Barclays 2013 Annual Report Download - page 9

Barclays’ sustainable success will be assured by
becoming the ‘Go-To’ bank for all of our stakeholders. If
we understand their needs and priorities and ensure that
these are at the heart of our decision-making, we will be
able to build a bank which is lower-risk, more predictable
and higher-performing.
The strategic response
In 2013, we launched the Transform programme to deliver the
recommendations of the Strategic Review. Transform is the plan that
will help Barclays become the ‘Go-To’ bank. It has three overall goals:
Turnaround, Return Acceptable Numbers, Sustain FORward
Momentum.
Turnaround the business
Turnaround was the immediate task of stabilising the business and
maintaining momentum. In the second half of 2012, we delivered our
new goal, purpose, and values to unite Barclays with a shared sense of
direction – how we will do business.
We have put in place a new Executive team which is focused on
delivery. The vast majority of our 139,600 colleagues have participated
in workshops and training in Barclays’ values. To cement our cultural
change, a guide for behaviour – The Barclays Way – has been published
internally and externally.
Return Acceptable Numbers
In 2013, we turned our attention towards the longer-term
transformation of Barclays. For our Return Acceptable Numbers phase,
we are de-risking and de-leveraging the business to make it more
sustainable for the long term.
We committed to consolidate to core lines of business, to generate
£1.7bn of cost savings by 2015, to lower our RWAs, funding and
liquidity, and to reach a Core Tier 1 capital ratio of 10.5%. See page 238
for further details on the Transform financial commitments.
In 2013, we:
 Completed a £5.8bn rights issue in October
 Issued £2.1bn of CRDIV and PRA-qualifying Additional Tier 1 (AT1)
capital
 Reduced CRDIV leverage exposure by £196bn in H2 2013 to
£1,363bn, of which an estimated £55bn related to foreign exchange
 Drove improvements in our loan-to-deposit ratio (to 101% at
December 2013)
Additionally, we reduced legacy assets in our Exit Quadrant portfolios
by £40bn through Investment Bank legacy asset reductions of £17bn
and derivative efficiencies of £23bn.
Sustain Forward Momentum
Our journey to ‘Go-To’ depends on continuing to adapt Barclays for the
future and ensuring that we do not return to a short-term bias as we
execute our plans. In order to Sustain FORward Momentum, we have
also set in place longer-term markers in four critical areas: Culture,
Rewards, Control and Cost.
The Board-commissioned Salz Review also prompted us to review our
conduct. We are committed to being open and transparent and to
regaining the trust of all of Barclays’ stakeholders. We have integrated
our necessary behavioural transformation into our Transform
programme. Full details on our response to the Salz Review can be
found on pages 126 to 129.
A strong culture is the first line of defence against repeating the
mistakes of the past. To unite around Barclays’ Values and Behaviours,
we published ‘The Barclays Way’ to govern our way of working across
our business globally. Colleagues are essential to embedding our
Purpose and Values and, in 2013, all colleagues attended Values and
Behaviours engagement sessions.
Reward and incentivisation is a critical enabler of behavioural change.
As of 2014, colleague performance will be measured and rewarded not
only on ‘what’ an employee delivers but also ‘how’ they achieve their
objectives. As such, remuneration will align with Barclays’ Purpose,
Values and Behaviours as well as the Group Balanced Scorecard.
As of February 2013 control functions now have solid reporting lines
into the Group CEO rather than business heads to avoid conflict of
interest.
The Remuneration Committee will embed aggregate and individual
incentive risk adjustments with additional Compliance and Risk input.
Furthermore, our principal risk framework has been enhanced with the
inclusion of conduct risk and reputation risk and a revised Enterprise-
Wide Risk Committee will ensure adequate Board oversight.
To address the cost challenge, we have focused on creating the right
level of financial analytics and on improving operational efficiencies.
The key elements of our cost programme are right-sizing our
businesses, industrialising handling of customer transactions and
queries, and adopting innovative technology and automated
processing.
Focus of efforts in 2014
In 2014, we will continue to build on the progress made in 2013. We will
focus on delivering on our financial commitments and expect to see
the benefits of our 2013 work on cost begin to crystallise.
We aim to respond positively to the evolving regulatory landscape. We
have sought to constructively engage our regulators and improve our
regulatory and public disclosures in order to improve transparency and
consistency with society’s expectations.
The new regulatory and emerging business environment will inevitably
call for continued rigorous review and adaption of the mix and
structure of the businesses of the Bank to ensure we generate
sustainable returns.
However, care needs to be taken to ensure that regulation does not go
too far. A healthy banking sector ensuring returns above the cost of
equity is essential to economic growth. Vibrant economies need vibrant
banks. It is therefore important to ensure that the rightly-increased
focus by the regulator on conduct supervision does not inadvertently
result in the withdrawal of services and the restriction of choice.
Another key focus over 2013 and the coming years is rebuilding the
trust that customers, clients, and stakeholders have in our organisation.
We have pledged to increase transparency and conduct our business in
the right way, as set out in our values.
We need to better respond to the current needs and anticipate the
future demands of our 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.
Group overview 02
Chief Executive’s strategic review 04
Strategy and operating environment 06
Business model/Value creation 08
Balanced Scorecard 10
Group Finance Director’s review 12
Strategic Risk overview 14
Performance review by division 18
Chairman’s governance overview 46
Summary remuneration report 48
It is important that we understand the
conditions in which we operate in order
to run the company effectively.
In this section we aim to highlight some
of the major external factors affecting
Barclays and how we aim to address
these factors through our strategy.
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