Barclays 2015 Annual Report Download - page 330

328 I Barclays PLC Annual Report 2015 home.barclays/annualreport
Notes to the financial statements
Scope o onsolidation
36 Principal subsidiaries continued
Country of registration or incorporation Company name
Percentage of voting
rights held (%)
Equity shareholder’s
funds (£m)
Retained profit for
the year (£m)
UK Fitzroy Finance Limited 100 – –
Cayman Islands Palomino Limited 100 2 –
These entities are managed by external counterparties and consequently are not controlled by the Group. Where appropriate, interests relating to
these entities are included in Note 37 Structured entities.
Significant restrictions
As is typical for a Group of its size and international scope, there are restrictions on the ability of Barclays PLC to obtain distributions of capital, access
the assets or repay the liabilities of members of its Group due to the statutory, regulatory and contractual requirements of its subsidiaries and due to
the protective rights of non-controlling interests. These are considered below.
Regulatory requirements
Barclays’ principal subsidiary companies have assets and liabilities before intercompany eliminations of £1,468bn (2014: £1,757bn) and £1,398bn
(2014: £1,683bn) respectively. The assets and liabilities are subject to prudential regulation and regulatory capital requirements in the countries in
which they are regulated. These require entities to maintain minimum capital levels which cannot be returned to the parent company, Barclays PLC
on a going concern basis.
In order to meet capital requirements, subsidiaries may hold certain equity-accounted and debt-accounted issued financial instruments and
non-equity instruments such as Tier 1 and Tier 2 capital instruments and other forms of subordinated liabilities. See Note 33 Non-controlling
interests and Note 30 Subordinated liabilities for particulars of these instruments. These instruments may be subject to cancellation clauses or
preference share restrictions that would limit the ability of the entity to repatriate the capital on a timely basis.
Liquidity requirements
Regulated subsidiaries of the Group are required to maintain liquidity pools to meet PRA and local regulatory requirements. The main subsidiaries
affected are Barclays Bank PLC, Barclays Africa Group Limited and Barclays Capital Inc which must maintain daily compliance with the regulatory
minimum. See pages 188 to 204 for further details of liquidity requirements, including those of our significant subsidiaries.
Statutory requirements
The Group’s subsidiaries are subject to statutory requirements not to make distributions of capital and unrealised profits and generally to maintain
solvency. These requirements restrict the ability of subsidiaries to make remittances of dividends to Barclays PLC, the ultimate parent, except in the
event of a legal capital reduction or liquidation. In most cases, the regulatory restrictions referred to above exceed the statutory restrictions.
Contractual requirements
Asset encumbrance
The Group uses its financial assets to raise finance in the form of securitisations and through the liquidity schemes of central banks. Once
encumbered, the assets are not available for transfer around the Group. The assets typically affected are disclosed in Note 40 Assets pledged.
Assets held by consolidated structured entities
£80m (2014: £379m) of assets included in the Group’s balance sheet relate to consolidated investment funds and are held to pay return and principal
to the holders of units in the funds. The assets held in these funds cannot be transferred to other members of the Group. The decrease is materially
driven by the sale of the Spanish business in January 2015, which included certain European wealth funds, and the disposal of a French wealth fund
during the year.
Other restrictions
The Group is required to maintain balances with central banks and other regulatory authorities, and these amounted to £4,369m (2014: £4,448m).
Barclays Africa Group Limited assets are subject to exchange control regulation determined by the South African Reserve Bank (SARB). Special
dividends and loans in lieu of dividends cannot be transferred without SARB approval.
37 Structured entities
A structured entity is an entity in which voting or similar rights are not the dominant factor in deciding control. Structured entities are generally
created to achieve a narrow and well defined objective with restrictions around their ongoing activities.
Depending on the Group’s power over the activities of the entity and its exposure to and ability to influence its own returns, it may consolidate the
entity. In other cases, it may sponsor or have exposure to such an entity but not consolidate it.
Consolidated structured entities
The Group has contractual arrangements which may require it to provide financial support to the following types of consolidated structured entities:
Securitisation vehicles
The Group uses securitisation as a source of financing and a means of risk transfer. Refer to Note 39 Securitisations for further detail.
The Group provides liquidity facilities to certain securitisation vehicles. At 31 December 2015, there were outstanding loan commitments to these
entities totalling £135m (2014: £201m).