Barclays 2013 Annual Report Download - page 16

Strategic Risk overview
‘Although economic and
market conditions remained
challenging in 2013, our
credit and market risk
portfolios have continued
to perform well’
Maintaining our risk profi le at an acceptable and
appropriate level is essential to ensure our continued
performance. Barclays constantly reviews its exposures in
a number of areas including asset quality, industry and
geography.
2013 performance
While the economic environment in Barclays’ main areas of business
was marked by generally weak growth in 2013, the loan impairment
charges reduced by 7% with the loan loss rate fi nshing the year 6bp
lower at 64bps. The loan impairment charge for wholesale decreased
by 27% principally refl ecting a reduction in Corporate Banking due to
lower exposure to the Spanish property and construction sector and
lower charges in the UK. Impairment increased by 4% in retail mainly in
UK RBB and Barclaycard as the two businesses grew and expanded
their business portfolios and from the non-recurrence of releases in
2012.
Market risk remains at moderate levels and the daily value at risk
reduced in 2013 from a combination of risk reduction and improved
market conditions, notably, tightening of credit spreads.
The operational risk profi le remained broadly steady while conduct risk
relating to legacy issues was evidenced by additional provisions for PPI
and interest rate hedging product redress.
Our funding profi le continued to strengthen during 2013 as reliance on
wholesale funding reduced as the loan to deposit ratio decreased to
101%. The Group's capital position was enhanced through the £5.8bn
rights issue and £2.1bn AT1 securities as action was taken to move
toward regulatory capital and leverage targets.
Risk was realigned in 2013 through two main programmes:
Transform Programme
Under Transform, the risk profi les of businesses were adjusted as they
were aligned with their revised strategies to meet the goal of becoming
the ‘Go-To’ bank. This included a lowering of risk in Corporate Banking
as Exit Quadrant assets were reduced in 2013. In Europe RBB, the risk
profi le is in line with the change of focus to mortgage lending and
small business customers through its Premier proposition. The risk
profi le in Barclaycard remained broadly stable with growth within
appetite and in line with ongoing strategy of recruiting quality prime
customers, combined with a controlled testing into other open 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 to conduct and reputation matters
Conduct risk and Reputation risk were re-categorised as Principal Risks
in 2013 with Executive Committee sponsorship from the Principal Risk
Owner, the Head of Compliance. The Board Enterprise Wide Risk
Committee was also created in 2013. It recommends to the Board the
Group’s overall risk appetite as well as evaluating and reporting details
of the Group’s overall risk profi le and risk monitoring.
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14 Barclays PLC Annual Report 2013