in the...

Page 150
... Credit risk concentrations by industry (audited) Other financial institutions Â£m Construction and property Â£m Government and central bank Â£m Wholesale and retail distribution and leisure Â£m Cards, unsecured loans and other personal lending Â£m As at Banks 31 December 2012 Â£m On-balance sheet...

Page 151
... and issuer type is presented on page 178 Further information on netting and collateral arrangements on derivatives financial instruments is presented on pages 179 and 180 Financial statements Risk management Shareholder information barclays.com/annualreport Barclays PLC Annual Report 2013 149

Page 152
... 35,181 Loans and advances to customers: Home loans 153,299 Credit cards, unsecured and other retail lending 14,728 Corporate loans 124,560 Total loans and advances to customers 292,587 Reverse repurchase agreements and other similar secured lending 141,861 Available for sale debt securities 87,888...

Page 153
...advances resulted in a lower loan loss rate of 64bps (2012: 70bps). Further detail can be found in the Retail and Wholesale Credit Risk sections on pages 158 and 173 respectively Financial statements Risk management Shareholder information barclays.com/annualreport Barclays PLC Annual Report 2013...

Page 154
... Government and central bank Energy and water Wholesale and retail distribution and leisure Business and other services Home loans Cards, unsecured loans and other personal lending Other Net loans and advances to customers and banks Impairment allowance As at 31 December 2012 Banks Other financial...

Page 155
...173 328 4,123 563 24,406 Financial review Financial statements Risk management Shareholder information Note a Included within Other financial institutions Americas are Â£250m (2012: Â£427m) of loans backed by retail mortgage collateral. barclays.com/annualreport Barclays PLC Annual Report 2013 153

Page 156
... 2013 Â£m 2012 Â£m 2011 Â£m Loan impairment UK RBB Europe RBB Africa RBB Barclaycard Investment Bank Corporate Banking Wealth and Investment Management Head Office and Other Operations Total loan impairment chargesa Impairment charges on available for sale financial investments (excluding BlackRock...

Page 157
... Â£m Exchange Balance at and other adjustments 31 December Â£m Â£m The Strategic Report At beginning of year Â£m Repayments Â£m Amounts written off Â£m 2013 Home loans Credit cards, unsecured and other retail lending Wholesale loans Total impaired loans 2012 Home loans Credit cards, unsecured...

Page 158
....7 46.2 For more information refer to the Retail Credit risk section, Wholesale Credit risk section and Risk management section. Note a 2012 PCRL balances in Africa RBB have been restated to better reflect their PCRL categorisation. As a result CRLs decreased by Â£99m and PPLs increased by Â£102m...

Page 159
... of Group balances in forbearance programmes Balances Impairment stock 2012 Â£m 2013 Â£m 2012 Â£m Coverage 2013 % 2012 % 2013 Â£m The Strategic Report As at 31 December Retail UK RBB Europe RBB Africa RBB Barclaycard Corporate Bankinga Wealth and Investment Management Wholesale Investment Bank...

Page 160
... allowance Â£m L&A net of impairment Â£m Credit risk loans Â£m CRLs % of gross L&A % Loan impairment charges Â£m Loan loss rates bps As at 31 December 2013 UK RBB Europe RBB Africa RBB Barclaycard Corporate Bankinga Wealth and Investment Management Total As at 31 December 2012 UK RBB Europe...

Page 161
...Strategic Report Credit cards, overdrafts and unsecured loans Â£m Other secured retail lendingb Â£m Business lending Â£m Total retail Â£m As at 31 December 2013 UK RBB Europe RBB Africa RBB Barclaycard Corporate Banking Wealth and Investment Management Total As at 31 December 2012 UK RBB Europe...

Page 162
Risk review Credit risk continued Potential Credit Risk Loans and coverage ratios PCRLs and coverage ratios CRLs PPLs 2012 Â£m 2013 Â£m 2012 Â£m PCRLs 2013 Â£m 2012 Â£m 2013 Â£m As at 31 December Home loans Credit cards and unsecured lending Other retail lending and business banking Total retaila...

Page 163
...: balances on programmes valuation forbearance coverage weighted programmes ratio % Â£m % The Strategic Report Governance Total Â£m Up-to-date Â£m As at 31 December 2013 Home Loans UK South Africa Spain Italy Credit Cards UK US Unsecured Loans UK As at 31 December 2012 Home Loans UK South Africa...

Page 164
... review Credit risk continued Business lending Balances on forbearance programmes: arrears managed of which: Past due of which: % of gross L&A % 1-90 days past due Â£m 91 or more days past due Â£m Impairment allowances marked against balances on forbearance programmes Â£m As at 31 December 2013 UK...

Page 165
.... Non-performing balances increased 13% to Â£90m, with a significant proportion of customers operating within the terms of their amended terms and conditions. The relatively low total balances on forbearance coverage ratio of 8.7% (2012: 8.7%) for UK business lending EWL managed balances principally...

Page 166
Risk review Credit risk continued Forebearance by type Home loans UK Â£m Spain Â£m Italya % South Africa % As at 31 December 2013 Interest only conversion Interest rate reduction Payment concession Term extension Other Total As at 31 December 2012 Interest only conversion Interest rate reduction ...

Page 167
... the business assesses the changing environment conditions. Financial review In the UK, gross loans and advances increased 7% to Â£123bn which includes Â£5.4bn of balances at acquisition from the Barclays Direct (formerly ING Direct) mortgage portfolio in February 2013. Within the total home loans...

Page 168
... total outstanding balances and the value of total collateral held against these balances. Balance weighted LTV approach is derived by calculating individual LTVs at account level and weighting by the individual loan balances to arrive at the average position. 166 Barclays PLC Annual Report 2013...

Page 169
... 58 45 Risk management In UK Home Loans, foreclosure in process increased 14% to 1,835 in 2013. This increase includes customers where contact and formal agreement of payment plans for arrears is still to be achieved. On average, 22% of customers in foreclosures in process made a monthly repayment...

Page 170
... increasing time to repossess and sell property. Exposures to interest-only home loans The Group provides interest-only mortgages to customers, mainly in the UK. Under the terms of these loans, the customer makes payments of interest only for the entire term of the mortgage, although customers may...

Page 171
... of gross charge-off outstanding balances ratesc % % Recoveries impairment coverage ratio % Risk review 30 day arrears % 90 day arrears % Financial review As at 31 December 2013 UK cards US cards UK personal loans Barclays Partner Finance South Africa cardsa Germany cards UK overdrafts Italy...

Page 172
... Africa and Europe RBB cards portfolios are not considered to be material. For further detail on policy relating to the re-aging of loans, please refer to the Risk Management section on page 402. Other secured retail lending The principal portfolio listed below accounts for 48% (2012: 50%) of total...

Page 173
...-off rates and recovery balances due to the macroeconomic environment. Financial statements Risk management Shareholder information Note a Gross charge-off rates are calculated over average monthly outstanding balances through the year. barclays.com/annualreport Barclays PLC Annual Report 2013 171

Page 174
... review Credit risk continued UK Commercial Real Estate (UK CRE) The UK CRE portfolio includes property investment, development, trading and housebuilders. During 2013 the gross loans and advances increased 4% to Â£1,593m in line with the overall business lending growth, whereas past due balances...

Page 175
... Loan loss rates bps The Strategic Report Governance Risk review As at 31 December 2013 Investment Banka Corporate Banking - UK - Europe - Rest of World Wealth and Investment Management Africa RBB Head Office and Other Functions Total As at 31 December 2012 Investment Banka Corporate Banking - UK...

Page 176
... ratio increased to 50.4% (2012: 50.2%). Analysis of Investment Bank wholesale loans and advances at amortised cost Gross L&A Â£m Impairment allowance Â£m L&A net of impairment Â£m Credit risk loans Â£m CRLs % of gross L&A % Loan impairment charges Â£m Loan loss rates bps As at 31 December 2013...

Page 177
...for commercial reasons that are not indicative of increased credit risk. Personal and Trusts includes Wealth and Investment Management clients that are, at the time of origination, high net worth individuals who use funds and trusts to organise their personal financial affairs. The Strategic Report...

Page 178
Risk review Credit risk continued Wholesale forbearance reporting split by business unit Corporate Banking Â£m Wealth and Investment Investment Bank Management Â£m Â£m Africa RBB Â£m Total Â£m As at 31 December 2013 Restructure: reduced contractual cash flows Restructure: maturity date extension ...

Page 179
... and scale limits. Total loans and advances at amortised cost to UK CRE remained broadly stable at Â£9,842m (31 December 2012: Â£10,036m) with new lending limited to high quality assets. The impairment charge of Â£62m (2012: Â£69m) was almost entirely in UK Corporate Banking. Commercial Real Estate...

Page 180
... provide an analysis of debt securities held by the Group for trading and investment purposes by issuer type and where the Group held government securities exceeding 10% of shareholders' equity. Further information on the credit quality of debt securities is presented on page 150. Further disclosure...

Page 181
... rights). Financial review Financial statements Risk management Shareholder information Note a 2012 counterparty netting for foreign exchange, interest rate and commodity derivatives have been revised to be on a consistent basis with 2013. barclays.com/annualreport Barclays PLC Annual Report 2013...

Page 182
Risk review Credit risk continued The table below sets out the fair value and notional amounts of OTC derivative financial instruments by collateral agreement type. Unilateral (one way) arrangements are where only one party needs to provide collateral and can be in favour of either Barclays or the ...

Page 183
... below presents selected financial data for these Exit Quadrant assets: CRD IV RWAsb Balance sheet 2013 Impairment (charge)/ release Â£m Net operating (expense)/ income Â£m The Strategic Report Investment Bank US residential mortgages Commercial mortgages and real estate Leveraged and other loans...

Page 184
... as available for sale. Basis of preparation The Group presents the direct balance sheet exposure to credit and market risk by country, with the totals reflecting allowance for impairment, netting and cash collateral held where appropriate. Trading and derivatives balances relate to Investment Bank...

Page 185
... into account impairment allowances and IFRS netting. Net exposure by country and counterparty (audited) Financial institutions Â£m Residential mortgages Â£m Other retail lending Â£m Total net on-balance Contingent sheet liabilities and exposure commitments Â£m Â£m The Strategic Report Governance...

Page 186
... institutions Corporate Held at amortised cost 22 159 7 1 4 1 23 163 8 1,562 480 10 Loans and advances Gross Â£m Impairment allowances Â£m 2013 Total Â£m 2012 Total Â£m As at 31 December Sovereign Financial institutions Residential mortgages Corporate Other retail lending Off-balance sheet 21...

Page 187
... the year; and â- â- Â£933m (2012: Â£1,045m) lending to small and medium enterprises (SMEs), largely secured against residential or commercial property. Financial review Financial statements Risk management Shareholder information barclays.com/annualreport Barclays PLC Annual Report 2013 185

Page 188
... Held at amortised cost 154 60 27 3 3 2 157 63 29 1,537 138 29 Loans and advances Gross Â£m Impairment allowances Â£m 2013 Total Â£m 2012 Total Â£m As at 31 December Sovereign Financial institutions Residential mortgages Corporate Other retail lending Off-balance sheet - 50 15,433 997...

Page 189
... Held at amortised cost 307 2 65 3 - - 310 2 65 594 2 331 Risk review Loans and advances Gross Â£m Impairment allowances Â£m 2013 Total Â£m 2012 Total Â£m As at 31 December Sovereign Financial institutions Residential mortgages Corporate Other retail lending Off-balance sheet 42 23 3,460...

Page 190
... default amount represents a net purchase or sale of insurance by the Group. This insurance reduces or increases the Group's total exposure and should be considered alongside the direct exposures disclosed in the preceding pages. 188 Barclays PLC Annual Report 2013 barclays.com/annualreport

Page 191
... net funding required from Group. For Ireland there is no local balance sheet funding requirement by the Group as total liabilities in this country exceed total assets. Financial statements Risk management Shareholder information barclays.com/annualreport Barclays PLC Annual Report 2013 189

Page 192
...this section. â- â- The relationship between the Group's market risk measures and balance sheet is presented on page 191. Measures of traded market risk, such as value at risk, decreased in the year due to lower levels of client activity and improved market conditions. More details are provided on...

Page 193
Balance sheet view of trading and banking books As defined by the regulatory rules, a trading book consists of positions held for trading intent or to hedge elements of the trading book. Trading intent must be evidenced in the basis of the strategies, policies and procedures set up by the firm to ...

Page 194
... market activities over the year as well as increased volume. The business remained within the Management VaR limits approved by the Board Financial Risk Committee (BFRC) throughout 2013 for both risk factor VaR and total VaR. Investment bank management VaR 80 60 40 40 Investment bank daily trading...

Page 195
...for the total Investment Bank Management VaR by risk factor. For the year ended 31 December 2013 Average Standalone Management VaR Â£m The Strategic Report Governance Portfolio Description of business activity Assets Â£m Liabilities Â£m Principal balance sheet line items Principal market risk...

Page 196
...driving Investment Bank's modelled capital requirement as at 2013 year end. The standalone portfolio results diversify at the total Investment Bank level and are not necessarily additive. Regulatory VaR in the prior table shows the total Investment Bank results. 194 Barclays PLC Annual Report 2013...

Page 197
...December 2013. The effect of structural hedging is taken into account. Net interest income sensitivity (AEaR) by business unit UK Rmm Â£m Europe Rmm Â£m Africa Rmm Â£m marclaycard Â£m Wealth and Investment Corporate manking Management Â£m Â£m Othera Â£m Total Â£m The Strategic Report Governance As...

Page 198
Risk review Market risk continued Economic capital UK Rmm Â£m Europe Rmm Â£m Africa Rmm Â£m marclaycard Â£m Wealth and Corporate Investment manking Management Â£m Â£m Total Â£m As at 31 December 2013 Prepayment risk Recruitment risk Residual risk 2012 Prepayment risk Recruitment risk Residual risk...

Page 199
... low level of non-trading exposures no reasonably possible change in foreign exchange rates would have a material effect on either the Group's profit or movements in equity for either of the years ended 31 December 2013 or 2012. b) Translational foreign exchange exposure The Group's investments in...

Page 200
... of the UKRF obligations and investments are adequately captured. VaR is measured and monitored on a monthly basis at the pension risk fora such as the Market Risk Committee, Pension Management Group and Pensions Executive Board. The VaR model takes into account the valuation of the liabilities...

Page 201
...4bn of redemptions of dated subordinated liabilities offset by Â£0.7bn of new issuances and a further Â£0.5bn decrease in securitisation deductions at a total capital level. Financial statements Risk management Shareholder information barclays.com/annualreport Barclays PLC Annual Report 2013 199

Page 202
... 2 capital)b Cash flow hedging reserveb Non-controlling interests per balance sheet - Less: Other Tier 1 capital - preference shares - Less: Non-controlling Tier 2 capital Other regulatory adjustments to non-controlling interests Other regulatory adjustments and deductions: Defined benefit pension...

Page 203
... Financial review 16,323 2,258 (2,672) (155) (612) 14 (718) (383) 2,141 (189) 320 16,327 (2,588) 852 47 (1,689) 65,873 Financial statements Risk management Shareholder information Note a The capital impacts of these items are net of tax. barclays.com/annualreport Barclays PLC Annual Report 2013...

Page 204
... risk type and business Credit risk Counterparty credit risk Internal model method Â£m Nonmodel method Â£m Market risk Charges add-on and Modelled non-VaR VaR modelled Â£m Â£m Operational risk Total RWAs As at 31 December 2013 UK RBB Europe RBB Africa RBB Barclaycard Investment Bank Corporate Bank...

Page 205
... may result in future changes to CRD IV capital requirements. It is assumed that corporates, pension funds and sovereigns that meet the eligibility conditions are exempt from CVA volatility charges. The Strategic Report Governance Risk review Financial review Financial statements Risk management...

Page 206
... by risk type and business As at 31 December 2013 UK RBB Europe RBB Africa RBB Barclaycard Investment Bank Corporate Bank Wealth and Investment Management Head Office Functions and Other Operations Total CRD IV RWAs Credit risk Â£m Counterparty credit risk Â£m Market risk Â£m Total Operational risk...

Page 207
...central clearing for customers and cash variation margin received and posted (as specified under SS3/132). b PRA Supervisory Statement SS3/13 on Capital and leverage ratios for major UK banks and building societies published in November 2013. barclays.com/annualreport Barclays PLC Annual Report 2013...

Page 208
...vulnerable by the PRA and a deduction relating to the calculation of PVA. No adjustment for PVA was applied as at 31 December 2013 as the underlying calculation of CET1 capital has been updated to reflect the agreed change in methodology. 206 Barclays PLC Annual Report 2013 barclays.com/annualreport

Page 209
... via Barclays Investment Bank with the external market. Limits exist to ensure no material risk is retained within any business/product area. â- â- Financial review Spot Economic Capital allocation by business (Â£m) a, b, c UK RBB 3,900 4,000 Barclaycard 3,700 3,700 Europe RBB 1,450 1,650 Africa...

Page 210
... Framework is delivered via a combination of policy formation, review and governance, analysis, stress testing, limit setting and monitoring. Liquidity risk is managed separately at Barclays Africa Group Limited (BAGL) due to local currency and funding requirements. Unless stated otherwise, all...

Page 211
... Business Banking, Corporate Banking, Wealth and Investment Management as Barclays is seen as greater credit risk than competitors. Additional outflows recognized against concentration of providers of wholesale secured financing Largest less-liquid secured funding counterparty refuses to roll trades...

Page 212
...as part of the LRA, the 30 day Barclays-specific scenario results in the lowest ratio at 104% (2012: 129%). This compares to 127% (2012: 141%) under the 90 day market-wide scenario and 112% (2012: 145%) under the 30 day combined scenario. 210 Barclays PLC Annual Report 2013 barclays.com/annualreport

Page 213
... government bonds and their inclusion in the liquidity pool does not compromise the liquidity position of the Group. The composition of the liquidity pool is subject to limits set by the Board, Treasury Committee and the independent credit risk and market risk functions. In addition, the investment...

Page 214
... secured funding Retail and Business Banking, Corporate Banking and Wealth and Investment Managemente Investment Bank Head Office and Other Operations Trading settlement balances and cash collateral Total The Group loan to deposit ratio as at 31 December 2013 was 101% (2012: 110%). Customer...

Page 215
... The Investment Bank does not rely on customer deposit funding from Retail and Business Banking, Corporate Banking and Wealth and Investment Management. As at 31 December 2013, Â£122bn (2012: Â£112bn) of total customer deposits were insured through the UK Financial Services Compensation Scheme (FSCS...

Page 216
...of end users of these products are individual retail investors. In 2013, Barclays repaid â,¬3bn of funding raised through the European Central Bank's 3 year LTRO, leaving â,¬5bn (2012: â,¬8bn) outstanding as at 31 December 2013 . The liquidity risk of wholesale funding is carefully managed primarily...

Page 217
... as well as collateral posted against derivatives margin requirements. Financial review Financial statements Risk management Shareholder information Note a Includes Â£0.3bn of bilateral secured funding in 2014 and Â£2bn in 2015. barclays.com/annualreport Barclays PLC Annual Report 2013 215

Page 218
... from other banks Other assets Current tax asset Investment in associates and joint ventures Goodwill and intangible assets Deferred tax assets Retirement benefit assets Total on-balance sheet Off-balance sheet Assets Â£bn a Assets fledged as collateral Â£bn Available Not available as collateral...

Page 219
...The Strategic Report On-balance sheet As at 31 December 2012 Cash and balances at central banks Trading portfolio assets Financial assets at fair value Derivative financial instruments Loans and advances - banksb Loans and advances - customersb Cash collateral and settlement balances Available for...

Page 220
... three months Â£bn (8.9) 4.3 (4.6) 2.3 (0.1) 2.2 6.6 (4.2) 2.4 (14.1) 5.7 (8.4) 6.6 (1.7) 4.9 7.5 (4.0) 3.5 The residual repurchase agreement activity is the firm-financing component and reflects Barclays funding of a portion of its trading portfolio assets. The primary risk related to firm...

Page 221
...is held against this risk. Credit ratings downgrades could also result in increased costs or reduced capacity to raise funding. Credit ratings As at 31 December 2013 Barclays Bank PLC Long-term Short-term Barclays PLC Long-term Short-term The Strategic Report Governance Standard & Poor's A (Stable...

Page 222
... included in other assets and other liabilities as the Group is not exposed to liquidity risk arising from them; any request for funds from creditors would be met by simultaneously liquidating or transferring the related investment. 220 Barclays PLC Annual Report 2013 barclays.com/annualreport

Page 223
... secured lending Available for sale financial investments Other financial assets Total financial assets Other assets Total assets Liabilities Deposits from banks Items in the course of collection due to other banks Customer accounts Repurchase agreements and other similar secured borrowing Trading...

Page 224
... secured lending Available for sale financial investments Other financial assets Total financial assets Other assets Total assets Liabilities Deposits from banks Items in the course of collection due to other banks Customer accounts Repurchase agreements and other similar secured borrowing a Trading...

Page 225
... Debt securities in issue Subordinated liabilities Other financial liabilities Total financial liabilities At 31 December 2012 Deposits from banks Items in the course of collection due to other banks Customer accounts Repurchase agreements and other similar secured lending Trading portfolio...

Page 226
...at 31 December 2013 Contingent liabilities Documentary credits and other short term trade related transactions Forward starting reverse repurchase agreements Standby facilities, credit lines and other commitments Total off balance sheet commitments given As at 31 December 2012 Contingent liabilities...

Page 227
...physical assets Employment practices and workplace safety Execution, delivery and process management External fraud 90.0 92.2 2013 2012 Risk management 0.1 0.1 0.0 0.1 5.2 3.7 3.5 3.6 Shareholder information Internal fraud 1.1 0.1 barclays.com/annualreport Barwlays PLC Annual Report 2013 225

Page 228
... for this past wonduwt. With interest rate hedging produwts, Barwlays rewognises that we have not met the standards expewted of us by our regulator and wustomers in some wases wonwerning small and medium-sized enterprises. 226 Barwlays PLC Annual Report 2013 barclays.com/annualreport

Page 229
...are free for wustomers using a landline. Barwlays was the first finanwial serviwes wompany to wommit to do this. The Strategic Report Governance Risk review Financial review Financial statements Risk management Shareholder information barclays.com/annualreport Barwlays PLC Annual Report 2013 227

Page 230
... in 2014 with implementation of the womplete framework planned to be womplete by the end of the year. Principal risk framework - Defines Conduct Risk, Risk Appetite and Roles and Responsibilities The Six Conduct Risk Key Risks: Business Model & Strategy Is our current and future business robust...

Page 231
... approawh to promoting good wustomer outwomes and market integrity is wonsistent with the 'Barwlays Way' - the new employee wode of wonduwt adopted in 2013. Financial review Financial statements Risk management Shareholder information barclays.com/annualreport Barwlays PLC Annual Report 2013 229

Page 232
... tools, inwluding the wollewtion of information from prudential returns, reports obtained from skilled persons, visits to firms and regular meetings with management to diswuss issues suwh as performanwe, risk management and strategy. 230 Barwlays PLC Annual Report 2013 barclays.com/annualreport

Page 233
... suwh liwenwe. Suwh wirwumstanwes generally inwlude violations of law, unsafe business prawtiwes and insolvenwy. The Strategic Report Governance Risk review Financial review Financial statements Risk management Shareholder information barclays.com/annualreport Barwlays PLC Annual Report 2013 231

Page 234
... 2013 and further work on large exposures. The Committee also wontinues to fowus on the wonsistenwy of risk weighting of assets and explaining the variations between banks. A sewond wonsultation on enhanwed standards was also held in relation to the 232 Barwlays PLC Annual Report 2013 barclays...

Page 235
...the Markets in Finanwial Instruments Direwtive (known as MiFID II) were agreed in January 2014. These amendments The Strategic Report Governance Risk review Financial review Financial statements Risk management Shareholder information barclays.com/annualreport Barwlays PLC Annual Report 2013 233

Page 236
... plans to inwrease the Core Equity Tier 1 leverage ratio to 3% by end June 2014 after adjustment for prospewtive wredit and wonduwt losses. Also responding to an FPC rewommendation, the Bank of England and PRA are also developing an approawh to annual stress testing of the UK banking system and...

Page 237
.... Settlements of those awtions have inwluded monetary penalties, wustomer remediation requirements and wommitments to modify business prawtiwes. â- â- Financial statements Risk management â- â- Shareholder information â- â- barclays.com/annualreport Barwlays PLC Annual Report 2013 235

Page 238
236 Barwlays PLC Annual Report 2013 barclays.com/annualreport

Page 239
... Balance sheet cobbentary Analysis of results by business Margins and balances review 238 245 246 The Strategic Report Governance 247 248 249 267 Risk review Financial review Financial statements Risk management Shareholder information barclays.com/annualreport Barclays PLC Avvual Report 2013...

Page 240
...The cost: income ratio is defined as operating expenses compared to total income net of insurance claims. The adjusted cost: income ratio excludes movements on own credit, gains on debt buy-backs, loss/gains on acquisitions and disposals, provisions for PPI and interest rate hedging products redress...

Page 241
... basis in 2015. Risk review Financial review Dividend payout ratio Dividend per share 2013 - 6.5p 2012 - 6.5p 2011 - 6.0p Dividend payout ratio 2013 - 38.9% 2012 - 18.3% 2014 Target - 40-50% It is the Group's policy to declare and pay dividends on a quarterly basis. In a normal year there will...

Page 242
... of the additional PRA add-on for PVA. The estimated CRD IV fully loaded leverage ratio increased to 3.1% (30 June 2013: 2.5%). Leverage plan target: PRA leverage ratio of at least 3.5% by the end of 2015 and a range of 3.5% to 4% beyond 2015. 240 Barclays PLC Annual Report 2013 barclays.com...

Page 243
... points and represents total annualised loan impairment divided by gross loans and advances to customers and banks held at amortised cost at the balance sheet date. The granting of credit is one of Barclays major sources of income and its most significant risk. The loan loss rate is an indicator...

Page 244
...and economic capital requirements; and support the Group's credit rating. During 2013, the Group's Core Tier 1 ratio strengthened to 13.2% (2012: 10.8%) primarily due to the rights issue and a decrease in RWAs offset by new regulatory deductions primarily related to foreseeable dividends. Core Tier...

Page 245
...Barclays UK Retail Banking, Barclaycard UK Credit Cards, Barclaycard US Credit Cards and ABSA Retail Banking. Wealth and Investment Management will be added in future reporting. CIB Client Franchise Metric is an income weighted ranking comprised of metrics representing the wallet share with Barclays...

Page 246
...products and services and how Barclays treats staff at all levels of the business. Cobpany KPIs Performance metric Definition Why it is important to the business and management Return on Equity (Adjusted) Adjusted 2013 - 4.5% 2018 Target - > Cost of Equity RoE is calculated as profit for the year...

Page 247
...standard. Financial statements Risk management Shareholder information Notb a Rbturn on avbragb sharbholdbrs' bquity rbprbsbnts profits attributablb to thb bquity holdbrs of thb parbnt as a pbrcbntagb of avbragb sharbholdbrs' bquity. barclays.com/annualreport Barclays PLC Annual Rbport 2013 245

Page 248
... in BlackRock, Inc dbcrbasbd 12%, principally rbflbcting improvbmbnts in Barclaycard, Corporatb Banking and UK RBB. This was partially offsbt by highbr chargbs in thb Invbstmbnt Bank, Africa RBB and Europb RBB. Impairmbnt chargbs as a proportion of Group loans and advancbs as at 31 Dbcbmbbr 2012...

Page 249
... IFRS 10 standard. Risk management Shareholder information Notb a Nbt assbt valub pbr sharb is calculatbd by dividing sharbholdbrs bquity, bxcluding non-controlling and othbr bquity intbrbsts, by thb numbbr of issubd ordinary sharbs. barclays.com/annualreport Barclays PLC Annual Rbport 2013 247

Page 250
... incrbasb rbturns. Total loans and advancbs to banks and custombrs rbmainbd stablb at Â£468bn (2012: Â£464bn) including incrbasbd sbttlbmbnt balancbs of Â£8.5bn, Â£4.4bn additional balancbs in UK RBB acquirbd through Barclays Dirbct, Â£1.8bn growth within Barclaycard across thb UK and intbrnational...

Page 251
... review Analysisuofuresultsubyubusiness Segmental analysis (audited) Analysisuofuresultsubyubusinessu(audited) Europeu RBBu Â£m Africau RBBu Â£m Investment Banku Â£m Wealthuand Corporate Investment Banking Management Â£m Â£m HeaduOffice Functions anduOther Operationsu Â£m The Strategic Report...

Page 252
Financial review Analysis of results by business continued Thb Group's activitibs havb bbbn organisbd undbr thb following businbss groupings: â- â- UK RBB is a lbading UK high strbbt bank providing currbnt account and savings products and Woolwich brandbd mortgagbs. UK RBB also providbs unsbcurbd...

Page 253
... 1,273 1,401 41,429 Risk management Shareholder information Notbs a Thb rbturn on avbragb tangiblb bquity for Africa RBB for 2011 and 2012 has bbbn rbvisbd to bxcludb amounts rblating to Absa Group's non-controlling intbrbsts. b Includbs risk wbightbd assbts and capital dbductions in Hbad Officb...

Page 254
... funding costs and increased customer rates on new Income Statement Information Net interest income Net fee and commission income Net investment income Net premiums from insurance contracts Other income/(expense) Total income Net claims and benefits incurred under insurance contracts Total income...

Page 255
...Â£400m). b Average LTV of mortgage portfolio and new mortgage lending calculated on the balance weighted basis. The comparative figure was restated following a detailed review of the LTVs post migration to a new data management system. barclays.com/annualreport Barclays PLC Annual Report 2013 253

Page 256
...) UK bank levy Costs to achieve Transform Goodwill impairment Operating expenses Other net (expense)/income Loss before tax Adjusted loss before taxa Adjusted attributable lossa,b Balance Sheet Information Loans and advances to customers at amortised cost Customer deposits Total assetsc Risk...

Page 257
... in credit performance across Europe, reflecting current economic conditions. The loan loss rate increased to 64bps (2011: 43bps). 90 day arrears rate for home loans increased 19bps to 0.8%. Governance Risk review Financial review Adjusteda 2013 2012 2011 2013 Statutory 2012 2011 Performance...

Page 258
... (excluding UK bank levy and costs to achieve Transform) UK bank levy Costs to achieve Transform Operating expenses Other net income Profit before tax Attributable profit/(loss)a Balance Sheet Information Loans and advances to customers at amortised cost Customer deposits Total assetsb Risk weighted...

Page 259
...on average tangible equity for 2011 and 2012 has been revised to exclude amounts relating to Absa Group's non-controlling interests. b Average LTV of mortgage portfolio and new mortgage lending calculated on the balance weighted basis. barclays.com/annualreport Barclays PLC Annual Report 2013 257

Page 260
Financial review Analysis of results by business continued Barclaycard Â£4,786m total income net of insurance claims Up from Â£4,344m in 2012 Net fee and commission income improved 11% to Â£1,435m due to increased payment volumes, predominantly in the US and UK. Credit impairment charges increased...

Page 261
... risk weighted assets Cost: income ratio Loan loss rate (bps) Key Facts 30 day arrears rates - UK cards 30 day arrears rates - US cards 30 day arrears rates - South Africa cardsb Total number of Barclaycard customers Total number of Barclaycard clients Value of payments processed Number of employees...

Page 262
... to the setting of inter-bank offered rates. 2013 Â£m 2012 Â£m 2011 Â£m Income Statement Information Net interest income Net fee and commission income Net trading income Net investment income Other income Total income Credit impairment charges and other provisions Net operating income Operating...

Page 263
... more information on Investment Bank business model and strategy please see pages 34 to 37 Including costs to achieve Transform, the cost to income ratio increased 10% to 75%. The compensation to income ratio increased to 43.2% (2012: 39.6%), with compensation costs broadly in line with prior year...

Page 264
... income Net fee and commission income Net trading income/(expense) Net investment income Other income Total income Credit impairment charges and other provisions Net operating income Operating expenses (excluding UK bank levy, costs to achieve Transform, provision for interest rate hedging products...

Page 265
... 63% Financial statements 2012 RoW Â£m Total Â£m UK Â£m Europe Â£m RoW Â£m Total Â£m Income Credit impairment charges and other provisions Operating expenses (excluding UK bank levy, costs to achieve Transform and provision for interest rate hedging products redress) UK bank levy Costs to achieve...

Page 266
... lower funding rates. Average customer assets increased 14% to Â£22.4bn. Customer liability margin decreased 15bps 2013 Â£m 2012 Â£m 2011 Â£m Income Statement Information Net interest income Net fee and commission income Net trading income Other expense Total income Credit impairment charges and...

Page 267
... Financial review Adjusted 2013 2012 2011a 2013 Statutory 2012 2011 Performance Measures Return on average tangible equity Return on average equity Return on average risk weighted assets Cost: income ratio Loan loss rate (bps) Other financial measures Client assets Number of employees (full time...

Page 268
...the application of a more conservative approach to risk weighting these exposures. 2013 Â£m 2012 Â£m 2011 Â£m Income Statement Information Adjusted total expense net of insurance claims Own credit (charge)/gain Gains on debt buy-backs Gain/(loss) on disposal of investment in BlackRock, Inc Total...

Page 269
... interest income 2013 Â£m 2012 Â£m The Strategic Report Governance Risk review Retail, Corporate Banking and Wealth and Investment Management customer income - Customer assets - Customer liabilities Total Retail, Corporate Banking and Wealth and Investment Management non-customer income - Product...

Page 270
... page for Retail and Business Banking, Corporate Banking and Wealth and Investment Management for each of the component parts of net interest income. Wealth and Corporate Investment Banking Management % % UK RBB % Europe RBB % Africa RBB % Barclaycard % Total % 2013 Customer asset margin...

Page 271
... balance sheet Consolidated statement of changes in equity Consolidated cash flow statement barent Company accounts Notes to the financial statements Significant accounting policies Segmental reporting Net interest income Net fee and commission income Net trading income Net investment income Credit...

Page 272
...balance sheet and value at risk (VaR). â- â- â- â- â- â- â- â- In addition, the audit of the Barclays Africa Group Limited Group (which includes the Absa Retail and Business Banking component and certain other business activities) was concluded prior to our audit of the financial statements...

Page 273
... coverage of risks, balances and transactions. The Group has eight operating segments: UK Retail and Business Banking, Europe Retail and Business Banking, Africa Retail and Business Banking, Barclaycard, Investment Bank, Corporate Banking, Wealth and Investment Management and Head Office and Other...

Page 274
...design and operating effectiveness of the controls over valuations and model approval. In those cases where the external information supporting the Group's valuations was limited and the directors' judgement was required, we examined the Group's internal price verification processes which test those...

Page 275
... from litigation and regulatory or competition claims which are subject to the future outcome of legal or regulatory processes. See Note 30 to the financial statements on pages 334 to 340. Risk management Shareholder information barclays.com/annualreport Barclays bLC Annual Report 2013 273

Page 276
... for management bias in order to achieve planned results. Risk of management override of internal controls We focussed on this area because ISAs (UK & Ireland) require that we consider the risk of management override of internal controls. 274 Barclays bLC Annual Report 2013 barclays.com...

Page 277
... Corporate Governance Statement relating to the Company's compliance with nine provisions of the UK Corporate Governance Code (the Code). We have nothing to report having performed our review. Risk management Shareholder information barclays.com/annualreport Barclays bLC Annual Report 2013 275

Page 278
... Consolidated Financial Statements; and the manner in which it accounts for its employee benefits due to the implementation of IAS 19 (revised): Employee Benefits, which resulted in the inclusion of the January 1, 2012 balance sheet. A company's internal control over financial reporting is a process...

Page 279
.../(loss) per share Diluted earnings/(loss) per share The Board of Directors approved the financial statements out on pages 277 to 376 on 3 March 2014. 11 11 3.8 3.7 (4.8) (4.8) 22.9 21.9 Risk management Shareholder information barclays.com/annualreport Barclays bLC Annual Report 2013 277

Page 280
...nancial statements Consolidated statement of comprehensive income For the year ended 31 December Profit after tax Other comprehensive (loss)/income from continuing operations: Currency translation reserve Currency translation differences Available for sale reserve Net(losses)/gains from changes in...

Page 281
...50,615 53,407 34 8,564 9,371 9,607 63,949 59,986 63,014 1,312,267 1,488,335 1,561,650 32 32 33 Financial statements Risk management Antony Jenkins Group Chief Executive Tushar Morzaria Group Finance Director Shareholder information barclays.com/annualreport Barclays bLC Annual Report 2013 279

Page 282
... Total comprehensive (loss)/income for the year Issue of new ordinary shares Issue of shares under employee share schemes Issue of other equity instruments Increase in treasury shares Vesting of shares under employee share schemes Dividends paid Other reserve movements Balance as at 31 December 2013...

Page 283
... with an insignificant risk of changes in value with original maturities of three months or less. Repurchase and reverse repurchase agreements are not considered to be part of cash equivalents. Risk management Shareholder information barclays.com/annualreport Barclays bLC Annual Report 2013 281

Page 284
Financial statements of Barclays PLC Parent company accounts Income statement For the year ended 31 December Dividends received from subsidiary Net Interest income Other (expense)/income Management charge from subsidiary Profit before tax Tax Profit after tax Notes 2013 Â£m 2012 Â£m 2011 Â£m 47 ...

Page 285
... tax and total comprehensive income Issue of shares under employee share schemes Dividends Balance as at 31 December 2012 Cash flow statement For the year ended 31 December Reconciliation of profit before tax to net cash flows from operating activities: brofit before tax Changes in operating assets...

Page 286
... in retail banking, credit cards, wholesale banking, investment banking, wealth management and investment management services. In addition, individual financial statements have been presented for the holding company. 2. Compliance with International Financial Reporting Standards The consolidated...

Page 287
... into Sterling at the rate ruling on the date of the transaction. Foreign currency balances are translated into Sterling at the period end exchange rates. Exchange gains and losses on such balances are taken to the income statement. The Group's foreign operations (including subsidiaries, joint...

Page 288
... from both operating and finance leases on the balance sheet. The IASB also plans to issue new standards on insurance contracts and revenue recognition. The Group will consider the financial impacts of these new standards as they are finalised. 286 Barclays PLC Annual Report 2013 barclays.com...

Page 289
...Funding risk - liquidity, on pages 208 to 224; and Segmental reporting on page 288. â- â- These are covered by the Audit opinion included on pages 271 to 275. Financial review Financial statements Risk management Shareholder information barclays.com/annualreport Barclays PLC Annual Report 2013...

Page 290
... relevant accounting policies. 2013 Â£m 2012 Â£m 2011 Â£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 accounts Debt securities in issue Subordinated liabilities...

Page 291
...and Business Banking, Barclaycard, Corporate Banking and Wealth and Investment Management decreased to 1.84% (2011: 2.03%), primarily reflecting the reduction in contribution from Group hedging activities. The Strategic Report Governance Risk review Note 4: Net fee and commission income Accounting...

Page 292
... funding costs relating to trading activities. Income arises from both the sale and purchase of trading positions, margins which are achieved through market-making and customer business and from changes in fair value caused by movements in interest and exchange rates, equity prices and other market...

Page 293
... directly in other comprehensive income. Further declines in the fair value of equity instruments after impairment are recognised in the income statement. Financial review Financial statements Risk management Shareholder information barclays.com/annualreport Barclays PLC Annual Report 2013...

Page 294
... statements For the year ended 31 December 2013 continued Note 7: Credit impairment charges and other provisions continued Critical accounting estimates and judgements The calculation of the impairment allowance involves the use of judgement, based on the Group's experience of managing credit risk...

Page 295
...the Group-wide cost reduction initiative. This has been partly offset by the Â£290m penalty relating to the industry wide investigation into the setting of interbank offered rates and an increase in expenses relating to the Financial Services Compensation Scheme. Financial review Note 9: Profit on...

Page 296
... relating to the UK tax rate change in 2013 and share based payments in 2012 and 2011. The table below shows the reconciliation between the actual tax charge and the tax charge that would result from applying the standard UK corporation tax rate to the Group's profit before tax. 2013 Â£m 2012...

Page 297
...on profit forecasts which indicate that it is probable that the entities will have future taxable profits against which the losses and temporary differences can be utilised. Financial statements Risk management Shareholder information barclays.com/annualreport Barclays PLC Annual Report 2013 295

Page 298
... differences investments Â£m Â£m Retirement benefit obligations Â£m Loan impairment allowance Â£m Tax losses carried forward Â£m Share based payments and deferred compensation Â£m Cash flow hedges Â£m Other provisions Â£m Other Â£m Total Â£m Assets Liabilities At 1 January 2013 Income statement...

Page 299
... profits in the year ending 31 December 2014. The 2013 financial statements include the 2013 interim dividends of Â£418m (2012: Â£367m) and final dividend declared in relation to 2012 of Â£441m (2011: Â£366m). Risk management Shareholder information Notes a The basic weighted average number...

Page 300
...2012 Â£m Cumulative changes in fair value from inception 2013 Â£m 2012 Â£m Loans and advances designated at fair value, attributable to credit risk Value mitigated by related credit derivatives 18,695 914 21,996 1,342 95 49 178 (6) (4,797) 444 (4,892) 395 298 Barclays PLC Annual Report 2013...

Page 301
... option period. Currency derivatives are primarily designated as hedges of the foreign currency risk of net investments in foreign operations. Risk review Financial review Financial statements Risk management Shareholder information barclays.com/annualreport Barclays PLC Annual Report 2013 299

Page 302
... loans to banks and customers and investments in fixed rate debt securities held. Credit derivatives The Group's principal credit derivative-related contracts include credit default swaps and total return swaps. A credit derivative is an arrangement whereby the credit risk of an asset (the reference...

Page 303
...,863) 494,986 (319,361) 40,193,114 (313,459) (956) (4,946) (319,361) 21,054,952 17,351,127 1,787,035 40,193,114 Financial statements Risk management Shareholder information barclays.com/annualreport Barclays PLC Annual Report 2013 301

Page 304
... interest rate curves. The maximum length of time over which the Group hedges exposure to the variability in future cash flows for forecast transactions, excluding those forecast transactions related to the payment of variable interest on existing financial instruments is 10 years (2012: 9 years...

Page 305
... 2013 (2012: Â£979m loss). 49,244 8,071 1,705 5,306 470 64,796 52,306 9,161 - 5,331 470 67,268 57,878 11,411 1,542 6,020 1,710 78,561 59,754 13,064 - 6,038 1,710 80,566 Financial statements Risk management Shareholder information barclays.com/annualreport Barclays PLC Annual Report 2013...

Page 306
... active market, or if there is compelling external evidence demonstrating an executable exit price. Unobservable input levels are generally determined via reference to observable inputs, historical observations or using other analytical techniques. 304 Barclays PLC Annual Report 2013 barclays.com...

Page 307
... modelled spreads. Valuation uncertainty arises mainly from the long dated nature of the portfolio, the lack of active secondary market in the loans and the lack of observable loan spreads. Financial statements Risk management Shareholder information barclays.com/annualreport Barclays PLC Annual...

Page 308
... agreements Non asset backed loans Asset backed securities Commercial real estate loans Issued debt Equity cash products Funds and fund-linked products Physical commodities Investment properties Otherb Total As at 31 December 2012 Interest rate derivatives Foreign exchange derivatives Credit...

Page 309
... Â£m Risk review Government and government sponsored debt Corporate debt Asset backed securities Non asset backed loans Funds and fund-linked products Other Trading portfolio assets Commercial real estate loans Non asset backed loans Asset backed loans Private equity investments Other Financial...

Page 310
...at 1 January 2013 Â£m Purchases Â£m Sales Â£m As at 31 December 2013 Â£m Trading portfolio liabilities Certificates of deposit, commercial paper and other money market instruments Issued debt Other Financial liabilities designated at fair value Interest rate derivatives Credit derivatives Equity...

Page 311
... for the main products that are not determined by reference to unadjusted quoted prices (Level 1), observability and sensitivity analysis for Level 3 are described below. Financial statements Risk management Shareholder information barclays.com/annualreport Barclays PLC Annual Report 2013 309

Page 312
.... Unobservable model inputs are set by referencing liquid market instruments and applying extrapolation techniques to match the appropriate risk profile. Level 3 sensitivity: Sensitivity relating to unobservable valuation inputs is based on the dispersion of consensus data services where available...

Page 313
... generally valued using industry standard modelling techniques including discounting of cash flows. The key valuation inputs are forward curves. Risk review Financial review Financial statements Risk management Shareholder information barclays.com/annualreport Barclays PLC Annual Report 2013 311

Page 314
...to the financial statements For the year ended 31 December 2013 continued Note 18: Fair value of assets and liabilities continued Observability: Repurchase agreement pricing is generally observable. Level 3 sensitivity: There is no Level 3 sensitivity associated with repurchase agreements as inputs...

Page 315
... are generally observable. Level 3 sensitivity: There is no Level 3 sensitivity associated with physical commodities as inputs to valuation are observable. Financial review Financial statements Risk management Shareholder information barclays.com/annualreport Barclays PLC Annual Report 2013 313

Page 316
... to the financial statements For the year ended 31 December 2013 continued Note 18: Fair value of assets and liabilities continued Investment Property Description: Investment property consists of commercial real estate property including most of the major property types retail, office, industrial...

Page 317
... other money market instruments Non asset backed loans Asset backed securities Commercial real estate loans Issued debt Equity cash products Funds and fund linked products Investment property Other Total As at 31 December 2012 Interest rate derivatives Foreign exchange derivatives Credit derivatives...

Page 318
... with those presented for derivatives. f 'Other' primarily includes receivables resulting from the acquisition of the North American businesses of Lehman Brothers, asset-backed loans, private equity investments and non current assets held for sale. 316 Barclays PLC Annual Report 2013 barclays.com...

Page 319
... that is favourable for the contracted receiver of the underlying (currency, bond, commodity etc.), but the sensitivity is dependent on the specific terms of the instrument. Financial statements Risk management Shareholder information barclays.com/annualreport Barclays PLC Annual Report 2013 317

Page 320
... the cost of funding into the valuation of uncollateralised derivatives accounted for at fair value across all asset classes and businesses within Barclays Corporate Banking and Investment Bank. This is called the 'funding fair value adjustment (FFVA). 318 Barclays PLC Annual Report 2013 barclays...

Page 321
... a particular risk exposure in an orderly transaction between market participants at the balance sheet date under current market conditions. Unrecognised gains as a result of the use of valuation models using unobservable inputs The amount that has yet to be recognised in income that relates to the...

Page 322
...: - Home loans - Credit cards, unsecured and other retail lending - Finance lease receivables - Corporate loans Reverse repurchase agreements and other similar secured lending Financial liabilities Deposits from banks Customer accounts: - Current and demand accounts - Savings accounts - Other time...

Page 323
... market rates for the issue concerned or issues with similar terms and conditions. Risk review Financial review Financial statements As at December 2013 Financial assets Loans and advances to banks Loans and advances to customers: - Home loans - Credit cards, unsecured and other retail lending...

Page 324
... exposures, commercial real estate loans, private equity investments, and fair value loans to government and business and other services. Note 19: Offsetting financial assets and financial liabilities In accordance with IAS 32 Financial Instruments: Presentation, the group reports financial assets...

Page 325
...Financial collateral increased Â£12,293m for reverse repurchase agreements and Â£26,810m for repurchase agreements. Net amount increased Â£502m for reverse repurchase agreements and Â£239m for repurchase agreements. Shareholder information barclays.com/annualreport Barclays PLC Annual Report 2013...

Page 326
..., finance leases, repurchase and reverse repurchase agreements and similar secured lending. Detail regarding the qroup's capital and liquidity position can be found on pages 199 to 224. Note 20: Loans and advances to banks and customers Accounting for financial instruments held at amortised cost...

Page 327
... the balance sheet as the Group does not acquire the risks and rewards of ownership. Consideration paid (or cash collateral provided) is accounted for as a loan asset at amortised cost. Financial statements Risk management The Group may also sell (a repurchase agreement) or lend securities subject...

Page 328
... The Group initially recognises investment property at cost, and subsequently at fair value at each balance sheet date reflecting market conditions at the reporting date. Gains and losses on re-measurement are included in the income statement. 326 Barclays PLC Annual Report 2013 barclays.com...

Page 329
... are carried out by management with the support of appropriately qualified independent valuers. Refer to Note 18 Fair value of assets and liabilities for further detail. Financial statements Risk management Shareholder information barclays.com/annualreport Barclays PLC Annual Report 2013 327

Page 330
... that impairment may have occurred. Goodwill Â£m Internally generated software Â£m Other software Â£m Core deposit intangibles Â£m Brands Â£m Customer lists Â£m Licences and other Â£m Total Â£m 2013 Cost As at 1 January 2013 Additions and disposals Exchange and other movements As at 31...

Page 331
...: 2013 Â£m 2012 Â£m The Strategic Report UK RBB Europe RBB Africa RBB Barclaycard Investment Bank Corporate Banking Wealth and Investment Management Total net book value of goodwill 3,142 63 690 482 77 112 312 4,878 3,144 62 863 514 93 139 391 5,206 Governance Critical accounting estimates...

Page 332
... than five years Over five years Total 567 1,220 2,441 4,228 34 124 8 166 695 1,290 2,768 4,753 13 3 - 16 Total future minimum sublease payments to be received under non-cancellable subleases as at 31 December 2013 was Â£108m (2012: Â£22m). 330 Barclays PLC Annual Report 2013 barclays.com...

Page 333
... insurance liabilities would be Â£7m (2012: Â£7m). Financial statements Risk management Shareholder information Note a 2012 amounts have been revised following a review of processes used to calculate the amount of risk ceded to reinsurers barclays.com/annualreport Barclays PLC Annual Report 2013...

Page 334
...the estimated cost of making redress payments to customers, clients and counterparties for losses or damages associated with inappropriate judgement in the execution of our business activities. Conduct remediation largely relates to payment protection insurance and interest rate hedging products but...

Page 335
... redress stated on a per policy basis. The average redress for December 2012 has been restated on a policy basis: previously Â£2,750 (per valid claim basis) Financial review Financial statements Risk management Shareholder information barclays.com/annualreport Barclays PLC Annual Report 2013 333

Page 336
... are not recorded on balance sheet: 2013 Â£m 2012 Â£m Guarantees and letters of credit pledged as collateral security Performance guarantees, acceptances and endorsements Contingent liabilities Documentary credits and other short-term trade related transactions Forward starting reverse repurchase...

Page 337
... parties by mortgage originator affiliates of an entity that the Group acquired in 2007 (Acquired Subsidiary). The Strategic Report Governance Risk review Financial review Financial statements Risk management Shareholder information barclays.com/annualreport Barclays PLC Annual Report 2013 335

Page 338
...statements For the year ended 31 December 2013 continued Note 30: Legal, competition and regulatory matters continued In connection with the Group's loan sales and sponsored private-label securitisations, the Group provided certain loan level representations and warranties (R&Ws) generally relating...

Page 339
... of foreign exchange markets under the US Sherman Antitrust Act and New York state law and naming several international banks as defendants, including BBPLC. The Strategic Report Governance Risk review Financial review Financial statements Risk management Shareholder information Please see...

Page 340
... to the financial statements For the year ended 31 December 2013 continued Note 30: Legal, competition and regulatory matters continued Investigations into LIBOR, ISDAfix, other Benchmarks and Foreign Exchange Rates The Financial Conduct Authority (FCA), the US Commodity Futures Trading Commission...

Page 341
... class actions alleging similar issues have also been filed in the US. The timing of these cases is uncertain. The Strategic Report Governance Risk review Financial review Financial statements Risk management Shareholder information barclays.com/annualreport Barclays PLC Annual Report 2013 339

Page 342
... of business from time to time, including (but not limited to) disputes in relation to contracts, securities, debt collection, consumer credit, fraud, trusts, client assets, competition, data protection, money laundering, employment, environmental and other statutory and common law issues. The Group...

Page 343
... in the final five years to maturity; and the exclusion of the impact of fair value hedging. Undated subordinated liabilities Subordinated liability per balance sheet Initial call date 2013 Â£m 2012 Â£m Regulatory capital 2013 Â£m 2012 Â£m Financial review Barclays Bank PLC issued Tier One Notes...

Page 344
... statements For the year ended 31 Demember 2013 montinued Note 31: Subordinated liabilities continued Undated loan capital Undated loan capital is issued by the Bank and its subsidiaries for the development and expansion of their business and to strengthen their capital bases. The principal terms...

Page 345
...82 1,962 940 41 815 1,855 41 600 108 50 82 - 129 - 149 - - 132 147 87 - 27 14,066 Governance Risk review Financial review 2013 2014 2014 2015 2017 2017 2017 2018 2018 2023 Financial statements Risk management Shareholder information barclays.com/annualreport Barclays PLC Annual Report 2013 343

Page 346
Notes to the finanmial statements For the year ended 31 Demember 2013 montinued Note 31: Subordinated liabilities continued Dated loan capital Dated loan capital is issued by the Bank and respective subsidiaries for the development and expansion of their business and to strengthen their respective ...

Page 347
...2012: Â£502m increase) principally reflected the Â£2.7bn losses from changes in fair value on Government Bonds offset by Â£2.4bn gains transferred from the income statement due to fair value hedging. Risk management Shareholder information barclays.com/annualreport Barclays PLC Annual Report 2013...

Page 348
... payments. Note 34: Non-controlling interests Profit attributable to Non-Controlling interest 2013 Â£m 2012 Â£m Equity attributable to Non-Controlling interest 2013 Â£m 2012 Â£m Dividends paid to Non-Controlling interest 2013 Â£m 2012 Â£m Barclays Bank PLC issued: - Preference shares - Upper Tier...

Page 349
... Limited) Summarised financial information for Barclays Africa Group Limited, before intercompany eliminations, is set out below: Barclays Africa Group Limited 2013 Â£m 282 (188) 94 Risk review Absa Group Limited 2012 Â£m Income statement information Total income net of insurance claims Profit...

Page 350
... in the charge for deferred bonuses to Â£1,147m. The average total number of persons employed by the Group was 140,300 (2012: 143,700). Note a In addition, Â£346m of Group compensation (2012: Â£44m; 2011: Â£35m) was capitalised as internally generated software. 348 Barclays PLC Annual Report 2013...

Page 351
... conditions - such as continuing to make payments into a share based savings scheme. Financial statements The charge for the year arising from share based payment schemes was as follows: Charge for the year 2013 Â£m 2012 Â£m 2011 Â£m Share Value Plan Executive Share Award Scheme Others Total...

Page 352
... statements For the year ended 31 Demember 2013 montinued Note 36: Share based payments continued Executive Share Award Scheme (ESAS) ESAS awards were granted to participants in the form of a provisional allocation of Barclays PLC shares. The total value of the ESAS award made to the employee...

Page 353
... based payment schemes. The total number of Barclays shares held in these employee benefit trusts at 31 December 2013 was 3.2 million (2012: 6.8 million). Dividend rights have been waived on all of these shares. The total market value of the shares held in trust based on the year end share price of...

Page 354
... Africa pension plan within defined benefit accounting. b The past service cost relates to additional benefits provided in Spain during restructuring, offset by savings from restructuring programs in France and Portugal and scheme closure in Ireland. 352 Barclays PLC Annual Report 2013 barclays...

Page 355
...2014. Shareholder information Note a The scheme assets and benefit obligation for 31 December 2012 have been restated to bring the DC assets and obligations for active members of the South Africa pension plan within defined benefit accounting. barclays.com/annualreport Barclays PLC Annual Report...

Page 356
... rate 0.5% increase in assumed price inflation 1 year increase to life expectancy at 60 The weighted average duration of the benefit payments reflected in the defined benefit obligation for the UKRF is 20 years. ( 9.2) 7.8 3.0 ( 2.3) 2.0 0.8 Assets A long term investment strategy has been set...

Page 357
... were as follows: Contributions paid Â£m Financial statements Risk management 2013 2012 2011 238 742 2,128 Shareholder information The Group's expected contribution to the UKRF in 2014 is Â£218m. In addition the expected contributions to UK defined contribution schemes is Â£46m to the UKRF and...

Page 358
... the financial statements For the year ended 31 December 2013 continued Performance This section presents information on the Group's investments in subsidiaries, joint ventures and associates and its interests in structured entities. Detail is also given on securitisation transactions the Group has...

Page 359
... to exchange control regulatfon determfned by the South Afrfcan Reserve Bank (SARB). Specfal dfvfdends and loans fn lfeu of dfvfdends cannot be transferred wfthout SARB approval. Financial statements Risk management Shareholder information barclays.com/annualreport Barclays PLC Annual Report 2013...

Page 360
... the related rfsks and so have not been presented. Other fnterest materfally fncludes a portfolfo under exft quadrant whfch fs befng managed down and condufts and corporate lendfng where the fnterest fs drfven by normal customer demand. 358 Barclays PLC Annual Report 2013 barclays.com...

Page 361
... balance sheet, were as follows: Type of security and nature of entity Asset securitisations Â£m Other Â£m Total Â£m The Strategic Report Governance Debt securftfes Equfty securftfes Traded loans Other assets Total 10,177 5 - - 10,182 345 87 538 120 1,090 10,522 92 538 120 11,272 Risk review...

Page 362
... Multi-seller credit conduit portfolio programmes Â£m Â£m Lending Â£m Mortgage backed securities Â£m Investment funds and trusts Â£m Others Â£m Total Â£m Trading portfolio assets - Debt securftfes - Equfty securftfes Financial assets designated at fair value - Loans and advances to customers - Debt...

Page 363
... Nonmonoline CDOs Â£m Others Â£m Total Â£m The Strategic Report Debt securftfes at fafr value Loans and advances Total on balance sheet exposure 740 2,788 3,528...Financial review Financial statements Risk management Shareholder information barclays.com/annualreport Barclays PLC Annual Report 2013...

Page 364
... securities Thfs represents a portfolfo of floatfng rate notes mafnly mortgage backed securfty posftfons used as an economfc hedge of fnterest rate rfsk under the Group's structural hedgfng programme. All notes are fnvestment grade. Investment funds and trusts In the course of fts fund management...

Page 365
... the Group's share for the year ended 31 December 2013 wfth the exceptfon of certafn undertakfngs for whfch the amounts are based on accounts made up to dates not earlfer than three months before the balance sheet date. Associates 2013 Â£m 2012 Â£m Joint ventures 2013 Â£m 2012 Â£m Profit or loss...

Page 366
... sheet: 2013 Assets Carrying amount Â£m Fair Value Â£m Liabilities Carrying amount Â£m Fafr Value Â£m 2012 Assets Carryfng amount Â£m Lfabflftfes Carryfng amount Â£m Loans and advances to customers Resfdentfal mortgage loans Credft cards, unsecured and other retafl lendfng Corporate loans Total...

Page 367
... fn the followfng lfne ftems: Loans and advances Â£m Trading portfolio assets Â£m Available for sale investments Â£m Type of transfer As at 31 December 2013 CLO and other assets US sub-prfme and Alt-A Commercfal mortgage backed securftfes Total As at 31 December 2012 CLO and other assets ABS CDO...

Page 368
Notes to the financial statements For the year ended 31 December 2013 continued Other disclosure matters The notes included in this section focuses on related party transactions, auditors' remuneration and directors' remuneration. Related parties include any subsidiaries, associates, joint ventures...

Page 369
...and Directors' remuneration contfnued The Group provfdes bankfng servfces to Dfrectors and other Key Management Personnel and persons connected to them. Transactfons durfng the year and the balances outstandfng at 31 December were as follows: Loans outstanding 2013 Â£m 2012 Â£m The Strategic Report...

Page 370
... year ended 31 December 2013 continued Note 43: Related party transactions and Directors' remuneration contfnued Directors' and Officers' shareholdings and options The beneficfal ownershfp of ordfnary share capftal of Barclays PLC by all Dfrectors and Officers of Barclays PLC (fnvolvfng 28 persons...

Page 371
... IAS 19 revfsed standard resulted fn the basfc earnfngs per share decreasfng 0.6p from 23.5p to 22.9p and the dfluted earnfngs per share decreasfng 0.7p from 22.6p to 21.9p. Financial statements Risk management Shareholder information barclays.com/annualreport Barclays PLC Annual Report 2013 369

Page 372
... on debt buy-backs and extfngufshments Other fncome Total income Net clafms and benefits fncurred on fnsurance contracts Total income net of insurance claims Credft fmpafrment charges and other provfsfons Impafrment of fnvestment fn BlackRock, Inc. Net operating income Staff costs Admfnfstratfon and...

Page 373
... - Changes in accounting policies, comparability and other adjustments contfnued Consolidated income statement - movement between published and restated For the year ended 31 December 2012 Continuing operations Interest fncome Interest expense Net interest income Fee and commfssfon fncome Fee and...

Page 374
... For the year ended 31 December 2013 continued Note 46: Transition Notes - Changes in accounting policies, comparability and other adjustments contfnued Consolidated statement of comprehensive income - movement between published and restated For the year ended 31 December 2012 (Loss)/profit after...

Page 375
... (129) 1,962 (78) 243 (207) 1,498,636 Risk review Financial review Financial statements Risk management 55,589 9,607 65,196 1,563,527 (945) (945) (433) (1,237) 53,407 9,607 (1,237) 63,014 (1,444) 1,561,650 Shareholder information barclays.com/annualreport Barclays PLC Annual Report 2013 373

Page 376
... 2013 The adoptfon of the IAS 19 revfsed standard resulted fn a change from a defined benefit asset of Â£2,066m to a defined benefit lfabflfty of Â£1,780m. Thfs movement fs due to actuarfal losses of Â£3,846m befng recognfsed on the balance sheet. 374 Barclays PLC Annual Report 2013 barclays...

Page 377
...,773 (604) 531 (7,097) (1,427) 2,258 (2,680) 97 (979) (111) (2,842) (4,111) (27,873) 149,769 121,896 86,191 33,473 2,228 4 121,896 Financial review Financial statements Risk management Shareholder information barclays.com/annualreport Barclays PLC Annual Report 2013 375

Page 378
... Company fnclude a Â£739m (2012: Â£nfl) recefvable held by Barclays PLC whfch fs payable by Barclays Bank PLC. The recefvable arose as a result of shares fssued by Barclays PLC to fund share awards for employee share schemes wfthfn Barclays Bank PLC. 376 Barclays PLC Annual Report 2013 barclays...

Page 379
... Ongoing business management 418 418 418 419 Capital fisk management Overview Our approach to capital risk management Ongoing capital management risks 420 420 420 421 Financial statements Risk management Shareholder information barclays.com/annualreport Barclays PLC Annual Report 2013 377

Page 380
... Risk management, therefore, plays a significant role in the Group achieving its goals and in turning Barclays into 'Go-To' bank. Barclays risk culture is the set of objectives and practices, shared across the organisation, that drive and govern risk management. 378 Barclays PLC Annual Report 2013...

Page 381
... their careers and contribute to the success of the Bank. 'Transform Risk' is being led by the Risk Executive Committee, coordinated by the global Risk COO, and supported by a team of people from across the risk function. It represents a significant shift in the operating model, process and systems...

Page 382
...; Collaborating with the first line to support business growth and drive an appropriate balance between risk and reward without diminishing the independence from the first line; and Reporting on the effectiveness of the risk and control environment to executive management and Board committees...

Page 383
...à¸€ reviews Group Risk Profile approves the Group Control Framework approves minimum control requirements for principal risks Financial review Authority controls appetite Financial statements Risk management Shareholder information barclays.com/annualreport Barclays PLC Annual Report 2013 381

Page 384
... relevant business, professional and risk management experience of the Directors of the Board are given in the Board of Directors section on pages 83 to 85. The terms of reference for each of the principal Board Committees are available from the Corporate Governance section at: http://group.barclays...

Page 385
...considers reputational and conduct related issues that arise as a result of business activity and from external forces Financial review Financial statements Credit Risk Market Risk Funding Risk Operational Risk Conduct Risk Reputation Risk The launch of the Transform programme and subsequent...

Page 386
... are operating effectively. Six-monthly reviews support the regulatory requirement for Barclays to make an annual statement about its system of internal controls. Group Key Risk Officers report their assessments of the risk exposure and control effectiveness to Group-level oversight committees and...

Page 387
...the main objectives of managing risk is to ensure that Barclays achieves an adequate balance between capital requirements and resources. The capital planning cycle is fully integrated within strategic planning. Shareholder information barclays.com/annualreport Barclays PLC Annual Report 2013 385

Page 388
... executive management to achieve execution of the Barclays strategy and business plans in line with the Board approved Purpose, Values, Code of Conduct ('the Barclays Way') and risk appetite. This includes assessing risk holistically, ensuring the soundness of the financial position of Barclays...

Page 389
...stress Extreme stress Financial statements Potential size of loss in one year Manage and monitor risk metrics as part of tracking of forecasts throughout year, and report to the Board. Implement strategic changes if forecasts are outside of acceptable range given current conditions The potentially...

Page 390
..., Return on RWAs Loan loss rate (LLR) Core Tier 1 and leverage ratios Dividends Fundamental economic and business indicators, which best describes shareholder focus in terms of profitability and ability to use capital resources efficiently. Describes the credit risk profile and whether impairment...

Page 391
...Board Financial Risk Committee provides input and agrees on scenario themes Economic parameters set by Group Risk Economic parameters reviewed by economists within the businesses Stress test scenarios and economic parameters issued by Group Risk Financial statements At the Group level, stress test...

Page 392
...: the stress test results are presented for review by the Executive Committee and BFRC, and are also shared with the Board. â- â- â- â- The results of our H2 2013 internal Group-wide stress test exercise show that the Group's profit before tax remains positive under the modelled severe global...

Page 393
... risk - Liquidity section. Further information on market risk stress testing is provided in the Market Risk section. The Strategic Report Governance Risk review Financial review Financial statements Risk management Shareholder information barclays.com/annualreport Barclays PLC Annual Report 2013...

Page 394
... Review retail credit risk policies and framework Investment Bank Corporate Bankinp Africa RBB Wealth and Investment Manapement UK RBB Europe RBB Africa RBB Barclaycard Corporate Bankinp (retail portfolios) Wealth and Investment Manapement 392 Barclays PLC Annual Report 2013 barclays...

Page 395
... for example, loans to banks, loan commitments and debt securities. Barclays' risk manapement policies and processes are desipned 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...

Page 396
... Status 6+ Asset is considered irrecoverable and is written off Write off Note a Balances prior to 2012 have not been restated for the adoption of IFRS 10. 394 Barclays PLC Annual Report 2013 barclays.com/annualreport Customer pays total overdue payments and returns back to in order position

Page 397
... (180 days past due date of contractual oblipation). Early charpe-off points are prescribed for unsecured assets. For example, in case of customer bankruptcy or insolvency, associated accounts are charped off within 60 days of notification. Identifying potential credit risk loans The Group reports...

Page 398
... in itself but would rise with reference rates. In addition, to the extent that a rise in interest rates impacted upon economic prowth and/or serviceability of wholesale clients and customers, this would be expected to feed throuph in future impairment numbers. In 2013, key judpements were made on...

Page 399
...accounts are charped off within 60 days of notification. See recovery information included in Portfolio reviews on pape 165. In addition please refer to Foreclosures in process and properties in possession on pape 167. Mortpapes Credit cards Personal loans, overdrafts & other secured loans Business...

Page 400
...ranpe of counterparties. For instance, Investment Bank, Corporate Bankinp and other business areas may all take property, cash or other physical assets as collateral for exposures to retailers, property companies or other client types. 398 Barclays PLC Annual Report 2013 barclays.com/annualreport

Page 401
... is taken usinp the financial collateral comprehensive method: supervisory volatility adjustments approach. The Strategic Report Governance Risk review Financial review Financial statements Risk management Shareholder information barclays.com/annualreport Barclays PLC Annual Report 2013 399

Page 402
...-balance sheet risk mitigation The Group applies fundamentally the same risk manapement policies for off-balance sheet risks as it does for its on-balance sheet risks. In the case of commitments to lend, customers and counterparties will be subject to the same credit manapement policies as for loans...

Page 403
... of forbearance offered by the Group to customers and clients remains small in comparison to the overall size of the loan book. Forbearance on the Group's principal portfolios in UK, US, Europe, and South Africa are presented in the Retail Credit risk section of the Risk review. See forbearance...

Page 404
... the credit review and approval process for each individual loan. The review will consider factors such as the strenpth of the business model and sustainability of the cash flows and for bridpe loans the review will also include an evaluation of the market risk. 402 Barclays PLC Annual Report 2013...

Page 405
... of future hypothetical exposure values (or mark-to-market) for a sinple transaction or proup of transactions by the same counterparty, and the CDS spread for a piven horizon. Financial statements Risk management Shareholder information barclays.com/annualreport Barclays PLC Annual Report 2013...

Page 406
..., with impairment allowances raised as appropriate and in line with the Group's impairment policies. These loans are all considered Hipher Risk for the purpose of this analysis of credit quality. Debt securities For assets held at fair value, the carryinp value on the balance sheet will include...

Page 407
..., Barclays could be required or might choose to make extra contributions to the pension fund. The Group's main defined benefit scheme was closed to new entrants in 2012. Organisation and structure Traded risk in the businesses resides primarily in the Investment Bank, while non-traded market risk...

Page 408
...appetite levels to the Board. The Committee is chaired by the Group Market Risk Director and attendees include the Group Chief Risk Officer, respective business aligned risk managers and senior managers from Group Market Risk as well as Internal Audit. 406 Barclays PLC Annual Report 2013 barclays...

Page 409
... Bank also manages the Interest Rate risks for other businesses through the Group Treasury function. Positions will contribute both to market risk limits and regulatory capital if relevant. Measure Description Traded market risk measurement - management view Market risk management measures Barclays...

Page 410
...Limits are applied at the total Investment Bank level as well as by risk factor type, which are then cascaded down to particular trading desks and businesses by the market risk management function. See page 192 for a review of Management VaR in 2013. Primary stress tests Key tool used by management...

Page 411
... Horizon 2 years 10 days 95% Barclays' management view of market risk exposures. Includes trading books and banking books exposed to price risk 2 years 1 day Financial review Regulatory VaR allows oversight of the total potential losses, at a given confidence level, of those trading books which...

Page 412
..., by setting and enforcing risk and position limits and defining the consequences of breaching these limits. Positions in the trading book are subject to market risk capital, computed using models where regulatory approval has been granted, otherwise the market risk capital requirement is calculated...

Page 413
... Markets Credit Counterparty Risk Trading Single Name Trading 3 3 3 2 2 2 1 0 0 0 0 0 Green Green Green Green Green Green Green Green Green Green Green Green Financial review Financial statements Risk management Shareholder information barclays.com/annualreport Barclays PLC Annual Report 2013...

Page 414
... â- â- Traded Market Risk Control The metrics that Barclays use to measure market risk are controlled through the use of appropriate limit framework. Limits are set at the total Investment Bank portfolio level, risk factor level, for example, interest rate risk, and at business level, for example...

Page 415
... for business and risk managers. These are sent to Group Market Risk for review and a risk summary is presented at the Market Risk Committee and the Investment Bank's Traded Positions Risk Review. The overall market risk profile is also presented to BFRC on a regular basis. The Strategic Report...

Page 416
... to the bank, pension risk is not governed by the conventional limit framework observed in traded and non-traded market risk. However, risk and positions are reported monthly to the Market Risk Committee (MRC) and periodically to the Pension Management Group (PMG), Pension Executive Board (PEB) and...

Page 417
... risk management Operational Risk Management Overview Operational Risk is defined as the risk of direct or indirect impacts resulting from human factors, inadequate or failed internal processes and systems or external events. During 2013 the Board Conduct, Reputation and Operational Risk Committee...

Page 418
... basis for OR&CC, BCRORC and BAC. The Internal Audit function provides further independent review and challenge of the Group's operational risk management controls, processes and systems and reports to the Board and senior management. 416 Barclays PLC Annual Report 2013 barclays.com/annualreport

Page 419
...recovery plans). â- â- Management may then conclude whether the potential risk is acceptable (within appetite) or whether changes in risk management control or business strategy are required. Risk management Shareholder information barclays.com/annualreport Barclays PLC Annual Report 2013 417

Page 420
... reviews the performance and risks associated with these holdings. The holdings are subject to limits set by the Board Financial Risk Committee and by the independent Group market and credit risk functions; and The Funding and Liquidity Risk Committee, a sub-committee of the Balance Sheet Management...

Page 421
... commitment limits Ratings Downgrade limits Internal pricing and incentives Barclays actively manages the composition and duration of the balance sheet and of contingent liquidity risk through the transfer of liquidity premium directly to business units. Liquidity premiums are charged and credited...

Page 422
...-term (3 year) financial planning cycles. Barclays' capital plans are developed with the objective of maintaining capital that is adequate in quantity and quality to support the approved risk profile and business needs, including our Transform financial commitments. As a result, the Group holds...

Page 423
... are reported to Group Treasury Committee monthly. Capital management information is readily available at all times to support the Executive Management's strategic and day-to-day business decision making, as may be required. The Group submits its Board approved ICAAP document to the PRA on an annual...

Page 424
422 Barclays PLC Annual Report 2013 barclays.com/annualreport

Page 425
... enquiries. Shareholder information Shareholder enquiries Index Your Barclays shareholding 424 428 429 The Strategic Report Governance 433 Risk review Financial review Financial statements Risk management Shareholder information barclays.com/annualreport Barclays PLC Annual Report 2013 423

Page 426
... a member notifies the Company Secretary in advance of his/her intention to propose a person for election. It is Barclays' practice that all Directors offer themselves for re-election annually in accordance with the UK Corporate Governance Code. (v) The Board has the power to appoint additional...

Page 427
...excepted transfer' of all of the relevant shares to a third party has occurred, or as the Board otherwise determines. The Strategic Report Governance Risk review Financial review Financial statements Risk management Shareholder information barclays.com/annualreport Barclays PLC Annual Report 2013...

Page 428
... unpaid dividends. Redemption and Purchase Subject to applicable legislation and the rights of the other Shareholders, any share may be issued on terms that it is, at the option of the Company or the holder of such share, redeemable. The Directors are authorised to determine the terms, conditions...

Page 429
...Technology Officer Chief Executive, Americas Chief Executive, Wealth and Investment Management Group Head of Compliance 2002 2004 2009 2012 2012 2012 2013 2013 2013 2013 2013 2013 2013 2014 Financial statements Risk management Shareholder information barclays.com/annualreport Barclays PLC Annual...

Page 430
... Communications Department Barclays Bank PLC 745 Seventh Avenue New York, NY 10019, USA ADR Depositary JP Morgan Chase Bank, N.A. PO Box 64504 St. Paul MN 55164-0854 USA Tel: 1-800-990-1135 (toll-free for US domestic callers) or +1 651 453 2128 Email: [email protected] Note a Calls cost...

Page 431
...group.barclays.com/aboutbarclays/investor-relations/annual-reports) Goodwill Group Finance Director's review 328-329 12-13 Financial statements 262-263 38-41 H 52-77 55 228-229 142-189 287 285 197 Head Office and Other Operations business analysis 266 Risk management I Impairment charges credit...

Page 432
... PLC) Pensions directors notes to the accounts Potential credit risk loans Presentation of information Property, plant and equipment Provisions 282-283 115 351-355 156 270 326-327 332-333 U UK Retail and Business Banking business analysis business strategy 252-253 18-21 W Wealth and Investment...

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Page 435
Shareholder information Your Barclays Shareholding Key dates* 28 March 2013 Final dividend payment date 24 April 2014 Annual General Meeting 13 June 2014 First interim dividend payment date 19 September 2014 Second interim dividend payment date 5 December 2014 Third interim dividend payment date *...

Page 436
... e-view members receive the latest updates from Barclays directly by email. To join Barclays e-view, please follow these 3 easy steps: Shareholder Relations, Barclays PLC, 1 Churchill Place, London E14 5HP Share price Information on the Barclays share price and other share price tools are available...

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