Barclays 2015 Annual Report Download - page 56

54 I Barclays PLC Annual Report 2015 home.barclays/annualreport
Governance: Directors’ report
What we did in 2015
Board Risk Committee report
Area of focus Matter addressed Role of the Committee Conclusion/action taken
Structural reform,
i.e. the progress of
structural reform,
including the
challenges to
execution.
The impact of structural reform on the
Group’s principal risks, including the
impact on capital and liquidity for
individual Group legal entities and the
potential overall impact on the safety
and soundness of the UK financial
system.
 Debated structural reform and the
impact on the capital and liquidity
flightpaths for individual legal
entities, in particular, the prospective
credit rating of Barclays Bank PLC in
the structural reform structure.
 Evaluated the respective impacts on
capital, liquidity and on the general
safeness and soundness of the
Group of different ring fence bank
(RFB) structures.
The Committee recognised the design
and implementation challenges of the
programme and supported management
in proposing structures and perimeters
that best ensured the safety and
soundness of all elements of the Group.
It requested a workshop on structural
reform to provide the Committee with an
in-depth view of the key challenges. The
workshop was held in December 2015
and all non-executive Directors were
invited to attend.
Liquidity and
funding, i.e. having
sufficient financial
resources available to
enable the Group to
meet its obligations as
they fall due.
Compliance with regulatory
requirements and internal liquidity risk
appetite (LRA).
 Assessed on a regular basis liquidity
performance against requirements.
 Debated the credit ratings of
Barclays PLC and Barclays Bank PLC
and potential market reaction to a
ratings downgrade following
removal of sovereign support
notching.
 Questioned the cost of additional
liquidity and asked for options to
reduce the cost to be considered.
The Committee ensured that
management had in place options to
manage any impact on liquidity of a
ratings downgrade. It agreed that the
cost of maintaining surplus liquidity was
appropriate.
Capital and leverage,
i.e., having sufficient
capital resources to
meet the Group’s
regulatory
requirements,
maintain its credit
rating and support
growth and strategic
options.
The flightpath to achieving required
regulatory and internal targets and
capital and leverage ratios.
 Debated on a regular basis, capital
performance against plan, tracking
the capital flightpath, any
challenges/headwinds and
regulatory developments.
 Evaluated options to maximise
capital and capital ratios in order to
meet regulatory and market
expectations.
The Committee supported the forecast
trajectory and the actions identified by
management to manage the Group’s
capital position.
Country risk, i.e. the
levels of risk the
Group is prepared to
take in specific
countries.
The potential impact on the Group’s
risk profile of political instability and
economic weakness in South Africa,
one of its main markets.
 Debated economic conditions in
South Africa and the future outlook.
 Examined the actions already taken
to manage risks, improve controls
and asset quality and develop
triggers for additional action in the
event of further macro deterioration.
 Monitored the impact on South
Africa of the slowdown in China and
the fall in commodity prices.
The Committee sought additional
information around the actions that had
been taken to manage the risk profile in
South Africa, including the impact of the
actions taken to date. It requested a
deep dive on the risk profile of the South
African business, inviting the South
African business heads to present on the
actions that had been taken and how the
business was positioned for a further
economic downturn, including the
impact of a further country rating
downgrade.