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<TITLE>Form 20-F</TITLE>
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 <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:ARIAL" SIZE="2"><B>UNITED STATES </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT
STYLE="font-family:ARIAL" SIZE="2"><B>SECURITIES AND EXCHANGE COMMISSION </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:ARIAL" SIZE="2"><B>WASHINGTON, DC 20549 </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:ARIAL" SIZE="2"><B>FORM 20-F </B></FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="2">(Mark One) </FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="2"><FONT STYLE="font-family:Times New Roman" SIZE="2"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="2"></FONT></FONT></TD>

<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2"><B>REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934 </B> </FONT></TD></TR></TABLE>
<P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:ARIAL" SIZE="2">OR </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="2"><FONT STYLE="font-family:Times New Roman" SIZE="2"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#254;</FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="2"></FONT></FONT></TD>

<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2"><B>ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 </B> </FONT></TD></TR></TABLE>
<P STYLE="margin-top:12px;margin-bottom:0px; margin-left:4%"><FONT STYLE="font-family:ARIAL" SIZE="2">For the fiscal year ended <U>December&nbsp;31, 2012 </U> </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT
STYLE="font-family:ARIAL" SIZE="2">OR </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="2"><FONT STYLE="font-family:Times New Roman" SIZE="2"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="2"></FONT></FONT></TD>

<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2"><B>TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 </B> </FONT></TD></TR></TABLE>
<P STYLE="margin-top:12px;margin-bottom:0px; margin-left:4%"><FONT STYLE="font-family:ARIAL" SIZE="2">For the transition <U>period</U> from
<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> to
<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </U><U></U> </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT
STYLE="font-family:ARIAL" SIZE="2">OR </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="2"><FONT STYLE="font-family:Times New Roman" SIZE="2"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="2"></FONT></FONT></TD>

<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2"><B>SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 </B> </FONT></TD></TR></TABLE>
<P STYLE="margin-top:12px;margin-bottom:0px; margin-left:4%"><FONT STYLE="font-family:ARIAL" SIZE="2">Date of event requiring this shell company report
<U></U><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE" ALIGN="center">


<TR>
<TD WIDTH="24%"></TD>
<TD VALIGN="bottom"></TD>
<TD WIDTH="24%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="25%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="24%"></TD></TR>


<TR>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Commission file numbers</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="2">Barclays PLC</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="2">1-09246</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="2">Barclays Bank PLC</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="2">1-10257</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD></TR>
</TABLE> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:ARIAL" SIZE="2"><B>BARCLAYS PLC </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT
STYLE="font-family:ARIAL" SIZE="2"><B>BARCLAYS BANK PLC </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:ARIAL" SIZE="2">(Exact Names of Registrants as Specified in their Charter[s]) </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:ARIAL" SIZE="2">ENGLAND </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:ARIAL" SIZE="2">(Jurisdiction of
Incorporation or Organization) </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:ARIAL" SIZE="2">1 CHURCHILL PLACE, LONDON E14 5HP, ENGLAND </FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:ARIAL" SIZE="2">(Address of Principal Executive Offices) </FONT></P> <P STYLE="margin-top:8px;margin-bottom:0px" ALIGN="center"><FONT
STYLE="font-family:ARIAL" SIZE="2"><B>PATRICK GONSALVES, +44 (0)20 7116 2901, PATRICK.GONSALVES@BARCLAYS.COM </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:ARIAL" SIZE="2"><B>1 CHURCHILL PLACE,
LONDON E14 5HP, ENGLAND </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:ARIAL" SIZE="2">*(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person) </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:ARIAL" SIZE="2">Securities registered or to be registered pursuant to Section&nbsp;12(b) of the Act: </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:ARIAL" SIZE="2"><B>Barclays PLC </B></FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE" ALIGN="center">


<TR>
<TD WIDTH="34%"></TD>
<TD VALIGN="bottom"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD></TR>
<TR>
<TD VALIGN="bottom" NOWRAP> <P STYLE="border-bottom:1px solid #000000;width:62pt"><FONT STYLE="font-family:ARIAL" SIZE="1">Title of Each Class</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" NOWRAP> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1">Name of Each Exchange</FONT></P> <P STYLE="margin-top:0px;margin-bottom:1px;border-bottom:1px solid #000000;width:82pt"><FONT
STYLE="font-family:ARIAL" SIZE="1">On Which Registered</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom">&nbsp;<FONT SIZE="1">&nbsp;</FONT></TD></TR>


<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:ARIAL" SIZE="2">25p ordinary shares</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:ARIAL" SIZE="2">New York Stock Exchange*</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:ARIAL" SIZE="2">American Depository Shares, each representing four 25p ordinary shares</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:ARIAL" SIZE="2">New York Stock Exchange</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD></TR>
</TABLE> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="2">*</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Not for trading, but in connection with the registration of American Depository Shares, pursuant to the requirements of the Securities and Exchange Commission.
</FONT></TD></TR></TABLE>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:ARIAL" SIZE="2"><B>Barclays Bank PLC </B></FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE" ALIGN="center">


<TR>
<TD WIDTH="51%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD WIDTH="47%"></TD></TR>
<TR>
<TD VALIGN="bottom" NOWRAP> <P STYLE="border-bottom:1px solid #000000;width:62pt"><FONT STYLE="font-family:arial" SIZE="1">Title of Each Class</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" NOWRAP> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:arial" SIZE="1">Name of Each Exchange</FONT></P> <P STYLE="margin-top:0px;margin-bottom:1px;border-bottom:1px solid #000000;width:83pt"><FONT
STYLE="font-family:arial" SIZE="1">On Which Registered</FONT></P></TD></TR>


<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:arial" SIZE="1">Callable Floating Rate Notes 2035</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:arial" SIZE="1">New York Stock Exchange</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:arial" SIZE="1">Non-Cumulative Callable Dollar Preference Shares, Series 2</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:arial" SIZE="1">New York Stock Exchange*</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"><FONT STYLE="font-family:arial" SIZE="1">American Depository Shares, Series 2, each representing one Non-Cumulative Callable Dollar Preference Share, Series 2</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:arial" SIZE="1">New York Stock Exchange</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:arial" SIZE="1">Non-Cumulative Callable Dollar Preference Shares, Series 3</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:arial" SIZE="1">New York Stock Exchange*</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"><FONT STYLE="font-family:arial" SIZE="1">American Depository Shares, Series 3, each representing one Non-Cumulative Callable Dollar Preference Share, Series 3</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:arial" SIZE="1">New York Stock Exchange</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:arial" SIZE="1">Non-Cumulative Callable Dollar Preference Shares, Series 4</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:arial" SIZE="1">New York Stock Exchange*</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"><FONT STYLE="font-family:arial" SIZE="1">American Depository Shares, Series 4, each representing one Non-Cumulative Callable Dollar Preference Share, Series 4</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:arial" SIZE="1">New York Stock Exchange</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:arial" SIZE="1">Non-Cumulative Callable Dollar Preference Shares, Series 5</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:arial" SIZE="1">New York Stock Exchange*</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"><FONT STYLE="font-family:arial" SIZE="1">American Depository Shares, Series 5, each representing one Non-Cumulative Callable Dollar Preference Share, Series 5</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:arial" SIZE="1">New York Stock Exchange</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:arial" SIZE="1">5.140% Lower Tier 2 Notes due October 2020</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:arial" SIZE="1">New York Stock Exchange</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:arial" SIZE="1">iPath<SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">&reg;</SUP> Dow Jones &#150; UBS Commodity Index Total Return<SUP
STYLE="vertical-align:baseline; position:relative; bottom:.8ex">SM</SUP> ETN</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:arial" SIZE="1">NYSE Arca</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:arial" SIZE="1">iPath<SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">&reg;</SUP> Dow Jones &#150; UBS Agriculture Subindex Total
Return<SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">SM</SUP> ETN</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:arial" SIZE="1">NYSE Arca</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:arial" SIZE="1">iPath<SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">&reg;</SUP> Dow Jones &#150; UBS Aluminum Subindex Total Return<SUP
STYLE="vertical-align:baseline; position:relative; bottom:.8ex">SM</SUP> ETN</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:arial" SIZE="1">NYSE Arca</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:arial" SIZE="1">iPath<SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">&reg;</SUP> Dow Jones &#150; UBS Cocoa Subindex Total Return<SUP
STYLE="vertical-align:baseline; position:relative; bottom:.8ex">SM</SUP> ETN</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:arial" SIZE="1">NYSE Arca</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:arial" SIZE="1">iPath<SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">&reg;</SUP> Dow Jones &#150; UBS Coffee Subindex Total Return<SUP
STYLE="vertical-align:baseline; position:relative; bottom:.8ex">SM</SUP> ETN</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:arial" SIZE="1">NYSE Arca</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:arial" SIZE="1">iPath<SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">&reg;</SUP> Dow Jones &#150; UBS Copper Subindex Total Return<SUP
STYLE="vertical-align:baseline; position:relative; bottom:.8ex">SM</SUP> ETN</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:arial" SIZE="1">NYSE Arca</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:arial" SIZE="1">iPath<SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">&reg;</SUP> Dow Jones &#150; UBS Cotton Subindex Total Return<SUP
STYLE="vertical-align:baseline; position:relative; bottom:.8ex">SM</SUP> ETN</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:arial" SIZE="1">NYSE Arca</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:arial" SIZE="1">iPath<SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">&reg;</SUP> Dow Jones &#150; UBS Energy Subindex Total Return<SUP
STYLE="vertical-align:baseline; position:relative; bottom:.8ex">SM</SUP> ETN</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:arial" SIZE="1">NYSE Arca</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:arial" SIZE="1">iPath<SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">&reg;</SUP> Dow Jones &#150; UBS Grains Subindex Total Return<SUP
STYLE="vertical-align:baseline; position:relative; bottom:.8ex">SM</SUP> ETN</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:arial" SIZE="1">NYSE Arca</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:arial" SIZE="1">iPath<SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">&reg;</SUP> Dow Jones &#150; UBS Industrial Metals Subindex Total
Return<SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">SM</SUP> ETN</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:arial" SIZE="1">NYSE Arca</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:arial" SIZE="1">iPath<SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">&reg;</SUP> Dow Jones &#150; UBS Lead Subindex Total Return<SUP
STYLE="vertical-align:baseline; position:relative; bottom:.8ex">SM</SUP> ETN</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:arial" SIZE="1">NYSE Arca</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
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STYLE="vertical-align:baseline; position:relative; bottom:.8ex">SM</SUP> ETN</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:arial" SIZE="1">NYSE Arca</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:arial" SIZE="1">iPath<SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">&reg;</SUP> Dow Jones &#150; UBS Natural Gas Subindex Total
Return<SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">SM</SUP> ETN</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:arial" SIZE="1">NYSE Arca</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:arial" SIZE="1">iPath<SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">&reg;</SUP> Dow Jones &#150; UBS Nickel Subindex Total Return<SUP
STYLE="vertical-align:baseline; position:relative; bottom:.8ex">SM</SUP> ETN</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:arial" SIZE="1">NYSE Arca</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
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STYLE="vertical-align:baseline; position:relative; bottom:.8ex">SM</SUP> ETN</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:arial" SIZE="1">NYSE Arca</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
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Return<SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">SM</SUP> ETN</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:arial" SIZE="1">NYSE Arca</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
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STYLE="vertical-align:baseline; position:relative; bottom:.8ex">SM</SUP> ETN</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:arial" SIZE="1">NYSE Arca</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
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STYLE="vertical-align:baseline; position:relative; bottom:.8ex">SM</SUP> ETN</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:arial" SIZE="1">NYSE Arca</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
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STYLE="vertical-align:baseline; position:relative; bottom:.8ex">SM</SUP> ETN</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:arial" SIZE="1">NYSE Arca</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:arial" SIZE="1">iPath<SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">&reg;</SUP> S&amp;P GSCI<SUP
STYLE="vertical-align:baseline; position:relative; bottom:.8ex">&reg;</SUP> Total Return Index ETN</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:arial" SIZE="1">NYSE Arca</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:arial" SIZE="1">iPath<SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">&reg;</SUP> S&amp;P GSCI<SUP
STYLE="vertical-align:baseline; position:relative; bottom:.8ex">&reg;</SUP> Crude Oil Total Return Index ETN</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:arial" SIZE="1">NYSE Arca</FONT></TD></TR></TABLE> <P STYLE="font-size:18px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="2">*</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Not for trading, but in connection with the registration of American Depository Shares, pursuant to the requirements of the Securities and Exchange Commission.
</FONT></TD></TR></TABLE>

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<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE" ALIGN="center">


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<TD WIDTH="51%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD WIDTH="47%"></TD></TR>
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<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>

<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:arial" SIZE="1">iPath<SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">&reg;</SUP> CBOE S&amp;P 500 BuyWrite Index<SUP
STYLE="vertical-align:baseline; position:relative; bottom:.8ex">SM</SUP> ETN</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:arial" SIZE="1">NYSE Arca</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
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<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:arial" SIZE="1">NYSE Arca</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
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<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:arial" SIZE="1">NYSE Arca</FONT></TD></TR>
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<TD HEIGHT="8" COLSPAN="2"></TD></TR>
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<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
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<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:arial" SIZE="1">NYSE Arca</FONT></TD></TR>
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<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:arial" SIZE="1">NYSE Arca</FONT></TD></TR>
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<TD HEIGHT="8" COLSPAN="2"></TD></TR>
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<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:arial" SIZE="1">NYSE Arca</FONT></TD></TR>
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<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:arial" SIZE="1">iPath<SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">&reg;</SUP> Inverse S&amp;P 500 VIX Short-Term Futures<SUP
STYLE="vertical-align:baseline; position:relative; bottom:.8ex">TM</SUP> ETN</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:arial" SIZE="1">NYSE Arca</FONT></TD></TR>
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<TD HEIGHT="8" COLSPAN="2"></TD></TR>
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<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:arial" SIZE="1">NYSE Arca</FONT></TD></TR>
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<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:arial" SIZE="1">iPath<SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">&reg;</SUP> Long Extended Russell 2000<SUP
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<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:arial" SIZE="1">NYSE Arca</FONT></TD></TR>
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<TD HEIGHT="8" COLSPAN="2"></TD></TR>
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<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:arial" SIZE="1">NYSE Arca</FONT></TD></TR>
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<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
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<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:arial" SIZE="1">NYSE Arca</FONT></TD></TR>
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<TD HEIGHT="8" COLSPAN="2"></TD></TR>
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ETN</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:arial" SIZE="1">NYSE Arca</FONT></TD></TR>
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<TD HEIGHT="8" COLSPAN="2"></TD></TR>
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<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:arial" SIZE="1">iPath<SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">&reg;</SUP> Short Enhanced MSCI Emerging Markets Index
ETN</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:arial" SIZE="1">NYSE Arca</FONT></TD></TR>
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<TD HEIGHT="8" COLSPAN="2"></TD></TR>
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<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:arial" SIZE="1">NYSE Arca</FONT></TD></TR>
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<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
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<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:arial" SIZE="1">NYSE Arca</FONT></TD></TR>
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<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
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<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:arial" SIZE="1">iPath<SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">&reg;</SUP> Optimized Currency Carry ETN</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:arial" SIZE="1">NYSE Arca</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:arial" SIZE="1">iPath<SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">&reg;</SUP> US Treasury Steepener ETN</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:arial" SIZE="1">NYSE Arca</FONT></TD></TR>
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<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:arial" SIZE="1">iPath<SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">&reg;</SUP> US Treasury Flattener ETN</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:arial" SIZE="1">NYSE Arca</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:arial" SIZE="1">iPath<SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">&reg;</SUP> US Treasury 2-year Bull ETN</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:arial" SIZE="1">NYSE Arca</FONT></TD></TR>
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<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:arial" SIZE="1">iPath<SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">&reg;</SUP> US Treasury 2-year Bear ETN</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:arial" SIZE="1">NYSE Arca</FONT></TD></TR>
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<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:arial" SIZE="1">iPath<SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">&reg;</SUP> US Treasury 10-year Bull ETN</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:arial" SIZE="1">NYSE Arca</FONT></TD></TR>
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<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:arial" SIZE="1">iPath<SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">&reg;</SUP> US Treasury 10-year Bear ETN</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:arial" SIZE="1">NYSE Arca</FONT></TD></TR>
</TABLE>

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<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD WIDTH="47%"></TD></TR>


<TR>
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<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:ARIAL" SIZE="1">iPath<SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">&reg;</SUP> US Treasury Long Bond Bull ETN</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1">NYSE Arca</FONT></TD></TR>
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<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1">NYSE Arca</FONT></TD></TR>
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<TD HEIGHT="8" COLSPAN="2"></TD></TR>
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<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
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<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
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</TABLE>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:4%"><FONT STYLE="font-family:ARIAL" SIZE="2">Securities registered or to be registered pursuant to Section&nbsp;12(g) of the Act: None </FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%"><FONT STYLE="font-family:ARIAL" SIZE="2">Securities for which there is a reporting obligation pursuant to Section&nbsp;15(d) of the Act: None </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; margin-left:4%"><FONT STYLE="font-family:ARIAL" SIZE="2">Indicate the number of outstanding shares of each of the issuers&#146; classes of capital or common stock as of the close of the period covered by
the annual report. </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE" ALIGN="center">


<TR>
<TD WIDTH="22%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="64%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>


<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:ARIAL" SIZE="2">Barclays PLC</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="2">25p ordinary shares</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="2">12,242,633,551</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:ARIAL" SIZE="2">Barclays Bank PLC</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="2">&pound;1 ordinary shares</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="2">2,342,558,515</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="2">&pound;1 preference shares</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="2">1,000</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="2">&pound;100 preference shares</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="2">75,000</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="2"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#128;</FONT><FONT STYLE="font-family:ARIAL" SIZE="2"></FONT>100 preference shares</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="2">240,000</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="2">$0.25 preference shares</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="2">237,000,000</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="2">$100 preference shares</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="2">100,000</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
</TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="2">Indicate by check mark if each registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
</FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="2">Yes <FONT STYLE="font-family:Times New Roman" SIZE="2"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#254;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="2"></FONT>&nbsp;&nbsp;&nbsp;&nbsp;No <FONT STYLE="font-family:Times New Roman" SIZE="2"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="2"></FONT> </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="2">If this report is an annual or transition report, indicate by check mark if the registrants are not required to file reports pursuant to Section&nbsp;13 or 15(d)
of the Securities Exchange Act 1934. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="2">Yes
<FONT STYLE="font-family:Times New Roman" SIZE="2"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="2"></FONT>&nbsp;&nbsp;&nbsp;&nbsp;No <FONT STYLE="font-family:Times New Roman" SIZE="2"><FONT
STYLE="FONT-FAMILY:WINGDINGS">&#254;</FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="2"></FONT> </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="2">Note&#151;Checking the box above will not relieve
any registrant required to file reports pursuant to Section&nbsp;13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="2">Indicate by check mark whether the registrants: (1)&nbsp;have filed all reports required to be filed by Section&nbsp;13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)&nbsp;have been subject to such filing requirements for the past 90 days. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="right"><FONT
STYLE="font-family:ARIAL" SIZE="2">Yes <FONT STYLE="font-family:Times New Roman" SIZE="2"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#254;</FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="2"></FONT>&nbsp;&nbsp;&nbsp;&nbsp;No <FONT
STYLE="font-family:Times New Roman" SIZE="2"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="2"></FONT> </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="2">Indicate by check mark whether the registrants have submitted electronically and posted on their corporate Web sites, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (&#167;&nbsp;232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="2">Yes
<FONT STYLE="font-family:Times New Roman" SIZE="2"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="2"></FONT>&nbsp;&nbsp;&nbsp;&nbsp;No <FONT STYLE="font-family:Times New Roman" SIZE="2"><FONT
STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="2"></FONT> </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="2">Indicate by check mark whether each registrant is a
large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of &#147;accelerated filer and large accelerated filer&#148; in Rule 12b-2 of the Exchange Act. (Check one): </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="2">Barclays PLC </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TR>
<TD WIDTH="34%"></TD>
<TD VALIGN="bottom"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD></TR>


<TR>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Large Accelerated Filer <FONT STYLE="font-family:Times New Roman" SIZE="2"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#254;</FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="2"></FONT></FONT></TD>

<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="2">Accelerated Filer <FONT STYLE="font-family:Times New Roman" SIZE="2"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="2"></FONT></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="2">Non-Accelerated Filer
<FONT STYLE="font-family:Times New Roman" SIZE="2"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="2"></FONT></FONT></TD></TR>
</TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="2">Barclays Bank PLC </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="34%"></TD>
<TD VALIGN="bottom"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD></TR>


<TR>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Large Accelerated Filer <FONT STYLE="font-family:Times New Roman" SIZE="2"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="2"></FONT></FONT></TD>

<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="2">Accelerated Filer <FONT STYLE="font-family:Times New Roman" SIZE="2"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="2"></FONT></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="2">Non-Accelerated Filer
<FONT STYLE="font-family:Times New Roman" SIZE="2"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#254;</FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="2"></FONT></FONT></TD></TR>
</TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="2">*Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this
filing: </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="2">U.S. GAAP <FONT STYLE="font-family:Times New Roman" SIZE="2"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="2"></FONT> </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="2">International Financial Reporting Standards as issued by the International Accounting Standards
Board&nbsp;&nbsp;<FONT STYLE="font-family:Times New Roman" SIZE="2"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#254;</FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="2"></FONT> </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="2">Other <FONT STYLE="font-family:Times New Roman" SIZE="2"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="2"></FONT> </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="2">*If &#147;Other&#148; has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to
follow: </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="2">Item&nbsp;17 <FONT STYLE="font-family:Times New Roman" SIZE="2"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="2"></FONT> </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="2">Item&nbsp;18
<FONT STYLE="font-family:Times New Roman" SIZE="2"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="2"></FONT> </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="2">If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="right"><FONT
STYLE="font-family:ARIAL" SIZE="2">Yes <FONT STYLE="font-family:Times New Roman" SIZE="2"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="2"></FONT>&nbsp;&nbsp;&nbsp;&nbsp;No <FONT
STYLE="font-family:Times New Roman" SIZE="2"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#254;</FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="2"></FONT> </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="2">(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS.) </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="2">Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section&nbsp;12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of
securities under a plan confirmed by a court. </FONT></P> <P STYLE="margin-top:24px;margin-bottom:0px" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="2">Yes
<FONT STYLE="font-family:Times New Roman" SIZE="2"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="2"></FONT>&nbsp;&nbsp;&nbsp;&nbsp;No <FONT STYLE="font-family:Times New Roman" SIZE="2"><FONT
STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="2"></FONT> </FONT></P>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:ARIAL" SIZE="2">SEC Form 20-F Cross reference information </FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="3%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="3%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="58%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="33%"></TD></TR>
<TR>
<TD VALIGN="bottom" COLSPAN="5"><FONT STYLE="font-family:ARIAL" SIZE="1"><B>Form&nbsp;20-F item number</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1"><B>Page&nbsp;and caption references</B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:1px"><FONT STYLE="font-family:ARIAL" SIZE="1"><B>in&nbsp;this&nbsp;document*</B></FONT></P></TD></TR>


<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:ARIAL" SIZE="2"><B>1</B></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="3"><FONT STYLE="font-family:ARIAL" SIZE="2"><B>Identity of Directors, Senior Management and Advisers</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="2">Not applicable</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:ARIAL" SIZE="2"><B>2</B></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="3"><FONT STYLE="font-family:ARIAL" SIZE="2"><B>Offer Statistics and Expected Timetable</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="2">Not applicable</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:ARIAL" SIZE="2"><B>3</B></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="3"><FONT STYLE="font-family:ARIAL" SIZE="2"><B>Key Information</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="2">A.</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="2">Selected financial data</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="2">166, 168, 305-306</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="2">B.</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="2">Capitalization and indebtedness</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="2">Not applicable</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="2">C.</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="2">Reason for the offer and use of proceeds</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="2">Not applicable</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="2">D.</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="2">Risk factors</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="2">72-79</FONT></TD></TR>
<TR>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2"><B>4</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" COLSPAN="3"><FONT STYLE="font-family:ARIAL" SIZE="2"><B>Information on the Company</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">A.</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">History and development of the company</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">31, 262 (Note&nbsp;38)-263 (Note&nbsp;39), 307, 348, 364</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">B.</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Business overview</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">i (Market&nbsp;Data), 1-4, 154-160, 172*,<BR>199-202 (Note&nbsp;1), 214-217 (Note&nbsp;15),<BR>245-246 (Note&nbsp;30)</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">C.</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Organizational structure</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:1px"><FONT STYLE="font-family:ARIAL" SIZE="2">262 (Note&nbsp;38)</FONT></P></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">D.</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Property, plants and equipment</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">232-233 (Note&nbsp;20), 234-235 (Note&nbsp;23)</FONT></TD></TR>
<TR>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2"><B>4A</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" COLSPAN="3"><FONT STYLE="font-family:ARIAL" SIZE="2"><B>Unresolved staff comments</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Not applicable</FONT></TD></TR>
<TR>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2"><B>5</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" COLSPAN="3"><FONT STYLE="font-family:ARIAL" SIZE="2"><B>Operating&nbsp;and&nbsp;Financial&nbsp;Review&nbsp;and Prospects</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">A.</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Operating results</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="2">124, 154-160, 166-188, 199-272</FONT></P> <P STYLE="margin-top:0px;margin-bottom:1px"><FONT STYLE="font-family:ARIAL" SIZE="2">(critical
accounting policies, estimates &amp; judgement)</FONT></P></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">B.</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Liquidity and capital resources</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:1px"><FONT STYLE="font-family:ARIAL" SIZE="2">86-87, 105, 126-150, 170, 196, 214-217 (Note&nbsp;15), 247-250 (Note&nbsp;31), 250 (Note&nbsp;32), 263-265 (Note&nbsp;40), 288-290, 297-301,
353</FONT></P></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">C.</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Research and development, patents and licenses, etc.</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Not applicable</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">D.</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Trend information</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">&#150;</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">E.</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Off-balance sheet arrangements</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">265-267 (Note&nbsp;41)</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">F.</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Tabular disclosure of contractual obligations</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">331*</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">G.</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Safe harbor</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">i (Forward-looking statements)</FONT></TD></TR>
<TR>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2"><B>6</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" COLSPAN="3"><FONT STYLE="font-family:ARIAL" SIZE="2"><B>Directors, Senior Management and Employees</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">A.</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Directors and senior management</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">35-37, 320-321</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">B.</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Compensation</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">39-68, 257-261 (Note&nbsp;37), 268-270 (Note&nbsp;43), </FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">C.</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Board practices</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">6-37, 50</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">D.</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Employees</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">38, 175, 177, 179, 181, 183, 184, 187, 188</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">E.</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Share ownership</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">39-68, 61-62, 254-256 (Note&nbsp;36),<BR>268-270 (Note&nbsp;43), 324-325*</FONT></TD></TR>
<TR>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2"><B>7</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" COLSPAN="3"><FONT STYLE="font-family:ARIAL" SIZE="2"><B>Major Shareholders and Related Party Transactions</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">A.</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Major shareholders</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">319</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">B.</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Related party transactions</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">268-270 (Note&nbsp;43), 246, 361&nbsp;(Note&nbsp;p)</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">C.</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Interests of experts and counsel</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Not applicable</FONT></TD></TR>
<TR>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2"><B>8</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" COLSPAN="3"><FONT STYLE="font-family:ARIAL" SIZE="2"><B>Financial Information</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">A.</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Consolidated statements and other financial information</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">30, 191-272, 304-310, 347-361</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">B.</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Significant changes</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">272 (Note 46)</FONT></TD></TR>
<TR>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2"><B>9</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" COLSPAN="3"><FONT STYLE="font-family:ARIAL" SIZE="2"><B>The Offer and Listing</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">A.</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Offer and listing details</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">305</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">B.</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Plan of distribution</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Not applicable</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">C.</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Markets</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">305-306</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">D.</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Selling shareholders</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Not applicable</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">E.</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Dilution</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Not applicable</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">F.</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Expenses of the issue</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Not applicable</FONT></TD></TR>
<TR>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2"><B>10</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" COLSPAN="3"><FONT STYLE="font-family:ARIAL" SIZE="2"><B>Additional Information</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">A.</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Share capital</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Not applicable</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">B.</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Memorandum and Articles of Association</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">307-310</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">C.</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Material contracts</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">15, 31, 50, 58, 250 (Note&nbsp;32)</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">D.</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Exchange controls</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">314</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">E.</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Taxation</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">311-314</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">F.</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Dividends and paying assets</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Not applicable</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">G.</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Statement by experts</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Not applicable</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">H.</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Documents on display</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">314</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">I.</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Subsidiary information</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">262 (Note&nbsp;38)</FONT></TD></TR>
<TR>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2"><B>11</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" COLSPAN="3"><FONT STYLE="font-family:ARIAL" SIZE="2"><B>Quantitative and Qualitative Disclosure about Market Risk</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">80-153, 274-303</FONT></TD></TR>
<TR>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2"><B>12</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" COLSPAN="3"><FONT STYLE="font-family:ARIAL" SIZE="2"><B>Description of Securities Other than Equity Securities</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">A.</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Debt Securities</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Not applicable</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">B.</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Warrants and Rights</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Not applicable</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">C.</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Other Securities</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Not applicable</FONT></TD></TR>
</TABLE>

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<TR>
<TD WIDTH="3%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="3%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="60%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>


<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">D.</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">American Depositary Shares</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">315-316</FONT></TD></TR>
<TR>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2"><B>13</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" COLSPAN="3"><FONT STYLE="font-family:ARIAL" SIZE="2"><B>Defaults, Dividends Arrearages and Delinquencies</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Not applicable</FONT></TD></TR>
<TR>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2"><B>14</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" COLSPAN="3"><FONT STYLE="font-family:ARIAL" SIZE="2"><B>Material Modifications to the Rights of Security Holders and Use of Proceeds</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Not applicable</FONT></TD></TR>
<TR>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2"><B>15</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" COLSPAN="3"><FONT STYLE="font-family:ARIAL" SIZE="2"><B>Controls and Procedures</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">A.</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Disclosure controls and procedures</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">320*</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">B.</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Management&#146;s annual report on internal control over financial reporting</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">33-34</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">C.</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Attestation report of the registered public accounting firm</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">191</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">D.</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Changes in internal control over financial reporting</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">34</FONT></TD></TR>
<TR>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2"><B>16A</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" COLSPAN="3"><FONT STYLE="font-family:ARIAL" SIZE="2"><B>Audit Committee Financial Expert</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">20</FONT></TD></TR>
<TR>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2"><B>16B</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" COLSPAN="3"><FONT STYLE="font-family:ARIAL" SIZE="2"><B>Code of Ethics</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">318, Exhibit 11.1</FONT></TD></TR>
<TR>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2"><B>16C</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" COLSPAN="3"><FONT STYLE="font-family:ARIAL" SIZE="2"><B>Principal Accountant Fees and Services</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">23, 317 (External auditor objectivity and independence: Non-Audit Services), 271 (Note 44)</FONT></TD></TR>
<TR>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2"><B>16D</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" COLSPAN="3"><FONT STYLE="font-family:ARIAL" SIZE="2"><B>Exemptions from the Listing Standards for Audit Committees</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Not applicable</FONT></TD></TR>
<TR>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2"><B>16E</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" COLSPAN="3"><FONT STYLE="font-family:ARIAL" SIZE="2"><B>Purchases of Equity Securities by the Issuer and Affiliated Purchasers</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">250 (Share Repurchase), 32</FONT></TD></TR>
<TR>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2"><B>16F</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" COLSPAN="3"><FONT STYLE="font-family:ARIAL" SIZE="2"><B>Change in Registrant&#146;s Certifying Accountant</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Not applicable</FONT></TD></TR>
<TR>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2"><B>16G</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" COLSPAN="3"><FONT STYLE="font-family:ARIAL" SIZE="2"><B>Corporate Governance</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">318</FONT></TD></TR>
<TR>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2"><B>17</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" COLSPAN="3"><FONT STYLE="font-family:ARIAL" SIZE="2"><B>Financial Statements</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Not applicable (See Item 8)</FONT></TD></TR>
<TR>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2"><B>18</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" COLSPAN="3"><FONT STYLE="font-family:ARIAL" SIZE="2"><B>Financial Statements</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Not applicable (See Item 8)</FONT></TD></TR>
<TR>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2"><B>19</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" COLSPAN="3"><FONT STYLE="font-family:ARIAL" SIZE="2"><B>Exhibits</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Exhibit Index</FONT></TD></TR>
</TABLE> <P STYLE="font-size:10px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="8%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="2">*</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2">Captions have been included only in respect of pages with multiple sections on the same page in order to identify the relevant caption on that page covered by the corresponding
Form 20-F item number. </FONT></TD></TR></TABLE>

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<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="2" COLOR="#5a6163">Barclays&nbsp;PLC&nbsp;and&nbsp;Barclays</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="2" COLOR="#5a6163">Bank PLC 2012 Annual</FONT></P> <P STYLE="margin-top:0px;margin-bottom:1px"><FONT STYLE="font-family:ARIAL" SIZE="2" COLOR="#5a6163">Report on Form 20-F</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
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<DIV STYLE="position:relative;float:left; margin-right:1%; width:48%;padding-right:9px;padding-bottom:8px;overflow:hidden;padding-top:3px">
 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The term &#145;Barclays PLC Group&#146; or the &#145;Group&#146; means Barclays PLC together with its
subsidiaries and the term &#145;Barclays Bank PLC Group&#146; means Barclays Bank PLC together with its subsidiaries. &#145;Barclays&#146; and &#145;Group&#146; are terms which are used to refer to either of the preceding groups when the subject
matter is identical. The term &#145;Company&#146;, &#145;Parent Company&#146; or &#145;Parent&#146; refers to Barclays PLC and the term &#145;Bank&#146; refers to Barclays Bank PLC. In this report, the abbreviations &#145;&pound;m&#146; and
&#145;&pound;bn&#146; represent millions and thousands of millions of pounds sterling respectively; the abbreviations &#145;$m&#146; and &#145;$bn&#146; represent millions and thousands of millions of US Dollars respectively; &#145;<FONT
STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163">&#128;</FONT><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT>m&#146; and &#145;<FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163">&#128;</FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT>bn&#146; represent millions and thousands of millions of euros respectively and &#145;C$m&#146; and &#145;C$bn&#146; represent millions and thousands of millions of Canadian dollars
respectively. </FONT></P> <P STYLE="margin-top:8px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Unless otherwise stated, the income statement analyses compare the 12 months to 31&nbsp;December 2012 to the corresponding
12 months of 2011 and balance sheet comparisons, relate to the corresponding position at 31&nbsp;December 2011. Unless otherwise stated, all disclosed figures relate to continuing operations. Relevant terms that are used in this document but are not
defined under applicable regulatory guidance or International Financial Reporting Standards (IFRS) are explained in the glossary on pages 367-378. A hard copy can be provided on request by contacting Barclays Investor Relations, Barclays PLC, 1
Churchill Place, London E14 5HP. </FONT></P> <P STYLE="margin-top:8px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Certain non-IFRS measures </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Barclays management believes that the non-IFRS measures included in this document provide valuable information to readers of its financial statements because they enable the reader to identify a
more consistent basis for comparing the business&#146; performance between financial periods, and provide more detail concerning the elements of performance which the managers of these businesses are most directly able to influence or are relevant
for an assessment of the Group. They also reflect an important aspect of the way in which operating targets are defined and performance is monitored by Barclays management.
</FONT></P></DIV><DIV STYLE="position:relative;float:right; width:48%;padding-right:9px;padding-bottom:8px;overflow:hidden;padding-top:3px">
 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">
However, any non-IFRS measures in this document are not a substitute for IFRS measures and readers should consider the IFRS measures as well. Key non-IFRS measures included in this document are:
</FONT></P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="17" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&#150;</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Adjusted profit/(loss) before tax is the non-IFRS equivalent of profit/(loss) before tax as it excludes the impact of own credit; gains on debt buy-backs;
impairment and disposal of the investment in BlackRock, Inc.; the provision for Payment Protection Insurance redress payments and claims management costs (PPI redress); the provision for interest rate hedging products redress and claims management
costs (interest rate hedging products redress); goodwill impairments; and gains and losses on acquisitions and disposals. The regulatory penalties relating to the industry-wide investigation into the setting of interbank offered rates have not been
excluded from adjusted measures. A reconciliation of IFRS and Adjusted profit/(loss) before tax is presented on page 326 for the Group and on pages 327-329 for each business; </FONT></TD></TR></TABLE>
<P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="17" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&#150;</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Adjusted profit/(loss) after tax represents profit/(loss) after tax excluding the post-tax impact of own credit; gains on debt buy-backs; impairment and disposal
of the investment in BlackRock, Inc.; the provision for PPI redress; the provision for interest rate hedging products redress; goodwill impairments; and gains and losses on acquisitions and disposals. A reconciliation is provided on page 326 for the
Group and on pages 327-329 for each business; </FONT></TD></TR></TABLE> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="17" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&#150;</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Adjusted profit/(loss) after tax and non-controlling interests represents adjusted profit/(loss) after tax less profit attributable to non-controlling interests.
The comparable IFRS measure is profit/(loss) after tax and non-controlling interests. A reconciliation is provided on page 326; </FONT></TD></TR></TABLE> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="17" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&#150;</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Adjusted income and total income/(expense) net of insurance claims on an adjusted basis represents total income/(expense) net of insurance claims excluding the
impact of own credit and gains on debt buy-backs. A reconciliation is provided on page 326 for the Group and on pages 327-329 for each business;
</FONT></TD></TR></TABLE></DIV><div style="clear:both; height:0px; font-size:0px">&nbsp;</div>


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<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="17" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&#150;</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Adjusted net operating income represents net operating income excluding the impact of own credit, gains on debt buy-backs and gain/(loss) on disposal of the
strategic investment in BlackRock, Inc. A reconciliation is provided on page 326 for the Group and on pages 327-329 for each business; </FONT></TD></TR></TABLE> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="17" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&#150;</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Adjusted operating expenses represents operating expenses excluding the provision for PPI redress, provision for the sale of interest rate hedging product redress
and goodwill impairment. A reconciliation is provided on page 326 for the Group and on pages 327-329 for each business; </FONT></TD></TR></TABLE> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="17" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&#150;</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Adjusted other net income/(expense) represents other net income/(expense) excluding gains and losses on acquisitions and disposals. A reconciliation is provided
on page 326 for the Group and on pages 327-329 for each business; </FONT></TD></TR></TABLE> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="17" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&#150;</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Adjusted cost: income ratio represents cost: income ratio excluding the impact of own credit, gains on debt buy-backs, gain on disposal of strategic investment in
BlackRock, Inc., the provision for PPI redress, provision for the sale of interest rate hedging product redress, and goodwill impairment. The comparable IFRS measure is cost: income ratio, which represents operating expenses to income net of
insurance claims. A reconciliation of the components used to calculate adjusted cost: income ratio to their corresponding IFRS measures is provided on page 326 for the Group and on pages 327-329 for each business; </FONT></TD></TR></TABLE>
<P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="17" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&#150;</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Adjusted compensation: net operating income ratio represents compensation: net operating income ratio excluding the impact of own credit, gains on debt buy-backs
and gain on disposal of strategic investment in BlackRock, Inc. A reconciliation is provided on page 326 for the Group; </FONT></TD></TR></TABLE> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="17" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&#150;</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Adjusted basic earnings per share represents adjusted profit after tax and non-controlling interests (set out on page 326) divided by the basic weighted average
number of shares in issue. The comparable IFRS measure is basic earnings per share, which represents profit after tax and non-controlling interests, divided by the basic weighted average number of shares in issue; </FONT></TD></TR></TABLE>
<P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="17" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&#150;</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Adjusted return on average shareholders equity represents adjusted profit after tax and non-controlling interests (set out on page 326) divided by average equity.
The comparable IFRS measure is return on average shareholders equity, which represents profit after tax and non-controlling interests, divided by average equity; </FONT></TD></TR></TABLE>
<P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="17" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&#150;</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Adjusted return on average tangible shareholders equity represents adjusted profit after tax and non-controlling interests (set out on page 326) divided by
average tangible equity. The comparable IFRS measure is return on average tangible shareholders equity, which represents profit after tax and non-controlling interests, divided by average tangible equity; </FONT></TD></TR></TABLE>
<P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="17" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&#150;</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Adjusted return on average risk weighted assets represents adjusted profit after tax (set out on page 326), divided by average risk weighted assets. The
comparable IFRS measure is return on average risk weighted assets, which represents profit after tax divided by average risk weighted assets; </FONT></TD></TR></TABLE> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="17" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&#150;</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Adjusted gross leverage is a non-IFRS measure representing the multiple of adjusted total tangible assets over total qualifying Tier 1 capital. Adjusted total
tangible assets are total assets adjusted to allow for derivative counterparty netting where the Group has a legally
</FONT></TD></TR></TABLE></DIV><DIV STYLE="position:relative;float:right; width:48%;padding-right:9px;padding-bottom:8px;overflow:hidden;padding-top:3px">


<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="17"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">
enforceable master netting agreement, assets under management on the balance sheet, settlement balances and cash collateral on derivative liabilities, goodwill and intangible assets. This measure
has been presented as it provides for a metric used by management in assessing balance sheet leverage. Barclays management believes that disclosing a measure of balance sheet leverage provides useful information to readers of Barclays financial
statements as a key measure of stability, which is consistent with the views of regulators and investors. The comparable IFRS measure is the ratio of total assets to total shareholders equity. The calculation of adjusted gross leverage, as well as
total assets to total shareholders equity, is presented on page 132; </FONT></TD></TR></TABLE> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="17" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&#150;</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Adjusted effective tax rate is a non-IFRS measure representing the tax charge on adjusted profit/(loss) before tax. The comparable IFRS measure is effective tax
rate, which represents the tax charge on profit/(loss) before tax; </FONT></TD></TR></TABLE> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="17" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&#150;</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Total incentive awards granted are non-IFRS measures as they represent incentive awards granted as opposed to the income statement charge, which reflects the
charge for employees actual services provided to the Group during the relevant calendar year. These non-IFRS measures have been presented as they provide a consistent basis for comparing the bonus pool between financial periods. A reconciliation of
total incentive awards to the income statement charge for performance costs is provided on page 46; </FONT></TD></TR></TABLE> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="17" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&#150;</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR) are calculated according to definitions and methodologies detailed in the standards provided by
the Basel Committee on Banking Supervision.&nbsp;The original guidelines released in December 2010 (&#145;Basel III: International Framework for Liquidity Risk Measurement, Standards and Monitoring&#146;, December 2010) were revised for the
calculation of the LCR ratio in January 2013 (&#145;Basel 3: The Liquidity Coverage Ratio and liquidity risk monitoring tools&#146;, January 2013). The results of both the December 2010 and January 2013 guidelines have been included in the
report.&nbsp;The LCR and NSFR metrics are regulatory ratios that are not yet finalised in local regulations and, as such, represent non-IFRS measures. These definitions and methodologies used to calculate the metrics are subject to further revisions
ahead of their respective implementation dates and our interpretation of these calculations may not be consistent with other financial institutions. </FONT></TD></TR></TABLE> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="17" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&#150;</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Pro forma risk weighted assets (RWAs), pro forma Common Equity Tier 1 (CET1) ratio on both a transitional and fully loaded basis and the CRD IV leverage ratio are
regulatory measurements that are not yet required to be disclosed and, as such, represent non-IFRS measures. They have been calculated on the basis of our current interpretation of the new capital requirements regulation and capital requirements
directive that implement Basel 3 proposals within the EU (known as CRD IV), including transitional provisions in line with the FSA&#146;s statement on CRD IV transitional provisions in October 2012, assuming they were applied as at 1&nbsp;January
2013. The methodologies for calculating these measurements are not yet finalised: they are subject to further revisions ahead of their implementation date and our interpretation of these calculations may not be consistent with other financial
institutions. For more information on the calculation of these measurements and the impacts of Basel 3, see pages 130-134. See pages 131-132 for information on our Core Tier 1 and RWAs, calculated on the basis that currently applies to the Group
under applicable regulatory requirements. </FONT></TD></TR></TABLE></DIV><div style="clear:both; height:0px; font-size:0px">&nbsp;</div>


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<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">

<DIV STYLE="position:relative;float:left; margin-right:1%; width:48%;padding-right:9px;padding-bottom:8px;overflow:hidden;padding-top:3px">
 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Forward-looking statements </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">This document contains certain forward-looking statements within the meaning of Section&nbsp;21E of the US Securities Exchange Act of 1934, as amended, and Section&nbsp;27A of the US Securities Act
of 1933, as amended, with respect to certain of the Group&#146;s plans and its current goals and expectations relating to its future financial condition and performance. Barclays cautions readers that no forward-looking statement is a guarantee of
future performance and that actual results could differ materially from those contained in the forward-looking statements. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts.
Forward-looking statements sometimes use words such as &#147;may&#148;, &#147;will&#148;, &#147;seek&#148;, &#147;continue&#148;, &#147;aim&#148;, &#147;anticipate&#148;, &#147;target&#148;, &#147;projected&#148;, &#147;expect&#148;,
&#147;estimate&#148;, &#147;intend&#148;, &#147;plan&#148;, &#147;goal&#148;, &#147;believe&#148;, &#147;achieve&#148; or other words of similar meaning. Examples of forward-looking statements include, among others, statements regarding the
Group&#146;s future financial position, income growth, assets, impairment charges, business strategy, capital ratios, leverage, payment of dividends, projected levels of growth in the banking and financial markets, projected costs, commitments in
connection with the Transform Programme, estimates of capital expenditures and plans and objectives for future operations and other statements that are not historical fact. </FONT></P> <P STYLE="margin-top:8px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances, including, but not limited to, UK domestic, Eurozone and global
macroeconomic and business conditions, the effects of continued volatility in credit markets, market related risks such as changes in interest rates and foreign exchange rates, effects of changes in valuation of credit market exposures, changes in
valuation of issued notes, the policies and actions of governmental and regulatory authorities (including requirements regarding capital and Group structures and the potential for one or more countries exiting the Eurozone), changes in legislation,
the further development of
</FONT></P></DIV><DIV STYLE="position:relative;float:right; width:48%;padding-right:9px;padding-bottom:8px;overflow:hidden;padding-top:3px">
 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">
standards and interpretations under IFRS and prudential capital rules applicable to past, current and future periods, evolving practices with regard to the interpretation and application of
standards under IFRS, the outcome of current and future legal proceedings, the success of future acquisitions and other strategic transactions and the impact of competition, a number of such factors being beyond the Group&#146;s control. As a
result, the Group&#146;s actual future results may differ materially from the plans, goals, and expectations set forth in the Group&#146;s forward-looking statements. </FONT></P> <P STYLE="margin-top:8px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Any forward-looking statements made herein speak only as of the date they are made. Except as required by the UK Financial Services Authority (FSA), the London Stock Exchange plc (the
&#145;LSE&#146;) or applicable law, Barclays expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Barclays expectations with regard
thereto or any change in events, conditions or circumstances on which any such statement is based. The reader should, however, consult any additional disclosures that Barclays has made or may make in documents it has published or may publish via the
Regulatory News Service of the LSE and/or has filed or may file with the US Securities and Exchange Commission. </FONT></P> <P STYLE="margin-top:8px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Market and other data
</B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">This document contains information, including statistical data, about certain Barclays markets and its competitive position. Except
as otherwise indicated, this information is taken or derived from Datastream and other external sources. Barclays cannot guarantee the accuracy of information taken from external sources, or that, in respect of internal estimates, a third party
using different methods would obtain the same estimates as Barclays. </FONT></P> <P STYLE="margin-top:8px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Use of Internet addresses </B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">This document contains inactive textual addresses of internet websites operated by us and third parties. Reference to such websites is made for
informational purposes only, and information found at such websites is not incorporated by reference into this document. </FONT></P></DIV><div style="clear:both; height:0px; font-size:0px">&nbsp;</div>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="6" COLOR="#5a6163">About Barclays </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="font-size:30px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="font-size:20px;margin-top:0px;margin-bottom:0px">&nbsp;
</P><DIV STYLE="position:relative;float:left; margin-right:1%; width:48%;padding-right:9px;padding-bottom:8px;overflow:hidden;padding-top:3px">
 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#00aeef">About Barclays </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Barclays is a major global 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 in over 50 countries and employs approximately 140,000 people. Barclays moves, lends, invests and protects
money for customers and clients worldwide. </FONT></P> <P STYLE="margin-top:14px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#00aeef">Our focus </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Under the leadership of Antony Jenkins, as CEO, Barclays commenced a Strategic Review in the fourth quarter of 2012, and the outcome of the review was announced in February 2013. The review is part
of a long-term programme to transform the culture and performance of Barclays over the next three to five years, which we refer to as the Transform Programme. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Barclays Strategic Review concluded that we will: </FONT></P> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Focus solely on activities that support customers and clients in geographic markets and businesses where Barclays has scale and competitive
advantage </FONT></P></TD></TR></TABLE> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Focus investment in the UK, US and Africa, while maintaining an appropriate presence across Europe and Asia to support our global investment
banking franchise </FONT></P></TD></TR></TABLE> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Restructure Barclays European retail operations to focus on the mass-affluent customer segment </FONT></P></TD></TR></TABLE>
<P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Reposition Barclays European and Asian Equities and Investment Banking Division businesses to reflect the market opportunities and maintain a
relevant proposition for our clients </FONT></P></TD></TR></TABLE> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Close the Structured Capital Markets business unit </FONT></P></TD></TR></TABLE>
<P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Manage Risk Weighted Assets (RWAs) more efficiently through a run-off of legacy assets in Europe and the Investment Bank and invest in
high-return businesses such as UK mortgages, Barclaycard and Wealth and Investment Management </FONT></P></TD></TR></TABLE> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Reduce total costs significantly across the Group by operating more efficiently </FONT></P></TD></TR></TABLE>
<P STYLE="margin-top:14px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#00aeef">Our goal </FONT></P> <P STYLE="margin-top:14px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#5a6163">Becoming the
&#145;Go-To&#146; bank </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Our goal is to build not only a sustainable, trusted business, but a business which customers and clients
consider as the first choice for answers and solutions &#150; their &#145;Go-To&#146; bank. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Customers and clients will benefit from our
focus on doing business in the right way, putting them firmly in the centre of all that we do. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">In coming years, we will re-establish
Barclays as a benchmark brand which our colleagues will value throughout their careers. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">For Barclays and our shareholders,
&#145;Go-To&#146; means a more efficient way of doing business and developing deeper relationships that sustainably improve return on shareholder investment.
</FONT></P></DIV><DIV STYLE="position:relative;float:right; width:48%;padding-right:9px;padding-bottom:8px;overflow:hidden;padding-top:3px">
 <div style="width:100%;margin-left:0%; margin-right:0%;background-color:#e7f7ff;padding-top:2px;padding-bottom:3px"> <P STYLE="margin-top:0px;margin-bottom:0px;padding-top:0px; margin-left:9px"><FONT
STYLE="font-family:ARIAL" SIZE="4" COLOR="#00aeef">How Barclays does business </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; margin-left:9px;margin-right:11px"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#5a6163">Our objective is to
create and deliver long term sustainable value for all our stakeholders &#150; in the right way. </FONT></P> <P STYLE="margin-top:10px;margin-bottom:0px; margin-left:9px;margin-right:6px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">We
fulfil our purpose by delivering the fundamental functions of a bank to our customers and clients for which we receive interest income and/or fees. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; margin-left:9px;margin-right:6px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Our competitive advantage </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:9px;margin-right:6px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Barclays
competitive advantage is created by the scale and diversity of our businesses and the quality, character and relationships of our people. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; margin-left:9px;margin-right:6px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Scale and diversity allow us to build sustainable businesses by delivering operational excellence, investing in innovation, managing our risks and allocating scarce resources, including capital,
efficiently across our portfolio of businesses. Our people allow us to cultivate deeper relationships with our customers and clients by bringing the best of Barclays to each. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; margin-left:9px;margin-right:6px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">As we refresh our goal, purpose and values and rebalance our objectives across multiple stakeholders, we believe
we can become the bank of choice for people regardless of the transaction they are looking to make. </FONT></P> <P STYLE="font-size:20px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center">


<IMG SRC="g497934g37l68.jpg" ALT="LOGO">
 </P> <P STYLE="font-size:10px;margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P></div></DIV><div style="clear:both; height:0px; font-size:0px">&nbsp;</div>

 <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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<TD WIDTH="96%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;I&nbsp;&nbsp;1</FONT></TD>
<TD NOWRAP VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR></TABLE>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#00aeef">About Barclays continued </FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:30px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:20px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="font-size:10px;margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
<DIV STYLE="position:relative;float:left; margin-right:1%; width:48%;padding-right:9px;padding-bottom:8px;overflow:hidden;padding-top:3px">
 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#00aeef">How our Group creates value </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Barclays operates a universal banking model through which we seek to build strong and stable relationships with our customers and clients by meeting a wide range of their needs across different
locations. These multi-dimensional strategies allow Barclays to offer a greater range of products and services and achieve both a smoother income stream and sustainable returns. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Our Retail and Business Banking businesses operate in a regional model, focusing on delivering targeted solutions to individuals and small businesses. Barclaycard, the Investment Bank, Corporate
Banking and Wealth and Investment Management leverage their offerings to provide comprehensive solutions across borders. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Where
possible, we have encouraged Group functions to take advantage of synergies through the sharing of ideas and collaboration from cross-functional working groups. </FONT></P> <P STYLE="margin-top:26px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="4" COLOR="#00aeef">How our businesses create value </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE" ALIGN="center">


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<TD WIDTH="55%"></TD></TR>


<TR STYLE="font-size:1px">
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #5a6163">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #5a6163">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #5a6163">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #5a6163">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #5a6163">&nbsp;</TD></TR>
<TR>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">&nbsp;Business &nbsp;type</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Primary income source</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Description</FONT></TD></TR>
<TR STYLE="font-size:1px">
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #5a6163">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #5a6163">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #5a6163">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #5a6163">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #5a6163">&nbsp;</TD></TR>
<TR>
<TD HEIGHT="5"></TD>
<TD HEIGHT="5" COLSPAN="2"></TD>
<TD HEIGHT="5" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>&nbsp;Retail and &nbsp;Business &nbsp;Banking</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Interest and fee income</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">We accept customer deposits in exchange for interest payment. We lend these funds, for an interest charge, to individuals and businesses looking to grow and make meaningful
contributions to the economy.</FONT></TD></TR>
<TR STYLE="font-size:1px">
<TD COLSPAN="5" VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #5a6163">&nbsp;</TD></TR>
<TR>
<TD HEIGHT="5"></TD>
<TD HEIGHT="5" COLSPAN="2"></TD>
<TD HEIGHT="5" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>&nbsp;Barclaycard</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Interest income and transaction fees</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">We facilitate and simplify the flow of funds between customers and businesses for a small percentage of the transaction and, in the case of credit cards, we earn interest
income on credit balances.</FONT></TD></TR>
<TR STYLE="font-size:1px">
<TD COLSPAN="5" VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #5a6163">&nbsp;</TD></TR>
<TR>
<TD HEIGHT="5"></TD>
<TD HEIGHT="5" COLSPAN="2"></TD>
<TD HEIGHT="5" COLSPAN="2"></TD></TR>
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<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>&nbsp;Investment &nbsp;Bank</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Trading income and fee income</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">We provide clients with financial and transaction advice, assistance with capital raising, trade execution and risk management for which we earn trading and fee
income.</FONT></TD></TR>
<TR STYLE="font-size:1px">
<TD COLSPAN="5" VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #5a6163">&nbsp;</TD></TR>
<TR>
<TD HEIGHT="5"></TD>
<TD HEIGHT="5" COLSPAN="2"></TD>
<TD HEIGHT="5" COLSPAN="2"></TD></TR>
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<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>&nbsp;Corporate &nbsp;Banking</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Interest and fee income</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">We provide clients with banking, cash management and financing services, in exchange for interest and fees, to facilitate growing businesses&#146; ability to conduct business
domestically and internationally.</FONT></TD></TR>
<TR STYLE="font-size:1px">
<TD COLSPAN="5" VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #5a6163">&nbsp;</TD></TR>
<TR>
<TD HEIGHT="5"></TD>
<TD HEIGHT="5" COLSPAN="2"></TD>
<TD HEIGHT="5" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>&nbsp;Wealth and &nbsp;Investment &nbsp;Management</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Interest and fee income</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">We help affluent customers grow and protect their wealth through advisory and investment services, for which we earn a fee, and private and international banking, on which we
earn interest.</FONT></TD></TR>
<TR STYLE="font-size:1px">
<TD COLSPAN="5" VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD></TR>
</TABLE> </DIV><DIV STYLE="position:relative;float:right; width:48%;padding-right:9px;padding-bottom:8px;overflow:hidden;padding-top:3px">
 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The Group is structured around the following businesses: </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>UK Retail and Business Banking (UKRBB) </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">UKRBB is our UK-based high street retail bank network and brand presence for the Group. UKRBB provides customer referrals for Barclaycard, Wealth and Investment Management and Corporate Banking; and
retail banking platforms and infrastructure. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">UKRBB has over 15&nbsp;million personal customers, one million of whom are classified as
mass-affluent and serves over 750,000 businesses. Our strategy is to develop and deliver simple and transparent products, run on scalable infrastructure and we invest heavily to try to enhance our customers&#146; experiences. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">In October, Barclays agreed to acquire the deposits, mortgages and business assets of ING Direct UK and the transaction completed in March 2013. It
is a good fit with our existing business and will be integrated into UKRBB. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">We have put the customer in control by developing services
and propositions that they can personalise to suit their needs. Our new current account proposition, Features Store, allows customers to tailor their banking relationship across a range of free and paid for features, whilst over 400,000 customers
have taken advantage of the ability to personalise their debit card. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Barclays Mobile Banking app, Pingit and Text Alerts were launched
with the aim of making customers&#146; lives much easier. These services help people to do their everyday banking, track payments and to send and receive money at any time, wherever they are. We also changed to a customer service based incentive
scheme for our frontline staff, to ensure that our customers remain at the heart of our business. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Europe Retail and Business Banking
(Europe RBB) </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Europe RBB offers a full range of banking, investment and insurance products tailored to meet our customers&#146;
financial needs. We provide services to over 1.5&nbsp;million retail customers and businesses in Europe. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Within our customer base, we
focus on the mass-affluent segment and offer a differentiated proposition. Our business leverages the expertise of Barclays other Retail and Business Banking franchises to benefit our client base as well as to exploit synergies across our non-retail
European businesses. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">In 2012, we took advantage of the expertise of our other Retail and Business Banking franchises to better serve
customers and made good progress against our long term vision of making our customers&#146; lives much easier. For instance, we simplified some of our most manual customer processes and launched mobile banking to allow customers in Spain, Italy and
France to access their accounts on the move. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">We also introduced a system into our French network that allows staff to quickly determine
a customer&#146;s investment profile and monitor their portfolios in real time. This system saves time, improves customer service and enhances our oversight over advisory services.
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 <P STYLE="font-size:20px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="font-size:10px;margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;
</FONT></P><DIV STYLE="position:relative;float:left; margin-right:1%; width:48%;padding-right:9px;padding-bottom:8px;overflow:hidden;padding-top:3px">
 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Africa </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Barclays in Africa comprises a local Retail and Business Bank, along with a local presence for Barclays global businesses &#150; Barclaycard, Corporate Banking, Investment Bank and Wealth and
Investment Management. Africa provides the Group with emerging market exposure and a promise of growth. Together, we serve over 14.3&nbsp;million customers and clients across 12 countries. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">In 2012, we consolidated our Barclays Africa and Absa banking operations into a single management structure. In 2013, subject to the receipt of regulatory approvals, the majority of Barclays Africa
businesses and Absa will be brought under one legal entity to create a leading pan-African financial services business. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Our One Africa
strategy focuses on broadening services in leading markets and investing in new geographies. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">As part of our goal to make customers and
clients lives much easier, we continued to drive innovation, for example, by rolling out several new online banking services to customers across Africa. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">We deployed our global, regional and local capabilities to the benefit of our corporate clients in landmark deals, such as the partnership of Kenya Airways and Barclays Bank of Kenya with Visa to
relaunch an airline co-branded credit card. Other major deals included the inaugural $0.5bn Zambia Sovereign benchmark issuance, that was 20 times oversubscribed; and project financing of $1.5bn for ExxonMobil/NNPC to develop 27 oil wells in
Nigeria. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Life insurance products have been launched in Botswana, Mozambique, Zambia and Ghana via our bancassurance model, through the
Barclays branch network. Two new Islamic banking products have been launched in Kenya by leveraging Group capabilities and synergies.
</FONT></P></DIV><DIV STYLE="position:relative;float:right; width:48%;padding-right:9px;padding-bottom:8px;overflow:hidden;padding-top:3px">
 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Barclaycard </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Barclaycard provides the Group with exposure to the fast growing global payments industry and is an important source of new relationships to Barclays for both individual and business customers.
</FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">We serve 29&nbsp;million retail and business customers across the world, including the United Kingdom, United States, Germany, South
Africa through Absa Card and Norway, Sweden and Denmark through the EnterCard joint venture. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Barclaycard is investing in core consumer
cards issuing to gain share in all markets, rebalancing towards high-return business payments and continuing to lead in payment innovation to meet evolving customer needs. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Barclaycard received numerous awards in 2012, including the Moneyfacts: Best Card Provider 2012 award in the UK and Forrester Voice of the Customer award in the US. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">We have a heritage of innovation, starting from the launch of the first credit card in the UK in 1966. Since 2011, Barclaycard has launched several
new products to meet evolving customer needs, including Freedom and Cashback consumer cards in the UK, Google Adwords for UK SMEs, Barclaycard Plus for online consumer spending in Germany and the world&#146;s first social media credit card,
Barclaycard Ring in the US. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Digital payments are a major part of our innovation and in 2012 we enabled over 750,000 mobile phones to
make payments (using PayTag) across three countries and helped increase contactless transactions by over 250% year on year in the UK.
</FONT></P></DIV><div style="clear:both; height:0px; font-size:0px">&nbsp;</div>

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<TD VALIGN="top" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;I&nbsp;&nbsp;3</FONT></TD>
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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#00aeef">About Barclays continued </FONT></P>
<P STYLE="font-size:10px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:30px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:20px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="font-size:10px;margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;
</FONT></P><DIV STYLE="position:relative;float:left; margin-right:1%; width:48%;padding-right:9px;padding-bottom:8px;overflow:hidden;padding-top:3px">
 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Investment Bank </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Barclays integrated universal banking model, with a presence in 50 countries, allows us to meet the needs of our clients by connecting capabilities from across the Group. The Investment Bank aims to
be the &#145;Go-To&#146; bank for corporate and institutional clients, providing them with the products and services they need to invest, grow and manage risk. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Through our client-focused flow business we provide diversity of income and risk to the Group and are able to deliver market execution services for retail, wealth and corporate customers.
</FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Our Investment Banking Division provides a full suite of banking services to corporations, governments and institutions worldwide.
Services include arranging and underwriting debt and equity issuance, providing advice on mergers and acquisitions, corporate finance and restructurings, making active markets for securities across global debt and equity exchanges and delivering
strategic risk management solutions. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Our Markets team provides execution and risk management across the full range of asset classes
including equity and fixed income, currency and commodity (FICC) products. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">We facilitate client transactions on stock, options and
futures exchanges globally and provide prime brokerage services, including clearing, financing and securities lending, to institutional clients. We are active market-makers for securities across every asset class, helping to provide liquidity to the
world&#146;s financial markets. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">We also provide access to derivative products allowing organisations to hedge exposure to movements in
interest rates, currencies and commodity prices. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">A combined Markets team was established October 2012, integrating our FICC, Equities
and Distribution divisions. This new structure will enable us to deliver more joined up solutions for our clients, and deliver greater synergies across product groups and trading and distribution teams. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Our global, multi asset Research team delivers actionable ideas and innovative products to our clients, partnering with them to help ensure they
make informed investment decisions. Our expertise in debt, equity and economic research provides our clients with impartial, insightful advice on global and regional companies, markets and topics. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Our clients include multi-national corporates, sovereign governments and supranational bodies and financial institutions, including banks, pension
funds and insurance firms. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">We help corporate clients to achieve growth and job creation in the real economy, governments to deliver
their stability and growth plans, and institutions to meet the long term investment needs of their clients. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">In 2012, we were once again
recognised for the strength of our client focus and were awarded Best US Investment Bank and Best UK Investment Bank by Euromoney. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Note
</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">a Source: Charterhouse Research based on 2,076 interviews with companies turning over between &pound;5m and &pound;1bn carried out in Q4
2012. </FONT></P></DIV><DIV STYLE="position:relative;float:right; width:48%;padding-right:9px;padding-bottom:8px;overflow:hidden;padding-top:3px">
 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Corporate Banking </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Corporate Banking is an integral part of Barclays universal banking offering. We help over 40,000 corporations achieve their ambitions. This includes multinational corporates and financial
institutions globally, and domestic corporations in the UK and South Africa. Corporate Banking has stable revenues and is self-funded. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px;padding-bottom:0px; "><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">We work closely with clients to fully understand their business and build long term, broad-based relationships. As a result, in the UK no other bank achieved a higher rating for overall client
satisfaction<SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">a</SUP>. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">We continue to strive for ever better client
servicing, and in 2012 a Global Corporates team was established jointly between Corporate Banking and the Investment Bank. The objective is to strengthen existing client relationships and provide more corporate banking solutions to the treasuries of
our largest multinational clients. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">In 2012 we launched the new Cash Management offering, Pingit for Corporates, providing clients with
more efficient and convenient ways to manage payments. We also continued to invest in our client servicing model. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">We continue to focus
on products that are important to our clients, and therefore invest in our Cash Management and Trade Finance capabilities. Key initiatives are underway, and in 2012, we launched our cash management platform Barclays.net, and invested in Trade
Finance hubs in key locations. We are also in the process of enhancing an integrated Corporate Banking offering with Absa across Africa. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Wealth and Investment Management </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Wealth and Investment Management (W&amp;IM) provides a full range of wealth management services to affluent and high-net-worth clients globally, including banking, credit, investments and advisory
services. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">We will be the &#145;Go-To&#146; wealth manager for clients by helping them to better understand, organise and invest their
wealth. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">We believe the best way to support clients is to have deep knowledge of their full financial position. Amongst other
techniques, we use the principles of behavioural finance to tailor investment and structuring solutions for each client through use of our proprietary Financial Personality Assessment tool. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">In addition to providing comprehensive wealth management services to affluent and high-net-worth clients, we bring the best of all areas of Barclays to these clients, be it retail, business,
corporate or investment banking. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">2012 marked the third year of W&amp;IM&#146;s five year strategic investment programme, known as
Project Gamma, to transform our business through improvements to client experience and productivity. It continues to progress well, with 2012 seeing continued improvement in both these areas. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">In 2012 we launched a new digital client portal, which allows clients to self-serve more effectively, when and how they prefer. In addition, we initiated more detailed client reporting, voice
biometrics for identification purposes, an upgraded portfolio management and construction tool, a more streamlined onboarding of new clients and quicker and simpler credit applications.
</FONT></P></DIV><div style="clear:both; height:0px; font-size:0px">&nbsp;</div>

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<div style="background-color:#e7f7ff"><div style="width:97%; margin-top:1.5%; margin-left:1.5%; margin-right:-1.25%">
 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="6" COLOR="#00aeef">Governance </FONT></P> <P STYLE="font-size:36px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="font-size:36px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:20px;margin-top:0px;margin-bottom:0px"><FONT SIZE="2">&nbsp;</FONT></P>
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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#00aeef">The governance process of Barclays and reports from each of the Board Committees presenting how the
Board support the delivery of the strategy. </FONT></P></DIV><DIV STYLE="position:relative;float:right; width:48%;padding-right:9px;padding-bottom:8px;overflow:hidden;padding-top:3px">
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<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">06</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><A HREF="#tx497934_55"><B>Corporate governance report </B></A></FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">07</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><A HREF="#tx497934_56">Leadership</A></FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">12</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><A HREF="#tx497934_57">Effectiveness</A></FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">20</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><A HREF="#tx497934_58">Accountability</A></FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">28</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><A HREF="#tx497934_59">Relations with Shareholders</A></FONT></TD></TR>
<TR>
<TD HEIGHT="10"></TD>
<TD HEIGHT="10" COLSPAN="2"></TD></TR>
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<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">30</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><A HREF="#tx497934_60"><B>Directors&#146; report</B></A></FONT></TD></TR>
<TR>
<TD HEIGHT="10"></TD>
<TD HEIGHT="10" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">35</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><A HREF="#tx497934_61"><B>Board of Directors</B></A></FONT></TD></TR>
<TR>
<TD HEIGHT="10"></TD>
<TD HEIGHT="10" COLSPAN="2"></TD></TR>
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<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">38</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><A HREF="#tx497934_63"><B>People</B></A></FONT></TD></TR>
<TR>
<TD HEIGHT="10"></TD>
<TD HEIGHT="10" COLSPAN="2"></TD></TR>
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<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">39</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><A HREF="#tx497934_64"><B>Remuneration report</B></A></FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">39</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><A HREF="#tx497934_65">Statement from the Chairman of the Board Remuneration Committee</A></FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">41</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><A HREF="#tx497934_67">Remuneration policy for all employees</A></FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">43</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><A HREF="#tx497934_68">2012 incentives</A></FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">48</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><A HREF="#tx497934_69">Directors&#146; remuneration policy</A></FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">53</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><A HREF="#tx497934_70">Implementation of Directors&#146; remuneration in 2012</A></FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">59</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><A HREF="#tx497934_71">Remuneration Committee</A></FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">61</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><A HREF="#tx497934_72">Additional remuneration disclosures</A></FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">63</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><A HREF="#tx497934_73">Statutory remuneration disclosures</A></FONT></TD></TR>
</TABLE> <P STYLE="font-size:10px;margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;I&nbsp;&nbsp;5</FONT></TD></TR></TABLE>
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</div></div>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="6" COLOR="#5a6163"><A NAME="tx497934_55"></A>Corporate governance report </FONT></P>
<P STYLE="font-size:36px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:36px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:20px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<DIV STYLE="position:relative;float:left; margin-right:1%; width:48%;padding-right:9px;padding-bottom:8px;overflow:hidden;padding-top:3px">
 <P STYLE="margin-top:0px;margin-bottom:0px">


<IMG SRC="g497934tx_pg40anew.jpg" ALT="LOGO">
 </P> <P STYLE="margin-top:10px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#5a6163">Dear Shareholder </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">This is my first report to you, as Chairman, on corporate governance at Barclays. I joined the Board with effect from 1&nbsp;September 2012, succeeding Marcus Agius as Chairman on 1&nbsp;November
2012. The context for my appointment was, as is well-known, the changes to the Board in the wake of the announcement in June 2012 of penalties relating to the industry-wide investigation into the setting of interbank offered rates. That
announcement, and the events that followed, inevitably dominated the second half of the year and the after effects continue to influence the Board&#146;s agenda. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>What is meant by corporate governance? </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Taking a step back, what is meant by
corporate governance? The UK Corporate Governance Code (the Code) is based on the widely-accepted definition of corporate governance as &#145;the system by which companies are directed and controlled. Boards of directors are responsible for the
governance of their companies.&#146; The Code makes clear that corporate governance is about what the board of a company does and how it sets the company&#146;s values. That is something that has been brought into sharp focus for Barclays during
2012. Barclays has a well-defined and well-structured corporate governance framework in place to support the Board&#146;s aim of achieving long term and sustainable shareholder value. But however robust the framework, it is imperative that it is
supported by the right culture, values and behaviours, both at the top and throughout the entire organisation. In 2012, Barclays faced much criticism of the values and behaviours it has demonstrated. We are unanimous as a Board that we must accept
this criticism and seek ways in which we can do better in future, with the aim of achieving a leadership position amongst our industry peers. I regard the independent review of Barclays business practices, led by Anthony Salz, which we announced in
July 2012, and the work instigated by Antony Jenkins on culture and values as part of the Transform Programme, as providing a solid foundation on which we can build and move forward to become best in class. You will read more about each of these
important initiatives elsewhere in the Annual Report and, later in this corporate governance report, Sir Michael Rake, Deputy Chairman and Senior Independent Director, reports on how Board governance responded to the LIBOR announcement.
</FONT></P></DIV><DIV STYLE="position:relative;float:right; width:48%;padding-right:9px;padding-bottom:8px;overflow:hidden;padding-top:3px">
 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>How is good governance achieved? </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Good and effective corporate governance is also very much dependent on the skills and experience of individuals on the Board and how well they work together as a whole to achieve long term value for
shareholders. A great deal is demanded and expected of our Directors, particularly given the systemic importance of financial institutions such as Barclays to the global economy and the impact we have on the societies in which we operate. As
Chairman, I am responsible for the effective performance of the Board and, in that regard, one of my areas of focus since joining the Board has been to ensure that we have a strong and well-functioning Board, comprised of individuals not only with
the right abilities in terms of technical or business experience, but with the personal qualities required to be effective stewards of the business and the dedication and commitment to the company, particularly in times of stress. I was closely
involved in the process to appoint a new Chief Executive and I am confident that, in appointing Antony Jenkins, we have the right person to lead the company, to deliver our strategy of becoming the &#145;Go-To&#146; bank and to implement the
significant cultural and behavioural changes that we, as a Board, want to achieve. I have also sought to reinforce the non-executive presence on the Board and to ensure that the Board is both balanced and diverse. We have revisited the range of
skills and competencies that we require around the Board table and these are set out on page 18 below. The Board needs to have non-executive Directors with financial services experience but also access to other skills and experiences, particularly
in the management of culture and cultural change. Tim Breedon and Diane de Saint Victor have joined the Board as non-executive Directors since I joined the Board and I anticipate that we will make further appointments during the course of 2013.
</FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>How is risk management being enhanced? </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">In looking at the corporate governance structures in place, it is clear to me that Barclays has been well served by having, for many years, a Board Risk Committee focused on credit, counterparty,
market, capital and liquidity risk. However, a major source of losses for Barclays and all banks in recent years has been from operational risk and, in particular, mis-selling of financial products. We need to strengthen Board-level governance over
these areas in 2013 and accordingly, we have created a Board Conduct, Reputation and Operational Risk Committee. Its responsibilities will include governance over operational risk, conduct risk, reputation matters and Barclays corporate
responsibility strategy. It will subsume the current Board Citizenship Committee. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>How do Board Committees support good governance?
</B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The report that follows describes how Barclays applied the principles of the Code during 2012. Board Committees play a crucial role
in the effectiveness of our corporate governance framework and Sir Michael Rake and David Booth report below on the activities of the Board Audit Committee and Board Risk Committee respectively. And Sir John Sunderland reports separately in the
Remuneration Report on how the Board Remuneration Committee has overseen remuneration policy, how we link remuneration to our strategy and to long term outcomes and how we ensure that we are not incentivising inappropriate risk-taking. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>What are the priorities for 2013? </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">We are determined as a Board and as a company to make progress during 2013 and to do everything in our power to regain the trust of our stakeholders: our commitment to implementing the
recommendations of the Salz Review is affirmation of our determination. </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px">


<IMG SRC="g497934tx_pg40b.jpg" ALT="LOGO">
 </P> <P STYLE="margin-top:14px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Sir David Walker </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Chairman </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">5 March 2013
</FONT></P></DIV><div style="clear:both; height:0px; font-size:0px">&nbsp;</div>

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<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">6&nbsp;&nbsp;I&nbsp;&nbsp;</FONT></TD>
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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#00aeef">Corporate governance report </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="6" COLOR="#5a6163"><A NAME="tx497934_56"></A>Leadership </FONT></P> <P STYLE="font-size:36px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:36px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<DIV STYLE="position:relative;float:left; margin-right:1%; width:48%;padding-right:9px;padding-bottom:8px;overflow:hidden;padding-top:3px">
 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>The role of the Board </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The principal responsibility of the Board is to promote the long term success of Barclays by creating and delivering sustainable shareholder value. The Board leads and provides direction for
management by setting strategy and overseeing its implementation by management. The Board seeks to ensure that, while the ultimate focus is long term growth, management also delivers on short term objectives, striking the right balance between the
two. In setting and monitoring the execution of Barclays strategy, consideration is given to the impact that those decisions will have on Barclays obligations to various stakeholders, such as shareholders, employees, suppliers and the community in
which Barclays operates as a whole. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The Board is also responsible for ensuring that an effective system of internal control is
maintained and that management maintains an effective risk management and oversight process across the Group, so that growth is delivered in a controlled and sustainable way. In addition, the Board is responsible for determining and promoting
Barclays collective vision of its purpose, values, culture and behaviours. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Specific key decisions and matters have been reserved for
approval by the Board. These include decisions on the Group&#146;s strategy, approval of risk appetite, capital and liquidity matters, major acquisitions, mergers or disposals, Board membership, financial results and governance issues, including the
approval of the corporate governance framework. A full formal schedule of matters specifically reserved to the Board can be found on Barclays website at Barclays.com. </FONT></P> <P STYLE="font-size:10px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="font-size:22px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TR BGCOLOR="#00aeef">
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff"></FONT><FONT STYLE="font-family:ARIAL" SIZE="1"><B><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff">&nbsp;Corporate Governance Framework</FONT></B></FONT></TD></TR>
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 </P> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Board Enterprise Wide Risk Committee </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">A Board Enterprise Wide Risk Committee was established at the end of January 2013. </FONT></P>
<P STYLE="margin-top:8px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Notes </FONT></P>
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<TD WIDTH="13" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">a</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Known as the Board Financial Risk Committee with effect from 31&nbsp;January 2013. </FONT></TD></TR></TABLE>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="13" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">b</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Known as the Board Conduct, Reputation and Operational Risk Committee with effect from 31&nbsp;January 2013.
</FONT></TD></TR></TABLE></DIV><DIV STYLE="position:relative;float:right; width:48%;padding-right:9px;padding-bottom:8px;overflow:hidden;padding-top:3px">
 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The names of the Directors and their full biographical details, including the skills and experience
they each bring to the Board, can be found on pages 35-37. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">To assist the Board in carrying out its functions and to ensure there is
independent oversight of internal control and risk management, the Board has delegated certain responsibilities to Board Committees, which are comprised of independent non-executive Directors and, in some cases, the Chairman. The Chairman of each
Board Committee reports to the Board on the matters discussed at Board Committee meetings. Each Board Committee has agreed Terms of Reference approved by the Board, which can be found on Barclays website. </FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">More information on the role of the Board and its Committees can be found in &#145;Corporate Governance in Barclays&#146;, which is available online at
Barclays.com</FONT></TD></TR>
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<TD VALIGN="top" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;I&nbsp;&nbsp;7</FONT></TD></TR></TABLE>


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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#00aeef">Corporate governance report </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="4" COLOR="#5a6163">Leadership continued </FONT></P> <P STYLE="font-size:60px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:20px;margin-top:0px;margin-bottom:0px"><FONT SIZE="2">&nbsp;</FONT></P>

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<TR BGCOLOR="#00aeef">
<TD VALIGN="top"> <P STYLE="margin-left:0.50em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff"></FONT><FONT STYLE="font-family:ARIAL" SIZE="1"><B><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff">Roles</FONT></B></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"></TD></TR>
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<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
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<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-left:0.50em"><FONT STYLE="font-family:ARIAL" SIZE="2" COLOR="#00aeef">Role of the Chairman</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The Chairman is responsible for the overall operation and governance of the Board. Sir David Walker, the Chairman, provides leadership
and manages the Board to ensure that Barclays satisfies its legal, regulatory and stewardship responsibilities. The Chairman sets the Board&#146;s agenda, in consultation with the Group Chief Executive and Company Secretary, taking full account of
the issues and concerns of Board members. Board agendas are structured to allow adequate and sufficient time for the discussion of the items on the agenda, in particular, strategic matters. The Chairman is also responsible for facilitating and
encouraging active engagement and appropriate challenge by Directors, particularly on matters of risk and strategy or other major proposals, by drawing on Directors&#146; skills, experience and knowledge.</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">It is the responsibility of the Chairman to ensure effective communication with
shareholders and other stakeholders and to ensure that members of the Board develop and maintain an understanding of the views of major investors and other key stakeholders. Details of how Barclays engages with its shareholders and other
stakeholders can be found on pages 28-29.</FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The full role profile for
the Chairman can be found in Barclays Charter of Expectations, which is available on Barclays website.</FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Sir David Walker is also Chairman of the Board Corporate Governance and Nominations Committee and the Board Citizenship Committee. He is a member of the Board Remuneration Committee and, although
not a member, will attend a number of the Board Audit and Board Risk Committee meetings each year to observe the Committees in action and assess their effectiveness.</FONT></P>
<P STYLE="font-size:6px;margin-top:0px;margin-bottom:1px">&nbsp;</P></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-left:0.50em"><FONT STYLE="font-family:ARIAL" SIZE="2" COLOR="#00aeef">Role&nbsp;of&nbsp;the&nbsp;Group Chief Executive</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The Group Chief Executive, Antony Jenkins, has responsibility for recommending the
Group&#146;s strategy to the Board and for implementing the strategy agreed by the Board, making and implementing operational decisions and managing the business day-to-day.</FONT></P>
<P STYLE="font-size:6px;margin-top:0px;margin-bottom:1px">&nbsp;</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The Board has delegated this responsibility to him and he is accountable to the Board. He is supported by the Executive Committee,
which he chairs.</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
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<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-left:0.50em"><FONT STYLE="font-family:ARIAL" SIZE="2" COLOR="#00aeef">Role of the<BR>non-executive<BR>Directors</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Non-executive Directors are independent of management. Their role is to effectively and
constructively challenge management and monitor the success of management in delivering the agreed strategy within the risk appetite and control framework set by the Board.</FONT></P>
<P STYLE="font-size:6px;margin-top:0px;margin-bottom:1px">&nbsp;</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">They are also responsible for exercising appropriate oversight through scrutinising the performance of management in meeting agreed
goals and objectives and monitoring performance.</FONT></TD></TR>
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<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
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<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-left:0.50em"><FONT STYLE="font-family:ARIAL" SIZE="2" COLOR="#00aeef">Role of the&nbsp;Senior Independent Director</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Sir Michael Rake is Deputy Chairman and Senior Independent Director. He was appointed as
Deputy Chairman in July 2012, at the height of events following the LIBOR announcement, having been Senior Independent Director since October 2011. As Senior Independent Director, Sir Michael&#146;s role is to provide a sounding board for the
Chairman and provide support for the Chairman in the delivery of his objectives. He also serves as a trusted intermediary for the Directors, when necessary. He is available to shareholders should the occasion arise where there is a need to convey
concerns to the Board other than through the Chairman or the Group Chief Executive. The Senior Independent Director is also expected to work with the Chairman and other Directors or shareholders, as required, where the stability of the Board or
Barclays is threatened.</FONT></P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:1px">&nbsp;</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">During 2012, Sir Michael Rake played a significant role in the wake of the announcement of
penalties relating to the industry-wide investigation into the setting of interbank offered rates. Subsequent to the announcement of the resignation of Marcus Agius as Chairman, Sir Michael was in contact with shareholders and other relevant
stakeholders, including Barclays regulators, to understand their views and concerns relating to the LIBOR announcement and the resignation of the Chairman. Further meetings and discussions were held with shareholders and other stakeholders after the
ensuing announcement of the resignation of Bob Diamond as Chief Executive. As Deputy Chairman, Sir Michael Rake has taken a lead role in the Board&#146;s governance response to the LIBOR announcement and he reports on that on page 11.</FONT></P>
<P STYLE="font-size:6px;margin-top:0px;margin-bottom:1px">&nbsp;</P></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
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<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-left:0.50em"><FONT STYLE="font-family:ARIAL" SIZE="2" COLOR="#00aeef">Company Secretary</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The Company Secretary, Lawrence Dickinson, works closely with the Chairman, the Group
Chief Executive and the Board Committee Chairmen in setting the annual forward calendar of agenda items for the meetings of the Board and its Committees. He also ensures that accurate, timely and appropriate information flows within and to the
Board, the Board Committees and between the Directors and senior management in general.</FONT></P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:1px">&nbsp;</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Board and Board Committee meeting papers are delivered a week before the meeting via a
secure electronic system, which can be accessed by Directors using tablet computers. After each meeting, the Chairman meets with the Company Secretary to agree actions to be followed up and to discuss the effectiveness of the meeting. Details of the
role of the Company Secretary and the support provided to the Board can be found in Barclays Charter of Expectations.</FONT></P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:1px">&nbsp;</P></TD></TR>
</TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Full role profiles for the non-executive Directors and Senior Independent Director can be found in Barclays Charter
of Expectations. </FONT></P>
 <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">8&nbsp;&nbsp;I&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"></TD></TR></TABLE>


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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>How the Board operates </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The Board meets regularly and there are eight scheduled meetings each year, including an annual strategy meeting. When necessary, and if circumstances dictate, additional Board meetings are held. In
2012, there were 15 additional meetings held at short notice to discuss matters such as changes to Board composition, issues arising from the LIBOR announcement, taxation matters and corporate transactions. In total, the Board met 23 times during
the year. The Chairman met privately with the non-executive Directors before each scheduled Board meeting to discuss any matters they wished to raise at the meeting.
</FONT></P></DIV><DIV STYLE="position:relative;float:right; width:48%;padding-right:9px;padding-bottom:8px;overflow:hidden;padding-top:3px">
 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Where Directors are unable to attend meetings, usually because of illness or long-standing prior
engagements, they are encouraged to give the Chairman their views or comments on the matters to be discussed. Following the meeting, the Chairman or the Company Secretary briefs any Director not present on the discussions and any decisions taken.
Details of Board meeting attendance in 2012 can be found in the table below. During the year, the non-executive Directors met the time commitment specified in their letters of appointment and committed significantly more time during the period of
stress Barclays experienced in July and August 2012. </FONT></P></DIV><div style="clear:both; height:0px; font-size:0px">&nbsp;</div>
 <P STYLE="font-size:18px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TR BGCOLOR="#00aeef">
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff"></FONT><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff">&nbsp;&nbsp;Attendance</FONT></B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"></TD></TR>
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<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #00aeef; BORDER-BOTTOM:1px solid #00aeef">&nbsp;<FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #00aeef; BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #00aeef; BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Independent</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #00aeef; BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #00aeef; BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Scheduled&nbsp;meetings&nbsp;eligible&nbsp;to&nbsp;attend</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #00aeef; BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #00aeef; BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">&nbsp;&nbsp;Additional&nbsp;meetings&nbsp;eligible&nbsp;to&nbsp;attend</FONT></TD></TR>
<TR>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>&nbsp;&nbsp;Group Chairman</B></FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Marcus Agius</B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:1px; margin-left:0.38em"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">(to 31&nbsp;October 2012)</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">On appointment</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <P STYLE="margin-top:0px;margin-bottom:0px">


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</P> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:1px">&nbsp;</P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;


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<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Sir David Walker</B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:1px; margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">(from 1&nbsp;September 2012) <SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">c</SUP></FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">On appointment</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-top:0px;margin-bottom:0px">


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</P> <P STYLE="font-size:1px;margin-top:0px;margin-bottom:1px">&nbsp;</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>&nbsp;&nbsp;Executive Directors</B></FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Robert E Diamond </B>(to 3 July 2012) <SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">b</SUP></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Executive Director</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom">


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</TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;


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<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Antony Jenkins </B>(from 30&nbsp;August 2012)</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Executive Director</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom">


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</TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD></TR>
<TR>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Chris Lucas
</B><SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">b</SUP></FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Executive Director</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-top:0px;margin-bottom:0px">


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</P> <P STYLE="font-size:3px;margin-top:0px;margin-bottom:1px">&nbsp;</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef">&nbsp;&nbsp;


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</TD></TR>
<TR>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>&nbsp;&nbsp;Non-executive Directors</B></FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>David Booth </B><SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">b</SUP></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Independent non-executive Director</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <P STYLE="margin-top:0px;margin-bottom:0px">


<IMG SRC="g497934tx_pg43b.jpg" ALT="LOGO">
</P> <P STYLE="font-size:2px;margin-top:0px;margin-bottom:1px">&nbsp;</P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;


<IMG SRC="g497934tx_pg43k.jpg" ALT="LOGO">
</TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Tim Breedon </B>(from 1&nbsp;November 2012)</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Independent non-executive Director</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom">


<IMG SRC="g497934tx_pg43gnew.jpg" ALT="LOGO">
</TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Alison Carnwath </B>(to 24&nbsp;July 2012) <SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">ab</SUP></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Independent non-executive Director</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom">


<IMG SRC="g497934tx_pg43d.jpg" ALT="LOGO">
</TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;


<IMG SRC="g497934tx_pg43m.jpg" ALT="LOGO">
</TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Fulvio Conti </B><SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">ab</SUP></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Independent non-executive Director</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom">


<IMG SRC="g497934tx_pg43c.jpg" ALT="LOGO">
</TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;


<IMG SRC="g497934tx_pg43k.jpg" ALT="LOGO">
</TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Simon Fraser</B></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Independent non-executive Director</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom">


<IMG SRC="g497934tx_pg43b.jpg" ALT="LOGO">
</TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;


<IMG SRC="g497934tx_pg43j.jpg" ALT="LOGO">
</TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Reuben Jeffery </B><SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">b</SUP></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Independent non-executive Director</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom">


<IMG SRC="g497934tx_pg43b.jpg" ALT="LOGO">
</TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;


<IMG SRC="g497934tx_pg43k.jpg" ALT="LOGO">
</TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Sir Andrew Likierman </B><SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">b</SUP></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Independent non-executive Director</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom">


<IMG SRC="g497934tx_pg43b.jpg" ALT="LOGO">
</TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;


<IMG SRC="g497934tx_pg43k.jpg" ALT="LOGO">
</TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Dambisa Moyo </B><SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">b</SUP></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Independent non-executive Director</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom">


<IMG SRC="g497934tx_pg43b.jpg" ALT="LOGO">
</TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;


<IMG SRC="g497934tx_pg43k.jpg" ALT="LOGO">
</TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Sir Michael Rake </B><SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">b</SUP></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Independent non-executive Director</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom">


<IMG SRC="g497934tx_pg43b.jpg" ALT="LOGO">
</TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;


<IMG SRC="g497934tx_pg43l.jpg" ALT="LOGO">
</TD></TR>
<TR>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Sir John Sunderland
</B><SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">b</SUP></FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Independent non-executive Director</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-top:0px;margin-bottom:0px">


<IMG SRC="g497934tx_pg43b.jpg" ALT="LOGO">
</P> <P STYLE="font-size:2px;margin-top:0px;margin-bottom:1px">&nbsp;</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef">&nbsp;&nbsp;


<IMG SRC="g497934tx_pg43k.jpg" ALT="LOGO">
</TD></TR>
<TR>
<TD VALIGN="top" COLSPAN="5" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Lawrence Dickins</B><B>on</B> Secretary</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
</TABLE> <P STYLE="margin-top:4px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>


<IMG SRC="g497934blackdot.jpg" ALT="LOGO">
</B>&nbsp;Attended&nbsp;&nbsp;&nbsp;&nbsp;<B>


<IMG SRC="g497934whitedot.jpg" ALT="LOGO">
</B>&nbsp;Did not attend </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Notes </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">a &nbsp;Unable to attend a scheduled meeting owing to a prior commitment. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">b
&nbsp;Unable to attend certain additional meetings held at short notice owing to prior commitments. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">c &nbsp;Appointed to the Board with
effect from 1&nbsp;September 2012 and as Chairman with effect from 1&nbsp;November 2012. </FONT></P> <P STYLE="font-size:24px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:24px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;
</P><DIV STYLE="position:relative;float:left; margin-right:1%; width:48%;padding-right:9px;padding-bottom:8px;overflow:hidden;padding-top:3px">
 <P STYLE="margin-top:0px;margin-bottom:0px">


<IMG SRC="g497934tx43new.jpg" ALT="LOGO">
 </P></DIV><DIV STYLE="position:relative;float:right; width:48%;padding-right:9px;padding-bottom:8px;overflow:hidden;padding-top:3px">

<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE" ALIGN="center">


<TR>
<TD WIDTH="100%"></TD></TR>


<TR>
<TD VALIGN="top" BGCOLOR="#e7f7ff"> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:0.50em"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#5a6163">Corporate Governance in
Barclays</FONT></P> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:8px;margin-bottom:0px; margin-left:0.50em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">All of our corporate governance
practices have been brought together in one document, Corporate Governance in Barclays. This framework provides the basis for promoting the highest standards of corporate governance in Barclays. Corporate Governance in Barclays is available on our
website, Barclays.com.</FONT></P> <P STYLE="font-size:20px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:2px;margin-top:0px;margin-bottom:1px"><FONT SIZE="1">&nbsp;</FONT></P></TD></TR>
</TABLE> <P STYLE="font-size:10px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE" ALIGN="center">


<TR>
<TD WIDTH="100%"></TD></TR>


<TR>
<TD VALIGN="top" BGCOLOR="#e7f7ff"> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:0.50em"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#5a6163">Charter of
Expectations</FONT></P> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:8px;margin-bottom:0px; margin-left:0.50em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The role profiles,
responsibilities, time commitments, key competencies and behaviours we expect of our Directors, together with the key indicators of high performance, are set out in our Charter of Expectations, which is available on our website,
Barclays.com.</FONT></P> <P STYLE="font-size:20px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:2px;margin-top:0px;margin-bottom:1px"><FONT SIZE="1">&nbsp;</FONT></P></TD></TR>
</TABLE> </DIV><div style="clear:both; height:0px; font-size:0px">&nbsp;</div>

 <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE">

<TR>
<TD WIDTH="51%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD WIDTH="47%"></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;I&nbsp;&nbsp;9</FONT></TD></TR></TABLE>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#00aeef">Corporate governance report </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="4" COLOR="#5a6163">Leadership continued </FONT></P> <P STYLE="font-size:60px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:20px;margin-top:0px;margin-bottom:0px"><FONT SIZE="2">&nbsp;</FONT></P>
 <DIV STYLE="position:relative;float:left; margin-right:1%; width:48%;padding-right:9px;padding-bottom:8px;overflow:hidden;padding-top:3px">
 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="2" COLOR="#00aeef">Board balance and diversity </FONT></P>
<P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE" ALIGN="center">


<TR>
<TD WIDTH="100%"></TD></TR>


<TR BGCOLOR="#00aeef">
<TD VALIGN="top"> <P STYLE="font-size:1px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff"></FONT><FONT STYLE="font-family:ARIAL" SIZE="1"><B><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff">&nbsp;Balance of non-executive and executive Directors</FONT></B></FONT></P> <P STYLE="font-size:1px;margin-top:0px;margin-bottom:1px">&nbsp;</P></TD></TR>
</TABLE> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px">


<IMG SRC="g49793444new1.jpg" ALT="LOGO">
 </P> <P STYLE="font-size:20px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE" ALIGN="center">


<TR>
<TD WIDTH="100%"></TD></TR>


<TR BGCOLOR="#00aeef">
<TD VALIGN="top"> <P STYLE="font-size:1px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff"></FONT><FONT STYLE="font-family:ARIAL" SIZE="1"><B><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff">&nbsp;Board gender balance</FONT></B></FONT></P> <P STYLE="font-size:1px;margin-top:0px;margin-bottom:1px">&nbsp;</P></TD></TR>
</TABLE> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px">


<IMG SRC="g49793444new2.jpg" ALT="LOGO">
 </P> <P STYLE="font-size:36px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE" ALIGN="center">


<TR>
<TD WIDTH="100%"></TD></TR>


<TR BGCOLOR="#00aeef">
<TD VALIGN="top"> <P STYLE="font-size:1px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff"></FONT><FONT STYLE="font-family:ARIAL" SIZE="1"><B><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff">&nbsp;Length of tenure of non-executive Directors</FONT></B></FONT></P> <P STYLE="font-size:1px;margin-top:0px;margin-bottom:1px">&nbsp;</P></TD></TR>
</TABLE> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px">


<IMG SRC="g497934tx_pg44c.jpg" ALT="LOGO">
 </P> <P STYLE="font-size:20px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE" ALIGN="center">


<TR>
<TD WIDTH="100%"></TD></TR>


<TR BGCOLOR="#00aeef">
<TD VALIGN="top"> <P STYLE="font-size:1px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff"></FONT><FONT STYLE="font-family:ARIAL" SIZE="1"><B><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff">&nbsp;Industry/background experience</FONT><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff"><SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">a</SUP></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff"></FONT></B></FONT></P> <P STYLE="font-size:1px;margin-top:0px;margin-bottom:1px">&nbsp;</P></TD></TR>
</TABLE> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE" ALIGN="center">


<TR>
<TD WIDTH="24%"></TD>
<TD VALIGN="bottom" WIDTH="3%"></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="3%"></TD>
<TD WIDTH="65%"></TD>
<TD VALIGN="bottom" WIDTH="3%"></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>


<TR>
<TD VALIGN="top" ROWSPAN="8">


<IMG SRC="g497934tx_pg44d.jpg" ALT="LOGO">
</TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">1</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Financial services</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">6</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">2</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Accountancy/financial expert</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">2</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">3</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Political/regulatory contacts</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">5</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">4</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Current or recent Chairman/CEO</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">4</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">5</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">International (US)</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">2</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">6</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">International (Europe)</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">2</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">7</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">International (RoW)</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">1</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">8</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Retail/marketing</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">1</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
</TABLE> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="line-height:1px;margin-top:0px;margin-bottom:2px;border-bottom:1pt solid #00aeef">&nbsp;</P> <P STYLE="margin-top:4px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Note </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">a &nbsp;Individual Directors may fall into one or more categories. </FONT></P>
<P STYLE="font-size:16px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TR BGCOLOR="#00aeef">
<TD VALIGN="top"> <P STYLE="font-size:1px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff"></FONT><FONT STYLE="font-family:ARIAL" SIZE="1"><B><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff">&nbsp;Geographical mix of non-executive Directors</FONT></B></FONT></P> <P STYLE="font-size:1px;margin-top:0px;margin-bottom:1px">&nbsp;</P></TD></TR>
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<TD VALIGN="top" COLSPAN="3"> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:1px; margin-left:0.50em"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#5a6163">Board activity in
2012</FONT></P></TD></TR>
<TR>
<TD VALIGN="top" COLSPAN="3"> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:1px; margin-left:0.50em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The Board&#146;s agenda in
2012 was dominated by the changing regulatory environment and, in the latter half of 2012, by consideration of the future direction and shape of the business and its culture and values in light of both the external environment and in the aftermath
of the LIBOR announcement. Key activities for the Board during the year included:</FONT></P></TD></TR>
<TR>
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.50em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">reviewing strategic options open to the Group in its different business areas in light of the regulatory and economic environment.</FONT></TD></TR>
<TR>
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.50em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">receiving updates from each of Barclays principal businesses and discussing their progress against agreed strategy.</FONT></TD></TR>
<TR>
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.50em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">discussing the implications of a statement by HMRC concerning the repurchase of debt by Barclays.</FONT></TD></TR>
<TR>
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.50em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">considering and approving the sale of Barclays interest in BlackRock, Inc.</FONT></TD></TR>
<TR>
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.50em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">discussing and agreeing Barclays &#145;One Africa&#146; strategy, involving the combination of the majority of Barclays operations in Africa with Absa.</FONT></TD></TR>
<TR>
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.50em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">considering the announcement of penalties relating to the industry-wide investigation into the setting of interbank offered rates and the subsequent
events.</FONT></TD></TR>
<TR>
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.50em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">discussing changes in the composition of the Board, including approving the appointment of a new Chairman and a new Chief Executive.</FONT></TD></TR>
<TR>
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.50em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">reviewing a report on compliance and internal audit lessons learned from the LIBOR incident.</FONT></TD></TR>
<TR>
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.50em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">discussing and reviewing progress of the work implemented by Antony Jenkins as part of the Transform Programme, including a review of business performance, costs, funding
and liquidity matters and a discussion of Barclays purpose, values and behaviours.</FONT></TD></TR>
<TR>
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.50em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">considering and approving Barclays risk appetite, liquidity risk appetite and the Group&#146;s capital plan.</FONT></TD></TR>
<TR>
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.50em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">receiving regular updates on global economic conditions and regulatory developments and the outlook for the industry.</FONT></TD></TR>
<TR>
<TD HEIGHT="16" COLSPAN="3"></TD></TR>
<TR>
<TD VALIGN="top" COLSPAN="3"> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:0.50em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">During 2012, the Board held two informal meetings with representatives from the FSA to ensure that
all Directors had the opportunity to hear first-hand from Barclays principal regulator and exchange views. The chart on page 18 illustrates how the Board allocated its time during 2012.</FONT></P>
<P STYLE="font-size:10px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:1px"><FONT SIZE="1">&nbsp;</FONT></P></TD></TR>
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<TD VALIGN="top"> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:0.50em"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#5a6163">Priorities for 2013</FONT></P>
<P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:0.50em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">In 2013, the Board&#146;s priority will be providing
oversight of and challenge to the progress of delivery of the actions and financial and non-financial commitments Barclays has made as part of its Strategic Review, which were announced in February 2013.</FONT></P>
<P STYLE="font-size:20px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:2px;margin-top:0px;margin-bottom:1px"><FONT SIZE="1">&nbsp;</FONT></P></TD></TR>
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<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">10&nbsp;&nbsp;I&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"></TD></TR></TABLE>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="font-size:30px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:20px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:10px;margin-top:0px;margin-bottom:0px"><FONT
SIZE="1">&nbsp;</FONT></P>
<div style ="BORDER-BOTTOM:1pt solid #5a6163;BORDER-LEFT:1pt solid #5a6163;BORDER-RIGHT:1pt solid #5a6163;BORDER-TOP:1pt solid #5a6163;MARGIN-LEFT:0px;MARGIN-RIGHT:0px;WIDTH:100%">
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<IMG SRC="g497934barclays_logo.jpg" ALT="LOGO">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </P> <P STYLE="margin-top:100px;margin-bottom:0px; margin-left:10%;margin-right:10%"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#00aeef">Board governance &#150;
</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:10%;margin-right:10%"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#00aeef">responding to the LIBOR announcement </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; margin-left:10%;margin-right:10%"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">In response to the announcement in June 2012 and subsequent events, the Board set up three specific
sub-committees of the Board, chaired by me in my capacity as Deputy Chairman and Senior Independent Director. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; margin-left:10%;margin-right:10%"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>LIBOR Employee Investigation Review Committee </B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px; margin-left:10%;margin-right:10%"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The purpose of this Committee, which comprised me, Sir John Sunderland and Marcus Agius, who was succeeded
following his retirement by Sir David Walker, was to provide a level of Board oversight in respect of the review of the conduct of certain current and former employees in relation to LIBOR. The Committee&#146;s role was to satisfy itself that proper
processes had been followed and that outcomes were appropriate. To assist the Committee in fulfilling this responsibility, the Committee appointed an independent adviser, John Turnbull from Linklaters LLP, who reviewed the scope and methodology of
the review and the resulting outcomes. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; margin-left:10%;margin-right:10%"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">We met four times during the second half of 2012 to consider
the progress of the review and the outcomes. At the conclusion of the review, 13 current employees were subject to disciplinary action, including 5 who were dismissed. In total, deferred compensation amounting to &pound;24.6m was clawed back from 15
current and former employees as a result of the review. This excludes any sums voluntarily surrendered by individuals. The Board Remuneration Committee considered the wider application of claw back and further details are in the Remuneration Report.
The Committee was satisfied that a thorough and fair process was conducted and that the outcomes of the review were appropriate in each individual case. This view was supported by our independent adviser. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; margin-left:10%;margin-right:10%"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Business Practices Review Committee </B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px; margin-left:10%;margin-right:10%"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The Business Practices Review Committee comprises me, David Booth and Sir John Sunderland and was established
following Barclays announcement in July 2012 that Anthony Salz would conduct an independent review of Barclays business practices (the Salz Review). The purpose of the Committee is to oversee the progress of the Salz Review and report to the Board
on progress, to consider any recommendations arising from the Salz Review and to oversee any action to be taken as a result. The Committee met twice in the second half of 2012 to check on the progress of the review and has held further meetings in
early 2013. The Committee will meet again to discuss the recommendations of the Salz Review and Barclays response, which are due to be published prior to the 2013 AGM. In addition to the formal meetings of the Committee, I have also met with Anthony
Salz directly on a number of occasions. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; margin-left:10%;margin-right:10%"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Regulatory Investigations Committee </B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px; margin-left:10%;margin-right:10%"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">In the fourth quarter of 2012, the Board established a Regulatory Investigations Committee comprising me, Antony
Jenkins, Sir John Sunderland and Sir David Walker. The primary purpose of this Committee is to oversee certain regulatory investigations, to consider the findings of those investigations and to direct the scope and conduct of those investigations as
appropriate, including directing and overseeing any remediation activities and considering whether any disciplinary action is required in respect of any Barclays employee. The Committee met four times in 2012 and will continue to meet in 2013. The
Committee has appointed an independent external adviser, John Turnbull from Linklaters LLP, to assist it in its deliberations. Sir David Walker assumed chairmanship of the Committee in early 2013. </FONT></P>
<P STYLE="font-size:18px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:10%;margin-right:10%">


<IMG SRC="g497934tx_pg45.jpg" ALT="LOGO">
 </P> <P STYLE="margin-top:14px;margin-bottom:0px; margin-left:10%;margin-right:10%"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Sir Michael Rake </B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px; margin-left:10%;margin-right:10%"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Deputy Chairman and Senior Independent Director </FONT></P>
<P STYLE="font-size:24px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:24px;margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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<TD VALIGN="top" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;I&nbsp;&nbsp;11</FONT></TD>
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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#00aeef">Corporate governance report </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="6" COLOR="#5a6163"><A NAME="tx497934_57"></A>Effectiveness </FONT></P>
<P STYLE="font-size:72px;margin-top:0px;margin-bottom:0px">&nbsp;
</P><DIV STYLE="position:relative;float:left; margin-right:1%; width:48%;padding-right:9px;padding-bottom:8px;overflow:hidden;padding-top:3px">
 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Board composition, qualification and independence </B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The composition, experience and balance of skills on the Board are regularly reviewed to ensure that there is the right mix on the Board and its
committees and that they are working effectively. There are currently 13 Directors on the Board, which comprises an independent Chairman, two executive Directors and ten independent non-executive Directors. The current members of the Board have a
wide range of skills and experience. Diversity, including gender diversity, is important for a Board to be effective. A chart showing the gender representation on the Board can be found on page 10. More information on Barclays Board diversity policy
can be found on page 19. </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">The balance of the Board is illustrated on page 10</FONT></TD></TR>
</TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Director independence </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The Board Corporate Governance and Nominations Committee and the Board consider and review the independence of each non-executive Director on an annual basis as part of the Directors&#146;
performance evaluation. In carrying out the review, consideration is given to factors such as length of tenure and the ability of the Director to provide objective challenge to management. The behaviours that the Board considers to be essential
indicators of independence are set out in Barclays Charter of Expectations. Following the annual review for 2012, the Board concluded that each of the non-executive Directors reviewed continues to demonstrate those behaviours and is considered by
the Board to be independent. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Directors&#146; external activities and conflicts of interest </B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Directors have a statutory duty to avoid situations in which they have or may have interests that conflict with those of Barclays, unless that
conflict is first authorised by the Directors. This includes potential conflicts that may arise when a Director takes up a position with another company. Barclays Articles of Association allow the Board to authorise such potential conflicts, and
there is in place a procedure to deal with any actual or potential conflict of interest. The Board deals with each appointment on its individual merit and takes into consideration all the circumstances. Prior to taking on additional responsibilities
or external appointments, Directors are obliged to obtain authorisation and it is their responsibility to ensure that they will be able to meet the time commitment expected of them in their role at Barclays. All potential conflicts approved by the
Board are recorded in an Interests Register, which is reviewed on an annual basis by the Board Corporate Governance and Nominations Committee to ensure that the procedure is working effectively. Following a review of the Interests Register in early
2013, the Committee concluded that all the potential conflicts as registered have been considered thoroughly and appropriately. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Executive Directors may take up only one FTSE 100 non-executive directorship and are allowed to retain any fees they receive for such appointments.
Antony Jenkins and Chris Lucas do not hold any such directorships. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Director re-election </FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">With the exception of Sir Andrew Likierman, who will be standing down at the Company&#146;s Annual General Meeting (AGM) to be held on 25&nbsp;April
2013, all Directors including Sir David Walker, Antony Jenkins, Tim Breedon and Diane de Saint Victor, who were all appointed since the last AGM, will each submit themselves for re-election at the AGM. Biographical details of each of the Directors,
together with details of their skills and experience, may be found on pages 35-37. Following a rigorous performance evaluation of each Director and the Board as a whole, excluding recent appointees Diane de Saint Victor and Tim Breedon, all
Directors are considered by the Board to be fully effective. </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">For more detailed information on Board evaluation please see pages 16-17</FONT></TD></TR>
</TABLE> </DIV><DIV STYLE="position:relative;float:right; width:48%;padding-right:9px;padding-bottom:8px;overflow:hidden;padding-top:3px">
 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Succession planning and Board appointments </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The Board recognises the need to ensure that the Board and executive management are always well resourced, with the right people in terms of skills and experience to deliver the Company&#146;s
strategy. Board composition is regularly reviewed to ensure the Board is refreshed progressively. Factors considered include length of tenure, background, experience, including industry and geographical experience, and diversity. </FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">The length of tenure of the current non-executive Directors and their geographical experience and background is illustrated on page 10</FONT></TD></TR>
</TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The Board Corporate Governance and Nominations Committee is responsible for both executive and non-executive
Director succession planning and recommends new appointments to the Board. </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">More details on the role of the Board Corporate Governance and Nominations Committee are given on pages 18-19</FONT></TD></TR>
</TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">In July 2012, the Company announced that Marcus Agius would resign as Chairman and that a successor was being
sought. Following a search, led by Sir John Sunderland with the assistance of MWM Consulting, an external search agency, Sir David Walker was appointed as a non-executive Director with effect from 1&nbsp;September 2012 and succeeded Marcus Agius as
Chairman with effect from 1&nbsp;November 2012. Following the resignation of Bob Diamond in July 2012, a search for a new Group Chief Executive commenced, led by the then Chairman, Marcus Agius and with the close involvement of the then
Chairman-designate, Sir David Walker and the Deputy Chairman, Sir Michael Rake. The search was conducted with the assistance of Spencer Stuart, an external search agency. Antony Jenkins was subsequently appointed as a Director and as Group Chief
Executive with effect from 30&nbsp;August 2012. Sir John Sunderland and Sir David Walker report on the search for a new Chairman and a new Group Chief Executive, respectively, on the following pages. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Tim Breedon was appointed as a non-executive Director with effect from 1&nbsp;November 2012, having been identified in early 2012 as a potential
candidate by the Board Corporate Governance and Nominations Committee itself, which had concluded there was a need to appoint a current or recent Chief Executive to the Board. Diane de Saint Victor was appointed as a non-executive Director with
effect from 1&nbsp;March 2013, having been identified as a potential candidate by MWM Consulting. Both were assessed against the required skills and competencies that the Board Corporate Governance and Nominations Committee had identified as being
desirable. Tim was previously Chief Executive of Legal&nbsp;&amp; General Group plc and has over 25 years experience of working in the insurance industry. He brings to the Board a significant knowledge of regulatory issues and a wealth of financial
services experience in addition to his experience as a chief executive. Diane is General Counsel of ABB and has a background in legal and regulatory matters and in leading cultural change. Her experience will bring a valuable perspective to the
Board as the Transform Programme is implemented and Barclays new Purpose and Values are embedded. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The external agencies named above
have no other connection with Barclays other than to provide executive recruitment services. </FONT></P></DIV><div style="clear:both; height:0px; font-size:0px">&nbsp;</div>

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<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">12&nbsp;&nbsp;I&nbsp;&nbsp;</FONT></TD>
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<p Style='page-break-before:always'>
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 <P STYLE="font-size:30px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:20px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<div style ="BORDER-BOTTOM:1pt solid #000000;BORDER-LEFT:1pt solid #000000;BORDER-RIGHT:1pt solid #000000;BORDER-TOP:1pt solid #000000;MARGIN-LEFT:0px;MARGIN-RIGHT:0px;WIDTH:100%">
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<IMG SRC="g497934barclays_logo.jpg" ALT="LOGO">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </P> <P STYLE="margin-top:100px;margin-bottom:0px; margin-left:10%;margin-right:10%"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#00aeef">Appointing a new Chairman
</FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; margin-left:10%;margin-right:10%"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Following the resignation of Marcus Agius as Chairman in July 2012, the Board asked me to take the
lead in finding a successor. An external search agency was briefed on the essential and desirable experience and personal attributes required for the role, which were agreed beforehand by the Board. It was clear to us that we needed to appoint an
experienced chairman, with financial services experience and strong governance credentials, who could provide the Board with effective leadership and who would command the respect of both fellow Directors and external stakeholders. Given the
resignation of Bob Diamond as Chief Executive, the Board was committed to appointing a new Chairman as quickly as possible. It was clear that any incoming Chief Executive would need to know the identity of the new Chairman given the pivotal
importance of their relationship to the effectiveness of the Board. It was also clear that, given the events of 2012, the minimum time commitment required of the Chairman would increase from roughly 60% of a full-time role to 80% of a full-time
role. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; margin-left:10%;margin-right:10%"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">A long list of candidates, both internal and external, was reviewed and discussed by the
non-executive Directors during July, with the list being narrowed to a shortlist of two candidates. Both candidates then had individual meetings with each non-executive Director and with Chris Lucas, Group Finance Director, and feedback on each
candidate was obtained. I also took soundings on the candidates from a number of stakeholders, including Barclays principal regulators and certain major institutional shareholders. The non-executive Directors met a number of times to provide
feedback on their meetings with each candidate and to discuss the personal references. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; margin-left:10%;margin-right:10%"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Our unanimous
view was that Sir David Walker was the right candidate to be appointed as Chairman of Barclays. Sir David has significant experience in financial services, coupled with a wealth of experience as both a director and as a chairman. He has an
impeccable reputation for governance, with an excellent understanding and experience of UK boardroom and corporate governance issues and the role of a chairman. The Board approved Sir David&#146;s appointment as a non-executive Director and as
Chairman-designate in early August and he subsequently joined the Board with effect from 1&nbsp;September 2012, succeeding Marcus Agius as Chairman with effect from 1&nbsp;November 2012. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; margin-left:10%;margin-right:10%"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">I am delighted that we were able to quickly secure the services of Sir David as Chairman: he commands great
respect within the financial services industry and has brought immense experience, integrity and knowledge to the role. </FONT></P> <P STYLE="font-size:16px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="margin-top:0px;margin-bottom:0px; margin-left:10%">


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 </P> <P STYLE="margin-top:18px;margin-bottom:0px; margin-left:10%;margin-right:10%"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Sir John Sunderland </B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px; margin-left:10%;margin-right:10%"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Independent non-executive Director </FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:48px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:48px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="font-size:48px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD VALIGN="top" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;I&nbsp;&nbsp;13</FONT></TD>
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 <P STYLE="font-size:30px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:20px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="font-size:10px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<div style ="BORDER-BOTTOM:1pt solid #5a6163;BORDER-LEFT:1pt solid #5a6163;BORDER-RIGHT:1pt solid #5a6163;BORDER-TOP:1pt solid #5a6163;MARGIN-LEFT:0px;MARGIN-RIGHT:0px;WIDTH:100%">
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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </P> <P STYLE="margin-top:100px;margin-bottom:0px; margin-left:10%;margin-right:10%"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#00aeef">Appointing a new Group Chief
Executive </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; margin-left:10%;margin-right:10%"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The process to appoint a new Group Chief Executive was initially led by my predecessor,
Marcus Agius, in conjunction with Sir Michael Rake, the Deputy Chairman, and other members of the Board Corporate Governance and Nominations Committee, although I was closely involved from the announcement of my appointment as Chairman-designate in
early August 2012. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; margin-left:10%;margin-right:10%"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">An external search firm was engaged to identify candidates against the role
specification and the skills, experience and personal qualities the Board had agreed were essential and desirable for the role of Group Chief Executive. An extensive list of global, potential candidates was reviewed, with a shortlist of candidates,
both internal and external, put forward to the Board for discussion during July 2012. After meetings between several candidates and the then Chairman, the Deputy Chairman and the Group HR Director, the candidate list was narrowed further to three
potential candidates, who each then met individually with me and with Barclays non-executive Directors. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; margin-left:10%;margin-right:10%"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The non-executive Directors on the Board met in mid-August 2012 to allow Directors to provide feedback on their
meetings with each candidate. It became clear from our discussions that Antony Jenkins was the candidate that best fit the role requirements and had the vision required to take Barclays forward, with the support of the Board and the Executive
Committee. I approached a number of our key stakeholders, including some of our major shareholders and representatives of our principal regulators, to discuss the proposed appointment and to gauge their views. A sub-committee of the Board,
comprising Marcus Agius, Sir Michael Rake and Sir John Sunderland, was appointed with delegated authority to finalise the terms of the appointment, which was announced on 30&nbsp;August 2012. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; margin-left:10%;margin-right:10%"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">I am pleased that we were able to implement such a thorough and rigorous process and settle the leadership of
Barclays quickly from a strong field of candidates. </FONT></P> <P STYLE="font-size:20px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:10%;margin-right:10%">


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 </P> <P STYLE="margin-top:10px;margin-bottom:0px; margin-left:10%;margin-right:10%"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Sir David Walker </B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px; margin-left:10%;margin-right:10%"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Chairman </FONT></P> <P STYLE="font-size:100px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P></div>

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<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">14&nbsp;&nbsp;I&nbsp;&nbsp; </FONT></TD>
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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#00aeef">Corporate governance report </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="4" COLOR="#5a6163">Effectiveness continued </FONT></P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:48px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="font-size:42px;margin-top:0px;margin-bottom:0px">&nbsp;
</P><DIV STYLE="position:relative;float:left; margin-right:1%; width:48%;padding-right:9px;padding-bottom:8px;overflow:hidden;padding-top:3px">
 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Executive Directors service contracts and non-executive Directors&#146; terms of appointment
</B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">On appointment, executive Directors are given a one year rolling service contract. The Chairman and the non-executive Directors have
a letter of appointment that sets out the terms and conditions of their Directorship, including the fees payable and the expected time commitment. Each non-executive Director is expected to commit a minimum of 20 days per annum
</FONT></P></DIV><DIV STYLE="position:relative;float:right; width:48%;padding-right:9px;padding-bottom:8px;overflow:hidden;padding-top:3px">
 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">
to the role. Additional time commitment is required to fulfil roles as Board Committee members and/or Board Committee chairmen, as applicable. On average, the time commitment of non-executive
Directors is in the range of 30&#150;36 days per annum, although they typically devote considerably more time to Barclays duties and did so during 2012, particularly in connection with the search for a new Chairman and a new Chief Executive.
</FONT></P></DIV><div style="clear:both; height:0px; font-size:0px">&nbsp;</div>
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<TD VALIGN="top" COLSPAN="3" BGCOLOR="#00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff">Board induction and professional development</FONT></TD></TR>
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<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #00aeef; BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Induction</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #00aeef; BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #00aeef; BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Professional development</FONT></TD></TR>
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<TD VALIGN="top"> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Newly appointed Directors are provided with a bespoke
induction programme to further their understanding and their knowledge of Barclays, its operations and staff. The Chairman, with the support of the Company Secretary, is responsible for the induction of new Directors and for the ongoing professional
development of all Directors. Induction programmes are tailored to each new Director, depending on the experience and background of the Director. For example, on his appointment to the Board, Sir David Walker&#146;s induction programme took into
account his later role as Chairman and included the following items:</FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:1.00em; text-indent:-1.00em"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT>&nbsp;
&nbsp;an induction pack providing background information on Barclays operations and policies;</FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="margin-top:0px;margin-bottom:0px; margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;
</FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT>&nbsp;&nbsp;sessions with each of the executive Directors and members of the Executive Committee;</FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT
STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT>&nbsp;&nbsp;meetings with the senior executives responsible for
each of the Group&#146;s principal businesses, including the Investment Bank, Retail and Business Banking, Wealth and Investment Management and Africa, focusing on the challenges and opportunities faced by each business;</FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT
STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT>&nbsp;&nbsp;meetings with key personnel in central support
functions, including compliance, corporate development, finance, risk management, citizenship and sustainability, internal audit and corporate affairs; and</FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="margin-top:0px;margin-bottom:0px; margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;
</FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT>&nbsp;&nbsp;meetings with key external stakeholders, such as major institutional shareholders and regulators.</FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:1px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">This initial induction programme will be supplemented with a programme of
business visits over a period of 12 &#150; 18 months, including visits to selected UK and overseas operational centres.</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Barclays offers a programme of ongoing professional
development for existing Directors. Personal development logs are maintained for each non-executive Director, which record external and internal briefings and other events that each attends, such as internal management conferences. During 2012,
non-executive Directors attended briefing sessions on Long Term Incentive Plans and on the Investment Bank&#146;s fixed income and prime services businesses. They also attended sessions demonstrating the use of new technology in Barclays branch
network. Members of the Board Audit Committee attended briefing sessions on algorithmic trading and members of the Board Risk Committee attended briefing sessions on operational risk and on the Investment Bank&#146;s balance sheet. Directors are
asked for input on potential topics for ongoing professional development, which informs the planned programme.</FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">In addition to the above, independent professional advice is available to the Directors at Barclays expense. During 2012, an independent adviser was engaged to advise the LIBOR Investigation
Employee Review Committee and the Regulatory Investigations Committee.</FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:1px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">An annual review of Barclays Director induction and development programmes is carried out by the Board Corporate Governance and Nominations Committee to ensure that they are appropriate and fit for
purpose. More information on Barclays Board induction and ongoing Director development can be found in &#145;Corporate Governance in Barclays&#146;.</FONT></P></TD></TR>
</TABLE> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="line-height:1px;margin-top:0px;margin-bottom:2px;border-bottom:1pt solid #00aeef">&nbsp;</P>
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<TD VALIGN="top" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;I&nbsp;&nbsp;15</FONT></TD></TR></TABLE>


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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#00aeef">Corporate governance report </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="4" COLOR="#5a6163">Effectiveness continued </FONT></P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:48px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="font-size:42px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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<TD VALIGN="top" COLSPAN="3" BGCOLOR="#00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff">Evaluation Statement</FONT></TD></TR>
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<TD VALIGN="bottom" COLSPAN="3" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:2px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:2px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>A
summary of the Board&#146;s progress against the actions arising from its 2011 Board Effectiveness Review can be found below:</B></FONT></P> <P STYLE="font-size:1px;margin-top:0px;margin-bottom:1px">&nbsp;</P></TD></TR>
<TR>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Theme</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Action Taken</FONT></TD></TR>
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<TD HEIGHT="8" COLSPAN="2"></TD></TR>
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<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="2" COLOR="#00aeef">Ensuring that the Board continues to have an appropriate range and balance of skills, experience and diversity</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Board composition is reviewed regularly. In 2012, a revised skills matrix was developed
against which the Board Corporate Governance and Nominations Committee assessed the current composition of the Board and identified the skills and experience to be sought in new appointments. Appointments were made to the Board and to Board
Committees during 2012 to maintain the balance of skills required. A renewed emphasis was given to gender diversity on the Board following the departure of Alison Carnwath and Diane de Saint Victor joined the Board in early 2013.</FONT></P>
<P STYLE="font-size:6px;margin-top:0px;margin-bottom:1px"><FONT SIZE="1">&nbsp;</FONT></P></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
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<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="2" COLOR="#00aeef">Continuing to develop an appropriate process for succession planning for key Board and senior executive management
positions</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Executive succession planning, including succession planning for Board and Executive
Committee roles, was a regular agenda item for the Board Corporate Governance and Nominations Committee during 2012. During 2012, a revised approach to talent management and the outcomes of a review of succession planning for senior strategic roles
were presented to the Board Corporate Governance and Nominations Committee.</FONT></P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:1px"><FONT SIZE="1">&nbsp;</FONT></P></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="2" COLOR="#00aeef">Enabling the Board to have greater interaction with Executive Committee members to gain an enhanced understanding of the challenges and
opportunities they face in their businesses</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">There has been greater interaction between the Board and members of the Executive
Committee, by way of presentations to the Board on the evening before Board meetings, followed by dinners over which key issues are discussed in greater depth. The Board also visited Barclays operations in New York twice during 2012, to gain
first-hand experience of Barclays US businesses.</FONT></P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:1px"><FONT SIZE="1">&nbsp;</FONT></P></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
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<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="2" COLOR="#00aeef">Ensuring that the Board has visibility of talent amongst senior executive management</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Three senior talent events took place in 2012, which enabled the Board to meet and
interact with senior executives at the level below Executive Committee in order to increase the Board&#146;s visibility of potential future leaders.</FONT></P>
<P STYLE="font-size:6px;margin-top:0px;margin-bottom:1px"><FONT SIZE="1">&nbsp;</FONT></P></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
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<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="2" COLOR="#00aeef">Continuing to ensure that timely and high-quality information flows to the Board and to Board Committees</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">A weekly update note from the Group Chief Executive is circulated to Board members,
covering key issues and developments, including regulatory matters, trading and senior appointments. This provides up-to-date information to Directors outside the formal Board meeting reports.</FONT></P>
<P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:8px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Increasing use has been made of a secure electronic system to deliver meeting
papers and other information to Directors securely and quickly via tablet computers.</FONT></P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:1px"><FONT SIZE="1">&nbsp;</FONT></P></TD></TR>
</TABLE>
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<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">16&nbsp;&nbsp;I&nbsp;&nbsp;</FONT></TD>
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<p Style='page-break-before:always'>
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 <P STYLE="font-size:96px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<DIV STYLE="position:relative;float:left; margin-right:1%; width:48%;padding-right:9px;padding-bottom:8px;overflow:hidden;padding-top:3px">
 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Evaluation of Board performance </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">To improve the effectiveness of the Board and its Committees, as well as that of each individual Director, a formal and rigorous Board review is undertaken on an annual basis. This review has been
externally facilitated since 2004. This formal process enables the Board to monitor trends in responses to questions and track progress made against action plans. On an annual basis, Barclays approach to Board evaluation is benchmarked against the
practices of other companies in the FTSE 20 to ensure that Barclays remains at the forefront of best practice. The Board Corporate Governance and Nominations Committee is responsible for overseeing the process and for monitoring any action plans on
behalf of the Board. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">For 2012, the Board evaluation process was conducted by Egon Zehnder International (Egon Zehnder), who used a
short questionnaire covering similar themes to previous years&#146; evaluations, although the main part of the evaluation process took the form of structured interviews with Directors and members of the Executive Committee. While Egon Zehnder is an
executive search agent, it did not undertake any Barclays Board searches during the year and the Board believes that it provides an impartial and objective board evaluation service. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The 2012 Board evaluation reviewed the events of 2012, in particular, those culminating in the resignations of Marcus Agius and Bob Diamond. The voting at Barclays 2012 AGM was also considered as
part of the evaluation process and Egon Zehnder held interviews with a selection of Barclays major shareholders. The substantial changes in the Board in 2012 inevitably complicated the performance evaluation process, but key themes were identified
and form the basis of the action plan for 2013 as follows: </FONT></P></DIV><DIV STYLE="position:relative;float:right; width:48%;padding-right:9px;padding-bottom:8px;overflow:hidden;padding-top:3px">

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<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Enhancing the relationship between the Board and the Executive Committee following changes in both Board and Executive Committee composition in
2012; </FONT></P></TD></TR></TABLE> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Ensuring that the working relationship between the Chairman and CEO is strong in recognition of the critical importance of this relationship to
the effectiveness of the Board as a whole; </FONT></P></TD></TR></TABLE> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
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<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Ensuring that the Board has greater line of sight into the views of key stakeholders. Informal meetings with Barclays regulators have started and
will continue, in both the UK and US; </FONT></P></TD></TR></TABLE> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Rebuilding trust with stakeholders with regard to Barclays remuneration policy, particularly in light of voting at the 2012 AGM. Extensive
consultation took place with stakeholders during 2012 and will continue into 2013; </FONT></P></TD></TR></TABLE> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TR>
<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Ensuring that an appropriate balance of skills, experience and diversity on the Board is maintained. Two new non-executive Directors have been
recently appointed and further appointments are envisaged in 2013; </FONT></P></TD></TR></TABLE> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Further improving the quality of information flows to the Board to achieve an appropriate balance between data and analysis; and
</FONT></P></TD></TR></TABLE> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Enhancing succession planning for key Board positions, in particular, continuing to ensure that the Board builds its knowledge and understanding
of the depth of talent in the business. </FONT></P></TD></TR></TABLE></DIV><div style="clear:both; height:0px; font-size:0px">&nbsp;</div>

 <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#00aeef">Corporate governance report </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="4" COLOR="#5a6163">Effectiveness continued </FONT></P> <P STYLE="font-size:60px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:20px;margin-top:0px;margin-bottom:0px"><FONT SIZE="2">&nbsp;</FONT></P>
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<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff"><B>&nbsp;Board Corporate Governance and Nominations Committee Report</B></FONT></TD></TR>
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<P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;
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 </P> <P STYLE="margin-top:16px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#5a6163">&nbsp;&nbsp;&#147;It is essential that the Board and its </FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#5a6163">&nbsp;&nbsp;Committees are properly constituted </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="4" COLOR="#5a6163">&nbsp;&nbsp;and balanced in terms of skills, </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#5a6163">&nbsp;&nbsp;experience and
diversity.&#148; </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;&nbsp;&nbsp;Sir David Walker </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;&nbsp;&nbsp;Chairman, Board Corporate Governance </FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;&nbsp;&nbsp;and Nominations Committee </FONT></P> <P STYLE="font-size:45px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD VALIGN="bottom" BGCOLOR="#00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff">Member</FONT></TD>
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<TD VALIGN="bottom" BGCOLOR="#00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff">Independent&nbsp;&nbsp;</FONT></TD>
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<TD VALIGN="bottom" ALIGN="right" BGCOLOR="#00aeef"> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff">Meetings&nbsp;</FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff">eligible&nbsp;to&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:1px" ALIGN="right"><FONT
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<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Sir David&nbsp;Walker&nbsp;</B>Chairman<SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">a</SUP></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:1px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">(from 1&nbsp;September 2012)</FONT></P></TD>
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<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">On&nbsp;appointment</FONT></TD>
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<P STYLE="margin-top:0px;margin-bottom:1px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">(to 31&nbsp;October 2012)</FONT></P></TD>
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<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Alison Carnwath</B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:1px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">(to 24&nbsp;July 2012)</FONT></P></TD>
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<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Sir Michael Rake</B></FONT></TD>
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<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;<B>Lawrence&nbsp;Dickinson&nbsp;</B>Secretary</FONT></TD>
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</TABLE> <P STYLE="margin-top:10px;margin-bottom:0px; margin-left:9px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;Note </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a &nbsp;&nbsp;Member of the Committee since 1 September 2012, </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;becoming Chairman from 1 November 2012. </FONT></P> <P STYLE="font-size:14px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Committee composition, skills and experience </B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">In addition to the Chairman, there are three non-executive Directors on the Committee, being the Chairmen of the main Board Committees. The names of
the members of the Committee are set out opposite, together with attendance at meetings in 2012. The Group Chief Executive also attends each meeting, although is not involved in decisions relating to Chief Executive succession. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Committee responsibilities and how they were discharged in 2012 </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The Committee is responsible for reviewing the composition of the Board and Board Committees to ensure they are properly constituted and balanced in terms of skills, experience and diversity. In
addition to this, it: </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
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<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">recommends to the Board the appointment of new Directors; </FONT></P></TD></TR></TABLE>
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<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
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<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">considers succession plans for the Chairman, Executive and other key positions, such as roles on the Executive Committee and other senior roles;
</FONT></P></TD></TR></TABLE> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
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<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">monitors corporate governance issues and developments to ensure that Barclays is in line with best practice guidelines; and
</FONT></P></TD></TR></TABLE> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
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<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">agrees and monitors the annual Board Effectiveness Review and tracks any actions arising. </FONT></P></TD></TR></TABLE>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The Committee&#146;s full terms of reference are available on the corporate governance section of Barclays website. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The Committee met four times in 2012, including an additional meeting solely to review and discuss Board composition. The chart below shows how the
Committee allocated its time. In 2012, the Committee focused primarily on Board composition and succession planning for roles below the Board level. Key activities undertaken by the Committee in 2012 were: </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Board composition </FONT></P>
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<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">reviewing the structure, size and composition of the Board and the principal Board Committees, looking at the need to refresh the Board and at
the balance and diversity of skills and experience on the Board. In reviewing the composition of the Board, a skills analysis was carried out using a revised skills matrix agreed by the Committee in 2012, which set out the core competencies and
skills that it would be desirable to have on the Board, such as financial services, experienced chief executives from other companies and industries, accountancy, retail and marketing and experience of the main geographic markets in which Barclays
operates, along with the target weightings for each. Following a review of the composition of the Board, the Committee approved the appointment of Tim Breedon as a non-executive Director with effect from 1&nbsp;November 2012 and the appointment of
Diane de Saint Victor as a non-executive Director with effect from 1&nbsp;March 2013. </FONT></P></TD></TR></TABLE> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
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<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">carried out a review of progress against Board diversity targets and discussed and agreed a Board Diversity Policy, recommending it to the Board
for its approval. </FONT></P></TD></TR></TABLE> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
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<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">considered and recommended changes to Board Committee composition during the year. The Committee recommended the appointment of David Booth to
the Board Remuneration Committee with effect from 1&nbsp;July 2012 to provide cross-membership between the Board Remuneration and Board Risk Committees. Drawing on reviews by the Committee, the Board as a whole considered and approved the
appointment of Sir John Sunderland as Chairman of the Board Remuneration Committee, recommended the appointment of Tim Breedon as a member of the Board Risk Committee and Board Remuneration Committee and the appointment of Sir David Walker as a
member of the Board Remuneration Committee and as a member and Chairman of the Board Corporate Governance and Nominations Committee and Board Citizenship Committee.
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<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">18&nbsp;&nbsp;I&nbsp;&nbsp;</FONT></TD>
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 <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:32px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Succession planning </FONT></P>
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<TD WIDTH="32"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="10" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">discussed succession planning for the position of Chief Executive and for the Executive Committee and reviewed potential candidates for these
roles; </FONT></P></TD></TR></TABLE> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="32"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="10" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">reviewed the Group&#146;s succession and talent management programme below Board level; </FONT></P></TD></TR></TABLE>
<P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="32"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="10" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">reviewed and discussed the processes, overall methodology and contingency plans in place for senior strategic roles; and
</FONT></P></TD></TR></TABLE> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="32"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="10" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">received updates on Barclays graduate recruitment and training programme, including an update on gender diversity. </FONT></P></TD></TR></TABLE>
<P STYLE="margin-top:12px;margin-bottom:0px; margin-left:32px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Corporate governance </FONT></P>
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<TR>
<TD WIDTH="32"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="10" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">reviewed Barclays corporate governance disclosures in the 2011 annual report and considered the proposed disclosures for the 2012 annual report;
</FONT></P></TD></TR></TABLE> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="32"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="10" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">reviewed and discussed Barclays approach to Board and Committee induction and development; </FONT></P></TD></TR></TABLE>
<P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="32"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="10" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">received updates on significant corporate governance developments in the UK and EU and how these might impact Barclays;
</FONT></P></TD></TR></TABLE> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="32"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="10" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">carried out an annual review of the Directors&#146; Interests Register to ensure that an effective process for authorising conflicts is in place
and authorised conflicts have been dealt with appropriately; </FONT></P></TD></TR></TABLE> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="32"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="10" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">reviewed and discussed issues raised at corporate governance meetings held with institutional investors and investor bodies; and
</FONT></P></TD></TR></TABLE> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="32"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="10" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">reviewed the effectiveness of the Committee and proposed changes to its terms of reference following a review against best practice.
</FONT></P></TD></TR></TABLE> <P STYLE="margin-top:12px;margin-bottom:0px; margin-left:32px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Board effectiveness </FONT></P>
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<TR>
<TD WIDTH="32"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="10" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">discussed and approved the proposed actions to be taken in response to the findings of the 2011 Board Effectiveness Review. The Committee also
reviewed reports on the status of the action plan to monitor the progress being made; </FONT></P></TD></TR></TABLE> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="32"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="10" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">reviewed the status of actions being taken in response to the findings of the FSA&#146;s review of Barclays Board governance as part of its Core
Prudential Programme, on which it reported in early 2012; and </FONT></P></TD></TR></TABLE> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="32"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="10" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">reviewed the market for board effectiveness facilitators and agreed to re-appoint Egon Zehnder.
</FONT></P></TD></TR></TABLE></DIV><DIV STYLE="position:relative;float:right; width:48%;padding-right:9px;padding-bottom:8px;overflow:hidden;padding-top:3px">

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<TR>
<TD WIDTH="100%"></TD></TR>


<TR>
<TD VALIGN="top" STYLE="BORDER:1px solid #00aeef; padding-left:8px; padding-right:8px"> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:0.36em"><FONT
STYLE="font-family:ARIAL" SIZE="4" COLOR="#00aeef">Statement on diversity policy</FONT></P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:0.63em"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Board diversity, in particular, gender diversity, continues to be a topic of much discussion. The Board believes that diversity is important for board effectiveness. However, diversity is much more
than the issue of gender, and includes diversity of skills, experience and background. In response to Lord Davies&#146;s report on Women on Boards, Barclays published a Board Diversity Policy in April 2012, which sets out Barclays approach to
diversity on the Board. The Board Diversity Policy can be found in the Corporate Governance section of Barclays website. All Barclays Board appointments are made on merit, in the context of the skills and experience the Board as a whole requires to
be effective. Nevertheless the Board is aiming to ensure that at least 20&nbsp;per cent of the Board is made up of women by the end of 2013 and for that position to have exceeded 25&nbsp;per cent by the end of 2015. Women currently represent 15% of
the Board. Diversity in relation to employees of the Barclays Group is covered by Barclays Equality and Diversity Charter and more information on diversity across Barclays can be found in the People section on page 38.</FONT></P>
<P STYLE="font-size:6px;margin-top:0px;margin-bottom:1px"><FONT SIZE="1">&nbsp;</FONT></P></TD></TR>
</TABLE> <P STYLE="font-size:10px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TR BGCOLOR="#b5e3f7">
<TD VALIGN="top"> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:1.00em"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#5a6163">Committee Effectiveness</FONT></P>
<P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:1.00em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The performance of the Committee is reviewed each year as
part of the Board Effectiveness Review.</FONT></P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="margin-top:0px;margin-bottom:0px; margin-left:1.00em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Following the 2011 annual effectiveness review of the Committee, the Committee improved the induction process for its new
members by committing to implement a bespoke induction for any new member, to be agreed by the Company Secretary with the Chairman and the new member. The Committee also provided more opportunities for members to bring items onto the Committee
agenda, such as including the Committee&#146;s annual forward agenda with the papers for each meeting.</FONT></P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:1.00em"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The 2012 review concluded that the Committee continues to operate effectively, although there was a slight diminution in the overall score.</FONT></P>
<P STYLE="font-size:6px;margin-top:0px;margin-bottom:1px"><FONT SIZE="1">&nbsp;</FONT></P></TD></TR>
</TABLE> <P STYLE="font-size:10px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TR>
<TD VALIGN="top" BGCOLOR="#e7f7ff"> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:1.00em"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#5a6163">Priorities for
2013</FONT></P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:1px; margin-left:1.00em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">In 2013, the Committee will continue to
carry out regular reviews of the balance of skills and experience on the Board against the skills matrix that has been developed and will seek to make further progress towards achieving the Board diversity targets that have been set. Executive
succession will continue to be high on the Committee&#146;s agenda.</FONT></P></TD></TR>
</TABLE> </DIV><div style="clear:both; height:0px; font-size:0px">&nbsp;</div>

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<TD VALIGN="top" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;I&nbsp;&nbsp;19</FONT></TD></TR></TABLE>


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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#00aeef">Corporate governance report </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="6" COLOR="#5a6163"><A NAME="tx497934_58"></A>Accountability </FONT></P> <P STYLE="font-size:24px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:20px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<div style ="BORDER-BOTTOM:1pt solid #00aeef;BORDER-LEFT:1pt solid #00aeef;BORDER-RIGHT:1pt solid #00aeef;BORDER-TOP:1pt solid #00aeef;MARGIN-LEFT:0px;MARGIN-RIGHT:0px;WIDTH:100%">

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<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff"><B>&nbsp;&nbsp;Board Audit Committee Chairman&#146;s Report</B></FONT></TD></TR>
</TABLE>
<P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;
</P><DIV STYLE="position:relative;float:left; margin-right:1%; width:48%;padding-right:9px;padding-bottom:8px;overflow:hidden;padding-top:3px">
 <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:13px">


<IMG SRC="g497934tx54a.jpg" ALT="LOGO">
 </P> <P STYLE="margin-top:16px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#5a6163">&nbsp;&nbsp;&#147;June 2012 saw </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="4" COLOR="#5a6163">&nbsp;&nbsp;the announcement of the </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#5a6163">&nbsp;&nbsp;penalties imposed on Barclays
</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#5a6163">&nbsp;&nbsp;relating to the industry-wide </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="4" COLOR="#5a6163">&nbsp;&nbsp;investigation into the setting of </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#5a6163">&nbsp;&nbsp;interbank offered rates and
this </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#5a6163">&nbsp;&nbsp;impacted the Committee&#146;s </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="4" COLOR="#5a6163">&nbsp;&nbsp;agenda.&#148; </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;&nbsp;&nbsp;Sir Michael Rake
</B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;&nbsp;&nbsp;<B></B>Chairman, Board Audit Committee </FONT></P>
<P STYLE="font-size:50px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:13px">


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<TD VALIGN="middle" COLSPAN="7"><FONT STYLE="font-family:ARIAL" SIZE="1">&nbsp;


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 </FONT><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Attended</FONT><FONT STYLE="font-family:ARIAL" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;


<IMG SRC="g497934tx58i.jpg" ALT="LOGO">
</FONT><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Did not attend</FONT><FONT STYLE="font-family:ARIAL" SIZE="1"></FONT></TD></TR>
</TABLE> <P STYLE="font-size:10px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:10px;margin-bottom:0px; margin-left:9px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;Note </FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a &nbsp;Unable to attend one meeting owing to prior commitments. </FONT></P>
<P STYLE="font-size:18px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TR>
<TD WIDTH="3%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="85%"></TD>
<TD VALIGN="bottom" WIDTH="3%"></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="3%"></TD>
<TD WIDTH="5%"></TD></TR>
<TR>
<TD HEIGHT="5"></TD>
<TD HEIGHT="5" COLSPAN="4" BGCOLOR="#00aeef"></TD>
<TD HEIGHT="5" COLSPAN="2" BGCOLOR="#00aeef"></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="3" BGCOLOR="#00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff">&nbsp;Board Risk Committee allocation of time</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" BGCOLOR="#00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff">%&nbsp;&nbsp;</FONT></TD></TR></TABLE>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE" ALIGN="center">


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<TD WIDTH="2%"></TD>
<TD VALIGN="bottom" WIDTH="3%"></TD>
<TD WIDTH="21%"></TD>
<TD VALIGN="bottom" WIDTH="5%"></TD>
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<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="3%"></TD>
<TD WIDTH="49%"></TD>
<TD VALIGN="bottom" WIDTH="5%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="5%"></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR>
<TD ROWSPAN="7" VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ROWSPAN="7" ALIGN="center">


<IMG SRC="g497934tx54i.jpg" ALT="LOGO">
</TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD COLSPAN="2" VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>2012</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">2011</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>


<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">1</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Control issues</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>13</B></FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">4</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">2</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Financial results</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>31</B></FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">42</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">3</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Internal audit matters</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>14</B></FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">6</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">4</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">External audit matters</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>6</B></FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">6</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">5</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Business control environment</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>14</B></FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">23</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">6</FONT></TD>
<TD NOWRAP VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Other (including Governance and Compliance)</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>22</B></FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">19</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
</TABLE> </DIV><DIV STYLE="position:relative;float:right; width:48%;padding-right:9px;padding-bottom:8px;overflow:hidden;padding-top:3px">
 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Sir Michael Rake, Chairman of the Board Audit Committee, reports on how the Board Audit Committee
discharged its responsibilities during 2012. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Chairman&#146;s overview of 2012 </B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The work of the Committee in 2012 has seen us address three main themes. First, accounting judgements, particularly in respect of provisions to be
made for product mis-selling. Secondly, the impact on the systems and controls in place at each of Barclays businesses arising from increasing regulatory demands and rising consumer expectations. And thirdly, the remediation programmes in place to
enhance our internal control and regulatory compliance systems and procedures. June 2012 saw the announcement of the penalties imposed on Barclays relating to the industry-wide investigation into the setting of interbank offered rates and this
impacted the Committee&#146;s agenda in the second half of the year. I report on all of these matters in more detail below. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The
approach of our regulators to regulation has continued to be intensive and intrusive, particularly in anticipation of the implementation of the new &#145;twin-peaks&#146; model of regulation in the UK and the additional focus on conduct risk and
outcomes for consumers. During 2012, I held a number of meetings with Barclays regulators in UK and US to discuss our approach to financial reporting, internal controls and regulatory compliance and to hear from them what they expect of the Board
Audit Committee and Barclays in this regard. I also interacted regularly with the lead audit partner of Barclays external auditors. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">I
reported after each Committee meeting to the Board on the main matters discussed in Committee meetings to ensure that all Directors were kept informed of the Committee&#146;s agenda. I also made myself available if any Director wished to discuss any
particular matters with me in more detail. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Committee composition, skills and experience </B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Membership of the Committee and attendance at meetings held in 2012 is set out opposite. Tim Breedon joined the Committee with effect from
1&nbsp;March 2013. Sir Andrew Likierman and I are the designated financial experts on the Committee for the purposes of the US Sarbanes-Oxley Act, although each member of the Committee has a depth of financial expertise and collectively, the
Committee has considerable financial and financial services experience on which to draw. More information on the skills and experience of the Committee members may be found in the Directors&#146; biographies on pages 35-37. The Committee is
conscious of the need to keep its knowledge up to date and, in early 2012, Committee members attended two briefing sessions on algorithmic trading, covering both the principles of algorithmic trading and the control mechanisms in place. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Ahead of each Committee meeting, I held a private meeting with the members of the Committee at which we discussed any particular items that they
wished to raise during the meeting. I also made myself available if any Committee member wished to discuss any particular matters with me and I was in regular contact with management, including the Group Finance Director and Chief Internal Auditor
during 2012. </FONT></P></DIV><div style="clear:both; height:0px; font-size:0px">&nbsp;</div>

 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P></div>

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<TD WIDTH="48%"></TD></TR>
<TR>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">20&nbsp;&nbsp;I&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"></TD></TR></TABLE>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="font-size:96px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:2px;margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
<div style ="BORDER-BOTTOM:1pt solid #00aeef;BORDER-LEFT:1pt solid #00aeef;BORDER-RIGHT:1pt solid #00aeef;BORDER-TOP:1pt solid #00aeef;MARGIN-LEFT:0px;MARGIN-RIGHT:0px;WIDTH:100%">

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</TABLE> <DIV STYLE="position:relative;float:left; margin-right:1%; width:48%;padding-right:9px;padding-bottom:8px;overflow:hidden;padding-top:3px">
 <div style="width:100%;margin-left:0%; margin-right:0%;border:solid 1pt #ffffff;padding-top:2px;padding-bottom:3px"> <P STYLE="margin-top:0px;margin-bottom:0px;padding-top:0px; margin-left:32px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Committee responsibilities and how they were discharged in 2012 </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:32px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The Committee is responsible for: </FONT></P> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="32"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="10" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">monitoring the integrity of the Group&#146;s financial reporting and satisfying itself that any significant financial judgements made by
management are sound; </FONT></P></TD></TR></TABLE> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="32"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="10" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">monitoring the Group&#146;s internal controls, including internal financial controls; and </FONT></P></TD></TR></TABLE>
<P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="32"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="10" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">monitoring and reviewing the activities and performance of the internal and external auditor, including monitoring their independence and
objectivity. </FONT></P></TD></TR></TABLE> <P STYLE="margin-top:12px;margin-bottom:0px; margin-left:32px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">You can obtain the Committee&#146;s full terms of reference on the corporate
governance section of Barclays website. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; margin-left:32px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The Committee met 10 times in 2012 and the chart opposite shows the way in
which we allocated our time. Committee meetings were attended by management, including the Group Chief Executive, Group Finance Director, Chief Internal Auditor, Chief Risk Officer and General Counsel, as well as representatives from the businesses
and other functions from time to time. The external auditor attended each meeting and the Committee held regular private sessions with the Chief Internal Auditor and the external auditor, which were not attended by management. These private sessions
allowed us to discuss matters directly with the audit teams. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; margin-left:32px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The main matters and areas of judgement we reviewed and
considered during 2012 were as follows: </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; margin-left:32px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Financial Reporting and Significant Financial Judgements </FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px; margin-left:32px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">With the support of the external auditor, the Committee assessed whether suitable accounting policies had been adopted, whether
management had made appropriate estimates and judgements and whether disclosures were balanced and fair. The main areas of focus in 2012 and matters where we specifically considered the judgements that had been made are set out below: </FONT></P>
<P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TR>
<TD WIDTH="32"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="10" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">We considered the presentation of the financial statements and in particular, the presentation of adjusted performance and the adjusting items,
including own credit, provisions for product mis-selling redress and the gain on the disposal of Barclays interest in BlackRock, Inc. We discussed the treatment of the LIBOR penalties and agreed with management&#146;s judgement that these should not
be treated as an adjusting item; </FONT></P></TD></TR></TABLE> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="32"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="10" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">We received reports on the assumptions underlying the provisions made for product mis-selling redress, specifically PPI and Interest Rate Hedging
Products. The trend in PPI claims has proved to be volatile during 2012, resulting in provisions being taken in both the first quarter and the third quarter. A provision for Interest Rate Hedging Products was taken at the half-year. We were content
after due challenge and debate with the assumptions made and the judgements applied. As part of reviewing the results for 2012, we considered a recommendation from management that further provisions should be taken in respect of PPI and Interest
Rate Hedging Products in the financial results for 2012 and, having reviewed the trend data and provisioning assumptions, agreed with management&#146;s recommendation; </FONT></P></TD></TR></TABLE>
<P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="32"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="10" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">In reviewing the results for 2012, we reviewed the assessments made for goodwill impairment and confirmed, based on management&#146;s
expectations of future performance of certain businesses, that no goodwill impairment charges were required in 2012;
</FONT></P></TD></TR></TABLE></div></DIV><DIV STYLE="position:relative;float:right; width:48%;padding-right:9px;padding-bottom:8px;overflow:hidden;padding-top:3px">
 <P STYLE="font-size:2px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TR>
<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">We also reviewed the judgements made in respect of tax, in particular, deferred tax assets in Spain and the US, including their recoverability.
We supported management&#146;s assumptions, based on current forecasts. We reviewed the level of tax provisioning in light of ongoing discussions with HMRC. We believe that the current level of provisions is reasonable; </FONT></P></TD></TR></TABLE>
<P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TR>
<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">At the request of the Board we considered whether the 2012 Annual Report was fair, balanced and understandable and whether it provided the
necessary information for shareholders to assess Barclays performance, business model and strategy. We were satisfied that, taken as a whole, the Annual Report is fair, balanced and understandable; </FONT></P></TD></TR></TABLE>
<P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TR>
<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">We reviewed the Group&#146;s credit impairment charges, which have reduced overall in 2012, to satisfy ourselves with the appropriateness of the
provision; </FONT></P></TD></TR></TABLE> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TR>
<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">We received reports from the Investment Bank Valuations Committee on the processes followed and the judgements made in valuing certain asset
classes, in particular, those assets where there is little or no market data. We were content with the rigour of the processes and the resulting valuations; </FONT></P></TD></TR></TABLE>
<P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Given ongoing uncertainties in the Eurozone, we reviewed and agreed enhanced disclosure of Barclays exposures in selected Eurozone countries,
including sovereign debt exposures, and Barclays disclosures in respect of re-denomination risk for certain countries; </FONT></P></TD></TR></TABLE> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">We reviewed disclosures on litigation and competition and regulatory matters contained in Barclays full and half-year results and trading
statements, in particular, the statements made with respect to investigations by the Financial Services Authority, Serious Fraud Office, US Department of Justice, and the US Securities and Exchange Commission&#146;s investigation into Barclays
relationships with third parties who assist it to win or retain business. We also reviewed the disclosure made in respect of civil claims made in connection with Barclays role in the setting of interbank offered rates; and
</FONT></P></TD></TR></TABLE> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">We received an update on future accounting standards changes and the potential impact that these may have on Barclays financial statements,
particularly the impact of IFRS 10 <I>Consolidated Financial Statements</I> and IAS 19 <I>Employee Benefits.</I> Some of these new accounting standards will apply for the financial year 2013 and we will continue to assess the impact on our financial
statements. </FONT></P></TD></TR></TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Internal control </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">To discharge our responsibility to review the effectiveness of the Group&#146;s internal controls, we received specific control environment reviews from each of the businesses, we reviewed control
issues of Group level significance and specific control issues and also received regular reports on regulatory and compliance matters. Some of the specific matters we reviewed in 2012 are set out below: </FONT></P>
<P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TR>
<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">We reviewed the control environment of each of our principal businesses: Europe RBB; UKRBB; Africa; Investment Bank; Barclaycard; Corporate
Banking; and Wealth and Investment Management. Given the planned integration of Absa and Barclays Africa, which is a major change programme, we were particularly concerned to understand the potential impact on resources in those businesses as they
integrate and automate and standardise processes and controls; </FONT></P></TD></TR></TABLE> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Technology remained an area of specific focus in 2012, particularly in view of a number of well-publicised IT failures at certain banks and the
impact of such failures on business continuity. We regularly reviewed specific IT-related control issues and also the progress of the remediation workthat is under
</FONT></P></TD></TR></TABLE></DIV><div style="clear:both; height:0px; font-size:0px">&nbsp;</div>

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<TD VALIGN="top" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;I&nbsp;&nbsp;21</FONT></TD></TR></TABLE>


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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#00aeef">Corporate governance report </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="4" COLOR="#5a6163">Accountability continued </FONT></P> <P STYLE="font-size:60px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:20px;margin-top:0px;margin-bottom:0px"><FONT SIZE="2">&nbsp;</FONT></P>
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<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff"></FONT><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff"><B><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff">Board Audit Committee Chairman&#146;s Report
continued</FONT></B></FONT></TD></TR>
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<P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;
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<TD VALIGN="top"> <P><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">
way to address them. We also received an update on cyber-security threats and the defences Barclays has in place against cyber attacks; </FONT></P></TD></TR></TABLE>
<P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The control environment in the Investment Bank was regularly reviewed, including reviewing the specific action plans that are in place to enhance
the control environment and in particular, to enhance the Compliance function. We will continue to review this important workstream in 2013; </FONT></P></TD></TR></TABLE> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">We received regular updates on compliance matters. These included updates on the actions being taken to comply with the Deferred Prosecution
Agreement (DPA) entered into as part of the settlement with US authorities following an investigation into Barclays compliance with US sanctions and US Dollar payment practices: all of the actions required by the DPA were completed in 2012. Further
details of Barclays compliance with the DPA may be found in the Risk management &#150; Supervision&nbsp;&amp; Regulation section; </FONT></P></TD></TR></TABLE> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">We also received a number of updates on Anti-Bribery and Corruption, Anti-Money Laundering and Client Assets compliance. More details of Barclays
Clients Assets compliance may be found in the Risk management &#150; Supervision &amp; Regulation section of this report; </FONT></P></TD></TR></TABLE> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">We were updated on the arrangements Barclays has in place for employees to raise concerns and received reports on any incidents reported and
investigated. There was a small increase in the number of reports and concerns raised by employees following the LIBOR announcement, although no new material issues were raised. We continue to regard employee reports as a valuable source of
information that helps identify fraud, inappropriate behaviour and control weaknesses; and </FONT></P></TD></TR></TABLE> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">We received an update on the likely direction to be taken by the Conduct Business Unit of the FSA in respect of the governance of conduct risk
and will be considering this further in 2013. </FONT></P></TD></TR></TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Further details of the Group&#146;s system of internal control and risk
management, including the main features of our internal control and risk management systems in relation to the financial reporting process, are included in the Directors&#146; Report on pages 30-32 and in the Risk management section on pages
273-303. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Oversight of Internal Audit and External Audit </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><I>Internal Audit </I></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">To fulfil our responsibility to monitor the effectiveness of
the internal audit function, we received regular reports from the Chief Internal Auditor, setting out the Internal Audit function&#146;s view of the control environment and performance against any key indicators. We also regularly reviewed the
Internal Audit Plan, any changes proposed and the level of resourcing available to the Internal Audit function. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">A new Chief Internal
Auditor was appointed in early 2012 and during the year provided the Committee with his views on the resourcing and effectiveness of the Internal Audit function. 2012 has seen a change in methodology in order to improve the effectiveness of internal
audit by focusing audit resources on high-risk auditable entities. In particular, the audit coverage of the Investment Bank has been increased. Given the change in audit methodology, we reviewed and approved the annual Internal Audit plan for 2013
in early 2013. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The Chief Internal Auditor updated the Committee on the work that Internal Audit will carry out as a result of the LIBOR
settlement, in order to meet the requirements of the Commodity Futures Trading Commission (CFTC) Order. Regular audits of the LIBOR-setting process will be carried out on a six-monthly basis and a third party audit will also be conducted. We
received the first of these reports in late 2012. </FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;
</FONT></P></DIV><DIV STYLE="position:relative;float:right; width:48%;padding-right:9px;padding-bottom:8px;overflow:hidden;padding-top:3px">
 <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Internal Audit&#146;s self-assessment of conformance, which we reviewed in the fourth quarter of
2012, evidenced that the function generally conforms to the standards set by the Institute of Internal Auditors. During 2013, an external assessment of the performance of the Internal Audit function will be conducted and the results will be reported
to the Committee. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><I>External Audit </I></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">It is our responsibility to monitor the performance, objectivity and independence of the external auditor. Each year, we agree the audit plan with the auditor to ensure that the coverage is focused
and that there is appropriate overlap with the work of Internal Audit. We also agree the terms of the engagement letter and approve, on behalf of the Board, the fees payable for the audit. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">To discharge our responsibility to assess the performance and effectiveness of the auditor, we carried out a survey in the fourth quarter of 2012, seeking views from key stakeholders across the
Group. The survey gathered views on the performance and effectiveness of PricewaterhouseCoopers (PwC). The results were reported to the Committee in early 2013 to help inform the Committee&#146;s deliberations on the auditor&#146;s performance and
whether the auditor should be recommended for re-appointment. A more detailed follow-up survey will be conducted at the end of the first quarter of 2013 following completion of the year-end audit. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">PwC and its predecessor firms has been Barclays auditor for many years, since 1896, although the lead audit partner now rotates every five years.
Based on the 2012 survey results and the Committee&#146;s own interactions with PwC, the Committee concluded that it continues to be fully satisfied with the performance of PwC and that PwC continues to be objective and independent. The
auditor&#146;s objectivity and independence is supported by Barclays policy on non-audit services provided by the auditor, which is described on page 23. PwC also provides specific assurance to the Committee on the arrangements it has in place to
maintain its independence and objectivity. The Committee has therefore recommended to the Board and to shareholders that PwC should be re appointed as the Group&#146;s auditors at the AGM on 25&nbsp;April 2013. The Committee recognises however that
the length of tenure of auditors is under increasing scrutiny and is therefore considering, in light of the new requirement in the Code that the external audit contract is put out to tender at least every ten years, how and when a tender process
might be implemented, particularly given the transitional provisions suggested by the Financial Reporting Council (FRC). A recommended course of action will be proposed to the Board during 2013.
</FONT></P></DIV><div style="clear:both; height:0px; font-size:0px">&nbsp;</div>

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<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">22&nbsp;&nbsp;I&nbsp;&nbsp;</FONT></TD>
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<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #00aeef; BORDER-TOP:1px solid #00aeef; BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-TOP:1px solid #00aeef; BORDER-RIGHT:1px solid #00aeef; BORDER-BOTTOM:1px solid #00aeef; padding-right:8px"> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#00aeef">Objectivity and independence</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#00aeef">of the
external auditor</FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">The Committee&#146;s responsibility to monitor and
review the objectivity and independence of the external auditor is supported by a policy to govern the non-audit services that may be provided by the external auditor. The policy sets out the circumstances in which the external auditor may be
permitted to undertake non-audit services. Allowable services are pre-approved up to but not including &pound;100,000, or &pound;25,000 in the case of certain taxation services. Any non-audit service that exceeds these thresholds requires approval
from me as Chairman of the Committee and must be robustly justified and, if appropriate, tendered, before it is approved. I closely review all requests for approval, particularly any which concern taxation-related services, and specifically tax
advisory services, where our approach is not to use the auditor unless there is a very strong case for not seeking an alternative supplier. The Committee receives a quarterly report on non-audit services undertaken by the auditor so that it can
monitor the types of services being provided and the fees incurred.</FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">A breakdown of the fees paid to the auditor for non-audit work may be found in note 44 on page 271. Significant categories of engagement undertaken
in 2012 include tax compliance services for assignments initiated pre January 2011 in connection with our expatriate and international assignees and attest and assurance services in connection with the production of a report attesting to the
effectiveness of controls in place at some of Barclays US based entities. In each case, approval was only given after a full and thorough assessment of the value case for using the auditor and of the skills and experience that the auditor would
bring to each assignment. I also satisfied myself that there were safeguards in place to protect the objectivity and independence of the auditor.</FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Further details of the non-audit services that are prohibited and allowed under our policy can be found on page 317.</FONT></P>
<P STYLE="font-size:2px;margin-top:0px;margin-bottom:1px"><FONT SIZE="1">&nbsp;</FONT></P></TD></TR>
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<TD VALIGN="top" BGCOLOR="#b5e3f7"> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:0.36em"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#5a6163">&nbsp;Committee Effectiveness</FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:0.63em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The performance of the Committee is reviewed each year as
part of the Board Effectiveness Review. This year&#146;s review concluded that the Committee continues to operate effectively, although there was a slight diminution in the overall score.</FONT></P>
<P STYLE="font-size:2px;margin-top:0px;margin-bottom:1px"><FONT SIZE="1">&nbsp;</FONT></P></TD></TR>
</TABLE> <P STYLE="font-size:2px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:0.36em"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#5a6163">&nbsp;Priorities for 2013</FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="margin-top:0px;margin-bottom:0px; margin-left:0.63em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">For 2013, I anticipate the Committee&#146;s areas of focus to be driven primarily by the changing regulatory environment,
particularly as the new regulatory regime in the UK is implemented. We will also be seeking to ensure that the control remediation programmes we already have in place are delivered, in addition to having oversight of any action plans that arise from
the controls workstream of the Transform Programme.</FONT></P> <P STYLE="font-size:2px;margin-top:0px;margin-bottom:1px"><FONT SIZE="1">&nbsp;</FONT></P></TD></TR>
</TABLE> <P STYLE="font-size:10px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px">


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 </P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Sir Michael Rake </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Chairman, Board Audit Committee </FONT></P></DIV><div style="clear:both; height:0px; font-size:0px">&nbsp;</div>

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<TD VALIGN="top" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;I&nbsp;&nbsp;23</FONT></TD></TR></TABLE>


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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#00aeef">Corporate governance report </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="4" COLOR="#5a6163">Accountability continued </FONT></P> <P STYLE="font-size:60px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:20px;margin-top:0px;margin-bottom:0px"><FONT SIZE="2">&nbsp;</FONT></P>
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<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff"><B>Board Risk Committee Chairman&#146;s Report</B></FONT></TD></TR>
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<P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;
</P><DIV STYLE="position:relative;float:left; margin-right:1%; width:48%;padding-right:9px;padding-bottom:8px;overflow:hidden;padding-top:3px">
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 </P> <P STYLE="margin-top:16px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#5a6163">&nbsp;&nbsp;&#147;We have been looking to take a more </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="4" COLOR="#5a6163">&nbsp;&nbsp;holistic view of risk management, </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#5a6163">&nbsp;&nbsp;so that we have an
enterprise wide </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#5a6163">&nbsp;&nbsp;view of risk management that goes </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="4" COLOR="#5a6163">&nbsp;&nbsp;beyond the management of financial </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#5a6163">&nbsp;&nbsp;risks.&#148; </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;&nbsp;David Booth </B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;&nbsp;Chairman, Board Risk Committee </FONT></P> <P STYLE="font-size:84px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
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<TD VALIGN="bottom" BGCOLOR="#00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff">Member</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff">Independent&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" BGCOLOR="#00aeef"> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff">Meetings&nbsp;</FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff">eligible&nbsp;to&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:1px" ALIGN="right"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff">attend&nbsp;</FONT></P></TD></TR>


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<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>David Booth </B>(Chairman)</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Yes</FONT></TD>
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<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Tim Breedon </B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:1px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">(from 1&nbsp;December 2012)</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Yes</FONT></TD>
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<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Reuben Jeffery</B><SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">a</SUP></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Yes</FONT></TD>
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<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Sir Andrew Likierman</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Yes</FONT></TD>
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<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Dambisa Moyo</B><SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">a</SUP></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Yes</FONT></TD>
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<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Sir Michael Rake</B><SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">a</SUP></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Yes</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
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<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
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<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:10px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:1px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Lawrence
Dickinson </B>Secretary</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
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<TD VALIGN="middle" COLSPAN="7"><FONT STYLE="font-family:ARIAL" SIZE="1">&nbsp;


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 </FONT><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Attended</FONT><FONT STYLE="font-family:ARIAL" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;


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</FONT><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Did not attend</FONT><FONT STYLE="font-family:ARIAL" SIZE="1"></FONT></TD></TR>
</TABLE> <P STYLE="margin-top:10px;margin-bottom:0px; margin-left:9px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;Note </FONT></P>
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<TD WIDTH="14"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">a</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;Unable to attend meetings because of prior commitments. </FONT></TD></TR></TABLE> <P STYLE="font-size:18px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD VALIGN="bottom" COLSPAN="3" BGCOLOR="#00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff">&nbsp;Board Risk Committee allocation of time</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" BGCOLOR="#00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff">%&nbsp;&nbsp;</FONT></TD></TR></TABLE>
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<TD VALIGN="top" ROWSPAN="6"> <P STYLE="font-size:3px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:1px; margin-left:0.38em">


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<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>2012</B></FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
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<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">2011</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
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<TD VALIGN="top" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">1</FONT></TD>
<TD NOWRAP VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Risk profile/Risk appetite</FONT></P> <P STYLE="margin-top:0px;margin-bottom:1px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">(including capital and liquidity management)</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>61</B></FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;45</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
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<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">2</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Key risk issues</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>18</B></FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;38</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
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<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">3</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Internal control/Risk policies</FONT></TD>
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<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>6</B></FONT></TD>
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<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;6</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
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<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">4</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
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<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Regulatory frameworks</FONT></TD>
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<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>5</B></FONT></TD>
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<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;4</FONT></TD>
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<TD VALIGN="top" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">5</FONT></TD>
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<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Other (including Remuneration and Governance issues)</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>10</B></FONT></TD>
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<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;7</FONT></TD>
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</TABLE> </DIV><DIV STYLE="position:relative;float:right; width:48%;padding-right:9px;padding-bottom:8px;overflow:hidden;padding-top:3px">
 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">David Booth, Chairman of the Board Risk Committee, reports on how the Committee discharged its
responsibilities in 2012. From 31&nbsp;January 2013, the Committee was renamed the Board Financial Risk Committee and oversight of operational risk was assumed by the Board Conduct, Reputation and Operational Risk Committee. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Chairman&#146;s overview of 2012 </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">2012 has been another challenging year for the Committee. Global economic conditions, particularly in the Eurozone, have driven much of our agenda. We have been looking to take a more holistic view
of risk management, partly in response to regulatory pressure so that we have an enterprise wide view of risk management that goes beyond the management of financial risks, such as credit risk, market risk and funding risk. I held a number of
meetings with Barclays regulators in the UK and US during 2012 to discuss our approach to risk management and to understand better our regulators&#146; areas of focus and how this might impact the remit of the Committee. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">I continued this year to request that representatives from the business, that is, business unit employees with day-to-day operational
responsibility for risk management, attend Committee meetings and present on specific issues. This provided the Committee with a valuable insight into how risk management principles are implemented in the business and gives a sense of the risk
management culture in the business. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">I submitted a report after each Committee meeting to the Board, to ensure that all Board members
were aware of the Committee&#146;s areas of focus. I continued to liaise with Sir Michael Rake, Chairman of the Board Audit Committee, to ensure that both Committees had appropriate oversight of risk and control matters. I also met regularly with
the Chief Risk Officer, the Chief Internal Auditor and the Group Treasurer. In July 2012, I joined the Board Remuneration Committee, which provides an opportunity for me to provide direct input into remuneration decisions from the perspective of
risk management and control. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Committee composition, skills and experience </B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Membership of the Committee and attendance at meetings held in 2012 is set out opposite. The Committee individually and collectively has experience
in finance and financial risk management and that experience and knowledge was strengthened further in late 2012 with the appointment of Tim Breedon to the Committee. More information on the skills and experience of the Committee members may be
found in the Directors&#146; biographies on pages 35-37. The Committee is keen to ensure that it has sufficient knowledge and information to be able to discharges its responsibilities effectively and during 2012, Committee members attended two
specific briefing sessions, the first on operational risk management, in light of increased regulatory focus in this area, and the second an in-depth review of the Investment Bank&#146;s balance sheet. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Committee responsibilities and how they were discharged in 2012 </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">During 2012, the Committee was responsible for: </FONT></P> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">recommending to the Board the total level of risk the Group is prepared to take (risk appetite) to achieve the generation of shareholder value;
</FONT></P></TD></TR></TABLE> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TR>
<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">monitoring risk appetite, including setting limits for individual types of risk, e.g., credit, market, funding risk and operational risk;
</FONT></P></TD></TR></TABLE> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">monitoring the Group&#146;s risk profile; </FONT></P></TD></TR></TABLE> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
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<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">ensuring that management properly identifies principal risks and that they are being appropriately managed;
</FONT></P></TD></TR></TABLE></DIV><div style="clear:both; height:0px; font-size:0px">&nbsp;</div>

 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P></div>

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<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">24&nbsp;&nbsp;I&nbsp;&nbsp;</FONT></TD>
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<P STYLE="font-size:0px;margin-top:0px;margin-bottom:0px">&nbsp;
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<TD WIDTH="32"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="10" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
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<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">ensuring that risk is taken into account during the due diligence phase of any strategic transaction; and </FONT></P></TD></TR></TABLE>
<P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
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<TD WIDTH="32"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="10" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">providing input from a risk perspective into the deliberations of the Board Remuneration Committee. </FONT></P></TD></TR></TABLE>
<P STYLE="margin-top:12px;margin-bottom:0px; margin-left:32px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">You can obtain the Committee&#146;s full terms of reference on the corporate governance section of Barclays website. More
information on risk management and the internal control framework is included in the Directors&#146; Report on pages 30-32 and in the Risk management section on pages 273-303. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; margin-left:32px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The Committee met 10 times in 2012 and the chart opposite shows the way in which we allocated our time. Committee meetings were
attended by management, including the Group Finance Director, Chief Internal Auditor, Chief Risk Officer and General Counsel. The external auditor also attended each meeting. From time to time, senior management below Board and Executive Committee
level, including representatives of the risk management function at both Group and business unit level, attended meetings for specific items. The Chief Internal Auditor, in addition to providing input on risk and control matters presented to the
Committee, also presented a regular, formal report on risk control issues. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; margin-left:32px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The way in which the Committee discharged
its responsibilities during 2012 is described below: </FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px; margin-left:32px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Risk Profile/Risk Appetite </FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px; margin-left:32px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">We considered the following matters in 2012: </FONT></P> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="10" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The Chief Risk Officer presented a quarterly Group Risk Profile Report, providing an update on credit, market, funding and liquidity and
operational risk in each of Barclays main businesses. Given the continuing uncertainties in the Eurozone, our discussions focused primarily on the potential impact of the Eurozone debt crisis, Eurozone sovereign risk and redenomination risk in our
European businesses. We received specific reports on Eurozone sovereign risk, including details of Barclays scenario planning in the event of a country exiting the Euro. In addition, we discussed the potential impact on our businesses of failure to
resolve the US Fiscal Cliff. We were also updated on specific country risk for countries where the economic outlook may be worsening or where there is risk to our businesses arising from political instability; </FONT></P></TD></TR></TABLE>
<P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="10" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The Group Treasurer provided a quarterly update on capital and liquidity. During 2012, given market conditions and the ongoing uncertainty in the
Eurozone, we held two additional meetings specifically to discuss liquidity risk appetite and Barclays liquidity risk management framework. In view of the external environment, and taking into account the potential stresses on Barclays following the
announcement of the penalties imposed relating to the industry-wide investigation into the setting of interbank offered rates, for a time over the summer we asked management to implement a revised liquidity risk management framework, in order to
extend the time horizon period for Barclays liquidity and to reduce our overall balance sheet leverage. Also during 2012 we agreed to a revised limit framework for Barclays US repo business. Further details of Barclays liquidity risk management
framework can be found in the Risk management section. The Group Treasurer also updated the Committee on regulatory changes in liquidity rules, on the introduction of new facilities, such as the Funding for Lending Scheme and on the potential impact
of CRD IV; </FONT></P></TD></TR></TABLE></DIV><DIV STYLE="position:relative;float:right; width:48%;padding-right:9px;padding-bottom:8px;overflow:hidden;padding-top:3px">

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STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
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<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">We considered and approved the scenarios for Barclays internal stress testing exercise, including a reverse stress test, and later reviewed the
results. The stress tests included a potential Eurozone break-up scenario. As in previous years, the stress testing exercises demonstrated that Barclays remains well-capitalised and profitable in a stress scenario; and </FONT></P></TD></TR></TABLE>
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<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">We considered risk appetite for 2013 and recommended it to the Board for approval. Taking a 1 in 7 scenario and a 1 in 25 scenario, we assessed
the performance of agreed financial volatility parameters in those scenarios to establish if there are any potential constraints. While the financial volatility parameters are largely unchanged from the prior year, some were recalibrated. The
proposed risk appetite for 2013 also allows for a higher level of non-credit losses, given the impact in 2012 of such losses, for example, product mis-selling redress. The Committee will monitor risk appetite for 2013 and may revisit it in light of
the Transform Programme. </FONT></P></TD></TR></TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Key Risk Issues </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Some of the other specific matters we considered in 2012 were: </FONT></P> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">We undertook two specific country and business risk reviews in 2012. We reviewed our operations in India, where we primarily have Investment
Banking business and support activities. From that discussion, we asked for loan to deposit ratios on a country by country basis to be reported to the Committee as a key indicator. We also reviewed our business in South Africa in view of the weak
economic outlook there and the difficult political environment, which present a number of challenges, particularly in terms of operational risk management. The Committee was content with the actions being taken by management to address these
challenges although asked to be kept informed of the progress of certain remediation programmes; </FONT></P></TD></TR></TABLE> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">After the significant trading losses experienced at JPMorgan in 2012, we received a report from management on their understanding of what
occurred in this incident and an assessment of the risk management systems and controls in place over any similar trading activity at Barclays. After due consideration, the Committee was satisfied with management&#146;s assessment that appropriate
systems and controls are in place; </FONT></P></TD></TR></TABLE> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">We received a regular report on the progress of the enhancements that are being made to risk management systems and controls in our Investment
Bank business in the US. The Committee will continue to monitor progress in 2013; </FONT></P></TD></TR></TABLE> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">In view of continuing weak global economic conditions, we were updated on Barclays credit rating strategy and on the potential impact on Barclays
credit ratings should the UK&#146;s credit rating be downgraded. Having discussed and assessed the position, the Committee supported the recommended credit rating strategy and associated programme of engagement with ratings agencies;
</FONT></P></TD></TR></TABLE> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Each year the Committee reviews Tax Risk. In early 2012, HMRC issued a statement concerning the tax treatment of a repurchase of debt by
Barclays. In light of that announcement, in its discussion on Tax Risk the Committee focused on tax risk in Barclays Structured Capital Markets business and on the steps being taken to enhance Barclays compliance with both the letter and spirit of
its obligations under the HMRC Code of Practice. After discussion and challenge, the Committee was satisfied with the actions being taken by management and asked to be promptly advised should tax risk limits require further review; and
</FONT></P></TD></TR></TABLE></DIV><div style="clear:both; height:0px; font-size:0px">&nbsp;</div>

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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#00aeef">Corporate governance report </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="4" COLOR="#5a6163">Accountability continued </FONT></P> <P STYLE="font-size:60px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:20px;margin-top:0px;margin-bottom:0px"><FONT SIZE="2">&nbsp;</FONT></P>
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<TD VALIGN="top" STYLE="BORDER:1px solid #00aeef; padding-left:8px; padding-right:8px" BGCOLOR="#00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff">Board Risk Committee Chairman&#146;s report continued</FONT></TD></TR>
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<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:2.00em; text-indent:-1.00em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT
STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We were updated on Barclays Leveraged Finance business, in particular, the performance of the portfolio
and the level of refinancing risk, which has reduced since the end of 2011. Having reviewed the status, the Committee was content with the actions being taken by management to monitor and mitigate refinancing risk.</FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:1.00em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Internal Control and Risk Management Framework</FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px; margin-left:1.00em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The Committee conducted its annual review of the Group&#146;s internal control and risk management framework (GICAF) to ensure
it remains fit for purpose and concluded that it remained so. More details on the GICAF and the Principal Risks Policy can be found in the Directors&#146; Report on pages 30-32 and in the Risk management section on pages 273-303. During 2012, we
were updated on conduct risk and the potential areas of focus for the Conduct Business Unit of the FSA. This new focus on conduct risk is likely to have an impact on Barclays Principal Risks Policy and we will assess how conduct risk is reflected in
Barclays risk management framework.</FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:1.00em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The
Committee spent a significant amount of time on operational risk matters in 2012, including a specific in-depth briefing session on operational risk and the development of our operational risk management framework. During the year we discussed the
effectiveness of the operational risk control framework and whether Barclays control environment is effective relative to the size and complexity of the business. With input from Barclays Internal Audit, we subsequently looked in more detail at five
businesses, Absa, Barclays Africa, Investment Bank US, Wealth&nbsp;&amp; Investment Management US and Continental Europe, to assess the general control environment and the resulting levels of operational risk in the context of any growth plans for
those businesses. We were satisfied that any growth plans for those businesses are appropriate to the control environment.</FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="margin-top:0px;margin-bottom:0px; margin-left:1.00em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Due diligence</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:1.00em"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The Committee reviewed the due diligence process followed for the acquisition of certain portfolios from Edcon Proprietary Limited and ING Direct UK, to satisfy itself that the due diligence process
in each case was thorough. This included reviewing the impact of each transaction on Barclays risk profile and risk appetite. In both cases, the Committee concluded that the due diligence process had been thorough and that the size and the impact of
the acquisitions could be accommodated within the Group&#146;s agreed risk appetite.</FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:1.00em"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Remuneration</FONT></P> <P STYLE="margin-top:0px;margin-bottom:1px; margin-left:1.00em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The Committee provided input to the Board
Remuneration Committee on the risk metrics to be used to determine financial performance and reviewed the risk function&#146;s view of performance, which was used to inform remuneration decisions for 2012. The risk perspective took into account
specific matters, such as product mis-selling redress, the penalties relating to the industry-wide investigation into the setting of interbank offered rates and, at the Committee&#146;s request, internal control issues. The Remuneration Report on
page 39 includes more detail on how risk is taken into account in remuneration decisions.</FONT></P></TD></TR>
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<TD VALIGN="top"> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:0.50em"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#5a6163">Committee Effectiveness</FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:0.50em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">As part of the annual Board Effectiveness Review, the
performance of the Committee is assessed. This year&#146;s review concluded that the Committee continues to operate effectively and there was a slight improvement in the overall score.</FONT></P>
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<TD VALIGN="top"> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:0.50em"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#5a6163">Priorities for 2013</FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:0.50em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">I expect the Committee in 2013 to continue to focus on
monitoring the risk to Barclays business from the ongoing weak economic conditions in its main geographies. We will also maintain our focus on capital and liquidity, particularly in view of the implementation of CRD IV. The Committee will also seek
to understand and act upon any changes required to Barclays risk management framework that might arise as a consequence of the new regulatory regime in the UK.</FONT></P>
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 </P> <P STYLE="margin-top:8px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>David Booth </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Chairman, Board Risk Committee </FONT></P></DIV><div style="clear:both; height:0px; font-size:0px">&nbsp;</div>

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<TD VALIGN="top" STYLE="BORDER:1px solid #00aeef; padding-left:8px; padding-right:8px" BGCOLOR="#00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff">Board Citizenship Committee Report</FONT></TD></TR>
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</P> <P STYLE="font-size:10px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:0.50em"><FONT STYLE="font-family:ARIAL" SIZE="3" COLOR="#5a6163">&#147;While retaining
its responsibility for oversight&nbsp;of Barclays citizenship strategy, the&nbsp;Committee in 2013 will focus on developing&nbsp;Barclays approach to conduct</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:0.50em"><FONT
STYLE="font-family:ARIAL" SIZE="3" COLOR="#5a6163">risk.&#148;</FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:0.50em"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Sir David Walker</B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:0.50em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Chairman, Board Citizenship
Committee</FONT></P> <P STYLE="font-size:60px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:10px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Committee composition, skills and experience</B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The Committee was established in August 2011 and during 2012 was responsible for the oversight of Barclays conduct with regard to its corporate and societal obligations and its reputation as a
responsible corporate citizen. The Committee was also responsible for:</FONT></P> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:1.00em; text-indent:-1.00em"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT>&nbsp;
&nbsp;&nbsp;&nbsp;Reviewing and monitoring the effectiveness of Barclays citizenship strategy, including the management of significant reputational, social and environmental issues; and</FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px; margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;
</FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT>&nbsp;&nbsp;&nbsp;&nbsp;Ensuring the fulfilment of the Board&#146;s objective to protect and enhance the brand and reputation of Barclays and ensuring that Barclays is
Treating Customers Fairly (TCF).</FONT></P> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">From the end of January 2013, the
Committee was renamed the Board Conduct, Reputation and Operational Risk Committee. You can obtain the Committee&#146;s full terms of reference on the corporate governance section of Barclays website.</FONT></P>
<P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">During 2012, the Committee comprised two non-executive Directors and the
Chairman, who chaired the Committee. Membership of the Committee is set out opposite, together with attendance at meetings in 2012. Sir David Walker joined the Committee on his appointment to the Board on 1&nbsp;September 2012 and took over as
Chairman of the Committee on 1&nbsp;November 2012. Tim Breedon joined the Committee with effect from 1&nbsp;February 2013 and Diane de Saint Victor joined the Committee with effect from 1&nbsp;March 2013.</FONT></P>
<P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Committee responsibilities and how they were discharged in
2012</B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The Committee met twice in 2012. The chart opposite shows how the Committee allocated its time at those meetings. During the
year, the Committee conducted the following business:</FONT></P> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:1.00em; text-indent:-1.00em"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT>&nbsp;
&nbsp;&nbsp;&nbsp;Reviewed the citizenship disclosure in the 2011 Annual Report;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT
STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT>&nbsp;&nbsp;&nbsp;&nbsp;Received an update on Barclays citizenship
strategy and discussed the five-year citizenship plan;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT
STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT>&nbsp;&nbsp;&nbsp;&nbsp;Reviewed the plans for the 2012 Barclays
Citizenship Day;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT
STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT>&nbsp;&nbsp;&nbsp;&nbsp;Reviewed the activities of the Global Investment Committee, which manages Barclays community investment
programme;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT
STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT>&nbsp;&nbsp;&nbsp;&nbsp;Conducted in-depth reviews of regional citizenship activity in Barclays businesses in the UK, US and
Africa;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT
STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT>&nbsp;&nbsp;&nbsp;&nbsp;Received updates on specific areas of focus such as supply chain management, human rights, complaints and
agricultural commodities trading;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT
STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT>&nbsp;&nbsp;&nbsp;&nbsp;Reviewed and approved Barclays
reputational risk control framework and policy; and</FONT></P> <P STYLE="margin-top:0px;margin-bottom:1px; margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT
STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT>&nbsp;&nbsp;&nbsp;&nbsp;Received an update on Barclays TCF agenda
and discussed the progress made against objectives.</FONT></P></TD>
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<TD VALIGN="top"> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:0.50em"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#5a6163">Committee Effectiveness</FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:0.50em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The performance of the Committee was reviewed as part of
the Board Effectiveness Review. The review concluded that the Committee had operated effectively, although it was recognised that it was in its first full year of operation and its role and responsibilities will become more defined in
future.</FONT></P> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:1px"><FONT SIZE="1">&nbsp;</FONT></P></TD>
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<TD VALIGN="top" BGCOLOR="#e7f7ff"> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:0.50em"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#5a6163">Priorities for
2013</FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:0.50em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">With effect from 31&nbsp;January 2013, the
Committee&#146;s remit was broadened to include conduct, reputation and operational risk and it was renamed the Board Conduct, Reputation and Operational Risk Committee. It will retain responsibility for oversight of Barclays citizenship strategy.
The Committee is expected to focus in 2013 on developing Barclays approach to conduct risk in the context of the UK regulator&#146;s new focus on conduct risk and outcomes for consumers.</FONT></P>
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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#00aeef">Corporate governance report </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="6" COLOR="#5a6163"><A NAME="tx497934_59"></A>Relations with Shareholders </FONT></P> <P STYLE="font-size:60px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD VALIGN="top" COLSPAN="5" BGCOLOR="#00aeef"> <P STYLE="font-size:2px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:2px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff">&nbsp;Shareholder
type</FONT></P> <P STYLE="font-size:2px;margin-top:0px;margin-bottom:1px">&nbsp;</P></TD></TR>
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<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:4px;margin-bottom:0px; margin-left:1.00em; text-indent:-1.00em"><FONT
STYLE="font-family:ARIAL" SIZE="2" COLOR="#00aeef">&nbsp;Institutional</FONT></P>
<P STYLE="margin-top:0px;margin-bottom:1px; margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:ARIAL" SIZE="2" COLOR="#00aeef">&nbsp;Shareholders</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:4px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Barclays Investor
Relations is dedicated to managing long term relationships with institutional investors and sell-side analysts. A structured Investor Relations programme is in place to ensure regular communication with shareholders and access to the Group Chief
Executive and Group Finance Director as well as senior management from across the business.</FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Shareholder engagement is spread throughout the year, with particular focus around results periods, which provide the opportunity for regular dialogue with current and prospective investors.
Approximately half of our investor engagement is conducted by executive management, with the remainder led by Barclays Investor Relations.</FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">In addition to the global programme of investor meetings, Barclays also participates regularly in investor conferences designed to provide access
to a wider audience. Barclays also hosts seminars for investors and analysts on business specific topics led by senior management. Relationships with sell-side analysts are maintained through regular dialogue with Investor Relations and formal
briefings with executive management.</FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Views expressed by
shareholders are communicated effectively to the Board. The Chairman and Senior Independent Director also meet regularly with Barclays larger shareholders to hear their views on corporate governance matters, including remuneration and Board
composition.</FONT></P> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:1px"><FONT SIZE="1">&nbsp;</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
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<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:4px;margin-bottom:0px; margin-left:1.00em; text-indent:-1.00em"><FONT
STYLE="font-family:ARIAL" SIZE="2" COLOR="#00aeef">&nbsp;Debt</FONT></P> <P STYLE="margin-top:0px;margin-bottom:1px; margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:ARIAL" SIZE="2" COLOR="#00aeef">&nbsp;Investors</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:4px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">A dedicated Debt
Investor Relations team within Investor Relations was set up in the autumn of 2012, with the aim of proactively engaging with fixed income investors and credit analysts in a way that presents a single (equity and debt) face to the market. The team
has led numerous meetings, including supporting Treasury in the global marketing of the Contingent Capital Notes issuance in November 2012, and is the primary contact for credit rating agencies.</FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The Debt Investor Relations team has also launched a new debt focused section
in the Investor Relations section of Barclays website, which provides information on the Group&#146;s capital, funding and liquidity positions as well as credit ratings. During 2013, Debt Investor Relations will continue to work closely with
Treasury to deliver structured, targeted and disciplined debt investor engagement.</FONT></P> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:1px"><FONT SIZE="1">&nbsp;</FONT></P></TD>
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<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:4px;margin-bottom:0px; margin-left:1.00em; text-indent:-1.00em"><FONT
STYLE="font-family:ARIAL" SIZE="2" COLOR="#00aeef">&nbsp;Private</FONT></P>
<P STYLE="margin-top:0px;margin-bottom:1px; margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:ARIAL" SIZE="2" COLOR="#00aeef">&nbsp;Shareholders</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:4px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Barclays has a
large private shareholder base and understands the need to treat all shareholders fairly, following industry best practice in terms of disclosure.</FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">We recently re-consulted all of our private shareholders on how they would like to receive their shareholder information. We believe that
communicating electronically with our shareholders ensures that they receive regular, up to date information about Barclays directly to their inbox. For example, we email all Barclays e-view members with our quarterly financial results and dividend
information. They can also vote online for AGMs, view any transactions on their shareholding, instantly update their personal and bank details and receive an electronic dividend tax voucher. It is also beneficial for the environment and lowers costs
for Barclays. We therefore actively encourage private shareholders to join Barclays e-view. Shareholders can sign up to Barclays e-view at www.eviewsignup.co.uk. We also encourage our private shareholders to hold their shares in Barclays Sharestore,
where shares are held electronically in a cost-effective and secure environment.</FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">We maintain a dedicated email address and Barclays Shareholder Helpline with our registrars so that our shareholders can easily contact them if they have any questions about their shareholding. In
order to ensure that the registrar provides the highest quality of service to our shareholders, we regularly monitor their operational performance via monthly meetings at which management information on transactions undertaken by the registrar are
discussed in detail, together with service level reports.</FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">We are
aware that, sometimes, shareholders do not keep their personal details on the shareholder register up to date. We recently conducted a tracing process using our search agent, Prosearch, to reunite over 24,000 Barclays Sharestore members identified
by the registrar as having lost contact with us, with their shares and unclaimed dividends. As at 31 December 2012, we had returned &pound;1.8m of unclaimed dividends to our shareholders.</FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">A wide range of information for all our shareholders can be found on our
website Barclays.com. We ensure that all documents produced for investor events are provided on the Investor Relations section of our website.</FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Private shareholders can discuss their concerns with us by email: privateshareholderrelations@barclays.com or in writing to Shareholder Relations
at Barclays PLC, 1 Churchill Place, London E14 5HP.</FONT></P> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:1px"><FONT SIZE="1">&nbsp;</FONT></P></TD>
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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#00aeef">Remuneration </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Sir John Sunderland, who became Chairman of the Remuneration Committee in July 2012, reports on the Board Remuneration Committee&#146;s activities during 2012 in the remuneration report on pages
39-68. </FONT></P> <P STYLE="margin-top:14px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#00aeef">Relations with Shareholders </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Understanding the views of shareholders </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Part of the Chairman&#146;s
responsibility is ensuring that there is effective communication with shareholders. The Chairman is in regular contact with institutional shareholders and reports back to the Board on any significant issues that are raised. The Group Chief
Executive, Group Finance Director and Senior Independent Director also had regular contact with shareholders during 2012 and the Chairman of the Board Remuneration Committee also held a series of meetings with key shareholders to discuss the
Group&#146;s remuneration structure and policy. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">During 2012, the Board received the results of an investor audit, conducted by one of
Barclays investor relations advisers, which set out views gathered from interviews with a number of Barclays investors on Barclays strategy, priorities, businesses, capital, funding and liquidity and management. It also provided a view on the
outlook for stock market conditions. Directors receive a weekly briefing note from the Group Chief Executive, which includes share price and market information. Analyst notes are made available to Directors on a regular basis. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Engaging effectively with investors </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Barclays understands the need to engage with its investors in a meaningful way and for such communication to be transparent to facilitate a mutual understanding of respective objectives. Interaction
with investors falls into four main areas: institutional shareholders, debt investors, private shareholders and the AGM. </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">General shareholder information can be found on Barclays website, Barclays.com/investor relations</FONT></TD></TR>
</TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>AGM </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The Board as a whole understands the importance of communicating effectively with shareholders and is committed to the constructive use of the AGM to meet with shareholders, hear their views and to
answer their questions. All Directors are required to attend the AGM. They all attended the 2012 AGM which was held on Friday, 27&nbsp;April 2012. The Chairman as well as the Chairmen of the Board Committees were available to answer
shareholders&#146; questions. In accordance with best practice, all resolutions were considered on a poll, which was conducted by the registrar and monitored by independent scrutineers. The results, along with proxy votes lodged prior to the
meeting, were made available on our website the same day. The votes cast at the meeting represented 60-67% of all the shares in issue and all resolutions were approved. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The 2013 AGM, will be held on Thursday, 25th&nbsp;April 2013 at the Royal Festival Hall in London. The Notice of AGM can be found in a separate document, which is sent out at least 20 working days
before the meeting. The Notice of AGM and the accompanying circular, which sets out a clear explanation of each resolution to be proposed at the meeting, can also be found at www.Barclays.com/AGM. The resolutions will be considered on a poll and the
results will be announced via the Regulatory News Service and made available on our website on the same day. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Shareholders unable to
attend the AGM are encouraged to vote in advance of the meeting via www.barclays.com/investor relations/vote. They may also submit questions to the Board by writing to Shareholder Relations at the address given above. </FONT></P>
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 </P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Sir David Walker </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Chairman </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">5 March 2013
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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="6" COLOR="#5a6163"><A NAME="tx497934_60"></A><A NAME="tx497934_22"></A>Directors&#146; report </FONT></P>
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</P><DIV STYLE="position:relative;float:left; margin-right:1%; width:48%;padding-right:9px;padding-bottom:8px;overflow:hidden;padding-top:3px">
 <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Profit and dividends </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The loss for the financial year, after taxation, was &pound;236m (2011: &pound;3,951m profit). The final dividend for 2012 of 3.5p&nbsp;per share will be paid on 15&nbsp;March 2013 to shareholders
whose names were on the Register of Members at the close of business on 22&nbsp;February 2013. With the interim dividends totalling 1.0p&nbsp;per ordinary share, paid in June, September and December 2012, the total distribution for 2012 is 6.5p
(2011: 6.0p)&nbsp;per ordinary share. The interim and final dividends for 2012 amounted to &pound;793m (2011: &pound;728m). </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Board of
Directors </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The names of the current Directors of Barclays PLC, along with their biographical details, are set out on pages 35-37 and
are incorporated into this report by reference. Bob Diamond, Alison Carnwath and Marcus Agius left the Board with effect from 3&nbsp;July 2012, 24&nbsp;July 2012 and 31&nbsp;October 2012 respectively. Sir David Walker, Antony Jenkins and Tim Breedon
joined the Board on 1&nbsp;September 2012, 30&nbsp;August 2012 and 1&nbsp;November 2012 respectively. There were no other changes to Directors in 2012. Diane de Saint Victor was appointed as a Director with effect from 1&nbsp;March 2013. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Appointment and retirement of Directors </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The appointment and replacement of Directors is governed by the Company&#146;s Articles of Association (the Articles), the UK Corporate Governance Code (the Code), the Companies Act 2006 and related
legislation. The Articles may only be amended by a special resolution of the shareholders. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The Board has the power to appoint
additional Directors or to fill a casual vacancy amongst the Directors. Under the Articles, any such Director holds office only until the next AGM and may offer himself/ herself for re-election. The Articles also require that at each AGM at least
one-third (rounded down) of the Directors retire by rotation. The retiring Directors are eligible to stand for re-election. The Code recommends that all Directors of FTSE 350 companies should be subject to annual re-election, and all Directors will
stand for election or re-election at the 2013 AGM with the exception of Sir Andrew Likierman, who having served on the Board for nine years, will retire at the 2013 AGM and will not offer himself for re-election. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Directors&#146; indemnities </B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The Company maintains Directors&#146; and Officers&#146; liability insurance which gives appropriate cover for any legal action brought against its
Directors. In addition, qualifying third party indemnity provisions (as defined by section 234 of the Companies Act 2006) were in force during the course of the financial year ended 31&nbsp;December 2012 for the benefit of the then Directors and, at
the date of this report, are in force for the benefit of the Directors in relation to certain losses and liabilities which they may incur (or have incurred) in connection with their duties, powers or office. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Creditor payment policy </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px;padding-bottom:0px; "><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Barclays policy follows the Department for Business, Innovation&nbsp;&amp; Skills&#146; Prompt Payment Code, copies of which can be obtained from the Prompt Payment Code website at
www.promptpaymentcode.org.uk. The trade creditor payment days for Barclays Bank PLC for 2012 were 38 days (2011: 37 days<SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">a</SUP>). This is an arithmetical calculation based on the
Companies Act regulations and does not necessarily reflect our practice, nor the experience of any individual creditor. </FONT></P> <P STYLE="margin-top:72px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Note
</FONT></P>
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<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The 2011 figure is restated as the figure reported in the 2011 Directors&#146; Report did not include data from all business divisions.
</FONT></TD></TR></TABLE></DIV><DIV STYLE="position:relative;float:right; width:48%;padding-right:9px;padding-bottom:8px;overflow:hidden;padding-top:3px">
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<P STYLE="font-size:48px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Political donations </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The Group did not give any money for political purposes in the UK or the rest of the EU nor did it make any political donations to political parties or other political organisations, or to any
independent election candidates, or incur any political expenditure during the year. Absa Group Limited, in which the Group has a majority stake, made donations totalling &pound;185,666 in 2012 (2011: &pound;224,158) in accordance with its policy of
making political donations to the major South African political parties as part of their Democracy Support Programme. The Group made no other political donations in 2012. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">In accordance with the US Federal Election Campaign Act, Barclays provides administrative support to a federal Political Action Committee (PAC) in the USA funded by the voluntary political
contributions of eligible Barclays employees. The PAC is not controlled by Barclays and all decisions regarding the amounts and recipients of contributions are guided by a steering committee comprised of eligible contributors. Contributions to
political organisations reported by the PAC during the calendar year 2012 election cycle totalled $63,564 (2011 $43,436). </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Charitable
donations </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Barclays provides funding and support to over 8,500 charities, voluntary organisations and social enterprises ranging from
small local organisations, such as Bikeworks, which provides disadvantaged young people in London with training to help them develop key skills to find employment in the cycling industry, to international organisations such as CARE International.
The Group committed &pound;32.1m in support of the community in the UK (2011: &pound;30.3m), including charitable donations of &pound;22.5m (2011: &pound;22.6m). </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Environment </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">In 2011 we launched the Barclays Climate Action Programme &#150; a
four-year plan which focuses on addressing environmental issues where we believe we have the greatest potential to make a difference. The Programme focuses on managing our own carbon footprint and reducing our absolute carbon emissions, developing
products and services to help enable the transition to a low-carbon economy, and managing the risks of climate change to our operations, clients, customers and society at large. We invest in improving the energy efficiency of our operations and
offset the emissions remaining through the purchase of carbon credits. We also have a long standing commitment to managing the environmental and social risks associated with our lending practices, which is embedded into our Credit Risk processes. A
governance structure is in place to facilitate clear dialogue across the business and with suppliers around issues of potential environmental and social risk. More details may be found on our website at www.barclays.com/citizenship. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">We are currently preparing for the forthcoming mandatory carbon reporting regulations coming into force in April 2013, requiring all UK companies
listed on the London Stock Exchange to disclose their global emissions in the Director&#146;s Report. We are awaiting the publication of the finalised requirements of the legislation by the UK Government but do not foresee any significant challenges
in adhering to the new regulation. </FONT></P></DIV><DIV STYLE="position:relative;float:right; width:48%;padding-right:9px;padding-bottom:8px;overflow:hidden;padding-top:3px">
 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Essential contracts or arrangements </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">There are no persons with whom the Group has contractual or other arrangements that are considered essential to the business of the Group. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Contracts of significance </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Barclays provided BlackRock, Inc. with customary
warranties and indemnities in connection with the sale of Barclays Global Investors (BGI) to BlackRock, Inc. in 2009. Barclays continued to provide indemnities in respect of certain of BGI&#146;s fully collateralised securities lending activities
until 30&nbsp;November 2012 and will continue to provide support in respect of certain BGI cash funds until December 2013. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Research
and development </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">In the ordinary course of business the Group develops new products and services in each of its business divisions.
</FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Share capital </B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><I>Share capital structure </I></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The
Company has Ordinary Shares in issue. The Company&#146;s Articles also allow for the issuance of Sterling, US Dollar, Euro and Yen preference shares (preference shares). No preference shares have been issued as at 28&nbsp;February 2013 (the latest
practicable date for inclusion in this report). Ordinary shares therefore represent 100% of the total issued share capital as at 31&nbsp;December 2012 and at 28&nbsp;February 2013. Details of the movement in Ordinary Share capital during the year
can be found in Note 32 on page 250. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">On 31&nbsp;October 2008, Barclays PLC issued, in conjunction with a simultaneous issue of Reserve
Capital Instruments issued by Barclays Bank PLC, warrants (the Warrants) to subscribe for up to 1,516.9&nbsp;million new Ordinary Shares at a price of &pound;1.97775. As at 31&nbsp;December 2012 there were unexercised Warrants to subscribe for
379.2&nbsp;million Ordinary Shares. On 13&nbsp;February 2013 Barclays PLC and Barclays Bank PLC announced that they had entered into an agreement with Deutsche Bank AG and Goldman Sachs International (the Warrantholders) pursuant to which the
Warrantholders had agreed to exercise in aggregate 379.2m outstanding Warrants. As a consequence of this agreement no other Warrants remain outstanding. Details of changes to the share capital structure which have taken place since the year end are
detailed in Note 46 Events After the Balance Sheet Date. </FONT></P></DIV><div style="clear:both; height:0px; font-size:0px">&nbsp;</div>

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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#00aeef">Directors&#146; report continued </FONT></P>
<P STYLE="font-size:48px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><I>Exercisability of rights under an employee share scheme </I></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Employee Benefit Trusts (EBTs) operate in connection with certain of the Group&#146;s Employee Share Plans (Plans). The trustees of the EBTs may
exercise all rights attached to the shares in accordance with their fiduciary duties other than as specifically restricted in the relevant Plan governing documents. The trustees of the EBTs have informed the Company that their normal policy is to
abstain from voting in respect of the Barclays shares held in trust. The trustees of the Global Sharepurchase EBT and UK Sharepurchase EBTs may vote in respect of Barclays shares held in the EBTs, but only as instructed by participants in those
Plans in respect of their Parternership shares and (when vested) Matching and Dividend shares. The trustees will not otherwise vote in respect of shares held in the Sharepurchase EBTs. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><I>Special rights </I></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">There are no persons holding securities that carry special
rights with regard to the control of the Company. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px;padding-bottom:0px; "><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><I>Substantial shareholders<SUP
STYLE="vertical-align:baseline; position:relative; bottom:.8ex">a</SUP> </I></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Substantial shareholders do not have different voting rights
from those of other shareholders. Information provided to the Company by substantial shareholders pursuant to the Financial Services Authority&#146;s (FSA) Disclosure and Transparency Rules (DTR) is published via a Regulatory Information Service and
is available on the Company&#146;s website. As at 31&nbsp;December 2012, the Company had been notified under Rule 5 of the DTR of the following holdings of voting rights in its shares. </FONT></P>
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<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #00aeef; BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">&nbsp;&nbsp;Person interested</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #00aeef; BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="right" STYLE="BORDER-TOP:1px solid #00aeef; BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Number of<BR>Barclays&nbsp;Shares</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #00aeef; BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #00aeef; BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="right" STYLE="BORDER-TOP:1px solid #00aeef; BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">%&nbsp;of&nbsp;total&nbsp;voting&nbsp;<BR>rights&nbsp;attaching&nbsp;to&nbsp;
<BR>issued&nbsp;share&nbsp;capital<SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">b</SUP></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #00aeef; BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD></TR>


<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">His Highness Sheikh Mansour</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Bin Zayed Al Nahyan<SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">c</SUP></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">858,546,492</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">7.02</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Qatar Holding LLC<SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">d</SUP></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">813,964,552</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">6.65</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">BlackRock, Inc.<SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">e</SUP></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">805,969,166</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">7.06</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Legal&nbsp;&amp; General Group plc<SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">f</SUP></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">480,805,132</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">3.99</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The Capital Group Companies
Inc<SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">g</SUP></FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">371,944,325</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">3.04</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
</TABLE> <P STYLE="font-size:96px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Notes </FONT></P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="13" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">a</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Significant shareholders for the last 3 years are shown on page&nbsp;319. </FONT></TD></TR></TABLE>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="13" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">b</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The percentage of voting rights detailed above was calculated at the time of the relevant disclosures made in accordance with Rule 5 of the DTR.
</FONT></TD></TR></TABLE>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="13" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">c</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Total shown comprises (1)&nbsp;758,437,618 shares that are legally owned by PCP Gulf Invest 3 Limited, which is wholly owned by Nexus Capital Investing Limited
(NCIL). NCIL is in turn wholly owned by Abu Dhabi International United Investments LLC, which is in turn wholly owned by His Highness Sheikh Mansour Bin Zayed Al Nahyan (HHSM); and (2)&nbsp;100,108,874 cash- settled options referencing ordinary
shares that are legally owned by Yas Capital Limited (YCL), which is, in turn, wholly owned by HHSM. YCL has no right to acquire or exercise any voting rights in Barclays PLC. Following an increase during February 2013 in issued share capital to
which voting rights are attached, the Company was notified on 4&nbsp;March 2013 that, in aggregate, HHSM is indirectly interested in 783,509,699 ordinary shares, comprising 758,437,618 shares held by PCP Gulf Invest 3 Limited and 25,072,081
cash-settled options referencing ordinary shares held by YCL, representing 6.09% of total voting rights attaching to issued share capital. </FONT></TD></TR></TABLE>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="13" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">d</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Qatar Holding LLC is wholly-owned by Qatar Investment Authority. </FONT></TD></TR></TABLE>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="13" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">e</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Total shown includes 8,003,236 contracts for difference to which voting rights are attached. </FONT></TD></TR></TABLE>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="13" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">f</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Legal&nbsp;&amp; General Group plc&#146;s interest is held by Legal&nbsp;&amp; General Assurance (Pensions Management) Limited. </FONT></TD></TR></TABLE>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="13" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">g</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The Capital Group Companies Inc (CG) holds its shares via CG management companies and funds. On 30&nbsp;January 2013, the Company was notified that CG was
interested in 492,653,250 shares, representing 4.02% of total voting rights attaching to issued share capital.
</FONT></TD></TR></TABLE></DIV><DIV STYLE="position:relative;float:right; width:48%;padding-right:9px;padding-bottom:8px;overflow:hidden;padding-top:3px">
 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><I>Powers of the Directors to issue or buy back the Company&#146;s shares </I></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The powers of the Directors are determined by the Companies Act 2006 and the Company&#146;s Articles. The Directors are authorised to issue and
allot shares, and to repurchase shares subject to annual shareholder approval at the AGM. Such authorities were granted by shareholders at the 2012 AGM. It will be proposed at the 2013 AGM that the Directors be granted new authorities to allot and
buy-back shares. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><I>Repurchase of shares </I></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The company did not repurchase any of its Ordinary Shares during 2012 (2011: none). As at 28&nbsp;February 2013, the Company had an unexpired authority to repurchase Ordinary Shares up to a maximum
of 1,220,174,570 Ordinary Shares. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><I>Change of control </I></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Warrants issued by Barclays PLC provided that if there is a change of control of Barclays PLC following a takeover bid, Barclays PLC must (so far as legally possible) use all reasonable endeavours
to cause the corporation which then controls Barclays PLC to execute a deed poll providing that holders of the Warrants shall have the right (during the period in which the Warrants are exercisable) to exercise the Warrants into the class and amount
of shares and other securities and property receivable upon such a takeover by the holders of the number of Ordinary Shares as would have been issued on exercise of the Warrants had such Warrants been exercised immediately prior to the completion of
such takeover. The Warrants contained provisions for the adjustment of the gross number of Ordinary Shares in the event of the occurrence of certain dilutive events including, amongst others, extraordinary dividends, bonus issues, alterations to the
nominal value of Ordinary Shares and rights issues. All outstanding Warrants were excercised on 13&nbsp;February 2013. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">There are no
other significant agreements to which the Company is a party that are affected by a change of control of the Company following a takeover bid. There are no agreements between the Company and its Directors or employees providing for compensation for
loss of office or employment that occurs because of a takeover bid. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><I>Risk management and internal control </I></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The Directors have responsibility for ensuring that management maintain an effective system of risk management and internal control and for
reviewing its effectiveness. Such a system is designed to manage rather than eliminate the risk of failure to achieve business objectives and can only provide reasonable and not absolute assurance against material misstatement or loss. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Barclays is committed to operating within a strong system of internal control that enables business to be transacted and risk taken without
exposing itself to unacceptable potential losses or reputational damage. The Group Internal Control and Assurance Framework (GICAF) is the overarching framework that sets out Barclays approach to internal governance. It establishes the mechanisms
and processes by which the Board directs the organisation, through setting the tone and expectations from the top, delegating its authority and monitoring compliance. The purpose of the GICAF is to identify and set minimum requirements in respect of
the main risks to achieving the Group&#146;s strategic objectives and to provide reasonable assurance that internal controls are effective. The key elements of the Group&#146;s system of internal control, which is aligned to the recommendations of
The Committee of Sponsoring Organizations of the Treadway Commission (COSO), are set out in the risk control frameworks relating to each of the Group&#146;s Key Risks and in the Group operational risk framework. As well as incorporating our internal
requirements, these reflect material Group-wide legal and regulatory requirements relating to internal control and assurance. The GICAF is reviewed and approved on behalf of the Group Chief Executive by the Group Governance and Control Committee at
least annually. The Board Risk Committee also reviews the GICAF annually. </FONT></P></DIV><div style="clear:both; height:0px; font-size:0px">&nbsp;</div>
 <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE">

<TR>
<TD WIDTH="51%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="48%"></TD></TR>
<TR>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">32&nbsp;&nbsp;I&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"></TD></TR></TABLE>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">

 <P>&nbsp;</P> <P STYLE="font-size:48px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;
</FONT></P><DIV STYLE="position:relative;float:left; margin-right:1%; width:48%;padding-right:9px;padding-bottom:8px;overflow:hidden;padding-top:3px">
 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Effectiveness of internal controls </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The Directors review the effectiveness of the system of internal control semi-annually. An internal control compliance certification process is conducted throughout the Group in support of this
review. Key controls are also assessed on a regular basis for both design and operating effectiveness. Issues arising out of business division risk and control assessments are considered to identify pervasive themes. Where appropriate, individually
significant issues or those affecting more than one business division may be categorised as having Group level significance and are reported to the Board Audit Committee via the Group Governance and Control Committee. The Board Audit Committee
monitors resolution of any identified control issues of Group level significance through to a satisfactory conclusion. In addition, regular reports are made to the Board Audit Committee by management, internal audit and the finance, compliance and
legal functions covering in particular financial controls, compliance and other operational controls. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Risk management and internal
control framework </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Processes are in place for identifying, evaluating and managing the significant risks facing the Group in accordance
with the guidance &#145;Internal Control: Revised Guidance for Directors on the UK Corporate Governance Code&#146; published by the Financial Reporting Council (the Turnbull Guidance). These processes include an attestation procedure which requires
all significant processes and identified material risks to be assessed and recorded, together with the related key controls by the Heads of Divisions, Businesses and Functions. As part of this, specific consideration is given to relevant
information, including as a minimum, legal entities; any open control issues; any outstanding internal and external audit findings; regulatory reviews and any outstanding regulatory compliance matters; compliance with Group level policies; records
of operational incidents and loss/risk events; experience of all types of fraud; and any other material control-related matters that have been raised either by management or via independent/external review. The status of any remediation in
connection with these matters is also considered. The results of this attestation procedure were reported to the Board Audit Committee in February 2013, when it was noted that although several of the Group Key Risk Owner attestations received refer
to outstanding control design/operating effectiveness issues, these had all been assessed against risk appetite and none of these had prevented the Heads of Divisions, Businesses or Functions from providing a Turnbull statement. All these issues had
identified remediation tasks and attributed timescales for resolution (or timescales being determined). </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The Board regularly reviews
these processes through its principal Board Committees. Regular risk reports are made to the Board covering risks of Group significance including credit risk, market risk, funding risk, operational risk and legal risk. The Board Risk Committee
receives reports covering the Principal Risks as well as reports on risk measurement methodologies and risk appetite. Further details of risk management procedures are given in the Risk management section on pages 273-303. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">As discussed in the Risk management section of the Annual Report a number of matters were public during the course of 2012 which related to
failings in the design and/or operation of certain controls other than those over financial reporting. Whilst the matters were disclosed in 2012, the failings giving rise to those issues occurred in prior periods. Management has reviewed the
specific control processes impacted and concluded that these are now designed and operating effectively. Areas of ongoing control remediation are not considered to constitute material control failings.
</FONT></P></DIV><DIV STYLE="position:relative;float:right; width:48%;padding-right:9px;padding-bottom:8px;overflow:hidden;padding-top:3px">
 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Controls over financial reporting </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">A framework of disclosure controls and procedures is in place to support the approval of the Group&#146;s financial statements. The Legal and Technical Review Committee is responsible for reviewing
the Group&#146;s financial reports and disclosures to ensure that they have been subject to adequate verification and comply with legal and technical requirements, and reports its conclusions to the Disclosure Committee. The Disclosure Committee,
which is chaired by the Group Finance Director, considers the content, accuracy and tone of the disclosures, reporting its conclusions to the Group Executive Committee and the Board Audit Committee, both of which review its conclusions and provide
further challenge. Finally, the Board reviews and approves results announcements and the Annual Report for publication and ensures that appropriate disclosures have been made. This governance process is in place to ensure both management and the
Board are given sufficient opportunity to review and challenge the Group&#146;s financial statements and other significant disclosures before they are made public. It also provides assurance for the Group Chief Executive and Group Finance Director
when providing certifications as required under the Sarbanes-Oxley Act 2002 and recommended by the Turnbull Guidance. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Throughout the
year ended 31&nbsp;December 2012, and to date, the Group has operated a system of risk management and internal control which provides reasonable assurance of effective and efficient operations covering all controls, including financial and
operational controls and compliance with laws and regulations. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Management&#146;s report on internal control over financial reporting
</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over
financial reporting is a process designed under the supervision of the principal executive and principal financial officers to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements
for external reporting purposes in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and the International Accounting Standards Board (IASB). </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and
dispositions of assets; provide reasonable assurances that transactions are recorded as necessary to permit preparation of financial statements in accordance with IFRS and that receipts and expenditures are being made only in accordance with
authorisations of management and the respective Directors; and provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use or disposition of assets that could have a material effect on the financial
statements. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Internal control systems, no matter how well designed, have inherent limitations and may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that internal controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate. </FONT></P></DIV><div style="clear:both; height:0px; font-size:0px">&nbsp;</div>
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<TD VALIGN="top" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;I&nbsp;&nbsp;33</FONT></TD></TR></TABLE>


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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#00aeef">Directors&#146; report continued </FONT></P>
<P STYLE="font-size:72px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;
</FONT></P><DIV STYLE="position:relative;float:left; margin-right:1%; width:48%;padding-right:9px;padding-bottom:8px;overflow:hidden;padding-top:3px">
 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Management has assessed the effectiveness of Barclays PLC Group&#146;s and Barclays Bank PLC
Group&#146;s internal control over financial reporting as of 31&nbsp;December 2012. In making its assessment, management has utilised the criteria set forth by COSO. Management concluded that, based on its assessment, the internal control over
financial reporting was effective as of 31&nbsp;December 2012. Our independent registered public accounting firm has issued a report on the Group&#146;s internal control over financial reporting, which is set out on page 191. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The system of internal financial and operational controls is also subject to regulatory oversight in the UK and overseas. Further information on
supervision by the financial services regulators is provided under Supervision and Regulation in the Risk review section on pages 154-160. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><I>Changes in internal control over financial reporting </I></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">There have been no
changes in the Group&#146;s internal control over financial reporting that occurred during the period covered by this report which have materially affected or are reasonably likely to materially affect the Group&#146;s internal control over
financial reporting. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Going concern </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The Group&#146;s business activities and financial position, the factors likely to affect its future development and performance, and its objectives and policies in managing the financial risk to
which it is exposed and its capital are discussed in the Business Review and Risk Management section. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The Directors have assessed, in
the light of current and anticipated economic conditions, the Group&#146;s ability to continue as a going concern. The Directors confirm they are satisfied that the Company and the Group have adequate resources to continue in business for the
foreseeable future. For this reason, they continue to adopt the &#145;going concern&#146; basis for preparing accounts. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Disclosure
of information to auditor </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Each Director confirms that, so far as he/she is aware, there is no relevant audit information of which
the Company&#146;s auditors are unaware and that each Director has taken all the steps that he/she ought to have taken as a Director to make himself/herself aware of any relevant audit information and to establish that the Company&#146;s auditors
are aware of that information. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Directors&#146; Responsibilities </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The following statement, which should be read in conjunction with the report of the independent registered public accounting firm set out on page 191, is made with a view to distinguishing for
shareholders the respective responsibilities of the Directors and of the auditors in relation to the accounts. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The Directors are
required by the Companies Act 2006 to prepare accounts for each financial year and, with regards to Group accounts, in accordance with Article 4 of the IAS Regulation. The Directors have prepared individual accounts in accordance with IFRS as
adopted by the EU. The accounts are required by law and IFRS to present fairly the financial position of the Company and the Group and the performance for that period. The Companies Act 2006 provides, in relation to such accounts, that references to
accounts giving a true and fair view are references to fair presentation.
</FONT></P></DIV><DIV STYLE="position:relative;float:right; width:48%;padding-right:9px;padding-bottom:8px;overflow:hidden;padding-top:3px">
 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The Directors consider that, in preparing the accounts on pages 192-272, and the additional
information contained on pages 80-160, the Group has used appropriate accounting policies, supported by reasonable judgements and estimates, and that all accounting standards which they consider to be applicable have been followed. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Having taken all the matters considered by the Board and brought to the attention of the Board during the year into account, the Directors are
satisfied that the annual report and accounts, taken as a whole, is fair, balanced and understandable, and provides the information necessary for shareholders to assess the Company&#146;s performance, business and model. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The Directors have responsibility for ensuring that the Company and the Group keep accounting records which disclose with reasonable accuracy the
financial position of the Company and the Group and which enable them to ensure that the accounts comply with the Companies Act 2006. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The Directors are responsible for the maintenance and integrity of the Company&#146;s website. Legislation in the UK governing the preparation and
dissemination of financial statements may differ from legislation in other jurisdictions. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The Directors have general responsibility for
taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The Directors confirm to the best of their knowledge that: </FONT></P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="20" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">(a)</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial
position and profit or loss of Barclays PLC and the undertakings included in the consolidation taken as a whole; and </FONT></TD></TR></TABLE> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="20" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">(b)</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The management report, which is incorporated into the Directors&#146; Report on pages 30-34, includes a fair review of the development and performance of the
business and the position of Barclays PLC and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face. </FONT></TD></TR></TABLE>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">By order of the Board </FONT></P> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px">


<IMG SRC="g497934tx68.jpg" ALT="LOGO">
 </P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Lawrence Dickinson </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Company Secretary </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">5 March 2013 </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Barclays PLC </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Registered in
England, Company No.&nbsp;48839 </FONT></P></DIV><div style="clear:both; height:0px; font-size:0px">&nbsp;</div>

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<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>1. Sir David Walker (73)</B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Chairman</FONT></P> <P STYLE="font-size:10px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Skills and experience</B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Sir
David joined the Board as a non-executive Director on 1 September 2012, and was appointed as Chairman on 1 November 2012. He began his career in 1961 with Her Majesty&#146;s Treasury, where, with a period on secondment to the International Monetary
Fund in Washington (1969-1973), he served until 1977. From 1977-1993, Sir David held several key positions at the Bank of England where, in 1981, he became one of four Executive Directors of the Bank. From 1988-92 he was Chairman of the Securities
&amp; Investment Board and, ex officio, a nominated member of the Council of Lloyd&#146;s over the same period. He was a non-executive member of the Court of the Bank of England from 1988-1993. Sir David was a non-executive board member of the
former CEGB and subsequently of National Power plc between 1984 and 1994. He was formerly Chairman of Reuters Venture Capital, Vice-Chairman of the Legal and General Group and was Chairman of the London Investment Bankers&#146; Association for four
years until June 2004. Sir David joined Morgan Stanley in 1994, where he was Chairman and CEO, Morgan Stanley International, and subsequently Chairman. At the end of 2005, he retired as Chairman but remained a Senior Advisor until the end of August
2012.</FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Since 2007 Sir David has completed two reports and made
recommendations in respect of the private equity industry and corporate governance at financial institutions. He also co-led the independent review of the report that the FSA produced into the failure of Royal Bank of Scotland and was a member of
the four-person Committee chaired by Lord Woolf (former Lord Chief Justice) into ethical business conduct in BAE Systems plc, which reported in May 2008.</FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Other principal external appointments</B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Sir David has been a member of the Group of Thirty (G30) since 1993: he is a trustee of the Group and was Treasurer from 1997-2004. He is also a trustee of the Cicely Saunders Foundation and was
Chairman of the Business Leaders&#146; Group of the East End charity Community Links from 1995-2011.</FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Committee membership</B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:1px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Member of the Board Remuneration Committee, the Board
Corporate Governance &amp; Nominations Committee and the Board Conduct, Reputation and Operational Risk Committee since 1 September 2012; Chairman of the Board Corporate Governance and Nominations Committee and Board Conduct, Reputation and
Operational Risk Committee since 1 November 2012; Chairman of the Board Enterprise Wide Risk Committee since its formation in January 2013.</FONT></P></TD></TR>
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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#00aeef">Board of Directors continued </FONT></P>
<P STYLE="font-size:72px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;
</FONT></P><DIV STYLE="position:relative;float:left; width:32%;padding-right:9px;padding-bottom:8px;overflow:hidden;padding-top:3px">
 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>2. Antony Jenkins (51) </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Group Chief Executive; Executive Director </FONT></P> <P STYLE="margin-top:10px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Skills and experience </B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Antony was appointed Group Chief Executive on 30&nbsp;August 2012, having previously been Chief Executive of Barclays Retail and Business Banking
business since November 2009. He started his career at Barclays in 1983, where he completed the Barclays Management Development Programme before going on to hold various roles in retail and corporate banking. He moved to Citigroup in 1989, working
in both London and New York. In January 2006, he rejoined Barclays as Chief Executive of Barclaycard, where he led a revival in the fortunes of the business. He joined the Barclays Executive Committee in November 2009. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Other principal external appointments </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Member of the Board of Directors of the Institute of International Finance from February 2013. Between February 2009 and February 2013, Antony represented Barclays as a Non-executive Director on the
Board of Absa, the Group&#146;s South African banking subsidiary. He was also on the Board of Visa Europe Ltd between October 2008 and December 2011. </FONT></P> <P STYLE="margin-top:10px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Committee membership </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Chairman of the Group Executive Committee </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>3. David Booth (58) </B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Non-executive Director </FONT></P> <P STYLE="margin-top:10px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Skills
and experience </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">David joined the Board in May 2007 as a non-executive Director. David has extensive banking industry knowledge and
experience, having previously been employed by Morgan Stanley from 1982 to 1992, and again from 1995 to 1997. David held various key positions within the company, including Head of Government Bond Trading, Head of Mortgage Trading, Sales and Finance
and Head of Global Operations and Technology. Having retired from the Management Committee of Morgan Stanley in 1997, David now manages his own venture capital investments. </FONT></P> <P STYLE="margin-top:10px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Other principal external appointments </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">President of East Ferry Investors, Inc.
</FONT></P> <P STYLE="margin-top:10px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Committee membership </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Chairman of the Board Financial Risk Committee since January 2010 (member since January 2008); Member of Board Corporate Governance and Nominations Committee since January 2010; Member of the Board
Remuneration Committee since July 2012; Member of the Board Enterprise Wide Risk Committee since its formation in January 2013.
</FONT></P></DIV><DIV STYLE="position:relative;float:left; margin-left:2%; width:32%;padding-right:9px;padding-bottom:8px;overflow:hidden;padding-top:3px">
 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>4. Tim Breedon (55) </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Non-executive Director </FONT></P> <P STYLE="margin-top:10px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Skills and experience </B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Tim was appointed to the Board as a non-executive Director with effect from 1&nbsp;November 2012. He was Group Chief Executive of Legal&nbsp;&amp;
General Group plc (L&amp;G), until June 2012. Tim joined L&amp;G in 1987, holding a number of roles before joining the board as Group Director (Investments) in 2002 and becoming Group Chief Executive in 2006. He remained an adviser to L&amp;G,
primarily with responsibilities in connection with Solvency II, until 31&nbsp;December 2012. </FONT></P> <P STYLE="margin-top:10px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Other principal external appointments
</B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Tim served as Chairman of the Association of British Insurers (ABI) between July 2010 and July 2012, having been a director since
2007. He was also chairman of the UK Government&#146;s non-bank lending taskforce, an industry-led taskforce that looked at the structural and behavioural barriers to the development of alternative debt markets in the UK, reporting its conclusions
and recommendations in March 2012. Tim was a Director of the Financial Reporting Council from 2004 to 2007. He also served as a Director on the Board of the Investment Management Association between 2004 and 2005. Non-executive Director at the
Ministry of Justice since December 2012. </FONT></P> <P STYLE="margin-top:10px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Committee membership </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Member of the Board Financial Risk Committee and the Board Remuneration Committee with effect from 1&nbsp;December 2012; Member of the Board Conduct, Reputation and Operational Risk Committee with
effect from 1&nbsp;February 2013; Member of the Board Audit Committee with effect from 1&nbsp;March 2013. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>5. Fulvio Conti (65)
</B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Non-executive Director </FONT></P> <P STYLE="margin-top:10px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Skills and experience </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Fulvio joined the Board in April 2006 as a non-executive
Director. Fulvio has significant financial and business experience from a career spanning over 35 years, and is currently CEO and General Manager of Enel SpA, the Italian energy company, where he was previously Chief Financial Officer from 1999 to
2005. During his career, Fulvio held the role of General Manager and CFO of Telecom Italia SpA from 1996-1998 and CFO for various private and government owned entities in Italy, was in charge of finance at Montedison-Compart, and was CFO of
Montecatini. He has also held positions in finance and operations in various affiliates of Mobil Oil Corporation in Italy and Europe, where he spent his initial career spanning over 20 years. </FONT></P> <P STYLE="margin-top:10px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Other principal external appointments </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Director of ENDESA SA since June 2009;
Director of AON PLC since January 2008; Director of the Italian Institute of Technology since October 2011; President of Eurelectric since June 2011; Independent Director of RCS MediaGroup S.p.A. since April 2012 and Vice President of Confindustria
since June 2012. </FONT></P> <P STYLE="margin-top:10px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Committee membership </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Member of the Board Audit Committee since September 2006.
</FONT></P></DIV><DIV STYLE="position:relative;float:right; width:32%;padding-right:9px;padding-bottom:8px;overflow:hidden;padding-top:3px">
 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>6. Simon Fraser (53) </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Non-executive Director </FONT></P> <P STYLE="margin-top:10px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Skills and experience </B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Simon joined the Board in March 2009 as a non-executive Director. He has extensive experience of the fund management industry, having started his
career at Fidelity International where he spent 27 years. During this time, Simon was President of the Investment Solutions Group and President of the Retirement Institute. He held a number of other positions during his time at Fidelity
International, including President, European&nbsp;&amp; UK Institutional Business, Global Chief Investment Officer, Chief Investment Officer for Asia Pacific and Chief Investment Officer of the European Investment Group. </FONT></P>
<P STYLE="margin-top:10px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Other principal external appointments </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Director of Fidelity European Values PLC since July 2002; Director of Fidelity Japanese Values PLC since May 2000; Chairman of The Merchants Trust PLC since May 2010; Chairman of Foreign&nbsp;&amp;
Colonial Investment Trust PLC since May 2010; Non-executive Director of Ashmore Group Plc since February 2012. </FONT></P> <P STYLE="margin-top:10px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Committee membership
</B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Member of the Board Audit Committee since May 2009; Member of the Board Remuneration Committee since May 2009. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>7. Reuben Jeffery III (59) </B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Non-executive Director </FONT></P> <P STYLE="margin-top:10px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Skills
and experience </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Reuben joined the Board in July 2009 as a non-executive Director. Reuben has been CEO of Rockefeller&nbsp;&amp; Co.,
Inc. since 2010 and has a broad range of banking and government experience. He previously served in the US government as Under Secretary of State for Economic, Energy and Agricultural Affairs (2007-2009), as Chairman of the Commodity Futures Trading
Commission (2005-2007); and as a Special assistant to the President on the staff of the National Security Council (2004-2005). Previous to his government service, Reuben spent eighteen years at Goldman, Sachs&nbsp;&amp; Co. (1983-2001) where he was
managing partner of Goldman Sachs in Paris (1997-2001) and led the firm&#146;s European Financial Institutions Group in London (1992-1997). Prior to joining Goldman Sachs, Reuben was a corporate attorney with Davis Polk&nbsp;&amp; Wardwell.
</FONT></P> <P STYLE="margin-top:10px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Other principal external appointments </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Member of the International Advisory Council of the China Securities Regulatory Commission; Member of the Advisory Board of TowerBrook Capital Partners LP; Member of the Board of Directors of the
Financial Services Volunteer Corps. </FONT></P> <P STYLE="margin-top:10px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Committee membership </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Member of the Board Financial Risk Committee since January 2010. </FONT></P></DIV><div style="clear:both; height:0px; font-size:0px">&nbsp;</div>

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</TABLE> <P STYLE="font-size:72px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
<DIV STYLE="position:relative;float:left; width:32%;padding-right:9px;padding-bottom:8px;overflow:hidden;padding-top:3px">
 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>8. Chris Lucas (52) </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Group Finance Director; Executive Director </FONT></P> <P STYLE="margin-top:10px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Skills and experience </B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Chris was appointed Group Finance Director and became a member of the Executive Committee in April 2007. He is responsible for a number of Group
functions including Finance, Investor Relations, Treasury, Tax, Corporate Development and Corporate Secretariat. Chris joined Barclays from PricewaterhouseCoopers LLP, where he was UK Head of Financial Services and Global Head of Banking and Capital
Markets. Chris has an extensive finance and accounting background, having spent most of his career working across financial services, including three years in New York as Head of the US Banking Audit Practice for Barclays for the 1999-2004 financial
years and subsequently held similar roles for other global financial services organisations. Chris has announced that he has decided to retire from the Company and has agreed to remain in his role until a successor has been appointed and an
appropriate handover has been completed. It is expected that this process will take a considerable time to complete. </FONT></P> <P STYLE="margin-top:10px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Other principal
external appointments </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">None held. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>9. Sir Andrew Likierman (69) </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Non-executive Director </FONT></P>
<P STYLE="margin-top:10px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Skills and experience: </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Sir
Andrew joined the Board in September 2004 as a non-executive Director. He has wide ranging experience within both public and private sectors and academia, and is currently Dean of the London Business School and Chairman of the National Audit Office.
Sir Andrew has held a number of high-profile roles, including 10 years spent as Managing Director, Financial Management, Reporting and Audit and Head of the Government Accountancy Service at HM Treasury. Sir Andrew also has a wealth of non-executive
experience that includes serving as a non-executive Director of the Bank of England. In his professional capacity, Andrew has held the presidency of the Chartered Institute of Management Accountants, served as a member of the Financial Reporting
Council for several years and was a member of the &#147;Cadbury Committee&#148; on UK Corporate Governance. Sir Andrew will retire from the Board at the 2013 AGM, having completed nine year&#146;s service on the Board this year. </FONT></P>
<P STYLE="margin-top:10px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Other principal external appointments: </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Trustee of the Institute for Government since September 2008; Chairman of </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Applied
Intellectual Capital Inc. (2006-2008); Non-executive Director of the Bank of England (2004-2008); Non-executive Director and Vice-Chairman of the Tavistock and Portman NHS Trust (2004-2008). </FONT></P> <P STYLE="margin-top:10px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Committee membership: </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Member of the Board Audit Committee since September
2004; Member of the Board Financial Risk Committee since September 2004.
</FONT></P></DIV><DIV STYLE="position:relative;float:left; margin-left:2%; width:32%;padding-right:9px;padding-bottom:8px;overflow:hidden;padding-top:3px">
 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>10. Dambisa Moyo (44) </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Non-executive Director </FONT></P> <P STYLE="margin-top:10px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Skills and experience: </B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Dambisa joined the Board in May 2010 as a non-executive Director. She is an international economist and commentator on the global economy, with a
background in financial services. Dambisa worked for the World Bank from 1993 to 1995. After completing a PhD in Economics, she worked for Goldman Sachs for eight years until November 2008 in the debt capital markets, hedge funds coverage and global
macroeconomics teams. </FONT></P> <P STYLE="margin-top:10px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Other principal external appointments: </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Non-executive Director of SABMiller PLC since June 2009; Non-executive Director of Barrick Gold Corporation since April 2011; Non-Executive Director of Lundin Petroleum AB (publ) until May 2012.
</FONT></P> <P STYLE="margin-top:10px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Committee membership: </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Member of the Board Financial Risk Committee since 2010; Member of the Board Conduct, Reputation and Operational Risk Committee since August 2011. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>11. Sir Michael Rake (65) </B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Deputy Chairman and Senior Independent Director </FONT></P> <P STYLE="margin-top:10px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Skills and experience: </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Sir Michael joined the Board in January 2008 as a
non-executive Director, and was appointed Senior Independent Director in October 2011 and Deputy Chairman in July 2012. Sir Michael has significant non-executive experience, both as a chairman and board member of listed companies. With over 30 years
spent with KPMG, Sir Michael has substantial financial and commercial experience gained in Continental Europe and the Middle East. He was Senior Partner of the UK firm from 1998-2002 and Chairman of KPMG International from 2002-2007. </FONT></P>
<P STYLE="margin-top:10px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Other principal external appointments: </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Chairman of BT Group plc since 2007; Chairman of easyjet Plc since January 2010 (Deputy Chairman June 2009-December 2009); Director of the Financial Reporting Council (2007-2011); Director of the
McGraw-Hill Companies since 2007; Chairman of the UK Commission for Employment and Skills (2007-2010); Chairman of Business in the Community (2004-2007). </FONT></P> <P STYLE="margin-top:10px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Committee membership: </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Chairman of the Board Audit Committee since March 2009
(member since January 2008); Member of the Board Financial Risk Committee since May 2009; Member of Board Corporate Governance and Nominations Committee since May 2009; Member of the Board Enterprise Wide Risk Committee since its formation in
January 2013. </FONT></P></DIV><DIV STYLE="position:relative;float:right; width:32%;padding-right:9px;padding-bottom:8px;overflow:hidden;padding-top:3px">
 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>12. Sir John Sunderland (67) </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Non-executive Director </FONT></P> <P STYLE="margin-top:10px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Skills and experience: </B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Sir John joined the Board in June 2005 as a non-executive Director. He has extensive business and Board level experience, having spent forty years
with Cadbury Schweppes PLC, where he became Chief Executive in 1996 and subsequently Chairman in 2003. Sir John has significant experience as a Director of UK listed companies, and has also held a number of similar positions in trade and
professional bodies, including the Confederation of British Industry and the Chartered Management Institute. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Other principal
external appointments: </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Chairman of Merlin Entertainments Limited since December 2009; Director of the Financial Reporting Council
from 2004 to 2011; Adviser to CVC Capital Partners; Association Member of BUPA; Governor of Reading University Council; Chancellor of Aston University; non-executive Director of AFC Energy plc; Deputy President of the Chartered Management Institute
until 2009 (President 2007-2008); Deputy President of the CBI until June 2008 (former member and President). </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Committee membership:
</B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Member of the Board Remuneration Committee in 2005 (Chairman since July 2012); Member of the Board Corporate Governance and
Nominations Committee since 2006, Member of the Board Conduct, Reputation and Operational Risk Committee since August 2011; Member of the Board Enterprise Wide Risk Committee since its formation in January 2013. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>13. Diane de Saint Victor (58) </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Non-executive Director </FONT></P> <P STYLE="margin-top:10px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Skills and experience: </B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Diane was appointed as a non-executive Director with effect from 1&nbsp;March 2013. She is currently General Counsel and Company Secretary and a
member of the Group Executive Committee of ABB Limited (ABB), the publicly listed international power and automation technologies company based in Switzerland, where her responsibilities include Head of Legal and Integrity Group. She was formerly
Senior Vice President and General Counsel of EADS, the European aerospace and defence company. </FONT></P> <P STYLE="margin-top:10px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Other principal external
appointments: </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">None held </FONT></P> <P STYLE="margin-top:10px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Committee Membership: </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Member of the Board Conduct, Reputation and Operational
risk Committee with effect from 1&nbsp;March 2013. </FONT></P></DIV><div style="clear:both; height:0px; font-size:0px">&nbsp;</div>

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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="6" COLOR="#5a6163"><A NAME="tx497934_63"></A><A NAME="tx497934_25"></A>People </FONT></P>
<P STYLE="font-size:48px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:36px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Throughout the challenges faced by Barclays during 2012 our colleagues have showed tremendous
resilience and resolve in the face of external criticism and uncertainty. Colleagues continue to rise to these challenges and embrace ways of working that are aligned to the new values and behaviours. They welcome the Transform Programme and the
chance to become the &#145;Go-To&#146; bank. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">We recognise that it is our colleagues who will implement our plans to deliver the
&#145;Go-To&#146; bank. By living our values every day they will make Barclays the bank we want it to be, a place where people want to join and a place where colleagues want to stay and develop their careers. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Successful employment relationships are built on mutual benefit and trust, and a more engaged workforce is always a more productive one. We build
trust through regular two-way communications, both informally, and through our Employee Opinion Surveys. These help us understand our colleagues&#146; views and concerns, and enable us to take their views into account as we deliver the
&#145;Go-To&#146; ambition. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The 2012 Employee Opinion Survey was completed by 84% of our colleagues in advance of the announcement of
the penalties in respect of LIBOR and EURIBOR rates. For the first time, we asked the same core set of questions across all our divisions, which will allow us to measure our progress going forward. These include whether our people feel proud to work
for Barclays, would recommend it as a place to work, and whether they believe in the goals and objectives of the company. Collectively, these questions allow us to understand the degree to which employees are engaged with the company. The overall
score for engagement was 73%, which is broadly in-line with the global benchmarks. The continuation of regular and open dialogue between the Group Chief Executive and the Executive Committee and colleagues, in events such as regular global Town
Halls, will be important in ensuring colleagues are well informed, understand the bank&#146;s objectives and remain engaged and connected with the future of Barclays. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Our &#145;Partnership&#146; approach to industrial relations where we have maintained regular and constructive dialogue with more than 30 unions, works councils and staff associations across the
globe, plays a key role in building and maintaining trust with our colleagues. Where we have had to restructure our business and this has resulted in job losses, we have worked closely with employee representatives to avoid compulsory redundancies
where possible, ensuring colleagues leaving Barclays have been supported and treated with respect. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Barclays colleagues remain focused
on serving customers and clients as reflected in our 2012 business results. This focus is supported by a distinctive culture underpinned by a common purpose, and clearly articulated set of values and behaviours. We believe that leadership behaviour
drives culture, which in turn impacts all aspects of organisational performance. A group of Barclays &#145;Values Leaders&#146; from all businesses and levels will deliver Barclays Purpose and Values training to all employees. In addition a
group-wide, standard and assured induction will be designed and implemented to ensure our colleagues will understand and be engaged in &#145;who we are&#146; and &#145;how we work together&#146;. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">We will assess business unit and individual performance against our goals through a balanced scorecard for the bank. This will measure not just
what we deliver, but also how we do business, our impact as a company, and adherence to our values. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Our People processes, specifically
those linked to Performance Management, Reward, Talent (including promotions and mobility), Leadership and Learning are subject to increased focus and, where appropriate, standardisation, as we devise clear strategies for each to support the
Transform Programme and strongly reflect the Barclays Values and Behaviours. We will continue to base variable remuneration on individuals&#146; performance ratings and the performance of their business. We will also continue to encourage our people
to be involved and to share in our success by regularly inviting them to participate in our &#145;all
</FONT></P></DIV><DIV STYLE="position:relative;float:right; width:48%;padding-right:9px;padding-bottom:8px;overflow:hidden;padding-top:3px">
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employee&#146; share plans. Further details of our approach to remuneration are included in the Remuneration Report on pages 39-68. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">We have established a global Diversity and Inclusion strategy to create an environment that ensures we treat people fairly and understand how to let people from all backgrounds feel able to
contribute to Barclays. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">We have clear objectives to: increase representation and decrease turnover of under-represented populations at
senior levels; maintain a positive climate of inclusion and engagement; and increase external recognition as a diverse and inclusive organisation. We have a wide range of initiatives in place to achieve our mission, including training for all
employees, workplace and working practice adjustments for persons with disabilities, and identification of high potential women with relevant programmes to support their career development and retention. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">We are proud that many of our initiatives have received external recognition around the world. Examples of this external recognition include being
ranked second in the UK Business Disability Forum benchmark and our Cultural Diversity Network being awarded Network of the Year by Race for Opportunity. We recognise there is more to be accomplished and will focus on the following priorities for
2013 and beyond: </FONT></P> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Full scale deployment of our Unconscious Bias programme to our global Managing Director population; </FONT></P></TD></TR></TABLE>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Continued momentum towards our 2015 Board-level female representation target of 25%; and </FONT></P></TD></TR></TABLE>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Identifying opportunities to make lives easier for diverse customers, following the success of initiatives such as Talking ATMs in 2012.
</FONT></P></TD></TR></TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">We continue to provide a range of opportunities and tailored training programmes for graduates &#150; recruiting a
total of 1,100 graduates during 2012 onto our global graduate programmes. We also continued to play an active role in addressing societal challenges around employability in 2012. For instance, our innovative Apprenticeship Programme, which seeks to
contribute to addressing the problem of youth unemployment in the UK, has recently recruited its 500th apprentice. We are committed to recruiting a total of 1,000 apprentices by the middle of 2013. The Big Barclays Apprentice Conversation was an
event that provided our apprentices the opportunity to meet and speak with senior leaders, including the Executive Committee and Antony Jenkins. Providing this two-way exchange of ideas and views will help us tailor our programme for future years
and provided a valuable insight into the drivers and motivations of an important talent pool and customer base. </FONT></P> <P STYLE="font-size:14px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE" ALIGN="center">


<TR>
<TD WIDTH="55%"></TD>
<TD VALIGN="bottom" WIDTH="3%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="3%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="3%"></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR BGCOLOR="#00aeef">
<TD VALIGN="bottom"> <P STYLE="font-size:1px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff"></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff">&nbsp;&nbsp;FTE by region</FONT></B></FONT></P> <P STYLE="font-size:1px;margin-top:0px;margin-bottom:1px">&nbsp;</P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD COLSPAN="2" VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD COLSPAN="2" VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD COLSPAN="2" VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef">&nbsp;<FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="right" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>2012</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="right" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">2011</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="right" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">2010</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD></TR>


<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">UK</FONT></P></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>55,300</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">56,100</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">58,100</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Africa &amp; Middle East</FONT></P></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>45,200</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">47,900</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">50,400</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Continental Europe</FONT></P></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>11,100</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">11,600</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">13,600</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Americas</FONT></P></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>11,100</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">10,900</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">11,500</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Asia Pacific</FONT></P></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>16,500</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">14,600</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">13,900</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Total</FONT></P></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>139,200</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">141,100</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">147,500</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
</TABLE> <P STYLE="font-size:16px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE" ALIGN="center">


<TR>
<TD WIDTH="91%"></TD>
<TD VALIGN="bottom" WIDTH="9%"></TD>
<TD></TD></TR>
<TR BGCOLOR="#00aeef">
<TD VALIGN="middle" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:1px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff"></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff">&nbsp;&nbsp;Global employment statistics</FONT></B></FONT></P> <P STYLE="font-size:1px;margin-top:0px;margin-bottom:1px">&nbsp;</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff"></FONT><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff">%&nbsp;&nbsp;</FONT></TD></TR></TABLE>
<P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px">


<IMG SRC="g497934tx73anbnew.jpg" ALT="LOGO">
 </P> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="line-height:1px;margin-top:0px;margin-bottom:2px;border-bottom:1pt solid #00aeef">&nbsp;</P></DIV><div style="clear:both; height:0px; font-size:0px">&nbsp;</div>

 <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="85%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE">

<TR>
<TD WIDTH="51%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="48%"></TD></TR>
<TR>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">38&nbsp;&nbsp;I&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"></TD></TR></TABLE>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#00aeef"><A NAME="tx497934_64"></A><A NAME="tx497934_26"></A>Remuneration report </FONT></P>
<P STYLE="margin-top:2px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="6" COLOR="#5a6163"><A NAME="tx497934_65"></A>Statement from the Chairman of the </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="6" COLOR="#5a6163">Board Remuneration Committee </FONT></P> <P STYLE="font-size:48px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;
</FONT></P><DIV STYLE="position:relative;float:left; margin-right:1%; width:48%;padding-right:9px;padding-bottom:8px;overflow:hidden;padding-top:3px">

<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE" ALIGN="center" BGCOLOR="#00aeef">


<TR>
<TD WIDTH="4%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="47%"></TD>
<TD VALIGN="bottom" WIDTH="5%"></TD>
<TD WIDTH="41%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="4%"></TD></TR>


<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" COLSPAN="3"> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:1px"><FONT STYLE="font-family:ARIAL" SIZE="3" COLOR="#ffffff">Current Remuneration</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" COLSPAN="3"><FONT STYLE="font-family:ARIAL" SIZE="3" COLOR="#ffffff">Committee members</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"></TD></TR>
<TR>
<TD HEIGHT="13"></TD>
<TD HEIGHT="13" COLSPAN="2"></TD>
<TD HEIGHT="13" COLSPAN="2"></TD>
<TD HEIGHT="13" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff"></FONT><FONT STYLE="font-family:ARIAL" SIZE="1"><B><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff">Chairman</FONT></B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff"></FONT><FONT STYLE="font-family:ARIAL" SIZE="1"><B><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff">Members</FONT></B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"></TD></TR>
<TR>
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<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff">Sir John Sunderland</FONT></TD>
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<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff">Sir David Walker</FONT></TD>
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<TD VALIGN="top" COLSPAN="3"> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:1px"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#5a6163">2012 Remuneration</FONT></P></TD>
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STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT>&nbsp;&nbsp;</FONT></P></TD>
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<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">While underlying financial performance has significantly improved, we have materially reduced remuneration. Variable remuneration has been reduced overall by 16% and fixed
remuneration by 7% year on year.</FONT></TD>
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<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Remuneration as a proportion of adjusted profit before tax and adjusted net operating income is down significantly, as are average individual bonus levels. We have made
substantial reductions in remuneration, including clawing back &pound;300m of unvested deferred and long term incentive awards and risk adjustments of &pound;860m to our 2012 incentives pool to reflect the LIBOR investigation and other risk issues
in 2012. Our deferral rates significantly exceed FSA requirements.</FONT></TD>
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STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT>&nbsp;&nbsp;</FONT></P></TD>
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<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The Barclays Long Term Incentive Plan has been restricted in 2013 to our most senior employees. The performance condition will include financial and risk measures along with
other measures from a balanced scorecard. After vesting a new two year holding period will apply to extend the plan to five years in total. We have also introduced new shareholding requirements for executive Directors and senior
executives.</FONT></TD>
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<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT
STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT>&nbsp;&nbsp;</FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:1px"><FONT SIZE="1">&nbsp;</FONT></P></TD>
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<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">These actions represent a major repositioning of Barclays remuneration and demonstrate our determination to pay no more than
necessary, while remaining competitive.</FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:1px"><FONT SIZE="1">&nbsp;</FONT></P></TD>
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<TD VALIGN="top" COLSPAN="3"> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:1px"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#5a6163">Priorities for 2013</FONT></P></TD>
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<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">We will continue to make sustainable reductions in remuneration levels while retaining the talent needed to execute the Board&#146;s strategy.</FONT></TD>
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<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Performance assessments and performance related remuneration will reflect both what and how business results are achieved.</FONT></TD>
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<P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
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<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">We will maintain a frequent, frank and constructive dialogue with our shareholders and regulators on remuneration matters, as we have in 2012.</FONT></TD>
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<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT
STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT>&nbsp;&nbsp;</FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:1px"><FONT SIZE="1">&nbsp;</FONT></P></TD>
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<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Our new remuneration policy will protect and promote shareholders&#146; interests.</FONT></P>
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<IMG SRC="g497934tx74a.jpg" ALT="LOGO">
 </P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#5a6163">Dear shareholder </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">As Chairman of the Board Remuneration Committee I am pleased to introduce the Directors&#146; Remuneration Report for 2012. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">I hope that 2012 will be seen as a turning point in the way Barclays approaches remuneration. For 2012 and in future we are taking a different approach to the balance between Directors&#146; and
employees&#146; remuneration, and returns for shareholders. We have been justifiably criticised for failures to engage effectively with and explain our decisions to shareholders and the wider public, as well as on some occasions being criticised for
the decisions themselves. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Reports of this kind tend towards standard disclosures and language. It is true, but arguably not very
illuminating, to say that our role as a Committee is to ensure that Barclays is able to motivate, retain and incentivise the people needed to deliver the Board&#146;s strategy. We need to go further, and explain that while discharging this role we
must also ensure that we pay no more than necessary to achieve Barclays objectives, and that we eliminate undeserved remuneration and that by doing so we protect and promote the interests of our shareholders. We must do all this on the basis of
transparent compliance and engagement with our regulators. </FONT></P></DIV><div style="clear:both; height:0px; font-size:0px">&nbsp;</div>

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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#00aeef">Remuneration report </FONT></P> <P STYLE="margin-top:2px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="4" COLOR="#5a6163">Statement from the Chairman of the Board Remuneration Committee continued </FONT></P> <P STYLE="font-size:48px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;
</FONT></P><DIV STYLE="position:relative;float:left; margin-right:1%; width:48%;padding-right:9px;padding-bottom:8px;overflow:hidden;padding-top:3px">
 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Business context in 2012 </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Despite challenging economic conditions, 2012 saw Group adjusted income increase by 2% and Group adjusted profit before tax increase by 26% on 2011 levels. Adjusted return on average
shareholders&#146; equity increased to 7.8% (2011: 6.6%). Statutory Group income decreased by 24% and profit before tax decreased 96%. Return on average shareholders&#146; equity decreased to negative 1.9% (2011: positive 5.8%). </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Despite this strong financial performance a number of significant risk and compliance issues hit Barclays during the year. The LIBOR investigation
and other issues including PPI and interest rate hedging products redress resulted in a loss of confidence in the bank, financial penalties, and the resignations of both Marcus Agius and Bob Diamond among other senior executives. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">We have marked these failings by significant risk adjustments to the 2012 incentives pool and to individual remuneration decisions. We made
reductions of &pound;860m to the 2012 incentives pool and a further &pound;300m has been clawed back from unvested deferred and long term incentive awards. These decisions show our commitment to link pay to performance and to align remuneration with
risk. Performance should be measured not just in financial terms but also in terms of behaviour, sustainability, risk management and long term value creation. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Remuneration Committee work in 2012 </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">A summary of the key subject areas covered
at the Committee&#146;s 2012 meetings can be found on page 60. We have reviewed and changed our policies. We have carefully considered our total remuneration spend, the structure of remuneration and individual decisions. In addition to incentive
awards and funding we have focused on broader remuneration design, frameworks and policy, and regulatory and risk issues. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">We have
reviewed and adopted a new remuneration policy. This reflects the direction of Barclays more broadly under the Transform Programme led by Antony Jenkins, and the adoption across the whole Group of a new statement of Barclays Purpose and Values.
</FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">We have made significant reductions to our remuneration costs both in absolute terms and relative to adjusted net operating income and
adjusted profit before tax. These are not one-off changes. They reflect the Committee&#146;s view that we are now on a multi-year path to reposition Barclays remuneration. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Accordingly, we have reduced both the incentives pool and average individual incentive awards across the Group. At a Group level 2012 total incentive awards are down 16% on 2011 levels. Within the
Investment Bank the reduction is 20%. As a result our compensation ratios (i.e. the proportions of adjusted net operating income and adjusted profit before tax used to pay all remuneration) are now significantly lower, having moved from the market
median to the lower quartile within our industry. This is a significant repositioning of our remuneration costs. Our intention is to continue to manage down these ratios over time. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The average bonus across the Group in 2012 (excluding the Investment Bank) has fallen by 8% to &pound;4,800. In the Investment Bank the average bonus in 2012 has fallen by 17% to &pound;54,100. 45%
of all Investment Bank employees received no bonus for 2012. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Outside of our formal meetings, we have listened to shareholders&#146;
concerns by meeting and engaging with them more frequently. Our discussions have been frank and clear. We have been challenged and assisted by the insight and recommendations this engagement generates. Shareholders&#146; concerns that we have
discussed include senior executive remuneration levels, remuneration in the Investment Bank in particular, and risk alignment in remuneration decisions. Among the changes we have made reflecting shareholders&#146; views are changes to the Barclays
Long Term Incentive Plan. We have also introduced a new shareholding requirement for executive Directors and senior executives which is at the higher end of the market.
</FONT></P></DIV><DIV STYLE="position:relative;float:right; width:48%;padding-right:9px;padding-bottom:8px;overflow:hidden;padding-top:3px">
 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Our remuneration report </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">We have sought to improve the transparency and clarity of our remuneration disclosures. We have adopted in this report many aspects of HM Government&#146;s proposed regulations on directors&#146;
remuneration reporting. We have done this a year before these are expected to apply formally to Barclays. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">We have made significant
structural changes to this year&#146;s report. In outline, after the remuneration questions and answers the report has the following sections: </FONT></P> <P STYLE="font-size:10px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">An explanation of our new remuneration policy for all Barclays employees (pages 41-42); </FONT></P></TD></TR></TABLE>
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<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
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<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">A detailed summary of how the 2012 incentives pool was determined, including risk adjustments (pages 43-47); </FONT></P></TD></TR></TABLE>
<P STYLE="font-size:10px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
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<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">An explanation of our forward looking policy for Directors&#146; remuneration (pages 48-52); </FONT></P></TD></TR></TABLE>
<P STYLE="font-size:10px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">An explanation of how 2012 Director remuneration decisions were implemented (pages 53-58); and </FONT></P></TD></TR></TABLE>
<P STYLE="font-size:10px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TR>
<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Details of the Committee&#146;s work in 2012 and other remuneration information including statutory disclosures (pages 59-68).
</FONT></P></TD></TR></TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The tables marked &#145;audited&#146; in the report have been audited by Barclays auditors, PricewaterhouseCoopers
LLP. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Focus in 2013 </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The Committee&#146;s focus in the coming months will be to continue the process of repositioning remuneration at Barclays, and regaining shareholder and public understanding and confidence. In
future, as part of the Transform Programme, individual performance will be assessed against a balanced scorecard and performance will be measured against Barclays values as well as other measures. The new performance assessment process will be in
place for all senior executives during 2013 and for all other employees during 2014. Our new remuneration policy summarises our objectives. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">We will continue to challenge assertions about the levels of pay required to attract, retain and motivate our people. We will not sanction paying more than is necessary, and will take appropriate
risk, supported by our shareholders, in exerting further downward pressure on remuneration. We committed last year to a journey to bring down our compensation ratios and have made good progress this year, with the Group compensation to adjusted net
operating income ratio declining to 38% (2011: 42%). The Group compensation to net operating income ratio increased to 46% (2011: 39%). We believe a ratio in the mid-30s is a sustainable position in the medium term which will ensure that we can
continue to pay our people competitively for performance while also enabling us to deliver a greater share of the income we generate to shareholders. We will be informed in this work by a continuing constructive engagement and dialogue with our
shareholders and our other stakeholders. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">I believe 2012 saw us move significantly forward in achieving the right balance between the
priorities of our various stakeholders. Reduced remuneration costs, increasingly robust risk-adjustments to both the incentives pool and individual incentive awards, tougher performance conditions, new shareholding requirements, and improved
remuneration disclosures create a best practice framework which we will continue to develop in the coming year and beyond. </FONT></P> <P STYLE="margin-top:14px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">On behalf of
the Board </FONT></P> <P STYLE="font-size:16px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px">


<IMG SRC="g497934tx75.jpg" ALT="LOGO">
 </P> <P STYLE="margin-top:16px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Sir John Sunderland </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Chairman, Board Remuneration Committee </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">5&nbsp;March 2013 </FONT></P>
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<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;I&nbsp;&nbsp;40</FONT></TD>
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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="6" COLOR="#5a6163"><A NAME="tx497934_67"></A>Remuneration policy for all employees </FONT></P>
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<TD VALIGN="top"> <P STYLE="font-size:2px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:0.50em"><FONT STYLE="font-family:ARIAL" SIZE="2" COLOR="#00aeef">Barclays approach to
remuneration</FONT></P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:0.50em"><FONT STYLE="font-family:ARIAL" SIZE="2" COLOR="#5a6163">This section sets out Barclays
remuneration policy for all employees, explaining the purpose and principles underlying the structure of remuneration packages, and how the policy links remuneration to the achievement of sustained high performance and long term value
creation.</FONT></P> <P STYLE="font-size:48px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:1px">&nbsp;</P></TD></TR>
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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Remuneration policy </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The Committee reviews and updates the Barclays remuneration policy periodically. For 2013, as part of the Transform Programme, the policy has been significantly updated. The principles set out in
the policy underpin both 2012 remuneration decisions and the Committee&#146;s objectives for 2013 and beyond. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The new remuneration
policy is set out in the table below. </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD VALIGN="middle" COLSPAN="3"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff"></FONT><FONT STYLE="font-family:ARIAL" SIZE="1"><B><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff">&nbsp;Barclays remuneration
decisions:</FONT></B></FONT></TD></TR>
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<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;&nbsp;1.</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Support the goal of becoming the &#145;Go-To&#146; bank by attracting, retaining and
competitively rewarding colleagues with the ability, experience, skill, values and behaviours to deliver that goal.</FONT></P> <P STYLE="font-size:2px;margin-top:0px;margin-bottom:1px"><FONT SIZE="1">&nbsp;</FONT></P></TD></TR>
<TR BGCOLOR="#e7f7ff">
<TD HEIGHT="5"></TD>
<TD HEIGHT="5" COLSPAN="2"></TD></TR>
<TR BGCOLOR="#e7f7ff">
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;&nbsp;2.</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Will only reward business results when these are achieved in a manner consistent with
Barclays values and behaviours:</FONT></P> <P STYLE="font-size:2px;margin-top:0px;margin-bottom:1px"><FONT SIZE="1">&nbsp;</FONT></P></TD></TR>
</TABLE> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="21"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="10" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Respect: </B>We respect and value those we work with, and the contribution that they make. </FONT></P></TD></TR></TABLE>
<P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TR>
<TD WIDTH="21"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="10" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Integrity: </B>We act fairly, ethically and openly in all we do. </FONT></P></TD></TR></TABLE>
<P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="21"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="10" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Service: </B>We put our clients and customers at the centre of what we do. </FONT></P></TD></TR></TABLE>
<P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="21"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="10" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Excellence: </B>We use our energy, skills and resources to deliver the best, sustainable results. </FONT></P></TD></TR></TABLE>
<P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TR>
<TD WIDTH="21"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="10" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Stewardship: </B>We are passionate about leaving things better than we found them. </FONT></P></TD></TR></TABLE>
<P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TR BGCOLOR="#e7f7ff">
<TD VALIGN="top" STYLE="BORDER-TOP:1px solid #00aeef; BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:1px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;&nbsp;3.</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #00aeef; BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-TOP:1px solid #00aeef; BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Protect and promote shareholder interests by incentivising colleagues to deliver sustained performance and create long term value through the delivery of Barclays goal. Those decisions will reflect
that performance for individuals and in aggregate. Barclays will pay competitively for high performance but will not pay more than the amount appropriate to maximise the long term value of the bank for its shareholders.</FONT></P>
<P STYLE="font-size:2px;margin-top:0px;margin-bottom:1px"><FONT SIZE="1">&nbsp;</FONT></P></TD></TR>
<TR BGCOLOR="#e7f7ff">
<TD HEIGHT="5"></TD>
<TD HEIGHT="5" COLSPAN="2"></TD></TR>
<TR BGCOLOR="#e7f7ff">
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;&nbsp;4.</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Create a direct and recognisable alignment between remuneration and risk exposure, as well as adjusting current and deferred
incentives for current and historic risk, including malus adjustments, as appropriate.</FONT></P> <P STYLE="font-size:2px;margin-top:0px;margin-bottom:1px"><FONT SIZE="1">&nbsp;</FONT></P></TD></TR>
<TR BGCOLOR="#e7f7ff">
<TD VALIGN="top" STYLE="BORDER-TOP:1px solid #00aeef; BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:1px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;&nbsp;5.</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #00aeef; BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-TOP:1px solid #00aeef; BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Should be as simple and clear for colleagues and stakeholders as possible &#150; as is the process used to determine them.</FONT></P> <P STYLE="font-size:2px;margin-top:0px;margin-bottom:1px"><FONT
SIZE="1">&nbsp;</FONT></P></TD></TR>
<TR BGCOLOR="#e7f7ff">
<TD HEIGHT="5"></TD>
<TD HEIGHT="5" COLSPAN="2"></TD></TR>
<TR BGCOLOR="#e7f7ff">
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;&nbsp;6.</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Ensure that balance between shareholder returns and remuneration is appropriate, clear and
supports long term shareholder interests.</FONT></P> <P STYLE="font-size:2px;margin-top:0px;margin-bottom:1px"><FONT SIZE="1">&nbsp;</FONT></P></TD></TR>
</TABLE> </DIV><DIV STYLE="position:relative;float:right; width:48%;padding-right:9px;padding-bottom:8px;overflow:hidden;padding-top:3px">
 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Remuneration and performance </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Adherence to the principles of the new remuneration policy means that remuneration decisions for all employees across the whole of Barclays are aligned with and support the achievement of Barclays
goal of becoming the &#146;Go-To&#146; bank. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">This is achieved by linking remuneration to performance, assessing both &#145;what&#146;
is achieved and also &#145;how&#146; goals are achieved. So we will measure and reward our people, not just on commercial success but on how they live Barclays values and behaviours in their daily work. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">We will embed Barclays values in the way remuneration is managed by incorporating our balanced scorecard of both financial and non-financial
measures into the performance appraisal process. Our balanced scorecard is a key part of the cultural change that is required to deliver the strategy of the Transform Programme. It measures Barclays performance across the following dimensions &#150;
Customers and Clients, Colleagues, Citizenship, Conduct and Company. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Linking our employee performance assessments and remuneration
decisions to the balanced scorecard promotes a clear and direct alignment between remuneration policy and Barclays strategy. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">We will
implement the following changes and improvements to the performance assessment process: </FONT></P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TR>
<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">During 2013 all senior executives&#146; performance assessment and objectives will be explicitly linked to the balanced scorecard and to our
values. They will therefore see how their own performance, and the assessment of it by their manager (and the Committee), is linked to Barclays strategy; </FONT></P></TD></TR></TABLE>
<P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Similar linkage of performance assessment and variable remuneration decisions for all employees will follow during 2013 and 2014;
</FONT></P></TD></TR></TABLE> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Personal objectives will be closely aligned with scorecards for the individual business or function in which employees work, which will align
with and support the Group balanced scorecard; </FONT></P></TD></TR></TABLE> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">In addition to an assessment of &#145;what&#146; each employee has achieved, appraisals will also include an overall, holistic, review of
behaviours which will overlay a specific focus on &#145;how&#146; the results of the individual&#146;s work have been achieved, and whether they have been achieved in a way which is consistent with our values; and </FONT></P></TD></TR></TABLE>
<P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TR>
<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The balanced scorecard approach will also underpin business and Group-wide decisions, in particular the Committee&#146;s determination of
incentive pools. It will also be part of the performance condition attached to awards under the 2013-2015 Barclays Long Term Incentive Plan. </FONT></P></TD></TR></TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">This means that all individual incentive decisions will be linked to Group, business (or function) and individual performance.
</FONT></P></DIV><div style="clear:both; height:0px; font-size:0px">&nbsp;</div>

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<TD WIDTH="48%"></TD></TR>
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<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;I&nbsp;&nbsp;41</FONT></TD></TR></TABLE>


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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#5a6163">Remuneration policy for all employees continued </FONT></P>
<P STYLE="font-size:96px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:96px;margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Remuneration structure
</B></FONT></P><DIV STYLE="position:relative;float:left; margin-right:1%; width:48%;padding-right:9px;padding-bottom:8px;overflow:hidden;padding-top:3px">
 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Employees receive salary, pension and benefits and are eligible to be considered for a discretionary
bonus. Employees in some customer-facing businesses participate in incentive plans including plans based on customer feedback and other measures of the quality of service they provide to customers. The table on this page provides further
</FONT></P></DIV><DIV STYLE="position:relative;float:right; width:48%;padding-right:9px;padding-bottom:8px;overflow:hidden;padding-top:3px">
 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">details of our employee remuneration structure. The structure is aligned with the remuneration
structure for executive Directors set out in more detail in the Directors&#146; remuneration policy section of this report. In 2013, only executive Directors and the most senior executives will participate in the Barclays Long Term Incentive Plan.
</FONT></P></DIV><div style="clear:both; height:0px; font-size:0px">&nbsp;</div>
 <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="font-size:24px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TR BGCOLOR="#00aeef">
<TD VALIGN="middle" COLSPAN="5"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff"></FONT><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff">&nbsp;&nbsp;Fixed
remuneration</FONT></B></FONT></TD></TR>
<TR>
<TD HEIGHT="5"></TD>
<TD HEIGHT="5" COLSPAN="2"></TD>
<TD HEIGHT="5" COLSPAN="2"></TD></TR>
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<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="2" COLOR="#00aeef">&nbsp;Salary</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:2px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT
STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></P>
<P STYLE="font-size:4px;margin-top:0px;margin-bottom:1px" align="left"><FONT SIZE="1">&nbsp;</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Salaries reflect individuals&#146; skills and experience and are reviewed annually in
the context of annual performance assessment. They are increased where justified by role change, increased responsibility or where justified by the latest available market data. Salaries may also be increased in line with local statutory
requirements and in line with union and works council commitments.</FONT></P> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:1px"><FONT SIZE="1">&nbsp;</FONT></P></TD></TR>
<TR>
<TD HEIGHT="5"></TD>
<TD HEIGHT="5" COLSPAN="2"></TD>
<TD HEIGHT="5" COLSPAN="2"></TD></TR>
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<TD VALIGN="top" NOWRAP><FONT STYLE="font-family:ARIAL" SIZE="2" COLOR="#00aeef">&nbsp;Pension&nbsp;and&nbsp;benefits</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"> <P STYLE="font-size:2px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT
STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:1px" align="left"><FONT SIZE="1">&nbsp;</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The provision of a market competitive package of benefits is important to attracting and retaining the talented staff Barclays
needs to deliver Barclays strategy. A new defined contribution pension scheme, the Barclays Pension Savings Plan, and a flexible benefits scheme, &#145;My Rewards&#146;, was launched in the UK in September 2012. This enables employees to choose from
a range of benefits including the level of their pension contribution, life assurance and private health benefits, annual leave (with the ability to &#145;buy&#146; and &#145;sell&#146; subject to certain parameters), and participation in Barclays
&#145;all employee&#146; share plans (HMRC approved for UK participants). The cost of providing the benefits is defined and controlled. My Rewards will be rolled out globally to all employees over the next few years.</FONT></P>
<P STYLE="font-size:14px;margin-top:0px;margin-bottom:1px"><FONT SIZE="1">&nbsp;</FONT></P></TD></TR>
<TR BGCOLOR="#00aeef">
<TD VALIGN="middle" NOWRAP><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff"></FONT><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff">&nbsp;&nbsp;Variable&nbsp;
remuneration</FONT></B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD></TR>
<TR>
<TD HEIGHT="5"></TD>
<TD HEIGHT="5" COLSPAN="2"></TD>
<TD HEIGHT="5" COLSPAN="2"></TD></TR>
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<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2" COLOR="#00aeef">&nbsp;Annual bonus</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"> <P STYLE="font-size:3px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:1px" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT
STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Annual bonuses incentivise the achievement of Group, business and individual objectives.</FONT></TD></TR>
<TR>
<TD HEIGHT="5"></TD>
<TD HEIGHT="5" COLSPAN="2"></TD>
<TD HEIGHT="5" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The ability to recognise performance through variable remuneration enables the Group to control flexibly its cost base and to react to events and market circumstances.
Bonuses remain a key feature of remuneration practice in the highly competitive and mobile market for talent within the financial services sector. The Committee is careful to control the proportion of variable to fixed remuneration paid to
individuals.</FONT></TD></TR>
<TR>
<TD HEIGHT="5"></TD>
<TD HEIGHT="5" COLSPAN="2"></TD>
<TD HEIGHT="5" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"> <P STYLE="font-size:2px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:1px" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT
STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Bonus deferral requirements are significantly in excess of FSA requirements.</FONT></TD></TR>
<TR>
<TD HEIGHT="5"></TD>
<TD HEIGHT="5" COLSPAN="2"></TD>
<TD HEIGHT="5" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"> <P STYLE="font-size:2px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:1px" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT
STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">For FSA Remuneration Code Staff (Code Staff) the deferral rate is a minimum of 40% (for bonuses of no more than &pound;500,000) or 60% (for bonuses of more than
&pound;500,000).</FONT></TD></TR>
<TR>
<TD HEIGHT="5"></TD>
<TD HEIGHT="5" COLSPAN="2"></TD>
<TD HEIGHT="5" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"> <P STYLE="font-size:2px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:1px" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT
STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">For non Code Staff, bonuses over &pound;65,000 are subject to a graduated level of deferral.</FONT></TD></TR>
<TR>
<TD HEIGHT="5"></TD>
<TD HEIGHT="5" COLSPAN="2"></TD>
<TD HEIGHT="5" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"> <P STYLE="font-size:2px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:1px" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT
STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">2012 bonuses awarded to Managing Directors in the Investment Bank are 100% deferred.</FONT></TD></TR>
<TR>
<TD HEIGHT="5"></TD>
<TD HEIGHT="5" COLSPAN="2"></TD>
<TD HEIGHT="5" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"> <P STYLE="font-size:2px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:1px" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT
STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Deferred bonuses are split equally between deferred cash bonuses under the Cash Value Plan (CVP) and deferred share bonuses under the Share Value Plan (SVP), each vesting
in equal annual tranches over three years subject to continued service and malus. For Code Staff an additional six month holding period will be applied to 2012 share bonuses when they vest.</FONT></TD></TR>
<TR>
<TD HEIGHT="5"></TD>
<TD HEIGHT="5" COLSPAN="2"></TD>
<TD HEIGHT="5" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:2px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:1px" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT
STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Deferred bonuses are subject to malus conditions which enable the Committee to reduce
the vesting level of deferred bonuses (including to nil) in the event of, for example, employee negligence or inappropriate conduct, or a material failure of risk management.</FONT></P> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:1px"><FONT
SIZE="1">&nbsp;</FONT></P></TD></TR>
</TABLE>
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<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">42&nbsp;&nbsp;I&nbsp;&nbsp;</FONT></TD>
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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="6" COLOR="#5a6163"><A NAME="tx497934_68"></A>2012 incentives </FONT></P>
<P STYLE="font-size:72px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:10px;margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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<TR>
<TD VALIGN="top" BGCOLOR="#e7f7ff"> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:0.50em"><FONT STYLE="font-family:ARIAL" SIZE="2" COLOR="#00aeef">2012 total incentive awards</FONT></P>
<P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:0.50em"><FONT STYLE="font-family:ARIAL" SIZE="2" COLOR="#5a6163">This section provides details of how 2012 total incentive
award decisions were made.</FONT></P> <P STYLE="font-size:16px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:14px;margin-top:0px;margin-bottom:1px"><FONT SIZE="1">&nbsp;</FONT></P></TD></TR>
</TABLE>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;
</P><DIV STYLE="position:relative;float:left; margin-right:1%; width:48%;padding-right:9px;padding-bottom:8px;overflow:hidden;padding-top:3px">
 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Business context and 2012 performance highlights </B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Despite the strong financial performance set out below a number of significant risk and compliance issues hit Barclays during the year. The LIBOR
investigation and other events including PPI and interest rate hedging products redress resulted in a loss of confidence in the Group, financial penalties, and the resignations of Marcus Agius, Bob Diamond and other senior executives. We have marked
these failings by making significant risk adjustments to the 2012 incentives pool and to unvested deferred and long term incentive awards, and in the individual remuneration decisions for 2012 for senior executives. Against this challenging
background, our financial performance for 2012 has nonetheless been strong. 2012 performance includes the following highlights which the Committee took into account in making its remuneration decisions for 2012: </FONT></P>
<P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TR>
<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Adjusted profit before tax was up 26% to &pound;7,048m for the 12 months ended 31&nbsp;December 2012, with an improvement of 46% in Corporate and
Investment Banking, and 52% in Wealth and Investment Management. Statutory profit before tax decreased 96% to &pound;246m (2011: &pound;5,879m); </FONT></P></TD></TR></TABLE> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Statutory profit before tax decreased to &pound;246m (2011: &pound;5,879m), including own credit charge of &pound;4,579m (2011: gain of
&pound;2,708m), gain on disposal of BlackRock, Inc. investment of &pound;227m (2011: impairment/loss of &pound;1,858m), &pound;1,600m (2011: &pound;1,000m) provision for PPI redress, and &pound;850m (2011: &pound;nil) provision for interest rate
hedging products redress; </FONT></P></TD></TR></TABLE> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
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<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The Investment Bank profit before tax increased 37% to &pound;4,063m driven by income growth of 13% and reduced operating expenses;
</FONT></P></TD></TR></TABLE> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
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<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Adjusted income was up 2% at &pound;29,043m despite challenging economic conditions, the continuing low interest rate environment and
non-recurrence of gains from the disposal of hedging instruments in 2011 of &pound;1,061m. Statutory income decreased 24% to &pound;24,691m driven by the increase in the own credit charge of &pound;4,579m (2011: gain of &pound;2,709m);
</FONT></P></TD></TR></TABLE> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TR>
<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Adjusted return on average shareholders&#146; equity increased to 7.8% (2011: 6.6%) with improvements in most of our businesses. Statutory return
on average shareholders&#146; equity was negative 1.9% (2011: positive 5.8%). Return on average shareholders&#146; equity decreased to negative 1.9% (2011: positive 5.8%); </FONT></P></TD></TR></TABLE>
<P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Adjusted operating expenses were down 3% to &pound;18,539m as we reduced non-performance costs by 3% to &pound;16,114m and performance costs by
4% to &pound;2,425m. Statutory operating expenses were up 1% to &pound;20,989m. Total incentive awards declined 16% for the Group and 20% for the Investment Bank, reducing the Investment Bank compensation: income ratio to 39% (2011: 47%). For a
reconciliation of total incentive awards granted to the relevant income statement charge, see page 46; and </FONT></P></TD></TR></TABLE> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Core Tier 1 remained strong at 10.9% (2011: 11.0%). Risk weighted assets reduced 1% to &pound;387bn.
</FONT></P></TD></TR></TABLE></DIV><DIV STYLE="position:relative;float:right; width:48%;padding-right:9px;padding-bottom:8px;overflow:hidden;padding-top:3px">
 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>2012 incentive awards - headlines </B></FONT></P>
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<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Total Group incentive awards have been reduced by 16% since 2011, with Group adjusted profit before tax increasing 26%. Statutory profit before
tax decreased 96%; </FONT></P></TD></TR></TABLE> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Incentive awards at the Investment Bank have been reduced by 20% since 2011, with adjusted and statutory profit before tax increasing 37%;
</FONT></P></TD></TR></TABLE> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
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<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Group incentives have reduced by &pound;1.3bn (38%)&nbsp;since 2010 with adjusted profit before tax up 23% since 2010. Statutory profit before
tax is down 96% since 2010. In the Investment Bank incentives have reduced by a similar amount, &pound;1.3bn (48%), since 2010 with adjusted profit before tax down 7% since 2010; </FONT></P></TD></TR></TABLE>
<P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
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<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Incentive pools have been reduced while adjusted profits have increased since 2011. This is because of actions taken by management to reposition
Barclays compensation in the market place and to reflect significant risk events that impacted Barclays in 2012. The significant risk events include the LIBOR investigation and redress for PPI and interest rate hedging products;
</FONT></P></TD></TR></TABLE> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Compensation to adjusted net operating income is down to 38% in 2012 (2011: 42%). Compensation to net operating income ratio increased to 46%
(2011: 39%). Within aggregate compensation there has been strong differentiation on the basis of individual performance to allow us to manage compensation costs but also to pay competitively for high performers; </FONT></P></TD></TR></TABLE>
<P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Average value of bonus per Group employee down 13% year on year to &pound;13,300; average value of bonus per Investment Bank employee down 17%
year on year to &pound;54,100. Average value of bonus per Group employee excluding the Investment Bank down 8% year on year to &pound;4,800; and </FONT></P></TD></TR></TABLE> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="9" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The proportion of the bonus pool that is deferred significantly exceeds the FSA&#146;s Remuneration Code requirements and is expected to remain
among the highest deferral levels globally. </FONT></P></TD></TR></TABLE></DIV><div style="clear:both; height:0px; font-size:0px">&nbsp;</div>

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<TD VALIGN="top" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;I&nbsp;&nbsp;43</FONT></TD></TR></TABLE>


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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#00aeef">2012 incentives continued </FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
<DIV STYLE="position:relative;float:left; margin-right:1%; width:48%;padding-right:9px;padding-bottom:8px;overflow:hidden;padding-top:3px">
 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>2012 incentives pool determination process </B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1">We recognise the importance that our stakeholders attach to the judgements that we apply in managing remuneration. Reduced remuneration costs, and increasingly
robust risk-adjustments and performance conditions will continue to be a focus in how we achieve the right balance between the priorities of our various stakeholders.
</FONT></P></DIV><DIV STYLE="position:relative;float:right; width:48%;padding-right:9px;padding-bottom:8px;overflow:hidden;padding-top:3px">
 <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1">Remuneration must be managed in a way which incentivises employees, ensures pay is linked to performance and is
appropriately aligned to risk. Material progress has been made in reducing absolute levels of remuneration. Variable remuneration has been reduced by 16% year on year.
</FONT></P></DIV><div style="clear:both; height:0px; font-size:0px">&nbsp;</div>
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<TD VALIGN="bottom" COLSPAN="24"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff"></FONT><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff">&nbsp;&nbsp;Barclays total
incentive awards granted - current year and deferred (audited)</FONT></B></FONT></TD>
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<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef">&nbsp;<FONT SIZE="1">&nbsp;</FONT></TD>
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<TD VALIGN="bottom" COLSPAN="2" ALIGN="right" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Barclays&nbsp;Group</B></FONT></TD>
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<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
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<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD COLSPAN="2" VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef">&nbsp;<FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="right" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Investment&nbsp;Bank</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD COLSPAN="2" VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef">&nbsp;<FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
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<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="right" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Year&nbsp;ended<BR>31.12.12<BR>&pound;m</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="right" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Year ended<BR>31.12.11</FONT></P>
<P STYLE="margin-top:0px;margin-bottom:1px" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">&pound;m</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="right" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">%&nbsp;<BR>Change&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="right" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Year&nbsp;ended<BR>31.12.12<BR>&pound;m</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="right" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Year ended<BR>31.12.11</FONT></P>
<P STYLE="margin-top:0px;margin-bottom:1px" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">&pound;m</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="right" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">%&nbsp;<BR>Change&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD></TR>


<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Current year cash bonus</FONT></P></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>852</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">832</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">2&nbsp;</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>399</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">381</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">5&nbsp;</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Current year share bonus</FONT></P></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>15</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">66</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">(77)</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>6</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">3</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">100&nbsp;</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Total current year bonus</B></FONT></P></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>867</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">898</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">(3)</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>405</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">384</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">5&nbsp;</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Deferred cash bonus</FONT></P></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>489</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">618</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">(21)</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>447</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">576</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">(22)</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Deferred share bonus</FONT></P></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>498</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">634</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">(21)</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>446</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">576</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">(23)</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Total deferred bonus</B></FONT></P></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>987</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">1,252</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">(21)</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>893</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">1,152</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">(22)</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Bonus pool</B></FONT></P></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>1,854</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">2,150</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">(14)</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>1,298</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">1,536</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">(15)</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Other incentives</FONT></P></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>314</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">428</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">(27)</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>96</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">201</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">(52)</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Total incentive awards
granted<SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">a</SUP></B></FONT></P></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>2,168</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">2,578</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">(16)</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>1,394</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">1,737</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">(20)</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="4" BGCOLOR="#e7f7ff"></TD>
<TD HEIGHT="16" COLSPAN="4"></TD>
<TD HEIGHT="16" COLSPAN="4"></TD>
<TD HEIGHT="16" COLSPAN="4" BGCOLOR="#e7f7ff"></TD>
<TD HEIGHT="16" COLSPAN="4"></TD>
<TD HEIGHT="16" COLSPAN="4"></TD></TR>
<TR>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Adjusted profit before tax</B></FONT></P></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>7,048</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">5,590</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">26&nbsp;</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>4,063</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">2,965</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">37&nbsp;</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Bonus pool as % of profit before tax (pre bonus)</FONT></P></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>82%</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">28%</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>23%</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">35%</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Bonus pool as % of adjusted profit before tax (pre bonus)<SUP
STYLE="vertical-align:baseline; position:relative; bottom:.8ex">b</SUP></FONT></P></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>20%</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">29%</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>23%</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">35%</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Proportion of bonus that is deferred</FONT></P></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>53%</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">58%</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>69%</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">75%</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Total employees (full time equivalent)</FONT></P></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>139,200</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">141,100</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">(1)</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>24,000</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">23,600</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">2&nbsp;</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Bonus per employee</FONT></P></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&pound;13,300</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&pound;15,237</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">(13)</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&pound;54,100</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&pound;65,085</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">(17)</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
</TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Deferred bonuses are payable only once an employee meets certain conditions, including a specified period of
service. This creates a timing difference between the communication of the bonus pool and the charges that appear in the income statement which are reconciled in the table on page 46. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">a &nbsp;For a reconciliation of total incentive awards granted to the relevant income statement charge, see page 46. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">b &nbsp;Calculated as bonus awards divided by adjusted profit before tax excluding the income statement charge for bonus awards. </FONT></P>
<P STYLE="font-size:20px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="font-size:20px;margin-top:0px;margin-bottom:0px">&nbsp;
</P><DIV STYLE="position:relative;float:left; margin-right:1%; width:48%;padding-right:9px;padding-bottom:8px;overflow:hidden;padding-top:3px">
 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Compensation ratio trends and benchmark against peers </B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1">The reduction in compensation in 2012 moves Barclays from being at the median pay-performance level compared to competitors over the last two years to below the
lower quartile level. This is a major shift which the Committee recognised would require strong management to achieve in a single year. Although it exposes the Group to some retention risk, the Committee determined that it was a necessary step on
the multi-year journey to reposition Barclays remuneration. Major shareholders and their representative bodies were consulted as part of the process for deciding to take this change of approach.
</FONT></P></DIV><DIV STYLE="position:relative;float:right; width:48%;padding-right:9px;padding-bottom:8px;overflow:hidden;padding-top:3px">
 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1">Antony Jenkins said in the 2012 Results Announcement on 12&nbsp;February 2013: </FONT></P>
<P STYLE="margin-top:8px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1">&#147;We committed last year to a journey to bring down our compensation ratio and have made good progress this year, with the Group compensation to net income
ratio declining to 38% (2011: 42%). While this is progress, not the destination, we believe a ratio in the mid-30s is a sustainable position in the medium term which will ensure that we can continue to pay our people competitively for performance
while also enabling us to deliver a greater share of the income we generate to shareholders.&#148; </FONT></P></DIV><div style="clear:both; height:0px; font-size:0px">&nbsp;</div>
 <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
 <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE">

<TR>
<TD WIDTH="51%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="48%"></TD></TR>
<TR>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">44&nbsp;&nbsp;I&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"></TD></TR></TABLE>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="font-size:30px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:20px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Incentive pool proposals from each of the businesses were subjected to detailed scrutiny and challenge through a sequence of the Committee&#146;s meetings before and after the year end. The final
incentives pool reflects the actions taken by the Group Chief Executive and the Committee towards achieving the long term objective of sustainably reducing compensation levels over time. It also reflects appropriate risk adjustments made in respect
of significant risk and compliance issues that have impacted Barclays in 2012 and the need to retain talent within Barclays to execute the new business strategy. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The table below summarises the three steps taken by the Committee in finalising the 2012 incentives pool. </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE" ALIGN="center">


<TR>
<TD WIDTH="18%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD WIDTH="80%"></TD></TR>


<TR>
<TD VALIGN="top" STYLE="BORDER-TOP:1px solid #00aeef; BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:1px"><FONT
STYLE="font-family:ARIAL" SIZE="2" COLOR="#00aeef">&nbsp;&nbsp;Step&nbsp;1</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #00aeef; BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #00aeef; BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Adjustment for performance &#150;</B> The Committee considered the overall performance of Barclays and individual businesses. The Committee also looked at any significant events and one off
transactions that have had a material impact on the financial results. The approach of the Committee is to use statutory profits as a starting point and then consider the impact of each adjustment. The Committee does not regard own credit as
reflective of performance and accordingly excludes these amounts from its consideration. The Committee manages compensation based on a range of compensation ratios and is supported by advice from the Group Finance Director and Chief Risk Officer.
Holding the compensation ratios broadly flat to 2011 would have suggested an increase of &pound;700m to the incentives pool.</FONT></P> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:1px">&nbsp;</P></TD></TR>
<TR>
<TD HEIGHT="5"></TD>
<TD HEIGHT="5" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="2" COLOR="#00aeef">&nbsp;&nbsp;Step 2</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Adjustments to reflect risk events in 2012 &#150; </B>The Committee made adjustments
to the 2012 incentives pool totalling &pound;860m. In addition, adjustments were made to unvested deferred and long term incentive awards. Further details on the risk adjustments made in 2012 are provided below and on the next page.</FONT></P>
<P STYLE="font-size:4px;margin-top:0px;margin-bottom:1px">&nbsp;</P></TD></TR>
<TR>
<TD HEIGHT="5"></TD>
<TD HEIGHT="5" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="2" COLOR="#00aeef">&nbsp;&nbsp;Step 3</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Additional adjustment to reposition Barclays in the market &#150; </B>The
Committee&#146;s objective is to reposition Barclays remuneration in the market and achieve a sustainable compensation ratio over time. The Committee has made a further adjustment of &pound;250m to make progress in achieving its objective, and the
resulting 2012 incentives pool represents the starting point in 2013, i.e. the adjustments for risk events in 2012 and the market repositioning will not be added back in 2013.</FONT></P>
<P STYLE="font-size:4px;margin-top:0px;margin-bottom:1px">&nbsp;</P></TD></TR>
</TABLE> <P STYLE="font-size:14px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE" ALIGN="center">


<TR>
<TD WIDTH="100%"></TD></TR>


<TR>
<TD VALIGN="top" BGCOLOR="#00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff"></FONT><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff">&nbsp;&nbsp;Determination of the
2012 total incentives pool</FONT></B></FONT></TD></TR>
</TABLE>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE" ALIGN="center">


<TR>
<TD WIDTH="18%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD WIDTH="52%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD WIDTH="12%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD WIDTH="12%"></TD></TR>
<TR>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef">&nbsp;<FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef">&nbsp;<FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef">&nbsp;<FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">&pound;m&nbsp;</FONT></TD></TR>


<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <P STYLE="font-size:1px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:1px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>2011 total incentives pool</B></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <P STYLE="font-size:1px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:1px" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>2,578&nbsp;</B></FONT></P></TD></TR>
<TR>
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="4"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="3" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">2011 compensation to adjusted net operating income ratio of 42%</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2" COLOR="#00aeef">&nbsp;&nbsp;Step 1</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Adjustment for performance</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">700&nbsp;</FONT></TD></TR>
<TR>
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2" COLOR="#00aeef">&nbsp;&nbsp;Step 2</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Adjustments to reflect risk events in 2012</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">(860)</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Risk adjustments:</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">LIBOR:</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">290</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Redress of PPI and interest rate hedging products and other risk adjustments:</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">570</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD></TR>
<TR>
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="4"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="2" COLOR="#00aeef">&nbsp;&nbsp;Step 3</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="3"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Additional adjustment to reposition Barclays in the market</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">(250)</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">To reflect Barclays intention to reposition itself in the market</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD></TR>
<TR>
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The compensation to adjusted net operating income ratio reduced from 42% in 2011 to 38% in 2012</FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:1px"><FONT SIZE="1">&nbsp;</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD></TR>
<TR>
<TD VALIGN="top" STYLE="BORDER-TOP:1px solid #00aeef; BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #00aeef; BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #00aeef; BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>2012 total incentives
pool<SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">a</SUP></B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #00aeef; BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #00aeef; BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #00aeef; BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" STYLE="BORDER-TOP:1px solid #00aeef; BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>2,168&nbsp;</B></FONT></TD></TR>
</TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">In addition to the reduction in variable remuneration described above, fixed remuneration reduced by 7% year on
year. This was driven by a reduction in salary costs reflecting a moderately declining headcount and reductions in the cost of post retirement benefits primarily reflecting scheme closures and benefit changes in the US and Spain, and lower interest
cost for the UK Retirement Fund. </FONT></P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">a</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">For a reconciliation of total incentive awards granted to the relevant income statement charge, see page 46. </FONT></TD></TR></TABLE>
 <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE">

<TR>
<TD WIDTH="51%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="48%"></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;I&nbsp;&nbsp;45</FONT></TD></TR></TABLE>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#00aeef">2012 incentives continued </FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The total risk adjustments made by the Committee are as follows: </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE" ALIGN="center">


<TR>
<TD WIDTH="48%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD WIDTH="45%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD></TD></TR>
<TR>
<TD VALIGN="bottom" COLSPAN="7" NOWRAP BGCOLOR="#00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff"></FONT><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff">&nbsp;&nbsp;
Risk adjustments in 2012 &#150; &pound;1,160m</FONT></B></FONT></TD></TR></TABLE> <P STYLE="font-size:2px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE" ALIGN="center">


<TR>
<TD WIDTH="1%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD WIDTH="16%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="71%"></TD>
<TD VALIGN="bottom" WIDTH="3%"></TD>
<TD WIDTH="2%"></TD></TR>

<TR>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef">&nbsp;<FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef">&nbsp;<FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef">&nbsp;<FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:2px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="margin-top:0px;margin-bottom:1px" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">&pound;m&nbsp;</FONT></P></TD></TR>
<TR>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="margin-top:0px;margin-bottom:1px; margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">1.</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Adjustments to 2012
incentives pool to reflect risk events</FONT></P> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:1px">&nbsp;</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:1px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">These are adjustments
made by the Committee to reflect the significant risk events that impact Barclays. For 2012 the Committee made discretionary risk adjustments as shown in the table on page 45.</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="margin-top:0px;margin-bottom:1px" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">860&nbsp;</FONT></P></TD></TR>
<TR>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="margin-top:0px;margin-bottom:1px; margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">2.</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:1px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Adjustments to
existing deferred and long term remuneration</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">In certain
circumstances the Committee may decide it is appropriate to exercise its power to reduce the value of unvested deferred and long term incentive awards (including to nil). In 2012 the Committee clawed back approximately &pound;300m of unvested
deferred and long term awards, the majority of which related to the LIBOR investigation. Combined with the adjustment to the 2012 incentives pool, the reductions for the LIBOR investigation exceeded the amount of the regulatory fines of
&pound;290m.</FONT></P> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:1px">&nbsp;</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="margin-top:0px;margin-bottom:1px" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">300&nbsp;</FONT></P></TD></TR>
</TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The risk adjustments outlined above are additional to the reduction in variable remuneration that naturally arises
from the reduced profits as a result of the financial impact of the risk events. </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE" ALIGN="center">


<TR>
<TD WIDTH="70%"></TD>
<TD VALIGN="bottom" WIDTH="3%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="3%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="3%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="3%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="3%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="3%"></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR BGCOLOR="#00aeef">
<TD VALIGN="bottom" COLSPAN="24"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff"></FONT><FONT STYLE="font-family:ARIAL" SIZE="1"><B><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff">&nbsp;&nbsp;Reconciliation of total incentive
awards granted to income statement charge (audited)</FONT></B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef">&nbsp;<FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD COLSPAN="2" VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef">&nbsp;<FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Barclays&nbsp;Group</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD COLSPAN="2" VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef">&nbsp;<FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD COLSPAN="2" VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef">&nbsp;<FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Investment&nbsp;Bank</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD COLSPAN="2" VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef">&nbsp;<FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef">&nbsp;<FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="right" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Year&nbsp;ended<BR>31.12.12<BR>&pound;m</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="right" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Year ended<BR>31.12.11</FONT></P>
<P STYLE="margin-top:0px;margin-bottom:1px" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">&pound;m</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="right" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">%<BR>Change</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="right" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Year&nbsp;ended<BR>31.12.12<BR>&pound;m</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="right" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Year ended<BR>31.12.11</FONT></P>
<P STYLE="margin-top:0px;margin-bottom:1px" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">&pound;m</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="right" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">%<BR>Change</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD></TR>


<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Total incentive awards for 2012</FONT></P></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>2,168&nbsp;</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">2,578&nbsp;</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">(16)</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>1,394&nbsp;</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">1,737&nbsp;</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">(20)</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Less: deferred bonuses awarded for 2012</FONT></P></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>(987)</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">(1,252)</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">(21)</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>(893)</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">(1,152)</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">(22)</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Add: current year charges for deferred bonuses from previous years</FONT></P></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>1,223&nbsp;</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">995&nbsp;</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">23&nbsp;</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>1,117&nbsp;</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">907&nbsp;</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">23&nbsp;</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Other<SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">a</SUP></FONT></P></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>21&nbsp;</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">206&nbsp;</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">(90)</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>75&nbsp;</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">248&nbsp;</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">(70)</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Income statement charge for performance costs</B></FONT></P></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>2,425&nbsp;</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">2,527&nbsp;</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">(4)</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>1,693&nbsp;</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">1,740&nbsp;</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">(3)</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
</TABLE> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="1%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">a</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;Difference between incentive awards granted and the income statement charge for commissions, commitments and other incentives </FONT></TD></TR></TABLE>
<P STYLE="font-size:16px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="1%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Employees only become eligible to receive payment from a deferred bonus once all of the relevant conditions have been fulfilled, including the
provision of services to the Group; </FONT></P></TD></TR></TABLE> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="1%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The income statement charge for performance costs reflects the charge for employees&#146; actual services provided to the Group during the
relevant calendar year (including where those services fulfil performance conditions attached to previously deferred bonuses). It does not include charges for deferred bonuses where performance conditions have not been met; and
</FONT></P></TD></TR></TABLE> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="1%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">As a consequence, while the 2012 incentive awards granted were down 16% compared to 2011, the income statement charge for performance costs was
down 4%. </FONT></P></TD></TR></TABLE>
 <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE">

<TR>
<TD WIDTH="51%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="48%"></TD></TR>
<TR>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">46&nbsp;&nbsp;I&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"></TD></TR></TABLE>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="font-size:30px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:20px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="font-size:10px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE" ALIGN="center">


<TR>
<TD WIDTH="100%"></TD></TR>


<TR BGCOLOR="#00aeef">
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff"></FONT><FONT STYLE="font-family:ARIAL" SIZE="1"><B><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff">&nbsp;&nbsp;Income statement charge
(audited)</FONT></B></FONT></TD></TR>
</TABLE>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE" ALIGN="center">


<TR>
<TD WIDTH="77%"></TD>
<TD VALIGN="bottom" WIDTH="3%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="3%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="3%"></TD>
<TD WIDTH="6%"></TD></TR>
<TR>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef">&nbsp;<FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="right" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Year&nbsp;ended<BR>31.12.12<BR>&pound;m</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="right" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Year&nbsp;ended<BR>31.12.11<BR>&pound;m</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">%&nbsp;Change&nbsp;</FONT></TD></TR>


<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Performance costs</FONT></P></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">2,425</FONT></TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">2,527</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">(4)</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Salaries</FONT></P></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">5,981</FONT></TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">6,277</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">(5)</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Non-performance employee share plans</FONT></P></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">105</FONT></TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">167</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">(37)</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Social security costs</FONT></P></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">685</FONT></TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">716</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">(4)</FONT></TD></TR>
<TR>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Post retirement benefits</FONT></P></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">590</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">727</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">(19)</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Total compensation costs</B></FONT></P></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B></B>&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>9,786</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B></B>&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">10,414</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">(6)</FONT></TD></TR>
<TR>
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="4" BGCOLOR="#e7f7ff"></TD>
<TD HEIGHT="16" COLSPAN="4"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Bank payroll tax</FONT></P></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">34</FONT></TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">76</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">(55)</FONT></TD></TR>
<TR>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Other<SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">a</SUP></FONT></P></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">627</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">917</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">(32)</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Non compensation costs</B></FONT></P></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B></B>&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>661</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B></B>&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">993</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">(33)</FONT></TD></TR>
<TR>
<TD HEIGHT="10"></TD>
<TD HEIGHT="10" COLSPAN="4" BGCOLOR="#e7f7ff"></TD>
<TD HEIGHT="10" COLSPAN="4"></TD>
<TD HEIGHT="10" COLSPAN="2"></TD></TR>
<TR STYLE="font-size:1px">
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" STYLE="BORDER-BOTTOM:1px solid #00aeef">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef">&nbsp;</TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Total Staff costs</B></FONT></P></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B></B>&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>10,447</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B></B>&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">11,407</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">(8)</FONT></TD></TR>
<TR>
<TD HEIGHT="10"></TD>
<TD HEIGHT="10" COLSPAN="4" BGCOLOR="#e7f7ff"></TD>
<TD HEIGHT="10" COLSPAN="4"></TD>
<TD HEIGHT="10" COLSPAN="2"></TD></TR>
<TR STYLE="font-size:1px">
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" STYLE="BORDER-BOTTOM:1px solid #00aeef">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef">&nbsp;</TD></TR>
</TABLE> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="1%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">a</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;Includes staff training, redundancy and retirement. </FONT></TD></TR></TABLE> <P STYLE="font-size:16px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="1%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Total staff costs reduced 8% to &pound;10,447m, principally reflecting a 5% reduction in salaries, a 19% reduction in post retirement benefits
and reductions in performance costs; </FONT></P></TD></TR></TABLE>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="1%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Salaries reduced by 5% to &pound;5,981m, reflecting a moderately declining average headcount; </FONT></P></TD></TR></TABLE>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="1%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The post retirement benefits charge decreased 19% to &pound;590m, primarily reflecting scheme closures and benefit changes in the US and Spain,
and lower interest cost for the UK Retirement Fund; </FONT></P></TD></TR></TABLE>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="1%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Performance costs reduced 4% to &pound;2,425m, reflecting a 22% reduction in charges for current year cash and share bonuses and other incentives
of &pound;1,202m, partially offset by a 23% increase in the charge for deferred bonuses from prior years to &pound;1,223m; and </FONT></P></TD></TR></TABLE>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="1%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Deferred bonuses awarded are expected to be charged to the income statement in the years outlined in the table below.
</FONT></P></TD></TR></TABLE> <P STYLE="font-size:14px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE" ALIGN="center">


<TR>
<TD WIDTH="87%"></TD>
<TD VALIGN="bottom"></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD VALIGN="bottom" WIDTH="3%"></TD>
<TD></TD>
<TD VALIGN="bottom"></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD VALIGN="bottom"></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>


<TR BGCOLOR="#00aeef">
<TD VALIGN="top" COLSPAN="18"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff"></FONT><FONT STYLE="font-family:ARIAL" SIZE="1"><B><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff">&nbsp;&nbsp;Year in which income statement charge is
expected to be taken for Deferred Bonuses awarded to date</FONT><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff"><SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">a</SUP></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff"></FONT></B></FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff"></FONT><FONT STYLE="font-family:ARIAL" SIZE="1"><B><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff"></FONT><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff"><SUP
STYLE="vertical-align:baseline; position:relative; bottom:.8ex"></SUP></FONT><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff">&nbsp;&nbsp;</FONT></B></FONT></TD></TR>
<TR>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" COLSPAN="7" ALIGN="center" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Actual</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B><SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex"></SUP></B><SUP
STYLE="vertical-align:baseline; position:relative; bottom:.8ex"></SUP></FONT><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex"><B></B></SUP><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" COLSPAN="5" ALIGN="center" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Expected<SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex"></SUP></B><SUP
STYLE="vertical-align:baseline; position:relative; bottom:.8ex"></SUP></FONT><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">b<B></B></SUP><B></B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B><SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex"></SUP></B><SUP
STYLE="vertical-align:baseline; position:relative; bottom:.8ex"></SUP></FONT><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex"><B></B></SUP><B>&nbsp;&nbsp;
</B></FONT></TD></TR>
<TR>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef">&nbsp;<FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="right" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Year&nbsp;ended<BR>31.12.11<BR>&pound;m</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef">&nbsp;<FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="right" STYLE="BORDER-BOTTOM:1px solid #00aeef">
<P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>&nbsp;&nbsp;&nbsp;&nbsp;Year&nbsp;ended<BR>31.12.12</B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:1px" ALIGN="right"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>&pound;m</B></FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="right" STYLE="BORDER-BOTTOM:1px solid #00aeef">
<P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">&nbsp;&nbsp;&nbsp;&nbsp;Year&nbsp;ended<BR>31.12.13</FONT></P> <P STYLE="margin-top:0px;margin-bottom:1px" ALIGN="right"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">&pound;m</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="right" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">2014&nbsp;and<BR>beyond<BR>&pound;m</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Barclays Group</B></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Deferred bonuses from 2009 and earlier bonus pools</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">405</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">153</FONT></TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">18</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&#150;</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Deferred bonuses from 2010 bonus pool</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">590</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">404</FONT></TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">147</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">21</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Deferred bonuses from 2011 bonus pool</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&#150;</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">666</FONT></TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">386</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">183</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Deferred bonuses from 2012 bonus pool</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&#150;</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&#150;</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">512</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">431</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Income statement charge for deferred bonuses</B></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>995</B></FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>1,223</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>1,063</B></FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>635</B></FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD></TR>
<TR>
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="4"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="4" BGCOLOR="#e7f7ff"></TD>
<TD HEIGHT="16" COLSPAN="4"></TD>
<TD HEIGHT="16" COLSPAN="4"></TD></TR>
<TR>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Investment Bank</B></FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Deferred bonuses from 2009 and earlier bonus pools</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">365</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">143</FONT></TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">17</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&#150;</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Deferred bonuses from 2010 bonus pool</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">542</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">374</FONT></TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">134</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">19</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Deferred bonuses from 2011 bonus pool</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&#150;</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">600</FONT></TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">347</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">164</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Deferred bonuses from 2012 bonus pool</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&#150;</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&#150;</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">463</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">384</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Income statement charge for deferred bonuses</B></FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>907</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>1,117</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>961</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>567</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD></TR>
</TABLE> <P STYLE="font-size:16px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE" ALIGN="center">


<TR>
<TD WIDTH="21%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="19%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="33%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="24%"></TD></TR>
<TR>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">&nbsp;&nbsp;Bonus Pool Component</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Expected&nbsp;Grant&nbsp;Date</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Expected Payment Date(s)<SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">c</SUP></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" NOWRAP STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Year(s)&nbsp;in&nbsp;which&nbsp;Income&nbsp;Statement&nbsp;&nbsp;</FONT></P>
<P STYLE="margin-top:0px;margin-bottom:1px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Charge Arises<SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">d</SUP></FONT></P></TD></TR>


<TR>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Current year cash bonus</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&#149; February 2013</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&#149; February 2013</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&#149; 2012</FONT></TD></TR>
<TR>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Current year share bonus</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&#149; February/March 2013</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" NOWRAP STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&#149;&nbsp;February&nbsp;2013&nbsp;to&nbsp;September&nbsp;2013&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&#149; 2012</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Deferred cash bonus</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&#149; March 2013</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&#149; March 2014 (33.3%)</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&#149; 2013 (48%)</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&#149; March 2015 (33.3%)</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&#149; 2014 (35%)</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&#149; March 2016 (33.3%)</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&#149; 2015 (15%)</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&#149; 2016 (2%)</FONT></TD></TR>
<TR>
<TD VALIGN="top" STYLE="BORDER-TOP:1px solid #00aeef"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Deferred share bonus</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&#149; March 2013</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&#149; March 2014 (33.3%)</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&#149; 2013 (48%)</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&#149; March 2015 (33.3%)</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&#149; 2014 (35%)</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&#149; March 2016 (33.3%)</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&#149; 2015 (15%)</FONT></TD></TR>
<TR>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&#149; 2016 (2%)</FONT></TD></TR>
</TABLE> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">a</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The actual amount charged depends upon whether performance conditions have been met and will vary compared with the above expectation. </FONT></TD></TR></TABLE>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">b</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Does not include the impact of future grants which may be made in 2013 and 2014. </FONT></TD></TR></TABLE>
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<TD WIDTH="2%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">c</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Payments are subject to all performance conditions being met prior to the expected payment date. In addition, employees receiving a deferred cash bonus may be
awarded a service credit of 10% of the initial value of the award at the time that the final instalment is made, subject to continued employment. </FONT></TD></TR></TABLE>
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<TD WIDTH="2%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">d</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The income statement charge is based on the period over which performance conditions are met. </FONT></TD></TR></TABLE>
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<TD VALIGN="top" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;I&nbsp;&nbsp;47</FONT></TD></TR></TABLE>


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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="6" COLOR="#5a6163"><A NAME="tx497934_69"></A>Directors&#146; remuneration policy </FONT></P>
<P STYLE="font-size:72px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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<TD VALIGN="top" BGCOLOR="#e7f7ff"> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:0.40em"><FONT STYLE="font-family:ARIAL" SIZE="2" COLOR="#00aeef">2013 Remuneration
policy for executive Directors</FONT></P> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:0.40em"><FONT STYLE="font-family:ARIAL" SIZE="2" COLOR="#5a6163">This section
describes Barclays forward-looking remuneration policy for executive Directors, explaining how each element of executive Directors&#146; remuneration packages operates. Total remuneration packages for executive Directors comprise salary, pension,
benefits, annual bonus and long term incentive plan awards.</FONT></P> <P STYLE="font-size:24px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:18px;margin-top:0px;margin-bottom:1px"><FONT SIZE="1">&nbsp;</FONT></P></TD></TR>
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<TD VALIGN="top" COLSPAN="7"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff"></FONT><FONT STYLE="font-family:ARIAL" SIZE="1"><B><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff">&nbsp;&nbsp;2013 remuneration policy for executive
Directors</FONT></B></FONT></TD></TR>
<TR>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Purpose</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Operation</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" NOWRAP STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Value&nbsp;and&nbsp;applicable&nbsp;performance&nbsp;measures&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD HEIGHT="5" BGCOLOR="#6ccff6"></TD>
<TD HEIGHT="5" COLSPAN="2"></TD>
<TD HEIGHT="5" COLSPAN="2"></TD>
<TD HEIGHT="5" COLSPAN="2"></TD></TR>
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<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#6ccff6"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="2" COLOR="#00aeef">Salary</FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="margin-top:0px;margin-bottom:1px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Rewards skills and experience and provides the basis for a competitive remuneration package</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Salaries are determined with reference to market practice and market data (on which the
Committee receives independent advice), and reflect individual experience and role.</FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Executive Directors&#146; salaries are benchmarked against comparable roles in other banks and FTSE 30 companies.</FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Salaries are reviewed annually and increases are made only exceptionally to reflect market movements and change in job responsibilities. The
Committee notes and manages the potential for salary increases to have a &#145;ratchet effect&#146; on total remuneration because of the linkage between salary and other elements of the remuneration package such as cash in lieu of pension, bonus and
long term incentive awards.</FONT></P> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:1px">&nbsp;</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Reviewed annually but increased only exceptionally.</FONT></TD></TR>
<TR>
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<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="2" COLOR="#00aeef">Pension</FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:1px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Enables executive Directors to build long term retirement
savings</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Current executive
Directors receive an annual cash allowance in lieu of participation in a pension arrangement.</FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">This is a common arrangement in executive remuneration, reflecting recent and continuing changes in the UK taxation of pension contributions. The rates of these allowances (as a percentage of
salary) for executive Directors exceed pension contribution rates for the broader employee population. This reflects market practice for senior executives. The rate of cash allowance in lieu of pension for any new executive Director is appropriately
benchmarked at the time of appointment.</FONT></P> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:1px">&nbsp;</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Group Chief Executive
&#150; currently 33% of salary.</FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Group Finance Director &#150;
currently 25% of salary.</FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Reviewed annually but increased only
exceptionally.</FONT></P> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:1px">&nbsp;</P></TD></TR>
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<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="2" COLOR="#00aeef">Benefits</FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:1px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Protects against risks and provides other benefits</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:1px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Executive
Directors&#146; benefits provision includes private medical cover, life and ill-health income protection, tax advice, the use of a company vehicle or the cash equivalent, and use of a company vehicle and driver when required for business
purposes.</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The value of benefits
in 2012 was &pound;81,000 for the current Group Chief Executive (including benefits received in his previous role as CEO of Retail and Business Banking) and &pound;34,000 for the Group Finance Director.</FONT></P>
<P STYLE="font-size:4px;margin-top:0px;margin-bottom:1px">&nbsp;</P></TD></TR>
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<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">48&nbsp;&nbsp;I&nbsp;&nbsp;</FONT></TD>
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 <P STYLE="font-size:30px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:20px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="font-size:10px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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<TR BGCOLOR="#00aeef">
<TD VALIGN="top" COLSPAN="7"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff"></FONT><FONT STYLE="font-family:ARIAL" SIZE="1"><B><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff">&nbsp;&nbsp;2013 remuneration policy for executive
Directors continued</FONT></B></FONT></TD></TR>
<TR>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Purpose</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Operation</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" NOWRAP STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Value&nbsp;and&nbsp;applicable&nbsp;performance&nbsp;metrics&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD></TR>
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<TD VALIGN="top"> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="2" COLOR="#00aeef">Annual bonus</FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Rewards delivery of the near term business targets set each year, the
individual performance of the executive Directors in achieving those targets, and contribution to delivering Barclays strategic objectives</FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="margin-top:0px;margin-bottom:1px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Deferred bonuses encourage long term focus and retention and the malus conditions that apply to them discourage excessive risk-taking and
inappropriate behaviours and encourage a long term view. Deferred share bonuses encourage long term shareholding and align executive Directors&#146; interests with those of shareholders</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Determination of annual bonus</B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Individual bonus decisions are based on executive Directors&#146; performance in the year, measured against Group and personal objectives.
Performance measures are both quantitative and qualitative, and both financial and non-financial. Bonus awards are made by the Committee following discussion of recommendations made by the Chairman (for the Group Chief Executive&#146;s bonus) and by
the Group Chief Executive (for the Group Finance Director&#146;s bonus).</FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Operation of risk adjustment and malus</B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Bonuses awarded reflect reductions made
to incentive pools in relation to risk events. Individual bonus decisions may also reflect reductions in relation to specific risk and compliance events. Once awarded, deferred bonuses are subject to malus conditions which enable the Committee to
reduce the vesting level of deferred bonuses (including to nil) in the event of, for example, employee negligence or inappropriate conduct, or a material failure of risk management.</FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Delivery mechanism</B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Bonuses paid to executive Directors are generally delivered in a combination of cash and shares which may be either immediate or deferred. Deferred
share bonuses are delivered in the form of awards under the Share Value Plan (SVP).</FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Deferral structure</B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Executive Directors are Code Staff and their bonuses are
therefore subject to deferral of at least the level applicable to all Code Staff, currently 40% (for bonuses of no more than &pound;500,000) or 60% (for bonuses of more than &pound;500,000). The Committee may choose to defer a greater proportion of
any bonus awarded to an executive Director than the minimum required by the FSA&#146;s Remuneration Code.</FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Timing of receipt</B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Non-deferred cash components of any bonus are received
following the performance year to which they relate, typically in February. Non-deferred share bonuses are subject to a six month holding period. Deferred share bonuses are awarded under the SVP. They vest over a three year period in thirds each
year, subject to continued service and the malus conditions. Once SVP awards made from 2013 have vested, the shares are (after payment of tax) subject to an additional six month holding period.</FONT></P>
<P STYLE="font-size:4px;margin-top:0px;margin-bottom:1px">&nbsp;</P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The value of any annual bonus is limited to a percentage of
salary. The current maximum percentage is 250% for both the Group Chief Executive and for the Group Finance Director.</FONT></P> <P STYLE="font-size:30px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:1px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The performance objectives by which executive Director bonuses for 2013 will be assessed include Group and individual measures, both financial and non-financial. At the Group level, performance of
each of the executive Directors will include measurement against progress in delivering the Transform commitments. This includes the 2015 financial targets including return on equity, cost to income ratio, core capital ratio and dividend payout
ratio. Further details of each executive Director&#146;s 2013 objectives are provided on pages 54 and 56.</FONT></P></TD></TR>
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<TD VALIGN="top" STYLE="BORDER-TOP:1px solid #00aeef; BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#d2d4d6"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #00aeef; BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-TOP:1px solid #00aeef; BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="2" COLOR="#00aeef">Long Term Incentive Plan (&#145;LTIP&#146;) award</FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Rewards execution of Barclays strategy and growth in shareholder value over a multi-year period</FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="margin-top:0px;margin-bottom:1px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Long term performance measurement, holding periods and the malus conditions discourage excessive risk-taking and inappropriate behaviours, encourage
a long term view and align executive Directors&#146; interests with those of shareholders</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #00aeef; BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-TOP:1px solid #00aeef; BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Determination of LTIP award</B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">LTIP awards are made by the Committee following
discussion of recommendations made by the Chairman (for the Group Chief Executive&#146;s LTIP award) and by the Group Chief Executive (for the Group Finance Director&#146;s LTIP award).</FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Operation of risk adjustment and malus</B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The achievement of performance conditions is the primary indicator of whether and to what extent LTIP awards will vest. Awards are also subject to
malus conditions similar to those applicable to deferred bonuses. The malus conditions enable the Committee to reduce awards (including to nil).</FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Delivery mechanism</B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Barclays
LTIP awards vest three years from the date of award. At vesting LTIP awards are satisfied in Barclays shares.</FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Timing of receipt</B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">For 2013 Barclays LTIP awards, a further holding period of
two years has been introduced which applies to the shares on vesting (after payment of tax), making the plan cycle five years in total.</FONT></P> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:1px">&nbsp;</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #00aeef; BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-TOP:1px solid #00aeef; BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The value of any LTIP award is limited to percentage of salary. The maximum potential payout value of an award is 400% of salary (based on the value of shares and salary at the start of the LTIP
performance period).</FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:1px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">A summary of the performance metrics that
apply to the LTIP awards for the 2010-2012, 2011-2013 and 2012-2014 performance periods is provided on page 67. The performance condition for the 2013-2015 LTIP is based on financial performance (RoRWA), risk (loan loss rate) and a balanced
scorecard.</FONT></P></TD></TR>
</TABLE>
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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#00aeef">Directors&#146; remuneration policy continued </FONT></P>
<P STYLE="font-size:96px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Executive Director service contracts </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Barclays executive Director service
contracts entitle the executive Directors to the fixed elements of remuneration and to consideration for variable remuneration each year. The contracts do not have a fixed term but provide for a notice period from Barclays of 12 months. Contracts
may be terminated immediately with payments in lieu of notice being paid in phased instalments, subject to contractual mitigation. In the event of termination for gross misconduct neither notice nor payment in lieu of notice is required. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The Committee&#146;s approach to payments in the event of termination is to take account of the individual circumstances including the reason for
termination, individual performance, contractual obligations and the terms of the deferred incentive plans and long term incentive plans in which the executive Director participates. </FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TR BGCOLOR="#00aeef">
<TD VALIGN="top" COLSPAN="3"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff"></FONT><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff">&nbsp;Termination
provisions</FONT></B></FONT></TD></TR>
<TR>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="2" COLOR="#00aeef">Antony
Jenkins</FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Effective contract date</FONT></P>
<P STYLE="margin-top:0px;margin-bottom:1px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">30 August 2012</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Contract
termination provisions</B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">12 months&#146; notice from the Company (six months from the Director). On notice from the Company 12
months&#146; salary payable and continuation of medical and pension benefits while an employee. No automatic contractual entitlement to bonus on termination, but may be considered.</FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Deferred bonus and LTIP awards treatment on termination</B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Antony Jenkins would normally continue to be entitled to receive unvested portions of deferred bonus if he was an eligible leaver under the relevant
plan rules. Any release of unvested portions would be made on the scheduled release date. Otherwise, outstanding deferred awards would normally lapse.</FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Any unvested awards under LTIPs would normally be released on the scheduled release date, pro-rated for time and performance, if Antony Jenkins was
an eligible leaver under the relevant plan rules. Otherwise, the unvested awards would normally lapse.</FONT></P> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:1px">&nbsp;</P></TD></TR>
<TR>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="2" COLOR="#00aeef">Chris
Lucas</FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Effective contract date</FONT></P>
<P STYLE="margin-top:0px;margin-bottom:1px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">1 April 2007</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Contract
termination provisions</B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">12 months&#146; notice from the Company (six months from the Director). On notice from the Company 12
months&#146; salary payable, bonus equivalent to the average of the previous three years&#146; bonuses (capped at 100% of current salary) and continuation of medical and pension benefits while an employee.</FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The current Group Finance Director&#146;s contractual terms date from 2006.
The provisions relating to bonus entitlement in the context of termination are no longer best practice. No future executive Director contract will include such terms.</FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Deferred bonus and LTIP awards treatment on termination</B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Chris Lucas would normally continue to be entitled to receive unvested portions of deferred bonus if he was an eligible leaver under the relevant plan rules. Any release of unvested portions would
be made on the scheduled release date. Otherwise, outstanding deferred awards would normally lapse.</FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Any unvested awards under LTIPs would normally be released on the scheduled release date, pro-rated for time and performance, if Chris Lucas was an eligible leaver under the relevant plan rules.
Otherwise, the unvested awards would normally lapse.</FONT></P> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:1px">&nbsp;</P></TD></TR>
</TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The remuneration packages offered on appointment to any new executive Director are a specific part of the
Committee&#146;s Terms of Reference. The terms of such packages must be approved by the Committee in consultation with the Chairman and (except for the terms of his own remuneration) the Group Chief Executive. Any award made to compensate for
forfeited remuneration from the new executive Director&#146;s previous employment may not be more generous than, and must mirror as far as possible, the terms of the forfeited remuneration. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Shareholding requirement </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">From 2013 the Committee has introduced a new
requirement that executive Directors should hold Barclays shares worth, as a minimum, four times salary. The current executive Directors have five years from the introduction of the new requirement to meet it (five years from appointment for a new
executive Director) and they have a reasonable period to build up to the requirement again if it is not met because of a share price fall. Shares that count towards the requirement are beneficially owned shares including any vested share awards
subject to holding periods (including vested LTIPs). Shares from unvested deferred share bonuses and unvested LTIPs do not count towards the requirement. This requirement replaces the previous guidelines, enhances the alignment of shareholders&#146;
and executive Directors&#146; interests in long term value creation, and positions Barclays at the higher end of market practice. Current executive Directors&#146; shareholdings as compared to the new shareholding requirement are summarised in the
chart on page 57. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The Committee also decided that from 2013 other members of the Group Executive Committee should be subject to a
shareholding requirement in excess of the requirements of the FSA&#146;s Remuneration Code. The shareholding requirement for other Group Executive Committee members is that they should hold Barclays shares worth, as a minimum, two times salary. In
all other respects the shareholding requirement for other Group Executive Committee members is the same as the requirement for executive Directors. </FONT></P>
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<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">50&nbsp;&nbsp;I&nbsp;&nbsp;</FONT></TD>
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 <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:96px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Illustrative scenarios for executive Directors&#146; remuneration </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The charts
below show the potential value of the current executive Directors&#146; remuneration in three scenarios: &#145;Minimum&#146; (i.e. fixed remuneration), &#145;Maximum&#146; (i.e. fixed remuneration and the maximum variable remuneration that may be
awarded) and &#145;Mid-point&#146; (i.e. fixed remuneration and 50% of the maximum variable remuneration that may be awarded). For the purposes of these charts, the value of benefits is based on an estimated annual value. The scenarios do not
reflect share price movement between award and vesting. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">A significant proportion of the potential remuneration of the executive
Directors is variable and is therefore performance-related and at risk. At the &#145;mid-point&#146; for the Group Chief Executive, 30% of total remuneration is fixed and 70% is variable, moving to 18% fixed and 82% variable at the maximum. At the
&#145;mid-point&#146; for the current Group Finance Director 29% of total remuneration is fixed and 71% is variable, moving to 17% fixed and 83% variable at the maximum. </FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;
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<TD VALIGN="top" BGCOLOR="#00aeef"> <P STYLE="margin-left:0.50em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff"></FONT><FONT STYLE="font-family:ARIAL" SIZE="1"><B><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff">Group Chief
Executive</FONT></B></FONT></P></TD></TR>
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<IMG SRC="g497934tx88anew.jpg" ALT="LOGO">
 </P> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD VALIGN="top" BGCOLOR="#00aeef"> <P STYLE="margin-left:0.50em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff"></FONT><FONT STYLE="font-family:ARIAL" SIZE="1"><B><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff">Group Finance
Director</FONT></B></FONT></P></TD></TR>
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<IMG SRC="g497934tx88bnew.jpg" ALT="LOGO">
 </P>
<P STYLE="line-height:1px;margin-top:0px;margin-bottom:2px;border-bottom:1pt solid #00aeef">&nbsp;</P></DIV><div style="clear:both; height:0px; font-size:0px">&nbsp;</div>
 <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>How shareholder views and
broader employee pay are taken into account by the Committee in setting policy and making remuneration decisions </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The Committee
Chairman and senior executives have engaged more extensively and more proactively with shareholders and shareholder representative bodies during 2012 than ever before. The Committee Chairman has met with major shareholders and also with the
Association of British Insurers, the National Association of Pension Funds and ISS to discuss remuneration matters. The Chairman, Committee Chairman and the Group Chief Executive also receive frequent comments from private shareholders either in
writing or at events such as our Annual General Meeting. We listen to all of these comments and we try to respond to all of them. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The
Committee takes account of the remuneration of the broader employee base when it considers the remuneration of the executive Directors. The Committee receives and reviews detailed analysis of remuneration proposals for employees across all of the
Group&#146;s businesses. This includes analysis by corporate grade and by performance rating and details of proposed bonuses and salary increases across the employee population. When the Committee considers executive Director remuneration it
therefore makes that consideration in the context of a detailed understanding of remuneration for the broader employee population. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Our
approach to executive Director and wider employee remuneration during 2013 will be characterised by a focus on bearing down on costs and ensuring the principles of our new remuneration policy are applied at all levels. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Comparison of executive Directors&#146; remuneration packages with remuneration packages for the broader employee population </B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The structure of total remuneration packages for executive Directors and for the broader employee population is similar. Employees receive salary,
pension and benefits and are eligible to be considered for a discretionary annual bonus. The broader employee population typically does not have a contractual limit on the quantum of their remuneration. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The Committee approaches any salary increases for executive Directors on an exception-only basis. Incremental annual salary increases remain more
common among employees at less senior levels. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">As with executive Directors, bonuses for the broader employee population are performance
based. Bonuses for executive Directors and the broader employee population are subject to deferral requirements. Executive Directors and other Code Staff are subject to deferral at a minimum rate of 40% (for bonuses of no more than &pound;500,000)
or 60% (for bonuses of more than &pound;500,000) but the Committee may chose to operate higher deferral rates. For non-Code Staff, bonuses in excess of &pound;65,000 are subject to a graduated level of deferral and in the Investment Bank, 2012
bonuses for Managing Directors are subject to 100% deferral. Executive Directors&#146; deferred bonuses may include deferred share bonuses awarded under the SVP. 2012 deferred bonuses for the broader employee population will be awarded 50% under the
SVP and 50% under the CVP, which vest over three years in equal tranches. The terms of deferred bonus awards for executive Directors and the wider employee population are broadly the same, in particular the vesting of all deferred bonuses is subject
to continued service and subject to malus conditions. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The broader employee population is not eligible to participate in the Barclays
Long Term Incentive Plan in 2013. </FONT></P>
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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#00aeef">Directors&#146; remuneration policy continued </FONT></P>
<P STYLE="font-size:72px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:72px;margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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<TD VALIGN="top" BGCOLOR="#e7f7ff"> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:0.50em"><FONT STYLE="font-family:ARIAL" SIZE="2" COLOR="#00aeef">Remuneration for
non-executive Directors</FONT></P> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:0.50em"><FONT STYLE="font-family:ARIAL" SIZE="2" COLOR="#5a6163">This section provides
details of the remuneration approach for the Chairman and non-executive Directors.</FONT></P> <P STYLE="font-size:24px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="font-size:8px;margin-top:0px;margin-bottom:1px"><FONT SIZE="1">&nbsp;</FONT></P></TD></TR>
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<TD WIDTH="76%"></TD></TR>


<TR>
<TD VALIGN="top" COLSPAN="3" BGCOLOR="#00aeef">
<P STYLE="margin-left:0.50em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff"></FONT><FONT STYLE="font-family:ARIAL" SIZE="1"><B><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff">Remuneration for non-executive
Directors</FONT></B></FONT></P></TD></TR>
<TR>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">&nbsp;&nbsp;&nbsp;Element and purpose</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Operation</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:1px; margin-left:0.50em"><FONT STYLE="font-family:ARIAL" SIZE="2" COLOR="#00aeef">Fees</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:1px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Fees are reviewed each year by the Board. Fees were last
increased in May 2011.</FONT></P></TD></TR>
<TR>
<TD VALIGN="top" ROWSPAN="3"> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:1px; margin-left:0.50em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Reflect individual
responsibilities and membership of Board Committees</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ROWSPAN="2"> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The first &pound;30,000 (Chairman: first
&pound;100,000) after tax and national insurance contributions of each non-executive Director&#146;s base fee is used to purchase Barclays shares which are retained on the non-executive Director&#146;s behalf until they retire from the
Board.</FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:1px"><FONT SIZE="1">&nbsp;</FONT></P></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The Chairman has a minimum time commitment equivalent to 80% of a full-time role.</FONT></P>
<P STYLE="font-size:2px;margin-top:0px;margin-bottom:1px">&nbsp;</P></TD></TR>
<TR>
<TD VALIGN="bottom" COLSPAN="3"> <P STYLE="line-height:1px;margin-top:0px;margin-bottom:2px;border-bottom:1pt solid #00aeef">&nbsp;</P></TD></TR>
<TR>
<TD VALIGN="top" ROWSPAN="6"> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:0.50em"><FONT STYLE="font-family:ARIAL" SIZE="2" COLOR="#00aeef">Benefits</FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:1px; margin-left:0.50em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">For Chairman only</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" ROWSPAN="3"> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:1px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The Chairman is provided with private medical
cover subject to the terms of the Barclays scheme rules from time to time, and is provided with the use of a company vehicle and driver when required for business purposes.</FONT></P></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ROWSPAN="3"> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">No other non-executive Director receives any
benefits from Barclays. Non-executive Directors are not eligible to receive a bonus. They may not participate in Barclays cash, share or long term incentive plans and are ineligible to join Barclays pension plans.</FONT></P>
<P STYLE="font-size:2px;margin-top:0px;margin-bottom:1px">&nbsp;</P></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="bottom" COLSPAN="3"> <P STYLE="line-height:1px;margin-top:0px;margin-bottom:2px;border-bottom:1pt solid #00aeef">&nbsp;</P></TD></TR>
<TR>
<TD VALIGN="top" ROWSPAN="10"> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:1px; margin-left:0.50em"><FONT STYLE="font-family:ARIAL" SIZE="2" COLOR="#00aeef">Notice and termination
provisions</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ROWSPAN="2"> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:1px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Each non-executive Director appointment is for
an initial six year term, renewable for a single term of three years thereafter and subject to annual re-election by shareholders.</FONT></P></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:1px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Notice period:</B></FONT></P></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Chairman: 12 months from the Company (six months from the Chairman). Non-executive Directors: six months.</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:1px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Termination payment policy</B></FONT></P></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ROWSPAN="5"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The Chairman&#146;s appointment may be terminated by Barclays on 12 months&#146; notice or immediately in which
case 12 months&#146; fees and contractual benefits are payable in instalments at the times they would have been received had the appointment continued. There are similar termination provisions for non-executive Directors based on six months&#146;
fees. No continuing payments of fees (or benefits) are due if a non-executive Director is not re-elected by shareholders at the Barclays Annual General Meeting.</FONT></P>
<P STYLE="font-size:2px;margin-top:0px;margin-bottom:1px">&nbsp;</P></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="bottom" COLSPAN="3"> <P STYLE="line-height:1px;margin-top:0px;margin-bottom:2px;border-bottom:1pt solid #00aeef">&nbsp;</P></TD></TR>
</TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The table below shows the fees payable to non-executive Directors in respect of Board and Committee chairmanship
and membership for the year ended 31&nbsp;December 2012 and for the year ending 31&nbsp;December 2013. The current Chairman does not receive any other fees in addition to his Chairman fee. </FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE" ALIGN="center">


<TR>
<TD WIDTH="88%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>


<TR>
<TD VALIGN="top" COLSPAN="8" BGCOLOR="#00aeef">
<P STYLE="margin-left:0.50em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff"></FONT><FONT STYLE="font-family:ARIAL" SIZE="1"><B><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff">Fees</FONT></B></FONT></P></TD>
<TD VALIGN="top" BGCOLOR="#00aeef">
<P STYLE="margin-left:0.50em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff"></FONT><FONT STYLE="font-family:ARIAL" SIZE="1"><B><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff">&nbsp;&nbsp;</FONT></B></FONT></P></TD></TR>
<TR>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef">&nbsp;<FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="right" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>2013<BR>&pound;000</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="right" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">2012<BR>&pound;000</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Chairman</FONT></P></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;750</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;750</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Board Member</FONT></P></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>80</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">80</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Additional responsibilities</B></FONT></P></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Senior Independent Director</FONT></P></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>30</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">30</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Chairman of Board Audit Committee or Board Remuneration Committee</FONT></P></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>70</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">70</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Chairman of Board Financial Risk Committee (Board Risk Committee to 31&nbsp;January 2013)</FONT></P></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>60</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">60</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Membership of Board Audit Committee or Board Remuneration Committee</FONT></P></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>30</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">30</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Membership of Board Conduct, Reputation and Operational Risk Committee<BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Board Citizenship Committee to
1&nbsp;February 2013)</FONT></P></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>25</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">15</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Membership of Board Financial Risk Committee (Board Risk Committee to 31&nbsp;January 2013)</FONT></P></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>25</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">25</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Membership of Board Corporate Governance and Nominations Committee</FONT></P></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>15</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">15</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
</TABLE>
 <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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<TD WIDTH="51%"></TD>
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<TD WIDTH="48%"></TD></TR>
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<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">52&nbsp;&nbsp;I&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"></TD></TR></TABLE>


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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="6" COLOR="#5a6163"><A NAME="tx497934_70"></A>Implementation of Directors&#146; remuneration in 2012 </FONT></P>
<P STYLE="font-size:72px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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<TD VALIGN="top" BGCOLOR="#e7f7ff"> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:0.50em"><FONT STYLE="font-family:ARIAL" SIZE="2" COLOR="#00aeef">2012 remuneration
outcomes for executive Directors</FONT></P> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:0.50em"><FONT STYLE="font-family:ARIAL" SIZE="2" COLOR="#5a6163">This section
explains how the Group remuneration policy for executive Directors has been implemented during 2012.</FONT></P> <P STYLE="font-size:18px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:1px"><FONT
SIZE="1">&nbsp;</FONT></P></TD></TR>
</TABLE> <P STYLE="margin-top:8px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="2" COLOR="#00aeef">Group Chief Executive remuneration &#150; Antony Jenkins </FONT></P>
<P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px">


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 </P> <P STYLE="margin-top:8px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">We have shown Antony Jenkins&#146; full remuneration for the whole of 2012 in the interests of clarity and
transparency. The LTIP award shown above for 2012 is for the 2013-2015 performance period. </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<P STYLE="margin-left:0.50em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff"></FONT><FONT STYLE="font-family:ARIAL" SIZE="1"><B><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff">Details of 2012
remuneration</FONT></B></FONT></P></TD></TR>
<TR>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#6dcff6"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="margin-top:0px;margin-bottom:1px"><FONT STYLE="font-family:ARIAL" SIZE="2" COLOR="#00aeef">Salary</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The 2012 salary shown
above of &pound;0.833m is the salary Antony Jenkins received in respect of the whole of 2012. This reflects a salary in 2012 of &pound;0.7m per annum for Antony&#146;s role as CEO of Retail and Business Banking (until 29 August 2012) and &pound;1.1m
per annum as Group Chief Executive (from 30 August 2012). The Committee did not increase Antony Jenkins&#146; salary for 2013.</FONT></P> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:1px">&nbsp;</P></TD></TR>
<TR>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#6dcff6"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="margin-top:0px;margin-bottom:1px"><FONT STYLE="font-family:ARIAL" SIZE="2" COLOR="#00aeef">Pension</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The 2012 pension
value shown above of &pound;0.215m is in respect of the whole of 2012. This reflects participation in the Afterwork pension plan from 1 January 2012 to 31 March 2012, cash in lieu of pension of 21% of salary from 1 April 2012 to 29 August 2012, and
cash in lieu of pension of 33% of salary from 30 August 2012. The cash in lieu of pension of 33% reflects market practice for senior executives in comparable roles.</FONT></P>
<P STYLE="font-size:4px;margin-top:0px;margin-bottom:1px">&nbsp;</P></TD></TR>
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<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#6dcff6"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="margin-top:0px;margin-bottom:1px"><FONT STYLE="font-family:ARIAL" SIZE="2" COLOR="#00aeef">Benefits</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Antony
Jenkins&#146; benefits include private medical cover, life and ill-health income protection, tax advice, car allowance and the use of a company vehicle and driver when required for business purposes. Antony is not entitled to tax
equalisation.</FONT></P> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:1px">&nbsp;</P></TD></TR>
<TR>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#d2d4d6"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:1px"><FONT STYLE="font-family:ARIAL" SIZE="2" COLOR="#00aeef">Annual
Bonus</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The Committee
considered Antony Jenkins&#146; performance for the whole of 2012 in the round. It assessed his performance against Group, business (by reference to his previous role as CEO of Retail and Business Banking up to 29 August 2012) and individual
measures. In doing so the Committee considered 2012 financial performance, including the highlights which are detailed on page 43.</FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">In considering his 2012 performance the Committee considered that Antony Jenkins had delivered strong Retail and Business Banking performance prior
to accepting the role of Group Chief Executive at a difficult time for Barclays. Since that time the Committee agreed he has quickly established a leadership profile that differentiates him from predecessors and a commitment to leading the changes
required including strengthening the culture and control environment across Barclays. The Committee welcomed Antony Jenkins&#146; contribution to its own work in managing remuneration costs and redressing the balance between employee and shareholder
returns.</FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">On 1 February 2013 Antony Jenkins announced that he did
not wish to be considered for a bonus for 2012, citing his wish to bear an appropriate degree of accountability for multiple issues besetting the bank during the year.</FONT></P>
<P STYLE="font-size:4px;margin-top:0px;margin-bottom:1px">&nbsp;</P></TD></TR>
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<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#d2d4d6"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="2" COLOR="#00aeef">Long Term</FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="2" COLOR="#00aeef">Incentive Plan</FONT></P>
<P STYLE="margin-top:0px;margin-bottom:1px"><FONT STYLE="font-family:ARIAL" SIZE="2" COLOR="#00aeef">2013-2015</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The Committee decided
to make an award to Antony Jenkins under the Barclays LTIP for the 2013-2015 performance period with a maximum potential payout value of 400% of his salary at the date of award (not taking into account the potential effect of share price movement
between award and any payout).</FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The LTIP maximum value of
&pound;4.4m is based on the maximum number of shares that can vest at the end of a performance period of three years. The maximum number of shares is 400% of salary at the start of the performance period divided by the share price at the date the
award is made. For the purposes of assessing the &#145;value at award&#146; of the LTIP (taking into account the range of possible outcomes) Barclays historical approach has been to ascribe a value of one-third of the maximum value assuming no share
price movement. So on the basis of this approach the &#145;value at award&#146; of the maximum LTIP to Antony as shown above is one-third x &pound;4.4m, i.e. &pound;1.467m. For the 2013-2015 Barclays LTIP, performance conditions will be based on
financial performance (measured on return on risk weighted assets), risk (measured by loan loss rate) and a balanced scorecard. Any award that vests after three years will be subject to a further two year holding period.</FONT></P>
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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#00aeef">Implementation of Directors&#146; remuneration in 2012 continued </FONT></P>
<P STYLE="font-size:96px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="2" COLOR="#00aeef">2012 remuneration overview &#150; Antony Jenkins </FONT></P>
<P STYLE="margin-top:8px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The chart below shows the maximum value of remuneration possible for 2012 under Antony Jenkins&#146; contract, the maximum potential value of the
remuneration actually awarded for 2012, and timing of receipt. The potential value of the 2013-2015 LTIP payout does not take into account share price movement or the value of additional shares which may be added to the number of shares released on
vesting to reflect dividends paid during the performance period. </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px">


<IMG SRC="g497934tx91_n.jpg" ALT="LOGO">
 </P> <P STYLE="margin-top:14px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The maximum potential bonus and LTIP award in the first column are based on Antony Jenkins&#146; Group Chief
Executive salary of &pound;1.1m. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>&#145;BIS single figure&#146; for 2012 remuneration </B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The Department for Business, Innovation and Skills&#146; (BIS) draft disclosure regulations include a requirement to show a single figure for
executive Director remuneration on a basis different to that shown on the opposite page. The &#145;BIS single figure&#146; basis requires that for LTIPs, rather than including the value of any LTIP awarded in 2013, the payout value of any LTIP whose
performance cycle ended in 2012 should be included instead. Accordingly, the table below shows Antony Jenkins&#146; 2012 remuneration on the &#145;BIS single figure&#146; basis. As Antony Jenkins was not a participant in a previous LTIP cycle that
ended in 2012, the LTIP figure is shown as zero and his 2012 total remuneration on the &#145;BIS single figure&#146; basis is &pound;1.129m. </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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2012 total remuneration</FONT></B></FONT></TD>
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<TD VALIGN="top" ALIGN="right" BGCOLOR="#00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff"></FONT><FONT STYLE="font-family:ARIAL" SIZE="1"><B><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff">&pound;000&nbsp;&nbsp;
</FONT></B></FONT></TD></TR>
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<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:2px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="margin-bottom:1px; margin-top:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">&nbsp;</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:2px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="margin-bottom:1px; margin-top:0px" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Salary</FONT></P></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:2px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="margin-bottom:1px; margin-top:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">&nbsp;&nbsp;</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Pension</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Benefits</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Bonus</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">LTIP</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Total</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">833</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">215</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">81</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">0</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">0</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">1,129</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
</TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Previous Long Term Incentive Plan awards </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Antony Jenkins was not a participant in a previous LTIP cycle that ended in 2012. Antony currently holds unvested LTIP awards under the Barclays LTIP for the performance period 2012-2014. Prior to
joining the Board, Antony participated in long term incentive plans linked to divisional performance. These divisional plans were not appropriate to his new role as Group Chief Executive and were brought to an end. The equivalent value of these
arrangements was made as awards with the same vesting date over Barclays shares under the SVP and the Barclays LTIP for the performance period 2012-2014. These awards are shown in the table on pages 65-66. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="2" COLOR="#00aeef">2013 objectives </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Antony
Jenkins&#146; performance objectives for 2013, by which 2013 remuneration decisions will be measured, include Group and individual measures and are both financial and non-financial. In line with the announcements of the outcomes of the Board&#146;s
Strategic Review that were made on 12&nbsp;February 2013, Antony is responsible for delivering the Transform commitments and the financial and non-financial commitments made in those announcements. In assessing Antony&#146;s performance, the
Committee will assess Antony&#146;s progress in working towards the 2015 financial targets including: </FONT></P> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="1%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Return on equity in excess of cost of equity and improvement in the quality of income and predictability of earnings;
</FONT></P></TD></TR></TABLE> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TR>
<TD WIDTH="1%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Reduction in the cost to income ratio; </FONT></P></TD></TR></TABLE> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TR>
<TD WIDTH="1%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Management of the core capital ratio; and </FONT></P></TD></TR></TABLE> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="1%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><FONT STYLE="font-family:Times New Roman" SIZE="1" COLOR="#5a6163"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#161;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"></FONT></FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Improvement in the dividend payout ratio. </FONT></P></TD></TR></TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Other key actions include a focus on activities which support Barclays customers and clients; growing the UK, US and African franchises; restructuring the European retail and corporate businesses;
repositioning the European and Asian equities and Investment Banking Division businesses; closing the Structured Capital Markets tax-related business unit; reducing risk weighted assets and investing in higher return businesses; and reducing
operating expenses through a new approach to strategically manage costs. Antony&#146;s performance will also be assessed by the Committee by reference to the relationships he builds with internal and external stakeholders, the leadership he provides
in driving cultural change, and his success in building a strong compliance and control structure to restore public confidence in Barclays. </FONT></P>
 <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">54&nbsp;&nbsp;I&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
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 <P STYLE="font-size:72px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:24px;margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="2" COLOR="#00aeef">Group Finance Director remuneration &#150; Chris Lucas </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="margin-top:0px;margin-bottom:0px">


<IMG SRC="g497934tx92_n.jpg" ALT="LOGO">
 </P> <P STYLE="margin-top:8px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The LTIP award shown above for 2012 is for the 2013-2015 performance period and the LTIP award for 2011 is for
the 2012-2014 performance period. </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD VALIGN="top" COLSPAN="5" BGCOLOR="#00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff"></FONT><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff">&nbsp;Details of 2012
remuneration</FONT></B></FONT></TD></TR>
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<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#6ccff6"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="2" COLOR="#00aeef">Salary</FONT></P>
<P STYLE="font-size:4px;margin-top:0px;margin-bottom:1px">&nbsp;</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Chris Lucas&#146;
salary for 2012 was &pound;0.8m. The Committee did not increase his salary for 2013.</FONT></P> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:1px">&nbsp;</P></TD></TR>
<TR>
<TD HEIGHT="8" BGCOLOR="#6ccff6"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#6ccff6"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="2" COLOR="#00aeef">Pension</FONT></P>
<P STYLE="font-size:4px;margin-top:0px;margin-bottom:1px"><FONT SIZE="1">&nbsp;</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">As Group Finance Director Chris Lucas is contractually entitled to cash in lieu of
pension contributions of 25% of his salary per annum. This reflects market practice for senior executives in comparable roles.</FONT></P> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:1px">&nbsp;</P></TD></TR>
<TR>
<TD HEIGHT="8" BGCOLOR="#6ccff6"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#6ccff6"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="2" COLOR="#00aeef">Benefits</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Chris Lucas&#146; benefits include private medical cover, life and ill-health income
protection, tax advice, car allowance and the use of a company vehicle and driver when required for business purposes. Chris is not entitled to tax equalisation.</FONT></P>
<P STYLE="font-size:4px;margin-top:0px;margin-bottom:1px">&nbsp;</P></TD></TR>
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<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
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<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#d2d4d6"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="2" COLOR="#00aeef">Annual Bonus</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">On 27 June 2012, Chris Lucas agreed with the Board voluntarily to forgo any
consideration for a bonus for 2012. This decision was made in the context of settlements reached by Barclays in relation to investigations by UK and US authorities into submissions made by Barclays to the bodies that set various interbank offered
rates.</FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">In the circumstances the Committee did not consider whether
a bonus would be appropriate for 2012 but it did still consider Chris Lucas&#146; performance during the year against Group and individual performance measures. The Committee noted and confirmed the assessment of his line manager, Antony Jenkins,
that Chris Lucas had exceeded expectations for the year, contributing positively to the process of change underway since Antony became Group Chief Executive. The Committee noted Chris Lucas&#146; effective execution of Barclays capital planning, his
leadership of the finance function and his contribution to the Board&#146;s business practices review and medium term planning. In doing so the Committee also considered the 2012 financial highlights as detailed on page 43.</FONT></P>
<P STYLE="font-size:4px;margin-top:0px;margin-bottom:1px">&nbsp;</P></TD></TR>
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<TD HEIGHT="8" BGCOLOR="#d2d4d6"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
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<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#d2d4d6"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="2" COLOR="#00aeef">Long Term</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="2" COLOR="#00aeef">Incentive Plan</FONT></P> <P STYLE="margin-top:0px;margin-bottom:1px"><FONT STYLE="font-family:ARIAL" SIZE="2" COLOR="#00aeef">2013-2015</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The Committee decided to make an award to Chris Lucas under the Barclays Long Term
Incentive Plan for the 2013-2015 performance period with a maximum potential payout value of 400% of his salary at the date of award (not taking into account the potential effect of share price movement between award and any payout).</FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The LTIP maximum value of &pound;3.2m is based on the maximum number of shares
that can vest at the end of a performance period of three years. The maximum number of shares is 400% of salary at the start of the performance period divided by the share price at the date the award is made. For the purposes of assessing the
&#145;value at award&#146; of the LTIP (taking into account the range of possible outcomes) Barclays historical approach has been to ascribe a value of one-third of the maximum value assuming no share price movement. So on the basis of this approach
the &#145;value at award&#146; of the maximum LTIP to Chris as shown above is one-third x &pound;3.2m, i.e. &pound;1.067m. The 2013-2015 performance condition for Chris&#146; LTIP is identical to that of Antony Jenkins&#146; 2013-2015 LTIP award as
detailed on page 53, as is the subsequent holding period.</FONT></P> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:1px">&nbsp;</P></TD></TR>
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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#00aeef">Implementation of Directors&#146; remuneration in 2012 continued </FONT></P>
<P STYLE="font-size:72px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:24px;margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="2" COLOR="#00aeef">2012 remuneration overview &#150; Chris Lucas </FONT></P> <P STYLE="margin-top:8px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The chart below shows the maximum value
of remuneration possible for 2012 for Chris Lucas, the maximum potential value of the remuneration actually awarded for 2012, and timing of receipt. The potential value of the 2013-2015 LTIP payout does not take into account share price movement or
the value of additional shares which may be added to the number of shares released on vesting to reflect dividends paid during the performance period. </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="margin-top:0px;margin-bottom:0px">


<IMG SRC="g497934tx93_n.jpg" ALT="LOGO">
 </P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>&#145;BIS single figure&#146; for 2012 remuneration </B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">On the Department for Business, Innovation and Skills (BIS) &#145;single figure&#146; basis (i.e. including the vesting amount of the 2010-2012 PSP
and not the value at award of his 2013-2015 LTIP award) Chris Lucas received 2012 total remuneration of &pound;1.677m. </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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2012 total remuneration</FONT></B></FONT></TD>
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STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff">&pound;</FONT><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff"></FONT>000</FONT></B></FONT></TD>
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<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:2px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="margin-bottom:1px; margin-top:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">&nbsp;</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:2px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="margin-bottom:1px; margin-top:0px" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Salary</FONT></P></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:2px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="margin-bottom:1px; margin-top:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">&nbsp;&nbsp;</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:2px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="margin-bottom:1px; margin-top:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">&nbsp;</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:2px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="margin-bottom:1px; margin-top:0px" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Pension</FONT></P></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:2px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="margin-bottom:1px; margin-top:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">&nbsp;&nbsp;</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:2px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="margin-bottom:1px; margin-top:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">&nbsp;</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:2px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="margin-bottom:1px; margin-top:0px" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Benefits</FONT></P></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:2px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="margin-bottom:1px; margin-top:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">&nbsp;&nbsp;</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:2px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="margin-bottom:1px; margin-top:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">&nbsp;</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:2px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="margin-bottom:1px; margin-top:0px" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Bonus</FONT></P></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:2px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="margin-bottom:1px; margin-top:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">&nbsp;&nbsp;</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:2px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="margin-bottom:1px; margin-top:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">&nbsp;</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:2px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="margin-bottom:1px; margin-top:0px" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">LTIP</FONT></P></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:2px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="margin-bottom:1px; margin-top:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">&nbsp;&nbsp;</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:2px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="margin-bottom:1px; margin-top:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">&nbsp;</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:2px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="margin-bottom:1px; margin-top:0px" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Total</FONT></P></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="font-size:2px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="margin-bottom:1px; margin-top:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">&nbsp;&nbsp;</FONT></P></TD></TR>
<TR>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">800</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">200</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">34</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">0</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">643</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">1,677</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
</TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Previous Long Term Incentive Plan awards </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The Committee considered the vesting and release of shares pursuant to Chris Lucas&#146; 2010-2012 Performance Share Plan (PSP) award. Vesting of the award is subject to Barclays total shareholder
return (TSR) growth and return on risk weighted assets (RoRWA) performance over the performance period. Each performance condition operates independently over 50% of the award respectively. For the performance period RoRWA was 0.69%, below the
threshold for the RoRWA element of the award to vest. At the end of 2012 Barclays relative TSR performance was ranked fifth out of a peer group of 12. The award was also subject to a discretionary underpin by which the Committee must be satisfied
with the underlying financial health of the Group. The Committee was satisfied that this underpin was met, and accordingly determined that the award should vest to the extent of 23% of the maximum number of shares under the total award. The shares
are scheduled to vest in March 2013. The value of these shares as at 28&nbsp;February 2013 is &pound;0.643m as shown in the &#145;BIS single figure&#146; table above. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Chris Lucas also currently holds unvested LTIP awards under the Barclays LTIP for the performance periods 2011-2013 and 2012-2014. These awards are shown in the table on pages 65-66. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="2" COLOR="#00aeef">2013 objectives </FONT></P> <P STYLE="margin-top:8px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Chris Lucas&#146;
performance objectives for 2013, by which 2013 remuneration decisions will be measured, include Group and individual measures and are both financial and non-financial. As for Antony Jenkins&#146; 2013 performance assessment as detailed on page 54,
the Committee will assess Chris&#146; performance in line with delivering the Transform commitments. Chris&#146; 2013 performance will also be assessed by the Committee by reference to driving the control agenda through leading the finance, tax and
treasury functions, and building and strengthening relationships with investors, regulators and other stakeholders. Chris&#146; objectives also include ensuring all risk and control frameworks and regulatory requirements are adhered to, and
developing financing and liquidity frameworks which are a source of competitive advantage for Barclays. </FONT></P>
 <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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<TR>
<TD WIDTH="51%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="48%"></TD></TR>
<TR>
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">56&nbsp;&nbsp;I&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"></TD></TR></TABLE>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="font-size:72px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:24px;margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Executive Directors&#146; shareholdings </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">From 2013 the Committee has introduced a new requirement that executive Directors should hold Barclays shares worth, as a minimum, four times salary. The current executive Directors have five years
from the introduction of this new requirement to meet it (five years from appointment for a new executive Director) and they have a reasonable period to build up to the requirement again if it is not met because of a share price fall. Shares that
count towards the requirement are beneficially owned shares including any vested share awards subject to holding periods (including vested LTIPs). Shares from unvested deferred share bonuses and unvested LTIPs do not count towards the requirement.
This requirement replaces the previous guidelines and positions Barclays at the higher end of market practice. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The chart below shows
the value of Barclays shares held beneficially by Antony Jenkins and Chris Lucas as at 28&nbsp;February 2013 that count towards the new shareholding requirement. </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="45%"></TD>
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<TD WIDTH="7%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD WIDTH="44%"></TD></TR>


<TR>
<TD VALIGN="top" COLSPAN="3" BGCOLOR="#00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff"></FONT><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff">&nbsp;&nbsp;
Executive&nbsp;Director&nbsp;beneficial&nbsp;shareholdings&nbsp;based&nbsp;on&nbsp;share&nbsp;price&nbsp;at&nbsp;28&nbsp;February&nbsp;2013&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff">&pound;000s<B>&nbsp;&nbsp;</B></FONT></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD></TR>
</TABLE> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px">


<IMG SRC="g497934tx94.jpg" ALT="LOGO">
 </P> <P STYLE="margin-top:26px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The table below provides further details of the executive Directors&#146; shareholdings. The format of this
table reflects the Department for Business, Innovation and Skills&#146; draft disclosure regulation requiring disclosure of shares owned beneficially by executive Directors, and shares in which executive Directors have interests which are subject to
either deferral terms or performance conditions. The interests shown below that are subject to performance conditions are based on the maximum number of shares that may vest. Further details on the executive Directors&#146; outstanding long term
awards and shareholdings are shown on pages 65-66. </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE" ALIGN="center">


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<TD WIDTH="79%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD></TD>
<TD></TD>
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<TD></TD>
<TD></TD>
<TD></TD></TR>


<TR BGCOLOR="#00aeef">
<TD VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff"></FONT><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff">&nbsp;&nbsp;Executive Director shareholdings at
28&nbsp;February 2013</FONT></B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="6" ALIGN="center" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B></B>Number of shares<B></B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Antony&nbsp;Jenkins</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Chris&nbsp;Lucas</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Held beneficially (counting towards shareholding requirement)</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">1,580,856</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">912,830</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Additional shares from unvested awards:</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;&nbsp;&nbsp;those subject to deferral but not performance conditions</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">4,495,937</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">1,155,479</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;&nbsp;&nbsp;those subject to performance conditions (maximum number of
shares)</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">2,319,062</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">4,902,118</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
</TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Former Chief Executive &#150; Bob Diamond </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Bob Diamond stepped down as Chief Executive and from the Boards of Barclays PLC and Barclays Bank PLC on 3&nbsp;July 2012. Following this, the Board of Barclays PLC and Bob Diamond reached agreement
on the terms of his termination of employment with the Barclays Group. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Pursuant to this agreement, and in line with his contract of
employment, Bob Diamond will continue to receive salary, pension allowance and other benefits until the end of his notice period. The salary and pension allowance will be paid in a lump sum at the end of the notice period. The notice period will end
on 2&nbsp;July 2013 unless the employment termination date is brought forward by Bob Diamond with the agreement of Barclays. The other benefits include private medical insurance, life and disability cover, accommodation while in the UK, tax advice,
the use of a company vehicle or the cash equivalent, and the use of a company driver when required for business purposes. In the event of an earlier cessation of employment, payments in respect of salary, pension allowance and other benefits will
only be made up to the employment termination date. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Bob Diamond voluntarily waived all of his unvested deferred bonus awards and long
term incentive share awards and no compensation was paid to him in respect of these. These awards had an estimated value of &pound;19.9m on 3&nbsp;July 2012. Bob Diamond was not considered for an annual bonus for 2012 and he will not receive any
future bonus or long term incentive awards. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">In accordance with his contract of employment, Bob Diamond was tax equalised during 2012 on
tax above the UK rate where that could not be offset by a double tax treaty. He is not entitled to tax equalisation for income in respect of any period after 3&nbsp;July 2012. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Further details on Bob Diamond&#146;s remuneration can be found on pages 63-66. </FONT></P>
 <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE">

<TR>
<TD WIDTH="51%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="48%"></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;I&nbsp;&nbsp;57</FONT></TD></TR></TABLE>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:6px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="4" COLOR="#00aeef">Implementation of Directors&#146; remuneration in 2012 continued </FONT></P>
<P STYLE="font-size:96px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE" ALIGN="center">


<TR>
<TD WIDTH="100%"></TD></TR>


<TR>
<TD VALIGN="top" BGCOLOR="#e7f7ff"> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:4px;margin-bottom:0px; margin-left:0.50em"><FONT STYLE="font-family:ARIAL" SIZE="2" COLOR="#00aeef">2012 remuneration for
non-executive Directors</FONT></P> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:8px;margin-bottom:0px; margin-left:0.50em"><FONT STYLE="font-family:ARIAL" SIZE="2" COLOR="#5a6163">This section provides
details of the fees provided to non-executive Directors during 2012 and details of their letters of appointment.</FONT></P> <P STYLE="font-size:8px;margin-top:0px;margin-bottom:1px"><FONT SIZE="1">&nbsp;</FONT></P></TD></TR>
</TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Remuneration for non-executive Directors reflects their responsibility and time commitment and the level of fees
paid to non-executive directors of comparable major UK companies. </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE" ALIGN="center">


<TR>
<TD WIDTH="75%"></TD>
<TD VALIGN="bottom" WIDTH="4%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="4%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="4%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="4%"></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>


<TR BGCOLOR="#00aeef">
<TD VALIGN="top" BGCOLOR="#00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff"></FONT><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff">&nbsp;&nbsp;2012 fees for the
Chairman and non-executive Directors (audited)</FONT></B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD></TR>
<TR>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef">&nbsp;<FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="right" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Fees<BR>&pound;000</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="right" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Benefits<BR>&pound;000</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="right" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>2012<BR>Total&nbsp;&pound;000</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="right" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">2011<BR>Total&nbsp;&pound;000</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Chairman</B></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD></TR>
<TR>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Sir David Walker</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">167</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">6</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>173</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&#150;</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Non-executive Directors</B></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">David Booth</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">170</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&#150;</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>170</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">145</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Tim Breedon</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">18</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&#150;</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>18</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&#150;</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Fulvio Conti</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">110</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&#150;</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>110</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">105</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Simon Fraser</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">140</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&#150;</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>140</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">130</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Reuben Jeffery III</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">105</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&#150;</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>105</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">98</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Sir Andrew Likierman</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">135</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&#150;</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>135</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">127</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Dambisa Moyo</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">120</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&#150;</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>120</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">105</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Sir Michael Rake</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">220</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&#150;</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>220</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">188</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Sir John Sunderland</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">161</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&#150;</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>161</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">132</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Alison Carnwath</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">114</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&#150;</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>114</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">158</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Marcus Agius</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">750</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">1</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>751</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">751</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Total</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">2,210</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">7</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#e7f7ff" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>2,217</B></FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" BGCOLOR="#e7f7ff"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>&nbsp;&nbsp;</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">1,939</FONT></TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">&nbsp;&nbsp;</FONT></TD></TR>
</TABLE> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">1.</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Sir David Walker was appointed to the Board as a non-executive Director with effect from 1&nbsp;September 2012 and as Chairman from 1&nbsp;November 2012. He
received fees for the period 1&nbsp;September 2012 to 31&nbsp;October 2012 at the rate of &pound;250,000&nbsp;per annum, and from 1&nbsp;November 2012 at the rate of &pound;750,000&nbsp;per annum. Sir David is also entitled to private medical cover
and the use of a company vehicle and driver when required for business purposes. </FONT></TD></TR></TABLE> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">2.</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Tim Breedon joined the Board as a non-executive Director on 1&nbsp;November 2012. </FONT></TD></TR></TABLE>
<P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">3.</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Alison Carnwath resigned from the Board as a non-executive Director with effect from 24&nbsp;July 2012. </FONT></TD></TR></TABLE>
<P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">4.</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Marcus Agius announced his intention to step down as Chairman and as a non-executive Director on 2&nbsp;July 2012. On 3&nbsp;July 2012, following the resignation
of Bob Diamond, the Board agreed that Marcus Agius would become full-time Chairman and lead the search for a new Chief Executive as well as chair the Group Executive Committee. Marcus&#146; appointment as a non-executive Director and Chairman
subsequently terminated on 31&nbsp;October 2012. In accordance with his appointment letter, Marcus Agius was paid his monthly fee as non-executive Director and Chairman for the remainder of his notice period up to 1&nbsp;January 2013. Accordingly
the fees and benefits shown in the table above are for the whole of 2012. No other payments were made in connection with his resignation. </FONT></TD></TR></TABLE> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">5.</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Marcus Agius was appointed as a senior advisor providing corporate advisory support to Barclays Corporate Banking with effect from 1&nbsp;November 2012. He is
entitled to a fee for this role at the rate of &pound;175,000&nbsp;per annum. This fee was not paid for the period of 1&nbsp;November 2012 to 1&nbsp;January 2013. He is also eligible for medical cover. The appointment will be reviewed after 12
months in the light of business generated. </FONT></TD></TR></TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B>Letters of appointment </B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">The Chairman and non-executive Directors have individual letters of appointment. The effective dates of the letters of appointment are shown in the
table below. All current non-executive Directors with the exception of Sir Andrew Likierman will be standing for re-election at the 2013 Annual General Meeting. </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE" ALIGN="center">


<TR>
<TD WIDTH="37%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD WIDTH="61%"></TD></TR>


<TR>
<TD VALIGN="top" BGCOLOR="#00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff"></FONT><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef"><B><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#ffffff">&nbsp;&nbsp;Effective dates of
letters of appointment</FONT></B></FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#00aeef"></TD></TR>
<TR>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#00aeef">Effective date</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Chairman</B></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD></TR>
<TR>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #00aeef"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Sir David Walker</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #00aeef"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">1 September 2012 (non-executive Director), 1 November 2012 (Chairman)</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163"><B>Non-executive Directors</B></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">David Booth</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">1 May 2007</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Tim Breedon</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">1 November 2012</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Fulvio Conti</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">1 April 2006</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Simon Fraser</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">10 March 2009</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Reuben Jeffery III</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">16 July 2009</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Sir Andrew Likierman</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">1 September 2004</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:0.38em"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">Dambisa Moyo</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:ARIAL" SIZE="1" COLOR="#5a6163">1 May 2010</FONT></TD></TR>
<TR>
<TD 
[{"type": "20-F", "sequence": "1", "filename": "d497934d20f.htm", "description": "FORM 20-F", "secsgml_size_bytes": 14151761}]
[{"company-data": {"conformed-name": "BARCLAYS PLC", "cik": "0000312069", "assigned-sic": "6029", "irs-number": "000000000", "state-of-incorporation": "X0", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "20-F", "act": "34", "file-number": "001-09246", "film-number": "13687346"}, "business-address": {"street1": "1 CHURCHILL PLACE", "city": "LONDON", "state": "X0", "zip": "E14 5HP", "phone": "01100442076993139"}, "mail-address": {"street1": "1 CHURCHILL PLACE", "city": "LONDON", "state": "X0", "zip": "E14 5HP"}, "former-company": [{"former-conformed-name": "BARCLAYS BANK PLC", "date-changed": "19850313"}, {"former-conformed-name": "BARCLAYS BANK LTD", "date-changed": "19820607"}]}, {"company-data": {"conformed-name": "BARCLAYS BANK PLC /ENG/", "cik": "0000312070", "assigned-sic": "6029", "irs-number": "000000000", "state-of-incorporation": "X0", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "20-F", "act": "34", "file-number": "001-10257", "film-number": "13687347"}, "business-address": {"street1": "1 CHURCHILL PLACE", "street2": "E14 5HP", "city": "LONDON ENGLAND", "state": "X0", "zip": "E14 5HP", "phone": "2124124000"}, "mail-address": {"street1": "1 CHURCHILL PLACE", "street2": "E14 5HP", "city": "LONDON ENGLAND", "state": "X0", "zip": "E14 5HP"}, "former-company": {"former-conformed-name": "BARCLAYS BANK INTERNATIONAL LTD", "date-changed": "19850313"}}]
Form 20-F
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 20-F
(Mark One)
¨
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
þ
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended
December 31, 2012
OR
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition
period
from
to
OR
¨
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell company report
Commission file numbers
Barclays PLC
1-09246
Barclays Bank PLC
1-10257
BARCLAYS PLC
BARCLAYS BANK PLC
(Exact Names of Registrants as Specified in their Charter[s])
ENGLAND
(Jurisdiction of
Incorporation or Organization)
1 CHURCHILL PLACE, LONDON E14 5HP, ENGLAND
(Address of Principal Executive Offices)
PATRICK GONSALVES, +44 (0)20 7116 2901, PATRICK.GONSALVES@BARCLAYS.COM
1 CHURCHILL PLACE,
LONDON E14 5HP, ENGLAND
*(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Barclays PLC
Title of Each Class
Name of Each Exchange
On Which Registered
25p ordinary shares
New York Stock Exchange*
American Depository Shares, each representing four 25p ordinary shares
New York Stock Exchange
*
Not for trading, but in connection with the registration of American Depository Shares, pursuant to the requirements of the Securities and Exchange Commission.
Barclays Bank PLC
Title of Each Class
Name of Each Exchange
On Which Registered
Callable Floating Rate Notes 2035
New York Stock Exchange
Non-Cumulative Callable Dollar Preference Shares, Series 2
New York Stock Exchange*
American Depository Shares, Series 2, each representing one Non-Cumulative Callable Dollar Preference Share, Series 2
New York Stock Exchange
Non-Cumulative Callable Dollar Preference Shares, Series 3
New York Stock Exchange*
American Depository Shares, Series 3, each representing one Non-Cumulative Callable Dollar Preference Share, Series 3
New York Stock Exchange
Non-Cumulative Callable Dollar Preference Shares, Series 4
New York Stock Exchange*
American Depository Shares, Series 4, each representing one Non-Cumulative Callable Dollar Preference Share, Series 4
New York Stock Exchange
Non-Cumulative Callable Dollar Preference Shares, Series 5
New York Stock Exchange*
American Depository Shares, Series 5, each representing one Non-Cumulative Callable Dollar Preference Share, Series 5
New York Stock Exchange
5.140% Lower Tier 2 Notes due October 2020
New York Stock Exchange
iPath
®
Dow Jones – UBS Commodity Index Total Return
SM
ETN
NYSE Arca
iPath
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Dow Jones – UBS Agriculture Subindex Total
Return
SM
ETN
NYSE Arca
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Dow Jones – UBS Aluminum Subindex Total Return
SM
ETN
NYSE Arca
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®
Dow Jones – UBS Cocoa Subindex Total Return
SM
ETN
NYSE Arca
iPath
®
Dow Jones – UBS Coffee Subindex Total Return
SM
ETN
NYSE Arca
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®
Dow Jones – UBS Copper Subindex Total Return
SM
ETN
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Dow Jones – UBS Cotton Subindex Total Return
SM
ETN
NYSE Arca
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®
Dow Jones – UBS Energy Subindex Total Return
SM
ETN
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®
Dow Jones – UBS Grains Subindex Total Return
SM
ETN
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Dow Jones – UBS Industrial Metals Subindex Total
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SM
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SM
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Dow Jones – UBS Livestock Subindex Total Return
SM
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Dow Jones – UBS Natural Gas Subindex Total
Return
SM
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Dow Jones – UBS Platinum Subindex Total Return
SM
ETN
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Dow Jones – UBS Precious Metals Subindex Total
Return
SM
ETN
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Dow Jones – UBS Softs Subindex Total Return
SM
ETN
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®
Dow Jones – UBS Sugar Subindex Total Return
SM
ETN
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®
Dow Jones – UBS Tin Subindex Total Return
SM
ETN
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®
S&P GSCI
®
Total Return Index ETN
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S&P GSCI
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Crude Oil Total Return Index ETN
NYSE Arca
*
Not for trading, but in connection with the registration of American Depository Shares, pursuant to the requirements of the Securities and Exchange Commission.
iPath
®
CBOE S&P 500 BuyWrite Index
SM
ETN
NYSE Arca
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MSCI India Index
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EUR/USD Exchange Rate ETN
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GBP/USD Exchange Rate ETN
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JPY/USD Exchange Rate ETN
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S&P 500 VIX Short-Term Futures
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S&P 500 VIX Mid-Term Futures
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Inverse S&P 500 VIX Short-Term Futures
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Long Extended Russell 1000
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TR Index ETN
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Long Extended Russell 2000
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TR Index ETN
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Long Enhanced MSCI EAFE
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TR Index ETN
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Short Enhanced MSCI EAFE
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TR Index ETN
NYSE Arca
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Long Enhanced MSCI Emerging Markets Index
ETN
NYSE Arca
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Short Enhanced MSCI Emerging Markets Index
ETN
NYSE Arca
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Long Extended S&P 500
®
TR Index ETN
NYSE Arca
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Global Carbon ETN
NYSE Arca
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Optimized Currency Carry ETN
NYSE Arca
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US Treasury Steepener ETN
NYSE Arca
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US Treasury Flattener ETN
NYSE Arca
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US Treasury 2-year Bull ETN
NYSE Arca
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US Treasury 2-year Bear ETN
NYSE Arca
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US Treasury 10-year Bull ETN
NYSE Arca
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US Treasury 10-year Bear ETN
NYSE Arca
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US Treasury Long Bond Bull ETN
NYSE Arca
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US Treasury Long Bond Bear ETN
NYSE Arca
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Pure Beta Broad Commodity ETN
NYSE Arca
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Pure Beta S&P GSCI
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-Weighted ETN
NYSE Arca
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Pure Beta Cocoa ETN
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Pure Beta Coffee ETN
NYSE Arca
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Pure Beta Cotton ETN
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Pure Beta Sugar ETN
NYSE Arca
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Pure Beta Aluminum ETN
NYSE Arca
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Pure Beta Copper ETN
NYSE Arca
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Pure Beta Lead ETN
NYSE Arca
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Pure Beta Nickel ETN
NYSE Arca
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Pure Beta Crude Oil ETN
NYSE Arca
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®
Seasonal Natural Gas ETN
NYSE Arca
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®
Pure Beta Agriculture ETN
NYSE Arca
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Pure Beta Grains ETN
NYSE Arca
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Pure Beta Softs ETN
NYSE Arca
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Pure Beta Industrial Metals ETN
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Pure Beta Energy ETN
NYSE Arca
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Pure Beta Livestock ETN
NYSE Arca
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Pure Beta Precious Metals ETN
NYSE Arca
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US Treasury 5-year Bull ETN
NYSE Arca
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®
US Treasury 5-year Bear ETN
NYSE Arca
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®
S&P 500 Dynamic VIX ETN
NYSE Arca
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Inverse S&P 500 VIX Short-Term FuturesTM ETN
(II)
NYSE Arca
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®
GEMS IndexTM ETN
NYSE Arca
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®
GEMS Asia 8 ETN
NYSE Arca
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Asian and Gulf Currency Revaluation
ETN
NYSE Arca
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S&P MLP ETN
NYSE Arca
Barclays ETN+ S&P 500
®
Dynamic VEQTOR™
ETN
NYSE Arca
Barclays ETN + Long B Leveraged Exchange Traded Notes Linked to the S&P 500
®
Total Return Index
SM
NYSE Arca
Barclays ETN + Short B Leveraged Exchange Traded Notes Linked to the Inverse Performance of the S&P 500
®
Total Return Index
SM
NYSE Arca
Barclays ETN + Long C Leveraged Exchange Traded Notes Linked to the S&P 500
®
Total Return Index
SM
NYSE Arca
Barclays ETN+ Shiller CAPE
TM
ETNs
NYSE Arca
Securities registered or to be registered pursuant to Section 12(g) of the Act: None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
Indicate the number of outstanding shares of each of the issuers' classes of capital or common stock as of the close of the period covered by
the annual report.
Barclays PLC
25p ordinary shares
12,242,633,551
Barclays Bank PLC
£1 ordinary shares
2,342,558,515
£1 preference shares
1,000
£100 preference shares
75,000
€
100 preference shares
240,000
$0.25 preference shares
237,000,000
$100 preference shares
100,000
Indicate by check mark if each registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes
þ
No
¨
If this report is an annual or transition report, indicate by check mark if the registrants are not required to file reports pursuant to Section 13 or 15(d)
of the Securities Exchange Act 1934.
Yes
¨
No
þ
Note—Checking the box above will not relieve
any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.
Indicate by check mark whether the registrants: (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports), and (2) have been subject to such filing requirements for the past 90 days.
Yes
þ
No
¨
Indicate by check mark whether the registrants have submitted electronically and posted on their corporate Web sites, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes
¨
No
¨
Indicate by check mark whether each registrant is a
large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one):
Barclays PLC
Large Accelerated Filer
þ
Accelerated Filer
¨
Non-Accelerated Filer
¨
Barclays Bank PLC
Large Accelerated Filer
¨
Accelerated Filer
¨
Non-Accelerated Filer
þ
*Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this
filing:
U.S. GAAP
¨
International Financial Reporting Standards as issued by the International Accounting Standards
Board
þ
Other
¨
*If "Other" has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to
follow:
Item 17
¨
Item 18
¨
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes
¨
No
þ
(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS.)
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of
securities under a plan confirmed by a court.
Yes
¨
No
¨
SEC Form 20-F Cross reference information
Form 20-F item number
Page and caption references
in this document*
1
Identity of Directors, Senior Management and Advisers
Not applicable
2
Offer Statistics and Expected Timetable
Not applicable
3
Key Information
A.
Selected financial data
166, 168, 305-306
B.
Capitalization and indebtedness
Not applicable
C.
Reason for the offer and use of proceeds
Not applicable
D.
Risk factors
72-79
4
Information on the Company
A.
History and development of the company
31, 262 (Note 38)-263 (Note 39), 307, 348, 364
B.
Business overview
i (Market Data), 1-4, 154-160, 172*,
199-202 (Note 1), 214-217 (Note 15),
245-246 (Note 30)
C.
Organizational structure
262 (Note 38)
D.
Property, plants and equipment
232-233 (Note 20), 234-235 (Note 23)
4A
Unresolved staff comments
Not applicable
5
Operating and Financial Review and Prospects
A.
Operating results
124, 154-160, 166-188, 199-272
(critical
accounting policies, estimates & judgement)
B.
Liquidity and capital resources
86-87, 105, 126-150, 170, 196, 214-217 (Note 15), 247-250 (Note 31), 250 (Note 32), 263-265 (Note 40), 288-290, 297-301,
353
C.
Research and development, patents and licenses, etc.
Not applicable
D.
Trend information
–
E.
Off-balance sheet arrangements
265-267 (Note 41)
F.
Tabular disclosure of contractual obligations
331*
G.
Safe harbor
i (Forward-looking statements)
6
Directors, Senior Management and Employees
A.
Directors and senior management
35-37, 320-321
B.
Compensation
39-68, 257-261 (Note 37), 268-270 (Note 43),
C.
Board practices
6-37, 50
D.
Employees
38, 175, 177, 179, 181, 183, 184, 187, 188
E.
Share ownership
39-68, 61-62, 254-256 (Note 36),
268-270 (Note 43), 324-325*
7
Major Shareholders and Related Party Transactions
A.
Major shareholders
319
B.
Related party transactions
268-270 (Note 43), 246, 361 (Note p)
C.
Interests of experts and counsel
Not applicable
8
Financial Information
A.
Consolidated statements and other financial information
30, 191-272, 304-310, 347-361
B.
Significant changes
272 (Note 46)
9
The Offer and Listing
A.
Offer and listing details
305
B.
Plan of distribution
Not applicable
C.
Markets
305-306
D.
Selling shareholders
Not applicable
E.
Dilution
Not applicable
F.
Expenses of the issue
Not applicable
10
Additional Information
A.
Share capital
Not applicable
B.
Memorandum and Articles of Association
307-310
C.
Material contracts
15, 31, 50, 58, 250 (Note 32)
D.
Exchange controls
314
E.
Taxation
311-314
F.
Dividends and paying assets
Not applicable
G.
Statement by experts
Not applicable
H.
Documents on display
314
I.
Subsidiary information
262 (Note 38)
11
Quantitative and Qualitative Disclosure about Market Risk
80-153, 274-303
12
Description of Securities Other than Equity Securities
A.
Debt Securities
Not applicable
B.
Warrants and Rights
Not applicable
C.
Other Securities
Not applicable
D.
American Depositary Shares
315-316
13
Defaults, Dividends Arrearages and Delinquencies
Not applicable
14
Material Modifications to the Rights of Security Holders and Use of Proceeds
Not applicable
15
Controls and Procedures
A.
Disclosure controls and procedures
320*
B.
Management's annual report on internal control over financial reporting
33-34
C.
Attestation report of the registered public accounting firm
191
D.
Changes in internal control over financial reporting
34
16A
Audit Committee Financial Expert
20
16B
Code of Ethics
318, Exhibit 11.1
16C
Principal Accountant Fees and Services
23, 317 (External auditor objectivity and independence: Non-Audit Services), 271 (Note 44)
16D
Exemptions from the Listing Standards for Audit Committees
Not applicable
16E
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
250 (Share Repurchase), 32
16F
Change in Registrant's Certifying Accountant
Not applicable
16G
Corporate Governance
318
17
Financial Statements
Not applicable (See Item 8)
18
Financial Statements
Not applicable (See Item 8)
19
Exhibits
Exhibit Index
*
Captions have been included only in respect of pages with multiple sections on the same page in order to identify the relevant caption on that page covered by the corresponding
Form 20-F item number.
Barclays PLC and Barclays
Bank PLC 2012 Annual
Report on Form 20-F
The term 'Barclays PLC Group' or the 'Group' means Barclays PLC together with its
subsidiaries and the term 'Barclays Bank PLC Group' means Barclays Bank PLC together with its subsidiaries. 'Barclays' and 'Group' are terms which are used to refer to either of the preceding groups when the subject
matter is identical. The term 'Company', 'Parent Company' or 'Parent' refers to Barclays PLC and the term 'Bank' refers to Barclays Bank PLC. In this report, the abbreviations '£m' and
'£bn' represent millions and thousands of millions of pounds sterling respectively; the abbreviations '$m' and '$bn' represent millions and thousands of millions of US Dollars respectively; '
€
m' and '
€
bn' represent millions and thousands of millions of euros respectively and 'C$m' and 'C$bn' represent millions and thousands of millions of Canadian dollars
respectively.
Unless otherwise stated, the income statement analyses compare the 12 months to 31 December 2012 to the corresponding
12 months of 2011 and balance sheet comparisons, relate to the corresponding position at 31 December 2011. Unless otherwise stated, all disclosed figures relate to continuing operations. Relevant terms that are used in this document but are not
defined under applicable regulatory guidance or International Financial Reporting Standards (IFRS) are explained in the glossary on pages 367-378. A hard copy can be provided on request by contacting Barclays Investor Relations, Barclays PLC, 1
Churchill Place, London E14 5HP.
Certain non-IFRS measures
Barclays management believes that the non-IFRS measures included in this document provide valuable information to readers of its financial statements because they enable the reader to identify a
more consistent basis for comparing the business' performance between financial periods, and provide more detail concerning the elements of performance which the managers of these businesses are most directly able to influence or are relevant
for an assessment of the Group. They also reflect an important aspect of the way in which operating targets are defined and performance is monitored by Barclays management.
However, any non-IFRS measures in this document are not a substitute for IFRS measures and readers should consider the IFRS measures as well. Key non-IFRS measures included in this document are:
–
Adjusted profit/(loss) before tax is the non-IFRS equivalent of profit/(loss) before tax as it excludes the impact of own credit; gains on debt buy-backs;
impairment and disposal of the investment in BlackRock, Inc.; the provision for Payment Protection Insurance redress payments and claims management costs (PPI redress); the provision for interest rate hedging products redress and claims management
costs (interest rate hedging products redress); goodwill impairments; and gains and losses on acquisitions and disposals. The regulatory penalties relating to the industry-wide investigation into the setting of interbank offered rates have not been
excluded from adjusted measures. A reconciliation of IFRS and Adjusted profit/(loss) before tax is presented on page 326 for the Group and on pages 327-329 for each business;
–
Adjusted profit/(loss) after tax represents profit/(loss) after tax excluding the post-tax impact of own credit; gains on debt buy-backs; impairment and disposal
of the investment in BlackRock, Inc.; the provision for PPI redress; the provision for interest rate hedging products redress; goodwill impairments; and gains and losses on acquisitions and disposals. A reconciliation is provided on page 326 for the
Group and on pages 327-329 for each business;
–
Adjusted profit/(loss) after tax and non-controlling interests represents adjusted profit/(loss) after tax less profit attributable to non-controlling interests.
The comparable IFRS measure is profit/(loss) after tax and non-controlling interests. A reconciliation is provided on page 326;
–
Adjusted income and total income/(expense) net of insurance claims on an adjusted basis represents total income/(expense) net of insurance claims excluding the
impact of own credit and gains on debt buy-backs. A reconciliation is provided on page 326 for the Group and on pages 327-329 for each business;
–
Adjusted net operating income represents net operating income excluding the impact of own credit, gains on debt buy-backs and gain/(loss) on disposal of the
strategic investment in BlackRock, Inc. A reconciliation is provided on page 326 for the Group and on pages 327-329 for each business;
–
Adjusted operating expenses represents operating expenses excluding the provision for PPI redress, provision for the sale of interest rate hedging product redress
and goodwill impairment. A reconciliation is provided on page 326 for the Group and on pages 327-329 for each business;
–
Adjusted other net income/(expense) represents other net income/(expense) excluding gains and losses on acquisitions and disposals. A reconciliation is provided
on page 326 for the Group and on pages 327-329 for each business;
–
Adjusted cost: income ratio represents cost: income ratio excluding the impact of own credit, gains on debt buy-backs, gain on disposal of strategic investment in
BlackRock, Inc., the provision for PPI redress, provision for the sale of interest rate hedging product redress, and goodwill impairment. The comparable IFRS measure is cost: income ratio, which represents operating expenses to income net of
insurance claims. A reconciliation of the components used to calculate adjusted cost: income ratio to their corresponding IFRS measures is provided on page 326 for the Group and on pages 327-329 for each business;
–
Adjusted compensation: net operating income ratio represents compensation: net operating income ratio excluding the impact of own credit, gains on debt buy-backs
and gain on disposal of strategic investment in BlackRock, Inc. A reconciliation is provided on page 326 for the Group;
–
Adjusted basic earnings per share represents adjusted profit after tax and non-controlling interests (set out on page 326) divided by the basic weighted average
number of shares in issue. The comparable IFRS measure is basic earnings per share, which represents profit after tax and non-controlling interests, divided by the basic weighted average number of shares in issue;
–
Adjusted return on average shareholders equity represents adjusted profit after tax and non-controlling interests (set out on page 326) divided by average equity.
The comparable IFRS measure is return on average shareholders equity, which represents profit after tax and non-controlling interests, divided by average equity;
–
Adjusted return on average tangible shareholders equity represents adjusted profit after tax and non-controlling interests (set out on page 326) divided by
average tangible equity. The comparable IFRS measure is return on average tangible shareholders equity, which represents profit after tax and non-controlling interests, divided by average tangible equity;
–
Adjusted return on average risk weighted assets represents adjusted profit after tax (set out on page 326), divided by average risk weighted assets. The
comparable IFRS measure is return on average risk weighted assets, which represents profit after tax divided by average risk weighted assets;
–
Adjusted gross leverage is a non-IFRS measure representing the multiple of adjusted total tangible assets over total qualifying Tier 1 capital. Adjusted total
tangible assets are total assets adjusted to allow for derivative counterparty netting where the Group has a legally
enforceable master netting agreement, assets under management on the balance sheet, settlement balances and cash collateral on derivative liabilities, goodwill and intangible assets. This measure
has been presented as it provides for a metric used by management in assessing balance sheet leverage. Barclays management believes that disclosing a measure of balance sheet leverage provides useful information to readers of Barclays financial
statements as a key measure of stability, which is consistent with the views of regulators and investors. The comparable IFRS measure is the ratio of total assets to total shareholders equity. The calculation of adjusted gross leverage, as well as
total assets to total shareholders equity, is presented on page 132;
–
Adjusted effective tax rate is a non-IFRS measure representing the tax charge on adjusted profit/(loss) before tax. The comparable IFRS measure is effective tax
rate, which represents the tax charge on profit/(loss) before tax;
–
Total incentive awards granted are non-IFRS measures as they represent incentive awards granted as opposed to the income statement charge, which reflects the
charge for employees actual services provided to the Group during the relevant calendar year. These non-IFRS measures have been presented as they provide a consistent basis for comparing the bonus pool between financial periods. A reconciliation of
total incentive awards to the income statement charge for performance costs is provided on page 46;
–
Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR) are calculated according to definitions and methodologies detailed in the standards provided by
the Basel Committee on Banking Supervision. The original guidelines released in December 2010 ('Basel III: International Framework for Liquidity Risk Measurement, Standards and Monitoring', December 2010) were revised for the
calculation of the LCR ratio in January 2013 ('Basel 3: The Liquidity Coverage Ratio and liquidity risk monitoring tools', January 2013). The results of both the December 2010 and January 2013 guidelines have been included in the
report. The LCR and NSFR metrics are regulatory ratios that are not yet finalised in local regulations and, as such, represent non-IFRS measures. These definitions and methodologies used to calculate the metrics are subject to further revisions
ahead of their respective implementation dates and our interpretation of these calculations may not be consistent with other financial institutions.
–
Pro forma risk weighted assets (RWAs), pro forma Common Equity Tier 1 (CET1) ratio on both a transitional and fully loaded basis and the CRD IV leverage ratio are
regulatory measurements that are not yet required to be disclosed and, as such, represent non-IFRS measures. They have been calculated on the basis of our current interpretation of the new capital requirements regulation and capital requirements
directive that implement Basel 3 proposals within the EU (known as CRD IV), including transitional provisions in line with the FSA's statement on CRD IV transitional provisions in October 2012, assuming they were applied as at 1 January
2013. The methodologies for calculating these measurements are not yet finalised: they are subject to further revisions ahead of their implementation date and our interpretation of these calculations may not be consistent with other financial
institutions. For more information on the calculation of these measurements and the impacts of Basel 3, see pages 130-134. See pages 131-132 for information on our Core Tier 1 and RWAs, calculated on the basis that currently applies to the Group
under applicable regulatory requirements.
Forward-looking statements
This document contains certain forward-looking statements within the meaning of Section 21E of the US Securities Exchange Act of 1934, as amended, and Section 27A of the US Securities Act
of 1933, as amended, with respect to certain of the Group's plans and its current goals and expectations relating to its future financial condition and performance. Barclays cautions readers that no forward-looking statement is a guarantee of
future performance and that actual results could differ materially from those contained in the forward-looking statements. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts.
Forward-looking statements sometimes use words such as "may", "will", "seek", "continue", "aim", "anticipate", "target", "projected", "expect",
"estimate", "intend", "plan", "goal", "believe", "achieve" or other words of similar meaning. Examples of forward-looking statements include, among others, statements regarding the
Group's future financial position, income growth, assets, impairment charges, business strategy, capital ratios, leverage, payment of dividends, projected levels of growth in the banking and financial markets, projected costs, commitments in
connection with the Transform Programme, estimates of capital expenditures and plans and objectives for future operations and other statements that are not historical fact.
By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances, including, but not limited to, UK domestic, Eurozone and global
macroeconomic and business conditions, the effects of continued volatility in credit markets, market related risks such as changes in interest rates and foreign exchange rates, effects of changes in valuation of credit market exposures, changes in
valuation of issued notes, the policies and actions of governmental and regulatory authorities (including requirements regarding capital and Group structures and the potential for one or more countries exiting the Eurozone), changes in legislation,
the further development of
standards and interpretations under IFRS and prudential capital rules applicable to past, current and future periods, evolving practices with regard to the interpretation and application of
standards under IFRS, the outcome of current and future legal proceedings, the success of future acquisitions and other strategic transactions and the impact of competition, a number of such factors being beyond the Group's control. As a
result, the Group's actual future results may differ materially from the plans, goals, and expectations set forth in the Group's forward-looking statements.
Any forward-looking statements made herein speak only as of the date they are made. Except as required by the UK Financial Services Authority (FSA), the London Stock Exchange plc (the
'LSE') or applicable law, Barclays expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Barclays expectations with regard
thereto or any change in events, conditions or circumstances on which any such statement is based. The reader should, however, consult any additional disclosures that Barclays has made or may make in documents it has published or may publish via the
Regulatory News Service of the LSE and/or has filed or may file with the US Securities and Exchange Commission.
Market and other data
This document contains information, including statistical data, about certain Barclays markets and its competitive position. Except
as otherwise indicated, this information is taken or derived from Datastream and other external sources. Barclays cannot guarantee the accuracy of information taken from external sources, or that, in respect of internal estimates, a third party
using different methods would obtain the same estimates as Barclays.
Use of Internet addresses
This document contains inactive textual addresses of internet websites operated by us and third parties. Reference to such websites is made for
informational purposes only, and information found at such websites is not incorporated by reference into this document.
About Barclays
About Barclays
Barclays is a major global 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 in over 50 countries and employs approximately 140,000 people. Barclays moves, lends, invests and protects
money for customers and clients worldwide.
Our focus
Under the leadership of Antony Jenkins, as CEO, Barclays commenced a Strategic Review in the fourth quarter of 2012, and the outcome of the review was announced in February 2013. The review is part
of a long-term programme to transform the culture and performance of Barclays over the next three to five years, which we refer to as the Transform Programme.
Barclays Strategic Review concluded that we will:
¡
Focus solely on activities that support customers and clients in geographic markets and businesses where Barclays has scale and competitive
advantage
¡
Focus investment in the UK, US and Africa, while maintaining an appropriate presence across Europe and Asia to support our global investment
banking franchise
¡
Restructure Barclays European retail operations to focus on the mass-affluent customer segment
¡
Reposition Barclays European and Asian Equities and Investment Banking Division businesses to reflect the market opportunities and maintain a
relevant proposition for our clients
¡
Close the Structured Capital Markets business unit
¡
Manage Risk Weighted Assets (RWAs) more efficiently through a run-off of legacy assets in Europe and the Investment Bank and invest in
high-return businesses such as UK mortgages, Barclaycard and Wealth and Investment Management
¡
Reduce total costs significantly across the Group by operating more efficiently
Our goal
Becoming the
'Go-To' bank
Our goal is to build not only a sustainable, trusted business, but a business which customers and clients
consider as the first choice for answers and solutions – their 'Go-To' bank.
Customers and clients will benefit from our
focus on doing business in the right way, putting them firmly in the centre of all that we do.
In coming years, we will re-establish
Barclays as a benchmark brand which our colleagues will value throughout their careers.
For Barclays and our shareholders,
'Go-To' means a more efficient way of doing business and developing deeper relationships that sustainably improve return on shareholder investment.
How Barclays does business
Our objective is to
create and deliver long term sustainable value for all our stakeholders – in the right way.
We
fulfil our purpose by delivering the fundamental functions of a bank to our customers and clients for which we receive interest income and/or fees.
Our competitive advantage
Barclays
competitive advantage is created by the scale and diversity of our businesses and the quality, character and relationships of our people.
Scale and diversity allow us to build sustainable businesses by delivering operational excellence, investing in innovation, managing our risks and allocating scarce resources, including capital,
efficiently across our portfolio of businesses. Our people allow us to cultivate deeper relationships with our customers and clients by bringing the best of Barclays to each.
As we refresh our goal, purpose and values and rebalance our objectives across multiple stakeholders, we believe
we can become the bank of choice for people regardless of the transaction they are looking to make.
I  1
About Barclays continued
How our Group creates value
Barclays operates a universal banking model through which we seek to build strong and stable relationships with our customers and clients by meeting a wide range of their needs across different
locations. These multi-dimensional strategies allow Barclays to offer a greater range of products and services and achieve both a smoother income stream and sustainable returns.
Our Retail and Business Banking businesses operate in a regional model, focusing on delivering targeted solutions to individuals and small businesses. Barclaycard, the Investment Bank, Corporate
Banking and Wealth and Investment Management leverage their offerings to provide comprehensive solutions across borders.
Where
possible, we have encouraged Group functions to take advantage of synergies through the sharing of ideas and collaboration from cross-functional working groups.
How our businesses create value
Business  type
Primary income source
Description
Retail and  Business  Banking
Interest and fee income
We accept customer deposits in exchange for interest payment. We lend these funds, for an interest charge, to individuals and businesses looking to grow and make meaningful
contributions to the economy.
Barclaycard
Interest income and transaction fees
We facilitate and simplify the flow of funds between customers and businesses for a small percentage of the transaction and, in the case of credit cards, we earn interest
income on credit balances.
Investment  Bank
Trading income and fee income
We provide clients with financial and transaction advice, assistance with capital raising, trade execution and risk management for which we earn trading and fee
income.
Corporate  Banking
Interest and fee income
We provide clients with banking, cash management and financing services, in exchange for interest and fees, to facilitate growing businesses' ability to conduct business
domestically and internationally.
Wealth and  Investment  Management
Interest and fee income
We help affluent customers grow and protect their wealth through advisory and investment services, for which we earn a fee, and private and international banking, on which we
earn interest.
The Group is structured around the following businesses:
UK Retail and Business Banking (UKRBB)
UKRBB is our UK-based high street retail bank network and brand presence for the Group. UKRBB provides customer referrals for Barclaycard, Wealth and Investment Management and Corporate Banking; and
retail banking platforms and infrastructure.
UKRBB has over 15 million personal customers, one million of whom are classified as
mass-affluent and serves over 750,000 businesses. Our strategy is to develop and deliver simple and transparent products, run on scalable infrastructure and we invest heavily to try to enhance our customers' experiences.
In October, Barclays agreed to acquire the deposits, mortgages and business assets of ING Direct UK and the transaction completed in March 2013. It
is a good fit with our existing business and will be integrated into UKRBB.
We have put the customer in control by developing services
and propositions that they can personalise to suit their needs. Our new current account proposition, Features Store, allows customers to tailor their banking relationship across a range of free and paid for features, whilst over 400,000 customers
have taken advantage of the ability to personalise their debit card.
Barclays Mobile Banking app, Pingit and Text Alerts were launched
with the aim of making customers' lives much easier. These services help people to do their everyday banking, track payments and to send and receive money at any time, wherever they are. We also changed to a customer service based incentive
scheme for our frontline staff, to ensure that our customers remain at the heart of our business.
Europe Retail and Business Banking
(Europe RBB)
Europe RBB offers a full range of banking, investment and insurance products tailored to meet our customers'
financial needs. We provide services to over 1.5 million retail customers and businesses in Europe.
Within our customer base, we
focus on the mass-affluent segment and offer a differentiated proposition. Our business leverages the expertise of Barclays other Retail and Business Banking franchises to benefit our client base as well as to exploit synergies across our non-retail
European businesses.
In 2012, we took advantage of the expertise of our other Retail and Business Banking franchises to better serve
customers and made good progress against our long term vision of making our customers' lives much easier. For instance, we simplified some of our most manual customer processes and launched mobile banking to allow customers in Spain, Italy and
France to access their accounts on the move.
We also introduced a system into our French network that allows staff to quickly determine
a customer's investment profile and monitor their portfolios in real time. This system saves time, improves customer service and enhances our oversight over advisory services.
2  I
Africa
Barclays in Africa comprises a local Retail and Business Bank, along with a local presence for Barclays global businesses – Barclaycard, Corporate Banking, Investment Bank and Wealth and
Investment Management. Africa provides the Group with emerging market exposure and a promise of growth. Together, we serve over 14.3 million customers and clients across 12 countries.
In 2012, we consolidated our Barclays Africa and Absa banking operations into a single management structure. In 2013, subject to the receipt of regulatory approvals, the majority of Barclays Africa
businesses and Absa will be brought under one legal entity to create a leading pan-African financial services business.
Our One Africa
strategy focuses on broadening services in leading markets and investing in new geographies.
As part of our goal to make customers and
clients lives much easier, we continued to drive innovation, for example, by rolling out several new online banking services to customers across Africa.
We deployed our global, regional and local capabilities to the benefit of our corporate clients in landmark deals, such as the partnership of Kenya Airways and Barclays Bank of Kenya with Visa to
relaunch an airline co-branded credit card. Other major deals included the inaugural $0.5bn Zambia Sovereign benchmark issuance, that was 20 times oversubscribed; and project financing of $1.5bn for ExxonMobil/NNPC to develop 27 oil wells in
Nigeria.
Life insurance products have been launched in Botswana, Mozambique, Zambia and Ghana via our bancassurance model, through the
Barclays branch network. Two new Islamic banking products have been launched in Kenya by leveraging Group capabilities and synergies.
Barclaycard
Barclaycard provides the Group with exposure to the fast growing global payments industry and is an important source of new relationships to Barclays for both individual and business customers.
We serve 29 million retail and business customers across the world, including the United Kingdom, United States, Germany, South
Africa through Absa Card and Norway, Sweden and Denmark through the EnterCard joint venture.
Barclaycard is investing in core consumer
cards issuing to gain share in all markets, rebalancing towards high-return business payments and continuing to lead in payment innovation to meet evolving customer needs.
Barclaycard received numerous awards in 2012, including the Moneyfacts: Best Card Provider 2012 award in the UK and Forrester Voice of the Customer award in the US.
We have a heritage of innovation, starting from the launch of the first credit card in the UK in 1966. Since 2011, Barclaycard has launched several
new products to meet evolving customer needs, including Freedom and Cashback consumer cards in the UK, Google Adwords for UK SMEs, Barclaycard Plus for online consumer spending in Germany and the world's first social media credit card,
Barclaycard Ring in the US.
Digital payments are a major part of our innovation and in 2012 we enabled over 750,000 mobile phones to
make payments (using PayTag) across three countries and helped increase contactless transactions by over 250% year on year in the UK.
I  3
About Barclays continued
Investment Bank
Barclays integrated universal banking model, with a presence in 50 countries, allows us to meet the needs of our clients by connecting capabilities from across the Group. The Investment Bank aims to
be the 'Go-To' bank for corporate and institutional clients, providing them with the products and services they need to invest, grow and manage risk.
Through our client-focused flow business we provide diversity of income and risk to the Group and are able to deliver market execution services for retail, wealth and corporate customers.
Our Investment Banking Division provides a full suite of banking services to corporations, governments and institutions worldwide.
Services include arranging and underwriting debt and equity issuance, providing advice on mergers and acquisitions, corporate finance and restructurings, making active markets for securities across global debt and equity exchanges and delivering
strategic risk management solutions.
Our Markets team provides execution and risk management across the full range of asset classes
including equity and fixed income, currency and commodity (FICC) products.
We facilitate client transactions on stock, options and
futures exchanges globally and provide prime brokerage services, including clearing, financing and securities lending, to institutional clients. We are active market-makers for securities across every asset class, helping to provide liquidity to the
world's financial markets.
We also provide access to derivative products allowing organisations to hedge exposure to movements in
interest rates, currencies and commodity prices.
A combined Markets team was established October 2012, integrating our FICC, Equities
and Distribution divisions. This new structure will enable us to deliver more joined up solutions for our clients, and deliver greater synergies across product groups and trading and distribution teams.
Our global, multi asset Research team delivers actionable ideas and innovative products to our clients, partnering with them to help ensure they
make informed investment decisions. Our expertise in debt, equity and economic research provides our clients with impartial, insightful advice on global and regional companies, markets and topics.
Our clients include multi-national corporates, sovereign governments and supranational bodies and financial institutions, including banks, pension
funds and insurance firms.
We help corporate clients to achieve growth and job creation in the real economy, governments to deliver
their stability and growth plans, and institutions to meet the long term investment needs of their clients.
In 2012, we were once again
recognised for the strength of our client focus and were awarded Best US Investment Bank and Best UK Investment Bank by Euromoney.
Note
a Source: Charterhouse Research based on 2,076 interviews with companies turning over between £5m and £1bn carried out in Q4
2012.
Corporate Banking
Corporate Banking is an integral part of Barclays universal banking offering. We help over 40,000 corporations achieve their ambitions. This includes multinational corporates and financial
institutions globally, and domestic corporations in the UK and South Africa. Corporate Banking has stable revenues and is self-funded.
We work closely with clients to fully understand their business and build long term, broad-based relationships. As a result, in the UK no other bank achieved a higher rating for overall client
satisfaction
a
.
We continue to strive for ever better client
servicing, and in 2012 a Global Corporates team was established jointly between Corporate Banking and the Investment Bank. The objective is to strengthen existing client relationships and provide more corporate banking solutions to the treasuries of
our largest multinational clients.
In 2012 we launched the new Cash Management offering, Pingit for Corporates, providing clients with
more efficient and convenient ways to manage payments. We also continued to invest in our client servicing model.
We continue to focus
on products that are important to our clients, and therefore invest in our Cash Management and Trade Finance capabilities. Key initiatives are underway, and in 2012, we launched our cash management platform Barclays.net, and invested in Trade
Finance hubs in key locations. We are also in the process of enhancing an integrated Corporate Banking offering with Absa across Africa.
Wealth and Investment Management
Wealth and Investment Management (W&IM) provides a full range of wealth management services to affluent and high-net-worth clients globally, including banking, credit, investments and advisory
services.
We will be the 'Go-To' wealth manager for clients by helping them to better understand, organise and invest their
wealth.
We believe the best way to support clients is to have deep knowledge of their full financial position. Amongst other
techniques, we use the principles of behavioural finance to tailor investment and structuring solutions for each client through use of our proprietary Financial Personality Assessment tool.
In addition to providing comprehensive wealth management services to affluent and high-net-worth clients, we bring the best of all areas of Barclays to these clients, be it retail, business,
corporate or investment banking.
2012 marked the third year of W&IM's five year strategic investment programme, known as
Project Gamma, to transform our business through improvements to client experience and productivity. It continues to progress well, with 2012 seeing continued improvement in both these areas.
In 2012 we launched a new digital client portal, which allows clients to self-serve more effectively, when and how they prefer. In addition, we initiated more detailed client reporting, voice
biometrics for identification purposes, an upgraded portfolio management and construction tool, a more streamlined onboarding of new clients and quicker and simpler credit applications.
4  I
Governance
The governance process of Barclays and reports from each of the Board Committees presenting how the
Board support the delivery of the strategy.
06
Corporate governance report
07
Leadership
12
Effectiveness
20
Accountability
28
Relations with Shareholders
30
Directors' report
35
Board of Directors
38
People
39
Remuneration report
39
Statement from the Chairman of the Board Remuneration Committee
41
Remuneration policy for all employees
43
2012 incentives
48
Directors' remuneration policy
53
Implementation of Directors' remuneration in 2012
59
Remuneration Committee
61
Additional remuneration disclosures
63
Statutory remuneration disclosures
I  5
Corporate governance report
Dear Shareholder
This is my first report to you, as Chairman, on corporate governance at Barclays. I joined the Board with effect from 1 September 2012, succeeding Marcus Agius as Chairman on 1 November
2012. The context for my appointment was, as is well-known, the changes to the Board in the wake of the announcement in June 2012 of penalties relating to the industry-wide investigation into the setting of interbank offered rates. That
announcement, and the events that followed, inevitably dominated the second half of the year and the after effects continue to influence the Board's agenda.
What is meant by corporate governance?
Taking a step back, what is meant by
corporate governance? The UK Corporate Governance Code (the Code) is based on the widely-accepted definition of corporate governance as 'the system by which companies are directed and controlled. Boards of directors are responsible for the
governance of their companies.' The Code makes clear that corporate governance is about what the board of a company does and how it sets the company's values. That is something that has been brought into sharp focus for Barclays during
2012. Barclays has a well-defined and well-structured corporate governance framework in place to support the Board's aim of achieving long term and sustainable shareholder value. But however robust the framework, it is imperative that it is
supported by the right culture, values and behaviours, both at the top and throughout the entire organisation. In 2012, Barclays faced much criticism of the values and behaviours it has demonstrated. We are unanimous as a Board that we must accept
this criticism and seek ways in which we can do better in future, with the aim of achieving a leadership position amongst our industry peers. I regard the independent review of Barclays business practices, led by Anthony Salz, which we announced in
July 2012, and the work instigated by Antony Jenkins on culture and values as part of the Transform Programme, as providing a solid foundation on which we can build and move forward to become best in class. You will read more about each of these
important initiatives elsewhere in the Annual Report and, later in this corporate governance report, Sir Michael Rake, Deputy Chairman and Senior Independent Director, reports on how Board governance responded to the LIBOR announcement.
How is good governance achieved?
Good and effective corporate governance is also very much dependent on the skills and experience of individuals on the Board and how well they work together as a whole to achieve long term value for
shareholders. A great deal is demanded and expected of our Directors, particularly given the systemic importance of financial institutions such as Barclays to the global economy and the impact we have on the societies in which we operate. As
Chairman, I am responsible for the effective performance of the Board and, in that regard, one of my areas of focus since joining the Board has been to ensure that we have a strong and well-functioning Board, comprised of individuals not only with
the right abilities in terms of technical or business experience, but with the personal qualities required to be effective stewards of the business and the dedication and commitment to the company, particularly in times of stress. I was closely
involved in the process to appoint a new Chief Executive and I am confident that, in appointing Antony Jenkins, we have the right person to lead the company, to deliver our strategy of becoming the 'Go-To' bank and to implement the
significant cultural and behavioural changes that we, as a Board, want to achieve. I have also sought to reinforce the non-executive presence on the Board and to ensure that the Board is both balanced and diverse. We have revisited the range of
skills and competencies that we require around the Board table and these are set out on page 18 below. The Board needs to have non-executive Directors with financial services experience but also access to other skills and experiences, particularly
in the management of culture and cultural change. Tim Breedon and Diane de Saint Victor have joined the Board as non-executive Directors since I joined the Board and I anticipate that we will make further appointments during the course of 2013.
How is risk management being enhanced?
In looking at the corporate governance structures in place, it is clear to me that Barclays has been well served by having, for many years, a Board Risk Committee focused on credit, counterparty,
market, capital and liquidity risk. However, a major source of losses for Barclays and all banks in recent years has been from operational risk and, in particular, mis-selling of financial products. We need to strengthen Board-level governance over
these areas in 2013 and accordingly, we have created a Board Conduct, Reputation and Operational Risk Committee. Its responsibilities will include governance over operational risk, conduct risk, reputation matters and Barclays corporate
responsibility strategy. It will subsume the current Board Citizenship Committee.
How do Board Committees support good governance?
The report that follows describes how Barclays applied the principles of the Code during 2012. Board Committees play a crucial role
in the effectiveness of our corporate governance framework and Sir Michael Rake and David Booth report below on the activities of the Board Audit Committee and Board Risk Committee respectively. And Sir John Sunderland reports separately in the
Remuneration Report on how the Board Remuneration Committee has overseen remuneration policy, how we link remuneration to our strategy and to long term outcomes and how we ensure that we are not incentivising inappropriate risk-taking.
What are the priorities for 2013?
We are determined as a Board and as a company to make progress during 2013 and to do everything in our power to regain the trust of our stakeholders: our commitment to implementing the
recommendations of the Salz Review is affirmation of our determination.
Sir David Walker
Chairman
5 March 2013
6  I
Corporate governance report
Leadership
The role of the Board
The principal responsibility of the Board is to promote the long term success of Barclays by creating and delivering sustainable shareholder value. The Board leads and provides direction for
management by setting strategy and overseeing its implementation by management. The Board seeks to ensure that, while the ultimate focus is long term growth, management also delivers on short term objectives, striking the right balance between the
two. In setting and monitoring the execution of Barclays strategy, consideration is given to the impact that those decisions will have on Barclays obligations to various stakeholders, such as shareholders, employees, suppliers and the community in
which Barclays operates as a whole.
The Board is also responsible for ensuring that an effective system of internal control is
maintained and that management maintains an effective risk management and oversight process across the Group, so that growth is delivered in a controlled and sustainable way. In addition, the Board is responsible for determining and promoting
Barclays collective vision of its purpose, values, culture and behaviours.
Specific key decisions and matters have been reserved for
approval by the Board. These include decisions on the Group's strategy, approval of risk appetite, capital and liquidity matters, major acquisitions, mergers or disposals, Board membership, financial results and governance issues, including the
approval of the corporate governance framework. A full formal schedule of matters specifically reserved to the Board can be found on Barclays website at Barclays.com.
Corporate Governance Framework
Board Enterprise Wide Risk Committee
A Board Enterprise Wide Risk Committee was established at the end of January 2013.
Notes
a
Known as the Board Financial Risk Committee with effect from 31 January 2013.
b
Known as the Board Conduct, Reputation and Operational Risk Committee with effect from 31 January 2013.
The names of the Directors and their full biographical details, including the skills and experience
they each bring to the Board, can be found on pages 35-37.
To assist the Board in carrying out its functions and to ensure there is
independent oversight of internal control and risk management, the Board has delegated certain responsibilities to Board Committees, which are comprised of independent non-executive Directors and, in some cases, the Chairman. The Chairman of each
Board Committee reports to the Board on the matters discussed at Board Committee meetings. Each Board Committee has agreed Terms of Reference approved by the Board, which can be found on Barclays website.
More information on the role of the Board and its Committees can be found in 'Corporate Governance in Barclays', which is available online at
Barclays.com
I  7
Corporate governance report
Leadership continued
Roles
Role of the Chairman
The Chairman is responsible for the overall operation and governance of the Board. Sir David Walker, the Chairman, provides leadership
and manages the Board to ensure that Barclays satisfies its legal, regulatory and stewardship responsibilities. The Chairman sets the Board's agenda, in consultation with the Group Chief Executive and Company Secretary, taking full account of
the issues and concerns of Board members. Board agendas are structured to allow adequate and sufficient time for the discussion of the items on the agenda, in particular, strategic matters. The Chairman is also responsible for facilitating and
encouraging active engagement and appropriate challenge by Directors, particularly on matters of risk and strategy or other major proposals, by drawing on Directors' skills, experience and knowledge.
It is the responsibility of the Chairman to ensure effective communication with
shareholders and other stakeholders and to ensure that members of the Board develop and maintain an understanding of the views of major investors and other key stakeholders. Details of how Barclays engages with its shareholders and other
stakeholders can be found on pages 28-29.
The full role profile for
the Chairman can be found in Barclays Charter of Expectations, which is available on Barclays website.
Sir David Walker is also Chairman of the Board Corporate Governance and Nominations Committee and the Board Citizenship Committee. He is a member of the Board Remuneration Committee and, although
not a member, will attend a number of the Board Audit and Board Risk Committee meetings each year to observe the Committees in action and assess their effectiveness.
Role of the Group Chief Executive
The Group Chief Executive, Antony Jenkins, has responsibility for recommending the
Group's strategy to the Board and for implementing the strategy agreed by the Board, making and implementing operational decisions and managing the business day-to-day.
The Board has delegated this responsibility to him and he is accountable to the Board. He is supported by the Executive Committee,
which he chairs.
Role of the
non-executive
Directors
Non-executive Directors are independent of management. Their role is to effectively and
constructively challenge management and monitor the success of management in delivering the agreed strategy within the risk appetite and control framework set by the Board.
They are also responsible for exercising appropriate oversight through scrutinising the performance of management in meeting agreed
goals and objectives and monitoring performance.
Role of the Senior Independent Director
Sir Michael Rake is Deputy Chairman and Senior Independent Director. He was appointed as
Deputy Chairman in July 2012, at the height of events following the LIBOR announcement, having been Senior Independent Director since October 2011. As Senior Independent Director, Sir Michael's role is to provide a sounding board for the
Chairman and provide support for the Chairman in the delivery of his objectives. He also serves as a trusted intermediary for the Directors, when necessary. He is available to shareholders should the occasion arise where there is a need to convey
concerns to the Board other than through the Chairman or the Group Chief Executive. The Senior Independent Director is also expected to work with the Chairman and other Directors or shareholders, as required, where the stability of the Board or
Barclays is threatened.
During 2012, Sir Michael Rake played a significant role in the wake of the announcement of
penalties relating to the industry-wide investigation into the setting of interbank offered rates. Subsequent to the announcement of the resignation of Marcus Agius as Chairman, Sir Michael was in contact with shareholders and other relevant
stakeholders, including Barclays regulators, to understand their views and concerns relating to the LIBOR announcement and the resignation of the Chairman. Further meetings and discussions were held with shareholders and other stakeholders after the
ensuing announcement of the resignation of Bob Diamond as Chief Executive. As Deputy Chairman, Sir Michael Rake has taken a lead role in the Board's governance response to the LIBOR announcement and he reports on that on page 11.
Company Secretary
The Company Secretary, Lawrence Dickinson, works closely with the Chairman, the Group
Chief Executive and the Board Committee Chairmen in setting the annual forward calendar of agenda items for the meetings of the Board and its Committees. He also ensures that accurate, timely and appropriate information flows within and to the
Board, the Board Committees and between the Directors and senior management in general.
Board and Board Committee meeting papers are delivered a week before the meeting via a
secure electronic system, which can be accessed by Directors using tablet computers. After each meeting, the Chairman meets with the Company Secretary to agree actions to be followed up and to discuss the effectiveness of the meeting. Details of the
role of the Company Secretary and the support provided to the Board can be found in Barclays Charter of Expectations.
Full role profiles for the non-executive Directors and Senior Independent Director can be found in Barclays Charter
of Expectations.
8  I
How the Board operates
The Board meets regularly and there are eight scheduled meetings each year, including an annual strategy meeting. When necessary, and if circumstances dictate, additional Board meetings are held. In
2012, there were 15 additional meetings held at short notice to discuss matters such as changes to Board composition, issues arising from the LIBOR announcement, taxation matters and corporate transactions. In total, the Board met 23 times during
the year. The Chairman met privately with the non-executive Directors before each scheduled Board meeting to discuss any matters they wished to raise at the meeting.
Where Directors are unable to attend meetings, usually because of illness or long-standing prior
engagements, they are encouraged to give the Chairman their views or comments on the matters to be discussed. Following the meeting, the Chairman or the Company Secretary briefs any Director not present on the discussions and any decisions taken.
Details of Board meeting attendance in 2012 can be found in the table below. During the year, the non-executive Directors met the time commitment specified in their letters of appointment and committed significantly more time during the period of
stress Barclays experienced in July and August 2012.
Attendance
Independent
Scheduled meetings eligible to attend
Additional meetings eligible to attend
Group Chairman
Marcus Agius
(to 31 October 2012)
On appointment
Sir David Walker
(from 1 September 2012)
c
On appointment
Executive Directors
Robert E Diamond
(to 3 July 2012)
b
Executive Director
Antony Jenkins
(from 30 August 2012)
Executive Director
Chris Lucas
b
Executive Director
Non-executive Directors
David Booth
b
Independent non-executive Director
Tim Breedon
(from 1 November 2012)
Independent non-executive Director
Alison Carnwath
(to 24 July 2012)
ab
Independent non-executive Director
Fulvio Conti
ab
Independent non-executive Director
Simon Fraser
Independent non-executive Director
Reuben Jeffery
b
Independent non-executive Director
Sir Andrew Likierman
b
Independent non-executive Director
Dambisa Moyo
b
Independent non-executive Director
Sir Michael Rake
b
Independent non-executive Director
Sir John Sunderland
b
Independent non-executive Director
Lawrence Dickins
on
Secretary
Attended
Did not attend
Notes
a  Unable to attend a scheduled meeting owing to a prior commitment.
b
 Unable to attend certain additional meetings held at short notice owing to prior commitments.
c  Appointed to the Board with
effect from 1 September 2012 and as Chairman with effect from 1 November 2012.
Corporate Governance in
Barclays
All of our corporate governance
practices have been brought together in one document, Corporate Governance in Barclays. This framework provides the basis for promoting the highest standards of corporate governance in Barclays. Corporate Governance in Barclays is available on our
website, Barclays.com.
Charter of
Expectations
The role profiles,
responsibilities, time commitments, key competencies and behaviours we expect of our Directors, together with the key indicators of high performance, are set out in our Charter of Expectations, which is available on our website,
Barclays.com.
I  9
Corporate governance report
Leadership continued
Board balance and diversity
Balance of non-executive and executive Directors
Board gender balance
Length of tenure of non-executive Directors
Industry/background experience
a
1
Financial services
6
2
Accountancy/financial expert
2
3
Political/regulatory contacts
5
4
Current or recent Chairman/CEO
4
5
International (US)
2
6
International (Europe)
2
7
International (RoW)
1
8
Retail/marketing
1
Note
a  Individual Directors may fall into one or more categories.
Geographical mix of non-executive Directors
Board activity in
2012
The Board's agenda in
2012 was dominated by the changing regulatory environment and, in the latter half of 2012, by consideration of the future direction and shape of the business and its culture and values in light of both the external environment and in the aftermath
of the LIBOR announcement. Key activities for the Board during the year included:
¡
reviewing strategic options open to the Group in its different business areas in light of the regulatory and economic environment.
¡
receiving updates from each of Barclays principal businesses and discussing their progress against agreed strategy.
¡
discussing the implications of a statement by HMRC concerning the repurchase of debt by Barclays.
¡
considering and approving the sale of Barclays interest in BlackRock, Inc.
¡
discussing and agreeing Barclays 'One Africa' strategy, involving the combination of the majority of Barclays operations in Africa with Absa.
¡
considering the announcement of penalties relating to the industry-wide investigation into the setting of interbank offered rates and the subsequent
events.
¡
discussing changes in the composition of the Board, including approving the appointment of a new Chairman and a new Chief Executive.
¡
reviewing a report on compliance and internal audit lessons learned from the LIBOR incident.
¡
discussing and reviewing progress of the work implemented by Antony Jenkins as part of the Transform Programme, including a review of business performance, costs, funding
and liquidity matters and a discussion of Barclays purpose, values and behaviours.
¡
considering and approving Barclays risk appetite, liquidity risk appetite and the Group's capital plan.
¡
receiving regular updates on global economic conditions and regulatory developments and the outlook for the industry.
During 2012, the Board held two informal meetings with representatives from the FSA to ensure that
all Directors had the opportunity to hear first-hand from Barclays principal regulator and exchange views. The chart on page 18 illustrates how the Board allocated its time during 2012.
Priorities for 2013
In 2013, the Board's priority will be providing
oversight of and challenge to the progress of delivery of the actions and financial and non-financial commitments Barclays has made as part of its Strategic Review, which were announced in February 2013.
10  I
Board governance –
responding to the LIBOR announcement
In response to the announcement in June 2012 and subsequent events, the Board set up three specific
sub-committees of the Board, chaired by me in my capacity as Deputy Chairman and Senior Independent Director.
LIBOR Employee Investigation Review Committee
The purpose of this Committee, which comprised me, Sir John Sunderland and Marcus Agius, who was succeeded
following his retirement by Sir David Walker, was to provide a level of Board oversight in respect of the review of the conduct of certain current and former employees in relation to LIBOR. The Committee's role was to satisfy itself that proper
processes had been followed and that outcomes were appropriate. To assist the Committee in fulfilling this responsibility, the Committee appointed an independent adviser, John Turnbull from Linklaters LLP, who reviewed the scope and methodology of
the review and the resulting outcomes.
We met four times during the second half of 2012 to consider
the progress of the review and the outcomes. At the conclusion of the review, 13 current employees were subject to disciplinary action, including 5 who were dismissed. In total, deferred compensation amounting to £24.6m was clawed back from 15
current and former employees as a result of the review. This excludes any sums voluntarily surrendered by individuals. The Board Remuneration Committee considered the wider application of claw back and further details are in the Remuneration Report.
The Committee was satisfied that a thorough and fair process was conducted and that the outcomes of the review were appropriate in each individual case. This view was supported by our independent adviser.
Business Practices Review Committee
The Business Practices Review Committee comprises me, David Booth and Sir John Sunderland and was established
following Barclays announcement in July 2012 that Anthony Salz would conduct an independent review of Barclays business practices (the Salz Review). The purpose of the Committee is to oversee the progress of the Salz Review and report to the Board
on progress, to consider any recommendations arising from the Salz Review and to oversee any action to be taken as a result. The Committee met twice in the second half of 2012 to check on the progress of the review and has held further meetings in
early 2013. The Committee will meet again to discuss the recommendations of the Salz Review and Barclays response, which are due to be published prior to the 2013 AGM. In addition to the formal meetings of the Committee, I have also met with Anthony
Salz directly on a number of occasions.
Regulatory Investigations Committee
In the fourth quarter of 2012, the Board established a Regulatory Investigations Committee comprising me, Antony
Jenkins, Sir John Sunderland and Sir David Walker. The primary purpose of this Committee is to oversee certain regulatory investigations, to consider the findings of those investigations and to direct the scope and conduct of those investigations as
appropriate, including directing and overseeing any remediation activities and considering whether any disciplinary action is required in respect of any Barclays employee. The Committee met four times in 2012 and will continue to meet in 2013. The
Committee has appointed an independent external adviser, John Turnbull from Linklaters LLP, to assist it in its deliberations. Sir David Walker assumed chairmanship of the Committee in early 2013.
Sir Michael Rake
Deputy Chairman and Senior Independent Director
I  11
Corporate governance report
Effectiveness
Board composition, qualification and independence
The composition, experience and balance of skills on the Board are regularly reviewed to ensure that there is the right mix on the Board and its
committees and that they are working effectively. There are currently 13 Directors on the Board, which comprises an independent Chairman, two executive Directors and ten independent non-executive Directors. The current members of the Board have a
wide range of skills and experience. Diversity, including gender diversity, is important for a Board to be effective. A chart showing the gender representation on the Board can be found on page 10. More information on Barclays Board diversity policy
can be found on page 19.
The balance of the Board is illustrated on page 10
Director independence
The Board Corporate Governance and Nominations Committee and the Board consider and review the independence of each non-executive Director on an annual basis as part of the Directors'
performance evaluation. In carrying out the review, consideration is given to factors such as length of tenure and the ability of the Director to provide objective challenge to management. The behaviours that the Board considers to be essential
indicators of independence are set out in Barclays Charter of Expectations. Following the annual review for 2012, the Board concluded that each of the non-executive Directors reviewed continues to demonstrate those behaviours and is considered by
the Board to be independent.
Directors' external activities and conflicts of interest
Directors have a statutory duty to avoid situations in which they have or may have interests that conflict with those of Barclays, unless that
conflict is first authorised by the Directors. This includes potential conflicts that may arise when a Director takes up a position with another company. Barclays Articles of Association allow the Board to authorise such potential conflicts, and
there is in place a procedure to deal with any actual or potential conflict of interest. The Board deals with each appointment on its individual merit and takes into consideration all the circumstances. Prior to taking on additional responsibilities
or external appointments, Directors are obliged to obtain authorisation and it is their responsibility to ensure that they will be able to meet the time commitment expected of them in their role at Barclays. All potential conflicts approved by the
Board are recorded in an Interests Register, which is reviewed on an annual basis by the Board Corporate Governance and Nominations Committee to ensure that the procedure is working effectively. Following a review of the Interests Register in early
2013, the Committee concluded that all the potential conflicts as registered have been considered thoroughly and appropriately.
Executive Directors may take up only one FTSE 100 non-executive directorship and are allowed to retain any fees they receive for such appointments.
Antony Jenkins and Chris Lucas do not hold any such directorships.
Director re-election
With the exception of Sir Andrew Likierman, who will be standing down at the Company's Annual General Meeting (AGM) to be held on 25 April
2013, all Directors including Sir David Walker, Antony Jenkins, Tim Breedon and Diane de Saint Victor, who were all appointed since the last AGM, will each submit themselves for re-election at the AGM. Biographical details of each of the Directors,
together with details of their skills and experience, may be found on pages 35-37. Following a rigorous performance evaluation of each Director and the Board as a whole, excluding recent appointees Diane de Saint Victor and Tim Breedon, all
Directors are considered by the Board to be fully effective.
For more detailed information on Board evaluation please see pages 16-17
Succession planning and Board appointments
The Board recognises the need to ensure that the Board and executive management are always well resourced, with the right people in terms of skills and experience to deliver the Company's
strategy. Board composition is regularly reviewed to ensure the Board is refreshed progressively. Factors considered include length of tenure, background, experience, including industry and geographical experience, and diversity.
The length of tenure of the current non-executive Directors and their geographical experience and background is illustrated on page 10
The Board Corporate Governance and Nominations Committee is responsible for both executive and non-executive
Director succession planning and recommends new appointments to the Board.
More details on the role of the Board Corporate Governance and Nominations Committee are given on pages 18-19
In July 2012, the Company announced that Marcus Agius would resign as Chairman and that a successor was being
sought. Following a search, led by Sir John Sunderland with the assistance of MWM Consulting, an external search agency, Sir David Walker was appointed as a non-executive Director with effect from 1 September 2012 and succeeded Marcus Agius as
Chairman with effect from 1 November 2012. Following the resignation of Bob Diamond in July 2012, a search for a new Group Chief Executive commenced, led by the then Chairman, Marcus Agius and with the close involvement of the then
Chairman-designate, Sir David Walker and the Deputy Chairman, Sir Michael Rake. The search was conducted with the assistance of Spencer Stuart, an external search agency. Antony Jenkins was subsequently appointed as a Director and as Group Chief
Executive with effect from 30 August 2012. Sir John Sunderland and Sir David Walker report on the search for a new Chairman and a new Group Chief Executive, respectively, on the following pages.
Tim Breedon was appointed as a non-executive Director with effect from 1 November 2012, having been identified in early 2012 as a potential
candidate by the Board Corporate Governance and Nominations Committee itself, which had concluded there was a need to appoint a current or recent Chief Executive to the Board. Diane de Saint Victor was appointed as a non-executive Director with
effect from 1 March 2013, having been identified as a potential candidate by MWM Consulting. Both were assessed against the required skills and competencies that the Board Corporate Governance and Nominations Committee had identified as being
desirable. Tim was previously Chief Executive of Legal & General Group plc and has over 25 years experience of working in the insurance industry. He brings to the Board a significant knowledge of regulatory issues and a wealth of financial
services experience in addition to his experience as a chief executive. Diane is General Counsel of ABB and has a background in legal and regulatory matters and in leading cultural change. Her experience will bring a valuable perspective to the
Board as the Transform Programme is implemented and Barclays new Purpose and Values are embedded.
The external agencies named above
have no other connection with Barclays other than to provide executive recruitment services.
12  I
Appointing a new Chairman
Following the resignation of Marcus Agius as Chairman in July 2012, the Board asked me to take the
lead in finding a successor. An external search agency was briefed on the essential and desirable experience and personal attributes required for the role, which were agreed beforehand by the Board. It was clear to us that we needed to appoint an
experienced chairman, with financial services experience and strong governance credentials, who could provide the Board with effective leadership and who would command the respect of both fellow Directors and external stakeholders. Given the
resignation of Bob Diamond as Chief Executive, the Board was committed to appointing a new Chairman as quickly as possible. It was clear that any incoming Chief Executive would need to know the identity of the new Chairman given the pivotal
importance of their relationship to the effectiveness of the Board. It was also clear that, given the events of 2012, the minimum time commitment required of the Chairman would increase from roughly 60% of a full-time role to 80% of a full-time
role.
A long list of candidates, both internal and external, was reviewed and discussed by the
non-executive Directors during July, with the list being narrowed to a shortlist of two candidates. Both candidates then had individual meetings with each non-executive Director and with Chris Lucas, Group Finance Director, and feedback on each
candidate was obtained. I also took soundings on the candidates from a number of stakeholders, including Barclays principal regulators and certain major institutional shareholders. The non-executive Directors met a number of times to provide
feedback on their meetings with each candidate and to discuss the personal references.
Our unanimous
view was that Sir David Walker was the right candidate to be appointed as Chairman of Barclays. Sir David has significant experience in financial services, coupled with a wealth of experience as both a director and as a chairman. He has an
impeccable reputation for governance, with an excellent understanding and experience of UK boardroom and corporate governance issues and the role of a chairman. The Board approved Sir David's appointment as a non-executive Director and as
Chairman-designate in early August and he subsequently joined the Board with effect from 1 September 2012, succeeding Marcus Agius as Chairman with effect from 1 November 2012.
I am delighted that we were able to quickly secure the services of Sir David as Chairman: he commands great
respect within the financial services industry and has brought immense experience, integrity and knowledge to the role.
Sir John Sunderland
Independent non-executive Director
I  13
Appointing a new Group Chief
Executive
The process to appoint a new Group Chief Executive was initially led by my predecessor,
Marcus Agius, in conjunction with Sir Michael Rake, the Deputy Chairman, and other members of the Board Corporate Governance and Nominations Committee, although I was closely involved from the announcement of my appointment as Chairman-designate in
early August 2012.
An external search firm was engaged to identify candidates against the role
specification and the skills, experience and personal qualities the Board had agreed were essential and desirable for the role of Group Chief Executive. An extensive list of global, potential candidates was reviewed, with a shortlist of candidates,
both internal and external, put forward to the Board for discussion during July 2012. After meetings between several candidates and the then Chairman, the Deputy Chairman and the Group HR Director, the candidate list was narrowed further to three
potential candidates, who each then met individually with me and with Barclays non-executive Directors.
The non-executive Directors on the Board met in mid-August 2012 to allow Directors to provide feedback on their
meetings with each candidate. It became clear from our discussions that Antony Jenkins was the candidate that best fit the role requirements and had the vision required to take Barclays forward, with the support of the Board and the Executive
Committee. I approached a number of our key stakeholders, including some of our major shareholders and representatives of our principal regulators, to discuss the proposed appointment and to gauge their views. A sub-committee of the Board,
comprising Marcus Agius, Sir Michael Rake and Sir John Sunderland, was appointed with delegated authority to finalise the terms of the appointment, which was announced on 30 August 2012.
I am pleased that we were able to implement such a thorough and rigorous process and settle the leadership of
Barclays quickly from a strong field of candidates.
Sir David Walker
Chairman
14  I
Corporate governance report
Effectiveness continued
Executive Directors service contracts and non-executive Directors' terms of appointment
On appointment, executive Directors are given a one year rolling service contract. The Chairman and the non-executive Directors have
a letter of appointment that sets out the terms and conditions of their Directorship, including the fees payable and the expected time commitment. Each non-executive Director is expected to commit a minimum of 20 days per annum
to the role. Additional time commitment is required to fulfil roles as Board Committee members and/or Board Committee chairmen, as applicable. On average, the time commitment of non-executive
Directors is in the range of 30–36 days per annum, although they typically devote considerably more time to Barclays duties and did so during 2012, particularly in connection with the search for a new Chairman and a new Chief Executive.
Board induction and professional development
Induction
Professional development
Newly appointed Directors are provided with a bespoke
induction programme to further their understanding and their knowledge of Barclays, its operations and staff. The Chairman, with the support of the Company Secretary, is responsible for the induction of new Directors and for the ongoing professional
development of all Directors. Induction programmes are tailored to each new Director, depending on the experience and background of the Director. For example, on his appointment to the Board, Sir David Walker's induction programme took into
account his later role as Chairman and included the following items:
¡
an induction pack providing background information on Barclays operations and policies;
¡
sessions with each of the executive Directors and members of the Executive Committee;
¡
meetings with the senior executives responsible for
each of the Group's principal businesses, including the Investment Bank, Retail and Business Banking, Wealth and Investment Management and Africa, focusing on the challenges and opportunities faced by each business;
¡
meetings with key personnel in central support
functions, including compliance, corporate development, finance, risk management, citizenship and sustainability, internal audit and corporate affairs; and
¡
meetings with key external stakeholders, such as major institutional shareholders and regulators.
This initial induction programme will be supplemented with a programme of
business visits over a period of 12 – 18 months, including visits to selected UK and overseas operational centres.
Barclays offers a programme of ongoing professional
development for existing Directors. Personal development logs are maintained for each non-executive Director, which record external and internal briefings and other events that each attends, such as internal management conferences. During 2012,
non-executive Directors attended briefing sessions on Long Term Incentive Plans and on the Investment Bank's fixed income and prime services businesses. They also attended sessions demonstrating the use of new technology in Barclays branch
network. Members of the Board Audit Committee attended briefing sessions on algorithmic trading and members of the Board Risk Committee attended briefing sessions on operational risk and on the Investment Bank's balance sheet. Directors are
asked for input on potential topics for ongoing professional development, which informs the planned programme.
In addition to the above, independent professional advice is available to the Directors at Barclays expense. During 2012, an independent adviser was engaged to advise the LIBOR Investigation
Employee Review Committee and the Regulatory Investigations Committee.
An annual review of Barclays Director induction and development programmes is carried out by the Board Corporate Governance and Nominations Committee to ensure that they are appropriate and fit for
purpose. More information on Barclays Board induction and ongoing Director development can be found in 'Corporate Governance in Barclays'.
I  15
Corporate governance report
Effectiveness continued
Evaluation Statement
A
summary of the Board's progress against the actions arising from its 2011 Board Effectiveness Review can be found below:
Theme
Action Taken
Ensuring that the Board continues to have an appropriate range and balance of skills, experience and diversity
Board composition is reviewed regularly. In 2012, a revised skills matrix was developed
against which the Board Corporate Governance and Nominations Committee assessed the current composition of the Board and identified the skills and experience to be sought in new appointments. Appointments were made to the Board and to Board
Committees during 2012 to maintain the balance of skills required. A renewed emphasis was given to gender diversity on the Board following the departure of Alison Carnwath and Diane de Saint Victor joined the Board in early 2013.
Continuing to develop an appropriate process for succession planning for key Board and senior executive management
positions
Executive succession planning, including succession planning for Board and Executive
Committee roles, was a regular agenda item for the Board Corporate Governance and Nominations Committee during 2012. During 2012, a revised approach to talent management and the outcomes of a review of succession planning for senior strategic roles
were presented to the Board Corporate Governance and Nominations Committee.
Enabling the Board to have greater interaction with Executive Committee members to gain an enhanced understanding of the challenges and
opportunities they face in their businesses
There has been greater interaction between the Board and members of the Executive
Committee, by way of presentations to the Board on the evening before Board meetings, followed by dinners over which key issues are discussed in greater depth. The Board also visited Barclays operations in New York twice during 2012, to gain
first-hand experience of Barclays US businesses.
Ensuring that the Board has visibility of talent amongst senior executive management
Three senior talent events took place in 2012, which enabled the Board to meet and
interact with senior executives at the level below Executive Committee in order to increase the Board's visibility of potential future leaders.
Continuing to ensure that timely and high-quality information flows to the Board and to Board Committees
A weekly update note from the Group Chief Executive is circulated to Board members,
covering key issues and developments, including regulatory matters, trading and senior appointments. This provides up-to-date information to Directors outside the formal Board meeting reports.
Increasing use has been made of a secure electronic system to deliver meeting
papers and other information to Directors securely and quickly via tablet computers.
16  I
Evaluation of Board performance
To improve the effectiveness of the Board and its Committees, as well as that of each individual Director, a formal and rigorous Board review is undertaken on an annual basis. This review has been
externally facilitated since 2004. This formal process enables the Board to monitor trends in responses to questions and track progress made against action plans. On an annual basis, Barclays approach to Board evaluation is benchmarked against the
practices of other companies in the FTSE 20 to ensure that Barclays remains at the forefront of best practice. The Board Corporate Governance and Nominations Committee is responsible for overseeing the process and for monitoring any action plans on
behalf of the Board.
For 2012, the Board evaluation process was conducted by Egon Zehnder International (Egon Zehnder), who used a
short questionnaire covering similar themes to previous years' evaluations, although the main part of the evaluation process took the form of structured interviews with Directors and members of the Executive Committee. While Egon Zehnder is an
executive search agent, it did not undertake any Barclays Board searches during the year and the Board believes that it provides an impartial and objective board evaluation service.
The 2012 Board evaluation reviewed the events of 2012, in particular, those culminating in the resignations of Marcus Agius and Bob Diamond. The voting at Barclays 2012 AGM was also considered as
part of the evaluation process and Egon Zehnder held interviews with a selection of Barclays major shareholders. The substantial changes in the Board in 2012 inevitably complicated the performance evaluation process, but key themes were identified
and form the basis of the action plan for 2013 as follows:
¡
Enhancing the relationship between the Board and the Executive Committee following changes in both Board and Executive Committee composition in
2012;
¡
Ensuring that the working relationship between the Chairman and CEO is strong in recognition of the critical importance of this relationship to
the effectiveness of the Board as a whole;
¡
Ensuring that the Board has greater line of sight into the views of key stakeholders. Informal meetings with Barclays regulators have started and
will continue, in both the UK and US;
¡
Rebuilding trust with stakeholders with regard to Barclays remuneration policy, particularly in light of voting at the 2012 AGM. Extensive
consultation took place with stakeholders during 2012 and will continue into 2013;
¡
Ensuring that an appropriate balance of skills, experience and diversity on the Board is maintained. Two new non-executive Directors have been
recently appointed and further appointments are envisaged in 2013;
¡
Further improving the quality of information flows to the Board to achieve an appropriate balance between data and analysis; and
¡
Enhancing succession planning for key Board positions, in particular, continuing to ensure that the Board builds its knowledge and understanding
of the depth of talent in the business.
I  17
Corporate governance report
Effectiveness continued
Board Corporate Governance and Nominations Committee Report
"It is essential that the Board and its
Committees are properly constituted
and balanced in terms of skills,
experience and
diversity."
Sir David Walker
Chairman, Board Corporate Governance
and Nominations Committee
Member
Independent
Meetings
eligible to
attend
Sir David Walker
Chairman
a
(from 1 September 2012)
On appointment
Marcus Agius
(to 31 October 2012)
On appointment
David Booth
Yes
Alison Carnwath
(to 24 July 2012)
Yes
Sir Michael Rake
Yes
Sir John Sunderland
Yes
Lawrence Dickinson
Secretary
Attended
Did not attend
Note
a   Member of the Committee since 1 September 2012,
becoming Chairman from 1 November 2012.
Committee composition, skills and experience
In addition to the Chairman, there are three non-executive Directors on the Committee, being the Chairmen of the main Board Committees. The names of
the members of the Committee are set out opposite, together with attendance at meetings in 2012. The Group Chief Executive also attends each meeting, although is not involved in decisions relating to Chief Executive succession.
Committee responsibilities and how they were discharged in 2012
The Committee is responsible for reviewing the composition of the Board and Board Committees to ensure they are properly constituted and balanced in terms of skills, experience and diversity. In
addition to this, it:
¡
recommends to the Board the appointment of new Directors;
¡
considers succession plans for the Chairman, Executive and other key positions, such as roles on the Executive Committee and other senior roles;
¡
monitors corporate governance issues and developments to ensure that Barclays is in line with best practice guidelines; and
¡
agrees and monitors the annual Board Effectiveness Review and tracks any actions arising.
The Committee's full terms of reference are available on the corporate governance section of Barclays website.
The Committee met four times in 2012, including an additional meeting solely to review and discuss Board composition. The chart below shows how the
Committee allocated its time. In 2012, the Committee focused primarily on Board composition and succession planning for roles below the Board level. Key activities undertaken by the Committee in 2012 were:
Board composition
¡
reviewing the structure, size and composition of the Board and the principal Board Committees, looking at the need to refresh the Board and at
the balance and diversity of skills and experience on the Board. In reviewing the composition of the Board, a skills analysis was carried out using a revised skills matrix agreed by the Committee in 2012, which set out the core competencies and
skills that it would be desirable to have on the Board, such as financial services, experienced chief executives from other companies and industries, accountancy, retail and marketing and experience of the main geographic markets in which Barclays
operates, along with the target weightings for each. Following a review of the composition of the Board, the Committee approved the appointment of Tim Breedon as a non-executive Director with effect from 1 November 2012 and the appointment of
Diane de Saint Victor as a non-executive Director with effect from 1 March 2013.
¡
carried out a review of progress against Board diversity targets and discussed and agreed a Board Diversity Policy, recommending it to the Board
for its approval.
¡
considered and recommended changes to Board Committee composition during the year. The Committee recommended the appointment of David Booth to
the Board Remuneration Committee with effect from 1 July 2012 to provide cross-membership between the Board Remuneration and Board Risk Committees. Drawing on reviews by the Committee, the Board as a whole considered and approved the
appointment of Sir John Sunderland as Chairman of the Board Remuneration Committee, recommended the appointment of Tim Breedon as a member of the Board Risk Committee and Board Remuneration Committee and the appointment of Sir David Walker as a
member of the Board Remuneration Committee and as a member and Chairman of the Board Corporate Governance and Nominations Committee and Board Citizenship Committee.
18  I
Succession planning
¡
discussed succession planning for the position of Chief Executive and for the Executive Committee and reviewed potential candidates for these
roles;
¡
reviewed the Group's succession and talent management programme below Board level;
¡
reviewed and discussed the processes, overall methodology and contingency plans in place for senior strategic roles; and
¡
received updates on Barclays graduate recruitment and training programme, including an update on gender diversity.
Corporate governance
¡
reviewed Barclays corporate governance disclosures in the 2011 annual report and considered the proposed disclosures for the 2012 annual report;
¡
reviewed and discussed Barclays approach to Board and Committee induction and development;
¡
received updates on significant corporate governance developments in the UK and EU and how these might impact Barclays;
¡
carried out an annual review of the Directors' Interests Register to ensure that an effective process for authorising conflicts is in place
and authorised conflicts have been dealt with appropriately;
¡
reviewed and discussed issues raised at corporate governance meetings held with institutional investors and investor bodies; and
¡
reviewed the effectiveness of the Committee and proposed changes to its terms of reference following a review against best practice.
Board effectiveness
¡
discussed and approved the proposed actions to be taken in response to the findings of the 2011 Board Effectiveness Review. The Committee also
reviewed reports on the status of the action plan to monitor the progress being made;
¡
reviewed the status of actions being taken in response to the findings of the FSA's review of Barclays Board governance as part of its Core
Prudential Programme, on which it reported in early 2012; and
¡
reviewed the market for board effectiveness facilitators and agreed to re-appoint Egon Zehnder.
Statement on diversity policy
Board diversity, in particular, gender diversity, continues to be a topic of much discussion. The Board believes that diversity is important for board effectiveness. However, diversity is much more
than the issue of gender, and includes diversity of skills, experience and background. In response to Lord Davies's report on Women on Boards, Barclays published a Board Diversity Policy in April 2012, which sets out Barclays approach to
diversity on the Board. The Board Diversity Policy can be found in the Corporate Governance section of Barclays website. All Barclays Board appointments are made on merit, in the context of the skills and experience the Board as a whole requires to
be effective. Nevertheless the Board is aiming to ensure that at least 20 per cent of the Board is made up of women by the end of 2013 and for that position to have exceeded 25 per cent by the end of 2015. Women currently represent 15% of
the Board. Diversity in relation to employees of the Barclays Group is covered by Barclays Equality and Diversity Charter and more information on diversity across Barclays can be found in the People section on page 38.
Committee Effectiveness
The performance of the Committee is reviewed each year as
part of the Board Effectiveness Review.
Following the 2011 annual effectiveness review of the Committee, the Committee improved the induction process for its new
members by committing to implement a bespoke induction for any new member, to be agreed by the Company Secretary with the Chairman and the new member. The Committee also provided more opportunities for members to bring items onto the Committee
agenda, such as including the Committee's annual forward agenda with the papers for each meeting.
The 2012 review concluded that the Committee continues to operate effectively, although there was a slight diminution in the overall score.
Priorities for
2013
In 2013, the Committee will continue to
carry out regular reviews of the balance of skills and experience on the Board against the skills matrix that has been developed and will seek to make further progress towards achieving the Board diversity targets that have been set. Executive
succession will continue to be high on the Committee's agenda.
I  19
Corporate governance report
Accountability
Board Audit Committee Chairman's Report
"June 2012 saw
the announcement of the
penalties imposed on Barclays
relating to the industry-wide
investigation into the setting of
interbank offered rates and
this
impacted the Committee's
agenda."
Sir Michael Rake
Chairman, Board Audit Committee
Attended
Did not attend
Note
a  Unable to attend one meeting owing to prior commitments.
Board Risk Committee allocation of time
%
2012
2011
1
Control issues
13
4
2
Financial results
31
42
3
Internal audit matters
14
6
4
External audit matters
6
6
5
Business control environment
14
23
6
Other (including Governance and Compliance)
22
19
Sir Michael Rake, Chairman of the Board Audit Committee, reports on how the Board Audit Committee
discharged its responsibilities during 2012.
Chairman's overview of 2012
The work of the Committee in 2012 has seen us address three main themes. First, accounting judgements, particularly in respect of provisions to be
made for product mis-selling. Secondly, the impact on the systems and controls in place at each of Barclays businesses arising from increasing regulatory demands and rising consumer expectations. And thirdly, the remediation programmes in place to
enhance our internal control and regulatory compliance systems and procedures. June 2012 saw the announcement of the penalties imposed on Barclays relating to the industry-wide investigation into the setting of interbank offered rates and this
impacted the Committee's agenda in the second half of the year. I report on all of these matters in more detail below.
The
approach of our regulators to regulation has continued to be intensive and intrusive, particularly in anticipation of the implementation of the new 'twin-peaks' model of regulation in the UK and the additional focus on conduct risk and
outcomes for consumers. During 2012, I held a number of meetings with Barclays regulators in UK and US to discuss our approach to financial reporting, internal controls and regulatory compliance and to hear from them what they expect of the Board
Audit Committee and Barclays in this regard. I also interacted regularly with the lead audit partner of Barclays external auditors.
I
reported after each Committee meeting to the Board on the main matters discussed in Committee meetings to ensure that all Directors were kept informed of the Committee's agenda. I also made myself available if any Director wished to discuss any
particular matters with me in more detail.
Committee composition, skills and experience
Membership of the Committee and attendance at meetings held in 2012 is set out opposite. Tim Breedon joined the Committee with effect from
1 March 2013. Sir Andrew Likierman and I are the designated financial experts on the Committee for the purposes of the US Sarbanes-Oxley Act, although each member of the Committee has a depth of financial expertise and collectively, the
Committee has considerable financial and financial services experience on which to draw. More information on the skills and experience of the Committee members may be found in the Directors' biographies on pages 35-37. The Committee is
conscious of the need to keep its knowledge up to date and, in early 2012, Committee members attended two briefing sessions on algorithmic trading, covering both the principles of algorithmic trading and the control mechanisms in place.
Ahead of each Committee meeting, I held a private meeting with the members of the Committee at which we discussed any particular items that they
wished to raise during the meeting. I also made myself available if any Committee member wished to discuss any particular matters with me and I was in regular contact with management, including the Group Finance Director and Chief Internal Auditor
during 2012.
20  I
Committee responsibilities and how they were discharged in 2012
The Committee is responsible for:
¡
monitoring the integrity of the Group's financial reporting and satisfying itself that any significant financial judgements made by
management are sound;
¡
monitoring the Group's internal controls, including internal financial controls; and
¡
monitoring and reviewing the activities and performance of the internal and external auditor, including monitoring their independence and
objectivity.
You can obtain the Committee's full terms of reference on the corporate
governance section of Barclays website.
The Committee met 10 times in 2012 and the chart opposite shows the way in
which we allocated our time. Committee meetings were attended by management, including the Group Chief Executive, Group Finance Director, Chief Internal Auditor, Chief Risk Officer and General Counsel, as well as representatives from the businesses
and other functions from time to time. The external auditor attended each meeting and the Committee held regular private sessions with the Chief Internal Auditor and the external auditor, which were not attended by management. These private sessions
allowed us to discuss matters directly with the audit teams.
The main matters and areas of judgement we reviewed and
considered during 2012 were as follows:
Financial Reporting and Significant Financial Judgements
With the support of the external auditor, the Committee assessed whether suitable accounting policies had been adopted, whether
management had made appropriate estimates and judgements and whether disclosures were balanced and fair. The main areas of focus in 2012 and matters where we specifically considered the judgements that had been made are set out below:
¡
We considered the presentation of the financial statements and in particular, the presentation of adjusted performance and the adjusting items,
including own credit, provisions for product mis-selling redress and the gain on the disposal of Barclays interest in BlackRock, Inc. We discussed the treatment of the LIBOR penalties and agreed with management's judgement that these should not
be treated as an adjusting item;
¡
We received reports on the assumptions underlying the provisions made for product mis-selling redress, specifically PPI and Interest Rate Hedging
Products. The trend in PPI claims has proved to be volatile during 2012, resulting in provisions being taken in both the first quarter and the third quarter. A provision for Interest Rate Hedging Products was taken at the half-year. We were content
after due challenge and debate with the assumptions made and the judgements applied. As part of reviewing the results for 2012, we considered a recommendation from management that further provisions should be taken in respect of PPI and Interest
Rate Hedging Products in the financial results for 2012 and, having reviewed the trend data and provisioning assumptions, agreed with management's recommendation;
¡
In reviewing the results for 2012, we reviewed the assessments made for goodwill impairment and confirmed, based on management's
expectations of future performance of certain businesses, that no goodwill impairment charges were required in 2012;
¡
We also reviewed the judgements made in respect of tax, in particular, deferred tax assets in Spain and the US, including their recoverability.
We supported management's assumptions, based on current forecasts. We reviewed the level of tax provisioning in light of ongoing discussions with HMRC. We believe that the current level of provisions is reasonable;
¡
At the request of the Board we considered whether the 2012 Annual Report was fair, balanced and understandable and whether it provided the
necessary information for shareholders to assess Barclays performance, business model and strategy. We were satisfied that, taken as a whole, the Annual Report is fair, balanced and understandable;
¡
We reviewed the Group's credit impairment charges, which have reduced overall in 2012, to satisfy ourselves with the appropriateness of the
provision;
¡
We received reports from the Investment Bank Valuations Committee on the processes followed and the judgements made in valuing certain asset
classes, in particular, those assets where there is little or no market data. We were content with the rigour of the processes and the resulting valuations;
¡
Given ongoing uncertainties in the Eurozone, we reviewed and agreed enhanced disclosure of Barclays exposures in selected Eurozone countries,
including sovereign debt exposures, and Barclays disclosures in respect of re-denomination risk for certain countries;
¡
We reviewed disclosures on litigation and competition and regulatory matters contained in Barclays full and half-year results and trading
statements, in particular, the statements made with respect to investigations by the Financial Services Authority, Serious Fraud Office, US Department of Justice, and the US Securities and Exchange Commission's investigation into Barclays
relationships with third parties who assist it to win or retain business. We also reviewed the disclosure made in respect of civil claims made in connection with Barclays role in the setting of interbank offered rates; and
¡
We received an update on future accounting standards changes and the potential impact that these may have on Barclays financial statements,
particularly the impact of IFRS 10
Consolidated Financial Statements
and IAS 19
Employee Benefits.
Some of these new accounting standards will apply for the financial year 2013 and we will continue to assess the impact on our financial
statements.
Internal control
To discharge our responsibility to review the effectiveness of the Group's internal controls, we received specific control environment reviews from each of the businesses, we reviewed control
issues of Group level significance and specific control issues and also received regular reports on regulatory and compliance matters. Some of the specific matters we reviewed in 2012 are set out below:
¡
We reviewed the control environment of each of our principal businesses: Europe RBB; UKRBB; Africa; Investment Bank; Barclaycard; Corporate
Banking; and Wealth and Investment Management. Given the planned integration of Absa and Barclays Africa, which is a major change programme, we were particularly concerned to understand the potential impact on resources in those businesses as they
integrate and automate and standardise processes and controls;
¡
Technology remained an area of specific focus in 2012, particularly in view of a number of well-publicised IT failures at certain banks and the
impact of such failures on business continuity. We regularly reviewed specific IT-related control issues and also the progress of the remediation workthat is under
I  21
Corporate governance report
Accountability continued
Board Audit Committee Chairman's Report
continued
way to address them. We also received an update on cyber-security threats and the defences Barclays has in place against cyber attacks;
¡
The control environment in the Investment Bank was regularly reviewed, including reviewing the specific action plans that are in place to enhance
the control environment and in particular, to enhance the Compliance function. We will continue to review this important workstream in 2013;
¡
We received regular updates on compliance matters. These included updates on the actions being taken to comply with the Deferred Prosecution
Agreement (DPA) entered into as part of the settlement with US authorities following an investigation into Barclays compliance with US sanctions and US Dollar payment practices: all of the actions required by the DPA were completed in 2012. Further
details of Barclays compliance with the DPA may be found in the Risk management – Supervision & Regulation section;
¡
We also received a number of updates on Anti-Bribery and Corruption, Anti-Money Laundering and Client Assets compliance. More details of Barclays
Clients Assets compliance may be found in the Risk management – Supervision & Regulation section of this report;
¡
We were updated on the arrangements Barclays has in place for employees to raise concerns and received reports on any incidents reported and
investigated. There was a small increase in the number of reports and concerns raised by employees following the LIBOR announcement, although no new material issues were raised. We continue to regard employee reports as a valuable source of
information that helps identify fraud, inappropriate behaviour and control weaknesses; and
¡
We received an update on the likely direction to be taken by the Conduct Business Unit of the FSA in respect of the governance of conduct risk
and will be considering this further in 2013.
Further details of the Group's system of internal control and risk
management, including the main features of our internal control and risk management systems in relation to the financial reporting process, are included in the Directors' Report on pages 30-32 and in the Risk management section on pages
273-303.
Oversight of Internal Audit and External Audit
Internal Audit
To fulfil our responsibility to monitor the effectiveness of
the internal audit function, we received regular reports from the Chief Internal Auditor, setting out the Internal Audit function's view of the control environment and performance against any key indicators. We also regularly reviewed the
Internal Audit Plan, any changes proposed and the level of resourcing available to the Internal Audit function.
A new Chief Internal
Auditor was appointed in early 2012 and during the year provided the Committee with his views on the resourcing and effectiveness of the Internal Audit function. 2012 has seen a change in methodology in order to improve the effectiveness of internal
audit by focusing audit resources on high-risk auditable entities. In particular, the audit coverage of the Investment Bank has been increased. Given the change in audit methodology, we reviewed and approved the annual Internal Audit plan for 2013
in early 2013.
The Chief Internal Auditor updated the Committee on the work that Internal Audit will carry out as a result of the LIBOR
settlement, in order to meet the requirements of the Commodity Futures Trading Commission (CFTC) Order. Regular audits of the LIBOR-setting process will be carried out on a six-monthly basis and a third party audit will also be conducted. We
received the first of these reports in late 2012.
Internal Audit's self-assessment of conformance, which we reviewed in the fourth quarter of
2012, evidenced that the function generally conforms to the standards set by the Institute of Internal Auditors. During 2013, an external assessment of the performance of the Internal Audit function will be conducted and the results will be reported
to the Committee.
External Audit
It is our responsibility to monitor the performance, objectivity and independence of the external auditor. Each year, we agree the audit plan with the auditor to ensure that the coverage is focused
and that there is appropriate overlap with the work of Internal Audit. We also agree the terms of the engagement letter and approve, on behalf of the Board, the fees payable for the audit.
To discharge our responsibility to assess the performance and effectiveness of the auditor, we carried out a survey in the fourth quarter of 2012, seeking views from key stakeholders across the
Group. The survey gathered views on the performance and effectiveness of PricewaterhouseCoopers (PwC). The results were reported to the Committee in early 2013 to help inform the Committee's deliberations on the auditor's performance and
whether the auditor should be recommended for re-appointment. A more detailed follow-up survey will be conducted at the end of the first quarter of 2013 following completion of the year-end audit.
PwC and its predecessor firms has been Barclays auditor for many years, since 1896, although the lead audit partner now rotates every five years.
Based on the 2012 survey results and the Committee's own interactions with PwC, the Committee concluded that it continues to be fully satisfied with the performance of PwC and that PwC continues to be objective and independent. The
auditor's objectivity and independence is supported by Barclays policy on non-audit services provided by the auditor, which is described on page 23. PwC also provides specific assurance to the Committee on the arrangements it has in place to
maintain its independence and objectivity. The Committee has therefore recommended to the Board and to shareholders that PwC should be re appointed as the Group's auditors at the AGM on 25 April 2013. The Committee recognises however that
the length of tenure of auditors is under increasing scrutiny and is therefore considering, in light of the new requirement in the Code that the external audit contract is put out to tender at least every ten years, how and when a tender process
might be implemented, particularly given the transitional provisions suggested by the Financial Reporting Council (FRC). A recommended course of action will be proposed to the Board during 2013.
22  I
Objectivity and independence
of the
external auditor
The Committee's responsibility to monitor and
review the objectivity and independence of the external auditor is supported by a policy to govern the non-audit services that may be provided by the external auditor. The policy sets out the circumstances in which the external auditor may be
permitted to undertake non-audit services. Allowable services are pre-approved up to but not including £100,000, or £25,000 in the case of certain taxation services. Any non-audit service that exceeds these thresholds requires approval
from me as Chairman of the Committee and must be robustly justified and, if appropriate, tendered, before it is approved. I closely review all requests for approval, particularly any which concern taxation-related services, and specifically tax
advisory services, where our approach is not to use the auditor unless there is a very strong case for not seeking an alternative supplier. The Committee receives a quarterly report on non-audit services undertaken by the auditor so that it can
monitor the types of services being provided and the fees incurred.
A breakdown of the fees paid to the auditor for non-audit work may be found in note 44 on page 271. Significant categories of engagement undertaken
in 2012 include tax compliance services for assignments initiated pre January 2011 in connection with our expatriate and international assignees and attest and assurance services in connection with the production of a report attesting to the
effectiveness of controls in place at some of Barclays US based entities. In each case, approval was only given after a full and thorough assessment of the value case for using the auditor and of the skills and experience that the auditor would
bring to each assignment. I also satisfied myself that there were safeguards in place to protect the objectivity and independence of the auditor.
Further details of the non-audit services that are prohibited and allowed under our policy can be found on page 317.
Committee Effectiveness
The performance of the Committee is reviewed each year as
part of the Board Effectiveness Review. This year's review concluded that the Committee continues to operate effectively, although there was a slight diminution in the overall score.
Priorities for 2013
For 2013, I anticipate the Committee's areas of focus to be driven primarily by the changing regulatory environment,
particularly as the new regulatory regime in the UK is implemented. We will also be seeking to ensure that the control remediation programmes we already have in place are delivered, in addition to having oversight of any action plans that arise from
the controls workstream of the Transform Programme.
Sir Michael Rake
Chairman, Board Audit Committee
I  23
Corporate governance report
Accountability continued
Board Risk Committee Chairman's Report
"We have been looking to take a more
holistic view of risk management,
so that we have an
enterprise wide
view of risk management that goes
beyond the management of financial
risks."
David Booth
Chairman, Board Risk Committee
Member
Independent
Meetings
eligible to
attend
David Booth
(Chairman)
Yes
Tim Breedon
(from 1 December 2012)
Yes
Reuben Jeffery
a
Yes
Sir Andrew Likierman
Yes
Dambisa Moyo
a
Yes
Sir Michael Rake
a
Yes
Lawrence
Dickinson
Secretary
Attended
Did not attend
Note
a
Unable to attend meetings because of prior commitments.
Board Risk Committee allocation of time
%
2012
2011
1
Risk profile/Risk appetite
(including capital and liquidity management)
61
45
2
Key risk issues
18
38
3
Internal control/Risk policies
6
6
4
Regulatory frameworks
5
4
5
Other (including Remuneration and Governance issues)
10
7
David Booth, Chairman of the Board Risk Committee, reports on how the Committee discharged its
responsibilities in 2012. From 31 January 2013, the Committee was renamed the Board Financial Risk Committee and oversight of operational risk was assumed by the Board Conduct, Reputation and Operational Risk Committee.
Chairman's overview of 2012
2012 has been another challenging year for the Committee. Global economic conditions, particularly in the Eurozone, have driven much of our agenda. We have been looking to take a more holistic view
of risk management, partly in response to regulatory pressure so that we have an enterprise wide view of risk management that goes beyond the management of financial risks, such as credit risk, market risk and funding risk. I held a number of
meetings with Barclays regulators in the UK and US during 2012 to discuss our approach to risk management and to understand better our regulators' areas of focus and how this might impact the remit of the Committee.
I continued this year to request that representatives from the business, that is, business unit employees with day-to-day operational
responsibility for risk management, attend Committee meetings and present on specific issues. This provided the Committee with a valuable insight into how risk management principles are implemented in the business and gives a sense of the risk
management culture in the business.
I submitted a report after each Committee meeting to the Board, to ensure that all Board members
were aware of the Committee's areas of focus. I continued to liaise with Sir Michael Rake, Chairman of the Board Audit Committee, to ensure that both Committees had appropriate oversight of risk and control matters. I also met regularly with
the Chief Risk Officer, the Chief Internal Auditor and the Group Treasurer. In July 2012, I joined the Board Remuneration Committee, which provides an opportunity for me to provide direct input into remuneration decisions from the perspective of
risk management and control.
Committee composition, skills and experience
Membership of the Committee and attendance at meetings held in 2012 is set out opposite. The Committee individually and collectively has experience
in finance and financial risk management and that experience and knowledge was strengthened further in late 2012 with the appointment of Tim Breedon to the Committee. More information on the skills and experience of the Committee members may be
found in the Directors' biographies on pages 35-37. The Committee is keen to ensure that it has sufficient knowledge and information to be able to discharges its responsibilities effectively and during 2012, Committee members attended two
specific briefing sessions, the first on operational risk management, in light of increased regulatory focus in this area, and the second an in-depth review of the Investment Bank's balance sheet.
Committee responsibilities and how they were discharged in 2012
During 2012, the Committee was responsible for:
¡
recommending to the Board the total level of risk the Group is prepared to take (risk appetite) to achieve the generation of shareholder value;
¡
monitoring risk appetite, including setting limits for individual types of risk, e.g., credit, market, funding risk and operational risk;
¡
monitoring the Group's risk profile;
¡
ensuring that management properly identifies principal risks and that they are being appropriately managed;
24  I
¡
ensuring that risk is taken into account during the due diligence phase of any strategic transaction; and
¡
providing input from a risk perspective into the deliberations of the Board Remuneration Committee.
You can obtain the Committee's full terms of reference on the corporate governance section of Barclays website. More
information on risk management and the internal control framework is included in the Directors' Report on pages 30-32 and in the Risk management section on pages 273-303.
The Committee met 10 times in 2012 and the chart opposite shows the way in which we allocated our time. Committee meetings were
attended by management, including the Group Finance Director, Chief Internal Auditor, Chief Risk Officer and General Counsel. The external auditor also attended each meeting. From time to time, senior management below Board and Executive Committee
level, including representatives of the risk management function at both Group and business unit level, attended meetings for specific items. The Chief Internal Auditor, in addition to providing input on risk and control matters presented to the
Committee, also presented a regular, formal report on risk control issues.
The way in which the Committee discharged
its responsibilities during 2012 is described below:
Risk Profile/Risk Appetite
We considered the following matters in 2012:
¡
The Chief Risk Officer presented a quarterly Group Risk Profile Report, providing an update on credit, market, funding and liquidity and
operational risk in each of Barclays main businesses. Given the continuing uncertainties in the Eurozone, our discussions focused primarily on the potential impact of the Eurozone debt crisis, Eurozone sovereign risk and redenomination risk in our
European businesses. We received specific reports on Eurozone sovereign risk, including details of Barclays scenario planning in the event of a country exiting the Euro. In addition, we discussed the potential impact on our businesses of failure to
resolve the US Fiscal Cliff. We were also updated on specific country risk for countries where the economic outlook may be worsening or where there is risk to our businesses arising from political instability;
¡
The Group Treasurer provided a quarterly update on capital and liquidity. During 2012, given market conditions and the ongoing uncertainty in the
Eurozone, we held two additional meetings specifically to discuss liquidity risk appetite and Barclays liquidity risk management framework. In view of the external environment, and taking into account the potential stresses on Barclays following the
announcement of the penalties imposed relating to the industry-wide investigation into the setting of interbank offered rates, for a time over the summer we asked management to implement a revised liquidity risk management framework, in order to
extend the time horizon period for Barclays liquidity and to reduce our overall balance sheet leverage. Also during 2012 we agreed to a revised limit framework for Barclays US repo business. Further details of Barclays liquidity risk management
framework can be found in the Risk management section. The Group Treasurer also updated the Committee on regulatory changes in liquidity rules, on the introduction of new facilities, such as the Funding for Lending Scheme and on the potential impact
of CRD IV;
¡
We considered and approved the scenarios for Barclays internal stress testing exercise, including a reverse stress test, and later reviewed the
results. The stress tests included a potential Eurozone break-up scenario. As in previous years, the stress testing exercises demonstrated that Barclays remains well-capitalised and profitable in a stress scenario; and
¡
We considered risk appetite for 2013 and recommended it to the Board for approval. Taking a 1 in 7 scenario and a 1 in 25 scenario, we assessed
the performance of agreed financial volatility parameters in those scenarios to establish if there are any potential constraints. While the financial volatility parameters are largely unchanged from the prior year, some were recalibrated. The
proposed risk appetite for 2013 also allows for a higher level of non-credit losses, given the impact in 2012 of such losses, for example, product mis-selling redress. The Committee will monitor risk appetite for 2013 and may revisit it in light of
the Transform Programme.
Key Risk Issues
Some of the other specific matters we considered in 2012 were:
¡
We undertook two specific country and business risk reviews in 2012. We reviewed our operations in India, where we primarily have Investment
Banking business and support activities. From that discussion, we asked for loan to deposit ratios on a country by country basis to be reported to the Committee as a key indicator. We also reviewed our business in South Africa in view of the weak
economic outlook there and the difficult political environment, which present a number of challenges, particularly in terms of operational risk management. The Committee was content with the actions being taken by management to address these
challenges although asked to be kept informed of the progress of certain remediation programmes;
¡
After the significant trading losses experienced at JPMorgan in 2012, we received a report from management on their understanding of what
occurred in this incident and an assessment of the risk management systems and controls in place over any similar trading activity at Barclays. After due consideration, the Committee was satisfied with management's assessment that appropriate
systems and controls are in place;
¡
We received a regular report on the progress of the enhancements that are being made to risk management systems and controls in our Investment
Bank business in the US. The Committee will continue to monitor progress in 2013;
¡
In view of continuing weak global economic conditions, we were updated on Barclays credit rating strategy and on the potential impact on Barclays
credit ratings should the UK's credit rating be downgraded. Having discussed and assessed the position, the Committee supported the recommended credit rating strategy and associated programme of engagement with ratings agencies;
¡
Each year the Committee reviews Tax Risk. In early 2012, HMRC issued a statement concerning the tax treatment of a repurchase of debt by
Barclays. In light of that announcement, in its discussion on Tax Risk the Committee focused on tax risk in Barclays Structured Capital Markets business and on the steps being taken to enhance Barclays compliance with both the letter and spirit of
its obligations under the HMRC Code of Practice. After discussion and challenge, the Committee was satisfied with the actions being taken by management and asked to be promptly advised should tax risk limits require further review; and
I  25
Corporate governance report
Accountability continued
Board Risk Committee Chairman's report continued
¡
We were updated on Barclays Leveraged Finance business, in particular, the performance of the portfolio
and the level of refinancing risk, which has reduced since the end of 2011. Having reviewed the status, the Committee was content with the actions being taken by management to monitor and mitigate refinancing risk.
Internal Control and Risk Management Framework
The Committee conducted its annual review of the Group's internal control and risk management framework (GICAF) to ensure
it remains fit for purpose and concluded that it remained so. More details on the GICAF and the Principal Risks Policy can be found in the Directors' Report on pages 30-32 and in the Risk management section on pages 273-303. During 2012, we
were updated on conduct risk and the potential areas of focus for the Conduct Business Unit of the FSA. This new focus on conduct risk is likely to have an impact on Barclays Principal Risks Policy and we will assess how conduct risk is reflected in
Barclays risk management framework.
The
Committee spent a significant amount of time on operational risk matters in 2012, including a specific in-depth briefing session on operational risk and the development of our operational risk management framework. During the year we discussed the
effectiveness of the operational risk control framework and whether Barclays control environment is effective relative to the size and complexity of the business. With input from Barclays Internal Audit, we subsequently looked in more detail at five
businesses, Absa, Barclays Africa, Investment Bank US, Wealth & Investment Management US and Continental Europe, to assess the general control environment and the resulting levels of operational risk in the context of any growth plans for
those businesses. We were satisfied that any growth plans for those businesses are appropriate to the control environment.
Due diligence
The Committee reviewed the due diligence process followed for the acquisition of certain portfolios from Edcon Proprietary Limited and ING Direct UK, to satisfy itself that the due diligence process
in each case was thorough. This included reviewing the impact of each transaction on Barclays risk profile and risk appetite. In both cases, the Committee concluded that the due diligence process had been thorough and that the size and the impact of
the acquisitions could be accommodated within the Group's agreed risk appetite.
Remuneration
The Committee provided input to the Board
Remuneration Committee on the risk metrics to be used to determine financial performance and reviewed the risk function's view of performance, which was used to inform remuneration decisions for 2012. The risk perspective took into account
specific matters, such as product mis-selling redress, the penalties relating to the industry-wide investigation into the setting of interbank offered rates and, at the Committee's request, internal control issues. The Remuneration Report on
page 39 includes more detail on how risk is taken into account in remuneration decisions.
Committee Effectiveness
As part of the annual Board Effectiveness Review, the
performance of the Committee is assessed. This year's review concluded that the Committee continues to operate effectively and there was a slight improvement in the overall score.
Priorities for 2013
I expect the Committee in 2013 to continue to focus on
monitoring the risk to Barclays business from the ongoing weak economic conditions in its main geographies. We will also maintain our focus on capital and liquidity, particularly in view of the implementation of CRD IV. The Committee will also seek
to understand and act upon any changes required to Barclays risk management framework that might arise as a consequence of the new regulatory regime in the UK.
David Booth
Chairman, Board Risk Committee
26  I
Board Citizenship Committee Report
"While retaining
its responsibility for oversight of Barclays citizenship strategy, the Committee in 2013 will focus on developing Barclays approach to conduct
risk."
Sir David Walker
Chairman, Board Citizenship
Committee
Committee composition, skills and experience
The Committee was established in August 2011 and during 2012 was responsible for the oversight of Barclays conduct with regard to its corporate and societal obligations and its reputation as a
responsible corporate citizen. The Committee was also responsible for:
¡
Reviewing and monitoring the effectiveness of Barclays citizenship strategy, including the management of significant reputational, social and environmental issues; and
¡
Ensuring the fulfilment of the Board's objective to protect and enhance the brand and reputation of Barclays and ensuring that Barclays is
Treating Customers Fairly (TCF).
From the end of January 2013, the
Committee was renamed the Board Conduct, Reputation and Operational Risk Committee. You can obtain the Committee's full terms of reference on the corporate governance section of Barclays website.
During 2012, the Committee comprised two non-executive Directors and the
Chairman, who chaired the Committee. Membership of the Committee is set out opposite, together with attendance at meetings in 2012. Sir David Walker joined the Committee on his appointment to the Board on 1 September 2012 and took over as
Chairman of the Committee on 1 November 2012. Tim Breedon joined the Committee with effect from 1 February 2013 and Diane de Saint Victor joined the Committee with effect from 1 March 2013.
Committee responsibilities and how they were discharged in
2012
The Committee met twice in 2012. The chart opposite shows how the Committee allocated its time at those meetings. During the
year, the Committee conducted the following business:
¡
Reviewed the citizenship disclosure in the 2011 Annual Report;
¡
Received an update on Barclays citizenship
strategy and discussed the five-year citizenship plan;
¡
Reviewed the plans for the 2012 Barclays
Citizenship Day;
¡
Reviewed the activities of the Global Investment Committee, which manages Barclays community investment
programme;
¡
Conducted in-depth reviews of regional citizenship activity in Barclays businesses in the UK, US and
Africa;
¡
Received updates on specific areas of focus such as supply chain management, human rights, complaints and
agricultural commodities trading;
¡
Reviewed and approved Barclays
reputational risk control framework and policy; and
¡
Received an update on Barclays TCF agenda
and discussed the progress made against objectives.
Committee Effectiveness
The performance of the Committee was reviewed as part of
the Board Effectiveness Review. The review concluded that the Committee had operated effectively, although it was recognised that it was in its first full year of operation and its role and responsibilities will become more defined in
future.
Priorities for
2013
With effect from 31 January 2013, the
Committee's remit was broadened to include conduct, reputation and operational risk and it was renamed the Board Conduct, Reputation and Operational Risk Committee. It will retain responsibility for oversight of Barclays citizenship strategy.
The Committee is expected to focus in 2013 on developing Barclays approach to conduct risk in the context of the UK regulator's new focus on conduct risk and outcomes for consumers.
I  27
Corporate governance report
Relations with Shareholders
Shareholder
type
Institutional
Shareholders
Barclays Investor
Relations is dedicated to managing long term relationships with institutional investors and sell-side analysts. A structured Investor Relations programme is in place to ensure regular communication with shareholders and access to the Group Chief
Executive and Group Finance Director as well as senior management from across the business.
Shareholder engagement is spread throughout the year, with particular focus around results periods, which provide the opportunity for regular dialogue with current and prospective investors.
Approximately half of our investor engagement is conducted by executive management, with the remainder led by Barclays Investor Relations.
In addition to the global programme of investor meetings, Barclays also participates regularly in investor conferences designed to provide access
to a wider audience. Barclays also hosts seminars for investors and analysts on business specific topics led by senior management. Relationships with sell-side analysts are maintained through regular dialogue with Investor Relations and formal
briefings with executive management.
Views expressed by
shareholders are communicated effectively to the Board. The Chairman and Senior Independent Director also meet regularly with Barclays larger shareholders to hear their views on corporate governance matters, including remuneration and Board
composition.
Debt
Investors
A dedicated Debt
Investor Relations team within Investor Relations was set up in the autumn of 2012, with the aim of proactively engaging with fixed income investors and credit analysts in a way that presents a single (equity and debt) face to the market. The team
has led numerous meetings, including supporting Treasury in the global marketing of the Contingent Capital Notes issuance in November 2012, and is the primary contact for credit rating agencies.
The Debt Investor Relations team has also launched a new debt focused section
in the Investor Relations section of Barclays website, which provides information on the Group's capital, funding and liquidity positions as well as credit ratings. During 2013, Debt Investor Relations will continue to work closely with
Treasury to deliver structured, targeted and disciplined debt investor engagement.
Private
Shareholders
Barclays has a
large private shareholder base and understands the need to treat all shareholders fairly, following industry best practice in terms of disclosure.
We recently re-consulted all of our private shareholders on how they would like to receive their shareholder information. We believe that
communicating electronically with our shareholders ensures that they receive regular, up to date information about Barclays directly to their inbox. For example, we email all Barclays e-view members with our quarterly financial results and dividend
information. They can also vote online for AGMs, view any transactions on their shareholding, instantly update their personal and bank details and receive an electronic dividend tax voucher. It is also beneficial for the environment and lowers costs
for Barclays. We therefore actively encourage private shareholders to join Barclays e-view. Shareholders can sign up to Barclays e-view at www.eviewsignup.co.uk. We also encourage our private shareholders to hold their shares in Barclays Sharestore,
where shares are held electronically in a cost-effective and secure environment.
We maintain a dedicated email address and Barclays Shareholder Helpline with our registrars so that our shareholders can easily contact them if they have any questions about their shareholding. In
order to ensure that the registrar provides the highest quality of service to our shareholders, we regularly monitor their operational performance via monthly meetings at which management information on transactions undertaken by the registrar are
discussed in detail, together with service level reports.
We are
aware that, sometimes, shareholders do not keep their personal details on the shareholder register up to date. We recently conducted a tracing process using our search agent, Prosearch, to reunite over 24,000 Barclays Sharestore members identified
by the registrar as having lost contact with us, with their shares and unclaimed dividends. As at 31 December 2012, we had returned £1.8m of unclaimed dividends to our shareholders.
A wide range of information for all our shareholders can be found on our
website Barclays.com. We ensure that all documents produced for investor events are provided on the Investor Relations section of our website.
Private shareholders can discuss their concerns with us by email: privateshareholderrelations@barclays.com or in writing to Shareholder Relations
at Barclays PLC, 1 Churchill Place, London E14 5HP.
28  I
Remuneration
Sir John Sunderland, who became Chairman of the Remuneration Committee in July 2012, reports on the Board Remuneration Committee's activities during 2012 in the remuneration report on pages
39-68.
Relations with Shareholders
Understanding the views of shareholders
Part of the Chairman's
responsibility is ensuring that there is effective communication with shareholders. The Chairman is in regular contact with institutional shareholders and reports back to the Board on any significant issues that are raised. The Group Chief
Executive, Group Finance Director and Senior Independent Director also had regular contact with shareholders during 2012 and the Chairman of the Board Remuneration Committee also held a series of meetings with key shareholders to discuss the
Group's remuneration structure and policy.
During 2012, the Board received the results of an investor audit, conducted by one of
Barclays investor relations advisers, which set out views gathered from interviews with a number of Barclays investors on Barclays strategy, priorities, businesses, capital, funding and liquidity and management. It also provided a view on the
outlook for stock market conditions. Directors receive a weekly briefing note from the Group Chief Executive, which includes share price and market information. Analyst notes are made available to Directors on a regular basis.
Engaging effectively with investors
Barclays understands the need to engage with its investors in a meaningful way and for such communication to be transparent to facilitate a mutual understanding of respective objectives. Interaction
with investors falls into four main areas: institutional shareholders, debt investors, private shareholders and the AGM.
General shareholder information can be found on Barclays website, Barclays.com/investor relations
AGM
The Board as a whole understands the importance of communicating effectively with shareholders and is committed to the constructive use of the AGM to meet with shareholders, hear their views and to
answer their questions. All Directors are required to attend the AGM. They all attended the 2012 AGM which was held on Friday, 27 April 2012. The Chairman as well as the Chairmen of the Board Committees were available to answer
shareholders' questions. In accordance with best practice, all resolutions were considered on a poll, which was conducted by the registrar and monitored by independent scrutineers. The results, along with proxy votes lodged prior to the
meeting, were made available on our website the same day. The votes cast at the meeting represented 60-67% of all the shares in issue and all resolutions were approved.
The 2013 AGM, will be held on Thursday, 25th April 2013 at the Royal Festival Hall in London. The Notice of AGM can be found in a separate document, which is sent out at least 20 working days
before the meeting. The Notice of AGM and the accompanying circular, which sets out a clear explanation of each resolution to be proposed at the meeting, can also be found at www.Barclays.com/AGM. The resolutions will be considered on a poll and the
results will be announced via the Regulatory News Service and made available on our website on the same day.
Shareholders unable to
attend the AGM are encouraged to vote in advance of the meeting via www.barclays.com/investor relations/vote. They may also submit questions to the Board by writing to Shareholder Relations at the address given above.
Sir David Walker
Chairman
5 March 2013
I  29
Directors' report
Profit and dividends
The loss for the financial year, after taxation, was £236m (2011: £3,951m profit). The final dividend for 2012 of 3.5p per share will be paid on 15 March 2013 to shareholders
whose names were on the Register of Members at the close of business on 22 February 2013. With the interim dividends totalling 1.0p per ordinary share, paid in June, September and December 2012, the total distribution for 2012 is 6.5p
(2011: 6.0p) per ordinary share. The interim and final dividends for 2012 amounted to £793m (2011: £728m).
Board of
Directors
The names of the current Directors of Barclays PLC, along with their biographical details, are set out on pages 35-37 and
are incorporated into this report by reference. Bob Diamond, Alison Carnwath and Marcus Agius left the Board with effect from 3 July 2012, 24 July 2012 and 31 October 2012 respectively. Sir David Walker, Antony Jenkins and Tim Breedon
joined the Board on 1 September 2012, 30 August 2012 and 1 November 2012 respectively. There were no other changes to Directors in 2012. Diane de Saint Victor was appointed as a Director with effect from 1 March 2013.
Appointment and retirement of Directors
The appointment and replacement of Directors is governed by the Company's Articles of Association (the Articles), the UK Corporate Governance Code (the Code), the Companies Act 2006 and related
legislation. The Articles may only be amended by a special resolution of the shareholders.
The Board has the power to appoint
additional Directors or to fill a casual vacancy amongst the Directors. Under the Articles, any such Director holds office only until the next AGM and may offer himself/ herself for re-election. The Articles also require that at each AGM at least
one-third (rounded down) of the Directors retire by rotation. The retiring Directors are eligible to stand for re-election. The Code recommends that all Directors of FTSE 350 companies should be subject to annual re-election, and all Directors will
stand for election or re-election at the 2013 AGM with the exception of Sir Andrew Likierman, who having served on the Board for nine years, will retire at the 2013 AGM and will not offer himself for re-election.
Directors' indemnities
The Company maintains Directors' and Officers' liability insurance which gives appropriate cover for any legal action brought against its
Directors. In addition, qualifying third party indemnity provisions (as defined by section 234 of the Companies Act 2006) were in force during the course of the financial year ended 31 December 2012 for the benefit of the then Directors and, at
the date of this report, are in force for the benefit of the Directors in relation to certain losses and liabilities which they may incur (or have incurred) in connection with their duties, powers or office.
Creditor payment policy
Barclays policy follows the Department for Business, Innovation & Skills' Prompt Payment Code, copies of which can be obtained from the Prompt Payment Code website at
www.promptpaymentcode.org.uk. The trade creditor payment days for Barclays Bank PLC for 2012 were 38 days (2011: 37 days
a
). This is an arithmetical calculation based on the
Companies Act regulations and does not necessarily reflect our practice, nor the experience of any individual creditor.
Note
a
The 2011 figure is restated as the figure reported in the 2011 Directors' Report did not include data from all business divisions.
30  I
Political donations
The Group did not give any money for political purposes in the UK or the rest of the EU nor did it make any political donations to political parties or other political organisations, or to any
independent election candidates, or incur any political expenditure during the year. Absa Group Limited, in which the Group has a majority stake, made donations totalling £185,666 in 2012 (2011: £224,158) in accordance with its policy of
making political donations to the major South African political parties as part of their Democracy Support Programme. The Group made no other political donations in 2012.
In accordance with the US Federal Election Campaign Act, Barclays provides administrative support to a federal Political Action Committee (PAC) in the USA funded by the voluntary political
contributions of eligible Barclays employees. The PAC is not controlled by Barclays and all decisions regarding the amounts and recipients of contributions are guided by a steering committee comprised of eligible contributors. Contributions to
political organisations reported by the PAC during the calendar year 2012 election cycle totalled $63,564 (2011 $43,436).
Charitable
donations
Barclays provides funding and support to over 8,500 charities, voluntary organisations and social enterprises ranging from
small local organisations, such as Bikeworks, which provides disadvantaged young people in London with training to help them develop key skills to find employment in the cycling industry, to international organisations such as CARE International.
The Group committed £32.1m in support of the community in the UK (2011: £30.3m), including charitable donations of £22.5m (2011: £22.6m).
Environment
In 2011 we launched the Barclays Climate Action Programme – a
four-year plan which focuses on addressing environmental issues where we believe we have the greatest potential to make a difference. The Programme focuses on managing our own carbon footprint and reducing our absolute carbon emissions, developing
products and services to help enable the transition to a low-carbon economy, and managing the risks of climate change to our operations, clients, customers and society at large. We invest in improving the energy efficiency of our operations and
offset the emissions remaining through the purchase of carbon credits. We also have a long standing commitment to managing the environmental and social risks associated with our lending practices, which is embedded into our Credit Risk processes. A
governance structure is in place to facilitate clear dialogue across the business and with suppliers around issues of potential environmental and social risk. More details may be found on our website at www.barclays.com/citizenship.
We are currently preparing for the forthcoming mandatory carbon reporting regulations coming into force in April 2013, requiring all UK companies
listed on the London Stock Exchange to disclose their global emissions in the Director's Report. We are awaiting the publication of the finalised requirements of the legislation by the UK Government but do not foresee any significant challenges
in adhering to the new regulation.
Essential contracts or arrangements
There are no persons with whom the Group has contractual or other arrangements that are considered essential to the business of the Group.
Contracts of significance
Barclays provided BlackRock, Inc. with customary
warranties and indemnities in connection with the sale of Barclays Global Investors (BGI) to BlackRock, Inc. in 2009. Barclays continued to provide indemnities in respect of certain of BGI's fully collateralised securities lending activities
until 30 November 2012 and will continue to provide support in respect of certain BGI cash funds until December 2013.
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 capital structure
The
Company has Ordinary Shares in issue. The Company's Articles also allow for the issuance of Sterling, US Dollar, Euro and Yen preference shares (preference shares). No preference shares have been issued as at 28 February 2013 (the latest
practicable date for inclusion in this report). Ordinary shares therefore represent 100% of the total issued share capital as at 31 December 2012 and at 28 February 2013. Details of the movement in Ordinary Share capital during the year
can be found in Note 32 on page 250.
On 31 October 2008, Barclays PLC issued, in conjunction with a simultaneous issue of Reserve
Capital Instruments issued by Barclays Bank PLC, warrants (the Warrants) to subscribe for up to 1,516.9 million new Ordinary Shares at a price of £1.97775. As at 31 December 2012 there were unexercised Warrants to subscribe for
379.2 million Ordinary Shares. On 13 February 2013 Barclays PLC and Barclays Bank PLC announced that they had entered into an agreement with Deutsche Bank AG and Goldman Sachs International (the Warrantholders) pursuant to which the
Warrantholders had agreed to exercise in aggregate 379.2m outstanding Warrants. As a consequence of this agreement no other Warrants remain outstanding. Details of changes to the share capital structure which have taken place since the year end are
detailed in Note 46 Events After the Balance Sheet Date.
I  31
Directors' report continued
Exercisability of rights under an employee share scheme
Employee Benefit Trusts (EBTs) operate in connection with certain of the Group's Employee Share Plans (Plans). The trustees of the EBTs may
exercise all rights attached to the shares in accordance with their fiduciary duties other than as specifically restricted in the relevant Plan governing documents. The trustees of the EBTs have informed the Company that their normal policy is to
abstain from voting in respect of the Barclays shares held in trust. The trustees of the Global Sharepurchase EBT and UK Sharepurchase EBTs may vote in respect of Barclays shares held in the EBTs, but only as instructed by participants in those
Plans in respect of their Parternership shares and (when vested) Matching and Dividend shares. The trustees will not otherwise vote in respect of shares held in the Sharepurchase EBTs.
Special rights
There are no persons holding securities that carry special
rights with regard to the control of the Company.
Substantial shareholders
a
Substantial shareholders do not have different voting rights
from those of other shareholders. Information provided to the Company by substantial shareholders pursuant to the Financial Services Authority's (FSA) Disclosure and Transparency Rules (DTR) is published via a Regulatory Information Service and
is available on the Company's website. As at 31 December 2012, the Company had been notified under Rule 5 of the DTR of the following holdings of voting rights in its shares.
Person interested
Number of
Barclays Shares
% of total voting
rights attaching to
issued share capital
b
His Highness Sheikh Mansour
Bin Zayed Al Nahyan
c
858,546,492
7.02
Qatar Holding LLC
d
813,964,552
6.65
BlackRock, Inc.
e
805,969,166
7.06
Legal & General Group plc
f
480,805,132
3.99
The Capital Group Companies
Inc
g
371,944,325
3.04
Notes
a
Significant shareholders for the last 3 years are shown on page 319.
b
The percentage of voting rights detailed above was calculated at the time of the relevant disclosures made in accordance with Rule 5 of the DTR.
c
Total shown comprises (1) 758,437,618 shares that are legally owned by PCP Gulf Invest 3 Limited, which is wholly owned by Nexus Capital Investing Limited
(NCIL). NCIL is in turn wholly owned by Abu Dhabi International United Investments LLC, which is in turn wholly owned by His Highness Sheikh Mansour Bin Zayed Al Nahyan (HHSM); and (2) 100,108,874 cash- settled options referencing ordinary
shares that are legally owned by Yas Capital Limited (YCL), which is, in turn, wholly owned by HHSM. YCL has no right to acquire or exercise any voting rights in Barclays PLC. Following an increase during February 2013 in issued share capital to
which voting rights are attached, the Company was notified on 4 March 2013 that, in aggregate, HHSM is indirectly interested in 783,509,699 ordinary shares, comprising 758,437,618 shares held by PCP Gulf Invest 3 Limited and 25,072,081
cash-settled options referencing ordinary shares held by YCL, representing 6.09% of total voting rights attaching to issued share capital.
d
Qatar Holding LLC is wholly-owned by Qatar Investment Authority.
e
Total shown includes 8,003,236 contracts for difference to which voting rights are attached.
f
Legal & General Group plc's interest is held by Legal & General Assurance (Pensions Management) Limited.
g
The Capital Group Companies Inc (CG) holds its shares via CG management companies and funds. On 30 January 2013, the Company was notified that CG was
interested in 492,653,250 shares, representing 4.02% of total voting rights attaching to issued share capital.
Powers of the Directors to issue or buy back the Company's shares
The powers of the Directors are determined by the Companies Act 2006 and the Company's Articles. The Directors are authorised to issue and
allot shares, and to repurchase shares subject to annual shareholder approval at the AGM. Such authorities were granted by shareholders at the 2012 AGM. It will be proposed at the 2013 AGM that the Directors be granted new authorities to allot and
buy-back shares.
Repurchase of shares
The company did not repurchase any of its Ordinary Shares during 2012 (2011: none). As at 28 February 2013, the Company had an unexpired authority to repurchase Ordinary Shares up to a maximum
of 1,220,174,570 Ordinary Shares.
Change of control
Warrants issued by Barclays PLC provided that if there is a change of control of Barclays PLC following a takeover bid, Barclays PLC must (so far as legally possible) use all reasonable endeavours
to cause the corporation which then controls Barclays PLC to execute a deed poll providing that holders of the Warrants shall have the right (during the period in which the Warrants are exercisable) to exercise the Warrants into the class and amount
of shares and other securities and property receivable upon such a takeover by the holders of the number of Ordinary Shares as would have been issued on exercise of the Warrants had such Warrants been exercised immediately prior to the completion of
such takeover. The Warrants contained provisions for the adjustment of the gross number of Ordinary Shares in the event of the occurrence of certain dilutive events including, amongst others, extraordinary dividends, bonus issues, alterations to the
nominal value of Ordinary Shares and rights issues. All outstanding Warrants were excercised on 13 February 2013.
There are no
other significant agreements to which the Company is a party that are affected by a change of control of the Company following a takeover bid. There are no agreements between the Company and its Directors or employees providing for compensation for
loss of office or employment that occurs because of a takeover bid.
Risk management and internal control
The Directors have responsibility for ensuring that management maintain an effective system of risk management and internal control and for
reviewing its effectiveness. Such a system is designed to manage rather than eliminate the risk of failure to achieve business objectives and can only provide reasonable and not absolute assurance against material misstatement or loss.
Barclays is committed to operating within a strong system of internal control that enables business to be transacted and risk taken without
exposing itself to unacceptable potential losses or reputational damage. The Group Internal Control and Assurance Framework (GICAF) is the overarching framework that sets out Barclays approach to internal governance. It establishes the mechanisms
and processes by which the Board directs the organisation, through setting the tone and expectations from the top, delegating its authority and monitoring compliance. The purpose of the GICAF is to identify and set minimum requirements in respect of
the main risks to achieving the Group's strategic objectives and to provide reasonable assurance that internal controls are effective. The key elements of the Group's system of internal control, which is aligned to the recommendations of
The Committee of Sponsoring Organizations of the Treadway Commission (COSO), are set out in the risk control frameworks relating to each of the Group's Key Risks and in the Group operational risk framework. As well as incorporating our internal
requirements, these reflect material Group-wide legal and regulatory requirements relating to internal control and assurance. The GICAF is reviewed and approved on behalf of the Group Chief Executive by the Group Governance and Control Committee at
least annually. The Board Risk Committee also reviews the GICAF annually.
32  I
Effectiveness of internal controls
The Directors review the effectiveness of the system of internal control semi-annually. An internal control compliance certification process is conducted throughout the Group in support of this
review. Key controls are also assessed on a regular basis for both design and operating effectiveness. Issues arising out of business division risk and control assessments are considered to identify pervasive themes. Where appropriate, individually
significant issues or those affecting more than one business division may be categorised as having Group level significance and are reported to the Board Audit Committee via the Group Governance and Control Committee. The Board Audit Committee
monitors resolution of any identified control issues of Group level significance through to a satisfactory conclusion. In addition, regular reports are made to the Board Audit Committee by management, internal audit and the finance, compliance and
legal functions covering in particular financial controls, compliance and other operational controls.
Risk management and internal
control framework
Processes are in place for identifying, evaluating and managing the significant risks facing the Group in accordance
with the guidance 'Internal Control: Revised Guidance for Directors on the UK Corporate Governance Code' published by the Financial Reporting Council (the Turnbull Guidance). These processes include an attestation procedure which requires
all significant processes and identified material risks to be assessed and recorded, together with the related key controls by the Heads of Divisions, Businesses and Functions. As part of this, specific consideration is given to relevant
information, including as a minimum, legal entities; any open control issues; any outstanding internal and external audit findings; regulatory reviews and any outstanding regulatory compliance matters; compliance with Group level policies; records
of operational incidents and loss/risk events; experience of all types of fraud; and any other material control-related matters that have been raised either by management or via independent/external review. The status of any remediation in
connection with these matters is also considered. The results of this attestation procedure were reported to the Board Audit Committee in February 2013, when it was noted that although several of the Group Key Risk Owner attestations received refer
to outstanding control design/operating effectiveness issues, these had all been assessed against risk appetite and none of these had prevented the Heads of Divisions, Businesses or Functions from providing a Turnbull statement. All these issues had
identified remediation tasks and attributed timescales for resolution (or timescales being determined).
The Board regularly reviews
these processes through its principal Board Committees. Regular risk reports are made to the Board covering risks of Group significance including credit risk, market risk, funding risk, operational risk and legal risk. The Board Risk Committee
receives reports covering the Principal Risks as well as reports on risk measurement methodologies and risk appetite. Further details of risk management procedures are given in the Risk management section on pages 273-303.
As discussed in the Risk management section of the Annual Report a number of matters were public during the course of 2012 which related to
failings in the design and/or operation of certain controls other than those over financial reporting. Whilst the matters were disclosed in 2012, the failings giving rise to those issues occurred in prior periods. Management has reviewed the
specific control processes impacted and concluded that these are now designed and operating effectively. Areas of ongoing control remediation are not considered to constitute material control failings.
Controls over financial reporting
A framework of disclosure controls and procedures is in place to support the approval of the Group's financial statements. The Legal and Technical Review Committee is responsible for reviewing
the Group's financial reports and disclosures to ensure that they have been subject to adequate verification and comply with legal and technical requirements, and reports its conclusions to the Disclosure Committee. The Disclosure Committee,
which is chaired by the Group Finance Director, considers the content, accuracy and tone of the disclosures, reporting its conclusions to the Group Executive Committee and the Board Audit Committee, both of which review its conclusions and provide
further challenge. Finally, the Board reviews and approves results announcements and the Annual Report for publication and ensures that appropriate disclosures have been made. This governance process is in place to ensure both management and the
Board are given sufficient opportunity to review and challenge the Group's financial statements and other significant disclosures before they are made public. It also provides assurance for the Group Chief Executive and Group Finance Director
when providing certifications as required under the Sarbanes-Oxley Act 2002 and recommended by the Turnbull Guidance.
Throughout the
year ended 31 December 2012, and to date, the Group has operated a system of risk management and internal control which provides reasonable assurance of effective and efficient operations covering all controls, including financial and
operational controls and compliance with laws and regulations.
Management's report on internal control over financial reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over
financial reporting is a process designed under the supervision of the principal executive and principal financial officers to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements
for external reporting purposes in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and the International Accounting Standards Board (IASB).
Internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and
dispositions of assets; provide reasonable assurances that transactions are recorded as necessary to permit preparation of financial statements in accordance with IFRS and that receipts and expenditures are being made only in accordance with
authorisations of management and the respective Directors; and provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use or disposition of assets that could have a material effect on the financial
statements.
Internal control systems, no matter how well designed, have inherent limitations and may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that internal controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
I  33
Directors' report continued
Management has assessed the effectiveness of Barclays PLC Group's and Barclays Bank PLC
Group's internal control over financial reporting as of 31 December 2012. In making its assessment, management has utilised the criteria set forth by COSO. Management concluded that, based on its assessment, the internal control over
financial reporting was effective as of 31 December 2012. Our independent registered public accounting firm has issued a report on the Group's internal control over financial reporting, which is set out on page 191.
The system of internal financial and operational controls is also subject to regulatory oversight in the UK and overseas. Further information on
supervision by the financial services regulators is provided under Supervision and Regulation in the Risk review section on pages 154-160.
Changes in internal control over financial reporting
There have been no
changes in the Group's internal control over financial reporting that occurred during the period covered by this report which have materially affected or are reasonably likely to materially affect the Group's internal control over
financial reporting.
Going concern
The Group's business activities and financial position, the factors likely to affect its future development and performance, and its objectives and policies in managing the financial risk to
which it is exposed and its capital are discussed in the Business Review and Risk Management section.
The Directors have assessed, in
the light of current and anticipated economic conditions, the Group's ability to continue as a going concern. The Directors confirm they are satisfied that the Company and the Group have adequate resources to continue in business for the
foreseeable future. For this reason, they continue to adopt the 'going concern' basis for preparing accounts.
Disclosure
of information to auditor
Each Director confirms that, so far as he/she is aware, there is no relevant audit information of which
the Company's auditors are unaware and that each Director has taken all the steps that he/she ought to have taken as a Director to make himself/herself aware of any relevant audit information and to establish that the Company's auditors
are aware of that information.
Directors' Responsibilities
The following statement, which should be read in conjunction with the report of the independent registered public accounting firm set out on page 191, is made with a view to distinguishing for
shareholders the respective responsibilities of the Directors and of the auditors in relation to the accounts.
The Directors are
required by the Companies Act 2006 to prepare accounts for each financial year and, with regards to Group accounts, in accordance with Article 4 of the IAS Regulation. The Directors have prepared individual accounts in accordance with IFRS as
adopted by the EU. The accounts are required by law and IFRS to present fairly the financial position of the Company and the Group and the performance for that period. The Companies Act 2006 provides, in relation to such accounts, that references to
accounts giving a true and fair view are references to fair presentation.
The Directors consider that, in preparing the accounts on pages 192-272, and the additional
information contained on pages 80-160, the Group has used appropriate accounting policies, supported by reasonable judgements and estimates, and that all accounting standards which they consider to be applicable have been followed.
Having taken all the matters considered by the Board and brought to the attention of the Board during the year into account, the Directors are
satisfied that the annual report and accounts, taken as a whole, is fair, balanced and understandable, and provides the information necessary for shareholders to assess the Company's performance, business and model.
The Directors have responsibility for ensuring that the Company and the Group keep accounting records which disclose with reasonable accuracy the
financial position of the Company and the Group and which enable them to ensure that the accounts comply with the Companies Act 2006.
The Directors are responsible for the maintenance and integrity of the Company's website. Legislation in the UK governing the preparation and
dissemination of financial statements may differ from legislation in other jurisdictions.
The Directors have general responsibility for
taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.
The Directors confirm to the best of their knowledge that:
(a)
The financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial
position and profit or loss of Barclays PLC and the undertakings included in the consolidation taken as a whole; and
(b)
The management report, which is incorporated into the Directors' Report on pages 30-34, includes a fair review of the development and performance of the
business and the position of Barclays PLC and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.
By order of the Board
Lawrence Dickinson
Company Secretary
5 March 2013
Barclays PLC
Registered in
England, Company No. 48839
34  I
Board of Directors
1. Sir David Walker (73)
Chairman
Skills and experience
Sir
David joined the Board as a non-executive Director on 1 September 2012, and was appointed as Chairman on 1 November 2012. He began his career in 1961 with Her Majesty's Treasury, where, with a period on secondment to the International Monetary
Fund in Washington (1969-1973), he served until 1977. From 1977-1993, Sir David held several key positions at the Bank of England where, in 1981, he became one of four Executive Directors of the Bank. From 1988-92 he was Chairman of the Securities
& Investment Board and, ex officio, a nominated member of the Council of Lloyd's over the same period. He was a non-executive member of the Court of the Bank of England from 1988-1993. Sir David was a non-executive board member of the
former CEGB and subsequently of National Power plc between 1984 and 1994. He was formerly Chairman of Reuters Venture Capital, Vice-Chairman of the Legal and General Group and was Chairman of the London Investment Bankers' Association for four
years until June 2004. Sir David joined Morgan Stanley in 1994, where he was Chairman and CEO, Morgan Stanley International, and subsequently Chairman. At the end of 2005, he retired as Chairman but remained a Senior Advisor until the end of August
2012.
Since 2007 Sir David has completed two reports and made
recommendations in respect of the private equity industry and corporate governance at financial institutions. He also co-led the independent review of the report that the FSA produced into the failure of Royal Bank of Scotland and was a member of
the four-person Committee chaired by Lord Woolf (former Lord Chief Justice) into ethical business conduct in BAE Systems plc, which reported in May 2008.
Other principal external appointments
Sir David has been a member of the Group of Thirty (G30) since 1993: he is a trustee of the Group and was Treasurer from 1997-2004. He is also a trustee of the Cicely Saunders Foundation and was
Chairman of the Business Leaders' Group of the East End charity Community Links from 1995-2011.
Committee membership
Member of the Board Remuneration Committee, the Board
Corporate Governance & Nominations Committee and the Board Conduct, Reputation and Operational Risk Committee since 1 September 2012; Chairman of the Board Corporate Governance and Nominations Committee and Board Conduct, Reputation and
Operational Risk Committee since 1 November 2012; Chairman of the Board Enterprise Wide Risk Committee since its formation in January 2013.
I  35
Board of Directors continued
2. Antony Jenkins (51)
Group Chief Executive; Executive Director
Skills and experience
Antony was appointed Group Chief Executive on 30 August 2012, having previously been Chief Executive of Barclays Retail and Business Banking
business since November 2009. He started his career at Barclays in 1983, where he completed the Barclays Management Development Programme before going on to hold various roles in retail and corporate banking. He moved to Citigroup in 1989, working
in both London and New York. In January 2006, he rejoined Barclays as Chief Executive of Barclaycard, where he led a revival in the fortunes of the business. He joined the Barclays Executive Committee in November 2009.
Other principal external appointments
Member of the Board of Directors of the Institute of International Finance from February 2013. Between February 2009 and February 2013, Antony represented Barclays as a Non-executive Director on the
Board of Absa, the Group's South African banking subsidiary. He was also on the Board of Visa Europe Ltd between October 2008 and December 2011.
Committee membership
Chairman of the Group Executive Committee
3. David Booth (58)
Non-executive Director
Skills
and experience
David joined the Board in May 2007 as a non-executive Director. David has extensive banking industry knowledge and
experience, having previously been employed by Morgan Stanley from 1982 to 1992, and again from 1995 to 1997. David held various key positions within the company, including Head of Government Bond Trading, Head of Mortgage Trading, Sales and Finance
and Head of Global Operations and Technology. Having retired from the Management Committee of Morgan Stanley in 1997, David now manages his own venture capital investments.
Other principal external appointments
President of East Ferry Investors, Inc.
Committee membership
Chairman of the Board Financial Risk Committee since January 2010 (member since January 2008); Member of Board Corporate Governance and Nominations Committee since January 2010; Member of the Board
Remuneration Committee since July 2012; Member of the Board Enterprise Wide Risk Committee since its formation in January 2013.
4. Tim Breedon (55)
Non-executive Director
Skills and experience
Tim was appointed to the Board as a non-executive Director with effect from 1 November 2012. He was Group Chief Executive of Legal &
General Group plc (L&G), until June 2012. Tim joined L&G in 1987, holding a number of roles before joining the board as Group Director (Investments) in 2002 and becoming Group Chief Executive in 2006. He remained an adviser to L&G,
primarily with responsibilities in connection with Solvency II, until 31 December 2012.
Other principal external appointments
Tim served as Chairman of the Association of British Insurers (ABI) between July 2010 and July 2012, having been a director since
2007. He was also chairman of the UK Government's non-bank lending taskforce, an industry-led taskforce that looked at the structural and behavioural barriers to the development of alternative debt markets in the UK, reporting its conclusions
and recommendations in March 2012. Tim was a Director of the Financial Reporting Council from 2004 to 2007. He also served as a Director on the Board of the Investment Management Association between 2004 and 2005. Non-executive Director at the
Ministry of Justice since December 2012.
Committee membership
Member of the Board Financial Risk Committee and the Board Remuneration Committee with effect from 1 December 2012; Member of the Board Conduct, Reputation and Operational Risk Committee with
effect from 1 February 2013; Member of the Board Audit Committee with effect from 1 March 2013.
5. Fulvio Conti (65)
Non-executive Director
Skills and experience
Fulvio joined the Board in April 2006 as a non-executive
Director. Fulvio has significant financial and business experience from a career spanning over 35 years, and is currently CEO and General Manager of Enel SpA, the Italian energy company, where he was previously Chief Financial Officer from 1999 to
2005. During his career, Fulvio held the role of General Manager and CFO of Telecom Italia SpA from 1996-1998 and CFO for various private and government owned entities in Italy, was in charge of finance at Montedison-Compart, and was CFO of
Montecatini. He has also held positions in finance and operations in various affiliates of Mobil Oil Corporation in Italy and Europe, where he spent his initial career spanning over 20 years.
Other principal external appointments
Director of ENDESA SA since June 2009;
Director of AON PLC since January 2008; Director of the Italian Institute of Technology since October 2011; President of Eurelectric since June 2011; Independent Director of RCS MediaGroup S.p.A. since April 2012 and Vice President of Confindustria
since June 2012.
Committee membership
Member of the Board Audit Committee since September 2006.
6. Simon Fraser (53)
Non-executive Director
Skills and experience
Simon joined the Board in March 2009 as a non-executive Director. He has extensive experience of the fund management industry, having started his
career at Fidelity International where he spent 27 years. During this time, Simon was President of the Investment Solutions Group and President of the Retirement Institute. He held a number of other positions during his time at Fidelity
International, including President, European & UK Institutional Business, Global Chief Investment Officer, Chief Investment Officer for Asia Pacific and Chief Investment Officer of the European Investment Group.
Other principal external appointments
Director of Fidelity European Values PLC since July 2002; Director of Fidelity Japanese Values PLC since May 2000; Chairman of The Merchants Trust PLC since May 2010; Chairman of Foreign &
Colonial Investment Trust PLC since May 2010; Non-executive Director of Ashmore Group Plc since February 2012.
Committee membership
Member of the Board Audit Committee since May 2009; Member of the Board Remuneration Committee since May 2009.
7. Reuben Jeffery III (59)
Non-executive Director
Skills
and experience
Reuben joined the Board in July 2009 as a non-executive Director. Reuben has been CEO of Rockefeller & Co.,
Inc. since 2010 and has a broad range of banking and government experience. He previously served in the US government as Under Secretary of State for Economic, Energy and Agricultural Affairs (2007-2009), as Chairman of the Commodity Futures Trading
Commission (2005-2007); and as a Special assistant to the President on the staff of the National Security Council (2004-2005). Previous to his government service, Reuben spent eighteen years at Goldman, Sachs & Co. (1983-2001) where he was
managing partner of Goldman Sachs in Paris (1997-2001) and led the firm's European Financial Institutions Group in London (1992-1997). Prior to joining Goldman Sachs, Reuben was a corporate attorney with Davis Polk & Wardwell.
Other principal external appointments
Member of the International Advisory Council of the China Securities Regulatory Commission; Member of the Advisory Board of TowerBrook Capital Partners LP; Member of the Board of Directors of the
Financial Services Volunteer Corps.
Committee membership
Member of the Board Financial Risk Committee since January 2010.
36  I
8. Chris Lucas (52)
Group Finance Director; Executive Director
Skills and experience
Chris was appointed Group Finance Director and became a member of the Executive Committee in April 2007. He is responsible for a number of Group
functions including Finance, Investor Relations, Treasury, Tax, Corporate Development and Corporate Secretariat. Chris joined Barclays from PricewaterhouseCoopers LLP, where he was UK Head of Financial Services and Global Head of Banking and Capital
Markets. Chris has an extensive finance and accounting background, having spent most of his career working across financial services, including three years in New York as Head of the US Banking Audit Practice for Barclays for the 1999-2004 financial
years and subsequently held similar roles for other global financial services organisations. Chris has announced that he has decided to retire from the Company and has agreed to remain in his role until a successor has been appointed and an
appropriate handover has been completed. It is expected that this process will take a considerable time to complete.
Other principal
external appointments
None held.
9. Sir Andrew Likierman (69)
Non-executive Director
Skills and experience:
Sir
Andrew joined the Board in September 2004 as a non-executive Director. He has wide ranging experience within both public and private sectors and academia, and is currently Dean of the London Business School and Chairman of the National Audit Office.
Sir Andrew has held a number of high-profile roles, including 10 years spent as Managing Director, Financial Management, Reporting and Audit and Head of the Government Accountancy Service at HM Treasury. Sir Andrew also has a wealth of non-executive
experience that includes serving as a non-executive Director of the Bank of England. In his professional capacity, Andrew has held the presidency of the Chartered Institute of Management Accountants, served as a member of the Financial Reporting
Council for several years and was a member of the "Cadbury Committee" on UK Corporate Governance. Sir Andrew will retire from the Board at the 2013 AGM, having completed nine year's service on the Board this year.
Other principal external appointments:
Trustee of the Institute for Government since September 2008; Chairman of
Applied
Intellectual Capital Inc. (2006-2008); Non-executive Director of the Bank of England (2004-2008); Non-executive Director and Vice-Chairman of the Tavistock and Portman NHS Trust (2004-2008).
Committee membership:
Member of the Board Audit Committee since September
2004; Member of the Board Financial Risk Committee since September 2004.
10. Dambisa Moyo (44)
Non-executive Director
Skills and experience:
Dambisa joined the Board in May 2010 as a non-executive Director. She is an international economist and commentator on the global economy, with a
background in financial services. Dambisa worked for the World Bank from 1993 to 1995. After completing a PhD in Economics, she worked for Goldman Sachs for eight years until November 2008 in the debt capital markets, hedge funds coverage and global
macroeconomics teams.
Other principal external appointments:
Non-executive Director of SABMiller PLC since June 2009; Non-executive Director of Barrick Gold Corporation since April 2011; Non-Executive Director of Lundin Petroleum AB (publ) until May 2012.
Committee membership:
Member of the Board Financial Risk Committee since 2010; Member of the Board Conduct, Reputation and Operational Risk Committee since August 2011.
11. Sir Michael Rake (65)
Deputy Chairman and Senior Independent Director
Skills and experience:
Sir Michael joined the Board in January 2008 as a
non-executive Director, and was appointed Senior Independent Director in October 2011 and Deputy Chairman in July 2012. Sir Michael has significant non-executive experience, both as a chairman and board member of listed companies. With over 30 years
spent with KPMG, Sir Michael has substantial financial and commercial experience gained in Continental Europe and the Middle East. He was Senior Partner of the UK firm from 1998-2002 and Chairman of KPMG International from 2002-2007.
Other principal external appointments:
Chairman of BT Group plc since 2007; Chairman of easyjet Plc since January 2010 (Deputy Chairman June 2009-December 2009); Director of the Financial Reporting Council (2007-2011); Director of the
McGraw-Hill Companies since 2007; Chairman of the UK Commission for Employment and Skills (2007-2010); Chairman of Business in the Community (2004-2007).
Committee membership:
Chairman of the Board Audit Committee since March 2009
(member since January 2008); Member of the Board Financial Risk Committee since May 2009; Member of Board Corporate Governance and Nominations Committee since May 2009; Member of the Board Enterprise Wide Risk Committee since its formation in
January 2013.
12. Sir John Sunderland (67)
Non-executive Director
Skills and experience:
Sir John joined the Board in June 2005 as a non-executive Director. He has extensive business and Board level experience, having spent forty years
with Cadbury Schweppes PLC, where he became Chief Executive in 1996 and subsequently Chairman in 2003. Sir John has significant experience as a Director of UK listed companies, and has also held a number of similar positions in trade and
professional bodies, including the Confederation of British Industry and the Chartered Management Institute.
Other principal
external appointments:
Chairman of Merlin Entertainments Limited since December 2009; Director of the Financial Reporting Council
from 2004 to 2011; Adviser to CVC Capital Partners; Association Member of BUPA; Governor of Reading University Council; Chancellor of Aston University; non-executive Director of AFC Energy plc; Deputy President of the Chartered Management Institute
until 2009 (President 2007-2008); Deputy President of the CBI until June 2008 (former member and President).
Committee membership:
Member of the Board Remuneration Committee in 2005 (Chairman since July 2012); Member of the Board Corporate Governance and
Nominations Committee since 2006, Member of the Board Conduct, Reputation and Operational Risk Committee since August 2011; Member of the Board Enterprise Wide Risk Committee since its formation in January 2013.
13. Diane de Saint Victor (58)
Non-executive Director
Skills and experience:
Diane was appointed as a non-executive Director with effect from 1 March 2013. She is currently General Counsel and Company Secretary and a
member of the Group Executive Committee of ABB Limited (ABB), the publicly listed international power and automation technologies company based in Switzerland, where her responsibilities include Head of Legal and Integrity Group. She was formerly
Senior Vice President and General Counsel of EADS, the European aerospace and defence company.
Other principal external
appointments:
None held
Committee Membership:
Member of the Board Conduct, Reputation and Operational
risk Committee with effect from 1 March 2013.
I  37
People
Throughout the challenges faced by Barclays during 2012 our colleagues have showed tremendous
resilience and resolve in the face of external criticism and uncertainty. Colleagues continue to rise to these challenges and embrace ways of working that are aligned to the new values and behaviours. They welcome the Transform Programme and the
chance to become the 'Go-To' bank.
We recognise that it is our colleagues who will implement our plans to deliver the
'Go-To' bank. By living our values every day they will make Barclays the bank we want it to be, a place where people want to join and a place where colleagues want to stay and develop their careers.
Successful employment relationships are built on mutual benefit and trust, and a more engaged workforce is always a more productive one. We build
trust through regular two-way communications, both informally, and through our Employee Opinion Surveys. These help us understand our colleagues' views and concerns, and enable us to take their views into account as we deliver the
'Go-To' ambition.
The 2012 Employee Opinion Survey was completed by 84% of our colleagues in advance of the announcement of
the penalties in respect of LIBOR and EURIBOR rates. For the first time, we asked the same core set of questions across all our divisions, which will allow us to measure our progress going forward. These include whether our people feel proud to work
for Barclays, would recommend it as a place to work, and whether they believe in the goals and objectives of the company. Collectively, these questions allow us to understand the degree to which employees are engaged with the company. The overall
score for engagement was 73%, which is broadly in-line with the global benchmarks. The continuation of regular and open dialogue between the Group Chief Executive and the Executive Committee and colleagues, in events such as regular global Town
Halls, will be important in ensuring colleagues are well informed, understand the bank's objectives and remain engaged and connected with the future of Barclays.
Our 'Partnership' approach to industrial relations where we have maintained regular and constructive dialogue with more than 30 unions, works councils and staff associations across the
globe, plays a key role in building and maintaining trust with our colleagues. Where we have had to restructure our business and this has resulted in job losses, we have worked closely with employee representatives to avoid compulsory redundancies
where possible, ensuring colleagues leaving Barclays have been supported and treated with respect.
Barclays colleagues remain focused
on serving customers and clients as reflected in our 2012 business results. This focus is supported by a distinctive culture underpinned by a common purpose, and clearly articulated set of values and behaviours. We believe that leadership behaviour
drives culture, which in turn impacts all aspects of organisational performance. A group of Barclays 'Values Leaders' from all businesses and levels will deliver Barclays Purpose and Values training to all employees. In addition a
group-wide, standard and assured induction will be designed and implemented to ensure our colleagues will understand and be engaged in 'who we are' and 'how we work together'.
We will assess business unit and individual performance against our goals through a balanced scorecard for the bank. This will measure not just
what we deliver, but also how we do business, our impact as a company, and adherence to our values.
Our People processes, specifically
those linked to Performance Management, Reward, Talent (including promotions and mobility), Leadership and Learning are subject to increased focus and, where appropriate, standardisation, as we devise clear strategies for each to support the
Transform Programme and strongly reflect the Barclays Values and Behaviours. We will continue to base variable remuneration on individuals' performance ratings and the performance of their business. We will also continue to encourage our people
to be involved and to share in our success by regularly inviting them to participate in our 'all
employee' share plans. Further details of our approach to remuneration are included in the Remuneration Report on pages 39-68.
We have established a global Diversity and Inclusion strategy to create an environment that ensures we treat people fairly and understand how to let people from all backgrounds feel able to
contribute to Barclays.
We have clear objectives to: increase representation and decrease turnover of under-represented populations at
senior levels; maintain a positive climate of inclusion and engagement; and increase external recognition as a diverse and inclusive organisation. We have a wide range of initiatives in place to achieve our mission, including training for all
employees, workplace and working practice adjustments for persons with disabilities, and identification of high potential women with relevant programmes to support their career development and retention.
We are proud that many of our initiatives have received external recognition around the world. Examples of this external recognition include being
ranked second in the UK Business Disability Forum benchmark and our Cultural Diversity Network being awarded Network of the Year by Race for Opportunity. We recognise there is more to be accomplished and will focus on the following priorities for
2013 and beyond:
¡
Full scale deployment of our Unconscious Bias programme to our global Managing Director population;
¡
Continued momentum towards our 2015 Board-level female representation target of 25%; and
¡
Identifying opportunities to make lives easier for diverse customers, following the success of initiatives such as Talking ATMs in 2012.
We continue to provide a range of opportunities and tailored training programmes for graduates – recruiting a
total of 1,100 graduates during 2012 onto our global graduate programmes. We also continued to play an active role in addressing societal challenges around employability in 2012. For instance, our innovative Apprenticeship Programme, which seeks to
contribute to addressing the problem of youth unemployment in the UK, has recently recruited its 500th apprentice. We are committed to recruiting a total of 1,000 apprentices by the middle of 2013. The Big Barclays Apprentice Conversation was an
event that provided our apprentices the opportunity to meet and speak with senior leaders, including the Executive Committee and Antony Jenkins. Providing this two-way exchange of ideas and views will help us tailor our programme for future years
and provided a valuable insight into the drivers and motivations of an important talent pool and customer base.
FTE by region
2012
2011
2010
UK
55,300
56,100
58,100
Africa & Middle East
45,200
47,900
50,400
Continental Europe
11,100
11,600
13,600
Americas
11,100
10,900
11,500
Asia Pacific
16,500
14,600
13,900
Total
139,200
141,100
147,500
Global employment statistics
%
38  I
Remuneration report
Statement from the Chairman of the
Board Remuneration Committee
Current Remuneration
Committee members
Chairman
Members
Sir John Sunderland
Sir David Walker
Simon Fraser
David Booth
Tim Breedon
2012 Remuneration
¡
While underlying financial performance has significantly improved, we have materially reduced remuneration. Variable remuneration has been reduced overall by 16% and fixed
remuneration by 7% year on year.
¡
Remuneration as a proportion of adjusted profit before tax and adjusted net operating income is down significantly, as are average individual bonus levels. We have made
substantial reductions in remuneration, including clawing back £300m of unvested deferred and long term incentive awards and risk adjustments of £860m to our 2012 incentives pool to reflect the LIBOR investigation and other risk issues
in 2012. Our deferral rates significantly exceed FSA requirements.
¡
The Barclays Long Term Incentive Plan has been restricted in 2013 to our most senior employees. The performance condition will include financial and risk measures along with
other measures from a balanced scorecard. After vesting a new two year holding period will apply to extend the plan to five years in total. We have also introduced new shareholding requirements for executive Directors and senior
executives.
¡
These actions represent a major repositioning of Barclays remuneration and demonstrate our determination to pay no more than
necessary, while remaining competitive.
Priorities for 2013
¡
We will continue to make sustainable reductions in remuneration levels while retaining the talent needed to execute the Board's strategy.
¡
Performance assessments and performance related remuneration will reflect both what and how business results are achieved.
¡
We will maintain a frequent, frank and constructive dialogue with our shareholders and regulators on remuneration matters, as we have in 2012.
¡
Our new remuneration policy will protect and promote shareholders' interests.
Dear shareholder
As Chairman of the Board Remuneration Committee I am pleased to introduce the Directors' Remuneration Report for 2012.
I hope that 2012 will be seen as a turning point in the way Barclays approaches remuneration. For 2012 and in future we are taking a different approach to the balance between Directors' and
employees' remuneration, and returns for shareholders. We have been justifiably criticised for failures to engage effectively with and explain our decisions to shareholders and the wider public, as well as on some occasions being criticised for
the decisions themselves.
Reports of this kind tend towards standard disclosures and language. It is true, but arguably not very
illuminating, to say that our role as a Committee is to ensure that Barclays is able to motivate, retain and incentivise the people needed to deliver the Board's strategy. We need to go further, and explain that while discharging this role we
must also ensure that we pay no more than necessary to achieve Barclays objectives, and that we eliminate undeserved remuneration and that by doing so we protect and promote the interests of our shareholders. We must do all this on the basis of
transparent compliance and engagement with our regulators.
I  39
Remuneration report
Statement from the Chairman of the Board Remuneration Committee continued
Business context in 2012
Despite challenging economic conditions, 2012 saw Group adjusted income increase by 2% and Group adjusted profit before tax increase by 26% on 2011 levels. Adjusted return on average
shareholders' equity increased to 7.8% (2011: 6.6%). Statutory Group income decreased by 24% and profit before tax decreased 96%. Return on average shareholders' equity decreased to negative 1.9% (2011: positive 5.8%).
Despite this strong financial performance a number of significant risk and compliance issues hit Barclays during the year. The LIBOR investigation
and other issues including PPI and interest rate hedging products redress resulted in a loss of confidence in the bank, financial penalties, and the resignations of both Marcus Agius and Bob Diamond among other senior executives.
We have marked these failings by significant risk adjustments to the 2012 incentives pool and to individual remuneration decisions. We made
reductions of £860m to the 2012 incentives pool and a further £300m has been clawed back from unvested deferred and long term incentive awards. These decisions show our commitment to link pay to performance and to align remuneration with
risk. Performance should be measured not just in financial terms but also in terms of behaviour, sustainability, risk management and long term value creation.
Remuneration Committee work in 2012
A summary of the key subject areas covered
at the Committee's 2012 meetings can be found on page 60. We have reviewed and changed our policies. We have carefully considered our total remuneration spend, the structure of remuneration and individual decisions. In addition to incentive
awards and funding we have focused on broader remuneration design, frameworks and policy, and regulatory and risk issues.
We have
reviewed and adopted a new remuneration policy. This reflects the direction of Barclays more broadly under the Transform Programme led by Antony Jenkins, and the adoption across the whole Group of a new statement of Barclays Purpose and Values.
We have made significant reductions to our remuneration costs both in absolute terms and relative to adjusted net operating income and
adjusted profit before tax. These are not one-off changes. They reflect the Committee's view that we are now on a multi-year path to reposition Barclays remuneration.
Accordingly, we have reduced both the incentives pool and average individual incentive awards across the Group. At a Group level 2012 total incentive awards are down 16% on 2011 levels. Within the
Investment Bank the reduction is 20%. As a result our compensation ratios (i.e. the proportions of adjusted net operating income and adjusted profit before tax used to pay all remuneration) are now significantly lower, having moved from the market
median to the lower quartile within our industry. This is a significant repositioning of our remuneration costs. Our intention is to continue to manage down these ratios over time.
The average bonus across the Group in 2012 (excluding the Investment Bank) has fallen by 8% to £4,800. In the Investment Bank the average bonus in 2012 has fallen by 17% to £54,100. 45%
of all Investment Bank employees received no bonus for 2012.
Outside of our formal meetings, we have listened to shareholders'
concerns by meeting and engaging with them more frequently. Our discussions have been frank and clear. We have been challenged and assisted by the insight and recommendations this engagement generates. Shareholders' concerns that we have
discussed include senior executive remuneration levels, remuneration in the Investment Bank in particular, and risk alignment in remuneration decisions. Among the changes we have made reflecting shareholders' views are changes to the Barclays
Long Term Incentive Plan. We have also introduced a new shareholding requirement for executive Directors and senior executives which is at the higher end of the market.
Our remuneration report
We have sought to improve the transparency and clarity of our remuneration disclosures. We have adopted in this report many aspects of HM Government's proposed regulations on directors'
remuneration reporting. We have done this a year before these are expected to apply formally to Barclays.
We have made significant
structural changes to this year's report. In outline, after the remuneration questions and answers the report has the following sections:
¡
An explanation of our new remuneration policy for all Barclays employees (pages 41-42);
¡
A detailed summary of how the 2012 incentives pool was determined, including risk adjustments (pages 43-47);
¡
An explanation of our forward looking policy for Directors' remuneration (pages 48-52);
¡
An explanation of how 2012 Director remuneration decisions were implemented (pages 53-58); and
¡
Details of the Committee's work in 2012 and other remuneration information including statutory disclosures (pages 59-68).
The tables marked 'audited' in the report have been audited by Barclays auditors, PricewaterhouseCoopers
LLP.
Focus in 2013
The Committee's focus in the coming months will be to continue the process of repositioning remuneration at Barclays, and regaining shareholder and public understanding and confidence. In
future, as part of the Transform Programme, individual performance will be assessed against a balanced scorecard and performance will be measured against Barclays values as well as other measures. The new performance assessment process will be in
place for all senior executives during 2013 and for all other employees during 2014. Our new remuneration policy summarises our objectives.
We will continue to challenge assertions about the levels of pay required to attract, retain and motivate our people. We will not sanction paying more than is necessary, and will take appropriate
risk, supported by our shareholders, in exerting further downward pressure on remuneration. We committed last year to a journey to bring down our compensation ratios and have made good progress this year, with the Group compensation to adjusted net
operating income ratio declining to 38% (2011: 42%). The Group compensation to net operating income ratio increased to 46% (2011: 39%). We believe a ratio in the mid-30s is a sustainable position in the medium term which will ensure that we can
continue to pay our people competitively for performance while also enabling us to deliver a greater share of the income we generate to shareholders. We will be informed in this work by a continuing constructive engagement and dialogue with our
shareholders and our other stakeholders.
I believe 2012 saw us move significantly forward in achieving the right balance between the
priorities of our various stakeholders. Reduced remuneration costs, increasingly robust risk-adjustments to both the incentives pool and individual incentive awards, tougher performance conditions, new shareholding requirements, and improved
remuneration disclosures create a best practice framework which we will continue to develop in the coming year and beyond.
On behalf of
the Board
Sir John Sunderland
Chairman, Board Remuneration Committee
5 March 2013
I  40
Remuneration policy for all employees
Barclays approach to
remuneration
This section sets out Barclays
remuneration policy for all employees, explaining the purpose and principles underlying the structure of remuneration packages, and how the policy links remuneration to the achievement of sustained high performance and long term value
creation.
Remuneration policy
The Committee reviews and updates the Barclays remuneration policy periodically. For 2013, as part of the Transform Programme, the policy has been significantly updated. The principles set out in
the policy underpin both 2012 remuneration decisions and the Committee's objectives for 2013 and beyond.
The new remuneration
policy is set out in the table below.
Barclays remuneration
decisions:
1.
Support the goal of becoming the 'Go-To' bank by attracting, retaining and
competitively rewarding colleagues with the ability, experience, skill, values and behaviours to deliver that goal.
2.
Will only reward business results when these are achieved in a manner consistent with
Barclays values and behaviours:
¡
Respect:
We respect and value those we work with, and the contribution that they make.
¡
Integrity:
We act fairly, ethically and openly in all we do.
¡
Service:
We put our clients and customers at the centre of what we do.
¡
Excellence:
We use our energy, skills and resources to deliver the best, sustainable results.
¡
Stewardship:
We are passionate about leaving things better than we found them.
3.
Protect and promote shareholder interests by incentivising colleagues to deliver sustained performance and create long term value through the delivery of Barclays goal. Those decisions will reflect
that performance for individuals and in aggregate. Barclays will pay competitively for high performance but will not pay more than the amount appropriate to maximise the long term value of the bank for its shareholders.
4.
Create a direct and recognisable alignment between remuneration and risk exposure, as well as adjusting current and deferred
incentives for current and historic risk, including malus adjustments, as appropriate.
5.
Should be as simple and clear for colleagues and stakeholders as possible – as is the process used to determine them.
6.
Ensure that balance between shareholder returns and remuneration is appropriate, clear and
supports long term shareholder interests.
Remuneration and performance
Adherence to the principles of the new remuneration policy means that remuneration decisions for all employees across the whole of Barclays are aligned with and support the achievement of Barclays
goal of becoming the 'Go-To' bank.
This is achieved by linking remuneration to performance, assessing both 'what'
is achieved and also 'how' goals are achieved. So we will measure and reward our people, not just on commercial success but on how they live Barclays values and behaviours in their daily work.
We will embed Barclays values in the way remuneration is managed by incorporating our balanced scorecard of both financial and non-financial
measures into the performance appraisal process. Our balanced scorecard is a key part of the cultural change that is required to deliver the strategy of the Transform Programme. It measures Barclays performance across the following dimensions –
Customers and Clients, Colleagues, Citizenship, Conduct and Company.
Linking our employee performance assessments and remuneration
decisions to the balanced scorecard promotes a clear and direct alignment between remuneration policy and Barclays strategy.
We will
implement the following changes and improvements to the performance assessment process:
¡
During 2013 all senior executives' performance assessment and objectives will be explicitly linked to the balanced scorecard and to our
values. They will therefore see how their own performance, and the assessment of it by their manager (and the Committee), is linked to Barclays strategy;
¡
Similar linkage of performance assessment and variable remuneration decisions for all employees will follow during 2013 and 2014;
¡
Personal objectives will be closely aligned with scorecards for the individual business or function in which employees work, which will align
with and support the Group balanced scorecard;
¡
In addition to an assessment of 'what' each employee has achieved, appraisals will also include an overall, holistic, review of
behaviours which will overlay a specific focus on 'how' the results of the individual's work have been achieved, and whether they have been achieved in a way which is consistent with our values; and
¡
The balanced scorecard approach will also underpin business and Group-wide decisions, in particular the Committee's determination of
incentive pools. It will also be part of the performance condition attached to awards under the 2013-2015 Barclays Long Term Incentive Plan.
This means that all individual incentive decisions will be linked to Group, business (or function) and individual performance.
I  41
Remuneration policy for all employees continued
Remuneration structure
Employees receive salary, pension and benefits and are eligible to be considered for a discretionary
bonus. Employees in some customer-facing businesses participate in incentive plans including plans based on customer feedback and other measures of the quality of service they provide to customers. The table on this page provides further
details of our employee remuneration structure. The structure is aligned with the remuneration
structure for executive Directors set out in more detail in the Directors' remuneration policy section of this report. In 2013, only executive Directors and the most senior executives will participate in the Barclays Long Term Incentive Plan.
Fixed
remuneration
Salary
¡
Salaries reflect individuals' skills and experience and are reviewed annually in
the context of annual performance assessment. They are increased where justified by role change, increased responsibility or where justified by the latest available market data. Salaries may also be increased in line with local statutory
requirements and in line with union and works council commitments.
Pension and benefits
¡
The provision of a market competitive package of benefits is important to attracting and retaining the talented staff Barclays
needs to deliver Barclays strategy. A new defined contribution pension scheme, the Barclays Pension Savings Plan, and a flexible benefits scheme, 'My Rewards', was launched in the UK in September 2012. This enables employees to choose from
a range of benefits including the level of their pension contribution, life assurance and private health benefits, annual leave (with the ability to 'buy' and 'sell' subject to certain parameters), and participation in Barclays
'all employee' share plans (HMRC approved for UK participants). The cost of providing the benefits is defined and controlled. My Rewards will be rolled out globally to all employees over the next few years.
Variable 
remuneration
Annual bonus
¡
Annual bonuses incentivise the achievement of Group, business and individual objectives.
¡
The ability to recognise performance through variable remuneration enables the Group to control flexibly its cost base and to react to events and market circumstances.
Bonuses remain a key feature of remuneration practice in the highly competitive and mobile market for talent within the financial services sector. The Committee is careful to control the proportion of variable to fixed remuneration paid to
individuals.
¡
Bonus deferral requirements are significantly in excess of FSA requirements.
¡
For FSA Remuneration Code Staff (Code Staff) the deferral rate is a minimum of 40% (for bonuses of no more than £500,000) or 60% (for bonuses of more than
£500,000).
¡
For non Code Staff, bonuses over £65,000 are subject to a graduated level of deferral.
¡
2012 bonuses awarded to Managing Directors in the Investment Bank are 100% deferred.
¡
Deferred bonuses are split equally between deferred cash bonuses under the Cash Value Plan (CVP) and deferred share bonuses under the Share Value Plan (SVP), each vesting
in equal annual tranches over three years subject to continued service and malus. For Code Staff an additional six month holding period will be applied to 2012 share bonuses when they vest.
¡
Deferred bonuses are subject to malus conditions which enable the Committee to reduce
the vesting level of deferred bonuses (including to nil) in the event of, for example, employee negligence or inappropriate conduct, or a material failure of risk management.
42  I
2012 incentives
2012 total incentive awards
This section provides details of how 2012 total incentive
award decisions were made.
Business context and 2012 performance highlights
Despite the strong financial performance set out below a number of significant risk and compliance issues hit Barclays during the year. The LIBOR
investigation and other events including PPI and interest rate hedging products redress resulted in a loss of confidence in the Group, financial penalties, and the resignations of Marcus Agius, Bob Diamond and other senior executives. We have marked
these failings by making significant risk adjustments to the 2012 incentives pool and to unvested deferred and long term incentive awards, and in the individual remuneration decisions for 2012 for senior executives. Against this challenging
background, our financial performance for 2012 has nonetheless been strong. 2012 performance includes the following highlights which the Committee took into account in making its remuneration decisions for 2012:
¡
Adjusted profit before tax was up 26% to £7,048m for the 12 months ended 31 December 2012, with an improvement of 46% in Corporate and
Investment Banking, and 52% in Wealth and Investment Management. Statutory profit before tax decreased 96% to £246m (2011: £5,879m);
¡
Statutory profit before tax decreased to £246m (2011: £5,879m), including own credit charge of £4,579m (2011: gain of
£2,708m), gain on disposal of BlackRock, Inc. investment of £227m (2011: impairment/loss of £1,858m), £1,600m (2011: £1,000m) provision for PPI redress, and £850m (2011: £nil) provision for interest rate
hedging products redress;
¡
The Investment Bank profit before tax increased 37% to £4,063m driven by income growth of 13% and reduced operating expenses;
¡
Adjusted income was up 2% at £29,043m despite challenging economic conditions, the continuing low interest rate environment and
non-recurrence of gains from the disposal of hedging instruments in 2011 of £1,061m. Statutory income decreased 24% to £24,691m driven by the increase in the own credit charge of £4,579m (2011: gain of £2,709m);
¡
Adjusted return on average shareholders' equity increased to 7.8% (2011: 6.6%) with improvements in most of our businesses. Statutory return
on average shareholders' equity was negative 1.9% (2011: positive 5.8%). Return on average shareholders' equity decreased to negative 1.9% (2011: positive 5.8%);
¡
Adjusted operating expenses were down 3% to £18,539m as we reduced non-performance costs by 3% to £16,114m and performance costs by
4% to £2,425m. Statutory operating expenses were up 1% to £20,989m. Total incentive awards declined 16% for the Group and 20% for the Investment Bank, reducing the Investment Bank compensation: income ratio to 39% (2011: 47%). For a
reconciliation of total incentive awards granted to the relevant income statement charge, see page 46; and
¡
Core Tier 1 remained strong at 10.9% (2011: 11.0%). Risk weighted assets reduced 1% to £387bn.
2012 incentive awards - headlines
¡
Total Group incentive awards have been reduced by 16% since 2011, with Group adjusted profit before tax increasing 26%. Statutory profit before
tax decreased 96%;
¡
Incentive awards at the Investment Bank have been reduced by 20% since 2011, with adjusted and statutory profit before tax increasing 37%;
¡
Group incentives have reduced by £1.3bn (38%) since 2010 with adjusted profit before tax up 23% since 2010. Statutory profit before
tax is down 96% since 2010. In the Investment Bank incentives have reduced by a similar amount, £1.3bn (48%), since 2010 with adjusted profit before tax down 7% since 2010;
¡
Incentive pools have been reduced while adjusted profits have increased since 2011. This is because of actions taken by management to reposition
Barclays compensation in the market place and to reflect significant risk events that impacted Barclays in 2012. The significant risk events include the LIBOR investigation and redress for PPI and interest rate hedging products;
¡
Compensation to adjusted net operating income is down to 38% in 2012 (2011: 42%). Compensation to net operating income ratio increased to 46%
(2011: 39%). Within aggregate compensation there has been strong differentiation on the basis of individual performance to allow us to manage compensation costs but also to pay competitively for high performers;
¡
Average value of bonus per Group employee down 13% year on year to £13,300; average value of bonus per Investment Bank employee down 17%
year on year to £54,100. Average value of bonus per Group employee excluding the Investment Bank down 8% year on year to £4,800; and
¡
The proportion of the bonus pool that is deferred significantly exceeds the FSA's Remuneration Code requirements and is expected to remain
among the highest deferral levels globally.
I  43
2012 incentives continued
2012 incentives pool determination process
We recognise the importance that our stakeholders attach to the judgements that we apply in managing remuneration. Reduced remuneration costs, and increasingly
robust risk-adjustments and performance conditions will continue to be a focus in how we achieve the right balance between the priorities of our various stakeholders.
Remuneration must be managed in a way which incentivises employees, ensures pay is linked to performance and is
appropriately aligned to risk. Material progress has been made in reducing absolute levels of remuneration. Variable remuneration has been reduced by 16% year on year.
Barclays total
incentive awards granted - current year and deferred (audited)
Barclays Group
Investment Bank
Year ended
31.12.12
£m
Year ended
31.12.11
£m
%
Change
Year ended
31.12.12
£m
Year ended
31.12.11
£m
%
Change
Current year cash bonus
852
832
2
399
381
5
Current year share bonus
15
66
(77)
6
3
100
Total current year bonus
867
898
(3)
405
384
5
Deferred cash bonus
489
618
(21)
447
576
(22)
Deferred share bonus
498
634
(21)
446
576
(23)
Total deferred bonus
987
1,252
(21)
893
1,152
(22)
Bonus pool
1,854
2,150
(14)
1,298
1,536
(15)
Other incentives
314
428
(27)
96
201
(52)
Total incentive awards
granted
a
2,168
2,578
(16)
1,394
1,737
(20)
Adjusted profit before tax
7,048
5,590
26
4,063
2,965
37
Bonus pool as % of profit before tax (pre bonus)
82%
28%
23%
35%
Bonus pool as % of adjusted profit before tax (pre bonus)
b
20%
29%
23%
35%
Proportion of bonus that is deferred
53%
58%
69%
75%
Total employees (full time equivalent)
139,200
141,100
(1)
24,000
23,600
2
Bonus per employee
£13,300
£15,237
(13)
£54,100
£65,085
(17)
Deferred bonuses are payable only once an employee meets certain conditions, including a specified period of
service. This creates a timing difference between the communication of the bonus pool and the charges that appear in the income statement which are reconciled in the table on page 46.
a  For a reconciliation of total incentive awards granted to the relevant income statement charge, see page 46.
b  Calculated as bonus awards divided by adjusted profit before tax excluding the income statement charge for bonus awards.
Compensation ratio trends and benchmark against peers
The reduction in compensation in 2012 moves Barclays from being at the median pay-performance level compared to competitors over the last two years to below the
lower quartile level. This is a major shift which the Committee recognised would require strong management to achieve in a single year. Although it exposes the Group to some retention risk, the Committee determined that it was a necessary step on
the multi-year journey to reposition Barclays remuneration. Major shareholders and their representative bodies were consulted as part of the process for deciding to take this change of approach.
Antony Jenkins said in the 2012 Results Announcement on 12 February 2013:
"We committed last year to a journey to bring down our compensation ratio and have made good progress this year, with the Group compensation to net income
ratio declining to 38% (2011: 42%). While this is progress, not the destination, we believe a ratio in the mid-30s is a sustainable position in the medium term which will ensure that we can continue to pay our people competitively for performance
while also enabling us to deliver a greater share of the income we generate to shareholders."
44  I
Incentive pool proposals from each of the businesses were subjected to detailed scrutiny and challenge through a sequence of the Committee's meetings before and after the year end. The final
incentives pool reflects the actions taken by the Group Chief Executive and the Committee towards achieving the long term objective of sustainably reducing compensation levels over time. It also reflects appropriate risk adjustments made in respect
of significant risk and compliance issues that have impacted Barclays in 2012 and the need to retain talent within Barclays to execute the new business strategy.
The table below summarises the three steps taken by the Committee in finalising the 2012 incentives pool.
Step 1
Adjustment for performance –
The Committee considered the overall performance of Barclays and individual businesses. The Committee also looked at any significant events and one off
transactions that have had a material impact on the financial results. The approach of the Committee is to use statutory profits as a starting point and then consider the impact of each adjustment. The Committee does not regard own credit as
reflective of performance and accordingly excludes these amounts from its consideration. The Committee manages compensation based on a range of compensation ratios and is supported by advice from the Group Finance Director and Chief Risk Officer.
Holding the compensation ratios broadly flat to 2011 would have suggested an increase of £700m to the incentives pool.
Step 2
Adjustments to reflect risk events in 2012 –
The Committee made adjustments
to the 2012 incentives pool totalling £860m. In addition, adjustments were made to unvested deferred and long term incentive awards. Further details on the risk adjustments made in 2012 are provided below and on the next page.
Step 3
Additional adjustment to reposition Barclays in the market –
The
Committee's objective is to reposition Barclays remuneration in the market and achieve a sustainable compensation ratio over time. The Committee has made a further adjustment of £250m to make progress in achieving its objective, and the
resulting 2012 incentives pool represents the starting point in 2013, i.e. the adjustments for risk events in 2012 and the market repositioning will not be added back in 2013.
Determination of the
2012 total incentives pool
£m
2011 total incentives pool
2,578
2011 compensation to adjusted net operating income ratio of 42%
Step 1
Adjustment for performance
700
Step 2
Adjustments to reflect risk events in 2012
(860)
Risk adjustments:
LIBOR:
290
Redress of PPI and interest rate hedging products and other risk adjustments:
570
Step 3
Additional adjustment to reposition Barclays in the market
(250)
To reflect Barclays intention to reposition itself in the market
The compensation to adjusted net operating income ratio reduced from 42% in 2011 to 38% in 2012
2012 total incentives
pool
a
2,168
In addition to the reduction in variable remuneration described above, fixed remuneration reduced by 7% year on
year. This was driven by a reduction in salary costs reflecting a moderately declining headcount and reductions in the cost of post retirement benefits primarily reflecting scheme closures and benefit changes in the US and Spain, and lower interest
cost for the UK Retirement Fund.
a
For a reconciliation of total incentive awards granted to the relevant income statement charge, see page 46.
I  45
2012 incentives continued
The total risk adjustments made by the Committee are as follows:
Risk adjustments in 2012 – £1,160m
£m
1.
Adjustments to 2012
incentives pool to reflect risk events
These are adjustments
made by the Committee to reflect the significant risk events that impact Barclays. For 2012 the Committee made discretionary risk adjustments as shown in the table on page 45.
860
2.
Adjustments to
existing deferred and long term remuneration
In certain
circumstances the Committee may decide it is appropriate to exercise its power to reduce the value of unvested deferred and long term incentive awards (including to nil). In 2012 the Committee clawed back approximately £300m of unvested
deferred and long term awards, the majority of which related to the LIBOR investigation. Combined with the adjustment to the 2012 incentives pool, the reductions for the LIBOR investigation exceeded the amount of the regulatory fines of
£290m.
300
The risk adjustments outlined above are additional to the reduction in variable remuneration that naturally arises
from the reduced profits as a result of the financial impact of the risk events.
Reconciliation of total incentive
awards granted to income statement charge (audited)
Barclays Group
Investment Bank
Year ended
31.12.12
£m
Year ended
31.12.11
£m
%
Change
Year ended
31.12.12
£m
Year ended
31.12.11
£m
%
Change
Total incentive awards for 2012
2,168
2,578
(16)
1,394
1,737
(20)
Less: deferred bonuses awarded for 2012
(987)
(1,252)
(21)
(893)
(1,152)
(22)
Add: current year charges for deferred bonuses from previous years
1,223
995
23
1,117
907
23
Other
a
21
206
(90)
75
248
(70)
Income statement charge for performance costs
2,425
2,527
(4)
1,693
1,740
(3)
a
Difference between incentive awards granted and the income statement charge for commissions, commitments and other incentives
¡
Employees only become eligible to receive payment from a deferred bonus once all of the relevant conditions have been fulfilled, including the
provision of services to the Group;
¡
The income statement charge for performance costs reflects the charge for employees' actual services provided to the Group during the
relevant calendar year (including where those services fulfil performance conditions attached to previously deferred bonuses). It does not include charges for deferred bonuses where performance conditions have not been met; and
¡
As a consequence, while the 2012 incentive awards granted were down 16% compared to 2011, the income statement charge for performance costs was
down 4%.
46  I
Income statement charge
(audited)
Year ended
31.12.12
£m
Year ended
31.12.11
£m
% Change
Performance costs
2,425
2,527
(4)
Salaries
5,981
6,277
(5)
Non-performance employee share plans
105
167
(37)
Social security costs
685
716
(4)
Post retirement benefits
590
727
(19)
Total compensation costs
9,786
10,414
(6)
Bank payroll tax
34
76
(55)
Other
a
627
917
(32)
Non compensation costs
661
993
(33)
Total Staff costs
10,447
11,407
(8)
a
Includes staff training, redundancy and retirement.
¡
Total staff costs reduced 8% to £10,447m, principally reflecting a 5% reduction in salaries, a 19% reduction in post retirement benefits
and reductions in performance costs;
¡
Salaries reduced by 5% to £5,981m, reflecting a moderately declining average headcount;
¡
The post retirement benefits charge decreased 19% to £590m, primarily reflecting scheme closures and benefit changes in the US and Spain,
and lower interest cost for the UK Retirement Fund;
¡
Performance costs reduced 4% to £2,425m, reflecting a 22% reduction in charges for current year cash and share bonuses and other incentives
of £1,202m, partially offset by a 23% increase in the charge for deferred bonuses from prior years to £1,223m; and
¡
Deferred bonuses awarded are expected to be charged to the income statement in the years outlined in the table below.
Year in which income statement charge is
expected to be taken for Deferred Bonuses awarded to date
a
Actual
Expected
b
Year ended
31.12.11
£m
Year ended
31.12.12
£m
Year ended
31.12.13
£m
2014 and
beyond
£m
Barclays Group
Deferred bonuses from 2009 and earlier bonus pools
405
153
18
–
Deferred bonuses from 2010 bonus pool
590
404
147
21
Deferred bonuses from 2011 bonus pool
–
666
386
183
Deferred bonuses from 2012 bonus pool
–
–
512
431
Income statement charge for deferred bonuses
995
1,223
1,063
635
Investment Bank
Deferred bonuses from 2009 and earlier bonus pools
365
143
17
–
Deferred bonuses from 2010 bonus pool
542
374
134
19
Deferred bonuses from 2011 bonus pool
–
600
347
164
Deferred bonuses from 2012 bonus pool
–
–
463
384
Income statement charge for deferred bonuses
907
1,117
961
567
Bonus Pool Component
Expected Grant Date
Expected Payment Date(s)
c
Year(s) in which Income Statement
Charge Arises
d
Current year cash bonus
• February 2013
• February 2013
• 2012
Current year share bonus
• February/March 2013
• February 2013 to September 2013
• 2012
Deferred cash bonus
• March 2013
• March 2014 (33.3%)
• 2013 (48%)
• March 2015 (33.3%)
• 2014 (35%)
• March 2016 (33.3%)
• 2015 (15%)
• 2016 (2%)
Deferred share bonus
• March 2013
• March 2014 (33.3%)
• 2013 (48%)
• March 2015 (33.3%)
• 2014 (35%)
• March 2016 (33.3%)
• 2015 (15%)
• 2016 (2%)
a
The actual amount charged depends upon whether performance conditions have been met and will vary compared with the above expectation.
b
Does not include the impact of future grants which may be made in 2013 and 2014.
c
Payments are subject to all performance conditions being met prior to the expected payment date. In addition, employees receiving a deferred cash bonus may be
awarded a service credit of 10% of the initial value of 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 performance conditions are met.
I  47
Directors' remuneration policy
2013 Remuneration
policy for executive Directors
This section
describes Barclays forward-looking remuneration policy for executive Directors, explaining how each element of executive Directors' remuneration packages operates. Total remuneration packages for executive Directors comprise salary, pension,
benefits, annual bonus and long term incentive plan awards.
2013 remuneration policy for executive
Directors
Purpose
Operation
Value and applicable performance measures
Salary
Rewards skills and experience and provides the basis for a competitive remuneration package
Salaries are determined with reference to market practice and market data (on which the
Committee receives independent advice), and reflect individual experience and role.
Executive Directors' salaries are benchmarked against comparable roles in other banks and FTSE 30 companies.
Salaries are reviewed annually and increases are made only exceptionally to reflect market movements and change in job responsibilities. The
Committee notes and manages the potential for salary increases to have a 'ratchet effect' on total remuneration because of the linkage between salary and other elements of the remuneration package such as cash in lieu of pension, bonus and
long term incentive awards.
Reviewed annually but increased only exceptionally.
Pension
Enables executive Directors to build long term retirement
savings
Current executive
Directors receive an annual cash allowance in lieu of participation in a pension arrangement.
This is a common arrangement in executive remuneration, reflecting recent and continuing changes in the UK taxation of pension contributions. The rates of these allowances (as a percentage of
salary) for executive Directors exceed pension contribution rates for the broader employee population. This reflects market practice for senior executives. The rate of cash allowance in lieu of pension for any new executive Director is appropriately
benchmarked at the time of appointment.
Group Chief Executive
– currently 33% of salary.
Group Finance Director –
currently 25% of salary.
Reviewed annually but increased only
exceptionally.
Benefits
Protects against risks and provides other benefits
Executive
Directors' benefits provision includes private medical cover, life and ill-health income protection, tax advice, the use of a company vehicle or the cash equivalent, and use of a company vehicle and driver when required for business
purposes.
The value of benefits
in 2012 was £81,000 for the current Group Chief Executive (including benefits received in his previous role as CEO of Retail and Business Banking) and £34,000 for the Group Finance Director.
48  I
2013 remuneration policy for executive
Directors continued
Purpose
Operation
Value and applicable performance metrics
Annual bonus
Rewards delivery of the near term business targets set each year, the
individual performance of the executive Directors in achieving those targets, and contribution to delivering Barclays strategic objectives
Deferred bonuses encourage long term focus and retention and the malus conditions that apply to them discourage excessive risk-taking and
inappropriate behaviours and encourage a long term view. Deferred share bonuses encourage long term shareholding and align executive Directors' interests with those of shareholders
Determination of annual bonus
Individual bonus decisions are based on executive Directors' performance in the year, measured against Group and personal objectives.
Performance measures are both quantitative and qualitative, and both financial and non-financial. Bonus awards are made by the Committee following discussion of recommendations made by the Chairman (for the Group Chief Executive's bonus) and by
the Group Chief Executive (for the Group Finance Director's bonus).
Operation of risk adjustment and malus
Bonuses awarded reflect reductions made
to incentive pools in relation to risk events. Individual bonus decisions may also reflect reductions in relation to specific risk and compliance events. Once awarded, deferred bonuses are subject to malus conditions which enable the Committee to
reduce the vesting level of deferred bonuses (including to nil) in the event of, for example, employee negligence or inappropriate conduct, or a material failure of risk management.
Delivery mechanism
Bonuses paid to executive Directors are generally delivered in a combination of cash and shares which may be either immediate or deferred. Deferred
share bonuses are delivered in the form of awards under the Share Value Plan (SVP).
Deferral structure
Executive Directors are Code Staff and their bonuses are
therefore subject to deferral of at least the level applicable to all Code Staff, currently 40% (for bonuses of no more than £500,000) or 60% (for bonuses of more than £500,000). The Committee may choose to defer a greater proportion of
any bonus awarded to an executive Director than the minimum required by the FSA's Remuneration Code.
Timing of receipt
Non-deferred cash components of any bonus are received
following the performance year to which they relate, typically in February. Non-deferred share bonuses are subject to a six month holding period. Deferred share bonuses are awarded under the SVP. They vest over a three year period in thirds each
year, subject to continued service and the malus conditions. Once SVP awards made from 2013 have vested, the shares are (after payment of tax) subject to an additional six month holding period.
The value of any annual bonus is limited to a percentage of
salary. The current maximum percentage is 250% for both the Group Chief Executive and for the Group Finance Director.
The performance objectives by which executive Director bonuses for 2013 will be assessed include Group and individual measures, both financial and non-financial. At the Group level, performance of
each of the executive Directors will include measurement against progress in delivering the Transform commitments. This includes the 2015 financial targets including return on equity, cost to income ratio, core capital ratio and dividend payout
ratio. Further details of each executive Director's 2013 objectives are provided on pages 54 and 56.
Long Term Incentive Plan ('LTIP') award
Rewards execution of Barclays strategy and growth in shareholder value over a multi-year period
Long term performance measurement, holding periods and the malus conditions discourage excessive risk-taking and inappropriate behaviours, encourage
a long term view and align executive Directors' interests with those of shareholders
Determination of LTIP award
LTIP awards are made by the Committee following
discussion of recommendations made by the Chairman (for the Group Chief Executive's LTIP award) and by the Group Chief Executive (for the Group Finance Director's LTIP award).
Operation of risk adjustment and malus
The achievement of performance conditions is the primary indicator of whether and to what extent LTIP awards will vest. Awards are also subject to
malus conditions similar to those applicable to deferred bonuses. The malus conditions enable the Committee to reduce awards (including to nil).
Delivery mechanism
Barclays
LTIP awards vest three years from the date of award. At vesting LTIP awards are satisfied in Barclays shares.
Timing of receipt
For 2013 Barclays LTIP awards, a further holding period of
two years has been introduced which applies to the shares on vesting (after payment of tax), making the plan cycle five years in total.
The value of any LTIP award is limited to percentage of salary. The maximum potential payout value of an award is 400% of salary (based on the value of shares and salary at the start of the LTIP
performance period).
A summary of the performance metrics that
apply to the LTIP awards for the 2010-2012, 2011-2013 and 2012-2014 performance periods is provided on page 67. The performance condition for the 2013-2015 LTIP is based on financial performance (RoRWA), risk (loan loss rate) and a balanced
scorecard.
I  49
Directors' remuneration policy continued
Executive Director service contracts
Barclays executive Director service
contracts entitle the executive Directors to the fixed elements of remuneration and to consideration for variable remuneration each year. The contracts do not have a fixed term but provide for a notice period from Barclays of 12 months. Contracts
may be terminated immediately with payments in lieu of notice being paid in phased instalments, subject to contractual mitigation. In the event of termination for gross misconduct neither notice nor payment in lieu of notice is required.
The Committee's approach to payments in the event of termination is to take account of the individual circumstances including the reason for
termination, individual performance, contractual obligations and the terms of the deferred incentive plans and long term incentive plans in which the executive Director participates.
Termination
provisions
Antony
Jenkins
Effective contract date
30 August 2012
Contract
termination provisions
12 months' notice from the Company (six months from the Director). On notice from the Company 12
months' salary payable and continuation of medical and pension benefits while an employee. No automatic contractual entitlement to bonus on termination, but may be considered.
Deferred bonus and LTIP awards treatment on termination
Antony Jenkins would normally continue to be entitled to receive unvested portions of deferred bonus if he was an eligible leaver under the relevant
plan rules. Any release of unvested portions would be made on the scheduled release date. Otherwise, outstanding deferred awards would normally lapse.
Any unvested awards under LTIPs would normally be released on the scheduled release date, pro-rated for time and performance, if Antony Jenkins was
an eligible leaver under the relevant plan rules. Otherwise, the unvested awards would normally lapse.
Chris
Lucas
Effective contract date
1 April 2007
Contract
termination provisions
12 months' notice from the Company (six months from the Director). On notice from the Company 12
months' salary payable, bonus equivalent to the average of the previous three years' bonuses (capped at 100% of current salary) and continuation of medical and pension benefits while an employee.
The current Group Finance Director's contractual terms date from 2006.
The provisions relating to bonus entitlement in the context of termination are no longer best practice. No future executive Director contract will include such terms.
Deferred bonus and LTIP awards treatment on termination
Chris Lucas would normally continue to be entitled to receive unvested portions of deferred bonus if he was an eligible leaver under the relevant plan rules. Any release of unvested portions would
be made on the scheduled release date. Otherwise, outstanding deferred awards would normally lapse.
Any unvested awards under LTIPs would normally be released on the scheduled release date, pro-rated for time and performance, if Chris Lucas was an eligible leaver under the relevant plan rules.
Otherwise, the unvested awards would normally lapse.
The remuneration packages offered on appointment to any new executive Director are a specific part of the
Committee's Terms of Reference. The terms of such packages must be approved by the Committee in consultation with the Chairman and (except for the terms of his own remuneration) the Group Chief Executive. Any award made to compensate for
forfeited remuneration from the new executive Director's previous employment may not be more generous than, and must mirror as far as possible, the terms of the forfeited remuneration.
Shareholding requirement
From 2013 the Committee has introduced a new
requirement that executive Directors should hold Barclays shares worth, as a minimum, four times salary. The current executive Directors have five years from the introduction of the new requirement to meet it (five years from appointment for a new
executive Director) and they have a reasonable period to build up to the requirement again if it is not met because of a share price fall. Shares that count towards the requirement are beneficially owned shares including any vested share awards
subject to holding periods (including vested LTIPs). Shares from unvested deferred share bonuses and unvested LTIPs do not count towards the requirement. This requirement replaces the previous guidelines, enhances the alignment of shareholders'
and executive Directors' interests in long term value creation, and positions Barclays at the higher end of market practice. Current executive Directors' shareholdings as compared to the new shareholding requirement are summarised in the
chart on page 57.
The Committee also decided that from 2013 other members of the Group Executive Committee should be subject to a
shareholding requirement in excess of the requirements of the FSA's Remuneration Code. The shareholding requirement for other Group Executive Committee members is that they should hold Barclays shares worth, as a minimum, two times salary. In
all other respects the shareholding requirement for other Group Executive Committee members is the same as the requirement for executive Directors.
50  I
Illustrative scenarios for executive Directors' remuneration
The charts
below show the potential value of the current executive Directors' remuneration in three scenarios: 'Minimum' (i.e. fixed remuneration), 'Maximum' (i.e. fixed remuneration and the maximum variable remuneration that may be
awarded) and 'Mid-point' (i.e. fixed remuneration and 50% of the maximum variable remuneration that may be awarded). For the purposes of these charts, the value of benefits is based on an estimated annual value. The scenarios do not
reflect share price movement between award and vesting.
A significant proportion of the potential remuneration of the executive
Directors is variable and is therefore performance-related and at risk. At the 'mid-point' for the Group Chief Executive, 30% of total remuneration is fixed and 70% is variable, moving to 18% fixed and 82% variable at the maximum. At the
'mid-point' for the current Group Finance Director 29% of total remuneration is fixed and 71% is variable, moving to 17% fixed and 83% variable at the maximum.
Group Chief
Executive
Group Finance
Director
How shareholder views and
broader employee pay are taken into account by the Committee in setting policy and making remuneration decisions
The Committee
Chairman and senior executives have engaged more extensively and more proactively with shareholders and shareholder representative bodies during 2012 than ever before. The Committee Chairman has met with major shareholders and also with the
Association of British Insurers, the National Association of Pension Funds and ISS to discuss remuneration matters. The Chairman, Committee Chairman and the Group Chief Executive also receive frequent comments from private shareholders either in
writing or at events such as our Annual General Meeting. We listen to all of these comments and we try to respond to all of them.
The
Committee takes account of the remuneration of the broader employee base when it considers the remuneration of the executive Directors. The Committee receives and reviews detailed analysis of remuneration proposals for employees across all of the
Group's businesses. This includes analysis by corporate grade and by performance rating and details of proposed bonuses and salary increases across the employee population. When the Committee considers executive Director remuneration it
therefore makes that consideration in the context of a detailed understanding of remuneration for the broader employee population.
Our
approach to executive Director and wider employee remuneration during 2013 will be characterised by a focus on bearing down on costs and ensuring the principles of our new remuneration policy are applied at all levels.
Comparison of executive Directors' remuneration packages with remuneration packages for the broader employee population
The structure of total remuneration packages for executive Directors and for the broader employee population is similar. Employees receive salary,
pension and benefits and are eligible to be considered for a discretionary annual bonus. The broader employee population typically does not have a contractual limit on the quantum of their remuneration.
The Committee approaches any salary increases for executive Directors on an exception-only basis. Incremental annual salary increases remain more
common among employees at less senior levels.
As with executive Directors, bonuses for the broader employee population are performance
based. Bonuses for executive Directors and the broader employee population are subject to deferral requirements. Executive Directors and other Code Staff are subject to deferral at a minimum rate of 40% (for bonuses of no more than £500,000)
or 60% (for bonuses of more than £500,000) but the Committee may chose to operate higher deferral rates. For non-Code Staff, bonuses in excess of £65,000 are subject to a graduated level of deferral and in the Investment Bank, 2012
bonuses for Managing Directors are subject to 100% deferral. Executive Directors' deferred bonuses may include deferred share bonuses awarded under the SVP. 2012 deferred bonuses for the broader employee population will be awarded 50% under the
SVP and 50% under the CVP, which vest over three years in equal tranches. The terms of deferred bonus awards for executive Directors and the wider employee population are broadly the same, in particular the vesting of all deferred bonuses is subject
to continued service and subject to malus conditions.
The broader employee population is not eligible to participate in the Barclays
Long Term Incentive Plan in 2013.
I  51
Directors' remuneration policy continued
Remuneration for
non-executive Directors
This section provides
details of the remuneration approach for the Chairman and non-executive Directors.
Remuneration for non-executive
Directors
Element and purpose
Operation
Fees
Fees are reviewed each year by the Board. Fees were last
increased in May 2011.
Reflect individual
responsibilities and membership of Board Committees
The first £30,000 (Chairman: first
£100,000) after tax and national insurance contributions of each non-executive Director's base fee is used to purchase Barclays shares which are retained on the non-executive Director's behalf until they retire from the
Board.
The Chairman has a minimum time commitment equivalent to 80% of a full-time role.
Benefits
For Chairman only
The Chairman is provided with private medical
cover subject to the terms of the Barclays scheme rules from time to time, and is provided with the use of a company vehicle and driver when required for business purposes.
No other non-executive Director receives any
benefits from Barclays. Non-executive Directors are not eligible to receive a bonus. They may not participate in Barclays cash, share or long term incentive plans and are ineligible to join Barclays pension plans.
Notice and termination
provisions
Each non-executive Director appointment is for
an initial six year term, renewable for a single term of three years thereafter and subject to annual re-election by shareholders.
Notice period:
Chairman: 12 months from the Company (six months from the Chairman). Non-executive Directors: six months.
Termination payment policy
The Chairman's appointment may be terminated by Barclays on 12 months' notice or immediately in which
case 12 months' fees and contractual benefits are payable in instalments at the times they would have been received had the appointment continued. There are similar termination provisions for non-executive Directors based on six months'
fees. No continuing payments of fees (or benefits) are due if a non-executive Director is not re-elected by shareholders at the Barclays Annual General Meeting.
The table below shows the fees payable to non-executive Directors in respect of Board and Committee chairmanship
and membership for the year ended 31 December 2012 and for the year ending 31 December 2013. The current Chairman does not receive any other fees in addition to his Chairman fee.
Fees
2013
£000
2012
£000
Chairman
750
750
Board Member
80
80
Additional responsibilities
Senior Independent Director
30
30
Chairman of Board Audit Committee or Board Remuneration Committee
70
70
Chairman of Board Financial Risk Committee (Board Risk Committee to 31 January 2013)
60
60
Membership of Board Audit Committee or Board Remuneration Committee
30
30
Membership of Board Conduct, Reputation and Operational Risk Committee
(Board Citizenship Committee to
1 February 2013)
25
15
Membership of Board Financial Risk Committee (Board Risk Committee to 31 January 2013)
25
25
Membership of Board Corporate Governance and Nominations Committee
15
15
52  I
Implementation of Directors' remuneration in 2012
2012 remuneration
outcomes for executive Directors
This section
explains how the Group remuneration policy for executive Directors has been implemented during 2012.
Group Chief Executive remuneration – Antony Jenkins
We have shown Antony Jenkins' full remuneration for the whole of 2012 in the interests of clarity and
transparency. The LTIP award shown above for 2012 is for the 2013-2015 performance period.
Details of 2012
remuneration
Salary
The 2012 salary shown
above of £0.833m is the salary Antony Jenkins received in respect of the whole of 2012. This reflects a salary in 2012 of £0.7m per annum for Antony's role as CEO of Retail and Business Banking (until 29 August 2012) and £1.1m
per annum as Group Chief Executive (from 30 August 2012). The Committee did not increase Antony Jenkins' salary for 2013.
Pension
The 2012 pension
value shown above of £0.215m is in respect of the whole of 2012. This reflects participation in the Afterwork pension plan from 1 January 2012 to 31 March 2012, cash in lieu of pension of 21% of salary from 1 April 2012 to 29 August 2012, and
cash in lieu of pension of 33% of salary from 30 August 2012. The cash in lieu of pension of 33% reflects market practice for senior executives in comparable roles.
Benefits
Antony
Jenkins' benefits include private medical cover, life and ill-health income protection, tax advice, car allowance and the use of a company vehicle and driver when required for business purposes. Antony is not entitled to tax
equalisation.
Annual
Bonus
The Committee
considered Antony Jenkins' performance for the whole of 2012 in the round. It assessed his performance against Group, business (by reference to his previous role as CEO of Retail and Business Banking up to 29 August 2012) and individual
measures. In doing so the Committee considered 2012 financial performance, including the highlights which are detailed on page 43.
In considering his 2012 performance the Committee considered that Antony Jenkins had delivered strong Retail and Business Banking performance prior
to accepting the role of Group Chief Executive at a difficult time for Barclays. Since that time the Committee agreed he has quickly established a leadership profile that differentiates him from predecessors and a commitment to leading the changes
required including strengthening the culture and control environment across Barclays. The Committee welcomed Antony Jenkins' contribution to its own work in managing remuneration costs and redressing the balance between employee and shareholder
returns.
On 1 February 2013 Antony Jenkins announced that he did
not wish to be considered for a bonus for 2012, citing his wish to bear an appropriate degree of accountability for multiple issues besetting the bank during the year.
Long Term
Incentive Plan
2013-2015
The Committee decided
to make an award to Antony Jenkins under the Barclays LTIP for the 2013-2015 performance period with a maximum potential payout value of 400% of his salary at the date of award (not taking into account the potential effect of share price movement
between award and any payout).
The LTIP maximum value of
£4.4m is based on the maximum number of shares that can vest at the end of a performance period of three years. The maximum number of shares is 400% of salary at the start of the performance period divided by the share price at the date the
award is made. For the purposes of assessing the 'value at award' of the LTIP (taking into account the range of possible outcomes) Barclays historical approach has been to ascribe a value of one-third of the maximum value assuming no share
price movement. So on the basis of this approach the 'value at award' of the maximum LTIP to Antony as shown above is one-third x £4.4m, i.e. £1.467m. For the 2013-2015 Barclays LTIP, performance conditions will be based on
financial performance (measured on return on risk weighted assets), risk (measured by loan loss rate) and a balanced scorecard. Any award that vests after three years will be subject to a further two year holding period.
I  53
Implementation of Directors' remuneration in 2012 continued
2012 remuneration overview – Antony Jenkins
The chart below shows the maximum value of remuneration possible for 2012 under Antony Jenkins' contract, the maximum potential value of the
remuneration actually awarded for 2012, and timing of receipt. The potential value of the 2013-2015 LTIP payout does not take into account share price movement or the value of additional shares which may be added to the number of shares released on
vesting to reflect dividends paid during the performance period.
The maximum potential bonus and LTIP award in the first column are based on Antony Jenkins' Group Chief
Executive salary of £1.1m.
'BIS single figure' for 2012 remuneration
The Department for Business, Innovation and Skills' (BIS) draft disclosure regulations include a requirement to show a single figure for
executive Director remuneration on a basis different to that shown on the opposite page. The 'BIS single figure' basis requires that for LTIPs, rather than including the value of any LTIP awarded in 2013, the payout value of any LTIP whose
performance cycle ended in 2012 should be included instead. Accordingly, the table below shows Antony Jenkins' 2012 remuneration on the 'BIS single figure' basis. As Antony Jenkins was not a participant in a previous LTIP cycle that
ended in 2012, the LTIP figure is shown as zero and his 2012 total remuneration on the 'BIS single figure' basis is £1.129m.
'BIS single figure' for
2012 total remuneration
£000
Salary
Pension
Benefits
Bonus
LTIP
Total
833
215
81
0
0
1,129
Previous Long Term Incentive Plan awards
Antony Jenkins was not a participant in a previous LTIP cycle that ended in 2012. Antony currently holds unvested LTIP awards under the Barclays LTIP for the performance period 2012-2014. Prior to
joining the Board, Antony participated in long term incentive plans linked to divisional performance. These divisional plans were not appropriate to his new role as Group Chief Executive and were brought to an end. The equivalent value of these
arrangements was made as awards with the same vesting date over Barclays shares under the SVP and the Barclays LTIP for the performance period 2012-2014. These awards are shown in the table on pages 65-66.
2013 objectives
Antony
Jenkins' performance objectives for 2013, by which 2013 remuneration decisions will be measured, include Group and individual measures and are both financial and non-financial. In line with the announcements of the outcomes of the Board's
Strategic Review that were made on 12 February 2013, Antony is responsible for delivering the Transform commitments and the financial and non-financial commitments made in those announcements. In assessing Antony's performance, the
Committee will assess Antony's progress in working towards the 2015 financial targets including:
¡
Return on equity in excess of cost of equity and improvement in the quality of income and predictability of earnings;
¡
Reduction in the cost to income ratio;
¡
Management of the core capital ratio; and
¡
Improvement in the dividend payout ratio.
Other key actions include a focus on activities which support Barclays customers and clients; growing the UK, US and African franchises; restructuring the European retail and corporate businesses;
repositioning the European and Asian equities and Investment Banking Division businesses; closing the Structured Capital Markets tax-related business unit; reducing risk weighted assets and investing in higher return businesses; and reducing
operating expenses through a new approach to strategically manage costs. Antony's performance will also be assessed by the Committee by reference to the relationships he builds with internal and external stakeholders, the leadership he provides
in driving cultural change, and his success in building a strong compliance and control structure to restore public confidence in Barclays.
54  I
Group Finance Director remuneration – Chris Lucas
The LTIP award shown above for 2012 is for the 2013-2015 performance period and the LTIP award for 2011 is for
the 2012-2014 performance period.
Details of 2012
remuneration
Salary
Chris Lucas'
salary for 2012 was £0.8m. The Committee did not increase his salary for 2013.
Pension
As Group Finance Director Chris Lucas is contractually entitled to cash in lieu of
pension contributions of 25% of his salary per annum. This reflects market practice for senior executives in comparable roles.
Benefits
Chris Lucas' benefits include private medical cover, life and ill-health income
protection, tax advice, car allowance and the use of a company vehicle and driver when required for business purposes. Chris is not entitled to tax equalisation.
Annual Bonus
On 27 June 2012, Chris Lucas agreed with the Board voluntarily to forgo any
consideration for a bonus for 2012. This decision was made in the context of settlements reached by Barclays in relation to investigations by UK and US authorities into submissions made by Barclays to the bodies that set various interbank offered
rates.
In the circumstances the Committee did not consider whether
a bonus would be appropriate for 2012 but it did still consider Chris Lucas' performance during the year against Group and individual performance measures. The Committee noted and confirmed the assessment of his line manager, Antony Jenkins,
that Chris Lucas had exceeded expectations for the year, contributing positively to the process of change underway since Antony became Group Chief Executive. The Committee noted Chris Lucas' effective execution of Barclays capital planning, his
leadership of the finance function and his contribution to the Board's business practices review and medium term planning. In doing so the Committee also considered the 2012 financial highlights as detailed on page 43.
Long Term
Incentive Plan
2013-2015
The Committee decided to make an award to Chris Lucas under the Barclays Long Term
Incentive Plan for the 2013-2015 performance period with a maximum potential payout value of 400% of his salary at the date of award (not taking into account the potential effect of share price movement between award and any payout).
The LTIP maximum value of £3.2m is based on the maximum number of shares
that can vest at the end of a performance period of three years. The maximum number of shares is 400% of salary at the start of the performance period divided by the share price at the date the award is made. For the purposes of assessing the
'value at award' of the LTIP (taking into account the range of possible outcomes) Barclays historical approach has been to ascribe a value of one-third of the maximum value assuming no share price movement. So on the basis of this approach
the 'value at award' of the maximum LTIP to Chris as shown above is one-third x £3.2m, i.e. £1.067m. The 2013-2015 performance condition for Chris' LTIP is identical to that of Antony Jenkins' 2013-2015 LTIP award as
detailed on page 53, as is the subsequent holding period.
I  55
Implementation of Directors' remuneration in 2012 continued
2012 remuneration overview – Chris Lucas
The chart below shows the maximum value
of remuneration possible for 2012 for Chris Lucas, the maximum potential value of the remuneration actually awarded for 2012, and timing of receipt. The potential value of the 2013-2015 LTIP payout does not take into account share price movement or
the value of additional shares which may be added to the number of shares released on vesting to reflect dividends paid during the performance period.
'BIS single figure' for 2012 remuneration
On the Department for Business, Innovation and Skills (BIS) 'single figure' basis (i.e. including the vesting amount of the 2010-2012 PSP
and not the value at award of his 2013-2015 LTIP award) Chris Lucas received 2012 total remuneration of £1.677m.
'BIS single figure' for
2012 total remuneration
£
000
Salary
Pension
Benefits
Bonus
LTIP
Total
800
200
34
0
643
1,677
Previous Long Term Incentive Plan awards
The Committee considered the vesting and release of shares pursuant to Chris Lucas' 2010-2012 Performance Share Plan (PSP) award. Vesting of the award is subject to Barclays total shareholder
return (TSR) growth and return on risk weighted assets (RoRWA) performance over the performance period. Each performance condition operates independently over 50% of the award respectively. For the performance period RoRWA was 0.69%, below the
threshold for the RoRWA element of the award to vest. At the end of 2012 Barclays relative TSR performance was ranked fifth out of a peer group of 12. The award was also subject to a discretionary underpin by which the Committee must be satisfied
with the underlying financial health of the Group. The Committee was satisfied that this underpin was met, and accordingly determined that the award should vest to the extent of 23% of the maximum number of shares under the total award. The shares
are scheduled to vest in March 2013. The value of these shares as at 28 February 2013 is £0.643m as shown in the 'BIS single figure' table above.
Chris Lucas also currently holds unvested LTIP awards under the Barclays LTIP for the performance periods 2011-2013 and 2012-2014. These awards are shown in the table on pages 65-66.
2013 objectives
Chris Lucas'
performance objectives for 2013, by which 2013 remuneration decisions will be measured, include Group and individual measures and are both financial and non-financial. As for Antony Jenkins' 2013 performance assessment as detailed on page 54,
the Committee will assess Chris' performance in line with delivering the Transform commitments. Chris' 2013 performance will also be assessed by the Committee by reference to driving the control agenda through leading the finance, tax and
treasury functions, and building and strengthening relationships with investors, regulators and other stakeholders. Chris' objectives also include ensuring all risk and control frameworks and regulatory requirements are adhered to, and
developing financing and liquidity frameworks which are a source of competitive advantage for Barclays.
56  I
Executive Directors' shareholdings
From 2013 the Committee has introduced a new requirement that executive Directors should hold Barclays shares worth, as a minimum, four times salary. The current executive Directors have five years
from the introduction of this new requirement to meet it (five years from appointment for a new executive Director) and they have a reasonable period to build up to the requirement again if it is not met because of a share price fall. Shares that
count towards the requirement are beneficially owned shares including any vested share awards subject to holding periods (including vested LTIPs). Shares from unvested deferred share bonuses and unvested LTIPs do not count towards the requirement.
This requirement replaces the previous guidelines and positions Barclays at the higher end of market practice.
The chart below shows
the value of Barclays shares held beneficially by Antony Jenkins and Chris Lucas as at 28 February 2013 that count towards the new shareholding requirement.
Executive Director beneficial shareholdings based on share price at 28 February 2013
£000s
The table below provides further details of the executive Directors' shareholdings. The format of this
table reflects the Department for Business, Innovation and Skills' draft disclosure regulation requiring disclosure of shares owned beneficially by executive Directors, and shares in which executive Directors have interests which are subject to
either deferral terms or performance conditions. The interests shown below that are subject to performance conditions are based on the maximum number of shares that may vest. Further details on the executive Directors' outstanding long term
awards and shareholdings are shown on pages 65-66.
Executive Director shareholdings at
28 February 2013
Number of shares
Antony Jenkins
Chris Lucas
Held beneficially (counting towards shareholding requirement)
1,580,856
912,830
Additional shares from unvested awards:
those subject to deferral but not performance conditions
4,495,937
1,155,479
those subject to performance conditions (maximum number of
shares)
2,319,062
4,902,118
Former Chief Executive – Bob Diamond
Bob Diamond stepped down as Chief Executive and from the Boards of Barclays PLC and Barclays Bank PLC on 3 July 2012. Following this, the Board of Barclays PLC and Bob Diamond reached agreement
on the terms of his termination of employment with the Barclays Group.
Pursuant to this agreement, and in line with his contract of
employment, Bob Diamond will continue to receive salary, pension allowance and other benefits until the end of his notice period. The salary and pension allowance will be paid in a lump sum at the end of the notice period. The notice period will end
on 2 July 2013 unless the employment termination date is brought forward by Bob Diamond with the agreement of Barclays. The other benefits include private medical insurance, life and disability cover, accommodation while in the UK, tax advice,
the use of a company vehicle or the cash equivalent, and the use of a company driver when required for business purposes. In the event of an earlier cessation of employment, payments in respect of salary, pension allowance and other benefits will
only be made up to the employment termination date.
Bob Diamond voluntarily waived all of his unvested deferred bonus awards and long
term incentive share awards and no compensation was paid to him in respect of these. These awards had an estimated value of £19.9m on 3 July 2012. Bob Diamond was not considered for an annual bonus for 2012 and he will not receive any
future bonus or long term incentive awards.
In accordance with his contract of employment, Bob Diamond was tax equalised during 2012 on
tax above the UK rate where that could not be offset by a double tax treaty. He is not entitled to tax equalisation for income in respect of any period after 3 July 2012.
Further details on Bob Diamond's remuneration can be found on pages 63-66.
I  57
Implementation of Directors' remuneration in 2012 continued
2012 remuneration for
non-executive Directors
This section provides
details of the fees provided to non-executive Directors during 2012 and details of their letters of appointment.
Remuneration for non-executive Directors reflects their responsibility and time commitment and the level of fees
paid to non-executive directors of comparable major UK companies.
2012 fees for the
Chairman and non-executive Directors (audited)
Fees
£000
Benefits
£000
2012
Total £000
2011
Total £000
Chairman
Sir David Walker
167
6
173
–
Non-executive Directors
David Booth
170
–
170
145
Tim Breedon
18
–
18
–
Fulvio Conti
110
–
110
105
Simon Fraser
140
–
140
130
Reuben Jeffery III
105
–
105
98
Sir Andrew Likierman
135
–
135
127
Dambisa Moyo
120
–
120
105
Sir Michael Rake
220
–
220
188
Sir John Sunderland
161
–
161
132
Alison Carnwath
114
–
114
158
Marcus Agius
750
1
751
751
Total
2,210
7
2,217
1,939
1.
Sir David Walker was appointed to the Board as a non-executive Director with effect from 1 September 2012 and as Chairman from 1 November 2012. He
received fees for the period 1 September 2012 to 31 October 2012 at the rate of £250,000 per annum, and from 1 November 2012 at the rate of £750,000 per annum. Sir David is also entitled to private medical cover
and the use of a company vehicle and driver when required for business purposes.
2.
Tim Breedon joined the Board as a non-executive Director on 1 November 2012.
3.
Alison Carnwath resigned from the Board as a non-executive Director with effect from 24 July 2012.
4.
Marcus Agius announced his intention to step down as Chairman and as a non-executive Director on 2 July 2012. On 3 July 2012, following the resignation
of Bob Diamond, the Board agreed that Marcus Agius would become full-time Chairman and lead the search for a new Chief Executive as well as chair the Group Executive Committee. Marcus' appointment as a non-executive Director and Chairman
subsequently terminated on 31 October 2012. In accordance with his appointment letter, Marcus Agius was paid his monthly fee as non-executive Director and Chairman for the remainder of his notice period up to 1 January 2013. Accordingly
the fees and benefits shown in the table above are for the whole of 2012. No other payments were made in connection with his resignation.
5.
Marcus Agius was appointed as a senior advisor providing corporate advisory support to Barclays Corporate Banking with effect from 1 November 2012. He is
entitled to a fee for this role at the rate of £175,000 per annum. This fee was not paid for the period of 1 November 2012 to 1 January 2013. He is also eligible for medical cover. The appointment will be reviewed after 12
months in the light of business generated.
Letters of appointment
The Chairman and non-executive Directors have individual letters of appointment. The effective dates of the letters of appointment are shown in the
table below. All current non-executive Directors with the exception of Sir Andrew Likierman will be standing for re-election at the 2013 Annual General Meeting.
Effective dates of
letters of appointment
Effective date
Chairman
Sir David Walker
1 September 2012 (non-executive Director), 1 November 2012 (Chairman)
Non-executive Directors
David Booth
1 May 2007
Tim Breedon
1 November 2012
Fulvio Conti
1 April 2006
Simon Fraser
10 March 2009
Reuben Jeffery III
16 July 2009
Sir Andrew Likierman
1 September 2004
Dambisa Moyo
1 May 2010
Sir Michael Rake
1 January 2008
Sir John Sunderland
1 June 2005
Alison Carnwath
1 August 2010 (until 24 July 2012)
Marcus Agius
1 January 2007 (until 31 October 2012)
58  I
Remuneration Committee
Role, membership
and activities of Barclays Board Remuneration Committee
This section explains how the Committee discharges its responsibilities, and gives details of the
Committee's membership, its terms of reference and its activity during 2012.
Board Remuneration
Committee
Chairman and members
(all current members are
considered independent by the
Board)
¡
Sir John Sunderland, Committee member since 1 July 2005, Committee Chairman since 24 July 2012
¡
Sir David Walker, Committee member since 1 September 2012
¡
Simon Fraser, Committee member since 1 May 2009
¡
David Booth, Committee member since 1 July 2012
¡
Tim Breedon, Committee member since 1 December
2012
¡
Alison Carnwath stood down as Committee Chairman with effect from 24 July 2012
¡
Marcus Agius stood down as a Committee member with effect from 12 July 2012
Committee attendance in
2012
Meetings eligible to attend
Sir John Sunderland
l
l
l
l
l
l
l
Sir David Walker
l
l
Simon Fraser
l
l
l
l
l
l
l
David Booth
l
l
l
l
Tim Breedon
l
Alison Carnwath
l
l
l
l
l
Marcus Agius
l
l
l
l
Attended
¡
Did not attend
Remit
¡
The Committee exercises oversight of remuneration as described in more detail below
Terms of Reference
¡
The Committee is responsible for setting the
over-arching objectives, principles and parameters of remuneration policy across the Group
¡
It has specific responsibility for approving
remuneration of executive Directors, members of the Group and business Executive Committees, Code Staff and any other employees with total remuneration of £1m or more
¡
It considers and approves buy-outs of forfeited rights for new hires of £1m or more, and packages on termination where the total value is £1m
or more
¡
The Committee also reviews the policy relating to all remuneration schemes including pensions, and considers and
approves policies to promote the alignment of the interests of shareholders and employees. It is also responsible for the selection and appointment of remuneration consultants. The Terms of Reference are at
www.group.barclays.com/about-barclays/about-us/the-board-committees or from the Company Secretary on request
Number of meetings
¡
Normally four or five scheduled meetings per
year
¡
Seven meetings were held during 2012
External
advisors
¡
The Committee takes into account independent
advice and appraisals of latest market data when considering incentive levels and remuneration packages against the background of its policy of not paying more than is necessary. Towers Watson advised the Committee in 2011 and up to February 2012,
and was re-appointed as its independent advisor in October 2012. Towers Watson also provides remuneration data to the Group and pensions advice and administration services to the Barclays Bank UK Retirement Fund. The advice provided by Towers Watson
to the Committee is independent. Towers Watson is a signatory to, and its continuing appointment as adviser to the Committee is conditional on adherence to, the voluntary UK Code of Conduct for executive remuneration consultants
¡
Johnson Associates, Inc. provided advice to the Committee between February 2012 and October 2012
Internal input
¡
Group Chief Executive and, as necessary, members
of the Executive Committee
¡
Company Secretary
¡
Human Resources Director
¡
Reward and Performance Director
¡
Regular updates on Group and business financial performance and the Group's risk profile were provided by the Group Finance Director and Chief Risk
Officer respectively
¡
No Barclays employee or Director participates in discussions or decisions of the Committee relating to his or her
own remuneration
I  59
Remuneration Committee continued
Remuneration Committee activities in 2012
The following provides a summary of the Committee's activities during 2012 and during the January and February 2013 meetings when 2012
remuneration decisions were finalised. The performance of the Committee is reviewed each year as part of the Board Effectiveness Review. This year's review concluded that the Committee continues to operate effectively. There was a diminution in
overall score partly as a result of the increase in votes against the 2011 remuneration report. In discharging its responsibilities for executive Director remuneration, as well as considering the 2012 remuneration decisions outlined in this report,
the Committee exercised its discretion in relation to the terms of Bob Diamond's termination of employment and the terms of Antony Jenkins' appointment as Group Chief Executive.
Board
Remuneration Committee activities
February 2012
¡
Final 2011 incentive funding
¡
Executive Director and senior executive remuneration
¡
Risk adjustment and malus
¡
2011 Remuneration Report
¡
Update on international mobility
¡
Review of payround analytics
March & May 2012
¡
Review of Committee effectiveness
¡
Review of Committee's Terms of Reference
¡
Compensation trend analysis
¡
Barclays LTIP review
¡
Employee opinion survey update
July 2012
(2 meetings)
¡
Lookback on 2011/12 payround and initial 2012
incentive projections
¡
Remuneration of senior individuals
October 2012
¡
Appointment of external Committee advisor
¡
Update on pension and benefits
¡
Forecast 2012 incentive funding
¡
Operation of malus
¡
FSA Remuneration Policy Statement and Code Staff
¡
Update on all employee share plans
December 2012
¡
Approach to executive Director pensions
¡
2012 incentive funding proposals
¡
Initial considerations on senior executive remuneration
¡
Barclays LTIP 2013 design
¡
Update on Absa Remuneration Committee activity
January & February 2013
¡
Final 2012 incentive funding
¡
Executive Director and senior executive
remuneration
¡
Revised remuneration policy and 2012 Remuneration Report
¡
Risk adjustment and malus
¡
Compensation projections
¡
Update on international mobility
¡
Review of payround analytics
Regular items: finance and risk reports; market and stakeholder updates including FSA, US Federal Reserve and other
regulatory matters; LTIP performance updates; hiring and leaver updates.
Shareholder engagement
The Committee was concerned at the disappointing level of support for last year's remuneration report. At the April 2012 Annual General Meeting
73% of the votes cast were in favour of the 2011 report, while 27% were against. The Committee is resolute in seeking to receive significantly more votes in favour of this report at the 2013 Annual General Meeting.
The decisions we have made for 2012 and the policies we have set for 2013 and beyond show that determination. We recognise that remuneration is an
area of particular interest to shareholders and that in setting and considering changes to remuneration policy we must take into account their views. Accordingly, a series of meetings were held in 2012 and early 2013 with major corporate
shareholders and shareholder representative groups (including the Association of British Insurers, National Association of Pension Funds and ISS). The Committee Chairman attended these meetings, accompanied by senior Barclays employees (including
the Reward and Performance Director and the Company Secretary). Matters discussed included executive Director remuneration, the Barclays LTIP for 2013 and the enhancement of executive shareholding requirements. Discussions also covered total
compensation and incentive costs, and strategic matters such as remuneration strategy and the allocation of distributable earnings between shareholders and employees. The Committee notes that shareholder views on some matters are not always
unanimous, but values the insight and engagement that these interactions and the expression of sometimes different views provide. This engagement is not cosmetic. It has contributed directly to the decisions made by the Committee for 2012 and for
2013.
60  I
Additional remuneration disclosures
2012 total remuneration of the eight highest paid senior executive
officers below Board level
The table below shows the details of salary, bonus for 2012 and the value at award of 2013 long term
incentive awards for the eight highest paid senior executive officers below Board level who were Key Management Personnel in 2012. Total incentives (i.e. bonus and the value at award of LTIP awards) for the 'top eight' in aggregate for
2012 reduced by 49% compared to total incentives for the 'top eight' in aggregate for 2011.
Eight highest paid
senior executive officers below Board level
1
2012
£000
2
2012
£000
3
2012
£000
4
2012
£000
5
2012
£000
6
2012
£000
7
2012
£000
8
2012
£000
Salary
700
600
400
600
758
400
700
518
Current year cash bonus
0
460
350
280
379
240
0
0
Current year share bonus
0
460
350
280
379
240
0
0
Deferred cash bonus
1,125
690
525
420
569
360
0
0
Deferred share bonus
1,125
690
525
420
569
360
0
0
Total of salary and bonus
2,950
2,900
2,150
2,000
2,654
1,600
700
518
Long term incentive award
800
800
800
800
0
800
800
779
Total remuneration
3,750
3,700
2,950
2,800
2,654
2,400
1,500
1,297
Total remuneration of the employees in the Barclays Group
The table below shows the number of employees in the Barclays Group in 2011 and 2012 in bands by reference to total remuneration. Total remuneration
comprises salary, bonus and the value at award of LTIP awards.
Total remuneration of
the employees in the Barclays Group
Number of employees
Total remuneration band
2012
2011
£0 to £25,000
71,581
77,483
£25,001 to £50,000
37,300
33,126
£50,001 to £100,000
22,766
21,424
£100,001 to £250,000
10,158
10,305
£250,001 to £500,000
2,440
2,518
£500,001 to £1,000,000
910
942
£1,000,001 to £2,500,000
373
388
£2,500,001 to £5,000,000
50
68
£5,000,001 and above
5
17
I  61
Additional remuneration disclosures continued
Code Staff remuneration
Code Staff are the members of the Barclays PLC Board and Barclays employees whose professional activities could have a material impact on the
Group's risk profile. A total of 393 individuals were Code Staff in 2012 (2011: 238).
Code Staff aggregate 2012 remuneration
by business
£
m
Investment
Bank
Corporate
Banking
Wealth and
Investment
Management
Retail &
Business
Banking
Absa
Group
Functions
412
11
41
32
8
36
Code Staff aggregate 2012 remuneration by
remuneration type
£
m
Senior management
Other 
Code Staff
Salary
10
93
Current year cash bonus
2
27
Current year share bonus
2
15
Deferred cash bonus
4
186
Deferred share bonus
4
188
Total
22
509
Long term incentive award
8
1
Value of long term incentive awards is the value at award.
Code Staff deferred
remuneration
£
m
Senior management
Other 
Code Staff
Deferred unvested remuneration outstanding at 31 December 2011
129
578
Impact of Code Staff leaving during 2011 or joining in 2012
(1
)
479
Deferred unvested remuneration outstanding at 1 January 2012
128
1,057
Deferred remuneration awarded in 2012
47
535
Deferred remuneration reduced in 2012 through performance adjustments
(46
)
(55
)
Deferred remuneration vested in 2012
(29
)
(391
)
Deferred unvested remuneration outstanding at 31 December 2012
100
1,146
There was no deferred vested remuneration outstanding at the end of 2012.
Code Staff joining and severance
payments
£m
Senior management
Other 
Code Staff
Total sign-on awards (three individuals)
0
1
Total buy-out awards (five individuals)
0
2
Total severance awards (five individuals) (highest individual award £1m)
0
2
'Senior management' means members of the Barclays PLC Board and senior managers as defined in the
FSA's Remuneration Code. Code Staff are subject to a minimum shareholding guideline and 2012 share bonuses awarded to Code Staff are subject to a six month holding period following vesting.
62  I
Statutory remuneration disclosures
This page and pages 64-68 provide details of executive Directors' remuneration in line with current UK directors' remuneration disclosure requirements. Accordingly the figures shown in the
tables on pages 63-64 for Antony Jenkins and for Bob Diamond are, unless otherwise stated, only for the period during which they served as executive Directors. Antony Jenkins' full year 2012 remuneration is shown on pages 53-54.
Executive Directors - total
remuneration (audited)
Antony Jenkins
Chris Lucas
Bob Diamond
2012
£000
2012
£000
2011
£000
2012
£000
2011
£000
Salary
373
800
800
685
1,350
Current year cash bonus
0
0
0
0
0
Current year share bonus
0
0
0
0
0
Deferred cash bonus
0
0
0
0
0
Deferred share bonus
0
0
1,800
0
2,700
Total of salary and bonus
373
800
2,600
685
4,050
Long term incentive award
1,467
1,067
1,333
0
2,250
Total remuneration
1,840
1,867
3,933
685
6,300
Antony Jenkins became an executive Director on 30 August 2012. The figure shown above for 2012 salary is for
the period from 30 August 2012 to 31 December 2012. Antony Jenkins was a member of the boards of Absa Group Limited and Absa Bank Limited during 2012. The directors fees for the Absa board positions were paid to Barclays not Antony
Jenkins. Bob Diamond ceased to be an executive Director on 3 July 2012. The figure shown above for 2012 salary is for the period from 1 January 2012 to 3 July 2012. In addition, Bob Diamond is entitled to salary for the period from
4 July 2012 to the date of termination of his employment (no later than 2 July 2013) at the rate of £1.35m per annum. This is payable in a lump sum at the end of his notice period.
Executive Directors - 2012 and 2013
salary
Salary
at
31 December 2012
£000
Salary at
1 April 2013
£000
Date of
previous
increase
Antony Jenkins
1,100
1,100
30 August 2012
Chris Lucas
800
800
1 April 2010
Bob Diamond's salary as an executive Director was £1.35m per annum (date of previous increase was
1 January 2011).
Executive Directors - Pension (audited)
Age at
31 December
2012
Completed
years of
service
Accrued
pension at
31 December
2012
£000
Transfer
value of
accrued
pension at
31 December
2011
£000
Transfer
value of
accrued
pension at
31 December
2012
£000
Increase in
transfer
value
during
2012
£000
2012
cash in
lieu of
pension
£000
Antony Jenkins
51
12
3
190
232
42
123
Chris Lucas
52
5
–
–
–
–
200
Bob Diamond
61
15
61
599
678
79
343
Antony Jenkins left the UK pension scheme on 1 April 2012, and started receiving cash in lieu of pension. He
was appointed as an executive Director on 30 August 2012, and the 2012 cash in lieu of pension shown above is for the period 30 August 2012 to 31 December 2012. The accrued pension shown above relates to his 1964 section pension only,
whereas the transfer values include a further defined benefit (cash balance) earned in the Afterwork pension section. The main reasons for the increase in transfer value during 2012 are changes to the underlying financial assumptions. Antony
Jenkins' accrued pension increased during 2012 due to inflation.
Bob Diamond ceased to be an executive Director on 3 July
2012. The 2012 cash in lieu of pension shown above is for the period 1 January 2012 to 3 July 2012. From 4 July 2012 until the date of termination of his employment (no later than 2 July 2013), he is entitled to cash in lieu of
pension (at a rate of £675,000 per annum). This will be paid in a lump sum at the end of his notice period. Bob Diamond ceased to be an active member of Barclays US defined benefit and contribution plans as at 31 December 2010. The
increase in the transfer value during 2012 is primarily due to changes in US financial assumptions and being one year closer to retirement age. Bob Diamond's accrued pension increased during 2012 due to exchange rate fluctuations.
I  63
Statutory remuneration disclosures continued
Executive Directors - Benefits
(audited)
2012
£000
2011
£000
Antony Jenkins
19
–
Chris Lucas
34
28
Bob Diamond
262
474
The figure shown above for Antony Jenkins is for the period from 30 August 2012 to 31 December 2012. The
figure shown above for 2012 benefits for Bob Diamond is for the period from 1 January 2012 to 3 July 2012. In addition, Bob Diamond is entitled to benefits for the period from 4 July 2012 to the date of termination of his employment
(no later than 2 July 2013). The total benefits for the period 4 July 2012 to 2 July 2013 are expected to be £0.4m.
Executive Directors - Tax equalisation
(audited)
2012
£000
2011
£000
Antony Jenkins
–
–
Chris Lucas
–
–
Bob Diamond
602
5,745
Bob Diamond was tax equalised on tax above the UK tax rate where that cannot be offset by a double tax treaty. The
2012 tax equalisation cost is in respect of income for the period up to 3 July 2012. Bob Diamond is not entitled to tax equalisation for income in respect of any period after 3 July 2012.
Executive Directors - total of salary,
current year bonus, cash in lieu of pension and benefits (audited)
2012
£000
2011
£000
Antony Jenkins
515
–
Chris Lucas
1,034
1,028
Bob Diamond
1,290
2,499
The total for 2012 for Bob Diamond including tax equalisation is £1.892m which is the sum of £1.29m
shown above and gross costs of tax equalisation of £0.602m (2011 total including 2011 tax equalisation: £8.244m).
64  I
Executive Directors -
outstanding share plan and long term incentive plan awards (audited)
Number of shares
under award/option
at 1 January
2012
(maximum)
Number of shares
awarded in year
(maximum)
Market price
on award date
Weighted average
exercise price
Number of shares
released/exercised
Antony Jenkins
Executive Share Award Scheme
10,905
–
–
–
3,853
Barclays LTIP 2012-2014
–
1,052,347
£1.81
–
–
Barclays LTIP 2012-2014
–
1,266,715
£1.86
–
–
Share Value Plan 2010
824,282
–
£3.55
–
412,141
Share Value Plan 2011
428,055
–
£2.88
–
142,685
Share Value Plan 2012
–
1,796,137
£2.53
–
–
Share Value Plan 2012
–
1,995,237
£1.86
–
–
Incentive Share Plan 2009
166,463
–
£2.34
–
166,463
Chris Lucas
PSP 2009-2011
1,598,046
–
£2.34
–
1,118,632
PSP 2010-2012
927,318
–
£3.55
–
–
Sharesave 2007
3,735
–
–
£4.70
–
Sharesave 2012
–
6,250
–
£1.44
–
Executive Share Award Scheme
646,762
–
–
–
–
Share Value Plan 2011
195,439
–
£2.76
–
65,146
Share Value Plan 2012
–
736,877
£2.53
–
–
Barclays LTIP 2011-2013
1,447,701
–
£2.76
–
–
Barclays LTIP 2012-2014
–
2,158,661
£1.81
–
–
Bob Diamond
PSP 2010-2012
5,563,902
–
£3.55
–
–
Incentive Share Option Plan
472,328
–
–
£3.96
–
Executive Share Award Scheme
246,141
–
–
–
48,679
Share Value Plan 2011
850,524
–
£2.76
–
283,508
Share Value Plan 2012
–
1,105,316
£2.53
–
–
Barclays LTIP 2011-2013
2,442,996
–
£2.76
–
–
Barclays LTIP 2012-2014
–
3,642,741
£1.81
–
–
The interests shown in the table above are the maximum number of Barclays shares that may be received under each
plan. Executive Directors do not pay for any share plan or long term incentive plan awards. Numbers shown for Executive Share Award Scheme (ESAS) represent provisional allocations that have been awarded and may also include shares under option as at
31 December 2012. Nil cost options are normally granted under mandatory ESAS awards at the third anniversary of grant and are exercisable (over initial allocation and two thirds of bonus shares) typically for two years. The aggregate exercise
price of a nil cost option is £1. At the fifth anniversary of the provisional allocation the nil cost options normally lapse and the shares (including bonus shares) are released at the discretion of the ESAS trustee. Chris Lucas held nil cost
options over 43,077 shares under ESAS as at 31 December 2012. These were granted in 2011. The first and last exercise dates are 1 March 2011 and 19 March 2013 respectively. Antony Jenkins received 634 dividend shares from ESAS awards
released in 2012, 22,949 dividend shares from SVP awards released in 2012 and 9,114 dividend shares from the Incentive Share Plan award released in 2012 (market price on release date was £2.36). Chris Lucas received 61,242 dividend shares from
the PSP award released in 2012 (market price on release date was £2.36) and 1,544 dividend shares from the SVP award released in 2012 (market price on release date was £2.03). Bob Diamond received 8,012 dividend shares from ESAS
Executive Directors -
outstanding Contingent Capital Plan (CCP) awards and Cash Value Plan awards (audited)
Value under
award
at
1 January
2012
(maximum)
(£000)
Value
awarded
in year
(maximum)
(£000)
Value
paid
in year
(£000)
Value
lapsed
in year
(£000)
Value under
award
at
31 December
2012
(maximum)
(£000)
First scheduled
release date
Last scheduled
release date
Antony Jenkins
Contingent Capital Plan 2011
1,350
–
450
–
900
15/03/2012
15/03/2014
Cash Value Plan 2012
–
2,250
–
–
2,250
18/03/2013
16/03/2015
Chris Lucas
Contingent Capital Plan 2011
540
–
180
–
360
23/05/2012
23/05/2014
Bob Diamond
Contingent Capital Plan 2011
2,350
–
783
1,567
–
–
–
Deferred cash bonuses granted under CCP in 2011 and CVP in 2012 are dependent on future service and vest subject to
malus conditions. The vesting of CCP awards is subject to the condition that the Core Tier 1 ratio is equal to or exceeds 7%. On the vesting of CCP awards, a 'coupon' may be added which for the awards shown is 7% on the award amount (on an
annualised and non-compounded basis). In addition to the values paid in year shown in the table above, a coupon of 7% was paid on the CCP amounts paid in 2012. Executive Directors do not pay for CCP awards. On the vesting of CVP awards, a
'service credit' may be added on the third and final vesting amount which for the award shown is 10% on the award amount. Antony Jenkins received the CVP award as part of his 2011 bonus, which was awarded in respect of performance in his
role as CEO of Retail and Business Banking. He did not pay for the award.
I  65
Statutory remuneration disclosures continued
Market price on
release/exercise
date
Number of
shares
lapsed in
2012
Number of shares
under
award/option
at
31 December 2012
(maximum)
Vested
number of
shares
under option
Value of
release/exercise
(£000)
End of three year
performance
period, or
first
exercise/scheduled
release date
Last exercise/
scheduled
release date
£2.356
–
7,052
–
9
20/03/2011
18/03/2013
–
–
1,052,347
–
–
31/12/2014
25/05/2015
–
–
1,266,715
–
–
31/12/2014
25/05/2015
£2.356
–
412,141
–
971
01/03/2011
18/03/2013
£2.356
–
285,370
–
336
12/03/2012
15/03/2014
–
–
1,796,137
–
–
18/03/2013
16/03/2015
–
–
1,995,237
–
–
17/03/2014
16/03/2015
£2.356
–
–
–
392
–
–
£2.356
479,414
–
–
2,635
–
–
–
–
927,318
–
–
31/12/2012
18/03/2013
–
–
3,735
–
–
01/11/2014
30/04/2015
–
–
6,250
–
–
01/11/2015
30/04/2016
–
–
646,762
40,621
–
01/03/2011
16/03/2015
£2.028
–
130,293
–
132
08/05/2012
06/05/2014
–
–
736,877
–
–
18/03/2013
16/03/2015
–
–
1,447,701
–
–
31/12/2013
06/05/2014
–
–
2,158,661
–
–
31/12/2014
25/05/2015
–
5,563,902
–
–
–
–
–
–
123,216
349,112
349,112
–
14/03/2006
22/03/2014
£2.356
197,462
–
–
115
–
–
£2.028
567,016
–
–
575
–
–
–
1,105,316
–
–
–
–
–
–
2,442,996
–
–
–
–
–
–
3,642,741
–
–
–
–
–
awards released in 2012 (market price on release date was £2.36) and 6,721 dividend shares from the SVP award
released in 2012 (market price on release date was £2.03). The options held at 31 December 2012 by Bob Diamond under the Incentive Share Option Plan vested in 2006 and 2007. With the exception of Chris Lucas' SVP 2012 award, SVP
awards do not have performance conditions as the awards are deferred share bonuses. Vesting of SVP awards is dependent on future service and subject to malus conditions. The vesting of 50% of each tranche of Chris Lucas' SVP 2012 award is
subject to the condition that on vesting return on equity exceeds cost of equity. The vesting of 50% of the second and third tranches of Chris Lucas' SVP 2012 award are also subject to the Committee being satisfied with progress against the
FSA's capital targets. The highest and lowest Barclays share prices during 2012 were £2.66 and £1.50 respectively; the share price on 31 December 2012 was £2.62. In relation to Chris Lucas' PSP 2009-2011 award, the
RoRWA performance measure was met and the TSR performance measure was partially met. The Committee also considered the underpin and was satisfied with the underlying health of the Group after considering economic profit and profit before tax on a
cumulative basis over the three year performance period. As a result, the award vested in March 2012 at 2.1 times the initial award (maximum was three times).
66  I
Executive Directors -
outstanding long term incentive plans performance conditions
Plan
Performance period
Performance period
measure
Target
Underpin
Actual performance
Barclays LTIP
2012-2014
60% of award calibrated against RoRWA (excluding own credit)
23% of award vests for average annual RoRWA percentage of 1.1% over the performance
period. Maximum of 60% vests for average annual RoRWA of 1.6%. Vesting on a straight line basis in between
Following the determination of the RoRWA vesting percentage, if the Committee is satisfied with underlying Group financial
health (based on cumulative profit before tax excluding own credit) it may, at its discretion, adjust the percentage of award up or down by up to five vesting percentage points (subject to the maximum of 60% for the award calibrated against
RoRWA)
To be determined at vesting in May 2015
30% of award
calibrated against loan loss rate
10% of award vests
for average annual loan loss rate of 93bps over the performance period. Maximum of 30% vests for 70bps or below. Vesting on a straight line basis in between
10% of award
calibrated against Citizenship metrics
Performance
against the Barclays Citizenship strategy is assessed by the Committee to determine the percentage of the award that may vest between 0% and 10%
Barclays
LTIP
2011-2013
60% of award
calibrated against RoRWA
23% of award vests
for average annual RoRWA percentage of 1% over the performance period. Maximum of 60% vests for average annual RoRWA of 1.5%. Vesting on a straight line basis in between
Following
the determination of the RoRWA vesting percentage, the Committee may take into account profit before tax over the performance period and may, at its discretion, adjust the percentage of award up or down by up to five vesting percentage points
(subject to the maximum of 60% for the award calibrated against RoRWA)
To be determined at vesting in
May 2014
30% of award
calibrated against loan loss rate
10% of award vests
for average annual loan loss rate of 95bps over the performance period. Maximum of 30% vests for 81bps or below. Vesting on a straight line basis in between
10% of award
calibrated against sustainability metrics
Performance against
the sustainability metrics is assessed by the Committee to determine the percentage of the award that may vest between 0% and 10%
PSP
2010-2012
50% of award
calibrated against a relative TSR performance condition
33% of maximum award
released for above median performance (6th place) with 100% released in 1st place and a scaled basis in between
Committee
must be satisfied with the underlying financial health of the Group after considering economic profit and profit before tax on a cumulative basis over the three year period
Details of actual performance are shown on
page 56
50% of award
calibrated against average RoRWA
17% of maximum award
released for 0.83% scaled to a maximum award at 1.46%
PSP TSR peer group: UK: HSBC; Europe: Banco Santander, BBVA, BNP Paribas, Credit Suisse, Deutsche Bank, Societe
Generale, Unicredit; US: Bank of America, JP Morgan Chase, Morgan Stanley.
I  67
Statutory remuneration disclosures continued
Executive Directors - interests in
Barclays PLC shares
Number of shares at 1 January 2012
Number of shares at 31 December 2012
Beneficial
Non-beneficial
Beneficial
Non-beneficial
Antony Jenkins
1,580,334
–
1,580,856
–
Chris Lucas
297,467
–
912,830
–
Interests shown for Antony Jenkins in the columns for 1 January 2012 are as at 30 August 2012 (the date
he joined the Board). Beneficial interests include shares held either directly or through a nominee, spouse, or children under 18. They include interests held through Sharepurchase. Non-beneficial interests include any interests in shares where an
executive Director holds the legal but not beneficial interest. There were no changes in the beneficial and non-beneficial interests in the period from 31 December 2012 to 28 February 2013.
Non-executive Directors -
interests in Barclays PLC shares
At 1 January 2012
total beneficial 
interests
At 31 December 2012
total beneficial 
interests
At 28 February 2013
total beneficial 
interests
Chairman
Sir David Walker
–
77,303
81,904
Non-executive Directors
David Booth
82,867
92,061
94,550
Tim Breedon
–
2,000
2,655
Fulvio Conti
48,500
58,015
60,978
Simon Fraser
79,514
87,970
90,637
Reuben Jeffery III
72,174
124,468
128,148
Sir Andrew Likierman
32,329
40,320
42,835
Dambisa Moyo
7,798
16,566
19,232
Sir Michael Rake
35,213
42,825
45,211
Sir John Sunderland
88,058
95,815
98,302
Beneficial interests shown for Sir David Walker and Tim Breedon in the column for 1 January 2012 are as at
1 September 2012 and 1 November 2012 respectively (the dates they joined the Board). Reuben Jeffery III's beneficial interest as at 31 December 2012 comprised 25,000 American Depositary Shares and 24,468 Barclays shares, and as
at 28 February 2013 comprised 25,000 American Depositary Shares and 28,148 Barclays shares. Except as described in this note, there were no changes to the total beneficial interests of the non-executive Directors in the period from
31 December 2012 to 28 February 2013.
Total shareholder return
The graph below shows the value, at 31 December 2012, of £100 invested in Barclays on 31 December 2007 compared with the value of
£100 invested in the FTSE 100 Index. The other points plotted are the values at intervening financial year ends. The FTSE 100 Index is a widely recognised performance comparison for large UK companies and this is why it has been chosen as a
comparator to illustrate Barclays total shareholder return.
Total
shareholder return
68  I
Risk review
Insight into the level of risk across our businesses and portfolios, the material risks and uncertainties we face and the key
areas of management focus. To find out more about the major risk policies which underlie our Risk Exposures, we have consolidated policy-based qualitative information under Risk Management.
For a more detailed breakdown on our Risk review and
Risk management contents please see pages 70-71.
I  69
Risk review
Contents
The management of risk plays a central role in the execution of Barclays strategy.
For the 2012 reporting we have aimed to
develop our approach to risk reporting to ensure disclosure is transparent and easily navigable:
¡
To provide the user with insight into the level of risk across our businesses and portfolios, the material risks and uncertainties we face and the key areas of
management focus, we present our Risk review;
¡
To allow the user to explore deeper and find out more
about the major risk policies which underlie our risk exposures, we have consolidated policy-based qualitative information under Risk management; and
¡
We have aimed to provide clear cross-referencing between the Risk review and Risk management sections.
Risk Overview
Risk
review
Risk
management
These pages
provide a
comprehensive overview
of Barclays risk factors
and approach to risk
management.
Risk
factors
Barclays risk management strategy
Our risk culture
Assigning responsibilities
Principal risks policy
Risk
management in the setting of strategy
72-79
274-280
274
276
277
277-280
Credit Risk
Risk
review
Risk
management
Credit risk is the risk of
suffering financial loss should
the Group's customers, clients
or market counterparties fail
to fulfil
their contractual
obligations.
Credit risk overview and risk factors
72-74
Analysis of Maximum exposure and collateral
and other credit enhancement held
80-81
289-290
Balance sheet concentrations of Credit risk
82-85
290-291
Balance sheet credit quality
86-87
290-291
Analysis of loans and advances and impairment
88-92
283-285
Retail credit risk
93-99
282-287
Wholesale credit risk
100-105
282-287
Barclays Credit Market Exposures
106
Exposures to Eurozone countries
107-118
Market Risk
Risk
review
Risk
management
Market risk is the risk of the Group suffering
financial loss due to the Group being unable to hedge its balance sheet at prevailing market levels.
Market risk overview and risk factors
Analysis of traded market risk exposures
Analysis of non-traded market risk exposures
Foreign exchange risk
Other market risks
75
119-120
120-123
124
125
292-293
293-296
296
70  I
Funding Risk –
Capital
Risk
review
Risk
management
Capital
risk is the risk that the Group is unable to maintain appropriate capital ratios.
Funding
risk – Capital overview and risk factors
Capital Composition
Movement in total regulatory capital
Risk Weighted Assets by risk type and
business
Movement in Risk Weighted Assets
Impact of Basel 3
Adjusted Gross Leverage
Implementation of Basel 3 – Leverage Impacts
Economic capital
75-76
300-301
127
128
129
129-130
130-132
132-133
133-134
135
Funding Risk –
Liquidity
Risk
review
Risk
management
Liquidity
risk is the risk that the Group is unable to meet its obligations as they fall due as a result of a sudden, and potentially protracted, increase in net cash outflows.
Funding
risk – Liquidity overview and risk factors
Liquidity risk stress testing
Liquidity pool
Funding structure
Encumbrance
Credit
Ratings
Liquidity Management at Absa Group
Contractual maturity of financial assets and liabilities
75-76
297-299
136-138
139-140
140-143
144-146
146-147
147
147-150
Operational Risk
Risk
review
Risk
management
Operational risk is the risk of direct or indirect impacts resulting from human factors, inadequate or failed internal processes and systems or
external events.
Operational risk overview and risk factors
Operational risk profile
Supervision and regulation
76-79
302-303
151
154-160
Reputation Risk
Risk
review
Risk
management
Reputation risk is
the risk of
damage to Barclays brand arising from any association, action, or inaction which is perceived by stakeholders to be
inappropriate or unethical.
Reputation
risk
152
Conduct Risk
Risk
review
Risk
management
Conduct Risk is the
risk that
detriment is caused to the Bank, our customers, clients or counterparties because of the inappropriate execution of our
business activities. Conduct Risk, being a material risk faced by the Group, has been categorised as a new Principal Risk in 2013.
Conduct
risk
153
I  71
Risk review
Risk factors
Risk factors
The following information describes the material risks
which the Group believes could cause its future results of operations, financial condition and prospects to differ materially from current expectations. Certain of the risks described below also have the potential to adversely impact the
Group's reputation and brand which could adversely affect the Group's results of operations, financial condition and prospects.
Business conditions and the general economy
Barclays offers a very broad range of services to personal and institutional customers, including governments. The Group has significant activities in a large number of countries. Consequently,
there are many ways in which changes in business conditions and the economy in a single country or region or globally can adversely impact profitability, whether at the level of the Group, the individual business units or specific countries of
operation.
During 2012, the economic environment in Barclays main markets was marked by generally weak or negative growth (as measured
by GDP), which has affected business, consumer and investor confidence across these regions. Economic performance in the near term remains uncertain and is expected to be subdued, which may in some cases lead to material adverse impacts on the
Group's operations, financial condition and prospects, through, for example, changes in credit ratings, share price and solvency of counterparties, as well as higher levels of impairment and default rates, lower revenues and higher costs. A
summary of the performance for each main geographical area is as follows:
¡
In the UK, the economy grew by 0.2% in 2012, but negative growth in the fourth quarter has led to expectations of another difficult year in 2013.
The potential for persistent unemployment, higher interest rates and rising inflation may increase the pressure on disposable incomes and affect an individual's ability to service debt with the potential to adversely impact performance in the
Group's retail sector.
¡
Although US economic performance in 2012 was largely positive, with growth slightly above 2%, the US economy grew by only 0.1% in the fourth
quarter of 2012. Moreover, the unemployment rate remained historically high and the risk of a failure of government leaders to reach a more lasting fiscal agreement remains, both of which increase uncertainty and contribute to a lack of business,
consumer and investor confidence and thus adversely affect Barclays US business operations.
¡
The Eurozone saw negative growth during 2012 as it was impacted by the ongoing sovereign debt crisis. Credit conditions have remained weak and a
depressed housing sector, high unemployment (especially acute amongst the under-30 year old population), contracting GDP and high government deficits may in the near term continue to adversely affect Barclays business operations in this region.
¡
While South Africa experienced moderate economic growth in 2012, the housing sector showed some weakness towards the end of the year leading to
uncertainty in the performance of the Absa business in the near term.
For further information on specific risks to
our business relating to a potential economic downturn and the continuing Eurozone crisis, see below under credit risk.
Credit risk
Credit risk is the risk of the Group suffering financial loss if any of its customers, clients or market counterparties fails to fulfil their contractual obligations to the Group.
The credit risk that the Group faces arises mainly from wholesale and retail loans and advances together with the counterparty credit risk arising
from derivative contracts entered into with its clients. Other sources of credit risk arise from trading activities, including: debt securities; settlement balances with market counterparties; available for sale investments; and reverse repurchase
agreements. It can also arise when an entity's credit rating is downgraded, leading to a fall in the value of Barclays investment. In addition, the Group may incur significant unrealised gains or losses due solely to changes in the Group's
credit spreads or those of third parties, as these changes may affect the fair value of the Group's derivative instruments and the debt securities that the Group holds or issues.
Risks
An economic downturn
The Group's results, financial condition and liquidity may continue to be adversely affected by the uncertainty around the global economy and
the economies of certain areas where Barclays has operations. The Group's performance is at risk from any deterioration in the economic environment which may result from a number of uncertainties, including most significantly the following
factors:
(i) Extent and sustainability of economic recovery, including impact of austerity measures on the European economies
The threat of weaker economies in a number of countries in which the Group operates could lead to higher levels of unemployment, rising
inflation, potentially higher interest rates and falling property prices. Any deterioration in the global economic conditions could have an adverse impact on the credit quality of the Group's customers and counterparties and could lead to a
reduction in recoverability and value of the Group's assets resulting in a requirement to increase the Group's level of impairment allowance.
Growth rates in the UK, US, Europe and South Africa continue to have implications for our portfolios, particularly in Europe where growth forecasts remain weak. Rising unemployment and higher
interest rates would reduce debt service ability in the retail sector with a knock-on effect on corporate credit. The implementation of austerity measures to address high levels of public debt has negatively impacted economic growth and led to
rising unemployment in some European countries. The monetary, interest rate and other policies of central banks and regulatory authorities may also have a significant adverse effect on a number of countries in which the Group operates. The
Group's profitability is subject to further uncertainty from the growth prospects for the Chinese economy and the effect that this may have on the recovery prospects of the global economy.
72  I
(ii) Increase in unemployment due to weaker economies in a number of countries in which the Group operates
During 2012 the unemployment rate in the Eurozone increased to 11.7% (December 2011: 10.7%) and remains particularly high in Spain at 26.1%
(December 2011: 23.2%), although rates have declined in the US to 7.8% (December 2011: 8.5%) and the UK to 7.8% (December 2011: 8.3%) as businesses created jobs despite weak economies.
As customers' ability to service their debt is particularly sensitive to
their employment status, any increase in unemployment rates could lead to an increase in delinquency and default rates, particularly in credit cards and unsecured loan portfolios, which may, in turn, lead to a requirement to increase the
Group's impairment allowances in the retail sector. Any increase in impairment or higher charge-off to recovery and write-offs could have a material adverse effect on the Group's results, financial condition and capital
position.
(iii) Impact of rising inflation and potential interest
rate rises on consumer debt affordability and corporate profitability
Rising inflation resulting from central bank monetary policies or
other factors, coupled with the potential for rising interest rates in response, could have significant adverse effects on both economic growth prospects and the ability of consumers and the corporate sector to service existing debt levels. Consumer
debt affordability is sensitive to interest rates and so any rise, or series of increases, may lead to a significant rise in the Group's impairment charges, particularly in unsecured products, such as credit cards and personal loans, and
adversely impact the Group's performance in a similar way to higher employment levels described above.
(iv) Possibility of further falls in residential property prices in the UK, South Africa and Western Europe
With a £115bn UK home loan portfolio (50% of the Group's total loans and advances to the retail sector), Barclays has a large exposure to adverse developments in the UK property sector.
76% of the loans in this portfolio have a Loan-to-Value (LTV) of equal to or less than 75%. While arrears have remained steady and impairment modest in this property book the housing sector remains weak, despite continuing low interest rates. This
weakness may contribute to further impairment in the near term resulting from a deterioration in house prices due to reduced affordability as a result of, for example, higher interest rates or increased unemployment.
Specifically, the UK interest only portfolio of £53bn remains more
susceptible to weak property prices as these loans mature and customers are required to repay the entire principal outstanding at a time when the loan to value may be high. For further details on the Group's exposure to interest only home loans
and the quality of the portfolio, refer to page 99.
The UK
Commercial Real Estate sector also remains at risk from deterioration in the housing sector which may affect customer confidence levels causing further adverse movements in real estate. This may result in higher levels of default rates in the
corporate sector leading to higher impairment charges and write- offs by the Group.
The Spanish and Portuguese economies, in particular their housing and property sectors, remain under significant stress with falling property prices having led to higher LTV ratios and contributing
to higher impairment charges.
These increases were principally
driven by:
–    Negative house price movements which have reduced market demand and mortgage
supply with the result that a customer's ability to sell has reduced and the likelihood of repossessions has increased. Also loss on default has increased due to lower amounts being realised from the sale of properties in a distressed market;
and
–    Customers' behaviour and a reduced willingness to pay as
a result of their perception of a lower equity stake.
As at 31
December 2012, home loan balances to Spain and Portugal were £13.6bn (31 December 2011: £14.9bn) and £3.7bn (31 December 2011: £3.9bn), respectively. The 2012 impairment charge to our residential mortgage book in Spain was
£72m (2011: £38m) and in Portugal was £24m (2011: £9m).
If these trends in Spain and Portugal continue or worsen and/or if these developments occur in other European countries such as
Italy in which we have particular exposure to residential mortgages outside the UK, we may incur significant impairment charges in the future, which may materially adversely affect the Group's results of operations and financial
condition.
Throughout 2012 the South African housing sector has
been depressed reflecting a weak economy and uncertain outlook. There is concern that unsecured personal debt levels are becoming very high. If the economic environment worsens and becomes subject to further stress this could adversely affect the
Group's performance in the home loan, unsecured loan, auto and credit card portfolios. In the home loan portfolio the average LTV ratio has remained broadly stable at 44.2% (2011: 45.2%), although impairment was higher in 2012 at £339m
(2011: £190m) reflecting higher loss given default rates and levels of write-offs in the recovery book. In Absa Business Markets, the corporate property book remains sensitive to property prices, with reductions potentially leading to
increased impairment charges.
For further information see Retail
Credit Risk and Wholesale Credit Risk (pages 93-105).
(v) US
'Fiscal Cliff' and debt ceiling negotiations
Following the temporary agreement reached at the turn of 2012/13 concerning the
expiry of tax cuts in the US federal budget as part of the 'Fiscal Cliff' legislative negotiations, considerable uncertainty remains with regards to a longer term agreement, in particular with respect to potential adjustments to US federal
government spending, for which the Fiscal Cliff legislative negotiations are ongoing. Failure to reach a more lasting agreement may lead to a new recession in the US, which may have a significant adverse effect on the global economy and lead to
negative pressures on the Group's profitability. Such a failure could also negatively impact upon market confidence, potentially leading to a reduction in investor appetite and liquidity in the US bond and loan markets, which would also impact
upon the Group's profitability.
The Eurozone
crisis
The Group's performance may be materially adversely affected by the actual or perceived increase in the risk of default
on the sovereign debt of certain European countries, the stresses currently being exerted on the financial system within the Eurozone, and the risk that one or more countries may exit the Euro.
(i) Impact of potentially deteriorating sovereign credit quality, particularly
debt servicing and refinancing capability
Concerns in the market about credit risk (including that of sovereign states) and the Eurozone
crisis remain high. The large sovereign debts and/or fiscal deficits of a number of European countries and the sustainability of austerity programmes they have introduced have raised concerns regarding the financial condition of some sovereign
states as well as financial institutions, insurers and other corporates that are: i) located in these countries; ii) have direct or indirect exposure to these countries (both to sovereign and private sector debt) and/or iii) whose banks,
counterparties, custodians, customers, service providers, sources of funding and/or suppliers have direct or indirect exposure to these countries.
The default, or a further decline in the credit rating, of one or more sovereigns or financial institutions could cause severe stress in the
financial system generally and could adversely affect the markets in which the Group operates, its businesses and the financial condition and prospects of the Group and that of its counterparties, customers, suppliers or creditors, directly or
indirectly, in ways which it is difficult to predict.
For further
information see Eurozone Exposure disclosures on pages 107-118.
I  73
Risk review
Risk factors continued
(ii) Potential exit of one or more countries from the Euro as a result of the European debt crisis
An exit of one or more countries from the Eurozone may adversely impact the Group's profitability in a number of ways. Risks
associated with a potential partial break-up of the Euro area include:
¡
Direct risk arising from sovereign default of an exiting country and the impact on the economy of, and the Group's counterparties in, that
country;
¡
Indirect risk arising from the subsequent impact on the economy of, and the Group's counterparties in, other Eurozone countries;
¡
Indirect risk arising from credit derivatives that reference Eurozone sovereign debt; and
¡
Direct redenomination risk on the potential mismatch in the currency of the assets and liabilities on balance sheets of the Group's local
operations in countries in the Eurozone.
Although the Group reduced the aggregate net funding mismatch in local
balance sheets during 2012 from £12.1bn to a £1.9bn surplus in Spain, from £6.9bn to £3.3bn in Portugal and from £12.0bn to £9.6bn in Italy, there can be no assurance that the steps taken by the Group to actively
match local external assets with local external liabilities will be fully successful.
Furthermore the departure from and/or the
abandonment of the Euro by one or more Eurozone countries could lead to significant negative effects on both existing contractual relations and the fulfilment of obligations by the Group and/or its customers, which would have a negative impact on
the activity, operating results, capital position and financial condition of the Group. An exit by a country from the Euro may also adversely affect the economic performance of that country, impacting areas such as interest and unemployment rates,
which in turn may adversely affect our retail and wholesale counterparties' (including a country's government or its agencies) solvency and their ability to service their debts. This may lead to additional impairment or a reduction in
value of Barclays credit assets in that country, which would adversely impact the Group's profitability.
The current absence of a
predetermined mechanism for a member state to exit the Euro means that it is not possible to predict the outcome of such an event and to accurately quantify the impact of such an event on the Group's profitability, liquidity and capital.
The majority of our net on balance sheet exposure to Spain, Portugal and Italy continues to be secured home loans, aggregating to
£32.4bn at 31 December 2012 (31 December 2011: £34.2bn). Although exposure to the less secured corporates and other retail lending portfolios have been reduced in these countries by 30% to £8.1bn (31 December 2011: £11.6bn)
and 17% to £6.1bn (31 December 2011: £7.5bn), respectively, there can be no assurance that the steps taken by the Group to reduce its exposures in these countries will be successful.
For further information see Eurozone Exposure disclosures on pages 107-118.
Specific sectors/geographies
The Group is subject to risks arising from changes in credit quality and recovery of loans and advances due from borrowers and counterparties from a specific portfolio, geography or large individual
names remain. Any deterioration in credit quality would lead to lower recoverability and higher impairment in a specific sector, geography or specific large counterparties.
(i) Possible deterioration in Credit Market Exposures
The Investment Bank holds
certain exposures to credit markets that became illiquid during 2007. These exposures primarily relate to commercial real estate and leveraged finance loans. The Group remains at risk from further deterioration to the remaining exposures, resulting
in further impairment. During 2012, credit market exposures decreased by £5.9bn to £9.3bn, mainly reflecting net sales and paydowns and other movements. We incurred total impairment charges of £243m related to these credit market
exposures (2011: £49m release).
For further information see Barclays Credit Market Exposure Section (page 106).
(ii) Potential liquidity shortages increasing counterparty risks
The Group's ability to enter into its normal funding arrangements could be materially affected by the actions and commercial soundness of other financial institutions. The Group has exposure to
many different industries and counterparties and should funding capacity in either the wholesale markets or central bank operations change significantly, liquidity shortages could result, which may lead to increased counterparty risk with other
financial institutions. This could also have an impact on refinancing risks in the corporate and retail sectors. The performance of the Group remains at risk from a material liquidity shortage.
(iii) Large single name losses
In
the ordinary course of our loan business, we have large individual exposures to individual single name counterparties. We are accordingly exposed to the credit risk of such counterparties in the event of their default of their obligations to us. If
such defaults occur, they may have a significant impact on the impairment charge particularly in Investment Bank and the larger business book in Corporate Banking. In addition, where such counterparty risk has been mitigated by taking collateral,
our credit risk may remain high if the collateral we hold cannot be realised or has to be liquidated at prices which are insufficient to recover the full amount of our loan or derivative exposure.
For further information see Wholesale Credit Risk and Loans and Advances to customers and banks disclosures on pages 100-105.
74  I
Market risk
Barclays is at risk from its earnings or capital being reduced due to:
¡
Traded market risk,
where Barclays supports customer activity primarily via the Investment Bank and is the risk of the Group being
impacted by changes in the level or volatility of positions in its trading books. This includes changes in interest rates, inflation rates, credit spreads, property prices, commodity prices, equity and bond prices and foreign exchange
levels;
¡
Non-traded market risk,
to support customer products primarily in the retail bank and is the risk of the Group being unable to hedge
its banking book balance sheet at prevailing market levels; and
¡
Pension risk,
where the investment profile is reviewed versus the defined benefit scheme and is the risk
of the Group's defined benefit obligations increasing or the value of the assets backing these defined benefit obligations decreasing due to changes in both the level and volatility of prices.
Risks
Specific areas and scenarios where market risk could lead to significantly lower revenues and adversely affect our results of operations in future years include:
(i) Reduced client activity and decreased market liquidity
The Investment Bank business model is focused on client intermediation. A significant reduction in client volumes or market liquidity could result
in lower fees and commission income and a longer time period between executing a client trade, closing out a hedge, or exiting a position arising from that trade. Longer holding periods in times of higher volatility could lead to revenue volatility
caused by price changes. Such conditions could adversely impact the Group's financial results in future periods.
(ii) Uncertain interest rate environment
Interest rate volatility can impact Barclays
net interest margin, which is the interest rate spread realised between lending and borrowing costs. The potential for future volatility and margin changes remains, and it is difficult to predict with any accuracy changes in absolute interest rate
levels, yield curves and spreads. Most developed economies are currently operating under historically low rates. Consequently the net interest margin earned by Barclays is reduced. This margin would likely compress further were central bank rates to
be cut. Rate changes, to the extent they are not neutralised by hedging programmes, may have a material adverse effect on the Group's results of operations, financial condition and prospects.
(iii) Pension fund risk
Adverse movements between pension assets and liabilities for defined benefit pension schemes could contribute to a pension deficit. The key
sensitivities are the discount rate and long term inflation assumptions made in determining the defined benefit obligation. The discount rate is derived from yields of corporate bonds with AA-ratings and consequently includes exposure both to
risk-free yields and credit spreads. Barclays defined benefit pension net position has been adversely affected, and could be adversely affected again, by decreases in discount rate or an increase in long term inflation assumptions.
Funding risk
Funding risk is the risk that the Group is unable to achieve its business plans due to:
¡
Capital risk:
the risk that the Group is unable to maintain appropriate capital ratios which could lead to: an inability
to support business activity; a failure to meet regulatory requirements; and/or changes to credit ratings, which could also result in increased costs or reduced capacity to raise funding;
¡
Liquidity risk:
the risk that the Group is unable to meet its obligations as they fall due resulting in: an inability to
support normal business activity, a failure to meet liquidity regulatory requirements; and/or changes to credit ratings; and
¡
Structural risk:
this risk predominantly arises from the impact on the Group's balance sheet of changes in primarily interest rates on income or foreign exchange rates on capital ratios and is, therefore, difficult to predict with any accuracy and may have a
material adverse effect on the Group's results of operations, financial condition and prospects.
For further information see pages 126-150.
Risks
(i) Increasing capital requirements
There are a number of regulatory developments that impact capital requirements. Most significantly Basel 3 which is planned to be adopted into EU
law through the fourth Capital Requirements Directive (CRD IV) and Capital Requirements Regulation which are on-going through the EU legislative process. Additional capital requirements may arise from other proposals including the recommendations of
the UK Independent Commission on Banking, including with respect to 'ring-fencing' separately the trading and non-trading businesses of banks: The Financial Services (Banking Reform) Bill; EU Review; and, section 165 of the Dodd-Frank Act.
For more information see Operational Risk-Legal and Regulatory Related Risks below.
Increased capital requirements and changes to what is defined to constitute capital may constrain the Group's planned activities and could increase costs and contribute to adverse impacts on
the Group's earnings. During periods of market dislocation, increasing the Group's capital resources in order to meet targets may prove more difficult or costly.
(ii) Maintaining capital strength
A material adverse deterioration in the Group's financial performance can affect the Group's capacity to support further capital
deployment.
I  75
Risk review
Risk factors continued
(iii) Changes in funding availability and costs
Market liquidity and the availability and cost of customer deposits and wholesale funding impacts the Group's ability to meet its obligations
as they fall due, support normal business activity and meet liquidity regulatory requirements. Large unexpected outflows, for example from customer withdrawals, ratings downgrades or loan drawdowns, could also result in forced reduction in the
balance sheet, inability to fulfil lending obligations and a failure to meet liquidity regulatory requirements.
(iv) Downgrade in
credit ratings
Credit ratings affect the cost and other terms upon which the Group is able to obtain funding. Rating agencies regularly
evaluate the Group and certain of its subsidiaries, as well as their respective debt securities. Their ratings are based on a number of factors, including their assessment of the relative financial strength of the Group or of the relevant entity, as
well as conditions affecting the financial services industry generally and there can be no assurance that the rating agencies will maintain the Group's or the relevant entity's current ratings or outlook, especially in light of the
difficulties in the financial services industry and the financial markets.
During 2012, Barclays Bank PLC rating was downgraded by
Moody's, from Aa3/P-1/C to A2/P-1/C-, as a result of the agency's rating repositioning of banks and securities firms with global capital market operations, and by DBRS, from AA High/R-1 High to AA/R-1 High, as the result of the resignation
of senior management during the summer.
Credit rating downgrades could result in contractual outflows to meet collateral requirements
on existing contracts and potential loss of unsecured funding. The aggregate contractual outflows to meet our collateral requirements on existing contracts following a one and two notch long term and associated short term simultaneous downgrades
across all credit rating agencies, would be £13bn and £17bn respectively. See page 146 in the Funding risk – Liquidity section for further information on Barclays credit rating and potential outflows relating to credit downgrades.
(v) Local balance sheet management and redenomination risk
The introduction of capital controls or new currencies by countries (for example in the Eurozone) to mitigate current stresses could have an adverse impact on the performance of local balance sheets
of certain Group companies depending on the asset quality, types of collateral and mix of liabilities. Further detail on the Group's exposures to Eurozone countries is included on pages 107-118.
Operational risk
Operational risk is the risk of direct or indirect impacts resulting from human factors, inadequate or failed internal processes and systems or external events. Operational risks are inherent in the
Group's business activities and include those relating to the conduct of employees and the Bank as a whole and consider the reputational impact of risks should they occur.
Risks
Legal and regulatory related risks
(i) Legal risk
The Group is subject
to a comprehensive range of legal obligations in all countries in which it operates and so is exposed to many forms of legal risk, including that: (i) business may not be conducted in accordance with applicable laws in the relevant
jurisdictions around the world and financial and other penalties may result; (ii) contractual obligations may either not be enforceable as intended or may be enforced in a way adverse to the Group; (iii) intellectual property may not be
adequately protected; and (iv) liability for damages may be incurred to third parties harmed by the conduct of the Group's business. The Group also faces regulatory and other investigations in various jurisdictions, including in the US.
Furthermore, the Group, like many other financial institutions, has come under greater regulatory scrutiny in recent years and expects
that environment to continue – see Regulatory Risk for further details.
Key legal proceedings to which the Group was exposed
during 2012 and continues to be exposed include those relating to:
¡
Lehman Brothers;
¡
Certain series of preference shares issued in the form of American Depositary Shares;
¡
Residential mortgage backed securities;
¡
Devonshire Trust; and
¡
LIBOR Civil Actions (see also competition and regulatory matters discussed below).
For more detailed information on each of these proceedings, see Note 29 to the financial statements. The outcome of each of these legal proceedings
is difficult to predict. However, it is likely that the Group will incur significant expense in connection with these matters and one or more of them could expose the Group to any of the following: substantial monetary damages; other penalties and
injunctive relief; potential regulatory restrictions on the Group's business; and/or negative effect on the Group's reputation.
76  I
Key competition and regulatory matters affecting Barclays during 2012 and which are ongoing are described in Competition and
Regulatory Matters Note 30. A description of the associated risks for each is set out below:
¡
Interchange investigations: The key risks arising from the investigations into Visa and MasterCard credit and debit interchange rates comprise the potential
for fines imposed by competition authorities, follow on litigation and proposals for new legislation. It is not currently possible to predict the likelihood or impact of these risks;
¡
London Interbank Offered Rates (LIBOR) investigations:
The risks associated with investigations by various authorities into submissions made by Barclays and other panel members to the bodies that set various interbank offered rates include: the potential for further financial penalties imposed by
governmental authorities in addition to those assessed in 2012; the pending and potential additional civil litigation; damage to Barclays reputation; the potential for criminal prosecution should Barclays violate the terms of its non-prosecution
agreement with the Department of Justice, Criminal Division Fraud Section; and potential further regulatory enforcement action should Barclays fail to comply with the Cease and Desist Order entered against it by the Commodity Futures Trading
Commission(CFTC);
¡
Interest Rate Hedging Products: The provision of
£850m that Barclays has made in 2012 for future redress to customers categorised as non-sophisticated has been based on the best currently available information (see Note 27 to the financial statements for further details), however there is a
risk that the provision may need to be increased to the extent that experience is not in line with management estimates. In addition, customers could initiate civil litigation against Barclays in connection with the sale of interest rate hedging
products;
¡
Federal Energy Regulatory Commission (FERC)
investigation: Barclays may be required to pay a civil penalty and profit disgorgement plus interest, and could incur damage to its reputation, if it is found to have violated the FERC's Anti-Manipulation Rule in connection with Barclays power
trading in the western US with respect to the period from late 2006 to 2008; and
¡
Other Regulatory investigations: These relate to investigations by the FSA and Serious Fraud Office in connection with certain commercial agreements between Barclays and Qatari interests and whether these may have related to Barclays capital
raisings in June and November 2008 and an investigation by the US Department of Justice and US Securities and Exchange Commission into whether the Group's relationships with third parties who assist Barclays to win or retain business are
compliant with the US Foreign Corrupt Practices Act. The risk of these investigations is that one or more of the relevant authorities will conclude that Barclays and/or one or more of its current or former senior employees has been involved in some
form of wrongdoing. It is not possible to foresee the outcome or impact of such findings other than that a fine or a number of fines would be possible.
(ii) Regulatory risk
Regulatory risk
arises from a failure or inability to comply fully with the laws, regulations or codes applicable specifically to the financial services industry which are currently subject to significant changes. Non-compliance could lead to fines, public
reprimands, damage to reputation, increased prudential requirements, enforced suspension of operations or, in extreme cases, withdrawal of authorisations to operate. Non-compliance may also lead to costs relating to investigations and remediation of
affected customers. The latter may exceed the direct costs of regulatory enforcement actions. In addition, reputational damage may lead to a reduction in franchise value.
Regulatory change
The banking industry continues to be subject to unprecedented levels of regulatory change and scrutiny in many of the countries in which the Group operates. This has led to a more intensive approach
to supervision and oversight, increased expectations and enhanced requirements, including capital and liquidity requirements (for example relating to Basel 3 and CRD IV), resolvability and the clearing of over-the-counter (OTC) derivatives. Banks,
such as Barclays, that are deemed by the Financial Stability Board to be globally systemic banks will be subject to particular scrutiny. In 2013 challenges are expected to increase, particularly in the United Kingdom with the Prudential Regulatory
Authority (PRA) and Financial Conduct Authority (FCA) taking over from the Financial Services Authority with enhanced powers and more focused regulatory mandates and objectives. In addition, the Financial Policy Committee (FPC) of the Bank of
England will have a powerful influence on the conduct of the new regulatory bodies and powers to raise capital requirements for the sector. Significant challenges are also anticipated in the United States as the Dodd-Frank Wall Street Reform and
Consumer Protection Act 2010 (DFA) is implemented, including restrictions on proprietary trading and fund-related activities (the so-called 'Volcker Rule'). Some of the impacts of the DFA extend beyond the United States. The full scale of
the DFA's impact on the Group remains unclear because the rules required to implement many of the provisions of DFA continue to be subject to rulemaking and will take effect over several years. As a result, regulatory risk will continue to
focus senior management attention and consume significant levels of business resource. Furthermore, uncertainty and the extent of international regulatory coordination as enhanced supervisory standards are developed and implemented may adversely
affect our ability to engage in effective business, capital and risk management planning.
For further information see Regulatory Developments in the section on Supervision and Regulation.
Structural reform
The UK
Government has introduced the Financial Services (Banking Reform) Bill which, when enacted, would give the UK authorities the power to implement the recommendations of the Independent Commission on Banking to ring fence the UK and EEA retail banking
activities of the Group. The Government has also announced that it will establish a reserve power allowing the regulator, with approval from the Government, to enforce full separation under certain circumstances.
The European Commission is considering the recommendations of the High Level
Expert Group to require banks to ring fence their trading activities. Proposals are expected in 2013.
In December 2012, the Federal Reserve issued a notice of proposed rulemaking (NPR) to implement for foreign banking organisations Section 165 (enhanced prudential standards) and Section 166 (early
remediation requirements) of the Dodd-Frank Act. The NPR proposes that foreign banking organisations, like Barclays, with total global assets of $50bn or more and with total US assets of $10bn or more (not including branches/agencies) establish an
intermediate holding company (IHC) for its US bank and nonbank subsidiaries. The IHC would be required to meet the enhanced prudential standards and early remediation requirements that are to a large degree, the same as, those applicable to similar
US bank holding companies, including some requirements previously assessed as not being applicable to the Group. The NPR, if adopted in its current form, has the potential to significantly increase the absolute and regulatory costs of Barclays US
operations.
These laws and regulations could result in changes to
the structure of Barclays, and an increase in the amount of loss-absorbing capital issued by Barclays, which may have an adverse impact on profitability, return on equity and/or financial condition. It is not yet possible to predict the detail of
secondary legislation or regulatory rulemaking or the ultimate consequences to the Group. For further information see the section on Supervision and Regulation.
I  77
Risk review
Risk factors continued
Conduct related issues
There are also a number of areas where Barclays conduct has not met the expectations of regulators and other stakeholders and where the Group has sustained financial and reputational damage in 2012,
and where the consequences are likely to endure into 2013 and beyond.
These include participation in benchmark rates and LIBOR and interest rate hedging products, which are discussed in the Legal Risk section above and
PPI. Provisions totalling £850m have been raised in respect of interest rate hedging products in 2012, and provisions of £2.6bn have been raised against PPI in 2011-2012. To the extent that experience is not in line with management
estimates, additional provisions may be required and further reputational damage may be incurred.
Furthermore, the Group is from time to time subject to regulatory investigations. The risk of these investigations to Barclays is that, a number of or all of the authorities will conclude that
Barclays has been involved in some form of wrongdoing. It is not possible to foresee the outcome or impact of such findings other than that fines or other forms of regulatory censure would be possible. This includes the investigation by the United
States FERC into the Group's conduct (see Legal Risk above).
There is a risk that there may be other conduct issues, including in business already written, that Barclays is not presently aware of.
Further details on PPI and interest rate hedging products, including a
description of management judgements and estimates and sensitivity analysis on those estimates where available are provided in Note 27 to the financial statements. Further details on the FERC investigations are provided in Note 30 to the financial
statements.
In addition to the risks highlighted under Legal Risk,
Barclays participates in the setting of a number of interest rate benchmarks such as LIBOR. The setting of such benchmarks is subject to increased scrutiny and additional regulation in a number of jurisdictions, with enhanced sanctions –
including potential criminal sanctions – and attendant damage to Barclays reputation for violations. Barclays may also be required to contribute to benchmarks due to its presence in certain markets. The UK FSA is considering the use of such
powers.
Further details on the LIBOR investigations are provided in
Note 29 and Note 30 to the financial statements. For further information on developments further to the Wheatley Review recommendations related to the setting of LIBOR, see Supervision and Regulation (page 158).
(iii) Implementation of Basel 3
The new capital requirements regulation and capital requirements directive that implement Basel 3 within the EU (collectively known as CRD IV)
include significant developments in the regulatory capital regime including: increased minimum capital ratios; changes to the definition of capital and the calculation of risk weighted assets; and the introduction of new measures relating to
leverage, liquidity and funding. The requirements are under consideration and are expected to be finalised during 2013; however the implementation date is uncertain.
The impact of the CRD IV rules, including with respect to the calculation of capital and risk weighted assets, and the timing of
implementation including the application of transitional relief, have not been finalised and remain subject to change by European legislators. The FSA may also alter its stated approach to the adoption of CRD IV in the United Kingdom. For example,
the scope of application of the volatility charge for credit value adjustments (CVA) may be different from that expected and restrictions may be applied on the maturity of hedges over to insignificant financial holdings, with the result that
individually and/or in aggregate such changes may materially negatively affect Barclays CRD IV capital, leverage, liquidity and funding ratios.
(iv) Recovery and resolution plans (RRP)
The strong regulatory focus on resolvability has continued in 2012, from both UK and international regulators. The Group continues to work with the authorities on RRP and the detailed practicalities
of the resolution process. This includes the provision of information that would be required in the event of a resolution, in order to enhance Barclays resolvability. The Group made its first formal RRP submissions to the UK and US regulators in
mid-2012 and has continued to work with the authorities to identify and address any impediments to resolvability.
Should the authorities decide that Barclays is not resolvable they have the ability to demand that the Group is broken into sections that are deemed resolvable. The impact of such structural changes
could impact capital, liquidity and leverage ratios, due to reduced benefits of diversification, as well as the overall profitability, via duplicated infrastructure costs, lost cross-rate revenues and additional funding costs.
Other operational risks
(v) Reputation risk
Reputation risk,
meaning the risk of damage to the Barclays brand arising from any association, action or inaction which is perceived by stakeholders to be inappropriate or unethical, is inherent in our business. Reputational damage can result from the actual or
perceived manner in which we conduct our business activities, from our financial performance, or from actual or perceived practices in the banking and financial industry. Such reputational damage reduces – directly or indirectly – the
attractiveness of Barclays to stakeholders and may lead to negative publicity, loss of revenue, litigation, regulatory or legislative action, loss of existing or potential client business, reduced workforce morale, and difficulties in recruiting
talent. Sustained reputational damage could have a materially negative impact on our licence to operate and destroy shareholder value.
(vi) Infrastructure resilience, Technology and CyberSecurity
Events across the industry during 2012 have reinforced the importance of infrastructure resilience to the banking infrastructure to allow customers to access their accounts and make payments in a
timely fashion. The Group recognises that this is an area of risk that continues to change rapidly and so requires continued focus.
Any disruption in a customer's access to their account information or delays in making payments will have a significant impact on the
Group's reputation and may also lead to potentially large costs to both rectify the issue and reimburse losses incurred by customers. However, given that it is not possible to predict the level or impact of such an event, should it occur, it is
not possible to accurately quantify either the reputational damage or associated costs to the Group.
78  I
Furthermore, Barclays recognises the growing threat of attacks to its systems,
customers and Group's information held on customers and transactions processed through these systems from individuals or groups via cyberspace (the interdependent network of information technology infrastructures, and includes technology
'tools' such as the internet, telecommunications networks, computer systems, and embedded processors and controllers in critical industries
a
). The implementation of
measures to manage the risk involves continued investment and use of internal resources.
However, given the increasing sophistication
and scope of potential attacks via cyberspace, it is possible that in the future such attacks may lead to significant breaches leading to associated costs and reputational damage although these cannot be quantified to any degree of accuracy at this
time due to the uncertain nature and impact of any such attack.
(vii) Transform Programme
In February 2013, we presented the results of our Strategic Review and the elements of our Transform Programme. As part of the Transform Programme,
we will seek to, among other initiatives, restructure Barclays European retail operations to focus on the mass affluent customer segment, manage risk weighted assets more efficiently through run-off of legacy assets in Europe and the Investment
Bank, and reduce total costs significantly across the Group.
As a result of certain commitments made in the Review, Barclays expects to
incur a restructuring charge of approximately £500m in the first quarter of 2013 and costs associated with implementing the strategic plan of approximately £1bn in 2013, £1bn in 2014 and £0.7bn in 2015.
The development and implementation of our Strategy Review requires difficult, subjective and complex judgements, including forecasts of economic
conditions in various parts of the world. We may fail to correctly identify the trends we seek to exploit and the relevant factors in making decisions as to capital deployment and cost reduction. Our ability to execute our strategy may also be
limited by our operational capacity and the increasing complexity of the regulatory environment in which we operate. Moreover, there is a risk that the restructuring costs associated with implementing the Transform Programme may be higher than our
current expectations. Failure to successfully implement the Transform Programme could have a material adverse effect on the expected benefits of the Transform Programme. In addition, factors beyond our control, including but not limited to the
market and economic conditions such as the risk of an economic downturn and other challenges discussed in detail above, could limit or delay our ability to achieve all of the expected benefits of the Transform Programme.
(viii) Taxation risk
The Group is subject to the tax laws in all countries in which it operates, including tax laws adopted at an EU level, and is impacted by a number of double taxation agreements between countries.
There is potential risk that the Group could suffer losses due to additional tax charges, other financial costs or reputational damage
due to: failure to comply with or correctly assess the application of, relevant tax law; failure to deal with tax authorities in a timely, transparent and effective manner; incorrect calculation of tax estimates for reported and forecast tax
numbers; or provision of incorrect tax advice.
For further information see the Financial Review (pages 161-188) and the Tax note (pages
208-211).
Note
a
As defined by the World Economic Forum's Partnership for Cyber Resilience, of which Barclays is a member.
I  79
Risk review
Credit risk
All disclosures in this section (pages 80-118) are unaudited unless otherwise stated
Credit risk
Credit risk is the risk of the Group suffering financial loss if any of its customers, clients or market counterparties fails to fulfil their contractual obligations to the Group.
Analysis of the Group's maximum exposure and collateral and other credit enhancements held
Basis of preparation
The following tables present a reconciliation between the Group's maximum exposure and its net exposure to credit risk; reflecting the financial effects of collateral, credit enhancements and
other actions taken to mitigate the Group's exposure.
For financial assets recognised on the balance sheet, maximum exposure to
credit risk represents the balance sheet carrying value after allowance for impairment. For off-balance sheet guarantees, the maximum exposure is the maximum amount that Barclays would have to pay if the guarantees were to be called upon. For loan
commitments and other credit related commitments that are irrevocable over the life of the respective facilities, the maximum exposure is the full amount of the committed facilities.
This and subsequent analyses of credit risk include only financial assets subject to credit risk.
They exclude other financial assets not subject to credit risk, mainly equity securities held for trading, as available for sale or designated at fair value, and traded commodities. Assets designated at fair value in respect of linked liabilities to
customers under investment contracts have also not been included as the Group is not exposed to credit risk on these assets. Credit losses in these portfolios, if any, would lead to a reduction in the linked liabilities and not result in a loss to
the Group.
The Group mitigates the credit risk to which it is exposed through netting and set-off, collateral and risk transfer.
Further detail on the Group's policies to each of these forms of credit enhancement are presented on pages 289-290.
Maximum exposure and effects of collateral and other credit enhancements
(audited)
As at 31 December 2012
Maximum
exposure
£m
Netting
and set-off
£m
Collateral
£m
Risk
transfer
£m
Net
exposure
£m
On-balance sheet:
Cash and balances at central banks
86,175
–
–
–
86,175
Items in the course of collection from other banks
1,456
–
–
–
1,456
Trading portfolio assets:
Debt securities
114,759
–
–
–
114,759
Traded loans
2,404
–
–
–
2,404
Total trading portfolio assets
117,163
–
–
–
117,163
Financial assets designated at fair value:
Loans and advances
21,996
–
(7,500
)
(111
)
14,385
Debt securities
6,118
–
(23
)
–
6,095
Other financial assets
7,727
–
(5,629
)
–
2,098
Total financial assets designated at fair value
35,841
–
(13,152
)
(111
)
22,578
Derivative financial instruments
469,146
(387,672
)
(53,183
)
(8,132
)
20,159
Loans and advances to banks
40,489
(1,012
)
(5,071
)
(136
)
34,270
Loans and advances to customers:
Home loans
174,988
–
(172,722
)
(53
)
2,213
Credit cards, unsecured and other retail lending
66,414
(10
)
(18,612
)
(2,321
)
45,471
Corporate loans
184,327
(10,243
)
(50,404
)
(8,489
)
115,191
Total loans and advances to customers
425,729
(10,253
)
(241,738
)
(10,863
)
162,875
Reverse repurchase agreements and other similar secured lending
176,956
–
(175,348
)
–
1,608
Available for sale debt securities
74,677
–
(234
)
(32
)
74,411
Other assets
2,001
–
–
–
2,001
Total on-balance sheet
1,429,633
(398,937
)
(488,726
)
(19,274
)
522,696
Off-balance sheet:
Securities lending arrangements
–
–
–
–
–
Guarantees and letters of credit pledged as collateral security
15,855
–
(2,278
)
(379
)
13,198
Acceptances, endorsements and other contingent liabilities
6,002
–
(61
)
(176
)
5,765
Documentary credits and other short term trade related transactions
1,027
–
(48
)
(11
)
968
Standby facilities, credit lines and other commitments
247,816
–
(17,973
)
(3,396
)
226,447
Total off-balance sheet
270,700
–
(20,360
)
(3,962
)
246,378
Total
1,700,333
(398,937
)
(509,086
)
(23,236
)
769,074
80  I
Overview
As
at 31 December 2012, the Group's net exposure to credit risk after taking into account netting and set-off, collateral and risk transfer reduced 4% to £769.1bn, reflecting a reduction in maximum exposure of 6% and a reduction in the
level of mitigation held by 7%. Overall, the extent to which the Group holds mitigation on its assets decreased marginally to 55% (2011: 56%).
Of the remaining exposure left unmitigated, a significant portion relates to cash held at central banks, available for sale debt securities issued
by governments, cash collateral and settlement balances, all of which are considered lower risk. Trading portfolio liability positions, which to a significant extent economically
hedge trading portfolio assets but which are not held specifically for risk management purposes, are excluded from the analysis
above. The credit quality of counterparties to derivative, available for sale and wholesale loan assets are predominantly investment grade. Further analysis on the credit quality of assets is presented on pages 86-87.
Where collateral has been obtained in the event of default, Barclays does not,
as a rule, use such assets for its own operations and they are usually sold on a timely basis. The carrying value of assets held by the Group as at 31 December 2012 as a result of the enforcement of collateral was £868m (2011:
£470m).
Maximum exposure and effects of collateral and other credit enhancements
(audited)
As at 31 December 2011
Maximum
exposure
£m
Netting
and set-off
£m
Collateral
£m
Risk
transfer
£m
Net
exposure
£m
On-balance sheet:
Cash and balances at central banks
106,894
–
–
–
106,894
Items in the course of collection from other banks
1,812
–
–
–
1,812
Trading portfolio assets:
Debt securities
123,364
–
–
–
123,364
Traded loans
1,374
–
–
–
1,374
Total trading portfolio assets
124,738
–
–
–
124,738
Financial assets designated at fair value:
Loans and advances
21,960
–
(7,887
)
(76
)
13,997
Debt securities
2,095
–
(22
)
–
2,073
Other financial assets
7,574
–
(5,541
)
–
2,033
Total financial assets designated at fair value
31,629
–
(13,450
)
(76
)
18,103
Derivative financial instruments
538,964
(440,592
)
(57,294
)
(7,544
)
33,534
Loans and advances to banks
47,446
(1,886
)
(8,653
)
(171
)
36,736
Loans and advances to customers:
Home loans
171,272
–
(167,581
)
(1,130
)
2,561
Credit cards, unsecured and other retail lending
64,492
(11
)
(16,159
)
(2,564
)
45,758
Corporate loans
196,170
(8,873
)
(53,616
)
(9,550
)
124,131
Total loans and advances to customers
431,934
(8,884
)
(237,356
)
(13,244
)
172,450
Reverse repurchase agreements and other similar secured lending
153,665
–
(150,337
)
–
3,328
Available for sale debt securities
63,610
–
(219
)
(3,532
)
59,859
Other assets
2,620
–
–
–
2,620
Total on-balance sheet
1,503,312
(451,362
)
(467,309
)
(24,567
)
560,074
Off-balance sheet:
Securities lending arrangements
35,996
–
(35,996
)
–
–
Guarantees and letters of credit pledged as collateral
security
a
14,181
–
(2,714
)
(608
)
10,859
Acceptances, endorsements and other contingent
liabilities
a
8,266
–
(23
)
(156
)
8,087
Documentary credits and other short term trade related transactions
1,358
–
(39
)
(49
)
1,270
Standby facilities, credit lines and other commitments
240,282
–
(15,522
)
(3,829
)
220,931
Total off-balance sheet
300,083
–
(54,294
)
(4,642
)
241,147
Total
1,803,395
(451,362
)
(521,603
)
(29,209
)
801,221
Note
a
2011 amounts have been restated to include £1.1bn additional collateral and risk transfers that mitigate guarantees and letters of credit pledged as
collateral security, and to include other contingent liabilities of £7.8bn, identified as being exposed to credit risk.
I  81
Risk review
Credit risk continued
Balance sheet concentrations of credit risk
A concentration of credit risk exists when a number of counterparties are located in a geographical region or are engaged in similar activities and
have similar economic characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes in economic or other conditions. The Group implements limits on concentrations in order to mitigate the risk.
The analyses of credit risk concentrations presented below are based on the location of the counterparty or customer or the industry in which they are engaged. Further detail on the Group's policies with regard to managing concentration risk is
presented on page 282.
Geographic concentrations
As at 31 December 2012, the geographic concentration of the Group's assets remained broadly consistent with 31 December 2011.
For balance sheet assets, the most significant change in concentrations was for cash held at central banks, with cash held as part of the liquidity pool moving from lower yielding Sterling and US
Dollar accounts to higher yielding Euro and Swiss Franc accounts. There was also a notable increase in the proportion of available for sale debt securities issued by counterparties in Europe, primarily high quality bonds forming part of the Group
liquidity pool. This increase was accompanied by a reduction in the proportion of debt securities issued by Asian (predominantly Japanese) and UK counterparties.
Within off-balance sheet, there was a significant reduction in the concentration of exposures in the Americas due to the cessation of the securities lending arrangements contracted with BlackRock,
Inc. upon the disposal of Barclays Global Investors in 2009. Further detail on this transaction is included in Note 28.
An analysis of
geographical and industry concentration of Group loans and advances held at amortised cost and at fair value is presented on pages 89-90. Information on exposures to Eurozone countries is presented on pages 107-118.
Credit risk concentrations by geography (audited)
As at 31 December 2012
United
Kingdom
£m
Europe
£m
Americas
£m
Africa and
Middle East
£m
Asia
£m
Total
£m
On-balance sheet:
Cash and balances at central banks
3,547
70,159
6,566
2,354
3,549
86,175
Items in the course of collection from other banks
788
296
–
371
1
1,456
Trading portfolio assets
16,408
21,386
62,875
2,985
13,509
117,163
Financial assets designated at fair value
24,100
3,546
5,644
1,947
604
35,841
Derivative financial instruments
147,651
157,609
127,367
4,264
32,255
469,146
Loans and advances to banks
7,506
14,942
12,278
2,110
3,653
40,489
Loans and advances to customers
228,007
81,442
63,252
46,093
6,935
425,729
Reverse repurchase agreements and other similar secured lending
29,565
25,743
98,313
4,133
19,202
176,956
Available for sale debt securities
24,024
29,803
11,128
7,103
2,619
74,677
Other assets
987
332
328
290
64
2,001
Total on-balance sheet
482,583
405,258
387,751
71,650
82,391
1,429,633
Off-balance sheet:
Securities lending arrangements
–
–
–
–
–
–
Guarantees and letters of credit pledged as collateral security
6,135
2,560
4,772
2,131
257
15,855
Acceptances, endorsements and other contingent liabilities
4,208
812
273
211
498
6,002
Documentary credits and other short term trade related transactions
629
103
–
295
–
1,027
Standby facilities, credit lines and other commitments
94,070
38,926
91,574
21,637
1,609
247,816
Total off-balance sheet
105,042
42,401
96,619
24,274
2,364
270,700
Total
587,625
447,659
484,370
95,924
84,755
1,700,333
82  I
Credit risk concentrations by geography (audited)
As at 31 December 2011
United
Kingdom
£m
Europe
£m
Americas
£m
Africa and
Middle East
£m
Asia
£m
Total
£m
On-balance sheet:
Cash and balances at central banks
14,631
53,779
27,065
2,418
9,001
106,894
Items in the course of collection from other banks
1,557
88
1
166
–
1,812
Trading portfolio assets
15,162
23,381
68,835
3,498
13,862
124,738
Financial assets designated at fair value
19,405
3,287
6,724
1,958
255
31,629
Derivative financial instruments
173,792
173,863
153,629
4,857
32,823
538,964
Loans and advances to banks
9,621
14,704
13,637
3,234
6,250
47,446
Loans and advances to customers
220,815
90,444
63,457
49,309
7,909
431,934
Reverse repurchase agreements and other similar secured lending
22,701
32,926
80,124
1,795
16,119
153,665
Available for sale debt securities
23,055
17,371
9,891
6,922
6,371
63,610
Other assets
1,510
407
256
365
82
2,620
Total on-balance sheet
502,249
410,250
423,619
74,522
92,672
1,503,312
Off-balance sheet:
Securities lending arrangements
–
–
35,996
–
–
35,996
Guarantees and letters of credit pledged as collateral security
3,885
2,416
5,457
2,100
323
14,181
Acceptances, endorsements and other contingent
liabilities
a
5,861
1,107
303
155
840
8,266
Documentary credits and other short term trade related transactions
655
235
143
201
124
1,358
Standby facilities, credit lines and other commitments
99,735
33,004
85,381
20,478
1,684
240,282
Total off-balance sheet
110,136
36,762
127,280
22,934
2,971
300,083
Total
612,385
447,012
550,899
97,456
95,643
1,803,395
Note
a
2011 amounts have been restated to include analysis of other contingent liabilities of £7.8bn, identified as being exposed to credit risk.
I  83
Risk review
Credit risk continued
Industrial concentrations
As at 31 December 2012, the industrial concentration of the Group's assets remained broadly consistent with 31 December 2011, with 50% of total assets being concentrated towards banks
and other financial institutions (2011: 51%). For balance sheet assets, the most significant change in concentration was for financial assets designated at fair value, for which the proportion of the overall balance that was concentrated towards
governments and central banks increased by 11% on account of the acquisition during the year of economically hedged government bonds.
Within off-balance sheet, there was a significant reduction in the concentration of exposures to other financial institutions due to the cessation
of the securities lending arrangements contracted with BlackRock, Inc. upon the disposal of Barclays Global Investors in 2009. Further detail on this transaction is included in Note 28.
Credit risk concentrations by industry (audited)
As at 31 December 2012
Banks
£m
Other
financial
institu-
tions
£m
Manu-
facturing
£m
Const-
ruction
and
property
£m
Govern-
ment and
central
bank
£m
Energy
and
water
£m
Wholesale
and retail
distrib-
ution
and
leisure
£m
Business
and
other
services
£m
Home
loans
£m
Cards,
unsecured
loans
and other
personal
lending
£m
Other
£m
Total
£m
On-balance sheet:
Cash and balances at central banks
–
–
–
–
86,175
–
–
–
–
–
–
86,175
Items in the course of collection from other banks
1,456
–
–
–
–
–
–
–
–
–
–
1,456
Trading portfolio assets
9,240
24,412
2,072
504
73,848
3,124
446
2,257
–
–
1,260
117,163
Financial assets designated at fair value
5,555
3,524
175
10,062
11,057
885
600
3,581
–
–
402
35,841
Derivative financial instruments
349,481
81,080
2,401
4,478
9,589
10,011
2,203
6,906
–
–
2,997
469,146
Loans and advances to banks
38,870
–
–
–
1,619
–
–
–
–
–
–
40,489
Loans and advances to customers
–
87,990
11,518
25,253
4,923
7,622
14,603
24,152
174,614
53,647
21,407
425,729
Reverse repurchase agreements and other similar secured lending
64,616
106,665
4
1,014
3,684
261
98
610
–
–
4
176,956
Available for sale debt securities
16,933
10,273
92
91
46,177
122
42
846
–
–
101
74,677
Other assets
249
632
2
34
165
6
8
192
13
694
6
2,001
Total on-balance sheet
486,400
314,576
16,264
41,436
237,237
22,031
18,000
38,544
174,627
54,341
26,177
1,429,633
Off-balance sheet:
Securities lending arrangements
–
–
–
–
–
–
–
–
–
–
–
–
Guarantees and letters of credit pledged as collateral security
836
3,810
1,649
847
1,680
1,856
989
2,654
89
289
1,156
15,855
Acceptances, endorsements and other contingent liabilities
533
891
883
371
10
828
495
1,565
–
44
382
6,002
Documentary credits and other short term trade related transactions
559
51
55
3
–
1
77
275
–
4
2
1,027
Standby facilities, credit lines and other commitments
–
34,464
24,937
8,675
3,829
21,790
10,566
13,727
17,538
96,993
15,297
247,816
Total off-balance sheet
1,928
39,216
27,524
9,896
5,519
24,475
12,127
18,221
17,627
97,330
16,837
270,700
Total
488,328
353,792
43,788
51,332
242,756
46,506
30,127
56,765
192,254
151,671
43,014
1,700,333
84  I
Credit risk concentrations by industry (audited)
As at 31 December 2011
Banks
£m
Other
financial
institu-
tions
£m
Manu-
facturing
£m
Const-
ruction
and
property
£m
Govern-
ment and
central
bank
£m
Energy
and
water
£m
Wholesale
and retail
distrib-
ution
and
leisure
£m
Business
and other
services
£m
Home
loans
£m
Cards,
unsecured
loans and
other
personal
lending
£m
Other
£m
Total
£m
On-balance sheet:
Cash and balances at central banks
–
–
–
–
106,894
–
–
–
–
–
–
106,894
Items in the course of collection from other banks
1,810
–
–
–
2
–
–
–
–
–
–
1,812
Trading portfolio assets
4,857
27,992
1,585
480
83,631
3,191
448
1,773
–
–
781
124,738
Financial assets designated at fair value
6,050
3,320
75
10,447
6,354
1,053
332
3,547
–
1
450
31,629
Derivative financial instruments
401,465
96,781
4,044
4,853
8,321
12,960
3,309
3,928
–
19
3,284
538,964
Loans and advances to banks
44,707
–
–
–
2,739
–
–
–
–
–
–
47,446
Loans and advances to customers
–
89,650
12,904
28,711
6,129
7,414
16,206
26,300
171,272
50,062
23,286
431,934
Reverse repurchase agreements and other similar secured lending
61,544
86,930
195
201
3,842
127
63
235
–
–
528
153,665
Available for sale debt securities
15,961
7,142
213
137
38,511
126
90
820
370
–
240
63,610
Other assets
506
374
–
54
492
–
7
310
2
818
57
2,620
Total on-balance sheet
536,900
312,189
19,016
44,883
256,915
24,871
20,455
36,913
171,644
50,900
28,626
1,503,312
Off-balance sheet:
Securities lending arrangements
–
35,996
–
–
–
–
–
–
–
–
–
35,996
Guarantees and letters of credit pledged as collateral security
990
3,947
1,534
757
630
1,615
913
2,213
–
310
1,272
14,181
Acceptances, endorsements and other contingent
liabilities
a
599
1,214
1,075
459
7
865
527
2,945
–
38
537
8,266
Documentary credits and other short term trade related transactions
428
128
40
1
–
–
215
480
–
65
1
1,358
Standby facilities, credit lines and other commitments
785
32,511
23,429
9,114
3,573
20,764
12,052
17,012
15,663
90,062
15,317
240,282
Total off-balance sheet
2,802
73,796
26,078
10,331
4,210
23,244
13,707
22,650
15,663
90,475
17,127
300,083
Total
539,702
385,985
45,094
55,214
261,125
48,115
34,162
59,563
187,307
141,375
45,753
1,803,395
Note
a
2011 amounts have been restated to include analysis of other contingent liabilities of £7.8bn, identified as being exposed to credit risk.
I  85
Risk review
Credit risk continued
Balance sheet credit quality
The following tables present the credit quality of Group assets exposed to credit risk.
Basis of preparation
For performing loans that are neither past due nor
impaired, which form the majority of loans in the portfolios, the following internal measures of credit quality have been used for the purposes of this analysis:
¡
Strong – there is a very high likelihood of the asset being recovered in full;
¡
Satisfactory – whilst there is a high likelihood that the asset will be recovered and therefore, of no cause for concern to the Group, the
asset may not be collateralised, or may relate to retail facilities, such as credit card balances and unsecured loans, which have been classified as satisfactory, regardless of the fact that the output of internal grading models may have indicated a
higher classification; and
¡
Higher risk – there is concern over the obligor's ability to make payments when due. These have not yet converted to actual
delinquency.
Non-performing loans – loans that are impaired or are past due but not impaired – have been
included in the Higher Risk category for this analysis with prior year comparatives restated to align presentation. An age analysis of both is presented on pages 91-92.
For assets held at fair value, the carrying value on the balance sheet will include, among other things, the credit risk of the issuer. Most listed and some unlisted securities are rated by external
rating agencies. The Group mainly uses external credit ratings provided by Standard & Poor's or Moody's. Where such ratings are not available or are not current, the Group will use its own internal ratings for the securities.
For further information on the way in which Barclays measures the credit quality of its loan portfolios, refer to pages 290-291.
Balance sheet credit quality (audited)
Strong
(investment
grade)
£m
Satisfactory
(BB+ to B)
£m
Higher risk
(B- and
below)
£m
Maximum
exposure to
credit risk
£m
Strong
(investment
grade)
%
Satisfactory
(BB+ to B)
%
Higher risk
(B- and
below)
%
As at 31 December 2012
Cash and balances at central banks
86,175
–
–
86,175
100
–
–
Items in the course of collection from other banks
1,320
103
33
1,456
91
7
2
Trading portfolio assets:
Debt securities
107,784
5,604
1,371
114,759
94
5
1
Traded loans
454
1,617
333
2,404
19
67
14
Total trading portfolio assets
108,238
7,221
1,704
117,163
92
6
2
Financial assets designated at fair value:
Loans and advances
19,609
1,684
703
21,996
89
8
3
Debt securities
5,485
164
469
6,118
90
3
7
Reverse repurchase agreements
5,010
963
61
6,034
83
16
1
Other financial assets
623
967
103
1,693
37
57
6
Total financial assets designated at fair value
30,727
3,778
1,336
35,841
86
10
4
Derivative financial instruments
443,102
23,498
2,546
469,146
94
5
1
Loans and advances to banks
36,695
2,868
926
40,489
91
7
2
Loans and advances to customers:
Home loans
142,828
20,407
11,753
174,988
81
12
7
Credit cards, unsecured and other retail lending
15,169
45,852
5,393
66,414
23
69
8
Corporate loans
121,417
51,196
11,714
184,327
66
28
6
Total loans and advances to customers
279,414
117,455
28,860
425,729
66
27
7
Reverse repurchase agreements and other similar secured lending
129,687
47,078
191
176,956
73
27
–
Available for sale debt securities
69,877
2,331
2,469
74,677
94
3
3
Other assets
1,623
322
56
2,001
81
16
3
Total assets
1,186,858
204,654
38,121
1,429,633
83
14
3
86  I
Overview
As at 31 December 2012, the proportion of the Group's assets classified as strong fell marginally to 83% (2011: 84%) of total assets
exposed to credit risk.
Traded assets continued to remain almost entirely investment grade, with counterparties to 94% (2011: 95%) of
total derivative financial instruments, and issuers of 94% (2011: 95%) of debt securities held for trading and 94% (2011: 91%) of debt securities held available for sale being investment grade. The credit quality of counterparties to reverse
repurchase agreements held at amortised cost remained broadly stable at 73% (2011: 77%). The credit risk of these assets is much reduced with balances being fully collateralised.
In the loan portfolios, 81% of home loans (2011: 78%) to customers are measured as strong. This increase in the period reflects improvements in the UK portfolio. The majority of credit card,
unsecured and other retail lending remained satisfactory, reflecting the unsecured nature of a significant proportion of the balance, comprising 69% of the total (2011: 70%). The credit quality profile of the Group's corporate lending improved
with counterparties rated strong increasing to 66% (2011: 61%), primarily due to the continued active management of corporate books in the Investment Bank and Corporate Banking.
Further analysis of debt securities by issuer type is presented on page 104.
Further
information on netting and collateral arrangements on derivatives financial instruments is presented on page 105.
Balance sheet credit quality (audited)
Strong
(investment
grade)
£m
Satisfactory
(BB+ to B)
£m
Higher risk
(B-
and
below)
£m
Maximum
exposure to
credit risk
£m
Strong
(investment
grade)
%
Satisfactory
(BB+ to B)
%
Higher risk
(B-
and
below)
%
As at 31 December 2011
Cash and balances at central banks
106,894
–
–
106,894
100
–
–
Items in the course of collection from other banks
1,615
99
98
1,812
89
6
5
Trading portfolio assets:
Debt securities
116,743
4,922
1,699
123,364
95
4
1
Traded loans
74
821
479
1,374
5
60
35
Total trading portfolio assets
116,817
5,743
2,178
124,738
94
4
2
Financial assets designated at fair value:
Loans and advances
19,484
1,487
989
21,960
89
7
4
Debt securities
1,163
184
748
2,095
55
9
36
Reverse repurchase agreements
4,018
1,554
207
5,779
69
27
4
Other financial assets
655
1,079
61
1,795
36
60
4
Total financial assets designated at fair value
25,320
4,304
2,005
31,629
80
14
6
Derivative financial instruments
515,109
19,875
3,980
538,964
95
4
1
Loans and advances to banks
42,278
2,594
2,574
47,446
89
6
5
Loans and advances to customers:
Home loans
134,009
25,847
11,416
171,272
78
15
7
Credit cards, unsecured and other retail lending
14,226
45,388
4,878
64,492
22
70
8
Corporate loans
119,856
59,370
16,944
196,170
61
30
9
Total loans and advances to customers
268,091
130,605
33,238
431,934
62
30
8
Reverse repurchase agreements and other similar secured lending
117,719
34,653
1,293
153,665
77
22
1
Available for sale debt securities
57,793
3,253
2,564
63,610
91
5
4
Other assets
2,130
417
73
2,620
81
16
3
Total assets
1,253,766
201,543
48,003
1,503,313
84
13
3
I  87
Risk review
Credit risk continued
Analysis of loans and advances and impairment
Total gross loans and advances to customers and banks decreased 3% to £500.3bn. Gross loans and advances to customers and banks at amortised
cost decreased 3% to £475.9bn with a 7% decrease in the wholesale portfolio offset by a 1% increase in the retail portfolio. The principal drivers for this decrease were:
¡
Investment Bank where loans and advances decreased 9% to £147.4bn driven by a reduction in corporate, interbank and other wholesale
lending; and
¡
Corporate Banking where loans and advances decreased 6% to £65.8bn due to the disposal of the Iveco Finance business and a reduction in
Spanish exposures.
These decreases were offset by an increase in:
¡
UKRBB, where a 5% increase to £129.7bn primarily reflected growth in home loans balances; and
¡
Barclaycard, where an 8% increase to £34.7bn primarily reflected business growth in the UK and the US and acquisition of portfolios in the
US and South Africa.
Retail and wholesale loans and advances to customers and banks
a
Gross
L&A
£m
Impairment
allowance
£m
L&A net of
impairment
£m
Credit risk
loans
£m
CRLs % of
gross L&A
%
Loan
impairment
charges
£m
Loan loss
rates
bps
As at 31 December 2012
Total retail
232,672
4,635
228,037
8,821
3.8
2,075
89
Wholesale – customers
203,123
5,000
198,123
9,693
4.8
1,507
74
Wholesale – banks
40,099
41
40,058
51
0.1
(23
)
(6
)
Total wholesale
243,222
5,041
238,181
9,744
4.0
1,484
61
Loans and advances at amortised cost
475,894
9,676
466,218
18,565
3.9
3,559
75
Traded loans
2,404
n/a
2,404
Loans and advances designated at fair value
21,996
n/a
21,996
Loans and advances held at fair value
24,400
n/a
24,400
Total loans and advances
500,294
9,676
490,618
As at 31 December 2011
Total retail
229,671
5,386
224,285
10,410
4.5
2,477
108
Wholesale – customers
212,992
5,166
207,826
10,898
5.1
1,307
61
Wholesale – banks
47,314
45
47,269
34
0.1
6
1
Total wholesale
260,306
5,211
255,095
10,932
4.2
1,313
50
Loans and advances at amortised cost
489,977
10,597
479,380
21,342
4.4
3,790
77
Traded loans
1,374
n/a
1,374
Loans and advances designated at fair value
21,960
n/a
21,960
Loans and advances held at fair value
23,334
n/a
23,334
Total loans and advances
513,311
10,597
502,714
Note
a
For December 2012 reporting UKRBB Medium Business lending (2011: £2,680m) and Barclaycard's Global Payment Acceptance, Global Commercial Payments and
Business Cards portfolios have been reclassified from wholesale to retail. Wealth and Investment Management's Private Bank portfolio (2011: £14,627m) has been reclassified from retail to wholesale. These reclassifications (including
comparatives) better reflect the way in which risk in these portfolios is managed.
88  I
Group loans and advances held
at amortised cost, by industry sector and geography
Loans and advances, net of impairment allowances, held at amortised cost
decreased by 3% to £466.2bn, reflecting a reduction in corporate, interbank and other wholesale lending. Home loans to customers in the UK and cards, unsecured and other personal lending to customers in the UK rose, in line with business
growth.
Loans and advances at amortised cost net of impairment allowances by industry
sector and geography
United
Kingdom
£m
Europe
£m
Americas
£m
Africa and
Middle East
£m
Asia
£m
Total
£m
As at 31 December 2012
Banks
7,134
14,475
12,050
1,806
3,405
38,870
Other financial institutions
17,113
20,986
42,277
4,490
3,124
87,990
Manufacturing
6,041
2,533
1,225
1,232
487
11,518
Construction
3,077
476
1
75
21
3,650
Property
15,167
2,411
677
3,101
247
21,603
Government and central bank
558
2,985
1,012
1,734
253
6,542
Energy and water
2,286
2,365
1,757
821
393
7,622
Wholesale and retail distribution and leisure
9,567
2,463
734
1,748
91
14,603
Business and other services
15,754
2,754
2,360
2,654
630
24,152
Home loans
119,652
36,659
480
17,553
270
174,614
Cards, unsecured loans and other personal lending
29,716
5,887
11,725
5,172
1,147
53,647
Other
9,448
2,390
1,232
7,817
520
21,407
Net loans and advances to customers and banks
235,513
96,384
75,530
48,203
10,588
466,218
Impairment allowance
3,270
2,775
2,180
1,381
70
9,676
As at 31 December 2011
Banks
9,251
13,503
13,349
2,956
5,648
44,707
Other financial institutions
18,474
20,059
44,965
2,264
3,888
89,650
Manufacturing
6,185
3,341
1,396
1,439
543
12,904
Construction
3,391
771
32
348
65
4,607
Property
16,230
3,193
869
3,600
212
24,104
Government and central bank
493
3,365
907
3,072
1,031
8,868
Energy and water
1,599
2,448
2,165
818
384
7,414
Wholesale and retail distribution and leisure
10,308
3,008
656
2,073
161
16,206
Business and other services
16,473
4,981
1,584
2,907
355
26,300
Home loans
112,260
38,508
566
19,437
501
171,272
Cards, unsecured loans and other personal lending
27,409
6,417
9,293
6,158
785
50,062
Other
8,363
5,554
1,312
7,471
586
23,286
Net loans and advances to customers and banks
230,436
105,148
77,094
52,543
14,159
479,380
Impairment allowance
4,005
2,920
2,128
1,446
98
10,597
I  89
Risk review
Credit risk continued
Loans and advances held at fair value by industry sector and geography
Total loans and advances held at fair value principally reflecting balances held in the Corporate and Investment Bank increased 5% to £24.4bn
(2011: £23.3bn). The movement is driven by government, and business and other services counterparties which increased by £0.9bn to £10.2bn, reflecting increased lending in the Americas. A large portion of the total comprises
lending to property, government, and business and other services. Property includes lending within the legacy Corporate Real Estate business as well as to social housing associations and the fall of £0.4bn to £9.9bn (2011: £10.3bn)
is primarily due to loan repayments.
Loans and advances held at fair value by industry sector and
geography
United
Kingdom
£m
Europe
£m
Americas
£m
Africa and
Middle East
£m
Asia
£m
Total
£m
As at 31 December 2012
Banks
–
493
120
422
–
1,035
Other financial institutions
a
13
611
622
8
39
1,293
Manufacturing
6
38
601
16
15
676
Construction
161
1
–
28
4
194
Property
8,668
830
295
121
–
9,914
Government and central bank
5,759
6
314
17
5
6,101
Energy and water
10
73
41
46
3
173
Wholesale and retail distribution and leisure
33
2
220
72
1
328
Business and other services
3,404
20
685
14
–
4,123
Other
105
132
46
224
56
563
Total
18,159
2,206
2,944
968
123
24,400
As at 31 December 2011
Banks
11
364
10
126
1
512
Other financial institutions
142
76
892
134
21
1,265
Manufacturing
16
211
154
7
18
406
Construction
158
–
–
19
2
179
Property
8,443
1,147
575
133
3
10,301
Government and central bank
5,609
–
–
19
8
5,636
Energy and water
32
203
46
104
–
385
Wholesale and retail distribution and leisure
63
15
243
36
2
359
Business and other services
3,381
76
201
34
–
3,692
Other
90
66
55
317
71
599
Total
17,945
2,158
2,176
929
126
23,334
Impairment charges (audited)
Loan impairment charges reduced 6% to £3,559m, reflecting lower impairment in UKRBB, Barclaycard and Corporate Banking partially offset by higher charges in some international businesses,
notably in Europe and South Africa, and a higher charge in the Investment Bank. The increase in the Investment Bank was related to ABS CDO Super Senior positions, losses on a small number of single name exposures; and a non-recurring release of
£223m in 2011. Combined with a 3% decrease in loans and advances, this resulted in a lower overall Group loan loss rate of 75bps (2011: 77bps; 2010: 118bps). Further detail can be found in the Retail credit risk and Wholesale credit risk
sections on pages 93 and 100.
Credit impairment charges and other provisions by business
(audited)
2012
£m
2011
£m
2010
£m
Loan impairment
UKRBB
269
536
819
Europe RBB
328
241
314
Africa RBB
646
466
562
Barclaycard
979
1,259
1,688
Investment Bank
b
448
129
642
Corporate Banking
851
1,120
1,551
Wealth and Investment Management
38
41
48
Head Office and Other Operations
–
(2
)
1
Total loan impairment charges
c
3,559
3,790
5,625
Impairment charges on available for sale investments (excluding BlackRock, Inc.)
40
60
51
Impairment of reverse repurchase agreements
(3
)
(48
)
(4
)
Total credit impairment charges and other provisions
3,596
3,802
5,672
Impairment of investment in BlackRock, Inc.
–
1,800
–
Notes
a
Included within Other financial institutions (Americas) are £427m (2011: £693m) of loans backed by retail mortgage collateral.
b
Credit market related impairment charges within Investment Bank comprised a net £243m charge (2011: £14m write back; 2010: £660m charge) against
loans and advances and a £6m write back (2011: £35m; 2010: £39m) against available for sale investments.
c
Includes write back of £4m (2011: £24m charge; 2010: £76m charge) in respect of undrawn facilities and guarantees.
90  I
Impairment allowances
(audited)
Impairment allowances decreased £921m to £9,676m, driven primarily by a reduction in the retail portfolios due
to improved underlying credit performance and delinquency. Amounts written off decreased £1,046m to £4,119m driven, in part, by the 2011 change in write-off policy, which resulted in higher write-offs in the prior year.
Movements in allowance for impairment by asset class
(audited)
At beginning
of year
£m
Acquisitions
and
disposals
£m
Unwind of
discount
£m
Exchange
and other
adjustments
£m
Amounts
written off
£m
Recoveries
£m
Amounts
charged to
income
statement
£m
Balance at
31 December
£m
2012
Home loans
834
–
(45
)
(33
)
(382
)
24
457
855
Credit cards, unsecured and other retail lending
4,540
(59
)
(144
)
(248
)
(2,102
)
119
1,674
3,780
Corporate loans
5,223
(21
)
(22
)
(5
)
(1,635
)
69
1,432
5,041
Total impairment allowance
10,597
(80
)
(211
)
(286
)
(4,119
)
212
3,563
9,676
2011
Home loans
854
(2
)
(80
)
(101
)
(184
)
14
333
834
Credit cards, unsecured and other retail lending
5,919
(4
)
(154
)
(145
)
(3,292
)
139
2,077
4,540
Corporate loans
5,659
(12
)
(9
)
(194
)
(1,689
)
112
1,356
5,223
Total impairment allowance
12,432
(18
)
(243
)
(440
)
(5,165
)
265
3,766
10,597
Age analysis of loans and advances that are past due (audited)
The following tables present an age analysis of loans and advances that are past due but not impaired and loans that are assessed as impaired. These
loans are reflected in the balance sheet credit quality tables on pages 86-87 as being higher risk.
Loans and advances past due but not impaired (audited)
Past due
up to
1 month
£m
Past due
1-2 months
£m
Past due
2-3 months
£m
Past due
3-6 months
£m
Past due
6 months
and over
£m
Total
£m
As at 31 December 2012
Loans and advances designated at fair value
108
50
39
19
176
392
Home loans
127
23
48
42
39
279
Credit cards, unsecured and other retail lending
133
6
6
8
35
188
Corporate loans
4,261
471
459
236
427
5,854
Total
4,629
550
552
305
677
6,713
As at 31 December 2011
Loans and advances designated at fair value
56
46
–
3
327
432
Home loans
35
5
22
31
21
114
Credit cards, unsecured and other retail lending
117
29
27
48
127
348
Corporate loans
8,343
315
298
315
236
9,507
Total
8,551
395
347
397
711
10,401
I  91
Risk review
Credit risk continued
Analysis of loans and advances assessed as impaired (audited)
The following tables present an age analysis of loans and advances collectively impaired, total individually impaired loans, and total impairment
allowance.
Loans and advances assessed as
impaired (audited)
Collectively assessed for impairment
Individually
assessed for
impairment
£m
Total
£m
Past due
up to
1 month
£m
Past due
1-2 months
£m
Past due
2-3 months
£m
Past due
3-6 months
£m
Past due
6 months
and over
£m
Total
£m
As at 31 December 2012
Home loans
4,649
2,297
650
888
1,964
10,448
783
11,231
Credit cards, unsecured and other retail lending
1,539
938
345
550
2,864
6,236
1,617
7,853
Corporate loans
344
57
46
57
872
1,376
7,449
8,825
Total
6,532
3,292
1,041
1,495
5,700
18,060
9,849
27,909
As at 31 December 2011
Home loans
4,034
2,636
550
1,345
2,113
10,678
382
11,060
Credit cards, unsecured and other retail lending
1,390
1,117
357
885
3,585
7,334
702
8,036
Corporate loans
138
71
71
81
455
816
9,607
10,423
Total
5,562
3,824
978
2,311
6,153
18,828
10,691
29,519
Potential Credit Risk Loans (PCRLs)
In line with disclosure requirements from the SEC in the US, the Group reports potentially and actually impaired loans as PCRLs. PCRLs comprise two categories of loans: Credit Risk Loans (CRLs) and
Potential Problem Loans (PPLs). For further information on definitions of CRLs and PPLs refer to pages 284-285.
PCRLs and coverage ratios
a
CRLs
PPLs
PCRLs
As at 31 December
2012
£m
2011
£m
2012
£m
2011
£m
2012
£m
2011
£m
Retail
8,821
10,410
656
600
9,477
11,010
Wholesale
b
9,744
10,932
1,102
1,372
10,846
12,304
Group
18,565
21,342
1,758
1,972
20,323
23,314
Impairment allowance
CRL coverage
PCRL coverage
As at 31 December
2012
£m
2011
£m
2012
%
2011
%
2012
%
2011
%
Retail
4,635
5,386
52.5
51.7
48.9
48.9
Wholesale
5,041
5,211
51.7
47.7
46.5
42.4
Group
9,676
10,597
52.1
49.7
47.6
45.5
For more information refer to the Retail credit risk section (pages 93-99), Wholesale credit risk section (pages
100-103) and Risk management section (pages 273-303).
Overall, CRL balances decreased by 13% reflecting improvements in both retail and
wholesale portfolios. The CRL coverage ratio increased to 52.1% (2011: 49.7%). Overall PPLs decreased 11% principally reflecting lower balances in the wholesale portfolios. The PCRL coverage ratio increased to 47.6% (2011: 45.5%).
Notes
a
UKRBB Medium Business lending and Barclaycard's Global Payment Acceptance, Global Commercial Payments and Business Cards portfolios have been reclassified
from wholesale to retail, whilst Wealth and Investment Management's Private Bank portfolio has been reclassified from retail to wholesale. This has resulted in a net increase in retail PCRLs of £9m and impairment allowance of £12m
with a corresponding decrease in wholesale PCRLs and impairment allowance in 2011. These reclassifications (including comparatives) better reflect the way in which risk in these portfolios is managed.
b
Includes all forbearance accounts that are over 90 days+ and/or impaired.
92  I
Retail credit risk
Gross loans and advances to customers in the retail portfolios increased 1% to £232.7bn, due to increases in: UKRBB of 5% to £129.7bn
driven by growth in home loans balances; Barclaycard of 8% to £34.7bn primarily reflecting business growth in the UK and US and acquisition of portfolios in the US and South Africa; and Wealth and Investment Management of 21% to £2.5bn
reflecting growth in the Wealth International home loans portfolio. These increases were partially offset by decreases of 9% in Africa RBB to £24.0bn primarily due to adverse currency movements and 8% in Europe RBB to £41.0bn due to
credit tightening actions, active management to reduce funding mismatches and currency movements.
Retail impairment allowances
decreased 14% to £4.6bn principally due to changes in the write-off policy, debt sales, lower severity and improved delinquency.
The total loan impairment charge across the retail portfolios reduced 16% to £2.1bn:
¡
The loan impairment charge at Barclaycard decreased 22% to £1.0bn as a result of improved delinquency, lower charge-offs and better
recovery rates;
¡
The loan impairment charge at UKRBB decreased 50% to £0.3bn mainly reflecting improvements across all portfolios, which also includes
higher recoveries principally from refunds of PPI in Consumer Lending and release of provision due to the resolution of backlogs in litigation in home loans;
¡
The reduction was partially offset by Africa RBB loan impairment charge, which increased 22% to £0.5bn reflecting higher loss given default
rates and higher levels of write-offs in the South African home loans recovery book; and
¡
Europe RBB impairment charge increased 36% to £0.3bn due to deterioration in credit performance reflecting current economic conditions
across Europe.
Lower impairment charges coupled with higher loan balances led to a fall in the retail loan loss rate
to 89bps (2011: 108ps).
Retail loans and advances at amortised cost
Gross
L&A
£m
Impairment
allowance
£m
L&A net of
impairment
£m
Credit risk
loans
£m
CRLs % of
gross L&A
%
Loan
impairment
charges
£m
Loan loss
rates
bps
As at 31 December 2012
UKRBB
a
129,682
1,369
128,313
2,883
2.2
269
21
Europe RBB
b
41,035
714
40,321
1,901
4.6
328
80
Africa RBB
23,987
700
23,287
1,790
7.5
472
197
Barclaycard
c
34,694
1,757
32,937
2,121
6.1
979
282
Corporate Banking
d
739
79
660
92
12.4
27
365
Wealth and Investment
Management
e
2,535
16
2,519
34
1.3
–
–
Total
232,672
4,635
228,037
8,821
3.8
2,075
89
As at 31 December 2011
UKRBB
a
123,055
1,686
121,369
3,299
2.7
536
44
Europe RBB
b
44,488
684
43,804
1,708
3.8
241
54
Africa RBB
26,363
731
25,632
2,362
9.0
386
146
Barclaycard
c
32,214
2,077
30,137
2,824
8.8
1,259
391
Corporate Banking
d
1,453
188
1,265
182
12.5
49
337
Wealth and Investment
Management
e
2,098
20
2,078
35
1.6
6
30
Total
229,671
5,386
224,285
10,410
4.5
2,477
108
Notes
a
UKRBB Medium Business net lending (2011: £2,680m) has been reclassified from wholesale to retail as at December 2012.
b
Europe RBB includes loans and advances to business customers at amortised cost.
c
Barclaycard business net lending (2011: £468m) has been reclassified from wholesale to retail as at December 2012.
d
Corporate Banking primarily includes retail portfolios in UAE.
e
Wealth and Investment Management includes Wealth International portfolio. Private Bank net lending (2011: £14,627m) has been reclassified from retail to
wholesale as at December 2012.
I  93
Risk review
Credit risk continued
Analysis of retail gross loans and advances
a
Secured
home loans
£m
Credit cards,
overdrafts
and
unsecured
loans
£m
Other
secured
retail
lending
b
£m
Business
lending
£m
Total retail
£m
As at 31 December 2012
UKRBB
114,766
6,863
–
8,053
129,682
Europe RBB
34,825
4,468
–
1,742
41,035
Africa RBB
17,422
2,792
3,086
687
23,987
Barclaycard
–
31,394
2,730
570
34,694
Corporate Banking
274
336
117
12
739
Wealth and Investment Management
2,267
63
205
–
2,535
Total
169,554
45,916
6,138
11,064
232,672
As at 31 December 2011
UKRBB
107,775
7,351
–
7,929
123,055
Europe RBB
37,099
4,994
–
2,395
44,488
Africa RBB
19,691
2,715
3,405
552
26,363
Barclaycard
–
28,557
3,181
476
32,214
Corporate Banking
421
728
284
20
1,453
Wealth and Investment Management
1,892
62
144
–
2,098
Total
166,878
44,407
7,014
11,372
229,671
PCRLs and coverage ratios
PCRLs and coverage ratios
c
CRLs
PPLs
PCRLs
As at 31 December
2012
£m
2011
£m
2012
£m
2011
£m
2012
£m
2011
£m
Home loans
3,397
3,688
262
212
3,659
3,900
Credit cards and unsecured lending
3,954
4,890
295
301
4,249
5,191
Other retail lending and business banking
1,470
1,832
99
87
1,569
1,919
Total retail
8,821
10,410
656
600
9,477
11,010
Impairment allowance
CRL coverage
PCRL coverage
As at 31 December
2012
£m
2011
£m
2012
%
2011
%
2012
%
2011
%
Home loans
849
892
25.0
24.2
23.2
22.9
Credit cards and unsecured lending
3,212
3,777
81.2
77.2
75.6
72.8
Other retail lending and business banking
574
717
39.0
39.1
36.6
37.4
Total retail
4,635
5,386
52.5
51.7
48.9
48.9
Notes
a
For December 2012 reporting UKRBB Medium Business gross lending (2011: £2,743m) and Barclaycard's Global Payment Acceptance, Global Commercial Payments
and Business Cards portfolios (2011: £476m) have been reclassified from wholesale to retail. Wealth and Investment Management's Private Bank portfolio (2011: £14,686m) has been reclassified from retail to wholesale. These
reclassifications (including comparatives) better reflect the way in which risk in these portfolios is managed.
b
Other secured retail lending includes Vehicle Auto Finance in Africa RBB and UK Secured Lending in Barclaycard.
c
UKRBB Medium Business lending and Barclaycard's Global Payment Acceptance, Global Commercial Payments and Business Cards portfolios have been reclassified
from wholesale to retail, whilst Wealth and Investment Management's Private Bank portfolio has been reclassified from retail to wholesale. This has resulted in a net increase in retail PCRLs of £9m and impairment allowance of £12m
with a corresponding decrease in wholesale PCRLs and impairment allowance in 2011. These reclassifications (including comparatives) better reflect the way in which risk in these portfolios is managed.
94  I
PCRLs and coverage ratios by business
a
CRLs
PPLs
PCRLs
As at 31 December
2012
£m
2011
£m
2012
£m
2011
£m
2012
£m
2011
£m
UKRBB
2,883
3,299
283
222
3,166
3,521
Europe RBB
1,901
1,708
113
99
2,014
1,807
Africa RBB
1,790
2,362
61
61
1,851
2,423
Barclaycard
2,121
2,824
193
204
2,314
3,028
Corporate Banking
92
182
5
11
97
193
Wealth and Investment Management
34
35
1
3
35
38
Total retail
8,821
10,410
656
600
9,477
11,010
Impairment allowance
CRL coverage
PCRL coverage
As at 31 December
2012
£m
2011
£m
2012
%
2011
%
2012
%
2011
%
UKRBB
1,369
1,686
47.5
51.1
43.2
47.9
Europe RBB
714
684
37.6
40.0
35.5
37.8
Africa RBB
700
731
39.1
30.9
37.8
30.2
Barclaycard
1,757
2,077
82.8
73.5
75.9
68.6
Corporate Banking
79
188
85.9
103.3
81.4
97.4
Wealth and Investment Management
16
20
47.1
57.1
45.7
52.6
Total retail
4,635
5,386
52.5
51.7
48.9
48.9
CRL balances in retail portfolios decreased 15% to £8.8bn (2011: £10.4bn), primarily due to
Barclaycard, where reductions reflected favourable delinquency performance, reductions in recovery balances, the change to the write-off policy at the end of 2011, and increased debt sale activity; Africa RBB, where reductions were driven by a
higher number of accounts being charged-off and written-off, particularly in South African Home Loans; and UKRBB, where reductions reflected falling recovery balances across principal portfolios due to improved performance. This was partially offset
by higher balances in Europe RBB principally in the Spanish and Italian home loans books.
The CRL coverage ratio increased to 52.5%
(2011: 51.7%). PPL balances increased 9% principally due to increased home loans balances in UKRBB. The PCRL coverage ratio remained stable at 48.9% (2011: 48.9%).
Secured home loans
Home loans to retail customers increased to £169.6bn
(2011: £166.9bn), and as a proportion of total retail gross loans and advances remained unchanged at 73%. The principal home loan portfolios listed below account for 96% of total home loans in the Group's retail portfolios.
Home loans principal portfolios
b
Gross loans
and advances
£m
> 90 day
arrears
%
Gross
charge-off
rates
%
Recoveries
proportion of
outstanding
balances
%
Recoveries
impairment
coverage
ratio
%
As at 31 December 2012
UK
114,766
0.3
0.6
0.5
13.4
South Africa
15,773
1.6
3.9
6.9
34.6
Spain
13,551
0.7
1.1
1.9
34.0
Italy
15,529
1.0
0.8
1.8
25.4
Portugal
3,710
0.7
1.4
2.8
25.6
As at 31 December 2011
UK
107,775
0.3
0.6
0.6
15.3
South Africa
17,585
3.2
3.7
6.9
19.4
Spain
14,918
0.5
0.6
1.6
32.5
Italy
15,935
1.0
0.5
1.3
29.3
Portugal
3,891
0.6
1.1
2.0
15.0
Notes
a
UKRBB Medium Business lending and Barclaycard's Global Payment Acceptance, Global Commercial Payments and Business Cards portfolios have been reclassified
from wholesale to retail, whilst Wealth and Investment Management's Private Bank portfolio has been reclassified from retail to wholesale. This has resulted in a net increase in retail PCRLs of £9m and impairment allowance of £12m
with a corresponding decrease in wholesale PCRLs and impairment allowance in 2011. These reclassifications (including comparatives) better reflect the way in which risk in these portfolios is managed.
b
Excluded from the above analysis are: Wealth International home loans, which are managed on the basis of individual customer exposures, France home loans and
other small home loans portfolios.
I  95
Risk review
Credit risk continued
Arrears rates remained steady in the UK as targeted balance growth and better customer
affordability criteria continued to be supported by the low base rate environment. The recoveries impairment coverage ratio decreased mainly because of a release of provision due to the resolution of backlogs in litigation.
In the UK, owner-occupied interest only balances of £38.1bn (2011: £39.2bn) represented 33% of total stock. Buy-to-let home loans
comprised 7% of the total stock (2011: 6%). For information on interest only lending, refer to page 99.
Arrears rates for South Africa
home loans significantly decreased reflecting improvements in portfolio performance. Increased focus on reducing the recoveries portfolio during 2012 resulted in higher write-offs. Coverage ratio on recoveries increased due to a higher mix of
insolvent accounts in this portfolio. These accounts result in higher losses due to increased legal costs and longer time to foreclose. Credit performance of home loans in Europe continued to worsen as economic conditions deteriorated further. In
Spain home loans, the recoveries impairment coverage ratio increased mainly due to incremental impairment taken to reflect potential declines in house prices.
Principal home loans portfolios – distribution of balances by LTV
(updated valuations)
a,b
UK
South Africa
Spain
Italy
Portugal
d
As at 31 December
2012
%
2011
%
2012
%
2011
%
2012
%
2011
%
2012
%
2011
%
2012
%
2011
%
<=75%
76.1
77.6
62.8
58.8
64.2
72.1
74.3
70.7
40.3
49.0
>75% and <=80%
9.2
7.5
9.0
8.7
6.5
6.6
16.0
16.8
8.3
11.4
>80% and <=85%
5.4
5.3
8.2
8.3
6.1
5.7
5.5
10.2
10.6
13.7
>85% and <=90%
3.3
3.6
6.4
7.2
5.5
4.0
1.4
1.3
11.1
9.4
>90% and <=95%
2.2
2.4
4.0
5.3
4.4
2.6
0.9
0.5
10.2
8.8
>95% and <=100%
1.4
1.5
2.8
3.3
3.3
1.9
0.6
0.2
7.6
4.6
>100%
2.4
2.1
6.8
8.4
10.0
7.1
1.3
0.3
11.9
3.1
Marked to market LTV
c
45.5
44.3
44.2
45.2
64.6
60.1
46.7
46.9
77.6
69.6
Credit quality of the principal home loan
portfolios reflected relatively conservative levels of high LTV lending and moderate LTV on existing portfolios. During 2012, using current valuations, the average LTV of principal home loans portfolios remained broadly stable in UK, South Africa
and Italy. However, it increased in Spain and Portugal as a result of continued decline in house prices.
Home loans – new lending
a,b
UK
South Africa
Spain
Italy
Portugal
As at 31 December
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
New home loans (£m)
18,170
17,202
1,186
1,381
284
502
848
3,719
83
495
Average LTV %
56.4
54.0
64.7
61.2
62.8
61.3
55.4
59.6
60.8
67.7
New home loans proportion
above 85% LTV
3.5
0.8
36.8
29.9
4.1
1.3
–
–
4.9
5.5
New lending in principal home loan portfolios listed above decreased 12% to £20,571m (2011: £23,299m).
The increase in average LTV for new home loans business to 56.4% (2011: 54.0%) in the UK was driven by the launch of a 90% LTV product, on a limited basis. The volume in this segment is constrained by tight credit criteria and risk limits, as
evidenced by the moderate increase of new home loans proportion above 85%.
Notes
a
Excluded from the above analysis are: Wealth International home loans, which are managed on the basis of individual customer exposures, France home loans and
other small home loans portfolios.
b
UK, South Africa and Italy marked to market methodology is based on valuation weighted approach. Valuation weighted LTV is the ratio between total outstanding
balance and the value of total collateral held against these balances. Spain and Portugal marked to market methodology is based on balance weighted approach. Balance weighted LTV is derived by calculating individual LTVs at account level and
weighting it by the individual loan balances to arrive at the average position. This is in line with local reporting practice.
c
Portfolio marked to market based on the most updated valuation and includes recoveries balances. Updated valuations reflect the application of the latest house
price index available in the country as at 31 December 2012 to calculate the average MTM portfolio LTV as at 31 December 2012.
d
In Portugal, the increase in average MTM LTVs and in the LTV distribution are due to the application of more detailed house price valuations since June 2012.
96  I
Credit cards, overdrafts and unsecured loans
Total credit cards, overdrafts and unsecured loans remained broadly stable with the increase in card portfolio balances due to acquisitions being offset by decreases in unsecured loans and overdraft
portfolios. 90 day arrears improved marginally to 1.1% (2011: 1.2%) in UK Cards, while the rate improved to 1.1% (2011: 1.5%) in US Cards reflecting a continued move towards better asset quality and improving delinquency performance. Arrears rates
in the European Cards portfolios deteriorated marginally in the same period, reflecting the difficult economic environment. Rates were broadly stable in South Africa card portfolios and performance remained within expectations. The reduction in the
coverage ratio on the main UK and US portfolios reflects improved recoveries, the change in write-off policy at the end of 2011 and increased debt sale activity. The principal portfolios listed below account for 87% of total credit cards, overdrafts
and unsecured loans in the Group's retail portfolios.
Principal portfolios
Gross
loans
and
advances
£m
30 day
arrears
%
90 day
arrears
%
Gross
charge-off
rates
%
Recoveries
proportion
of
outstanding
balances
%
Recoveries
impairment
coverage
ratio
%
As at 31 December 2012
UK cards
a
15,434
2.5
1.1
4.9
6.2
80.4
US cards
b
9,296
2.4
1.1
5.0
2.3
90.7
UK personal loans
4,861
3.0
1.3
5.1
17.4
78.9
South Africa cards
c
2,511
5.2
2.8
4.2
5.2
70.9
Barclays Partner Finance
2,323
1.9
1.0
3.9
4.8
78.1
Europe RBB cards
1,604
6.2
2.9
9.2
12.7
95.5
UK overdrafts
1,382
5.3
3.5
8.2
14.6
92.7
Italy salary advance loans
d
1,354
2.3
0.9
8.4
9.4
12.5
South Africa personal loans
1,061
5.6
3.1
8.5
7.6
72.3
As at 31 December 2011
UK cards
a
14,692
2.7
1.2
6.2
6.8
85.2
US cards
b
8,303
3.1
1.5
7.6
3.5
92.1
UK personal loans
5,166
3.4
1.7
6.5
19.0
82.8
South Africa cards
c
1,816
5.1
3.0
5.6
6.4
72.9
Barclays Partner Finance
2,122
2.4
1.3
4.6
6.3
84.8
Europe RBB cards
1,684
5.9
2.6
10.1
13.8
89.5
UK overdrafts
1,322
6.0
3.9
9.7
17.5
90.6
Italy salary advance loans
d
1,629
2.6
1.3
6.3
6.6
11.7
South Africa personal loans
1,164
6.4
3.9
8.3
6.9
72.4
Business lending
Business lending primarily relates to small and medium enterprises typically with exposures up to £3m or with a turnover up to £5m. The principal portfolios listed below account for 88%
of total Business lending loans in the Group's retail portfolios.
Principal portfolios
Arrears
Managed
e
Early Warning List
Managed
f
As at 31 December 2012
Gross
loans and
advances
£m
Drawn
balances
£m
Of which
arrears
balances
%
Drawn
balances
£m
Of
which
Early
Warning List
balances
%
Loan loss
rates
bps
Gross
charge-off
rates
%
Recoveries
proportion
of
outstanding
balances
%
Recoveries
coverage
ratio
%
UK
8,053
713
6.0
7,122
9.2
140
2.5
4.3
34.9
Spain
1,095
95
11.3
993
60.4
210
3.8
6.6
45.0
Portugal
596
185
6.4
393
17.8
503
5.7
6.7
65.9
Notes
a
UK cards includes the acquired Egg credit card assets, which totalled £1.7bn at acquisition. The outstanding acquired balances have been excluded from the
recoveries impairment coverage ratio on the basis that the portfolio has been recognised on acquisition at fair value during 2011 (with no related impairment allowance). Impairment allowances have been recognised as appropriate where these relate to
the period post acquisition.
b
US cards risk metrics exclude the impact of U-promise in 2011.
c
South Africa cards risk metrics exclude the Edcon portfolio which was acquired in November 2012. In addition, these metrics now include Woolworth Financial
Services portfolios.
d
The recoveries impairment coverage ratio for Italy salary advance loans is lower than other unsecured portfolios as these loans are extended to customers where
the repayment is made via a salary deduction at source by qualifying employers and Barclays is insured in the event of termination of employment or death. Recoveries represent balances where insurance claims are pending that we believe are largely
recoverable, hence the lower coverage.
e
Arrears managed accounts are principally customers with an exposure threshold less than £50k in the UK and
€
100k in Europe, with processes designed to manage a homogeneous set of assets. Arrears balances reflects the
total balances of accounts which are past due on payments.
f
EWL Managed accounts are customers that exceed the arrears managed threshold, with processes that record heightened levels of risk through an EWL grading. EWL
balances comprise of a list of three categories graded in line with the perceived severity of the risk attached to the lending, and can include customers that are up to date with contractual payments or subject to forbearance as appropriate.
I  97
Risk review
Credit risk continued
UK business lending gross loans and advances increased 2% to £8,053m (2011: £7,929m).
Loan loss rates improved to 140bps (2011: 213bps) whilst a broadly stable credit policy has been maintained. Business lending gross loans and advances in Europe reduced 27% in 2012 to £1,742m (2011: £2,395m) primarily due to the
tightening of credit policy, reducing new business volumes and currency movements. Spain gross loans and advances reduced 31% to £1,095m (2011: £1,576m). Loan loss rates increased to 210bps (2011: 115bps) reflecting both increasing
arrears in the difficult macro environment and the reducing balances. Early Warning List (EWL) balances reflect the close monitoring of the portfolio, with over 75% of EWL balances not in arrears. Portugal gross loans and advances reduced 21% to
£596m (2011: £758m). Loan loss rates increased to 503bps (2011: 238bps) reflecting both increasing arrears in the difficult macro environment and reducing balances.
Retail forbearance programmes
Retail forbearance is available to customers
experiencing financial difficulties. Forbearance solutions may take a number of forms depending on the extent of the financial dislocation. Short term solutions normally focus on temporary reductions to contractual payments and switches from capital
and interest payments to interest only. For customers with longer term financial difficulties, term extensions may be offered, which may also include interest rate concessions and conversion to fully amortising balances for card portfolios.
Forbearance on the Group's principal portfolios in the US, UK and Europe is presented below.
In South Africa, forbearance and rehabilitation balances are not published as local practices are in the process of being aligned to the Barclays
Group policy. In other retail portfolios the level of forbearance extended to customers is not material and typically is not a significant factor in the management of customer relationships.
Loans in forbearance in the principal home loans portfolios increased 3% to £1,987m, mainly due to an increase in Spain and Italy home loans. Within UK home loans, term extensions account for
over 80% of forbearance balances with the majority of the remainder being switches from capital and interest to interest only. In Spain forbearance accounts are predominantly full account restructures. In Italy the majority of the balances relate to
specific schemes required by the Italian government (e.g. debt relief scheme following the earthquake of 2009) and amendments are weighted towards payment holidays and interest suspensions.
Principal portfolios
Gross L&A
subject to
forbearance
programmes
£m
Forbearance
programmes
proportion
of
outstanding
balances
%
Impairment
coverage on
gross
L&A
subject to
forbearance
programmes
%
Marked to
market
LTV
of home loan
forbearance
balances
a
%
As at 31 December 2012
Home loans
UK
1,596
1.4
0.8
36.6
Spain
174
1.3
5.8
68.9
Italy
217
1.4
2.9
49.1
Credit cards, overdrafts and unsecured loans
UK cards
b,c
991
6.3
37.8
n/a
UK personal loans
168
3.4
29.0
n/a
US cards
d
116
1.3
15.0
n/a
Business lending
e
UK
203
2.5
15.4
n/a
As at 31 December 2011
Home loans
UK
1,613
1.5
0.8
31.6
Spain
145
1.0
3.7
67.4
Italy
171
1.1
2.6
46.5
Credit cards, overdrafts and unsecured loans
UK cards
b,c
989
6.5
38.2
n/a
UK personal loans
201
3.8
29.5
n/a
US cards
d
125
1.7
19.7
n/a
Notes
a
UK and Italy marked to market methodology is based on valuation weighted approach. Valuation weighted LTV is the ratio between total outstanding balance and the
value of total collateral held against these balances. Spain marked to market methodology is based on balance weighted approach. Balance weighted LTV approach is derived by calculating individual LTVs at account level and weighting it by the
individual loan balances to arrive at the average position. This is in line with local reporting practice.
b
Impairment allowances against UK cards forbearance decreased, reflecting improved expectations on debt repayment. As a result, the impairment coverage ratio
decreased during 2012. UK cards includes Barclays Branded Card and Partnership Card assets.
c
UK cards includes balances related to the acquired Egg credit card assets, which totalled £1.7bn at acquisition. The outstanding acquired balances have been
excluded from the forbearance impairment coverage ratio on the basis that the portfolio has been recognised on acquisition at fair value during 2011 (with no related impairment allowance). Impairment allowances have been recognised as appropriate
where these relate to the period of post acquisition.
d
US Cards includes the U-promise portfolio in 2012. The outstanding acquired balances have been excluded from the forbearance impairment coverage ratio on the
basis that the portfolio has been recognised on acquisition at fair value during 2011.
e
Forbearance policies for Business lending were implemented in 2012. Comparable figures for previous periods are not available.
96  I
Re-age activity
Re-age is applicable only to revolving products where a minimum due payment is required. Re-age refers to returning of a delinquent
account to up-to-date status without collecting the full arrears (principal, interest and fees). The changes in timing of cash flows following re-aging do not result in any additional cost to Barclays. The following are the principal portfolios in
which re-age activity occurs.
Principal Portfolios
Re-aged balances in total
outstanding, excluding
recoveries
balances
Re-aged balances as
proportion of total
outstanding, excluding
recoveries
balances
30 day arrears of re-aged
balances at 12 months
on
book
As at 31 December
2012
£m
2011
£m
2012
%
2011
%
2012
%
2011
%
UK Cards
232
185
1.6
1.3
17.2
14.6
US Cards
96
170
1.1
2.4
13.8
16.4
Re-aged balances as a percentage of total outstanding, excluding recoveries balances increased in the UK cards
portfolios. The decrease in US cards has been driven by improved ability of customers to self cure from a position of delinquency. The re-age activity in South 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 page 287.
Exposures to interest only home loans
In the course of its retail lending
business, 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 make early repayments of
the principal provided that these are no more than 5% of the principal balance in any year.
Subject to such overpayments, the entire
principal remains outstanding until the end of the loan term and the customer is responsible for repaying this on maturity. The repayment vehicle may include sale of the mortgaged property.
Interest only lending is subject to underwriting criteria that include: a maximum size of loan, maximum loan to value ratios, affordability and maximum loan term amongst other criteria. Borrowers on
interest only terms must have a repayment strategy in place to repay the loan at maturity and a customer contact strategy has been developed to ensure ongoing communications are in place with interest only customers at various points during the term
of the mortgage. The contact strategy is varied dependent on our view of the risk of the customer.
Interest only
mortgages comprise £53bn (46%) of the total £115bn UK Home Loans portfolio. Of these, £46bn
a
are owner-occupied
b
with the remaining £7bn buy-to-let
c
.
Exposure to interest only owner-occupied home loans
As at December 31
2012
Interest only balances (£m)
45,693
90 days arrears (%)
0.3
Marked to market LTV %
45.2
Interest only mortgages maturing during:
2013 (£m)
710
2014 (£m)
872
2015 (£m)
1,046
Management adjustments to models
Management adjustments to models for impairment in retail portfolios are applied in order to factor in certain conditions or changes in policy that are not incorporated into the relevant impairment
models, to ensure that the impairment allowance reflects all known facts and circumstances at the period end. The main factors in management adjustments to models include changes to reflect current economic conditions and a decline in recoveries.
Adjustments typically increase the model derived impairment allowance.
Management adjustments to models for retail impairment resulted
in a total additional impairment charge of £45.9m in 2012. Management adjustments to models of more than £10m with respect to impairment charge in our principal retail portfolios are presented below and represent £26.9m of the
total adjustment.
Material portfolios
As at 31 December 2012
Total management
adjustments
to
impairment charge,
including forbearance
£m
Total management
adjustments charge
proportion of total
impairment
charge
%
Spain home loans
14.0
19.3
Portugal home loans
12.9
54.4
The high level of management adjustment for Spain and Portugal home loans in 2012 reflected a requirement to
increase coverage to take into account potential declines in house prices.
Notes
a
Balances also include the interest only portion of the Part and Part UK owner-occupied portfolio. A Part and Part Home Loan is a product in which part of the loan
is interest only and part is amortising. Where customers request a further advance, this is generally made on a repayment basis. Advances made on a repayment basis have been included above.
b
Owner-occupied refers to mortgages where the intention of the customer was to occupy the property at origination.
c
Buy-to-let refers to mortgages where the intention of the customer (investor) was to let the property at origination.
I  99
Risk review
Credit risk continued
Wholesale credit risk
Gross loans and advances to customers and banks in the wholesale portfolios decreased 7% to £243.2bn principally as a result of a 9% fall in the Investment Bank mainly due to a reduction in
corporate, interbank and other wholesale lending. For more detail, see analysis of Investment Bank wholesale loans and advances on page 102. Furthermore, there was a 6% decrease in balances in Corporate Banking primarily in Europe due to the
disposal of the Iveco Finance business and a reduction in Spanish exposures.
The total loan impairment charge across the wholesale
portfolios increased 13% to £1.5bn principally due to higher charges in the Investment Bank, due to charges in ABS CDO Super Senior positions and losses on a small number of single name exposures. In addition, there was a non-recurring release
of £223m in 2011. Furthermore, the impairment charge in Africa RBB increased 118% to £174m, principally due to the impact of one large name in the commercial property portfolio in South Africa. This was partially offset by lower loan
impairment charges in Corporate Banking, principally in Spain where there are ongoing initiatives to reduce exposure within the property and construction sector.
The higher impairment charge and lower loan balances led to a higher wholesale loan loss rate of 61bps in 2012 (2011: 50bps).
CRLs in the wholesale portfolio decreased 11% to £9,744m primarily due to decreases in Investment Banking, where lower balances principally reflected asset sales and paydowns, as well as
decreases in Corporate Banking, where the lower balances principally reflected the disposal of the Iveco Finance business in Europe.
Presented below is further information related to the Group's wholesale lending portfolios by business, with additional analysis of portfolios
in the Investment Bank and Corporate Banking. Further detail is presented on the Group's wholesale exposure to Eurozone countries (pages 107-118); geographic and industry asset concentrations (pages 82-84 and 89-90) and asset credit quality
(pages 86-87).
Wholesale loans and advances at amortised cost
a,b
Gross
L&A
£m
Impairment
allowance
£m
L&A net of
impairment
£m
Credit risk
loans
£m
CRLs % of
gross
L&A
%
Loan
impairment
charges
£m
Loan loss
rates
bps
As at 31 December 2012
Africa RBB
9,246
323
8,923
772
8.3
174
188
Investment Bank
c
147,439
2,463
144,976
4,209
2.9
448
30
Corporate Banking
65,835
2,098
63,737
4,141
6.3
824
125
– UK
52,667
428
52,239
1,381
2.6
279
53
– Europe
8,122
1,536
6,586
2,607
32.1
527
649
– Rest of World
5,046
134
4,912
153
3.0
18
36
Wealth and Investment Management
d
19,236
141
19,095
603
3.1
38
20
Head Office and Other Functions
1,466
16
1,450
19
1.3
–
–
Total
243,222
5,041
238,181
9,744
4.0
1,484
61
As at 31 December 2011
Africa RBB
9,729
294
9,435
720
7.4
80
82
Investment Bank
c
161,194
2,555
158,639
5,253
3.3
129
8
Corporate Banking
70,268
2,235
68,033
4,312
6.1
1,071
152
– UK
52,772
545
52,227
1,267
2.4
345
65
– Europe
12,899
1,574
11,325
2,876
22.3
699
542
– Rest of World
4,597
116
4,481
169
3.7
27
59
Wealth and Investment Management
d
17,157
110
17,047
611
3.6
35
20
Head Office and Other Functions
1,958
17
1,941
36
1.8
(2
)
(10
)
Total
260,306
5,211
255,095
10,932
4.2
1,313
50
Notes
a
Loans and advances to business customers in Europe RBB are included in the retail loans and advances to customers at amortised cost table on page 93.
b
For December 2012 reporting UKRBB Medium Business net lending (2011: £2,680m) and Barclaycard's Global Payment Acceptance, Global Commercial Payments
and Business Cards portfolios (2011: £468m) have been reclassified from wholesale to retail. These reclassifications (including comparatives) better reflect the way in which risk in these portfolios is managed.
c
Investment Bank gross loans and advances include cash collateral and settlement balances of £85,116m as at 31 December 2012 and £75,707m as at
31 December 2011. Excluding these balances, CRLs as a proportion of gross loans and advances were 6.8% and 6.1% respectively.
d
Wealth and Investment Management Private Bank net lending (2011: £14,627m) has been reclassified from retail to wholesale as at December 2012.
100  I
PCRLs and coverage ratios
a
CRLs
b
PPLs
PCRLs
As at 31 December
2012
£m
2011
£m
2012
£m
2011
£m
2012
£m
2011
£m
Africa RBB
772
720
84
132
856
852
Investment Bank
4,209
5,253
327
445
4,536
5,698
Corporate Banking
4,141
4,312
617
756
4,758
5,068
Wealth and Investment Management
603
611
74
39
677
650
Head Office and Other Functions
19
36
–
–
19
36
Total wholesale
9,744
10,932
1,102
1,372
10,846
12,304
Impairment allowance
CRL coverage
PCRL coverage
As at 31 December
2012
£m
2011
£m
2012
%
2011
%
2012
%
2011
%
Africa RBB
323
294
41.8
40.8
37.7
34.5
Investment Bank
2,463
2,555
58.5
48.6
54.3
44.8
Corporate Banking
2,098
2,235
50.7
51.8
44.1
44.1
Wealth and Investment Management
141
110
23.4
18.0
20.8
16.9
Head Office and Other Functions
16
17
84.2
47.2
84.2
47.2
Total wholesale
5,041
5,211
51.7
47.7
46.5
42.4
CRL balances in the wholesale portfolio decreased 11% to £9.7bn (Dec 11: £10.9bn) primarily due to
falls in: Investment Bank, where lower balances principally reflected asset sales and paydowns; and Corporate Banking, where the lower balances principally reflected the disposal of the Iveco Finance business in Europe.
The CRL coverage ratio increased to 51.7% (2011: 47.7%). PPL balances in the wholesale portfolio decreased 20% principally due to reduced balances
in the UK and Europe in Corporate Banking and Investment Bank. The PCRL coverage ratio increased to 46.5% (2011: 42.4%) .
Notes
a
UKRBB Medium Business lending and Barclaycard's Global Payment Acceptance, Global Commercial Payments and Business Cards portfolios have been reclassified
from wholesale to retail, whilst Wealth and Investment Management's Private Bank portfolio has been reclassified from retail to wholesale. This has resulted in a net increase in retail PCRLs of £9m and impairment allowance of £12m
with a corresponding decrease in wholesale PCRLs and impairment allowance in 2011. These reclassifications (including comparatives) better reflect the way in which risk in these portfolios is managed.
b
Includes all forbearance accounts that are 90 days+ and/or impaired.
I  101
Risk review
Credit risk continued
Analysis of Investment Bank wholesale loans and advances at amortised cost
Investment Bank wholesale loans and advances decreased 9% to £147,439m (2011: £161,194m). This was driven by a reduction in corporate,
interbank and other wholesale lending offset by higher settlement balances.
Included within corporate lending and other wholesale
lending portfolios are £1,336m (2011: £3,204m) of loans backed by retail mortgage collateral classified within financial institutions.
Analysis of Investment Bank wholesale loans and advances at amortised
cost
Gross
L&A
£m
Impairment
allowance
£m
L&A net of
impairment
£m
Credit risk
loans
£m
CRLs % of
gross L&A
%
Loan
impairment
charges
£m
Loan loss
rates
bps
As at 31 December 2012
Loans and advances to banks
Interbank lending
13,737
41
13,696
51
0.4
41
30
Cash collateral and settlement balances
23,350
–
23,350
–
–
–
–
Loans and advances to customers
Corporate lending
29,468
285
29,183
519
1.8
160
54
Government lending
1,369
–
1,369
–
–
–
–
ABS CDO Super Senior
3,099
1,712
1,387
3,099
100.0
232
748
Other wholesale lending
14,650
425
14,225
540
3.7
15
10
Cash collateral and settlement balances
61,766
–
61,766
–
–
–
–
Total
147,439
2,463
144,976
4,209
2.9
448
30
As at 31 December 2011
Loans and advances to banks
Interbank lending
19,655
45
19,610
34
0.2
(5
)
(3
)
Cash collateral and settlement balances
23,066
–
23,066
–
–
–
–
Loans and advances to customers
Corporate lending
38,326
730
37,596
1,515
4.0
194
51
Government lending
3,276
–
3,276
–
–
–
–
ABS CDO Super Senior
3,390
1,548
1,842
3,390
100.0
6
18
Other wholesale lending
20,840
232
20,608
314
1.5
(66
)
(32
)
Cash collateral and settlement balances
52,641
–
52,641
–
–
–
–
Total
161,194
2,555
158,639
5,253
3.3
129
8
102  I
Wholesale forbearance
programmes
Wholesale client relationships are individually managed with lending decisions made with reference to specific
circumstances and on bespoke terms. Forbearance occurs when Barclays, for reasons relating to the actual or perceived financial difficulty of an obligor, grants a concession below current Barclays standard rates (i.e. lending criteria below our
current lending terms), that would not normally be considered. This includes all troubled debt restructures granted below our standard rates.
Wholesale forbearance reporting split by exposure
class
Sovereign
£m
Financial
institutions
£m
Corporate
£m
Personal and
trusts
£m
Total
£m
As at 31 December 2012
Restructure: reduced contractual cash flows
4
16
405
–
425
Restructure: maturity date extension
5
107
1,412
33
1,557
Restructure: changed cash flow profile (other than extension)
5
46
876
26
953
Restructure: payment other than cash
–
–
71
1
72
Change in security
–
–
76
8
84
Adjustments/non-enforced covenants
10
7
626
128
771
Other
–
–
318
74
392
Total
24
176
3,784
270
4,254
Wholesale forbearance reporting split by business
unit
Corporate
Banking
£m
Investment
Bank
£m
Wealth and
Investment
Management
£m
Africa RBB
£m
Total
£m
As at 31 December 2012
Restructure: reduced contractual cash flows
258
138
–
29
425
Restructure: maturity date extension
952
408
112
85
1,557
Restructure: changed cash flow profile (other than extension)
624
152
70
107
953
Restructure: payment other than cash
64
7
1
–
72
Change in security
45
26
12
1
84
Adjustments/non-enforced covenants
377
115
277
2
771
Other
162
–
211
19
392
Total
2,482
846
683
243
4,254
The tables above detail balance information for wholesale forbearance cases. Comparable figures for previous
reporting periods are not available.
Loan impairment on forbearance cases amounted to £1,149m at 31 December 2012, which
represented 27% of total forbearance balances. At 31 December 2012, maturity date extension accounted for the largest proportion of forbearance recognised, followed by changes to cash flow profile other than maturity extension, adjustments to
or non-enforcement of covenants, and reduction of contractual cash flows.
Corporate borrowers accounted for 89% of balances and 95% of
impairment booked to forbearance exposures at 31 December 2012, with impairment representing 29% of forbearance balances.
Corporate Banking accounted for the single largest proportion of overall Group forbearance, with forbearance exposures concentrated in Western
Europe and particularly Spain, which accounted for 29% of total Group forbearance balances and 45% of total impairment booked to forbearance exposures at 31 December 2012.
UK Commercial Real Estate (UK CRE)
The UK CRE portfolio includes property
investment, development, trading and housebuilders but excludes social housing contractors.
Total loans and
advances at amortised cost to UK CRE amounted to £9,676m
a
at 31 December 2012 (2011: £9,519m), with a total of £295m (3.0% of the total) being past due
(2011: £366m; 3.8%). Impairment allowances totalled £80m at 31 December 2012 (2011: £78m).
The impairment charge
for 2012 for the UK CRE portfolio was £49m (2011: £40m) with the increase primarily relating to UK Corporate Banking.
Note
a
An additional £270m (2011: £321m) of UK CRE exposure is held at fair value.
I  103
Risk review
Credit risk continued
Analysis of debt securities
Debt securities include government securities held as part of the Group's treasury management portfolio for asset and liability, liquidity and regulatory purposes and are for use on a
continuing basis in the activities of the Group.
The following tables 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 in any of the last three years.
Further information on the credit quality of debt securities is presented on pages 86-87. Further disclosure on sovereign exposures in the Eurozone is presented on pages 107-118.
Debt securities
2012
2011
As at 31 December
£m
%
£m
%
Of which issued by:
Governments and other public bodies
124,803
63.8
117,489
62.1
Corporate and other issuers
35,761
18.3
40,041
21.2
US agency
19,886
10.2
17,249
9.1
Mortgage and asset backed securities
14,556
7.4
13,713
7.3
Bank and building society certificates of deposit
548
0.3
577
0.3
Total
195,554
100.0
189,069
100.0
Government securities
2012
2011
2010
As at 31 December
Fair value
£m
Fair value
£m
Fair value
£m
United States
36,740
45,932
25,553
United Kingdom
29,252
19,722
21,999
South Africa
6,582
6,657
5,324
France
6,462
6,357
3,731
Japan
6,439
8,221
7,210
Germany
4,501
6,823
3,008
Italy
3,717
4,432
6,443
Spain
2,467
3,152
6,573
104  I
Analysis of derivatives
(audited)
The tables below set out the fair values of the derivative assets together with the value of those assets subject to
enforceable counterparty netting arrangements for which the Group holds offsetting liabilities and eligible collateral.
Derivative assets (audited)
Balance sheet
assets
£m
Counterparty
netting
£m
Net
exposure
£m
As at 31 December 2012
Foreign exchange
59,479
50,084
9,395
Interest rate
354,992
299,068
55,924
Credit derivatives
29,797
25,497
4,300
Equity and stock index
10,985
6,821
4,164
Commodity derivatives
13,893
6,202
7,691
Total derivative assets
469,146
387,672
81,474
Cash collateral held
46,855
Net exposure less collateral
34,619
As at 31 December 2011
Foreign exchange
63,886
53,570
10,316
Interest rate
376,162
315,924
60,238
Credit derivatives
63,313
51,930
11,383
Equity and stock index
13,202
8,944
4,258
Commodity derivatives
22,401
10,224
12,177
Total derivative assets
538,964
440,592
98,372
Cash collateral held
51,124
Net exposure less collateral
47,248
Barclays received collateral from clients in support of OTC derivative transactions. These transactions are
generally undertaken under International Swaps and Derivatives Association (ISDA) agreements governed by either UK or New York law.
Exposure relating to derivatives, repurchase agreements, reverse repurchase agreements, stock borrowing and loan transactions is calculated using
internal FSA approved models. These are used as the basis to assess both regulatory capital and capital appetite and are managed on a daily basis. The methodology encompasses all relevant factors to enable the current value to be calculated and the
future value to be estimated, for example, current market rates, market volatility and legal documentation (including collateral rights).
I  105
Risk review
Credit risk continued
Barclays Credit Market Exposures (audited)
a
During 2012, credit market exposures decreased by £5,851m to £9,310m, reflecting net sales and paydowns and other movements of £5,436m, foreign exchange movements of £459m,
offset by net fair value gains and impairment charges of £44m.
Barclays credit market exposures
2012
As at 31 December
2012
$m
2011
$m
2012
£m
2011
£m
Fair value
(losses)/
gains and net
funding
£m
Impairment
(charge)/
release
£m
Total
(losses)/
gains
£m
US residential mortgages
ABS CDO Super Senior
2,243
2,844
1,387
1,842
(33
)
(232
)
(265
)
US sub-prime and Alt-A
b
1,129
2,134
698
1,381
83
(22
)
61
Commercial mortgages
Commercial real estate loans and properties
4,411
8,228
2,727
5,329
115
–
115
Commercial mortgage backed securities
b
411
1,578
254
1,022
154
–
154
Monoline protection on CMBS
–
14
–
9
–
–
–
Other credit market
Leveraged Finance
c
5,732
6,278
3,544
4,066
(54
)
11
(43
)
SIVs, SIV-Lites and CDPCs
–
9
–
6
(1
)
–
(1
)
Monoline protection on CLO and other
956
1,729
591
1,120
(29
)
–
(29
)
CLO and other
assets
b
176
596
109
386
52
–
52
Total
15,058
23,410
9,310
15,161
287
(243
)
44
¡
Net sales, paydowns and other movements of £5,436m included:
–
£2,497m of commercial real estate loans and properties including sale of BauBeCon for £898m (
€
1,131m) in August, 100% stake in Archstone for £857m ($1,338m) and sale of Calwest for £341m
($550m) in September;
–
£885m commercial mortgage backed securities;
–
£693m US sub-prime and Alt-A;
–
£470m leveraged finance primarily relating to three counterparties;
–
£449m monoline protection on CLO and other; and
–
£317m CLO and other assets.
¡
ABS CDO Super Senior and leveraged finance exposures are accounted for at amortised cost less impairment. The fair values of these exposures as
at 31 December 2012 were £922m and £3,059m respectively (31 December 2011: £917m and £3,350m). Materially, all other credit market exposures are accounted for on a fair value basis.
Notes
a
As the majority of exposure is held in US Dollars, the exposures above are shown in both US Dollars and Sterling.
b
Collateral assets of £719m (31 December 2011: £2,272m) previously underlying the Protium loan are now included within the relevant asset classes as
the assets are now managed alongside similar credit market exposures. These assets comprised: US sub-prime and Alt-A £352m (31 December 2011: £965m), commercial mortgage backed securities £258m (31 December 2011: £921m), CLO
and other assets £109m (31 December 2011: £386m).
c
Includes undrawn commitments of £202m (31 December 2011: £180m).
106  I
Exposures to Eurozone countries
(audited)
Overview
The Group recognises the credit and market risk resulting from the ongoing volatility in the Eurozone and continues to monitor events closely while
taking coordinated steps to mitigate the risks associated with the challenging economic environment. Risks associated with a potential partial break-up of the Euro area include:
¡
Direct risk arising from sovereign default of an exiting country and the impact on the economy of, and the Group's counterparties in, that
country;
¡
Indirect risk arising from the subsequent impact on the economy of, and the Group's counterparties in, other Eurozone countries;
¡
Indirect risk arising from credit derivatives that reference Eurozone sovereign debt (see page 117); and
¡
Direct redenomination risk on the potential mismatch in the currency of the assets and liabilities on balance sheets of the Group's local
operations in countries in the Eurozone (see page 118).
The Group has performed and continues to perform stress tests
to model the event of a break-up of the Eurozone area. Contingency planning has also been undertaken based on a series of potential scenarios that might arise from an escalation in the crisis. Multiple tests have been run to establish the impact on
customers, systems, processes and staff in the event of the most plausible scenarios. Where issues have been identified, appropriate remedial actions have either been completed or are underway.
During 2012 the Group's net on-balance sheet exposures to Spain, Italy, Portugal, Ireland, Cyprus and Greece reduced by 13% to £59.0bn.
Exposure to retail customers and corporate clients reduced 12% to £48.1bn, largely reflecting reduced lending in Spain, Italy and Portugal as part of the active management to reduce redenomination risk. Sovereign exposure decreased 29% to
£5.0bn, principally due to a reduction in government bonds held as available for sale.
Basis of preparation
These disclosures are prepared on the same basis as the previous Annual Report and present 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 activities, principally as market-maker for government bond positions. Positions are held at fair value, with daily movements taken through profit and loss:
¡
Trading assets and liabilities are presented by issuer type, whereby positions are netted to the extent allowable under IFRS. Where liability
positions exceed asset positions by counterparty type, exposures are presented as nil;
¡
Derivative assets and liabilities are presented by counterparty type, whereby positions are netted to the extent allowable under IFRS. Cash
collateral held is then added to give a net credit exposure. Where liability positions and collateral held exceed asset positions by counterparty type, exposures are presented as nil; and
¡
Assets designated at fair value include debt and equity securities, loans and reverse repurchase agreements that have been designated at fair
value.
Available for sale assets are principally investments in government bonds and other debt securities. Balances
are reported on a fair value basis, with movements in fair value going through other comprehensive income (OCI).
Loans and advances held at amortised cost
a
comprise: (i) retail lending portfolios, predominantly mortgages secured on residential property; and (ii) corporate lending portfolios. Settlement balances and cash collateral are excluded from this analysis.
Sovereign exposures reflect direct exposures to central and local governments
b
, the majority of which are used for hedging interest rate risk and liquidity purposes. The remaining portion is actively managed reflecting our role as a leading primary dealer,
market maker and liquidity provider to our clients. Financial institution and corporate exposures reflect the country of operations of the counterparty or issuer depending on the asset class analysed (including foreign subsidiaries and without
reference to cross-border guarantees). Retail exposures reflect the country of residence for retail customers and country of operations for business banking customers. Off-balance sheet exposure consists primarily of undrawn commitments and
guarantees issued to third parties on behalf of our corporate clients.
Notes
a
The Group also enters into reverse repurchase agreements and other similar secured lending, which are materially fully collateralised.
b
In addition, the Group held cash with the central banks of these countries totalling £0.7bn as at 31 December 2012 (2011: £0.8bn). Other material
balances with central banks are classified within loans to financial institutions.
I  107
Risk review
Credit risk continued
Summary of Group exposures
The following table shows Barclays exposure to Eurozone countries monitored internally as being higher risk and thus being the subject of particular management focus. Detailed analysis on these
countries is on pages 110-116. Exposures on loans and advances to geographic regions including Europe as a whole are set out on pages 89-90. The net exposure provides the most appropriate measure of the credit risk to which the Group is exposed. The
gross exposure is also presented below, alongside off-balance sheet contingent liabilities and commitments. Gross exposure reflects total exposures before the effects of economic hedging by way of trading portfolio liabilities, derivative
liabilities, and cash collateral, but after taking into account impairment allowances and IFRS netting.
Net exposure by country and counterparty (audited)
Sovereign
£m
Financial
institutions
£m
Corporate
£m
Residential
mortgages
£m
Other retail
lending
£m
Total net
on-balance
sheet
exposure
£m
Contingent
liabilities and
commitments
£m
Total net
exposure
£m
As at 31 December 2012
Spain
1,690
1,488
4,135
13,305
2,428
23,046
3,301
26,347
Italy
2,669
528
1,962
15,591
1,936
22,686
3,082
25,768
Portugal
637
48
1,958
3,474
1,783
7,900
2,588
10,488
Ireland
11
3,768
1,127
112
83
5,101
1,644
6,745
Cyprus
8
–
106
44
26
184
131
315
Greece
1
–
61
8
9
79
5
84
As at 31 December 2011
Spain
2,530
987
5,345
14,654
3,031
26,547
3,842
30,389
Italy
3,493
669
2,918
15,934
2,335
25,349
3,140
28,489
Portugal
810
51
3,295
3,651
2,053
9,860
2,536
12,396
Ireland
244
4,311
977
94
86
5,712
1,582
7,294
Cyprus
15
–
128
51
2
196
127
323
Greece
14
2
67
5
18
106
26
132
During 2012 the Group's sovereign exposure to Spain, Italy, Portugal, Ireland, Cyprus and Greece reduced by
29% to £5.0bn. Spanish sovereign exposure reduced 33% to £1.7bn due to the disposal of available for sale government bonds, held for the purpose of interest rate hedging and liquidity, which have been replaced by interest rate swaps with
alternative counterparties. Italian sovereign exposure decreased 24% to £2.7bn principally due to a reduction in government bonds held as available for sale.
Residential mortgage exposure reduced by 5% to £32.5bn, reflecting lower new originations across Spain, Italy and Portugal in line with Group strategy to reduce redenomination risk. Other
retail lending reduced by 17% to £6.3bn driven primarily by reduced lending to business banking customers in Spain and Portugal as a result of the challenging economic conditions. Corporate exposure reduced 27% to £9.3bn, largely
reflecting reduced lending in Spain, Italy and Portugal as part of the active management to reduce the aggregate net funding mismatch in local balance sheets. Exposures to financial institutions fell marginally by 3% to £5.8bn, with reduced
exposure in Ireland of £0.5bn and in Italy of £0.1bn offsetting an increase in Spain of £0.5bn.
Gross exposure by country and counterparty (audited)
Sovereign
£m
Financial
institutions
£m
Corporate
£m
Residential
mortgages
£m
Other retail
lending
£m
Total gross
on-balance
sheet
exposure
£m
Contingent
liabilities and
commitments
£m
Total gross
exposure
£m
As at 31 December 2012
Spain
2,523
9,253
4,447
13,305
2,428
31,956
3,301
35,257
Italy
5,428
7,687
2,348
15,591
1,936
32,990
3,082
36,072
Portugal
1,035
347
2,130
3,474
1,783
8,769
2,588
11,357
Ireland
46
8,613
1,397
112
83
10,251
1,644
11,895
Cyprus
8
102
120
44
26
300
131
431
Greece
3
1,181
61
8
9
1,262
5
1,267
As at 31 December 2011
Spain
3,278
8,593
5,751
14,654
3,031
35,307
3,842
39,149
Italy
5,530
6,921
3,469
15,934
2,335
34,189
3,140
37,329
Portugal
1,102
400
3,541
3,651
2,053
10,747
2,536
13,283
Ireland
348
10,105
1,665
94
86
12,298
1,582
13,880
Cyprus
15
120
128
51
2
316
127
443
Greece
14
1,111
67
5
18
1,215
26
1,241
108  I
Barclays has exposures to other
Eurozone countries as set out below. Total net on-balance sheet exposures to individual countries that are less than £1bn are reported in aggregate under 'Other'.
Net exposure by country and counterparty (audited)
Sovereign
£m
Financial
institutions
£m
Corporate
£m
Residential
mortgages
£m
Other retail
lending
£m
Total net
on-balance
sheet
exposure
£m
Contingent
liabilities and
commitments
£m
Total net
exposure
£m
As at 31 December 2012
France
3,746
5,345
3,905
2,607
121
15,724
7,712
23,436
Germany
277
4,454
4,945
27
1,734
11,437
6,604
18,041
Netherlands
3,503
4,437
2,002
16
92
10,050
2,205
12,255
Luxembourg
13
1,481
704
151
49
2,398
812
3,210
Belgium
2,548
284
239
9
6
3,086
1,525
4,611
Austria
1,047
228
187
5
–
1,467
127
1,594
Finland
1,044
209
140
3
–
1,396
461
1,857
Other
210
9
24
26
41
310
25
335
As at 31 December 2011
France
4,189
4,969
4,232
2,796
260
16,446
8,121
24,567
Germany
3,444
2,570
2,963
14
1,551
10,542
6,623
17,165
Netherlands
244
4,596
1,807
14
4
6,665
1,899
8,564
Luxembourg
a
–
1,842
809
103
85
2,839
765
3,604
Belgium
2,033
42
282
10
–
2,367
881
3,248
Austria
134
360
237
5
2
738
119
857
Finland
298
47
43
3
–
391
447
838
Other
202
3
35
32
43
315
49
364
During 2012 the Group's net on-balance sheet exposures to
other Eurozone countries increased by 14% to £45.9bn. Sovereign exposure increased 17% to £12.4bn principally due to an increase in government bonds held as available for sale in the Netherlands, Austria and Finland of £4.4bn,
partially offset by a reduction in traded exposures to Germany of £3.0bn. Exposures to financial institutions and corporates increased 14% and 17%, to £16.4bn and £12.1bn respectively, reflecting increases in securities issued by
German counterparties.
Gross exposure by country and counterparty (audited)
Sovereign
£m
Financial
institutions
£m
Corporate
£m
Residential
mortgages
£m
Other retail
lending
£m
Total
gross
on-balance
sheet
exposure
£m
Contingent
liabilities and
commitments
£m
Total
gross
exposure
£m
As at 31 December 2012
France
6,310
44,631
5,301
2,607
121
58,970
7,712
66,682
Germany
7,413
45,686
7,156
27
1,734
62,016
6,604
68,620
Netherlands
5,365
20,217
2,856
16
92
28,546
2,205
30,751
Luxembourg
13
5,092
1,061
151
49
6,366
812
7,178
Belgium
3,764
6,214
560
9
6
10,553
1,525
12,078
Austria
1,332
2,320
273
5
–
3,930
127
4,057
Finland
1,624
7,228
265
3
–
9,120
461
9,581
Other
525
28
29
26
41
649
25
674
As at 31 December 2011
France
6,636
44,879
5,771
2,796
260
60,342
8,121
68,463
Germany
9,105
45,639
5,708
14
1,551
62,017
6,623
68,640
Netherlands
2,116
14,399
7,273
14
4
23,806
1,899
25,705
Luxembourg
1,034
4,221
1,056
103
85
6,499
765
7,264
Belgium
2,889
9,760
653
10
–
13,312
881
14,193
Austria
454
2,922
289
5
2
3,672
119
3,791
Finland
1,023
11,821
127
3
–
12,974
447
13,421
Other
489
35
35
32
43
634
49
683
Note
a  Exposure to financial institutions has been restated to exclude exposures to supranational entities.
I  109
Risk review
Credit risk continued
Spain (audited)
Fair value through profit or loss
Trading portfolio
Derivatives
Designated
at FV
Total
As at 31 December
Assets
£m
Liabilities
£m
Net
£m
Assets
£m
Liabilities
£m
Cash
collateral
£m
Net
£m
Assets
£m
2012
£m
2011
£m
Sovereign
905
(806
)
99
27
(27
)
–
–
–
99
–
Financial institutions
577
(117
)
460
7,648
(7,560
)
(88
)
–
291
751
221
Corporate
272
(106
)
166
489
(206
)
–
283
365
814
629
Fair value through OCI
Available for sale
assets
a
As at 31 December
Cost
£m
AFS
reserve
£m
2012
Total
£m
2011
Total
£m
Sovereign
1,588
(26
)
1,562
2,468
Financial institutions
491
(11
)
480
490
Corporate
10
–
10
2
Held at amortised cost
Loans and advances
As at 31 December
Gross
£m
Impairment
allowances
£m
2012
Total
£m
2011
Total
£m
Sovereign
29
–
29
62
Financial institutions
271
(14
)
257
276
Residential mortgages
13,424
(119
)
13,305
14,654
Corporate
4,371
(1,060
)
3,311
4,714
Other retail lending
2,564
(136
)
2,428
3,031
Off-balance sheet
Contingent liabilities
and commitments
As at 31 December
2012
£m
2011
£m
Sovereign
–
188
Financial institutions
88
22
Residential mortgages
12
20
Corporate
1,938
2,510
Other retail lending
1,263
1,102
Note
a
'Cost' refers to the fair value of the asset at recognition, less any impairment booked. 'AFS reserve' is the cumulative fair value gain or
loss on the assets that is held in equity. 'Total' is the fair value of the assets at the balance sheet date.
110  I
Sovereign
¡
£1,562m (2011: £2,468m) AFS holdings in government bonds. No impairment and £26m (2011: £51m) cumulative fair value loss
held in AFS reserve.
Financial institutions
¡
£751m (2011: £221m) held at fair value through profit and loss, predominantly debt securities held by the Investment Bank to support
trading and market making activities; and
¡
£480m (2011: £490m) AFS assets with £11m (2011: £17m) cumulative loss held in AFS reserve.
Residential mortgages
¡
£13,305m (2011: £14,654m) fully secured on residential property with average balance weighted marked to market LTV of 64.6% (2011:
60.1%). The increase in LTV is reflected in the CRL coverage of 36% (2011: 28%);
¡
90 day arrears rates have increased to 0.7% (2011: 0.5%) while gross charge-off rates have increased to 1.1% (2011: 0.6%).
Corporate
¡
Net lending to corporates of £3,311m (2011: £4,714m) with CRLs of £1,887m (2011: £2,073), impairment allowance of
£1,060m (2011: £1,187m) and CRL coverage of 56% (2011: 57%). Balances on early warning lists peaked in November 2010. The portfolio is kept under close review and impairment recognised as appropriate;
¡
Net lending to the property and construction industry of £1,188m (2011: £1,866m) largely secured on real estate collateral, with CRLs
of £1,429m (2011: £1,664m), impairment allowance of £820m (2011: £810m) and CRL coverage of 57% (2011: 49%);
¡
Corporate impairment in Spain was at its highest level during the first half of 2010 when commercial property declines were reflected earlier in
the cycle; and
¡
£359m (2011: £488m) lending to multinational and large national corporates, which continues to perform.
Other retail lending
¡
£1,052m (2011: £1,115m) credit cards and unsecured loans. 30 days and 90 days arrears rates and charge-off rates in credit cards and
unsecured loans were broadly stable in 2012; and
¡
£1,045m (2011: £1,529m) lending to small and medium enterprises (SMEs), largely secured against residential or commercial property.
I  111
Risk review
Credit risk continued
Italy (audited)
Fair value through profit or loss
Trading portfolio
Derivatives
Designated
at FV
Total
As at 31 December
Assets
£m
Liabilities
£m
Net
£m
Assets
£m
Liabilities
£m
Cash
collateral
£m
Net
£m
Assets
£m
2012
£m
2011
£m
Sovereign
2,178
(2,178
)
–
1,702
(581
)
–
1,121
2
1,123
1,144
Financial institutions
271
(85
)
186
7,074
(5,341
)
(1,733
)
–
166
352
456
Corporate
282
(116
)
166
477
(214
)
(56
)
207
326
699
171
Fair value through OCI
Available for sale
assets
a
As at 31 December
Cost
£m
AFS
reserve
£m
2012
Total
£m
2011
Total
£m
Sovereign
1,509
28
1,537
2,334
Financial institutions
134
4
138
138
Corporate
27
2
29
27
Held at amortised cost
Loans and advances
As at 31 December
Gross
£m
Impairment
allowances
£m
2012
Total
£m
2011
Total
£m
Sovereign
9
–
9
15
Financial institutions
38
–
38
75
Residential mortgages
15,698
(107
)
15,591
15,934
Corporate
1,354
(120
)
1,234
2,720
Other retail lending
2,042
(106
)
1,936
2,335
Off-balance sheet
Contingent liabilities
and commitments
As at 31 December
2012
£m
2011
£m
Financial institutions
90
17
Residential mortgages
45
101
Corporate
2,158
2,034
Other retail lending
789
988
Sovereign
¡
Predominantly £1,537m (2011: £2,334m) AFS government bonds with no impairment and £28m cumulative fair value gain (2011:
£123m cumulative fair value loss) held in the AFS reserve.
Residential mortgages
¡
£15,591m (2011: £15,934m) secured on residential property with average valuation weighted marked to market LTV of 46.7% (2011:
46.9%). CRL coverage of 23% (2011: 25%) remains stable; and
¡
90 day arrears at 1.0% (2011: 1.0%) were stable; however gross charge-off rates increased to 0.8% (2011: 0.5%).
Corporate
¡
£1,234m (2011: £2,720m) focused on large corporate clients with very limited exposure to the property sector; and
¡
Balances in early warning lists were broadly stable since December 2011.
Other retail lending
¡
£1,337m (2011: £1,615m) Italian salary advance loans (repayment deducted at source by qualifying employers and Barclays is insured in
the event of termination of employment or death). Arrears rates on salary loans improved during 2012 while charge-off rates deteriorated; and
¡
£434m (2011: £483m) credit cards and other unsecured loans. Arrears rates (both 30 and 90 days) and gross charge-off rates in cards
and unsecured loans have improved in 2012.
Note
a
'Cost' refers to the fair value of the asset at recognition, less any impairment booked. 'AFS reserve' is the cumulative fair value gain or
loss on the assets that is held in equity. 'Total' is the fair value of the assets at the balance sheet date.
112  I
Portugal (audited)
Fair value through profit or loss
Trading portfolio
Derivatives
Designated
at FV
Total
As at 31 December
Assets
£m
Liabilities
£m
Net
£m
Assets
£m
Liabilities
£m
Cash
collateral
£m
Net
£m
Assets
£m
2012
£m
2011
£m
Sovereign
144
(136
)
8
262
(262
)
–
–
–
8
69
Financial institutions
22
(4
)
18
295
(176
)
(119
)
–
–
18
11
Corporate
62
(16
)
46
362
(151
)
(5
)
206
–
252
328
Fair value through OCI
Available for sale assets
a
As at 31 December
Cost
£m
AFS
reserve
£m
2012
Total
£m
2011
Total
£m
Sovereign
598
(4
)
594
716
Financial institutions
2
–
2
2
Corporate
332
(1
)
331
677
Held at amortised cost
Loans and advances
As at 31 December
Gross
£m
Impairment
allowances
£m
2012
Total
£m
2011
Total
£m
Sovereign
35
–
35
25
Financial institutions
28
–
28
38
Residential mortgages
3,505
(31
)
3,474
3,651
Corporate
1,671
(296
)
1,375
2,290
Other retail lending
1,985
(202
)
1,783
2,053
Off-balance sheet
Contingent liabilities
and commitments
As at 31 December
2012
£m
2011
£m
Sovereign
–
3
Financial institutions
1
3
Residential mortgages
25
52
Corporate
889
1,101
Other retail lending
1,673
1,377
Sovereign
¡
£637m (2011: £810m) largely AFS government bonds. No impairment and £4m (2011: £159m) cumulative fair value loss held in
the AFS reserve.
Residential mortgages
¡
Secured on residential property with average balance weighted marked to market LTV of 77.6% (2011: 69.6%). The higher LTV is reflected in a
higher CRL coverage of 25% (2011: 14%); and
¡
90 day arrears rates remained stable at 0.7% (2011: 0.6%) while the recoveries impairment coverage improved to 25.6% (2011: 15.0%) driven by an
increase in loss given default rates.
Corporate
¡
Net lending to corporates of £1,375m (2011: £2,290m), with CRLs of £501m (2011: £443m), impairment allowance of
£296m (2011: £194m) and CRL coverage of 59% (2011: 44%); and
¡
Net lending to the property and construction industry of £364m (2011: £541m) secured, in part, against real estate collateral, with
CRLs of £275m (2011: £277m), impairment allowance of £149m (2011: £107m) and CRL coverage of 54% (2011: 39%).
Other retail lending
¡
£950m (2011: £1,052m) credit cards and unsecured loans. During 2012, arrears rates in the cards portfolio deteriorated while
charge-off rates improved; and
¡
CRL coverage of 74% (2011: 78%) driven by credit cards and unsecured loans exposure.
Note
a
'Cost' refers to the fair value of the asset at recognition, less any impairment booked. 'AFS reserve' is the cumulative fair value gain or
loss on the assets that is held in equity. 'Total' is the fair value of the assets at the balance sheet date.
I  113
Risk review
Credit risk continued
Ireland (audited)
Fair value through profit or loss
Trading portfolio
Derivatives
Designated
at FV
Total
As at 31 December
Assets
£m
Liabilities
£m
Net
£m
Assets
£m
Liabilities
£m
Cash
collateral
£m
Net
£m
Assets
£m
2012
£m
2011
£m
Sovereign
35
(35
)
–
–
–
–
–
2
2
39
Financial institutions
1,003
(32
)
971
4,813
(3,828
)
(985
)
–
582
1,553
1,561
Corporate
170
(37
)
133
386
(35
)
(198
)
153
7
293
52
Fair value through OCI
Available for sale
assets
a
As at 31 December
Cost
£m
AFS
reserve
£m
2012
Total
£m
2011
Total
£m
Sovereign
9
–
9
205
Financial institutions
63
(3
)
60
249
Corporate
4
–
4
–
Held at amortised cost
Loans and advances
As at 31 December
Gross
£m
Impairment
allowances
£m
2012
Total
£m
2011
Total
£m
Financial institutions
2,309
(154
)
2,155
2,501
Residential mortgages
122
(10
)
112
94
Corporate
866
(36
)
830
925
Other retail lending
83
–
83
86
Off-balance sheet
Contingent liabilities
and commitments
As at 31 December
2012
£m
2011
£m
Financial institutions
b
628
702
Corporate
1,007
872
Other retail lending
9
8
Financial institutions
¡
Exposure focused on financial institutions with investment grade credit ratings;
¡
Exposure to Irish banks amounted to £102m (2011: £58m); and
¡
£1.4bn (2011: £1.3bn) of loans relate to issuers domiciled in Ireland whose principal business and exposures are outside of Ireland.
Corporate
¡
£830m (2011: £925m) net loans and advances, including a significant proportion to other multinational entities domiciled in Ireland,
whose principal businesses and exposures are outside of Ireland; and
¡
The portfolio continues to perform and has not been impacted materially by the decline in the property sector.
Notes
a
'Cost' refers to the fair value of the asset at recognition, less any impairment booked. 'AFS reserve' is the cumulative fair value gain or
loss on the assets that is held in equity. 'Total' is the fair value of the assets at the balance sheet date.
b
The comparative figure has been restated following the re-designation of counterparties from the year end.
114  I
Cyprus (audited)
Fair value through profit or loss
Trading portfolio
Derivatives
Designated
at FV
Total
As at 31 December
Assets
£m
Liabilities
£m
Net
£m
Assets
£m
Liabilities
£m
Cash
collateral
£m
Net
£m
Assets
£m
2012
£m
2011
£m
Financial institutions
–
–
–
102
(102
)
–
–
–
–
–
Corporate
–
–
–
26
(8
)
(6
)
12
–
12
11
Held at amortised cost
Loans and advances
As at 31 December
Gross
£m
Impairment
allowances
£m
2012
Total
£m
2011
Total
£m
Sovereign
8
–
8
15
Residential mortgages
44
–
44
51
Corporate
94
–
94
117
Other retail lending
26
–
26
2
Off-balance sheet
Contingent liabilities
and commitments
As at 31 December
2012
£m
2011
£m
Corporate
94
107
Other retail lending
37
20
I  115
Risk review
Credit risk continued
Greece (audited)
Fair value through profit or loss
Trading portfolio
Derivatives
Designated
at FV
Total
As at 31 December
Assets
£m
Liabilities
£m
Net
£m
Assets
£m
Liabilities
£m
Cash
collateral
£m
Net
£m
Assets
£m
2012
£m
2011
£m
Sovereign
3
(2
)
1
–
–
–
–
–
1
8
Financial institutions
–
–
–
1,181
(231
)
(950
)
–
–
–
2
Corporate
3
–
3
–
–
–
–
–
3
3
Fair value through OCI
Available for sale assets
a
As at 31 December
Cost
£m
AFS
reserve
£m
2012
Total
£m
2011
Total
£m
Sovereign
–
–
–
6
Held at amortised cost
Loans and advances
As at 31 December
Gross
£m
Impairment
allowances
£m
2012
Total
£m
2011
Total
£m
Residential mortgages
8
–
8
5
Corporate
58
–
58
64
Other retail lending
22
(13
)
9
18
Off-balance sheet
Contingent liabilities
and commitments
As at 31 December
2012
£m
2011
£m
Financial institutions
–
1
Corporate
3
3
Other retail lending
2
22
Note
a
'Cost' refers to the fair value of the asset at recognition, less any impairment booked. 'AFS reserve' is the cumulative fair value gain or
loss on the assets that is held in equity. 'Total' is the fair value of the assets at the balance sheet date.
116  I
Analysis of indirect exposures
Indirect exposure to sovereigns can arise
through a number of different sources, including credit derivatives referencing sovereign debt; guarantees to savings and investment funds which hold sovereign risk; lending to financial institutions who themselves hold exposure to sovereigns and
guarantees, implicit or explicit, by the sovereign to the Group's counterparties. A geographic and industrial analysis of the Group's loans and advances, including lending to European counterparties by type, is set out on pages 89-90.
Credit derivatives referencing sovereign debt
The Group enters into credit mitigation arrangements (principally credit default swaps and total return swaps) for which the reference asset is government debt. For Spain, Italy and Portugal these
have the net effect of reducing the Group's exposure in the event of sovereign default. An analysis of the Group's credit derivatives referencing sovereign debt is presented below.
Spain
£m
Italy
£m
Portugal
£m
Ireland
£m
Cyprus
£m
Greece
£m
As at 31 December 2012
Fair value
– Bought
656
1,092
337
84
1
–
– Sold
(640
)
(1,026
)
(327
)
(94
)
(1
)
–
Net derivative fair value
16
66
10
(10
)
–
–
Contract notional amount
– Bought
(11,840
)
(18,008
)
(3,535
)
(3,220
)
(7
)
–
– Sold
11,702
17,635
3,437
3,274
7
–
Net derivative notional amount
(138
)
(373
)
(98
)
54
–
–
Net protection from credit derivatives in the event of sovereign default (notional less fair
value)
(122
)
(307
)
(88
)
44
–
–
As at 31 December 2011
Net protection from credit derivatives in the event of sovereign default (notional less fair
value)
(157
)
(374
)
(26
)
(49
)
–
19
The fair values and notional amounts of credit derivative assets and liabilities would be lower than reported under
IFRS if netting was permitted for assets and liabilities with the same counterparty or for which we hold cash collateral. An analysis of the effects of such netting is presented below.
Spain
£m
Italy
£m
Portugal
£m
Ireland
£m
Cyprus
£m
Greece
£m
As at 31 December 2012
Fair value
– Bought
165
289
119
33
1
–
– Sold
(149
)
(223
)
(109
)
(43
)
(1
)
–
Net derivative fair value
16
66
10
(10
)
–
–
Contract notional amount
– Bought
(2,550
)
(3,943
)
(1,118
)
(1,006
)
(4
)
– Sold
2,412
3,570
1,020
1,060
4
Net derivative notional amount
(138
)
(373
)
(98
)
54
–
–
Net protection from credit derivatives in the event of sovereign default (notional less fair
value)
(122
)
(307
)
(88
)
44
–
–
As at 31 December 2011
Net protection from credit derivatives in the event of sovereign default (notional less fair
value)
(157
)
(374
)
(26
)
(49
)
–
19
Credit derivatives are contracts whereby the default risk of an asset (reference asset) is transferred from the
buyer to the seller of the credit derivative contract. Credit derivatives referencing sovereign assets are bought and sold to support client transactions and for risk management purposes. The contract notional amount represents the size of the
credit derivative contracts that have been bought or sold, while the fair value represents the change in the value of the reference asset. The net protection or exposure from credit derivatives in the event of sovereign 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.
In addition, the Group has indirect sovereign exposure through the guarantee of certain savings and investment funds, which hold a proportion of
their assets in sovereign debt. As at 31 December 2012, the net liability in respect of these guarantees was £33m (2011: £41m).
I  117
Risk review
Credit risk continued
Exposure to Eurozone residential property sector
Barclays risk exposure and impairment in Spain and Portugal has been and will be affected by the housing sector in those countries as a result of
changes to the bank's risk appetite in a declining housing sector, where the desired level of new business has been reduced, and with it, the total exposure.
Falls in property prices have led to higher credit risk and higher impairment charges. The 2012 impairment charge to our residential mortgage book in Spain was £72m (2011: £38m) and in
Portugal was £24m (2011: £9m). These increases were principally driven by:
(i)
Negative house price movements: this has reduced market demand and also mortgage supply with the result that a customer's ability to sell has reduced and the
likelihood of repossessions has increased. Impairment charges have risen, given a loss event as the loss on default has increased due to lower amounts realised from the sale of properties in a distressed market; and
(ii)
Customers' behaviour and a reduced willingness to pay as a result of their perception of a lower equity stake.
For information on our exposures to home loans in Spain and Portugal see pages 95-96.
Eurozone balance sheet redenomination risk
Redenomination risk is the risk of
financial loss to the Group should one or more countries exit the Euro, leading to a potentially different valuation of local balance sheet assets and liabilities. The Group is directly exposed to redenomination risk where there could be a different
value for locally denominated assets and liabilities.
Within Barclays, retail banking, corporate banking and wealth management
activities in the Eurozone are generally booked locally within each country. Locally booked customer assets and liabilities, primarily loans and advances to customers and customer deposits, are predominantly denominated in Euros. The remaining
funding need is met through local funding secured against customer loans and advances, with any residual need funded through the Group.
During 2012, a series of mitigating actions was taken to reduce local net funding mismatches primarily by raising local liabilities in Spain,
Portugal and Italy. These actions included the drawdown of
€
8.2bn in the European Central Bank's
three year Long Term Refinancing Operation (LTRO) in Spain and Portugal. As a result of these mitigating actions the Group reduced the aggregate net funding mismatch in local balance sheets from £12.1bn to a £1.9bn surplus in Spain, from
£6.9bn to £3.3bn in Portugal and from £12.0bn to £9.6bn in Italy.
Barclays continues to monitor the potential
impact of the Eurozone volatility on local balance sheet funding and will consider actions as appropriate to manage the risk. Direct exposure to Greece is very small with negligible 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.
118  I
Risk review
Market risk
All disclosures in this section (pages 119-125) are
unaudited unless otherwise stated
Market risk
Market risk is the risk of the Group's earnings or
capital being reduced due to volatility of trading book positions or an inability to hedge the banking book balance sheet.
Analysis of traded market risk exposures
Following a volatile beginning to the year, markets steadily improved through the second half of the year with momentum gaining in the fourth quarter of 2012, even as some wider concerns persisted.
The Investment Bank's focus on market risk exposures centred on limiting illiquid risk exposures when possible. Primary risk metrics showed a fall in market risk from 2011 levels.
The three main contributors to total Daily Value at Risk (DVaR) were credit, spread and interest rate risk. From 2011 levels, average credit risk DVaR fell by £3m (11%), spread DVaR fell by
£2m (8%) and interest rate DVaR fell by £3m (18%). Total management DVaR fell by £19m (33%) reflecting the sharp reduction in the DVaR measure.
Tail risk measures also indicate a similar decline in risk profile, with a particularly sharp fall in 3W. However, some of this decline can be attributed to the rolling of the time period within the
historical simulation.
The daily average, maximum and minimum values of DVaR,
Expected Shortfall and 3W (audited)
For the year ended 31 December
2012
2011
DVaR (95%)
Average
£m
High
a
£m
Low
a
£m
Average
£m
High
a
£m
Low
a
£m
Interest rate risk
14
23
7
17
48
8
Inflation risk
3
7
2
4
9
2
Spread risk
23
31
17
25
40
17
Credit risk
26
44
18
29
48
17
Basis risk
11
21
5
6
6
6
Foreign exchange risk
6
10
2
5
8
2
Equity risk
9
19
4
18
34
9
Commodity risk
6
9
4
12
18
7
Diversification
effect
b
(60
)
na
na
(54
)
na
na
Total DVaR
38
75
27
57
88
33
Expected
Shortfall
c
47
91
30
71
113
43
3W
d
77
138
44
121
202
67
¡
Interest rate risk measures the impact of changes in interest (swap) rates and volatilities on cash instruments and derivatives;
¡
Inflation risk measures the impact of changes in inflation rates and volatilities on cash instruments and derivatives;
¡
Spread risk measures the impact of changes to the swap spread, i.e. the difference between swap rates and government bond yields;
¡
Credit risk measures the impact of changes to the credit spread of credit risky sovereign bonds, corporate bonds, securitised products or credit
derivatives such as Credit Default Swaps;
¡
Basis risk measures the impact of changes in Interest rate tenor basis (e.g. the basis between swaps vs. 3M LIBOR and swaps vs. 6M LIBOR) and
cross currency basis;
¡
Foreign exchange risk measures the impact of changes in foreign exchange rates and volatilities;
¡
Equity risk measures the impact of changes in equity prices, volatilities and dividend yields;
¡
Commodity risk measures the impact of changes in commodity prices and volatilities, including the basis between related commodities; and
¡
Diversification effect reflects the fact the risk of a diversified portfolio is smaller than the sum of the risks of its constituent parts. It is
measured as the sum of the individual asset class DVaR estimates less the total DVaR.
Notes
a
The high and low DVaR figures reported for each category did not necessarily occur on the same day as the high and low DVaR reported as a whole. Consequently a
diversification effect balance for the high and low DVaR figures would not be meaningful and is therefore omitted from the above table.
b
Diversification for 2011 has been restated to increase granularity by reporting DVaR asset class, primarily relating to credit and inflation, which were applied
for the whole period, and basis VaR, which was introduced in 2011 resulting in its partial contribution to average diversification.
c
The average of all one day hypothetical losses beyond the 95% confidence level DVaR.
d
The average of the three largest one day estimated losses.
I  119
Risk review
Market risk continued
Investment Bank management DVaR
Investment Bank daily trading revenue
Management DVaR fell sharply early in 2012
from levels seen in 2011. For the remainder of the year, DVaR remained relatively stable but at lower levels than seen in recent years. VaR based tail measures such as Expected Shortfall and 3W also saw sharp falls from 2011.
Analysis of trading revenue (audited)
The histogram above shows the distribution of daily trading revenue for the Investment Bank in 2012 and 2011. Trading revenue excludes income from Private Equity and Principal Investments.
The average daily revenue at the Investment Bank in 2012 was £46m, up 11% from 2011. There were more positive trading revenue
days in 2012 than in 2011, with 88% of days generating positive trading revenue compared to 80% in 2011. The second half of 2012 was much stronger than in 2011.
Analysis of stress testing
Stress tests and scenario analysis also indicate a
fall in market risk levels from 2011, in line with the trend in DVaR. Combined stress scenarios show that a sharp and rapid slowdown in global economic activity is the largest threat to the trading exposures. The scenario assumes an extreme and
instant sell off across all risky assets coupled with a contraction in credit, and limited gains in safe havens. The calculation assumes an instant shock to positions, without any opportunity to hedge immediately, and assumes an appropriate holding
period where the firm may be unable to unwind its trading positions.
Non-traded market risk exposures (audited)
Analysis of net interest income sensitivity
The table below shows sensitivity analysis on the pre-tax net interest income for the non-trading financial assets and financial liabilities held at 31 December 2012 and 31 December 2011.
The sensitivity has been measured using AEaR methodology as described on page 296 (using a 100 bps movement). The benchmark interest rate for each currency is set as at 31 December 2012. The figures include the effect of hedging instruments but
exclude banking book exposures held or issued by the Investment Bank as these are measured and managed using DVaR.
Net interest income sensitivity (AEaR) by currency
(audited)
As at 31 December
2012
2011
+100 bps
£m
-100 bps
£m
+100 bps
£m
-100 bps
£m
GBP
96
(273
)
68
(321
)
USD
30
(23
)
(9
)
(11
)
EUR
20
(49
)
(41
)
(5
)
ZAR
27
(25
)
31
(29
)
Others
9
(4
)
14
(5
)
Total
182
(374
)
63
(371
)
As percentage of net interest income
1.56%
(3.21%
)
0.52%
(3.04%
)
Non-traded interest rate risk, as measured by AEaR, was £374m as at 31 December 2012, an increase of
£3m compared to 31 December 2011. The increase in risk reflects an increase in the Group equity balances and associated hedges, partly offset by reduction in the margin compression in the retail bank. AEaR is measured for a reduction in
rates for the purposes of this analysis.
120  I
Analysis of equity
sensitivity
The table below shows the overall impact of a 100bps movement in interest rates on available for sale and cash flow
hedge reserves. This data is captured using PV01 (present value of 1bp), which is an indicator of the overall shift in asset value for a 1bp shift in the yield.
Analysis of equity sensitivity
(audited)
31 December 2012
31 December 2011
+100 bps
£m
-100 bps
£m
+100 bps
£m
-100 bps
£m
Net interest income
182
(374
)
63
(371
)
Taxation effects on the above
(51
)
105
(21
)
122
Effect on profit for the year
131
(269
)
42
(249
)
As percentage of net profit after tax
(55.51%
)
113.98%
1.06%
(6.30%
)
Effect on profit for the year (per above)
131
(269
)
42
(249
)
Available for sale reserve
(674
)
674
(1,108
)
1,102
Cash flow hedge reserve
(2,179
)
2,260
(2,248
)
2,280
Taxation effects on the above
799
(822
)
1,101
(1,109
)
Effect on equity
(1,923
)
1,843
(2,213
)
2,024
As percentage of equity
(3.05%
)
2.93%
(3.39%
)
3.10%
Margins and Balances
Basis of preparation
Customer assets represents loans and advances to
customers and net interest income on customer assets represents interest received from customers less interest expense for funding those assets at the relevant internal funding rate. Customer liabilities represents customer deposits. Net interest
income on customer liabilities represents the interest income from the funds generated from customer liabilities at the internal rate of funding less the interest paid to customers. Customer net interest income is the sum of customer asset and
customer liability net interest income. Under this approach, customer net interest income reflects interest related to customer assets and liabilities only and does not include any interest on securities or other non-customer assets and liabilities.
Non-customer interest income principally reflects the impact of product and equity structural hedges, as well as certain other net
interest income received on government bonds and other debt securities held for the purposes of interest rate hedging and liquidity for local banking activities. All reverse repurchase and repurchase agreements and related interest are recorded in
the Investment Bank and are therefore not included in the Retail and Business Banking, Corporate Banking and Wealth and Investment Management customer margins data.
The customer asset margin is defined as net interest income earned on customer assets (excluding the impact of the product structural hedge relating to those assets), divided by total average
customer assets. Similarly, the customer liability margin is net interest income earned on customer liabilities (excluding the impact of the product structural hedge relating to those liabilities), divided by total average customer liabilities.
The customer net interest margin is calculated as net interest income on both customer assets and liabilities (excluding the impact of
product structural hedges) as a percentage of the sum of average customer assets and liabilities, consistent with the presentation of the net interest margin.
The non-customer generated margin is calculated as non-customer net interest income (principally comprising the impact of both the product and equity structural hedges) as a percentage of the sum of
average customer assets and liabilities, consistent with the presentation of the net interest margin.
I  121
Risk review
Market risk continued
Analysis of net interest income
2012
£m
2011
£m
Retail and Business Banking, Corporate Banking and Wealth and Investment Management customer
net interest income
Customer assets
6,723
6,983
Customer liabilities
3,093
2,866
Total customer net interest income
9,816
9,849
Retail and Business Banking, Corporate Banking and Wealth and Investment Management non-customer net interest income
Product structural hedge
a
989
1,168
Equity structural hedge
b
231
824
Other
118
148
Retail and Business Banking, Corporate Banking and Wealth and Investment Management net interest income
11,154
11,989
Investment Bank
619
1,177
Head Office and Other Operations
(134
)
(965
)
Group net interest income
11,639
12,201
Group net interest income decreased by £562m to £11,639m (2011: £12,201m) principally due to
reduced contributions from structural hedges. The overall contribution to Group income from structural hedges decreased by £1,540m to £1,737m. Of this decrease, £1,061m related to the non-recurrence of gains from the sale of
hedging instruments in the second half of 2011, which did not contribute to Group net interest income in 2011 as it was recognised as non-interest income, but a proportion of which is reflected in the net interest income of Retail and Business
Banking, Corporate Banking and Wealth and Investment Management, shown above.
Retail and Business Banking, Corporate Banking and
Wealth and Investment Management net interest income
Barclays distinguishes the relative net interest contribution from customer
assets and customer liabilities, and separates this from the contribution delivered by non-customer income, which principally arises from the Group hedging activities.
Customer net interest income
Customer net interest income decreased marginally
to £9,816m (2011: £9,849m), principally due to reductions in the customer asset margin across the majority of businesses partially offset by growth in average customer assets and liabilities.
The customer asset margin declined to 2.11% (2011: 2.19%), reflecting an increase in funding rates across Retail and Business Banking, Corporate
Banking and Wealth and Investment Management businesses. This was partially offset by a move towards higher margin business in Africa RBB.
The customer liability margin increased to 1.09% (2011: 1.06%) reflecting increased funding rates and therefore value generated from Retail and Business Banking, Corporate Banking and Wealth and
Investment Management customer liabilities.
Non-customer net interest income
Non-customer net interest income decreased 37% to £1,338m, reflecting a reduction in the benefits from Group hedging activities. Group hedging
activities utilise structural interest rate hedges to mitigate the impact of the low interest rate environment on customer liabilities and the Group's equity.
Product structural hedges generated a lower contribution of £989m (2011: £1,168m). Hedge durations were maintained throughout the period. Based on current interest rate curves and the
ongoing hedging strategy, fixed rate returns on product structural hedges are expected to continue to make a significant but declining contribution in 2013.
The contribution from equity structural hedges in Retail and Business Banking, Corporate Banking and Wealth and Investment Management decreased to £231m (2011: £824m) following the sale
of hedging instruments in the second half of 2011 and the continued low interest rate environment.
Other Group net interest income
Head Office and Other Operations net interest expense decreased to £134m (2011: £965m) principally reflecting the
non-recurrence of a transfer of gains from the sale of hedging instruments to businesses.
Investment Bank net interest income decreased
47% to £619m, due to a reduction in interest income from equity structural hedges and credit market exposures.
Total Group income
from equity structural hedges decreased to £748m (2011: £2,109m) including £517m (2011: £1,285m) that was allocated to the Investment Bank and Head Office.
Notes
a
Product structural hedges convert short term interest margin volatility on product balances (such as non-interest bearing current accounts and managed rate
deposits) into a more stable medium term rate and are built on a monthly basis to achieve a targeted maturity profile.
b
Equity structural hedges are in place to manage the volatility in net earnings generated by businesses on the Group's equity, with the impact allocated to
businesses in line with their economic capital usage.
122  I
Net interest margin
The net interest margin for Retail and Business Banking, Corporate Banking and Wealth and Investment Management decreased to 1.85%
(2011: 2.03%), reflecting the reduction in contribution from Group hedging activities. Consistent with prior periods the net interest margin is expressed as a percentage of the sum of average customer assets and liabilities, to reflect the impact of
the margin generated on retail and commercial banking liabilities.
The net interest margin, expressed as a percentage of average
customer assets only, declined to 3.50% (2011: 3.77%).
An analysis is provided below for Retail and Business Banking, Corporate Banking
and Wealth and Investment Management for each of the component parts of net interest income.
Net interest margin
UKRBB
%
Europe
RBB
%
Africa
RBB
a
%
Barclaycard
%
Corporate
Banking
a
%
Wealth and
Investment
Management
%
Total
%
2012
Customer asset margin
1.07
0.83
3.26
9.39
1.14
0.65
2.11
Customer liability margin
0.97
0.38
2.34
(0.60
)
1.09
1.12
1.09
Customer net interest margin
1.03
0.71
2.90
9.01
1.11
0.99
1.63
Non-customer generated margin
0.34
0.37
0.22
(0.55
)
0.13
0.23
0.22
Net interest margin
1.37
1.08
3.12
8.46
1.24
1.22
1.85
Average customer assets (£m)
124,275
40,790
34,108
32,452
67,494
19,670
318,789
Average customer liabilities (£m)
111,753
14,824
22,085
1,286
83,149
50,155
283,252
2011
Customer asset margin
1.22
0.87
2.92
9.52
1.46
0.77
2.19
Customer liability margin
0.87
0.65
2.76
–
0.94
0.99
1.06
Customer net interest margin
1.05
0.81
2.86
9.52
1.19
0.93
1.67
Non-customer generated margin
0.46
0.47
0.36
(0.08
)
0.27
0.36
0.36
Net interest margin
1.51
1.28
3.22
9.44
1.46
1.29
2.03
Average customer assets (£m)
118,503
43,749
37,944
30,289
70,398
17,546
318,429
Average customer liabilities (£m)
107,761
17,702
23,531
–
77,372
44,536
270,902
The 2012 decrease in customer asset and liability margins partially reflects a year on year increase in the
Group's average internal funding rates. The increase in funding rates has had an adverse impact on customer asset margins and a benefit to customer liability margins, resulting in a reduction of 3bps (2011: 2bps) in the net interest margin.
The Group uses a range of internal funding rates which price intra-group funding and liquidity to give credit to businesses with net
surplus liquidity and to charge those businesses in need of wholesale funding at a rate that is driven by prevailing market rates and includes term premiums. The objective is to price internal funding for assets and liabilities in line with the cost
of alternative external funding, which ensures there is consistency between retail and wholesale sources. Rates are applied to all entities within the Group on a consistent basis. There have been no material changes to the methodologies used during
2012.
Note
a
2011 comparatives have been revised to reflect certain corporate banking activities previously reported in Africa RBB which are now included within Corporate
Banking. Corporate Banking average customer assets, average customer liabilities and net interest income have therefore been adjusted by £1,731m, £6,740m and £118m respectively although the net interest margin remains at 1.46%.
Africa RBB comparatives have additionally been revised to include gross cheque advances and cheque deposits of £798m within average assets and average liabilities respectively where these were previously reported net. The Africa RBB net
interest margin is therefore revised to 3.22% (previously reported as 3.07%) and the Group 2011 net interest margin is revised to 2.03% (previously reported as 2.04%).
I  123
Risk review
Market risk continued
Foreign exchange risk (audited)
The Group is exposed to two sources of foreign exchange risk:
a) Transactional
foreign currency exposure
Transactional foreign exchange exposures represent exposure on banking assets and liabilities, denominated
in currencies other than the functional currency of the transacting entity.
The Group's risk management policies prevent the
holding of significant open positions in foreign currencies outside the trading portfolio managed by the Investment Bank which is monitored through DVaR.
There were no material net transactional foreign currency exposures outside the trading portfolio at either 31 December 2012 or 2011. Due to the 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 2012 or 2011.
b) Translational foreign exchange exposure
The Group's investments in
overseas subsidiaries and branches create capital resources denominated in foreign currencies principally US Dollar, Euro and South African Rand. Changes in the Sterling value of the investments due to foreign currency movements are captured in the
currency translation reserve, resulting in a movement in Core Tier 1 capital.
The Group's strategy is to minimise the volatility
of the capital ratios caused by foreign exchange movements, by using the Core Tier 1 capital movements to broadly match the revaluation of the Group's foreign currency RWA exposures.
During 2012, total structural currency exposures net of hedging instruments decreased from £16.7bn to £16.3bn, as a result of hedging decisions taken in accordance with the Group's
capital ratio management strategy for foreign exchange rate movements.
The economic hedges primarily represent the US Dollar and Euro
preference shares and reserve capital instruments in issue that are treated as equity under IFRS, and do not qualify as hedges for accounting purposes.
Functional currency of operations
(audited)
Foreign
currency
net
investments
£m
Borrowings
which hedge
the net
investments
£m
Derivatives
which hedge
the net
investments
£m
Structural
currency
exposures
pre economic
hedges
£m
Economic
hedges
£m
Remaining
structural
currency
exposures
£m
As at 31 December 2012
US Dollar
35,280
6,251
13,861
15,168
4,822
10,346
Euro
5,369
1,494
1,990
1,885
1,951
(66
)
Rand
4,048
–
131
3,917
–
3,917
Japanese Yen
597
175
407
15
–
15
Other
3,084
–
1,027
2,057
–
2,057
Total
48,378
7,920
17,416
23,042
6,773
16,269
As at 31 December 2011
US Dollar
30,335
7,217
8,094
15,024
5,072
9,952
Euro
6,568
4,096
280
2,192
2,017
175
Rand
4,258
–
–
4,258
–
4,258
Japanese Yen
681
293
336
52
–
52
Other
3,144
–
930
2,214
–
2,214
Total
44,986
11,606
9,640
23,740
7,089
16,651
124  I
Other market risks
Pension risk
Barclays
maintains a number of defined benefit pension schemes for past and current employees. The ability of the pension fund to meet the projected pension payments is maintained principally through investments. Pension risk arises because the estimated
market value of the pension fund assets might decline; or their investment returns might reduce; or the estimated value of the pension liabilities might increase. Barclays monitors the market risks arising from its defined benefit pension schemes,
and works with the trustees to address shortfalls. In these circumstances, Barclays could be required or might choose to make extra contributions to the pension fund. Financial details of the pension fund are in Note 37 on page 260.
Asset management structural risk
Asset management structural risk arises where the fee and commission income earned by asset management products is affected by a change in market levels, primarily through the link between income
and the value of assets under management. Asset management structural risk mainly resides in Wealth and Investment Management. It is Barclays policy that businesses monitor and regularly assess potential hedging strategies.
Disclosures about certain trading activities including non-exchange traded commodity contracts
The Group provides a fully integrated service to clients for base metals, precious metals, oil, power, natural gas, coal, freight, emission credits,
structured products and other related commodities.
The Group offers both over the counter (OTC) and exchange traded derivatives,
including swaps, options, forwards and futures and enters into physically settled contracts in base metals, power and gas, oil and related products. Physical commodity positions are held at fair value and reported under the trading portfolio in Note
13 on page 213.
The fair values of physical and derivative positions are primarily determined through a combination of recognised
market observable prices, exchange prices, and established inter-commodity relationships. Further information on fair value measurement of financial instruments can be found in Note 18 on page 219-231.
Credit risk exposures are actively managed by the Group. Refer to the credit risk section on page 80 for more information on the Group's
approach to credit risk management and the credit quality of derivative assets.
The tables below analyse the overall fair value of the
OTC commodity derivative contracts by movement over time and contractual maturity. As at 31 December 2012 the fair value of the commodity derivative contracts reflects a gross positive fair value of £13,227m (2011: £20,588m) and a
gross negative value of £14,061m (2011: £20,133m).
Movement in fair value of commodity derivative
positions
2012
£m
2011
£m
Fair value of contracts outstanding as at 1 January
455
(363
)
Contracts realised or otherwise settled during the period
(460
)
1,494
Fair value of new contracts entered into during the period
(731
)
(33
)
Other changes in fair values
(98
)
(643
)
Fair value of contracts outstanding as at 31 December
(834
)
455
Maturity analysis of commodity derivative fair
value
2012
£m
2011
£m
Not more than one year
(478
)
447
Over one year but not more than five years
(371
)
35
Over five years
15
(27
)
Total
(834
)
455
On occasion, Barclays will hold dominant positions in base metals on the London Metal Exchange (LME), as per the
Exchange's definition. Barclays complies fully with LME's Lending Guidance, which is the Exchange's mechanism for limiting the impact of dominant market positions by prescribing the amount and level at which positions must be lent.
I  125
Risk review
Funding risk – Capital
All disclosures in this section (pages 126-135) are unaudited unless otherwise
stated
Capital risk
Capital risk is the risk that the Group is unable to maintain appropriate capital ratios, which could lead to: an inability to
support business activity; a failure to meet regulatory requirements; or a change to credit ratings.
Capital management is integral to the Group's approach to financial stability and sustainability management
and is therefore embedded in the way our businesses and legal entities operate. Our capital management strategy is driven by the strategic aims of the Group and the risk appetite set by the Board.
For further information on related policies, please refer to the Risk management section on pages 274-303.
For further information on supervision and regulation, refer to pages 154-160.
Barclays has continued to maintain a capital buffer over the FSA's minimum regulatory capital requirements.
¡
The Core Tier 1 ratio decreased to 10.9% (2011: 11.0%) reflecting a reduction in Core Tier 1 capital of £0.9bn to £42.1bn, partially
offset by a 1% reduction in risk weighted assets to £386.9bn.
Barclays generated £1.8bn Core Tier 1
capital from earnings after absorbing the impact of dividends paid and provisions for PPI and interest rate hedging product redress. The increase from earnings was more than offset by other movements in Core Tier 1 capital, principally:
¡
£1.2bn increase in the adjustment for defined benefit pensions, driven by an additional contribution made to the UK Retirement Fund in
April 2012 and deducting expected future deficit contributions over the next five years;
¡
£1.6bn reduction due to foreign currency movements, primarily due to depreciation of the US Dollar, Euro and South African Rand against
Sterling which was broadly offset by foreign currency movements in risk weighted assets; and
¡
Total capital resources increased by £2.1bn reflecting lower deductions for material holdings principally as a result of the sale of the
stake in BlackRock, Inc. Within Tier 2 capital, the redemption of £2.7bn dated subordinated liabilities was partially offset by the issuance of $3bn of contingent capital notes (CCNs).
126  I
Capital Composition
Key capital ratios
As at 31 December
2012
2011
Core Tier 1
10.9%
11.0%
Tier 1
13.3%
12.9%
Total capital
17.1%
16.4%
Capital Resources (audited)
As at 31 December
2012
£m
2011
£m
Shareholders' equity (excluding non-controlling interests) per balance sheet
53,586
55,589
Own credit cumulative loss/(gain)
a
804
(2,680
)
Unrealised (gains)/losses on available for sale debt
securities
a,b
(417
)
803
Unrealised gains on available for sale equity (recognised as Tier 2
capital)
a
(110
)
(828
)
Cash flow hedging reserve
a
(2,099
)
(1,442
)
Non-controlling interests per balance sheet
9,371
9,607
– Less: Other Tier 1 capital – preference shares
(6,203
)
(6,235
)
– Less: Other Tier 1 capital – reserve capital instruments
–
–
– Less: Non-controlling Tier 2 capital
(547
)
(573
)
Other regulatory adjustments to non-controlling interests
(171
)
(138
)
Other regulatory adjustments and deductions:
Defined benefit pension adjustment
a
(2,445
)
(1,241
)
Goodwill and intangible assets
a
(7,622
)
(7,560
)
50% excess of expected losses over impairment
a
(648
)
(506
)
50% of securitisation positions
(1,206
)
(1,577
)
Other regulatory
adjustments
b
(172
)
(153
)
Core Tier 1 capital
42,121
43,066
Other Tier 1 capital:
Preference shares
6,203
6,235
Tier 1 notes
c
509
530
Reserve capital instruments
2,866
2,895
Regulatory adjustments and deductions:
50% of material holdings
(241
)
(2,382
)
50% of the tax on excess of expected losses over impairment
176
129
Total Tier 1 capital
51,634
50,473
Tier 2 capital:
Undated subordinated liabilities
1,625
1,657
Dated subordinated liabilities
14,066
15,189
Non-controlling Tier 2 capital
547
573
Reserves arising on revaluation of property
a
39
25
Unrealised gains on available for sale equity
a
110
828
Collectively assessed impairment allowances
2,002
2,385
Tier 2 deductions:
50% of material holdings
(241
)
(2,382
)
50% excess of expected losses over impairment (gross of tax)
(824
)
(635
)
50% of securitisation positions
(1,206
)
(1,577
)
Total capital regulatory adjustments and deductions:
Investments that are not material holdings or qualifying holdings
(1,139
)
(1,991
)
Other deductions from total capital
(550
)
(597
)
Total regulatory capital
66,063
63,948
Notes
a
The capital impacts of these items are net of tax.
b
Available for sale reserves for debt securities has been revised to include the adjustment for the scope of regulatory consolidation previously disclosed in other
regulatory adjustments.
c
Tier 1 notes are included in subordinated liabilities in the consolidated balance sheet.
I  127
Risk review
Funding risk – Capital continued
Movement in total regulatory capital
2012
£m
2011
£m
Core Tier 1 capital as at 1 January
43,066
42,861
(Loss)/profit for the year
(236
)
3,951
Removal of own credit
a
3,484
(2,059
)
Dividends paid
(1,427
)
(1,387
)
Retained capital generated from earnings
1,821
505
Movement in reserves – impact of share schemes
(165
)
714
Movement in currency translation reserves
(1,578
)
(1,607
)
Movement in qualifying available for sale equity reserves
–
749
Other reserves movements
33
128
Movement in other qualifying reserves
(1,710
)
(16
)
Movement in regulatory adjustments and deductions:
Defined benefit pension adjustment
a
(1,204
)
(1,340
)
Goodwill and intangible asset balances
a
(62
)
766
50% excess of expected losses over impairment
a
(142
)
(238
)
50% of securitisation positions
371
783
Other regulatory adjustments
(19
)
(255
)
Core Tier 1 capital as at 31 December
42,121
43,066
Other Tier 1 capital as at 1 January
7,407
10,685
Redemption of Tier 1 notes
–
(518
)
Redemption of reserve capital instruments
–
(3,188
)
Regulatory adjustments on other Tier 1 capital
(82
)
(95
)
50% of material holdings
2,141
294
50% of the tax on excess of expected losses over impairment
47
229
Tier 1 capital as at 31 December
51,634
50,473
Tier 2 capital as at 1 January
16,063
16,019
Issuance of contingent capital notes and subordinated notes
2,258
880
Redemption of subordinated notes
(2,672
)
(2,655
)
Amortisation adjustments
(155
)
696
Regulatory adjustments on Tier 2 capital
(612
)
(287
)
Reserves arising on revaluation of property
a
14
(4
)
Unrealised gains on available for sale equity
a
(718
)
828
Collectively assessed impairment allowances
(383
)
(24
)
50% of material holdings
2,141
294
50% excess of expected losses over impairment (gross of tax)
(189
)
(467
)
50% of securitisation positions
371
783
Tier 2 capital as at 31 December
16,118
16,063
Other deductions from total capital as at 1 January
(2,588
)
(2,250
)
Investments that are not material holdings or qualifying holdings
852
(369
)
Other deductions from total capital
47
31
Other deductions from total capital as at 31 December
(1,689
)
(2,588
)
Total regulatory capital as at 31 December
66,063
63,948
Note
a
The capital impacts of these items are net of tax.
128  I
Risk Weighted Assets (RWAs) by risk type and
business
Credit risk
Counterparty
credit risk
Market risk
Operational
risk
Total
RWAs
£m
STD
£m
F-IRB
£m
A-IRB
£m
Internal
model
method
£m
Non-
model
method
£m
STD
£m
Modelled
VaR
£m
Charges
add-on
and
non-VaR
modelled
£m
£m
As at 31 December 2012
UKRBB
1,163
–
31,096
–
–
–
–
–
6,524
38,783
Europe RBB
5,727
–
9,157
–
3
–
–
–
2,225
17,112
Africa RBB
6,217
5,778
10,580
–
7
–
–
–
4,426
27,008
Barclaycard
16,641
–
13,442
–
–
–
–
–
6,381
36,464
Investment Bank
9,530
3,055
47,991
25,127
4,264
25,396
22,497
15,429
24,730
178,019
Corporate Banking
25,744
3,430
31,743
500
–
–
–
–
6,556
67,973
Wealth and Investment
Management
11,540
317
593
–
199
–
–
–
3,184
15,833
Head Office and Other Operations
205
–
5,301
–
–
–
–
–
160
5,666
Total RWAs
76,767
12,580
149,903
25,627
4,473
25,396
22,497
15,429
54,186
386,858
As at 31 December 2011
UKRBB
1,193
–
27,896
–
–
–
–
–
4,867
33,956
Europe RBB
6,147
–
9,691
–
2
–
–
–
1,596
17,436
Africa RBB
8,840
6,615
11,452
–
6
–
–
–
3,376
30,289
Barclaycard
15,262
–
14,167
–
–
–
–
–
4,757
34,186
Investment Bank
11,395
2,882
47,937
32,570
4,792
27,823
26,568
17,560
15,173
186,700
Corporate Banking
30,826
2,926
34,338
561
–
–
–
–
4,191
72,842
Wealth and Investment
Management
10,262
297
834
–
153
–
–
–
1,530
13,076
Head Office and Other Operations
833
–
1,431
–
–
–
–
–
250
2,514
Total RWAs
84,758
12,720
147,746
33,131
4,953
27,823
26,568
17,560
35,740
390,999
Movement in RWAs
£bn
As at 1 January 2012
391.0
Methodology and model changes
38.7
Business activity
(28.4
)
Foreign exchange
(11.3
)
Change in risk parameters
(3.1
)
As at 31 December 2012
386.9
I  129
Risk review
Funding risk – Capital continued
RWAs reduced by 1% to £386.9bn driven by:
¡
Methodology and model changes: the £38.7bn increase is primarily driven by:
–
£18.4bn increase in operational risk driven by a recalibration of risk scenarios taking into account risk events impacting Barclays and the
banking industry;
–
£12.0bn increase in market risk within Investment Bank, principally relating to VaR model scope and the sovereign incremental risk charge;
–
£4.7bn increase due to the introduction of minimum loss given default parameters for sovereign exposures; and
–
£2.8bn increase in credit risk as a result of changes to the treatment of real estate exposures.
¡
Business risk reduction: the £28.4bn decrease is primarily driven by:
–
£24.6bn decrease as a result of Investment Bank risk reduction primarily in market risk and derivative counterparty credit risk, including
a £4.2bn decrease as a result of the sell down of legacy assets (in addition to £1.0bn lower capital deductions related to legacy business);
–
£6.9bn credit risk decrease within Corporate Banking, reflecting business risk reduction and the exit from non-core international
portfolios;
–
Offset by £2.2bn increase within UKRBB predominantly driven by mortgage balance growth.
¡
Foreign exchange: the £11.3bn decrease is primarily due to the depreciation of the US Dollar, Euro and South African Rand against Sterling;
and
¡
Change in risk parameters: the £3.1bn decrease is primarily driven by improvements in underlying risk profiles and market conditions.
Impact of Basel 3
The new capital requirements regulation and capital requirements directive that implement Basel 3 proposals within the EU (collectively known as CRD IV) are still under consideration. The
requirements are expected to be finalised during 2013, however the implementation date is uncertain.
¡
CRD IV includes the requirement for a minimum Common Equity Tier 1 (CET1) ratio of 4.5%, a minimum Tier 1 ratio of 6% and a minimum total capital
ratio of 8%. There is an additional requirement for a Capital Conservation Buffer (CCB) of 2.5% and Counter-Cyclical Capital Buffer (CCCB) of up to 2.5% to be applied when macroeconomic conditions indicate areas of the economy are over-heating. Our
working assumption is that the CCCB would be zero if implemented today;
¡
In addition globally systemically important banks are expected to hold a buffer of up to 2.5%. For Barclays, this was confirmed in November 2012
by the Financial Stability Board (FSB) to be 2.0% resulting in an expected regulatory target CET1 ratio of 9.0%. This regulatory target capital requirement will phase in between adoption of CRD IV and 2019;
¡
The proposed changes to the definition of CET1 also include transitional provisions relating to capital deductions and grandfathering of
ineligible capital instruments that are in line with the FSA's statement on CRD IV transitional provisions in October 2012;
¡
Given the phasing of both capital requirements and target levels, in advance of needing to comply with the fully loaded end state requirements
Barclays will have the opportunity to continue to generate additional capital from earnings and take management actions to mitigate the impact of CRD IV. Our expectation is that ineligible Additional Tier 1 capital, which qualifies for
grandfathering under the transitional relief, will be replaced with eligible capital over time;
¡
To provide an indication of the potential impact on Barclays, we have estimated our pro forma RWAs and CET1 ratio on both a transitional and
fully loaded basis, reflecting our current interpretation of the rules and assuming they were applied as at 1 January 2013. As at that date Barclays pro forma RWAs on a CRD IV basis would have been estimated at approximately £468bn, with
a resultant transitional CET1 ratio of approximately 10.6% and a fully loaded CET1 ratio of approximately 8.2%. Further analysis of the impacts are set out on page 134;
¡
Based on our estimated proforma capital ratios, identified actions and retained earnings, we expect to be in excess of the minimum capital
requirements as they are expected to apply over the transitional period and through to the end state position;
¡
The Basel 3 guidelines include a proposed leverage metric to be implemented by national supervisors initially under a parallel run for disclosure
purposes only, and migrating to a mandatory limit over a period of five years. Based on our interpretation of the current proposals, the Group's CRD IV leverage ratio as at 31 December 2012 would be within the proposed limit of 33x,
allowing for transitional relief to Tier 1 capital. Further analysis of the impacts are set out on page 134;
¡
The actual impact of CRD IV on capital ratios may be materially different as the requirements and related technical standards have not yet been
finalised, for example provisions relating to the scope of application of the CVA volatility charge and restrictions on short hedges relating to insignificant financial holdings. The actual impact will also be dependent on required regulatory
approvals and the extent to which further management action is taken prior to implementation.
130  I
Estimated impact of CRD IV
Pro forma
CET1
Transitional
Pro forma
CET1
Fully-loaded
As
at
31 December
2012
£bn
As
at
1 January
2013
£bn
As
at
1 January
2013
£bn
Core Tier 1 capital (FSA 2009 definition)
42.1
42.1
42.1
IFRS 10 impact (introduced on 1 Jan 2013)
–
(0.4
)
(0.4
)
Core Tier 1 capital post-IFRS 10 (FSA 2009 definition)
42.1
41.7
41.7
Risk Weighted Assets (RWA) (current Basel 2.5 rules)
387
387
387
Core Tier 1 ratio (Basel 2.5)
10.9%
10.8%
10.8%
CRD IV impact on Core Tier 1 capital:
Adjustments not impacted by transitional provisions
Conversion from securitisation deductions to RWAs
1.0
1.0
Prudential Valuation Adjustment (PVA)
(1.2
)
(1.2
)
Other
(0.2
)
(0.2
)
Adjustments impacted by transitional provisions
Goodwill and intangibles
7.6
–
Expected losses over impairment
0.6
(1.1
)
Deferred tax assets deduction
(0.1
)
(1.3
)
Excess minority interest
–
(0.9
)
Debit Valuation Adjustment (DVA)
–
(0.3
)
Pensions
–
(0.1
)
Gains on available for sale equity and debt
–
0.7
CET1 capital
49.5
38.4
RWAs (post CRD IV)
468
468
CET1 ratio
10.6%
8.2%
Basis of calculation of the impact of CRD IV
CRD IV, models and waivers
¡
The proforma ratios, capital computations and RWAs are based on our interpretation of the draft July 2011 CRD IV rules and best expectation of
how these draft rules will be updated for subsequent Basel announcements and EU discussions. They assume that all items in the Internal Model Method application to the FSA are approved, and existing FSA waivers, where such discretion is available
under CRD IV, will continue.
Capital resources
¡
Proforma capital numbers at 1 January 2013 are based on 31 December 2012 actuals with an adjustment for IFRS 10 impact (as a result of
consolidating some entities that were not previously consolidated and deconsolidating some entities that were previously consolidated);
¡
Transitional CET1 capital is based on application of the CRD IV transitional provisions and FSA guidance dated 26 October 2012 setting out
the minimum pace of transitions with certain exceptions set out in the guidance. In line with this guidance, deferred tax assets deduction is assumed to transition in at 10% in 2013. Other deductions (including goodwill and intangibles, expected
losses over impairment and DVA) transition in at 0% in 2013, 20% in 2014, 40% in 2015 and so on;
¡
PVA was previously assumed to be subject to transitional treatment. Following FSA guidance, the impact of PVA is now factored into CET1 on
inception in full. PVA is subject to final rules to be agreed by the EBA and the impact is currently based on methodology agreed with the FSA;
¡
The draft July 2011 CRD IV rules include the implementation of a capital deduction for financial holdings greater than 10% of CET1 capital, which
under Basel 2.5 are subject to equity market risk capital requirements. Under current regulatory rules, the Group's financial holdings net down to £3.3bn exposure after allowing for permitted economic hedging. The current draft of the CRD
IV rules applies a further restriction, where the maturity of the hedging instrument is less than one year, which would result in a higher net position of approximately £10.1bn. This would be in excess of 10% of our CET1 and would result in a
capital deduction on a fully loaded basis of approximately £4.6bn at CET1 level and a further deduction of approximately £1.4bn at total capital level. However, we have identified management actions that would be taken in the event that
the CRD IV draft requirements remain unchanged, and as a result we are highly confident that no capital deduction would be required; and
¡
Excess minority interest has been calculated on a CRD IV basis and included in our full impact capital base on the assumption that supervisory
regimes outside the EU that are implementing Basel 3, and are currently considered equivalent supervisory and regulatory regimes, will continue to be considered equivalent regimes under CRD IV.
I  131
Risk review
Funding risk – Capital continued
RWAs
¡
It is assumed that EU corporates, pension funds and sovereigns are exempt from CVA volatility charge;
¡
It is assumed all central counterparties will implement the Committee on Payment and Settlement Systems' and the Technical Committee of the
International Organization of Securities' 'Principles for Financial Market Infrastructures' and hence will be deemed to be 'Qualifying'. The final determination of Qualifying status will be made by the appropriate Regulatory
Authority;
¡
The pro forma RWA increase from Basel 3 includes 1250% risk weighting of securitisation positions while pro forma capital includes add back of
Basel 2 50/50 securitisation deductions;
¡
Pro forma RWAs for definition of default assume that national discretion over 180 days definition of default remains for UK retail mortgages;
¡
'Other' CRD IV impact to RWAs include adjustments for withdrawal of national discretion of definition of default relating to non-UK
mortgage retail portfolios (£1.4bn), deferred tax assets (£2.3bn), material holdings (£2.3bn), other counterparty credit risk (£6.4bn) and other items; and
¡
RWAs are sensitive to market conditions. Pro forma impact on RWAs for all periods reflects market conditions as at 31 December 2012.
Adjusted gross leverage
Adjusted gross leverage
As at 31 December
2012
£m
2011
£m
Total assets
a
1,490,321
1,563,527
Counterparty net/collateralised derivatives
b
(434,527
)
(491,716
)
Assets held in respect of linked liabilities to customers under investment contracts
c
(1,494
)
(1,681
)
Net settlement balances and cash collateral
(71,718
)
(61,913
)
Goodwill and intangible assets
(7,915
)
(7,846
)
Adjusted total tangible assets
974,667
1,000,371
Total qualifying Tier 1 capital
51,634
50,473
Adjusted gross leverage
19x
20x
Adjusted gross leverage (excluding liquidity pool)
16x
17x
Ratio of total assets to shareholders' equity
24x
24x
Ratio of total assets to shareholders' equity (excluding liquidity pool)
21x
22x
Barclays continues to manage its balance sheet within limits and targets for balance sheet usage. The adjusted
gross leverage reduced to 19x as at 31 December 2012 (2011: 20x) principally as a result of an increase in qualifying Tier 1 capital to £51.6bn (2011: £50.5bn), offset by a reduction in adjusted total tangible assets by 2.6% to
£975bn. At month ends during 2012 the ratio moved in a range from 19x to 23x (2011: 20x to 23x), with fluctuations arising primarily within collateralised reverse repurchase lending and high quality trading portfolio assets. Significant
monthly fluctuations included:
¡
an increase to 23x in April 2012 driven by an increase in reverse repurchase agreements and holdings of trading portfolio assets and a decrease
in Tier 1 capital;
¡
a fall in June 2012 to 20x driven by an increase in Tier 1 capital, and decreases in holdings of trading portfolio assets and reverse repurchase
agreements; and
¡
a decrease to 19x in December 2012 resulting from decreases in reverse repurchase agreements, holdings of trading portfolio assets and cash and
balances at central banks.
Adjusted total tangible assets include cash and balances at central banks of £86.2bn
(2011: £106.9bn). Excluding these balances, the balance sheet leverage would be 17x (2011: 18x). Excluding the liquidity pool, leverage would be 16x (2011: 17x).
Notes
a
Includes liquidity pool of £150bn (2011: £152bn).
b
Comprising counterparty netting of £387,672m (2011: £440,592m) and collateral held of £46,855m (2011: £51,124m) as disclosed on page
105.
c
Comprising financial assets designated at fair value and associated cash balances.
132  I
The ratio of total assets to
total shareholders' equity was 24x as at 31 December 2012 (2011: 24x). The ratio moved within a month end range of 24x to 28x (2011: 24x to 28x), driven by trading activity fluctuations noted above and changes in gross interest rate
derivatives and settlement balances. Significant drivers of fluctuations other than those noted above comprised:
¡
an increase to 26x in April 2012 due to increases in settlement balances and trading portfolio assets offset by decreases in gross derivative
balances;
¡
a further increase to 28x in May 2012 arising from increases in gross derivatives balances and trading portfolio assets; and
¡
decreases to 26x in August 2012 and 24x in December 2012 as a result of decreases in gross derivative balances, trading portfolio assets and in
settlement balances.
Group Treasury agrees adjusted tangible asset targets at a segment level to manage the Barclays
balance sheet and leverage ratio. The Investment Bank's adjusted tangible assets are managed and reviewed monthly by the Corporate and Investment Banking Treasury Committee which includes members of Treasury, Finance and the businesses. The
Committee agrees limits with each business across the Investment Bank and monitors balance sheet usage against those limits. Businesses were required to manage the balance sheet to defined limits and were not permitted to exceed them without prior
approval by nominated Committee members. Barclays continues to operate within limits and targets for balance sheet usage as part of its balance sheet management activities.
Implementation of Basel 3 – leverage impacts
Barclays already measures and
reports adjusted gross leverage as an internal measure of balance sheet leverage based on adjusted tangible assets divided by qualifying regulatory Tier 1 capital. The business operates within limits and targets for balance sheet usage at a Group
and business unit level as part of its balance sheet management activities. As at 31 December 2012, the Group's adjusted gross leverage was 19x.
CRD IV introduces a non-risk based leverage ratio that is intended to act as a supplementary buffer to the risk based capital requirements. By 1 January 2018 banks will be required to be above
the proposed limit of 3% leverage (equivalent to 33x). Prior to that date there are no regulatory requirements to exceed this threshold, but banks will be required to publish their leverage ratio annually in the Pillar 3 disclosures once the rules
come into force.
The CRD IV leverage ratios are higher than the adjusted gross leverage ratio, primarily due to the CRD IV ratio
excluding netting of settlement balances and cash collateral against derivatives and including off-balance sheet potential future exposures and undrawn commitments, which the adjusted gross leverage ratio (consistent with many other banks'
treatment) does not. The key adjustments to total assets under the CRD IV leverage ratio are as follows:
¡
Netting adjustments: netting permitted for regulatory purposes in relation to derivative and secured financing transaction (SFT) assets against
corresponding liabilities;
¡
Regulatory deductions: items (comprising goodwill and intangibles, deferred tax asset losses, own paper, cash flow hedge reserve, and pension
assets) deducted from the capital measure are also deducted from total assets to ensure consistency between the numerator and denominator of the ratio;
¡
Other adjustments: includes adjustments required to change from an IFRS scope of consolidation to a regulatory scope of consolidation. The final
rules with regards to scope of consolidation for leverage purposes are uncertain;
¡
Potential Future Exposure on derivatives: add-on calculated by assigning standardised percentages to underlying values on derivative contracts in
accordance with the CRD IV mark-to-market method, which is aimed at creating an assessment of the potential future credit exposure; and
¡
Undrawn Commitments: regulatory add-on relating to off-balance sheet undrawn commitments based on a credit conversion factor of 10% for
unconditionally cancellable commitments and 100% for other commitments.
I  133
Risk review
Funding risk – Capital continued
Leverage ratio calculation
To provide an indication of the potential impact on Barclays, we have estimated our pro forma CRD IV leverage ratio as at 31 December 2012. The CRD IV requirements, when implemented, will be
based upon a three month average.
CRD IV leverage ratio calculation
As at 31 December 2012
Adjusted
gross
leverage
£m
Proforma
CRD IV
leverage
£m
Cash and balances at central banks
86,175
86,175
Trading portfolio assets
145,030
145,030
Financial assets designated at fair value
46,061
46,061
Derivative financial instruments
469,146
469,146
Loans and advances to banks and customers
466,218
466,218
Reverse repurchase agreements and other similar secured lending
176,956
176,956
Available for sale investments
75,109
75,109
Goodwill and intangible assets
7,915
7,915
Other assets
17,711
17,711
Total assets
1,490,321
1,490,321
Netting adjustments for derivatives and SFTs
(387,672
)
(394,908
)
Collateral on derivatives
(46,855
)
na
Net settlement balances and cash collateral
(71,718
)
na
Regulatory deductions and other adjustments
(9,409
)
(21,665
)
Adjusted total tangible assets
974,667
na
Potential future exposure on derivatives
160,550
Undrawn commitments
179,134
End point CRD IV leverage exposure measure
1,413,433
Transitional adjustments to assets deducted from regulatory Tier 1 Capital
490
Transitional CRD IV leverage exposure measure
1,413,923
Leverage ratio
As at 31 December
Tier 1 capital
£m
Leverage
Leverage
CRD IV transitional measure
50,282
28x
3.6%
CRD IV adjusted full end point measure
49,578
29x
3.5%
CRD IV full end point measure
39,983
35x
2.8%
Adjusted gross leverage
51,634
19x
5.3%
CRD IV transitional measure is based on Tier 1 capital, allowing for both transitional treatment of deductions from
CET1 and transitional relief for grandfathered ineligible Tier 1 instruments. This is the measure of Tier 1 capital that will apply for capital ratio requirements. Leverage ratio requirements will not be mandatory until 2018.
CRD IV adjusted full end point measure is based on Tier 1 capital, not allowing for transitional treatment of deductions from CET1 but adding back
ineligible Tier 1 instruments.
CRD IV full end point measure is based on the fully loaded definition of Tier 1 capital, not allowing
for either transitional treatment of deductions from CET1 or transitional relief for grandfathered ineligible Tier 1 instruments. In practice, our expectation is that ineligible Additional Tier 1 capital, which qualifies for grandfathering under the
transitional relief, will be replaced with eligible capital over time.
In the event that the July 2011 CRD IV rules relating to
maturity restrictions on hedging remain unchanged, the fully loaded Tier 1 capital position would reduce by approximately £4.8bn to £35.2bn, increasing CRD IV leverage to 32x on an adjusted full end point basis and to 40x on a full end
point basis. However, we have identified management actions that would be taken in the event that the CRD IV draft requirements remain unchanged, and as a result we are highly confident that no capital reduction would be required.
134  I
Economic capital
Economic capital is an internal measure of the risk profile of the bank expressed as the estimated stress loss at a 99.98% confidence level.
Barclays assesses capital requirements by measuring the Group's risk profile using internally developed models. The Group assigns economic capital primarily within the following risk categories: credit risk, market risk, operational risk, fixed
asset risk (property and equipment) and pension risk.
The Group regularly reviews its economic capital methodology and benchmarks
outputs to external reference points. The framework uses default probabilities during average credit conditions, rather than those prevailing at the balance sheet date, thus seeking to remove cyclicality from the economic capital calculation. The
economic capital framework takes into consideration time horizon, correlation of risks and risk concentrations. Economic capital is allocated on a consistent basis across all of Barclays businesses and risk activities.
Economic capital is used as part of the Group's Internal Capital Adequacy Assessment Process (ICAAP) and for assessing the Group's
Financial Volatility within the Risk Appetite framework.
Average economic capital allocation by business
£m
a,b,c
Average economic capital allocation by risk type
£m
a,b,c
Notes
a
Calculated using an adjusted average over the year and rounded to the nearest £50m for presentation purposes.
b
Total period end average economic capital requirement (including pension risk) as at 31 December 2012 stood at £32,050m (2011: £35,800m).
c
Average economic capital charts exclude the economic capital calculated for pension risk (average pension risk for 2012 is £3,300m compared with
£2,550m in 2011).
d
Includes transition businesses and capital for central function risk. Also includes the Group's investment in BlackRock, Inc. which was sold during the
second quarter of 2012.
e
Includes credit risk loans.
f
Includes investments in associates, private equity risk, insurance risk, residual value and business risk. Also includes the Group's investment in BlackRock,
Inc. which was sold in during the second quarter of 2012.
I  135
Risk review
Funding risk – Liquidity
All disclosures in this section (pages 136-150) are unaudited and exclude Absa Group unless otherwise stated
Liquidity
risk
Liquidity risk is the failure to meet
obligations leading to an inability to support normal business activity and to meet liquidity regulatory requirements.
Barclays has a comprehensive Liquidity Risk Management Framework (the Liquidity Framework) for managing the
Group's liquidity risk. The Liquidity Framework meets the FSA's standards and is designed to ensure that the Group maintains sufficient financial resources of appropriate quality for the Group's funding profile. The Liquidity
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 Absa Group due to local currency and funding requirements. For details of liquidity risk management at Absa, see page 147.
For further detail on liquidity risk governance and framework see page 297.
Liquidity risk stress testing
Under the Liquidity Framework, the Group has
established the Liquidity Risk Appetite (LRA), which is the level of liquidity risk the Group chooses to take in pursuit of its business objectives and in meeting its regulatory obligations. It is measured with reference to anticipated stressed net
contractual and contingent outflows for a variety of stress scenarios and is used to size the liquidity pool.
Liquidity Risk
Appetite
As part of the LRA, the Group runs three primary liquidity stress scenarios, aligned to the FSA's prescribed stresses:
¡
a three month market-wide stress event;
¡
a one month Barclays-specific stress event; and
¡
a combined one month market-wide and Barclays-specific stress event.
Under normal market conditions, the liquidity pool is managed to be at least 100% of anticipated outflows under each of these stress scenarios. Barclays is primarily focused upon the one month
Barclays-specific stress scenario, which results in the greatest net outflows of each of the liquidity stress tests. The combined one month scenario assumes outflows consistent with a firm-specific stress for the first two weeks of the stress
period, followed by relatively lower outflows consistent with a market-wide stress for the remainder of the stress period.
136  I
Key LRA assumptions include:
Liquidity risk driver
Barclays specific stress
Net wholesale funding outflow
¡
Outflows at contractual maturity of wholesale funding and conduit commercial paper, with no rollover/new issuance; and
¡
Prime Brokerage: 100% loss of excess client derivative margin and 100% loss of excess client
cash.
Loss of secured financing and increased haircuts
¡
Loss of repo capacity at contractual maturity date and incremental haircut widening, depending upon
collateral type.
Retail and commercial bank deposit outflows
¡
Substantial outflows as Barclays is seen as greater credit risk than competitors.
Intra-day risk
¡
Liquid collateral held against intra-day requirement at clearing and payment systems is regarded as encumbered with no liquidity value assumed;
and
¡
Liquid collateral is held against withdrawal of unsecured intra-day lines provided by third
parties.
Intra-group risk
¡
Risk of liquidity within subsidiaries becoming unavailable to the wider Group.
Funding concentration risk
¡
Additional outflows recognised against concentration of providers of wholesale secured
financing.
Off-balance sheet risk
¡
Collateral outflows due to market movements, taking account of disputes and mismatches between collateralised and uncollateralised OTC and exchange-traded
positions;
¡
Outflow of all collateral owed by Barclays to counterparties but not yet called;
¡
Anticipated increase in the firm's derivative initial margin requirement in a stressed environment;
¡
Collateral outflows contingent upon a multi-notch credit rating downgrade of Barclays Bank PLC;
¡
Significant drawdown on committed facilities provided to corporates, based on counterparty type, creditworthiness and facility type; and
¡
Drawdown on retail commitments.
Franchise viability
¡
Barclays liquidity stress testing recognises that it will be necessary to hold additional liquidity in order
to meet outflows that are non-contractual in nature, but are necessary in order to support the firm's ongoing franchise (for example, market-making activities).
Mitigating actions
¡
Unencumbered marketable assets that are held outside of the liquidity pool, and that are of known liquidity
value to the firm, are assumed to be monetised (subject to haircut/valuation adjustment).
In the summer of 2012, Barclays reduced its risk appetite by tightening limits and extending the time horizon of
the LRA. The reduction was a pre-emptive and precautionary measure in response to market conditions and the LIBOR announcement and senior management resignations. No material deterioration in funding conditions materialised.
Liquidity regulation
Since
June 2010, the Group has reported its liquidity position against Individual Liquidity Guidance (ILG) provided by the FSA. The FSA defines both eligible liquidity pool assets and stress outflows against reported balances.
The Group also monitors its position against anticipated Basel 3 liquidity metrics – the Liquidity Coverage Ratio (LCR) and the Net Stable
Funding Ratio (NSFR). The LCR is designed to promote short term resilience of a bank's liquidity risk profile by ensuring that it has sufficient high quality liquid resources to survive an acute stress scenario lasting for 30 days. The NSFR has
a time horizon of one year and has been developed to promote a sustainable maturity structure of assets and liabilities.
I  137
Risk review
Funding risk – Liquidity continued
In January 2013, the Basel Committee on Banking Supervision published a revised standard for the
LCR. Compared to the previous version of the standard (published by the Basel Committee in December 2010), these revisions result in significantly lower stress requirements and allow for the inclusion in the liquidity pool of an additional category
of high-quality liquid assets (referred to as Level 2B assets). Furthermore, the Basel Committee announced that the LCR requirement will be subject to a phase-in period between January 2015 (60% minimum requirement) and January 2019 (100% minimum
requirement). The minimum NSFR requirement is to be introduced in January 2018 at 100%.
Based on the revised Basel
standards, as at 31 December 2012, Barclays had a surplus to both of these requirements with an estimated Basel 3 LCR of 126% and an estimated Basel 3 NSFR of 104% (2011:
97%)
a
.
Comparing internal and regulatory liquidity stress
tests
The LRA stress scenarios, the FSA ILG and Basel 3 LCR are all broadly comparable short term stress scenarios in which the
adequacy of defined liquidity resources is assessed against contractual and contingent stress outflows. The FSA ILG and the Basel 3 LCR stress tests provide an independent assessment of the Group's liquidity risk profile.
Stress Test
Barclays LRA
FSA ILG
Basel 3 LCR
Basel 3 NSFR
Time Horizon
1 – 3 months
3 months
30 days
1 year
Calculation
Liquid assets to net cash outflows
Liquid assets to net cash outflows
Liquid assets to net cash outflows
Stable funding resources to stable funding requirements
As at 31 December 2012, the Group held eligible liquid assets significantly in excess of 100% of stress
requirements for each of the one month Barclays-specific LRA scenario and the Basel 3 LCR requirement:
Compliance with internal and regulatory stress
tests
As at 31 December 2012
Barclays LRA
(one month
Barclays specific
requirement)
b
£bn
Estimated
Basel 3 LCR
(revised text
January 2013)
£bn
Total eligible liquidity pool
150
155
Asset inflows
–
18
Stress outflows
Retail and commercial deposit outflows
(29
)
(36
)
Wholesale funding
(45
)
(47
)
Net secured funding
(11
)
(12
)
Derivatives
(10
)
(10
)
Contractual credit rating downgrade exposure
(13
)
(14
)
Drawdowns of loan commitments
(6
)
(22
)
Other
(2
)
–
Total stress net cash flows
(116
)
(123
)
Surplus
34
32
Liquidity pool as a percentage of anticipated net cash flows
129%
126%
Barclays plans to maintain its surplus to the internal and regulatory stress requirements at an efficient level.
Barclays will continue to monitor the money markets closely, in particular for early indications of the tightening of available funding. In these conditions, the nature and severity of the stress scenarios are reassessed and appropriate action taken
with respect to the liquidity pool. This may include further increasing the size of pool or monetising the pool to meet stress outflows.
Notes
a
Under the previous version of the Basel standards published in December 2010, the Group LCR estimate as at 31 December 2012 was 103% (2011: 82%). Banks
employ a wide range of interpretations and assumptions to calculate the Basel liquidity ratios. These interpretations and assumptions are subject to change prior to implementation in January 2015 (LCR) and January 2018 (NSFR). The LCR and NSFR
estimates are calculated for the Group on a consolidated basis (including Absa Group), in line with the latest guidance from the Basel Committee. The inclusion of Absa Group in the calculation does not have a significant impact on the estimated
ratios.
b
Of the three stress scenarios monitored as part of the LRA, the one month Barclays specific scenario results in the lowest ratio at 129% (2011: 107%). This
compares to 141% (2011: 127%) under the three month market-wide scenario and 145% (2011: 118%) under the one month combined scenario.
138   I
Liquidity pool (audited)
The Group
liquidity pool is held unencumbered against contractual and contingent stress outflows in the LRA stress tests and is not used to support payment or clearing requirements. As at 31 December 2012, the Group liquidity pool was £150bn (2011:
£152bn). During 2012 the month-end liquidity pool ranged from £150bn to £173bn and the month-end average balance was £162bn (2011: £156bn).
Barclays does not include any own-name securities in its liquidity pool.
Composition of the Group liquidity pool as at
31 December 2012 (audited)
Liquidity
pool
£bn
Liquidity pool
of which FSA
eligible
£bn
Liquidity pool of which
Basel 3 LCR eligible
Level 1
£bn
Level 2A
a
£bn
Cash and deposits with central
banks
b
85
82
82
–
Government bonds
c
AAA rated
40
39
40
–
AA+ to AA- rated
5
4
5
–
A+ to A- rated
1
–
–
1
Total government bonds
46
43
45
1
Other
Supranational bonds and multilateral development banks
4
4
4
–
Agencies and agency mortgage-backed securities
7
–
5
2
Covered bonds (rated AA- and above)
5
–
–
5
Other
3
–
–
–
Total Other
19
4
9
7
Total
150
129
136
8
The Group liquidity pool is well diversified by major currency and the Group monitors LRA stress scenarios for
major currencies.
Liquidity pool by currency
USD
£bn
EUR
£bn
GBP
£bn
Other
£bn
Total
£bn
Liquidity pool
26
66
25
33
150
Management of the Group liquidity pool (audited)
The composition of the Group liquidity pool is efficiently managed. The maintenance of the liquidity pool increases the Group's costs as the interest expense paid on the liabilities used to
fund the liquidity pool is greater than the interest income received on liquidity pool assets. This cost can be reduced by investing a greater portion of the Group liquidity pool in highly liquid assets other than cash and deposits with central
banks. These assets primarily comprise 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 of the
liquidity pool is monitored for concentration risk by issuer, currency, asset type and country. Given the incremental returns generated by these highly liquid assets, the risk and reward profile is continuously managed.
As at 31 December 2012 the portion of the Group liquidity pool comprised of cash and deposits with central banks reduced to £85bn (2011:
£105bn) as a result of a reallocation to government bonds and other highly liquid assets.
Barclays manages the liquidity pool on
a centralised basis. As at 31 December 2012, 90% of the liquidity pool was located in Barclays Bank PLC (2011: 94%) and was available to meet liquidity needs across the Group. The residual liquidity pool is held predominantly within Barclays
Capital Inc. (BCI). The portion of the liquidity pool outside of Barclays Bank PLC is held against entity-specific stressed outflows and regulatory requirements. To the extent the use of this portion of the liquidity pool is restricted due to
regulatory requirements, it is assumed to be unavailable to the rest of the Group.
For more information on the governance framework for
investing the Group liquidity pool see page 297.
Notes
a
The LCR eligible assets presented in this table represent only those assets which are also eligible for the Group liquidity pool and do not include any Level 2B
assets as a result.
b
Of which over 95% (2011: over 95%) was placed with the Bank of England, US Federal Reserve, European Central Bank, Bank of Japan and Swiss National Bank.
c
Of which over 80% (2011: over 80%) of securities are comprised of UK, US, Japan, France, Germany, Denmark and the Netherlands.
I  139
Risk review
Funding risk – Liquidity continued
Contingent liquidity
In addition to the Group liquidity pool, Barclays has access to other unencumbered assets which provide a source of contingent liquidity. Whilst these are not relied on in the Group's LRA, a
portion of these assets may be monetised in a stress to generate liquidity through use as collateral for secured funding or through outright sale.
In either a Barclays-specific or market-wide liquidity stress, liquidity available via market sources could be severely disrupted. In circumstances where market liquidity is unavailable or available
only at heavily discounted prices, Barclays could generate liquidity via central bank facilities. The Group maintains a significant amount of collateral pre-positioned at central banks and available to raise funding.
For more detail on the Group's other unencumbered assets see page 144.
Funding Structure
The basis for sound liquidity risk management is a solid funding
structure that reduces the probability of a liquidity stress leading to an inability to meet funding obligations as they fall due. The Group's overall funding strategy is to develop a diversified funding base (both geographically and by
depositor type) and maintain access to a variety of alternative funding sources, to provide protection against unexpected fluctuations, while minimising the cost of funding.
Within this, the Group aims to align the sources and uses of funding. As such, retail and commercial customer loans and advances are largely funded by customer deposits. Other assets together with
other loans and advances and unencumbered assets, are funded by long term wholesale debt and equity.
Trading portfolio assets and
reverse repurchase agreements are largely funded in the wholesale markets by repurchase agreements and trading portfolio liabilities, while derivative assets are largely matched by derivatives liabilities. The liquidity pool is predominantly funded
through wholesale markets. These funding relationships are summarised below as of 31 December 2012:
Assets
Liabilities
Customer loans and advances
a
£
364bn
Group liquidity pool
£
150bn
Other
assets
b
£
163bn
Reverse repurchase agreements and matched assets and liabilities
c
£
347bn
Derivative financial instruments
b
£
466bn
Customer
deposits
a
£
336bn
<1 Year wholesale funding
£
101bn
>1 Year wholesale funding
£
138bn
Equity and other liabilities
b
£
108bn
Repurchase agreements and matched assets
and liabilities
c
£
347bn
Derivative financial instruments
b
£
460bn
Deposit funding (including
Absa Group; audited)
Deposit Funding
d
2012
2011
Funding of loans and advances to customers
Loans and
advances to
customers
£bn
Customer
deposits
£bn
Loan to
deposit
ratio
%
Loan to
deposit
ratio
%
Retail and Business Banking
232.8
158.4
147
146
Corporate Banking
e
62.9
97.1
65
83
Wealth and Investment Management
21.2
53.8
39
40
Total funding excluding secured
316.9
309.3
102
111
Secured funding
–
48.8
–
–
Sub-total including secured funding
316.9
358.1
88
101
Retail and Business Banking, Corporate Banking and Wealth and Investment Management
e
316.9
309.3
102
111
Investment Bank
46.2
26.1
177
138
Head Office and Other Operations
0.8
0.2
–
–
Trading settlement balances and cash collateral
61.8
50.1
123
142
Total
425.7
385.7
110
118
Notes
a
Excluding cash collateral and settlement balances.
b
Absa Group balances other than customer loans and advances of £37bn and customer deposits of £33bn are included in other assets and liabilities.
c
Comprised of reverse repurchase that provide financing to customers collateralised by highly liquid securities on a short term basis or are used to settle short
term inventory positions; repo financing of trading portfolio assets and matched cash collateral and settlement balances.
d
Included within Retail and Business Banking, Corporate Banking and the Investment Bank are Absa Group related balances totalling £37bn of loans and advances
to customers funded by £33bn of customer deposits.
e
In addition Corporate Banking holds £17.6bn (2011: £17.2bn) loans and advances as financial assets held at fair value.
140  I
The Group loan to deposit ratio as at 31 December 2012 was 110% (2011: 118%).
Retail and Business Banking, Corporate Banking and Wealth and Investment Management activities are largely funded with customer deposits. As at 31 December 2012, the loan to deposit ratio for
these businesses was 102% (2011: 111%). The funding gap for these businesses is met using asset backed securities (ABS) and covered bonds secured primarily over customer loans and advances such as residential mortgages and credit card receivables,
resulting in a loan to deposit and secured funding ratio of 88% (2011: 101%).
The excess of the Investment Bank's loans and
advances over customer deposits is funded with long term debt and equity. 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 2012, £112bn of total customer deposits were insured through the UK Financial Services Compensation Scheme (FSCS) and
other similar schemes. In addition to these customer deposits, there were £3bn of other liabilities insured by governments.
Although, contractually, current accounts are repayable on demand and savings accounts at short notice, the Group's broad base of customers
– numerically and by depositor type – helps protect against unexpected fluctuations in balances. Such accounts form a stable funding base for the Group's operations and liquidity needs. Barclays models the behaviour of both assets and
liabilities on a net cash flow basis using our experience of customer behaviour to assess balance sheet behaviouralised funding gaps under business as usual conditions. These behavioural maturities are used to determine funds transfer pricing
interest rates at which businesses are rewarded and charged for sources and uses of funds.
Behavioural Maturity Profile (including Absa Group;
audited)
Loans and
advances to
customers
£bn
Customer
deposits
£bn
Customer
funding
surplus/
(deficit)
£bn
Behavioural maturity
profile cash outflow/
(inflow)
As at 31 December 2012
Less than
one year
£bn
Greater than
one year
£bn
Retail and Business Banking
232.8
158.4
(74.4
)
(16.8
)
(57.6
)
Corporate Banking
62.9
97.1
34.2
11.3
22.9
Wealth and Investment Management
21.2
53.8
32.6
6.9
25.7
Total funding excluding secured
316.9
309.3
(7.6
)
1.4
(9.0
)
Secured funding
–
48.8
48.8
14.5
34.3
Total Retail and Business Banking, Corporate Banking and Wealth and Investment Management
funding
316.9
358.1
41.2
15.9
25.3
The relatively low cash outflow within one year demonstrates that customer funding remains broadly matched from a
behavioural perspective.
Wholesale funding (audited)
Wholesale funding relationships as at 31 December 2012:
Assets
£bn
Trading portfolio assets and other securities
85
Reverse repurchase agreements
132
Reverse repurchase agreements
44
Derivative financial instruments
466
Liquidity pool
150
Other assets
a
148
Liabilities
£bn
Repurchase agreements
217
Trading portfolio liabilities
44
Derivative financial instruments
460
Less than 1 year wholesale debt
101
Greater than 1 year wholesale debt and equity
197
Trading portfolio assets are
largely funded by repurchase agreements. The majority of reverse repurchase agreements (i.e. secured lending) are matched by repurchase agreements. The remainder of reverse repurchase agreements are used to settle trading portfolio liabilities.
Derivative assets and liabilities are largely matched. A substantial proportion of balance sheet derivative positions qualify for counterparty netting and the remaining portions are largely offset once netted against cash collateral received and
paid. The liquidity pool is largely funded by wholesale debt, the majority of which matures in less than one year. Other assets are largely matched by term wholesale debt and equity.
Note
a
Predominantly available for sale investments, trading portfolio assets, financial assets designated at fair value and loans and advances to banks funded by
greater than one year wholesale debt and equity.
I  141
Risk review
Funding risk – Liquidity continued
Composition of wholesale funding (audited)
The Group maintains access to a variety of sources of wholesale funds in major currencies, including those available from money markets, repo
markets and term investors, across a variety of distribution channels and geographies. The Group is an active participant in money markets, has direct access to US, European and Asian capital markets through its global investment banking operations
and long term investors through its clients worldwide. As a result, wholesale funding is well diversified by product, maturity, geography and major currency.
As at 31 December 2012, total wholesale funding outstanding (excluding repurchase agreements) was £240bn (2011: £265bn). £101bn of wholesale funding matures in less than one
year (2011: £130bn) of which £18bn relates to term funding (2011: £27bn)a. £138bn of wholesale funding had a residual maturity of over one year (2011: £135bn).
As at 31 December 2012, outstanding wholesale funding comprised £39bn of secured funding (2011: £39bn) and £201bn of unsecured funding (2011: £227bn).
Maturity profile of wholesale funding
b
(audited)
Not more
than one
month
£bn
Over one
month but
not
more
than three
months
£bn
Over three
months but
not more
than
six
months
£bn
Over six
months but
not more
than one
year
£bn
Sub-total
less than
one year
£bn
Over one
year but
not more
than two
years
£bn
Over two
years
£bn
Total
£bn
Deposits from banks
10.8
8.7
1.5
0.7
21.7
1.6
7.2
30.5
Customer deposits and commercial paper
5.8
23.4
9.0
6.9
45.1
2.0
1.3
48.4
Asset backed commercial paper
2.9
2.5
–
–
5.4
–
–
5.4
Senior unsecured (public benchmark)
3.3
–
–
0.6
3.9
7.8
14.4
26.1
Senior unsecured (privately placed)
0.7
4.1
4.0
5.3
14.1
10.8
38.5
63.4
Covered bonds/ABS
–
0.4
1.3
0.4
2.1
4.7
20.8
27.6
Subordinated liabilities
–
0.6
–
0.1
0.7
–
22.0
22.7
Other
c
3.8
1.4
1.9
1.2
8.3
1.2
5.9
15.4
Total as at 31 December 2012
27.3
41.1
17.7
15.2
101.3
28.1
110.1
239.5
Of which secured
4.6
4.0
2.4
1.3
12.3
5.2
21.5
39.0
Of which unsecured
22.7
37.1
15.3
13.9
89.0
22.9
88.6
200.5
Total as at 31 December 2011
130.3
265.2
Of which secured
16.9
38.7
Of which unsecured
113.4
226.5
The Group has £63bn of privately placed senior unsecured notes in issue. These notes are issued through a
variety of distribution channels including intermediaries and private banks. A large proportion of end users of these products are individual retail investors.
The liquidity risk of wholesale funding is carefully managed primarily through the LRA stress tests, against which the liquidity pool is held. Although not a requirement, the liquidity pool exceeded
wholesale funding maturing in less than one year by £49bn as at 31 December 2012 (2011: £22bn).
The average maturity
of wholesale funding net of the liquidity pool was at least 61 months (2011: 58 months).
Notes
a
Term funding maturities comprise public benchmark and privately placed senior unsecured notes, covered bonds/ABS and subordinated debt where the original maturity
of the instrument was more than one year. In addition, as at 31 December 2012, £3bn of these instruments were not counted towards term financing as they had an original maturity of less than one year.
b
The composition of wholesale funds comprises the balance sheet reported deposits from banks, financial liabilities at fair value, debt securities in issue and
subordinated liabilities, excluding cash collateral and settlement balances. It does not include collateral swaps, including participation in the Bank of England's FLS. Included within deposits from banks are £6.7bn of liabilities drawn
in the European Central Bank's three year LTRO.
c
Primarily comprised of fair value deposits (£7.1bn) and secured financing of physical gold (£6.0bn).
142  I
Currency composition of wholesale debt
As at 31 December 2012, the proportion of wholesale funding by major currencies was as follows:
Currency composition of wholesale funds
USD
%
EUR
%
GBP
%
Other
%
Deposits from banks
11
51
30
8
Customer deposits and commercial paper
50
30
20
–
Asset backed commercial paper
78
13
9
–
Senior unsecured
27
37
16
20
Covered bonds/ABS
22
58
19
1
Subordinated liabilities
28
24
47
1
Total as at 31 December 2012
31
38
22
9
Total as at 31 December 2011
27
42
17
14
To manage cross-currency refinancing risk Barclays manages to foreign exchange cash-flow limits, which limit risk
at specific maturities.
Term financing (audited)
The Group continues to attract deposits in unsecured money markets and to raise additional secured and unsecured term funding in a variety of markets. During 2012 the Group issued approximately
£28bn of term funding, comprising:
¡
£3.4bn equivalent of public benchmark senior unsecured debt;
¡
£6.2bn equivalent of net privately placed senior unsecured debt;
¡
£16.8bn equivalent of secured debt; and
¡
£1.9bn of subordinated debt.
Included within secured funding issued during 2012 is £6bn of funding raised through participation in the Bank of England's FLS.
Subordinated debt issued during 2012 comprises a Tier 2 issue of £1.9bn equivalent of contingent capital notes which includes a write-off feature should the Group's Core Tier 1 or CET1
capital, as appropriate, fall below 7%.
As previously disclosed, in addition to the above issuance, Euro funding gaps in Spain and
Portugal were reduced through accessing
€
8.2bn of the European Central Bank's three year LTRO in
February 2012 (see page 118 for more detail of Eurozone balance sheet redenomination risk).
Funding plan
Barclays maintains a long term strategic funding plan, designed to reduce structural funding risk and optimise interest costs.
Total 2012 issuance was sufficient to cover the Group's needs for 2012 and also to pre-fund a large portion of the Group's needs for
2013.
The Group's needs in 2012 were significantly lower than the £27bn of term funding maturing in that year due to the
improvement in the customer loan to deposit ratio and a reduction in legacy assets.
The Group has £18bn of term debt maturing in
2013 and a further £24bn maturing in 2014. However, with expected deposit growth and reduction in legacy assets, funding needs are likely to be lower. The Group continues to recognise the importance of a diversified funding base, and therefore
monitors opportunities across a variety of funding markets.
I  143
Risk review
Funding risk – Liquidity continued
Encumbrance
Asset encumbrance arises from collateral pledged against secured funding and other collateralised obligations. Barclays funds a portion of trading portfolio assets and other securities via
repurchase agreements and other similar secured borrowing and pledges a portion of customer loans and advances as collateral in securitisation, covered bond and other similar secured structures.
Barclays monitors the mix of secured and unsecured funding sources within the Group's funding plan and seeks to efficiently utilise available
collateral to raise secured funding and meet other collateralised obligations. Over the last 18 months the proportion of term funding requirements met with secured funding has increased, resulting in an increase in the encumbrance of loans and
advances to customers. We expect to moderately increase encumbrance of loans and advances to customers through additional term secured funding in the Group's Funding Plan, however, this is not expected to materially impact the overall
proportion of assets that are encumbered.
As at 31 December 2012, only £231bn of the Group's balance sheet assets were
encumbered (excluding reverse repurchase agreements), which primarily related to firm financing of trading portfolio assets and other securities and to funding secured against loans and advances to customers. In addition, £308bn of the total
£359bn securities accepted as collateral, and held off-balance sheet, were on-pledged, the significant majority of which relates to matched-book activity where reverse repurchase agreements are matched by repurchase agreements entered into to
facilitate client activity. The remainder relates primarily to reverse repurchases used to settle trading portfolio liabilities as well as collateral posted against derivatives margin requirements.
Asset encumbrance
Unencumbered assets
Assets
Encumbered
assets
a
Readily
available
b
Other
c
On-balance sheet
£bn
£bn
£bn
£bn
Cash and balances at central banks
84.6
–
82.1
2.5
Trading portfolio assets
142.0
85.0
54.6
2.4
Financial assets at fair value
d
37.1
8.1
6.9
22.1
Available for sale investments
70.3
12.3
58.0
–
Loans and advances to banks
e
16.0
–
–
16.0
Loans and advances to customers
e
327.7
72.9
40.4
214.4
Other (incl. derivatives)
489.0
–
–
489.0
Cash collateral and settlement balances
85.1
52.5
–
32.6
Total on-balance sheet (excl. reverse repurchase agreements)
1,251.8
230.8
242.0
779.0
Off-balance sheet
Collateral
received
Collateral
received of
which
on-pledge
Unencumbered assets
Readily
available
b
Other
c
£bn
£bn
£bn
£bn
Fair value of securities accepted as collateral
359.1
308.0
51.1
–
Total unencumbered collateral
293.1
779.0
Of the £1,072bn total unencumbered assets, £293bn are classified as readily available for use as
collateral. This includes cash and securities held in the Group liquidity pool as well as additional unencumbered assets which provide a source of contingent liquidity. While these additional assets are not relied on in the Group's LRA, a
portion of these assets may be monetised in a stress to generate liquidity through use as collateral for secured funding or through outright sale.
Unencumbered assets not classified as readily available for use as collateral consist primarily of derivatives and loans and advances to customers. Loans and advances to customers are only
classified as readily available if they are already in a form such that they can be used to raise funding without further management actions. This includes excess collateral already in secured funding vehicles and collateral pre-positioned at
central banks and available for use in secured financing transactions. All other loans and advances are conservatively classified as not readily available, however a proportion would be suitable for use in secured funding structures.
Notes
a
Encumbered assets have been identified via the Group's assets pledged process. For securities and commodities assets are considered encumbered if there has
been legal title transfer against repurchase, stock lending and other similar secured borrowing agreements, trading portfolio liabilities or derivatives margin. Encumbered loans and advances have been identified where assets are pledged against
external securitisations or covered bonds or have been used in external repurchase or other similar agreements with market counterparts or central banks. Additionally, encumbered assets include cash collateral posted. Encumbered assets do not
include assets which may have been pledged for other reasons and does not include client activity.
b
Readily available assets are those on and off-balance sheet assets that have not been identified as encumbered and are in transferable form.
c
Other unencumbered cash and balances at central banks represents required central bank reserves.
d
Excluding reverse repurchase agreements at fair value.
e
Excluding cash collateral and settlement balances.
144  I
Encumbrance of loans and advances
Barclays issues ABS, covered bonds and other
similar secured instruments that are secured primarily over customer loans and advances. Notes issued from these programmes are also used in repurchase agreements with market counterparts and in central bank facilities. Barclays also utilises loan
collateral in central bank facilities in non-securitised form.
The Group currently manages four primary on balance sheet asset-backed
funding programmes to obtain term financing for mortgage and credit card lending. The UK regulated covered bond and the residential mortgage master trust securitisation programmes both utilise assets originated by the Group's UK residential
mortgage business. The other programmes are credit card master trust securitisations and use receivables from the Group's UK and US credit card businesses. The programmes utilise true sale mechanics to transfer the title of the loan assets from
Barclays Bank PLC (BBPLC) to insolvency remote special purpose vehicles. These programmes initially transfer the respective assets by way of a beneficial transfer of the assets. However, should there be a 'perfection' event (including,
amongst other things, the insolvency of BBPLC or BBPLC not maintaining the appropriate credit rating required by the relevant rating agency), then legal transfer of the assets would occur.
As at 31 December 2012, £98bn of customer loans and advances were transferred to these and other asset backed funding programmes or utilised to secure funding from central bank
facilities. These assets were used to support £27bn of externally issued notes and a further £31bn of retained notes and non-securitised loan collateral used in repurchase agreements with market counterparts and at central bank
facilities. Inclusive of required over-collateralisation of £15bn, a total of 17% of total loans and advances to customers were used to secure external funding via these programmes.
In addition, as at 31 December 2012 the Group had £15bn of excess collateral within its asset backed funding programmes that can readily be used to raise additional secured funding and
support future issuance. A portion of retained notes are also available to raise secured funding.
Encumbrance of customer loans and advances
Notes issued
As at 31 December 2012
Assets
a
£bn
Externally
issued notes
£bn
Other
secured
funding
b
£bn
Retained
£bn
Mortgages (residential mortgage backed securities)
34.1
5.1
19.6
3.8
Mortgages (covered bonds)
29.9
16.2
1.9
–
Mortgages (loans)
c
14.2
–
7.3
–
Credit cards
12.9
5.5
–
1.0
Corporate loans
2.5
0.2
1.1
3.1
Other
d
4.8
–
1.2
3.1
Total
98.4
27.0
31.1
11.0
Repurchase agreements and reverse repurchase agreements
Barclays enters into repurchase and other similar secured borrowing agreements to finance its trading portfolio assets. The majority of reverse
repurchase agreements are matched by offsetting repurchase agreements entered into to facilitate client activity. The remainder are used to settle trading portfolio liabilities.
Due to the high quality of collateral provided against secured financing transactions, the liquidity risk associated with this activity is significantly lower than unsecured financing transactions.
Nonetheless, Barclays manages to gross and net secured mismatch limits to limit refinancing risk under a severe stress scenario and a portion of the Group's liquidity pool is held against stress outflows on these positions. The Group secured
mismatch limits are calibrated based on market capacity, liquidity characteristics of the collateral and risk appetite of the Group.
The cash value of repurchase and reverse repurchase transactions will typically differ from the market value of the collateral against which these
transactions are secured by an amount referred to as a haircut (or overcollateralisation). Typical haircut levels vary depending on the quality of the collateral that underlies these transactions. For transactions secured against highly liquid
collaterale, lenders demand relatively small haircuts (typically ranging from 0-2%). For transactions secured against less liquid collateral, haircuts vary by asset class (typically ranging from 5-10% for corporate bonds and other less liquid
collateral).
As at 31 December 2012, the significant majority of repurchase activity related to matched-book activity. The Group
may face refinancing risk on the net maturity mismatch for matched-book activity. However, 75% of matched-book activity is against highly liquid collateral and where against less liquid collateral net repurchase maturities are managed to
longer-tenors.
Notes
a
Includes £3bn of cash reserves supporting secured funding vehicles.
b
Comprised of bilateral repurchase agreements, collateral swaps and participation in central bank facilities.
c
For mortgage loan collateral, assets reflects the value of collateral pledged and other secured funding reflects the liquidity value obtained.
d
Primarily comprised of local authority covered bonds and export credit agency guaranteed loan collateral.
e
Highly liquid assets include government bonds, agency securities and mortgage backed securities. Less liquid assets include asset backed securities, corporate
bonds, equities and other.
I  145
Risk review
Funding risk – Liquidity continued
Net matched book activity
a
Negative number represents net repurchase agreement (net liability)
Less than
one month
£bn
One month
to three
months
£bn
Over three
months
£bn
Highly liquid
b
(14.1
)
6.6
7.5
Less liquid
b
5.7
(1.7
)
(4.0
)
Total
(8.4
)
4.9
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-financing activity is the inability to roll-over transactions as they mature. However, 74% of firm-financing activity was secured against highly liquid assets and the weighted
average maturity of firm-financing activity secured against less liquid assets was 98 days.
Firm financing repurchase agreements
Less than
one month
£bn
One month
to three
months
£bn
Over three
months
£bn
Total
£bn
Highly liquid
b
66.8
6.5
2.9
76.2
Less liquid
b
16.0
4.3
6.0
26.3
Total
82.8
10.8
8.9
102.5
Credit Ratings
In addition to monitoring and managing key metrics related to the financial strength of Barclays, we also subscribe to independent credit rating agency reviews by Standard & Poor's,
Moody's, Fitch and DBRS. These ratings assess the credit worthiness of Barclays and are based on reviews of a broad range of business and financial attributes including risk management processes and procedures, capital strength, earnings,
funding, liquidity, accounting and governance.
A credit rating downgrade could result in contractual outflows to meet collateral
requirements on existing contracts. Outflows related to a multiple-notch credit rating downgrade are included in the LRA stress scenarios and a portion of the liquidity pool 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 2012
Standard & Poor's
Moody's
Fitch
DBRS
Barclays PLC
Long Term
A (Negative)
A3 (Negative)
A (Stable)
n/a
Short Term
A-1
P-2
F1
n/a
Barclays Bank PLC
Long Term
A+ (Negative)
A2 (Negative)
A (Stable)
AA (Negative)
Short Term
A-1
P-1
F1
R-1 (High)
During 2012, Barclays Bank PLC rating was downgraded by Moody's, from Aa3/P-1 to A2/P-1, as a result of the
agency's rating repositioning of banks and securities firms with global capital market operations, and by DBRS, from AA High/ R-1 High to AA/R-1 High, as the result of the resignation of senior management during the summer. Barclays was fully
reserving for maximum contractual outflows as a result of the ratings actions in the liquidity pool. There has been no significant change in deposit funding or wholesale funding in relation to the rating actions.
Further credit rating downgrades could result in contractual outflows to meet collateral requirements on existing contracts. The below table shows
contractual collateral requirements following one and two notch long term and associated short term simultaneous downgrades across all credit rating agencies, which are fully reserved for in the liquidity pool. These numbers do not assume any
management or restructuring actions that could be taken to reduce posting requirements. These outflows do not include the potential liquidity impact from loss of unsecured funding, such as from money market funds, or loss of secured funding
capacity. However, unsecured and secured funding stresses are included in the LRA stress scenarios and a portion of the liquidity pool is held against these risks.
Notes
a
Includes collateral swaps.
b
Highly liquid assets include government bonds, agency securities and mortgage-backed securities. Less liquid assets include asset-backed securities, corporate
bonds, equities and other.
146  I
Contractual credit rating downgrade exposure (cumulative cash
flow)
Cumulative cash outflow
As at 31 December 2012
One-notch
downgrade
£bn
Two-notch
downgrade
£bn
Securitisation derivatives
5
7
Contingent liabilities
7
7
Derivatives margining
–
1
Liquidity facilities
1
2
Total contractual funding or margin requirements
13
17
Liquidity Management at Absa Group (audited)
Liquidity risk is managed separately at Absa Group due to local currency, funding and regulatory requirements.
In addition to the Group liquidity pool, as at 31 December 2012, Absa Group held £4.6bn of liquidity pool assets against Absa-specific anticipated stressed outflows. The liquidity pool
consists of South African government bonds and Treasury bills.
The Absa loan to deposit ratio as at 31 December 2012 was 112%
(2011: 115%). The improvement in the loan to deposit ratio was driven by a reduction in loans and advances as a result of exchange rate movements combined with lower demand for credit across the South African economy in general, as well as a
continued focus on ensuring that high credit standards continue to be applied. Absa has also seen an increase in the term of customer deposits over the period.
As at 31 December 2012, Absa had £12bn of wholesale funding outstanding (2011: £15bn), of which £6bn matures in less than 12 months (2011: £9bn). Issuance of term debt
during 2012 included £0.5bn of senior unsecured debt and £0.4bn of subordinated debt, further extending the term and diversity of the funding base.
Contractual maturity of financial assets and liabilities (audited)
Details of
contractual maturities for assets and liabilities form an important source of information for the management of liquidity risk. Such information is used (among other things) as the basis for modelling a behavioural balance sheet, for input into the
liquidity framework, as discussed above.
The table below provides detail on the contractual maturity of all financial instruments and
other assets and liabilities. Derivatives (other than those designated in a hedging relationship) and trading portfolio assets and liabilities are included in the on demand column at their fair value. Liquidity risk on these items is not managed on
the basis of contractual maturity since they are not held for settlement according to such maturity and will frequently be settled before contractual maturity at fair value. Derivatives designated in a hedging relationship are included according to
their contractual maturity.
Financial assets designated at fair value in respect of linked liabilities to customers under investment
contracts have been 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.
I  147
Risk review
Funding risk – Liquidity continued
Contractual maturity of financial assets and liabilities (including Absa Group;
audited)
As at 31 December 2012
On
demand
£m
Not more
than three
months
£m
Over three
months but
not more
than six
months
£m
Over
six
months but
not more
than one
year
£m
Over one
year
but not
more than
two years
£m
Over two
years but
not more
than five
years
£m
Over five
years but
not more
than ten
years
£m
Over ten
years
£m
Total
£m
Assets
Cash and balances at central banks
42,419
43,756
–
–
–
–
–
–
86,175
Items in the course of collection from other banks
1,225
231
–
–
–
–
–
–
1,456
Trading portfolio assets
145,030
–
–
–
–
–
–
–
145,030
Financial assets designated at fair value
1,268
15,672
772
1,225
2,054
3,354
1,861
18,592
44,798
Derivative financial instruments
465,346
169
49
56
355
1,993
717
461
469,146
Loans and advances to banks
4,646
32,788
236
967
933
288
172
459
40,489
Loans and advances to customers
37,479
76,288
7,971
17,243
26,789
74,479
64,467
121,013
425,729
Reverse repurchase agreements and other similar secured lending
36
166,029
8,135
2,457
66
199
12
22
176,956
Available for sale financial investments
333
4,338
2,770
9,955
10,805
19,408
15,189
12,311
75,109
Other financial assets
–
1,615
–
–
386
–
–
–
2,001
Total financial assets
697,782
340,886
19,933
31,903
41,388
99,721
82,418
152,858
1,466,889
Other assets
23,432
Total assets
1,490,321
Liabilities
Deposits from banks
8,619
57,099
1,664
844
1,617
5,925
229
1,013
77,010
Items in the course of collection due to other banks
1,449
124
–
–
–
–
–
–
1,573
Customer accounts
255,747
90,490
9,810
12,954
11,148
2,790
1,981
787
385,707
Repurchase agreements and other similar secured borrowing
394
207,312
4,538
3,742
47
1,309
–
–
217,342
Trading portfolio liabilities
44,794
–
–
–
–
–
–
–
44,794
Financial liabilities designated at fair value
1,434
7,882
6,278
7,178
11,977
23,037
10,145
8,855
76,786
Derivative financial instruments
459,334
63
32
48
333
844
1,074
740
462,468
Debt securities in issue
1,523
38,850
10,796
9,128
16,388
28,011
12,208
2,677
119,581
Subordinated liabilities
–
877
–
92
363
2,240
11,883
8,563
24,018
Other financial liabilities
–
4,080
–
–
641
–
–
–
4,721
Total financial liabilities
773,294
406,777
33,118
33,986
42,514
64,156
37,520
22,635
1,414,000
Other liabilities
13,364
Total liabilities
1,427,364
Cumulative liquidity gap
(75,512
)
(141,403
)
(154,588
)
(156,671
)
(157,797
)
(122,232
)
(77,334
)
52,889
62,957
148  I
Contractual maturity of financial assets and liabilities (including Absa Group;
audited)
As at 31 December 2011
On
demand
£m
Not more
than three
months
£m
Over three
months but
not
more
than six
months
£m
Over six
months but
not
more
than one
year
£m
Over one
year
but not
more than
two years
£m
Over two
years but
not
more
than five
years
£m
Over five
years but
not
more
than ten
years
£m
Over ten
years
£m
Total
£m
Assets
Cash and balances at central banks
58,317
48,577
–
–
–
–
–
–
106,894
Items in the course of collection from other banks
1,188
624
–
–
–
–
–
–
1,812
Trading portfolio assets
152,183
–
–
–
–
–
–
–
152,183
Financial assets designated at fair value
802
4,257
1,046
1,725
1,812
4,355
2,532
19,118
35,647
Derivative financial instruments
535,306
122
109
188
64
1,389
904
882
538,964
Loans and advances to banks
6,133
35,730
2,047
827
1,211
753
326
419
47,446
Loans and advances to customers
43,523
74,024
8,124
16,583
26,882
78,404
61,784
122,610
431,934
Reverse repurchase agreements and other similar secured lending
24
141,751
7,674
3,423
374
128
133
158
153,665
Available for sale investments
360
10,423
4,798
4,047
3,710
20,827
12,392
11,934
68,491
Other financial assets
–
1,978
–
–
640
–
–
–
2,618
Total financial assets
797,836
317,486
23,798
26,793
34,693
105,856
78,071
155,121
1,539,654
Other assets
23,873
Total assets
1,563,527
Liabilities
Deposits from banks
7,866
79,507
880
896
351
1,283
333
–
91,116
Items in the course of collection due to other banks
965
4
–
–
–
–
–
–
969
Customer accounts
213,927
119,010
8,839
11,568
3,774
5,408
2,206
1,300
366,032
Repurchase agreements and other similar secured borrowing
23
196,066
9,356
1,554
72
183
36
2
207,292
Trading portfolio liabilities
45,887
–
–
–
–
–
–
–
45,887
Financial liabilities designated at fair value
1,525
11,743
4,033
11,077
8,391
27,718
11,511
10,318
86,316
Derivative financial instruments
524,551
345
146
44
63
1,078
592
1,091
527,910
Debt securities in issue
75
52,189
13,084
7,803
8,848
28,727
13,235
5,775
129,736
Subordinated liabilities
–
78
–
115
855
741
13,403
9,678
24,870
Other financial liabilities
–
3,629
–
–
1,594
–
–
–
5,223
Total financial liabilities
794,819
462,571
36,338
33,057
23,948
65,138
41,316
28,164
1,485,351
Other liabilities
12,980
Total liabilities
1,498,331
Cumulative liquidity gap
3,017
(142,068
)
(154,608
)
(160,872
)
(150,127
)
(109,409
)
(72,654
)
54,303
65,196
Expected maturity dates do not differ significantly from the contract dates, except for:
¡
Trading portfolio assets and liabilities and derivative financial instruments, which may not be held to maturity as part of the Group's
trading strategies. For these instruments, which are mostly held by the Investment Bank, liquidity and repricing risk is managed through the Daily Value at Risk (DVaR) methodology;
¡
Retail deposits, which are included within customer accounts, are repayable on demand or at short notice on a contractual basis. In practice,
these instruments form a stable base for the Group's operations and liquidity needs because of the broad base of customers – both numerically and by depositor type (see Behavioural Maturity Profile on page 141); and
¡
Financial assets designated at fair value held in respect of linked liabilities, which are managed with the associated liabilities.
I  149
Risk review
Funding risk – Liquidity continued
Contractual maturity of financial liabilities on an undiscounted basis (audited)
The table below presents the cash flows payable by the Group under financial liabilities by remaining contractual maturities at the
balance sheet date. The amounts disclosed in the table are the contractual undiscounted cash flows of all financial liabilities (i.e. nominal values).
The balances in the below table do not agree directly to the balances in the consolidated balance sheet as the table incorporates all cash flows, on an undiscounted basis, related to both principal
as well as those associated with all future coupon payments.
Derivative financial instruments held for trading and trading portfolio
liabilities are included in the on demand column at their fair value.
Financial liabilities designated at fair value in respect of
linked liabilities under investment contracts have been excluded from this analysis as the Group is not exposed to liquidity risk arising from them.
Contractual maturity of financial liabilities – undiscounted (including Absa
Group; audited)
On demand
£m
Within
one year
£m
Over
one year
but not
more than
five years
£m
Over
five years
£m
Total
£m
As at 31 December 2012
Deposits from banks
8,619
59,675
7,629
1,267
77,190
Items in the course of collection due to other banks
1,449
124
–
–
1,573
Customer accounts
255,747
113,516
14,492
3,624
387,379
Reverse repurchase agreements and other similar secured lending
394
215,599
1,357
–
217,350
Trading portfolio liabilities
44,794
–
–
–
44,794
Financial liabilities designated at fair value
1,434
21,380
35,753
24,301
82,868
Derivative financial instruments
459,334
144
1,193
2,079
462,750
Debt securities in issue
1,523
60,396
46,742
16,566
125,227
Subordinated liabilities
–
1,948
6,284
24,266
32,498
Other financial liabilities
–
4,080
641
–
4,721
Total financial liabilities
773,294
476,862
114,091
72,103
1,436,350
Off-balance sheet items
Loan commitments
121,522
42,587
78,962
4,996
248,067
Other commitments
170
714
110
50
1,044
Total off-balance sheet items
121,692
43,301
79,072
5,046
249,111
Total financial liabilities and off-balance sheet items
894,986
520,163
193,163
77,149
1,685,461
At 31 December 2011
Deposits from banks
7,866
81,308
1,651
409
91,234
Items in the course of collection due to other banks
965
4
–
–
969
Customer accounts
213,927
139,617
9,418
5,659
368,621
Reverse repurchase agreements and other similar secured lending
23
207,000
257
41
207,321
Trading portfolio liabilities
45,887
–
–
–
45,887
Financial liabilities designated at fair value
1,525
28,147
39,459
30,743
99,874
Derivative financial instruments
524,551
828
1,512
2,333
529,224
Debt securities in issue
75
74,953
40,983
21,754
137,765
Subordinated liabilities
–
1,002
4,456
27,584
33,042
Other financial liabilities
–
3,629
1,594
–
5,223
Total financial liabilities
794,819
536,488
99,330
88,523
1,519,160
Off-balance sheet items
Loan commitments
223,622
12,071
3,548
1,125
240,366
Other commitments
364
793
198
6
1,361
Total off-balance sheet items
223,986
12,864
3,746
1,131
241,727
Total financial liabilities and off-balance sheet items
1,018,805
549,352
103,076
89,654
1,760,887
150  I
Risk review
Operational risk
All disclosures in this section are unaudited
Operational risk
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.
Operational risks are inherent in the Group's business activities and are typical of any large enterprise. It is not cost effective to attempt
to eliminate all operational risks and in any event it would not be possible to do so. Losses from operational risks of small significance are expected to occur and are accepted as part of the normal course of business. Those of material
significance are rare and the Group seeks to reduce the likelihood of these in accordance with its risk appetite.
The Principal Risk
comprises the following Key Risks: CyberSecurity risk, External suppliers, Fraud, Financial reporting, Information, Legal, Product, Payments, People, Premises and security, Regulatory, Taxation, Technology and Transaction operations. For definitions
of these key risks see page 302.
For more information on Legal, Regulatory and Taxation risks please see pages 76, 77 and 79.
Operational risk profile
The Barclays operational risk profile in 2012 was dominated by the regulatory penalties in respect of LIBOR and EURIBOR submissions (£290m) and provisions for PPI (£1.6bn) and
interest rate hedging product redress (£850m).
Within operational risk a high proportion of risk events have a low associated
financial cost and a very small proportion of operational risk events will have a material impact on results of operations and financial conditions of the Group. In 2012 74.7% of the Group's net operational risk losses had a value of
£50,000 or less (2011: 70.4%) and accounted for only 1.3% of the Group's total net loss impact. The analysis below presents Barclays operational risk events by Basel 2 category. There has been an increase in the proportion of losses by
amount within the Clients, products and business practices category to 92.2% (2011: 65.9%), driven by penalties relating to the industry-wide investigation into the setting of interbank offered rates, provisions for PPI and interest rate hedging
product redress. In 2012, Execution, delivery and process management (46.1%) and External fraud (40.8%) remain the categories with the highest frequency of events. Execution, delivery and process management events are common to the banking
industry where high volumes of transactions are processed on a daily basis. These are often fully or partially recovered, resulting in low value net losses. High volume, low value external fraud events are also consistent with industry experience,
driven by debit and credit card fraud. These remained within the expected levels during 2012.
The Group's operational risk profile
is informed by bottom-up risk assessment by business unit and top-down qualitative review from the Operational Risk Committee. This continues to highlight Clients, products and business practices as a key operational risk exposure. CyberSecurity
risk is an area identified for increased focus which has driven the introduction of a new key risk category and impacts business disruption and system failures and external fraud risk events.
For further information see Risk management section (pages 274-303).
Operational risk events by risk
category
% of total risk events by count
Operational risk events by risk
category
% of total risk events by value
I  151
Risk review
Reputation risk
All disclosures in this section are unaudited
Reputation risk
Reputation risk is the risk of damage to Barclays brand
arising from any association, action or inaction which is perceived by stakeholders to be inappropriate or unethical.
Such damage reduces, directly or indirectly, the attractiveness of Barclays to stakeholders and may lead to negative
publicity; loss of revenue; litigation; regulatory or legislative action; loss of existing and potential client business; reduced workforce morale; and difficulties in recruiting talent. Sustained reputational damage could have a materially negative
impact on our licence to operate and destroy significant shareholder value.
Reputation risk is broadly triggered by failure to comply
with either stated or expected norms in two ways:
¡
As an additional consequence of not applying other risk controls; and
¡
As a consequence of otherwise inappropriate behaviour, where there is no breach of control, law or regulation, but the decision or behaviour is
generally regarded as unethical or inconsistent with our values.
Assessments of reputation risk cannot be static as
they are driven by evolving norms and are composed of risks that can take numerous diverse forms. For example, risk can arise from:
¡
Association with controversial clients or sectors: for example, if Barclays provided funding or services to a client connected with (or perceived
to be connected with) controversial activities;
¡
Operating or doing business in an inappropriate manner: for example, if Barclays paid bribes to secure commercial advantages; and
¡
Past, present or potential failures in corporate governance or management: for example, if Barclays provided funding or services to clients
without fully implementing anti-money laundering precautions.
Managing reputation risk on a day-to-day basis is the
direct responsibility of the individuals involved in making commercial decisions in their respective businesses or functions. Every member of staff must take responsibility, so the foundation of our approach is to clearly establish our goal, purpose
and values and ensure that all individuals across the organisation deliver in a way consistent with that culture.
Where individuals are
confronted by a decision which appears to have wider reputational consequences, they will be supported by a clear set of rules and processes that provide a clear articulation of the expectations for how people should identify and manage risk
consistently, including how to escalate the issue.
Recognising that Barclays has one global brand, management of reputation risk cannot
be ring-fenced and allocated to a single global 'owner'. However, where truly difficult decisions with the potential to materially affect the Bank are escalated, they will be dealt with by a committee of senior executives (Barclays
Reputation Council).
In 2012, Barclays experienced a number of reputation-impacting events. Many of these events were the result of
prior years' decisions and behaviours, and included executive remuneration, the industry-wide investigation into the setting of interbank offered rates such as LIBOR, and the mis-selling of PPI to consumers and interest rate hedging products to
business customers.
We sought to manage the impact of these events to restore trust in Barclays. In addition, as part of our Transform
Programme, we have tried to learn from these events and understand their drivers so that we can better prevent events going forward. Key lessons and areas where we will continue to make improvements include:
¡
Visibly principled leadership;
¡
Values-based assessment and rewards;
¡
Strong and integrated governance; and
¡
Broad, active and on-going bilateral stakeholder engagement.
Barclays began to revise its approach to reputation risk comprehensively and holistically in 2012. In order to strengthen the governance relating to reputation matters, we have recategorised
reputation risk as a new Principal Risk and have created a Board Conduct, Reputation and Operational Risk Committee in 2013. The Barclays Reputation Council created a Bank wide Reputation Risk Control Framework and Reputation Risk Impact/ Control
Policy, both of which were approved by the Board. The Council has also delivered training on reputation risk to senior executives across the bank to ensure the knowledge and culture is embedded.
We will continue to strengthen foundations, enhance governance and improve proactive risk identification/remediation throughout 2013.
152  I
Risk review
Conduct risk
All disclosures in this section are unaudited
Conduct risk
Conduct risk is the risk that detriment is caused to the Bank, our customers, clients or counterparties because of the inappropriate execution of our business activities.
During 2012 there were a number of conduct risk issues affecting the group, as set out under legal risk and regulatory risk in the risk factors
section on pages 76-77.
In response, during 2013 we have specifically recategorised conduct risk as a Principal Risk which will be
under the supervision of Sir Hector Sants, Head of Compliance and Government and Regulatory Relations. In order to strengthen the governance relating to conduct matters we have created a Board Conduct, Reputation and Operational Risk Committee. The
Committee meets quarterly under the auspices of the Chairman of the Group. We will also establish a management committee to focus on conduct risk.
In addition the restructuring of the FSA has led to a focus on conduct risk. This is intended to go beyond the previous focus on compliance with rules, on process and on treating customers fairly,
to embrace a holistic approach of how a firm organises itself and does business in order to ensure good customer outcomes.
The FSA and,
from 1 April 2013 the Financial Conduct Authority (FCA), expects regulated firms to be able to focus holistically on conduct risk and to report internally to management and to regulators on conduct risk which the FCA will assess through the
Firm Systematic Framework. This necessitates a new approach and Barclays has proactively initiated a number of initiatives in order to ensure that it both meets business needs and the expectations of regulators and other stakeholders.
We will continue developing our definition and standard of conduct risk and building out and embedding a new framework for conduct risk management
and have established a group wide programme to deliver this outcome. The programme has Executive Committee sponsorship from the Head of Compliance and Regulatory and Government Relations. The components of the programme include:
¡
Design and rollout: design and embedding of a new conduct risk Principal Risk in accordance with the group principal risks policy;
¡
Strategy and management information: assessing how best to feed conduct risk appetite into strategic decision-making and developing management
information to support decision-making and facilitate the monitoring of the conduct risk profile against appetite; and
¡
Conduct risk assessment: assessing the current state of controls within each business to capture what we do well and identify where we must
improve.
The programme will look to build on and enhance the work already done in this area, for example the focus on
treating customers fairly and complaints handling. It will also take account of emerging regulatory developments following the legal creation of the FCA.
I  153
Risk management
Supervision and regulation
All disclosures in this section (pages 154 to 160) are
unaudited
Supervision of the Group
The Group's operations, including its overseas offices, subsidiaries and associates, are subject to a significant body of rules and regulations that are a condition for authorisation to conduct
banking and financial services business. These apply to business operations and affect financial returns and include reserve and reporting requirements and prudential and conduct of business regulations. These requirements are set by the relevant
central banks and regulatory authorities that supervise the Group in the jurisdictions in which it operates. The requirements reflect global standards developed by, among others, the Basel Committee on Banking Supervision and the International
Organisation of Securities Commissions. They also reflect requirements of or derived from EU legislation.
In the UK, until
31 March 2013, the Financial Services Authority (FSA) remains the independent body responsible for the regulation and supervision of deposit taking, life insurance, home mortgages, general insurance and investment business.
Following the passage of the Financial Services Act 2012, the Bank of England will have responsibility for monitoring the financial system as a
whole and the system of regulation in the UK will be reorganised. From 1 April 2013, the regulation and supervision of the Group will be divided between the Prudential Regulation Authority (PRA) – which is established as a subsidiary of
the Bank of England – and the Financial Conduct Authority (FCA). In addition, the Financial Policy Committee (FPC) of the Bank of England will have significant influence on the prudential requirements that may be imposed on the banking system.
It is also intended that it will have a number of macro-prudential tools at its disposal that may be used to vary the prudential requirements to which the Group is subject, including the power to vary the counter-cyclical capital buffer and to vary
sectoral capital requirements. Further details on the reform of regulation in the UK can be found below.
The Financial Services and
Markets Act 2000 (FSMA) as amended remains the principal statute under which financial institutions are regulated in the UK. Barclays Bank PLC is authorised under the FSMA to carry on a range of regulated activities within the UK and is subject to
consolidated prudential supervision by the FSA and, from 1 April, by the PRA. In its role as supervisor, the FSA seeks to maintain the safety and soundness of financial institutions with the aim of strengthening, but not guaranteeing, the
protection of customers and the financial system. The FSA's continuing supervision of financial institutions is conducted through a variety of regulatory tools, including the collection of information from statistical and prudential returns,
reports obtained from skilled persons, visits to firms and regular meetings with management to discuss issues such as performance, risk management and strategy. This will remain the case under the PRA.
Firms are subject to a rolling programme of continuous, intensive and intrusive engagement on prudential and conduct matters. The FSA also
promulgates requirements that banks and other financial institutions are required to meet on matters such as capital adequacy, limits on large exposures to individual entities and groups of closely connected entities, liquidity and rules of business
conduct. From 1 April 2013, the regulation and supervision of conduct matters will be assumed by the FCA.
The Banking Act 2009 (the Banking Act) provides a regime to allow the Bank of England (or, in certain
circumstances, HM Treasury) to resolve failing banks in the UK, in consultation with the FSA and HM Treasury as appropriate. Under the Banking Act, these authorities are given powers, including (a) the power to make share transfer orders
pursuant to which all or some of the securities issued by a UK bank may be transferred to a commercial purchaser or the UK government; and (b) the power to transfer all or some of the property, rights and liabilities of a UK bank to a
commercial purchaser or Bank of England entity. A share transfer order can extend to a wide range of securities including shares and bonds issued by a UK bank (including Barclays Bank PLC) or its holding company (Barclays PLC) and warrants for such
shares and bonds. From 1 April 2013, certain of these powers will be extended to companies within the same group as a UK bank. The Banking Act also gives the authorities powers to override events of default or termination rights that might be
invoked as a result of the exercise of the resolution powers. The Banking Act powers apply regardless of any contractual restrictions and compensation may be payable in the context of both share transfer orders and property appropriation.
The Banking Act also gives the Bank of England the power to override, vary or impose contractual obligations between a UK bank, its
holding company and its group undertakings for reasonable consideration, in order to enable any transferee or successor bank to operate effectively. There is also power for HM Treasury to amend the law (excluding provisions made by or under the
Banking Act) for the purpose of enabling it to use the regime powers effectively, potentially with retrospective effect. In addition, the Banking Act gives the Bank of England statutory responsibility for financial stability in the UK and for the
oversight of payment systems.
The Financial Services Act 2010, among other things, requires the UK regulator to make rules about
remuneration and to require regulated firms to have a remuneration policy that is consistent with both effective risk management and the standards issued by the Financial Stability Board. The FSA is mandated to make rules that require authorised
firms (or a subset of authorised firms) to draw up recovery and resolution plans and to consult with HM Treasury and the Bank of England on the adequacy of firms' plans. This Act also allows the FSA to make rules requiring firms to operate a
collective consumer redress scheme to deal with cases of widespread failure by regulated firms to meet regulatory requirements that may have created consumer detriment.
In addition to establishing the FPC, PRA and FCA, the Financial Services Act 2012 among other things, clarifies responsibilities between HM Treasury and the Bank of England in the event of a
financial crisis by giving the Chancellor of the Exchequer powers to direct the Bank of England where public funds are at risk and there is a serious threat to financial stability; it establishes the objectives and accountabilities of the new
regulatory bodies; amends the Threshold Conditions for authorisation; and gives the new bodies additional powers, including powers of direction over the unregulated parent undertakings (such as Barclays PLC) where this is necessary to ensure
effective consolidated supervision of the Group; and a power for the FCA to make temporary product intervention rules for a maximum period of six months, if necessary without consultation. The Act also gives the FCA the power to set rules in
relation to the setting of benchmarks and creates a new criminal offence relating to the making of a false or misleading statement, or the creation of a false or misleading impression, in connection with the setting of a benchmark.
154  I
Following the financial crisis and the failure of a number of financial institutions, the FSA has
paid particular attention to compliance with rules on client money and assets, and developing further policy and rules in this area. In January 2011, Barclays Capital Securities Limited (BCSL) was subject to an FSA fine for breaches of the client
money and assets (CASS) segregation rules. Specifically, BCSL failed to segregate client monies placed on GBP money market deposits intra-day in a segregated trust account. Throughout the relevant period the funds were segregated overnight but on an
intra-day basis client money was co-mingled with firm money for between five and seven hours each day. Upon discovery of the intra-day segregation issue BCSL corrected the situation promptly.
BCSL also undertook a wider CASS review in 2010 and implemented a remediation plan to address the issues identified in that review which included:
–
Enhancements to the client documentation and static data control framework: enhancements were made to the contractual and static data control framework to provide
for systemic and centralised capture of the relevant contractual client money and custody terms and alignment to downstream calculation, segregation and reconciliation processes.
–
An exercise was undertaken to align the client money contractual terms within the Terms of Business with the operational segregation practices and where required
enter into supplemental or amended contracts with clients to clarify the basis upon which the monies and/or assets that they place with Barclays are held.
–
Increased automation of the client money calculation and reconciliation practices: BCSL has introduced an automated client money system which has significantly
reduced the level of manual processing involved in the client money calculation and segregation procedures and enhanced the available audit trail to inform the daily assurance processes.
–
Increased clarity and transparency of CASS Policies, Procedures and Roles and Responsibilities: a CASS oversight officer has been appointed and a formal
organisational structure (including roles and responsibilities) covering CASS requirements has been agreed and implemented across relevant business and infrastructure areas. Awareness of CASS and the application to the firm's business
activities has been enhanced through the introduction of a mandatory structured training course for those involved in CASS Processing and the development of detailed operational policies and procedures.
–
Enhanced Governance and Oversight Controls: a formal Governance, Control and Oversight committee structure with formal reporting obligations into the firm's
central governance framework has been established.
A CASS specialist team has been established within the Operational
Regulatory Control team and ongoing CASS quality assurance and incident management and reporting processes have been established and implemented.
This CASS remediation plan has been completed.
Banks, insurance companies and other financial institutions in the UK are subject to a single
financial services compensation scheme (the Financial Services Compensation Scheme – FSCS) which operates when an authorised firm is unable or is likely to be unable to meet claims made against it because of its financial circumstances. Most
deposits made with branches of Barclays Bank PLC within the European Economic Area (EEA) which are denominated in Sterling or other currencies are covered by the FSCS. Most claims made in respect of investment business will also be protected claims
if the business was carried on from the UK or from a branch of the bank or investment firm in another EEA member state. The FSCS is funded by levies on authorised UK firms such as Barclays Bank PLC. In the event that the FSCS raises those funds more
frequently or significantly increases the levies to be paid by firms, the associated costs to the Group may have a material impact on the Group's results. Further details can be found in Note 28 on page 241.
Outside the UK, the Group has operations (and main regulators) located in continental Europe, in particular France, Germany, Spain, Switzerland,
Portugal and Italy (local central banks and other regulatory authorities); Asia Pacific (various regulatory authorities including the Hong Kong Monetary Authority, the Financial Services Agency of Japan, the Australian Securities and Investments
Commission, the Monetary Authority of Singapore, the China Banking Regulatory Commission and the Reserve Bank of India); Africa and the Middle East (various regulatory authorities including the South African Reserve Bank) and the United States of
America (including the Board of Governors of the Federal Reserve System (FRB), the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC)).
Regulation in the UK is considerably shaped and influenced by EU directives and regulations. These provide the structure of the European Single Market, an important feature of which is the framework
for the regulation of authorised firms. This framework is designed to enable a credit institution or investment firm authorised in one EU member state to conduct banking or investment business through the establishment of branches or by the
provision of services on a cross-border basis in other member states without the need for local authorisation. Barclays operations in Europe are authorised and regulated by a combination of both home and host regulators.
Barclays operations in South Africa, including Absa Group Limited, are supervised and regulated by mainly the South African Reserve Bank (SARB),
the Financial Services Board (FSB) as well as the Department of Trade and Industry (DTI). SARB oversees the banking industry and follows a risk-based approach to supervision, whilst the FSB oversees the non-banking financial services industry such
as insurance and investment business and focuses on enhancing consumer protection and regulating market conduct. The DTI regulates consumer credit through the National Credit Act (NCA) 2005, as well as other aspects of consumer protection not
regulated under the jurisdiction of the FSB through the Consumer Protection Act (CPA) 2008. It is intended that regulatory responsibilities in South Africa will in future be divided between the SARB which will be responsible for prudential
regulation and the FSB will be responsible for matters of market conduct. The precise timing for the move to 'twin peaks' regulation remains to be determined.
I  155
Risk management
Supervision and regulation continued
In the United States, Barclays PLC, Barclays Bank PLC and Barclays US banking subsidiaries are
subject to a comprehensive regulatory framework involving numerous statutes, rules and regulations, including the International Banking Act of 1978, the Bank Holding Company Act of 1956, as amended (BHC Act), the Foreign Bank Supervision Enhancement
Act of 1991, the Financial Services Modernization Act of 1999, the USA PATRIOT Act of 2001 and the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (DFA). This framework regulates the activities of Barclays, including its US banking
subsidiaries and the US branches of Barclays Bank PLC, as well as imposing prudential restrictions, such as limits on extensions of credit by the Bank's US branches and the US banking subsidiaries to a single borrower and to affiliates. The New
York and Florida branches of Barclays Bank PLC are subject to extensive federal and state supervision and regulation by the FRB and, as applicable, the New York State Department of Financial Services and the Florida Office of Financial Regulation .
Barclays Bank Delaware, a Delaware chartered commercial bank, is subject to supervision and regulation by the Federal Deposit Insurance Corporation (FDIC), the Delaware State Bank Commissioner and the Consumer Financial Protection Bureau. The
deposits of Barclays Bank Delaware are insured by the FDIC. Barclays Wealth Trustees (US) NA is an uninsured non-depository trust company chartered and supervised by the OCC. The licensing authority of each US branch of Barclays Bank PLC has the
authority, in certain circumstances, to take possession of the business and property of Barclays Bank PLC located in the state of the office it licenses or to revoke or suspend such license. Such circumstances generally include violations of law,
unsafe business practices and insolvency.
Barclays PLC and Barclays Bank PLC are bank holding companies registered with the FRB, which
exercises umbrella authority over Barclays US operations. Barclays PLC and Barclays Bank PLC have each elected to be treated as a financial holding company under the BHC Act. Financial holding companies may engage in a broader range of financial and
related activities than are permitted to registered bank holding companies that do not maintain financial holding company status, including underwriting and dealing in all types of securities. Financial holding companies such as Barclays PLC and
Barclays Bank PLC are required to meet or exceed certain capital ratios and be deemed to be 'well managed', and Barclays Bank Delaware and Barclays Wealth Trustees (US) NA are each required to meet certain capital requirements and be
deemed to be 'well managed'. In order for Barclays PLC and Barclays Bank PLC to maintain their status as financial holding companies, Barclays Bank Delaware must be both 'well capitalised' and 'well managed' under
applicable regulatory standards. In addition, Barclays Bank Delaware must have at least a 'satisfactory' rating under the Community Reinvestment Act of 1977 (CRA). Entities ceasing to meet any of these requirements, are allotted a period
of time in which to restore capital levels or the management or CRA rating. Should Barclays PLC or Barclays Bank PLC fail to meet the above requirements, during the allotted period of time they could be prohibited from engaging in new types of
financial activities or making certain types of acquisitions. If the capital level or rating is not restored, the Group may be required by the FRB to cease certain activities in the United States.
Under the Federal Deposit Insurance Act of 1950, as amended by the DFA, Barclays is required to act as a source of financial strength for Barclays
Bank Delaware. This could, among other things, require Barclays to inject capital into Barclays Bank Delaware if it fails to meet minimum regulatory capital requirements.
A major focus of US government policy relating to financial institutions in recent years has been
combating money laundering and terrorist financing and enforcing compliance with US economic sanctions. Regulations applicable to US operations of Barclays Bank PLC and its subsidiaries impose obligations to maintain appropriate policies, procedures
and controls to detect, prevent and report money laundering and terrorist financing and to ensure compliance with US economic sanctions against designated foreign countries, nationals and others. Failure of a financial institution to maintain and
implement adequate programmes to combat money laundering and terrorist financing or to ensure economic sanction compliance could have serious legal and reputational consequences for the institution. In particular, on August 16, 2010, the United
States filed in the United States District Court for the District of Columbia a criminal information against Barclays, which alleged violations of US sanctions laws. The United States and Barclays simultaneously entered into a Deferred Prosecution
Agreement (DPA), pursuant to which the United States agreed to defer prosecution for a period of two years, provided that Barclays complied with various undertakings, including undertakings relating to cooperation and remediation. The DPA provided
that if Barclays complied with those undertakings, the United States would move to dismiss the information. On August 31, 2012, the United States moved the Court to dismiss the information with prejudice on the ground that Barclays had
'fully cooperated with the United States, complied with all of its obligations under the DPA, and not otherwise violated the DPA'. On November 30, 2012, the Court granted the motion to dismiss.
Barclays US securities broker/dealer, investment advisory and Investment banking operations are subject to ongoing supervision and regulation by
the SEC, the Financial Industry Regulatory Authority (FINRA) and other government agencies and self-regulatory organisations (SROs) as part of a comprehensive scheme of regulation of all aspects of the securities and commodities business under the
US federal and state securities laws. Similarly, Barclays US commodity futures and options-related operations are subject to ongoing supervision and regulation by the CTFC, the National Futures Association and other SROs.
The credit card-related activities of the Group in the US are subject to the Credit Card Accountability, Responsibility and Disclosure Act of 2009
(Credit CARD Act) which was enacted by Congress in May 2009 to prohibit certain credit card pricing and marketing practices for consumer credit card accounts. Among the numerous provisions are those that prohibit increasing rates on existing
balances and over limit fees in most instances, restrict increasing fees and rates prospectively, restrict what penalty fees can be assessed, regulate how payments are to be allocated to different balances and how the billing process is to work, and
revises all communications to cardholders.
Regulatory developments
The regulatory change generated by the financial crisis is having and will continue to have a substantial impact on all financial institutions, including the Group. The full impact of this change
remains unclear, but will be significant. Regulatory change is being pursued at a number of levels, globally notably through the G20, Financial Stability Board (FSB) and Basel Committee on Banking Supervision (BCBS), regionally through the European
Union and nationally, especially in the UK and US. Increased prudential requirements and changes to the definitions of capital and liquid assets may affect the Group's planned activities and could increase costs and contribute to adverse
impacts on the Group's earnings. Similarly, increased requirements in relation to capital markets activities and to market conduct requirements may affect the Group's planned activities and could increase costs and thereby contribute to
adverse impacts on the Group's earnings.
156  I
Global
The programme of reform of the global regulatory framework that was agreed by G20 Heads of Government in April 2009 has continued to be taken forward during 2012.
The FSB has been designated by the G20 as the body responsible for co-ordinating the delivery of the global reform programme. It has focused
particularly on the risks posed by systemically important financial institutions. In 2011, G20 Heads of Government adopted FSB proposals to reform the regulation of globally systematically important financial institutions (G-SIFIs). A key element of
this programme is that G-SIFIs should be capable of being resolved without recourse to taxpayer support. Barclays has been designated a G-SIFI by the FSB. G-SIFIs will be subject to:
–
The FSB's international standard for national resolution regimes, Key Attributes of Effective Resolution Regimes for Financial Institutions. Among other
things, this seeks to give resolution authorities powers to intervene in and resolve a financial institution that is no longer viable, including through the transfers of business and creditor financed recapitalisation (bail-in within resolution)
that allocates losses to shareholders and unsecured and uninsured creditors in their order of seniority, at a regulator-determined point of non-viability that may precede insolvency. The concept of bail-in may affect the rights of senior unsecured
creditors subject to any bail-in in the event of a resolution of a failing bank.
–
Requirements for resolvability assessments and for recovery and resolution planning.
–
Requirements for banks determined to be globally systemically important to have additional loss absorption capacity above that required by Basel 3 standards (see
below). The surcharges rise in increments from 1% to 2.5% of risk weighted assets (with an empty bucket of 3.5% to discourage institutions from developing their business in a way that heightens their systemic nature). This additional buffer must be
met with common equity.
–
More intensive supervision, including through stronger supervisory mandates, resources and powers, and higher supervisory expectations for risk management
functions, data aggregation capabilities, risk governance and internal controls.
–
G-SIFIs are subject to enhanced supervision and a comprehensive crisis management framework within supervisory colleges.
In its November 2012 list of G-SIFIs, the FSB placed Barclays in a bucket that would require it to meet a 2% surcharge. The additional loss
absorbency requirements will apply to those banks identified in November 2014 as globally systemically important and will be phased in starting in January 2016, with full implementation by January 2019. G-SIFIs must also meet the higher supervisory
expectations for data aggregation capabilities by January 2016. In October 2012, the FSB and BCBS finalised a principles based framework for domestic systemically important banks (D-SIBs). National authorities will begin to apply requirements to
banks identified as D-SIBs from January 2016 in line with the phase in arrangements for G-SIFIs.
The FSB continues to pursue a number
of work streams that will affect the Group, its counterparties and the markets in which it operates. These include policy work on shadow banking and on enhanced disclosures.
The BCBS issued the final guidelines on Basel 3 capital and liquidity standards in December 2010,
with revisions to counterparty credit risk in July and November 2011. It has continued to refine elements of this package, notably in relation to regulatory liquidity where revisions were agreed in January 2013 to the definitions of high quality
liquid assets and net cash outflows for the purpose of calculating the Liquidity Coverage Ratio, as well as establishing a timetable for phasing-in the standard from January 2016. The requirements of Basel 3 as a whole are subject to a number of
transitional provisions that run to the end of 2018. An assessment of the likely impact of the Basel 3 capital, leverage and liquidity requirements and the Group response can be found in the analysis of funding risk in relation to capital and to
liquidity (pages 130-134 and 138 respectively). The Group is, however, primarily subject to the EU's implementation of the Basel 3 standard through the Capital Requirements Directive (see below).
The BCBS also maintains a number of active work streams that will affect the Group. These include a fundamental review of the trading book where a
consultation on enhanced capital standards was issued in May 2012. Consultations on enhanced standards were also held in relation to margin requirements for non-centrally cleared derivatives, capital requirements for exposures to central
counterparties, the management of risks associated with the settlement of foreign exchange transactions and on the securitisation framework. The results of this work are expected in 2013. The BCBS is also understood to be examining a regime for
large exposures. These developments may further increase the capital required by the Group to transact affected business and/or affect the ability of the Group to undertake certain transactions.
European Union
The EU
continues to develop its regulatory structure in response to the financial and Eurozone crises. At the December 2012 meeting of EU Finance Ministers, following the Euro Area Summit of 29 June, it was agreed to establish a single supervisory
mechanism within the Eurozone. The European Central Bank (ECB) will have responsibility for the supervision of the most significant Eurozone credit institutions, financial holding companies or mixed financial holding companies. The ECB may extend
its supervision to institutions of significant relevance that have established subsidiaries in more than one participating member state and with significant cross-border assets or liabilities. It is expected that the single supervisory mechanism
will become operational in 2014.
The European Banking Authority which came into being on 1 January 2011, along with the other
European Supervisory Authorities, remains charged with the development of a single rulebook for the EU as a whole and with enhancing co-operation between national supervisory authorities. The European Securities Markets Authority has a similar role
in relation to the capital markets and to banks and other firms doing investment and capital markets business. The progressive reduction of national discretion on the part of national regulatory authorities within the EU may lead to the elimination
of prudential arrangements that have been agreed with those authorities. This may serve to increase or decrease the amount of capital and other resources that Barclays is required to hold. The overall effect is not clear and may only become evident
over a number of years. The European Banking Authority and the European Securities Markets Authority each have the power to mediate between and override national authorities under certain circumstances. Responsibility for day to day supervision
remains with national authorities and for banks, like the Group, that are incorporated in countries that will not participate in the single supervisory mechanism, is expected to remain so.
I  157
Risk management
Supervision and regulation continued
Basel 3 will be implemented in the EU by amendment to the Capital Requirements Directive (CRD IV).
Formal proposals to amend the CRD IV were adopted by the European Commission in July 2011. These take the form of a regulation and a directive which are currently going through the EU legislative process. It had been expected that CRD IV would enter
into force on 1 January 2013. However, delays in the legislative process mean that this date has been missed and no further implementation date has been specified. Much of the detailed implementation is expected to be done through binding
technical standards to be developed by the European Banking Authority, that are intended to ensure a harmonised application of rules through the EU but which have yet to be developed. While there may be some differences between CRD IV and Basel 3,
the current expectation is that the overall impact will be broadly similar.
A significant addition to the EU legislative framework for
financial institutions is the proposal for a Directive establishing a framework for the recovery and resolution of credit institutions and investment firms. This proposal is intended to implement many of the requirements of the FSB's 'Key
Attributes of Effective Resolution Regimes for Financial Institutions'. The proposal would give resolution authorities extensive powers to 'bail-in' liabilities (i.e. write down liabilities or convert them to equity) and firms would
need a minimum percentage of liabilities in a form that allows them to be subject to 'bail-in'. The proposal also requires the development of recovery and resolution plans at group and firm-level. The proposal sets out a harmonised set of
resolution tools across the EU, including the power to impose a temporary stay on the rights of creditors to terminate, accelerate or close out contracts. There are also significant funding implications for financial institutions: the proposal
envisages the establishment of pre-funded resolution funds of 1% of covered deposits to be built up over 10 years, although the proposal also envisages that national deposit guarantee schemes may be able to fulfil this function. The proposal is
currently going through the legislative process and the financial impact on the Group is not yet clear.
An unrelated proposal to amend
the Directive on Deposit Guarantee Schemes is also being considered, and the linkage that has emerged with the Recovery and Resolution Directive remains to be clarified. The proposal on Deposit Guarantee schemes also envisages that national schemes
should be pre-funded, with a fund to be raised over a number of years. This would be a significant change for UK banks where levies are currently raised as needed after failure. The proposals remain under debate and the financial impact on the Group
is not yet clear.
In October 2012, a group of experts set up by the European Commission to consider possible reform of the structure of
the EU banking sector presented its report. Among other things, the group recommended the mandatory separation of proprietary trading and other high-risk trading activities from other banking activities. The European Commission has consulted on the
proposals put forward by this group, but has yet to determine whether it will take these forward and, if so, how. It is expected that the European Commission will clarify its intentions later this year.
The European Market Infrastructure Regulation (EMIR) introduces new requirements to improve transparency and reduce the risks associated with the
derivatives market. When it enters fully into force, EMIR will require entities that enter into any form of derivative contract, including interest rate, foreign exchange, equity, credit and commodity derivatives, to: report
every derivative contract that they enter to a trade repository; implement new risk management standards, including operational processes and margining, for all bilateral over-the-counter
derivatives trades that are not cleared by a central counterparty; and clear, through a central counterparty, over-the-counter derivatives that are subject to a mandatory clearing obligation. EMIR has potential operational and financial impacts on
the group, including collateral requirements. However, not all the implementing regulation is available and it is not possible at this stage to determine the full impact.
Proposals to amend the Markets in Financial Instruments Directive continue to be debated. This will affect many of the investment markets in which the Group operates and the instruments in which it
trades, and how it transacts with market counterparties and other customers. These proposals are currently going through the legislative process and the overall impact on the Group is not yet clear.
United Kingdom
Following
the passage of the Financial Services Act 2012 which amended the structure of regulation and supervision in the UK as described above, the Government is proposing legislation to take forward the proposals of the Independent Commission on Banking
(ICB).
On 4 February 2013, the UK Government introduced the Financial Services (Banking Reform) Bill to the House of Commons. The
Bill would give the UK authorities the powers to implement the key recommendations of the ICB by requiring, amongst other things: (i) the separation of the UK and EEA retail banking activities of a UK bank in a legally distinct, operationally
separate and economically independent entity within the same group ('ring fencing') and (ii) the increase of the loss-absorbing capacity of ring-fenced banks and UK headquartered global systemically important banks to levels higher
than the Basel 3 guidelines. The Bill would also give depositors protected under the Financial Services Compensation Scheme preference if a bank enters insolvency. At the same time, the Government announced that it will be bringing forward
amendments to the Bill to establish a reserve power allowing the regulator, with approval from the Government, to enforce full separation under certain circumstances. The Bill consists in large part of enabling provisions, with much of the detail
expected to be contained in secondary legislation. The Government is expected to publish the draft secondary legislation later this year. The Government intends that primary and secondary legislation will be in place by the end of this Parliament
(May 2015) and that UK banks will be required to be compliant by 1 January 2019.
The Parliamentary Commission on Banking Standards
was formed in July 2012. The Commission is appointed by both Houses of Parliament to consider and report on:
–
professional standards and culture of the UK banking sector, taking account of regulatory and competition investigations into the LIBOR rate-setting process
–
lessons to be learned about corporate governance, transparency and conflicts of interest, and their implications for regulation and for Government policy and to
make recommendations for legislative and other action.
The recommendations of the Commission are expected in March 2013
and are likely to influence UK Government policy and legislative proposals, possibly through amendment to the Banking Reform Bill and its accompanying secondary legislation which will be under debate through much of 2013.
158  I
While the new regulatory structure takes effect on 1 April 2013, the UK has sought to
'shadow' the new regime to the extent possible without the support of the necessary legislation. The Bank of England has operated an Interim FPC and the FSA, has since 1 April 2012 has been operating in two distinct and largely
autonomous business units covering prudential and conduct matters respectively. The FPC has recommended that the FSA should seek to ensure that UK banks hold greater levels of capital as a means of balancing financial stability with the desirability
of lending to the real economy. Both business units of the FSA have continued to develop and apply a more intrusive and assertive approach to supervision and its policy of credible deterrence in relation to enforcement that has continued to see
significant growth in the size of regulatory fines. In anticipation of international agreement, the FSA has established and implemented capital and liquidity requirements that are substantially increased from pre-crisis levels, and has, together
with the Bank of England, proceeded to establish Recovery and Resolution Planning requirements. In keeping with the requirements of the FSB, the Group submitted its Recovery and Resolution Plan by 30 June 2012. The Retail Distribution Review
entered into force on 1 January 2013 and the Mortgage Market Review will apply from 26 April 2014. These will affect the economics of investment advice and home finance provision respectively. The FSA, following consultation, has also
begun to take a more interventionist approach to the design of financial products and to the governance processes around product design. This approach will be carried through into the FCA when it is established.
As noted above, the Financial Services Act 2012 brings the setting of benchmarks within the scope of regulation and makes the manipulation or
attempted manipulation of benchmarks a criminal offence. This followed the recommendations of the Wheatley Review into LIBOR that the UK authorities should introduce statutory regulation of both administration of, and submission to, LIBOR and that
– as far as possible – submissions should be based on transaction data. In December 2012, the FSA issued a consultation on the regulation and supervision of benchmarks. The proposals included: requiring those submitting data to benchmarks
to have in place a clear conflicts of interest policy and appropriate systems and controls, and those individuals particularly responsible within firms to be approved by the FSA under the FSA's Approved Persons Regime. The Wheatley Review also
concluded that markets benefit from the participation of major firms in the LIBOR panels and that market integrity could be undermined if submitting firms were to leave them. The FSA is considering the use of powers to require firms to contribute to
the rate on a permanent basis which the government is proposing to grant. Reforms to the setting of other benchmarks, including some in which Barclays participates, are also being contemplated in the EU and in other jurisdictions.
United States
The DFA
became law in July 2010. The full scale of the DFA's impact on the Group remains unclear because the rules required to implement many of the provisions of DFA continue to be subject to rulemaking and will take effect over several years. In
addition, market practices and structures may change in response to the requirements of the DFA in ways that are difficult to predict but that could impact Barclays business. Nonetheless, certain provisions of the DFA are particularly likely to have
an effect on the Group, including:
–
Systemic risk:
The DFA
created the Financial Stability Oversight Council (FSOC) and empowered it to make recommendations to the FRB to
apply heightened supervisory requirements and prudential standards applicable to 'systematically important' entities and activities and to work with all primary financial regulatory
agencies to establish regulations, as necessary, to address financial stability concerns. In December 2012, the FRB issued proposed rules that, if adopted, would implement the enhanced prudential standards and early remediation requirements in the
DFA with respect to foreign banking organisations, such as Barclays, and other foreign financial companies designated by the FSOC as systemically important. Previously, the FRB had issued proposed rules to implement such standards and requirements
with respect to US bank holding companies with over $50bn in consolidated assets and other US financial companies designated by the FSOC as systemically important. The proposed rules for foreign banking organisations are broadly consistent with the
approach taken in the FRB's proposed rules applicable to such US companies.
The specific requirements applicable to foreign banking organisations under the proposed rules depend on the level of assets of the foreign banking organisation
both inside and outside the United States and could significantly increase the regulatory costs to such organisations of operating in the United States, particularly in relation to non-bank operations. Based on its total US and non-US assets,
Barclays would be subject to the most stringent requirements of the proposed rules: Barclays would be required to create a US intermediate holding company (IHC) structure to hold its US banking and non-banking subsidiaries, and the IHC would be
subject to supervision and regulation by the FRB. While the operations and assets of Barclays Bank PLC's US branches would not be required to be held in the IHC, the branches would be subject to separate requirements.
The IHC would be subject to a number of separate supervisory, prudential and early-remediation requirements, including (i) capital requirements and leverage
limits; (ii) mandatory stress testing of capital levels by the FRB and submission of a capital plan to the FRB; (iii) limitations on capital distributions by the IHC to its parent company, unless such distributions are part of such a
capital plan that has been submitted to and approved by the FRB; (iv) substantive liquidity requirements, including requirements to conduct monthly internal liquidity stress tests for the IHC and for Barclays Bank PLC's US branch network,
separately, and to maintain a 30-day buffer of highly liquid assets; (v) liquidity risk management requirements, including compliance with liquidity risk management standards established by the FRB and an independent review function to review
and evaluate regularly the adequacy and effectiveness of the liquidity risk management practices of Barclays combined US operations; (vi) overall risk management requirements, including creation of a US risk committee (or use of Barclays
enterprise-wide risk committee for this function, provided it meets certain requirements) and the hiring of a US chief risk officer, and (vii) stringent concentration and credit exposure limits.
The proposals envisage that the above requirements would take effect on 1 July 2015. If adopted in their current form, the proposed rules
have the potential to increase the absolute and regulatory costs of Barclays US operations significantly. The proposals are subject to a public comment period, and the FRB has posed a number of questions regarding how to implement the proposed
rules. As a result of this process, the FRB may modify its proposals, which could result in changes to the requirements and the ultimate effect of the proposed rules. It, therefore, is not possible to determine with certainty what
I  159
Risk management
Supervision and regulation continued
effect the proposed rules (or the final rules adopted by the FRB) may have on Barclays or its US operations.
–
Other enhanced prudential requirements:
In addition to the requirements that would be implemented under the above proposals, and separate and apart from Basel 3, the DFA also imposes higher capital, liquidity and leverage requirements on
US banks and bank holding companies generally.
–
Restrictions on proprietary trading and fund-related activities:
The so-called 'Volcker Rule', will, once effective, significantly restrict the ability of US bank holding companies and their affiliates, and the US branches of foreign banks, to conduct
proprietary trading in securities and derivatives as well as certain activities related to hedge funds and private equity funds. In October 2011, US regulators proposed rules to implement the Volcker Rule. Those rules have not yet been finalised.
The proposed rules are highly complex and many aspects remain unclear, including the exemption from the proprietary trading and fund-related activity prohibitions for activities conducted by non-US organisations 'solely outside the United
States'. The agencies appeared to construe this exemption very narrowly in the proposed rules. Analysis continues of the proposals, but it is clear that compliance with them would entail significant effort by the Group. Although the Volcker
Rule is likely to impose significant additional compliance and operational costs on the Group, the full impact will not be known with certainty until the rules have been finalised. Whilst the Group has identified that its private equity fund, hedge
fund and trading operations may be affected by the Volcker Rule, until the final regulations are adopted, the impact on the Group's ability to engage in these activities continues to remain uncertain. As such, it cannot currently be determined
whether the restrictions will have a material effect on the Group. While the statutory Volcker Rule provisions officially took effect in July 2012, Barclays has until the end of the conformance period, currently set for July 2014 (subject to
possible extensions), in order to conform its activities to the requirements of the rule.
–
Resolution plans:
The DFA
requires bank holding companies with total consolidated assets of $50bn or more to submit to the FRB and the FDIC, and regularly update, a plan for 'rapid and orderly' resolution to be used if the company experiences material financial
distress or failure. Non-US banking organisations that are treated as bank holding companies under US law, such as Barclays, are required to submit such plans with respect to their US operations if they have more than $50bn in US assets. As Barclays
US assets exceed $250bn, it submitted a resolution plan as required by 1 July 2012.
–
Regulation of derivatives markets:
Among the changes mandated by the DFA are that many types of derivatives now traded in the over-the counter markets be traded on an exchange or swap execution facility and centrally cleared through
a regulated clearing house. In addition, many participants in these markets will be required to register with the
CFTC as 'swap dealers' or 'major swap participants' and/or with the US SEC as 'securities swap dealers' or 'major securities swap dealers' and be subject
to CFTC and SEC regulation and oversight. Barclays Bank PLC has registered as a swap dealer. Entities required to register will also be subject to business conduct, capital, margin, recordkeeping and reporting requirements. The DFA also requires
most standardised derivatives to be traded on a regulated platform and cleared through a regulated clearing house. In addition, the CFTC, pursuant to the DFA, has adopted rules on position limits on derivatives on physical commodities. These rules
have been overturned by a US District Court and the case is now on appeal. However, it is expected that these rules will be adopted in some form in the future. It is also possible that other additional regulations (many of which still are not
final), and the related expenses and requirements, will increase the cost of and restrict participation in the derivative markets, thereby increasing the costs of engaging in hedging or other transactions and reducing liquidity and the use of the
derivative markets. Barclays Bank PLC and its subsidiaries and affiliates may be exposed to these effects whether or not they are required to register in the capacities described. The new regulation of the derivative markets could adversely affect
the business of Barclays Bank PLC and its affiliates in these markets and could make it more difficult and expensive to conduct hedging and trading activities. The DFA also contains a 'derivatives push-out' requirement that, as early as
July, 2013, could prevent the Group from conducting certain swaps-related activities in the US branches of Barclays Bank PLC.
–
Risk retention requirements for securitisations:
The US federal banking agencies are required by the DFA to develop rules whereby, subject to certain exceptions, any sponsor of an asset backed security ('ABS') transaction must retain,
generally, not less than five percent of the credit risk of any asset that the sponsor, through the issuance of ABS, transfers, sells or conveys to a third party. This may impact the participation by the Group's US operations in such
transactions.
–
The Bureau of Consumer Financial Protection (CFPB):
The CFPB is empowered to regulate the credit card industry, including the terms of credit card agreements with consumers, disclosures, and fees. Actions by the CFPB in this area are likely to
impact the Group's US credit card business. The CFPB became operational in July 2011, and has developed a model credit card disclosure form and is accepting consumer credit card complaints. More broadly, the CFPB has the authority to examine
and take enforcement action against any US bank with over $10bn in total assets, such as Barclays Bank Delaware, with respect to its compliance with Federal laws regulating the provision of consumer financial services and with respect to
'unfair, deceptive or abusive acts and practices'. Since becoming operational, the CFPB has initiated several high-profile public actions against financial companies, including major credit card issuers. Settlements of those actions have
included monetary penalties, customer remediation requirements and commitments to modify business practices.
160  I
Financial review
A review of the performance of Barclays,
including the key performance indicators,
and our businesses' contribution to the
overall performance of the Group.
162
Key performance indicators
166
Consolidated summary income statement
167
Income statement commentary
168
Consolidated summary balance sheet
169
Balance sheet commentary
171
Analysis of results by business
I  161
Financial review
Key performance indicators
The Key Performance Indicators presented below reflect the way in which the performance of the Group has been measured during 2012.
In 2013, these will be updated with certain new measures consistent with the new strategy of the Executive Committee.
Returns KPIs
Definition
Why is it important to the business and 
management
Return on average
shareholders' equity (RoE)
RoE is calculated as profit for the year attributable to equity holders of the parent divided by average shareholders' equity for the year excluding
non-controlling interests. Shareholders' equity is made up of share capital, retained earnings and other reserves.
These measures indicate the returns generated by the management of business based on the RWAs and the
shareholders' equity. Achieving target returns demonstrates the organisation's ability to execute its strategy and align interests of management and shareholders.
Returns lie at the heart of our capital allocation and performance management
process.
Adjusted RoE
Statutory RoE
2012 –7.8%
2012 – (1.9)%
2011 –6.6%
2011 –5.8%
2010 –6.8%
2010 – 7.2%
Return on average tangible
shareholders' equity (RoTE)
RoTE is calculated as profit for the year attributable to equity holders of the parent divided by average shareholders'
equity for the year, excluding non-controlling interests, goodwill and intangible assets.
Adjusted RoTE
Statutory RoTE
2012 –9.1%
2012 – (2.2)%
2011 –7.9%
2011 – 6.9%
2010 –8.2%
2010 –8.7%
Return on average risk weighted assets (RoRWA)
RoRWA is calculated as profit after tax for the year divided by average risk weighted assets for the year.
Adjusted RoRWA
Statutory RoRWA
2012 –1.3%
2012 – (0.1)%
2011 –1.1%
2011 –1.0%
2010 –1.1%
2010 –1.1%
Profit before tax
Profit before tax and adjusted profit before tax are the two primary profitability measures used by management to assess
performance. Profit before tax is stated in accordance with International Financial Reporting Standards and represents total income less impairment charges and operating expenses. Adjusted profit before tax represents profit before tax adjusted to
exclude the impact on income and costs of own credit, gains on debt buy-backs, gain/loss on disposal of a portion of the Group's strategic investment in BlackRock, Inc., the impairment of the investment in BlackRock, Inc., the provision of PPI
and interest rate hedging products redress, goodwill impairments, and gains and losses on acquisitions and disposals of subsidiaries, associates and joint ventures.
Profit before tax is a key indicator of financial performance to many of our
stakeholders.
Adjusted profit before tax is presented to provide a
consistent basis for company performance between periods.
Adjusted
Statutory
2012 – £7,048m
2012 – £246m
2011 – £5,590m
2011 – £5,879m
2010 – £5,707m
2010 –£6,065m
162  I
Returns KPIs
continued
Definition
Why is it important to the business and
management
Cost: income ratio
Cost: income ratio is defined as operating expenses compared to total income net of insurance claims.
This is a measure management uses to assess the productivity of the business operations. Restructuring the cost base
is a key execution priority for management and includes a review of all categories of discretionary spending and an analysis of how we can run the business to ensure that costs increase at a slower rate than income.
Adjusted
2012 – 64%
2011 – 67%
2010 – 64%
Statutory
2012 – 85%
2011 –
64%
2010 – 64%
Loan loss rate
The loan loss rate is quoted in basis points and represents total annualised loan impairment divided by gross loans and advances to customers and bank 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 of the cost of granting credit.
During 2012 the loan
loss rate decreased to 75bps (2011: 77bps) reflecting a 6% reduction in impairment charge on loans and advances and a 3% contraction in gross loans and advances principally due to lower balances in the Investment Bank.
2012 –
75bps
2011 – 77bps
2010 – 118bps
Dividend per share
It is the Group's policy to declare and pay dividends on a quarterly basis. In a normal year there will be three equal payments in June, September and
December and a final variable payment in March.
The ability to pay dividends demonstrates the financial strength of the Group. Whilst recognising the market's desire for us to maintain strong capital
ratios, in light of recent regulatory and economic uncertainty, dividend distributions when compared to historical highs, have been prudent.
2012 –
6.5p
2011 – 6.0p
2010 – 5.5p
I  163
Financial review
Key performance indicators continued
Capital KPIs
Definition
Why is it important to the business and management
Core Tier 1 ratio
2012 – 10.9%
2011 – 11.0%
2010 – 10.8%
Capital requirements are part of the regulatory framework governing how banks and depository institutions are managed. Capital ratios
express a bank's capital as a percentage of its risk weighted assets as defined by the UK FSA. Core Tier 1 is broadly tangible shareholders' funds less certain capital deductions (see page 128 for a reconciliation).
The Group's capital management activities seek to maximise shareholders' value
by prudently optimising the level and mix of its capital resources. The Group's capital management objectives are to maintain sufficient capital resources to: ensure the financial holding company is well capitalised relative to the minimum
regulatory capital requirements set by the FSA; ensure locally regulated subsidiaries can meet their minimum regulatory capital requirements; support the Group's risk appetite and economic capital requirements; and support the Group's
credit rating.
During 2012, the Group's Core Tier 1 ratio
remained strong, closing at 10.9%.
Adjusted gross leverage
2012 – 19x
2011 – 20x
2010 – 20x
Adjusted gross leverage is defined as the multiple of adjusted total tangible assets over total qualifying Tier 1 capital. Adjusted
total tangible assets are total assets less derivative counterparty netting, assets under management on the balance sheet, settlement balances, and cash collateral on derivative liabilities, goodwill and intangible assets. Tier 1 capital is defined
by the UK FSA. The calculation of adjusted gross leverage, as well as the ratio of total assets to total shareholders equity is shown on page 72.
Barclays believes that there will be more capital and less leverage in the banking
system and that lower levels of leverage are regarded as a helpful measure of stability going forward. This is consistent with the views of our regulators and investors.
In 2012, adjusted gross leverage reduced to 19x principally due to the
increase in qualifying Tier 1 Capital to £51.6bn (2011: £50.5bn). The ratio of total assets to shareholders equity was 24x (2011: 24x) and moved within a month end range of 24x to 28x (2011: 24x to 28x). Excluding the liquidity pool, the
ratio of total assets to shareholders equity was 21x (2011: 22x).
Income growth KPIs
Definition
Why is it important to the business and management
Total income
Defined as total income net of insurance claims.
Total income is a key indicator of financial performance to many of our stakeholders and income growth a key execution
priority for Barclays management.
Adjusted RoE
2012 – £29,043m
2011 – £28,512m
2010 –
£31,049m
Statutory RoE
2012 – £24,691m
2011 – £32,292m
2010 – £31,440m
Income by geography
Defined as total income net of insurance claims generated in distinct geographic segments. Geographic segmental analysis is based on
customer location and the definition of the countries within each region is provided in the glossary.
The goal of increasing the international diversification of our income helps to reduce statutory risk by providing exposure to
different economic cycles and is demonstrated by our ratio of non-UK to UK business income.
UK statutory income in the below table includes the impact
of an own credit charge of £4,579m in 2012, gain of £2,708m in 2011 and gain of £391m in 2010.
Adjusted
Statutory
Geographic split of income
2012
%
2011
%
2010
%
2012
%
2011
%
2010
%
UK
41
43
39
31
49
40
Europe
13
15
16
15
13
15
Americas
26
21
25
32
19
25
Africa and the Middle East
16
17
16
18
15
16
Asia
4
4
4
4
4
4
164  I
Citizenship KPIs
Definition
Why is it important to the business and management
Gross new lending to UK households and businesses
2012 – £44.0bn
2011 – £45.0bn
2010 – £43.5bn
Defined as lending to UK households and those businesses with UK-based activities.
We have remained 'open for business' during the economic downturn, and are
focused on lending responsibly to our customers and clients around the world.
Supporting customers in difficulty has never been more critical, but providing access to credit must be based on the ability to repay. We provided £44bn in gross new lending to UK households
and businesses, including an estimated £5.7bn of net new lending under the Funding for Lending Scheme. Barclays was the leading provider of loans to UK households and businesses under the National Loan Guarantee Scheme and the FLS through the
third quarter of 2012
a
with strong growth continuing particularly to individuals and households through the fourth quarter of 2012.
Global investment in our communities
2012 – £64.5m
2011 – £63.5m
2010 – £55.3m
Defined as Barclays total contribution to supporting the communities where we operate.
The success and competitiveness of a business and the extent to which it contributes to
and is integrated in the communities in which it operates are closely related. We are committed to maintaining investment in our communities for the long term both in good times and in bad. This performance metric demonstrates the consistency of our
commitment over time.
Colleagues involved in volunteering, giving and fundraising
initiatives
2012 – 68,000
2011 – 70,000
2010 – 59,000
Defined as the total number of Barclays employees taking part in volunteering, giving or fundraising activities (excluding pensioners).
b
Barclays community investment programme aims to engage and support colleagues around the
world to get involved with our main partnerships, as well as the local causes they care about. Harnessing their energy, time and skills delivers real benefit to local communities, to their own personal development and to their engagement with
Barclays.
Group Employee Opinion Survey (EOS) – Proud to be
Barclays
2012 – 78%
2011 – 81%
2010 – 83%
This KPI reflects an aggregate of scores across Barclays for a question measuring sense of pride in being associated with or working
for Barclays.
Successful employment relationships are built on mutual benefit and trust, and a more
engaged workforce is usually a more productive one. We build trust through regular two-way communications, both informally, and through our Employee Opinion Surveys. These help us understand our colleagues' views and concerns when shaping
future organisational direction.
The KPI of 'Proud to be
Barclays' is one element of employee engagement.
Percentage of senior managers who are female
c
2012 – 22%
2011 – 21%
2010 – 24%
The number of female colleagues who are working across all Barclays businesses at the senior management level as a percentage of the
total senior manager population.
c
Diversity is important to Barclays as we believe that only through access to the most diverse pool of talent will we recruit and retain
the most talented individuals to serve our customers and clients.
Notes
a
Cumulative net stock lending for the third quarter of 2012 as per Bank of England publication in December 2012:
http://www.bankofengland.co.uk/markets/Pages/FLS/data.aspx.
b
2010 and 2011 employee participation figures have been restated to exclude the number of Barclays pensioners who received support as part of Barclays Community
Investment programme.
c
For 2012 'senior' has been reinterpreted as being at a 'Director (B7)' level. Prior year comparatives have been revised to reflect this.
I  165
Financial review
Consolidated summary income statement
For the year ended 31 December
2012
£m
2011
£m
2010
£m
2009
£m
2008
£m
Continuing operations
Net interest income
11,639
12,201
12,523
11,918
11,469
Non-interest income net of claims and benefits on insurance contracts
17,631
16,253
18,526
17,776
8,043
Own credit (charge)/gain
(4,579)
2,708
391
(1,820
)
1,663
Gains on debt buy-backs
–
1,130
–
1,249
24
Total income net of insurance claims
24,691
32,292
31,440
29,123
21,199
Credit impairment charges and other provisions
(3,596)
(3,802
)
(5,672
)
(8,071
)
(5,419
)
Impairment of investment in BlackRock, Inc.
–
(1,800
)
–
–
–
Provision for PPI redress
(1,600)
(1,000
)
–
–
–
Provision for interest rate hedging products redress
(850)
–
–
–
–
Goodwill impairment
–
(597
)
(243
)
(1
)
(112
)
Other operating expenses
(18,539)
(19,180
)
(19,728
)
(16,714
)
(13,279
)
Other net income/expense
140
(34
)
268
248
2,747
Profit before tax
246
5,879
6,065
4,585
5,136
Taxation
(482)
(1,928
)
(1,516
)
(1,074
)
(453
)
(Loss)/Profit after tax from continuing operations
(236)
3,951
4,549
3,511
4,683
Profit for the year from discontinued operations, including gain on disposal
–
–
–
6,777
604
(Loss)/Profit after tax
(236)
3,951
4,549
10,288
5,287
(Loss)/Profit attributable to equity holders of the Parent
(1,041)
3,007
3,564
9,393
4,382
Profit attributable to non-controlling interests
805
944
985
895
905
(236)
3,951
4,549
10,288
5,287
Selected financial statistics
Basic earnings per share from continuing operations
(8.5p)
25.1p
30.4p
24.1p
51.4p
Basic earnings per share
(8.5p)
25.1p
30.4p
86.2p
59.3p
Diluted earnings per share
(8.5p)
24.0p
28.5p
81.6p
57.5p
Dividends per ordinary share
6.5p
6.0p
5.5p
2.5p
11.5p
Dividend payout ratio
(76.5)%
23.9%
18.1%
2.9%
19.4%
Return on average shareholders' equity
a
(1.9)%
5.8%
7.2%
23.8%
16.5%
Average United States Dollar exchange rate
b
1.59
1.61
1.55
1.57
1.86
Average Euro exchange rate
b
1.23
1.15
1.17
1.12
1.26
Average Rand exchange
rate
b
13.03
11.60
11.31
13.14
15.17
The financial information above is extracted from the published accounts. This information should be read together
with the information included in the accompanying consolidated financial statements.
Notes
a
Return on average shareholders' equity represents profits attributable to the equity holders of the parent as a percentage of average shareholders'
equity.
b
The average rates are derived from daily spot rates during the year used to convert foreign currency transactions into Sterling for accounting purposes.
166  I
Financial review
Income statement commentary
2012
Barclays delivered profit before tax of £246m in 2012, a decrease from £5,879 in 2011. Excluding movements on own credit, gains on debt buy-backs, loss/gains on acquisitions and
disposals, impairment of investment in BlackRock, Inc., provision for PPI and interest rate hedging products and goodwill impairment, adjusted profit before tax increased 26% to £7,048m.
Income decreased 24% to £24,691m driven by the increase in the own credit charge to £4,579m (2011: the gain of £2,708m). Adjusted
income, that excludes own credit and debt buy backs increased 2% to £29,043m. Income increased despite challenging economic conditions, the continuing low interest rate environment and non-recurrence of £1,061m gains from the disposal of
hedging instruments in 2011.
Customer net interest income for Retail and Business Banking, Corporate Banking and Wealth and Investment
Management remained stable at £9,816m (2011: £9,849m) while the net interest margin for these businesses declined to 185bps (2011: 203bps), principally reflecting the non-recurrence of gains from the disposal of hedging instruments in
2011.
Total income in the Investment Bank increased 13% to £11,722m driven by increases in Fixed Income, Currency and Commodities
(FICC), Equities and Prime Services, and Investment Banking, particularly in the Americas.
Impairment charges and other credit
provisions decreased 5% to £3,596m, principally reflecting improvements in Barclaycard, Corporate Banking and UKRBB. This was partially offset by higher charges in the Investment Bank, Africa RBB and Europe RBB. Impairment charges as a
proportion of Group loans and advances as at 31 December 2012 improved to 75bps, compared to 77bps for 2011.
As a result, net
operating income for the Group after impairment charges decreased 21% to £21,095m. Net adjusted operating income that excludes movements on own credit, gains on debt buy-backs, loss/gains on acquisitions and disposals, impairment of investment
in BlackRock, Inc., provision for PPI and interest rate hedging products and goodwill impairment increased 3% to £25,447m.
Operating expenses increased 1% to £20,989m in 2012. Adjusted operating expenses, that excludes £1,600m (2011: £1,000m) provision
for PPI redress and £850m (2011: £nil) provision for interest rate hedging products redress, were down 3% to £18,539m, including £125m (2011: £408m) of restructuring charges.
The cost: income ratio increased to 85% (2011: 64%) driven by the impact of the own credit charge. The adjusted cost: income ratio that excludes
movements on own credit, gains on debt buy-backs, loss/gains on acquisitions and disposals, impairment of investment in BlackRock, Inc., provision for PPI and interest rate hedging products and goodwill impairment improved to 64% (2011: 67%).
The tax charge for continuing operations for 2012 was £482m (2011: £1,928m) on profit before tax of £246m (2011:
£5,879m), representing an effective tax rate of 195.9% (2011: 32.8%).The high effective tax rate in 2012 is a result of the combination of losses in the UK, primarily relating to the own credit charge of £4,579m (2011: gain of
£2,708m) with tax relief at 24.5% (2011: 26.5%) and profits outside the UK taxed at higher rates.
2011
Barclays delivered profit before tax of £5,879m in 2011, a decrease of 3%. Excluding movements on own credit, gains on debt buy-backs, loss/gains on acquisitions and disposals, impairment of
investment in BlackRock, Inc., provision for PPI and goodwill impairment, adjusted profit before tax decreased 2% to £5,590m.
Income increased 3% to £32,292m. Adjusted income that excludes own credit and debt buy backs decreased 8% to £28,512m principally
reflecting a decrease in income at Investment Bank. Income increased in most other businesses despite continued low interest rates and difficult macroeconomic conditions.
The Retail and Business Banking, Corporate Banking and Wealth and Investment Management net interest margin remained stable at 203bps (2010: 203bps). Net interest income from Retail and Business
Banking, Corporate Banking, Wealth and Investment Management and the Investment Bank increased 5% to £13.2bn, of which the contribution from hedging (including £463m of increased gains from the disposal of hedging instruments) increased
by 3%.
Impairment charges and other credit provisions decreased 33% to £3,802m reflecting significant improvements across all
businesses. Impairment charges as a proportion of Group loans and advances as at 31 December 2011 improved to 77bps, compared to 118bps for 2010. In addition, impairment of £1,800m was taken against the investment in BlackRock, Inc.
As a result, net operating income for the Group after impairment charges increased 4% to £26,690m.
Operating expenses increased 4% to £20,777m in 2011. Adjusted operating expenses, that excludes provision for PPI redress, goodwill
impairment, and the UK bank levy of £325m (2010: £nil), were down 4% to £18,855m, which included £408m (2010: £330m) of restructuring charges. Despite cost savings, the cost: income ratio remained stable at 64% (2010:
64%),
The effective tax rate increased to 32.8% (2010: 25.0%), principally due to non-deductible charges arising on the impairment of
BlackRock, Inc. and goodwill, and the UK bank levy.
Adjusted profit reconciliation
2012
£m
2011
£m
Adjusted profit before tax
7,048
5,590
Own credit
(4,579
)
2,708
Gains on debt buy-backs
–
1,130
Gain/(loss) on disposal and impairment of investment in BlackRock, Inc.
227
(1,858
)
Provision for PPI redress
(1,600
)
(1,000
)
Provision for interest rate hedging products redress
(850
)
–
Goodwill impairment
–
(597
)
Losses on acquisitions and disposals
–
(94
)
Statutory profit before tax
246
5,879
I  167
Financial review
Consolidated summary balance sheet
As at 31 December
2012
£m
2011
£m
2010
£m
2009
£m
2008
£m
Assets
Cash, balances at central banks and items in the course of collection
87,631
108,706
99,014
83,076
31,714
Trading portfolio assets
145,030
152,183
168,867
151,344
185,637
Financial assets designated at fair value
46,061
36,949
41,485
42,568
121,199
Derivative financial instruments
469,146
538,964
420,319
416,815
984,802
Available for sale investments
75,109
68,491
65,110
56,483
64,976
Loans and advances to banks
40,489
47,446
37,799
41,135
47,707
Loans and advances to customers
425,729
431,934
427,942
420,224
461,815
Reverse repurchase agreements and other similar secured lending
176,956
153,665
205,772
143,431
130,354
Other assets
24,170
25,189
23,337
23,853
24,776
Total assets
1,490,321
1,563,527
1,489,645
1,378,929
2,052,980
Liabilities
Deposits and items in the course of collection due to banks
78,583
92,085
79,296
77,912
116,545
Customer accounts
385,707
366,032
345,788
322,429
335,505
Repurchase agreements and other similar secured borrowings
217,342
207,292
225,534
198,781
182,285
Trading portfolio liabilities
44,794
45,887
72,693
51,252
59,474
Financial liabilities designated at fair value
78,280
87,997
97,729
87,881
146,075
Derivative financial instruments
462,468
527,910
405,516
403,416
968,072
Debt securities in issue
119,581
129,736
156,623
135,902
149,567
Subordinated liabilities
24,018
24,870
28,499
25,816
29,842
Other liabilities
16,591
16,522
15,705
17,062
18,204
Total liabilities
1,427,364
1,498,331
1,427,383
1,320,451
2,005,569
Shareholders' equity
Shareholders' equity excluding non-controlling interests
53,586
55,589
50,858
47,277
36,618
Non-controlling interests
9,371
9,607
11,404
11,201
10,793
Total shareholders' equity
62,957
65,196
62,262
58,478
47,411
Total liabilities and shareholders' equity
1,490,321
1,563,527
1,489,645
1,378,929
2,052,980
Risk weighted assets and capital ratios
Risk weighted assets
386,858
390,999
398,031
382,653
433,302
Core Tier 1 ratio
10.9%
11.0%
10.8%
10.0%
5.6%
Tier 1 ratio
13.3%
12.9%
13.5%
13.0%
8.6%
Risk asset ratio
17.1%
16.4%
16.9%
16.6%
13.6%
Adjusted gross leverage
19x
20x
20x
20x
28x
Total assets to shareholders' equity
24x
24x
24x
24x
43x
Net asset value per ordinary share
438p
456p
417p
414p
437p
Number of ordinary shares of Barclays PLC (in millions)
12,243
12,199
12,182
11,412
8,372
Year-end United States Dollar Exchange rate
1.62
1.54
1.55
1.62
1.46
Year-end Euro exchange rate
1.23
1.19
1.16
1.12
1.04
Year-end Rand exchange rate
13.74
12.52
10.26
11.97
13.74
The financial information above is extracted from the published accounts. This information should be read together
with the information included in the accompanying consolidated financial statements.
168  I
Financial review
Balance sheet commentary
Total assets
Total assets decreased £73.2bn to £1,490.3bn principally reflecting lower derivative assets as spreads tightened within the credit derivative portfolio. This was partially offset by
increased reverse repurchase agreements and other similar secured lending due to higher matched book trading.
Cash and balances at
central banks and items in the course of collection decreased £21.1bn to £87.6bn as the cash contribution to the Group liquidity pool was reduced.
Trading portfolio assets deceased £7.2bn to £145.0bn due to a reduction in debt securities, including the disposal of European government issued bonds and the liquidation of legacy CLO
and CDO positions. This was partially offset by an increase in traded loans and commodities.
Financial assets designated at fair value
increased by £9.1bn to £46.1bn primarily reflecting increases in economically hedged European equity and bond positions.
Derivative financial assets decreased £69.8bn to £469.1bn reflecting the tightening of credit spreads and trades matured and terminated
during the year.
Available for sale investments increased £6.6bn to £75.1bn primarily driven by the acquisition of UK, US
and higher grade European government bonds as part of the Group's Liquidity Risk Appetite portfolio. This was partially offset by a reduction in equity securities due to the disposal of the Group's investment in BlackRock, Inc.
Loans and advances to banks net of impairment decreased by £7.0bn to £40.5bn due to repayment and maturation of facilities across a
range of counterparties.
Loans and advances to customers net of impairment decreased by £6.2bn to £425.7bn primarily as a
result of lower corporate lending in the Investment Bank due to significant paydown of loans and the sale of ABS CDO Super Senior positions, offset by higher settlement balances and cash collateral. Corporate Banking lending reduced reflecting the
ongoing challenging economic environment in Europe and Group strategy to reduce redenomination risk. Lending in UKRBB increased reflecting growth in home loans and in Barclaycard reflecting business growth in the UK and US and acquisitions in the US
and South Africa.
Reverse repurchase agreements have increased by £23.3bn to £177.0bn, driven by increased matched book
trading opportunities and trading desks' funding requirements.
Total liabilities
Total liabilities decreased £71.0bn to £1,427.4bn.
Deposits from banks
and items in the course of collection decreased by £13.5bn to £78.6bn primarily driven by the reduced level of deposits that the Group has sought to attract to contribute towards the cash component of the Group liquidity pool.
Customer accounts increased £19.7bn to £385.7bn, primarily as a result of an increase in cash collateral and settlement
balances and increases in underlying deposit taking in Corporate Banking and Wealth, offset by a reduction in corporate deposits in the Investment Bank as the cash component of the Group liquidity pool is reduced.
Repurchase agreements and other similar secured borrowing increased £10.1bn to £217.3bn driven by increased matched book trading and
trading desks' funding requirements.
Trading portfolio liabilities remained broadly flat at £44.8bn, with the opposing
movements in equities and debt securities reflecting trading strategies across desks.
Financial liabilities designated at fair value
decreased £9.7bn to £78.2bn primarily reflecting buybacks and net maturation of notes issued by the Group, offset by an increase in the own credit adjustment due to a tightening of credit spreads.
Derivative financial liabilities decreased £65.4bn to £462.5bn broadly in line with the decrease in derivative assets.
Debt securities in issue decreased £10.2bn to £119.6bn due to managed changes in the funding composition.
Subordinated liabilities decreased by £0.9bn to £24.0bn due to redemptions in the year of £2.7bn largely offset by the issuance
of $3bn of Contingent Capital Notes (CCNs) and £0.4bn of other subordinated callable notes.
Shareholders' equity
Total shareholders' equity decreased £2.2bn to £63.0bn.
Share capital and share premium remained broadly stable at £12.5bn. Retained earnings decreased £1.9bn to £37.5bn with losses attributable to the equity holders of the Parent of
£1.0bn.
The available for sale reserve increased £0.5bn driven largely by net gains on the fair value of debt securities
held as part of the Group liquidity pool, offset partially by the disposal of the investment in BlackRock, Inc.
Currency translation
reserve movements of £1.3bn were largely due to the depreciation of the US Dollar and South African Rand against Sterling.
Non-controlling interests decreased £0.2bn to £9.4bn, primarily reflecting currency translation movements of £0.3bn due to the
depreciation of the South African Rand against Sterling.
Net asset value per share decreased 3.9% to 438p and net tangible asset value
per share decreased 4.6% to 373p.
I  169
Financial review
Balance sheet commentary continued
Balance sheet leverage
Barclays continues to operate within limits and targets for balance sheet usage as part of its balance sheet management activities.
The adjusted gross leverage was 19x (2011: 20x) principally reflecting a £1.2bn increase in Tier 1 Capital offset by a £25.7bn decrease in adjusted total tangible assets. At month ends
during 2012 the ratio moved in a range from 19x to 23x, (2011: 20x to 23x) with fluctuations arising primarily within collateralised reverse repurchase lending and high quality trading portfolio assets.
The ratio of total assets to total shareholders' equity was 24x as at 31 December 2012 (2011: 24x). The ratio moved within a month end
range of 24x to 28x, (2011: 24x to 28x) driven by trading activity fluctuations including changes in derivatives and settlement balances.
Capital management
The Core
Tier 1 ratio remains robust at 10.9% (2011: 11.0%) and the Tier 1 ratio is 13.3% (2011: 12.9%).
Risk weighted assets decreased 1% to
£387bn in 2012. This was largely driven by a reduction in credit, counterparty credit and market risk in Corporate and Investment banking, primarily as a result of business risk reductions including sell down of legacy assets and the strategic
exit from non-core portfolios. In addition, the depreciation of the US Dollar and Euro against Sterling contributed to a further risk weighted assets reduction. These were broadly offset by an increase in operational risk reflecting recent events in
the banking industry, as well as externally driven methodology rule changes in market risk and credit risk.
Core Tier 1 capital
decreased by £0.9bn to £42.1bn. Capital generated from retained profits of £1.8bn was offset by contributions made to the UK Retirement fund and foreign currency movements. Total capital resources increased by £2.1bn to
£66.1bn mainly due to lower deductions for material holdings as a result of the sale of our holding in BlackRock, Inc.
Liquidity and funding
The Group's overall funding strategy is to develop a diversified funding base and maintain access to a variety of funding sources, minimising the cost of funding and providing protection
against unexpected fluctuations. The Group aims to align the sources and uses of funding.
Customer loans and advances are largely
funded by deposits, with any excess funded by long term secured debt and equity. The total loan to deposit ratio was 110% (2011: 118%).
Wholesale funding is well managed with trading portfolio assets being largely funded by repurchase agreements and the majority of reverse
repurchase agreements being matched by repurchase financing. Derivative assets and liabilities are also largely matched.
As at
31 December 2012, the Group had £240bn of wholesale debt diversified across currencies, of which £39bn was secured. Term funding raised in 2012 was £28bn (2011: £30bn) compared to maturities of £27bn.
Approximately 17% of customer loans and advances were secured against external funding, leaving significant headroom for further secured issuance.
At 31 December 2012 the liquidity pool was £150bn (2011: £152bn) and moved within a month-end range of £150bn to
£173bn. The liquidity pool comprises high quality, liquid unencumbered assets, diversified across currencies broadly in line with wholesale debt requirements, with 87% (2011: 93%) comprising cash and deposits with central banks and government
bonds.
170  I
Financial review
Analysis of results by business
All disclosures in this section are unaudited unless
otherwise stated
Segmental analysis (audited)
Analysis of results by business (audited)
UKRBB
£m
Europe
RBB
£m
Africa
RBB
£m
f
Barclaycard
£m
Investment
Bank
£m
Corporate
Banking
£m
f
Wealth and
Investment
Management
£m
Head Office
and Other
Operations
£m
Total
£m
As at 31 December 2012
Total income net of insurance claims
a
4,421
915
3,157
4,170
11,722
2,918
1,815
(4,427
)
24,691
Credit impairment charges and other provisions
(269
)
(328
)
(646
)
(979
)
(460
)
(872
)
(38
)
(4
)
(3,596
)
Operating expenses
b
,
c
,
d
(3,864
)
(839
)
(2,053
)
(2,135
)
(7,249
)
(2,355
)
(1,463
)
(1,031
)
(20,989
)
Other
income/(losses)
e
4
13
10
30
50
10
1
22
140
Profit/(loss) before tax from continuing operations
292
(239
)
468
1,086
4,063
(299
)
315
(5,440
)
246
Total assets
136,665
47,128
44,798
37,511
1,074,805
86,255
23,716
39,443
1,490,321
As at 31 December 2011
Total income net of insurance claims
a
4,656
1,226
3,571
4,095
10,335
3,108
1,744
3,557
32,292
Credit impairment charges and other provisions
(536
)
(261
)
(466
)
(1,259
)
(93
)
(1,147
)
(41
)
(1,799
)
(5,602
)
Operating expenses
b
,
c, d
(3,102
)
(1,638
)
(2,279
)
(2,306
)
(7,289
)
(1,882
)
(1,493
)
(788
)
(20,777
)
Other
income/(losses)
e
2
12
6
31
12
(71
)
(3
)
(23
)
(34
)
Profit/(loss) before tax from continuing operations
1,020
(661
)
832
561
2,965
8
207
947
5,879
Total assets
127,845
51,310
48,243
33,838
1,158,350
91,190
20,866
31,885
1,563,527
As at 31 December 2010
Total income net of insurance claims
a
4,518
1,164
3,512
4,024
13,209
3,162
1,560
291
31,440
Credit impairment charges and other provisions
(819
)
(314
)
(559
)
(1,688
)
(543
)
(1,699
)
(48
)
(2
)
(5,672
)
Operating expenses
b
,
c, d
(2,809
)
(1,033
)
(2,307
)
(1,570
)
(8,295
)
(2,018
)
(1,349
)
(590
)
(19,971
)
Other
income/(losses)
e
99
44
84
25
18
(2
)
–
–
268
Profit/(loss) before tax from continuing operations
989
(139
)
730
791
4,389
(557
)
163
(301
)
6,065
Total assets
121,590
53,609
57,760
30,324
1,094,799
88,239
17,849
25,475
1,489,645
Notes
a
The impact of own credit movements in the fair value of structured note issuance is charge of £4,579m (2011: gain of £2,708m; 2010: gain of
£391m) is included within the results of Head Office and Other Operations. This reflects the fact that these fair value movements relate to the credit worthiness of the issuer as a whole. Furthermore, delays to planned changes in accounting
standards will mean own credit movements are likely to continue to be reflected in the income statement for the foreseeable future.
b
The UK bank levy of £345m (2011: £325m; 2010: £nil) is reported under Head Office and Other Operations.
c
The provision for PPI redress of £1,600m is reported under UKRBB £1,180m (2011: £400m; 2010: £nil) and Barclaycard £420m (2011:
£600m; 2010: £nil).
d
The impairment of goodwill is £nil (2011: £597m; 2010: £243m) relates to Europe RBB £nil (2011: £427m; 2010: £nil), Corporate
Banking £nil (2011: £123m; 2010: £243m) and Barclaycard £nil (2011: £47m; 2010: £nil).
e
Other income/(losses) represents: share of post-tax results of associates and joint ventures; profit or (loss) on disposal of subsidiaries, associates and joint
ventures; and gains on acquisitions.
f
Certain corporate banking activities in Africa, previously reported under Africa RBB, are now included within Corporate Banking. The 2010 and 2011 comparatives
have been restated. This restatement has no impact on the Group's overall result.
I  171
Financial review
Analysis of results by business continued
The Group's activities have been organised under the following business groupings:
¡
UKRBB is a leading UK high street bank providing current account and savings products and Woolwich branded mortgages. UKRBB also provides
unsecured loans and general insurance as well as banking and money transmission services to small and medium sized businesses. UKRBB was previously named UK Retail Banking;
¡
Europe RBB provides retail services, including credit cards in Spain, Italy, Portugal and France, as well as business lending to small and medium
sized enterprises, through a variety of distribution channels. Europe RBB was previously named Western Europe Retail Banking;
¡
Africa RBB provides retail, corporate and credit card services across Africa and the Indian Ocean. Africa RBB combines the operations previously
reported as Barclays Africa and Absa;
¡
Barclaycard is an international payments services provider for consumer and business customers including credit cards and consumer lending;
¡
The Investment Bank division of Barclays provides large corporate, government and institutional clients with a full spectrum of solutions to meet
their strategic advisory, financing and risk management needs;
¡
Corporate Banking provides integrated banking solutions to large corporates, financial institutions and multinationals in the UK and
internationally;
¡
Wealth and Investment Management focuses on private and intermediary clients worldwide, providing international and private banking, investment
management, fiduciary services and brokerage; and
¡
Head Office and Other Operations comprise head office and central support functions, businesses in transition and consolidation adjustments.
Income by Geographic Region
c
(audited)
Adjusted
a,b
Statutory
2012
£m
2011
£m
2010
£m
2012
£m
2011
£m
2010
£m
Continuing operations
UK
a
12,012
11,981
12,323
7,433
15,819
12,714
Europe
3,816
4,207
4,828
3,816
4,207
4,828
Americas
b
7,599
6,083
7,742
7,826
6,025
7,742
Africa and Middle East
4,510
4,967
4,997
4,510
4,967
4,997
Asia
1,106
1,274
1,159
1,106
1,274
1,159
Total
29,043
28,512
31,049
24,691
32,292
31,440
Statutory income from individual countries which represent more than 5% of
total income
c
(audited)
2012
£m
2011
£m
2010
£m
Continuing operations
UK
7,433
15,819
12,714
US
7,604
5,802
7,172
South Africa
4,211
3,942
3,684
Notes
a
UK adjusted income excludes the impact of an own credit charge of £4,579m (2011: gains of £2,708m; 2010: gains of £391m), gains on debt buy
£nil (2011: gains of £1,130m, 2010: £nil).
b
Americas adjusted income also excludes gain on disposal of strategic investment in BlackRock, Inc. of £227m (2011: loss of £58m, 2010: £nil).
c
Total income net of insurance claims based on counterparty location.
172  I
Returns and equity by business
Returns on average equity and average tangible equity are calculated using profit after tax and non-controlling interests for the period, divided by average allocated equity or tangible equity as
appropriate.
Average allocated equity has been calculated as 10% of average risk weighted assets for each business, adjusted for
capital deductions, including goodwill and intangible assets, reflecting the assumptions the
Group uses for capital planning purposes. The higher capital level currently held, reflecting the Core Tier 1 capital ratio of 10.9% as at 31 December 2012, is allocated to Head Office and
Other Operations. Average allocated tangible equity is calculated using the same method but excludes goodwill and intangible assets.
Comparatives throughout this document have been calculated based on 10% of risk weighted assets.
Return on average equity
Adjusted
Statutory
2012
%
2011
%
2010
%
2012
%
2011
%
2010
%
UKRBB
16.0
14.9
9.9
3.1
10.6
11.4
Europe RBB
(8.0
)
(6.0
)
(1.0
)
(8.0
)
(21.8
)
(0.2
)
Africa RBB
3.8
9.7
8.8
3.8
9.8
11.6
Barclaycard
22.1
17.4
12.5
15.2
6.8
12.5
Investment Bank
13.7
10.4
13.5
13.7
10.4
13.5
Corporate Banking
5.5
1.7
(3.7
)
(3.7
)
(1.0
)
(6.6
)
Wealth and Investment Management
13.9
10.9
8.8
13.9
10.9
8.8
Group excluding Head Office and Other Operations
12.1
9.4
8.8
8.0
6.4
8.7
Head Office and Other Operations Impact
(4.3
)
(2.8
)
(2.0
)
(9.9
)
(0.6
)
(1.5
)
Group
7.8
6.6
6.8
(1.9
)
5.8
7.2
Return on average tangible equity
Adjusted
Statutory
2012
%
2011
%
2010
%
2012
%
2011
%
2010
%
UKRBB
30.5
28.6
18.7
5.9
20.3
21.4
Europe RBB
(9.2
)
(7.9
)
(1.3
)
(9.2
)
(29.0
)
(0.2
)
Africa RBB
a
7.6
16.2
15.9
7.6
16.3
18.4
Barclaycard
29.7
23.0
16.9
20.5
9.0
16.9
Investment Bank
14.2
10.8
14.1
14.2
10.8
14.1
Corporate Banking
5.8
1.8
(4.0
)
(3.9
)
(1.0
)
(7.2
)
Wealth and Investment Management
19.2
15.0
12.3
19.2
15.0
12.3
Group excluding Head Office and Other Operations
14.2
11.5
10.8
9.5
8.0
10.7
Head Office and Other Operations Impact
(5.1
)
(3.6
)
(2.6
)
(11.7
)
(1.1
)
(2.0
)
Group
9.1
7.9
8.2
(2.2
)
6.9
8.7
Average equity
Average tangible equity
2012
£m
2011
£m
2010
£m
2012
£m
2011
£m
2010
£m
UKRBB
6,940
6,821
6,954
3,634
3,562
3,694
Europe RBB
2,278
2,703
2,506
1,984
2,032
1,844
Africa RBB
2,511
2,625
2,499
1,067
1,034
807
Barclaycard
4,666
4,634
4,263
3,472
3,503
3,149
Investment Bank
20,437
20,501
22,122
19,732
19,750
21,176
Corporate Banking
7,026
7,450
8,285
6,676
6,959
7,575
Wealth and Investment Management
1,961
1,723
1,647
1,415
1,259
1,179
Head Office and Other
Operations
b
8,939
5,356
1,561
8,939
5,352
1,559
Group
c
54,758
51,813
49,837
46,919
43,451
40,983
Notes
a
The return on average tangible equity for Africa RBB has been calculated based on average tangible equity including amounts relating to Absa Group's
non-controlling interests.
b
Includes risk weighted assets and capital deductions in Head Office and Other Operations, plus the residual balance of average shareholders' equity and
tangible equity.
c
Group average shareholders' equity and average shareholders' tangible equity excludes the cumulative impact of own credit on retained earnings for the
calculation of adjusted performance measures.
d
Certain corporate banking activities in Africa, previously reported under Africa RBB, are now included within Corporate Banking. The 2010 and 2011 comparatives
have been restated. The restatement has no impact on the Group's overall results.
I  173
Financial review
Analysis of results by business continued
UK Retail and
Business Banking
2012
Income declined 5% to £4,421m reflecting higher funding costs and reduced contribution from structural hedges, including non recurrence of gains from the disposal of hedging instruments in
2011.
Net interest income declined 5% to £3,227m with net interest margin down 14bps to 137bps principally due to reduced
contributions from structural hedges. Customer asset margin decreased 15bps to 107bps reflecting higher funding costs. Average customer assets increased 5% to £124.3bn driven by mortgage growth. Customer liability margin increased 10bps to
97bps reflecting an increase in funding rates and therefore the value generated from customer liabilities. Average customer liabilities increased 4% to £111.8bn due to personal savings deposit growth. Non-interest income declined 4% to
£1,194m reflecting lower net insurance income.
Credit impairment charges decreased 50% to £269m reflecting improvements
across all portfolios, principally in personal unsecured lending. Loan loss rate reduced to 21bps (2011: 44bps). 90 day arrear rates improved 33bps on UK personal loans to 1.3% and deteriorated 4bps on UK mortgages to 0.3%. Adjusted operating
expenses remained broadly flat at £2,684m (2011: £2,702m). Statutory operating expenses increased to £3,864m (2011: £3,102m), primarily due to the PPI redress costs of £1,180m (2011: £400m).
Adjusted profit before tax improved 4% to £1,472m. Statutory profit before tax declined 71% to
£292m after £1,180m (2011: £400m) provision for PPI redress.
Adjusted return on average equity improved to 16.0%
(2011: 14.9%). Statutory return on average equity declined to 3.1% (2011: 10.6%).
Total loans and advances to customers increased 6% to
£128.2bn driven by growth in mortgage balances. Mortgage balances of £114.7bn at 31 December 2012 (2011: £107.8bn). Gross new mortgage lending of £18.2bn (2011: £17.2bn) and mortgage redemptions of £11.3bn
(2011: £10.7bn), resulted in net new mortgage lending of £6.9bn (2011: £6.5bn). Average LTV ratio for the mortgage portfolio (including buy-to-let) on a current valuation basis was 46% (31 December 2011: 44%). Average LTV of new
mortgage lending was 56% (31 December 2011: 54%). Total customer deposits increased 4% to £116.0bn primarily driven by growth in savings from ISAs and retail bonds.
Risk weighted assets increased 14% to £38.8bn principally due to mortgage balance growth, an increased operational risk charge and adoption of a more comprehensive approach to loans subject to
forbearance.
2012
£m
2011
£m
2010
£m
Income Statement Information
Net interest income
3,227
3,413
3,165
Net fee and commission income
1,154
1,157
1,255
Net trading loss
–
–
(2
)
Net investment income
–
17
–
Net premiums from insurance contracts
74
92
130
Other (expense)/income
(1
)
(1
)
1
Total income
4,454
4,678
4,549
Net claims and benefits incurred under insurance contracts
(33
)
(22
)
(31
)
Total income net of insurance claims
4,421
4,656
4,518
Credit impairment charges and other provisions
(269
)
(536
)
(819
)
Net operating income
4,152
4,120
3,699
Operating expenses (excluding provision for PPI redress)
(2,684
)
(2,702
)
(2,809
)
Provision for PPI redress
(1,180
)
(400
)
–
Operating expenses
(3,864
)
(3,102
)
(2,809
)
Share of post-tax results of associates and joint ventures
4
2
(1
)
Gains on acquisition
–
–
100
Profit before tax
292
1,020
989
Adjusted profit before tax
a
1,472
1,420
889
Balance Sheet Information
Loans and advances to customers at amortised cost
£128.2bn
£121.2bn
£115.6bn
Customer accounts
£116.0bn
£111.8bn
£108.4bn
Total assets
£136.7bn
£127.8bn
£121.6bn
Risk weighted assets
£38.8bn
£34.0bn
£35.3bn
Note
a
Adjusted profit before tax excludes the impact of the provision for PPI redress of £1,180m (2011: £400m; 2010: £nil) and gains on acquisitions
of £nil (2011: £nil; 2010: £100m).
174  I
2011
Income increased 3% to £4,656m driven by mortgages and personal savings.
Net
interest income increased 8% to £3,413m with the net interest margin rising to 151bps (2010: 145bps) and risk adjusted net interest margin up to 127bps (2010: 108bps). Customer asset margin declined to 122bps (2010: 126bps) with average
customer assets increasing 4% to £118.5bn. Customer liability margin improved to 87bps (2010: 68bps) reflecting the increase in the cost of funds and therefore the value generated from customer liabilities with average customer liabilities
increasing 3% to £107.8bn.
Net fee and commission income decreased 8% to £1,157m following closure of the branch-based
element of the financial planning business.
Credit impairment charges decreased 35% to £536m with annualised loan loss rate of
44bps (2010: 70bps). Personal unsecured lending impairment improved 44% to £311m with 90 day arrears rates on UK personal loans improving to 1.7% (2010: 2.6%).
Adjusted operating expenses decreased 8% to £2,702m, which excludes the £400m provision for PPI redress in 2011 and £123m one-off pension credit in 2010. Including these items,
statutory operating expenses increased 10% to £3,102m.
Adjusted profit before tax improved 60% to £1,420m. Including £400m provision for PPI
redress and £100m gain on acquisition of Standard Life Bank in 2010, statutory profit before tax improved 3% to £1,020m.
Adjusted return on average equity improved to 14.9% (2010: 9.9%) and adjusted return on average tangible equity improved to 28.6% (2010: 18.7%).
Statutory return on average equity decreased to 10.6% (2010: 11.4%) and statutory return on average tangible equity decreased to 20.3% (2010: 21.4%).
Total loans and advances to customers increased 5% to £121.2bn driven by growth in mortgage balances. Average mortgage balances increased 6% reflecting strong positive net lending. Mortgage
balances at 31 December 2011 were £107.8bn, a share by value of 9% (2010: 8%). Gross new mortgage lending increased to £17.2bn (2010: £16.9bn), with a share by value of 12% (2010: 13%). Mortgage redemptions decreased to
£10.7bn (2010: £11.0bn), resulting in net new mortgage lending of £6.5bn (2010: £5.9bn). Average Loan to Value (LTV) ratio on the mortgage portfolio (including buy-to-let) on a current valuation basis was 44% (2010: 43%).
Average LTV of new mortgage lending was 54% (2010: 52%). Total customer deposits increased 3% to £111.8bn.
Risk weighted assets
decreased 4% to £34.0bn reflecting a decrease in unsecured lending balances partially offset by the growth in mortgage balances.
Adjusted
a
Statutory
2012
2011
2010
2012
2011
2010
Performance Measures
Return on average equity
16.0%
14.9%
9.9%
3.1%
10.6%
11.4%
Return on average tangible equity
30.5%
28.6%
18.7%
5.9%
20.3%
21.4%
Return on average risk weighted assets
3.1%
3.0%
1.9%
0.6%
2.1%
2.2%
Loan loss rate (bps)
21
44
70
21
44
70
Cost: income ratio
61%
58%
62%
87%
67%
62%
Key Facts
90 day arrears rates – UK loans
1.3%
1.7%
2.6%
90 day arrears rates – home loans
0.3%
0.3%
0.3%
Number of UK current accounts
11.7m
11.9m
11.6m
Number of UK savings accounts
15.4m
15.1m
14.4m
Number of UK mortgage accounts
945,000
930,000
916,000
Number of Barclays Business customers
765,000
785,000
760,000
LTV of mortgage portfolio
46%
44%
43%
LTV of new mortgage lending
56%
54%
52%
Number of branches
1,593
1,625
1,658
Number of ATMs
4,166
3,629
3,345
Number of employees (full time equivalent)
34,800
34,100
34,700
Note
a
Adjusted performance measures excludes the impact of the provision for PPI redress of £1,180m (2011: £400m; 2010: £nil) and gains on
acquisitions of £nil (2011: £nil; 2010: £100m).
I  175
Financial review
Analysis of results by business continued
Europe Retail and
Business Banking
2012
Income declined 25% to £915m reflecting the challenging economic environment across Europe and non-recurrence of gains from disposal of hedging instruments in 2011.
Net interest income declined 24% to £599m. Customer asset margin decreased 4bps to 83bps with net interest margin down 20bps to 108bps,
driven by higher funding costs partially offset by product re-pricing. Average customer assets decreased 7% to £40.8bn driven by active management to reduce funding mismatch. Customer liability margin decreased 27bps to 38bps and average
customer liabilities decreased 16% to £14.8bn, reflecting competitive pressures.
Non-interest income declined 28% to £316m,
reflecting lower commissions mainly from Italy mortgage sales and lower sales of investment products.
Credit impairment charges
increased 26% to £328m due to deterioration in credit performance across Europe reflecting current economic conditions. Loan loss rate increased to 80bps (2011: 54bps). 90 day arrears rate for home loans increased 19bps to 0.7% in Spain,
increased 5bps to 0.7% in Portugal and increased 6bps to 1.0% in Italy.
Adjusted operating expenses decreased 31% to £839m, reflecting non recurrence of 2011
restructuring charges of £189m and related ongoing cost savings. Statutory operating expenses, which includes goodwill impairment of £nil (2011: £427m) decreased 49% to £839m (2011: £1,638m).
Adjusted loss before tax increased 2% to £239m while adjusted return on average equity declined to negative 8.0% (2011: negative 6.0%)
primarily due to lower average capital resulting from the 2011 goodwill impairment write-off. Statutory loss before tax decreased 64% to £239m (2011: £661m) and statutory return on average equity increased to negative 8.0% (2011:
negative 21.8%) driven by the non-recurrence of 2011 goodwill impairment charges of £427m.
Loans and advances to customers
decreased 8% to £40.0bn reflecting currency movements and active management to reduce funding mismatch. This change has driven an 8% reduction in total assets to £47.1bn.
Customer deposits increased 7% to £17.6bn, reflecting active management to reduce funding mismatch.
Risk weighted assets decreased 2% to £17.1bn principally due to reductions in loans and advances and currency movements, partially offset by an increased operational risk charge and portfolio
deterioration in Spain.
2012
£m
2011
£m
2010
£m
Income Statement Information
Net interest income
599
786
679
Net fee and commission income
284
429
421
Net trading income
7
9
20
Net investment income
52
91
67
Net premiums from insurance contracts
331
463
479
Other income/(expense)
1
(49
)
9
Total income
1,274
1,729
1,675
Net claims and benefits incurred under insurance contracts
(359
)
(503
)
(511
)
Total income net of insurance claims
915
1,226
1,164
Credit impairment charges and other provisions
(328
)
(261
)
(314
)
Net operating income
587
965
850
Operating expenses (excluding goodwill impairment)
(839
)
(1,211
)
(1,033
)
Goodwill impairment
–
(427
)
–
Operating expenses
(839
)
(1,638
)
(1,033
)
Share of post-tax results of associates and joint ventures
13
12
15
Gains on acquisition
–
–
29
(Loss)/profit before tax
(239
)
(661
)
(139
)
Adjusted (loss)/profit before tax
a
(239
)
(234
)
(168
)
Balance Sheet Information
Loans and advances to customers at amortised cost
£
40.0bn
£
43.6bn
£
43.4bn
Customer accounts
£
17.6bn
£
16.4bn
£
18.9bn
Total assets
£
47.1bn
£
51.3bn
£
53.6bn
Risk weighted assets
£
17.1bn
£
17.4bn
£
17.3bn
Note
a
Adjusted profit before tax and adjusted performance measures excludes goodwill impairment of £nil (2011: £427m; 2010: £nil) and gains on
acquisition of £nil (2011: £nil; 2010: £29m).
176  I
2011
Income improved 5% to £1,226m reflecting higher average asset and liability volumes, improved margins and the appreciation of the average value of the Euro against Sterling.
Net interest income improved 16% to £786m with the net interest margin up to 128bps (2010: 116bps). Average customer assets increased 5% to
£43.7bn despite customer asset margin reduction to 87bps (2010: 102bps) due to increased funding costs. Average customer liabilities increased 3% to £17.7bn with customer liability margin up to 65bps (2010: 11bps) mainly due to
re-pricing.
Net premiums from insurance contracts declined 3% to £463m, with a corresponding decline in net claims and benefits
of £503m (2010: £511m).
Credit impairment charges and other provisions decreased 17% to £261m principally due to
lower charges in the cards portfolios reflecting lower 30 and 90 day arrears rates and lower recovery balances. The lower impairment was the main driver for the loan loss rate decreasing to 54bps (2010: 71bps).
Adjusted operating expenses, which excludes the £427m Spanish goodwill impairment, increased 17% to £1,211m, primarily due to
restructuring charges of £189m. 142 branches, largely in Spain, have been closed and the number of employees reduced by 900 during 2011. Including Spanish goodwill impairment, operating expenses increased 59% to £1,638m (2010:
£1,033m).
Europe Retail and Business Banking adjusted loss before tax increased to £234m (2010:
£168m) reflecting repositioning of the business due to the deteriorating economic environment and restructuring charges of £189m (2010: £22m). Loss before tax of £661m (2010: £139m) reflecting £427m of Spanish
goodwill impairment and restructuring charges of £189m. Spanish goodwill was fully impaired due to the deteriorating economic environment in Spain in the fourth quarter of 2011 and ongoing economic uncertainty.
Loans and advances to customers remained stable. Customer deposits decreased 13% to £16.4bn, reflecting the competitive environment.
Adjusted return on average equity of negative 6.0% (2010: negative 1.0%) and return on average equity of negative 21.8% (2010: negative
0.2%) reflecting the repositioning of the business during 2011.
Adjusted
a
Statutory
2012
2011
2010
2012
2011
2010
Performance Measures
Return on average equity
b
(8.0%
)
(6.0%
)
(1.0%
)
(8.0%
)
(21.8%
)
(0.2%
)
Return on average tangible equity
b
(9.2%
)
(7.9%
)
(1.3%
)
(9.2%
)
(29.0%
)
(0.2%
)
Return on average risk weighted assets
b
(1.1%
)
(0.9%
)
(0.1%
)
(1.1%
)
(3.3%
)
(0.0%
)
Loan loss rate (bps)
80
54
71
80
54
71
Cost: income ratio
92%
99%
89%
92%
134%
89%
Key Facts
90 day arrears rates – Spain home loans
0.7%
0.5%
0.4%
90 day arrears rates – Portugal home loans
0.7%
0.6%
0.4%
90 day arrears rates – Italy home loans
1.0%
1.0%
0.8%
90 day arrears rates – Total Europe RBB home loans
0.8%
0.7%
0.5%
30 day arrears rates – cards
6.2%
5.9%
6.8%
Number of customers
2.7m
2.7m
2.7m
Number of branches
923
978
1,120
Number of sales centres
219
250
243
Number of distribution points
1,142
1,228
1,363
Number of employees (full time equivalent)
7,900
8,500
9,400
Notes
a
Adjusted profit before tax and adjusted performance measures excludes goodwill impairment of £nil (2011: £427m; 2010: £nil) and gains on
acquisition of £nil (2011: £nil; 2010: £29m).
b
2010 return on average equity, return on average tangible equity and return on average risk weighted assets reflect a deferred tax benefit of £205m.
I  177
Financial review
Analysis of results by business continued
Africa Retail and Business
Banking
2012
Income declined 12% to £3,157m. Excluding currency movements, income declined 2% reflecting non-recurrence of gains from the disposal of Group hedging instruments in 2011 and downward
commercial property valuations with underlying businesses across Africa remaining flat.
Net interest income declined 11% to
£1,751m with the net interest margin down 10bps to 312bps primarily due to lower income generated through non customer related items partially offset by increased higher margin business. Customer asset margin increased 34bps to 326bps
reflecting a change in composition towards higher margin business. Average customer assets decreased 10% to £34.1bn driven by currency movements and a modest decline in the South African mortgage book. Customer liability margin decreased 42bps
to 234bps driven by a decline in South Africa partially offset by improving margins across a number of other African countries. Average customer liabilities decreased 6% to £22.1bn driven by currency movements as deposits continued to grow in
South Africa where Absa remains a leader in retail deposits.
Non-interest income declined 12% to £1,406m driven largely by
adverse currency movements.
Credit impairment charges increased 39% to £646m. Excluding currency movements impairment
charges increased 57% principally reflecting higher loss given default rates and higher levels of write-offs in the South African home loans recovery book and the impact of one large name in the commercial property portfolio in South Africa. Loan
loss rate increased to 194bps (2011: 129bps). However 90 day arrears rate for home loans decreased by 168bps to 1.6% reflecting improved new business and continuing low interest rate environment.
Operating expenses decreased 10% to £2,053m mainly due to currency movements with underlying business growth broadly in line.
Profit before tax declined 44% to £468m and adjusted return on average equity decreased to 3.8% (2011: 9.7%). Statutory return on average
equity decreased to 3.8% (2011: 9.8%).
Loans and advances to customers decreased 8% to £31.7bn mainly due to currency movements
and a modest decline in the South African mortgage book.
Customer deposits decreased 3% to £22.0bn. Excluding currency movements
customer deposits increased 7% mainly due to growth in South African deposits.
Risk weighted assets decreased 11% to £27.0bn,
principally due to foreign exchange movements and a change in approach for sovereign risk weightings, offset by an increased operational risk charge.
2012
£m
2011
£m
b
2010
£m
b
Income Statement Information
Net interest income
1,751
1,978
1,914
Net fee and commission income
1,101
1,196
1,245
Net trading income
69
70
52
Net investment income
5
56
58
Net premiums from insurance contracts
417
432
400
Other income
21
54
57
Total income
3,364
3,786
3,726
Net claims and benefits incurred under insurance contracts
(207
)
(215
)
(215
)
Total income net of insurance claims
3,157
3,571
3,512
Credit impairment charges and other provisions
(646
)
(466
)
(559
)
Net operating income
2,511
3,105
2,953
Operating expenses
(2,053
)
(2,279
)
(2,307
)
Share of post-tax results of associates and joint ventures
10
6
3
Profit on disposal of subsidiaries, associates and joint ventures
–
–
81
Profit before tax
468
832
730
Adjusted profit before tax
a
468
830
649
Balance Sheet Information
Loans and advances to customers at amortised cost
£
31.7bn
£
34.4bn
£
43.0bn
Customer accounts
£
22.0bn
£
22.6bn
£
23.3bn
Total assets
£
44.8bn
£
48.2bn
£
57.8bn
Risk weighted assets
£
27.0bn
£
30.3bn
£
35.0bn
Notes
a
Adjusted profit before tax and adjusted performance measures excludes the impact of profit on disposals of subsidiaries, associates and joint ventures of
£nil (2011: £2m; 2010: £81m).
b
Certain corporate banking activities in Africa, previously reported under Africa RBB, are now included within Corporate Banking. The 2010 and 2011 comparatives
have been restated. This restatement has no impact on the Group's overall results.
178  I
2011
Income improved 2% to £3,786m with good underlying growth offset by currency movements.
Net interest income improved 3% to £1,978m with the net interest margin remaining stable at 322bps. South Africa improved to £1,510m due to strong liability growth and margin
improvements, partially offset by the depreciation in the average value of the Rand against Sterling and a reduction in total advances to customers. The rest of the African businesses declined to £468m due to Sterling appreciation and the
impact of margin compression in both retail and corporate portfolios.
Net fee and commission income declined 4% to £1,196m
reflecting the impact of currency movements partially offset by the impact of volume growth and selected pricing increases.
Credit
impairment charges decreased 17% to £466m reflecting improved economic conditions in South Africa and better recoveries across the continent, together with currency movements.
Operating expenses decreased 1% to £2,279m, primarily driven by strong cost management, currency movements and restructuring benefits partially offset by a one-off pension credit in 2010 and
inflationary pressures.
Adjusted profit before tax improved 28% to £830m reflecting business growth in South Africa and a
significant improvement in credit impairments across the African continent offset by non-recurrence of a pension credit of £54m in 2010. Profit before tax improved 14% to £832m, with 2010 including a gain of £77m from the sale of
the custody business.
Customer assets decreased 20% to £34.4bn, driven by depreciation of major African currencies
against Sterling and lower volumes. Customer asset margin was 292bps. Improvement in South Africa driven by strong liability growth and margin improvements, partially offset by the depreciation in the average value of the Rand against Sterling and a
reduction in total advances to customers.
Customer liabilities decreased 3% to £22.6bn driven by depreciation of the Rand against
Sterling partially offset by underlying growth in retail and commercial deposits of 13% in South Africa. Customer liability margin was 304bps as growth in high margin products within retail was offset by pressures on commercial margins.
Adjusted
a
Statutory
2012
2011
2010
2012
2011
2010
Performance Measures
Return on average equity
b, c
3.8%
9.7%
8.8%
3.8%
9.8%
11.6%
Return on average tangible equity
c
7.6%
16.2%
15.9%
7.6%
16.3%
18.4%
Return on average risk weighted assets
0.9%
1.7%
1.6%
0.9%
1.7%
1.9%
Loan loss rate (bps)
194
129
125
194
129
125
Cost: income ratio
65%
64%
66%
65%
64%
66%
Key Facts
90 days arrears rate – South African home loans
1.6%
3.2%
3.9%
Number of customers
13.5m
14.5m
14.4m
Number of ATMs
10,468
10,068
9,530
Number of branches
1,339
1,354
1,321
Number of sales centres
112
139
222
Number of distribution points
1,451
1,493
1,543
Number of employees (full time equivalent)
41,700
43,800
47,700
Notes
a
Adjusted profit before tax and adjusted performance measures excludes the impact of profit on disposals of subsidiaries, associates and joint ventures of
£nil (2011: £2m; 2010: £81m).
b
The return on average equity differs from the return on the equity reported by Absa Group Ltd as the latter does not include goodwill arising from Barclays
acquisition of the Absa Group and does include other Absa Group businesses that Barclays Group reports within Barclaycard, Investment Bank and Wealth and Investment Management.
c
Including non-controlling interests.
I  179
Financial review
Analysis of results by business continued
Barclaycard
2012
Income increased 2% to £4,170m reflecting continued growth across the business and contributions from portfolio acquisitions. This was partially offset by higher funding costs, non-recurrence
of gains from the disposal of hedging instruments in 2011 and depreciation of Rand against Sterling. UK income increased 1% to £2,616m including contribution from 2011 portfolio acquisitions and business growth offset by increased funding
costs. International income improved 7% to £1,554m driven by higher US outstanding balances and contribution from portfolio acquisitions.
Net interest income remained flat at £2,854m. Contributions from business growth and acquisitions were offset by lower net interest margin of 846bps (2011: 944bps) which stabilised in the
second half of the year. Average customer assets increased 7% to £32.5bn due to portfolio acquisitions and business growth. Customer asset margin was down 13bps to 939bps due to higher funding costs.
Non-interest income improved 7% to £1,316m driven by increased volumes in the Business Payment and US portfolios.
Credit impairment charges decreased 22% to £979m resulting from improved delinquency, lower charge-offs and better recovery rates, primarily
in the first half of 2012. Loan loss rate improved by 109bps to 282bps (2011: 391bps). 30 day arrears rates for consumer cards in UK down to 2.5% (2011: 2.7%), in the US down to 2.4% (2011: 3.1%) and in South Africa up to 5.2% (2011: 4.9%).
Adjusted operating expenses increased 3% to £1,715m reflecting portfolio acquisitions,
provision for certain other insurance products and investment spend. Statutory operating expenses, including the provision for PPI redress of £420m (2011: £600m) and goodwill impairment of £nil (2011: £47m), decreased 7% to
£2,135m (2011: £2,306m).
Adjusted profit before tax improved 25% to £1,506m. Statutory profit before tax increased by
£525m to £1,086m after £420m (2011: £600m) provision for PPI redress.
Adjusted return on average equity
improved to 22.1% (2011: 17.4%). Statutory return on average equity improved to 15.2% (2011: 6.8%).
Total assets increased 11% to
£37.5bn primarily driven by business growth and acquisitions.
Customer deposits increased by £2.2bn to £2.8bn due to
business funding initiatives in the US and Germany.
Risk weighted assets increased 7% to £36.5bn, principally due to growth in
assets and an increased operational risk charge.
2012
£m
2011
£m
2010
£m
Income Statement Information
Net interest income
2,854
2,860
2,814
Net fee and commission income
1,271
1,171
1,136
Net trading loss
(9
)
(7
)
(8
)
Net investment income
–
10
39
Net premiums from insurance contracts
36
42
50
Other income
19
20
1
Total income
4,171
4,096
4,032
Net claims and benefits incurred under insurance contracts
(1
)
(1
)
(8
)
Total income net of insurance claims
4,170
4,095
4,024
Credit impairment charges and other provisions
(979
)
(1,259
)
(1,688
)
Net operating income
3,191
2,836
2,336
Operating expenses (excluding provision for PPI redress and goodwill impairment)
(1,715
)
(1,659
)
(1,570
)
Provision for PPI redress
(420
)
(600
)
–
Goodwill impairment
–
(47
)
–
Operating expenses
(2,135
)
(2,306
)
(1,570
)
Share of post-tax results of associates and joint ventures
30
31
25
Profit on disposal of subsidiaries, associates and joint ventures
–
–
–
Profit before tax
1,086
561
791
Adjusted profit before tax
a
1,506
1,208
791
Balance Sheet Information
Loans and advances to customers at amortised cost
£32.9bn
£30.1bn
£26.6bn
Customer deposits
£2.8bn
£0.6bn
£0.6bn
Total assets
£37.5bn
£33.8bn
£30.3bn
Risk weighted assets
£36.5bn
£34.2bn
£31.9bn
Note
a
Adjusted profit before tax and adjusted performance measures excludes the impact of the provision for PPI redress of £420m (2011: £600m; 2010:
£nil), and goodwill impairment in FirstPlus secured lending portfolio of £nil (2011: £47m; 2010: £nil).
180  I
2011
Income improved 2% to £4,095m, with growth in balances driven by UK Cards partially offset by higher customer balance repayments in the US and depreciation of US Dollar against Sterling.
Barclaycard's UK businesses income improved 8% to £2,639m including contribution from Egg and MBNA portfolios, partially offset by continued run-off of the FirstPlus portfolio. Barclaycard's International businesses income declined
7% to £1,456m due to customer balance repayments in the US and depreciation of the US Dollar against Sterling.
Net interest
income improved 2% to £2,860m. Average customer assets increased 5% to £30.3bn. UK Cards average extended card balances increased 27% to £11.2bn due to acquisitions and balance transfers, partially offset by higher customer balance
repayments in the US and continued run-off of the FirstPlus portfolio. Customer asset margin was up 17bps to 952bps, with net interest margin down 33bps to 944bps due to hedge impact.
Credit impairment charges decreased 25% to £1,259m principally driven by lower charges in the cards portfolios, reflecting improved underlying delinquency performance, lower bankruptcies and
charge-offs.
Operating expenses increased 47% to £2,306m, reflecting the provision for PPI redress,
FirstPlus goodwill impairment and the impact of the Egg and MBNA acquisitions. Excluding these items, operating expenses were flat on prior year.
Adjusted profit before tax improved 53% to £1,208m. Profit before tax declined 29% to £561m after £600m provision for PPI redress and £47m goodwill impairment in the
FirstPlus secured lending portfolio. Barclaycard's international businesses profit increased driven by significant improvements in the US and South Africa. Both the Egg consumer card assets and the MBNA corporate card portfolio acquired during
the first half of 2011 delivered profits.
Adjusted return on average equity increased to 17.4% (2010: 12.5%) and adjusted return on
average tangible equity increased to 23.0% (2010: 16.9%), reflecting increased adjusted profit after tax. Statutory return on average equity decreased to 6.8% (2010: 12.5%) and statutory return on average tangible equity decreased to 9.0% (2010:
16.9%), reflecting decreased profit after tax.
Total assets increased 12% to £33.8bn and risk weighted assets increased 7% to
£34.2bn reflecting acquired portfolios and organic growth in the UK. These were partially offset by continued run-off of the FirstPlus portfolio.
Adjusted
a
Statutory
2012
2011
2010
2012
2011
2010
Performance Measures
Return on average equity
22.1%
17.4%
12.5%
15.2%
6.8%
12.5%
Return on average tangible equity
29.7%
23.0%
16.9%
20.5%
9.0%
16.9%
Return on average risk weighted assets
3.3%
2.6%
1.9%
2.3%
1.2%
1.9%
Loan loss rate (bps)
282
391
570
282
391
570
Cost: income ratio
41%
41%
39%
51%
56%
39%
Key Facts
30 day arrears rates – UK cards
2.5%
2.7%
3.4%
30 day arrears rates – US cards
2.4%
3.1%
4.6%
30 day arrears rates – South Africa cards
5.2%
4.9%
7.2%
Total number of Barclaycard customers
28.8m
22.6m
21.7m
Total average customer assets
£32.5bn
£30.3bn
£28.8m
Payments Processed
£240bn
£219bn
£199m
Number of retailer relationships
89,000
87,000
87,000
Number of employees (full time equivalent)
11,000
10,400
9,900
Note
a
Adjusted profit before tax and adjusted performance measures excludes the impact of the provision for PPI redress of £420m (2011: £600m; 2010:
£nil) and £nil goodwill impairment in FirstPlus secured lending portfolio (2011: £47m; 2010: £nil).
I  181
Financial review
Analysis of results by business continued
Investment Bank
2012
Profit before tax increased 37% to £4,063m driven by strong income growth and reduced operating expenses.
Total income increased 13% to £11,722m. Fixed Income, Currency and Commodities (FICC) income improved 17% to £7,403m in an uncertain but more favourable trading environment. Increased
liquidity and higher client volumes across a number of product areas resulted in increased contributions from the Rates, Emerging Markets, Commodities, Securitised Products and Credit businesses, partially offset by lower contributions from Currency
driven by subdued volumes and lower volatility. Equities and Prime Services income increased 14% to £1,991m, reflecting global market share gains which resulted in improved performance in cash equities and equity derivatives, despite subdued
market volumes. Investment Banking income increased 5% to £2,123m, reflecting global market share gains and increases in revenues across global financial advisory and underwriting businesses more than offsetting the impact of increased
internal sales concessions. Debt underwriting activity and equity underwriting in the Americas grew particularly strongly and were primary contributors to the 8% increase in total net fees and commission income.
Credit impairment charges of £460m (2011: £93m) primarily related to £232m on ABS
CDO Super Senior positions as a result of model changes to calibrate to current market data sources, and higher losses on single name exposures. The prior year included a non recurring release of £223m.
Operating expenses decreased 1% to £7,249m, driven by a 3% reduction in total performance costs to £1,693m including £210m
increase in deferred bonus charges. Non-performance costs remained in line at £5,556m (2011: £5,571m) despite absorbing £193m charge relating to the setting of inter-bank offered rates.
Cost to net operating income ratio of 64% (2011: 71%) within target range of 60% to 65%. The compensation to income ratio improved to 39% (2011:
47%).
Return on average equity of 13.7% (2011: 10.4%) and return on average risk weighted assets of 1.5% (2011: 1.2%).
Assets contributing to adjusted gross leverage decreased 6% to £567.9bn reflecting decreases in cash and balances at central banks, trading
portfolio assets, and loans and advances to banks and customers, partially offset by an increase in reverse repurchase agreements.
2012
£m
2011
£m
2010
£m
Income Statement Information
Net interest income
619
1,177
1,121
Net fee and commission income
3,262
3,026
3,347
Net trading income
7,315
5,264
7,986
Net investment income/(loss)
526
873
752
Other income
–
(5
)
3
Total income
11,722
10,335
13,209
Credit impairment charges and other provisions
(460
)
(93
)
(543
)
Net operating income
11,262
10,242
12,666
Operating expenses
(7,249
)
(7,289
)
(8,295
)
Share of post-tax results of associates and joint ventures
50
12
18
Profit before tax
4,063
2,965
4,389
Adjusted profit before tax
4,063
2,965
4,389
Balance Sheet Information
Loans and advances to banks and customers at amortised cost
£145.0bn
£158.6bn
£149.7bn
Customer deposits
£76.2bn
£83.1bn
£70.3bn
Total assets
£1,074.8bn
£1,158.4bn
£1,094.8bn
Assets contributing to adjusted gross leverage
£567.9bn
£604.0bn
£668.1bn
Risk weighted assets
£178.0bn
£186.7bn
£191.3bn
182  I
Credit market exposures decreased 39% to £9,310m, reflecting net sales and paydowns and other
movements of £5,436m, foreign exchange movements of £459m, offset by net fair value gains and impairment charges of £44m.
Risk weighted assets decreased 5% to £178.0bn, principally reflecting reductions in risk exposures, including legacy asset sell downs, and foreign exchange movements. This was partially offset
by an increased operational risk charge and a more conservative approach to sovereign exposures.
2011
Investment Bank profit before tax declined to £2,965m (2010: £4,389) driven by a 22% reduction in income to £10,335m in a
challenging market environment, partially offset by reduced credit impairment charges and operating expenses, including compensation costs.
FICC declined 27% to £6,325m, reflecting lower contributions from Rates, Credit, and Commodities in a challenging trading environment. Currency improved 27% on 2010, benefiting from market
volatility and strong client volumes. Equities and Prime Services declined 14%, with reduced performance in cash equities and equity derivatives offset by improved client flow in equity financing. Investment Banking reduced 10%. Equity underwriting
was in line with the prior year, while financial advisory and debt underwriting were impacted by lower deal activity.
Credit impairment
charge of £93m reflecting charges primarily relating to leveraged finance, offset by a release of £223m of the impairment allowance relating to the Protium loan.
Operating expenses reduced 12% to £7,289m, reflecting a decrease in both non-compensation and
compensation costs. The 2011 bonus pool decreased 32% to £1.5bn compared to a decrease in headcount of 3%.
Return on average
equity decreased to 10.4% (2010: 13.5%) and return on average risk weighted assets to 1.2% (2010: 1.5%), reflecting difficult market conditions.
Assets contributing to adjusted gross leverage decreased 10% to £604bn primarily due to a reduction in reverse repurchase transactions. Total assets increased 6% to £1,158bn, reflecting
increases in the fair value of gross interest rate derivative assets offset by a reduction in reverse repurchase agreements.
Credit
market exposures of £15.2bn, reduced by £8.7bn primarily driven by sale of assets formerly held as Protium collateral and commercial real estate loans and properties.
Risk weighted assets down 2% to £187bn, reflecting lower levels of client activity, risk reduction and reduction in credit market exposures, more than offsetting the impact of CRD III.
Analysis of total income
2012
£m
2011
£m
2010
£m
Fixed Income, Currency and Commodities
7,403
6,325
8,687
Equities and Prime Services
1,991
1,751
2,040
Investment Banking
2,123
2,027
2,243
Principal Investments
205
232
239
Total income
11,722
10,335
13,209
Adjusted
Statutory
2012
2011
2010
2012
2011
2010
Performance Measures
Return on average equity
13.7%
10.4%
13.5%
13.7%
10.4%
13.5%
Return on average tangible equity
14.2%
10.8%
14.1%
14.2%
10.8%
14.1%
Return on average risk weighted assets
1.5%
1.2%
1.5%
1.5%
1.2%
1.5%
Loan loss rate (bps)
30
8
42
30
8
42
Cost: income ratio
62%
71%
63%
62%
71%
63%
Cost: net operating income ratio
64%
71%
65%
64%
71%
65%
Compensation: income ratio
39%
47%
43%
39%
47%
43%
Average income per employee (000s)
£494
£424
£529
£494
£424
£529
Other measures
Average DVaR (95%)
£38m
£57m
£53m
Number of employees (full time equivalent)
24,000
23,600
24,800
I  183
Financial review
Analysis of results by business continued
Corporate
Banking
2012
Adjusted profit before tax improved £347m to £551m including a gain of £71m (2011: loss of £111m) in the net valuation of fair value items, primarily driven by improved
credit impairment in Europe and UK and lower operating expenses. Statutory loss before tax was £299m (2011: profit £8m) including a £850m provision for interest rate hedging products redress.
¡
UK adjusted profit before tax improved 22% to £910m reflecting a £182m improvement in the net valuation of fair value items, improved
operating expenses and credit impairment. UK statutory profit before tax decreased £687m to £60m including a £850m provision for interest rate hedging products redress.
¡
Europe loss before tax improved £266m to £381m principally due to improved credit impairment charges in Spain of £337m (2011:
£480m) and improved operating expenses benefitting from progress in restructuring, partially offset by reduced income from exited businesses and non-core clients.
¡
Rest of the World statutory profit before tax improved £114m to £22m reflecting the non-recurrence of prior year loss on disposal of
Barclays Bank Russia. Rest of the World adjusted profit before tax improved £41m to £22m reflecting lower operating expenses as a result of refocusing of our international business.
Net interest income decreased 13% to £1,870m reflecting increased funding costs, non-recurring
income from exited businesses and gains on the disposal of hedging instruments. Net interest margin down 22bps to 124bps principally due to higher funding costs and non-recurring gains from the sale of hedging instruments. Customer asset margin
decreased 32bps to 114bps reflecting higher funding costs and reduced balances due to the refocusing of our international business. Customer liability margin increased 15bps to 109bps principally due to higher balances in the UK driven by currency
deposits and current accounts, and reflecting an increase in funding rates and therefore the value generated from customer liabilities.
Credit impairment charges reduced 24% to £872m. Loan loss rate improved to 128bps (2011: 156bps). Impairment charges in Europe reduced by
£174m to £542m, primarily as a result of ongoing action to reduce exposure within the property and construction sector in Spain.
Adjusted operating expenses improved 14% to £1,505m, reflecting the benefits of prior year restructuring and cost control initiatives. Adjusted cost to income ratio improved to 52% (2011:
57%). Statutory operating expenses, which includes the provision for interest rate hedging product redress of £850m (2011: £nil), increased to £2,355m (2011: £1,882m). As a result, statutory cost to income ratio deteriorated
to 81% (2011: 61%). Adjusted return on average equity improved to 5.5% (2011: 1.7%). Statutory return on average equity is negative 3.7% (2011: negative 1.0%).
2012
£m
2011
£m
b
2010
£m
b
Income Statement Information
Net interest income
1,870
2,155
2,123
Net fee and commission income
955
1,005
983
Net trading (expense)/income
65
(99
)
81
Net investment income/(loss)
23
29
(32
)
Other income
5
18
7
Total income
2,918
3,108
3,162
Credit impairment charges and other provisions
(872
)
(1,147
)
(1,699
)
Net operating income
2,046
1,961
1,463
Operating expenses excluding goodwill impairment
(1,505
)
(1,759
)
(1,775
)
Provision for interest rate hedging products redress
(850
)
–
–
Goodwill impairment
–
(123
)
(243
)
Operating expenses
(2,355
)
(1,882
)
(2,018
)
Share of post-tax results of associates and joint ventures
10
2
(2
)
Loss on disposal of subsidiaries, associates and joint ventures
(73
)
–
(Loss)/profit before tax
(299
)
8
(557
)
Adjusted profit/(loss) before
tax
a
551
204
(314
)
Balance Sheet Information and Key Facts
Loans and advances to customers at amortised cost
£62.9bn
£66.9bn
£68.1bn
Loans and advances to customers at fair value
£17.6bn
£17.2bn
£14.4bn
Customer deposits
£97.1bn
£85.2bn
£79.0bn
Total assets
£86.3bn
£91.2bn
£88.2bn
Risk weighted assets
£68.0bn
£72.8bn
£74.2bn
Number of employees (full time equivalents)
10,300
11,200
12,900
Notes
a
Adjusted profit before tax and adjusted performance measures exclude the impact of goodwill impairment of £nil (2011: £123m, 2010: £243m),
provision for interest rate hedging products redress of £850m (2011: £nil, 2010: £nil) and loss on disposal of £nil (2011: £73m, 2010: £nil).
b
Certain corporate banking activities in Africa, previously reported under Africa RBB, are now included within Corporate Banking. The 2010 and 2011 comparatives
have been restated. This restatement has no impact on the Group's overall results.
184  I
Total assets in UK up by £0.6bn driven by solid growth in net UK lending. Total assets down
£4.9bn to £86.3bn as increases in the UK are more than offset by reductions in Europe and Rest of the World due to the refocusing of our international business. Customer deposits increased 14% to £97.1bn with increased balances in
the UK and Europe due to higher currency deposits and current accounts.
Risk weighted assets decreased 7% to £68.0bn, principally
reflecting the benefit of the refocusing of our international business, partially offset by an increased operational risk charge.
2011
Adjusted profit before
tax improved to £204m (2010: loss of £314m), reflecting significant progress in restructuring overseas operations and improved credit impairment in Europe. Profit before tax improved to £8m (2010: £557m loss), including
£123m impairment of Spanish goodwill and £73m loss on the disposal of Barclays Bank Russia (BBR).
UK profit before tax
declined £88m to £747m including a decline in the net valuation of fair value loans. Excluding this item, underlying UK performance improved, reflecting increased net investment and fee and commission income and improving credit
impairment, partially offset by an increase in costs mainly from the non-recurrence of a prior year pension credit and continued investment in infrastructure. Europe loss before tax reduced 24% to £647m, reflecting lower credit impairment
partially offset by the goodwill impairment in Spain. Rest of the World loss before tax reduced 83% to £92m, principally due to the non-recurrence of a prior year goodwill impairment in BBR, lower operating expenses and an improvement in loan
loss rates, partially offset by the loss on disposal of BBR.
Net interest income improved 2% to £2,155m driven by increases in UK customer liabilities and
customer liability margins. Customer assets decreased 2% to £66.9bn and customer liabilities increased 8% to £85.2bn.
Credit impairment charges reduced 32% to £1,147m, as overall loan loss rates improved to 156bps (2010: 219bps). UK reduced 22% to
£355m, benefiting from lower default rates and tightly controlled exposure to commercial real estate loans. Europe reduced 33% to £716m primarily due to lower impairment charges in Spain of £480m (2010: £898m), reflecting
proactive risk management action to reduce exposure to the property and construction sector. Rest of the World reduced 58% to £76m, primarily as a result of management action to reduce risk profile of portfolios.
Adjusted operating expenses reduced by 1% to £1,759m, which excludes the impact of goodwill impairment. Including goodwill impairment,
statutory operating expenses decreased 7% to £1,882m (2010: £2,018m). A decrease in restructuring charges and benefits from streamlining operations more than offset the impact of the non-recurrence of the prior year pension credit.
Total assets increased to £91.2bn (2010: £88.2bn) mainly driven by higher balances in the UK. There was 8% growth in
customer deposits to £85.2bn (2010: £79.0bn), largely within the UK, benefiting from product innovation.
Risk weighted
assets decreased 2% to £72.8bn reflecting reductions in net exposures in Europe and Rest of the World, partially offset by higher net balances in the UK.
Adjusted
a
Statutory
2012
2011
2010
2012
2011
2010
Performance Measures
Return on average equity
5.5%
1.7%
(3.7%
)
(3.7%
)
(1.0%
)
(6.6%
)
Return on average tangible equity
5.8%
1.8%
(4.0%
)
(3.9%
)
(1.0%
)
(7.2%
)
Return on average risk weighted assets
0.6%
0.2%
(0.4%
)
(0.3%
)
(0.1%
)
(0.7%
)
Loan loss rate (bps)
128
156
219
128
156
219
Cost: income ratio
52%
57%
56%
81%
61%
64%
Income Statement Information
2012
2011
UK
£m
Europe
£m
RoW
£m
Total
£m
UK
£m
Europe
£m
RoW
£m
Total
£m
Income
2,234
313
371
2,918
2,199
440
469
3,108
Credit impairment charges and other provisions
(285
)
(542
)
(45
)
(872
)
(355
)
(716
)
(76
)
(1,147
)
Operating expenses (excluding provision for interest rate hedging products redress)
(1,041
)
(152
)
(312
)
(1,505
)
(1,099
)
(248
)
(412
)
(1,759
)
Provision for interest rate hedging redress
(850
)
–
–
(850
)
–
(123
)
–
(123
)
Other net income
2
–
8
10
2
–
(73
)
(71
)
Profit/(loss) before tax
60
(381
)
22
(299
)
747
(647
)
(92
)
8
Adjusted profit/(loss) before
tax
a
910
(381
)
22
551
747
(524
)
(19
)
204
Note
a
Adjusted profit before tax and adjusted performance measures exclude the impact of goodwill impairment of £nil (2011: £123m, 2010: £243m),
provision for interest rate hedging products redress of £850m (2011: £nil, 2010: £nil) and loss on disposal of £nil (2011: £73m, 2010: £nil).
I  185
Financial review
Analysis of results by business continued
Wealth and
Investment Management
2012
Income improved 4% to £1,815m primarily driven by an increase in the High Net Worth businesses.
Net interest income grew 7% to £853m reflecting growth in deposit and lending balances in the High Net Worth businesses. Net interest margin decreased 7bps to 122bps due to ongoing low
interest rate environment and reduced contribution from structural hedges. Customer deposits increased 16% to £53.8bn. Loans and advances to customers increased 13% to £21.2bn.
Net fees and commissions income remained broadly in line at £946m (2011: £943m) despite challenging market conditions.
Operating expenses decreased 2% to £1,463m as cost control initiatives were partially offset by
the continued cost of the strategic investment programme.
Profit before tax increased 52% to £315m and return on average equity
increased to 13.9% (2011: 10.9%).
Client assets increased 13% to £186.0bn (2011: £164.2bn) principally reflecting increase
in net new assets in High Net Worth businesses.
Risk weighted assets increased 21% to £15.8bn principally due to growth in
lending and an increased operational risk charge.
2012
£m
2011
£m
2010
£m
Income Statement Information
Net interest income
853
798
678
Net fee and commission income
946
943
869
Net trading income
16
5
11
Net investment income
–
–
2
Other (expense)/income
–
(2
)
–
Total income
1,815
1,744
1,560
Credit impairment charges and other provisions
(38
)
(41
)
(48
)
Net operating income
1,777
1,703
1,512
Operating expenses
(1,463
)
(1,493
)
(1,349
)
Share of post-tax results of associates and joint ventures
1
(3
)
–
Profit before tax
315
207
163
Adjusted profit before tax
315
207
163
Balance Sheet Information
Loans and advances to customers at amortised cost
£
21.2bn
£18.8bn
£16.1bn
Customer deposits
£
53.8bn
£46.5bn
£44.8bn
Total assets
£
23.7bn
£20.9bn
£17.8bn
Risk weighted assets
£
15.8bn
£13.1bn
£12.4bn
186  I
2011
Income improved 12% to £1,744m reflecting strong income growth in the High Net Worth businesses. Net operating income improved 13% to £1,703m with the loan loss rate reducing to 21bps
(2010: 29bps).
Net interest income improved 18% to £798m as customer deposit and loan balances have increased reflecting growth
in High Net Worth client balances and an increase in margins on deposits. Net interest margin increased to 129bps from 122bps with average customer deposits up £3.6bn to £44.5bn and average loans up £3.0bn to £17.5bn.
Net fee and commission income improved 9% to £943m driven by higher transactional activity in the High Net Worth businesses.
Operating expenses increased 11% to £1,493m reflecting increase in investment spend and related restructuring costs to support
the strategic investment programme. Includes the cost of increase in the client facing staff and infrastructure to support the High Net Worth businesses.
Profit before tax increased 27% to £207m driven by strong income growth partly offset by
increased investment in the growth of the business.
Client assets increased marginally to £164.2bn (2010: £163.9bn) with
strong net new asset growth in the High Net Worth businesses offset by market, foreign exchange and other movements.
Return on average
equity increased to 10.9% (2010: 8.8%) and return on average tangible equity up to 15.0% (2010: 12.3%) with growth in income and profit before tax significantly higher than increased equity.
Risk weighted assets increased 6% to £13.1bn. This compares to growth in lending of 17%, with an increased level of collateral in the lending portfolio.
Adjusted
Statutory
2012
2011
2010
2012
2011
2010
Performance Measures
Return on average equity
13.9%
10.9%
8.8%
13.9%
10.9%
8.8%
Return on average tangible equity
19.2%
15.0%
12.3%
19.2%
15.0%
12.3%
Return on average risk weighted assets
2.0%
1.5%
1.2%
2.0%
1.5%
1.2%
Loan loss rate (bps)
17
21
29
17
21
29
Cost: income ratio
81%
86%
86%
81%
86%
86%
Other financial measures
Total client assets
£
186.0bn
£
164.2bn
£
163.9bn
Number of employees
7,900
8,100
7,700
I  187
Financial review
Analysis of results by business continued
Head Office and
Other Operations
2012
Adjusted total expense net of insurance claims reduced to £152m (2011: £223m) principally due to changes in the value of hedges relating to employee share awards which were closed out
during the first quarter of 2012. Statutory total income net of insurance claims decreased to an expense of £4,427m (2011: income of £3,557m) driven by the impact of own credit.
Operating expenses increased 31% to £1,031m mainly from higher regulatory costs, including a charge relating to the allocation to Head Office and Other Operations of the penalty of £97m
(2011: £nil) arising from the industry wide investigation into the setting of interbank offered rates, Financial Services Compensation Scheme of £135m (2011: £45m), the increase in the UK bank levy to £345m (2011:
£325m) and increased strategic initiative costs.
Adjusted loss before tax increased by 8% to £1,088m. Statutory loss before
tax increased to £5,440m (2011: profit £947m) including an own credit charge of £4,579m (2011: £2,708m gain) and non-recurrence of gains on debt buy-backs, partially offset by the impact of BlackRock, Inc. investment disposal
and income from changes in the value of hedges relating to employee share awards that were closed out during the first quarter of 2012.
Total assets increased to £39.4bn (2011: £31.9bn) reflecting growth in the liquidity bond portfolio held at Head Office and Other
Operations, partially offset by the sale of the strategic investment in BlackRock, Inc. Risk weighted assets have increased £3.2bn to £5.7bn, principally reflecting increases in sovereign bonds held for liquidity purposes and the
application of a more conservative approach to risk weighting these exposures.
2011
Total income improved to £3,557m (2010: £291m). Own credit gains, increased to £2,708m (2010: £391m) and gains on debt buy-backs of £1,130m (2010: £nil) were
recognised resulting from the retirement of Tier 1 capital, which will not qualify as Tier 1 capital under Basel 3. This was partially offset by the non-recurrence in 2011 of £265m income from currency translation reserves following the
repatriation of capital from overseas operations that was recognised in 2010.
Operating expenses increased to £788m (2010:
£590m) principally due to the UK bank levy of £325m and higher Financial Services Compensation Scheme (FSCS) costs, partially offset by non recurrence of a 2010 provision of £194m in relation to resolution of the investigation into
Barclays compliance with US economic sanctions. The loss on disposal of £23m reflects losses from currency translation reserves recognised in the income statement following the disposal of Barclays Bank Russia.
The £1,800m impairment in of the Group's investment in BlackRock, Inc. reflects the recycling through the income statement of the
cumulative reduction in market value of the Group's investment in BlackRock, Inc. as at 30 September 2011 previously recognised in equity.
Adjusted loss before tax increased 46% to £1,010m, principally as a result of a £325m charge arising from the UK bank levy that came into force during 2011. Profit before tax improved to
£947m (2010: loss of £301m), reflecting own credit gains and gains on debt buy-backs partially offset by the impairment of the Group's investment in BlackRock, Inc.
Total assets increased 25% to £31.9bn due to purchases of government bonds to support the Group's hedging and liquidity management activities.
2012
£m
2011
£m
2010
£m
Adjusted total expense net of insurance claims
a
(75
)
(223
)
(100
)
Own credit (charge)/gain
(4,579
)
2,708
391
Gains on debt buy-backs
–
1,130
–
Gain/(loss) on disposal of investment in BlackRock, Inc.
227
(58
)
–
Total income net of insurance claims
(4,427
)
3,557
291
Credit impairment (charge)/release and other provisions
(4
)
1
(2
)
Impairment of investment in BlackRock, Inc.
–
(1,800
)
–
Net operating income/(loss)
(4,431
)
1,758
289
Operating expenses (excluding UK bank levy)
(686
)
(463
)
(590
)
UK bank levy
(345
)
(325
)
–
Operating expenses
(1,031
)
(788
)
(590
)
Other net income/(expense)
22
(23
)
–
Profit/(loss) before tax
(5,440
)
947
(301
)
Adjusted loss before tax
b
(1,088
)
(1,010
)
(692
)
Balance Sheet Information
Total assets
£39.4bn
£31.9bn
£25.5bn
Risk weighted assets
£5.7bn
£2.5bn
£0.7bn
Number of employees (full time equivalent)
1,600
1,400
1,400
Notes
a
Includes net interest expense of £134m (2011: £965m).
b
Adjusted performance measures and profit before tax exclude the impact of an own credit charge of £4,579m (2011: gain of £2,708m, 2010: gain of
£391m), gains on debt buy-backs (retirement of non-qualifying Tier 1 Capital under Basel 3) of £nil (2011: £1,130m, 2010: £nil), gain on disposal of strategic investment in BlackRock, Inc. of £227m (2011: loss of
£58m, 2010: £nil), impairment of investment in BlackRock, Inc. of £nil (2011: £1,800m, 2010: £nil) and loss on disposals of £nil (2011: £23m, 2010: £nil).
188  I  Barclays PLC Annual Report 2012
barclays.com/annualreport
Financial statements
Detailed analysis of our statutory accounts, independently audited and providing in-depth disclosure
on the financial performance and position of the Group.
190
Presentation of information
191
Independent Registered Public Accounting Firm's report
192
Consolidated income statement
193
Consolidated statement of comprehensive income
194
Consolidated balance sheet
195
Consolidated statement of changes in equity
196
Consolidated cash flow statement
197
Parent Company accounts
199
Notes to the financial statements
199
Significant accounting policies
Performance/return
203
2
Segmental reporting
203
3
Net interest income
204
4
Net fee and commission income
205
5
Net trading income
205
6
Net investment income
206
7
Credit impairment charges and impairment on available for sale investments
208
8
Administration and general expenses
208
9
Profit on disposal of subsidiaries, associates and joint ventures
208
10
Tax
212
11
Earnings per share
212
12
Dividends on ordinary shares
Assets and liabilities held at fair value
213
13
Trading portfolio
213
14
Financial assets designated at fair value
214
15
Derivative financial instruments
218
16
Available for sale investments
218
17
Financial liabilities designated at fair value
219
18
Fair value of financial instruments
Financial instruments held at amortised cost
232
19
Loans and advances to banks and customers
232
20
Finance leases
233
21
Reclassification of financial assets held for trading
233
22
Reverse repurchase and repurchase agreements including other similar lending and
borrowing
Non-current assets and other investments
234
23
Property, plant and equipment
236
24
Goodwill and intangible assets
238
25
Operating leases
Accruals, provisions, contingent liabilities and legal proceedings
239
26
Accruals, deferred income and other liabilities
240
27
Provisions
241
28
Contingent liabilities and commitments
242
29
Legal proceedings
245
30
Competition and regulatory matters
Capital instruments, equity and reserves
247
31
Subordinated liabilities
250
32
Ordinary shares, share premium, and other equity
251
33
Reserves
252
34
Non-controlling interests
Employee benefits
253
35
Staff costs
254
36
Share based payments
257
37
Pensions and post-retirement benefits
Scope of consolidation
262
38
Investment in subsidiaries
263
39
Investments in associates and joint ventures
263
40
Securitisations
265
41
Off-balance sheet arrangements
267
42
Assets pledged
Other disclosure matters
268
43
Related party transactions and Directors' remuneration
271
44
Auditors' remuneration
272
45
Financial risks, liquidity and capital management
272
46
Events after the balance sheet date
I  189
Presentation of information
Barclays approach to disclosures
The Group aims to continually enhance its disclosures and their usefulness to the readers of the financial statements in the light of developing market practice and areas of focus.
In particular for 2012, the Group has considered the recommendations of the Enhanced Disclosure Task Force (EDTF). The EDTF was formed by the
Financial Stability Board with a remit to broaden and deepen the risk disclosures of global banks in a number of areas, including liquidity and funding, credit risk and market risk.
In 2012 we have:
¡
a significantly expanded and more transparent remuneration report;
¡
streamlined risk reporting by separating quantitative risk exposures and qualitative risk management policy disclosure into two sections;
¡
provided greater information on regulatory capital and RWAs;
¡
increased information on funding structure and levels of encumbrance; and
¡
disclosed further information on the credit risk of loans subject to forbearance.
BBA Code for Financial Reporting Disclosure
Barclays has adopted the BBA Code for Financial Reporting Disclosure and has prepared the 2012 Annual Report and Accounts in compliance with the
Code. The British Bankers' Association published a Code for Financial Reporting Disclosure (the Code). The Code sets out five disclosure principles together with supporting guidance. The principles are that UK banks will:
¡
provide high quality, meaningful and decision-useful disclosures;
¡
review and enhance their financial instrument disclosures for key areas of interest;
¡
assess the applicability and relevance of good practice recommendations to their disclosures acknowledging the importance of such guidance;
¡
seek to enhance the comparability of financial statement disclosures across the UK banking sector; and
¡
clearly differentiate in their annual reports between information that is audited and information that is unaudited.
Statutory Accounts
The consolidated accounts of Barclays PLC and its subsidiaries are set out on pages 192-196 along with the accounts of Barclays PLC itself on pages 197-198. The accounting policies and the Notes
commencing on page 199 apply equally to both sets of accounts unless otherwise stated.
190  I
Independent Registered Public Accounting Firm's report
Report of Independent Registered Public Accounting Firm To the Board of Directors and Shareholders
of Barclays PLC
In our opinion, the accompanying Consolidated income statements and the related Consolidated balance sheets,
Consolidated cash flow statements, Consolidated statements of comprehensive income and Consolidated statements of changes in equity present fairly, in all material respects, the financial position of Barclays PLC ('the Company') and its
subsidiaries at 31 December 2012 and 31 December 2011 and the results of their operations and cash flows for each of the three years in the period ended 31 December 2012, in conformity with International Financial Reporting Standards
(IFRSs) as issued by the International Accounting Standards Board. Also, in our opinion the Company maintained, in all material respects, effective internal control over financial reporting as of 31 December 2012, based on criteria established
in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible for these financial statements, for maintaining effective internal
control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management's report on internal control over financial reporting as it pertains to Barclays PLC in the
Directors' report. Our responsibility is to express opinions on these financial statements and on the Company's internal control over financial reporting based on our integrated audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require
that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our
audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation.
Our audit of internal control over financial reporting included obtaining an understanding of
internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such
other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that
(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors
of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
PricewaterhouseCoopers LLP
London, United Kingdom
5 March 2013
I  191
Consolidated financial statements
Consolidated income statement
For the year ended 31 December
Notes
2012
£m
2011
£m
2010
£m
Continuing operations
Interest income
3
19,199
20,589
20,035
Interest expense
3
(7,560
)
(8,388
)
(7,512
)
Net interest income
11,639
12,201
12,523
Fee and commission income
4
10,216
10,208
10,368
Fee and commission expense
4
(1,634
)
(1,586
)
(1,497
)
Net fee and commission income
8,582
8,622
8,871
Net trading income
5
3,025
7,660
8,078
Net investment income
6
817
2,305
1,477
Net premiums from insurance contracts
896
1,076
1,137
Gains on debt buy-backs and extinguishments
–
1,130
–
Net gain on disposal of investment in BlackRock, Inc.
227
–
–
Other income
105
39
118
Total income
25,291
33,033
32,204
Net claims and benefits incurred on insurance contracts
(600
)
(741
)
(764
)
Total income net of insurance claims
24,691
32,292
31,440
Credit impairment charges and other provisions
7
(3,596
)
(3,802
)
(5,672
)
Impairment of investment in BlackRock, Inc.
7
–
(1,800
)
–
Net operating income
21,095
26,690
25,768
Staff costs
35
(10,447
)
(11,407
)
(11,916
)
Administration and general expenses
8
(6,643
)
(6,356
)
(6,585
)
Depreciation of property, plant and equipment
23
(669
)
(673
)
(790
)
Amortisation of intangible assets
24
(435
)
(419
)
(437
)
Goodwill impairment
24
–
(597
)
(243
)
Provision for PPI redress
27
(1,600
)
(1,000
)
–
Provision for interest rate hedging products redress
27
(850
)
–
–
UK bank levy
(345
)
(325
)
–
Operating expenses
(20,989
)
(20,777
)
(19,971
)
Share of post-tax results of associates and joint ventures
110
60
58
Profit/(loss) on disposal of subsidiaries, associates and joint ventures
9
28
(94
)
81
Gain on acquisitions
2
–
129
Profit before tax
246
5,879
6,065
Taxation
10
(482
)
(1,928
)
(1,516
)
(Loss)/profit after tax
(236
)
3,951
4,549
Attributable to:
Equity holders of the Parent
(1,041
)
3,007
3,564
Non-controlling interests
34
805
944
985
(Loss)/profit after tax
(236
)
3,951
4,549
p
p
p
Earnings per share
Basic (loss)/earnings per share
11
(8.5
)
25.1
30.4
Diluted (loss)/earnings per share
11
(8.5
)
24.0
28.5
Dividends per share
6.5
6.0
5.5
Interim dividends per share
3.0
3.0
3.0
Final dividend per share
12
3.5
3.0
2.5
192  I
Consolidated financial statements
Consolidated statement of comprehensive income
For the year ended 31 December
2012
£m
2011
£m
2010
£m
(Loss)/profit after tax
(236
)
3,951
4,549
Other comprehensive income from continuing operations:
Currency translation reserve
a
– Currency translation differences
(1,578
)
(1,607
)
1,184
Available for sale reserve
a
– Net gains/(losses) from changes in fair value
1,237
2,742
(133
)
– Net gains transferred to net profit on disposal
(703
)
(1,614
)
(1,020
)
– Net losses transferred to net profit due to impairment
40
1,860
53
– Net (gains)/losses transferred to net profit due to fair value hedging
474
(1,803
)
(308
)
– Changes in insurance liabilities
(150
)
18
31
– Tax
(352
)
171
141
Cash flow hedging reserve
a
– Net gains from changes in fair value
1,499
2,407
601
– Net gains transferred to net profit
(695
)
(753
)
(684
)
– Tax
(142
)
(391
)
39
Other
95
(74
)
59
Other comprehensive income for the year, net of tax, from continuing operations
(275
)
956
(37
)
Total comprehensive income for the year
(511
)
4,907
4,512
Attributable to:
Equity holders of the Parent
(1,107
)
4,576
2,975
Non-controlling interests
596
331
1,537
(511
)
4,907
4,512
Note
a  For further details
refer to Note 33.
I  193
Consolidated financial statements
Consolidated balance sheet
As at 31 December
Notes
2012
£m
2011
£m
Assets
Cash and balances at central banks
86,175
106,894
Items in the course of collection from other banks
1,456
1,812
Trading portfolio assets
13
145,030
152,183
Financial assets designated at fair value
14
46,061
36,949
Derivative financial instruments
15
469,146
538,964
Available for sale investments
16
75,109
68,491
Loans and advances to banks
19
40,489
47,446
Loans and advances to customers
19
425,729
431,934
Reverse repurchase agreements and other similar secured lending
22
176,956
153,665
Prepayments, accrued income and other assets
4,360
4,563
Investments in associates and joint ventures
39
570
427
Property, plant and equipment
23
5,754
7,166
Goodwill and intangible assets
24
7,915
7,846
Current tax assets
10
252
374
Deferred tax assets
10
3,016
3,010
Retirement benefit assets
37
2,303
1,803
Total assets
1,490,321
1,563,527
Liabilities
Deposits from banks
77,010
91,116
Items in the course of collection due to other banks
1,573
969
Customer accounts
385,707
366,032
Repurchase agreements and other similar secured borrowing
22
217,342
207,292
Trading portfolio liabilities
13
44,794
45,887
Financial liabilities designated at fair value
17
78,280
87,997
Derivative financial instruments
15
462,468
527,910
Debt securities in issue
119,581
129,736
Subordinated liabilities
31
24,018
24,870
Accruals, deferred income and other liabilities
26
12,232
12,580
Provisions
27
2,766
1,529
Current tax liabilities
10
621
1,397
Deferred tax liabilities
10
719
695
Retirement benefit liabilities
37
253
321
Total liabilities
1,427,364
1,498,331
Shareholders'
equity
Shareholders' equity excluding non-controlling interests
53,586
55,589
Non-controlling interests
34
9,371
9,607
Total shareholders' equity
62,957
65,196
Total liabilities and shareholders' equity
1,490,321
1,563,527
The financial statements on pages 192-272 were approved by the Board of Directors on 5 March 2013 and signed
on its behalf by:
Sir David Walker
Group Chairman
Antony Jenkins
Group Chief Executive
Chris
Lucas
Group Finance Director
194  I
Consolidated financial statements
Consolidated statement of changes in equity
Called up
share
capital
and share
premium
£m
a
Available
for sale
reserve
£m
b
Cash
flow
hedging
reserve
£m
b
Currency
translation
reserve
£m
b
Other
reserves
and
treasury
shares
£m
b
Retained
earnings
£m
Total
£m
Non-
controlling
interests
£m
Total
equity
£m
Balance as at 1 January 2012
12,380
25
1,442
1,348
1,022
39,372
55,589
9,607
65,196
(Loss)/Profit after tax
–
–
–
–
–
(1,041
)
(1,041
)
805
(236
)
Currency translation movements
–
–
–
(1,319
)
–
–
(1,319
)
(259
)
(1,578
)
Available for sale investments
–
502
–
–
–
–
502
44
546
Cash flow hedges
–
–
657
–
–
–
657
5
662
Other
–
–
–
–
–
94
94
1
95
Total comprehensive income for the year
–
502
657
(1,319
)
–
(947
)
(1,107
)
596
(511
)
Issue of shares under employee share schemes
97
–
–
–
–
717
814
–
814
Increase in treasury shares
–
–
–
–
(979
)
–
(979
)
–
(979
)
Vesting of shares under employee share schemes
–
–
–
–
946
(946
)
–
–
–
Dividends paid
–
–
–
–
–
(733
)
(733
)
(694
)
(1,427
)
Other reserve movements
–
–
–
–
–
2
2
(138
)
(136
)
Balance as at 31 December 2012
12,477
527
2,099
29
989
37,465
53,586
9,371
62,957
Balance as at 1 January
2011
12,339
(1,355
)
152
2,357
600
36,765
50,858
11,404
62,262
Profit after tax
–
–
–
–
–
3,007
3,007
944
3,951
Currency translation movements
–
–
–
(1,009
)
–
–
(1,009
)
(598
)
(1,607
)
Available for sale investments
–
1,380
–
–
–
–
1,380
(6
)
1,374
Cash flow hedges
–
–
1,290
–
–
–
1,290
(27
)
1,263
Other
–
–
–
–
–
(92
)
(92
)
18
(74
)
Total comprehensive income for the year
–
1,380
1,290
(1,009
)
–
2,915
4,576
331
4,907
Issue of shares under employee share schemes
41
–
–
–
–
838
879
–
879
Increase in treasury shares
–
–
–
–
(165
)
–
(165
)
–
(165
)
Vesting of shares under employee share schemes
–
–
–
–
499
(499
)
–
–
–
Dividends paid
–
–
–
–
–
(660
)
(660
)
(727
)
(1,387
)
Redemption of Reserve Capital Instruments
–
–
–
–
–
–
–
(1,415
)
(1,415
)
Other reserve movements
–
–
–
–
88
13
101
14
115
Balance as at 31 December 2011
12,380
25
1,442
1,348
1,022
39,372
55,589
9,607
65,196
Balance as at 1 January
2010
10,804
(110
)
252
1,615
871
33,845
47,277
11,201
58,478
Profit after tax
–
–
–
–
–
3,564
3,564
985
4,549
Currency translation movements
–
–
–
742
–
–
742
442
1,184
Available for sale investments
–
(1,245
)
–
–
–
–
(1,245
)
9
(1,236
)
Cash flow hedges
–
–
(100
)
–
–
–
(100
)
56
(44
)
Other
–
–
–
–
14
14
45
59
Total comprehensive income for the year
–
(1,245
)
(100
)
742
–
3,578
2,975
1,537
4,512
Issue of new ordinary shares
1,500
–
–
–
–
–
1,500
–
1,500
Issue of shares under employee share schemes
35
–
–
–
–
830
865
–
865
Increase in treasury shares
–
–
–
–
(989
)
–
(989
)
–
(989
)
Vesting of shares under employee share schemes
–
–
–
–
718
(718
)
–
–
–
Dividends paid
–
–
–
–
–
(531
)
(531
)
(803
)
(1,334
)
Redemption of Reserve Capital Instruments
–
–
–
–
–
–
–
(487
)
(487
)
Other reserve movements
–
–
–
–
–
(239
)
(239
)
(44
)
(283
)
Balance as at 31 December 2010
12,339
(1,355
)
152
2,357
600
36,765
50,858
11,404
62,262
Notes
a  For further details refer to Note 32.
b  For further details refer to Note 33.
I  195
Consolidated financial statements
Consolidated cash flow statement
For the year ended 31 December
2012
£m
2011
£m
2010
£m
Continuing operations
Reconciliation of profit before tax to net cash flows from operating activities:
Profit before tax
246
5,879
6,065
Adjustment for non-cash items:
Allowance for impairment
3,596
5,602
5,672
Depreciation, amortisation and impairment of property, plant, equipment and intangibles
1,119
1,104
1,346
Other provisions, including pensions
3,057
1,787
914
Net profit on disposal of investments and property, plant and equipment
(679
)
(1,645
)
(1,057
)
Other non-cash movements
5,448
1,345
(5,904
)
Changes in operating assets and liabilities
Net decrease/(increase) in loans and advances to banks and customers
2,231
(13,836
)
(875
)
Net (increase)/decrease in reverse repurchase agreements and other similar secured lending
(23,291
)
52,176
(62,337
)
Net (decrease)/increase in deposits and debt securities in issue
(4,594
)
6,712
36,958
Net increase /(decrease) in repurchase agreements and other similar secured borrowing
10,050
(18,266
)
26,753
Net decrease/(increase) in derivative financial instruments
4,376
3,730
(1,298
)
Net decrease/(increase) in trading assets
6,893
21,360
(17,505
)
Net (decrease)/increase in trading liabilities
(973
)
(26,899
)
21,441
Net (increase)/decrease in financial investments
(18,838
)
(4,255
)
11,126
Net decrease in other assets
555
119
1,366
Net (decrease) in other liabilities
(1,396
)
(4,148
)
(2,521
)
Corporate income tax paid
(1,516
)
(1,686
)
(1,458
)
Net cash from operating activities
(13,716
)
29,079
18,686
Purchase of available for sale investments
(80,796
)
(67,525
)
(76,418
)
Proceeds from sale or redemption of available for sale investments
73,769
66,941
71,251
Purchase of property, plant and equipment
(604
)
(1,454
)
(1,767
)
Other cash flows associated with investing activities
532
126
1,307
Net cash from investing activities
(7,099
)
(1,912
)
(5,627
)
Dividends paid
(1,427
)
(1,387
)
(1,307
)
Proceeds of borrowings and issuance of subordinated debt
2,258
880
2,131
Repayments of borrowings and redemption of subordinated debt
(2,680
)
(4,003
)
(1,211
)
Net issue of shares and other equity instruments
97
41
1,535
Net (purchase)/disposal of treasury shares
(979
)
(235
)
(989
)
Net redemption of shares issued to non-controlling interests
(111
)
(1,257
)
–
Net cash from financing activities
(2,842
)
(5,961
)
159
Effect of exchange rates on cash and cash equivalents
(4,109
)
(2,933
)
3,842
Net (decrease)/increase in cash and cash equivalents
(27,766
)
18,273
17,060
Cash and cash equivalents at beginning of year
149,673
131,400
114,340
Cash and cash equivalents at end of year
121,907
149,673
131,400
Cash and cash equivalents comprise:
Cash and balances at central banks
86,175
106,894
97,630
Loans and advances to banks with original maturity less than three months
33,500
40,481
31,934
Available for sale treasury and other eligible bills with original maturity less than three months
2,228
2,209
1,667
Trading portfolio assets with original maturity less than three months
4
89
169
121,907
149,673
131,400
Interest received in 2012 was £24,390m (2011: £28,673m; 2010: £28,631m) and interest paid in 2012
was £16,701m (2011: £20,106m; 2010: £20,759m).
The Group is required to maintain balances with
central banks and other regulatory authorities and these amounted to £5,169m at 31 December 2012 (2011: £4,364m; 2010: £5,244m)
a
.
For the purposes of the cash flow statement, cash comprises cash on hand and demand deposits, and cash equivalents comprise highly liquid
investments that are convertible into cash 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.
Note
a  Amounts have been restated to include additional balances (2011: £1,864m; 2010: £2,934m) held with central banks and other regulatory authorities.
196  I
Financial statements of Barclays PLC
Parent company accounts
Income statement
For the year ended 31 December
2012
£m
2011
£m
2010
£m
Dividends received from subsidiary
696
643
235
Other income
16
–
–
Interest income
4
5
5
Management charge from subsidiary
(5
)
(5
)
(5
)
Profit before tax
711
643
235
Tax
(4
)
–
–
Profit after tax
707
643
235
Profit after tax and total comprehensive income for the year was £707m (2011: £643m; 2010: £235m). There were no other components of total
comprehensive income other than the profit after tax.
The Company had no staff during the year (2011: nil; 2010: nil).
Balance sheet
As at 31 December
Notes
2012
£m
2011
£m
Assets
Cash and balances at central banks
–
1
Investments in subsidiaries
38
21,429
21,429
Derivative financial instrument
a
422
–
Other assets
86
24
Total assets
21,937
21,454
Liabilities
Deposits from banks
409
–
Other liabilities
3
–
Total liabilities
412
–
Shareholders' equity
Called up share capital
32
3,061
3,050
Share premium account
32
9,416
9,330
Capital redemption reserve
394
394
Retained earnings
8,654
8,680
Total shareholders' equity
21,525
21,454
Total liabilities and shareholders' equity
21,937
21,454
The financial statements on pages 197-272 were approved by the Board of Directors on 5 March 2013 and signed
on its behalf by:
Sir David Walker
Group Chairman
Antony Jenkins
Group Chief Executive
Chris
Lucas
Group Finance Director
Note
a
The derivative financial instrument held by Barclays PLC (the Parent company) represents Barclays PLC's right to receive a Capital Note for no additional
consideration, in the event the Barclays PLC consolidated Core Tier 1 (CT1) or Common Equity Tier 1 (CET1) ratio, as appropriate, falls below 7%, at which point the notes are automatically assigned by the holders to Barclays PLC.
I  197
Financial statements of Barclays PLC
Parent company accounts continued
Statement of changes in equity
Notes
Called up
share capital
and share
premium
£m
a
Capital
reserves and
other equity
£m
Retained
earnings
£m
Total equity
£m
Balance as at 1 January 2012
12,380
394
8,680
21,454
Profit after tax and total comprehensive income
–
–
707
707
Issue of shares under employee share schemes
97
–
–
97
Dividends
12
–
–
(733
)
(733
)
Balance as at 31 December 2012
12,477
394
8,654
21,525
Balance as at 1 January 2011
12,339
394
8,710
21,443
Profit after tax and total comprehensive income
–
–
643
643
Issue of shares under employee share schemes
41
–
–
41
Dividends
12
–
–
(670
)
(670
)
Other
–
–
(3
)
(3
)
Balance as at 31 December 2011
12,380
394
8,680
21,454
Cash flow statement
For the year ended 31 December
2012
£m
2011
£m
2010
£m
Reconciliation of profit before tax to net cash flows from operating activities:
Profit before tax
711
643
235
Changes in operating assets and liabilities
(72
)
(14
)
15
Other non-cash movements
(4
)
–
–
Corporate income tax paid
–
–
(28
)
Net cash from operating activities
635
629
222
Capital contribution to subsidiaries
–
–
(1,214
)
Purchase of shares in subsidiaries
–
–
–
Net cash used in investing activities
–
–
(1,214
)
Issue of shares and other equity instruments
97
41
1,535
Dividends paid
(733
)
(670
)
(543
)
Net cash from financing activities
(636
)
(629
)
992
Net decrease in cash and cash equivalents
(1
)
–
–
Cash and cash equivalents at beginning of year
1
1
1
Cash and cash equivalents at end of year
b
–
1
1
Net cash from operating activities includes:
Dividends received
696
643
235
Interest received
4
5
5
The Parent Company's principal activity is to hold the investment in its wholly-owned subsidiary, Barclays
Bank PLC. Dividends received are treated as operating income.
The Company was not exposed at 31 December 2012 or 2011 to
significant risks arising from the financial instruments it holds, which comprised cash, balances with central banks and other assets that had no credit or market risk.
Notes
a  Details of share capital and share premium are shown in Note 32
b
 Comprising cash and balances at central banks.
198  I
Notes to the financial statements
For the year ended 31 December 2012
1 Significant accounting policies
This section describes Barclays significant accounting
policies and critical accounting estimates that relate to the financial statements and notes as a whole. If an accounting policy or a critical accounting estimate relates to a specific note, the applicable accounting policy and/or critical
accounting estimate is contained within the relevant note.
1. Reporting entity
These financial statements are prepared for Barclays PLC and its subsidiaries (the Barclays PLC Group or the Group) under Section 399 of the Companies Act 2006. The Group is a major global
financial services provider engaged 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 financial statements of the Group, and the individual financial statements of Barclays PLC, have been prepared in
accordance with International Financial Reporting Standards (IFRS) and interpretations (IFRICs) issued by the Interpretations Committee, as published by the International Accounting Standards Board (IASB). They are also in accordance with IFRS and
IFRIC interpretations endorsed by the European Union. The principal accounting policies applied in the preparation of the consolidated and individual financial statements are set out below, and in the relevant notes to the financial statements.
These policies have been consistently applied. There were no changes in accounting policy in the year.
3. Basis of
preparation
The consolidated and individual financial statements have been prepared under the historical cost
convention modified to include the fair valuation of investment property and particular financial instruments to the extent required or permitted under IFRS as set out in the relevant accounting policies. They are stated in millions of pounds
Sterling (£m), the functional currency of Barclays PLC.
4. Accounting policies
Barclays prepares financial statements in accordance with IFRS. The Group's significant accounting policies relating to
specific financial statement items, together with a description of the accounting estimates and judgements that were critical to preparing them, are set out under the relevant notes. Accounting policies that affect the financial statements as a
whole are set out below.
(i) Consolidation
Barclays applies IAS 27
Consolidated and Separate Financial Statements
and SIC 12
Consolidation – Special Purpose Entities
(SPEs).
The consolidated financial statements combine the financial statements of Barclays PLC and all its subsidiaries. Subsidiaries are
entities over which it has control of the financial and operating policies through its holdings of voting shares and special purpose entities, which are consolidated when the substance of the relationship between the Group and the entity indicates
control. The control assessment for special purpose entities includes an assessment of the Group's exposure to the risks and benefits of the entity.
The consolidation of SPEs is considered at inception, based on the arrangements in place and the assessed risk exposures at that time. The initial consolidation analysis is revisited at a later date
if:
¡
The Group acquires additional interests in the entity;
¡
The contractual arrangements of the entity are amended such that the relative exposures to risks and rewards change; and
¡
The Group acquires control over the main operating and financial decisions of the entity.
There are a number of subsidiaries in which the Group has less than half of the voting rights which are consolidated when the
substance of the relationship between the Group and the entity indicates that the entity is controlled by the Group. Such entities are deemed to be controlled by the Group when relationships with such entities give rise to benefits that are in
substance no different from those that would arise were the entity a subsidiary.
Intra-group transactions and balances
are eliminated on consolidation and consistent accounting policies are used throughout the Group for the purposes of the consolidation.
Changes in ownership interests in subsidiaries are accounted for as equity transactions if they occur after control has already been obtained and they do not result in loss of control.
Details of the principal subsidiaries are given in Note 38.
I  199
Notes to the financial statements
For the year ended 31 December 2012 continued
1 Significant accounting policies
continued
(ii) Foreign currency translation
The Group applies IAS 21
The Effects of Changes in Foreign Exchange Rates.
Transactions and balances in foreign currencies are translated 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 ventures, associates and branches) based mainly
outside the UK may have different functional currencies. The functional currency of an operation is the currency of the main economy to which it is exposed.
Prior to consolidation (or equity accounting) the assets and liabilities of non-Sterling operations are translated at the closing rate and items of income, expense and other comprehensive income are
translated into Sterling at the rate on the date of the transactions. Exchange differences arising on the translation of foreign operations are included in currency translation reserves within equity. These are transferred to the income statement
when the Group loses control, joint control or significant influence over the foreign operation or on partial disposal of the operation.
(iii) Financial assets and liabilities
The Group
applies IAS 39
Financial Instruments: Recognition and Measurement
for the recognition, classification and measurement and derecognition of financial assets and financial liabilities, for the impairment of financial assets and for hedge
accounting.
Recognition
The Group recognises financial assets and liabilities when it becomes a party to the terms of the contract, which is the trade date or the settlement date.
Classification and measurement
Financial assets and liabilities are initially recognised at fair value and may be held at fair value or amortised cost depending on the Group's intention toward the assets and the nature of
the assets and liabilities, mainly determined by their contractual terms.
The accounting policy for
each type of financial asset or liability is included within the relevant note for the item. The Group's policies for determining the fair values of the assets and liabilities are set out in Note 18.
Derecognition
The Group derecognises a financial asset, or a portion of a financial asset, from its balance sheet where the contractual rights to cash flows from the asset have expired, or have been transferred,
usually by sale, and with them either substantially all the risks and rewards of the asset or significant risks and rewards, along with the unconditional ability to sell or pledge the asset.
Financial liabilities are de-recognised when the liability has been settled, has expired or has been extinguished.
An exchange of an existing financial liability for a new liability with the same lender on substantially different terms – generally a difference of 10% in the present value of the cash flows – is accounted for as an extinguishment of the
original financial liability and the recognition of a new financial liability.
Critical accounting estimates and
judgements
Transactions in which the Group transfers assets and liabilities, portions of them, or
financial risks associated with them can be complex and it may not be obvious whether substantially all of the risks and rewards have been transferred. It is often necessary to perform a quantitative analysis. Such an analysis compares the
Group's exposure to variability in asset cash flows before the transfer with its retained exposure after the transfer.
A cash flow analysis of this nature may require judgement. In particular, it is necessary to estimate the asset's expected future cash flows as well as potential variability around this
expectation. The method of estimating expected future cash flows depends on the nature of the asset, with market and market-implied data used to the greatest extent possible. The potential variability around this expectation is typically determined
by stressing underlying parameters to create reasonable alternative upside and downside scenarios. Probabilities are then assigned to each scenario. Stressed parameters may include default rates, loss severity or prepayment rates.
(iv) Issued debt and equity instruments
The Group applies IAS 32
Financial Instruments: Presentation
to determine whether funding is either a financial liability (debt) or equity.
Issued financial instruments or their components are classified as liabilities if the contractual arrangement
results in the Group having a present obligation to either deliver cash or another financial asset, or a variable number of equity shares, to the holder of the instrument, if this is not the case, the instrument is generally an equity instrument and
the proceeds included in equity, net of transaction costs. Dividends and other returns to equity holders are recognised when paid or declared by the members at the annual general meeting and treated as a deduction from equity.
Where issued financial instruments contain both liability and equity components, these are accounted for
separately. The fair value of the debt is estimated first and the balance of the proceeds is included within equity.
200  I
1 Significant accounting policies
continued
5. Future accounting developments
As at 31 December 2012 the IASB had issued the following accounting standards. These are effective on 1 January 2013, unless otherwise indicated:
¡
IFRS 10
Consolidated Financial Statements
which replaces requirements in IAS 27
Consolidated and Separate Financial Statements
and
SIC 12
Consolidation – Special Purpose Entities.
This introduces new criteria to determine whether entities in which the Group has interests should be consolidated. The implementation of IFRS 10 will result in the Group consolidating
some entities that were previously not consolidated and deconsolidating some entities that were previously consolidated. The financial impact on the Group as at 31 December 2012 if IFRS 10 had been adopted at that date would have been to
decrease assets by £144m, increase liabilities by £333m and decrease total shareholders' equity by £477m. Consolidated profit after tax for the year ended 31 December 2012 would have increased by £439m (calculated
by applying the transition relief guidance set out in the June 2012 Amendment to IFRS 10 for interests in entities disposed of prior to 1 January 2013). The impact on the Core Tier 1 ratio would have been a 12bps decrease.
¡
IFRS 11
Joint Arrangements,
which replaces IAS 31 Interests in Joint Ventures. This specifies the accounting for joint arrangements
whether these are joint operations or joint ventures. It is not expected to have a material impact on the Group;
¡
IFRS 12
Disclosures of Interests in Other Entities.
This specifies the required disclosures in respect of interests in, and risks arising
from, subsidiaries, joint ventures, associates and structured entities whether consolidated or not. As a disclosure only standard it will have no financial impact;
¡
IFRS 13
Fair Value Measurement.
This provides comprehensive guidance on how to calculate the fair value of financial and non-financial
assets and liabilities. It is not expected to have a material impact on the Group financial statements;
¡
IAS 19
Employee Benefits (Revised 2011).
This requires that actuarial gains and losses arising from defined benefit pension schemes are
recognised in full. Previously the Group deferred these over the remaining average service lives of the employees (the 'corridor' approach). See Note 37 for more information and an estimate of the financial effects of adoption; and
¡
IAS 32 and IFRS 7 Amendments:
Offsetting Financial Assets and Financial Liabilities.
The circumstances in which netting is permitted have
been clarified and disclosures on offsetting have been considerably expanded. The amendments on offsetting are effective from 1 January 2014 and those on disclosures from 1 January 2013.
In 2009 and 2010, the IASB issued IFRS 9
Financial Instruments
which contains new requirements for accounting for financial
assets and liabilities and will contain new requirements for impairment and hedge accounting, replacing the corresponding requirements in IAS 39. It will lead to significant changes in the way that the Group accounts for financial instruments. The
key changes issued and proposed relate to:
¡
Financial assets. Financial assets will be held at either fair value or amortised cost, except for equity investments not held for trading and
certain eligible debt instruments, which may be held at fair value through other comprehensive income;
¡
Financial liabilities. Gains and losses on fair value changes in own credit arising on non-derivative financial liabilities designated at fair
value through profit or loss will be excluded from the Income Statement and instead taken to other comprehensive income;
¡
Impairment. Credit losses expected (rather than only losses incurred in the year) on loans, debt securities and loan commitments not held at fair
value through profit or loss will be reflected in impairment allowances; and
¡
Hedge accounting. Hedge accounting will be more closely aligned with financial risk management.
Adoption is not mandatory until periods beginning on or after 1 January 2015, subject to EU endorsement. Earlier adoption is
possible, subject to endorsement. At this stage, it is not possible to determine the potential financial impacts of adoption on the Group.
In addition, the IASB has indicated that it will issue a new standard on accounting for leases. Under the proposals, lessees would be required to recognise assets and liabilities arising 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.
Critical accounting estimates and judgements
The preparation of financial statements in accordance with IFRS requires the use of estimates. It also requires management to exercise judgement in applying the accounting policies. The key areas
involving a higher degree of judgement or complexity, or areas where assumptions are significant to the consolidated and individual financial statements, are highlighted under the relevant note. Critical accounting estimates and judgements are
disclosed in:
Page
Credit impairment charges and impairment on available for sale investments
206
Tax
208
Available for sale investments
218
Fair value of financial instruments
219
Page
Goodwill and intangible assets
236
Provisions
240
Pensions and post-retirement benefits
257
I  201
Notes to the financial statements
For the year ended 31 December 2012 continued
1 Significant accounting policies
continued
6. Other disclosures
To
improve transparency and ease of reference by concentrating related information in one place, and to reduce duplication, certain disclosures required under IFRS have been included within the Risk and Financial review sections as follows:
¡
credit risk, on pages 80-118, including exposures to Eurozone countries;
¡
market risk, on pages 119-125;
¡
funding risk – capital, on pages 126-135;
¡
funding risk – liquidity, on pages 136-150; and
¡
segmental reporting on pages 171-172.
These are covered by the Audit opinion included on page 191.
202  I
Performance
The notes included in this section focus on the results and
performance of the Group. Information on the segmental performance, income generated, expenditure incurred, tax, earnings per share and dividends are included here.
2 Segmental reporting
Presentation of segmental reporting
The Group's segmental reporting is in
accordance with IFRS 8
Operating Segments.
Operating segments are reported in a manner consistent with the internal reporting provided to the Executive Committee, which is responsible for allocating resources and assessing performance of the
operating segments and has been identified as the chief operating decision maker. All transactions between business segments are conducted on an arm's length basis, with intra-segment revenue and costs being eliminated in Head Office. Income
and expenses directly associated with each segment are included in determining business segment performance.
An analysis of the Group's performance by business segment and income by geographic segment is included on
pages 171 and 172.
3 Net interest income
Accounting for interest income and expense
The Group applies IAS 39
Financial Instruments: Recognition and Measurement.
Interest income on loans and advances at amortised cost,
available for sale debt investments, and interest expense on financial liabilities held at amortised cost, are calculated using the effective interest method which allocates interest, and direct and incremental fees and costs, over the expected
lives of the assets and liabilities.
The effective interest method
requires the Group to estimate future cash flows, in some cases based on its experience of customers' behaviour, considering all contractual terms of the financial instrument, as well as the expected lives of the assets and liabilities. Due to
the large number of products and types (both assets and liabilities), there are no individual estimates that are material to the results or financial position.
See also Note 14 – Financial assets designated at fair value and Note 17 – Financial liabilities designated at fair value for relevant
accounting policies.
2012
£m
2011
£m
2010
£m
Cash and balances with central banks
253
392
271
Available for sale investments
1,720
2,137
1,483
Loans and advances to banks
369
350
440
Loans and advances to customers
16,461
17,271
17,677
Other
396
439
164
Interest income
19,199
20,589
20,035
Deposits from banks
(257
)
(366
)
(370
)
Customer accounts
(2,480
)
(2,526
)
(1,410
)
Debt securities in issue
(2,929
)
(3,524
)
(3,632
)
Subordinated liabilities
(1,632
)
(1,813
)
(1,778
)
Other
(262
)
(159
)
(322
)
Interest expense
(7,560
)
(8,388
)
(7,512
)
Net interest income
11,639
12,201
12,523
Interest income includes £211m (2011: £243m, 2010: £213m) accrued on impaired loans.
Other interest income principally includes interest income relating to reverse repurchase agreements and hedging activity. Similarly, other
interest expense principally includes interest expense relating to repurchase agreements and hedging activity.
Included in net interest
income is hedge ineffectiveness as detailed on page 217.
I  203
Notes to the financial statements
For the year ended 31 December 2012 continued
3 Net interest income
continued
2012
Net interest income declined by 5% to £11,639m. Interest income decreased by 7% to £19,199m, driven by a reduction in income from loans
and advances to customers, which fell £810m to £16,461m, and interest income derived from available for sale investments, which fell £417m to £1,720m. The decrease in interest income from loans and advances to customers is
attributable primarily to the Investment Bank and Africa RBB reflecting lower average loan balances. These movements were partly offset by a £291m increase in Barclaycard reflecting increased average loan balances primarily due to the Egg
acquisition. The fall in interest from available for sale investments primarily reflects lower average balances and yield in the Investment Bank and lower yields on government bonds held in the Liquidity Risk Appetite portfolio. Interest expense
reduced by 10% to £7,560m, driven by a reduction in interest on debt securities in issue of £595m to £2,929m due to lower average balances and lower yields, and a reduction in interest on subordinated liabilities of £181m to
£1,632m due to lower average balances.
The net interest margin for Retail and Business Banking, Corporate Banking and Wealth and
Investment Management decreased to 1.85% (2011: 2.03%), primarily reflecting the reduction in contribution from Group hedging activities.
2011
Group net interest
income decreased £322m to £12,201m. Interest income rose 3% to £20,589m reflecting an increase in interest income derived from available for sale investments of £654m, predominantly as a result of the expansion of the
Liquidity Risk Appetite portfolio during the year. This was largely offset by a decrease in interest income from loans and advances to customers primarily as a result of lower average balances in the Investment Bank (excluding settlement balances
and cash collateral), offset partially by increased lending across the majority of other businesses. The increase in interest expense was driven primarily by a reduction in benefits from Group hedging activities.
The net interest margin for Retail and Business Banking, Corporate Banking and Wealth and Investment Management remained stable at 2.03% (2010:
2.03%).
Further information on business margins is presented on pages 121-123.
4 Net fee and commission income
Accounting for net fee and commission income
The Group applies IAS 18
Revenue.
Fees and commissions charged for services provided or received by the Group are recognised as the services are provided, for example on completion of the underlying transaction.
2012
£m
2011
£m
2010
£m
Banking, investment management and credit related fees and commissions
9,948
9,958
10,142
Brokerage fees
92
87
77
Foreign exchange commission
176
163
149
Fee and commission income
10,216
10,208
10,368
Fee and commission expense
(1,634
)
(1,586
)
(1,497
)
Net fee and commission income
8,582
8,622
8,871
2012
Net fee and commission income remained stable with a £40m decline to £8,582m. Higher fees as a result of increased volumes within the Barclaycard Business Payment and US portfolios and
growth in debt and equity underwriting activity were offset by lower commissions mainly from Italy mortgage sales and the impact of adverse currency movements in Africa RBB.
2011
Net fee and commission income declined £249m to £8,622m,
primarily due to financial advisory and debt underwriting income within the Investment Bank being impacted by lower deal activity.
204  I
5
Net trading income
Accounting for net trading income
In accordance with IAS 39, trading positions
are held at fair value and the resulting gains and losses are included in the income statement, together with
interest and dividends arising from long and short positions and 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 variables.
Own credit gains/losses arise from the fair valuation of financial liabilities
designated at fair value through profit or loss. See Note 17 Financial liabilities
designated at fair value.
2012
£m
2011
£m
2010
£m
Trading income
7,604
4,952
7,687
Own credit (losses)/gains
(4,579
)
2,708
391
Net trading income
3,025
7,660
8,078
Included within net trading income were gains of £656m (2011: £16m loss, 2010: £32m gain) on
financial assets designated at fair value and losses of £3,980m (2011: £3,850m gain, 2010: £903m loss) on financial liabilities designated at fair value.
2012
Net trading income decreased 61% to £3,025m, primarily reflecting a
£7,287m variance in own credit (2012: £4,579m charge; 2011: £2,708m gain) as a result of improved credit spreads on Barclays issued debt. This was offset partially by a £2,652m increase in underlying trading income,
reflecting increased liquidity and higher client volumes across a number of product areas in FICC and an improved performance in cash equities and equity derivatives in Equities and Prime Services.
2011
Net trading income
decreased £418m to £7,660m. Trading income, which primarily arises in the Investment Bank, decreased 36% to £4,952m reflecting lower contributions from Commodities and Fixed Income Rates and Credit, partially offset by an increase
in Currency that benefitted from market volatility and strong client volumes. The impact from difficult trading conditions was partially offset by a gain on own credit of £2,708m (2010: £391m).
6 Net investment income
Accounting for net investment
income
Dividends are recognised when the right to receive the dividend has been established. Other accounting policies relating to
net investment income are
set out in Note 16, Available for sale investments, and Note 14, Financial assets designated at fair value.
2012
£m
2011
£m
2010
£m
Net gain from disposal of available for sale investments
452
1,645
1,027
Dividend income
42
129
116
Net gain from financial instruments designated at fair value
206
287
274
Other investment income
117
244
60
Net investment income
817
2,305
1,477
2012
Net investment income decreased by £1,488m to £817m largely driven by the non-recurrence of gains on disposal of the economic structural hedge portfolio during 2011 and a reduction in
dividends following the disposal of the Group's stake in BlackRock, Inc. during the first half of 2012.
2011
Net investment income increased by £828m to £2,305m due to the gains on the sale of hedging instruments held as part of the economic
structural hedge portfolio and increases in income from investment properties.
I  205
Notes to the financial statements
For the year ended 31 December 2012 continued
7 Credit impairment charges and impairment on available for sale
investments
Accounting for the impairment of financial assets
Loans and other assets held
at amortised cost
In accordance with IAS 39, the Group assesses at each balance sheet date whether there is objective evidence that loan
assets or available for sale investments (debt or equity) will not be recovered in full and, wherever necessary, recognises an impairment loss in the income statement.
An impairment loss is recognised if there is objective evidence of impairment as a result of events that have occurred and these have adversely
impacted the estimated future cash flows from the assets. These events include:
¡
becoming aware of significant financial difficulty of the issuer or obligor;
¡
a breach of contract, such as a default or delinquency in interest or principal payments;
¡
the Group, for economic or legal reasons relating to the borrower's financial difficulty, grants a concession that it would not otherwise
consider;
¡
it becomes probable that the borrower will enter
bankruptcy or other financial reorganisation;
¡
the disappearance of an active market for that financial asset because of financial difficulties; and
¡
observable data at a portfolio level indicating that there is a measurable decrease in the estimated future cash flows, although the decrease cannot yet be
ascribed to individual financial assets in the portfolio – such as adverse changes in the payment status of borrowers in the portfolio or national or local economic conditions that correlate with defaults on the assets in the
portfolio.
Impairment assessments are conducted individually for
significant assets, which comprise all wholesale customer loans and larger retail business loans, and collectively for smaller loans and for portfolio level risks, such as country or sectoral risks. For the purposes of the assessment, loans with
similar credit risk characteristics are grouped together, generally on the basis of their product type, industry, geographical location, collateral type, past due status and other factors relevant to the evaluation of expected future cash
flows.
The impairment assessment includes estimating the expected
future cash flows from the asset or the group of assets, which are then discounted using the original effective interest rate calculated for the asset. If this is lower than the carrying value of the asset or the portfolio, an impairment allowance
is raised.
If, in a subsequent period, the amount of the impairment
loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed by adjusting the allowance account. The amount of the reversal is recognised
in the income statement.
Following impairment, interest income
continues to be recognised at the original effective interest rate on the restated carrying amount, representing the unwind of the discount of the expected cash flows, including the principal due on non-accrual loans.
Uncollectable loans are written off against the related allowance for loan
impairment on completion of the Group's internal processes and all recoverable amounts have been collected. Subsequent recoveries of amounts previously written off are credited to the income statement.
Available for sale investments
Impairment of available for sale debt instruments
Debt instruments are assessed for impairment in the same way as loans. If impairment is deemed to have occurred, the cumulative decline in the fair value of the instrument that has previously been
recognised in equity is removed from equity and recognised in the income statement. This may be reversed if there is evidence that the circumstances of the issuer have improved.
Impairment of available for sale equity instruments
Where there has been a prolonged or significant decline in the fair value of an equity instrument below its acquisition cost, it is deemed to be
impaired. The cumulative net loss that has been previously recognised directly in equity is removed from equity and recognised in the income statement.
Increases in the fair value of equity instruments after impairment are recognised directly in other comprehensive income. Further declines in the
fair value of equity instruments after impairment are recognised in the income statement.
206  I
7 Credit impairment charges
and impairment on available for sale assets
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.
Within the retail and small businesses portfolios, which comprise large numbers of small homogeneous assets with similar risk characteristics where credit scoring techniques are generally used,
statistical techniques are used to calculate impairment allowances on a portfolio basis, based on historical recovery rates and assumed emergence periods. These statistical analyses use as primary inputs the extent to which accounts in the portfolio
are in arrears and historical information on the eventual losses encountered from such delinquent portfolios. There are many such models in use, each tailored to a product, line of business or customer category. Judgement and knowledge is needed in
selecting the statistical methods to use when the models are developed or revised. The impairment allowance reflected in the financial statements for these portfolios is therefore considered to be reasonable and supportable. The impairment charge
reflected in the income statement for these retail portfolios is £2,075m (2011: £2,477m; 2010: £3,379m) and amounts to 58% (2011: 65%; 2010: 60%) of the total impairment charge on loans and advances.
For individually significant assets, impairment allowances are calculated on an
individual basis and all relevant considerations that have a bearing on the expected future cash flows are taken into account (for example, the business prospects for the customer, the realisable value of collateral, the Group's position
relative to other claimants, the reliability of customer information and the likely cost and duration of the work-out process). The level of the impairment allowance is the difference between the value of the discounted expected future cash flows
(discounted at the loan's original effective interest rate) and its carrying amount. Subjective judgements are made in the calculation of future cash flows. Furthermore, judgements change with time as new information becomes available or as
work-out strategies evolve, resulting in frequent revisions to the impairment allowance as individual decisions are taken. Changes in these estimates would result in a change in the allowances and have a direct impact on the impairment charge. The
impairment charge reflected in the financial statements in relation to wholesale portfolios is £1,484m (2011: £ 1,313m; 2010: £2,246m) and amounts to 42% (2011: 35%; 2010: 40%) of the total impairment charge on loans and advances.
Further information on impairment allowances and related credit information is set out within the Risk review.
2012
£m
2011
£m
2010
£m
New and increased impairment allowances
4,703
4,962
6,939
Releases
(928
)
(931
)
(1,189
)
Recoveries
(212
)
(265
)
(201
)
Impairment charges on loans and advances
3,563
3,766
5,549
(Releases)/charges in respect of provision for undrawn contractually committed facilities and guarantees
provided
(4
)
24
76
Loan impairment
3,559
3,790
5,625
Available for sale assets (excluding BlackRock, Inc.)
40
60
51
Reverse repurchase agreements
(3
)
(48
)
(4
)
Credit impairment charges and other provisions
3,596
3,802
5,672
Impairment of investment in BlackRock, Inc.
–
1,800
–
More information on the impairment assessment and the measurement of credit losses is included on pages 283-285.
The movements on the impairment allowance and the charge for the year is shown on page 91.
2012
Loan impairment fell 6% to £3,559m reflecting lower impairment in UKRBB, Barclaycard and Corporate Banking, partially offset by higher charges
in Europe and South Africa and a higher charge in the Investment Bank. The increase in the Investment Bank was primarily related to ABS CDO Super Senior positions and losses on a small number of single name exposures. The prior year included a
non-recurring release of £223m.
2011
Loan impairment fell 33% to £3,790m reflecting generally improving underlying trends across the majority of retail and wholesale businesses. Retail impairment charges reduced 27%, principally
relating to Barclaycard, UKRBB and Africa RBB. Wholesale impairment charges reduced 41%, principally reflecting lower charges in Spain and in the Investment Bank, including a non-recurring release of £223m relating to the loan to Protium which
has now been repaid.
As at 30 September 2011, an impairment charge of £1,800m was recognised resulting from an assessment
that there was objective evidence that the Group's investment in BlackRock, Inc. was impaired. The impairment reflects the recycling through the income statement of the cumulative reduction in market value previously recognised in the available
for sale reserve, since the Group's acquisition of its holding in BlackRock, Inc. as part of the sale of Barclays Global Investors on 1 December 2009.
Further analysis of the Group's impairment charges is presented on pages 88-92.
I  207
Notes to the financial statements
For the year ended 31 December 2012 continued
8 Administration and general expenses
2012
£m
2011
£m
2010
£m
Property and equipment
1,656
1,763
1,813
Outsourcing and professional services
2,179
1,869
1,705
Operating lease rentals
622
659
637
Marketing, advertising and sponsorship
572
585
631
Communications, subscriptions, publications and stationery
727
740
750
Travel and accommodation
324
328
358
Other administration and general expenses
546
400
566
Impairment of property, equipment and intangible assets (excluding goodwill)
17
12
125
Administration and general expenses
6,643
6,356
6,585
2012
Administration and general expenses increased £287m to £6,643m, primarily due to the £290m penalty relating to the industry wide investigation into the setting of interbank offered
rates. An increase in expenses relating to the Financial Services Compensation Scheme were offset by a reduction in the underlying cost base reflecting the impact of the Group-wide cost reduction initiative.
2011
Administration and
general expenses decreased £229m to £6,356m, principally reflecting the benefits of restructuring and the non-recurrence of the one-off provision in respect of the resolution of a review of Barclays compliance with US economic sanctions
that occurred in 2010. These reductions have been offset by an increase in outsourcing and professional services as a result of Barclaycard acquisitions and restructuring charges.
9 Profit on disposal of subsidiaries, associates and joint ventures
During the year, the profit on disposal of subsidiaries, associates and joint ventures was £28m (2011: loss of £94m), principally relating to the disposal of the Group's 51% stake
in Iveco Finance in May 2012. The Iveco gain on disposal of £21m relates to accumulated foreign exchange gains that were previously recognised directly in equity and were recycled through the income statement within Head Office and Other
Operations.
1
0 Tax
Accounting for income taxes
Barclays applies IAS 12
Income Taxes
in accounting for taxes on income. Income tax payable on taxable profits ('Current Tax') is
recognised as an
expense in the period in which the profits arise. Withholding taxes are also treated as income taxes. Income tax recoverable on tax allowable losses
is recognised as a current tax asset only to the extent that it is regarded
as recoverable by offset against taxable profits arising in the current or prior
period. Current tax is measured using tax rates and tax laws that have been enacted or substantively enacted at the balance sheet date.
Deferred tax is provided in full, using the liability method, on temporary
differences arising from the differences between the tax bases of assets and
liabilities and their carrying amounts in the consolidated financial statements. Deferred tax is determined using tax rates and legislation enacted or
substantively
enacted by the balance sheet date which are expected to apply when the deferred tax asset is realised or the deferred tax liability is
settled. Deferred tax assets and liabilities are only offset when there is both a legal right to set-off and an
intention to settle on a net basis.
2012
£m
2011
£m
2010
£m
Current tax charge
Current year
568
2,690
1,413
Adjustment for prior years
207
(61
)
(20
)
775
2,629
1,393
Deferred tax (credit)/charge
Current year
(206
)
(631
)
118
Adjustment for prior years
(87
)
(70
)
5
(293
)
(701
)
123
Tax charge
482
1,928
1,516
Tax relating to each component of other comprehensive income can be found in the consolidated statement of
comprehensive income, which includes within Other a tax credit of £95m (2011: £74m charge; 2010: £59m credit), principally relating to share based payments.
208  I
10 Tax
continued
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.
2012
£m
2011
£m
2010
£m
Profit before tax from continuing operations
246
5,879
6,065
Tax charge based on the standard UK corporation tax rate of 24.5% (2011: 26.5%; 2010: 28%)
60
1,558
1,698
Effect of non-UK profits or losses at local statutory tax rates different from the UK statutory tax rate
402
190
108
Non-creditable taxes
563
567
454
Non-taxable gains and income
(642
)
(494
)
(572
)
Impact of share price movements on share based payments
(63
)
147
41
Deferred tax assets (previously not recognised)/not recognised
(135
)
(816
)
(160
)
Change in tax rates
(75
)
17
34
Non-deductible impairment charges, loss on disposals and UK bank levy
84
770
68
Other items including non-deductible expenses
168
120
(140
)
Adjustments in respect of prior years
120
(131
)
(15
)
Tax charge
482
1,928
1,516
Effective tax rate
195.9%
32.8%
25.0%
The tax charge for continuing operations for 2012 was £482m (2011: £1,928m) on profit before tax of
£246m (2011: £5,879m), representing an effective tax rate of 195.9% (2011: 32.8%).The high effective tax rate in 2012 is a result of the combination of losses in the UK, primarily relating to the own credit charge of £4,579m (2011:
gain of £2,708m) with tax relief at 24.5% (2011: 26.5%) and profits outside the UK taxed at higher rates represented by £402m (2011: £190m) in the tax rate reconciliation above. The aggregate of the remaining items in the tax rate
reconciliation amounts to £20m (2011: £180m).
Current tax assets and liabilities
Movements on current tax assets and liabilities were as follows:
2012
£m
2011
£m
Assets
374
196
Liabilities
(1,397
)
(646
)
As at 1 January 2012
(1,023
)
(450
)
Income statement
(775
)
(2,629
)
Equity
(172
)
104
Corporate income tax paid
1,516
1,686
Other movements
85
266
(369
)
(1,023
)
Assets
252
374
Liabilities
(621
)
(1,397
)
As at 31 December 2012
(369
)
(1,023
)
Other movements include current tax amounts relating to acquisitions, disposals and exchange.
Deferred tax assets and liabilities
The deferred tax amounts on the balance sheet were as follows:
2012
£m
2011
£m
Barclays Group US Inc. tax group (BGUS)
1,113
1,039
US Branch of Barclays Bank PLC (US Branch)
924
704
Spanish tax group
602
696
Other
377
571
Deferred tax asset
3,016
3,010
Deferred tax liability
(719
)
(695
)
Net deferred tax
2,297
2,315
I  209
Notes to the financial statements
For the year ended 31 December 2012 continued
10 Tax
continued
The table below shows the components of deferred tax amounts on the balance sheet. Positive amounts in liabilities relate to deferred tax assets in entities that are in a net liability position on
the balance sheet.
Fixed asset
timing
differences
£m
Available
for sale
investments
£m
Cash flow
hedges
£m
Retirement
benefit
obligations
£m
Loan
impairment
allowance
£m
Other
provisions
£m
Tax losses
carried
forward
£m
Share
based
payments
£m
Other
£m
Total
£m
Assets
17
43
–
93
376
96
1,346
329
716
3,016
Liabilities
(84
)
(49
)
(661
)
(337
)
81
9
290
167
(135
)
(719
)
At 31 December 2012
(67
)
(6
)
(661
)
(244
)
457
105
1,636
496
581
2,297
Assets
97
160
–
87
391
161
1,493
226
395
3,010
Liabilities
(247
)
(39
)
(489
)
(134
)
40
100
–
130
(56
)
(695
)
At 31 December 2011
(150
)
121
(489
)
(47
)
431
261
1,493
356
339
2,315
US deferred tax assets in BGUS and the US Branch
The deferred tax asset in BGUS and the US Branch includes amounts relating to tax losses of £135m (2011: £329m) and £834m (2011: £603m) respectively, which first arose in
2007. In accordance with US tax rules tax losses can be carried forward and offset against profits for a period of 20 years and therefore any unused tax losses may begin to expire in 2028. The remaining balance primarily relates to temporary
differences which are not time limited. The deferred tax asset for the US Branch has been measured using a marginal tax rate being the excess of the US tax rate (a combination of Federal, City and State taxes) over the UK statutory rate.
BGUS returned to profitability in 2012, primarily driven by Barclays Capital Inc., its US Broker Dealer, with tax losses expected to be fully
utilised in 2013. A 20% reduction in forecasted profit would not extend the recovery period. The assumptions used in the profit forecasts do not include any incremental tax planning strategies.
The tax losses in the US Branch are projected to be fully utilised by 2018, based on profit forecasts covering the period from 2013 to 2015, with
no profit growth assumed after 2015. A 20% reduction in forecasted profit would extend the recovery period by 2 years to 2020. The assumptions used in the profit forecasts do not include any incremental tax planning strategies.
Spain deferred tax asset
The deferred tax asset in Spain includes £322m (2011: £417m) relating to tax losses incurred from 2010 to 2012. In accordance with
Spanish tax rules tax losses can be carried forward and offset against profits for a period of 18 years. The remaining balance primarily relates to temporary differences which are not time limited. The asset has reduced to £602m (2011:
£696m) reflecting a lower anticipated tax recovery rate.
The 2010 to 2012 tax losses are expected to be fully utilised by 2023.
Additional losses are anticipated to arise in 2013, partly relating to restructuring costs. The recoverability of the deferred tax asset has been determined using business profit forecasts covering the period from 2013 to 2016, with a subsequent
annual growth rate of 2% p.a. A 20% reduction in forecast profits for 2016 and each subsequent year would extend the recovery period of the tax losses by two years to 2025. A reduction in profits of more than this may result in a partial impairment
of the deferred tax asset depending upon the timing of the reversal of deductible temporary differences. The forecast assumptions do not include any incremental tax planning strategies.
Other deferred tax assets
The deferred tax asset of £377m (2011:
£571m) in other entities includes £55m (2011: £144m) relating to tax losses carried forward. Entities which have suffered a loss in either the current or prior year have a total deferred tax asset of £135m (2011: £189m)
relating to tax losses carried forward and temporary differences. Recognition is based 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. There is no net deferred tax asset in the UK.
210  I
10 Tax
continued
The table below shows movements on deferred tax assets and liabilities during the year. The amounts are different from those
disclosed on the balance sheet as they are presented before offsetting asset and liability balances where there is a legal right to set-off and an intention to settle on a net basis.
Fixed asset
timing
differences
£m
Available
for sale
investments
£m
Cash flow
hedges
£m
Retirement
benefit
obligations
£m
Loan
impairment
allowance
£m
Other
provisions
£m
Tax losses
carried
forward
£m
Share
based
payments
£m
Other
£m
Total
£m
Assets
254
186
–
85
431
261
1,493
356
1,435
4,501
Liabilities
(404
)
(65
)
(489
)
(132
)
–
–
–
–
(1,096
)
(2,186
)
At 1 January 2012
(150
)
121
(489
)
(47
)
431
261
1,493
356
339
2,315
Income statement
60
(49
)
(30
)
(185
)
86
(134
)
130
171
244
293
Equity
–
(67
)
(146
)
3
–
–
–
(12
)
(6
)
(228
)
Other movements
23
(11
)
4
(15
)
(60
)
(22
)
13
(19
)
4
(83
)
(67
)
(6
)
(661
)
(244
)
457
105
1,636
496
581
2,297
Assets
158
61
53
134
457
105
1,636
496
1,412
4,512
Liabilities
(225
)
(67
)
(714
)
(378
)
–
–
–
–
(831
)
(2,215
)
At 31 December 2012
(67
)
(6
)
(661
)
(244
)
457
105
1,636
496
581
2,297
Assets
134
76
–
118
345
162
1,558
372
668
3,433
Liabilities
(558
)
(43
)
(109
)
–
–
–
–
–
(720
)
(1,430
)
At 1 January 2011
(424
)
33
(109
)
118
345
162
1,558
372
(52
)
2,003
Income statement
267
10
–
(180
)
91
110
(54
)
37
420
701
Equity
–
73
(393
)
–
–
–
–
(82
)
3
(399
)
Other movements
7
5
13
15
(5
)
(11
)
(11
)
29
(32
)
10
(150
)
121
(489
)
(47
)
431
261
1,493
356
339
2,315
Assets
254
186
–
85
431
261
1,493
356
1,435
4,501
Liabilities
(404
)
(65
)
(489
)
(132
)
–
–
–
–
(1,096
)
(2,186
)
At 31 December 2011
(150
)
121
(489
)
(47
)
431
261
1,493
356
339
2,315
Other movements include deferred tax amounts relating to acquisitions, disposals and exchange.
The amount of deferred tax liability expected to be settled after more than 12 months is £1,714m (2011: £1,044m). The amount of
deferred tax asset expected to be recovered after more than 12 months is £2,990m (2011: £2,050m). These amounts are before offsetting asset and liability balances where there is a legal right to set-off and an intention to settle on a
net basis.
Unrecognised deferred tax
Deferred tax assets have not been recognised in respect of gross deductible temporary differences of £28m (2011: £1,163m), gross tax losses of £7,295m (2011: £2,299m) which
includes capital losses of £3,358m (2011: £2,034m), and unused tax credits of £155m (2011: £nil). Tax losses of £3m (2011: £97m) expire within 5 years, £83m (2011: £101m) expire within 6 to10 years,
£5m (2011: £5m) expire within 11 to 20 years and £7,204m (2011: £2,096m) can be carried forward indefinitely. Deferred tax assets have not been recognised in respect of these items because it is not probable that future
taxable profits and gains will be available against which the Group can utilise benefits.
Deferred tax is not recognised in respect of
the Group's investments in subsidiaries and branches where remittance is not contemplated and for those associates and interests in joint ventures where it has been determined that no additional tax will arise. The aggregate amount of temporary
differences for which deferred tax liabilities have not been recognised is £836m (2011: £703m).
Critical accounting
estimates and judgements
The Group is subject to income taxes in numerous jurisdictions and the calculation of the Group's tax
charge and worldwide provisions for income taxes necessarily involves a degree of estimation and judgement. There are many transactions and calculations for which the ultimate tax treatment is uncertain and cannot be determined until resolution has
been reached with the relevant tax authority. The Group recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due after taking into account external advice where appropriate. Where the final
tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current and deferred income tax assets and liabilities in the period in which such determination is made. These risks are
managed in accordance with the Group's Tax Risk Framework.
Deferred tax assets have been recognised based on business profit
forecasts. Further detail on the recognition of deferred tax assets is provided on page 208 in the deferred tax assets and liabilities section of this tax note.
I  211
Notes to the financial statements
For the year ended 31 December 2012 continued
11 Earnings per share
2012
£m
2011
£m
2010
£m
(Loss)/profit attributable to equity holders of parent from continuing operations
(1,041
)
3,007
3,564
Dilutive impact of convertible options
–
–
(10
)
(Loss)/profit attributable to equity holders of parent from
continuing operations
including dilutive impact of convertible options
(1,041
)
3,007
3,554
2012
million
2011
million
2010
million
Basic weighted average number of shares in
issue
a
12,225
11,988
11,719
Number of potential ordinary shares
389
538
733
Diluted weighted average number of shares
12,614
12,526
12,452
Basic earnings per share
Diluted earnings per share
b
2012
p
2011
p
2010
p
2012
p
2011
p
2010
p
(Loss)/earnings per ordinary share from continuing operations
(8.5
)
25.1
30.4
(8.5
)
24.0
28.5
(Loss)/earnings per ordinary share
(8.5
)
25.1
30.4
(8.5
)
24.0
28.5
The calculation of basic earnings per share is based on the profit attributable to equity holders of the parent and
the number of basic weighted average number of shares excluding treasury shares held in employee benefit trusts or held for trading. When calculating the diluted earnings per share, the weighted average number of shares in issue is adjusted for the
effects of all dilutive potential ordinary shares held in respect of Barclays PLC, totalling 389 million (2011: 538 million) shares. In addition, the profit attributable to equity holders of the parent is adjusted for the dilutive impact of the
potential conversion of outstanding options held in respect of Absa Group Limited. The decrease in the number of potential ordinary shares is primarily driven by the impact of the decrease in the average share price to £2.14 (2011:
£2.34) on both the 379 million (2011: 379 million) unexercised warrants and the 820 million (2011: 867 million) outstanding options granted under employee share schemes, which have strike prices ranging from £1.41 to
£5.22 with an average of £3.28 (2011: £3.71) .
The 379 million unexercised warrants as at 31 December 2012
were exercised on 13 February 2013. Please refer to Note 46.
Of the total number of employee share options and share awards at
31 December 2012, 145 million were anti-dilutive (2011: 248 million).
12 Dividends on Ordinary
Shares
The Directors have approved a final dividend in respect of 2012 of 3.5p per ordinary share of 25p each, amounting to
£426m (2011: £366m), which will be paid on 15 March 2013. The financial statements for the year ended 31 December 2012 does not reflect this dividend, which will be accounted for in shareholders' equity as an appropriation
of retained profits in the year ending 31 December 2013. The 2012 financial statements include the 2012 interim dividends of £367m (2011: £362m) and final dividend declared in relation to 2011 of £366m (2010: £298m).
Notes
a  The
number of basic weighted average number of shares excludes Treasury shares held in employee benefit trusts for trading.
b
 Potential ordinary shares shall be treated as dilutive when, and only when, their conversion to ordinary shares would increase loss per share.
212  I
Assets and liabilities held at fair value
The notes included in this section focus on assets and
liabilities the Group holds and recognises at fair value.
Fair value refers to the price that would be received to sell an asset or the price that would be paid to transfer
a liability in an arm's length transaction with a willing
counterparty, which may be an observable market price
or, where there is no quoted price for the instrument, may be an estimated based on available market data.
Detail regarding the Group's approach to managing market risk can be found on
pages 292-296.
13 Trading portfolio
Accounting for trading portfolio assets and liabilities
In accordance with IAS 39, all assets and liabilities held for trading purposes are held at fair value with gains and losses in
the changes in fair value taken to the income statement net trading income (Note 5).
Trading portfolio assets
Trading portfolio liabilities
2012
£m
2011
£m
2012
£m
2011
£m
Debt securities and other eligible bills
114,759
123,364
(36,742
)
(35,063
)
Equity securities
24,751
24,861
(7,979
)
(10,741
)
Traded loans
2,404
1,374
–
–
Commodities
3,116
2,584
(73
)
(83
)
Trading portfolio assets/(liabilities)
145,030
152,183
(44,794
)
(45,887
)
14 Financial assets designated at fair value
Accounting for financial assets designated at fair value
In accordance with IAS 39, financial assets may be designated at fair value, with gains and losses taken to the income statement
in net trading income (Note 5) and net investment income (Note 6). The Group has the ability to make the fair value designation when holding the instruments at fair value reduces an accounting mismatch (caused by an offsetting liability or asset
being held at fair value), is managed by the Group on the basis of its fair value, or includes terms that have substantive derivative characteristics (Note 15).
2012
£m
2011
£m
Loans and advances
21,996
21,960
Debt securities
6,118
2,095
Equity securities
8,957
4,018
Reverse repurchase agreements
6,034
5,779
Customers' assets held under investment contracts
1,263
1,302
Other financial assets
1,693
1,795
Financial assets designated at fair value
46,061
36,949
The total portfolio of linked liabilities to customers under investment contracts also includes £0.2bn (2011:
£0.4bn) reported within cash and balances at central banks. The carrying value of the total portfolio assets equals the carrying value of liabilities to customers under investment contracts shown in Note 17. Any change in the value of assets
results in an equal but opposite change in the value of amounts due to the policyholders. Therefore, the Group is not exposed to the financial risks inherent in the investments.
Credit risk of loans and advances designated at fair value and related credit derivatives
The following table shows the maximum exposure to credit risk, the changes in fair value attributable to changes in credit risk and the cumulative changes in fair value since initial recognition
together with the amount by which related credit derivatives mitigate this risk:
Maximum exposure
as at 31 
December
Changes in fair value
during the year 
ended
Cumulative changes in
fair value from 
inception
2012
£m
2011
£m
2012
£m
2011
£m
2012
£m
2011
£m
Loans and advances designated at fair value, attributable to credit risk
21,996
21,960
178
(75
)
(4,892
)
(5,070
)
Fair value of related credit derivatives
1,342
1,198
(6
)
138
395
401
I  213
Notes to the financial statements
For the year ended 31 December 2012 continued
15 Derivative financial instruments
Derivative instruments are contracts whose value is derived from one or more underlying financial instruments or indices defined in the contract.
They include swaps, forward rate agreements, futures, options and combinations of these instruments and primarily affect the Group's net interest income, net trading income, net fee and commission income and derivative assets and liabilities.
Notional amounts of the contracts are not recorded on the balance sheet. The Group's objectives and policies on managing the risks that arise in connection with derivatives, including the policies for hedging, are discussed in the Risk
management section on pages 288-289. Trading derivatives are managed within the Group's market risk management policies, which are outlined on pages 292-296.
The Group's exposure to credit risk arising from derivative contracts are outlined in the Credit risk section on page 105.
Accounting for derivatives
The Group applies IAS 39. All derivative instruments are held at fair value through profit or loss, except for
derivatives held for risk management purposes in an effective hedge relationship (see hedge accounting below). This includes terms included in a contract or other financial asset or liability (the host), which, had it been a standalone contract,
would have met the definition of a derivative. These are separated from the host and accounted for in the same way as a derivative.
Hedge accounting
The Group applies hedge
accounting to represent, to the maximum possible extent permitted under accounting standards, the economic effects of its interest and currency risk management strategies. Derivatives are used to hedge interest rate, exchange rate, commodity, and
equity exposures and exposures to certain indices such as house price indices and retail price indices related to non-trading positions. Where derivatives are held for risk management purposes, and when transactions meet the required criteria for
documentation and hedge effectiveness, the Group applies fair value hedge accounting, cash flow hedge accounting, or hedging of a net investment in a foreign operation, as appropriate to the risks being hedged.
Fair value hedge accounting
Changes in fair value of derivatives that qualify and are designated as fair value hedges are recorded in the income
statement, together with changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. The fair value changes adjust the carrying value of the hedged asset or liability held at amortised cost.
If hedge relationships no longer meet the criteria for hedge accounting, hedge accounting is discontinued. For fair
value hedges of interest rate risk, the fair value adjustment to the hedged item is amortised to the income statement over the period to maturity of the previously designated hedge relationship using the effective interest method. If the hedged item
is sold or repaid, the unamortised fair value adjustment is recognised immediately in the income statement.
Cash flow hedge accounting
For qualifying cash flow
hedges, the fair value gain or loss associated with the effective portion of the cash flow hedge is recognised initially in other comprehensive income, and then recycled to the income statement in the periods when the hedged item will affect profit
or loss. Any ineffective portion of the gain or loss on the hedging instrument is recognised in the income statement immediately.
When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is
recognised when the hedged item is ultimately recognised in the income statement. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was recognised in equity is immediately transferred to the income
statement.
Hedges of net investments
The Group's net investments in foreign operations, including monetary items accounted for as
part of the net investment, are hedged for foreign currency risks using both derivatives and foreign currency borrowings. Hedges of net investments are accounted for similarly to cash flow hedges; the effective portion of the gain or loss on the
hedging instrument being recognised directly in other comprehensive income and the ineffective portion being recognised immediately in the income statement. The cumulative gain or loss recognised in other comprehensive income is recognised in the
income statement on the disposal or partial disposal of the foreign operation, or other reductions in the Group's investment in the operation.
Types of derivatives held
Foreign exchange derivatives
The Group's principal exchange rate-related contracts are forward foreign exchange contracts, currency swaps and currency options. Forward
foreign exchange contracts are agreements to buy or sell a specified quantity of foreign currency, usually on a specified future date at an agreed rate. A currency swap generally involves the exchange, or notional exchange, of equivalent amounts of
two currencies and a commitment to exchange interest periodically until the principal amounts are re-exchanged on a future date.
Currency options provide the buyer with the right, but not the obligation, either to purchase or sell a fixed amount of a currency at a specified
exchange rate on or before a future date. As compensation for assuming the option risk, the option writer generally receives a premium at the start of the option period.
Currency derivatives are primarily designated as hedges of the foreign currency risk of net investments in foreign operations.
214  I
15 Derivative financial
instruments
continued
Interest rate derivatives
The Group's principal interest rate related contracts are interest rate swaps, forward rate agreements, basis swaps, caps, floors and swaptions. Included in this product category are
transactions that include combinations of these features. An interest rate swap is an agreement between two parties to exchange fixed rate and floating rate interest by means of periodic payments based upon a notional principal amount and the
interest rates defined in the contract. Certain agreements combine interest rate and foreign currency swap transactions, which may or may not include the exchange of principal amounts. A basis swap is a form of interest rate swap, in which both
parties exchange interest payments based on floating rates, where the floating rates are based upon different underlying reference indices. In a forward rate agreement, two parties agree a future settlement of the difference between an agreed rate
and a future interest rate, applied to a notional principal amount. The settlement, which generally occurs at the start of the contract period, is the discounted present value of the payment that would otherwise be made at the end of that period.
Interest rate derivatives, designated as cash flow hedges, primarily hedge the exposure to cash flow variability from interest rates of
variable rate loans to banks and customers, variable rate debt securities held and highly probable forecast financing transactions and reinvestments.
Interest rate derivatives designated as fair value hedges primarily hedge the interest rate risk of fixed rate borrowings in issue, fixed rate 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 asset) is transferred to the seller of protection. A credit default swap is a contract where the protection seller receives premium or interest-related payments in return for contracting to make payments to the protection buyer upon a
defined credit event. Credit events normally include bankruptcy, payment default on a reference asset or assets, or downgrades by a rating agency. A total return swap is an instrument whereby the seller of protection receives the full return of the
asset, including both the income and change in the capital value of the asset. The buyer of the protection in return receives a predetermined amount.
Equity derivatives
The Group's principal equity-related contracts are equity and
stock index swaps and options (including warrants, which are equity options listed on an exchange). An equity swap is an agreement between two parties to exchange periodic payments, based upon a notional principal amount, with one side paying fixed
or floating interest and the other side paying based on the actual return of the stock or stock index. An equity option provides the buyer with the right, but not the obligation, either to purchase or sell a specified stock, basket of stocks or
stock index at a specified price or level on or before a specified date. The Group also enters into fund-linked derivatives, being swaps and options whose underlyings include mutual funds, hedge funds, indices and multi-asset portfolios.
Commodity derivatives
The
Group's principal commodity-related derivative contracts are swaps, options, forwards and futures. The main commodities transacted are base metals, precious metals, oil and oil-related products, power and natural gas.
The Group's total derivative asset and liability position as reported on the balance sheet is as follows:
Total
derivatives
2012
2011
Notional
contract
amount
£m
Fair value
Notional
contract
amount
£m
Fair value
Asset
£m
Liabilities
£m
Assets
£m
Liabilities
£m
Total derivative assets/(liabilities) held for trading
40,192,194
465,347
(459,334)
43,095,991
535,306
(524,552)
Total derivative assets/(liabilities) held for risk management
302,822
3,799
(3,134)
243,534
3,658
(3,358)
Derivative assets/(liabilities)
40,495,016
469,146
(462,468)
43,339,525
538,964
(527,910)
The fair value of derivative assets decreased by 13% to £469bn reflecting the tightening of credit spreads
and trades that matured and terminated during the period.
I  215
Notes to the financial statements
For the year ended 31 December 2012 continued
15 Derivative financial instruments
continued
The fair values and notional amounts of derivative instruments held for trading are set out in the following table:
Derivatives held for trading
2012
2011
Notional
Fair value
Notional
Fair value
contract
amount
£m
Asset
£m
Liabilities
£m
contract
amount
£m
Assets
£m
Liabilities
£m
Foreign exchange derivatives
Forward foreign exchange
2,421,109
25,670
(26,665)
2,346,638
29,165
(26,968)
Currency swaps
1,277,523
28,007
(31,456)
1,158,267
27,388
(33,641)
OTC options bought and sold
604,777
5,581
(5,663)
713,690
7,269
(6,669)
OTC derivatives
4,303,409
59,258
(63,784)
4,218,595
63,822
(67,278)
Exchange traded futures and options – bought and sold
120,328
41
(37)
234,279
–
(2)
Foreign exchange derivatives
4,423,737
59,299
(63,821)
4,452,874
63,822
(67,280)
Interest rate derivatives
Interest rate swaps
6,676,588
264,830
(249,566)
8,974,201
251,629
(240,849)
Forward rate agreements
3,757,855
1,521
(1,483)
4,556,842
3,249
(3,374)
OTC options bought and sold
4,378,143
84,844
(85,517)
5,426,331
117,689
(113,214)
OTC derivatives
14,812,586
351,195
(336,566)
18,957,374
372,567
(357,437)
Interest rate derivatives cleared by central counterparty
17,103,792
172
(58)
15,543,970
–
–
Exchange traded futures and options – bought and sold
1,079,453
6
(1)
1,040,636
3
(3)
Interest rate derivatives
32,995,831
351,373
(336,625)
35,541,980
372,570
(357,440)
Credit derivatives
OTC swaps
1,529,984
29,788
(29,198)
1,666,786
60,481
(57,972)
Credit derivatives cleared by central counterparty
238,196
9
(10)
219,864
2,831
(3,376)
Credit derivatives
1,768,180
29,797
(29,208)
1,886,650
63,312
(61,348)
Equity and stock index derivatives
OTC options bought and sold
87,397
6,131
(9,391)
95,233
7,393
(10,768)
Equity swaps and forwards
74,098
1,762
(2,420)
167,098
2,516
(2,808)
OTC derivatives
161,495
7,893
(11,811)
262,331
9,909
(13,576)
Exchange traded futures and options – bought and sold
347,965
3,092
(3,192)
237,779
3,293
(2,616)
Equity and stock index derivatives
509,460
10,985
(15,003)
500,110
13,202
(16,192)
Commodity derivatives
OTC options bought and sold
81,787
1,786
(1,987)
91,573
2,810
(2,554)
Commodity swaps and forwards
164,771
11,441
(12,074)
300,100
17,778
(17,579)
OTC derivatives
246,558
13,227
(14,061)
391,673
20,588
(20,133)
Exchange traded futures and options – bought and sold
248,428
666
(616)
322,704
1,812
(2,159)
Commodity derivatives
494,986
13,893
(14,677)
714,377
22,400
(22,292)
Derivative assets/(liabilities) held for trading
40,192,194
465,347
(459,334)
43,095,991
535,306
(524,552)
Total OTC derivatives held for trading
21,054,032
461,361
(455,420)
25,496,759
527,367
(516,396)
Total derivatives cleared by central counterparty held for trading
17,341,988
181
(68)
15,763,834
2,831
(3,376)
Total exchange traded derivatives held for trading
1,796,174
3,805
(3,846)
1,835,398
5,108
(4,780)
Derivative assets/(liabilities) held for trading
40,192,194
465,347
(459,334)
43,095,991
535,306
(524,552)
216  I
15 Derivative financial
instruments
continued
The fair values and notional amounts of derivative instruments held for risk management are set out in
the following table:
Derivatives held for risk management
2012
2011
Notional
Fair value
Notional
Fair value
contract
amount
£m
Asset
£m
Liabilities
£m
contract
amount
£m
Assets
£m
Liabilities
£m
Derivatives designated as cash flow hedges
Interest rate swaps
97,935
2,043
(1,094)
120,557
2,147
(1,725)
Forward foreign exchange
148
–
(3)
328
3
(1)
Interest rate derivatives cleared by central counterparty
79,039
–
–
36,264
–
–
Derivatives designated as cash flow hedges
177,122
2,043
(1,097)
157,149
2,150
(1,726)
Derivatives designated as fair value hedges
Interest rate swaps
44,031
1,576
(1,984)
38,574
1,447
(1,238)
Interest rate derivatives cleared by central counterparty
64,209
–
–
35,801
–
–
Derivatives designated as fair value hedges
108,240
1,576
(1,984)
74,375
1,447
(1,238)
Derivatives designated as hedges of net investments
Forward foreign exchange
17,460
180
(53)
11,391
61
(388)
Currency swaps
–
–
–
619
–
(6)
Derivatives designated as hedges of net investments
17,460
180
(53)
12,010
61
(394)
Derivatives held for risk management
302,822
3,799
(3,134)
243,534
3,658
(3,358)
The Group has hedged the following forecast cash flows, which primarily vary with interest rates. These cash flows
are expected to impact the income statement in the following periods, excluding any hedge adjustments that may be applied:
Total
£m
Up to
one year
£m
Between
one to
two years
£m
Between
two to
three years
£m
Between
three to
four years
£m
Between
four to
five years
£m
More than
five years
£m
2012
Forecast receivable cash flows
2,417
345
333
353
354
350
682
Forecast payable cash flows
54
31
18
4
–
1
–
2011
Forecast receivable cash flows
3,818
700
582
597
612
596
731
Forecast payable cash flows
177
108
28
24
9
–
8
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 9 years (2011: 9 years).
Amounts recognised in net interest income
2012
£m
2011
£m
Losses on the hedged items attributable to the hedged risk
(74
)
(765
)
Gains on the hedging instruments
114
683
Fair value ineffectiveness
40
(82
)
Cash flow hedging ineffectiveness
30
8
Net investment hedging ineffectiveness
–
(1
)
All gains and losses on hedging derivatives relating to forecast transactions, which are no longer expected to
occur, have been recycled to the income statement.
Gains and losses transferred from the cash flow hedging reserve in the current year
to net interest income was a £97m gain (2011: £86m gain); interest expense a £571m gain (2011: £732m gain); net trading income a £48m loss (2011: £157m loss) and administration and general expenses a £1m
gain (2011: £2m gain).
I  217
Notes to the financial statements
For the year ended 31 December 2012 continued
16 Available for sale investments
Accounting for available for sale investments
Available for sale investments
are held at fair value with gains and losses being included in other comprehensive income. The Group uses this classification for assets that are not derivatives and are not held for trading purposes or otherwise designated at fair value through
profit or loss, or at amortised cost. Dividends and interest (calculated using the effective interest method) are recognised in the income statement in net interest income (Note 3) or, net investment income (Note 6). On disposal, the cumulative gain
or loss recognised in other comprehensive income is also included in net investment income.
2012
£m
2011
£m
Debt securities and other eligible bills
74,677
63,610
Equity securities
432
4,881
Available for sale investments
75,109
68,491
Critical accounting estimates and judgements
Approximately $4.5bn (£2.8bn) of the assets acquired as part of the 2008 acquisition of the North American business of Lehman Brothers had not been received by 31 December 2012.
Approximately $3.0bn (£1.9bn) of this amount was recognised as part of the acquisition accounting and is included as an available for sale investment on the balance sheet. As discussed in Note 29, Barclays entitlement to these assets is
the subject of legal proceedings between the SIPA Trustee for Lehman Brothers Inc. and Barclays. As such, there continues to be significant judgement involved in the valuation of this asset and uncertainty relating to the outcome of ongoing appeals.
The Group takes the view that the effective provision of US$1.5bn (£0.9bn) that is reflected in its estimate of fair value is appropriate. The valuation of this asset will be kept under review as legal proceedings progress.
17 Financial liabilities designated at fair value
Accounting for liabilities designated at fair value through profit and loss
In
accordance with IAS 39, financial liabilities may be designated at fair value, with gains and losses taken to the income statement within net trading income (Note 5) and net investment income (Note 6). The Group has the ability to do this when
holding the instruments at fair value reduces an accounting mismatch (caused by an offsetting liability or asset being held at fair value), is managed by the Group on the basis of its fair value, or includes terms that have substantive derivative
characteristics (Note 15).
2012
2011
Fair value
£m
Contractual
amount due
on maturity
£m
Fair value
£m
Contractual
amount due
on maturity
£m
Debt securities
58,169
60,045
66,565
70,787
Deposits
11,930
13,583
10,755
11,422
Liabilities to customers under investment contracts
1,494
–
1,681
–
Other financial liabilities
6,687
6,705
8,996
9,561
Financial liabilities designated at fair value
78,280
80,333
87,997
91,770
The cumulative own credit net loss recognised is £979m at 31 December 2012 (2011: £3,600m gain).
218  I
18 Fair value of financial instruments
Accounting for financial assets and liabilities – fair values
The Group
applies IAS 39. All financial instruments are initially recognised at fair value on the date of initial recognition and, depending on the classification of the asset, may continue to be held at fair value either through profit or loss or other
comprehensive income.
The fair value of a financial instrument is
the amount for which an asset could be exchanged, or a liability settled, in an arm's length transaction between knowledgeable willing parties.
Wherever possible, fair value is determined by reference to a quoted market price for that instrument. For many of the Group's financial assets
and liabilities, especially derivatives, quoted prices are not available, and valuation models are used to estimate fair value. The models calculate the expected cash flows under the terms of each specific contract and then discount these values
back to a present value. These models use as their basis independently sourced market parameters including, for example, interest rate yield curves, equities and commodities prices, option volatilities and currency rates.
For financial liabilities held at fair value, the carrying amount reflects the
effect on fair value of changes in own credit spreads derived from observable market data, such as spreads on Barclays issued bonds or credit default swaps. Most market parameters are either directly observable or are implied from instrument prices.
The model may perform numerical procedures in the pricing such as interpolation when input values do not directly correspond to the most actively traded market trade parameters.
On initial recognition, it is presumed that the transaction price is the fair
value unless there is observable information available in an active market to the contrary.
For valuations that have made use of significant unobservable inputs, the difference between the model valuation and the initial transaction price ('Day One profit') is recognised in
profit or loss either:
¡
on a straight-line basis over the term of the transaction,
or over the period until all model inputs will become observable where appropriate;
or
¡
released in full when previously unobservable inputs become observable.
Various factors influence the availability of observable inputs and these may vary from product to product and change over time. Factors include the
depth of activity in the relevant market, the type of product, whether the product is new and not widely traded in the marketplace, the maturity of market modelling and the nature of the transaction (bespoke or generic). To the extent that valuation
is based on models or inputs that are not observable in the market, the determination of fair value can be more subjective, dependant on the significance of the unobservable input to the overall valuation. Unobservable inputs are determined based on
the best information available, for example by reference to similar assets, similar maturities or other analytical techniques.
The sensitivity of valuations used in the financial statements to reasonably possible changes in variables is shown on page 229.
Comparison of carrying amounts and fair values
The following table summarises the fair value of financial assets and liabilities measured at amortised cost on the Group's balance sheet.
2012
2011
Carrying
amount
£m
Fair
value
£m
Carrying
amount
£m
Fair
value
£m
Financial assets
Loans and advances to banks
40,489
40,489
47,446
47,446
Loans and advances to customers:
– Home loans
174,988
164,608
171,272
163,433
– Credit cards, unsecured and other retail lending
66,414
65,357
64,492
63,482
– Corporate loans
184,327
178,492
196,170
190,408
Reverse repurchase agreements and other similar secured lending
176,956
176,895
153,665
153,365
Financial liabilities
Deposits from banks
77,010
77,023
91,116
91,137
Customer accounts:
– Current and demand accounts
127,819
127,819
116,208
116,208
– Savings accounts
99,875
99,875
93,160
93,160
– Other time deposits
158,013
158,008
156,664
156,689
Debt securities in issue
119,581
119,725
129,736
128,997
Repurchase agreements and other similar secured borrowing
217,342
217,342
207,292
207,292
Subordinated liabilities
24,018
23,467
24,870
20,745
I  219
Notes to the financial statements
For the year ended 31 December 2012 continued
18 Fair value of financial instruments
continued
Valuation
The fair value is the amount an asset could be exchanged, or a
liability settled, between knowledgeable, willing parties in an arm's length transaction. As a wide range of valuation techniques are available, it may be inappropriate to compare the Barclays fair value information to independent market or
other financial institutions. Assumptions changes and different valuation methodologies can have significant impact on fair values which are based on unobservable inputs.
Financial assets
The carrying value of financial assets held at amortised cost
(including loans and advances, and other lending such as reverse repurchase agreements and cash collateral on securities borrowed) is determined in accordance with the accounting policy noted on pages 232-233.
Loans and advances to banks and customers
The carrying value of variable rate loans is assumed to be their fair value based on frequent repricing. The fair value of the fixed rate loans is determined using discounted cash flows by
aggregating for the same or similar products. This approach is used mainly in Retail and Business Banking and Wealth and Investment Management by applying derived market interest rates on expected cash flows. These valuation techniques also consider
expected credit losses and changes to behavioural profiles.
For the Investment Bank and Corporate Banking, the fair value is determined
by applying a credit spread for the counterparty. Credit spreads are based on regional and industry segments and take the contractual maturity of the loan facilities into consideration. In the absence of counterparty rating, the average of regional
and industry segmental credit spreads are applied to the contractual maturity of the loan.
The fair value of asset backed securities
and reclassified trading portfolio assets to loans and advances are determined primarily from market quotes and, where these are not available, by alternative techniques including reference to credit spreads on similar assets with similar obligor,
broker quotes and other research data.
Financial liabilities
The carrying value of financial liabilities held at amortised cost (including customer accounts and other deposits such as repurchase agreements and cash collateral on securities lent, debt
securities in issue and subordinated liabilities) is determined in accordance with the accounting policy noted on page 232.
In many
cases, the fair value disclosed approximates the carrying value because the instruments are short term in nature or have interest rates that reprice frequently such as customer accounts and other deposits and short term debt securities.
The fair value for deposits repayable on demand is considered to be equal to their carrying value. The fair value for all other deposits is
estimated using discounted cash flows applying either market rates or current rates for deposits of similar remaining maturities.
Fair
values of other debt securities in issue are based on quoted prices where available, or where these are unavailable, are estimated using valuation model.
Fair values for dated and undated convertible and non convertible loan capital are based on quoted market rates for the issue concerned or similar issues with terms and conditions.
Valuation inputs
IFRS 7
Financial Instruments: Disclosure
requires an entity to classify its financial instruments held at fair value according to a hierarchy that reflects the significance of observable market inputs. The three levels of the fair value hierarchy
are defined below.
Quoted market prices – Level 1
Financial instruments are classified as Level 1 if their value is observable in an active market. Such instruments are valued by reference to unadjusted quoted prices for identical assets or
liabilities in active markets where the quoted price is readily available, and the price represents actual and regularly occurring market transactions on an arm's length basis. An active market is one in which transactions occur with sufficient
volume and frequency to provide pricing information on an ongoing basis.
This category includes liquid government bonds actively traded
through an exchange or clearing house, actively traded listed equities and actively exchange-traded derivatives.
Valuation technique
using observable inputs – Level 2
Financial instruments classified as Level 2 have been valued using models whose inputs are
observable in an active market. Valuations based on observable inputs include financial instruments such as swaps and forwards which are valued using market standard pricing techniques, and options that are commonly traded in markets where all the
inputs to the market standard pricing models are observable.
This category includes most investment grade and liquid high yield bonds,
certain asset backed securities, US agency securities, government bonds, less actively traded listed equities, bank, corporate and municipal obligations, certain OTC derivatives, certain convertible bonds, certificates of deposit, commercial paper,
collateralised loan obligations (CLOs), most commodities based derivatives, credit derivatives, certain credit default swaps (CDSs), most fund units, certain loans, foreign exchange spot and forward transactions and certain issued notes.
220  I
18 Fair value of financial
instruments
continued
Valuation technique using significant unobservable inputs – Level 3
Financial instruments are classified as Level 3 if their valuation incorporates significant inputs that are not based on observable market data
(unobservable inputs). A valuation input is considered observable if it can be directly observed from transactions in an active market, or if there is compelling external evidence demonstrating an executable exit price. An input is deemed
significant if it is shown to contribute more than 10% to the valuation of a financial instrument.
Unobservable input levels are
generally determined based on observable inputs of a similar nature, historical observations or other analytical techniques.
The Level
3 category includes certain corporate debt securities, distressed debt, private equity investments, commercial real estate loans, certain OTC derivatives (requiring complex and unobservable inputs such as correlations and long dated volatilities),
certain convertible bonds, certain CDS, derivative exposures to monoline insurers, certain fund units, certain asset backed securities, certain issued notes, certain CDOs (synthetic and some cash underlyings), certain CLOs and certain loans.
The following table shows the Group's financial assets and liabilities that are held at fair value analysed by level within the
fair value hierarchy.
Financial assets and liabilities held at fair value
Valuation technique using
Quoted
market
prices
(Level 1)
£m
Observable
inputs
(Level 2)
£m
Significant
unobservable
inputs
(Level 3)
£m
Total
£m
As at 31 December 2012
Trading portfolio assets
51,614
85,930
7,486
145,030
Financial assets designated at fair value
14,405
25,705
5,951
46,061
Derivative financial assets
2,864
460,139
6,143
469,146
Available for sale investments
28,946
43,283
2,880
75,109
Total assets
97,829
615,057
22,460
735,346
Trading portfolio liabilities
(20,270)
(24,522)
(2)
(44,794)
Financial liabilities designated at fair value
(181)
(75,866)
(2,233)
(78,280)
Derivative financial liabilities
(2,668)
(454,896)
(4,904)
(462,468)
Total Liabilities
(23,119)
(555,284)
(7,139)
(585,542)
As at 31 December 2011
Trading portfolio assets
61,530
81,449
9,204
152,183
Financial assets designated at fair value
4,179
24,091
8,679
36,949
Derivative financial assets
2,550
525,147
11,267
538,964
Available for sale investments
30,857
34,761
2,873
68,491
Total assets
99,116
665,448
32,023
796,587
Trading portfolio liabilities
(26,155)
(19,726)
(6)
(45,887)
Financial liabilities designated at fair value
(39)
(84,822)
(3,136)
(87,997)
Derivative financial liabilities
(2,263)
(517,066)
(8,581)
(527,910)
Total Liabilities
(28,457)
(621,614)
(11,723)
(661,794)
Transfers from Level 1 to Level 2 primarily comprised certain government bonds and equity products, as a result of
regular observability reassessments.
I  221
Notes to the financial statements
For the year ended 31 December 2012 continued
18 Fair value of financial instruments
continued
The following table shows the Group's financial assets and liabilities that are held at fair value disaggregated by valuation technique and
product type.
Financial assets and liabilities held at fair value by product
type
Assets
Valuation technique using
Liabilities
Valuation technique using
Quoted
market
prices
(Level 1)
£m
Observable
inputs
(Level 2)
£m
Significant
unobservable
inputs
(Level 3)
£m
Quoted
market
prices
(Level 1)
£m
Observable
inputs
(Level 2)
£m
Significant
unobservable
inputs
(Level 3)
£m
As at 31 December 2012
Commercial real estate loans
–
1
1,798
(1)
–
–
Asset backed products
17
28,755
4,175
(2)
(3,654)
(539)
Other credit products
–
25,582
1,792
–
(28,266)
(1,178)
Derivative exposure to monoline insurers
–
–
592
–
–
–
Non-asset backed debt instruments
66,034
94,471
3,845
(13,207)
(75,787)
(1,687)
Equity products
29,781
7,448
1,242
(9,862)
(10,902)
(1,688)
Private equity
8
26
1,675
–
–
–
Funds and fund-linked products
1,124
2,625
864
(3)
(994)
–
Foreign exchange products
–
29,260
216
–
(30,000)
(246)
Interest rate products
–
385,977
1,275
–
(377,965)
(1,117)
Commodity products
693
20,720
665
(5)
(25,904)
(582)
Other
172
20,192
4,321
(39)
(1,812)
(102)
Total
97,829
615,057
22,460
(23,119)
(555,284)
(7,139)
As at 31 December 2011
Commercial real estate loans
–
–
2,452
–
–
–
Asset backed products
30
29,995
5,752
–
(5,595)
(1,020)
Other credit products
–
55,347
4,386
–
(57,608)
(3,765)
Derivative exposure to monoline insurers
–
–
1,129
–
–
–
Non-asset backed debt instruments
66,622
84,296
4,213
(15,788)
(77,966)
(2,086)
Equity products
30,141
7,810
1,079
(12,589)
(11,724)
(1,531)
Private equity
–
39
2,827
–
–
–
Funds and fund-linked products
968
3,169
1,290
–
(1,017)
–
Foreign exchange products
–
34,658
457
–
(33,536)
(187)
Interest rate products
–
405,635
2,433
–
(399,254)
(2,090)
Commodity products
857
26,551
773
(4)
(33,120)
(991)
Other
498
17,948
5,232
(76)
(1,794)
(53)
Total
99,116
665,448
32,023
(28,457)
(621,614)
(11,723)
222  I
18 Fair value of financial
instruments
continued
Level 3 classification
The following table shows Level 3 financial assets and liabilities disaggregated by balance sheet classification and product type.
Level 3 financial assets and liabilities by balance sheet classification
and product type
Non-derivative assets
Non-derivative liabilities
Derivatives
Trading
portfolio
assets
£m
Financial
assets
designated
at fair value
£m
Available
for sale
investments
£m
Trading
portfolio
liabilities
£m
Financial
liabilities
designated
at fair value
£m
Net
derivative
financial
instruments
a
£m
As at 31 December 2012
Commercial real estate loans
–
1,798
–
–
–
–
Asset backed products
2,592
335
492
–
–
217
Other credit products
–
18
–
–
(522)
1,118
Derivative exposure to monoline insurers
–
57
–
–
–
535
Non-asset backed debt instruments
3,577
213
52
(2)
(1,669)
(13)
Equity products
141
–
7
–
–
(594)
Private equity
1
1,240
434
–
–
–
Funds and fund-linked products
864
–
–
–
–
–
Foreign exchange products
5
2
3
–
(2)
(38)
Interest rate products
–
1
–
–
(1)
158
Commodity products
–
–
5
–
(39)
117
Other
b
306
2,287
1,887
–
–
(261)
Total
7,486
5,951
2,880
(2)
(2,233)
1,239
As at 31 December 2011
Commercial real estate loans
–
2,452
–
–
–
–
Asset backed products
3,306
693
252
(1)
(13)
495
Other credit products
–
196
–
–
(1,007)
1,432
Derivative exposure to monoline insurers
–
–
–
–
–
1,129
Non-asset backed debt instruments
3,953
223
36
(5)
(2,081)
1
Equity products
115
–
15
–
–
(582)
Private equity
–
2,238
589
–
–
–
Funds and fund-linked products
1,258
32
–
–
–
–
Foreign exchange products
6
–
–
–
–
264
Interest rate products
–
3
–
–
–
340
Commodity products
–
–
18
–
(35)
(201)
Other
b
566
2,842
1,963
–
–
(192)
Total
9,204
8,679
2,873
(6)
(3,136)
2,686
Notes
a
The derivative financial instruments are represented on a net basis. On a gross basis derivative financial assets as at 31 December 2012 totalled
£6,143m (2011: £11,267m) and derivative financial liabilities totalled £4,904m (2011: £8,581m).
b
Other primarily includes fixed rate loans and receivables resulting from the acquisition of the North American businesses of Lehman Brothers.
I  223
Notes to the financial statements
For the year ended 31 December 2012 continued
18 Fair value of financial instruments
continued
Level 3 movement analysis
The following table summarises the movements in the Level 3 balance during the year. The table shows gains and losses and includes amounts for all
financial assets and liabilities transferred to and from Level 3 during the year. Transfers have been reflected as if they had taken place at the beginning of the year.
Analysis of movements in Level 3 financial assets and
liabilities
Trading
portfolio
assets
£m
Financial
assets
designated
at fair
value
£m
Available
for sale
investments
£m
Trading
portfolio
liabilities
£m
Financial
liabilities
designated
at fair
value
£m
Net
derivative
financial
instruments
a
£m
Total
£m
As at 1 January 2012
9,204
8,679
2,873
(6)
(3,136)
2,686
20,300
Purchases
3,443
2,972
50
(1)
(8)
434
6,890
Sales
(4,445)
(3,837)
(226)
1
29
(138)
(8,616)
Issues
–
–
–
–
(289)
(354)
(643)
Settlements
(744)
(915)
(57)
1
450
5
(1,260)
Total gains and losses in the period recognised in theincome statement
– trading income
248
(236)
(17)
–
81
(1,438)
(1,362)
– other income
(7)
3
–
–
44
(109)
(69)
Total gains or losses recognised in other comprehensive income
–
–
(19)
–
–
–
(19)
Net transfers
(213)
(715)
276
3
596
153
100
As at 31 December 2012
7,486
5,951
2,880
(2)
(2,233)
1,239
15,321
As at 1 January 2011
5,741
10,904
3,290
(101)
(3,637)
2,828
19,025
Purchases
6,863
1,659
74
2
–
420
9,018
Sales
(5,390)
(2,210)
(317)
5
223
(144)
(7,833)
Issues
–
57
–
–
(647)
(389)
(979)
Settlements
(190)
(2,157)
(39)
–
523
60
(1,803)
Total gains and losses in the period recognised in theincome statement
– trading income
(355)
117
–
2
982
(686)
60
– other income
–
(12)
90
–
150
–
228
Total gains or losses recognised in other comprehensiveincome
–
–
(26)
–
–
–
(26)
Net transfers
2,535
321
(199)
86
(730)
597
2,610
As at 31 December 2011
9,204
8,679
2,873
(6)
(3,136)
2,686
20,300
The significant movements in the Level 3 positions during the year ended 31 December 2012 are as follows:
¡
Purchases of £6.9bn primarily comprising £3.6bn in asset backed debt instruments, £1.4bn in commercial real estate loans and
£1.0bn in non-asset backed loans;
¡
Sales of £8.6bn primarily comprising £4.7bn of asset backed debt instruments, £1.3bn of commercial real estate loans and
£1.5bn of private equity disposals including the sale of an investment in Archstone, an apartment company, for £0.9bn;
¡
Settlements of £1.3bn including £0.3bn of asset backed debt instruments and £0.7bn in commercial real estate loans; and
¡
Net losses on the fair value of Level 3 assets recognised in the income statement totalled £1.4bn (31 December 2011: £0.3bn)
primarily due to a reduction in the fair value of monoline and non-monoline credit derivatives.
Note
a
The derivative financial instruments are represented on a net basis. On a gross basis derivative financial assets as at 31 December 2012 totalled
£6,143m (2011: £11,267m) and derivative financial liabilities totalled £4,904m (2011: £8,581m).
224  I
18 Fair value of financial
instruments
continued
Gains and losses on Level 3 financial assets and liabilities
The following table discloses the gains and losses recognised in the year arising on Level 3 financial assets and liabilities held at year end.
Gains and losses recognised during the period on Level 3 financial assets
and liabilities held
Trading
portfolio
assets
£m
Financial
assets
designated at
fair value
£m
Available
for sale
investments
£m
Trading
portfolio
liabilities
£m
Financial
liabilities
designated
at fair 
value
£m
Net
derivative
financial
instruments
£m
Total
£m
As at 31 December 2012
Recognised in the income statement
– trading income
(36)
(174)
(3)
(1)
33
(1,747)
(1,928)
– other income
(7)
6
(11)
–
55
(61)
(18)
Total gains or losses recognised in other comprehensive income
–
–
67
–
–
–
67
Total
(43)
(168)
53
(1)
88
(1,808)
(1,879)
As at 31 December 2011
Recognised in the income statement
– trading income
(44
)
270
–
–
729
(324
)
631
– other income
–
118
(54
)
–
–
–
64
Total gains or losses recognised in other comprehensive income
–
–
135
–
–
–
135
Total
(44)
388
81
–
729
(324)
830
Valuation techniques and sensitivity analysis
Current year valuation methodologies were consistent with the prior year unless otherwise noted below. These methodologies are commonly used by market participants.
Sensitivity analysis is performed on products with significant unobservable parameters (Level 3) to generate a range of reasonably possible
alternative valuations. The sensitivity methodologies applied take account of the nature of valuation techniques used, as well as the availability and reliability of observable proxy and historical data and the impact of using alternative models.
Sensitivities are calculated without reflecting the impact of any diversification in the portfolio.
Sensitivities are dynamically
calculated on a monthly basis. The calculation is based on a range, standard deviation or spread data of a reliable reference source or a scenario based on alternative market views alongside the impact of using alternative models. The level of shift
or scenarios applied is considered for each product and varied according to the quality of the data and variability of underlying market. Sensitivity to using alternative models is quantified through scenario analysis and proxy approaches. The
approach adopted in determining these sensitivities has continued to evolve during the year, in the context of changing market conditions.
The valuation techniques used 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.
Commercial real estate loans
Description:
This legacy portfolio includes lending on a range of commercial property types including retail, hotel, office, multi-family and
industrial properties.
Valuation:
Performing loans are valued using a spread-based approach, with consideration of characteristics such as property type,
geographic location, yields, credit quality and property performance reviews. Where there is significant uncertainty regarding loan performance, valuation is based on the underlying collateral, whose value is determined through property-specific
information such as third party valuation reports and bids for the underlying properties.
Observability:
Since each commercial real estate loan is unique in
nature and the secondary commercial loan market is relatively illiquid, valuation inputs are generally considered unobservable.
Level 3
sensitivity:
For performing loans, sensitivity is determined by applying an adjusted spread of 15% for each loan
(both up and down). This adjusted spread is derived from loan origination spreads provided by independent market research. For non-performing loans, a plausible worst-case valuation is determined from the history of third-party valuation reports or
bids received.
I  225
Notes to the financial statements
For the year ended 31 December 2012 continued
18 Fair value of financial instruments
continued
Asset backed products
Description:
These are debt and derivative products that are
linked to the cash flows of a pool of referenced assets via securitisation. This category includes residential mortgage backed securities, commercial mortgage backed securities, asset backed securities, CDOs, CLOs and derivatives with cash flows
linked to securitisations.
Valuation:
Where available, valuations are based on observable market prices which are sourced from broker quotes and inter-dealer prices.
Otherwise, valuations are determined using industry standard cash flow models that calculate fair value based on loss projections, prepayment, recovery and discount rates.
These inputs are determined by reference to a number of sources including proxying to observed transactions, market indices or market research, and by assessing underlying collateral performance.
Proxying to observed transactions, indices or research requires an assessment and comparison of the relevant securities'
underlying attributes including collateral, tranche, vintage, underlying asset composition (historical losses, borrower characteristics, and loan attributes such as loan-to-value ratio and geographic concentration) and credit ratings (original and
current).
Observability:
Where an asset backed product does not have an observable market price and the valuation is determined using a model, an
instrument is considered unobservable.
Level 3 sensitivity:
The sensitivity analysis for asset backed products is based on external vendor pricing dispersion or bid offer ranges, defined at
position level. Half of the observed pricing dispersion or bid offer range is multiplied by the market value of the position to calculate the valuation sensitivity. Where there is no observable dispersion of bid offer data, price movements on
appropriate indices are used. Sensitivity is based on the average of the largest upward and downward price movement in the preceding 12 month period.
Other credit products
Description:
These products are linked to the credit spread of a referenced entity, index or basket of referenced entities. This category includes synthetic CDOs, single name and index CDS and Nth-to-default
basket swaps.
Valuation:
CDS are valued using a market standard model that incorporates the credit curve as its principal input. Credit spreads are
observed directly from broker data, third party vendors or priced to proxies. Where credit spreads are unobservable, they are determined with reference to recent transactions or bond spreads from observable issuances of the same issuer or other
similar entities as a proxy. Synthetic CDOs are valued using a model that calculates fair value based on credit spreads, recovery rates, correlations and interest rates and is calibrated daily. The model is calibrated to the index tranche market.
Observability:
CDS contracts referencing entities that are not actively traded are considered unobservable. The correlation input to bespoke CDO
valuation is considered unobservable as it is proxied from the observable index tranche market.
Level 3 sensitivity:
The sensitivity of valuations of the illiquid
CDS portfolio is determined by applying a shift to each underlying reference asset. The shift is based upon the average bid offer spreads observed in the market for similar CDS.
Bespoke Collateralised Synthetic Obligation (CSO) sensitivity is calculated using correlation levels derived from the range of contributors to a consensus bespoke service.
Derivative exposure to monoline insurers
Description:
These products are derivatives through which credit protection has been purchased on structured debt instruments (primarily CLOs) from monoline insurers.
Valuation:
The value of the CDS is derived from the value of the cash instrument that it protects. A valuation adjustment is then applied to reflect the counterparty credit risk associated with the relevant
monoline. This adjustment is calculated using an assessment of the likely recovery of the protected cash security, which is derived from a scenario-based calculation of the mark-to-market of the instrument using an appropriate valuation model; and
the probability of default and loss given default of the monoline counterparty, as estimated from independent fundamental credit analysis.
Observability:
Due to the counterparty credit risk associated with these insurers, derivative exposure to monoline counterparty insurers is generally considered unobservable.
Level 3
sensitivity:
Sensitivity is measured by stressing inputs to the counterparty valuation adjustment including our
expected exposures and the probability of default of the monoline derivative counterparty. The modelled expected exposures are stressed by shifting the recovery rate assumptions on the underlying protected assets. The probability of default of the
monoline derivative counterparty is stressed by shifting the internal default curve.
226  I
18 Fair value of financial
instruments
continued
Non-asset backed debt instruments
Description:
These are government bonds, US agency bonds, corporate bonds, commercial paper, certificates of deposit, convertible bonds, notes and other non-asset backed bonds. Within this population, valuation
inputs are unobservable for certain convertible bonds and corporate bonds.
Valuation:
Liquid government bonds actively traded through an
exchange or clearing house are marked to the closing levels observed in these markets. Less liquid government bonds, US agency bonds, corporate bonds, commercial paper and certificates of deposit are valued using observable market prices which are
sourced from broker quotes, inter-dealer prices or other reliable pricing services. Where there are no observable market prices, fair value is determined by reference to either issuances or CDS spreads of the same issuer as proxy inputs to obtain
discounted cash flow amounts. In the absence of observable bond or CDS spreads for the respective issuer, similar reference assets or sector averages are applied as a proxy (the appropriateness of proxies being assessed based on issuer, coupon,
maturity and industry).
Convertible bonds are valued using prices observed through broker sources, market data services and
trading activity. Where reliable external sources are not available, fair value is determined using a spread to the equity conversion value or the value of the bond without the additional equity conversion. The spread level is determined with
reference to similar proxy assets.
Fair valued Barclays issued notes are valued using discounted cash flow techniques and industry
standard models incorporating various observable input parameters depending on the terms of the instrument. Any unobservable inputs generally have insignificant impact on the overall valuation.
Observability:
Where an observable market price is not available, an instrument is considered unobservable.
Level 3 sensitivity:
The sensitivity for the corporate bonds portfolio is determined by applying a shift to each underlying position driven by average bid offer spreads observed in the market for similar bonds.
Equity products
Description:
This category includes listed equities, exchange traded equity derivatives, OTC equity derivatives, preference shares and contracts for difference.
Valuation:
OTC equity derivatives valuations are determined using industry standard models. The models calculate fair value based on input parameters such as stock prices, dividends, volatilities, interest
rates, equity repo curves and, for multi-asset products, correlations. Unobservable model inputs are determined by reference to liquid market instruments and applying extrapolation techniques to match the appropriate risk profile.
Observability:
In general, input parameters are deemed observable up to liquid maturities which are determined separately for each parameter and underlying instrument.
Level 3
sensitivity:
Sensitivity is estimated based on the dispersion of consensus data services either directly or through
proxies.
Private equity
Description:
This category includes private equity investments.
Valuation:
Private equity investments are valued in accordance
with the 'International Private Equity and Venture Capital Valuation Guidelines'. This requires the use of a number of individual pricing benchmarks such as the prices of recent transactions in the same or similar entities, discounted cash
flow analysis, and comparison with the earnings multiples of listed comparative companies. Full valuations are performed at least bi-annually, with the portfolio reviewed on a monthly basis for material events that might impact upon fair value.
Observability:
Unobservable inputs include earnings estimates, multiples of comparative companies, marketability discounts and discount rates.
Model inputs are based on market conditions at the reporting date. The valuation of unquoted equity instruments is subjective by nature. However, the relevant methodologies are commonly applied by other market participants and have been consistently
applied over time.
L
evel 3 sensitivity:
The relevant valuation models are each sensitive to a number of key assumptions, such as projected future earnings, comparator multiples, marketability discounts and discount rates. Valuation
sensitivity is estimated by flexing such assumptions to reasonable alternative levels and determining the impact on the resulting valuation.
Funds and fund-linked products
Description:
This category includes holdings in hedge funds, funds
of funds, and fund derivatives. Fund derivatives are derivatives whose underlyings include mutual funds, hedge funds, fund indices and multi-asset portfolios. They are valued using underlying fund prices, yield curves and other available market
information.
Valuation:
In general, fund holdings are valued based on the latest available valuation received from the fund administrator. In the case of
illiquid fund holdings the valuation will take account of all available information in relation to the underlying fund or collection of funds and maybe adjusted relative to the performance of relevant index benchmarks.
Observability:
Funds are deemed unobservable where the fund is either suspended, in wind-down, has a redemption restriction that severely affects liquidity, or where the latest net asset value from the fund
administrators is more than three months old.
I  227
Notes to the financial statements
For the year ended 31 December 2012 continued
18 Fair value of financial instruments
continued
Level 3
sensitivity:
Sensitivity is calculated on an individual fund basis using a loss based scenario approach which factors
in the underlying assets of the specific fund and assumed recovery rates.
Foreign exchange products
Description:
These products are derivatives linked to the foreign exchange market. This category includes foreign exchange (FX) forward
contracts, FX swaps and FX options. Exotic derivatives are valued using industry standard and bespoke models.
Valuation:
Input parameters include FX rates, interest rates, FX
volatilities, interest rate volatilities, FX interest rate correlations and others as appropriate. Unobservable model inputs are set by referencing liquid market instruments and applying extrapolation techniques to match the appropriate risk
profile.
Observability:
Certain correlations and long dated forward and volatilities are unobservable.
Level 3 sensitivity:
Sensitivity relating to unobservable valuation inputs is based on the dispersion of consensus data services.
Interest rate products
Description:
These are products linked to interest rates or inflation indices. This category includes interest rate and inflation swaps, swaptions, caps, floors, inflation options, balance guaranteed swaps and
other exotic interest rate derivatives. Interest rate products are valued using standard discounted cash flow techniques.
Valuation:
Interest rate derivative cash flows are valued using
interest rate yield curves whereby observable market data is used to construct the term structure of forward rates. This is then used to project and discount future cash flows based on the parameters of the trade. Instruments with optionality are
valued using volatilities implied from market observable inputs. Exotic interest rate derivatives are valued using industry standard and bespoke models based on observable market parameters which are determined separately for each parameter and
underlying instrument. Where unobservable, a parameter will be set with reference to an observable proxy. Inflation forward curves and interest rate yield curves are extrapolated beyond observable tenors.
Balance guaranteed swaps are valued using cash flow models that calculate fair value based on loss projections, prepayment, recovery and discount
rates. These parameters are determined by reference to underlying asset performance, independent research, ABX indices, broker quotes, observable trades on similar securities and third party pricing sources. Prepayment is projected based on
observing historic prepayment.
Observability:
Inflation forward curves and interest rate yield curves are observable up to liquid maturities after which they are deemed
unobservable.
Level 3 sensitivity:
Sensitivity relating to unobservable valuation inputs is based on the dispersion of consensus data services.
Commodity products
Description:
These products are exchange traded and OTC
derivatives based on underlying commodities such as metals, crude oil and refined products, agricultural, power and natural gas.
Valuation:
The valuations of certain commodity swaps and options are determined using models incorporating discounting of cash flows and other industry standard modelling techniques. Valuation inputs include
forward curves, volatilities implied from market observable inputs and tenor correlation. Unobservable inputs are set with reference to similar observable products or by applying extrapolation techniques from the observable market.
Observability:
Within this population, certain forward curves and volatilities for longer dated exposures are unobservable.
Level 3
sensitivity:
Sensitivity is determined primarily by measuring historical variability over two years. The estimate is
calculated using data for short dated parameter curves to generate best and worst case scenarios. Where historical data is unavailable or uncertainty is due to volumetric risk, sensitivity is measured by applying appropriate stress scenarios or
using proxy bid-offer spread levels.
Other
Description:
This category is largely made up of fixed rate loans, which are valued using models that discount expected future cash flows. The receivables resulting from the acquisition of the North American
businesses of Lehman Brothers is also included within 'Other'. For more details, refer to Note 29 Legal Proceedings.
Valuation:
Fixed rate loans are valued using models that calculate fair value based on observable interest rates and unobservable credit spreads. Unobservable credit spreads are modelled according to issuer
credit quality. Derived levels are validated against any origination activity that occurs.
Level 3 sensitivity:
The sensitivity for fixed rate loans is
calculated by applying a 25% shift in borrower credit spreads.
No stress has been applied to the receivables relating to the
Lehman acquisition (Note 29). The sensitivity inherent in the measurement of the receivables is akin to a litigation provision. Due to this, an upside and downside stress on a basis comparable with the other assets cannot be applied.
228  I
18 Fair value of financial
instruments
continued
Sensitivity analysis of valuations using unobservable inputs
Fair value
Favourable changes
Unfavourable changes
Product type
Total
assets
£m
Total
liabilities
£m
Income
statement
£m
Equity
£m
Income
statement
£m
Equity
£m
As at 31 December 2012
Commercial real estate loans
1,798
–
87
–
(80)
–
Asset backed products
4,175
(539)
299
7
(210)
(7)
Other credit products
1,792
(1,178)
191
–
(191)
–
Derivative exposure to monoline insurers
592
–
164
–
(268)
–
Non-asset backed debt instruments
3,845
(1,687)
32
12
(26)
(12)
Equity products
1,242
(1,688)
220
3
(214)
(3)
Private equity
1,675
–
257
74
(225)
(71)
Funds and fund-linked products
864
–
112
–
(112)
–
Foreign exchange products
216
(246)
46
–
(46)
–
Interest rate products
1,275
(1,117)
108
–
(108)
–
Commodity products
665
(582)
68
–
(68)
–
Other
4,321
(102)
67
–
(70)
–
Total
22,460
(7,139)
1,651
96
(1,618)
(93)
As at 31 December 2011
Commercial real estate loans
2,452
–
102
–
(118)
–
Asset backed products
5,752
(1,020)
488
2
(388)
(2)
Other credit products
4,386
(3,765)
167
–
(167)
–
Derivative exposure to monoline insurers
1,129
–
–
–
(133)
–
Non-asset backed debt instruments
4,213
(2,086)
24
–
(22)
–
Equity products
1,079
(1,531)
169
11
(169)
(15)
Private equity
2,827
–
375
81
(364)
(82)
Funds and fund-linked products
1,290
–
174
–
(174)
–
Foreign exchange products
457
(187)
57
–
(57)
–
Interest rate products
2,433
(2,090)
60
–
(60)
–
Commodity products
773
(991)
116
–
(123)
–
Other
5,232
(53)
196
–
(196)
–
Total
32,023
(11,723)
1,928
94
(1,971)
(99)
The effect of stressing unobservable inputs to a range of reasonably possible alternatives alongside considering
the impact of using alternative models would be to increase fair values by up to £1.7bn (2011: £2.0bn) or to decrease fair values by up to £1.7bn (2011: £2.1bn) with substantially all the potential effect impacting profit and
loss rather than equity.
Discounting approaches for derivative instruments
During 2011, in line with market practice, the methodology for valuing certain collateralised interest rate products, principally in the Fixed Income Rates business, was amended to reflect the
impact of 'cheapest to deliver' collateral on discounting curves, where counterparty Credit Support Annex (CSA) agreements specify the right of the counterparty posting collateral to choose the currency of collateral posted. During 2012,
the valuation of collateralised derivatives in other business areas was updated to reflect CSA aware discounting. The December 2012 impact of this transition was not material to the overall valuation.
Additionally, during 2012, a fair value adjustment was applied to account for the impact of incorporating the cost of funding into the valuation of
uncollateralised derivatives. This was driven by the impact of discounting future expected uncollateralised cash flows to reflect the cost of funding, taking into account observed traded levels on uncollateralised derivatives and other relevant
factors.
The Group continues to monitor market practices and activity to ensure the approach to discounting in derivative valuation
remains appropriate.
Complex derivative instruments
Valuation estimates made by counterparties with respect to complex derivative instruments, for the purpose of determining the amount of collateral to be posted, often differ, sometimes
significantly, from Barclays own estimates. In almost all cases, Barclays has been able to successfully resolve such differences or otherwise reach an accommodation with respect to collateral posting levels, including in certain cases by entering
into compromise collateral arrangements. Due to the ongoing nature of collateral calls, Barclays will often be engaged in discussions with one or more counterparties in respect of such differences at any given time. Valuation estimates made by
counterparties for collateral purposes are, like any other third-party valuation, considered when determining Barclays own fair value estimates.
I  229
Notes to the financial statements
For the year ended 31 December 2012 continued
18 Fair value of financial instruments
continued
Fair value adjustments
The
main valuation adjustments required to arrive at a fair value are described below:
Bid-offer valuation adjustments
For assets and liabilities where the Group is not a market maker, mid prices are adjusted to bid and offer prices respectively. Bid-offer
adjustments reflect expected close out strategy and, for derivatives, the fact that they are managed on a portfolio basis. The methodology for determining the bid-offer adjustment for a derivative portfolio will generally involve netting between
long and short positions and the bucketing of risk by strike and term in accordance with hedging strategy. Bid-offer levels are derived from market sources, such as broker data. For those assets and liabilities where the firm is a market maker and
has the ability to transact at, or better than, mid price (which is the case for certain equity, bond and vanilla derivative markets), the mid price is used, since the bid-offer spread does not represent a transaction cost.
Uncertainty adjustments
Market
data input for exotic derivatives may not have a directly observable bid-offer spread. In such instances, an uncertainty adjustment is applied as a proxy for the bid offer adjustment. An example of this is correlation risk where an adjustment is
required to reflect the possible range of values that market participants apply. The uncertainty adjustment may be determined by calibrating to derivative prices, or by scenario analysis or historical analysis.
Credit and debit valuation adjustments
Credit valuation adjustments (CVAs) and debit valuation adjustments (DVAs) are incorporated into derivative valuations to reflect the impact on fair value of counterparty credit risk and Barclays
own credit quality respectively. These adjustments are modelled for OTC derivatives across all asset classes. Calculations are derived from estimates of exposure at default, probability of default and recovery rates, on a counterparty basis.
Counterparties include (but are not limited to) corporates, monolines, sovereigns and sovereign agencies, supranationals, and special-purpose vehicles.
Exposure at default for CVA and DVA is generally based on expected exposure, estimated through the simulation of underlying risk factors. For some complex products, where this approach is not
feasible, simplifying assumptions are made, either through proxying with a more vanilla structure, or using current or scenario-based mark-to-market as an estimate of future exposure. Where strong collateralisation agreement exists as a mitigant to
counterparty risk, the exposure is set to zero.
Probability of default and recovery rate information is generally sourced from the CDS
markets. For counterparties where this information is not available, or considered unreliable due to the nature of the exposure, alternative approaches are taken based on mapping internal counterparty ratings onto historical or market-based default
and recovery information. In particular, this applies to sovereign related names where the effect of using the recovery assumptions implied in CDS levels would imply a £200m increase in CVA.
Correlation between counterparty credit and underlying derivative risk factors may lead to a systematic bias in the valuation of counterparty
credit risk, termed 'wrong-way' or 'right-way' risk. This is not incorporated into the CVA calculation, but is monitored regularly via scenario analysis and has been found to be immaterial.
Model valuation adjustments
Valuation models are reviewed under the firm's model governance framework. This process identifies the assumptions used and any model
limitations (for example, if the model does not incorporate volatility skew). Where necessary, fair value adjustments will be applied to take these factors into account. Model valuation adjustments are dependant on the size of portfolio, complexity
of the model, whether the model is market standard and to what extent it incorporates all known risk factors. All models and model valuation adjustments are subject to review on at least an annual basis.
Own credit adjustments
The
carrying amount of issued notes that are designated under the IAS 39 fair value option is adjusted to reflect the effect of changes in own credit spreads. The resulting gain or loss is recognised in the income statement. For funded instruments such
as issued notes, mid-level credit spreads on Barclays issued bonds are the basis for this adjustment.
At 31 December 2012, the own
credit adjustment arose from the fair valuation of Barclays financial liabilities designated at fair value. Barclays credit spreads tightened during 2012, leading to a charge of £4,579m (2011: gain of £2,708m) from the fair value of
changes primarily in own credit itself but also reflecting the effects of foreign exchange rates, time decay and trade activity.
230  I
18 Fair value of financial
instruments
continued
Key valuation adjustments that may be of interest from a financial statement user perspective are
quantified below:
As at 31 December
2012
£m
2011
£m
Bid-offer valuation adjustments
(452)
(603)
Uncertainty adjustments
(294)
(313)
Derivative credit valuation adjustments:
– Monolines
(235)
(403)
– Other derivative credit valuation adjustments
(693)
(958)
Derivative debit valuation adjustments
442
774
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 difference between the transaction price (the fair value at initial
recognition) and the amount that would have arisen had valuation models using unobservable inputs been used on initial recognition, less amounts subsequently recognised, is as follows:
Year ended 31 December
2012
£m
2011
£m
As at 1 January
117
137
Additions
78
93
Amortisation and releases
(47)
(113)
As at 31 December
148
117
Valuation control framework
The Finance-Product Control-Valuations function is responsible for independent price verification, oversight of fair value adjustments and escalation of valuation issues. This process covers all
fair value positions and is a key control in ensuring the material accuracy of valuations.
Price verification uses independently
sourced data that is deemed most representative of the market. The characteristics against which the data source is assessed are independence, reliability, consistency with other sources and evidence that the data represents an executable price. The
most current data available at balance sheet date is used. Where significant variances are noted in the independent price verification process, an adjustment is taken to the fair value position. Additional fair value adjustments may be taken to
reflect such factors as bid-offer spreads, market data uncertainty, model limitations and counterparty risk – further detail on these fair value adjustments is disclosed on page 230.
Governance over the valuation process is the responsibility of the Valuation Committee. This Committee meets monthly and is responsible for overseeing valuation and fair value adjustment policy
within Corporate and Investment Banking and this is the forum to which valuation issues are escalated. The Valuation Committee delegates more detailed review to the following five sub-committees: Independent Valuations, Legacy and Other Assets,
Litigation Risk, Models and Governance.
The Independent Valuations Sub-committee reviews the results of the independent price
verification and fair value adjustments process on a monthly basis. This includes, but is not limited to, reviewing fair value adjustments and methodologies, independent price verification results, limits and valuation uncertainty. The Legacy and
Other Assets Sub-committee is responsible for overseeing the valuation and measurement issues arising in legacy assets, certain AFS positions and other assets as delegated by the Valuation Committee. The Litigation Risk Sub-committee is responsible
for overseeing the valuation and measurement issues arising from legal risks within Corporate and Investment Banking.
The Models
Sub-committee is responsible for overseeing policies and controls related to the use of valuation models. This includes but is not limited to review of global model risk reports, the trade approval process and model validation, model-related fair
value adjustments, and independent price verification variances or collateral disputes relating to model usage.
The Governance
Sub-committee is responsible for overseeing the governance of valuation processes, policies and procedures. This Sub-committee monitors the development of the Valuation control framework, completeness of balance sheet oversight and appropriate
representation of senior management at the Valuation Committee and each of the above referenced sub-committees. Regulatory and accounting issues related to fair value are assessed by the Governance Sub-committee.
Critical accounting estimates and judgements
Quoted market prices are not available for many of the financial assets and liabilities that are held at fair value and the Group uses a variety of techniques to estimate the fair value. The above
note describes the more judgemental aspects of valuation in the period, including: credit valuation adjustments on monoline exposures, commercial real estate loans, private equity investments, and fair value loans to government and business and
other services.
I  231
Notes to the financial statements
For the year ended 31 December 2012 continued
Financial instruments held at amortised cost
The notes included in this section focus on assets that are
held at amortised cost arising from the Group's retail and wholesale lending including loans and advances, finance leases, repurchase and reverse repurchase agreements and similar secured lending and borrowing. Detail regarding the Group's
capital and liquidity position can be found on pages 126-150.
Accounting for financial instruments held at amortised cost
Loans and advances
to customers and banks, customer accounts, debt securities and most financial liabilities are held at amortised cost. That is, the initial fair value (which is normally the amount advanced or borrowed) is adjusted for repayments and the amortisation
of coupon, fees and expenses to represent the effective interest rate of the asset or liability.
19 Loans and advances to banks and customers
As at 31 December
2012
£m
2011
£m
Gross loans and advances to banks
40,530
47,491
Less: allowance for impairment
(41
)
(45
)
Loans and advances to banks
40,489
47,446
Gross loans and advances to customers
435,364
442,486
Less: allowance for impairment
(9,635
)
(10,552
)
Loans and advances to customers
425,729
431,934
Further analysis of the Group's loans and advances to banks and customers and impairment allowances are
included on pages 80-118.
20 Finance leases
Accounting for finance leases
The Group applies IAS 17
Leases
in
accounting for finance leases, both where it is the lessor or the lessee. A finance lease is a lease which confers substantially all the risks and rewards of the leased assets on the lessee. Where the Group is the lessor, the leased asset is not
held on the balance sheet; instead a finance lease receivable is recognised representing the minimum lease payments receivable under the terms of the lease, discounted at the rate of interest implicit in the lease. Where the Group is the lessee, the
leased asset is recognised in property, plant and equipment and a finance lease liability is recognised, representing the minimum lease payments payable under the lease, discounted at the rate of interest implicit in the lease.
Interest income or expense is recognised in interest receivable or payable,
allocated to accounting periods to reflect a constant periodic rate of return.
Finance lease receivables
Finance lease receivables are included within loans and advances to customers. The Group specialises in asset-based lending and works with a broad range of international technology, industrial
equipment and commercial companies to provide customised finance programmes to assist manufacturers, dealers and distributors of assets.
Investment in finance lease receivables
2012
2011
Gross
investment
in finance
lease
receivables
£m
Future
finance
income
£m
Present
value of
minimum
lease
payments
receivable
£m
Un-
guaranteed
residual
values
£m
Gross
investment
in finance
lease
receivables
£m
Future
finance
income
£m
Present
value of
minimum
lease
payments
receivable
£m
Un-
guaranteed
residual
values
£m
Not more than one year
2,363
(329
)
2,034
80
2,977
(437
)
2,540
71
Over one year but not more than five years
5,055
(749
)
4,306
105
6,333
(934
)
5,399
122
Over five years
617
(120
)
497
318
1,379
(320
)
1,059
395
Total
8,035
(1,198
)
6,837
503
10,689
(1,691
)
8,998
588
The impairment allowance for uncollectable finance lease receivables amounted to £140m at 31 December
2012 (2011: £290m).
232  I
20 Finance leases
continued
Finance lease liabilities
The Group leases items of property, plant and equipment on terms that meet the definition of finance leases. Finance lease liabilities are included within accruals, deferred income and other
liabilities (Note 26).
As at 31 December 2012, the total future minimum payments under finance leases were £35m (2011:
£64m), of which £5m (2011: £10m) was due within one year. As at 31 December 2012, the carrying amount of assets held under finance leases was £22m (2011: £28m).
21 Reclassification of financial assets held for trading
Accounting for the reclassification of financial assets
held for trading
In accordance with IAS 39, where the Group no longer intends to trade in financial assets it may transfer them out
of the held for trading classification and measure them at amortised cost if they meet the definition of a loan. The initial value used for the purposes of establishing amortised cost is fair value on the date of the transfer.
Prior to 2010, the Group reclassified certain financial assets, originally classified as held for trading but
subsequently deemed to be not held for trading purposes, to loans and receivables.
The carrying value of the securities reclassified
into loans and receivables has decreased from £7,652m to £5,188m primarily as a result of sales and paydowns of the underlying securities offset by increases due to the reversal of the discount on reclassification and FX movements.
Sales of securities from the 16 December 2008 reclassification totalled £151m (2011: £91m) and sales of securities
from the 25 November 2009 reclassification totalled £1,316m (2011: £482m).
The following table provides a summary of
the assets reclassified from held for trading to loans and receivables.
2012
2011
Carrying
value
£m
Fair
value
£m
Carrying
value
£m
Fair
value
£m
As at 31 December
Trading assets reclassified to loans and receivables
Reclassification 25 November 2009
5,140
4,996
7,434
7,045
Reclassification 16 December 2008
48
50
218
217
Total financial assets reclassified to loans and receivables
5,188
5,046
7,652
7,262
If the reclassifications had not been made, the Group's income statement for 2012 would have included a net
gain on the reclassified trading assets of £247m (2011: loss of £152m).
22 Reverse repurchase
and repurchase agreements including other similar lending and borrowing
Reverse repurchase agreements (and stock borrowing or
similar transaction) are a form of secured lending whereby the Group provides a loan or cash collateral in exchange for the transfer of collateral, generally in the form of marketable securities subject to an agreement to transfer the securities
back at a fixed price in the future. Repurchase agreements are where the Group obtains such loans or cash collateral, in exchange for the transfer of collateral.
Accounting for reverse repurchase and repurchase
agreements including other similar lending and borrowing
The Group purchases (a reverse repurchase agreement) or borrows securities
subject to a commitment to resell or return them. The securities are not included on 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.
The Group may also sell (a repurchase
agreement) or lend securities subject to a commitment to repurchase or redeem them. The securities are retained on the balance sheet as the Group retains substantially all the risks and rewards of ownership. Consideration received (or cash
collateral provided) is accounted for as a financial liability at amortised cost.
As at 31 December
2012
£m
2011
£m
Assets
Banks
64,616
64,470
Customers
112,340
89,195
Reverse repurchase agreements and other similar secured lending
176,956
153,665
Liabilities
Banks
87,815
69,544
Customers
129,527
137,748
Repurchase agreements and other similar secured borrowing
217,342
207,292
I  233
Notes to the financial statements
For the year ended 31 December 2012 continued
Non-current assets and other investments
The notes included in this section focus on the
Group's non-current tangible and intangible assets and property plant and equipment, which provide long term future economic benefits.
23 Property, plant and equipment
Accounting for property, plant and equipment
The Group applies IAS 16 Property Plant and Equipment and IAS 40 Investment Properties.
Property, plant and equipment is stated at cost, which includes direct and incremental acquisition costs less accumulated depreciation and provisions for impairment, if required. Subsequent costs
are capitalised if these result in an enhancement to the asset.
Depreciation is provided on the depreciable amount of
items of property, plant and equipment on a straight-line basis over their estimated useful economic lives. Depreciation rates, methods and the residual values underlying the calculation of depreciation of items of property, plant and equipment are
kept under review to take account of any change in circumstances. The Group uses the following annual rates in calculating depreciation:
Annual rates in calculating depreciation
Depreciation rate
Freehold land
Not depreciated
Freehold buildings and long-leasehold property (more than 50 years to run)
2-3.3%
Leasehold property over the remaining life of the lease (less than 50 years to run)
Over the remaining life of the lease
Costs of adaptation of freehold and leasehold
property
a
6-10%
Equipment installed in freehold and leasehold
property
a
6-10%
Computers and similar equipment
17-33%
Fixtures and fittings and other equipment
9-20%
Investment property
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
remeasurement are included in the income statement.
Note
a
Where leasehold property has a remaining useful life of less than 15 years, costs of adaptation and installed equipment are depreciated over the remaining life of
the lease.
234  I
23 Property, plant and
equipment continued
Investment
property
£m
Property
£m
Equipment
£m
Leased
assets
£m
Total
£m
Cost
As at 1 January 2012
2,928
3,959
4,755
20
11,662
Acquisitions and disposals of subsidiaries
(16
)
6
1
–
(9
)
Additions and disposals
(191
)
177
211
(6
)
191
Change in fair value of investment properties
23
–
–
–
23
Exchange and other
movements
a
(1,058
)
(112
)
(173
)
–
(1,343
)
As at 31 December 2012
1,686
4,030
4,794
14
10,524
Accumulated depreciation and impairment
As at 1 January 2012
–
(1,245
)
(3,244
)
(7
)
(4,496
)
Depreciation charge
–
(212
)
(456
)
(1
)
(669
)
Disposals
–
18
204
2
224
Exchange and other movements
–
25
146
–
171
As at 31 December 2012
–
(1,414
)
(3,350
)
(6
)
(4,770
)
Net book value
1,686
2,616
1,444
8
5,754
Cost
As at 1 January 2011
1,570
4,229
4,749
75
10,623
Acquisitions of subsidiaries
1,201
–
–
–
1,201
Additions and disposals
277
(183
)
256
1
351
Change in fair value of investment properties
(138
)
–
–
–
(138
)
Exchange and other movements
18
(87
)
(250
)
(56
)
(375
)
As at 31 December 2011
2,928
3,959
4,755
20
11,662
Accumulated depreciation and impairment
As at 1 January 2011
–
(1,326
)
(3,133
)
(24
)
(4,483
)
Depreciation charge
–
(206
)
(463
)
(4
)
(673
)
Disposals
–
275
175
4
454
Exchange and other movements
–
12
177
17
206
As at 31 December 2011
–
(1,245
)
(3,244
)
(7
)
(4,496
)
Net book value
2,928
2,714
1,511
13
7,166
Property rentals of £105m (2011: £94m) and £52m (2011: £61m) have been included in net
investment income and other income respectively.
The fair value of investment property is determined by reference to current market
prices for similar properties, adjusted as necessary for condition and location, or by reference to recent transactions updated to reflect current economic conditions. Discounted cash flow techniques may be employed to calculate fair value where
there have been no recent transactions, using current external market inputs such as market rents and interest rates. Valuations are carried out by management with the support of appropriately qualified independent valuers.
Note
a
Of the other movement, £1.1bn relates to a transfer of Baubecon, an investment property, to other assets held for sale in June. Subsequently in July,
Baubecon was disposed.
I  235
Notes to the financial statements
For the year ended 31 December 2012 continued
24 Goodwill and intangible assets
Accounting for goodwill and other intangible
assets
Goodwill
The
carrying value of goodwill is determined in accordance with IFRS 3
Business Combinations
and IAS 36
Impairment of Assets
.
Goodwill arises on the acquisition of subsidiaries, associates and joint ventures, and represents the excess of the fair value of the purchase
consideration over the fair value of the Group's share of the assets acquired and the liabilities and contingent liabilities assumed on the date of the acquisition.
Goodwill is reviewed annually for impairment, or more frequently when there
are indications that impairment may have occurred. The test involves comparing the carrying value of goodwill with the present value of the pre-tax cash flows, discounted at a rate of interest that reflects the inherent risks, of the cash generating
unit to which the goodwill relates, or the cash generating unit's fair value if this is higher.
Intangible assets
The accounting standard that the Group applies in accounting for
intangible assets other than goodwill is IAS
38 Intangible Assets
.
Intangible assets include brands, customer lists, internally generated software, licences and other contracts and core deposit intangibles. They are initially recognised when they are separable or
arise from contractual or other legal rights, the cost can be measured reliably and, in the case of intangible assets not acquired in a business combination, where it is probable that future economic benefits attributable to the assets will flow
from their use.
Intangible assets are stated at cost (which is, in
the case of assets acquired in a business combination, the acquisition date fair value) less amortisation and provision for impairment, if any, and are amortised over their useful lives in a manner that reflects the pattern to which they contribute
to future cash flows, generally over 4-25 years.
Intangible assets
are reviewed for impairment when there are indicators that impairment may have occurred.
Goodwill
£m
Internally
generated
software
£m
Other
software
£m
Core
deposit
intangibles
£m
Brands
£m
Customer
lists
£m
Licences
and
other
£m
Total
£m
2012
Cost
As at 1 January 2012
6,697
1,437
328
287
166
1,724
444
11,083
Additions and disposals
29
446
115
(21
)
(1
)
19
34
621
Exchange and other movements
(141
)
(39
)
35
(23
)
(16
)
(105
)
(2
)
(291
)
As at 31 December 2012
6,585
1,844
478
243
149
1,638
476
11,413
Accumulated amortisation and impairment
As at 1 January 2012
(1,392
)
(694
)
(114
)
(114
)
(106
)
(615
)
(202
)
(3,237
)
Disposals
–
32
5
21
1
1
5
65
Amortisation charge
–
(162
)
(52
)
(11
)
(18
)
(152
)
(40
)
(435
)
Impairment charge
–
(8
)
–
–
–
–
(2
)
(10
)
Exchange and other movements
13
23
3
8
12
49
11
119
As at 31 December 2012
(1,379
)
(809
)
(158
)
(96
)
(111
)
(717
)
(228
)
(3,498
)
Net book value
5,206
1,035
320
147
38
921
248
7,915
2011
Cost
As at 1 January 2011
7,259
1,091
234
347
202
1,686
473
11,292
Additions and disposals
(210
)
375
98
(1
)
–
144
(19
)
387
Exchange and other movements
(352
)
(29
)
(4
)
(59
)
(36
)
(106
)
(10
)
(596
)
As at 31 December 2011
6,697
1,437
328
287
166
1,724
444
11,083
Accumulated amortisation and impairment
As at 1 January 2011
(1,040
)
(552
)
(86
)
(121
)
(109
)
(493
)
(194
)
(2,595
)
Disposals
210
2
5
–
–
–
23
240
Amortisation charge
–
(157
)
(35
)
(13
)
(18
)
(158
)
(38
)
(419
)
Impairment charge
(597
)
(4
)
–
–
–
–
–
(601
)
Exchange and other movements
35
17
2
20
21
36
7
138
As at 31 December 2011
(1,392
)
(694
)
(114
)
(114
)
(106
)
(615
)
(202
)
(3,237
)
Net book value
5,305
743
214
173
60
1,109
242
7,846
236  I
24 Goodwill and intangible
assets
continued
Goodwill
Goodwill is allocated to business operations according to business segments as follows:
2012
£m
2011
£m
UKRBB
3,144
3,145
Europe RBB
62
64
Africa RBB
a
863
947
Barclaycard
514
505
Investment Bank
93
102
Corporate Banking
a
139
151
Wealth and Investment Management
391
391
Total net book value of goodwill
5,206
5,305
Critical accounting estimates and judgements
Goodwill
Testing goodwill for impairment involves a significant amount of
estimation. This includes the identification of independent cash generating units and the allocation of goodwill to these units based on which units are expected to benefit from the acquisition. The allocation is reviewed following business
reorganisation. Cash flow projections necessarily take into account changes in the market in which a business operates including the level of growth, competitive activity and the impacts of regulatory change. Determining both the expected pre-tax
cash flows and the risk adjusted interest rate appropriate to the operating unit require the exercise of judgement. The estimation of pre-tax cash flows is sensitive to the periods for which detailed forecasts are available and to assumptions
regarding the long term sustainable cash flows.
Other intangible assets
Determining the estimated useful lives of intangible assets (such as those arising from contractual relationships) requires an analysis of circumstances and judgement. The assessment of whether an
asset is exhibiting indicators of impairment as well as the calculation of impairment, which requires the estimation of future cash flows and fair values less costs to sell, also requires the preparation of cash flow forecasts and fair values for
assets that may not be regularly bought and sold. The most significant amounts of intangible assets relate to Absa and Lehman Brothers North American businesses.
Impairment testing of goodwill
Total impairment charges of £nil have
been recognised during the year. Impairment charges of £597m recognised in 2011 related to the goodwill held in FirstPlus and Spain which was not supportable based on value in use calculations.
Key assumptions
The key
assumptions used for impairment testing are set out below for each significant goodwill balance. Other goodwill of £1,247m (2011: £1,264m) was allocated to multiple cash generating units which are not considered individually significant.
UKRBB
At
31 December 2012, goodwill relating to Woolwich was £3,130m (2011: £3,130m) of the total UKRBB balance. The carrying value of the cash generating unit (CGU) is determined using an allocation of total Group shareholder funds
excluding goodwill based on the CGU's share of risk weighted assets before goodwill balances are added back. The recoverable amount of the CGU has been determined using cash flow predictions based on financial budgets approved by management and
covering a five-year period, with a terminal growth rate of 2% (2011: 3%) applied thereafter. The forecast cash flows have been discounted at a pre-tax rate of 12% (2011: 13%). Based on these assumptions, the recoverable amount exceeded the carrying
amount including goodwill by £9,334m (2011: £8,683m). A one percentage point change in the discount rate or the terminal growth rate would increase or decrease the recoverable amount by £1,637m (2011: £1,399m) and
£1,115m (2011: £939m) respectively. A reduction in the forecast cash flows of 10% per annum would reduce the recoverable amount by £1,767m (2011: £1,538m).
Africa RBB
At 31 December 2012, goodwill relating to Absa RBB was £829m
(2011: £911m) of the total Africa RBB balance. The carrying value of the CGU has been determined by using net asset value. The recoverable amount of the Absa Group has been determined using cash flow predictions based on financial budgets
approved by management and covering a five year period, with a terminal growth rate of 6% (2011: 6%) applied thereafter. The forecast cash flows have been discounted at a pre-tax rate of 13% (2011: 14%). The recoverable amount calculated based on
value in use exceeded the carrying amount including goodwill by £3,133m (2011: £4,746m). A one percentage point change in the discount rate or the terminal growth rate would increase or decrease the recoverable amount by £813m
(2011: £948m) and £623m (2011: £702m) respectively. A reduction in the forecast cash flows of 10% per annum would reduce the recoverable amount by £643m (2011: £842m).
Note
a
Certain corporate banking activities in Africa previously reported under Africa RBB are now included within Corporate Banking to align Africa to the reporting
approach for UK and Europe. 2011 balances have been restated.
I  237
Notes to the financial statements
For the year ended 31 December 2012 continued
25 Operating leases
Accounting for operating leases
The Group applies IAS 17
Leases
, for operating leases. An operating lease is a lease where substantially all of the risks and rewards of the
leased assets remain with the lessor. Where the Group is the lessor, lease income is recognised on a straight-line basis over the period of the lease unless another systematic basis is more appropriate. The Group recognises leased assets on balance
sheet within property, plant and equipment.
Where the Group is the
lessee, rentals payable are recognised as an expense in the income statement on a straight-line basis over the lease term unless another systematic basis is more appropriate.
Operating lease receivables
The Group acts as lessor, whereby items of plant and equipment are purchased and then leased to third parties under arrangements qualifying as operating leases. The future minimum lease payments
expected to be received under non-cancellable operating leases as at 31 December 2012 was £4m (2011: £14m).
Operating lease commitments
The Group leases various offices, branches and other premises under non-cancellable operating lease arrangements. With such operating lease
arrangements, the asset is kept on the lessor's balance sheet and the Group reports the future minimum lease payments as an expense over the lease term. The leases have various terms, escalation and renewal rights. There are no contingent rents
payable.
Operating lease rentals of £622m (2011: £659m) have been included in administration and general expenses.
The future minimum lease payments by the Group under non-cancellable operating leases are as follows:
2012
2011
Property
£m
Equipment
£m
Property
£m
Equipment
£m
Not more than one year
695
13
585
12
Over one year but not more than five years
1,290
3
1,673
2
Over five years
2,768
–
2,830
–
Total
4,753
16
5,088
14
Total future minimum sublease payments to be received under non-cancellable subleases as at 31 December 2012
was £22m (2011: £121m).
238  I
Accruals, provisions, legal proceedings and contingent liabilities
The notes included in this section focus on the Group's accruals,
provisions and contingent liabilities. Provisions are recognised for present obligations arising as consequences of past events where it is probable that a transfer of economic benefit will be necessary to settle the obligation and it can be
reliably estimated. Contingent liabilities reflect potential liabilities that are not recognised on the balance sheet.
26 Accruals, deferred income and other liabilities
Accounting for insurance contracts
The Group applies IFRS 4
Insurance
Contracts
to its insurance contracts. An insurance contract is a contract that compensates a third party against a loss from non-financial risk. Some wealth management and other products, such as life assurance contracts, combine investment and
insurance features; these are treated as insurance contracts when they pay benefits that are at least 5% more than they would pay if the insured event does not occur.
Insurance liabilities include current best estimates of future contractual cash flows, claims handling, and administration costs in respect of
claims. Liability adequacy tests are performed at each balance sheet date to ensure the adequacy of contract liabilities. Where a deficiency is highlighted by the tests, insurance liabilities are increased, any deficiency being recognised in the
income statement.
Insurance premium revenue is recognised in the
income statement in the period earned, net of reinsurance premiums payable, in net premiums from insurance contracts. Increases and decreases in insurance liabilities are recognised in the income statement in net claims and benefits on insurance
contracts.
2012
£m
2011
£m
Accruals and deferred income
4,806
4,959
Other creditors
4,702
5,171
Obligations under finance leases (see Note 20)
35
64
Insurance contract liabilities, including unit-linked liabilities
2,689
2,386
Accruals, deferred income and other liabilities
12,232
12,580
Insurance liabilities relate principally to the Group's long term business. Insurance contract liabilities
associated with the Group's short term non-life business are £126m (2011: £118m). The maximum amounts payable under all of the Group's insurance products, ignoring the probability of insured events occurring and the
contribution from investments backing the insurance policies, were £102bn (2011: £104bn) or £79bn (2011: £82bn) after reinsurance. Of this insured risk, £87bn (2011: £89bn) or £67bn (2011: £69bn) after
reinsurances was concentrated in short term insurance contracts in Africa.
The impact to the income statement and equity under a
reasonably possible change in the assumptions used to calculate the insurance liabilities would be £7m (2011: £8m).
I  239
Notes to the financial statements
For the year ended 31 December 2012 continued
27 Provisions
Accounting for provisions
The Group applies IAS 37
Provisions, Contingent
Liabilities and Contingent Assets
in accounting for non-financial liabilities.
Provisions are recognised for present obligations arising as consequences of past events where it is more likely than not that a transfer of economic benefit will be necessary to settle the
obligation, which can be reliably estimated. Provision is made for the anticipated cost of restructuring, including redundancy costs when an obligation exists; for example, when the Group has a detailed formal plan for restructuring a business and
has raised valid expectations in those affected by the restructuring by announcing its main features or starting to implement the plan. Provision is made for undrawn loan commitments if it is probable that the facility will be drawn and result in
the recognition of an asset at an amount less than the amount advanced.
Onerous
contracts
£m
Redundancy
and
restructuring
£m
Undrawn
contractually
committed
facilities
and
guarantees
provided
£m
Payment
Protection
Insurance
redress
£m
Interest 
rate
hedging
product
redress
£m
Litigation
£m
Sundry
provisions
£m
Total
£m
As at 1 January 2012
116
216
230
565
–
140
262
1,529
Additions
24
74
124
1,600
850
105
401
3,178
Amounts utilised
(20
)
(136
)
(5
)
(1,179
)
(36
)
(35
)
(66
)
(1,477
)
Unused amounts reversed
(15
)
(73
)
(129
)
–
–
(11
)
(160
)
(388
)
Exchange and other movements
(1
)
(10
)
(61
)
–
–
1
(5
)
(76
)
As at 31 December 2012
104
71
159
986
814
200
432
2,766
As at 1 January 2011
74
177
229
–
–
151
316
947
Additions
71
330
111
1,000
–
176
36
1,724
Amounts utilised
(31
)
(257
)
(2
)
(435
)
–
(104
)
(64
)
(893
)
Unused amounts reversed
–
(31
)
(109
)
–
–
(73
)
(13
)
(226
)
Exchange and other movements
2
(3
)
1
–
–
(10
)
(13
)
(23
)
As at 31 December 2011
116
216
230
565
–
140
262
1,529
Provisions expected to be recovered or settled within no more than 12 months after 31 December 2012 were
£1,700m (2011: £1,260m).
Critical accounting estimates and judgements
Payment Protection Insurance Redress
Following the conclusion of the 2011 judicial review, a provision for PPI redress of £1.0bn was raised in May 2011 based on FSA guidelines and
historic industry experience in resolving similar claims. Subsequently, further provisions of £300m were raised in March 2012, £700m in September 2012 and £600m in December 2012, bringing the total provision for PPI redress to
£2.6bn. As at 31 December 2012 £1.6bn of the provision has been utilised, including gesture of goodwill payments to customers with accrued claims at the conclusion of the judicial review, leaving a residual provision of
£1.0bn.
As of 31 December 2012, 1.1m customer initiated claims
a
have been received and processed. The volume of claims received has declined since the peak in May 2012, although the rate of decline has been lower than previously expected.
In addition to customer initiated claims, in August 2012, in accordance with regulatory standards, Barclays commenced proactive mailing
of the holders of approximately 750,000 policies. Of this population approximately 100,000 have been mailed as at 31 December and it is anticipated that the remainder will be completed by June 2013.
To date Barclays has upheld on average 39% of claims received, excluding payment of gestures of goodwill and reflecting a high proportion of claims
for which no PPI policy exists. The average redress per valid claim to date is £2,750, comprising, where applicable, the refund of premium, compound interest charged and interest of 8%.
The current provision is calculated based on a number of key assumptions which continue to involve significant management judgement:
¡
Customer initiated claim volumes – claims received not yet processed and an estimate of future claims initiated by customers where the
volume is anticipated to continue to decline over time;
¡
Proactive response rate – volume of claims in response to proactive mailing;
¡
Uphold rate – the percentage of claims that are upheld as being valid upon review; and
¡
Average claim redress – the expected average payment to customers for upheld claims based on the type and age of the policy/policies.
The provision also includes an estimate of the Group's claims handling costs and those costs associated with
claims that are subsequently referred to the Financial Ombudsman Service.
Note
a  Total claims received to date including those for which no PPI policy exists and excluding responses to proactive mailing.
240  I
27 Provisions
continued
These assumptions remain subjective, in particular the uncertainty associated with future claims levels. Therefore,
it is possible that the eventual outcome may materially differ from current estimates, resulting in an increase or decrease to the required provision. The following table details, by key assumption, actual data through to 31 December 2012,
forecast assumptions used in the provision calculation and sensitivity analysis illustrating the impact on the provision if the future expected assumptions prove too high or too low:
Assumption
Cumulative
actual to
31.12.12
Future
Expected
Sensitivity Analysis
increase/decrease
in provision
Customer initiated claims
a
1,100k
450k
50k = £44m
Proactive mailing
100k
650k
Response rate to proactive mailing
27%
29%
1% = £9m
Average uphold rate per claim
b
39%
53%
1% = £11m
Average redress per valid
claim
b
£2,750
£2,000
£100 = £41m
Interest Rate Hedging Product Redress
On 29 June 2012, the FSA announced that it had reached agreement with a number of UK banks, including Barclays, in relation to a review and redress exercise to be carried out in respect of
interest rate hedging products sold to small and medium sized enterprises. During the second half of 2012, Barclays completed a pilot review of a sample of individual cases. On 31 January 2013, the FSA issued a report on the findings of the
pilot, along with those conducted by a number of other banks. The report included a number of changes and clarifications to the requirements under which the main review and redress exercise should be conducted. Barclays has agreed to conduct the
exercise in line with the approach set out in this report and will commence shortly. Our current analysis suggests that there are approximately 4,000 private or retail classified customers to which interest rate hedging products were sold within the
relevant timeframe, of which approximately 3,000 are likely to be categorised as non-sophisticated under the terms of the agreement.
As
at 30 June 2012, a provision of £450m was recognised, reflecting management's initial estimate of future redress to customers categorised as non-sophisticated and related costs. As at 31 December 2012, an additional provision of
£400m has been recognised, reflecting the results of the pilot review, an updated estimate of administrative costs and the greater clarity afforded by the implementation requirements agreed with the FSA. The provision recognised in the balance
sheet as at 31 December 2012 is £814m, after utilisation of £36m during 2012, primarily related to administrative costs.
The pilot exercise provides the best currently available information upon which to base an estimate. However, the ultimate cost of the exercise
will depend on the extent and nature of redress payable across the impacted population. This will be impacted by a number of factors, including:
¡
The number of customers for which Barclays is deemed not to have complied with relevant regulatory requirements at the time of sale;
¡
The nature of any redress offered by Barclays, in particular whether existing products are terminated or replaced with alternative products; and
¡
The level of reasonably foreseeable consequential loss payable.
The appropriate provision level will be kept under ongoing review as the main redress and review exercise progresses.
28 Contingent liabilities and commitments
Accounting for contingent liabilities
Contingent liabilities are possible
obligations whose existence will be confirmed only by uncertain future events, and present obligations where the transfer of economic resources is uncertain or cannot be reliably measured. Contingent liabilities are not recognised on the balance
sheet but are disclosed unless the outflow of economic resources is remote.
The following table summarises the nominal principal amount of contingent liabilities and commitments which are not
recorded on balance sheet:
2012
£m
2011
£m
Securities lending arrangements
–
35,996
Guarantees and letters of credit pledged as collateral security
15,855
14,181
Performance guarantees, acceptances and endorsements
6,406
8,706
Contingent liabilities
22,261
58,883
Documentary credits and other short term trade related transactions
1,027
1,358
Standby facilities, credit lines and other commitments
247,816
240,282
Notes
a  Total claims received to date including those for which no PPI policy exists and excluding responses to proactive mailing.
b  Claims include both customer initiated and proactive mailings.
I  241
Notes to the financial statements
For the year ended 31 December 2012 continued
28 Contingent liabilities and commitments
continued
Securities Lending Arrangements
Up to the disposal of Barclays Global Investors on 1 December 2009, the Group facilitated securities lending arrangements for its managed investment funds whereby securities held by funds under
management were lent to third parties. Borrowers provided cash or investment grade assets as collateral equal to 100% of the market value of the securities lent plus a margin of 2% –10%. The Group agreed with BlackRock, Inc. to continue to
provide indemnities to support these arrangements until 30 November 2012.
The Financial Services Compensation Scheme
The Financial Services Compensation Scheme (the FSCS) is the UK's compensation scheme for customers of authorised institutions
that are unable to pay claims. It provides compensation to depositors in the event that UK licensed deposit taking institutions are unable to meet their claims. The FSCS raises levies on UK licensed deposit taking institutions to meet such claims
based on their share of UK deposits on 31 December of the year preceding the scheme year (which runs from 1 April to 31 March).
Compensation has previously been paid out by the FSCS funded by loan facilities totalling approximately £18bn provided by HM Treasury to FSCS
in support of FSCS's obligations to the depositors of banks declared in default. In April 2012, the FSCS agreed revised terms on the loan facilities including a 70bps increase in the interest rate payable to 12 month LIBOR plus 100 bps. This
rate will be subject to a floor equal to the HM Treasury's own cost of borrowing. The facilities are expected to be repaid wholly from recoveries from the failed deposit takers, except for an estimated shortfall of £0.8bn. The FSCS has
announced it intends to recover this shortfall by levying the industry in instalments across 2013, 2014 and 2015, in addition to the ongoing interest charges on the outstanding loans. Barclays has included an accrual of £156m in other
liabilities as at 31 December 2012 (2011: £58m) in respect of the Barclays portion of the total levies raised by the FSCS.
US Mortgage Activities
Barclays activities within the US residential mortgage sector during the period of 2005 through 2008 included: sponsoring and underwriting of
approximately $39bn of private-label securitisations; underwriting of approximately $34bn of other private-label securitisations; sales of approximately $0.2bn of loans to government sponsored enterprises (GSEs) and sales of approximately $3bn of
loans to others. Some of the loans sold by Barclays were originated by a Barclays subsidiary. Barclays also performed servicing activities through its US residential mortgage servicing business which Barclays acquired in Q4 2006 and subsequently
sold in Q3 2010.
In connection with Barclays loan sales and sponsored private-label securitisations, Barclays provided certain loan
level representations and warranties (R&Ws) generally relating to the underlying borrower, the property, mortgage documentation and/or compliance with law. Under certain circumstances, Barclays may be required to repurchase the related loans or
make other payments related to such loans if the R&Ws are breached. Barclays was the sole provider of R&Ws with respect to approximately $5bn of Barclays sponsored securitisations, approximately $0.2bn of sales of loans to GSEs and
approximately $3bn of loans sold to others. Other than approximately $1bn of loans sold to others for which R&Ws expired prior to 2012, there are no expiration provisions applicable to the R&Ws made by Barclays. Barclays R&Ws with
respect to loans sold to others are related to loans that were generally sold at significant discounts and contained more limited R&Ws than loans sold to GSEs and in respect of the approximately $5bn of Barclays sponsored securitisations
discussed above. R&Ws on the remaining approximately $34bn of Barclays sponsored securitisations were primarily provided by third party originators directly to the securitisation trusts with Barclays, as depositor to the securitisation trusts,
providing more limited R&Ws. Total unresolved repurchase requests associated with all R&Ws made by Barclays on loans sold to GSEs and others and private-label activities were $0.4bn at 31 December 2012. Barclays currently has no
provisions with respect to such repurchase requests, given Barclays analysis of such requests and Barclays belief as to applicable defences with respect thereto. Based upon a large number of defaults occurring in US residential mortgages, there is a
potential for additional requests for repurchases.
Claims against Barclays as an underwriter of RMBS offerings have been brought in
certain civil actions. Additionally, Barclays has received inquiries from various regulatory and governmental authorities regarding its mortgage-related activities and is cooperating with such inquiries.
It is not practicable to provide an estimate of the financial impact of the potential exposure in relation to Barclays US Mortgage activities.
Further details on contingent liabilities relating to Legal Proceedings and Competition and Regulatory Matters are held in Note 29 and
30 respectively.
29 Legal Proceedings
Lehman Brothers
On 15 September 2009, motions were filed in the United
States Bankruptcy Court for the Southern District of New York (the Bankruptcy Court) by Lehman Brothers Holdings Inc. (LBHI), the SIPA Trustee for Lehman Brothers Inc. (the Trustee) and the Official Committee of Unsecured Creditors of Lehman
Brothers Holdings Inc. (the Committee). All three motions challenged certain aspects of the transaction pursuant to which BCI and other companies in the Group acquired most of the assets of Lehman Brothers Inc. (LBI) in September 2008 and the Court
Order approving such sale (the Sale). The claimants were seeking an order voiding the transfer of certain assets to BCI; requiring BCI to return to the LBI estate alleged excess value BCI received; and declaring that BCI is not entitled to certain
assets that it claims pursuant to the sale documents and Order approving the Sale (the Rule 60 Claims). On 16 November 2009, LBHI, the Trustee and the Committee filed separate complaints in the Bankruptcy Court asserting claims against BCI
based on the same underlying allegations as the pending motions and seeking relief similar to that which is requested in the motions. On 29 January 2010, BCI filed its response to the motions and also filed a motion seeking delivery of certain
assets that LBHI and LBI have failed to deliver as required by the sale documents and the Court Order approving the Sale (together with the Trustee's competing claims to those assets, the Contract Claims). Approximately $4.5bn
(£2.8bn) of the assets acquired as part of the acquisition had not been received by 31 December 2012, approximately $3.0bn (£1.9bn) of which were recognised as part of the accounting for the acquisition and are included in
the balance sheet as at 31 December 2012. This results in an effective provision of $1.5bn (£0.9bn) against the uncertainty inherent in the litigation and issues relating to the recovery of certain assets held by institutions outside the
United States.
242  I
29 Legal Proceedings
continued
On 22 February 2011, the Bankruptcy Court issued its Opinion in relation to these matters, rejecting the Rule
60 Claims and deciding some of the Contract Claims in the Trustee's favour and some in favour of BCI. On 15 July 2011, the Bankruptcy Court entered final Orders implementing its Opinion. Barclays and the Trustee each appealed the
Bankruptcy Court's adverse rulings on the Contract Claims to the United States District Court for the Southern District of New York (the District Court). LBHI and the Committee did not pursue an appeal from the Bankruptcy Court's ruling on
the Rule 60 Claims. After briefing and argument, the District Court issued its Opinion on 5 June 2012 in which it reversed one of the Bankruptcy Court's rulings on the Contract Claims that had been adverse to Barclays and affirmed the
Bankruptcy Court's other rulings on the Contract Claims. On 17 July 2012, the District Court issued an amended Opinion, correcting certain errors but not otherwise affecting the rulings, and an agreed Judgment implementing the rulings in
the Opinion. Barclays and the Trustee have each appealed the adverse rulings of the District Court to the United States Court of Appeals for the Second Circuit.
Under the Judgment of the District Court, Barclays is entitled to receive:
¡
$1.1bn (£0.7bn) from the Trustee in respect of 'clearance box' assets;
¡
property held at various institutions to secure obligations under the exchange-traded derivatives transferred to Barclays in the Sale (the ETD
Margin), subject to the proviso that Barclays will be entitled to receive $507m (£0.3bn) of the ETD Margin only if and to the extent the Trustee has assets available once the Trustee has satisfied all of LBI's customer claims; and
¡
$769m (£0.5bn) from the Trustee in respect of LBI's 15c3-3 reserve account assets only if and to the extent the Trustee has assets
available once the Trustee has satisfied all of LBI's customer claims.
A portion of the ETD Margin which has not
yet been recovered by Barclays or the Trustee is held or owed by certain institutions outside the United States (including several Lehman affiliates that are subject to insolvency or similar proceedings). Barclays cannot reliably estimate at this
time how much of the ETD Margin held or owed by such institutions Barclays is ultimately likely to receive. Further, Barclays cannot reliably estimate at this time if and to the extent the Trustee will have assets remaining available to it to pay
Barclays the $507m (£0.3bn) in respect of ETD Margin or the $769m (£0.5bn) in respect of LBI's 15c3-3 reserve account assets after satisfying all of LBI's customer claims. In this regard, the Trustee announced in October 2012
that if his proposed settlement agreements with LBHI and with the Administrator for the liquidation of Lehman Brothers Inc. (Europe) are approved by the relevant courts, then the Trustee should be in position to satisfy all customer claims and make
meaningful distributions to creditors (without having to use any of the assets that Barclays claims). If the District Court's rulings were to be unaffected by future proceedings, conservatively assuming no recovery by Barclays of any of the ETD
Margin not yet recovered by Barclays or the Trustee that is held or owed by institutions outside the United States and no recovery by Barclays of the $507m (£0.3bn) in respect of ETD Margin or the $769m (£0.5bn) in respect of LBI's
15c3-3 reserve account assets, Barclays estimates its loss would be approximately $0.9bn (£0.5bn). Under the same scenario, but assuming the Trustee's proposed settlement agreements with LBHI and the Administrator for the liquidation of
Lehman Brothers Inc. (Europe) are implemented, and result in the receipt by Barclays of the $507m ETD Margin and $769m in respect of the 15c3-3 reserve account assets, Barclays estimates its profit would be approximately $0.4bn (£0.2bn) plus
the value of any recovery of the ETD Margin held or owed by institutions outside of the United States. In this context, Barclays is satisfied with the valuation of the asset recognised on its balance sheet and the resulting level of effective
provision.
American Depositary Shares
Barclays Bank PLC, Barclays PLC and various current and former members of Barclays PLC's Board of Directors have been named as defendants in five proposed securities class actions (which have
been consolidated) pending in the United States District Court for the Southern District of New York (the Court). The consolidated amended complaint, dated 12 February 2010, alleges that the registration statements relating to American
Depositary Shares representing Preferred Stock, Series 2, 3, 4 and 5 (the ADS) offered by Barclays Bank PLC at various times between 2006 and 2008 contained misstatements and omissions concerning (amongst other things) Barclays portfolio of
mortgage-related (including US subprime-related) securities, Barclays exposure to mortgage and credit market risk and Barclays financial condition. The consolidated amended complaint asserts claims under Sections 11, 12(a) (2) and 15 of the
Securities Act of 1933. On 5 January 2011, the Court issued an Order and, on 7 January 2011, Judgment was entered, granting the defendants' motion to dismiss the complaint in its entirety and closing the case. On 4 February 2011,
the plaintiffs filed a motion asking the Court to reconsider in part its dismissal order. On 31 May 2011, the Court denied in full the plaintiffs' motion for reconsideration. The plaintiffs have appealed both decisions (the grant of the
defendants' motion to dismiss and the denial of the plaintiffs' motion for reconsideration) to the United States Court of Appeals for the Second Circuit. Oral argument was held on 18 October 2012.
Barclays considers that these ADS-related claims against it are without merit and is defending them vigorously. It is not practicable to estimate
Barclays possible loss in relation to these claims or any effect that they might have upon operating results in any particular financial period.
US Federal Housing Finance Agency and Other Residential Mortgage-Backed Securities Litigation
The United States Federal Housing Finance Agency (FHFA), acting for two US government sponsored enterprises, Fannie Mae and Freddie Mac (collectively, the GSEs), filed lawsuits against 17 financial
institutions in connection with the GSEs' purchases of residential mortgage-backed securities (RMBS). The lawsuits allege, amongst other things, that the RMBS offering materials contained materially false and misleading statements and/or
omissions. Barclays Bank PLC and/or certain of its affiliates or former employees are named in two of these lawsuits, relating to sales between 2005 and 2007 of RMBS, in which BCI was lead or co-lead underwriter.
Both complaints demand, amongst other things: rescission and recovery of the consideration paid for the RMBS; and recovery for the GSEs'
alleged monetary losses arising out of their ownership of the RMBS. The complaints are similar to other civil actions filed against Barclays Bank and/or certain of its affiliates by other plaintiffs, including the Federal Home Loan Bank of Seattle,
Federal Home Loan Bank of Boston, Federal Home Loan Bank of Chicago, Cambridge Place Investment Management, Inc., HSH Nordbank AG (and affiliates), Sealink Funding Limited, Landesbank Baden-Württemberg (and affiliates), Deutsche
Zentral-Genossenschaftsbank AG (and affiliates), Stichting Pensioenfonds ABP, Royal Park Investments SA/NV, Bayerische Landesbank, John Hancock Life Insurance Company (and affiliates), Prudential Life Insurance Company of America (and affiliates)
and the National Credit Union Administration relating to purchases of RMBS. Barclays considers that the claims against it are without merit and intends to defend them vigorously.
I  243
Notes to the financial statements
For the year ended 31 December 2012 continued
29 Legal Proceedings
continued
The original amount of RMBS related to the claims against Barclays in the FHFA cases and the other civil actions against Barclays Bank PLC and/or
certain of its affiliates totalled approximately $8.5bn, of which approximately $2.7bn was outstanding as at 31 December 2012. Cumulative losses reported on these RMBS as at 31 December 2012 were approximately $0.4bn. If Barclays were to
lose these cases Barclays believes it could incur a loss of up to the outstanding amount of the RMBS at the time of Judgment (taking into account further principal payments after 31 December 2012), plus any cumulative losses on the RMBS at such
time and any interest, fees and costs, less the market value of the RMBS at such time. Barclays has estimated the total market value of the RMBS as at 31 December 2012 to be approximately $1.6bn. Barclays may be entitled to indemnification for
a portion of any losses. These figures do not include two related class actions brought on behalf of a putative class of investors in RMBS issued by Countrywide and underwritten by BCI and other underwriters, in which Barclays is indemnified by
Countrywide.
Devonshire Trust
On 13 January 2009, Barclays commenced an action in the Ontario Superior Court (the Court) seeking an order that its early terminations earlier that day of two credit default swaps under an
ISDA Master Agreement with the Devonshire Trust (Devonshire), an asset-backed commercial paper conduit trust, were valid. On the same day, Devonshire purported to terminate the swaps on the ground that Barclays had failed to provide liquidity
support to Devonshire's commercial paper when required to do so. On 7 September 2011, the Court ruled that Barclays early terminations were invalid, Devonshire's early terminations were valid and, consequently, Devonshire was entitled
to receive back from Barclays cash collateral of approximately C$533m together with accrued interest thereon. Barclays is appealing the Court's decision. If the Court's decision were to be unaffected by future proceedings, Barclays
estimates that its loss would be approximately C$500m, less any impairment provisions taken by Barclays for this matter.
LIBOR Civil
Actions
Barclays and other banks have been named as defendants in class action and non-class action lawsuits pending in United
States Federal Courts in connection with their roles as contributor panel banks to US Dollar LIBOR, the first of which was filed on 15 April 2011. The complaints are substantially similar and allege, amongst other things, that Barclays and the
other banks individually and collectively violated various provisions of the Sherman Act, the Commodity Exchange Act, the Racketeer Influenced and Corrupt Organizations Act (RICO) and various state laws by suppressing or otherwise manipulating US
Dollar LIBOR rates. The lawsuits seek an unspecified amount of damages and trebling of damages under the Sherman and RICO Acts. The proposed class actions purport to be brought on behalf of (amongst others) plaintiffs that (i) engaged in US
Dollar LIBOR-linked over-the-counter transactions; (ii) purchased US Dollar LIBOR-linked financial instruments on an exchange; (iii) purchased US Dollar LIBOR-linked debt securities; (iv) purchased adjustable-rate mortgages linked to
US Dollar LIBOR; or (v) issued loans linked to US Dollar LIBOR.
An additional class action was commenced on 30 April 2012 in
the United States District Court for the Southern District of New York (SDNY) against Barclays and other Japanese Yen LIBOR panel banks by plaintiffs involved in exchange-traded derivatives. The complaint also names members of the Japanese Bankers
Association's Euroyen TIBOR panel, of which Barclays is not a member. The complaint alleges, amongst other things, manipulation of the Euroyen TIBOR and Yen LIBOR rates and breaches of US antitrust laws between 2006 and 2010.
A further class action was commenced on 6 July 2012 in the SDNY against Barclays and other EURIBOR panel banks by plaintiffs that purchased or
sold EURIBOR-related financial instruments. The complaint alleges, amongst other things, manipulation of the EURIBOR rate and breaches of the Sherman Act and the Commodity Exchange Act beginning as early as 1 January 2005 and continuing through
to 31 December 2009. On 23 August 2012, the plaintiffs voluntarily dismissed the complaint.
On 21 February 2013, a class
action was commenced in the United States District Court for the Northern District of Illinois against Barclays and other EURIBOR panel banks by plaintiffs that purchased or sold a NYSE LIFFE EURIBOR futures contract. The complaint alleges
manipulation of the EURIBOR rate and violations of the Sherman Act beginning as early as 1 June 2005 and continuing through 30 June 2010.
In addition, Barclays has been granted conditional leniency from the Antitrust Division of the DOJ in connection with potential US antitrust law violations with respect to financial instruments that
reference EURIBOR.
Barclays has also been named as a defendant along with four current and former Barclays officers and directors in a
proposed securities class action pending in the SDNY in connection with Barclays role as a contributor panel bank to LIBOR. The complaint principally alleges that Barclays Annual Reports for the years 2006-2011 contained misstatements and omissions
concerning (amongst other things) Barclays compliance with its operational risk management processes and certain laws and regulations. The complaint also alleges that Barclays daily US Dollar LIBOR submissions themselves constituted false statements
in violation of US securities law. The complaint is brought on behalf of a proposed class consisting of all persons or entities (other than the defendants) that purchased Barclays sponsored American Depositary Receipts on an American securities
exchange between 10 July 2007 and 27 June 2012. The complaint asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act 1934.
It is not practicable to provide an estimate of the financial impact of the potential exposure of any of the actions described or what effect if any that they might have upon operating results, cash
flows or Barclays financial position in any particular period.
See also Note 30.
244  I
29 Legal Proceedings
continued
Other
Barclays is engaged in various other legal proceedings both in the United Kingdom and a number of overseas jurisdictions, including the United States, involving claims by and against it which arise
in the ordinary course of business, including debt collection, consumer claims and contractual disputes. Barclays does not expect the ultimate resolution of any of these proceedings to which Barclays is party to have a material adverse effect on its
results of operations, cash flows or the financial position of the Group and Barclays has not disclosed the contingent liabilities associated with these claims either because they cannot reliably be estimated or because such disclosure could be
prejudicial to the conduct of the claims. Provisions have been recognised for those cases where Barclays is able reliably to estimate the probable loss where the probable loss is not de minimis.
30 Competition and regulatory matters
This note highlights some of the key competition and regulatory challenges facing Barclays, many of which are beyond our control. The extent of the impact of these matters on Barclays and the impact
on Barclays of any other competition and regulatory matters in which Barclays is or may in the future become involved cannot always be predicted but may materially impact our businesses and earnings.
Regulatory change
There is
continuing political and regulatory scrutiny of the banking industry which, in some cases, is leading to increased or changing regulation which is likely to have a significant effect on the industry.
On 4 February 2013, the UK Government introduced the Financial Services (Banking Reform) Bill (the Bill) to the House of Commons. The Bill
would give the UK authorities the powers to implement the key recommendations of the Independent Commission on Banking by requiring, amongst other things: (i) the separation of the UK and EEA retail banking activities of UK banks in a legally
distinct, operationally separate and economically independent entity (so called 'ring fencing') and (ii) the increase of the loss-absorbing capacity of ring-fenced banks and UK headquartered global systemically important banks to
levels higher than the Basel 3 guidelines. The Bill would also give depositors protected under the Financial Services Compensation Scheme preference if a bank enters insolvency. At the same time, the Government announced that it will be bringing
forward amendments to the Bill to establish a reserve power allowing the regulator, with approval from the Government, to enforce full separation under certain circumstances. The Government is expected to publish draft secondary legislation by late
summer this year. The UK Government intends that primary and secondary legislation will be in place by the end of this Parliament (May 2015) and that UK banks will be required to be compliant by 1 January 2019.
The US Dodd-Frank Wall Street Reform and Consumer Protection Act contains far reaching regulatory reform, including potential reform of the
regulatory regime for foreign banks operating in the US which may, amongst other things, require the US subsidiaries of foreign banks to be held under a US intermediate holding company subject to a comprehensive set of prudential and supervisory
requirements in the US. The full impact on Barclays businesses and markets will not be known until the principal implementing rules are adopted in final form by governmental authorities, a process which is underway and which will take effect over
several years.
Interchange
The Office of Fair Trading, as well as other competition authorities elsewhere in Europe, continues to investigate Visa and MasterCard credit and debit interchange rates. These investigations may
have an impact on the consumer credit industry as well as having the potential for the imposition of fines. The timing of these cases is uncertain and it is not possible to provide an estimate of the potential financial impact of this matter on
Barclays.
London Interbank Offered Rate
The UK Financial Services Authority (the FSA), the US Commodity Futures Trading Commission (the CFTC), the US Securities and Exchange Commission, the US Department of Justice Fraud Section (the
DOJ-FS) and Antitrust Division, the European Commission, the UK Serious Fraud Office and various US state attorneys general are amongst various authorities conducting investigations (the Investigations) into submissions made by Barclays and other
panel members to the bodies that set various interbank offered rates, such as the London Interbank Offered Rate (LIBOR) and the Euro Interbank Offered Rate (EURIBOR).
On 27 June 2012, Barclays announced that it had reached settlements with the FSA, the CFTC and the DOJ-FS in relation to their Investigations and Barclays had agreed to pay total penalties of
£290m (Pounds Sterling equivalent), which have been reflected in operating expenses for 2012. The settlements were made by entry into a Settlement Agreement with the FSA, a Non-Prosecution Agreement (NPA) with the DOJ-FS and a Settlement Order
Agreement with the CFTC. In addition, Barclays has been granted conditional leniency from the Antitrust Division of the Department of Justice in connection with potential US antitrust law violations with respect to financial instruments that
reference EURIBOR.
The terms of the Settlement Agreement with the FSA are confidential. However, the Final Notice of the FSA, which
imposed a financial penalty of £59.5m, is publicly available on the website of the FSA. This sets out the FSA's reasoning for the penalty, references the settlement principles and sets out the factual context and justification for the
terms imposed. Summaries of the NPA and the CFTC Order are set out below. The full text of the NPA and the CFTC Order are publicly available on the websites of the DOJ and the CFTC, respectively.
I  245
Notes to the financial statements
For the year ended 31 December 2012 continued
30 Competition and regulatory matters
continued
In addition to a $200m civil monetary penalty, the CFTC Order requires Barclays to cease and desist from further violations of specified provisions
of the Commodity Exchange Act and take specified steps to ensure the integrity and reliability of its benchmark interest rate submissions, including LIBOR and EURIBOR, and improve related internal controls. Amongst other things, the CFTC Order
requires Barclays to:
¡
Make its submissions based on certain specified factors, with Barclays transactions being given the greatest weight, subject to certain specified
adjustments and considerations;
¡
Implement firewalls to prevent improper communications including between traders and submitters;
¡
Prepare and retain certain documents concerning submissions and retain relevant communications;
¡
Implement auditing, monitoring and training measures concerning its submissions and related processes;
¡
Make regular reports to the CFTC concerning compliance with the terms of the CFTC Order;
¡
Use best efforts to encourage the development of rigorous standards for benchmark interest rates; and
¡
Continue to cooperate with the CFTC's ongoing investigation of benchmark interest rates.
As part of the NPA, Barclays agreed to pay a $160m penalty. In addition, the DOJ agreed not to prosecute Barclays for any crimes (except for
criminal tax violations, as to which the DOJ cannot and does not make any agreement) related to Barclays submissions of benchmark interest rates, including LIBOR and EURIBOR, contingent upon Barclays satisfaction of specified obligations under the
NPA. In particular, under the NPA, Barclays agreed for a period of two years from 26 June 2012, amongst other things, to:
¡
Commit no United States crime whatsoever;
¡
Truthfully and completely disclose non-privileged information with respect to the activities of Barclays, its officers and employees, and others
concerning all matters about which the DOJ inquires of it, which information can be used for any purpose, except as otherwise limited in the NPA;
¡
Bring to the DOJ's attention all potentially criminal conduct by Barclays or any of its employees that relates to fraud or violations of the
laws governing securities and commodities markets; and
¡
Bring to the DOJ's attention all criminal or regulatory investigations, administrative proceedings or civil actions brought by any
governmental authority in the United States by or against Barclays or its employees that alleges fraud or violations of the laws governing securities and commodities markets.
Barclays also agreed to cooperate with the DOJ and other government authorities in the United States in connection with any investigation or
prosecution arising out of the conduct described in the NPA, which commitment shall remain in force until all such investigations and prosecutions are concluded. Barclays also continues to cooperate with the other ongoing investigations.
It is not practicable to provide an estimate of the financial impact of these matters or what effect, if any, that the matters might have upon
operating results, cash flows or Barclays financial position in any particular period.
For a discussion of litigation arising in
connection with the Investigations see note 29.
Interest Rate Hedging Products
See Note 27.
FERC Investigation
The United States Federal Energy Regulatory Commission (the FERC) Office of Enforcement investigated Barclays power trading in the
western US with respect to the period from late 2006 through 2008. On 31 October 2012, the FERC issued a public Order to Show Cause and Notice of Proposed Penalties (Order and Notice) against Barclays Bank PLC in relation to this matter. In the
Order and Notice the FERC asserts that Barclays Bank PLC violated the FERC's Anti-Manipulation Rule by manipulating the electricity markets in and around California from November 2006 to December 2008. The FERC is proposing that Barclays Bank
PLC pay a $435m civil penalty and disgorge an additional $34.9m of profits plus interest. Barclays intends to defend this matter vigorously.
Other Regulatory Investigations
The FSA and the Serious Fraud Office are both
investigating certain commercial agreements between Barclays and Qatari interests and whether these may have related to Barclays capital raisings in June and November 2008. The FSA investigation involves four current and former senior employees
including Chris Lucas, Group Finance Director, as well as Barclays. The FSA enforcement investigation began in July 2012 and the Serious Fraud Office commenced its investigation in August 2012.
In October 2012 Barclays was informed by the US Department of Justice and the US Securities and Exchange Commission that they had commenced an
investigation into whether the Group's relationships with third parties who assist Barclays to win or retain business are compliant with the United States Foreign Corrupt Practices Act.
Barclays is co-operating with all the authorities fully. It is not possible to estimate the financial impact upon Barclays should any adverse findings be made.
246  I
Capital instruments, equity and reserves
The notes included in this section focus on the
Group's loan capital and shareholders equity including issued share capital, retained earnings, other equity balances and interests of minority shareholders in our subsidiary entities (non-controlling interests). For more information on capital
management and how the Group maintains sufficient capital to meet our regulatory requirements see pages 126-135.
31 Subordinated liabilities
Accounting for subordinated
debt
Subordinated debt is measured at amortised cost using the effective interest method under IAS
39.
Subordinated liabilities include accrued interest and comprise undated and dated loan capital as follows:
2012
£m
2011
£m
Undated subordinated liabilities
6,740
6,741
Dated subordinated liabilities
17,278
18,129
Total subordinated liabilities
24,018
24,870
None of the Group's loan capital is secured. Regulatory capital differs from the amounts recorded in the
balance sheet due to FSA requirements relating to: capital eligibility criteria; amortisation of principal 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
Regulatory capital
Initial call date
2012
£m
2011
£m
2012
£m
2011
£m
Barclays Bank PLC issued
Tier One Notes (TONs)
6% Callable Perpetual Core Tier One Notes
2032
116
103
89
90
6.86% Callable Perpetual Core Tier One Notes ($681m)
2032
720
753
420
440
Reserve Capital Instruments (RCIs)
5.926% Step-up Callable Perpetual Reserve Capital Instruments
($533m)
2016
393
414
327
343
7.434% Step-up Callable Perpetual Reserve Capital Instruments
($347m)
2017
261
273
213
217
6.3688% Step-up Callable Perpetual Reserve Capital Instruments
2019
117
122
95
95
14% Step-up Callable Perpetual Reserve Capital Instruments
2019
3,298
3,210
2,150
2,155
5.3304% Step-up Callable Perpetual Reserve Capital Instruments
2036
113
120
81
85
Total Tier 1 capital instruments included in subordinated liabilities
5,018
4,995
3,375
3,425
Undated Notes
6.875% Undated Subordinated Notes
2015
152
158
135
135
6.375% Undated Subordinated Notes
2017
153
157
133
133
7.7% Undated Subordinated Notes ($99m)
2018
72
75
62
64
8.25% Undated Subordinated Notes
2018
165
166
140
140
7.125% Undated Subordinated Notes
2020
215
214
158
158
6.125% Undated Subordinated Notes
2027
233
233
196
196
Junior Undated Floating Rate Notes ($121m)
Any interest payment date
75
78
133
139
Undated Floating Rate Primary Capital Notes Series 3
Any interest payment date
146
146
145
145
Bonds
9.25% Perpetual Subordinated Bonds (ex-Woolwich PLC)
2021
99
99
75
75
9% Permanent Interest Bearing Capital Bonds
At any time
47
46
40
40
Loans
5.03% Reverse Dual Currency Undated Subordinated Loan
(Yen 8,000m)
2028
47
53
57
66
5% Reverse Dual Currency Undated Subordinated Loan
(Yen 12,000m)
2028
72
82
86
100
Barclays SLCSM Funding B.V. guaranteed by the Bank
6.140% Fixed Rate Guaranteed Perpetual Subordinated Notes
2015
246
239
265
264
Total undated subordinated liabilities
6,740
6,741
5,000
5,080
I  247
Notes to the financial statements
For the year ended 31 December 2012 continued
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 of the undated loan capital are described below:
Subordination
All undated loan
capital ranks behind the claims against the bank of depositors and other unsecured unsubordinated creditors and holders of dated loan capital in the following order: Junior Undated Floating Rate Notes; other issues of Undated Notes, Bonds and
Loans-ranking pari passu with each other; followed by TONs and RCIs-ranking pari passu with each other.
Interest
All undated loan capital bears a fixed rate of interest until the initial call date, with the exception of the 9% Bonds which are fixed for the life
of the issue, and the Junior and Series 3 Undated Notes which are floating rate.
After the initial call date, in the event that they
are not redeemed, the 6.875%, 6.375%, 7.125%, 6.125% Undated Notes, the 9.25% Bonds and the 6.140% Perpetual Notes will bear interest at rates fixed periodically in advance for five year periods based on market rates. All other undated loan capital
except the two floating rate Undated Notes will bear interest, and the two floating rate Undated Notes currently bear interest, at rates fixed periodically in advance based on London interbank rates.
Payment of interest
Barclays Bank
PLC is not obliged to make a payment of interest on its Undated Notes, Bonds and Loans excluding the 7.7% Undated Notes, 8.25% Undated Notes, 9.25% Bonds and 6.140% Perpetual Notes if, in the preceding six months, a dividend has not been declared or
paid on any class of shares of Barclays PLC or, in certain cases, any class of preference shares of the Bank. The Bank is not obliged to make a payment of interest on its 9.25% Perpetual Subordinated Bonds if, in the immediately preceding 12
months' interest period, a dividend has not been paid on any class of its share capital. Interest not so paid becomes payable in each case if such a dividend is subsequently paid or in certain other circumstances. During the year, the Bank
declared and paid dividends on its ordinary shares and on all classes of preference shares.
No payment of principal or any interest may
be made unless the Bank satisfies a specified solvency test.
The Bank may elect to defer any payment of interest on the 7.7% Undated
Notes and 8.25% Undated Notes. Until such time as any deferred interest has been paid in full, neither the Bank nor Barclays PLC may declare or pay a dividend, subject to certain exceptions, on any of its ordinary shares, preference shares, or other
share capital or satisfy any payments of interest or coupons on certain other junior obligations.
The Issuer and the Bank may elect to
defer any payment of interest on the 6.140% Perpetual Notes. However, any deferred interest will automatically become immediately due and payable on the earlier of: (i) the date on which any dividend or other distribution or interest or other
payment is made in respect of any pari passu or any junior obligations or on which any pari passu or any junior obligations are purchased, (ii) the date of redemption or purchase of the 6.140% Perpetual Notes, or (iii) certain other events
including bankruptcy, liquidation or winding up of the Issuer or the Bank.
The Bank may elect to defer any payment of interest on the
RCIs. Any such deferred payment of interest must be paid on the earlier of: (i) the date of redemption of the RCIs, (ii) the coupon payment date falling on or nearest to the tenth anniversary of the date of deferral of such payment, and
(iii) in respect of the 14% RCIs only, substitution. Whilst such deferral is continuing, neither the Bank nor Barclays PLC may declare or pay a dividend, subject to certain exceptions, on any of its ordinary shares or preference shares.
The Bank may elect to defer any payment of interest on the TONs if it determines that it is, or such payment would result in it being,
in non-compliance with capital adequacy requirements and policies of the FSA. Any such deferred payment of interest will only be payable on a redemption of the TONs. Until such time as the Bank next makes a payment of interest on the TONs, neither
the Bank nor Barclays PLC may (i) declare or pay a dividend, subject to certain exceptions, on any of their respective ordinary shares or Preference Shares, or make payments of interest in respect of the Bank's Reserve Capital Instruments
and (ii) certain restrictions on the redemption, purchase or reduction of their respective share capital and certain other securities also apply.
Repayment
All undated loan capital is repayable, at the option of the Bank generally
in whole at the initial call date and on any subsequent coupon or interest payment date or in the case of the 6.875%, 6.375%, 7.125%, 6.125% Undated Notes, the 9.25% Bonds and the 6.140% Perpetual Notes on any fifth anniversary after the initial
call date. In addition, each issue of undated loan capital is repayable, at the option of the Bank, in whole for certain tax reasons, either at any time, or on an interest payment date. There are no events of default except non-payment of principal
or mandatory interest. Any repayments require prior notification to the FSA.
Other
All issues of undated loan capital have been made in the Euro currency market and/or under Rule 144A, and no issues have been registered under the
US Securities Act of 1933.
All issues of undated subordinated liabilities are non-convertible.
248  I
31 Subordinated liabilities
continued
Dated subordinated liabilities
Subordinated liabilities
per balance sheet
Regulatory capital
Initial
call
date
Maturity
date
2012
£m
2011
£m
2012
£m
2011
£m
Barclays Bank PLC issued
Callable Floating Rate Subordinated Notes ($500m)
2012
2017
–
324
–
324
10.125% Subordinated Notes (ex-Woolwich plc)
2012
2017
–
102
–
100
Floating Rate Subordinated Step-up Callable Notes ($1,500m)
2012
2017
–
972
–
971
Floating Rate Subordinated Step-up Callable Notes (
€
1,500m)
2012
2017
–
1,259
–
1,257
5.015% Subordinated Notes ($150m)
2013
96
103
19
39
4.875% Subordinated Notes (
€
750m)
2013
636
659
122
251
Callable Fixed/Floating Rate Subordinated Notes (
€
1,000m)
2014
2019
861
900
815
838
4.38% Fixed Rate Subordinated Notes ($75m)
2015
52
55
27
39
4.75% Fixed Rate Subordinated Notes ($150m)
2015
103
110
56
78
5.14% Lower Tier 2 Notes ($1,250m)
2015
2020
885
900
773
810
6.05% Fixed Rate Subordinated Notes ($2,250m)
2017
1,635
1,723
1,391
1,457
Floating Rate Subordinated Notes (
€
40m)
2018
33
34
33
34
6% Fixed Rate Subordinated Notes (
€
1,750m)
2018
1,519
1,556
1,427
1,466
CMS-Linked Subordinated Notes (
€
100m)
2018
85
88
82
84
CMS-Linked Subordinated Notes (
€
135m)
2018
114
117
110
113
Fixed/Floating Rate Subordinated Callable Notes
2018
2023
608
621
500
500
Floating Rate Subordinated Notes (
€
50m)
2019
40
41
41
42
6% Fixed Rate Subordinated Notes (
€
1,500m)
2021
1,333
1,333
1,223
1,257
9.5% Subordinated Bonds (ex-Woolwich plc)
2021
338
344
200
200
Subordinated Floating Rate Notes (
€
100m)
2021
80
83
82
84
10% Fixed Rate Subordinated Notes
2021
2,446
2,389
1,962
1,961
10.179% Fixed Rate Subordinated Notes ($1,521m)
2021
1,133
1,174
940
985
Subordinated Floating Rate Notes (
€
50m)
2022
41
42
41
42
6.625% Fixed Rate Subordinated Notes (
€
1,000m)
2022
954
954
815
838
7.625% Contingent Capital Notes ($3,000m)
2022
1,848
–
1,855
–
Subordinated Floating Rate Notes (
€
50m)
2023
41
42
41
42
5.75% Fixed Rate Subordinated Notes
2026
810
781
600
600
5.4% Reverse Dual Currency Subordinated Loan (Yen 15,000m)
2027
90
104
108
126
6.33% Subordinated Notes
2032
62
62
50
50
Subordinated Floating Rate Notes (
€
100m)
2040
82
84
82
84
Absa Bank Limited issued
8.75% Subordinated Callable Notes (ZAR 1,500m)
2012
2017
–
124
–
120
6.25% CPI-linked Subordinated Callable Notes (ZAR 1,886m)
2013
2018
169
181
–
71
8.8% Subordinated Fixed Rate Callable Notes (ZAR 1,725m)
2014
2019
136
148
129
138
6.00% CPI-linked Subordinated Callable Notes (ZAR 3,758m)
2014
2019
275
286
–
–
8.1% Subordinated Callable Notes (ZAR 2,000m)
2015
2020
156
167
149
159
10.28% Subordinated Callable Notes (ZAR 600m)
2017
2022
44
49
–
–
Subordinated Callable Notes (ZAR 400m)
2017
2022
29
32
–
–
Subordinated Callable Notes (ZAR 1,805m)
2017
2022
132
–
132
–
Subordinated Callable Notes (ZAR 2,007m)
2018
2023
147
–
147
–
8.295% Subordinated Callable Notes (ZAR 1,188m)
2018
2023
87
–
87
–
5.50% CPI-linked Subordinated Callable Notes (ZAR 1,500m)
2023
2028
129
135
–
–
Other capital issued by Barclays Botswana, Kenya and Zambia
2011–2016
49
51
27
29
Total dated subordinated liabilities
17,278
18,129
14,066
15,189
I  249
Notes to the financial statements
For the year ended 31 December 2012 continued
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 capital bases. The principal terms of the dated loan capital are described below:
Subordination
All dated loan
capital ranks behind the claims against the bank of depositors and other unsecured unsubordinated creditors but before the claims of the undated loan capital and the holders of their equity. The dated loan capital issued by subsidiaries, are
similarly subordinated.
Interest
Interest on the Floating Rate Notes are fixed periodically in advance, based on the related interbank or local central bank rates.
All other Non-Convertible Notes are generally fixed interest for the life of the issue, but some are reset to a floating rate after a fixed period, with varying interest rate terms.
Repayment
Those Notes with a call
date are repayable at the option of the issuer, on conditions governing the respective debt obligations, some in whole or in part, and some only in whole. The remaining dated loan capital outstanding at 31 December 2012 is redeemable only on
maturity, subject in particular cases, to provisions allowing an early redemption in the event of certain changes in tax legislation or regulations.
Any repayments prior to maturity require, in the case of the Bank, the prior notification to the FSA, or in the case of the overseas issues, the approval of the local regulator for that
jurisdiction.
There are no committed facilities in existence at the balance sheet date which permit the refinancing of debt beyond the
date of maturity.
The other capital issued by Barclays Kenya, Botswana and Zambia includes amounts of £15m (2011: £26m)
issued by Barclays Botswana that are convertible. These are repayable at the option of the issuer, prior to maturity, on conditions governing the respective debt obligations, some in whole or in part and some only in whole.
Other
The 7.625% Contingent
Capital Notes will be automatically transferred from investors to Barclays PLC (or another entity within the Group) for nil consideration should the Core Tier 1 or Common Equity Tier 1 capital of the Group (as relevant at the time) fall below 7.0%
on certain dates as specified in the terms.
The 5.14% Lower Tier 2 Notes and the 7.625% Contingent Capital Notes were registered under
the US Securities Act of 1933. All other issues of dated loan capital have been made in the Euro currency market, local markets and/or under Rule 144A.
32 Ordinary shares, share premium, and other equity
Called up share capital, allotted and fully paid
Number of
shares
m
Ordinary
shares
£m
Share
premium
£m
Total
£m
As at 1 January 2012
12,199
3,050
9,330
12,380
Issued to staff under share incentive plans
44
11
86
97
As at 31 December 2012
12,243
3,061
9,416
12,477
As at 1 January 2011
12,182
3,045
9,294
12,339
Issued to staff under share incentive plans
17
5
36
41
As at 31 December 2011
12,199
3,050
9,330
12,380
Warrants
On 31 October 2008, Barclays PLC issued warrants to subscribe for up to 1,516.9 million new ordinary shares at a price of £1.97775, in conjunction with a simultaneous issue by
Barclays Bank PLC of Reserve Capital Instruments. No warrants were exercised during either 2012 or 2011. As at 31 December 2012, there were unexercised warrants to subscribe for 379.2 million shares (2011: 379.2 million), which were
exercised on 13 February 2013. Refer to Note 46 Events after the balance sheet date for further details.
Share repurchase
At the 2012 AGM on 27 April 2012, Barclays PLC was authorised to repurchase 1,220,174,570 of its ordinary shares of 25p. The
authorisation is effective until the AGM in 2013 or the close of business on 30 June 2013, whichever is the earlier. No share repurchases were made during either 2012 or 2011.
250  I
33 Reserves
Currency translation reserve
The currency translation reserve represents the
cumulative gains and losses on the retranslation of the Group's net investment in foreign operations, net of the effects of hedging. Currency translation movements in 2012 of £1,578m (2011: £1,607m), including £259m (2011:
£598m) associated with non-controlling interests, are largely due to the depreciation of the US Dollar and Rand against Sterling.
The impact of the currency translation reserve recognised in the income statement during the year was £24m (2011: nil).
Available for sale reserve
The available for sale reserve represents the unrealised change in the fair value of available for sale investments since initial recognition.
The available for sale reserve increased by £546m (2011: £1,374m), largely driven by £1,193m gains from changes in
fair value (excluding non-controlling interests), £474m losses transferred to the income statement due to fair value hedging, offset by £703m gains transferred to the income statement, including the disposal of BlackRock, Inc. and a
£352m decrease due to the impact of current and deferred tax movements.
Cash flow hedging reserve
The cash flow hedging reserve represents the cumulative gains and losses on effective cash flow hedging instruments that will be recycled to the
income statement when the hedged transactions affect profit or loss.
The increase in the cash flow hedging reserve of £662m
(2011: £1,263m increase) principally reflected £1,535m increases in the fair value of interest rate swaps held for hedging purposes partially offset by £695m gains transferred to net profit.
Other reserves and treasury shares
Other reserves represent the excess of the repurchase price over the nominal of redeemed ordinary and preference shares issues by the Group.
Treasury shares are deducted from shareholders' equity within other reserves and treasury shares. A transfer is made to retained earnings in line with the vesting of treasury shares held for
the purposes of share based payments.
The treasury shares primarily relate to Barclays PLC shares held in relation to the Group's
various share schemes. These schemes are described in Note 36.
During the period £979m (2011: £165m) net purchases of
treasury shares were made principally reflecting the increase in shares held for the purposes of employee share schemes, and £946m (2011: £499m) was transferred to retained earnings reflecting the vesting of deferred share based
payments.
I  251
Notes to the financial statements
For the year ended 31 December 2012 continued
34 Non-controlling interests
Profit attributable to
non-controlling 
interests
Equity attributable to
non-controlling 
interests
2012
£m
2011
£m
2012
£m
2011
£m
Barclays Bank PLC issued:
– Preference shares
462
465
5,927
5,929
– Reserve Capital Instruments (RCIs)
–
46
–
–
– Upper Tier 2 instruments
4
3
591
586
Absa Group Limited
304
401
2,737
2,861
Other non–controlling interests
35
29
116
231
Total
805
944
9,371
9,607
The decrease in Absa Group Limited equity attributable to non-controlling interest to £2,737m (2011:
£2,861m) is principally due to £247m depreciation of African currencies against Sterling and £194m of dividends paid, offset by retained profits of £304m.
During 2011 the RCIs, with a nominal value of $2bn, generated £46m of coupons before being redeemed.
Details of the Preference shares and Upper Tier 2 instruments are shown below:
2012
£m
2011
£m
Preference shares:
6.00% non cumulative callable preference shares
746
746
6.278% non cumulative callable preference shares
550
550
4.875% non cumulative callable preference shares
689
689
4.75% non cumulative callable preference shares
1,010
1,011
6.625% non cumulative callable preference shares
407
407
7.1% non cumulative callable preference shares
660
660
7.75% non cumulative callable preference shares
552
553
8.125% non cumulative callable preference shares
1,313
1,313
Total Barclays Bank PLC preference shares
5,927
5,929
Absa Group preference shares
338
371
Total preference shares
6,265
6,300
Upper Tier 2 instruments:
Undated Floating Rate Primary Capital Notes Series 1
276
274
Undated Floating Rate Primary Capital Notes Series 2
315
312
Total Upper Tier 2 instruments
591
586
252  I
Employee benefits
The notes included in this section focus on the costs and
commitments associated with employing our staff.
35 Staff costs
Accounting for staff cost
The Group applies IAS 19
Employee benefits
in
its accounting for most of the components of staff costs.
Short
term employee benefits
– salaries, and accrued performance costs, social security and the Bank Payroll Tax are recognised over the period in which the employees provide the services to which the payments relate.
Performance costs
– recognised to the extent that the Group has a
present obligation to its employees that can be measured reliably and are recognised over the period of service that employees are required to work to qualify for the services.
Deferred cash bonus awards and deferred share bonus awards are made to
employees to incentivise performance over the vesting period. To receive payment under an award, employees must provide service over the vesting period, typically three years from the grant date. The period over which the expense for deferred cash
and share bonus awards is recognised is based upon the common understanding between the employee and the Group and the terms and conditions of the award. The Group considers that it is appropriate to recognise the awards over the period from the
date of grant to the date that the awards vest as this is the period over which the employees understand that they must provide service in order to receive awards. The table on page 47 details the relevant award dates, payment dates and the period
in which the income statement charge arises for bonuses. No expense has been recognised in 2012 for the deferred bonuses granted in March 2013, as they are dependent upon future performance rather than performance during 2012.
The accounting policies for share based payments and pensions and other
post-retirement benefits are under Note 36 and Note 37 respectively.
2012
£m
2011
£m
2010
£m
Performance costs
2,425
2,527
3,350
Salaries
5,981
6,277
6,151
Other share based payments
105
167
168
Social security costs
685
716
719
Post-retirement benefits
590
727
528
Total compensation costs
9,786
10,414
10,916
Bank payroll tax
34
76
96
Other
627
917
904
Non compensation costs
661
993
1,000
Staff costs
10,447
11,407
11,916
2012
Total staff costs reduced 8% to £10,447m, principally reflecting a 5% reduction in salaries, a 19% reduction in post-retirement benefits and reductions in performance costs. Salaries reduced
by 5% to £5,981m reflecting a moderately declining average headcount. The post-retirement benefits charge decreased 19% to £590m, primarily reflecting scheme closures and benefit changes in the US and Spain, and lower interest cost for
the UK Retirement Fund. The post-retirement benefits charge includes £311m (2011: £318m; 2010: £297m) in respect of defined contribution schemes and £279m (2011: £409m; 2010: £231m) in respect of defined benefit
schemes.
Performance costs reduced 4% to £2,425m, reflecting a 22% reduction in charges for current year cash and share bonuses
and sales commissions, commitments and other incentives of £1,202m, partially offset by a 23% increase in the charge for deferred bonuses from prior years to £1,223m.
The Group incentive awards granted (which exclude charges relating to prior year deferrals but include current year awards vesting in future years) were down 16% to £2.2bn. Investment Bank
incentive awards were down 20% to £1.4bn.
I  253
Notes to the financial statements
For the year ended 31 December 2012 continued
35 Staff costs
continued
The UK Government applied a bank payroll tax of 50% to all discretionary bonuses over £25,000 awarded to UK bank employees between 9 December 2009 and 5 April 2010. The total bank
payroll tax paid was £437m, of which £397m was recognised between 2009 and 2011. For 2012, a charge of £34m has been recognised in relation to prior year deferrals, with the remaining £6m to be recognised in 2013.
The average total number of persons employed by the Group including both continuing and discontinued operations was 143,700 (2011: 149,700).
2011
Staff
costs decreased 4% to £11,407m, largely due to a 25% reduction in performance costs partially offset by the non-recurrence of a £304m credit in 2010 relating to post-retirement benefits. Charges relating to prior year deferrals were
£1bn. The Group incentive awards granted (which exclude charges relating to prior year deferrals but include current year awards vesting in future years) were down 26% to £2.6bn. Investment Bank incentive awards were down 35% to
£1.7bn.
Salaries increased 2% to £6,277m against a moderately declining average headcount. During 2011, staff numbers
decreased 4% primarily due to restructuring activities across the businesses.
36 Share based payments
Accounting for share based payments
The Group applies IFRS 2
Share Based
Payments
in accounting for employee remuneration in the form of shares.
Employee incentives include awards in the form of shares and share options, as well as offering employees the opportunity to purchase shares on favourable terms. The cost of the employee services
received in respect of the shares or share options granted is recognised in the income statement over the period that employees provide services, generally the period in which the award is granted or notified and the vesting date of the shares or
options. The overall cost of the award is calculated using the number of shares and options expected to vest and the fair value of the shares or options at the date of grant.
The number of shares and options expected to vest takes into account the
likelihood that performance and service conditions included in the terms of the awards will be met. Failure to meet the non-vesting condition is treated as a cancellation, resulting in an acceleration of recognition of the cost of the employee
services.
The fair value of shares is the market price ruling on
the grant date, in some cases adjusted to reflect restrictions on transferability. The fair value of options granted is determined using option pricing models to estimate the numbers of shares likely to vest. These take into account the exercise
price of the option, the current share price, the risk-free interest rate, the expected volatility of the share price over the life of the option and other relevant factors. Market conditions that must be met in order for the award to vest are also
reflected in the fair value of the award, as are any other non-vesting conditions, such as continuing to make payments into a share based savings scheme.
The charge for the year arising from share based payment schemes was as follows:
Charge for 
the year
2012
£m
2011
£m
2010
£m
Share Value Plan
610
634
361
Executive Share Award Scheme
115
101
304
Others
58
137
172
Total equity settled
783
872
837
Cash settled
35
34
23
Total share based payments
818
906
860
The terms of the main current plans are as follows:
Share Value Plan (SVP)
The SVP was introduced in March 2010 and approved by
shareholders (for executive Director participation and use of new issue shares) at the AGM in April 2011. SVP awards are granted to participants in the form of a conditional right to receive Barclays PLC shares or provisional allocations of Barclays
PLC shares which vest or are considered for release over a period of three years in equal annual tranches. Participants do not pay to receive an award or to receive a release of shares. The grantor may also make a dividend equivalent payment to
participants on release of a SVP award. SVP awards are also made to eligible employees for recruitment purposes under schedule 1 to the SVP. From 2010, the portion of a business unit LTIP award that was previously granted under ESAS is normally
granted under SVP. All awards are subject to potential forfeiture in certain leaver scenarios.
254  I
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 was dependent upon the business unit,
Group and individual employee performance. The ESAS award must normally be held for at least three years. Additional bonus shares are subsequently awarded to recipients of the provisional allocation and are considered for release upon achieving
continued service for three and five years from the date of award. ESAS awards were also made to eligible employees for recruitment purposes under JSAP (Joiners Share Award Plan). All awards are subject to potential forfeiture if the individual
resigns and commences work with a competitor business.
Other schemes
In addition to the above schemes, the Group operates a number of other schemes including schemes operated by and settled in the shares of subsidiary undertakings, none of which are individually or
in aggregate material in relation to the charge for the year or the dilutive effect of outstanding share options. Included within other schemes are the Performance Share Plan, Incentive Share Plan, Sharesave, Sharepurchase, and the Barclays Long
Term Incentive Plan which was introduced and approved at the AGM in April 2011.
Share option and award plans
The weighted average fair value per award granted and weighted average share price at the date of exercise/release of shares during the year was:
Weighted average
fair value per award
granted
in year
Weighted average share
price at 
exercise/release
during year
2012
£m
2011
£m
2012
£m
2011
£m
SVP
a,b
2.41
2.80
2.39
3.08
ESAS
a,c
1.69
2.84
2.38
2.87
Others
a
0.63-2.45
0.65-2.77
2.14-2.45
2.18-3.03
SVP and ESAS are nil cost awards and nil cost options respectively on which the performance conditions are
substantially completed at the date of grant. Consequently the fair value of these awards/options is based on the market value at that date.
Movements in options and awards
The movement in the number of options and
awards for the major schemes and the weighted average exercise price of options was:
SVP
a,b
ESAS
a,c
Others
a,d
Number (000s)
Number (000s)
Number (000s)
Weighted average
ex. price (£)
2012
2011
2012
2011
2012
2011
2012
2011
Outstanding at beginning of
year/acquisition date
392,638
226,842
252,028
383,483
214,363
175,253
1.93
2.80
Granted in the year
345,165
255,592
3,571
11,267
114,305
111,374
1.44
1.52
Exercised/released in the year
(170,672
)
(77,315
)
(153,425
)
(117,126
)
(60,150
)
(18,164
)
1.47
2.03
Less: forfeited in the year
(26,259
)
(12,481
)
(24,307
)
(25,596
)
(48,970
)
(46,480
)
1.76
2.59
Less: expired in the year
–
–
–
–
(18,572
)
(7,620
)
2.79
3.94
Outstanding at end of year
540,872
392,638
77,867
252,028
200,976
214,363
1.70
1.93
Of which exercisable:
29
–
20,178
25,025
20,302
20,424
3.21
2.78
Certain of the Group's share option plans enable certain directors and employees to subscribe for new ordinary
shares of Barclays PLC. For accounting for treasury shares see Note 33 Reserves.
Notes
a
Options/award granted over Barclays PLC shares.
b
Nil cost award and therefore the weighted average exercise price was nil.
c
Nil cost options and therefore there was no weighted average exercise price.
d
The number of awards within others at the end of the year principally relates to Sharesave (number of awards exercisable at end of year was 6,317,134). The
weighted average exercise price relates to Sharesave.
I  255
Notes to the financial statements
For the year ended 31 December 2012 continued
36 Share based payments
continued
The weighted average contractual remaining life and number of options and awards outstanding (including those exercisable) at the balance sheet date
are as follows:
2012
2011
Weighted
average
remaining
contractual
life in 
years
Number of
options/
awards
outstanding
(000s)
Weighted
average
remaining
contractual
life in 
years
Number of
options/
awards
outstanding
(000s)
SVP
a,b
1
540,872
2
392,638
ESAS
a,c
–
77,867
2
252,028
Others
a
0-4
200,976
0-4
214,363
There were no significant modifications to the share based payments arrangements in the years 2012, 2011 and 2010.
As at 31 December 2012, the total liability arising from cash-settled share based payments transactions was £5m (2011:
£12m).
Holdings of Barclays PLC Shares
Various employee benefit trusts established by the Group, hold shares in Barclays PLC to meet obligations under the Barclays share based payment schemes. The total number of Barclays shares held in
these employee benefit trusts at 31 December 2012 was 6.8 million (2011: 3.9 million). Dividend rights have been waived on all of these shares (2011: nil). The total market value of the shares held in trust based on the year end share
price of £2.62 (2011: £1.74) was £17.8m (2011: £6.8m).
Notes
a  Options/award granted over Barclays PLC shares.
b  Nil cost award.
c  Nil cost options.
256  I
37 Pensions and post-retirement benefits
Accounting for pensions and post-retirement benefits
The Group operates a
number of pension schemes including defined contribution and defined benefit as well as post-employment benefit schemes.
Defined contribution schemes
– the Group recognises contributions due in respect of the accounting period in the income statement. Any contributions unpaid at the balance sheet date are
included as a liability.
Defined benefit schemes
– the
Group recognises its obligation to members of the scheme at the period end, less the fair value of the scheme assets and unrecognised actuarial gains or losses. Each scheme's obligations are calculated using the projected unit credit method on
the assumptions set out in the note below. Scheme assets are stated at fair value as at the period end.
The Group uses the option within IAS 19
Employee Benefits
to defer actuarial gains and losses over the remaining service lives of the employees.
Actuarial gains and losses comprise experience adjustments (differences
between previous actuarial assumptions and what has actually occurred) and the effects of changes in actuarial assumptions. Cumulative actuarial gains and losses, to the extent that they exceed the greater of: 10% of the fair value of the scheme
assets or 10% of the present value of the defined benefit obligation, are deferred and the excess amortised in the income statement over the average service lives of scheme members. Gains and losses on curtailments are recognised when the
curtailment occurs, which may be when a demonstrable commitment to a reduction in benefits, or reduction in eligible employees, occurs. The gain or loss comprises any change in the present value of the obligation, the fair value of the assets and
any related unrecognised actuarial gain or loss and past service costs.
Where a scheme's assets and its unrecognised actuarial losses exceed its obligation, an asset is recognised to the extent that it does not exceed the present value of future contribution
holidays or refunds of contributions.
Post-employment
benefits
– the cost of providing health care benefits to retired employees is accrued as a liability in the financial statements over the period that the employees provide services to the Group, using a methodology similar to that for
defined benefit pension schemes.
Future accounting
development
From 1 January 2013, the Group will adopt IAS 19 revised. Had the Group adopted the revisions in these financial
statements the net recognised position would reduce by £3.3bn (2011: £1.7bn) resulting in a liability of £1.3bn (2011: £0.2bn). Profit after tax for the period ended 31 December 2012 would have been lower by £22m
(2011: £83m) and other comprehensive income lower by £2.4bn (2011: £1.2bn). Shareholders equity would have been reduced by £2.5bn (2011: £1.3bn) and additional deferred tax assets of £0.8bn (2011: £0.5bn)
would have been recognised.
Pension schemes
From 1 October 2012 a new UK pension scheme, the Barclays Pension Savings Plan (BPSP) was established to satisfy Auto Enrolment legislation. The BPSP is a defined contribution scheme providing
benefits for all new UK employees, and all existing Investment Bank employees, along with all UK employees who were not members of a pension scheme as at 1 October 2012.
The UK Retirement Fund (UKRF) is the Group's main defined benefit scheme, representing approximately 93% of the Group's total retirement benefit obligations. The UKRF was closed to new
entrants as at 1 October 2012, and comprises ten sections, the most significant of which are:
¡
Afterwork: comprising of a voluntary defined contribution element and a contributory cash balance defined benefit. The cash balance element is
revalued until Normal Retirement Age in line with the increase in Retail Price Index (RPI) (maximum 5%). An investment-related increase of up to 2% a year may also be added at Barclays discretion. Between 1 October 2003 and 1 October 2012
the majority of new UK employees outside of the Investment Bank were eligible to join this section;
¡
The Pension Investment Plan (PIP): a defined contribution section providing benefits for Investment Bank employees from 1 July 2001 to
1 October 2012. This section was closed as at 1 October 2012 for existing and new Investment Bank employees. All PIP members now accrue benefits in the BPSP mentioned above; and
¡
The 1964 Pension Scheme: most employees recruited before July 1997 built up benefits in this non-contributory defined benefit scheme in respect
of service up to 31 March 2010. Pensions were calculated by reference to service and pensionable salary. From 1 April 2010 members became eligible to accrue future service benefits in either Afterwork or PIP.
The costs of ill-health retirements and death in service benefits are borne by the UKRF for Afterwork members, and through insured policies for
BPSP members.
I  257
Notes to the financial statements
For the year ended 31 December 2012 continued
37 Pensions and post-retirement benefits
continued
Governance
The UKRF operates
under trust law and is managed and administered on behalf of the members in accordance with the terms of the Trust Deed and Rules and all relevant legislation. The Corporate Trustee is Barclays Pension Funds Trustees Limited, a private limited
company incorporated on 20 December 1990 and a wholly owned subsidiary of Barclays Bank PLC. The Trustee is the legal owner of the assets of the UKRF which are held separately from the assets of the Group.
The Trustee Board comprises six Management Directors selected by Barclays, of whom three are independent Directors with no relationship with
Barclays or the UKRF, plus three Member Nominated Directors selected from eligible active staff and pensioner members who apply for the role.
Similar principles of pension governance apply to the Group's other pension schemes, although different legislation covers overseas schemes where, in most cases, the Group has the power to
determine the funding rate.
Amounts recognised
The following tables include: the amounts recognised in the income statement, an analysis of benefit obligations and an analysis of scheme assets for all Group schemes. The net position is
reconciled to the assets and liabilities recognised on the balance sheet. The tables include funded and unfunded post-retirement benefits.
Income statement charge
2012
£m
2011
£m
2010
£m
Current service cost
357
348
349
Interest cost
1,081
1,154
1,146
Expected return on scheme assets
(1,152
)
(1,176
)
(1,122
)
Recognised actuarial loss
32
57
75
Past service cost
1
23
(233
)
Curtailment or settlements
(40
)
3
16
Total
279
409
231
Balance sheet reconciliation
2012
2011
Total
£m
Of which
relates to
UKRF
Total
£m
Of which
relates to
UKRF
Benefit obligation at beginning of the year
(22,994
)
(21,263
)
(21,801
)
(20,173
)
Current service cost
(357
)
(309
)
(348
)
(300
)
Interest cost
(1,081
)
(992
)
(1,154
)
(1,053
)
Past service cost
9
–
(23
)
–
Actuarial (loss)/gain
(1,930
)
(1,768
)
(569
)
(418
)
Benefits paid
779
690
802
684
Exchange and other movements
167
(3
)
99
(3
)
Benefit obligation at end of the year
(25,407
)
(23,645
)
(22,994
)
(21,263
)
Fair value of scheme assets at beginning of the year
22,748
21,540
18,905
17,621
Expected return on scheme assets
1,152
1,082
1,176
1,094
Employer contribution
840
742
2,220
2,128
Actuarial gain/(loss)
236
167
1,419
1,470
Benefits paid
(779
)
(690
)
(802
)
(684
)
Exchange and other movements
(101
)
4
(170
)
(89
)
Fair value of scheme assets at the end of the year
24,096
22,845
22,748
21,540
Net (deficit)/asset
(1,311
)
(800
)
(246
)
277
Unrecognised actuarial losses
3,361
3,003
1,728
1,403
Net recognised asset
2,050
2,203
1,482
1,680
Recognised assets
2,303
2,203
1,803
1,680
Recognised liabilities
(253
)
–
(321
)
–
Net recognised asset
2,050
2,203
1,482
1,680
Included within the benefit obligation was £1,597m (2011: £1,560m) relating to overseas pensions and
£165m (2011: £171m) relating to other post-retirement benefits. Of the total benefit obligation of £25,407m (2011: £22,994m), £326m (2011: £334m) was wholly unfunded.
As at 31 December 2012, the UKRF's IAS 19 scheme assets were in deficit versus obligations by £800m (2011: surplus of £277m).
The most significant driver for this change was the fall in real corporate bond yields relative to inflation. This was partially offset by the deficit contribution of £500m paid in April 2012.
258  I
37 Pensions and
post-retirement benefits
continued
Critical accounting estimates and judgements
Actuarial valuation of the schemes' obligation is dependent upon a series of assumptions, below is a summary of the main financial and
demographic assumptions adopted for UKRF.
UKRF financial assumptions
2012
% p.a.
2011
% p.a.
Discount rate
4.31
4.74
Inflation rate
2.93
3.04
Rate of increase in salaries
3.43
3.54
Rate of increase for pensions in payment
2.88
2.94
Rate of increase for pensions in deferment
2.88
2.94
Afterwork revaluation rate
3.40
3.47
Expected return on scheme assets
n/a
5.00
The UKRF discount rate assumption is based on a liability-weighted rate, derived from an AA corporate bond yield
curve. For 2012 the basis for deriving the discount rate assumption was revised. From December 2012, the rate is taken as the average of a liability-weighted rate derived from an AA corporate bond yield curve and the Towers Watson RATE link model.
The impact of this change on the UKRF Defined Benefit Obligation was a £1.1bn decrease with no impact on the current year profit. The change will affect future years' profits and on an IAS 19 Revised basis, the change in estimate will
result in a £50m reduced charge to the income statement, compared to if the Group had continued using last year's AA corporate bond yield curve. It is not possible to estimate the effect on profits after 2013.
The UKRF's post-retirement mortality assumptions are based on a best estimate assumption derived from an analysis in 2012 of Barclays own
post-retirement mortality experience, which was carried out at the time of the latest triennial funding valuation, and taking account of recent evidence from published mortality surveys. An allowance has been made for future improvements in this
observed rate of mortality based on the CMI (2010) Core Projection model with a 1% p.a. long term trend. The table below shows how the assumed life expectancy at 60, for members of the UKRF, has varied over the last three years:
Assumed life expectancy
2012
2011
2010
Life expectancy at 60 for current pensioners (years)
– Males
27.8
27.7
27.6
– Females
28.9
28.8
28.7
Life expectancy at 60 for future pensioners currently aged 40 (years)
– Males
29.2
29.1
29.7
– Females
30.5
30.4
30.7
Sensitivity analysis on actuarial assumptions
The following table shows a sensitivity analysis of the most material assumptions on the UKRF benefit obligation:
Change in key assumptions
Impact on UKRF benefit
obligation
(Decrease)/
Increase
%
(Decrease)/
Increase
£bn
0.5 % increase in discount rate
(9.1
)
(2.2
)
0.5% increase in assumed price inflation
8.4
2.0
1 year increase to life expectancy at 60
2.5
0.6
I  259
Notes to the financial statements
For the year ended 31 December 2012 continued
37 Pensions and post-retirement benefits
continued
Assets
A long term
investment strategy has been set for the UKRF, with its asset allocation comprising a mixture of equities, bonds, property and other appropriate assets. This recognises that different asset classes are likely to produce different long term returns
and some asset classes may be more volatile than others. The long term investment strategy ensures, amongst other aims, that investments are adequately diversified. Asset managers are permitted some flexibility to vary the asset allocation from the
long term investment strategy within control ranges agreed with the Trustee from time to time.
The UKRF also employs derivative
instruments, where appropriate, to achieve a desired exposure or return, or to match assets more closely to liabilities. The value of assets shown reflects the actual physical assets held by the scheme, with any derivative holdings reflected on a
mark to market basis.
The value of the assets of the schemes, their percentage in relation to total scheme assets, and their expected
rate of return were as follows:
Analysis of scheme assets
Total
Of which relates to UKRF
Value
£m
% of
total
fair value of
scheme
assets
%
Expected
rate of
return
%
Value
£m
% of
total
fair value of
scheme
assets
%
Expected
rate of
return
%
As at 31 December 2012
Equities
6,360
26.4
n/a
5,783
25.3
n/a
Bonds
10,963
45.5
n/a
10,575
46.3
n/a
Property
1,244
5.2
n/a
1,228
5.4
n/a
Derivatives
1,637
6.8
n/a
1,637
7.2
n/a
Cash
3,240
13.4
n/a
3,118
13.6
n/a
Other
652
2.7
n/a
504
2.2
n/a
Fair value of scheme assets
24,096
100
n/a
22,845
100
n/a
As at 31 December 2011
Equities
4,979
21.9
7.8
4,452
20.7
7.7
Bonds
11,246
49.4
3.8
10,872
50.5
3.7
Property
1,389
6.1
6.2
1,356
6.3
6.1
Derivatives
1,296
5.7
–
1,296
6.0
–
Cash
3,253
14.3
0.6
3,167
14.7
0.5
Other
585
2.6
4.4
397
1.8
2.5
Fair value of scheme assets
22,748
100
5.1
21,540
100
5.0
Included within fair value of scheme assets were: £7m (2011: £15m) relating to shares in Barclays
Group, £3m (2011: £12m) relating to bonds issued by the Barclays Group, and £1m (2011: £12m) relating to property occupied by Group companies. The UKRF also invests in pooled investment vehicles which may hold shares or debt
issued by the Barclays Group. The UKRF scheme assets also includes £240m relating to UK private equity investments (2011: £50m) and £1,174m relating to overseas private equity investments (2011: £1,342m). These are disclosed
above within Equities.
The expected return on assets is determined by calculating a total return estimate based on weighted average
estimated returns for each asset class. Asset class returns are estimated using current and projected economic and market factors such as inflation, credit spreads and equity risk premiums. The Group actual return on scheme assets was an increase of
£1,385m (2011: £2,595m increase), of which £1,249m (2011: £2,564m) relates to UKRF.
The overall expected return
on asset assumption has been based on the portfolio of assets created after allowing for the net impact of the derivatives on the risk and return profile of the holdings. As at 31 December 2012, the expected rate of return is not applicable due
to the removal of the expected return on scheme assets under IAS 19 Revised, effective from 1 January 2013.
Approximately a third
of the UK Retirement Fund assets are invested in liability driven investment strategies; primarily UK gilts as well as interest rate and inflation swaps. These are used to better match the fund's assets to its liabilities. The swaps are used to
reduce the scheme's inflation and duration risks against its liabilities.
260  I
37 Pensions and
post-retirement benefits
continued
Actuarial gains and losses
The actuarial gains and losses arising on scheme obligations and scheme assets are as follows:
Total actuarial gains and losses
2012
£m
2011
£m
2010
£m
2009
£m
2008
£m
Present value of obligations
(25,407
)
(22,994
)
(21,801
)
(20,646
)
(15,783
)
Fair value of scheme assets
24,096
22,748
18,905
16,700
14,496
Net deficit in the schemes
(1,311
)
(246
)
(2,896
)
(3,946
)
(1,287
)
Experience gains and (losses) on scheme liabilities
– amount
13
(57
)
(216
)
62
(177
)
– as percentage of scheme liabilities
–
–
(1%
)
–
(1%
)
Experience gains and (losses) on scheme assets
– amount
236
1,419
1,012
1,416
(4,655
)
– as percentage of scheme assets
1%
6%
5%
8%
(32%
)
Actuarial gains and losses relating to UKRF
2012
£m
2011
£m
2010
£m
2009
£m
2008
£m
Present value of obligations
(23,645
)
(21,263
)
(20,173
)
(19,209
)
(14,395
)
Fair value of scheme assets
22,845
21,540
17,621
15,675
13,537
Net (deficit)/surplus in the schemes
(800
)
277
(2,552
)
(3,534
)
(858
)
Experience gains and (losses) on scheme liabilities
– amount
29
(34
)
(207
)
106
88
– as percentage of scheme liabilities
–
–
(1%
)
1%
1%
Experience gains and (losses) on scheme assets
– amount
167
1,470
995
1,424
(4,534
)
– as percentage of scheme assets
1%
7%
6%
9%
(33%
)
Funding
The latest triennial funding valuation of the UKRF was carried out with an effective date of 30 September 2010, and showed a deficit of £5.0bn. In compliance with the Pensions Act 2004,
the Bank and Trustee agreed a scheme-specific funding target, statement of funding principles, a schedule of contributions and a recovery plan to eliminate the deficit in the Fund.
The recovery plan to eliminate the deficit will result in the Bank paying deficit contributions to the Fund until 2021. Deficit contributions of £1.8bn were paid to the fund in December 2011
and a further £0.5bn paid in April 2012. Further deficit contributions are payable from 2017 to 2021 starting at £0.65bn in 2017 and increasing by approximately 3.5% per annum until 2021. These deficit contributions are in addition
to the regular contributions to meet the Group's share of the cost of benefits accruing over each year. Including deficit contributions, the Group's estimated contribution to the UKRF in 2013 will be £175m. Excluding the UKRF, the
Group is expected to pay contributions of approximately £133m to UK schemes and £60m to overseas schemes in 2013.
The
Scheme Actuary prepares an annual update of the funding position as at 30 September. The latest annual update was carried out as at 30 September 2012 and showed a deficit of £3.6bn.
Contributions paid with respect to the UKRF were as follows:
Contributions paid
£m
2012
742
2011
2,128
2010
666
I  261
Notes to the financial statements
For the year ended 31 December 2012 continued
Scope of consolidation
The notes included in this section focus on information on
the Group's investments in subsidiaries, joint ventures and associates. Detail is also given on securitisation transactions the Group has entered into and arrangements that are held off-balance sheet.
38 Investment in subsidiaries
Accounting for investment in subsidiaries
In the individual financial
statements of Barclays PLC, investments in subsidiaries are stated at cost less impairment, if any. Cost also includes directly attributable costs of the investment.
Principal subsidiaries for the Group are set out below. This list includes those subsidiaries that are most
significant in the context of the Group's business, results or financial position.
Country of
registration or
incorporation
Company name
Nature of business
Percentage of
equity capital
held (%)
England
Barclays Bank PLC
Banking, holding company
100
England
Barclays Bank Trust Company Limited
Banking, asset management and trust services
100
England
Barclays Capital Securities Limited
Securities dealing
100
Isle of Man
Barclays Private Clients International Limited
Banking
100
*
Japan
Barclays Securities Japan Limited
Securities dealing
100
Kenya
Barclays Bank of Kenya Limited
Banking
68.5
*
South Africa
Absa Bank Limited
Banking
55.6
*
Spain
Barclays Bank S.A.U.
Banking
100
*
USA
Barclays Capital Inc.
Securities dealing
100
USA
Barclays Bank Delaware
US credit card issuer
100
The country of registration or incorporation is also the principal area of operation of each of the above
subsidiaries. Investments in subsidiaries held directly by Barclays Bank PLC are marked *. Information on the Group's subsidiaries, as required by the Companies Act, will be included in the Annual Return to be filed at the UK Companies House.
Although the Group's interest in the equity voting rights in certain entities listed below may exceed 50%, or it may have the
power to appoint a majority of their Boards of Directors, they are excluded from consolidation because the Group either does not direct the financial and operating policies of these entities, or another entity has a controlling interest in them.
Consequently, these entities are not controlled by Barclays:
Country of
registration or
incorporation
Company name
Percentage
of ordinary
share
capital held
(%)
Equity
shareholders'
funds
£m
Retained
profit for
the year
£m
UK
Fitzroy Finance Limited
100
–
–
Cayman Islands
Palomino Limited
100
1
–
262  I
39
Investments in associates and joint ventures
Accounting for associates and joint ventures
Barclays applies IAS 28
Investments in Associates
and IAS 31
Interests in Joint Ventures
. Associates are entities in which the Group has significant influence, but not control, over its operating and financial policies. Generally the Group holds more than
20%, but less than 50%, of their voting shares. Joint Ventures are entities whose activities are governed by a contractual arrangement between the Group and one or more parties to share equally in decisions regarding operating and financial
policies.
The Group's investments in associates and joint
ventures are initially recorded at cost and increased (or decreased) each year by the Group's share of the post-acquisition profit (or loss). In some cases, investments in these entities may be held at fair value through profit or loss, for
example, those held by private equity businesses.
2012
£m
2011
£m
Investment in associates
258
169
Investment in joint ventures
312
258
Total
570
427
Summarised financial information for the Group's associates and joint ventures is set out below. The amounts
shown are assets, liabilities and net income of the investees, not just the Group's share, as at and for the year ended 31 December 2012 with the exception of certain undertakings for which the amounts are based on accounts made up to
dates not earlier than three months before the balance sheet date.
2012
2011
Associates
£m
Joint ventures
£m
Associates
£m
Joint ventures
£m
Total assets
3,580
3,740
4,001
3,447
Total liabilities
2,816
3,205
3,603
2,938
Profit after tax
137
168
45
88
The Group's share of commitments and contingencies of its associates and joint ventures was comprised of
unutilised credit facilities provided to customers of £2,711m (2011: £1,265m). These are included in Note 28.
40 Securitisations
Accounting for securitisations
The Group uses securitisations as a source of
finance and a means of risk transfer. Such transactions generally result in the transfer of contractual cash flows from portfolios of financial assets to holders of issued debt securities.
Securitisations may, depending on the individual arrangement, result in
continued recognition of the securitised assets and the recognition of the debt securities issued in the transaction; lead to partial continued recognition of the assets to the extent of the Group's continuing involvement in those assets or to
derecognition of the assets and the separate recognition, as assets or liabilities, of any rights and obligations created or retained in the transfer. Full derecognition only occurs when the Group transfers both its contractual right to receive cash
flows from the financial assets, or retains the contractual rights to receive the cash flows, but assumes a contractual obligation to pay the cash flows to another party without material delay or reinvestment, and also transfers substantially all
the risks and rewards of ownership, including credit risk, prepayment risk and interest rate risk.
In the course of its normal banking activities, the Group makes transfers of financial assets, either legally
(where legal rights to the cash flows from the asset are passed to the counterparty) or beneficial (where the Group retains the rights to the cash flows but assumes a responsibility to transfer them to the counterparty). Depending on the nature of
the transaction, this may result in derecognition of the assets in their entirety, partial derecognition or no derecognition of the assets subject to the transfer.
Full derecognition only occurs when the Group transfers both its contractual right to receive cash flows from the financial assets (or retains the contractual rights to receive the cash flows, but
assumes a contractual obligation to pay the cash flows to another party without material delay or reinvestment) and substantially all the risks and rewards of ownership, including credit risk, prepayment risk and interest rate risk. When an asset is
transferred, in some circumstances, the Group may retain an interest in it (continuing involvement) requiring the Group to repurchase it in certain circumstances for other than its fair value on that date.
I  263
Notes to the financial statements
For the year ended 31 December 2012 continued
40 Securitisations
continued
A summary of the main transactions, and the assets and liabilities and the financial risks arising from these transactions, is set out below:
Transfers of financial assets that do not result in derecognition
Securitisations
The Group was party to securitisation transactions involving its
residential mortgage loans, business loans and credit card balances. In addition, the Group acts as a conduit for commercial paper, whereby it acquires static pools of residential mortgage loans from other lending institutions for securitisation
transactions.
In these transactions, the assets, interests in the assets, or beneficial interests in the cash flows arising from the
assets, are transferred to a special purpose entity, which then issues interest bearing debt securities to third-party investors.
Securitisations may, depending on the individual arrangement, result in continued recognition of the securitised assets and the recognition of the
debt securities issued in the transaction. Partial continued recognition of the assets to the extent of the Group's continuing involvement in those assets can also occur or derecognition of the assets and the separate recognition, as assets or
liabilities, of any rights and obligations created or retained in the transfer.
The following table shows the carrying amount of
securitised assets that have not resulted in full derecognition, together with the associated liabilities, for each category of asset on the balance sheet:
2012
2011
Assets
Liabilities
Assets
Liabilities
Carrying
amount
£m
Fair Value
£m
Carrying
amount
£m
Fair Value
£m
Carrying
amount
£m
Fair Value
£m
Loans and advances to customers
Residential mortgage loans
5,545
5,129
(5,066
)
(4,600
)
7,946
(8,085
)
Credit cards, unsecured and other retail lending
6,944
7,015
(5,519
)
(5,542
)
4,059
(3,477
)
Corporate loans
944
798
(809
)
(679
)
1,391
(1,428
)
Total
13,433
12,942
(11,394
)
(10,821
)
13,396
(12,990
)
Assets designated at fair value through profit or loss
Retained interest in residential mortgage loans
12
n/a
–
n/a
1
–
Balances included within loans and advance to customers represent securitisations where substantially all the risks
and rewards of the asset have been retained by the Group.
The relationship between the transferred assets and the associated
liabilities is that holders of notes may only look to cash flows from the securitised assets for payments of principal and interest due to them under the terms of their notes, although the contractual terms of their notes may be different to the
maturity and interest of the transferred assets.
Retained interests in residential mortgage loans are securities which represent a
continuing exposure to the prepayment and credit risk in the underlying securitised assets. The carrying amount of the loans before transfer was £16m (2011: £2,299m). The retained interest is initially recorded as an allocation of the
original carrying amount based on the relative fair values of the portion derecognised and the portion retained.
For transfers of
assets in relation to repurchase agreements, see Notes 22 and 42.
264  I
40 Securitisations
continued
Continuing involvement in financial assets that have been derecognised
In some cases, the Group may have transferred a financial asset in its entirety but may have continuing involvement in it. This arises in asset
securitisations where loans and asset backed securities were derecognised as a result of the Group's involvement with CLOs, CDOs, RMBS and CMBS. Continuing involvement largely arises from providing financing into these structures in the form of
retained notes, which do not bear first losses.
The table below shows the potential financial implications of such continuing
involvement:
Continuing involvement as at
Gain/(loss) from
31 December 2012
continuing involvement
Type of transfer
Carrying
amount
£m
Fair value
£m
Maximum
exposure
to loss
£m
For
the
year ended
31 December
2012
£m
Cumulative
to
31 December
2012
£m
CLO and other assets
2,546
2,495
2,556
126
(839
)
ABS CDO Super Senior
1,387
922
1,387
(230
)
(1,708
)
US sub-prime and Alt-A
781
781
781
8
(1,336
)
Commercial mortgage backed securities
239
239
239
1
(41
)
Total
4,953
4,437
4,963
(95
)
(3,924
)
Assets which represent the Group's continuing involvement in derecognised assets are recorded in the following
line items:
Type of transfer
Loans and
advances
£m
Trading
portfolio
assets
£m
Derivatives
£m
Available
for sale
investments
£m
Total
£m
CLO and other assets
1,624
899
7
16
2,546
ABS CDO Super Senior
1,387
–
–
–
1,387
US sub-prime and Alt-A
703
78
–
–
781
Commercial mortgage backed securities
–
239
–
–
239
Total
3,714
1,216
7
16
4,953
41 Off-balance sheet arrangements
In the ordinary course of business and primarily to facilitate client transactions, the Group enters into transactions which may involve the use of
off-balance sheet arrangements and special purpose entities (SPEs). These arrangements include the provision of guarantees, loan commitments, retained interests in assets which have been transferred to an unconsolidated SPE or obligations arising
from the Group's involvements with such SPEs.
Guarantees
The Group issues guarantees on behalf of its customers. In the majority of cases, the Group will hold collateral against the exposure, have a right of recourse to the customer or both. In addition,
the Group issues guarantees on its own behalf. The main types of guarantees provided are: financial guarantees given to banks and financial institutions on behalf of customers to secure loans; overdrafts; and other banking facilities, including
stock borrowing indemnities and standby letters of credit. Other guarantees provided include performance guarantees, advance payment guarantees, tender guarantees, guarantees to Her Majesty's Revenue and Customs and retention guarantees. The
nominal principal amount of contingent liabilities with off-balance sheet risk is set out in Note 28.
Loan commitments
The Group enters into commitments to lend to its customers subject to certain conditions. Such loan commitments are made either for
a fixed period or are cancellable by the Group subject to notice conditions. Information on loan commitments and similar facilities is set out in Note 28.
Leasing
The Group leases various offices, branches, other premises and
equipment under non-cancellable operating lease arrangements. With such operating lease arrangements, the asset is kept on the lessor's balance sheet and the Group reports the future minimum lease payments as an expense over the lease term.
Information on leasing can be found in Note 25.
Special Purpose Entities (SPEs)
SPEs are entities that are created to accomplish a narrow and well defined objective. There are often specific restrictions or limits around their
ongoing activities. The Group's transactions with SPEs take a number of forms, including:
¡
the provision of financing to fund asset purchases, or commitments to provide finance for future purchases;
¡
derivative transactions to provide investors in the SPE with a specified exposure;
¡
the provision of liquidity or backstop facilities which may be drawn upon if the SPE experiences future funding difficulties; and
¡
direct investment in the notes issued by SPEs.
I  265
Notes to the financial statements
For the year ended 31 December 2012 continued
41 Off-balance sheet arrangements
continued
A number of the Group's transactions have recourse only to the assets of unconsolidated SPEs. Typically, the majority of the exposure to these
assets is borne by third parties and the Group's risk is mitigated through over-collateralisation, unwind features and other protective measures.
The business activities within the Group where SPEs are used include multi-seller conduit programmes, asset securitisations, client intermediation, credit structuring, asset realisations and fund
management. These activities are described below. In addition, later sections provide quantitative information on the Group's involvements with CDOs, SIVs, SIV-Lites and conduits.
Multi-seller conduit programmes
Barclays creates, administers and provides
liquidity and credit enhancements to several commercial paper conduit programmes, primarily in the United States. These conduits provide clients access to liquidity in the commercial paper markets by allowing them to sell consumer or trade
receivables to the conduit, which then issues commercial paper to investors to fund the purchase. The conduits have sufficient collateral, credit enhancements and liquidity support to maintain an investment grade rating for the commercial paper.
Asset securitisations
The Group has assisted its customers with the formation of asset securitisations, some of which are effected through the use of SPEs. These entities have minimal equity and rely on funding in the
form of notes to purchase the assets for securitisation. As these SPEs are created for other companies, the Group does not usually control these entities and therefore does not consolidate them. The Group may provide financing in the form of senior
notes or junior notes and may also provide derivatives to the SPE. These transactions are included on the balance sheet.
The Group has
also used SPEs to securitise part of its originated and purchased retail and commercial lending portfolios and credit card receivables. These SPEs are usually consolidated and derecognition only occurs when the Group transfers its contractual right
to receive cash flows from the financial assets, or retains the contractual rights to receive the cash flows, but assumes a contractual obligation to pay the cash flows to another party without material delay or reinvestment, and also transfers
substantially all the risks and rewards of ownership, including credit risk, prepayment risk and interest rate risk. The carrying amount of securitised assets together with the associated liabilities are set out in Note 40.
Client intermediation
The
Group has structured transactions as a financial intermediary to meet investor and client needs. These transactions involve entities structured by either the Group or the client and are used to modify cash flows of third party assets to create
investments with specific risk or return profiles or to assist clients in the efficient management of other risks. Such transactions will typically result in a derivative being shown on the balance sheet, representing the Group's exposure to
the relevant asset. The Group also invests in lessor entities specifically to acquire assets for leasing. Client intermediation also includes arrangements to fund the purchase or construction of specific assets (most common in the property
industry).
Credit structuring
The Group structures investments to provide specific risk profiles to investors. This may involve the sale of credit exposures, often by way of derivatives, to an entity which subsequently funds
those exposures by issuing securities. These securities may initially be held by Barclays prior to sale outside of the Group.
Asset
realisations
The Group establishes SPEs to facilitate the recovery of loans in circumstances where the borrower has suffered
financial loss.
To the extent that there are guarantees and commitments in relation to SPEs the details are included in Note 28.
Collateralised debt obligations (CDOs)
The Group has structured and underwritten CDOs. At inception, the Group's exposure principally takes the form of a liquidity facility provided to support future funding difficulties or cash
shortfalls in the vehicles. If required by the vehicle, the facility is drawn with the amount advanced included within loans and advances on the balance sheet. Upon an event of default or other triggering event, the Group may acquire control of a
CDO and, therefore, be required to fully consolidate the vehicle for accounting purposes. The potential for transactions to hit default triggers before the end of 2012 has been assessed and is included in the determination of an impairment charge of
£232m (2011: £6m) in relation to ABS CDO Super Senior and other credit market exposures for the year ended 31 December 2012.
The Group's exposure to ABS CDO Super Senior positions before hedging was £1,387m as at 31 December 2012 (2011: £1,842m), equivalent to an aggregate 60.30% (2011: 51.68%)
decline in value on average for all investors. This represents the Group's exposure to High Grade CDOs, stated net of write downs and charges. These facilities are fully drawn and included within loans and advances on the balance sheet.
Collateral
The
collateral underlying unconsolidated CDOs comprised 78% (2011: 78%) residential mortgage backed securities, 2% (2011: 2%) non-residential asset backed securities and 20% (2011: 20%) in other categories (a proportion of which will be backed by
residential mortgage collateral). The remaining Weighted Average Life (WAL) of all collateral is 6.16 years (2011: 7.41 years). The combined Net Asset Value (NAV) for all of the collateral underlying the CDOs was £1bn (2011: £1bn).
266  I
41 Off-balance sheet
arrangements
continued
Funding
The CDOs were funded with senior unrated notes and rated notes up to AAA. The capital structure senior to the AAA notes on cash CDOs was supported by a liquidity facility provided by the Group. The
senior portion covered by liquidity facilities is on average 85% (2011: 82%) of the capital structure. The initial WAL of the notes in issue averaged 6.7 years (2011: 6.7 years). The full contractual maturity is 38.2 years (2011: 38.2 years).
Interests in third party CDOs
The Group has purchased securities in and entered into derivative instruments with third party CDOs. These interests are held as trading assets or liabilities on the Group's balance sheet and
measured at fair value. The Group has not provided liquidity facilities or similar agreements to third party CDOs.
Structured
investment vehicles (SIVs)
The Group does not structure or manage SIVs. Group exposure to third party SIVs comprised: £nil
(2011: £nil) of senior liquidity facilities and derivative exposures included on the balance sheet at their net fair value of £nil (2011: £6m).
SIV-Lites
The Group does not have any exposure to SIV-Lite transactions nor is
it involved in the ongoing management thereof.
Commercial paper and medium term note conduits
The Group provided £7bn (2011: £14bn) in undrawn backstop liquidity facilities to its own sponsored CP conduits. The Group fully
consolidates these entities such that the underlying assets are reflected on the Group balance sheet. These consolidated entities in turn provide facilities of £661m (2011: £717m) to third party conduits containing prime UK buy-to-let
Residential Mortgage Backed Securities (RMBS) assets. As at 31 December 2012, the entire facility had been drawn and is included in available for sale financial investments.
The Group provided backstop facilities to support the paper issued by one third party conduit. This facility totalled £247m (2011: £259m), with underlying collateral comprising 100% auto
loans. There were no drawings on this facility as at 31 December 2012.
The Group provided backstop facilities to five third party
SPEs that fund themselves with medium term notes. These notes are sold to investors as a series of 12-month securities and remarketed to investors annually. If investors decline to renew their holdings at a price below a pre-agreed spread, the
backstop facility requires the Group to purchase the outstanding notes at scheduled maturity. The Group has provided facilities of £0.5bn (2011: £0.9bn) to SPEs holding prime UK and Australian owner-occupied RMBS assets. As at the
balance sheet date these facilities had been drawn and were included in loans and advances.
42 Assets
pledged
Assets are pledged as collateral to secure liabilities under repurchase agreements, securitisations and stock lending
agreements or as security deposits relating to derivatives. The following table summarises the nature and carrying amount of the assets pledged as security against these liabilities:
2012
£m
2011
£m
Trading portfolio assets
85,026
86,677
Loans and advances
72,918
40,613
Other
20,789
19,976
Assets pledged
178,733
147,266
Barclays has an additional £15bn (2011: £16bn) of loans and advances within its asset backed funding
programmes that can readily be used to raise additional secured funding and available to support future issuance.
Collateral held as
security for assets
Under certain transactions, including reverse repurchase agreements and stock borrowing transactions, the Group
is allowed to resell or re-pledge the collateral held. The fair value at the balance sheet date of collateral accepted and re-pledged to others was as follows:
2012
£m
2011
£m
Fair value of securities accepted as collateral
360,061
391,287
Of which fair value of securities re-pledged/transferred to others
307,950
341,060
The full disclosure as per IFRS7 has been included in collateral and other credit enhancements (page 80).
I  267
Notes to the financial statements
For the year ended 31 December 2012 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, entities under common directorships and Key Management Personnel.
43 Related party transactions and Directors' remuneration
a) Related party transactions
Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party
in making financial or operation decisions, or one other party controls both. The definition includes subsidiaries, associates, joint ventures and the Group's pension schemes, as well as other persons.
Subsidiaries
Transactions
between Barclays PLC and subsidiaries also meet the definition of related party transactions. Where these are eliminated on consolidation, they are not disclosed in the Group financial statements. Transactions between Barclays PLC and its
subsidiary, Barclays Bank PLC, are fully disclosed on its balance sheet and income statement. A list of the Group's principal subsidiaries is shown in Note 38.
Associates, joint ventures and other entities
The Group provides banking
services to its associates, joint ventures, Group pension funds (principally the UK Retirement Fund) and to entities under common directorships, providing loans, overdrafts, interest and non-interest bearing deposits and current accounts to these
entities as well as other services. Group companies also provide investment management and custodian services to the Group pension schemes. The Group also provides banking services for unit trusts and investment funds managed by Group companies and
are not individually material. All of these transactions are conducted on the same terms as third-party transactions. Summarised financial information for the Group's associates and joint ventures is set out in Note 39.
Entities under common directorships
The Group enters into normal commercial relationships with entities for which members of the Group's Board also serve as Directors. The amounts included in the Group's financial statements
relating to such entities that are not publicly listed are shown in the table below under Entities under common directorships.
Amounts
included in the Group's financial statements, in aggregate, by category of related party entity are as follows:
Associates
£m
a
Joint
ventures
£m
Entities under
common
directorships
£m
a
Pension
funds, unit
trusts and
investment
funds
£m
For the year ended and as at 31 December 2012
Income
2
38
1
20
Impairment
–
(5
)
–
–
Total Assets
170
1,657
198
–
Total Liabilities
18
585
94
152
For the year ended and as at
31 December 2011
Income
(40
)
20
1
17
Impairment
(2
)
(6
)
–
–
Total Assets
176
1,529
364
–
Total Liabilities
26
454
70
182
For the year ended and as at
31 December 2010
Income
19
(15
)
10
–
Impairment
(5
)
(9
)
–
–
Total Assets
135
2,113
45
–
Total Liabilities
28
477
110
142
No guarantees, pledges or commitments have been given or received in respect of these transactions in 2012 or 2011.
Derivatives transacted on behalf of the Pensions Funds Unit Trusts and Investment Funds were £661.1m (2011: £568.9m).
Note
a
The 2011 liability balances for related party transactions with associates and entities under common directorship have been restated by £10m and £42m
respectively to more appropriately reflect the nature of the relationships with two specific entities.
268  I
43 Related party transactions
and Directors' remuneration
continued
Key Management Personnel
The Group's Key Management Personnel, and persons connected with them, are also considered to be related parties for disclosure purposes. Key
Management Personnel are defined as those persons having authority and responsibility for planning, directing and controlling the activities of Barclays PLC (directly or indirectly) and comprise the Directors of Barclays PLC and the Officers of the
Group (listed on page 351), certain direct reports of the Chief Executive and the heads of major business units.
There were no material
related party transactions with entities under common directorship where a Director or other member of Key Management Personnel (or any connected person) is also a Director or other member of Key Management Personnel (or any connected person) of
Barclays.
The Group provides banking services to Directors and other Key Management Personnel and persons connected to them.
Transactions during the year and the balances outstanding at 31 December 2012 were as follows:
Loans
outstanding
a
2012
£m
2011
£m
As at 1 January
5.9
5.9
Loans issued during the year
0.6
0.7
Loan repayments during the year
(0.6
)
(0.7
)
As at 31 December
5.9
5.9
No allowances for impairment were recognised in respect of loans to Directors or other members of Key Management
Personnel (or any connected person).
Deposits
outstanding
a
2012
£m
2011
£m
As at 1 January
39.1
36.5
Deposits received during the year
141.8
244.1
Deposits repaid during the year
(144.6
)
(241.5
)
As at 31 December
37.3
39.1
Total commitments outstanding
Total commitments outstanding refers to the total of any undrawn amounts on credit cards and/or overdraft facilities provided to Key Management Personnel. Total commitments outstanding as at
31 December 2012 were £2.3m (2011: £1.4m).
All loans to Directors and other Key Management Personnel (and persons
connected to them), (a) were made in the ordinary course of business, (b) were made on substantially the same terms, including interest rates and collateral, as those prevailing at the same time for comparable transactions with other
persons and (c) did not involve more than a normal risk of collectability or present other unfavourable features.
Remuneration
of Directors and other Key Management Personnel
Total remuneration awarded to Directors and other Key Management Personnel below
represents the awards made to individuals that have been approved by the Board Remuneration Committee as part of the latest payround decisions and is consistent with the approach adopted for disclosures set out on pages 39-68. Costs recognised in
the income statement reflect the accounting charge for the year included within operating expenses. The difference between the values awarded and the recognised income statement charge principally relates to the recognition of deferred costs for
prior year awards. Figures are provided for the period that individuals met the definition of Directors and other Key Management Personnel.
Note
a
Loan and deposit balances held with Directors and Key Management Personnel have been restated to more appropriately reflect the nature of certain transactions
held. The impact of this has been to increase the 2011 opening and closing loan balance previously reported by £1.5m and to increase the 2011 opening and closing deposit balances by £1.5m and £0.4m respectively.
I  269
Notes to the financial statements
For the year ended 31 December 2012 continued
43 Related party transactions and Directors' remuneration
continued
2012
£m
2011
£m
Salaries and other short term benefits
20.2
20.9
Pension costs
0.4
0.4
Other long term benefits
17.9
39.1
Share-based payments
24.6
33.7
Employer social security charges on emoluments
7.9
9.1
Costs recognised for accounting purposes
71.0
103.2
Employer social security charges on emoluments
(7.9
)
(9.1
)
Other long term benefits – difference between awards granted and costs recognised
(13.4
)
(14.2
)
Share based payments – difference between awards granted and costs recognised
(12.0
)
(17.7
)
Total remuneration awarded
37.7
62.2
b) Disclosure required by the Companies Act 2006
The following information is presented in accordance with the Companies Act 2006:
2012
£m
2011
£m
Aggregate emoluments
5.5
15.9
Amounts paid under LTIPs
2.8
5.8
8.3
21.7
There were no pension contributions paid to defined contribution schemes on behalf of Directors (2011: £nil).
There were no notional pension contributions to defined contribution schemes.
As at 31 December 2012, there were no Directors
accruing benefits under a defined benefit scheme (2011: nil).
Directors' and Officers' shareholdings and options
The beneficial ownership of ordinary share capital of Barclays PLC by all Directors and Officers of Barclays PLC (involving 22
persons) at 31 December 2012 amounted 19,620,252 (2011: 43,978,451) ordinary shares of 25p each (0.16% of the ordinary share capital outstanding).
At 31 December 2012 executive Directors and Officers of Barclays PLC (involving 12 persons) held options to purchase a total of 1,128,437 Barclays PLC ordinary shares (2011: 1,920,575) of 25p
each at prices ranging from 144p to 470p under Sharesave and ranging from 317p to 467p under the Incentive Share Option Plan, respectively.
Advances and credit to Directors and guarantees on behalf of Directors
In
accordance with Section 413 of the Companies Act 2006, the total amount of advances and credits made available in 2012 to persons who served as directors during the year was £0.3m (2011: £nil). The total value of guarantees entered
into on behalf of Directors during 2012 was £nil (2011: £0.2m).
270  I
44
Auditors' remuneration
Auditors' remuneration is included within outsourcing and professional services costs in
Administration and general expenses and comprises:
Audit
£m
Audit
related
£m
Taxation
services
£m
Other
services
£m
Total
£m
2012
Audit of the Group's annual accounts
10
–
–
–
10
Other services:
Fees payable for the Company's associates
a
25
–
–
–
25
Other services supplied
b
–
4
–
–
4
Other services relating to taxation
– compliance services
–
–
2
–
2
– advisory services
c
–
–
–
–
–
Other
–
2
–
1
3
Total auditors' remuneration
35
6
2
1
44
2011
Audit of the Group's annual accounts
13
–
–
–
13
Other services:
Fees payable for the Company's associates pursuant to
legislation
a
26
–
–
–
26
Other services supplied pursuant to such legislation
b
–
3
–
–
3
Other services relating to taxation
– compliance services
–
–
5
–
5
– advisory services
c
–
–
1
–
1
Services relating to corporate finance transactions entered into or proposed to be entered into by or on behalf of the Company or any of its
associates
d
–
–
–
2
2
Other
–
3
–
1
4
Total auditors' remuneration
39
6
6
3
54
2010
Audit of the Group's annual accounts
12
–
–
–
12
Other services:
Fees payable for the Company's associates pursuant to
legislation
a
26
–
–
–
26
Other services supplied pursuant to such legislation
b
–
3
–
–
3
Other services relating to taxation
– compliance services
–
–
7
–
7
– advisory services
c
–
–
1
–
1
Services relating to corporate finance transactions entered into or proposed to be entered into by or on behalf of the Company or any of its
associates
d
–
–
–
1
1
Other
–
4
–
2
6
Total auditors' remuneration
38
7
8
3
56
The figures shown in the above table relate to fees paid to PricewaterhouseCoopers LLP and its associates for
continuing operations of business. Fees paid to other auditors not associated with PricewaterhouseCoopers LLP in respect of the audit of the Company's subsidiaries were £7m (2011: £6m; 2010: £4m).
Notes
a
Comprises the fees for the statutory audit of the subsidiaries and associated pension schemes both inside and outside Great Britain and fees for the work
performed by associates of PricewaterhouseCoopers LLP in respect of the consolidated financial statements of the Company. Fees relating to the audit of the associated pension schemes were £0.2m (2011: £0.2m; 2010: £0.4m).
b
Comprises services in relation to statutory and regulatory filings. These include audit services for the review of the interim financial information under the
Listing Rules of the UK listing authority.
c
Includes consultation on tax matters, tax advice relating to transactions and other tax planning and advice.
d
Comprises due diligence related to transactions and other work in connection with such transactions.
I  271
Notes to the financial statements
For the year ended 31 December 2012 continued
45 Financial risks, liquidity and capital management
To improve transparency and ease of reference, by concentrating related information in one place, and to reduce duplication, disclosures required
under IFRS relating to financial risks and capital resources have been included within the Risk management and governance section as follows:
¡
credit risk, on pages 80-118;
¡
market risk, on pages 119-125;
¡
capital risk, on pages 126-135; and
¡
liquidity risk, on pages 136-150.
46 Events after the balance sheet date
Strategic
Review
On 12 February 2013, Barclays announced the outcome of its Strategic Review and set out certain commitments based on the
results of the review. The commitments are expected to result in:
¡
a restructuring charge of approximately £500m in the first quarter of 2013 relating to a reduction in headcount across the Group; and
¡
costs associated with implementing the strategic plan of approximately £1bn in 2013, £1bn in 2014 and £0.7bn in 2015.
Further information on the strategic review commitments is given on page 1.
Exercise of Warrants
On
13 February 2013, Barclays PLC and Barclays Bank PLC entered into an agreement with Deutsche Bank AG and Goldman Sachs International (the Warrantholders) pursuant to which the Warrantholders agreed to exercise in aggregate 379,218,809
outstanding warrants, constituted by a warrant deed poll dated 31 October 2008 (the Warrants), to subscribe for an equivalent number of new ordinary shares in Barclays PLC. As a consequence of this agreement no other Warrants will remain
outstanding.
As a consequence of the exercise of the Warrants, Barclays PLC received £750 million of Core Tier 1 equity
capital, equivalent to an additional pro forma 19bps on its full year 2012 Core Tier 1 Ratio of 10.9%.
Conditional upon receipt of this
amount, Barclays PLC agreed to contribute such amount to the capital of Barclays Bank PLC. As a result, Barclays Bank PLC received a net £743.7 million of Core Tier 1 equity capital.
The transaction involved the payment of an aggregate £6.3 million Warrant Exercise Payment by Barclays Bank PLC to the Warrantholders,
in respect of the early exercise of the Warrants.
272  I
Risk management
A comprehensive overview of Barclays approach to risk management and more specific information on
policies that the Group determines to be of particular significance in the current operating environment.
Barclays risk management strategy
274
Our Risk Culture
276
Assigning Responsibilities
277
Principal Risks Policy
277
Risk management in the setting of strategy
280
Environmental Risk
Credit risk management:
281
Overview
283
Allowances for Impairment and Other Credit Provisions
286
Forbearance
287
Retail Re-aging activity
287
Retail small arrears capitalisation
288
Derivative credit risk
289
Credit risk mitigation
290
Asset credit quality
Market risk management:
292
Overview
293
Traded market risk (audited)
296
Non-traded interest rate risk (audited)
Liquidity risk management:
297
Overview
298
Liquidity risk framework
298
Ongoing business management
Capital risk management:
300
Overview
300
Our approach to capital risk management
301
Ongoing capital management risks
Operational risk management:
302
Overview
302
Operational risk management
I  273
Risk management
Barclays risk management strategy
These disclosures are unaudited unless otherwise stated
Barclays risk management
strategy
The following pages provide a
comprehensive overview of Barclays approach to risk management and more specific information on policies that the Group determines to be of particular significance in the current operating environment.
Barclays risk management strategy (audited)
Barclays has clear risk management objectives and a well-established strategy to deliver them, through core risk management processes.
At a strategic level, our risk management objectives are to:
¡
Identify the Group's significant risks;
¡
Formulate the Group's risk appetite and ensure that business profile and plans are consistent with it;
¡
Optimise risk/return decisions by taking them as closely as possible to the business, while establishing strong and independent review and
challenge structures;
¡
Ensure that business growth plans are properly supported by effective risk infrastructure;
¡
Manage risk profile to ensure that specific financial deliverables remain possible under a range of adverse business conditions; and
¡
Help executives improve the control and co-ordination of risk taking across the business.
The Group's approach is to provide direction on: understanding the principal risks to achieving Group strategy; establishing risk appetite;
and establishing and communicating the risk management framework. The process is then broken down into five steps: identify, assess, control, report and manage/challenge. Each of these steps is broken down further, to establish end-to-end activities
within the risk management process and the infrastructure needed to support it (see panel below). The Group's risk management strategy is broadly unchanged in 2012.
Our risk culture
We have defined our Purpose as 'helping people achieve their ambitions – in the right way'. This is underpinned by five core values: Respect, Integrity, Service, Excellence and
Stewardship.
Barclays risk culture is based on a close alignment with our businesses to support understanding, trust and openness
together with clear independence to ensure strong challenge, rigorous, analytical and objective decision making and consistency across the bank. Risk is a shared responsibility between business and risk teams with the business operating as a
'first line of defence'.
This culture is operationalised and embedded in our organisational structure. Independent risk teams
are in place within each of our major businesses to support close working relationships with and knowledge of business teams taking on the risk. These teams ultimately report to a Chief Risk Officer within each business who in turn reports both to
the Group Chief Risk Officer and their business Chief Executive.
A separate Group Risk team, including individually identified
Principal Risk Owners for each Principal Risk, strengthens oversight and looks across the Group to ensure that for each Principal Risk, an overall risk appetite has been clearly defined and that required standards of risk management are being
consistently delivered.
Following operational events that were identified in 2012, the Board of Barclays is undertaking a review of its
business practices (the Salz Review) and culture. Barclays Board and Executive Committee will consider the review's recommendations carefully, with the intention of implementing them in full. Barclays will publish an account of how it
specifically intends to implement them a short time after the conclusion of the review. The broader work at Barclays oriented at changing the Bank's culture will be particularly informed by the Review's recommendations.
Steps
Activity
Identify
¡
Establish the process for identifying and understanding business-level risks.
Assess
¡
Agree and implement measurement and reporting standards and methodologies.
Control
¡
Establish key control processes and practices, including limit structures, impairment allowance criteria and reporting requirements.
¡
Monitor the operation of the controls and adherence to risk direction and limits.
¡
Provide early warning of control or appetite breaches.
¡
Ensure that risk management practices and conditions are appropriate for the business environment.
Report
¡
Interpret and report on risk exposures, concentrations and risk-taking outcomes.
¡
Interpret and report on sensitivities and Key Risk Indicators.
¡
Communicate with external parties.
Manage and Challenge
¡
Review and challenge all aspects of the Group's risk profile.
¡
Assess new risk-return opportunities.
¡
Advise on optimising the Group's risk profile.
¡
Review and challenge risk management practices.
274  I
Governance structure at Group level as at 31 December 2012
I  275
Risk management
Barclays risk management strategy continued
Group Risk is also aligning its vision to support the Chief Executive's vision of becoming the
'Go-To' bank for all its stakeholders. Group Risk's mission is to deliver effective and then efficient risk management that is consistent with Barclays commercial objectives, through providing functional capability and control as well
as independent and appropriate challenge at every level, from a single transaction to an aggregate portfolio view, while ensuring 'no surprises'. To achieve this mission the following guiding principles will be followed:
¡
Effectiveness and expertise;
¡
Operational excellence;
¡
Transparency, consistency and control;
¡
Balance risk and reward; and
¡
Independence.
Assigning responsibilities (audited)
Responsibility for risk management resides at all levels within the Group, from the Board and the Executive Committee down through the organisation to each business manager and risk specialist.
Barclays distributes these responsibilities so that risk/return decisions are taken at the most appropriate level; as close as possible to the business, and subject to robust and effective review and challenge. The responsibilities for effective
review and challenges reside with senior managers, risk oversight committees, the independent Group Risk function, the Board Risk Committee and, ultimately, the Board.
The
Board
is responsible for approving risk appetite (see page 7), which is the level of risk the Group chooses to take in pursuit of its business objectives. The Chief Risk Officer regularly
presents a report to the Board summarising developments in the risk environment and performance trends in the key portfolios. The Board is also responsible for the Internal Control and Assurance Framework (Group Control Framework). It oversees the
management of the most significant risks through the regular review of risk exposures and related key controls. Executive management responsibilities relating to this are set via the Group's Principal Risks Policy.
The
Board Risk Committee
(BRC) monitors the Group's risk profile against the agreed appetite. Where actual performance differs from
expectations, the actions being taken by management are reviewed to ensure that the BRC is comfortable with them. After each meeting, the Chair of the BRC prepares a report for the next meeting of the Board. Barclays first established a separate
Board Risk Committee in 1999 and all members are non-executive directors. The Finance Director and the Chief Risk Officer attend each meeting as a matter of course. The BRC receives regular and comprehensive reports on risk methodologies and the
Group's risk profile including the key issues affecting each business portfolio and forward risk trends. The Committee also commissions in-depth analyses of significant risk topics, which are presented by the Chief Risk Officer or senior risk
managers in the businesses. The Chair of the Committee prepares a statement each year on its activities (see pages 24-26).
The
Board
Audit Committee
receives quarterly reports on control issues of significance and a half-yearly review of the adequacy of impairment allowances, which it reviews relative to the risk inherent in the portfolios, the business environment, the
Group's policies and methodologies and the performance trends of peer banks. The Chair of the Board Audit Committee also sits on the BRC. See pages 20-23 for additional details on the membership and activities of the Board Audit Committee.
The
Board Remuneration Committee
receives a detailed report on risk management performance from the BRC which is considered in
the setting of performance objectives in the context of incentive packages. See pages 39-68 for additional details on membership and activities of the Board Remuneration Committee.
Summaries of the relevant business, professional and risk management experience of the Directors of the Board are given on pages 35-37. The terms of reference for each of the principal Board
Committees are available from the Corporate Governance section at: http://group. barclays.com/About-us/Management-structure/Corporate-governance.
The
Chief Risk Officer
is a member of the Executive Committee and has overall day-to-day accountability for risk management under delegated authority from the Group Chief Executive. The Group
Chief Executive must consult the Chairman of the Board Risk Committee in respect of the Chief Risk Officer's performance appraisal and compensation as well as all appointments to or departures from the role.
In order to strengthen the Board-level governance over conduct risk and reputation matters we have created a Board Conduct, Reputation and
Operational Risk Committee in 2013. As a consequence the Board Risk Committee will have oversight of credit, market and funding risk matters and will be renamed the Board Financial Risk Committee.
The Chief Risk Officer manages the independent Group Risk function and chairs the Financial Risk Committee and the Operational Risk Committee,
which monitor the Group's financial and non-financial risk profile relative to established risk appetite. Reporting to the Chief Risk Officer, and working in the Group Risk function, are risk-type heads for retail credit risk, wholesale credit
risk, market risk, operational risk and fraud risk. Along with their teams, the risk-type heads are responsible for establishing a Group-wide framework for oversight of the risks and controls of their risk type. These risk-type teams liaise with
each business as part of the monitoring and management processes.
In addition, each business has an embedded risk management function,
headed by a Business Chief Risk Officer (BCRO). BCROs and their teams are responsible for assisting business heads in the identification and management of their business risk profiles and for implementing appropriate controls. These teams also
assist Group Risk in the formulation of Group policies and their implementation across the businesses. The business risk directors report jointly to their respective business heads and to the Chief Risk Officer.
The risk type heads within the central Group Risk function and the BCROs within the businesses report to the Chief Risk Officer and are members of
the Financial Risk Committee or Operational Risk Committee as appropriate.
For further details on the management of each of the
Principal Risks, see pages 280-303.
Internal Audit
is responsible for the independent review of risk management and the control
environment. Its objective is to provide reliable, valued and timely assurance to the Board and Executive Management over the effectiveness of controls, mitigating current and evolving high risks and in so doing enhancing the controls culture within
the Group. The Board Audit Committee reviews and approves Internal Audit's plans and resources, and evaluates the effectiveness of Internal Audit. An assessment by external advisers is also carried out periodically.
In addition to the committees shown in the chart, there is a Board Citizenship Committee which reviews emerging issues with potentially significant
reputational impact and looks at contribution to growth in the real economy, creating jobs, supporting sustainable growth and supporting communities through investment programmes and efforts of employees.
276  I
Principal Risks policy (audited)
Risk management responsibilities are laid out in the Principal Risks policy, which covers the categories of risk in which Barclays has its most
significant actual or potential risk exposures.
The Principal Risks Framework:
¡
creates clear ownership and accountability;
¡
ensures the Group's most significant risk exposures are understood and managed in accordance with agreed risk appetite (for financial risks)
and risk tolerances (for non-financial risks); and
¡
ensures regular reporting of both risk exposures and the operating effectiveness of controls.
Each Principal Risk comprises individual Key Risk Types. The four
a
Principal Risks are: Credit, Market, Funding and Operational, each owned by a senior executive within the Group Risk function known as the Group Principal Risk Owner. The first
three Principal Risks are risks that Barclays actively seeks to manage and have direct income implications. The fourth Principal Risk relates to operational risks, exposure to which arises directly from undertaking business processes in support of
Barclays activities, and which the Group seeks to minimise. There was no material change to this policy in 2012.
The five risk
management steps required by the Principal Risks Policy are: Identify, Assess, Control, Report, and Manage and Challenge (see page 274 for more detail).
Each Key Risk is owned by a senior individual known as the Group Key Risk Owner who is responsible for proposing a risk appetite statement and managing the risk in line with the Principal Risks
Policy. This includes the documentation, communication and maintenance of a risk control framework which makes clear, for every business across the firm, the mandated control requirements in managing exposures to that Key Risk. These control
requirements are given further specification, according to the business or risk type, to provide a complete and appropriate system of internal control.
Business function heads are responsible for obtaining ongoing assurance that the key controls they have put in place to manage the risks to their business objectives are operating effectively.
Six-monthly reviews support the regulatory requirement for Barclays to make an annual external statement about its system of internal controls.
Group Key Risk Owners report their assessments of the risk exposure and control effectiveness to Group-level oversight committees and their assessments form the basis of the reports that go to the
Board Risk Committee (see chart above):
¡
Financial Risk Committee has oversight of Credit and Market Risks;
¡
Treasury Committee has oversight of Funding Risk; and,
¡
Operational Risk Committee has oversight of all Operational Risk types, with the exception of Tax Risk, which is primarily overseen by the Tax
Risk Committee.
Each Group Key Risk Owner also undertakes an annual programme of risk-based conformance reviews.
Note
a
Conduct Risk and Reputation Risk have been re-categorised as Principal Risks in 2013.
Risk management in the setting of strategy (audited)
The planning cycle is centred on the medium-term planning (MTP) process, performed once a year. This sets out the Group's objectives in
detailed plans which take account of the likely business environment. The risk functions at Group and business levels are heavily involved in this process.
In addition to supporting transaction decisions, the measurement and control of credit, market, operational and other risks have considerable influence on Barclays strategy. The Board is solely
responsible for approving the MTP, the associated risk appetite statement, and the capital plans. As such, the business plans of Barclays must incur a level of risk that falls within the Board's tolerance, or be modified accordingly. The Board
Risk Committee (BRC) has been in place since 1999 and is devoted to review the firm's risk and make appropriate recommendations to the Board. For details of the activities of the Board and the BRC in 2012 see pages 10 and 24-26.
The risk appetite and the Group-wide stress testing processes, described below, are closely linked to the MTP process and also support strategic
planning and capital adequacy. The risk appetite process ensures that senior management and the Board understand the Plan's sensitivities to key risk types, and includes a set of mandate and scale limits to ensure the Group stays within
appetite. Stress testing informs management on the impact to the business of detailed scenarios. Integral to the Group-wide stress testing process is a set of actions that management would take to mitigate the impact of a stress.
One of 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.
MTP process
The MTP process, performed annually, requires each business unit to present its plans for business performance over the coming three years.
Achieving the planned performance in each business is dependent upon the ability of the business to manage its risks. It is an iterative process featuring weekly reviews at the most senior levels as the plan is updated until final agreement. The
output includes a detailed statement of the Group's strategy over the medium-term, as well as detailed financial projections.
Risk
managers support the MTP by providing robust review and challenge of the business plans to ensure that the financial projections are internally consistent; achievable given risk management capabilities and that they present a suitable balance
between risk and reward. This culminates in the Risk Executive Dialogue process in which the Chief Risk Officer and senior management in each of our businesses discuss the findings from the risk reviews, and changes to the business plans are
mandated as necessary.
The business plans are prepared with reference to a consistent set of economic assumptions which are reviewed
within Group Risk to ensure that they appropriately reflect emerging risk trends. They are used as baseline scenarios in the stress testing and risk appetite processes.
The output from the business plan forms the basis of all strategic processes. In particular, the plans comprise projections of capital resources and requirements given profit generation, dividend
policy and capital issuance. Risk variables are also considered, most importantly in the forecasting of the Group's impairment charge, and in sensitivity analyses of the plans (which include risk appetite and stress testing).
I  277
Risk management
Barclays risk management strategy continued
Risk Appetite
Risk appetite
Risk appetite is defined as the level of risk that Barclays is prepared to sustain whilst pursuing its business strategy, recognising a range of possible outcomes as business plans are implemented.
Barclays framework combines a top-down view of its capacity to take risk with a bottom-up view of the business risk profile associated with each business area's medium-term plans. The appetite is ultimately approved by the Board.
Barclays has run a risk appetite process since 2004. The process is comprised of 'Financial Volatility' and 'Mandate and
Scale'. The strategy and business activities are reflected in key performance metrics, which are dependent in large part on risk performance.
Financial Volatility
Financial volatility is defined as the level of potential
deviation from expected financial performance that Barclays is prepared to sustain at relevant points on the risk profile. When setting appetite, management and the Board articulate the Group's strategy and summarise objectives in terms of key
financial metrics. The Group's risk profile is assessed via a 'bottom-up' analysis of the Group's business plans to establish the volatility of the key metrics. If the projections entail too high a level of risk (i.e. breach the
top-down financial objectives at the through-the-cycle, moderate or severe level), management will challenge each area to re-balance the risk profile to bring the bottom-up risk appetite back within top-down appetite. Performance against risk
appetite usage is measured and reported to the Executive Committee and the Board regularly throughout the year. Our top-down appetite is quantified through an array of financial performance and capital metrics which are reviewed on an annual basis.
For 2012, the strategic metrics in the table below are set at three levels: budget, and stressed 'one in seven' and 'one in twenty-five'.
To measure the risk entailed by the business plans, management estimates potential earnings
volatility from each business under various scenarios:
¡
through-the-cycle: the average losses based on measurements over many years;
¡
1 in 7 (moderate) loss: the worst level of losses out of a random sample of 7 years; and
¡
1 in 25 (severe) loss: the worst level of losses out of a random sample of 25 years.
These scenarios are defined more generically through a level of probability of occurrence rather than through a specific set of economic variables
like in stress tests.
These potentially larger but increasingly less likely levels of loss are illustrated in the risk appetite
concepts chart below. Since the level of loss at any given probability is dependent on the portfolio of exposures in each business, the statistical measurement for each key risk category gives the Group clearer sight and better control of
risk-taking throughout the enterprise. Specifically, this framework enables it to:
¡
improve management confidence and debate regarding the Group's risk profile;
¡
re-balance the risk profile of the MTP where breaches are indicated, thereby achieving a superior risk-return profile;
¡
identify unused risk capacity, and thus highlight the need to identify further profitable opportunities; and
¡
improve executive management control and co-ordination of risk-taking across businesses.
Measure relevant
to strategy and risk
Link between strategy and risk profile
Profit before tax, Return on Equity, Return on RWAs
Fundamental economic and business indicators, which best describe the focus of our shareholders in terms of profitability and ability
to use capital resources efficiently.
Loan loss rate (LLR)
Describes our credit risk profile and whether impairment is within our appetite.
Core Tier 1 and Leverage
Monitors our capital adequacy in relation to our capital plan.
Cash Dividends
Measures the risks of not being able to continue paying appropriate cash dividends.
Risk appetite concepts (diagram not to scale)
278  I
In summary, the stress levels represent the risk tolerance of Barclays in terms of its key
objectives. These objectives act as constraints on risk performance and imply maximum levels of acceptable losses that are tracked quarterly and reported to the Board. Any breaches must be approved and remedial actions mandated.
Mandate and Scale
The
second element to the setting of risk appetite in Barclays is an extensive system of Mandate and Scale limits, which is a risk management approach that seeks to formally review and control business activities to ensure that they are within Barclays
mandate (i.e. aligned with expectations), and are of an appropriate scale (relative to the risk and reward of the underlying activities). Barclays achieves this by using limits and triggers to avoid concentrations which would be out of line with
external expectations, and which may lead to unexpected losses of a scale that would be detrimental to the stability of the relevant business line or the Group. These limits are set by the independent risk function, formally monitored each month and
subject to Board-level oversight.
For example, in our commercial property finance and construction portfolios, a comprehensive series
of limits are in place to control exposure within each business and geographic sector. To ensure that limits are aligned to the underlying risk characteristics, the Mandate and Scale limits differentiate between types of exposure. There are, for
example, individual limits for property investment and property development, and for senior and subordinated lending.
Barclays uses the
Mandate and Scale framework to:
¡
limit concentration risk;
¡
keep business activities within Group and individual business mandate;
¡
ensure activities remain of an appropriate scale relative to the underlying risk and reward; and
¡
ensure risk-taking is supported by appropriate expertise and capabilities.
As well as Group-level Mandate & Scale limits, further limits are set by risk managers within each business unit, covering particular
portfolios.
Interaction of risk appetite with business strategy
The strategy and business activities are reflected in key performance metrics, which are dependent in large part on risk performance. Risk appetite, as described above, helps to ensure that the
strategy is adaptable to various degrees of financial stress.
Each year, our MTP process ensures that our appetite takes account of the
strategy (detailed on page 274).
For further information on Risk Factors and the Operating and Business Environment, refer to pages
72-79.
Stress testing
Group-wide stress tests are an integral part of the annual MTP process and annual review of risk appetite to ensure that the Group's financial position and risk profile provide sufficient
resilience to withstand the impact of severe economic stress.
The Board Risk Committee agrees the range of scenarios to be tested and
the independent Group Risk function leads the process. Macroeconomic stress test scenarios are designed to be both severe and plausible and are tested against the FSA's scenario framework to ensure that they are appropriately conservative.
The following diagram summarises the process for designing and agreeing the scenarios to be run. The process includes Group Risk
consultation with economists in the businesses. This ensures relevance of scenarios to our businesses and a consistent interpretation of the scenarios across the Group.
At the Group level, stress test scenarios capture a wide range of macroeconomic variables that are relevant to assess the impact of the stress scenario on our portfolios. This includes for example,
GDP, unemployment, asset prices, foreign exchange rates and interest rates. Economic parameters are set using expert judgement and historical and quantitative analysis to ensure coherence and appropriate severity.
The stress testing process is detailed and comprehensive using bottom-up analysis performed by each of Barclays businesses. It includes all aspects
of the Group's balance sheet across all risk types and is forward looking over a five year period. Our stress testing approach combines running statistical models with expert judgement to ensure the results accurately reflect the impact of the
stress.
The businesses' stress test methodologies and results are subject to a detailed review and challenge both within the
businesses (including review and sign-off by business Chief Risk Officers) and by Head Office Functions. The stress test results are presented for review by the Executive Committee and Board Risk Committee, and are also shared with the Board and the
FSA. The results of our H2 2012 internal Group-wide stress test exercise show that the Group's profit before tax remains positive under the modelled severe global stress scenario, with the Group remaining well capitalised above the required
regulatory minimum level.
A key objective of the Group-wide stress test process is to identify and document management actions that
would be taken to mitigate the impact of stress. The bottom-up process ensures all levels of management are informed of the impact of the stress scenarios and are aware of appropriate management actions to be taken when a stress event occurs.
In addition, the framework also includes reverse stress testing techniques which aim to identify the circumstances under which our
business model would become no longer viable, leading to a significant change in business strategy. Examples include extreme macroeconomic downturn scenarios (such as a break-up of the Euro area) or specific idiosyncratic events.
Stress Testing
I  279
Risk management
Barclays risk management strategy continued
Reverse stress testing is used to help support ongoing risk management and is fully integrated into
our risk appetite framework. For example, our reverse stress testing methodology includes identifying tail risks associated with specific (low likelihood) circumstances, and identifying appropriate mitigating actions.
Barclays also uses stress testing techniques at portfolio and product level to support risk management. For example, portfolio management in the US
cards business employs stressed assumptions of unemployment to determine profitability hurdles for new accounts. In the UK mortgage business, affordability thresholds incorporate stressed estimates of interest rates. In the Investment Bank, global
scenario testing is used to gauge potential losses that could arise in conditions of extreme market stress. Stress testing is also conducted on positions in particular asset classes, including interest rates, commodities, equities, credit and
foreign exchange.
Information on the Group's stress testing specifically relating to liquidity risk is set out on pages 136-138.
Further information on market risk stress testing is provided on pages 120-121.
Environmental risk
Barclays has a dedicated Environmental Risk Management team which is a part of the central Credit Risk Management function in Group
Risk, recognising that environment is a mainstream credit risk issue. Environmental issues are required considerations in credit risk assessment, and environmental risk policies are explicitly referenced in the Credit Facility Sanctioning Standards.
Barclays approach to environmental credit risk management addresses risk under any of three categories:
Direct Risk:
arises when the Bank takes commercial land as collateral. In many jurisdictions, enforcement of a commercial mortgage by the bank, leading to possession, potentially renders the Bank liable for the costs of remediating a site if deemed to be
contaminated by the regulator, including for pre-existing conditions. In the UK, our policy requires commercial land, if being pledged as collateral, to be subject to a screening mechanism using the bespoke Barclays Siteguard tool. Assessment of the
commercial history of a piece of land and its potential for environmental contamination helps ensure any potential environmental degradation is reflected in the value ascribed to that security. It also identifies potential liabilities which may be
incurred by the Bank, if realisation of the security were to become a possibility.
Indirect Risk:
can arise when environmental issues may impact the creditworthiness of the borrower. For instance, incremental costs may be incurred in upgrading a business' operations to meet emerging
environmental regulations or tightening standards. In other circumstances, failure to meet those standards may lead to fines. Environmental impacts on businesses may also include shifts in the market demand for goods or services generated by our
customers, or changing supply chain pressures. Environmental considerations affecting our clients can be varied. The bank has developed a series of environmental risk briefing notes, covering ten broad industry headings ranging from Agriculture and
Fisheries to Oil and Gas, from Mining and Metals to Utilities and Waste Management. These briefing notes are available to colleagues in business development and credit risk functions across the organisation, outlining the nature of environmental and
social risks of which to be aware, as well as the factors which mitigate those risks.
Reputation Risk:
would arise causing damage to the Bank's image, through association with clients, their transactions or
projects if these are perceived by external stakeholders to be environmentally damaging. Where the Bank is financing infrastructure projects which have potentially adverse environmental impacts the Group's Environmental and Social Impact
Assessment policy will apply. This policy identifies the circumstances in which the Bank requires due diligence to include assessment of specialist environmental reports. These reports will include consideration of a wide range of the project's
potential impacts including on air, water and land quality, on biodiversity issues, on locally affected communities, including any material upstream and downstream impacts, and working conditions together with employee and community health and
safety. Adherence to the Group ESIA policy is the mechanism by which Barclays fulfils the requirements of the Equator Principles. These Principles are an internationally recognised framework for environmental due diligence in project finance.
Barclays was one of the four banks which collaborated in developing the Principles, ahead of their launch in 2003 with 10 adopting banks. There are now over 70 banks worldwide which have adopted the Equator Principles. (See
www.equator-principles.com).
Further details on the Barclays approach to environmental risk management can be found at Barclays.com, in
our section on Citizenship; the way we do business, 'Environmental and Social Risk in Lending'.
280  I
Risk management
Credit risk management
Credit risk management overview
Credit risk is the risk of suffering financial loss should any of the Group's customers, clients or market counterparties fail to fulfil their contractual obligations to the Group. The granting
of credit is one of the Group's major sources of income and, as the most significant risk, the Group dedicates considerable resources to its control.
Overview (audited)
The credit risk that the Group
faces arises mainly from wholesale and retail loans and advances together with the counterparty credit risk arising from derivative contracts entered into with our clients. Other sources of credit risk arise from trading activities, including debt
securities; settlement balances with market counterparties, available for sale assets and reverse repurchase loans.
Credit risk
management objectives are to:
¡
maintain a framework of controls to ensure credit risk-taking is based on sound credit risk management principles;
¡
identify, assess and measure credit risk clearly and accurately across the Group and within each separate business, from the level of individual
facilities up to the total portfolio;
¡
control and plan credit risk-taking in line with external stakeholder expectations and avoiding undesirable concentrations;
¡
monitor credit risk and adherence to agreed controls; and
¡
ensure that risk-reward objectives are met.
Organisation and structure (audited)
Barclays has structured the responsibilities of credit risk management so that decisions are taken as close as possible to the business, whilst ensuring robust review and challenge of performance,
risk infrastructure and strategic plans. The credit risk management teams in each business are accountable to the business risk directors in those businesses who, in turn, report to the heads of their businesses and also to the Chief Risk Officer.
The responsibilities of the credit risk management teams in the businesses include: sanctioning new sources of risk; monitoring risk
against limits and other parameters; ensuring all elements of post sanction fulfilment are completed in line with terms of the sanction; maintaining robust systems, data gathering, quality, storage and reporting methods for effective credit risk
management; and performing effective turnaround and workout scenarios via dedicated restructuring and recoveries teams.
Credit risk
approval is undertaken by experienced credit risk professionals operating within a clearly defined delegated authority framework, with only the most senior credit officers entrusted with the higher levels of delegated authority. The largest credit
exposures are approved at the Credit Committee which is managed by Group Risk. In the wholesale portfolios, credit risk managers are organised in sanctioning teams by geography, industry and/or product.
The role of the Group Risk function is to provide Group-wide direction, oversight and challenge of credit risk-taking. Group Risk sets the Credit
Risk Control Framework, which provides a structure within which credit risk is managed together with supporting Group Credit Risk Policies. Group Risk also provides technical support, review and validation of credit risk measurement models across
the Group.
Monitoring weaknesses in
portfolios
Write Off
I  281
Risk management
Credit risk management continued
Reporting
The Group dedicates considerable resources to gaining a clear and accurate understanding of credit risk across the business and ensuring that its balance sheet correctly reflects the value of the
assets in accordance with applicable accounting principles. This process can be summarised in four broad stages:
¡
measuring exposures and concentrations;
¡
monitoring weaknesses in portfolios;
¡
raising allowances for impairment and other credit provisions; and
¡
returning assets to a performing status or writing off assets when the whole or part of a debt is considered irrecoverable.
Measuring exposures and concentrations
Loans and advances to customers provide the principal source of credit risk to the Group although Barclays can also be exposed to other forms of credit risk through, for example, loans to banks,
loan commitments and debt securities. Barclays risk management policies and processes are designed 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. One area of particular review is concentration risk. A concentration of credit risk exists when a number of counterparties are engaged in similar activities and have similar economic characteristics that would cause their
ability to meet contractual obligations to be similarly affected by changes in economic and other conditions. As a result, Barclays constantly reviews its concentration in a number of areas including, for example, geography, maturity and industry
(see pages 82-85).
Diversification is achieved through setting maximum exposure guidelines to individual counterparties. Excesses are
reported to the Financial Risk Committee and the BRC. Mandate and Scale limits are used to maintain concentrations at appropriate levels. Limits are typically based on the nature of the lending and the amount of the portfolio meeting certain
standards of underwriting criteria.
Monitoring weaknesses in portfolios
Whilst the basic principles for monitoring weaknesses in wholesale and retail exposures are broadly similar, they reflect the differing nature of the assets. As a matter of policy all facilities
granted to corporate or wholesale counterparties are subject to a review on, at least, an annual basis, even when they are performing satisfactorily.
Wholesale portfolios
Wholesale accounts that are deemed to contain heightened
levels of risk are recorded on graded early warning lists (EWL) or watchlists (WL) comprising three categories graded in line with the perceived severity of the risk attached to the lending, and its probability of default. Examples of heightened
levels of risk may include, for example:
¡
a material reduction in profits;
¡
a material reduction in the value of collateral held;
¡
a decline in net tangible assets in circumstances which are not satisfactorily explained; or
¡
periodic waiver requests or changes to the terms of the credit agreement over an extended period of time.
These lists are updated monthly and circulated to the relevant risk control points. Once an account has been placed on WL or EWL, the exposure is
carefully monitored and, where appropriate, exposure reductions are effected. Should an account become impaired, it will normally, but not necessarily, have passed through each of the three categories, which reflect the need for increasing caution
and control. Where an obligor's financial health gives grounds for concern, it is immediately placed into the appropriate category. While all obligors, regardless of financial health, are subject to a full review of all facilities on at least
an annual basis, more frequent interim reviews may be undertaken should circumstances
dictate. Specialist recovery functions deal with clients in higher levels of EWL/WL, default, collection or insolvency. Their mandate is to maximise shareholder value ideally via working
intensively with the client to help them to either return to financial health or in the cases of insolvency obtain the orderly and timely recovery of impaired debts.
Within the wholesale portfolios the Basel definitions of default are used as default indicators in addition to the IAS 39 objective evidence of impairment. A default is triggered if individual
identified impairment is recognised. The Basel definitions of default used are:
1.
Bank puts the credit obligation on a non-accrued status.
2.
Bank makes a charge-off or account specific identified impairment resulting from a significant perceived decline in credit quality.
3.
Bank sells the credit obligation at a material credit-related economic loss.
4.
Bank consents to a distressed restructuring of the credit obligation where this is likely to result in a diminished financial obligation caused by the material
forgiveness or postponement of principal, interest or fees.
5.
Bank triggers a petition for obligor's bankruptcy or similar order.
6.
Bank becomes aware of the obligor having sought or having been placed in bankruptcy or similar protection where this would avoid or delay repayment of the credit
obligation to the banking group.
7.
Bank becomes aware of an acceleration of an obligation by a firm.
8.
Where the obligor is a bank – revocation of authorisation.
9.
Where the obligor is a sovereign – trigger of default definition of an approved External Credit Assessment Institution (i.e. a rating agency).
10.
Obligor past due more than 90 days on any material credit obligation to the banking group.
Retail portfolios
Within the retail portfolios, which tend to comprise
homogeneous assets, statistical techniques more readily allow potential weaknesses to be monitored on a portfolio basis. The approach is consistent with the Group's policy of raising a collective impairment allowance as soon as objective
evidence of impairment is identified. Retail accounts can be classified according to specified categories of arrears status (or cycle), which reflects the level of contractual payments which are overdue. An outstanding balance is deemed to be
delinquent when it is one day or one penny down and goes into default when it moves into recovery (normally 180 days). Impairment is considered from entry into delinquency.
The probability of default increases with the number of contractual payments missed, thus raising the associated impairment requirement.
Once a loan has passed through a prescribed number of cycles (normally six) it will charge-off and enter recovery status. 'Charge-off' refers to the point in time when collections activity
changes from the collection of arrears to the recovery of the full balance. In most cases, charge-off will result in the account moving to a legal recovery function or debt sale. This will typically occur after an account has been treated by a
collections function. However, in certain cases, an account may be charged off directly from a performing status, such as in the case of insolvency or death.
The timings of the charge-off points are established based on the type of loan. For the majority of products, the standard period for charging off accounts is six cycles (180 days past due date of
contractual obligation). Early charge-off points are prescribed for unsecured assets. For example, in case of customer bankruptcy or insolvency, associated accounts are charged off within 60 days of notification.
282  I
Allowances for impairment and other credit provisions
Barclays establishes, through charges against profit, impairment allowances and other credit provisions for the incurred loss inherent in the
lending book. Under IFRS, impairment allowances are recognised where there is objective evidence of impairment as a result of one or more loss events that have occurred after initial recognition, and where these events have had an impact on the
estimated future cash flows of the financial asset or portfolio of financial assets. Impairment of loans and receivables is measured as the difference between the carrying amount and the present value of estimated future cash flows discounted at the
financial asset's original effective interest rate. If the carrying amount is less than the discounted cash flows, then no further allowance is necessary.
Impairment allowances are measured individually for assets that are individually significant, and collectively where a portfolio comprises homogenous assets and where appropriate statistical
techniques are available. In terms of individual assessment, the principal trigger point for impairment is the missing of a contractual payment which is evidence that an account is exhibiting serious financial problems, and where any further
deterioration is likely to lead to failure. Details of other trigger points can be found on page 282. Two key inputs to the cash flow calculation are the valuation of all security and collateral, as well as the timing of all asset realisations,
after allowing for all attendant costs. This method applies mainly in the corporate portfolios.
For collective assessment, the principal
trigger point for impairment is the missing of a contractual payment which is the policy consistently adopted across all credit cards, unsecured loans, mortgages and most other retail lending. Details of other trigger points can be found on page
282. The calculation methodology relies on the historical experience of pools of similar assets; hence the impairment allowance is collective. The impairment calculation is typically based on a roll-rate approach, where the percentage of assets that
move from the initial delinquency to default is derived from statistical probabilities based on historical experience. Recovery amounts and contractual interest rates are calculated using a weighted average for the relevant portfolio. This method
applies mainly to the Group's retail portfolios and is consistent with Barclays policy of raising an allowance as soon as impairment is identified. Unidentified impairment is also referred to as collective impairment. This is to reflect the
impairment that is collectively held against a pool of assets where a loss event has occurred, but has not yet been captured. Hence, it is referred to as collective impairment against the pool.
Impairment in the wholesale portfolios is generally calculated by valuing each impaired asset on a case by case basis, i.e. on an individual
assessment basis. A relatively small amount of wholesale impairment relates to unidentified or collective impairment; in such cases impairment is calculated using modelled PD x LGD x EAD (Exposure at Default) adjusted for an emergence period.
For retail portfolios, the impairment allowance in the retail portfolios is mainly assessed on a
collective basis and is based on the drawn balances adjusted to take into account the likelihood of the customer defaulting at a particular point in time (PDpit) and the amount estimated as not recoverable (LGD). The basic calculation is:
Impairment allowance = Total outstandings x Probability of Default (PDpit) x Loss Given Default (LGD)
The PDpit increases with the number of contractual payments missed thus raising the associated impairment requirement.
Unidentified impairment allowances are also raised to cover losses which are judged to be incurred but not yet specifically identified in customer
exposures at the balance sheet date, and which, therefore, have not been specifically reported. The incurred but not yet reported calculation is based on the asset's probability of moving from the performing portfolio to being specifically
identified as impaired within the given emergence period and then on to default within a specified period. This is calculated on the present value of estimated future cash flows discounted at the financial asset's original effective interest
rate. The emergence periods vary across businesses and are based on actual experience and are reviewed on an annual basis. The current policy also incorporates a High Risk segment which supplements the unidentified impairment calculation. High Risk
segments are those which can be demonstrated to experience higher levels of loss when compared to the performing segment. This segmentation allows for earlier identification of potential loss issues in a portfolio. Unidentified impairment is also
referred to as collective impairment. This is to reflect the impairment that is collectively held against a pool of assets where a loss event has occurred, but has not yet been captured. Hence, it is referred to as collective impairment against the
pool.
Emergence and outcome periods
To develop models to calculate the allowance for impairment we need to first estimate the time horizons of these models. These time horizons are called the emergence and outcome periods. Emergence
period is the time it takes for an account that is impaired but not yet identified to move from the performing to the impaired segment. Outcome period is the time it takes for a retail account to move from the impaired segment to the default
segment.
For wholesale portfolios in Corporate Banking and Investment Bank, the emergence period is portfolio specific and is based on
the anticipated length of time from the occurrence of a loss event to identified impairment being incurred. The emergence period in Corporate Banking is derived from actual case file review. This has also been benchmarked against the time taken to
move between risk grades in our internal watch lists, from EWL1 or 2 into EWL3 which is the level of risk that will attract a collective impairment allowance. Both methodologies produce similar results for the emergence period, which is currently 3
months. The average life of the Investment Bank portfolio is estimated to be 18 months, during which time Investment Bank
Product type
Emergence
period
(months)
Outcome
period
(months)
Mortgages
6
12
Credit cards
1
6
Personal loans, overdrafts & other secured loans
3
6
Business banking arrears managed commercial mortgages
6
12
Business banking arrears managed non-'commercial mortgages'
3
6
Business banking EWL managed
3
12
Mortgages under forbearance
n/a
24
All unsecured products under forbearance
n/a
12
Business banking EWL managed under forbearance
n/a
24
I  283
Risk management
Credit risk management continued
is exposed to losses on the portfolio. However, it is expected that incurred losses would become apparent within 6 months, therefore the Investment Bank use a 6-month emergence period.
For retail portfolios, minimum emergence periods and outcome periods are defined at a product level. Emergence and outcome periods at
31 December 2012 for the main retail products were as shown in the table on the previous page.
Outcome periods are tested
periodically (at least annually) against the actual time elapsing from the initial indication of potential default to the loss event. When necessary, the outcome period is adjusted to reflect our most up-to-date experience of customer behaviour.
This methodology ensures that the Group captures the loss incurred at the correct balance sheet date. These impairment allowances are
reviewed and adjusted at least quarterly by an appropriate charge or release of the stock of impairment allowances based on statistical analysis and management judgement. Where appropriate, the accuracy of this analysis is periodically assessed
against actual losses.
As one of the controls to ensure that adequate impairment allowances are held, movements in impairment to
individual names with a total impairment allowance of £25m or more are presented to the Credit Committee for agreement.
Returning assets to a performing status
In wholesale portfolios, an account may only be returned to a performing status when it ceases to have any actual or perceived financial stress and no longer meets any of the EWL/WL criteria, or
once facilities have been fully repaid or cancelled. Unless a facility is fully repaid or cancelled, the decision in Corporate Banking to return an account to performing status may only be taken by the Business Credit Risk, while within the
Investment Bank, the decision can only be taken by the Investment Bank WatchList Committee.
A retail asset, pre point of charge-off may
only be returned to a performing status in the following circumstances:
1.
All arrears (both capital and interest) have been cleared and payments have returned to original contractual payments;
2.
For revolving products, a re-age event has occurred, when the customer is returned to an up-to-date status without having cleared the requisite level of arrears;
3.
For amortising products (excluding residential mortgages), a small arrears capitalisation event has occurred, where the customer is returned to an up-to-date
status without having cleared the requisite level of arrears;
4.
For amortising products, which are performing on a programme of Forbearance and meet the following criteria may be returned to the performing
book classified as High Risk
a
:
(a)
No interest rate concessions must have been granted;
(b)
Restructure must remain within original product parameters (original term + extension); and
(c)
12 consecutive payments at the revised contractual payment amount must have been received post the Restructure event.
Note
a
The identification and subsequent treatment of up-to-date customers who, either through an event or observed behaviour exhibit potential financial difficulty.
High Risk must also include customers who have suffered recent financial dislocation, i.e. prior forbearance or re age.
For residential mortgages, accounts may also be considered for Rehabilitation post charge-off, where
customer circumstances have changed. The customer must clear all unpaid capital and interest and confirm their ability to meet full payments going forward.
Writing off of assets
'Write-off' refers to the point where it is
determined that the asset is irrecoverable, or it is no longer considered economically viable to try and recover the asset or it is deemed immaterial or full and final settlement is reached and a shortfall remains. In the event of write-off, the
customer balance is removed from the balance sheet and the impairment reserve held against the asset is released.
The timing and extent
of write-offs may involve some element of subjective judgement. Nevertheless, a write-off will often be prompted by a specific event, such as the inception of insolvency proceedings or other formal recovery action, which makes it possible to
establish that some or the entire advance is beyond realistic prospect of recovery. In any event, the position of impaired loans is reviewed at least quarterly to ensure that irrecoverable advances are being written off in a prompt and orderly
manner and in compliance with any local regulations.
Total write-offs of impaired financial assets
For Retail portfolios the timings of the write-off points are established based on the type of loan. For unsecured assets, write-off must occur
within 12 months after charge-off if no payment has been received for 12 months. For secured loans, the shortfall after the receipt of the proceeds from the disposal of the collateral is written off within 3 months of that date if no repayment
schedule has been agreed with the borrower. Such assets are only written off once all the necessary procedures have been completed and the amount of the loss has been determined.
Subsequent recoveries of amounts previously written off are written back and hence decrease the amount of the reported loan impairment charge in the income statement. In 2012, total write-offs of
impaired financial assets decreased 20% to £4,119m (2011: £5,165m).
Identifying Potential Credit Risk Loans
In line with disclosure requirements from the SEC in the US, the Group reports potentially and actually impaired loans as Potential
Credit Risk Loans (PCRLs). PCRLs comprise two categories of loans: Potential Problem Loans (PPLs) and Credit Risk Loans (CRLs).
PPLs
are loans that are currently complying with repayment terms but where serious doubt exists as to the ability of the borrower to continue to comply with such terms in the near future. If the credit quality of a loan on an EWL or WL deteriorates to
the highest category (wholesale) or deteriorates to delinquency cycle 2 (retail), consideration is given to including it within the PPL category.
Should further evidence of deterioration be observed, a loan may move to the CRL category. Events that would trigger the transfer of a loan from the PPL to the CRL category include a missed payment
or a breach of covenant. CRLs comprise three classes of loans:
284  I
¡
Impaired loans:
comprises loans where an individual identified impairment allowance has been raised and also include loans which are fully collateralised or where indebtedness has already been written down to the
expected realisable value. This category includes all retail loans that have been charged off to legal recovery. The impaired loan category may include loans, which, while impaired, are still performing;
¡
Accruing past due 90 days or more:
comprises loans that are 90 days or more past due with respect to principal or interest. An impairment allowance will be raised against these loans if the expected cash flows discounted at the
effective interest rate are less than the carrying value; and
¡
Impaired and restructured loans:
comprises loans not included above where, for economic or legal reasons related to the debtor's financial difficulties, a concession has been granted to the debtor that would not otherwise be
considered. Where the concession results in the expected cash flows discounted at the effective interest rate being less than the loan's carrying value, an impairment allowance will be raised.
Loan loss rate and coverage ratios
The loan loss rate (LLR) provides Barclays with one way of monitoring the trends in the quality of the loan portfolio at the Group, business and product levels. At Barclays, the LLR represents the
annualised impairment charges on loans and advances to customers and banks and other credit provisions as a percentage of the total, period-end loans and advances to customers and banks, gross of impairment allowances. Details of the LLR for the
current period may be found on pages 93 and 100.
The impairment allowance is the aggregate of the identified and unidentified
impairment balances. Impairment allowance coverage, or the coverage ratio, is reported at two levels:
¡
Credit risk loans coverage ratio (impairment allowances as a percentage of CRL balances); and
¡
Potential credit risk loans coverage ratio (impairment allowances as a percentage of total CRL and PPL balances).
Appropriate coverage ratios will vary according to the type of product but can be broadly bracketed under three categories: secured retail home
loans; credit cards, unsecured and other personal lending products; and corporate facilities. Analysis and experience has indicated that, in general, the severity rates for these types of products are typically within the following ranges:
¡
Secured retail home loans: 5%-20%;
¡
Credit cards, unsecured and other personal lending products: 65%-75%; and
¡
Corporate facilities: 30%-50%.
CRL coverage ratios would therefore be expected to be at or around these levels over a defined period
of time. In principle, a number of factors may affect the Group's coverage ratios, including:
¡
The mix of products within total CRL balances:
Coverage ratios will tend to be lower when there is a high proportion of secured retail and corporate balances within total CRLs. This is due to the fact that the recovery outlook on these types of
exposures is typically higher than retail unsecured products, with the result that they will have lower impairment requirements;
¡
The stage in the economic cycle:
Coverage ratios will tend to be lower in the earlier stages of deterioration in credit conditions. At this stage, retail delinquent balances will be predominantly in the early delinquency cycles and
corporate names will have only recently moved to CRL categories. As such balances attract a lower impairment requirement, the CRL coverage ratio will be lower;
CRL coverage
¡
The balance of PPLs to CRLs:
The impairment requirements for PPLs are lower than for CRLs, so the greater the proportion of PPLs, the lower the PCRL coverage ratio; and
¡
Write-off policies:
The speed with which defaulted assets are written off will affect coverage ratios. The more quickly assets are written off, the lower the ratios will be, since stock with 100% coverage will tend to
roll out of PCRL categories more quickly.
Details of the coverage ratios for the current period may be found on pages
92, 94-95 and 101.
Loan loss rate (bps) –
longer term trends
I  285
Risk management
Credit risk management continued
Forbearance
The Group offers forbearance programmes to assist customers and clients in financial difficulty through agreements to accept less than contractual amounts due where financial distress would
otherwise prevent satisfactory repayment within the original terms and conditions of the contract. These agreements may be initiated by the customer, Barclays or a third party.
In the retail portfolios, as part of the Group Risk Forbearance Policy, solutions may take a number of forms depending on the extent of the financial dislocation. Short term solutions normally focus
on temporary reductions to contractual payments and switches from capital and interest payments to interest only. For customers with longer term financial difficulties, term extensions may be offered, which may include interest rate concessions and
a switch to fully amortising balances for card portfolios.
In the wholesale portfolios, Barclays will on occasion participate in
debt-for-asset swaps, debt standstills or debt restructuring agreements as part of the business support process. Debt restructuring agreements may include actions to improve security; such as changing an overdraft to a factoring or invoice
discounting facility or moving debt to asset owning companies. Consideration is also given to the waiving or relaxing of covenants where this is the optimum strategy for the survival of the client's business. For further detail, see page 103.
Impairment of loans under forbearance
Loans under forbearance programmes are subject to Group Impairment Policy. In both retail and wholesale portfolios, identified impairment is raised for such accounts, recognising the agreement
between the Bank and customer to pay less than the original contractual payment and is measured using a future discounted cash flow approach comparing the debt outstanding to the expected repayment on the debt. This results in higher impairment
being held for loans under forbearance than for fully performing assets, reflecting the additional credit risk attached to loans subject to forbearance.
Sustainability of loans under forbearance
The Group closely monitors the
sustainability of loans for which forbearance has been granted.
In the wholesale portfolios, customers that have been granted
forbearance are placed on WL/EWL and therefore subject to increased levels of credit risk oversight. Obligors then remain on WL/EWL for a minimum of 12 months from the date forbearance is applied until satisfactory performance is evidenced. Obligors
may only be removed from WL/EWL status in less than 12 months in exceptional circumstances, e.g. full repayment of facilities or significant restructuring that materially improves credit quality.
In retail portfolios, the type of forbearance programme offered should be appropriate to the nature and the expected duration of the
customer's financial distress. It is imperative that the solution agreed is both appropriate to that customer and sustainable, with a clear demonstration from the customer of both willingness and ability to repay. Before any programme of
forbearance is granted, an affordability assessment is undertaken to ensure suitability of the offer.
For further detail on the
Group's impairment policy and the way loans are separated into pools reflecting similar risk characteristics, see pages 282-285.
For disclosure on the Group's accounting policy with respect to impairment, see pages 206-207 and page 282.
Retail forbearance
Retail forbearance is available to customers experiencing financial difficulties. Forbearance solutions take a number of forms depending on individual customer circumstances. Short term solutions
focus on temporary reductions to contractual payments and may change from capital and interest payments to interest only. For customers with longer term financial difficulties, term extensions may be offered, which may include interest rate
concessions.
When an account is placed into a programme of forbearance, the asset will be classified as such for the remainder of its
term, unless after 12 months it qualifies for reclassification, upon which it will be returned to the up to date book and classified as high risk for a further 12 month period. When Barclays agrees to a forbearance programme with a customer, the
impairment allowance recognises the impact on cash-flows of the agreement to receive less than the original contractual payments. The Group Retail Impairment Policy prescribes the methodology for impairment of forbearance assets, which is measured
by comparing the debt outstanding to the revised expected repayment. This results in higher impairment than for fully performing assets, reflecting the additional credit risk attached to loans subject to forbearance.
During 2012, Barclays continued to assist customers in financial difficulty through the use of forbearance programmes. However, the extent 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 US, UK and Europe are presented on pages 96-97. In South Africa, forbearance balances are not published as local practices are in the process of being aligned to the Barclays Group policy.
The level of forbearance extended to customers in other retail portfolios is not material and, typically, does not currently play a significant
part in the way customer relationships are managed. However, additional portfolios will be added to this disclosure should the forbearance in respect of such portfolios become material.
Barclays would not consider a retail loan to be renegotiated where the amendment is at the request of the customer, there is no evidence of actual or imminent financial difficulty and the amendment
meets with all Barclays underwriting criteria. In this case it would be treated as a new loan. In the normal course of business, customers who are not in financial difficulties frequently apply for new loan terms, for example to take advantage of a
lower interest rate or to secure a further advance on a mortgage product. Where these applications meet our underwriting criteria and the loan is made at market interest rates, the loan is not classified as being in forbearance. Only in
circumstances where a customer has requested a term extension, interest rate reduction or further advance and there is evidence of financial difficulty is the loan classified as forbearance and included in our disclosures on forbearance.
Wholesale forbearance
Wholesale client relationships are individually managed with lending decisions made with reference to specific circumstances and on bespoke terms.
Forbearance occurs when Barclays, for reasons relating to the actual or perceived financial difficulty of an obligor, grants a
concession below current Barclays standard rates (i.e. lending criteria below our current lending terms), that would not otherwise be considered. This includes all troubled debt restructures granted below our standard rates.
Forbearance would typically be evident where the concession(s) agreed impact the ability to repay debt or avoid recognising a default with a lack
of appropriate commercial balance and risk mitigation/structural enhancement of benefit to Barclays in return for concession(s).
286  I
The following list is not exhaustive but provides some examples of instances that would typically be
considered to be evidence of forbearance:
¡
a reduction of current contractual interest rate for the sole purpose of maintaining performing debt status with no other improvement to terms of
benefit to the Bank;
¡
non-enforcement of a material covenant breach impacting the borrower's ability to repay;
¡
converting a fully or partially amortising facility to bullet repayment at maturity with no other improvement to terms of benefit to the Bank for
the sole purpose of avoiding a payment default due to the customer's inability to meet amortisation;
¡
extension in maturity date for a Project Finance facility that gives an effective contractual term longer than the underlying project contract
being financed; and
¡
any release of a material security interest without receiving appropriate value by way of repayment/ alternate security offered or other
improvement in terms available to the Bank commensurate with the value of the security released.
Where a concession
is granted that is not a result of financial difficulty and/ or is within our current market terms, the concession would not amount to forbearance. For example, a commercially balanced restructure within our current terms which involves Barclays
granting concessions and receiving risk mitigation/ structural enhancement of benefit to Barclays would not be indicative of forbearance.
The following list (not exhaustive) gives some examples of instances that would not typically be considered to be evidence of forbearance:
¡
temporary/permanent waivers/resets of covenants agreed in line with our current terms;
¡
amending contractual maturity to meet current lending terms that results in a previously amortising facility having a bullet repayment as a
consequence of shorter maturity date;
¡
equity/warrants taken to increase return to the Bank without compromising contractual interest;
¡
extension of maturity date where the extension is within the normally granted terms for the type of facility in question; and
¡
release of a material security interest where commensurate value is received by way of repayment/other security offered.
Cases where a technical default may have occurred, the Bank has decided to reserve its position but does not consider
the default to be sufficient to impact the borrower's ability to pay, would not typically be considered forbearance (as the borrower would continue to meet its payment obligations under existing terms).
The Group Watch List/Early Warning List and Forbearance Policy requires that a permanent record is retained of all individual cases of forbearance,
and upon granting forbearance the obligor is placed on WL/EWL. The obligor then remains on WL/EWL and is flagged as being in forbearance for a minimum of 12 months from the date forbearance is applied. Obligors may be removed from WL/EWL status in
less than 12 months in exceptional circumstances, e.g. full repayment of facilities or significant restructuring. Obligors placed on WL/EWL status are subject to increased levels of credit risk oversight.
Obligors who have been granted forbearance are classified as a Basel 'unlikeliness' to pay default for capital purposes with PD of 1
throughout the period that they remain classified as being in forbearance. This is on the basis that without intervention by Barclays the obligor is unlikely to meet its obligations in full which would lead to default.
Impairment is assessed on an individual basis and recognised where relevant impairment triggers have
been reached including where customers are in arrears and require renegotiation of terms. Forbearance is considered to be an indicator that impairment may be present and an impairment test is performed for all cases placed in forbearance.
A control framework exists along with regular sampling to ensure watch list and impairment policies are enforced as defined and to
ensure that all assets have suitable levels of impairment applied. Portfolios are subject to independent assessment.
Aggregate data for
wholesale forbearance cases is reviewed by the Wholesale Credit Risk Management Committee.
Please see page 103 for details of loans
currently in forbearance.
Retail re-aging activity
Re-aging refers to the placing of an account into an up-to-date position without the requisite repayment of arrears. The re-age policy applies to revolving products only. No reduction is made to the
minimum due payment amounts which are calculated, as a percentage of balance, with any unpaid principal included in the calculation of the following month's minimum due payment.
The changes in timing of cash flows following re-aging do not result in any additional cost to Barclays. The following are the conditions required to be met before a re-age may occur:
¡
the account must not have been previously charged off or written off;
¡
the borrower cannot be bankrupt, subject to an Individual Voluntary Arrangement (a UK contractual arrangement with creditors for individuals
wishing to avoid bankruptcy), a fraud or deceased;
¡
the borrower must show a renewed willingness and ability to repay the debt. This will be achieved by the borrower making at least three
consecutive contractual monthly payments or the equivalent cumulative amount. Contractual monthly payment is defined as the contractual minimum due. Funds may not be advanced for any part of this;
¡
the account must have been on book at least 9 months (i.e. 9 months prior to the 3 month qualification period); and
¡
no account should be re-aged more than once within any 12 month period, or more than twice in a 5 year period.
We consider these assets as belonging to a separate 'High Risk' pool. Under 'High Risk', the performance of the assets is a
risk characteristic and results in a higher probability of default being assigned to them in our impairment models which meet the requirement of IAS 39, AG87-88. This results in an appropriately higher impairment allowance being recognised on the
assets.
Retail small arrears capitalisation
Small Arrears Capitalisation is available for amortising products with the exception of residential mortgages. This refers to the capitalisation of small levels of arrears (up to 90 days past due),
together with either a corresponding term extension or increase to contractual monthly payment without the requirement to classify the accounts as forbearance. Contractual monthly payments must not be reduced. The small arrears capitalisation
activity is also subject to the conditions outlined above under Retail re-aging activity, being met. Any capitalisation event exceeding this must be executed under the direction of the Forbearance policy.
I  287
Risk management
Credit risk management continued
Derivative credit risk
The Group buys and sells financial instruments that are traded or cleared on an exchange, including interest rate swaps, futures and options on
futures. Holders of exchange traded instruments provide margin daily with cash or other security at the exchange, to which the holders look for ultimate settlement.
The Group also buys and sells financial instruments that are traded over the counter, rather than on a recognised exchange. These instruments range from standardised transactions in derivative
markets, to trades where the specific terms are tailored to the requirements of the Group's customers. In many cases, industry standard documentation is used, most commonly in the form of a master agreement, with individual transaction
confirmations. The existence of a signed master agreement is intended to give the Group protection in situations where a counterparty is in default.
Counterparty credit exposure arises from the risk that parties are unable to meet their payment obligations under certain financial contracts such as derivatives, securities financing transactions
(e.g. repurchase agreements), or long settlement transactions.
Internal capital for counterparty credit risk is assessed and allocated
based on the economic capital for wholesale credit risk calculation. The magnitude of the exposure is determined by considering the current mark to market of the contract, the historic volatility of the underlying asset and the time to maturity.
This allows calculation of a Credit Equivalent Exposure (CEE) for such exposures. The total economic capital for a portfolio of such exposures is then calculated in a manner similar to a book of loans.
'Wrong-way risk' in a trading exposure arises when there is significant correlation between the underlying asset and the counterparty,
which in the event of default would lead to a significant mark to market loss. When assessing the credit exposure of a wrong-way trade, analysts take into account the correlation between the counterparty and the underlying asset as part of the
sanctioning process.
Adjustments to the calculated CEE are considered on a case by case basis. In the case of specific wrong-way risk
trades, which are self-referencing or reference other entities within the same counterparty, specific approval by a senior credit officer is required.
Netting and collateral arrangements
Credit risk from derivatives is mitigated
where possible through netting agreements whereby derivative assets and liabilities with the same counterparty can be offset. Group policy requires all netting arrangements to be legally documented. The ISDA Master Agreement is the Group's
preferred agreement for documenting over the counter (OTC) derivatives. It provides the contractual framework within which dealing activities across a full range of OTC products are conducted and contractually binds both parties to apply close-out
netting across all outstanding transactions covered by an agreement if either party defaults or other predetermined events occur. The majority of the Group's OTC derivative exposures (excluding those cleared via a central clearing counterparty)
are covered by ISDA master netting and ISDA Credit Support Annex (CSA) collateral agreements.
Collateral is obtained against derivative assets, depending on the creditworthiness of the
counterparty and/or nature of the transaction. Any collateral taken in respect of OTC trading exposures will be subject to a 'haircut' which is negotiated at the time of signing the collateral agreement. A haircut is the valuation
percentage applicable to each type of collateral and will be largely based on liquidity and price volatility of the underlying security. The collateral obtained for derivatives is either cash, direct debt obligation government (G14+) bonds
denominated in the domestic currency of the issuing country, debt issued by supranationals or letters of credit issued by an institution with a long-term unsecured debt rating of A+/A3 or better. Where the Group has ISDA master agreements, the
collateral document will be the ISDA CSA. The collateral document must give Barclays the power to realise any collateral placed with it in the event of the failure of the counterparty, and to place further collateral when requested or in the event
of insolvency, administration or similar processes, as well as in the case of early termination.
Under IFRS, netting is permitted only
if both of the following criteria are satisfied:
¡
the entity has a legally enforceable right to set off the recognised amounts; and
¡
the entity intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Under US GAAP, netting is also permitted, regardless of the intention to settle on a net basis, where there is a
counterparty master agreement that would be enforceable in the event of bankruptcy.
Derivative counterparty credit risk measurement
(Credit Value Adjustments)
Barclays participates in derivative transactions, and is therefore exposed to counterparty credit risk
(or 'counterparty risk'). This is the risk that a counterparty will fail to make the future payments agreed in the derivative contract. This is considered as a separate risk to the volatility of the mark to market payment flows. Modelling
this counterparty risk is an important part of managing credit risk on derivative transactions.
The counterparty risk arising under
derivative transactions is taken into account when reporting the fair value of derivative positions. The adjustment to the value is known as Credit Value Adjustment. It is the difference between the value of a derivative contract with a risk free
counterparty and that of a contract with the actual counterparty. This is equivalent to the cost of hedging the counterparty risk, which is replicated by purchasing and selling credit default swaps (CDS) on the counterparty to create a hedge
position that mirrors the Expected Exposure profile for the counterparty.
Credit Value Adjustment for derivative positions are
calculated as a function of the 'Expected Exposure', which is the average of future hypothetical exposure values (or mark to market) for a single transaction or group of transactions by the same counterparty, and the CDS spread for a given
horizon.
In order to calculate the Expected Exposure, the expected mark to market is calculated using Monte Carlo simulations of risk
factors that may affect the valuation of the derivative. These simulations include credit mitigants such as exposure netting, collateral, mandatory break clauses and set-off clauses. Counterparties with appropriate credit mitigants will generate a
lower Expected Exposure profile compared to counterparties without credit mitigants in place for the same derivative transactions.
288  I
Credit risk mitigation
Barclays employs a range of techniques and strategies to actively mitigate credit risks to which it is exposed. These can broadly be divided into
three types:
¡
netting and set-off;
¡
collateral; and
¡
risk transfer.
Barclays has detailed policies in place to ensure that credit risk mitigation is appropriately recognised and recorded. The recognition of credit
risk mitigation is subject to a number of considerations, including ensuring legal certainty of enforceability and effectiveness, ensuring the valuation and liquidity of the collateral is adequately monitored, and ensuring the value of the
collateral is not materially correlated with the credit quality of the obligor.
All three types of credit risk mitigation may be used
by different areas of the Group for exposures with a full range of counterparties. For instance, Investment Bank, Corporate Banking 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.
Netting and set-off
In many jurisdictions in which Barclays operates, credit risk exposures can be reduced by applying netting and set-off. In exposure terms, this
credit risk mitigation technique is used mainly in derivative and repo transactions with financial institutions.
For derivative
transactions, Barclays will often seek to enter into standard master agreements with counterparties (e.g. ISDA). These master agreements allow for netting of credit risk exposure to a counterparty resulting from a derivative transaction against
Barclays obligations to the counterparty in the event of default, to produce a lower net credit exposure. These agreements may also reduce settlement exposure (e.g. for foreign exchange transactions) by allowing for payments on the same day in the
same currency to be set off against one another.
In the majority of its portfolios Barclays uses the Internal Model Method (IMM) to
calculate counterparty credit risk exposures.
Collateral
The Group has the ability to call on collateral in the event of default of the borrower or other counterparty, comprising:
¡
Home loans: a fixed charge over residential property in the form of houses, flats and other dwellings;
¡
Wholesale lending: a fixed charge over commercial property and other physical assets, in various forms;
¡
Credit cards, unsecured and other retail lending: includes charges over motor vehicle and other physical assets; second lien charge over
residential property, which is subordinate to first charge held either by the Group or by another party; and finance lease receivables, for which typically the Group retains legal title to the leased asset and has the right to repossess the asset on
the default of the borrower;
¡
Derivatives: Barclays also often seeks to enter into CSAs with counterparties with which Barclays has master agreements in place. These annexes
to master agreements provide a mechanism for further reducing credit risk, whereby collateral (margin) is posted on a regular basis (typically daily or weekly) to collateralise the mark to market exposure of a derivative portfolio;
¡
Reverse repurchase agreements: collateral typically comprises highly liquid securities which have been legally transferred to Barclays subject to
an agreement to return them for a fixed price; and
¡
Financial guarantees and similar off-balance sheet commitments: cash collateral may be held against these arrangements.
In exposure terms, the main portfolios that Barclays takes collateral for are home loans and reverse repurchase
agreements with financial institutions.
The Group may also obtain collateral in the form of floating charges over receivables and
inventory of corporate and other business customers. The value of this collateral varies from period to period depending on the level of receivables and inventory. It is impracticable to provide an estimate of the amount (fair value or nominal
value) of this collateral. The Group may in some cases obtain collateral and other credit enhancements at a counterparty level, which are not specific to a particular class of financial instrument. The fair value of the credit enhancement gained has
been apportioned across the relevant asset classes.
Assets other than cash are subject to regular revaluation to ensure they continue
to achieve appropriate mitigation of risk. Customer agreements often include requirements for provision of additional collateral should valuations decline or credit exposure increase (for example due to market moves impacting a derivative exposure).
The carrying value of non-cash collateral reflects the fair value of the physical assets limited to the carrying value of the asset
where the exposure is over-collateralised. In certain cases where active markets or recent valuations of the assets are not available, estimates are used. For assets collateralised by residential or commercial property (and certain other physical
assets), where it is not practicable to assess current market valuations of each underlying property, values reflect historical fair values updated for movements in appropriate external indices. For further information on loan-to-value ratios in
principal home loans portfolios see page 96.
For assets collateralised by traded financial instruments, values reflect mark to market
or mark to model values of those assets, applying a haircut where appropriate.
The net realisable value from a distressed sale of
collateral obtained by the Group upon default or insolvency of a counterparty will in some cases be lower than the carrying value recognised above. Assets obtained are normally sold, generally at auction, or realised in an orderly manner for the
maximum benefit of the Group, the borrower and the borrower's other creditors in accordance with the relevant insolvency regulations. For business customers, in some circumstances, where excess funds are available after repayment in full of the
outstanding loan, they are offered to any other, lower ranked, secured lenders. Any additional funds are returned to the customer. Barclays does not, as a rule, occupy repossessed properties for its business use or use assets obtained in its
operations.
When property is taken as collateral it is monitored to ensure that the current value is not less than its value at
origination. Monitoring is undertaken at least once every three years for residential property, and annually for commercial property. More frequent monitoring is carried out where the property sector is subject to significant deterioration.
Deterioration is monitored principally by geography. Specific exercises to monitor property values may be undertaken where the property
sector in a given geography has been subject to significant deterioration and where Barclays has a material concentration of property collateral.
I  289
Risk management
Credit risk management continued
Monitoring may be undertaken either at the level of an individual property or at a portfolio level.
Monitoring on a portfolio level refers to a more frequent process of indexing collateral values on each individual loan, using a regional or national index, and updating LGD values. Where an appropriate local index is not available, property values
are monitored on an individual basis as part of the annual review process for the loan.
For larger loans, property valuation is
reviewed by an independent valuer at least every three years, and an independent valuer also reviews the property valuation where information indicates that the value of the property may have declined materially relative to general market prices. In
addition, trigger points are defined under which property values must be reviewed.
Liens over fluctuating assets such as inventory and
trade receivables, known as floating charges, over the assets of a borrower are monitored annually. The valuation of this type of collateral takes into account the ability to establish objectively a price or market value, the frequency with which
the value can be obtained (including a professional appraisal or valuation), and the volatility or a proxy for the volatility of the value of the collateral.
Additional revaluations are usually performed when a loan is moved to EWL or WL. More detail of when a corporate account may be moved to an EWL or WL may be found on page 282. Exceptions to this may
be considered where it is clear a revaluation is not necessary, for instance where there is a very high margin of security or a recent valuation has been undertaken. Conversely, a material reduction in the value of collateral held represents an
increase in credit risk and will often cause a loan to be placed on the EWL or WL.
Any one of these events may also trigger a test for
impairment, depending on individual circumstances of the loan. When calculating impairment, the difference between an asset's carrying amount and the present value of all estimated cash flows discounted at the original effective interest rate
will be recognised as impairment. Such cash flows include the estimated fair value of the collateral which reflects the results of the monitoring and review of collateral values as detailed above and valuations undertaken as part of our impairment
process.
Whether property values are updated as part of the annual review process, or by indexation of collateral values, the updated
collateral values feed into the calculation of risk parameters (for example Loss Given Default) which, in turn, feed into identified and unidentified impairment calculations at each balance sheet date.
Trends in loan loss rates incorporate the impact of any decrease in the fair value of collateral held.
Where Barclays calculates regulatory capital under advanced IRB regulations the benefit of collateral is generally taken by adjusting LGDs. For
standardised portfolios the benefit of collateral is taken using the financial collateral comprehensive method: supervisory volatility adjustments approach.
Risk transfer
A range of instruments including guarantees, credit insurance,
credit derivatives and securitisation can be used to transfer credit risk from one counterparty to another. This mitigates credit risk in two main ways:
¡
firstly, if the risk is transferred to a counterparty which is more credit worthy than the original counterparty, then overall credit risk will
have been reduced
¡
secondly, where recourse to the first counterparty remains, both counterparties must default before a loss materialises. This will be less likely
than the default of either counterparty individually so credit risk is reduced
Risk transfer can also be used to reduce risk concentrations within portfolios lowering the impact of
stress events.
Risk transfer transactions are undertaken with consideration to whether the collateral provider is correlated with the
exposure, the credit worthiness of the collateral provider and legal certainty of enforceability and effectiveness. Where credit risk mitigation is deemed to transfer credit risk this exposure is appropriately recorded against the credit risk
mitigation provider.
The balances shown represent the notional value of the guarantees held by the Group issued by corporate and
financial institutional counterparties. In addition, the Group obtains guarantees from customers in respect of personal loans and smaller business loans, which are not reflected in the above table.
In exposure terms, risk transfer is used most extensively as a credit risk mitigation technique for wholesale loans and derivative financial
instruments.
For instruments that are deemed to transfer credit risk, in advanced IRB portfolios the protection is recognised by using
the PD and LGD of the protection provider.
Off-balance sheet risk mitigation
The Group applies fundamentally the same risk management 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 management policies as for loans and advances. Collateral may be sought depending on the strength of the counterparty and the nature of the transaction.
Asset credit quality
Loans and advances
All loans and advances are categorised as either neither
past due nor impaired; past due but not impaired; or impaired, which includes restructured loans. For the purposes of the disclosures on pages 86-87 and 91-92:
¡
a loan is considered past due when the borrower has failed to make a payment when due under the terms of the loan contract.
¡
the impairment allowance includes allowances against financial assets that have been individually impaired and those subject to collective
impairment.
¡
loans neither past due nor impaired consist predominantly of wholesale and retail loans that are performing. These loans, although unimpaired,
may carry an unidentified impairment provision.
¡
loans that are past due but not impaired consist predominantly of wholesale loans that are past due but individually assessed as not being
impaired. These loans, although individually assessed as unimpaired, may carry an unidentified impairment provision.
¡
impaired loans that are individually assessed consist predominantly of wholesale loans that are past due and for which an individual allowance
has been raised.
¡
impaired loans that are collectively assessed consist predominantly of retail loans that are one day or more past due for which a collective
allowance is raised. Wholesale loans that are past due, individually assessed as unimpaired, but which carry an unidentified impairment provision, are excluded from this category. Refer to pages 283-285 for further detail on Group Risk Impairment
Policy.
290  I
Home loans and credit card receivables that are subject to forbearance in the retail portfolios are
included in the collectively assessed impaired loans column in the tables on pages 91-92. Included within wholesale loans that are neither past due nor impaired are a portion of loans that have been subject to forbearance or similar strategies as
part of the Group's ongoing relationship with clients. The loans will have an internal rating reflective of the level of risk to which the Group is exposed, bearing in mind the circumstances of the forbearance and the overall performance and
prospects of the client. Loans on forbearance programmes will typically, but not always, attract a higher risk rating than similar loans which are not. A portion of wholesale loans under
forbearance is included in the past due but not impaired column, although not all loans subject to forbearance are necessarily impaired or past due. Where wholesale loans under forbearance have been impaired, these form part of individually assessed
impaired loans.
The Group uses the following
internal measures to determine credit quality for loans that are performing:
Retail
lending
Wholesale
lending
Credit quality description
Probability
of default
Probability
of default
Default
grade
Strong
0.0-0.60%
0.0-0.05%
1-3
0.05-0.15%
4-5
0.15-0.30%
6-8
0.30-0.60%
9-11
Satisfactory
0.60-10.00%
0.60-2.15%
12-14
2.15-11.35%
15-19
Higher risk
10.00%+
11.35%+
20-21
For loans that are performing, these descriptions can be summarised as follows:
Strong – there is a very high likelihood of the asset being recovered in full.
Satisfactory – whilst there is a high likelihood that the asset will be recovered and therefore, of no cause for concern to the Group, the asset may not be collateralised, or may relate to
retail facilities, such as credit card balances and unsecured loans, which have been classified as satisfactory, regardless of the fact that the output of internal grading models may have indicated a higher classification. At the lower end of this
grade there are customers that are being more carefully monitored, for example, corporate customers which are indicating some evidence of some deterioration, mortgages with a high loan to value ratio, and unsecured retail loans operating outside
normal product guidelines.
Higher risk – there is concern over the obligor's ability to make payments when due. However,
these have not yet converted to actual delinquency. There may also be doubts over value of collateral or security provided. However, the borrower or counterparty is continuing to make payments when due and is expected to settle all outstanding
amounts of principal and interest.
Loans that are past due are monitored closely, with impairment allowances raised as appropriate and
in line with the Group's impairment policies. These loans are all considered Higher Risk for the purpose of this analysis of credit quality.
Debt securities
For assets held at fair value, the carrying value on the
balance sheet will include, among other things, the credit risk of the issuer. Most listed and some unlisted securities are rated by external rating agencies. The Group mainly uses external credit ratings provided by Standard & Poor's
or Moody's. Where such ratings are not available or are not current, the Group will use its own internal ratings for the securities.
I  291
Risk management
Market risk management
Market risk management overview (audited)
Market risk is the risk of the Group's earnings or capital being reduced due to:
¡
The Group being impacted by changes in the level or volatility of positions in its trading books. This includes changes in the interest rates,
credit spreads, commodity prices, equity prices and foreign exchange levels ('traded market risk').
¡
The Group being unable to hedge its banking book balance sheet at prevailing market levels ('non-traded market risk').
¡
The Group's defined benefit obligations increasing or the value of the assets backing these defined benefit obligations decreasing due to
changes in both the level and volatility of prices ('pension risk').
Group-wide view of market risk
Barclays defines three sources of market risk: traded market risk, non-traded risk and pension risk. Traded risk in the businesses
resides primarily in Investment Bank including investment banking services at Absa Capital, while non-traded market risk resides mainly in Retail and Business Banking, Corporate Banking, Wealth and Investment Management and Treasury. Pensions risk
is monitored centrally with the cost borne across businesses.
Barclays market risk objectives are to:
¡
understand and control market risk by robust measurement, limit setting, reporting and oversight;
¡
facilitate business growth within a controlled and transparent risk management framework;
¡
ensure that traded market risk in the businesses resides primarily in Investment Bank including Absa Capital; and
¡
minimise non-traded market risk.
Barclays banking book operations generate non-traded market risk, primarily through interest rate
risk arising from the sensitivity of net interest margin to changes in interest rates. Banking businesses, such as RBB or Corporate Banking, engage in internal derivative trades with Treasury to remove this interest rate risk. The businesses remain
susceptible to market risk from three key sources:
¡
Prepayment risk: balance run-off may be faster or slower than expected due to economic conditions or customer's response to interest rates.
This can lead to a mismatch between the anticipated balance of products provided to customers and the hedges executed with Treasury;
¡
Recruitment risk: the volume of new business may be lower or higher than expected requiring the business to unwind or execute hedging
transactions with Treasury at different rates than expected; and
¡
Residual risk and margin compression: the business may retain a small element of interest rate risk to facilitate the day-to-day management of
customer business. Additionally, in the current low rate environment, Barclays managed rate deposits are exposed to margin compression. This is because for any further fall in base rate Barclays must absorb an increasing amount of the rate move in
its margin.
Treasury acts as a central internal clearing house for non-behavioural interest rate risk, netting off
positions between businesses where possible. Treasury is subject to market risk limits which ensure the majority of the interest rate risk in Treasury is passed to the Investment Bank. Treasury is permitted to retain limited interest rate risks to
facilitate the day-to-day management of hedges with the banking businesses.
Investment Bank manages the interest rate risk it receives
from Treasury as part of its day-to-day rates trading operations consistent with its client-facing activities. The positions will contribute both to market risk limits and regulatory capital requirements to the extent they are retained by the
Investment Bank. Investment Bank manages the risk arising from these internal trades within the VaR, stress and position limits set by Risk in the same manner as external, client-facing transactions are managed.
The Management Daily Value at Risk (see traded market risk) metrics disclosed in this annual report relate to the trading books in Investment Bank
and Absa, and some banking books in Investment Bank. Interest rate risk in the banking book is typically measured through net interest margin measures such as annual earnings at risk, which is disclosed below.
292  I
Organisation and structure
The Board Risk Committee reviews and approves market risk appetite for the group. The Group Market Risk Director is responsible for the Barclays Market Risk Control Framework and, under delegated
authority from the Chief Risk Officer, sets a limit framework within the context of the approved market risk appetite. Market risk reports summarise Barclays market risk exposures against agreed limits and are distributed to the principal risk
owners.
The Market Risk Committee approves and makes recommendations concerning the market risk profile across Barclays Group. This
includes approving the Barclays Market Risk Control Framework and Group Market Risk Policies; reviewing issues, limits and utilisation; and proposing risk appetite levels to the Board. The Committee is chaired by the Group Market Risk Director and
attendees include the Chief Risk Officer, respective business aligned risk managers and senior managers from Group Market Risk as well as Internal Audit.
The head of each business is accountable for all market risks associated with its activities. The head of the market risk team covering each business is responsible for implementing the risk control
framework for market risk. The control frameworks for traded, non-traded and pensions risk are all governed by the Market Risk Control Framework, which sets out how market risk should be identified, measured, controlled, reported and reviewed. The
Framework also outlines and references Group Market Risk policies.
Market risk oversight and challenge is provided by business
committees, Group committees including the Market Risk Committee and Group Market Risk. The chart above gives an overview of the business control structure.
Traded market risk
Traded market risk arises primarily as a result of client facilitation in wholesale markets. This involves market making, risk management solutions
and execution of syndications. Mismatches between client transactions and hedges result in market risk due to changes in asset prices. At Investment Bank and Absa, trading risk is measured for the trading book, as defined for regulatory purposes,
and certain banking books.
Trading book positions in the Investment Bank and Absa generate market risk capital requirements, in line
with the regulatory requirements set out in the Capital Requirements Directive ('CRD III') and the FSA's Prudential Sourcebook for Banks, Building Societies and Investment Firms ('BIPRU'). Positions which cannot be included
in the trading book are included within the banking book and generate risk capital requirements in line with this treatment.
Barclays
maintains a Trading Book Policy Statement ('TBPS') which defines the minimum requirements a business must meet to run trading positions and the process by which positions are allocated to trading or banking books. Trading intent is a key
element in deciding whether a position should be treated as a trading or banking book exposure.
Currently all trading books must be
managed by either Investment Bank or separately by Absa Capital. Businesses with trading books are required to document their implementation of trading book standards which define how the Barclays-wide TBPS requirements will be implemented. The
requirements also consider some of the points raised by the Fundamental Review of the Trading Book consultation paper. In particular, businesses are expected to evidence trading intent, e.g. by setting and enforcing risk and position limits and
defining the consequences of breaching these limits.
Overview of the business
market risk control structure
I  293
Risk management
Market risk management continued
Risk measurement
Positions in the trading book are subject to market risk capital. Market risk capital is computed
using internal models (VaR, SVaR, IRC, APR) where the position is amenable to market risk modelling and is model approved by the FSA for capital. Otherwise the market risk capital requirement is calculated using standard rules as defined by the FSA
in BIPRU. If any of the criteria specified in the TBPS are not met for a position, then that position must be allocated to the banking book.
Risk measurement
Barclays uses a range of complementary technical approaches
to measure and control traded market risk including: Daily Value at Risk (DVaR), Expected Shortfall, primary and secondary stress testing and combined scenario stress testing. The risk management process also involves a trade approval process and
additional control mechanisms where necessary such as position limits.
Daily Value at Risk (DVaR) is an estimate of the potential loss
arising from unfavourable market movements, if the current positions were to be held unchanged for one business day. For internal market risk management purposes, the Investment Bank uses a historical simulation methodology with a two-year equally
weighted historical period, at the 95% confidence level for all trading portfolios and certain banking books.
The table on page 295
demonstrates the risk types generated by different Investment Bank businesses. The table shows the level of DVaR type contribution to the total undiversified Management DVaR for each of the separate business units.
As defined by the FSA, a green model is consistent with a good working DVaR model and is achieved for models that have four or fewer back-testing
exceptions in a 12-month period. Back-testing counts the number of days when a loss (as defined by the FSA) exceeds the corresponding DVaR estimate, measured at the 99% confidence level. For the Investment Bank's DVaR model, green model status
was maintained for 2012.
The DVaR model is regularly assessed and reviewed internally by Group Executive Models Committee and
within the Investment Bank.
When reviewing DVaR estimates the following considerations should be taken into account:
¡
Historical simulation uses the most recent two years of past data to generate possible future market moves, but the past may not be a good
indicator of the future;
¡
The one day time horizon does not fully capture the market risk of positions that cannot be closed out or hedged within one day;
¡
DVaR is based on positions as at close of business and consequently intra-day risk, the risk from a position bought and sold on the same day, is
not captured; and
¡
DVaR does not indicate the potential loss beyond the DVaR confidence level.
These drawbacks are common to Value at Risk models. In order to partly mitigate these issues, Barclays also calculates Expected Shortfall based on
the same two year historical simulation data set as used to calculate DVaR. Expected Shortfall is the average of all one day hypothetical losses beyond the 95% confidence level DVaR.
Stress testing provides an estimate of potential significant future losses that might arise from extreme market moves or scenarios. Primary stress tests apply stress moves to key liquid risk factors
for each of the major trading asset classes, namely:
¡
Interest rates – shock to the level and structure of interest rates and inflation across currencies;
¡
Credit – impact on traded corporate credit exposures, including across rating grades, geography, sectors and products;
294  I
Concentration of market risk by business unit and risk type
¡
Foreign exchange – impact of unfavourable moves in currency prices and volatility;
¡
Equity – shocks to share prices including exposures to specific markets and sectors;
¡
Emerging Markets – stresses across specific countries including corporate and sovereign credit, interest rates and currency shocks;
¡
Commodities – adverse commodity price changes across both physical and derivative markets; and
¡
Securitised Products – stresses to securitised structures and hedges.
Secondary stress tests apply stress moves to less liquid risks, e.g. equity volatility skew. Secondary stresses are aggregated by the same set of
asset classes shown above and assuming a severe flight to quality scenario. The asset class stress scenarios are frequently calibrated to previously observed market shocks.
Combined scenarios apply simultaneous shocks to several risk factors, reflecting extraordinary, but plausible macro scenarios. This is assessed by applying respective changes in foreign exchange
rates, interest rates, credit spreads, commodities and equities to the portfolio. E.g. impact of a rapid and extreme slowdown in the global economy.
The annual Group-wide stress testing exercise aims to simulate the dynamics of exposures across Barclays Group and cover all risk factors. The exercise is also designed to measure the impact to
Barclays fundamental business plan, and is used to manage the wider group's strategy.
Where necessary, market risk managers also
apply specific position limits, e.g. on currency open positions, in order to limit certain activities and for monitoring exposure. The Investment Bank also applies a trade approval process designed to assess the impact of potential new transactions
on the firm's risk profile.
Trading Book Regulatory Capital Models
In 2011, the Investment Bank implemented new regulatory risk models to comply with the CRD III revisions to the market risk capital requirement.
These were Stressed VaR (SVaR), Incremental Risk Charge (IRC) and the All Price Risk (APR). All three models were approved by the FSA for calculation of regulatory capital for designated trading book portfolios. The SVaR approval matches the scope
of the DVaR model as used for regulatory capital calculations.
SVaR is an estimate of the potential loss arising from a 12 month period
of significant financial stress. SVaR uses the DVaR methodology based on inputs calibrated to historical data from a continuous 12 month period that maximises the DVaR based capital at a 99% one-tailed confidence limit.
IRC is computed on all fixed income positions subject to specific market risk (excluding the correlation trading portfolio). It calculates the
incremental risk arising from rating migrations and defaults, beyond what is already captured in specific market risk DVaR, to a 99.9% confidence level over a one year holding period.
APR covers the correlation trading portfolio and is intended to capture all risk factors relevant to corporate nth-to-default and tranched credit derivatives. As for IRC, the capital requirement is
based on a 99.9% confidence interval over a one year holding period.
When reviewing estimates produced by the CRD III models the
following considerations should be taken into account:
¡
SVaR uses the same methodology as the DVaR model and hence is subject to the same considerations as this model. In addition, SVaR is calibrated
to a specific 12 month historical stress period which may not reflect a stress period that could arise in the future;
¡
In common with DVaR, neither IRC nor APR indicate the potential loss beyond the specified confidence level, and they do not measure risk from
trades which are bought and sold in between weekly runs; and
¡
Both IRC and APR are computed to a 1-in-1,000 year confidence level which cannot be backtested on a similar historical basis as with other
regulator models.
I  295
Risk management
Market risk management continued
Risk control
Market risk is controlled through the use of an appropriate limit framework. Limits are set at the total Investment Bank portfolio level, risk factor level (e.g. interest rate risk) and business
line level (e.g. Emerging Markets). Stress limits and many book limits, such as foreign exchange and interest rate sensitivity limits, are also used to control risk appetite.
The total DVaR, risk factor DVaR, primary and secondary stress limits are approved by Board Risk Committee ('BRC'). The more granular limit framework is set by risk managers to comply with
the overall risk appetite and anticipated business opportunities. Compliance with limits is monitored by the independent Risk department in the Investment Bank with oversight provided by Group Market Risk.
Throughout 2012, Group Market Risk continued its ongoing programme of conformance tests on the Investment Bank's market risk management
practices. These visits review the current market risk profile and potential market risk developments, as well as verifying conformance with Barclays Market Risk Control Framework.
Risk reporting
Barclays Investment Bank's market risk managers produce a
number of detailed and summary market risk reports daily, weekly, fortnightly and monthly for business and risk managers. These are also sent to Group Market Risk for review, a risk summary is presented at the Market Risk Committee and the
Investment Bank's Traded Positions Risk Review.
Non-traded interest rate risk
Non-traded interest rate risk arises from the provision of retail and wholesale (non-traded) banking products and services, when the interest rate
repricing date for loans (assets) is different to the repricing date for deposits (liabilities). This includes current accounts and equity balances which do not have a defined maturity date and an interest rate that does not change in line with Base
rate changes. The risk resides mainly in Retail and Business Banking, Corporate Banking and Group Treasury. Barclays objective is to minimise non-traded interest rate risk and this is achieved by transferring interest rate risk from the business to
a local or Group Treasury, which in turn hedges the net exposure via Investment Bank with the external market. Limits exist to ensure no material risk is retained within any business or product area. Trading activity is not permitted outside
Investment Bank.
Risk measurement
The risk in each business is measured and controlled using both an income metric (Annual Earnings at Risk) and value metrics (Economic Value of Equity, Economic Capital, DVaR, risk factor stress
testing, scenario stress testing).
Annual Earnings at Risk (AEaR) measures the sensitivity of net interest income over the next
12-month period. It is calculated as the difference between the estimated income using the current yield curve and the lowest estimated income following a parallel increase or decrease in interest rates, subject to a minimum interest rate of 0%.
The main model assumptions are:
¡
The balance sheet is kept at the current level i.e. no growth is assumed; and
¡
Balances are adjusted for an assumed behavioural profile. This includes the treatment of fixed rate loans including mortgages.
Economic Value of Equity (EVE) calculates the change in the present value of the banking book for a parallel upward
and downward rate shock. This calculation is a present value sensitivity while AEaR is an income sensitivity.
Economic Capital (EC)
consistent models are used to measure: recruitment risk, the risk from customers not taking up their fixed rate loan offer; and prepayment risk, the risk of a customer deciding not to carry on with their fixed rate loan. Behavioural profiles are
also used when modelling the balance sheet.
A combination of DVaR, stress limits, net open position and specific currency or tenor
limits are in place for all local Treasury activities.
Risk control
Non-traded market risk is controlled through the use of limits on the above risk measures. Limits are set at the total business level and then cascaded down. The total business level limits for
AEaR, EVE, EC, DVaR and stress are agreed by the Group Market Risk Committee.
Compliance with limits is monitored by the respective
business market risk team with oversight provided by Group Market Risk.
The interest rate risk for balances with no defined maturity
date and an interest rate that is not linked to the base rate is managed by Group Treasury. A series of continuous rolling hedges are used to mitigate the interest rate risk in the banking book.
Risk reporting
Each
business area is responsible for their respective market risk reports. A combination of daily and monthly risk reports are produced and used by the business. These are also sent to Group Market Risk for review and inclusion in the Group Daily Market
Risk Report. A risk summary is also presented at Market Risk Committee and respective Asset and Liability Committees.
296  I
Risk management
Liquidity risk management
Liquidity risk management overview (audited)
Liquidity risk is the failure to meet obligations leading to an inability to support normal business activity and to meet liquidity regulatory
requirements. Such outflows would deplete available cash resources for client lending, trading activities and investments. These outflows could be principally through customer withdrawals, wholesale counterparties removing financing, collateral
posting requirements or loan drawdowns.
This risk is inherent in all banking operations and can be affected by a range of
Group-specific and market-wide events which can result in:
¡
An inability to support normal business activity; and
¡
A failure to meet liquidity regulatory requirements.
During periods of market dislocation, the Group's ability to manage liquidity requirements may be impacted by a reduction in the availability of wholesale term funding as well as an increase in
the cost of raising wholesale funds. Asset sales, balance sheet reductions and the increasing costs of raising funding will affect the earnings of the Group.
In illiquid markets, the Group may decide to hold assets rather than securitising, syndicating or disposing of them. This could affect the Group's ability to originate new loans or support
other customer transactions as both capital and liquidity are consumed by existing or legacy assets.
In addition, the introduction of
capital controls or new currencies by countries to mitigate current stresses could have a consequential effect on performance of the balance sheets of certain Group companies based on the asset quality, types of collateral and mix of liabilities.
The efficient management of liquidity is essential to the Group in retaining the confidence of the financial markets and ensuring that
the business is sustainable. Liquidity risk is managed through the Liquidity Risk Framework, which is designed to meet the following objectives:
¡
To maintain liquidity resources that are sufficient in amount and quality and a funding profile that is appropriate to meet the liquidity risk
framework as expressed by the Board;
¡
To maintain market confidence in the Group's name;
¡
To set limits to control liquidity risk within and across lines of business and legal entities;
¡
To accurately price liquidity costs, benefits and risks and incorporate those into product pricing and performance measurement;
¡
To set early warning indicators to identify immediately the emergence of increased liquidity risk or vulnerabilities including events that would
impair access to liquidity resources;
¡
To project fully over an appropriate set of time horizons cash flows arising from assets, liabilities and off-balance sheet items; and
¡
To maintain a Contingency Funding Plan that is comprehensive and proportionate to the nature, scale and complexity of the business and that is
regularly tested to ensure that it is operationally robust.
Governance and organisation
Barclays Treasury operates a centralised governance control process that covers all of the Group's liquidity risk management activities. The
Barclays Treasurer is responsible for designing the Group Liquidity Risk Management framework (the Liquidity Framework) which is sanctioned by the Board Risk Committee (BRC). The Liquidity Framework incorporates liquidity policies, systems and
controls that the Group has implemented to manage liquidity risk within tolerances approved by the Board and regulatory agencies. The Board sets the Group's Liquidity Risk Appetite (LRA), being the level of risk the Group chooses to take in
pursuit of its business objectives and in meeting its regulatory obligations. The Treasury Committee is responsible for the management and governance of the mandate defined by the Board and includes the following sub-committees:
¡
The Group Funding and Liquidity Management Committee is responsible for the review, challenge and approval of the Liquidity Framework. The
Liquidity Framework is reviewed regularly at Treasury Committee and BRC;
¡
The Group Asset and Liability Management Committee oversees the management and governance of asset and liability management including behavioural
mismatch, structural risk and transfer pricing; and
¡
The Investment Advisory Group supervises the investment of a portion of the Group liquidity pool in longer-dated liquid assets. The Investment
Advisory Group approves a detailed allocation framework across assets and tenors, and reviews the performance and risks associated with these holdings. The holdings are subject to limits set by the BRC and by the independent Group market and credit
risk functions.
Liquidity is recognised as a key risk and the Barclays Treasurer is the Group Key Risk owner,
supported by Key Risk Owners at regional and country levels. Execution of the Group's liquidity risk management strategy is carried out at country level, with the country Key Risk Owners providing reports to Barclays Treasury to evidence
conformance with the agreed risk profile. Further oversight is provided by country, regional and business level committees.
Governance and organisation
I  297
Risk management
Liquidity risk management continued
Ongoing business management
Liquidity risk framework
Barclays has a comprehensive Liquidity Framework for managing the Group's liquidity risk. The Liquidity Framework is designed to deliver the
appropriate term and structure of funding consistent with the Liquidity Risk Appetite set by the Board.
The Liquidity Framework
incorporates a range of ongoing business management tools to monitor, limit and stress test the Group's balance sheet and contingent liabilities. Limit setting and transfer pricing are tools that are designed to control the level of liquidity
risk taken and drive the appropriate mix of funds, which together reduce the likelihood that a liquidity stress event could lead to an inability to meet the Group's obligations as they fall due. The stress tests assess potential contractual and
contingent stress outflows under a range of scenarios, which are then used to determine the size of the liquidity pool that is immediately available to meet anticipated outflows if a stress occurred.
In addition the Group maintains a Contingency Funding Plan which details how liquidity stress events of varying severity would be managed. Since
the precise nature of any stress event can not be known in advance, the plans are designed to be flexible to the nature and severity of the stress event and provide a menu of options that could be used as appropriate at the time. Barclays also
maintains Recovery Plans which consider actions to facilitate recovery from severe stress or an orderly resolution. The overall framework therefore provides the necessary tools to manage the continuum of liquidity risk, as summarised in the chart
above.
Ongoing business management
Liquidity Limits
Barclays
manages limits on a variety of on and off-balance sheet exposures, a sample of which are shown in the table below. These limits serve to control the overall extent and composition of liquidity risk taken by managing exposure to particular sources of
liabilities, asset liability mismatches and counterparty concentrations. Barclays also limits activities permitted at a country level. Businesses are only allowed to have funding exposure to wholesale markets where they can demonstrate that their
market is sufficiently deep and liquid and then only relative to the size and complexity of their business.
Internal Pricing and
Incentives
Barclays actively manages the composition and duration of the balance sheet and of contingent liabilities through the
transfer of liquidity premium directly to business units. Liquidity premiums are charged and credited to businesses according to the behavioural life of assets and liabilities and contingent risk. These transfer pricing mechanisms are designed to
ensure that liquidity risk is reflected in product pricing and performance measurement, thereby ensuring that the Liquidity Framework is integrated into business level decision making to drive the appropriate mix of sources and uses of funds.
Liquidity Limits
298  I
Early Warning Indicators
Barclays monitors a range of market indicators for early signs of liquidity risk either in the market or specific to Barclays, a sample of which are shown in the table below. Additionally country
and business level Asset and Liability Committees monitor early warning indicators appropriate to their businesses. These are designed to immediately identify the emergence of increased liquidity risk to maximise the time available to execute
appropriate mitigating actions. A deterioration in Early Warning Indicators can lead to invocation of the Group's Contingency Funding Plan, which provides a framework for how the liquidity stress would be managed.
Risk appetite and planning
Regulatory requirements are complied with at the Group and entity level, with the Liquidity Risk Appetite (LRA) providing a consistent Group wide
perspective that supplements these requirements. Under the Liquidity Framework, the Group has established the LRA, which is the level of liquidity risk the Group chooses to take in pursuit of its business objectives and in meeting its regulatory
obligations. It is measured with reference to the liquidity pool compared to anticipated stressed net contractual and contingent outflows for each of three stress scenarios.
The stress outflows are used to determine the size of the Group Liquidity Pool, which represents those resources immediately available to meet outflows in a stress. In addition to the liquidity
pool, the Liquidity Framework provides for other management actions, including generating liquidity from other liquid assets on the Group's balance sheet in order to meet additional stress outflows, or to preserve or restore the Liquidity Pool
in the event of a liquidity stress.
Contingency Funding Plan and Recovery Resolution Plan
Barclays maintains a Contingency Funding Plan (CFP), which is designed to provide a framework where a liquidity stress could be effectively managed.
The CFP is proportionate to the nature, scale and complexity of the business and is tested to ensure that it is operationally robust. The CFP details the circumstances in which the plan could be invoked, including as a result of adverse movements in
Early Warning Indicators. As part of the plan the Barclays Treasurer has established a Liquidity Management Committee (LMC.) On invocation of the CFP, the LMC would meet to identify the likely impact of the event on the Group and determine the
response, which would be proportionate to the nature and severity of the stress.
The CFP provides a communication plan and includes
management actions to respond to liquidity stresses of varying severity. This could include monetising the liquidity pool, slowing the extension of credit, increasing the tenor of funding and securitising or selling assets.
The Group continues to work with the authorities on recovery and resolution planning (RRP). The Group made its first formal RRP submissions to the
UK and US regulators in mid-2012 and has since continued to work with the authorities to identify and address any impediments to resolvability.
Examples of Early Warning Indicators
Change in composition of deposits
Level of debt buybacks
Rising funding costs
Widening CDS spreads
Change in maturity profile
Repo haircut widening
I  299
Risk management
Capital risk management
Capital risk management overview (audited)
Capital risk is the risk that the Group has insufficient capital resources to:
¡
Meet minimum regulatory requirements in the UK and in other jurisdictions such as the United States and South Africa where regulated activities
are undertaken. The Group's authority to operate as a bank is dependent upon the maintenance of adequate capital resources;
¡
Support its credit rating. A weaker credit rating would increase the Group's cost of funds; or
¡
Support its growth and strategic options.
Capital Management is integral to the Group's approach to financial stability and sustainability management and is therefore embedded in the way our Businesses and Legal Entities operate. Our
Capital Management strategy is driven by the strategic aims of the Group and the risk appetite set by the Board.
Our objectives are achieved
through well embedded capital management practices:
Primary Objectives
Core Practices
Provide a viable and sustainable business offering by maintaining adequate capital to cover
the Group's current and forecast business needs and associated risks
¡
Maintain a capital plan on a short term and medium term basis aligned with strategic objectives
¡
Meet minimum
regulatory requirements at all times in the UK and in all other jurisdictions that the Group operates in, such as the United States and South Africa where regulated activities are undertaken
Ensure the Group and legal entities maintain adequate capital to withstand the impact of the
risks that may arise under the stressed conditions analysed by the Group
¡
¡
Perform Group-wide internal and regulatory stress tests
Maintain capital buffers over regulatory minimums
¡
Develop contingency
plans for severe (stress management actions) and extreme stress tests (recovery actions)
Support a strong credit rating
¡
Maintain capital ratios aligned with rating agency expectations
Our approach to capital risk management
We adopt a forward-looking, risk based approach to Capital Risk Management. Capital demand and supply is actively managed on a centralised basis, at
a business level, at a local entity level and on a regional basis taking into account the regulatory, economic and commercial environment in which Barclays operates.
Capital planning
Capital forecasts are managed on a top-down and bottom-up
analysis through both Short Term (Year 1 monthly) and Medium Term (3 year) financial planning cycles. Our capital plans are developed with the objective of maintaining capital that is adequate in quantity and quality to support our risk profile and
business needs. As a result the Group holds a diversified pool of capital resources that provides strong loss absorbing capacity and optimised returns.
Our capital plans are continually monitored against internal target capital ratios to ensure they remain appropriate, and to consider risks to the plan including possible future regulatory charges.
Local management ensures compliance with an entity's minimum regulatory capital requirements by reporting to local Asset and
Liability Committees with oversight by the Group's Capital Committee, as required.
Capital allocation
Capital allocations are approved by the Group Executive Committee and monitored by the Treasury Committee, taking into consideration the risk
appetite, growth and strategic aims of the Group. Barclays Bank PLC (BBPLC) is the primary source of capital to its legal entities. Regulated legal entities are, at a minimum, allocated adequate capital to meet their current and forecast regulatory
and business requirements.
Risk identification
Capital demand is assessed and quantified for credit, market, operational, interest rate risk on the banking book, pension obligation risk and securitisation risks, in line with the FSA's
regulatory requirements.
Treasury works closely with Group Risk, businesses and legal entities to support a proactive approach to
identifying sources of capital ratio volatilities which are incorporated in the Group's capital plan. We monitor capital risks against firm-specific and macroeconomic early warning indicators and report to Treasury Committee, associated with
clear escalation channels to senior management.
Stress testing
Internal stress testing is undertaken to quantify and understand the impact of sensitivities on the capital plan and capital ratios, arising from 1 in 7 year and 1 in 25 year stresses. Actual recent
economic, market and peer institution stresses are used to inform the assumptions of our stress tests and assess the effectiveness of our mitigations strategies.
Group also undertakes stress tests prescribed by the FSA and ECB. Legal entities undertake stress tests prescribed by their local regulators. These stress tests inform decisions on the size and
quality of capital buffer required and the results are incorporated into the Group capital plan to ensure adequacy of capital under normal and severe, but plausible stressed conditions.
300  I
Risk mitigation
As part of the stress testing process we identify the actions that should be taken to mitigate the risks that could arise in the event of material adverse changes in the current economic and
business outlook.
As an additional layer of protection, the Barclays Recovery Plan defines the actions and implementation strategies
available for the Group to increase or preserve our capital resources in the event that stress events are more extreme than anticipated. In addition, the strong regulatory focus on resolvability has continued in 2012, from both UK and international
regulators. The Group continues to work with the authorities on recovery and resolution planning (RRP), and the detailed practicalities of the resolution process, including the provision of information that would be required in the event of a
resolution, so as to enhance Barclays resolvability (a Citizenship commitment made in May 2012). The Group made its first formal RRP submissions to the UK and US regulators in mid-2012 and has since continued to work with the authorities to identify
and address any impediments to resolvability.
Transferability of capital
The Group's policy is for surplus capital held in Group entities to be repatriated to BBPLC in the form of dividends and/or capital
repatriation, subject to local regulatory requirements, exchange controls and tax implications. This approach provides optimal flexibility on the re-deployment of capital across legal entities. The Group is not aware of any material impediments to
the prompt transfer of capital resources, in line with the above policy, or repayment of intra-group liabilities when due.
Governance
Our Group and
legal entity capital plans are underpinned by the Capital Management Framework, which includes our capital management policies and practices approved by the Capital Committee and implemented consistently and aimed at delivering on our objectives.
The Group Treasury Committee and the Board approve the Group capital plan, stress tests and Recovery Plan. The Group Treasury Committee manages compliance with the Group's capital management objectives. The Committee reviews actual and forecast
capital demand and resources on a monthly basis. The Board Risk Committee annually reviews risk appetite and then analyses the impacts of stress scenarios on the Group capital forecast (see pages 24-26) in order to understand and manage the
Group's projected capital adequacy, amongst other things.
Resources
Global teams operate in accordance with the Group's policies and procedures, having direct access to local regulators and businesses in order
to support individual capital management at a legal entity level.
Senior management awareness and transparency
Capital ratios, early warning indicators and movements in capital demand and supply 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 FSA on an annual basis, which forms the
basis of the Individual Capital Guidance set by the FSA.
Pillar 3 disclosures are approved by the Board and publicly available as a
separate document in line with the Basel 2 and FSA requirements.
Ongoing capital management risks
Capital ratio sensitivity to foreign exchange rate movements
The Group has capital resources and risk weighted assets denominated in foreign currencies. Changes in foreign exchange rates result in changes in the Sterling equivalent value of foreign currency
denominated capital resources and risk weighted assets. As a result, the Group's regulatory capital ratios are sensitive to foreign currency movements.
The Group's capital ratio management strategy is to minimise the volatility of the capital ratios caused by foreign exchange rate movements. To achieve this, the Group aims to maintain the
ratio of foreign currency Core Tier 1, Tier 1 and Total capital resources to foreign currency RWAs the same as the Group's consolidated capital ratios.
The Group's investments in foreign currency subsidiaries and branches, to the extent that they are not hedged for foreign exchange movements, translate into Sterling upon consolidation creating
Core Tier 1 capital resources sensitive to foreign currency movements. Changes in the Sterling value of the investments due to foreign currency movements are captured in the currency translation reserve, resulting in a movement in Core Tier 1
capital.
To create foreign currency Tier 1 and Total Capital resources additional to the Core Tier 1 capital resources, the Group
issues, where possible, debt capital in non-Sterling currencies. This is primarily achieved by the issuance of debt capital from Barclays Bank PLC in USD and EUR, but can also be achieved by subsidiaries issuing capital in local currencies, such as
ABSA in South Africa.
I  301
Risk management
Operational risk management
Operational risk management overview (audited)
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. Recognising the impact operational risk may have on the Group a new Board Conduct, Reputation and Operational Risks Committee will be created in 2013.
The management of Operational Risk has two key objectives:
¡
To minimise the impact of losses suffered in the normal course of business (expected losses) and to avoid or reduce the likelihood of suffering
an extreme (or unexpected) loss; and
¡
To improve the effective management of the Barclays Group and strengthen its brand and external reputation.
Barclays is committed to the management and measurement of operational risk and was granted a waiver by the FSA to operate an Advanced Measurement
Approach (AMA) for operational risk under Basel 2, which commenced in January 2008. The majority of the Group calculates regulatory capital using AMA, however, in specific areas we apply the Basic Indicator Approach. In certain joint ventures and
associates, Barclays may not be able to apply the AMA.
Areas where the Group is working towards the rollout of AMA and the Basic
Indicator Approach is applied are: the Africa RBB businesses, including Barclays Bank Mozambique and National Bank of Commerce (Tanzania); Barclays Bank PLC Pakistan; Barclays Investment and Loans India Limited; the new to bank business activities
acquired from Lehman Brothers; and the portfolios of assets purchased from Woolworths Financial Services in South Africa, Citi Cards Portugal and Italy, Standard Life Bank, MBNA Corporate Cards, Upromise, RCI, Egg Cards, EdCon, SallreMae and
Ameriprice.
Barclays works to benchmark its internal operational risk practices with peer banks and to drive the development of
advanced operational risk techniques across the industry.
Organisation and structure
Operational Risk is one of four Principal Risks in the Barclays Principal Risks Policy and comprises a number of specific Key Risks defined as
follows:
¡
CyberSecurity:
Risk of loss or detriment to Barclays business and customers as a result of actions committed or facilitated through the
use of networked information systems;
¡
External supplier:
Inadequate selection and ongoing management of external suppliers;
¡
Financial reporting:
Reporting mis-statement or omission within external financial or regulatory reporting;
¡
Fraud:
Dishonest behaviour with the intent to make a gain or cause a loss to others;
¡
Information:
Inadequate protection of Barclays information in accordance with its value and sensitivity;
¡
Legal:
Failure to identify and manage legal risks;
¡
Product:
Inadequate design, assessment and testing of products/services;
¡
Payment process:
Failure in operation of payments processes;
¡
People:
Inadequate people capabilities, and/or performance/reward structures, and/or inappropriate behaviours;
¡
Premises & security:
Unavailability of premises (to meet business demand) and/or safe working environments, and inadequate
protection of physical assets, employees and customers against external threats;
¡
Regulatory:
Failure or inability to comply fully with the laws, regulations or codes applicable specifically to the financial services
industry;
¡
Taxation:
Failure to comply with tax laws and practice which could lead to financial penalties, additional tax charges or reputational
damage;
¡
Technology:
Failure to develop and deploy secure, stable and reliable technology solutions; and
¡
Transaction operations:
Failure in the management of critical transaction processes.
These risks may result in financial and/or non-financial impacts including legal/regulatory breaches or reputational damage. For more information
on Legal, Regulatory and Taxation risks please see pages 76-79.
The Operational Risk Framework comprises a number of elements which
allow Barclays to manage and measure its Operational Risk profile and to calculate the amount of Operational Risk capital that Barclays needs to hold to absorb potential losses. The minimum, mandatory requirements for each of these elements are set
out in the Group Operational Risk policies. This framework is implemented across the Group: vertically, through the organisational structure with all businesses required to implement and operate an Operational Risk framework that meets, as a
minimum, the requirements detailed in these operational risk policies; and horizontally, with the Group Key Risk Owners required to monitor information relevant to their Key Risk from each Operational Risk framework element.
Barclays operates with a robust system of internal control that seeks to ensure that business is transacted and risk taken without exposure to
unacceptable potential losses or reputational damage. To this end, Barclays has implemented the Group Internal Control and Assurance Framework (GICAF) which is aligned with the internationally recognised Committee of Sponsoring Organisations of the
Treadway Commission Framework (COSO).
The prime responsibility for the management of operational risk and the compliance with control
requirements rests with the business and functional units where the risk arises. Operational risk managers are widely distributed throughout the Group and support these areas, assisting line managers in understanding and managing their risks.
The Operational Risk Director (or equivalent) for each business is responsible for ensuring the implementation of and compliance with
Group Operational Risk policies.
The Group Operational Risk Director is responsible for establishing, owning and maintaining an
appropriate Group-wide Operational Risk Framework and for overseeing the portfolio of Operational Risk across the Group.
302  I
The Operational Risk Committee (ORC) is the senior executive body responsible for the oversight and
challenge of Operational risk in Barclays. Group Operational Risk Executive Committee (GOREC) is a sub-committee of the ORC, the output of which is presented to the Board Risk Committee (BRC).
In addition, Governance and Control Committees (G&CCs) in each business monitor control effectiveness. The Group G&CC receives reports from
these committees and considers Group-significant control issues and their remediation. The Group G&CC presents to the Board Audit Committee (BAC).
Businesses are required to report their Operational risks on both a regular and an event-driven basis. The reports include a profile of the material risks to their business objectives and the
effectiveness of key controls, control issues of Group-level significance, operational risk events and a review of scenarios and capital. Specific reports are prepared on a regular basis for ORC, BRC 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.
Operational risk management framework
The Barclays Operational risk framework is a key component of GICAF and has been designed to meet a number of external governance
requirements including Basel, the Capital Requirements Directive and Turnbull guidance as an evaluation framework for the purposes of Section 404(a) of the Sarbanes-Oxley Act. It also supports the Sarbanes-Oxley requirements.
The Operational risk framework includes the following elements:
Risk assessments
Barclays identifies and assesses all material risks within
each business and evaluates the key controls in place to mitigate those risks. Managers in the businesses use self-assessment techniques to identify risks, evaluate the effectiveness of key controls in place and assess whether the risks are
effectively managed within business risk appetite. The businesses are then able to make decisions on what, if any, action is required to reduce the level of risk to Barclays. These risk assessments are monitored on a regular basis to ensure that
each business continually understands the risks it faces.
Risk events
An operational risk event is any circumstance where, through the lack or failure of a control, Barclays has actually, or could have, made a loss. The definition includes situations in which Barclays
could have made a loss, but in fact made a gain, as well as incidents resulting in reputational damage or regulatory impact only.
A
standard threshold is used across the Group for reporting risk events and as part of our analysis we seek to identify where improvements are needed to processes or controls, to reduce the recurrence and/or magnitude of risk events.
Barclays also uses a database of external risk events which are publicly available and is a member of the Operational risk data eXchange (ORX), a
not-for-profit association of international banks formed to share anonymous loss data information. Barclays uses this external loss information to support and inform risk identification, assessment and measurement.
Key indicators
Key Indicators (KIs) are metrics which allow Barclays to monitor its operational risk profile. KIs include measurable thresholds that reflect the risk appetite of the business. KIs are monitored to
alert management when risk levels exceed acceptable ranges or risk appetite levels and drive timely decision making and actions.
Key
Risk Scenarios
By combining data from risk events, risk assessments and key indicators with that from audit findings, expert
management judgement and other internal data sources, Barclays is able to generate Key Risk Scenarios (KRSs). These scenarios identify the most significant operational risks across the Group. The KRSs are validated at business and Group level to
ensure that they appropriately reflect the level of operational risk the business faces.
Barclays shares and receives an anonymous
sub-set of KRS information with member banks of ORX in order to compare and contrast scenario analysis with peers.
Insurance
As part of its risk management approach, the Group also uses insurance to mitigate the impact of some operational risks.
Operational risk appetite
Barclays approach to determining appetite for Operational risk combines both quantitative measures and qualitative judgement, in order to best
reflect the nature of non financial risks.
The monitoring and tracking of Operational risk measures is supplemented with qualitative
review and discussion at senior management executive committees on the action being taken to improve controls and reduce risk to an acceptable level.
Operational risk appetite is aligned to the Group's Risk Appetite Framework.
Reporting
The ongoing
monitoring and reporting of Operational risk is a key component of an effective Operational Risk Framework. Reports are used by the Operational risk function and by business management to understand, monitor, manage and control operational risks and
losses.
Operational risk measurement
The Operational risk capital model uses the outputs of the risk management tools to measure Barclays operational risk exposure, and in particular, Key Risk Scenarios. The model estimates the
frequency and severity of operational risk losses for each risk type to provide a distribution of potential losses over a year for Barclays as a whole. This process takes into account the possibility of correlations i.e. impacts from different risks
occurring together. The model generates a regulatory capital requirement, which is determined to a level of 99.9% confidence. Once the overall level of regulatory capital for the Group has been established it is allocated, on a risk sensitive basis,
to businesses.
I  303
Shareholder information
Resources for shareholders including the Company articles of association, classes
of shares and contact details for shareholder enquiries.
304
Shareholder information
364
Shareholder enquiries
365
Index
304  I
Dividends on the ordinary shares of Barclays PLC
Barclays PLC has paid dividends on its ordinary shares every year since its incorporation in 1896.
Since December 2009 Barclays has declared and paid dividends on a quarterly basis. A final dividend for the full year ended 31 December 2011
of 3.0p was paid in March 2012 and there were three equal payments in June, September and December 2012 of 1p per ordinary share. A final cash dividend for the full year ended 31 December 2012 of 3.5p was announced on 12 February 2013
for payment on 15 March 2013.
The dividends declared for each of the last five years were:
Pence per 25p ordinary share
2012
2011
2010
2009
2008
Interim
3.00
3.00
3.00
1.00
11.50
Final
3.50
3.00
2.50
1.50
–
Total
6.50
6.00
5.50
2.50
11.50
US Dollars per 25p ordinary share
2012
2011
2010
2009
2008
Interim
0.05
0.05
0.05
0.02
0.20
Final
0.05
0.05
0.04
0.02
–
Total
0.10
0.10
0.09
0.04
0.20
The gross dividends applicable to an American Depositary Share (ADS) representing four ordinary shares, before
deduction of withholding tax, are as follows:
US Dollars per American Depositary Share
2012
2011
2010
2009
2008
Interim
0.19
0.19
0.18
0.07
0.82
Final
0.22
0.19
0.16
0.09
–
Total
0.41
0.38
0.34
0.16
0.82
For years prior to 2009, final dividends expressed in Dollars have been translated at the Noon Buying Rates in New
York City for cable transfers in Pounds Sterling as certified for customs purposes by the Federal Reserve Bank of New York (the Noon Buying Rate). From January 2009, the Federal Reserve Bank of New York discontinued the publication of Noon Buying
Rates. The final dividends for 2010, 2011 and 2012 are expressed in Dollars translated at the closing spot rate for Pounds Sterling as determined by Bloomberg at 5pm in New York City (the 'Closing Spot Rate') on 4 March 2011,
2 March 2012 and 4 March 2013 respectively (the latest practicable date for inclusion in this report). No representation is made that Pounds Sterling amounts have been, or could have been, or could be, converted into Dollars at these
rates.
Trading market for ordinary shares of Barclays PLC
The principal trading market for Barclays PLC ordinary shares is the London Stock Exchange. At the close of business on 31 December 2012, 12,242,633,551 ordinary shares were in issue.
Ordinary share listings were also obtained on the New York Stock Exchange (NYSE) with effect from 9 September 1986. Trading on the
NYSE is in the form of ADSs under the symbol 'BCS'. Each ADS represents four ordinary shares and is evidenced by an American Depositary Receipt (ADR). The ADR depositary is JP Morgan Chase
Bank, N.A. Details of trading activity are published in the stock tables of leading daily newspapers in the US.
There were 661 ADR holders and 1,667 recorded holders of ordinary shares with US addresses at 31 December 2012, whose shareholdings represented approximately 4.1% of total outstanding ordinary
shares on that date. Since certain of the ordinary shares and ADRs were held by brokers or other nominees, the number of recorded holders in the US may not be representative of the number of beneficial holders or of their country of residence.
The following table shows the high and low sales price for the ordinary shares during the periods indicated, based on mid-market prices
at close of business on the London Stock Exchange and the high and low sale price for ADSs as reported on the NYSE composite tape.
Sale prices for ordinary
shares
25p ordinary shares
American Depositary Shares
High
p
Low
p
High
US$
Low
US$
2013
By month:
January
307.66
269.60
19.29
17.71
February
330.56
288.32
20.55
18.10
2012
By month:
July
176.52
148.20
10.77
9.31
August
200.00
160.95
12.35
10.05
September
237.00
178.80
14.81
11.49
October
288.00
214.50
15.80
14.09
November
255.70
226.15
16.28
14.53
December
268.70
243.15
17.47
15.66
By Quarter:
First quarter
287.45
176.75
16.27
11.18
Second quarter
240.61
160.00
15.24
10.30
Third quarter
237.00
148.20
14.81
9.31
Fourth quarter
288.00
214.50
17.47
14.09
2011
First quarter
333.55
272.75
21.64
16.77
Second quarter
308.85
237.30
20.04
15.33
Third quarter
265.55
138.85
17.09
8.55
Fourth quarter
210.00
144.35
13.85
9.24
2011
333.55
138.85
21.64
8.55
2010
383.20
255.40
24.10
15.40
2009
383.60
51.20
25.40
3.10
2008
506.40
127.70
41.40
7.40
2007
790.00
474.50
62.50
39.90
This section incorporates information on the prices at which securities of Barclays PLC have traded. It is
emphasised that past performance cannot be relied upon as a guide to future performance.
I  305
Shareholder information continued
Shareholdings at
31 December 
2012
a
Number of
shareholders
Percentage
of holders
Shares held
Percentage
of capital
Classification of shareholders
Personal Holders
310,223
95.72
483,243,453
3.95
Banks and Nominees
12,052
3.72
11,411,761,438
93.21
Other Companies
1,819
0.56
347,579,502
2.84
Insurance Companies
9
–
34,862
–
Pension Funds
11
–
14,296
–
Total
324,114
100
12,242,633,551
100
Shareholding range
1 - 100
19,810
6.11
786,513
0.01
101 - 250
76,636
23.64
15,777,954
0.13
251 - 500
86,225
26.60
30,047,718
0.25
501 - 1,000
51,721
15.96
37,288,311
0.30
1,001 - 5,000
65,498
20.21
144,168,692
1.18
5,001 - 10,000
12,898
3.98
91,404,991
0.75
10,001 - 25,000
7,589
2.34
115,075,723
0.94
25,001 - 50,000
1,771
0.55
60,920,539
0.50
50,001 and over
1,966
0.61
11,747,163,110
95.94
Totals
324,114
100
12,242,633,551
100
United States Holdings
1,667
0.51
5,007,859
0.04
Note
a  These figures include Barclays Sharestore members.
Currency of presentation
In this report, unless otherwise specified, all amounts are expressed in Pound Sterling. For the months of September 2012 through to February 2013, the highest and lowest closing spot rates as
determined by Bloomberg at 5:00 p.m (New York time) (the 'Closing Spot Rate'), expressed in US Dollars per Pound Sterling were:
(US Dollars per Pound Sterling)
February
January
December
November
October
September
2013
2012
High
1.58
1.63
1.63
1.61
1.62
1.63
Low
1.51
1.57
1.60
1.58
1.60
1.59
For 2008 the average of the Noon Buying Rates on the last day of each month is shown in the table below. From
January 2009, the Federal Reserve Bank of New York discontinued the publication of Noon Buying Rates. From 2009 the average Closing Spot Rate on the last day of each month is shown in the table below.
(US Dollars per Pound Sterling)
2012
2011
2010
2009
2008
Average
1.59
1.61
1.54
1.57
1.84
On 4 March 2013, the Closing Spot Rate in Pound Sterling was $1.51.
No representation is made that Pounds Sterling amounts have been, or could have been, or could be, converted into US Dollars at any of the above
rates. For the purpose of presenting financial information in this report, exchange rates other than those shown above may have been used.
306  I
Articles of Association
The Company was incorporated in England on 20 July 1896 under the Companies Acts 1862 to 1890 as a company limited by shares and was reregistered in 1982 as a public limited company under the
Companies Acts 1948 to 1980. The Company is registered under company number 48839. The Company was reregistered as Barclays PLC on 1 January 1985.
Under the Companies Act 2006 (Act) a company's Memorandum of Association now need only contain the names of the subscribers and the number of shares each subscriber has agreed to take. For
companies in existence as of 1 October 2009, all other provisions which were contained in the company's Memorandum of Association, including the company's objects, are now deemed to be contained in the company's articles. The Act
also states that a company's objects are unrestricted unless that company's articles provide otherwise. Barclays PLC adopted new Articles of Association at its Annual General Meeting (AGM) on 30 April 2010 to reflect these changes and
as a result its objects are now unrestricted.
The Company may, by Special Resolution, amend its Articles of Association. In addition to
the changes referred to above, the Articles of Association adopted at the 2010 AGM updated the Articles of Association to reflect the implementation of the remaining provisions of the Companies Act 2006. The following is a summary of the current
Articles of Association (Articles):
Directors
(i)
The minimum number of Directors (excluding alternate Directors) is five. There is no maximum limit. There is no age limit for Directors.
(ii)
Excluding executive remuneration and any other entitlement to remuneration for extra services (including service on board committees) under the Articles, a
Director is entitled to a fee at a rate determined by the Board but the aggregate fees paid to all Directors shall not exceed £2,000,000 per annum or such higher amount as may be approved by an ordinary resolution of the Company. Each
Director is entitled to reimbursement for all travelling, hotel and other expenses properly incurred by him/her in or about the performance of his/her duties.
(iii)
No Director may act (either himself/herself or through his/her firm) as an auditor of the Company. A Director may hold any other office of the Company on such
terms as the Board shall determine.
(iv)
At each AGM of the Company, one third of the Directors (rounded down) are required to retire from office by rotation and may offer themselves for re-election. The
Directors so retiring are those who have been longest in office (and in the case of equality of service length are selected by lot). Other than a retiring Director, no person shall (unless recommended by the Board) be eligible for election unless a
member notifies the Company Secretary in advance of his/her intention to propose a person for election.
(v)
The Board has the power to appoint additional Directors or to fill a casual vacancy amongst the Directors. Any Director so appointed holds office until the next
AGM, when he/she may offer himself/ herself for re-election. He/she is not taken into account in determining the number of Directors retiring by rotation.
(vi)
The Board may appoint any Director to any executive position or employment in the Company on such terms as they determine.
(vii)
A Director may appoint either another Director or some other person approved by the Board to act as his/her alternate with power to attend Board meetings and
generally to exercise the functions of the appointing Director in his/her absence (other than the power to appoint an alternate).
(viii)
The Board may authorise any matter in relation to which a Director has, or can have, a direct interest that conflicts, or possibly may conflict with, the
Company's interests. Only Directors who have no interest in the matter being considered will be able to authorise the relevant matter and they may impose limits or conditions when giving authorisation if they think this is appropriate.
(ix)
A Director may hold positions with or be interested in other companies and, subject to legislation applicable to the Company and the FSA's requirements, may
contract with the Company or any other company in which the Company is interested. A Director may not vote or count towards the quorum on any resolution concerning any proposal in which he/she (or any person connected with him/her) has a material
interest (other than by virtue of his/her interest in securities of the Company) or if he/she has a duty which conflicts or may conflict with the interests of the Company, unless the resolution relates to any proposal:
(a)
to indemnify a Director or provide him/her with a guarantee or security in respect of money lent by him/her to, or any obligation incurred by him/her or any other
person for the benefit of (or at the request of), the Company (or any other member of the Group);
(b)
to indemnify or give security or a guarantee to a third party in respect of a debt or obligation of the Company (or any other member of the Group) for which the
Director has personally assumed responsibility;
(c)
to obtain insurance for the benefit of Directors;
(d)
involving the acquisition by a Director of any securities of the Company pursuant to an offer to existing holders of securities or to the public;
(e)
that the Director underwrite any issue of securities of the Company (or any of its subsidiaries);
(f)
concerning any other company in which the Director is interested as an officer or creditor or shareholder but, broadly, only if he/she (together with his/her
connected persons) is directly or indirectly interested in less than 1% of either any class of the issued equity share capital or of the voting rights of that company; and
(g)
concerning any other arrangement for the benefit of employees of the Company (or any other member of the Group) under which the Director benefits or stands to
benefit in a similar manner to the employees concerned and which does not give the Director any advantage which the employees to whom the arrangement relates would not receive.
(x)
A Director may not vote or be counted in the quorum on any resolution which concerns his/her own employment or appointment to any office of the Company or any
other company in which the Company is interested.
I  307
Shareholder information continued
(xi)
Subject to applicable legislation, the provisions described in sub-paragraphs (ix) and (x) may be relaxed or suspended by an ordinary resolution of the
members of the Company or any applicable governmental or other regulatory body.
(xii)
A Director is required to hold an interest in ordinary shares having a nominal value of at least £500, which currently equates to 2,000 Ordinary Shares
unless restricted from acquiring or holding such interest by any applicable law or regulation or any applicable governmental or other regulatory body. A Director may act before acquiring those shares but must acquire the qualification shares within
two months from his/her appointment. Where a Director is unable to acquire the requisite number of shares within that time owing to law, regulation or requirement of any governmental or other relevant authority, he/she must acquire the shares as
soon as reasonably practicable once the restriction(s) end.
(xiii)
The Board may exercise all of the powers of the Company to borrow money, to mortgage or charge its undertaking, property and uncalled capital and to issue
debentures and other securities.
Classes of Shares
The Company only has Ordinary Shares in issue. The Articles also provide for Sterling preference shares of £100 each, Dollar preference shares of $100 each, Dollar preference shares of $0.25
each, Euro preference shares of
€
100 each and Yen preference shares of ¥10,000 each (together, the
Preference Shares). In accordance with the authority granted at the AGM, Preference Shares may be issued by the Board from time to time in one or more series with such rights and subject to such restrictions and limitations as the Board may
determine. No Preference Shares have been issued to date. The Articles contain provisions to the following effect:
(i) Dividends
Subject to the provisions of the Articles and applicable legislation, the Company in General Meeting may declare dividends on the
Ordinary Shares by ordinary resolution, but such dividend may not exceed the amount recommended by the Board. The Board may also pay interim or final dividends if it appears they are justified by the Company's financial position.
Each Preference Share confers the right to a non-cumulative preferential dividend (Preference Dividend) payable in such currency at such rates
(whether fixed or calculated by reference to or in accordance with a specified procedure or mechanism), on such dates and on such other terms as may be determined by the Board prior to allotment thereof.
The Preference Shares rank in regard to payment of dividend in priority to the holders of Ordinary Shares and any other class of shares in the
Company ranking junior to the Preference Shares.
Dividends may be paid on the Preference Shares if, in the opinion of the Board, the
Company has sufficient distributable profits, after payment in full or the setting aside of a sum to provide for all dividends payable on (or in the case of shares carrying a cumulative right to dividends, before) the relevant dividend payment date
on any class of shares in the Company ranking pari passu with or in priority to the relevant series of Preference Shares as regards participation in the profits of the Company.
If the Board considers that the distributable profits of the Company available for distribution are
insufficient to cover the payment in full of Preference Dividends, Preference Dividends shall be paid to the extent of the distributable profits on a pro rata basis.
Notwithstanding the above, the Board may, at its absolute discretion, determine that any Preference Dividend which would otherwise be payable may either not be payable at all or only payable in
part.
If any Preference Dividend on a series of Preference Shares is not paid, or is only paid in part, for the reasons described
above, holders of Preference Shares will not have a claim in respect of such non-payment.
If any dividend on a series of Preference
Shares is not paid in full on the relevant dividend payment date, a dividend restriction shall apply. The dividend restriction means that, subject to certain exceptions, neither the Company nor Barclays Bank may (a) pay a dividend on, or
(b) redeem, purchase, reduce or otherwise acquire, any of their respective ordinary shares, other preference shares or other share capital ranking equal or junior to the relevant series of Preference Shares until the earlier of such time as the
Company next pays in full a dividend on the relevant series of Preference Shares or the date on which all of the relevant series of Preference Shares are redeemed.
All unclaimed dividends payable in respect of any share may be invested or otherwise made use of by the Board for the benefit of the Company until claimed. If a dividend is not claimed after 12
years of it becoming payable, it is forfeited and reverts to the Company.
The Board may (although it currently does not), with the
approval of an ordinary resolution of the Company, offer shareholders the right to choose to receive an allotment of additional fully paid Ordinary Shares instead of cash in respect of all or part of any dividend.
(ii) Voting
Every member
who is present in person or by proxy or represented at any general meeting of the Company, and who is entitled to vote, has one vote on a show of hands (when a proxy is appointed by more than one member, the proxy will have one vote for and one vote
against a resolution if he has received instructions to vote for the resolution by one or more members and against the resolution by one or more members). On a poll, every member who is present or represented and who is entitled to vote has one vote
for every share held. In the case of joint holders, only the vote of the senior holder (as determined by order in the share register) or his proxy may be counted. If any sum payable remains unpaid in relation to a member's shareholding, that
member is not entitled to vote that share or exercise any other right in relation to a meeting of the Company unless the Board otherwise determine.
If any member, or any other person appearing to be interested in any of the Company's Ordinary Shares, is served with a notice under Section 793 of the Act and does not supply the Company
with the information required in the notice, then the Board, in its absolute discretion, may direct that member shall not be entitled to attend or vote at any meeting of the Company. The Board may further direct that if the shares of the defaulting
member represent 0.25% or more of the issued shares of the relevant class, that dividends or other monies payable on those shares shall be retained by the Company until the direction ceases to have effect and that no transfer of those shares shall
be registered (other than certain specified 'excepted transfers'). A direction ceases to have effect seven days after the Company has received the information requested, or when the Company is notified that an 'excepted transfer'
of all of the relevant shares to a third party has occurred, or as the Board otherwise determines.
308  I
(iii) Transfers
Ordinary Shares may be held in either certificated or uncertificated form. Certificated Ordinary Shares shall be transferred in writing in any usual or other form approved by the Board and executed
by or on behalf of the transferor. Transfers of uncertificated Ordinary Shares shall be made in accordance with the Act and Uncertificated Securities Regulations.
The Board is not bound to register a transfer of partly paid Ordinary Shares, or fully paid shares in exceptional circumstances approved by the FSA. The Board may also decline to register an
instrument of transfer of certificated Ordinary Shares unless it is duly stamped and deposited at the prescribed place and accompanied by the share certificate(s) and such other evidence as reasonably required by the Board to evidence right to
transfer, it is in respect of one class of shares only, and it is in favour of not more than four transferees (except in the case of executors or trustees of a member).
Preference Shares may be represented by share warrants to bearer or be in registered form.
Preference Shares represented by share warrants to bearer are transferred by delivery of the relevant warrant. Preference Shares in registered form shall be transferred in writing in any usual or
other form approved by the Board and executed by or on behalf of the transferor. The Company's registrar shall register such transfers of Preference Shares in registered form by making the appropriate entries in the register of Preference
Shares.
Each Preference Share shall confer, in the event of a winding up or any return of capital by reduction of capital (other than,
unless otherwise provided by their terms of issue, a redemption or purchase by the Company of any of its issued shares, or a reduction of share capital), the right to receive out of the surplus assets of the Company available for distribution
amongst the members and in priority to the holders of the Ordinary Shares and any other shares in the Company ranking junior to the relevant series of Preference Shares and pari passu with any other class of Preference Shares, repayment of the
amount paid up or treated as paid up in respect of the nominal value of the Preference Share together with any premium which was paid or treated as paid when the Preference Share was issued in addition to an amount equal to accrued and unpaid
dividends.
(iv) 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 and manner of redemption of any such shares under the Articles. While the Company currently has no redeemable shares in issue, any series of Preference Shares issued in the future will be
redeemable, in whole or in part, at the option of the Company on a date not less than five years after the date on which such series of Preference Shares was first issued. Note that under the Companies Act 1985, in addition to obtaining shareholder
approval, companies required specific enabling provisions in their articles to purchase their own shares. Following implementation of the Act, this enabling provision is now included in the Act and is therefore no longer included in the Articles.
Shareholder approval is still required under the Act in order to purchase shares.
(v) Calls on capital
The Directors may make calls upon the members in respect of any monies unpaid on their shares. A person upon whom a call is made remains liable even if the shares in respect of which the call is
made have been transferred. Interest will be chargeable on any unpaid amount called at a rate determined by the Board (of not more than 20% per annum).
If a member fails to pay any call in full (following notice from the Board that such failure will result in forfeiture of the relevant shares), such shares (including any dividends declared but not
paid) may be forfeited by a resolution of the Board, and will become the property of the Company. Forfeiture shall not absolve a previous member for amounts payable by him/her (which may continue to accrue interest).
The Company also has a lien over all partly paid shares of the Company for all monies payable or called on that share and over the debts and
liabilities of a member to the Company. If any monies which are the subject of the lien remain unpaid after a notice from the Board demanding payment, the Company may sell such shares.
(vi) Variation of Rights
The rights attached to any class of shares may be
varied either with the consent in writing of the holders of at least 75% in nominal value of the issued shares of that class or with the sanction of special resolution passed at a separate meeting of the holders of the shares of that class.
The rights of shares shall not (unless expressly provided by the rights attached to such shares) be deemed varied by the creation of
further shares ranking equally with them.
Annual and other general meetings
The Company is required to hold an AGM in addition to such other general meetings as the Directors think fit. The type of the meeting will be
specified in the notice calling it. Under the Companies Act 2006, the AGM must be held within six months of the financial year end. A general meeting may be convened by the Board on requisition in accordance with the applicable legislation.
In the case of an AGM, a minimum of 21 clear days' notice is required. The notice must be in writing and must specify the place,
the day and the hour of the meeting, and the general nature of the business to be transacted. A notice convening a meeting to pass a special resolution shall specify the intention to propose the resolution as such. The accidental failure to give
notice of a general meeting or the non-receipt of such notice will not invalidate the proceedings at such meeting.
Subject as noted
above, all shareholders are entitled to attend and vote at general meetings. The Articles do, however, provide that arrangements may be made for simultaneous attendance at a satellite meeting place or, if the meeting place is inadequate to
accommodate all members and proxies entitled to attend, another meeting place may be arranged to accommodate such persons other than that specified in the notice of meeting, in which case shareholders may be excluded from the principal place.
Holders of Preference Shares have no right to receive notice of, attend or vote at, any general meetings of the Company as a result of
holding Preference Shares.
I  309
Shareholder information continued
Limitations on foreign shareholders
There are no restrictions imposed by the Articles or (subject to the effect of any economic sanctions that may be in force from time to time) by current UK laws which relate only to non-residents of
the UK and which limit the rights of such non-residents to hold or (when entitled to do so) vote the Company's Ordinary Shares.
Notices
A document or
information may be sent by the Company in hard copy form, electronic form, by being made available on a website, or by another means agreed with the recipient, in accordance with the provisions set out in the Act. Accordingly, a document or
information may only be sent in electronic form to a person who has agreed to receive it in that form or, in the case of a company, who has been deemed to have so agreed pursuant to applicable legislation. A document or information may only be sent
by being made available on a website if the recipient has agreed to receive it in that form or has been deemed to have so agreed pursuant to applicable legislation, and has not revoked that agreement.
In respect of joint holdings, documents or information shall be sent to the joint holder whose name stands first in the register.
A member who (having no registered address within the UK) has not supplied an address in the UK at which documents or information may be sent is
not entitled to have documents or information sent to him/her.
In addition, the Company may cease to send notices to any member who has
been sent documents on two consecutive occasions over a period of at least 12 months and when each of those documents is returned undelivered or notification is received that they have not been delivered.
Capitalisation of profits
The Company may, by ordinary resolution, upon the recommendation of the Board capitalise all or any part of an amount standing to the credit of a
reserve or fund to be set free for distribution provided that amounts from the share premium account, capital redemption reserve or any profits not available for distribution should be applied only in paying up unissued shares to be allotted to
members credited as fully paid and no unrealised profits shall be applied in paying up debentures of the Company or any amount unpaid on any share in the capital of the Company.
Indemnity
Subject to applicable legislation, every current and former Director or other officer of the Company (other than any person engaged by the company as auditor) shall be indemnified by the Company
against any liability in relation to the Company, other than (broadly) any liability to the Company or a member of the Group, or any criminal or regulatory fine.
Officers of the Group
Date of
appointment
as officer
Lawrence Dickinson
Company
Secretary
2002
Mark Harding
Group General
Counsel
2003
Thomas L. Kalaris
Chief Executive of Wealth and
2009
Investment Banking
Executive Chairman of
Barclays in the Americas
Robert Le Blanc
Chief Risk
Officer
2004
Peter Estlin
Co-Head of
Finance
2012
Mark Merson
Financial Controller and
2012
Co-Head of Finance
Maria Ramos
Group Chief Executive, Absa
2009
and Barclays Africa
Rich Ricci
Chief Executive of Corporate
2009
and Investment Banking
Sir Hector Sants
Head of Compliance and
2013
Government and Regulatory
Relations
Valerie Soranno Keating
CEO,
Barclaycard
2012
Ashok Vaswani
CEO, Retail and Business
2012
Banking
310  I
Taxation of UK holders
The following is a summary of certain UK tax issues which are likely to be material to the holding and disposal of Ordinary Shares of Barclays PLC, Preference Shares of Barclays Bank PLC (the
'Bank'), or ADSs representing such Ordinary Shares or Preference Shares (together the 'Shares').
It is based on
current law and the practice of Her Majesty's Revenue and Customs ('HMRC'), which may be subject to change, possibly with retrospective effect. It is a general guide for information purposes and should be treated with appropriate
caution. It is not intended as tax advice and it does not purport to describe all of the tax considerations that may be relevant to a prospective purchaser, holder or disposer of Shares. In particular, the summary deals with shareholders who are
resident and, in the case of individuals, ordinarily resident (the concept of ordinary residence is expected to be abolished from 6 April 2013) and domiciled in the UK for UK tax purposes, who hold their Shares as investments (other than under
an individual savings account) and who are the absolute beneficial owners of their Shares. The statements are not addressed to: (i) shareholders who own (or are deemed to own) 10 per cent or more of the voting power of Barclays PLC or the
Bank; (ii) shareholders who hold Shares as part of hedging transactions; (iii) investors who have (or are deemed to have) acquired their Shares by virtue of an office or employment; and (iv) Shareholders who hold Shares in connection
with a trade, profession or vocation carried on in the UK (whether through a branch or agency or, in the case of a corporate Shareholder, through a permanent establishment or otherwise). It does not discuss the tax treatment of classes of
shareholder subject to special rules, such as dealers in securities.
Persons who are in any doubt as to their tax position should
consult their professional advisers. Persons who may be liable to taxation in jurisdictions other than the United Kingdom in respect of their acquisition, holding or disposal of Shares are particularly advised to consult their professional advisers
as to whether they are so liable.
(i) Taxation of dividends
In accordance with UK law, Barclays PLC or Bank (as the case may be) pays dividends on the Shares without any deduction or withholding tax in respect of any taxes imposed by the UK government or any
UK taxing authority.
UK resident individuals receiving a dividend will generally be entitled to a tax credit in respect of such
dividend which may be used by certain shareholders to set against any liability they may have to UK income tax on that dividend. The value of the tax credit is currently equal to one-ninth of the amount of the cash dividend. The cash dividend
received plus the related tax credit (together, the 'gross dividend') will be part of the shareholder's total income for UK income tax purposes. It will be regarded as the top slice of the shareholder's income, and will be
subject to UK income tax at a special rate (see below).
If the shareholder is a UK resident individual liable to income tax only at the
basic rate, then he/she will be liable to UK income tax of 10% of the gross dividend. Since the tax credit will fully match this liability, there should be no further tax liability in respect of the dividend received. If, however, the individual
shareholder is subject to income tax at the higher or additional rates, there will be a further liability to tax because the tax credit will not fully match the tax liability. Higher/additional rate taxpayers are taxable on the gross dividend at a
special rate (currently 32.5%/ 42.5% respectively) against which the tax credit may be set. The dividend additional rate will be 37.5% with effect from 6 April 2013.
Subject to special rules for small companies, UK resident shareholders within the charge to UK
corporation tax will be subject to UK corporation tax on the dividends paid on the Shares unless the dividend falls within an exempt class and certain conditions are met.
UK resident shareholders are not entitled to any repayment of the tax credits. A non-UK resident shareholder will not generally be entitled to any payment from HMRC of a tax credit in respect of a
UK dividend paid on the Shares. Some non-UK resident shareholders may be able to recover some of the tax credit under an applicable double tax treaty and should consult their own professional advisers as to whether they are so entitled and as to the
process for making such a claim.
(ii) Taxation of shares under the Dividend Reinvestment Plan
Where a shareholder elects to purchase shares using their cash dividend, such shareholders will generally be liable for income tax or corporation
tax (as the case may be) on dividends reinvested in the Dividend Reinvestment Plan on the same basis as if they had received the cash and arranged the investment themselves. They should accordingly include the dividend received in their tax return
in the normal way.
(iii) Taxation of capital gains
Where shares are disposed of, a liability to tax on capital/chargeable gains may arise, depending on the shareholder's circumstances. Where shares are sold, a liability to tax may result if the
disposal proceeds exceed the sum of the base cost of the shares sold and any other allowable deductions such as share dealing costs and in certain circumstances indexation relief. To arrive at the total base cost of any Barclays PLC shares held, in
appropriate cases the amount subscribed for rights taken up in 1985 and 1988 must be added to the cost of all other shares held. For this purpose, current legislation permits the market valuation at 31 March 1982 to be substituted for the
original cost of shares purchased before that date. Shareholders other than those within the charge to corporation tax should note that, following the Finance Act 2008, no indexation allowance will be available. Shareholders within the charge to UK
corporation tax may be eligible for indexation allowance.
The calculations required to compute chargeable capital gains may be complex.
Capital gains may also arise from the gifting of shares to connected parties such as relatives (although not spouses or civil partners) and family trusts. Shareholders are advised to consult their personal financial adviser if further information
regarding a possible tax liability in respect of their holdings of Barclays PLC shares is required.
(iv) Stamp duty and stamp duty
reserve tax
Dealings in Shares will generally be subject to stamp duty or stamp duty reserve tax (although see the comments below as
regards ADSs in the section 'Taxation of US holders – Stamp Duty'). The transfer on sale of Ordinary Shares and Preference Shares will generally be liable to stamp duty at 0.5% of the consideration paid for that transfer. An
unconditional agreement to transfer Ordinary Shares and Preference Shares, or any interest therein, will generally be subject to stamp duty reserve tax at 0.5% of the consideration given. Such liability to stamp duty reserve tax will be cancelled,
or a right to a repayment (generally, with interest) in respect of the stamp duty reserve tax liability will arise, if the agreement is completed by a duly stamped transfer within six years of the agreement having become unconditional. Both stamp
duty and stamp duty reserve tax are normally the liability of the transferee.
I  311
Shareholder information continued
Paperless transfers of Ordinary Shares and Preference Shares within CREST are liable to stamp duty
reserve tax rather than stamp duty. Stamp duty reserve tax on transactions settled within the CREST system or reported through it for regulatory purposes will be collected by CREST.
Special rules apply to certain categories of person, including intermediaries, market makers, brokers, dealers and persons connected with depositary arrangements and clearance services.
(v) Inheritance tax
An
individual may be liable to inheritance tax on the transfer of Shares. Where an individual is liable, inheritance tax may be charged on the amount by which the value of his or her estate is reduced as a result of any transfer by way of gift or other
gratuitous transaction made by them or treated as made by them.
Taxation of US holders
The following is a summary of the principal US (and certain UK) tax consequences for US holders of Ordinary Shares of Barclays PLC, Preference
Shares of Barclays Bank PLC (the 'Bank'), or ADSs representing such Ordinary Shares or Preference Shares, and who are citizens or residents of the US, or otherwise who are subject to US federal income tax on a net income basis in respect
of such securities, that own the shares or ADSs as capital assets for tax purposes. It is not, however, a comprehensive analysis of all the potential tax consequences for such holders and it does not discuss the tax consequences of members of
special classes of holders subject to special rules, including (i) dealers in securities, (ii) traders in securities that elect to use a mark-to-market method of accounting for securities holdings, (iii) tax-exempt organizations,
(iv) life insurance companies, (v) holders liable for alternative minimum tax, (vi) holders that actually or constructively own 10% or more of Barclays voting stock, (vii) holders that hold shares or ADSs as part of a straddle or
a hedging or conversion transaction, (viii) holders that purchase or sell shares or ADSs as part of a wash sale for tax purposes, (ix) US holders (as defined below) whose functional currency is not the US dollar, or (x) holders who
are resident, or (in the case of individuals) ordinarily resident, or who are carrying on a trade, in the UK. The summary also does not address any aspect of US federal taxation other than US federal income taxation (such as the estate and gift tax
or the Medicare tax on net investment income). Investors are advised to consult their tax advisers regarding the tax implications of their particular holdings, including the consequences under applicable state and local law, and in particular
whether they are eligible for the benefits of the Treaty, as defined below.
A US holder is a beneficial owner of shares or ADSs that
is, for US federal income tax purposes, (i) a citizen or resident of the US, (ii) a US domestic corporation, (iii) an estate whose income is subject to US federal income tax regardless of its source, or (iv) a trust if a US court
can exercise primary supervision over the trust's administration and one or more US persons are authorised to control all substantial decisions of the trust. If a partnership holds the shares or ADSs, the United States federal income tax
treatment of a partner will generally depend on the status of the partner and the tax treatment of the partnership. A partner in a partnership holding the shares or ADSs should consult its tax adviser with regard to the United States federal income
tax treatment of an investment in the shares or ADSs.
This section is based on the Internal Revenue Code of 1986, as amended, its
legislative history, existing and proposed regulations, published rulings and court decisions (the 'Code'), and on the Double Taxation Convention between the UK and the US as entered into force in March 2003 (the 'Treaty'), all
of which are subject to change, possibly on a retroactive basis.
This section is also based in part upon the representations of the ADR Depositary and the assumption
that each obligation of the Deposit Agreement and any related agreement will be performed in accordance with its terms.
For the
purposes of the Treaty, the Estate and Gift Tax Convention between the United Kingdom and the United States, and the Code, the holders of ADRs evidencing ADSs will be treated as owners of the underlying Ordinary shares or Preference shares, as the
case may be. Generally, exchanges of shares for ADRs and ADRs for shares will not be subject to US federal income tax or to UK capital gains tax.
(i) Taxation of dividends
Subject to PFIC rules discussed below, a US holder
is subject to US federal income taxation on the gross amount of any dividend paid by Barclays PLC or Barclays Bank PLC, as applicable, out of its current or accumulated earnings and profits (as determined for US federal income tax purposes).
Dividends paid to a non-corporate US holder that constitute qualified dividend income will be taxable to the holder at the preferential rates applicable to long-term capital gains provided that the holder has a holding period of the shares or ADSs
of more than 60 days during the 121-day period beginning 60 days before the ex-dividend date (or, in the case of preference shares or ADSs relating thereto, if the dividend is attributable to a period or periods aggregating over 366 days, provided
that the holder holds the shares or ADSs for more than 90 days during the 181-day period beginning 90 days before the ex-dividend date) and meets certain other holding period requirements. Dividends paid by Barclays PLC or Barclays Bank PLC, with
respect to the Ordinary or Preference shares or ADSs will generally be qualified dividend income.
A US holder will not be subject to UK
withholding tax. The US holder will include in gross income for US federal income tax purposes the amount of the dividend actually received. Dividends must be included in income when the US holder, in the case of shares, or the Depositary, in the
case of ADSs, actually or constructively receives the dividend. The dividend will not be eligible for the dividends-received deduction generally allowed to US corporations in respect of dividends received from other US corporations. For foreign tax
credit purposes, dividends will generally be income from sources outside the United States and will, depending on a US holder's circumstances, be either 'passive' or 'general' income for purposes of computing the foreign tax
credit allowable to a US holder.
The amount of the dividend distribution includable in income will be the US Dollar value of the
Pound Sterling payments made, determined at the spot Pound Sterling/US Dollar foreign exchange rate on the date the dividend distribution is includable in income, regardless of whether the payment is in fact converted into US Dollars.
Generally, any gain or loss resulting from currency exchange fluctuations during the period from the date the dividend payment is includable in income to the date the payment is converted into US Dollars will be treated as ordinary income or loss
and, for foreign tax credit limitation purposes, from sources within the US and will not be eligible for the special tax rate applicable to qualified dividend income.
Distributions in excess of current or accumulated earnings and profits, as determined for US federal income tax purposes, will be treated as a non-taxable return of capital to the extent of the US
holder's basis in the shares or ADSs and thereafter as capital gain. However, we do not expect to calculate earnings and profits in accordance with United States federal income tax principles. Accordingly, you should expect to generally treat
distributions we make as dividends.
312  I
(ii) Taxation of capital gains
Subject to PFIC rules discussed below, US holders will generally not be subject to UK tax, but will be subject to US tax on capital gains realised on the sale or other disposition of Ordinary
shares, Preference shares or ADSs. Generally, a US holder will recognise capital gain or loss for United States federal income tax purposes equal to the difference between the US dollar value of the amount realised and a US holder's tax basis,
determined in US Dollars, in its shares or ADSs. Capital gain of a noncorporate US holder is generally taxed at preferential rates where the holder has a holding period of greater than one year. The gain or loss will generally be income or loss from
sources within the United States for foreign tax credit limitation purposes.
(iii) Taxation of premium on redemption or purchase of
shares
No refund of tax will be available under the Treaty in respect of any premium paid on a redemption of Preference shares by
Barclays Bank PLC or on a purchase by Barclays PLC of its own shares. For US tax purposes, redemption premium generally will be treated as an additional amount realised in the calculation of gain or loss but may be treated as a distribution in
respect of the holder's shares.
(iv) Taxation of passive foreign investment companies (PFICs)
Barclays PLC and Barclays Bank PLC believe that their respective shares and ADSs should not be treated as stock of a PFIC for US federal income tax
purposes, but this conclusion is a factual determination that is made annually and thus may be subject to change. If Barclays PLC or Barclays Bank PLC were to be treated as a PFIC, unless a US holder elects to be taxed annually on a mark to market
basis with respect to the shares or ADSs, gain realised on the sale or other disposition of their shares or ADSs would in general not be treated as capital gain. Instead, for a US holder, such gain and certain 'excess distributions' would
be treated as having been realised rateably over the holding period for the shares or ADSs and generally would be taxed at the highest tax rate in effect for each such year to which the gain was allocated, together with an interest charge in respect
of the tax attributable to each such year. With certain exceptions, a US holder's shares or ADSs will be treated as stock in a PFIC if Barclays PLC or Barclays Bank PLC was a PFIC at any time during such holder's holding period in their
shares or ADSs. Dividends that a US holder receives will not be eligible for the special tax rates applicable to qualified dividend income if Barclays PLC or Barclays Bank PLC are treated as a PFIC with respect to such US holder either in the
taxable year of the distribution or the preceding taxable year, but instead will be taxable at rates applicable to ordinary income.
(v) Certain reporting requirements
US Holders should consult their tax advisers regarding any tax reporting or filing requirements that may apply to receiving payments on or with respect to, acquiring, owning, or disposing of the
shares or ADSs. Failure to comply with certain reporting obligations could result in the imposition of substantial penalties.
(vi)
Stamp duty
No UK stamp duty is payable on the transfer of an ADS, provided that the separate instrument of transfer is not executed
in, and remains at all times outside, the UK. No UK stamp duty reserve tax is payable in respect of an agreement to transfer an ADS.
(vii) Estate and gift tax
Under the Estate and Gift Tax Convention between the United Kingdom and the United States, a US holder generally is not subject to UK inheritance
tax.
FATCA Risk Factor
In certain circumstances shares or ADSs may be subject to US withholding tax starting in 2017
The United States has passed legislation (commonly referred to as 'FATCA') which generally will impose new information reporting and other requirements with respect to certain holders of
'financial accounts', as such term is defined in the FATCA rules. Under FATCA, non-US financial institutions generally will be required to enter into agreements with the US Internal Revenue Service ('IRS') to identify financial
accounts held by US persons or entities with substantial US ownership, as well as accounts of other 'financial institutions' that are not themselves participating in (or otherwise exempt from) the FATCA reporting regime. For these
purposes, the term 'financial institution' includes, among others, banks, insurance companies and funds that are engaged primarily in the business of investing, reinvesting or trading in securities, commodities or partnership interests.
If a participating non-US financial institution makes a covered payment to an accountholder that has not provided information requested
to enable the institution to comply with its FATCA reporting obligations, or if the recipient of the payment is a non-participating non-US financial institution (that is not otherwise exempt), the payor will be required to withhold 30% on all or a
portion of the payment. The withholding tax on payments to a non-participating non-US financial institution generally will apply whether the financial institution is receiving payments for its own account or on behalf of another person. The IRS has
not yet issued guidance on how this withholding tax will be calculated with respect to such payments.
If Barclays PLC or Barclays Bank
PLC were to enter into a reporting agreement with the IRS under the FATCA rules, an investor in shares or ADSs that is not a financial institution may be required to provide information including, where applicable, a waiver of any local legal
banking confidentiality restrictions to establish whether it is a non-US person, US person or is substantially owned by US persons in order to establish an exemption from this withholding tax. An investor in shares or ADSs that is a financial
institution may be required to establish whether it is a US financial institution or a participating non-US financial institution in order to establish such an exemption.
An investor may be able to obtain a credit for or refund of any amounts withheld under these rules, provided the required information is furnished to the IRS on a timely basis. An investor that is a
non-US financial institution generally will be able to obtain a refund only to the extent an applicable income tax treaty with the United States entitles such institution to a reduced rate of tax on the payment that was subject to withholding under
these rules. Investors generally will not be entitled to interest from the IRS for the period prior to the refund. It is not entirely clear how income tax treaty exemptions apply to withholding on payments of gross proceeds recognized on the sale or
other disposition of shares or ADSs.
Financial institutions in jurisdictions that have enacted legislation to collect and share
information regarding their US accountholders with the United States will generally be able to receive payments free of withholding under FATCA. To date, the UK, Denmark, Ireland, Mexico and Switzerland have entered into such intergovernmental
agreements with the US, to gather relevant information and share it with the US. France Germany, Italy and Spain have announced their intention to enter into similar agreements and many other countries are in negotiation or exploring their options
with the US. Outside of those countries which have already signed or initialled agreements, it is not yet clear whether legislation implementing these agreements will be enacted in any jurisdiction nor is it entirely clear how any such legislation
will impact the treatment of shares or ADSs under FATCA.
I  313
Shareholder information continued
In the event that such legislation is not enacted, FATCA withholding may also apply in these jurisdictions
Further guidance is anticipated prior to the effective date of these rules, which may significantly modify these rules as they apply to us and to investors. Investors should consult their own
advisors about the application of FATCA to the shares or ADSs, in particular if they may be classified as financial institutions under these rules.
Exchange controls and other limitations affecting security holders
Other than
certain economic sanctions which may be in force from time to time, there are currently no UK laws, decrees or regulations which would affect the transfer of capital or remittance of dividends, interest and other payments to holders of Barclays
securities who are not residents of the UK. There are also no restrictions under the Articles of Association of either Barclays PLC or Barclays Bank PLC, or (subject to the effect of any such economic sanctions) under current UK laws, which relate
only to non-residents of the UK, and which limit the right of such non-residents to hold Barclays securities or, when entitled to vote, to do so.
Documents on display
It is possible to read and copy documents that have been
filed by Barclays PLC and Barclays Bank PLC with the US Securities and Exchange Commission at the US Securities and Exchange Commission's office of Investor Education and Advocacy located at 100 F Street, NE Washington DC 20549. Please call the
US Securities and Exchange Commission at 1-800-SEC-0330 for further information on the public reference rooms and their copy charges. Filings with the US Securities and Exchange Commission are also available to the public from commercial document
retrieval services, and from the website maintained by the US Securities and Exchange Commission at www.sec.gov.
314  I
Fees and Charges Payable by a Holder of ADSs
The ADR depositary collects fees for delivery and surrender of ADSs directly from investors depositing ordinary shares or surrendering ADSs for the purpose of withdrawal or from intermediaries
acting for them.
The charges of the ADR depositary payable by investors are as follows:
Type of service
ADR depositary actions
Fee
ADR depositary or substituting the underlying shares
Issuance of ADSs against the deposit of ordinary shares, including deposits and issuances
in respect of:
–    Share distributions, stock splits, rights issues, mergers
–    Exchange
of securities or other transactions or event or other distribution affecting the ADSs or deposited securities
$5.00 or less per 100 ADSs (or portion thereof)
Receiving or distributing cash dividends
Distribution of cash dividends
No fee currently payable
Selling or exercising rights
Distribution or sale of securities, the fee being in an amount equal to the fee for the execution and delivery of ADSs which would have
been charged as a result of the deposit of such securities
$5.00 or less per 100 ADSs (or portion thereof)
Withdrawing an underlying ordinary share
Acceptance of ADSs surrendered for withdrawal of deposited ordinary shares
$5.00 or less per 100 ADSs (or portion thereof)
General depositary services, particularly those charged on an annual basis
Other services performed by the ADR depositary in administering the ADS program
No fee currently payable
Expenses of the ADR depositary
Expenses incurred on behalf of holders in connection with:
–    Taxes
and other governmental charges
–    Cable, telex and facsimile transmission/delivery
–    Transfer or registration fees, if applicable, for the registration of
transfers or underlying ordinary shares
–    Expenses of the ADR depositary in connection with the conversion of foreign currency into US dollars (which are paid out of such foreign currency)
–    Any
other charge payable by the ADR depositary or its agents
Expenses payable at the sole discretion of the ADR depositary by billing holders or by deducting charges from one or more cash
dividends or other cash distributions
I  315
Shareholder information continued
Fees and Payments made by the ADR depositary to Barclays
The ADR depositary has
agreed to reimburse certain Barclays expenses related to the Barclays ADS program and incurred by Barclays in connection with the program up to $1m per annum. The table below sets out the expenses that the ADR depositary reimbursed and the amounts
reimbursed in the year ended 31 December 2012, which include certain expenses paid by the ADR depositary to third parties on behalf of Barclays:
Category of expense reimbursed to Barclays
Amount reimbursed for the Year Ended 31 December 2012
(000s)
Audit fees and Section 404 Sarbanes-Oxley Act Compliance
$494.4
Legal fees
$207.1
Distribution of voting documentation – AGM
$113.8
Investor Relations
$94.1
NYSE listing fees
$90.6
Total
$1,000
Under certain circumstances, including removal of the ADR depositary or termination of the ADS program by Barclays,
Barclays is required to repay the ADR depositary certain amounts reimbursed and/or expenses paid to or on behalf of Barclays.
The ADR
depositary has agreed to waive certain of its fees chargeable to Barclays with respect to standard costs associated with the administration of the ADS program.
316  I
Additional Information
External auditor objectivity and independence: Non-Audit Services
Our policy on the provision of services by the Group's statutory Auditor sets out the circumstances in which the auditor may be permitted to undertake non-audit work for the Group.
The Board Audit Committee oversees compliance with the Policy and considers and, if appropriate, approves requests to use the Auditor for non-audit
work. Allowable services are pre approved up to but not including £100,000 or £25,000 in the case of certain taxation services. The Group Finance Director and the Company Secretary and their teams deal with day to day
administration of the policy, facilitating requests for approval.
Details of the services that are prohibited and allowed are set out
below:
Services that are prohibited include:
–
Bookkeeping;
–
design and implementation of financial information systems;
–
appraisal or valuation services;
–
actuarial services;
–
internal audit outsourcing;
–
management and Human Resources functions;
–
broker or dealer, investment advisor or investment banking services; and
–
legal, expert and tax services involving advocacy.
Allowable services that the Board Audit Committee considers for approval include:
–
statutory and regulatory audit services and regulatory non-audit services;
–
other attest and assurance services;
–
accountancy advice and training;
–
risk management and controls advice;
–
transaction support;
–
taxation services;
–
business support and recoveries; and
–
translation services.
I  317
Additional Information continued
NYSE Corporate Governance Statement
As our main listing is on the London Stock
Exchange, we follow the UK Corporate Governance Code. However, as Barclays also has American Depositary Receipts listed on the New York Stock Exchange (NYSE), we are also subject to the NYSE's Corporate Governance Rules (NYSE Rules). We are
exempt from most of the NYSE Rules, which US domestic companies must follow, because we are a non-US company listed on the NYSE. However, we are required to provide an Annual Written Affirmation to the NYSE of our compliance with the applicable NYSE
Rules and must also disclose any significant differences between our corporate governance practices and those followed by domestic US companies listed on the NYSE. Key differences between the Code and NYSE Rules are set out here:
Director Independence
NYSE
Rules require the majority of the Board to be independent. The Code requires at least half of the Board (excluding the Chairman) to be independent. The NYSE Rules contain different tests from the Code for determining whether a Director is
independent. We follow the Code's recommendations as well as developing best practices among other UK public companies. The independence of our non-executive Directors is reviewed by the Board on an annual basis and it takes into account the
guidance in the Code and the criteria we have established for determining independence, which are described on page 12.
Board
Committees
We have a Board Corporate Governance and Nominations Committee and a Board Remuneration (rather than Compensation)
Committee, both of which are broadly similar in purpose and constitution to the Committees required by the NYSE Rules and whose terms of reference comply with the Code's requirements. The NYSE Rules state that both Committees must be composed
entirely of independent Directors. As the Group Chairman was independent on appointment, the Code permits him to chair the Board Corporate Governance and Nominations Committee and be a member of the Board Remuneration Committee. Except for these
appointments, both Committees are composed solely of non-executive Directors, whom the Board has determined to be independent. We comply with the NYSE Rules requirement that we have a Board Audit Committee comprised solely of independent
non-executive Directors. However, we follow the Code recommendations, rather than the NYSE Rules, regarding the responsibilities of the Board Audit Committee (except for applicable mandatory responsibilities under the Sarbanes-Oxley Act), although
both are broadly comparable. We also have a Board Financial Risk Committee, comprised of independent non-executive Directors, which considers and discusses policies with respect to financial risk assessment and risk management.
Corporate Governance Guidelines
The NYSE Rules require domestic US companies to adopt and disclose corporate governance guidelines. There is no equivalent recommendation in the Code but the Board Corporate Governance and
Nominations Committee has developed corporate governance guidelines, 'Corporate Governance in Barclays', which have been approved and adopted by the Board.
Code of Ethics
The NYSE Rules require that domestic US companies adopt and
disclose a code of business conduct and ethics for Directors, officers and employees. Rather than a single consolidated code as envisaged in the NYSE Rules, we have a number of 'values based' business conduct and ethics policies, which
apply to all employees. In addition, we have adopted a Code of Ethics for the Chief Executive and senior financial officers as specified by the US Securities and Exchange Commission.
Shareholder Approval of Equity-compensation Plans
The NYSE listing standards
require that shareholders must be given the opportunity to vote on all equity-compensation plans and material revisions to those plans. We comply with UK requirements, which are similar to the NYSE standards. However, the Board does not explicitly
take into consideration the NYSE's detailed definition of what are considered 'material revisions'.
318  I
Share Capital
Substantial
shareholders
As at 4 March, 2013 the Company had been notified under Rule 5 of the DTR of the following holdings of voting
rights in its shares:
2012
Holder
Number of
Barclays Shares
% of total voting
rights attached
to 
issued share
capital
a
Number of
warrants
% of total voting
rights attached
to 
issued share
capital
His Highness Sheikh Mansour Bin Zayed Al Nahyan
b
783,509,699
6.09
–
–
Qatar Holding LLC
c
813,964,552
6.65
–
–
BlackRock, Inc
d
805,969,166
7.06
–
–
Legal & General Group Plc
e
480,805,132
3.99
–
–
The Capital Group Companies Inc
f
492,653,250
4.02
–
–
a
The percentage of voting rights detailed above were calculated at the time of the relevant disclosures made in accordance with Rule 5 of the DTR.
b
Total shown comprises (1) 758,437,618 shares that are legally owned by PCP Gulf Invest 3 Limited, which is wholly owned by Nexus Capital Investing Limited
(NCIL). NCIL is in turn wholly owned by Abu Dhabi International United Investments LLC, which is in turn wholly owned by His Highness Sheikh Mansour Bin Zayed Al Nahyan (HHSM); and (2) 25,072,081 cash-settled options referencing ordinary shares
that are legally owned by Yas Capital Limited (YCL), which is, in turn, wholly owned by HHSM. YCL has no right to acquire or exercise any voting rights in Barclays PLC.
c
Qatar Holding LLC is wholly-owned by Qatar Investment Authority.
d
Total shown includes 8,003,236 contracts for difference to which voting rights are attached.
e
Legal & General Group plc's interest is held by Legal & General Assurance (Pensions Management) Limited.
f
The Capital Group Companies Inc (CG) holds its shares via CG management companies and funds.
As at 2 March 2012, the Company had been notified under Rule 5 of the Disclosure and Transparency Rules of the FSA of the following holdings
of voting rights in its shares:
2011
Holder
Number of
Barclays Shares
% of total voting
rights attached
to
issued share
capital
Number of
warrants
% of total voting
rights attached
to 
issued share
capital
a
BlackRock, Inc
b
805,969,166
7.06
–
–
Qatar Holding LLC
c
827,411,735
6.79
379,218,809
1.62
Nexus Capital Investing Ltd
d
852,730,529
6.99
–
–
Legal & General Group Plc
480,805,132
3.99
–
–
a
The percentages of voting rights detailed above were calculated at the time of the relevant disclosures made in accordance with Rule 5 of the DTR and were
calculated without including the new shares to be issued when the Warrants are exercised. This results in the percentage figures being artificially high.
b
The number of Barclays shares includes 8,003,236 contracts for difference to which voting rights are attached.
c
Total shown includes 13,447,183 options on ordinary shares.
d
Total shown includes 94,292,911 cash-settled options referencing ordinary shares.
As at 4 March 2011, the Company had been notified under Rule 5 of the Disclosure and Transparency Rules of the FSA of the following holdings of voting rights in its shares:
2010
Holder
Number of
Barclays Shares
% of total voting
rights attached
to 
issued share
capital
Number of
warrants
% of total voting
rights attached
to 
issued share
capital
a
BlackRock, Inc
b
805,969,166
7.06
–
–
Qatar Holding LLC
813,964,552
6.76
379,218,809
3.15
Nexus Capital Investing Ltd
758,437,618
6.30
–
–
Legal & General Group Plc
480,805,132
3.99
–
–
a
The percentages of voting rights detailed above were calculated at the time of the relevant disclosures made in accordance with Rule 5 of the DTR and were
calculated without including the new shares to be issued when the Warrants are exercised. This results in the percentage figures being artificially high.
b
The number of Barclays shares includes 8,003,236 contracts for difference to which voting rights are attached.
I  319
Additional Information continued
Disclosure controls and procedures
The Chief Executive, Antony Jenkins, and
the Group Finance Director, Chris Lucas, conducted with Group Management an evaluation of the effectiveness of the design and operation of the Group's disclosure controls and procedures as at 31 December 2012, which are defined as those
controls and procedures designed to ensure that information required to be disclosed in reports filed or submitted under the US Securities Exchange Act of 1934 is recorded, processed, summarised and reported within the time periods specified in the
US Securities and Exchange Commission's rules and forms. As of the date of the evaluation, the Chief Executive and Group Finance Director concluded that the design and operation of these disclosure controls and procedures were effective.
Group Executive Committee
Antony Jenkins, Chief Executive, Executive Director
See page 36 for full
biography.
Chris Lucas, Group Finance Director, Executive Director
See page 37 for full biography.
Robert Le Blanc, Chief Risk Officer
Robert joined Barclays in 2002 as Head of Risk Management for the Investment Bank, and has been the Chief Risk Officer for Barclays
Group since 2004. Prior to joining Barclays, Robert spent most of his career at JP Morgan in the capital markets, fixed income, emerging market and credit and risk management areas in New York and London. Robert is a non-executive Director of Absa,
which is majority owned by Barclays.
Mark Harding, Group General Counsel
Mark joined Barclays as Group General Counsel in 2003 and is responsible for legal issues throughout the bank. Previously, Mark was a partner in the
international law firm, Clifford Chance, where his practice spanned bank finance, capital markets and financial services regulation. He also spent four years at UBS as General Counsel of its investment bank. Mark chairs the Group Governance and
Control Committee. Mark is past Chairman of the General Counsel 100 Group and of the Board of the International Swaps and Derivatives Association (ISDA), and is a Governor of the Legal Education Foundation. Mark has announced that he has decided to
retire from the company and has agreed to remain in his role until a successor has been appointed and an appropriate handover has been completed. It is expected that this process will take a considerable time to complete.
Thomas L Kalaris, Chief Executive of Wealth and Investment Management and Executive Chairman of Barclays in the Americas
Tom joined Barclays in September 1996, and joined the Barclays Executive Committee in November 2009. He also chairs Barclays Client Committee and
the Barclays Americas Executive Committee. During an 18 year career at JP Morgan, Tom held a number of roles, including Head of Fixed Income Sales, Trading and Research, and was responsible for all activities with investors in the United States. He
has served on the US Treasury Borrowing Advisory Committee and is a former Chair of the US Bond Market Association, a predecessor organization to SIFMA (Securities Industry and Financial Markets Association).
Shaygan Kheradpir, Chief Operations and Technology Officer
Shaygan joined Barclays in January 2011 and is responsible for technology and operations across Barclays. Prior to his appointment as Chief Operations and Technology Officer he was Chief Operating
Officer of Barclay's global retail business bank (RBB). From January 2007 to December 2010, Shaygan served as the Executive Vice President and Chief Information & Technical Officer for Verizon Communications where he was responsible for the
technology initiatives of all Verizon's business units. Prior to this, Shaygan was Senior Vice President and Chief Information Officer for Verizon Telecom, with oversight of all information technology initiatives for the company's wireline
communications unit. Shaygan began his communications career with GTE in 1987. Shaygan is a member of the National Institute of Standards & Technology VCAT (Visiting Committee on Advanced Technology), an adjunct professor of electrical
engineering at Northeastern University, and holds several patents. He was named to the CIO magazine's Hall of Fame in 2007. Shaygan holds a Bachelor's, Master's and Doctorate degree in electrical engineering from Cornell University.
Maria Ramos, Group Chief Executive, Absa and Chief Executive of Africa, Barclays
Maria Ramos is the Chief Executive of Absa Group Ltd, which is majority owned by Barclays. Prior to joining Absa in March 2009, she was Group Chief
Executive of Transnet Ltd, the state-owned South African freight transport and logistics service provider, for five years. This was after successfully serving as Director-General of the National Treasury for seven years. She has in the past served
as a Non-Executive and Independent Director on the Boards of Sanlam Ltd, Remgro Ltd and SABMiller PLC. She currently serves on the Board of Richemont SA, the Executive Committee of the World Economic Forum's International Business Council and
the Executive Committee of Business Leadership South Africa.
Rich Ricci, Chief Executive of Corporate and Investment Banking
Rich joined Barclays Capital in 1994 and subsequently assumed responsibility for several of its support areas. In December 2002 he
became COO of Barclays Global Investors (BGI) and a member of the BGI Executive Committee. Rich was appointed COO of Barclays Investment Banking and Investment Management businesses in January 2005, comprising Barclays Capital, Barclays Wealth and
BGI. Prior to joining Barclays Capital, Rich held senior front-office, finance and technology positions at the Bank of Boston and the Bank of New England. Rich was appointed Co-Chief Executive of Corporate and Investment Banking in 2009 and assumed
his current position in June 2012.
Sir Hector Sants, Head of Compliance and Government and Regulatory Relations
Sir Hector joined Barclays in January 2013 as Head of Compliance and Government and Regulatory Relations. Prior to that Sir Hector was the Chief
Executive of the Financial Services Authority from July 2007 until July 2012. He was also Deputy Governor Designate of the Bank of England and CEO designate of the Prudential Regulation Authority between June 2010 and July 2012. During this period
he served as a member of the interim Financial Policy Committee of the Bank of England. He joined the FSA in May 2004 as a Managing Director prior to which he was Chief Executive Officer of Europe, Middle East and Africa at Credit Suisse First
Boston. Sir Hector is also Chair of the Said Business School at Oxford University, a role he was appointed to in 2010.
Valerie
Soranno Keating, CEO, Barclaycard
Valerie is the CEO of Barclaycard, a broad international payments business that manages over
£200bn in annual payments from consumer and business customers in Europe, South Africa and the US. She joined Barclaycard in June 2009 after a 16-year career at American Express, where she was a member of the Global Management team and held a
variety of senior executive positions. Prior to American Express, Valerie spent eight years as a management consultant with A.T. Kearney where she advised Fortune 500 companies on operational excellence and business strategy. Valerie is a
member of the Board of Visa Europe, chairs the Barclays Global Payment Council and is Chairman of the Board of Barclays Bank of Delaware.
320  I
Ashok Vaswani, CEO, Retail and Business Banking
Ashok is responsible for
retail and business products and services. Ashok joined Barclays in 2010, managing the credit card business across the UK, Europe and the Nordics, becoming chairman of Entercard. He went on to manage Barclays in Africa and his most recent role was
CEO for UK Retail and Business Banking. Prior to Barclays, Ashok was a partner at Brysam Global Partners, a New York City based private equity firm focused on building retail financial service businesses in emerging markets. Ashok spent 20 years
with Citigroup working in Asia, Middle East, Central Asia, Europe and North America, his last position being CEO of the Global Consumer Bank in Asia Pacific. Ashok is on the advisory board of S. P. Jain Institute of Management and has served on the
advisory board of Insead Singapore and Visa Asia Pacific. He is Founder Director of Lend-a-Hand, a non-profit organisation focused on economic development in India. Ashok represents Barclays as a Non-executive director on the Board of Absa, the
Group's South African banking subsidiary, having been appointed in February 2013.
I  321
Additional Information continued
Section 13(r) to the US Securities Exchange Act of 1934 (Iran sanctions and related
disclosure)
Section 219 of the US Iran Threat Reduction and Syria Human Rights Act of 2012 ('ITRA') added new
Section 13(r) to the US Securities Exchange Act of 1934, as amended (the 'Exchange Act') requiring each SEC reporting issuer to disclose in its annual and, if applicable, quarterly reports whether it or any of its affiliates have
knowingly engaged in certain activities, transactions or dealings relating to Iran or with the Government of Iran or certain designated natural persons or entities involved in terrorism or the proliferation of weapons of mass destruction during the
period covered by the report. The required disclosure includes disclosure of activities not prohibited by US or other law even if conducted outside the US by non-US affiliates in compliance with local law. Pursuant to Section 13(r) of the
Exchange Act, we note the following for the period covered by this annual report:
Legacy guarantees
Barclays entered into several guarantees for the benefit of Iranian banks between 1993 and 2006 in connection with the supply of goods and services
by Barclays customers to Iranian buyers. These were counter guarantees issued to the Iranian banks to support guarantees issued by these banks to the Iranian buyers. The Iranian banks and a number of the Iranian buyers have since been designated as
Specifically Designated Nationals ('SDNs') by the US Treasury Department's Office of Foreign Assets Control ('OFAC'). In addition, Barclays entered into similar guarantees between 1993 and 2005 for the benefit of a Syrian
bank that is now an SDN. Some of the underlying buyers related to the Syrian guarantees have also been designated SDNs.
The guarantees
have been either issued on an 'extend or pay' basis, which means that, although the guarantee is of limited duration on its face, until there is full performance under the contract to provide goods and services, the terms of the guarantee
require Barclays to either maintain the guarantee or pay the beneficiary bank the full amount of the guarantee or on the basis that Barclays obligations can only be discharged with the consent of the beneficiary counter party. Barclays is not able
to exit its obligations under the guarantees unilaterally, and thus maintains a limited legacy portfolio of these guarantees. The guarantees were entered into in compliance with applicable laws and regulations at the time at which they were entered
into. Revenue in the amount of less than £12,000 was received in the year ending 31 December 2012. Any payments made under the guarantees are made in compliance with applicable laws and regulations. Barclays intends to terminate each of
these legacy guarantees if the applicable law changes so as to allow it.
Lease payments
Barclays is party to a long-term lease, entered into in 1979, with the National Iranian Oil Company ('NIOC') pursuant to which Barclays
rents a portion of NIOC House in London to house a Barclays bank branch. Barclays makes payments to a wholly-owned subsidiary of the NIOC Pension Fund in respect of this lease. NIOC is wholly owned by the Iranian Government and is an SDN. Barclays
has obtained authorisation from Her Majesty's Treasury ('HMT') to make the quarterly lease payments into a frozen account, and the payments have been made in compliance with applicable laws and regulations. The lease is a 60 year
lease and has 26 years remaining. There is no early termination clause.
Clearing system
Banks in the United Arab Emirates ('UAE'), including certain of the Iranian banks that are SDNs, participate in the various banking payment and settlement systems used in the UAE (the
'UAE Clearing Systems'). Barclays, by virtue of its banking activities in the UAE, participates in the UAE Clearing Systems, and its participation in the UAE Clearing Systems is in compliance with applicable law and
regulations. However, in order to help reduce the risk of participating in transactions in which participant Iranian SDN banks may be involved, as of 1 July 2012, Barclays implemented restrictions relating to its participation in the UAE
Image Cheque Clearance System and the UAE Funds Transfer System. Barclays intends to similarly restrict its participation in the other UAE Clearing Systems in accordance with applicable law and regulation when it is able. Barclays
attributed no revenue in 2012 in relation to its participation in the UAE Clearing Systems.
Payments reported to OFAC
In February 2012, a customer of Barclays received seven payments made by third parties on behalf of an Iranian SDN. Five further
payments were blocked by Barclays in April and May 2012, in respect of which Barclays filed the required blocked property reports with OFAC. Barclays voluntarily disclosed the seven payments to OFAC on July 3, 2012. Barclays received less than
£50 in revenue in relation to these payments. Barclays has exited its primary banking relationships with this customer and will close remaining legacy positions as soon as it is able.
Barclays also processed a payment on behalf of its customer for the payment of goods that included freight costs to a supplier who used a SDN shipping company for the transportation of such goods.
Barclays was not aware prior to the payment of the use of the SDN shipping company and has voluntarily disclosed this payment to OFAC. Barclays received less than £50 in revenue in relation to this payment.
Account closure payments
Between December 1999 and August 2012 Barclays maintained a UK bank account in London for a customer that is the Government of Iran within the
meaning of Section 13(r) of the Exchange Act. During 2012, the account was closed and Barclays paid away the balance of the account to a non-Barclays account held by the customer. Barclays obtained HMT's prior authorisation and the payment
was made in compliance with applicable rules and regulations. Although the bank account has been closed, the customer did not at the same time close its Barclaycard merchant facility which was used to allow the processing of card payments for the
customer. This account was dormant in 2011 and 2012 and the facility is being closed and will be exited before the end of March 2013. No revenue was received from this customer in the year ended 31 December 2012.
In 2012, Barclays closed personal accounts held by two customers who were removed from the HMT Sanctions List though they remained SDNs as
determined by OFAC. In one instance, the funds were withdrawn by the customer; in the other instance, Barclays transferred the funds to an account with another UK bank. Barclays has no further relationship with either person. No revenue was received
from these two customers in the year ended 31 December 2012.
Others
During the course of 2012, Barclays processed certain payments made by its customers either returning funds or receiving funds in connection with
unwinding certain business transactions with Iranian SDN banks. All such payments were made in compliance with applicable law and regulations. For processing these payments, Barclays received fees totalling less than £10.
322  I
Barclays processed a payment for its non-UK bank customer that was paying funds it held on behalf of
an SDN Iranian bank to that SDN bank's frozen Sterling account held at another UK bank. The customer obtained the necessary HMT license and the payment by Barclays was made in compliance with applicable law and regulations. In respect of this
transaction, Barclays received fees totalling less than £10.
During the course of 2012, Barclays also received certain payments
into customer accounts made by or on behalf of the Government of Iran, or by or through other Iranian government-owned entities, including banks which are SDNs. All such payments were received in compliance with applicable law and regulations and,
where appropriate, Barclays has made the required notifications to HMT and obtained HMT's prior authorisation and Barclays customers held the required HMT licenses to receive or make such payments. In respect of these transactions, Barclays
received fees totalling less than £20.
In addition, a Barclays customer has a rolling annual contract with an SDN to facilitate
the SDN's monthly salary transactions. Barclays received those payments into its customer's account from a frozen account under HMT licence and processed the paying away of those funds to the SDN's employees in compliance with
applicable law and regulations. During the year ended 31 December 2012 Barclays received less than £100 in revenue in relation to these payments.
I  323
Additional information
Summary of Certain Share and Cash Plans and Long Term Incentive Plans
Summary of Barclays Group share and cash plans and
long term incentive plans
Barclays operates a number of share and cash plans and long term incentive plans. The principal plans used
for awards made in or, in respect of, the 2012 performance year are shown in the table below. Awards are granted either by the plan trustee or by the Board Remuneration Committee, and are subject to the applicable plan rules. Barclays has a number
of employee benefit trusts which operate with these plans. In some cases the trustee purchases shares in the market to satisfy awards; in others, new issue or treasury shares may be used to satisfy awards where the appropriate shareholder approval
has been obtained.
Summary of principal
share and cash plans and long term incentive plans
Name of plan
Eligible employees
Executive
Directors
eligible
Delivery
Design details
Share Value Plan
(SVP)
All employees (including executive Directors)
Yes
Deferred share bonus released in annual instalments over a three year period, dependent on future service and subject to
malus provisions
–   Plan typically used
for mandatory deferral of a proportion of bonus into Barclays shares where bonus is above a threshold (set annually by the Committee)
–   This plan typically works in tandem with the CVP
–   Deferred share
bonus vests over three years in equal annual instalments dependent on future service
–   Vesting is subject to malus provisions
–   Dividend
equivalents may be released based on the number of shares under award that are released
–   On cessation of employment, eligible leavers normally remain eligible for release
(on the scheduled release dates) subject to the Committee and/or trustee discretion. For other leavers, awards will normally lapse
–   On change of control, awards may vest at the Committee's and/or trustee's
discretion
–   For SVP awards made in 2013 to Code Staff, a holding period of 6 months will apply
to shares (after tax) on release
Cash Value Plan
(CVP)
All employees (excluding executive Directors)
No
Deferred cash bonus paid in annual instalments over a three year period, dependent on future service and subject to malus
provisions
–   Plan typically used for
mandatory deferral of a proportion of bonus where bonus is above a threshold (set annually by the Committee)
–   This plan typically works in tandem with the SVP
–   Deferred cash
bonus vests over three years in equal annual instalments dependent on future service
–   Vesting is subject to malus provisions
–   Participants
may be awarded a service credit of 10% of the initial value of the award at the same time as the final instalment is paid
–   Change of control and leaver provisions are as for SVP
Barclays LTIP
Selected employees (including executive Directors)
Yes
Awards over Barclays shares or over other capital instruments, subject to risk-adjusted performance conditions and malus provisions
–   Awarded on a discretionary basis with participation reviewed by
the Committee
–   Awards only vest if the risk-adjusted performance conditions are satisfied over a
three year period
–   Vesting is subject to malus provisions
–   For awards
made for the 2012-2014 performance period, 50% of any Barclays shares released (after payment of tax) will be subject to an additional 12 month holding period
–   For awards made for the 2013-2015 performance period, any Barclays shares released
(after payment of tax) will be subject to an additional two year holding period
–   On cessation of employment, eligible leavers normally remain eligible for release (on the scheduled release dates) pro-rated for time and performance. For other leavers,
awards will normally lapse
–   On change of control, awards may vest at the
Committee's discretion
324  I
Additional information
Summary of Certain Share and Cash Plans and Long Term Incentive Plans
Name of plan
Eligible employees
Executive
Directors
eligible
Delivery
Design details
Business Unit Long Term Incentive Plans
Selected senior employees (excluding executive Directors) within each business unit
No
Design varies by business unit. Awards made after at least three years, with additional deferral after this period. Awards typically
made 50% in cash and 50% in Barclays share awards
–   Participation on a
discretionary basis
–   Risk-adjusted performance conditions vary by business unit to reflect applicable
business strategy
–   Minimum plan duration is between three and five years (depending on
plan)
–   Award is subject to malus provisions
–   Participation
may cease if the participant leaves Barclays other than for eligible leaver reasons
–   No new awards under business unit long term incentive plans are expected to be made in 2013
Sharesave
All employees in the UK and Ireland
Yes
Options over Barclays shares at a discount of 20%, with shares or cash value of savings delivered after three to five years
–   HMRC approved in the UK
and approved by the Revenue Commissioners in Ireland
–   Opportunity to purchase Barclays shares at a discount price (currently a 20% discount) set on award date with savings made over three, five or seven year term
–   Maximum
individual savings of £250 per month (
€
315 in Ireland)
–   On cessation
of employment, eligible leavers may exercise options and acquire shares to the extent of their savings for six months
–   On change of control, participants may exercise options and acquire shares to the
extent of their savings for six months
Sharepurchase
All employees in the UK
Yes
Barclays shares and dividend/matching shares held in trust for three to five years
–   HMRC approved
plan
–   Participants may purchase up to £1,500 of Barclays shares each tax
year
–   Barclays matches the first £600 of shares purchased by employees on a one for
one basis for each tax year
–   Dividends received are awarded as additional shares
–   Purchased
shares may be withdrawn at any time (though if removed prior to three years from award, the corresponding matching shares are forfeited).
–   On cessation of employment, participants must withdraw shares
–   Depending on
reason for and timing of leaving, matching shares may be forfeited
–   On change of control, participants are able to instruct the Sharepurchase trustee how to act or vote on their behalf
Global Sharepurchase
Employees in certain non-UK jurisdictions
Yes
Barclays shares and dividend/matching shares held in trust for three to five years
–   Global Sharepurchase is
an extension of the Sharepurchase plan offered in the UK
–   Operates in substantially the same way as Sharepurchase (see above)
I  325
Additional information
Reconciliation of non-IFRS figures to IFRS figures
Reconciliation of non-IFRS profit before tax to IFRS profit before tax
Adjusting Items
IFRS
£m
Own credit
losses/(gains)
£m
Gains on
debt buy
backs
£m
(Gain)/loss
on disposal
of Blackrock,
Inc.
a
£m
Impairment of
investment in
Blackrock,
Inc.
£m
Provision for
PPI & interest
rate
hedging
product
redress
£m
Goodwill
impairment
£m
Loss on
acquisistions
and disposals
£m
Adjusted
£m
For the year ended 31 December 2012
Total income net of insurance claims
24,691
4,579
–
(227
)
–
–
–
–
29,043
Credit impairment charges and other provisions
(3,596
)
–
–
–
–
–
–
–
(3,596
)
Operating expenses
(20,989
)
–
–
–
–
2,450
–
–
(18,539
)
Other income/(losses)
140
–
–
–
–
–
–
–
140
Profit before tax
246
4,579
–
(227
)
–
2,450
–
–
7,048
For the year ended 31 December 2011
Total income net of insurance claims
32,292
(2,708
)
(1,130
)
58
–
–
–
–
28,512
Credit impairment charges and other provisions
(3,802
)
–
–
–
–
–
–
–
(3,802
)
Impairment of investment in BlackRock, Inc.
(1,800
)
–
–
–
1,800
–
–
–
–
Operating expenses
(20,777
)
–
–
–
–
1,000
597
–
(19,180
)
Other income/(losses)
(34
)
–
–
–
–
–
–
94
60
Profit before tax
5,879
(2,708
)
(1,130
)
58
1,800
1,000
597
94
5,590
For the year ended 31 December 2010
Total income net of insurance claims
31,440
(391
)
–
–
–
–
–
–
31,049
Credit impairment charges and other provisions
(5,672
)
–
–
–
–
–
–
–
(5,672
)
Operating expenses
(19,971
)
–
–
–
–
–
243
–
(19,728
)
Other income/(losses)
268
–
–
–
–
–
–
(210
)
58
Profit before tax
6,065
(391
)
–
–
–
–
243
(210
)
5,707
Note
a
2012 includes a £227m gain on disposal of strategic investment in BlackRock, Inc. 2011 includes a £58m loss on partial disposal of strategic
investment in BlackRock, Inc., both recorded through investment income and recorded in Total Income net of insurance claims. The £1,800m impairment of our stake in the BlackRock, Inc. investment in 2011 is recorded as part of Net operating
income.
326  I
Commitments and contractual obligations
Analysis of results by business
UK RBB
£m
Europe RBB
£m
Africa RBB
£m
Barclaycard
£m
Investment
Bank
£m
Corporate
Banking
£m
Wealth and
Investment
Management
£m
Head Office
and Other
Operations
£m
Total
£m
2012
Statutory basis
Total income net of insurance claims
4,421
915
3,157
4,170
11,722
2,918
1,815
(4,427
)
24,691
Credit impairment charges and other provisions
(269
)
(328
)
(646
)
(979
)
(460
)
(872
)
(38
)
(4
)
(3,596
)
Net operating income
4,152
587
2,511
3,191
11,262
2,046
1,777
(4,431
)
21,095
Operating expenses
(3,864
)
(839
)
(2,053
)
(2,135
)
(7,249
)
(2,355
)
(1,463
)
(1,031
)
(20,989
)
Other net income
4
13
10
30
50
10
1
22
140
Statutory profit/(loss) before tax
292
(239
)
468
1,086
4,063
(299
)
315
(5,440
)
246
Tax
(79
)
57
(212
)
(293
)
(1,184
)
66
(40
)
1,203
(482
)
Statutory (loss)/profit after tax
213
(182
)
256
793
2,879
(233
)
275
(4,237
)
(236
)
Statutory (loss)/profit after tax and non- controlling interests
214
(182
)
95
711
2,810
(259
)
272
(4,702
)
(1,041
)
Adjusted basis
Total income net of insurance claims
4,421
915
3,157
4,170
11,722
2,918
1,815
(75
)
29,043
Credit impairment charges and other provisions
(269
)
(328
)
(646
)
(979
)
(460
)
(872
)
(38
)
(4
)
(3,596
)
Net operating income
4,152
587
2,511
3,191
11,262
2,046
1,777
(79
)
25,447
Operating expenses (excluding UK bank levy)
(2,684
)
(839
)
(2,053
)
(1,715
)
(7,249
)
(1,505
)
(1,463
)
(1,031
)
(18,539
)
Other net income
4
13
10
30
50
10
1
22
140
Adjusted profit before tax
1,472
(239
)
468
1,506
4,063
551
315
(1,088
)
7,048
Adjusted profit after tax
1,108
(182
)
256
1,115
2,879
415
275
(843
)
5,023
Adjusted profit after tax and non-controlling interests
1,109
(182
)
95
1,033
2,810
389
272
(1,308
)
4,218
Adjusting items
Own credit
a
–
–
–
–
–
–
–
4,579
4,579
Gain on disposal of BlackRock, Inc. investment
a
–
–
–
–
–
–
–
(227
)
(227
)
Provision for PPI redress
b
1,180
–
–
420
–
–
–
–
1,600
Provision for interest rate hedging products redress
b
–
–
–
–
–
850
–
–
850
Post tax impact of adjusting items
c
895
–
–
322
–
648
–
3,394
5,259
Notes
a
Adjusting item recorded in Total income net of insurance claims.
b
Adjusting item recorded in Operating expenses.
c
Adjusting item recorded in Adjusted profit after tax and Adjusted profit after tax and non-controlling interests.
I  327
Additional information
Reconciliation of non-IFRS figures to IFRS figures continued
Analysis of results
by business
UK RBB
£m
Europe RBB
£m
Africa RBB
a
£m
Barclaycard
£m
Investment
Bank
£m
Corporate
Banking
a
£m
Wealth and
Investment
Management
£m
Head Office
and Other
Operations
£m
Total
£m
2011
Statutory basis
Total income net of insurance claims
4,656
1,226
3,571
4,095
10,335
3,108
1,744
3,557
32,292
Credit impairment charges and other provisions
(536
)
(261
)
(466
)
(1,259
)
(93
)
(1,147
)
(41
)
1
(3,802
)
Impairment of investment in BlackRock, Inc.
–
–
–
–
–
–
–
(1,800
)
(1,800
)
Net operating income
4,120
965
3,105
2,836
10,242
1,961
1,703
1,758
26,690
Operating expenses
(3,102
)
(1,638
)
(2,279
)
(2,306
)
(7,289
)
(1,882
)
(1,493
)
(788
)
(20,777
)
Other net (expense)/income
2
12
6
31
12
(71
)
(3
)
(23
)
(34
)
Statutory profit/(loss) before tax
1,020
(661
)
832
561
2,965
8
207
947
5,879
Tax
(295
)
73
(299
)
(173
)
(781
)
(59
)
(18
)
(376
)
(1,928
)
Statutory profit/(loss) after tax
725
(588
)
533
388
2,184
(51
)
189
571
3,951
Statutory profit/(loss) after tax and non-controlling interests
725
(588
)
256
317
2,126
(71
)
188
54
3,007
Adjusted basis
Total income net of insurance claims
4,656
1,226
3,571
4,095
10,335
3,108
1,744
(223
)
28,512
Credit impairment charges and other provisions
(536
)
(261
)
(466
)
(1,259
)
(93
)
(1,147
)
(41
)
1
(3,802
)
Net operating income
4,120
965
3,105
2,836
10,242
1,961
1,703
(222
)
24,710
Operating expenses (excluding UK bank levy)
(2,702
)
(1,211
)
(2,279
)
(1,659
)
(7,289
)
(1,759
)
(1,493
)
(788
)
(19,180
)
Other net income/(expense)
2
12
4
31
12
2
(3
)
–
60
Adjusted profit before tax
1,420
(234
)
830
1,208
2,965
204
207
(1,010
)
5,590
Adjusted profit after tax
1,019
(161
)
531
876
2,184
145
189
(518
)
4,265
Adjusted profit after tax and non-controlling interests
1,019
(161
)
254
805
2,126
125
188
(1,035
)
3,321
Adjusting items
Own credit
b
–
–
–
–
–
–
–
(2,708
)
(2,708
)
Gains on debt buy-backs
b
–
–
–
–
–
–
–
(1,130
)
(1,130
)
Impairment and loss on disposal of BlackRock, Inc.
investment
c
–
–
–
–
–
–
–
1,858
1,858
Provision for PPI redress
d
400
–
–
600
–
–
–
–
1,000
Goodwill impairment
d
–
427
–
47
–
123
–
–
597
Losses/(gains) on acquisitions and disposals
e
–
–
(2
)
–
–
73
–
23
94
Post tax impact of adjusting items
f
294
427
(2
)
488
–
196
–
(1,089
)
314
Notes
a
Certain corporate banking activities in Africa, previously reported under Africa RBB, are now included within Corporate Banking. The 2010 and 2011 comparatives
have been restated. This restatement has no impact on the Group's overall result.
b
Adjusting item recorded in Total income net of insurance claims.
c
2011 includes a £58m loss on partial disposal of strategic investment in BlackRock, Inc., both recorded through investment income and recorded in Total
Income net of insurance claims. The £1,800m impairment of our stake in the BlackRock, Inc. investment in 2011 is reported as part of Net operating income.
d
Adjusting item recorded in Operating expenses.
e
Adjusting item recorded in Other net income.
f
Adjusting item recorded in Adjusted profit after tax and Adjusted profit after tax and non-controlling interests.
328  I
Analysis of results by business
UK RBB
£m
Europe RBB
£m
Africa RBB
a
£m
Barclaycard
£m
Investment
Bank
£m
Corporate
Banking
a
£m
Wealth and
Investment
Management
£m
Head Office
and Other
Operations
£m
Total
£m
2010
Statutory basis
Total income net of insurance claims
4,518
1,164
3,512
4,024
13,209
3,162
1,560
291
31,440
Credit impairment charges and other provisions
(819
)
(314
)
(559
)
(1,688
)
(543
)
(1,699
)
(48
)
(2
)
(5,672
)
Net operating income
3,699
850
2,953
2,336
12,666
1,463
1,512
289
25,768
Operating expenses
(2,809
)
(1,033
)
(2,307
)
(1,570
)
(8,295
)
(2,018
)
(1,349
)
(590
)
(19,971
)
Other net income/(expense)
99
44
84
25
18
(2
)
–
–
268
Statutory profit/(loss) before tax
989
(139
)
730
791
4,389
(557
)
163
(301
)
6,065
Tax
(201
)
137
(179
)
(199
)
(1,339
)
24
(18
)
259
(1,516
)
Statutory profit/(loss) after tax
788
(2
)
551
592
3,050
(533
)
145
(42
)
4,549
Statutory profit/(loss) after tax and non-controlling interests
789
(4
)
290
531
2,994
(546
)
145
(635
)
3,564
Adjusted basis
Total income net of insurance claims
4,518
1,164
3,512
4,024
13,209
3,162
1,560
(100
)
31,049
Credit impairment charges and other provisions
(819
)
(314
)
(559
)
(1,688
)
(543
)
(1,699
)
(48
)
(2
)
(5,672
)
Net operating income
3,699
850
2,953
2,336
12,666
1,463
1,512
(102
)
25,377
Operating expenses (excluding UK bank levy)
(2,809
)
(1,033
)
(2,307
)
(1,570
)
(8,295
)
(1,775
)
(1,349
)
(590
)
(19,728
)
Other net income/(expense)
(1
)
15
3
25
18
(2
)
–
–
58
Adjusted profit before tax
889
(168
)
649
791
4,389
(314
)
163
(692
)
5,707
Adjusted profit after tax
688
(22
)
480
592
3,050
(290
)
145
(323
)
4,320
Adjusted profit after tax and non-controlling interests
689
(24
)
219
531
2,994
(303
)
145
(916
)
3,335
Adjusting items
Own credit
b
–
–
–
–
–
–
–
(391
)
(391
)
Goodwill impairment
c
–
–
–
–
–
243
–
–
243
Gains on acquisitions and disposals
d
(100
)
(29
)
(81
)
–
–
–
–
–
(210
)
Post tax impact of adjusting items
e
(100
)
(20
)
(71
)
–
–
243
–
(281
)
(229
)
Notes
a
Certain corporate banking activities in Africa, previously reported under Africa RBB, are now included within Corporate Banking. The 2010 and 2011 comparatives
have been restated. This restatement has no impact on the Group's overall result.
b
Adjusting item recorded in Total income net of insurance claims.
c
Adjusting item recorded in Operating expenses.
d
Adjusting item recorded in Other net income.
e
Adjusting item recorded in Adjusted profit after tax and Adjusted profit after tax and non-controlling interests.
I  329
Additional information
Additional financial disclosure (unaudited)
Deposits and short-term borrowings
Deposits
Deposits include deposits from banks and customers accounts.
Average for the year ended
31 December
a
2012
£m
2011
£m
2010
£m
Deposits from banks
Customers in the United Kingdom
13,853
13,821
13,486
Other European Union
54,897
45,417
48,715
United States
9,759
10,392
7,373
Africa
5,009
3,583
1,783
Rest of the World
8,824
15,906
20,837
Total deposits from banks
92,342
89,119
92,194
Customer Accounts
Customers in the United Kingdom
236,063
226,018
214,466
Other European Union
51,619
44,229
44,188
United States
48,090
36,934
29,837
Africa
47,826
46,568
42,354
Rest of World
9,484
17,778
23,464
Customer Accounts
393,082
371,527
354,309
Deposits from banks in offices in the United Kingdom received from non-residents amounted to £48,382m (2011:
£63,965m).
Year ended 31 December
2012
£m
2011
£m
2010
£m
Customer Accounts
385,707
366,032
345,788
In offices in the United Kingdom:
Current and Demand Accounts
– interest free
56,806
51,592
48,125
Current and Demand Accounts
– interest bearing
27,140
28,429
27,091
Savings accounts
86,579
82,291
79,444
Other time deposits- retail
16,410
24,712
29,422
Other time deposits- wholesale
57,151
54,048
43,948
Total repayable in offices
in the United Kingdom
244,086
241,072
228,030
In offices outside
the United Kingdom:
Current and Demand Accounts
- interest free
11,976
9,150
6,493
Current and Demand Accounts
- interest bearing
31,897
27,036
28,734
Savings accounts
13,293
10,868
12,484
Other time deposits
84,455
77,906
70,047
Total repayable in offices
outside the United Kingdom
141,621
124,960
117,758
Customer accounts deposits in offices in the United Kingdom received from non-residents
amounted to £43,346m (2011: £45,826m
b
).
Notes
a
Calculated based on month-end balances.
b
The prior year figure has been revised to reflect a more accurate geographic segmentation of customer account deposit balances.
Short-term borrowings
Short-term borrowings include deposits from banks, commercial paper and negotiable certificates of deposit.
Deposits from banks
Deposits from banks are taken from a wide range of counterparties and
generally have maturities of less than one year.
2012
£m
2011
£m
2010
£m
Year-end balance
77,010
91,116
77,975
Average balance
a
92,342
89,119
92,194
Maximum balance
a
101,469
111,358
102,137
Average interest rate during year
0.3%
0.4%
0.4%
Year-end interest rate
0.4%
0.2%
0.2%
Commercial paper
Commercial paper is issued by the Group, mainly in the United States, generally in denominations of not less than US$100,000, with maturities of up to 270 days.
2012
£m
2011
£m
2010
£m
Year-end balance
15,718
21,077
20,138
Average balance
a
19,175
19,639
19,986
Maximum balance
a
24,671
24,245
25,976
Average interest rate during year
0.3%
0.2%
0.3%
Year-end interest rate
0.3%
0.5%
0.4%
Negotiable certificates of deposit
Negotiable certificates of deposits are issued mainly in the United Kingdom and United States, generally in denominations of not less than $100,000.
2012
£m
2011
£m
2010
£m
Year-end balance
35,621
36,959
60,184
Average balance
a
38,827
45,609
55,242
Maximum balance
a
49,660
53,723
60,803
Average interest rate during year
0.9%
0.7%
0.6%
Year-end interest rate
0.7%
1.3%
1.0%
Repurchase Agreements
Repurchase agreements are entered into with both customers and banks and generally have maturities of not more than three months.
2012
£m
2011
£m
2010
£m
Year-end balance
217,342
207,292
225,534
Average balance
a
271,425
291,338
298,054
Maximum balance
a
325,752
347,533
373,627
Average interest rate during year
0.4%
0.6%
0.4%
Year-end interest rate
0.2%
0.2%
0.3%
330  I
Commitments and contractual
obligations
Commercial commitments include guarantees, contingent liabilities and standby facilities.
Commercial commitments
Amount of commitment expiration per period
Less than
one year
£m
Between
one to three
years
£m
Between
three to five
years
£m
After five
years
£m
Total
amounts
committed
£m
As at 31 December 2012
Guarantees and letters of credit pledged as collateral security
8,938
3,401
2,792
724
15,855
Performance guarantees, acceptances and endorsements
4,959
534
404
509
6,406
Documentary credits and other short-term trade related transactions
866
111
–
50
1,027
Standby facilities, credit lines and other commitments
163,873
59,420
19,551
4,972
247,816
As at 31 December 2011
Securities Lending arrangements
a
35,996
–
–
–
35,996
Guarantees and letters of credit pledged as collateral security
6,761
2,967
2,097
2,356
14,181
Performance guarantees, acceptances and endorsements
6,750
843
564
549
8,706
Documentary credits and other short-term trade related transactions
1,155
197
–
6
1,358
Standby facilities, credit lines and other commitments
163,989
23,241
44,867
8,185
240,282
Contractual obligations include debt securities, operating lease and purchase obligations.
Contractual obligations
Payments due by period
Less than
one year
£m
Between
one to
three years
£m
Between
three to
five years
£m
After five
years
£m
Total
£m
As at 31 December 2012
Long-term debt
b
63,867
34,022
19,004
40,832
157,725
Operating lease obligations
708
730
563
2,768
4,769
Purchase obligations
536
538
15
–
1,089
Total
65,111
35,290
19,582
43,600
163,583
As at 31 December 2011
Long-term debt
b
75,237
28,347
17,256
48,301
169,140
Operating lease obligations
597
755
920
2,830
5,102
Purchase obligations
825
836
123
39
1,823
Total
76,659
29,938
18,299
51,170
176,065
Net cash flows from derivatives used to hedge long-term debt amount to £6.9bn (2011: £6.1bn).
Further information on the contractual maturity of the Group's assets and liabilities is given in the Funding section of the Risk
review.
Notes
a
The Securities lending arrangements with Blackrock expired on 30 November 2012.
b
Long-term debt has been prepared to reflect cash flows on an undiscounted basis, which includes interest payments. The prior year numbers have been revised to
reflect this basis.
I  331
Additional information
Additional financial disclosure (unaudited) continued
Securities
Securities at fair value
2012
2011
2010
As at 31 December
Book value
£m
Amortised
cost
£m
Book value
£m
Amortised
cost
£m
Book value
£m
Amortised
cost
£m
Investment securities – available for sale
United Kingdom government
13,132
12,742
9,490
8,899
12,056
12,130
Other government
a
33,038
31,370
29,103
28,101
22,120
22,444
Other public bodies and US Agencies
4,027
4,017
801
802
1,545
1,568
Mortgage and asset backed securities
4,601
4,745
2,853
3,173
2,148
2,390
Bank and building society certificates of deposit
410
420
401
414
576
599
Corporate and other issuers
19,469
19,043
20,962
20,914
21,184
21,139
Debt securities
74,677
72,337
63,610
62,303
59,629
60,270
Equity securities
432
399
4,881
7,724
5,481
6,014
Investment securities – available for sale
75,109
72,736
68,491
70,027
65,110
66,284
Other securities – held for trading
United Kingdom government
11,143
n/a
10,232
n/a
9,943
n/a
Other government
56,639
n/a
65,265
n/a
60,674
n/a
Other public bodies and US Agencies
19,265
n/a
16,447
n/a
28,181
n/a
Mortgage and asset backed securities
12,320
n/a
10,859
n/a
11,611
n/a
Bank and building society certificates of deposit
4
n/a
38
n/a
757
n/a
Corporate and other issuers
13,086
n/a
17,824
n/a
25,156
n/a
Debt securities
112,457
n/a
120,665
n/a
136,322
n/a
Equity securities
24,751
n/a
24,861
n/a
25,613
n/a
Other securities – held for trading
137,208
n/a
145,526
n/a
161,935
n/a
Investment debt securities include government securities held as part of the Group's treasury management
portfolio for asset and liability, liquidity and regulatory purposes and are for use on a continuing basis in the activities of the Group. In addition, the Group holds as investments listed and unlisted corporate securities. Bank and building
society certificates of deposit are freely negotiable and have original maturities of up to five years, but are typically held for shorter periods.
Maturities and yield of available for sale debt securities
As at 31 December 2012
Maturing with one
year
Maturing after one
but within five years
Maturing after five
but within ten years
Maturing after ten
years
Total
Amount
£m
Yield
%
Amount
£m
Yield
%
Amount
£m
Yield
%
Amount
£m
Yield
%
Amount
£m
Yield
%
Government
9,305
1.1
%
15,832
3.0
%
12,735
5.0
%
8,298
4.6
%
46,170
3.5
%
Other public bodies and US Agencies
2,530
0.4
%
1,012
4.3
%
484
5.6
%
1
2.6
%
4,027
2.0
%
Other issuers
5,486
1.9
%
13,129
6.0
%
1,908
5.1
%
3,957
5.9
%
24,480
5.0
%
Total book value
17,321
1.3
%
29,973
4.4
%
15,127
5.1
%
12,256
5.0
%
74,677
3.9
%
The yield for each range of maturities is calculated by dividing the annualised interest income prevailing at
31 December 2012 by the fair value of securities held at that date.
Note
a
The comparative figures for 2011 and 2010 have been revised for the inclusion of AFS Treasury and Other Eligible Bills.
332  I
Average balance sheet
Average balances are based upon daily averages for most UK banking operations and monthly averages elsewhere.
Average assets and interest income
2012
2011
2010
Year ended 31 December
Average
balance
£m
Interest
£m
Average
rate
%
Average
balance
£m
Interest
£m
Average
rate
%
Average
balance
£m
Interest
£m
Average
rate
%
Assets
Loans and advances to banks:
a
– in offices in the United Kingdom
39,013
487
1.2
37,019
567
1.5
51,735
439
0.8
– in offices outside the United Kingdom
108,028
354
0.3
98,590
464
0.5
76,477
337
0.4
Loans and advances to customers:
a
– in offices in the United Kingdom
277,210
9,438
3.4
261,786
9,186
3.5
261,936
8,346
3.2
– in offices outside the United Kingdom
148,095
7,832
5.3
151,549
8,738
5.8
142,410
9,048
6.4
Available for sale investments:
– in offices in the United Kingdom
48,263
1,145
2.4
48,840
1,507
3.1
25,215
674
2.7
– in offices outside the United Kingdom
17,598
549
3.1
17,945
627
3.5
22,547
839
3.7
Trading portfolio assets:
– in offices in the United Kingdom
54,867
1,499
2.7
64,023
2,135
3.3
76,341
2,519
3.3
– in offices outside the United Kingdom
130,253
2,423
1.9
136,747
3,387
2.5
105,443
3,884
3.7
Reverse repurchase agreements and
cash collateral on securities
borrowed:
b
– in offices in the United Kingdom
196,241
940
0.5
205,555
1,592
0.8
215,982
1,169
0.5
– in offices outside the United Kingdom
118,130
347
0.3
142,619
450
0.3
148,791
526
0.4
Financial assets designated at fair value:
– in offices in the United Kingdom
25,044
49
0.2
20,373
96
0.5
21,822
750
3.4
– in offices outside the United Kingdom
6,387
212
3.3
4,688
95
2.0
8,283
129
1.6
Total average interest earning assets
1,169,129
25,275
2.2
1,189,734
28,844
2.4
1,156,982
28,660
2.5
Impairment allowances/provisions
(10,925
)
(11,653
)
(10,143
)
Non-interest earning assets
578,485
550,956
596,162
Total average assets and interest income
1,736,689
25,275
1.5
1,729,037
28,844
1.7
1,743,001
28,660
1.6
Percentage of total average interest
earning assets in offices outside the
United Kingdom
45.2
%
46.4
%
43.6
%
Total average interest earning assets
related to:
Interest income
25,275
2.2
28,844
2.4
28,660
2.5
Interest expense
(16,917
)
1.6
(21,048
)
1.9
(20,511
)
1.8
8,358
0.6
7,796
0.5
8,149
0.7
Notes
a
Loans and advances to banks and customers include all doubtful lendings, including non accrual lendings. Interest receivable on such lendings has been included to
the extent to which either cash payments have been received or interest has been accrued in accordance with the income recognition policy of the Group.
b
Average balances for reverse repurchase agreements and cash collateral on securities borrowed have been stated on a gross basis prior to any offsetting to provide
a more meaningful comparison to the related interest income and expense. The Group balance sheet on page 194 offsets financial assets and liabilities where a legally enforceable right to set off the recognised amounts and there is an intention to
settle on a net basis or to realise an asset and liability simultaneously.
I  333
Additional information
Additional financial disclosure (unaudited) continued
Average liabilities and interest expense
2012
2011
2010
Year ended 31 December
Average
balance
£m
Interest
£m
Average
rate
%
Average
balance
£m
Interest
£m
Average
rate
%
Average
balance
£m
Interest
£m
Average
rate
%
Liabilities and shareholders' equity
Deposits by banks:
– in offices in the United Kingdom
62,453
313
0.5
61,621
670
1.1
58,666
461
0.8
– in offices outside the United Kingdom
19,854
187
0.9
13,954
304
2.2
19,870
296
1.5
Customer accounts:
– in offices in the United Kingdom
210,068
2,059
1.0
207,457
2,305
1.1
198,149
1,602
0.8
– in offices outside the United Kingdom
88,972
2,773
3.1
88,962
2,834
3.2
72,660
2,698
3.7
Debt securities in issue:
– in offices in the United Kingdom
77,279
2,378
3.1
83,685
3,188
3.8
86,209
2,594
3.0
– in offices outside the United Kingdom
53,035
1,366
2.6
63,158
1,756
2.8
68,581
1,889
2.8
Dated and undated loan capital and other subordinated liabilities principally:
– in offices in the United Kingdom
23,680
2,036
8.6
27,512
2,393
8.7
26,794
2,180
8.1
Repurchase agreements and cash collateral on securities
lent:
a
– in offices in the United Kingdom
204,766
953
0.5
206,240
1,866
0.9
181,043
1,104
0.6
– in offices outside the United Kingdom
172,827
703
0.4
204,122
432
0.2
226,105
714
0.3
Trading portfolio liabilities:
– in offices in the United Kingdom
36,174
1,575
4.4
43,217
2,142
5.0
51,073
2,225
4.4
– in offices outside the United Kingdom
63,594
1,060
1.7
77,691
1,949
2.5
48,046
1,853
3.9
Financial liabilities designated at fair value
– in offices in the United Kingdom
37,443
1,477
3.9
37,854
1,001
2.6
64,153
2,696
4.2
– in offices outside the United Kingdom
16,731
37
0.2
19,050
208
1.1
19,189
199
1.0
Total average interest bearing liabilities
1,066,876
16,917
1.6
1,134,523
21,048
1.9
1,120,538
20,511
1.8
Interest free customer deposits:
– in offices in the United Kingdom
52,713
48,192
47,263
– in offices outside the United Kingdom
7,177
7,879
6,563
Other non-interest bearing liabilities
550,806
475,699
507,299
Minority and other interests and shareholders' equity
59,117
62,744
61,338
Total average liabilities, shareholders' equity and interest expense
1,736,689
16,917
1.0
1,729,037
21,048
1.2
1,743,001
20,511
1.2
Percentage of total average interest bearing non-capital liabilities in offices outside the United Kingdom
38.9
%
41.2
%
40.6
%
Notes
a
Average balances for repurchase agreements and cash collateral on securities borrowed have been stated on a gross basis prior to any offsetting to provide a more
meaningful comparison to the related interest income and expense. The Group balance sheet on page 194 offsets financial assets and liabilities where a legally enforceable right to set off the recognised amounts and there is an intention to settle on
a net basis or to realise an asset and liability simultaneously.
334  I
Changes in net interest income – volume
and rate analysis
The following tables allocate changes in net interest income between changes in volume and changes in interest
rates for the last three years. Volume and rate variances have been calculated on the movement in the average balances and the change in the interest rates on average interest earning assets and average interest bearing liabilities. Where variances
have arisen from changes in both volumes and interest rates, these have been allocated proportionately between the two.
2012/2011 Change due to
increase/(decrease) in:
2011/2010 Change due to
increase/(decrease) in:
2010/2009 Change due to
increase/(decrease) in:
Total
change
£m
Volume
£m
Rate
£m
Total
change
£m
Volume
£m
Rate
£m
Total
change
£m
Volume
£m
Rate
£m
Interest receivable
Loans and advances to banks:
– in offices in the UK
(80
)
30
(110
)
128
(150
)
278
(44
)
99
(143
)
– in offices outside the UK
(110
)
41
(151
)
127
103
24
66
219
(153
)
(190
)
71
(261
)
255
(47
)
302
22
318
(296
)
Loans and advances to customers:
– in offices in the UK
252
530
(278
)
840
(5
)
845
(1,233
)
(246
)
(987
)
– in offices outside the UK
(906
)
(196
)
(710
)
(310
)
559
(869
)
(553
)
(62
)
(491
)
(654
)
334
(988
)
530
554
(24
)
(1,786
)
(308
)
(1,478
)
Available for sale investments:
– in offices in the UK
(361
)
(18
)
(343
)
833
714
119
(851
)
(610
)
(241
)
– in offices outside the UK
(78
)
(12
)
(66
)
(212
)
(163
)
(49
)
354
333
21
(439
)
(30
)
(409
)
621
551
70
(497
)
(277
)
(220
)
Trading portfolio assets
– in offices in the UK
(636
)
(281
)
(355
)
(384
)
(410
)
26
(743
)
(664
)
(79
)
– in offices outside the UK
(965
)
(155
)
(810
)
(497
)
973
(1,470
)
656
52
604
(1,601
)
(436
)
(1,165
)
(881
)
563
(1,444
)
(87
)
(612
)
525
Reverse repurchase agreements and cash collateral on securities borrowed:
– in offices in the UK
(652
)
(69
)
(583
)
423
(58
)
481
(601
)
460
(1,061
)
– in offices outside the UK
(103
)
(73
)
(30
)
(76
)
(21
)
(55
)
(139
)
15
(154
)
(755
)
(142
)
(613
)
347
(79
)
426
(740
)
475
(1,215
)
Financial assets designated at fair value:
– in offices in the UK
(47
)
18
(65
)
(654
)
(47
)
(607
)
(72
)
117
(189
)
– in offices outside the UK
117
42
75
(34
)
(66
)
32
(186
)
(100
)
(86
)
70
60
10
(688
)
(113
)
(575
)
(258
)
17
(275
)
Total interest receivable:
– in offices in the UK
(1,524
)
210
(1,734
)
1,186
44
1,142
(3,544
)
(844
)
(2,700
)
– in offices outside the UK
(2,045
)
(353
)
(1,692
)
(1,002
)
1,385
(2,387
)
198
457
(259
)
(3,569
)
(143
)
(3,426
)
184
1,429
(1,245
)
(3,346
)
(387
)
(2,959
)
I  335
Additional information
Additional financial disclosure (unaudited) continued
Changes in net interest income – volume and rate analysis
2012/2011 Change due to
increase/(decrease) in:
2011/2010 Change due to
increase/(decrease) in:
2010/2009 Change due to
increase/(decrease) in:
Total
change
£m
Volume
£m
Rate
£m
Total
change
£m
Volume
£m
Rate
£m
Total
change
£m
Volume
£m
Rate
£m
Interest payable
a
Deposits by banks:
– in offices in the UK
(357
)
9
(366
)
209
24
185
(344
)
(86
)
(258
)
– in offices outside the UK
(117
)
98
(215
)
8
(104
)
112
1
(129
)
130
(474
)
107
(581
)
217
(80
)
297
(343
)
(215
)
(128
)
Customer accounts
– in offices in the UK
(246
)
29
(275
)
703
78
625
(947
)
270
(1,217
)
– in offices outside the UK
(61
)
–
(61
)
136
553
(417
)
(1,220
)
(396
)
(824
)
(307
)
29
(336
)
839
631
208
(2,167
)
(126
)
(2,041
)
Debt securities in issue:
– in offices in the UK
(810
)
(231
)
(579
)
594
(78
)
672
408
305
103
– in offices outside the UK
(390
)
(267
)
(123
)
(133
)
(151
)
18
(389
)
(345
)
(44
)
(1,200
)
(498
)
(702
)
461
(229
)
690
19
(40
)
59
Dated and undated loan capital and other subordinated liabilities principally in offices in the
UK
(357
)
(329
)
(28
)
213
59
154
291
30
261
Repurchase agreements and cash collateral on securities lent:
– in offices in the UK
(913
)
(13
)
(900
)
762
171
591
(196
)
82
(278
)
– in offices outside the UK
271
(75
)
346
(282
)
(64
)
(218
)
(135
)
39
(174
)
(642
)
(88
)
(554
)
480
107
373
(331
)
121
(452
)
Trading portfolio liabilities:
– in offices in the UK
(567
)
(325
)
(242
)
(83
)
(367
)
284
32
(191
)
223
– in offices outside the UK
(889
)
(312
)
(577
)
96
888
(792
)
854
359
495
(1,456
)
(637
)
(819
)
13
521
(508
)
886
168
718
Financial liabilities designated at fair value:
– in offices in the UK
476
(11
)
487
(1,695
)
(890
)
(805
)
1,473
1,312
161
– in offices outside the UK
(171
)
(22
)
(149
)
9
(1
)
10
(30
)
9
(39
)
305
(33
)
338
(1,686
)
(891
)
(795
)
1,443
1,321
122
Total interest payable:
– in offices in the UK
(2,774
)
(871
)
(1,903
)
703
(1,003
)
1,706
717
1,722
(1,005
)
– in offices outside the UK
(1,357
)
(578
)
(779
)
(166
)
1,121
(1,287
)
(919
)
(463
)
(456
)
(4,131
)
(1,449
)
(2,682
)
537
118
419
(202
)
1,259
(1,461
)
Movement in net interest income
Increase/(decrease) in interest receivable
(3,569
)
(143
)
(3,426
)
184
1,429
(1,245
)
(3,346
)
(387
)
(2,959
)
Increase/(decrease) in interest payable
(4,131
)
(1,449
)
(2,682
)
537
118
419
(202
)
1,259
(1,461
)
(7,700
)
(1,592
)
(6,108
)
721
1,547
(826
)
(3,548
)
872
(4,420
)
Note
a
Values for the 2011/2010 movement have been revised to more appropriately reflect the drivers of the change in interest expense.
336  I
Credit risk additional
disclosure
This section of the report contains supplementary information that is more detailed or contains longer histories than the
data presented in the credit risk management section.
A. Impairment
Movements in allowance for impairment by geography
2012
£m
2011
£m
2010
£m
2009
£m
2008
£m
Allowance for impairment as at 1 January
10,597
12,432
10,796
6,574
3,772
Acquisitions and disposals
(80
)
(18
)
78
434
307
Unwind of discount
(211
)
(243
)
(213
)
(185
)
(135
)
Exchange and other adjustments
(286
)
(440
)
331
(127
)
791
Amounts written off:
United Kingdom
(1,972
)
(2,401
)
(1,928
)
(1,588
)
(1,514
)
Europe
(1,119
)
(932
)
(616
)
(599
)
(162
)
Americas
(311
)
(954
)
(742
)
(686
)
(1,056
)
Africa and the Middle East
(655
)
(695
)
(627
)
(446
)
(187
)
Asia
(62
)
(183
)
(397
)
(61
)
–
Recoveries:
United Kingdom
127
159
116
48
131
Europe
31
43
22
13
4
Americas
–
–
5
8
3
Africa and the Middle East
51
56
54
80
36
Asia
3
7
4
1
–
New and increased impairment allowance:
United Kingdom
1,728
2,442
2,848
3,163
2,162
Europe
1,589
1,299
1,434
1,945
754
Americas
483
438
1,323
1,650
1,543
Africa and the Middle East
853
727
949
1,124
551
Asia
50
56
385
229
106
Reversals of impairment allowance:
United Kingdom
(356
)
(353
)
(355
)
(331
)
(213
)
Europe
(463
)
(135
)
(264
)
(248
)
(94
)
Americas
(23
)
(280
)
(386
)
(6
)
(14
)
Africa and the Middle East
(70
)
(113
)
(128
)
(45
)
(36
)
Asia
(16
)
(50
)
(56
)
(1
)
(1
)
Recoveries:
United Kingdom
(127
)
(159
)
(116
)
(48
)
(131
)
Europe
(31
)
(43
)
(22
)
(13
)
(4
)
Americas
–
–
(5
)
(8
)
(3
)
Africa and the Middle East
(51
)
(56
)
(54
)
(80
)
(36
)
Asia
(3
)
(7
)
(4
)
(1
)
–
Allowance for impairment as at 31 December
9,676
10,597
12,432
10,796
6,574
Average loans and advances for the year
572,346
548,944
532,558
447,569
453,413
I  337
Additional information
Additional financial disclosure (unaudited) continued
Analysis of impairment charges
As at 31 December
2012
£m
2011
£m
2010
£m
2009
£m
2008
£m
Impairment charges:
United Kingdom
1,245
1,930
2,377
2,784
1,818
Europe
1,095
1,121
1,148
1,684
656
Americas
460
158
932
1,636
1,526
Africa and the Middle East
732
558
767
999
479
Asia
31
(1
)
325
227
105
Impairment on loans and advances
3,563
3,766
5,549
7,330
4,584
Impairment on available for sale assets
40
1,860
51
670
382
Impairment on reverse repurchase agreements
(3
)
(48
)
(4
)
43
124
Impairment charges
3,600
5,578
5,596
8,043
5,090
Other credit provisions charge
(4
)
24
76
28
329
Impairment charges
3,596
5,602
5,672
8,071
5,419
The industry classifications in the tables below have been prepared at the level of the borrowing entity. This
means that a loan to a subsidiary of a major corporation is classified by the industry in which the subsidiary operates, even though the Parent's predominant business may be in a different industry.
Total impairment charges on loans and advances by industry
As at 31 December
2012
£m
2011
£m
2010
£m
2009
£m
2008
£m
United Kingdom:
Financial institutions
30
83
22
485
76
Manufacturing
12
41
38
112
118
Construction
25
22
77
54
15
Property
82
59
123
113
80
Energy and water
1
5
–
–
1
Wholesale and retail distribution and leisure
109
297
170
314
59
Business and other services
138
138
238
175
234
Home loans
18
66
37
33
28
Cards, unsecured and other personal lending
799
1,200
1,646
1,416
1,179
Other
31
19
26
82
28
Total United Kingdom
1,245
1,930
2,377
2,784
1,818
Overseas
2,318
1,836
3,172
4,546
2,766
Total impairment charges
3,563
3,766
5,549
7,330
4,584
338  I
Allowance for impairment by industry
2012
2011
2010
2009
2008
As at 31 December
£m
%
£m
%
£m
%
£m
%
£m
%
United Kingdom:
Financial institutions
411
4.2
456
4.3
447
3.6
493
4.6
81
1.2
Manufacturing
37
0.4
97
0.9
84
0.6
142
1.3
185
2.8
Construction
31
0.3
53
0.5
76
0.6
41
0.4
18
0.3
Property
118
1.2
121
1.1
131
1.0
90
0.8
114
1.7
Energy and water
–
–
–
–
–
–
–
–
1
–
Wholesale and retail distribution and leisure
243
2.5
378
3.6
256
2.1
182
1.7
43
0.7
Business and other services
217
2.2
258
2.4
259
2.1
218
2.0
236
3.6
Home loans
129
1.3
134
1.3
85
0.7
63
0.6
46
0.7
Cards, unsecured and other personal lending
2,043
21.1
2,469
23.3
3,020
24.3
2,688
24.9
2,160
32.9
Other
41
0.4
39
0.4
71
0.6
92
0.8
63
0.9
Total United Kingdom
3,270
33.8
4,005
37.8
4,429
35.6
4,009
37.1
2,947
44.8
Overseas
6,406
66.2
6,592
62.2
8,003
64.4
6,787
62.9
3,627
55.2
Total
9,676
100.0
10,597
100.0
12,432
100.0
10,796
100.0
6,574
100.0
Amounts written off and recovered by industry
Amounts written off
Recoveries of amounts previously written off
As at 31 December
2012
£m
2011
£m
2010
£m
2009
£m
2008
£m
2012
£m
2011
£m
2010
£m
2009
£m
2008
£m
United Kingdom:
Financial institutions
55
67
68
72
88
4
–
2
3
4
Manufacturing
76
28
102
162
53
2
4
6
4
8
Construction
52
45
42
34
19
4
2
1
3
2
Property
95
71
86
141
27
7
3
4
3
2
Energy and water
1
3
–
2
1
–
–
–
4
–
Wholesale and retail distribution and leisure
246
229
103
182
137
13
39
6
8
7
Business and other services
200
127
198
197
153
22
6
7
5
10
Home loans
36
45
20
16
4
2
3
1
–
1
Cards, unsecured and other personal lending
1,184
1,739
1,250
724
960
73
102
75
13
88
Other
27
47
59
58
72
–
–
14
5
9
Total United Kingdom
1,972
2,401
1,928
1,588
1,514
127
159
116
48
131
Overseas
2,147
2,764
2,382
1,792
1,405
85
106
85
102
43
Total
4,119
5,165
4,310
3,380
2,919
212
265
201
150
174
Impairment ratios
2012
%
2011
%
2010
%
2009
%
2008
%
Impairment charges as a percentage of average loans and advances
0.62
0.69
1.04
1.64
1.01
Amounts written off (net of recoveries) as a percentage of average loans and advances
0.68
0.89
0.77
0.72
0.61
Allowance for impairment balance as a percentage of loans and advances as at
31 December
2.03
2.16
2.60
2.29
1.27
I  339
Additional information
Additional financial disclosure (unaudited) continued
B. Potential credit risk loans
Credit risk loans summary
As at 31 December
2012
£m
2011
£m
2010
£m
2009
£m
2008
£m
Impaired loans
15,172
17,326
26,630
16,401
12,264
Accruing loans which are contractually overdue 90 days or more as to principal or interest
2,605
3,179
4,388
5,310
2,953
Impaired and restructured loans
788
837
864
831
483
Credit risk loans
18,565
21,342
31,882
22,542
15,700
Credit risk loans
As at 31 December
2012
£m
2011
£m
2010
£m
2009
£m
2008
£m
Impaired loans:
United Kingdom
4,717
5,801
5,744
4,724
3,793
Europe
4,886
5,261
5,397
4,184
1,713
Americas
3,345
3,759
11,928
4,744
4,397
Africa and Middle East
2,151
2,408
3,206
2,390
1,996
Asia
73
97
355
359
365
Total
15,172
17,326
26,630
16,401
12,264
Accruing loans which are contractually overdue 90 days or more as to principal or interest:
United Kingdom
1,227
1,216
1,380
2,305
1,656
Europe
476
650
802
953
562
Americas
96
110
164
232
433
Africa and Middle East
803
1,195
2,010
1,766
172
Asia
3
8
32
54
130
Total
2,605
3,179
4,388
5,310
2,953
Impaired and restructured loans:
United Kingdom
615
643
662
582
367
Europe
27
60
33
41
29
Americas
116
124
141
180
82
Africa and Middle East
25
7
20
22
–
Asia
5
3
8
6
5
Total
788
837
864
831
483
Total credit risk loans:
United Kingdom
6,559
7,660
7,786
7,611
5,816
Europe
5,389
5,971
6,232
5,178
2,304
Americas
3,557
3,993
12,233
5,156
4,912
Africa and Middle East
2,979
3,610
5,236
4,178
2,168
Asia
81
108
395
419
500
Credit risk loans
18,565
21,342
31,882
22,542
15,700
Potential problem loans
As at 31 December
2012
£m
2011
£m
2010
£m
2009
£m
2008
£m
United Kingdom
1,035
1,110
892
1,013
883
Europe
430
530
669
796
963
Americas
80
106
779
1,181
431
Africa and Middle East
212
217
335
502
140
Asia
1
9
20
31
39
Potential problem loans
1,758
1,972
2,695
3,523
2,456
340  I
Interest foregone on credit risk loans
2012
£m
2011
£m
2010
£m
Interest income that would have been recognised under the original contractual terms
United Kingdom
245
272
316
Rest of the
World
a
310
344
566
Total
555
616
882
Total impairment allowance coverage of credit risk loans
2012
2011
2010
2009
2008
As at 31 December
%
%
%
%
%
United Kingdom
49.9
52.3
56.9
53.2
50.7
Europe
51.5
48.9
44.8
42.1
41.8
Americas
61.3
53.3
24.2
51.7
31.8
Africa and Middle East
46.4
40.1
35.5
37.1
39.5
Asia
86.4
90.7
100.0
84.2
49.2
Total coverage of credit risk lending
52.1
49.7
39.0
47.9
41.9
Total impairment allowance coverage of potential credit risk loans
2012
2011
2010
2009
2008
As at 31 December
%
%
%
%
%
United Kingdom
43.1
45.7
51.0
47.0
44.0
Europe
47.7
44.9
40.5
36.5
29.5
Americas
59.9
51.9
22.7
42.0
29.2
Africa and Middle East
43.3
37.8
33.3
33.2
37.1
Asia
85.4
83.8
95.2
78.4
45.5
Total coverage of potential credit risk lending
47.6
45.5
36.0
41.4
36.2
Note
a
Rest of the World comparatives for 2011 and 2010 have been revised to reflect an overstatement in interest foregone.
I  341
Additional information
Additional financial disclosure (unaudited) continued
C. Maturity Analysis of Loans and Advances
Maturity analysis of loans and advances to customers
On
demand
£m
Not more
than
three
months
£m
Over
three
months
but not
more
than six
months
£m
Over six
months
but not
more
than one
year
£m
Over one
year but
no more
than
three
years
£m
Over
three
years but
not more
than five
years
£m
Over five
years but
not more
than ten
years
£m
Over ten
years
£m
Total
£m
As at 31 December 2012
United Kingdom
Corporate lending
17,050
14,011
1,166
3,156
14,008
10,460
8,805
10,964
79,620
Other lending to customers in the United Kingdom
4,472
3,171
2,015
4,036
15,586
15,431
30,505
76,445
151,661
Total United Kingdom
21,522
17,182
3,181
7,192
29,594
25,891
39,310
87,409
231,281
Europe
5,221
20,746
2,429
4,165
12,483
8,244
10,469
20,375
84,132
Americas
3,392
32,169
935
3,228
6,344
6,347
6,285
6,733
65,433
Africa and Middle East
8,244
2,804
1,596
2,917
7,261
6,336
9,155
9,206
47,519
Asia
418
4,136
525
353
684
443
158
282
6,999
Total loans and advances to customers
38,797
77,037
8,666
17,855
56,366
47,261
65,377
124,005
435,364
As at 31 December 2011
United Kingdom
Corporate lending
23,215
13,742
1,606
3,199
14,484
11,674
6,949
7,834
82,703
Other lending to customers in the United Kingdom
4,982
2,364
1,785
3,774
14,114
22,307
26,247
66,530
142,103
Total United Kingdom
28,197
16,106
3,391
6,973
28,598
33,981
33,196
74,364
224,806
Europe
5,874
21,378
1,698
2,881
12,245
7,418
9,605
32,237
93,336
Americas
4,986
29,251
1,260
2,398
5,449
5,584
9,727
6,928
65,583
Africa and Middle East
a
7,109
2,807
1,638
4,470
7,147
6,438
9,576
11,569
50,754
Asia
347
5,036
753
406
613
304
215
333
8,007
Total loans and advances to customers
46,513
74,578
8,740
17,128
54,052
53,725
62,319
125,431
442,486
Note
a
2011 comparatives have been revised to more accurately reflect the maturity profile of loans and advances to customers in Africa and Middle East.
342  I
Maturity analysis of loans and advances to banks
On
demand
£m
Not more
than
three
months
£m
Over
three
months
but not
more
than six
months
£m
Over six
months
but not
more
than one
year
£m
Over one
year but
no more
than
three
years
£m
Over
three
years but
not more
than five
years
£m
Over five
years but
not more
than ten
years
£m
Over ten
years
£m
Total
£m
As at 31 December 2012
United Kingdom
940
6,023
-117
238
–
1
13
409
7,507
Europe
1,554
12,686
–
357
363
–
–
46
15,006
Americas
223
11,273
53
2
678
–
49
–
12,278
Africa and Middle East
605
864
57
275
44
135
96
5
2,081
Asia
1,358
1,949
242
94
–
–
15
–
3,658
Total loans and advances to banks
4,680
32,795
235
966
1,085
136
173
460
40,530
As at 31 December 2011
United Kingdom
853
7,294
394
322
19
353
48
356
9,639
Europe
2,712
11,423
91
81
421
2
1
–
14,731
Americas
863
11,305
335
95
952
3
84
–
13,637
Africa and Middle East
482
1,796
299
217
189
18
172
61
3,234
Asia
1,237
3,942
929
112
5
2
21
2
6,250
Total loans and advances to banks
6,147
35,760
2,048
827
1,586
378
326
419
47,491
I  343
Additional information
Additional financial disclosure (unaudited) continued
D. Industrial and Geographical Concentrations of Loans and Advances
Loans and advances to customers by
industry
As at 31 December
2012
£m
2011
£m
2010
£m
2009
£m
2008
£m
Financial institutions
90,586
92,035
90,409
95,839
114,069
Manufacturing
11,907
13,264
15,096
18,855
26,374
Construction
4,001
4,931
6,173
6,303
8,239
Property
22,575
25,087
23,720
23,468
22,155
Government and central bank
4,943
6,135
5,109
4,801
5,301
Energy and water
7,638
7,425
9,240
10,735
14,101
Wholesale and retail distribution and leisure
15,070
16,818
17,886
19,746
20,208
Business and other services
24,722
27,214
27,138
30,277
37,373
Home loans
175,498
172,106
168,909
149,738
140,166
Cards, unsecured loans and other personal lending
56,865
53,783
51,724
44,971
48,305
Other
21,559
23,688
24,922
26,226
32,047
Loans and advances to customers
435,364
442,486
440,326
430,959
468,338
Loans and advances to customers in the
UK
As at 31 December
2012
£m
2011
£m
2010
£m
2009
£m
2008
£m
Financial institutions
17,518
18,912
20,325
23,738
27,936
Manufacturing
6,078
6,282
6,744
8,705
11,528
Construction
3,108
3,444
3,683
3,544
4,280
Property
15,283
16,351
13,877
13,677
12,286
Government and central bank
198
123
80
496
20
Energy and water
2,286
1,598
2,183
2,446
3,037
Wholesale and retail distribution and leisure
9,810
10,686
11,850
12,793
14,629
Business and other services
15,971
16,731
15,430
16,576
19,891
Home loans
119,781
112,394
105,019
90,921
85,884
Cards, unsecured loans and other personal lending
31,772
29,881
28,970
27,493
28,134
Other
9,476
8,404
8,105
9,103
11,170
Loans and advances to customers in the UK
231,281
224,806
216,266
209,492
218,795
Loans and advances to customers in
Europe
As at 31 December
2012
£m
2011
£m
2010
£m
2009
£m
2008
£m
Financial institutions
21,211
20,255
18,333
15,583
14,899
Manufacturing
2,827
3,545
4,987
5,907
9,926
Construction
663
943
1,440
1,619
1,786
Property
3,242
4,023
3,771
4,425
4,952
Government and central bank
2,458
2,167
951
598
1,125
Energy and water
2,376
2,453
3,621
4,670
6,822
Wholesale and retail distribution and leisure
2,588
3,134
2,938
2,793
2,999
Business and other services
2,985
5,498
6,526
6,388
7,128
Home loans
36,965
38,732
37,524
36,100
34,999
Cards, unsecured loans and other personal lending
6,346
6,875
8,348
7,658
6,643
Other
2,471
5,711
4,997
5,844
7,496
Loans and advances to customers in Europe
84,132
93,336
93,436
91,585
98,775
344  I
Loans and advances to customers in the
Americas
As at 31 December
2012
£m
2011
£m
2010
£m
2009
£m
2008
£m
Financial institutions
44,102
46,636
45,329
49,042
63,434
Manufacturing
1,229
1,400
922
1,864
2,875
Construction
1
33
34
–
21
Property
686
882
806
1,012
878
Government and central bank
785
620
354
346
498
Energy and water
1,761
2,170
2,428
2,521
3,222
Wholesale and retail distribution and leisure
739
661
651
1,004
1,228
Business and other services
2,368
1,605
1,211
1,952
2,457
Home loans
480
566
214
154
163
Cards, unsecured loans and other personal lending
12,047
9,691
8,129
7,719
8,028
Other
1,235
1,319
1,398
1,586
5,059
Loans and advances to customers in the Americas
65,433
65,583
61,476
67,200
87,863
Loans and advances to customers in Africa
and the Middle East
As at 31 December
2012
£m
2011
£m
2010
£m
2009
£m
2008
£m
Financial institutions
4,631
2,343
2,960
3,797
2,250
Manufacturing
1,252
1,459
1,565
1,615
1,287
Construction
205
444
961
903
2,053
Property
3,117
3,618
4,825
4,341
3,744
Government and central bank
1,502
2,796
3,271
3,310
3,641
Energy and water
822
819
520
569
721
Wholesale and retail distribution and leisure
1,833
2,170
1,968
1,805
1,024
Business and other services
2,760
3,012
3,530
4,700
5,196
Home loans
17,999
19,912
25,831
22,141
19,120
Cards, unsecured loans and other personal lending
5,542
6,521
4,933
993
3,171
Other
7,856
7,660
9,341
8,515
7,417
Loans and advances to customers in Africa and the Middle East
47,519
50,754
59,705
52,689
49,624
Loans and advances to customers in
Asia
As at 31 December
2012
£m
2011
£m
2010
£m
2009
£m
2008
£m
Financial institutions
3,124
3,889
3,462
3,679
5,550
Manufacturing
521
578
878
764
758
Construction
24
67
55
237
99
Property
247
213
441
13
295
Government and central bank
429
453
51
17
Energy and water
393
385
488
529
299
Wholesale and retail distribution and leisure
100
167
479
1,351
328
Business and other services
638
368
441
661
2,701
Home loans
273
502
321
422
–
Cards, unsecured loans and other personal lending
1,158
815
1,344
1,108
2,329
Other
521
594
1,081
1,178
905
Loans and advances to customers in Asia
6,999
8,007
9,443
9,993
13,281
Interest rate sensitivity of loans and
advances
As at 31 December
Fixed
rate
£m
2012
Variable
rate
£m
Total
£m
Fixed
rate
£m
2011
Variable
rate
£m
Total
£m
Banks
16,021
24,509
40,530
20,049
27,442
47,491
Customers
104,066
331,298
435,364
90,374
352,112
442,486
I  345
Additional information
Additional financial disclosure (unaudited) continued
Foreign outstandings in currencies other than the local currency of the borrower for countries where this exceeds
0.75% of total Group assets
As % of
assets
Total
£m
Banks
and other
financial
institutions
£m
Government
and official
institutions
£m
Commercial
industrial
and other
private
sectors
£m
As at 31 December 2012
United States
6.4
95,024
7,074
19,096
68,854
Germany
2.5
37,304
8,845
5,286
23,173
France
2.1
30,895
15,546
6,940
8,409
Japan
1.4
20,370
18,533
1,815
22
Netherlands
1.2
18,209
1,377
4,351
12,481
As at 31 December 2011
United States
7.4
116,374
15,120
28,174
73,080
Germany
2.1
32,990
7,707
4,249
21,034
France
1.8
28,260
18,035
6,047
4,178
Netherlands
0.9
14,481
2,530
579
11,372
As at 31 December 2010
United States
6.4
95,707
4,775
11,988
78,944
France
2.0
29,357
21,711
3,440
4,206
Germany
1.7
24,636
14,079
1,164
9,393
Cayman Islands
0.9
12,683
178
17
12,488
Switzerland
0.8
11,940
2,776
5,673
3,491
Off-Balance Sheet and other Credit
Exposures
As at 31 December
2012
£m
2011
£m
2010
£m
Off-balance sheet exposures
Contingent liabilities
22,261
58,883
50,630
Commitments
248,843
241,640
224,157
On-balance sheet exposures
Trading portfolio assets
145,030
152,183
168,867
Financial assets designated at fair value on own account
46,061
35,647
40,056
Derivative financial instruments
469,146
538,964
420,319
Available for sale financial investments
75,109
68,491
65,110
Notional principal amounts of credit
derivatives
As at 31 December
2012
£m
2011
£m
2010
£m
Credit derivatives held or issued for trading purposes
a
1,768,180
1,886,650
1,952,475
Additional Related Parties disclosures
For US disclosure purposes, the aggregate emoluments of all Directors and Officers of Barclays PLC who held office during the year (2012: 28 persons, 2011: 24 persons, 2010: 26 persons) for the year
ended 31 December 2012 amounted to £70.6m (2011: £102.8m ;2010: £121.7m). In addition, the aggregate amount set aside for the year ended 31 December 2012, to provide pension benefits for the Directors and Officers
amounted to £0.4m (2011 £0.4m, 2010: £1.0m).
Note
a
Includes credit derivatives held as economic hedges which are not designated as hedges for accounting purposes.
346  I
Independent Registered Public Accounting Firm's Report
Report of Independent Registered Public Accounting Firm To the Board of Directors and Shareholders of Barclays Bank PLC
In our opinion, the accompanying Consolidated income statement and the related Consolidated statement of comprehensive income, Consolidated balance sheets, Consolidated statements of changes in
equity and Consolidated cash flow statements present fairly, in all material respects, the financial position of Barclays Bank PLC and its subsidiaries at 31 December 2012 and 31 December 2011, and the results of their operations and their
cash flows for each of the three years in the period ended 31 December 2012 in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
London, United Kingdom
5 March 2013
I  347
Barclays Bank PLC data
349
Consolidated income statement
350
Consolidated statement of comprehensive income
351
Consolidated balance sheet
352
Consolidated statement of changes in equity
353
Consolidated cash flow statement
354
Notes to the accounts
362
Financial
 data
Barclays Bank PLC is a wholly owned subsidiary of Barclays PLC, which is the Group's ultimate parent company. The
consolidated financial statements of Barclays Bank PLC and Barclays PLC are materially the same, with the key differences being that, in accordance with IFRS:
¡
Preference shares issued by Barclays Bank PLC are included within share capital and share premium in Barclays Bank PLC but represent
non-controlling interests in Barclays PLC.
¡
Certain issuances of capital notes by Barclays Bank PLC are included within other shareholders' equity in Barclays Bank PLC, but represent
non-controlling interests in Barclays PLC.
¡
The carrying value of Contingent Capital Notes (CCNs) is higher in the balance sheet of Barclays Bank PLC, which issued the notes, than in the
consolidated balance sheet of Barclays PLC due to the different contractual rights and obligations of each. In the Barclays PLC consolidated financial statements, the CCNs are liabilities that are cancelled in the event that the consolidated Common
Equity Tier 1 (CET 1) ratio falls below 7%. To Barclays Bank PLC, which has no ability to cancel the CCNs (which is effected by an automatic legal transfer of ownership from the holder to Barclays PLC), the coupon is higher than the market rate
appropriate for a liability without the automatic transfer feature. This leads to the recognition of an initial fair value for the CCNs that is higher than par for Barclays Bank PLC. The difference between initial fair value and par is amortised
over the period to the expected maturity of the notes. In its consolidated financial statements, Barclays PLC recognises the notes at par.
¡
Barclays PLC shares held for the purposes of employee share schemes and for trading are recognised as available for sale investments and trading
portfolio assets respectively within Barclays Bank PLC. Barclays PLC deducts treasury shares from shareholders equity.
More extensive disclosures are contained in previous sections within this document for the year ended 31 December 2012, including risk
exposures and business performance, which are materially the same as those for Barclays Bank PLC.
348  I
Barclays Bank PLC data
Consolidated income statement
For the year ended 31 December
Notes
2012
£m
2011
£m
2010
£m
Continuing operations
Interest income
a
19,199
20,589
20,035
Interest expense
a
(7,564
)
(8,393
)
(7,517
)
Net interest income
11,635
12,196
12,518
Fee and commission income
4
10,216
10,208
10,368
Fee and commission expense
4
(1,634
)
(1,586
)
(1,497
)
Net fee and commission income
8,582
8,622
8,871
Net trading income
b
3,028
7,738
8,080
Net investment income
c
663
2,322
1,490
Net premiums from insurance contracts
896
1,076
1,137
Net gain on disposal of investment in BlackRock, Inc.
227
–
–
Gain on debt buy-backs and extinguishments
–
1,130
–
Other income
108
39
118
Total income
25,139
33,123
32,214
Net claims and benefits incurred on insurance contracts
(600
)
(741
)
(764
)
Total income net of insurance claims
24,539
32,382
31,450
Credit impairment charges and other credit provisions
7
(3,596
)
(3,802
)
(5,672
)
Impairment of investment in BlackRock, Inc.
7
–
(1,800
)
–
Net operating income
20,943
26,780
25,778
Staff costs
36
(10,447
)
(11,407
)
(11,916
)
Administration and general expenses
d
(6,638
)
(6,351
)
(6,581
)
Depreciation of property, plant and equipment
24
(669
)
(673
)
(790
)
Amortisation of intangible assets
25
(435
)
(419
)
(437
)
Goodwill impairment
25
–
(597
)
(243
)
Provision for PPI redress
28
(1,600
)
(1,000
)
–
Provision for interest rate hedging products redress
(850
)
–
–
UK Bank Levy
(345
)
(325
)
–
Operating expenses
(20,984
)
(20,772
)
(19,967
)
Share of post-tax results of associates and joint ventures
110
60
58
Profit/(loss) on disposal of subsidiaries, associates and joint ventures
9
28
(94
)
81
Gain on acquisitions
2
–
129
Profit before tax from continuing operations
99
5,974
6,079
Tax
e
(483
)
(1,928
)
(1,516
)
(Loss)/Profit after tax
(384
)
4,046
4,563
Attributable to:
Equity holders of the Parent
(723
)
3,616
4,172
Non-controlling interests
339
430
391
(Loss)/Profit after tax
(384
)
4,046
4,563
The note numbers refer to the notes on pages 199 to 272, whereas the note letters refer to Barclays Bank PLC
supplementary notes on pages 354 to 361.
Barclays Bank PLC supplementary notes provided on pages 354 to 361 cover the line items where
there is a difference to Barclays PLC.
I  349
Barclays Bank PLC data
Consolidated statement of comprehensive income
For the year ended 31 December
2012
£m
2011
£m
2010
£m
(Loss)/profit after tax
(384
)
4,046
4,563
Other comprehensive income for continuing operations:
Currency translation reserve
a
– Currency translation differences
(1,578
)
(1,607
)
1,177
Available for sale reserve
a
– Net gains/(losses) from changes in fair value
1,237
2,581
(152
)
– Net gains transferred to net profit on disposal
(549
)
(1,614
)
(1,020
)
– Net losses transferred to net profit due to impairment
40
1,860
53
– Net loss/(gains) transferred to net profit due to fair value hedging
474
(1,803
)
(308
)
– Changes in insurance liabilitites
(150
)
18
31
– Tax
(352
)
170
141
Cash flow hedging reserve
a
– Net gains from changes in fair value
1,499
2,406
601
– Net gains transferred to net profit
(695
)
(753
)
(684
)
– Tax
(142
)
(390
)
39
Other
95
(74
)
59
Other comprehensive income for the year, net of tax, from continuing operations
(121
)
794
(63
)
Total comprehensive income for the year
(505
)
4,840
4,500
Attributable to:
Equity holders of the Parent
(635
)
5,041
3,609
Non-controlling interests
130
(201
)
891
Total comprehensive income for the year
(505
)
4,840
4,500
Note
a
For further details refer to Note k
350  I
Barclays Bank PLC data
Consolidated balance sheet
As at 31 December
Notes
2012
£m
2011
£m
Assets
Cash and balances at central banks
86,175
106,894
Items in the course of collection from other banks
1,456
1,812
Trading portfolio assets
14
145,030
152,183
Financial assets designated at fair value
15
46,061
36,949
Derivative financial instruments
h
469,146
538,964
Available for sale investments
f
75,133
69,023
Loans and advances to banks
g
40,898
46,792
Loans and advances to customers
g
425,729
431,934
Reverse repurchase agreements and other similar secured lending
23
176,956
153,665
Prepayments, accrued income and other assets
4,357
4,560
Investments in associates and joint ventures
41
570
427
Property, plant and equipment
24
5,754
7,166
Goodwill and intangible assets
25
7,915
7,846
Current tax assets
e
252
374
Deferred tax assets
10
3,012
3,010
Retirement benefit assets
38
2,303
1,803
Total assets
1,490,747
1,563,402
Liabilities
Deposits from banks
77,010
91,116
Items in the course of collection due to other banks
1,573
969
Customer accounts
385,796
366,045
Repurchase agreements and other similar secured borrowing
23
217,342
207,292
Trading portfolio liabilities
14
44,794
45,887
Financial liabilities designated at fair value
18
78,280
87,997
Derivative financial instruments
h
462,468
527,798
Debt securities in issue
119,581
129,736
Subordinated liabilities
33
24,422
24,870
Accruals, deferred income and other liabilities
27
12,232
12,580
Provisions
28
2,766
1,529
Current tax liabilities
e
617
1,397
Deferred tax liabilities
10
719
695
Retirement benefit liabilities
38
253
321
Total liabilities
1,427,853
1,498,232
Shareholders' equity
Shareholders' equity excluding non-controlling interests
60,038
62,078
Non-controlling interests
l
2,856
3,092
Total shareholders' equity
62,894
65,170
Total liabilities and shareholders' equity
1,490,747
1,563,402
The note numbers refer to the notes on pages 199 to 272, whereas the note letters refer to those on pages 354 to
361.
These financial statements have been approved for issue by the Board of Directors on 5 March 2013.
I  351
Barclays Bank PLC data
Consolidated statement of changes in equity
Called
up
share
capital
and share
premium
a
£m
Available
for sale
reserve
b
£m
Cash
flow
hedging
reserve
b
£m
Currency
translation
reserve
b
£m
Other
shareholder's
equity
a
£m
Retained
earnings
£m
Total
£m
Non-
controlling
interests
£m
Total
equity
£m
Balance as at 1 January 2012
14,494
(130
)
1,442
1,348
648
44,276
62,078
3,092
65,170
(Loss)/Profit after tax
–
–
–
–
–
(723
)
(723
)
339
(384
)
Currency translation movements
–
–
–
(1,319
)
–
–
(1,319
)
(259
)
(1,578
)
Available for sale investments
–
656
–
–
–
–
656
44
700
Cash flow hedges
–
–
657
–
–
–
657
5
662
Other
–
–
–
–
1
93
94
1
95
Total comprehensive income for the year
–
656
657
(1,319
)
1
(630
)
(635
)
130
(505
)
Issue of shares under employee share schemes
–
–
–
–
–
717
717
–
717
Vesting of Barclays PLC shares under share-based payment schemes
–
–
–
–
–
(946
)
(946
)
–
(946
)
Dividends paid
–
–
–
–
–
(696
)
(696
)
(229
)
(925
)
Dividends on preference shares and other shareholders' equity
–
–
–
–
–
(465
)
(465
)
–
(465
)
Other reserve movements
–
–
–
–
(4
)
(11
)
(15
)
(137
)
(152
)
Balance as at 31 December 2012
14,494
526
2,099
29
645
42,245
60,038
2,856
62,894
Balance as at 1 January 2011
14,494
(1,348
)
152
2,357
2,069
41,450
59,174
3,467
62,641
Profit after tax
–
–
–
–
–
3,616
3,616
430
4,046
Currency translation movements
–
–
–
(1,009
)
–
–
(1,009
)
(598
)
(1,607
)
Available for sale investments
–
1,218
–
–
–
–
1,218
(6
)
1,212
Cash flow hedges
–
–
1,290
–
–
–
1,290
(27
)
1,263
Other
–
–
–
–
18
(92
)
(74
)
–
(74
)
Total comprehensive income for the year
–
1,218
1,290
(1,009
)
18
3,524
5,041
(201
)
4,840
Issue of shares under employee share schemes
–
–
–
–
–
838
838
–
838
Vesting of Barclays PLC shares under share-based payment schemes
–
–
–
–
–
(499
)
(499
)
–
(499
)
Dividends paid
–
–
–
–
–
(643
)
(643
)
(188
)
(831
)
Dividends on preference shares and other shareholders' equity
–
–
–
–
–
(539
)
(539
)
–
(539
)
Redemption of Reserve Capital Instruments
–
–
–
–
(1,415
)
–
(1,415
)
–
(1,415
)
Other reserve movements
–
–
–
–
(24
)
145
121
14
135
Balance as at 31 December 2011
14,494
(130
)
1,442
1,348
648
44,276
62,078
3,092
65,170
Notes
a
For further details refer to Note j.
b
For further details refer to Note k.
352  I
Barclays Bank PLC data
Consolidated cash flow statement
For the year ended 31 December
2012
£m
2011
£m
2010
£m
Continuing operations
Reconciliation of profit before tax to net cash flows from operating activities:
Profit before tax
99
5,974
6,079
Adjustment for non-cash items:
Allowance for impairment
3,596
5,602
5,672
Depreciation, amortisation and impairment of property, plant, equipment and intangibles
1,119
1,104
1,346
Other provisions, including pensions
3,057
1,787
914
Net profit on disposal of investments and property, plant and equipment
(524
)
(1,645
)
(1,057
)
Other non-cash movements
5,018
432
(6,886
)
Changes in operating assets and liabilities
Net decrease/(increase) in loans and advances to banks and customers
1,167
(13,182
)
(875
)
Net (increase)/decrease in reverse repurchase agreements and other similar lending
(23,291
)
52,176
(62,337
)
Net (decrease)/increase in deposits and debt securities in issue
(4,518
)
6,711
36,946
Net increase/(decrease) in repurchase agreements and other similar borrowing
10,050
(18,266
)
26,753
Net decrease/(increase) in derivative financial instruments
4,488
3,618
(1,298
)
Net decrease/(increase) in trading assets
6,893
21,423
(17,517
)
Net (decrease)/increase in trading liabilities
(973
)
(26,899
)
21,441
Net (increase)/decrease in financial investments
(18,838
)
(4,255
)
11,126
Net decrease in other assets
555
122
1,366
Net (decrease) in other liabilities
(1,396
)
(4,148
)
(2,521
)
Corporate income tax paid
(1,516
)
(1,686
)
(1,430
)
Net cash from operating activities
(15,014
)
28,868
17,722
Purchase of available for sale investments
(80,796
)
(67,525
)
(76,418
)
Proceeds from sale or redemption of available for sale investments
74,148
66,941
71,251
Purchase of property, plant and equipment
(604
)
(1,454
)
(1,767
)
Other cash flows associated with investing activities
532
126
1,307
Net cash from investing activities
(6,720
)
(1,912
)
(5,627
)
Dividends paid
(1,390
)
(1,370
)
(1,011
)
Proceeds of borrowings and issuance of subordinated debt
2,258
880
2,131
Repayments of borrowings and redemption of subordinated debt
(2,680
)
(4,003
)
(1,211
)
Net redemption of shares and other equity instruments
–
(1,257
)
–
Net redemption of shares issued to non-controlling interests
(111
)
–
–
Capital injection from Barclays Plc
–
–
1,214
Net cash from financing activities
(1,923
)
(5,750
)
1,123
Effect of exchange rates on cash and cash equivalents
(4,109
)
(2,933
)
3,842
Net (decrease)/increase in cash and cash equivalents
(27,766
)
18,273
17,060
Cash and cash equivalents at beginning of year
149,673
131,400
114,340
Cash and cash equivalents at end of year
121,907
149,673
131,400
Cash and cash equivalents comprise:
Cash and balances at central banks
86,175
106,894
97,630
Loans and advances to banks with original maturity less than three months
33,500
40,481
31,934
Available for sale treasury and other eligible bills with original maturity less than three months
2,228
2,209
1,667
Trading portfolio assets with original maturity less than three months
4
89
169
121,907
149,673
131,400
Interest received in 2012 was £24,390m (2011: £28,673m; 2010: £28,631m) and
interest paid in 2012 was £16,701m (2011:£20,106m; 2010: £20,759m). The Group is required to maintain balances with central banks and other regulatory authorities and these amounted to £5,169m at 31 December 2012 (2011:
£4,364m; 2010: £5,244m)
a
.
Note
a
Amounts have been restated to include additional balances (2011: £1,864m; 2010: £2,934m) held with central banks and other regulatory authorities.
I  353
Barclays Bank PLC data
Notes to the accounts
a Net interest income
2012
£m
2011
£m
2010
£m
Cash and balances with central banks
253
392
271
Available for sale investments
1,720
2,137
1,483
Loans and advances to banks
369
350
440
Loans and advances to customers
16,461
17,271
17,677
Other
396
439
164
Interest income
19,199
20,589
20,035
Deposits from banks
(257
)
(366
)
(370
)
Customer accounts
(2,485
)
(2,531
)
(1,415
)
Debt securities in issue
(2,929
)
(3,524
)
(3,632
)
Subordinated liabilities
(1,632
)
(1,813
)
(1,778
)
Other
(261
)
(159
)
(322
)
Interest expense
(7,564
)
(8,393
)
(7,517
)
Net interest income
11,635
12,196
12,518
Interest income includes £211m (2011: £243m, 2010: £213m) accrued on impaired loans.
Other interest income principally includes interest income relating to reverse repurchase agreements and hedging activity. Similarly, other
interest expense principally includes interest expense relating to repurchase agreements and hedging activity.
Included in net interest
income is hedge ineffectiveness as detailed in Note 15.
b Net Trading Income
2012
£m
2011
£m
2010
£m
Trading income
7,607
5,030
7,689
Own credit (losses)/gains
(4,579
)
2,708
391
Net trading income
3,028
7,738
8,080
c Net investment income
2012
£m
2011
£m
2010
£m
Net gain from disposal of available for sale assets
297
1,652
1,027
Dividend income
42
139
129
Net gain from financial instruments designated at fair value
206
287
274
Other investment income
118
244
60
Net investment income
663
2,322
1,490
354  I
d Administrative and general
expenses
2012
£m
2011
£m
2010
£m
Property and equipment
1,655
1,763
1,813
Outsourcing and professional services
2,179
1,864
1,704
Operating lease rentals
622
659
637
Marketing, advertising and sponsorship
572
585
631
Communications, subscriptions, publications and stationery
727
740
750
Travel and accommodation
323
328
358
Other administration and general expenses
543
400
563
Impairment of property, equipment and intangible assets (excluding goodwill)
17
12
125
Administration and general expenses
6,638
6,351
6,581
e Tax
2012
£m
2011
£m
2010
£m
Current tax charge
Current year
565
2,690
1,413
Adjustment for prior years
207
(61
)
(20
)
772
2,629
1,393
Deferred tax (credit)/charge
Current year
(202
)
(631
)
118
Adjustment for prior years
(87
)
(70
)
5
(289
)
(701
)
123
Tax charge
483
1,928
1,516
Tax relating to each component of other comprehensive income can be found in the consolidated statement of
comprehensive income, which includes within Other, tax credit of £95m (2011: £74m charge, 2010: £59m credit) principally relating to share based payments.
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.
2012
£m
2011
£m
2010
£m
Profit before tax from continuing operations
99
5,974
6,079
Tax charge based on the standard UK corporation tax rate of 24.5% (2011:26.5%, 2010:28%)
24
1,583
1,702
Effect of non-UK profits or losses at local statutory tax rates different from the UK statutory tax rate
402
190
108
Non-creditable taxes
563
567
454
Non-taxable gains and income
(604
)
(519
)
(576
)
Impact of share price movements on share-based payments
(63
)
147
41
Deferred tax assets (previously not recognised)/ not recognised
(135
)
(816
)
(160
)
Change in tax rates
(75
)
17
34
Non-deductible impairment charges, loss on disposals and UK bank levy
84
770
68
Other items including non-deductible expenses
167
120
(140
)
Adjustments in respect of prior years
120
(131
)
(15
)
Tax charge
483
1,928
1,516
Effective tax rate
488%
32%
25%
I  355
Barclays Bank PLC data
Notes to the accounts continued
Current tax assets and liabilities
Movements on current tax assets and liabilities were as
follows:
2012
£m
2011
£m
Assets
374
196
Liabilities
(1,397
)
(646
)
As at 1 January
(1,023
)
(450
)
Income statement
(772
)
(2,629
)
Equity
(172
)
104
Corporate income tax paid
1,516
1,686
Other movements
86
266
(365
)
(1,023
)
Assets
252
374
Liabilities
(617
)
(1,397
)
As at 31 December
(365
)
(1,023
)
f Available for sale financial investments
2012
£m
2011
£m
Debt securities and other eligible bills
74,677
63,610
Equity securities
456
5,413
Available for sale financial investments
75,133
69,023
g Loans and advances to banks and customers
2012
£m
2011
£m
Gross loans and advances to banks
40,939
46,837
Less: allowance for impairment
(41
)
(45
)
Loans and advances to banks
40,898
46,792
Gross loans and advances to customers
435,364
442,486
Less: allowance for impairment
(9,635
)
(10,552
)
Loans and advances to customers
425,729
431,934
h Derivative financial instruments
Notional
contract
amount
£m
Fair value
Assets
£m
Liabilities
£m
Year ended 31 December 2012
Total derivative assets/(liabilities) held for trading
40,192,194
465,347
(459,334
)
Total derivative assets/(liabilities) held for risk management
302,822
3,799
(3,134
)
Derivative assets/(liabilities)
40,495,016
469,146
(462,468
)
Year ended 31 December 2011
Total derivative assets/(liabilities) held for trading
43,095,991
535,306
(524,440
)
Total derivative assets/(liabilities) held for risk management
243,534
3,658
(3,358
)
Derivative assets/(liabilities)
43,339,525
538,964
(527,798
)
356  I
i Subordinated liabilities
2012
£m
2011
£m
Undated subordinated liabilities
6,740
6,741
Dated subordinated liabilities
17,682
18,129
Total subordindated liabilities
24,422
24,870
Subordinated liabilities are the same as that presented in the Barclays PLC financial statements, except for the
difference of £404m (2011: £nil) in dated subordinated liabilities due to the recognition of an initial fair value for the CCNs that is higher than par for Barclays Bank PLC.
j Ordinary shares, share premium and other equity
Ordinary Shares
The issued ordinary share capital of Barclays Bank PLC, as at 31 December 2012, comprised 2,342 million ordinary shares of
£1 each (2011: 2,342 million).
Preference Shares
The issued preference share capital of Barclays Bank PLC, as at 31st December 2012, comprised 1,000 Sterling Preference Shares of £1 each (2011: 1,000); 240,000 Euro Preference Shares of
€
100 each (2011: 240,000); 75,000 Sterling Preference Shares of £100 each (2011: 75,000); 100,000 US
Dollar Preference Shares of US$100 each (2011: 100,000); 237 million US Dollar Preference Shares of US$0.25 each (2011: 237 million).
Share capital
2012
£m
2011
£m
Called up ordinary share capital, alloted and fully paid
As at 1 January
2,342
2,342
As at 31 December
2,342
2,342
Called up preference share capital, allotted and fully paid as at 1 January and
31 December
60
60
Called up share capital
2,402
2,402
Share premium
2012
£m
2011
£m
As at 1 January
12,092
12,092
As at 31 December
12,092
12,092
Sterling £1 Preference Shares
1,000 Sterling cumulative callable preference shares of £1 each (the £1 Preference Shares) were issued on 31 December 2004 at nil premium.
The £1 Preference Shares entitle the holders thereof to receive Sterling cumulative cash dividends out of distributable profits of Barclays
Bank PLC, semi-annually at a rate reset semi-annually equal to the Sterling interbank offered rate for six-month sterling deposits.
Barclays Bank PLC shall be obliged to pay such dividends if: (1) it has profits available for the purpose of distribution under the Companies
Act 2006 as at each dividend payment date; and (2) it is solvent on the relevant dividend payment date, provided that a capital regulations condition is satisfied on such dividend payment date. The dividends shall not be due and payable on the
relevant dividend payment date except to the extent that Barclays Bank PLC could make such payment and still be solvent immediately thereafter. Barclays Bank PLC shall be considered solvent on any date if: (1) it is able to pay its debts to
senior creditors as they fall due; and (2) its auditors have reported within the previous six months that its assets exceed its liabilities. If Barclays Bank PLC shall not pay, or shall pay only in part, a dividend for a period of seven days or
more after the due date for payment, the holders of the £1 Preference Shares may institute proceedings for the winding-up of Barclays Bank PLC. No remedy against Barclays Bank PLC shall be available to the holder of any £1 Preference
Shares for the recovery of amounts owing in respect of £1 Preference Shares other than the institution of proceedings for the winding-up of Barclays Bank PLC and/or proving in such winding-up.
On a winding-up or other return of capital (other than a redemption or purchase by Barclays Bank PLC of any of its issued shares, or a reduction of
share capital, permitted by the Articles of Barclays Bank PLC and under applicable law), the assets of Barclays Bank PLC available to shareholders shall be applied in priority to any payment to the holders of ordinary shares and any other class of
shares in the capital of Barclays Bank PLC then in issue ranking junior to the £1 Preference Shares on such a return of capital and pari passu on such a return of capital with the holders of any other class of shares in the capital of Barclays
Bank PLC then in issue (other than any class of shares in the capital of Barclays Bank PLC then in issue ranking in priority to the £1 Preference Shares on a winding-up or other such return of capital), in payment to the holders of the
£1 Preference Shares of a sum equal to the aggregate of: (1) an amount equal to the dividends accrued thereon for the then current dividend period (and any accumulated arrears thereof) to the date of the commencement of the winding-up or
other such return of capital; and (2) an amount equal to £1 per £1 Preference Share. After payment of the full amount of the liquidating distributions to which they are entitled, the holders of the £1 Preference Shares
will have no right or claim to any of the remaining assets of Barclays Bank PLC and will not be entitled to any further participation in such return of capital.
I  357
Barclays Bank PLC data
Notes to the accounts continued
The £1 Preference Shares are redeemable at the option of Barclays Bank PLC, in whole but not in part only, subject to the Companies Act 2006 and its Articles. Holders of the £1
Preference Shares are not entitled to receive notice of, or to attend, or vote at, any general meeting of Barclays Bank PLC.
Euro
Preference Shares
100,000 Euro 4.875% non-cumulative callable preference shares of
€
100 each (the 4.875% Preference Shares) were issued on 8 December 2004 for a consideration of
€
993.6m (£688.4m), of which the nominal value was
€
10m and the balance was share premium. The 4.875% Preference Shares entitle the holders thereof to receive Euro
non-cumulative cash dividends out of distributable profits of Barclays Bank PLC, annually at a fixed rate of 4.875% per annum on the amount of
€
10,000 per preference share until 15 December 2014, and thereafter quarterly at a rate reset quarterly equal to 1.05% per annum above the Euro interbank offered rate for
three-month Euro deposits.
The 4.875% Preference Shares are redeemable at the option of Barclays Bank PLC, in whole but not in part
only, on 15 December 2014, and on each dividend payment date thereafter at
€
10,000 per share
plus any dividends accrued for the then current dividend period to the date fixed for redemption.
140,000 Euro 4.75% non-cumulative
callable preference shares of
€
100 each (the 4.75% Preference Shares) were issued on 15 March 2005
for a consideration of
€
1,383.3m (£966.7m), of which the nominal value was
€
14m and the balance was share premium. The 4.75% Preference Shares entitle the holders thereof to receive Euro
non-cumulative cash dividends out of distributable profits of Barclays Bank PLC, annually at a fixed rate of 4.75% per annum on the amount of
€
10,000 per preference share until 15 March 2020, and thereafter quarterly at a rate reset quarterly equal to 0.71% per annum above the Euro interbank offered rate for
three-month Euro deposits.
The 4.75% Preference Shares are redeemable at the option of Barclays Bank PLC, in whole but not in part
only, on 15 March 2020, and on each dividend payment date thereafter at
€
10,000 per share plus
any dividends accrued for the then current dividend period to the date fixed for redemption.
Sterling Preference Shares
75,000 Sterling 6.0% non-cumulative callable preference shares of £100 each (the 6.0% Preference Shares) were issued on
22 June 2005 for a consideration of £743.7m, of which the nominal value was £7.5m and the balance was share premium. The 6.0% Preference Shares entitle the holders thereof to receive Sterling non-cumulative cash dividends out of
distributable profits of Barclays Bank PLC, annually at a fixed rate of 6.0% per annum on the amount of £10,000 per preference share until 15 December 2017, and thereafter quarterly at a rate reset quarterly equal to
1.42% per annum above the London interbank offered rate for three-month Sterling deposits.
The 6.0% Preference Shares are
redeemable at the option of Barclays Bank PLC, in whole but not in part only, on 15 December 2017, and on each dividend payment date thereafter at £10,000 per share plus any dividends accrued for the then current dividend period to
the date fixed for redemption.
US Dollar Preference Shares
100,000 US Dollar 6.278% non-cumulative callable preference shares of US$100 each (the 6.278% Preference Shares), represented by 100,000 American Depositary Shares, Series 1, were issued on
8 June 2005 for a consideration of US$995.4m (£548.1m), of which the nominal value was US$10m and the balance was share premium. The 6.278% Preference Shares entitle the holders thereof to receive US Dollar non-cumulative cash dividends
out of distributable profits of Barclays Bank PLC, semi-annually at a fixed rate of 6.278% per annum on the amount of US$10,000 per preference share until 15 December 2034, and thereafter quarterly at a rate reset quarterly equal to
1.55% per annum above the London interbank offered rate for three-month US Dollar deposits.
The 6.278% Preference Shares are
redeemable at the option of Barclays Bank PLC, in whole but not in part only, on 15 December 2034, and on each dividend payment date thereafter at US$10,000 per share plus any dividends accrued for the then current dividend period to the date
fixed for redemption.
30 million US Dollar 6.625% non-cumulative callable preference shares of US$0.25 each (the 6.625% Preference
Shares), represented by 30 million American Depositary Shares, Series 2, were issued on 25 and 28 April 2006 for a consideration of US$727m (£406m), of which the nominal value was US$7.5m and the balance was share premium. The 6.625%
Preference Shares entitle the holders thereof to receive US Dollar non-cumulative cash dividends out of distributable profits of Barclays Bank PLC, quarterly at a fixed rate of 6.625% per annum on the amount of US$25 per preference share.
The 6.625% Preference Shares are redeemable at the option of Barclays Bank PLC, in whole but not in part only, on any dividend payment
date at US$25 per share plus any dividends accrued for the then current dividend period to the date fixed for redemption.
55 million US Dollar 7.1% non-cumulative callable preference shares of US$0.25 each (the 7.1% Preference Shares), represented by
55 million American Depositary Shares, Series 3, were issued on 13 September 2007 for a consideration of US$1,335m (£657m), of which the nominal value was US$13.75m and the balance was share premium. The 7.1% Preference Shares
entitle the holders thereof to receive US Dollar non-cumulative cash dividends out of distributable profits of Barclays Bank PLC, quarterly at a fixed rate of 7.1% per annum on the amount of US$25 per preference share.
The 7.1% Preference Shares are redeemable at the option of Barclays Bank PLC, in whole or in part, on any dividend payment date at US$25 per share
plus any dividends accrued for the then current dividend period to the date fixed for redemption.
358  I
46 million US Dollar 7.75%
non-cumulative callable preference shares of US$0.25 each (the 7.75% Preference Shares), represented by 46 million American Depositary Shares, Series 4, were issued on 7 December 2007 for a consideration of US$1,116m (£550m), of
which the nominal value was US$11.5m and the balance was share premium. The 7.75% Preference Shares entitle the holders thereof to receive US Dollar non-cumulative cash dividends out of distributable profits of Barclays Bank PLC, quarterly at a
fixed rate of 7.75% per annum on the amount of US$25 per preference share.
The 7.75% Preference Shares are redeemable at the
option of Barclays Bank PLC, in whole or in part, on 15 March 2013, and on each dividend payment date thereafter at US$25 per share plus any dividends accrued for the then current dividend period to the date fixed for redemption.
106 million US Dollar 8.125% non-cumulative callable preference shares of US$0.25 each (the 8.125% Preference Shares), represented by
106 million American Depositary Shares, Series 5, were issued on 11 April 2008 and 25 April 2008 for a total consideration of US$2,650m (£1,345m), of which the nominal value was US$26.5m and the balance was share premium. The
8.125% Preference Shares entitle the holders thereof to receive US Dollar non-cumulative cash dividends out of distributable profits of Barclays Bank PLC, quarterly at a fixed rate of 8.125% per annum on the amount of US$25 per preference
share.
The 8.125% Preference Shares are redeemable at the option of Barclays Bank PLC, in whole or in part, on 15 June 2013, and
on each dividend payment date thereafter at US$25 per share plus any dividends accrued for the then current dividend period to the date fixed for redemption.
No redemption or purchase of any 4.875% Preference Shares, the 4.75% Preference Shares, the 6.0% Preference Shares, the 6.278% Preference Shares, the 6.625% Preference Shares, the 7.1% Preference
Shares, the 7.75% Preference Shares and the 8.125% Preference Shares (together, the Preference Shares) may be made by Barclays Bank PLC without the prior notification to the UK FSA and any such redemption will be subject to the Companies Act 2006
and the Articles of Barclays Bank PLC.
On a winding-up of Barclays Bank PLC or other return of capital (other than a redemption or
purchase of shares of Barclays Bank PLC, or a reduction of share capital), a holder of Preference Shares will rank in the application of assets of Barclays Bank PLC available to shareholders: (1) junior to the holder of any shares of Barclays
Bank PLC in issue ranking in priority to the Preference Shares; (2) equally in all respects with holders of other preference shares and any other shares of Barclays Bank PLC in issue ranking pari passu with the Preference Shares; and
(3) in priority to the holders of ordinary shares and any other shares of Barclays Bank PLC in issue ranking junior to the Preference Shares.
The holders of the 6% Callable Perpetual Core Tier One Notes and the US$681m 6.86% Callable Perpetual Core Tier One Notes of Barclays Bank PLC (together, the TONs) and the holders of the 5.3304%
Step-up Callable Perpetual Reserve Capital Instruments, the US$533m 5.926% Step-up Callable Perpetual Reserve Capital Instruments, the 6.3688% Step-up Callable Perpetual Reserve Capital Instruments, the US$347m 7.434% Step-up Callable Perpetual
Reserve Capital Instruments and the 14% Step-up Callable Perpetual Reserve Capital Instruments of Barclays Bank PLC (together, the RCIs) would, for the purposes only of calculating the amounts payable in respect of such securities on a winding-up of
Barclays Bank PLC, subject to limited exceptions and to the extent that the TONs and the RCIs are then in issue, rank pari passu with the holders of the most senior class or classes of preference shares then in issue in the capital of Barclays Bank
PLC. Accordingly, the holders of the preference shares would rank equally with the holders of such TONs and RCIs on such a winding-up of Barclays Bank PLC (unless one or more classes of shares of Barclays Bank PLC ranking in priority to the
preference shares are in issue at the time of such winding-up, in which event the holders of such TONs and RCIs would rank equally with the holders of such shares and in priority to the holders of the preference shares).
Subject to such ranking, in such event, holders of the preference shares will be entitled to receive out of assets of Barclays Bank PLC available
for distributions to shareholders, liquidating distributions in the amount of
€
10,000 per 4.875%
Preference Share,
€
10,000 per 4.75% Preference Share, £10,000 per 6.0% Preference Share,
US$10,000 per 6.278% Preference Share, US$25 per 6.625% Preference Share, US$25 per 7.1% Preference Share, US$25 per 7.75% Preference Share and US$0.25 per 8.125% Preference Share, plus, in each case, an amount equal to the accrued dividend for the
then current dividend period to the date of the commencement of the winding-up or other such return of capital. If a dividend is not paid in full on any preference shares on any dividend payment date, then a dividend restriction shall apply.
This dividend restriction will mean that neither Barclays Bank PLC nor Barclays PLC may (a) declare or pay a dividend (other than
payment by Barclays PLC of a final dividend declared by its shareholders prior to the relevant dividend payment date, or a dividend paid by Barclays Bank PLC to Barclays PLC or to a wholly owned subsidiary) on any of their respective ordinary
shares, other preference shares or other share capital or (b) redeem, purchase, reduce or otherwise acquire any of their respective share capital, other than shares of Barclays Bank PLC held by Barclays PLC or a wholly owned subsidiary, until
the earlier of: (1) the date on which Barclays Bank PLC next declares and pays in full a preference dividend; and (2) the date on or by which all the preference shares are redeemed in full or purchased by Barclays Bank PLC.
Holders of the preference shares are not entitled to receive notice of, or to attend, or vote at, any general meeting of Barclays Bank PLC.
Barclays Bank PLC is not permitted to create a class of shares ranking as regards participation in the profits or assets of Barclays Bank PLC in priority to the preference shares, save with the sanction of a special resolution of a separate general
meeting of the holders of the preference shares (requiring a majority of not less than three-fourths of the holders of the preference shares voting at the separate general meeting) or with the consent in writing of the holders of three-fourths of
the preference shares.
Except as described above, the holders of the preference shares have no right to participate in the surplus
assets of Barclays Bank PLC.
I  359
Barclays Bank PLC data
Notes to the accounts continued
Other shareholders' equity
2012
£m
2011
£m
As at 1 January
648
2,069
Tax Credits
–
18
Other Movements
(3
)
(24
)
Redemption
–
(1,415
)
As at 31 December
645
648
Included in other shareholders' equity are:
Issuance of capital notes which bear interest at rates fixed periodically in advance, based on London interbank rates. These notes are repayable in each case, at the option of the Bank, in whole on
any interest payment date. The Bank is not obliged to make a payment of interest on its capital notes if, in the preceding six months, a dividend has not been declared or paid on any class of shares of Barclays PLC.
k Reserves
Currency
translation reserve
The currency translation reserve represents the cumulative gains and losses on the retranslation of the
Group's net investment in foreign operations, net of the effects of hedging. Currency translation movements in 2012 of £1,578m (2011: £1,607m), including £259m (2011: £598m) associated with non-controlling interests, are
largely due to the depreciation of the US Dollar and Rand against Sterling.
The impact of the currency translation reserve recognised
in the income statement during the year was £24m (2011: nil).
Available for sale reserve
The available for sale reserve represents the unrealised change in the fair value of available for sale investments since initial recognition.
The available for sale reserve increased £700m (2011: increased £1,212m), largely driven by £1,192m gains from
changes in fair value (excluding non-controlling interests), £474m losses transferred to income statement due to fair value hedging, offset by £549m of gains transferred to the income statement including the disposal of BlackRock, Inc.
and a £352m decrease due to the impact of current and deferred tax movements.
Cash flow hedging reserve
The cash flow hedging reserve represents the cumulative gains and losses on effective cash flow hedging instruments that will be recycled to the
income statement when the hedged transactions affect profit or loss.
The increase in the cash flow hedging reserve of £662m
(2011: £1,263m increase) principally reflected £1,535m increase in the fair value of interest rate swaps held for hedging purposes partially offset by £695m gains transferred to net profit.
l Non-controlling interests
Profit attributable to non-
controlling
interests
Equity attributable to non-
controlling
interests
2012
£m
2011
£m
2012
£m
2011
£m
Absa Group Limited
304
401
2,737
2,861
Other non-controlling interests
35
29
119
231
Total
339
430
2,856
3,092
The decrease in Absa Group equity attributable to non-controlling interest to £2,737m (2011: £2,861m)
is principally due to £247m depreciation of African currencies against Sterling and £194m of dividends paid, offset by retained profits of £304m.
m Dividends
Ordinary dividends were paid to enable Barclays PLC to fund its
dividend to shareholders.
Dividends per ordinary share in relation to 2012 were 15p (2011: 15p), including the prior year final
dividend paid during the year results in a dividend per ordinary share of 30p (2011: 27p). The 2012 financial statements include 2012 interim dividends of £352m (2011: £355m) and final dividends declared in relation to 2011 of
£344m (2011: £288m).
Dividends paid on the 4.75%
€
100 preference shares amounted to £399.40 per share (2011: £408.27). Dividends paid on
the 4.875%
€
100 preference shares amounted to £394.33 per share (2011: £412.64).
Dividends paid on the 6.0% £100 preference shares amounted to £600.00 per share (2011: £600.00).
360  I
Dividends paid on the 6.278% US$100 preference shares amounted to £396.43 per share (2011: £394.48). Dividends paid on the 6.625% US$0.25 preference shares amounted to
£1.05 per share (2011: £1.04). Dividends paid on the 7.1% US$0.25 preference shares amounted to £1.12 per share (2011: £1.11). Dividends paid on the 7.75% US$0.25 preference shares amounted to £1.22 per
share (2011: £1.22). Dividends paid on the 8.125% US$0.25 preference shares amounted to £1.28 per share (2011: £1.28).
Dividends paid on preference shares amounted to £465m (2011: £467m). Dividends paid on other equity instruments amounted to £4m (2011: £72m).
n Capital
The Barclays
Bank PLC Group's policies and objectives for managing capital are the same as those for the Barclays PLC Group, disclosed on pages 126 to 135.
The table below provides details of the Barclays Bank PLC Group at 31 December 2012 and 2011.
Regulatory capital
2012
£m
2011
£m
Core Tier 1 capital
42,059
43,040
Tier 1 capital
51,560
50,447
Tier 2 capital
16,106
16,063
Deductions from total capital
(1,689
)
(2,588
)
Total capital resources
65,977
63,922
The capital composition of Barclays Bank PLC Group is broadly equivalent to Barclays PLC Group shown in the table
on page 127.
o Segmental reporting
Segmental reporting by Barclays Bank PLC is the same as that presented in the Barclays PLC financial statements, except for:
–
the difference in profit before tax of £147m (2011: £95m) between Barclays PLC and Barclays Bank PLC is included in Head Office and
Other Operations and Investment Bank; and
–
the difference in total assets of £426m (2011: £125m) is represented by holdings of Barclays PLC shares held for employee share
schemes and Barclays Bank Plc issued loan notes to fund the derivatives created in Barclays Plc.
p Related Parties
The aggregate emoluments of all Directors and Officers of Barclays Bank PLC who held office during the year (2012: 29 persons,
2011: 25 persons 2010: 27 persons) for the year ended 31 December 2012 amounted to £70.9m (2011: £103.1m , 2010 £122.0m). In addition, the aggregate amount set aside by the Bank and its subsidiaries for the year ended
31 December 2012, to provide pension benefits for the Directors and Officers amounted to £0.4m (2011: £0.4 m, 2010: £1.0m).
I  361
Barclays Bank PLC data
Financial data
Selected financial statistics
2012
%
2011
%
2010
%
2009
%
2008
%
Return on average shareholders' equity
a
(1.1
)
5.7
6.8
6.5
12.1
Return on average total assets
b
–
0.2
0.3
0.2
0.3
Average shareholders' equity as a percentage of average total assets
4.1
4.0
4.0
2.9
2.0
Selected income statement data
£m
£m
£m
£m
£m
Continuing operations
Interest income
19,199
20,589
20,035
21,236
28,010
Interest expense
(7,564
)
(8,393
)
(7,517
)
(9,567
)
(16,595
)
Non-interest income
13,504
20,927
19,696
18,256
9,975
Operating expenses
(20,984
)
(20,772
)
(19,967
)
(16,712
)
(13,387
)
Impairment charges
(3,596
)
(5,602
)
(5,672
)
(8,071
)
(5,419
)
Share of post-tax results of associates and joint ventures
110
60
58
34
14
Profit/loss on disposal of subsidiaries, associates and joint ventures
28
(94
)
81
188
327
Gain on acquisitions
2
–
129
26
2,406
Profit before tax from continuing operations
99
5,974
6,079
4,559
5,094
Profit for the year from discontinued operations, including gain on disposal
–
–
–
6,777
604
Profit attributable to equity holders of the Parent from:
Continuing operations
(723
)
3,616
4,172
3,228
4,259
Discontinued operations
–
–
–
6,765
587
Selected balance sheet data
£m
£m
£m
£m
£m
Total shareholders' equity
62,894
65,170
62,641
58,699
43,574
Subordinated liabilities
24,422
24,870
28,499
25,816
29,842
Deposits from banks, customer accounts and debt securities in issue
582,387
586,897
580,400
534,803
603,869
Loans and advances to banks and customers
466,627
478,726
465,741
461,359
509,522
Total assets
1,490,747
1,563,402
1,490,038
1,379,148
2,053,029
Notes
a
Return on average shareholders' equity represents profit attributable to the equity holders of the parent as a percentage of average shareholders'
equity.
b
Return on average total assets represents profit attributable to the equity holders of the parent as a percentage of average total assets.
362  I
Ratio of earnings to fixed charges – Barclays Bank Plc
2012
2011
2010
2009
2008
(In £m except for ratios)
Ratio of earnings to fixed charges
Fixed charges
Interest expense
16,705
21,053
20,516
20,962
38,197
Rental expense
251
268
254
256
235
Total fixed charges
16,956
21,321
20,770
21,218
38,432
Earnings
Income before taxes and non-controlling interests
99
5,974
6,079
4,559
5,094
Less: unremitted pre-tax income of associated companies and joint ventures
(113
)
(47
)
(49
)
(43
)
(19
)
Total earnings excluding fixed charges
(14
)
5,927
6,030
4,516
5,075
Fixed charges
16,956
21,321
20,770
21,218
38,432
Total earnings including fixed charges
16,942
27,248
26,800
25,734
43,507
Ratio of earnings to fixed charges
1.00
1.28
1.29
1.21
1.13
Ratio of earnings to fixed charges and preference shares – Barclays Bank Plc
2012
2011
2010
2009
2008
(In £m except for ratios)
Combined fixed charges, preference share dividends and similar appropriations
Interest expense
16,705
21,053
20,516
20,962
38,197
Rental expense
251
268
254
256
235
Fixed charges
16,956
21,321
20,770
21,218
38,432
Preference share dividends and similar appropriations
466
514
594
646
583
Total fixed charges
17,422
21,835
21,364
21,864
39,015
Earnings
Income before taxes and non-controlling interests
99
5,974
6,079
4,559
5,094
Less: unremitted pre-tax income of associated companies and joint ventures
(113
)
(47
)
(49
)
(43
)
(19
)
Total earnings excluding fixed charges
(14
)
5,927
6,030
4,516
5,075
Fixed charges
17,422
21,835
21,364
21,864
39,015
Total earnings including fixed charges
17,408
27,762
27,394
26,380
44,090
Ratio of earnings to fixed charges, preference share dividends and similar
appropriations
1.00
1.27
1.28
1.21
1.13
I  363
Shareholder enquiries
Investors who have any questions about their investment in Barclays, or about Barclays in general,
may write to the Director, Investor Relations at our Head office as follows:
Director, Investor Relations
Barclays PLC
1 Churchill Place
London
E14 5HP
or, in the United States of America:
The Corporate Communications Department
Barclays Bank PLC
745 Seventh Avenue
New York, NY
10019, USA
Registered and Head office
1 Churchill Place
London
E14 5HP
Tel: +44 (0) 20 7116 1000
Registrar
The Registrar to
Barclays
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA
Tel: 0871 384 2055
a
or +44 (0) 121 415 7004 (from overseas)
Email: questions@share-registers.co.uk
ADR Depositary
JP Morgan Chase Bank, N.A.
PO Box
64504
St. Paul
MN
55164-0504
USA
Tel:
1-800-990-1135 (toll-free for US domestic callers)
or +1 651 453 2128
Email: jpmorgan.adr@wellsfargo.com
a
Calls cost 8p per minute plus network extras. Lines open 8.30am to 5.30pm Monday to Friday.
364  I
Index
A
Accounting
201
developments
199-202
policies
190
presentation
Africa Retail and Business Banking
178-179
business analysis
172
business description
Allowance for impairment
232
notes to the accounts
91
risk management
194
Annual Report and Accounts (approval)
171
Assets by class of business
191
Auditors reports
218
Available for sale investments
B
Barclaycard
180-181
business analysis
172
business description
174-175
Business analysis retail business banking
C
Capital adequacy data
126-135
capital management and resources
168
capital ratios
194
Consolidated balance sheet
196
Consolidated cash flow statement
192
Consolidated income statement
193
Consolidated statement of comprehensive income
245-246
Competition and regulatory matters
82-85
Concentrations of credit risk
241-242
Contingent liabilities and commitments
Corporate Banking
184-185
business analysis
172
business description
Corporate governance
6-29
corporate governance report
9
attendance at board meetings
80-118
Credit risk
201
Critical accounting estimates
200
Currency of presentation
124
Currency risk
D
Derivatives and other financial
instruments
105
credit risk
214-217
notes to the accounts
Directors and officers
35-37
biographies
53-58
emoluments
68
interests
268-270
notes to the accounts
30-34
Directors' report
212
Dividends
212
Earnings per share
135
Economic capital
E
Employees
38
diversity and inclusion
38
involvement
272
Events after the balance sheet date
F
219-231
Fair value of financial instruments
213
Financial assets designated at fair value
218
Financial liabilities designated at fair value
161-188
Financial review
G
Glossary (refer to http://group.barclays.com/
about-barclays/investor-relations/annual-reports)
236-237
Goodwill
H
Head Office and Other Operations
188
business analysis
172
business description
I
Impairment charges
206-207
notes to the accounts
90
risk management
236-237
Intangible assets
120-121
Interest rate risk
263
Investment in associates and joint ventures
Investment Bank
182-183
business analysis
172
business description
K
162-165
Key performance indicators
L
232-233,
238
Leasing
242-245
Legal proceedings
136-150
Liquidity Risk
232
Loans and advances to banks
232
Loans and advances to customers
M
119-125
Market Risk
307-310
Memorandum and Articles of Association
N
204
Net fee and commission income
203-204
Net interest income
252
Non-controlling interests
I  365
Index continued
O
265-267
Off-balance sheet arrangements
Operating expenses
208
administration and general expenses
253-254
staff costs
250
Ordinary shares, share premiums, and other equity
P
197-198
Parent Company accounts (Barclays PLC) Pension
Pensions
53-58
Directors
257-261
notes to the accounts
92
Potential credit risk loans
190
Presentation of information
234-235
Property, Plant and equipment
240-241
Provisions
R
Risk Management
72
Barclays approach to risk management
72-79
principal risks
80-118
credit risk management
119-125
market risk management
126-135
capital risk management
136-150
liquidity risk management
151
operational risk management
154-160
supervision and regulation
268-270
Related Party transactions
39-68
Remuneration report
251
Reserves
171-188
Results by business
72-79
Risk factors
129-130
Risk weighted assets
S
233
Securities borrowing, securities lending, repurchasing and reverse repurchase agreements
263-265
Securitisation
Segmental reporting
171
by class of business
172
by geographical segments
254-256
Share-based payments
304-316, 364
Shareholder information
247-250
Subordinated liabilities
T
Tax
79
tax risk
208-211
notes to accounts
168
Total assets
213
Trading portfolio
U
UK Retail and Business Banking
174-175
business analysis
172
business description
W
Wealth and Investment Management
186-187
business analysis
172
business description
366  I
Glossary of terms
'A-IRB / Advanced-Internal
Ratings Based'
See 'Internal Ratings Based (IRB) approach'.
'ABS CDO Super Senior'
Super senior tranches of debt linked
to collateralised debt obligations of asset backed securities (defined below). Payment of super senior tranches takes priority over other obligations.
'Absa'
The previously reported South African segment of
Barclays PLC excluding Absa Capital, Absa Card and Absa Wealth which are reported within Investment Bank, Barclaycard, and Wealth and Investment Management respectively.
'Absa Group'
Absa Group Limited and its subsidiaries,
including Absa Bank Limited and Absa Financial Services Limited, which is listed on the Johannesburg Stock Exchange and is one of South Africa's largest financial services groups.
'ABX indices'
A published index used in the valuation of
sub-prime mortgage backed securities. Also known as the Asset Backed Securities Index.
'Acceptances and endorsements'
An acceptance is an undertaking by a bank to pay a bill of exchange drawn on a customer. The
Group expects most acceptances to be presented, but reimbursement by the customer is normally immediate. Endorsements are residual liabilities of the Group in respect of bills of exchange which have been paid and subsequently rediscounted.
'Adjusted cost: income ratio'
Operating expenses compared to total income net of insurance claims, adjusted to exclude the impact of own credit gain or loss, gains on debt buy-backs, gain on disposal of strategic investment in
BlackRock, Inc., a provision for PPI redress, provision for the sale of interest rate hedging products redress, and goodwill impairment.
'Adjusted gross leverage'
The multiple of adjusted total tangible assets over total qualifying Tier 1 capital. Adjusted total tangible assets are total assets less derivative counterparty netting where the Group has a
legally enforceable master netting agreement, assets under management on the balance sheet, settlement balances and cash collateral on derivative liabilities, goodwill and intangible assets. See 'Tier 1 capital'.
'Adjusted income'
Total income net of insurance claims adjusted to exclude the impact of own credit and gains on debt buy-backs.
'Adjusted profit before tax'
Profit before tax adjusted to
exclude the impact of own credit, gains on debt buy-backs, impairment and disposal of the investment in BlackRock, Inc., the provision for Payment Protection Insurance redress payments and claims management costs (PPI redress), the provision for
interest rate hedging products redress and claims management costs (interest rate hedging products redress), goodwill impairments, and gains and losses on acquisition and disposals.
'Adjusted return on average shareholders'
equity'
Adjusted profit after tax attributable to ordinary shareholders as a proportion of average shareholders' equity.
'Africa'
Geographic segment comprising countries where Barclays operates in Africa and the Indian Ocean.
'Africa Retail and Business Banking (Africa RBB)'
A business unit that provides a full range of retail banking services and insurance products under the Absa and Barclays brands through a variety of retail distribution channels and offers
customised business solutions for commercial and large corporate customers across Africa.
'All price risk
(APR)'
Replaces specific risk for the correlation trading portfolio and is intended to capture all risk factors relevant to corporate nth-to-default and tranched credit derivatives
(CDs) and other positions identified as belonging to the correlation trading portfolio (CTP). As for incremental risk charge (IRC), the capital requirement is based on a 99.9% confidence interval over a one year holding period. As specified in CRD
III, the APR charge is subject to a floor based on a percentage of the standardised rules capital requirement for the CTP.
'Alt-A'
Loans regarded as lower risk than sub-prime, but with higher risk characteristics than lending under normal
criteria.
'Americas'
Geographic segment comprising the USA, Canada and countries where Barclays operates within Latin America.
'Annual Earnings at Risk (AEaR)'
The sensitivity of annual
earnings to shocks in market rates, at approximately 99th percentile for change over one period. For interest rates this equates to a 2% parallel shift in rates. For equity indices, it equates to a 25% change from one-period end to the next, or 15%
from one-period end to the next period's average.
'Arrears'
Customers are said to be in arrears when they are behind in fulfilling their obligations with the result that an outstanding loan is unpaid or overdue. Such customers are also said to be in a state of delinquency. When a customer is in arrears,
their entire outstanding balance is said to be delinquent, meaning that delinquent balances are the total outstanding loans on which payments are overdue.
'Asia'
Geographic segment comprising countries where
Barclays operates within Asia (including Singapore, Japan, China and India), Australasia and the Middle East.
'Asset Backed Commercial Paper (ABCP)'
Typically short-term notes secured on specified assets issued by consolidated special
purpose entities for funding purposes.
'Asset Backed Securities
(ABS)'
Securities that represent an interest in an underlying pool of referenced assets. The referenced pool can comprise any assets which attract a set of associated cash flows
but are commonly pools of residential or commercial mortgages and, in the case of Collateralised Debt Obligations (CDOs), the referenced pool may be ABS or other classes of assets.
'Average income per employee'
Total income net of insurance
claims divided by the number of employees.
'Average LTV (Loan to
Value) of new mortgage lending'
The ratio of all new mortgage balances disbursed in the period to the appraised property value of those mortgages, i.e. total amount disbursed
period-to-date divided by total amount of appraised property value.
'Back testing'
Includes a number of techniques that assess the continued statistical validity of a model by simulating how the model would have predicted recent experience.
'Backstop facility'
A standby facility that is a liquidity arrangement whereby another party agrees to make a payment should the primary party not do so.
'Balance weighted approach'
In the context of the credit
risk disclosures on secured home loans, a means of calculating marked to market LTVs derived by calculating individual LTVs at account level and weighting it by the balances to arrive at the average position.
I  367
Glossary of terms continued
'Banking book'
A regulatory classification denoting all exposures which are not in the trading book. Banking Book positions attract credit risk regulatory capital requirements (or deductions, where required).
'Barclaycard'
An international payments business service provider to retail and business customers including credit cards, consumer lending, merchant acquiring, commercial cards and point of sale
finance. Barclaycard has scaled operations in UK, US, Germany, Scandinavia and South Africa.
'Barclays Business'
A business unit within UK Retail and Business Banking providing banking services to small and medium
enterprises.
'Basel 2'
The second of the Basel Accords. It sets a framework of minimum capital requirements for banks – covering credit, operational and market risk; supervisory review of banks'
assessment of capital adequacy and disclosure requirements.
'Basel
3'
The third of the Basel Accords. Developed in response to the financial crisis of 2008, setting new requirements on composition of capital, counterparty credit risk, liquidity
and leverage ratios.
'Basel Committee of Banking Supervisors (BCBS
or The Basel Committee)'
A forum for regular cooperation on banking supervisory matters which develops global supervisory standards for the banking industry. Its members are
officials from central banks or prudential supervisors from 27 countries and territories.
'Basic Indicator Approach'
The method for calculating the Operational Risk Capital Requirement (see 'Operational Risk
Charge'), under the relevant FSA rules, equal to 15% of the three-period average of the sum of a firm's net interest income and net non-interest income.
'Basis point(s)/bp(s)'
One hundredth of a per cent (0.01%);
100 basis points is 1%. The measure is used in quoting movements in interest rates, yields on securities and for other purposes.
'Basis
risk'
Measures the impact of changes in tenor basis (e.g., the basis between swaps vs. 3 month (3M) Libor and swaps vs. 6 month (6M) Libor) and cross currency basis.
'Business Payments Portfolio'
Businesses within Barclaycard providing payment services including merchant acquiring, commercial cards, business payment solutions and point of sale finance.
'Capital adequacy'
The Group manages its capital resources to ensure that those Group entities that are subject to local capital adequacy regulation in individual countries meet their minimum capital requirements.
'Capital ratios'
Key financial ratios measuring the Group's capital adequacy or financial strength. These include the Core Tier 1 ratio, Tier 1 capital ratio and Risk asset ratio.
'Capital requirements'
Amount to be held by the Bank to cover the risk of losses to a certain confidence level.
'Capital resources'
Financial instruments on balance sheet
that are eligible to satisfy capital requirements.
'Central Counterparty / Central
Clearing Counterparties (CCPs)'
A clearing house mediating between the buyer and the seller in a financial transaction, such as a derivative contract or repurchase agreement
(repo). Where a central counterparty is used, a single bi-lateral contract between the buyer and seller is replaced with two contracts, one between the buyer and the CCP and one between the CCP and the seller. The use of CCPs allows for greater
oversight and improved credit risk mitigation in OTC markets.
'Charge-off'
In
 the retail segment this refers to the point in time when collections activity changes from the collection of arrears to the recovery of the full balance. This is normally when six payments are in arrears.
'Collateralised Debt Obligation (CDO)'
Securities issued by a third party which reference Asset Backed Securities (ABSs) (defined above) and/or certain other related assets purchased by the issuer. CDOs may feature exposure to sub-prime
mortgage assets through the underlying assets.
'Collateralised
Loan Obligation (CLO)'
A security backed by the repayments from a pool of commercial loans. The payments may be made to different classes of owners (in tranches).
'Collateralised Synthetic Obligation (CSO)'
A form of synthetic collateralised debt obligation (CDO) that does not hold assets like bonds or loans but invests in credit default swaps (CDSs) or other non-cash assets to gain exposure to a
portfolio of fixed income assets.
'Collectively assessed
impairment allowances'
Impairment of financial assets is measured collectively where a portfolio comprises homogenous assets and where appropriate statistical techniques are
available.
'Commercial Mortgage Backed Securities
(CMBS)'
Securities that represent interests in a pool of commercial mortgages. Investors in these securities have the right to cash received from future mortgage payments (interest
and/or principal).
'Commercial Paper (CP)'
Typically short-term notes issued by entities, including banks, for funding purposes.
'Commercial real estate'
Commercial real estate includes office buildings, industrial property, medical centres, hotels, retail stores, shopping centres, farm land, multifamily housing buildings, warehouses, garages, and
industrial properties. Commercial real estate loans are loans backed by a package of commercial real estate.
'Commissions, commitments and other incentives'
Includes commission-based arrangements, guaranteed incentives and Long Term
Incentive Plan awards.
'Commodity derivatives'
Exchange traded and OTC derivatives based on an underlying commodity (e.g. metals, precious metals, oil and oil related, power and natural gas).
'Commodity risk'
Measures the impact of changes in commodity prices and volatilities, including the basis between related commodities (e.g., Brent vs. WTI crude prices).
'Common Equity Tier 1 (CET1) capital'
In the context of Basel III, a measure of capital that is predominantly common equity.
'Compensation: income ratio'
Total compensation costs
compared to total adjusted income.
'Conduits'
Financial vehicles that hold asset-backed debt such as mortgages, vehicle loans, and credit card receivables, all financed
368  I
with short-term loans (generally commercial paper) that use the asset-backed debt as collateral. The profitability of a conduit depends on the ability to roll over maturing short-term debt at a
cost that is lower than the returns earned from asset-backed securities held in the portfolio.
'Contingent capital notes (CCNs)'
Interest bearing debt securities issued by Barclays Bank PLC that are permanently written
off from the holder's perspective in the event of Barclays PLC Group's core tier 1 (CT1) or common equity tier 1 (CET1) ratio, as appropriate, falling below 7%. They are one form of contingent capital securities which have been issued
by banks and whose terms could include a conversion into ordinary shares of the issuer rather than a permanent write off.
'Core Tier 1 capital '
Called-up share capital and eligible reserves plus non-controlling equity interests, less intangible
assets and deductions relating to the excess of expected loss over regulatory impairment allowance and securitisation positions as specified by the FSA.
'Core Tier 1 ratio'
Core Tier 1 capital as a percentage of
risk weighted assets.
'Corporate Banking'
A business unit that provides banking services to global clients across Europe, Africa, Asia, and the US, and local clients in the UK and South Africa. These services encompass Debt, Cash and Trade
Finance.
'Corporate income tax paid'
Tax paid during the period on taxable profits, including withholding tax deducted from income.
'Correlation trading portfolio'
A portfolio consisting of
(i) securitisation positions, excluding re-securitisations, and nth-to-default credit derivatives referencing single name credit default swaps (CDS) or commonly traded CDS indices, and (ii) liquid hedges of positions described under (i).
'Cost: income ratio'
Operating expenses compared to total income net of insurance claims.
'Cost: net operating income ratio'
Operating expenses compared to total income net of insurance claims less credit
impairment charges and other provisions.
'Cost of
Equity'
The rate of return targeted by the equity holders of a company.
'Counterparty risk'
In the context of Risk Weighted Assets
by Risk, a component of risk weighted assets that represents the risk of loss in derivatives, repurchase agreements and similar transactions resulting from the default of the counterparty.
'Coverage ratio'
Impairment allowances as a percentage of
credit risk loan balances.
'Covered bonds'
Debt securities backed by a portfolio of mortgages that are segregated from the issuer's other assets solely for the benefit of the holders of the covered bonds.
'CRD III'
The Third Capital Requirements Directive. EU Directive that came into force on 31 December 2011 updating market risk capital requirements and requirements relating to securitisation.
'CRD IV'
The Fourth Capital Requirements Directive. Proposal
for a Directive and an accompanying Regulation that together will (among other things) update EU capital adequacy and liquidity requirements and implement Basel 3 in the European Union.
'CRD IV leverage
ratio'
The ratio of Tier 1 capital to particular on- and off-balance sheet exposures, calculated in accordance with the methodology set out in the Basel 3 guidelines published in
December 2010.
'Credit Card Accountability Responsibility and
Disclosure Act of 2009 (CARD Act)'
Legislation signed into US law on 22 May 2009 to provide changes to credit card industry practices in the US including significantly
restricting credit card issuers' ability to change interest rates and assess fees to reflect individual consumer risk, change the way payments are applied and requiring changes to consumer credit card disclosures.
'Credit default swaps (CDS)'
A contract under which the protection seller receives premiums or interest-related payments in return for contracting to make payments to the protection buyer in the event of a defined credit
event. Credit events normally include bankruptcy, payment default on a reference asset or assets, or downgrades by a rating agency.
'Credit Derivative Product Company (CDPC)'
A company that sells protection on credit derivatives. CDPCs are similar to monoline insurers. However, unlike monoline insurers, they are not regulated as insurers. See 'Credit Market
Exposures (CME)'.
'Credit derivatives (CDs)'
An arrangement whereby the credit risk of an asset (the reference asset) is transferred from the buyer to the seller of the protection.
'Credit enhancements'
See 'Liquidity and Credit
enhancements'.
'Credit impairment charges'
Also known as 'credit impairment'. Impairment charges on loans and advances to customers and banks and in respect of undrawn facilities and guarantees (see 'Loan impairment')
and impairment charges on available for sale assets and reverse repurchase agreements.
'Credit market exposures (CME)'
Assets and other instruments relating to commercial real estate and leveraged finance
businesses that have been significantly impacted by the deterioration in the global credit markets. The exposures include positions subject to fair value movements in the Income Statement, positions that are classified as loans and advances and
available for sale and other assets.
'Credit risk'
The risk of the Group suffering financial loss if a counterparty fails to fulfil its contractual obligations to the Group under a loan agreement or similar. In the context of Risk Weighted Assets
by Risk, it is the component of risk weighted assets that represents the risk of loss in loans and advances and similar transactions resulting from the default of the counterparty.
'Credit Risk Loans (CRLs)'
A loan becomes a credit risk loan
when evidence of deterioration has been observed, for example a missed payment or other breach of covenant. A loan may be reported in one of three categories: impaired loans, accruing past due 90 days or more, impaired or restructured loans. These
may include loans which, while impaired, are still performing but have associated individual impairment allowances raised against them.
'Credit risk mitigation'
A range of techniques and strategies to actively mitigate credit risks to which the bank is exposed. These can be broadly divided into three types; Collateral, Netting and set-off, and Risk
Transfer.
'Credit spread'
The premium over the benchmark or risk-free rate required by the market to accept a lower credit quality.
I  369
Glossary of terms continued
'Credit Valuation Adjustment
(CVA)'
The difference between the risk-free value of a portfolio of trades and the market value which takes into account the counterparty's risk of default. The CVA therefore
represents an estimate of the adjustment to fair value that a market participant would make to incorporate the credit risk of the counterparty due to any failure to perform on contractual agreements.
'CRL Coverage'
Impairment allowances as a percentage of total CRL (See 'Credit Risk Loans'). Also known as the 'CRL coverage ratio'.
'Current year cash bonus'
Bonuses paid to employees in cash
on a discretionary basis in respect of performance in the period.
'Current year share bonus'
Bonuses paid to employees in shares on a discretionary basis in respect of performance in the period. In keeping with Regulatory requirements, the shares may be subject to a minimum retention
period.
'Customer asset margin'
Net interest income earned on customer assets (excluding the impact of the product structural hedge relating to those assets), divided by total average customer assets.
'Customer assets'
Represents loans and advances to customers. Average balances calculated as the sum of all daily balances for the year to date divided by number of days year to date.
'Customer deposits'
Money deposited by all individuals and companies that are not credit institutions. Such funds are recorded as liabilities in the Group's balance sheet under Customer Accounts.
'Customer liabilities'
Represents customer deposits.
'Customer liability margin'
Net interest income earned on customer liabilities (excluding the impact of the product
structural hedge relating to those liabilities), divided by total average customer liabilities.
'Customer net interest income'
The sum of customer asset and customer liability net interest income. Customer net interest
income reflects interest related to customer assets and liabilities only and does not include any interest on securities or other non-customer assets and liabilities.
'Daily Value at Risk (DVaR)'
An estimate of the potential
loss which might arise from market movements under normal market conditions, if the current positions were to be held unchanged for one business day, measured to a specified confidence level.
'DBRS'
A credit rating agency.
'Debit Valuation Adjustment (DVA)'
The opposite of credit valuation adjustment (CVA). It is the difference between the risk-free value of a portfolio of trades and the market value which takes into account the Group's risk of
default. The DVA, therefore, represents an estimate of the adjustment to fair value that a market participant would make to incorporate the credit risk of the Group due to any failure to perform on contractual agreements. The DVA decreases the value
of a liability to take into account a reduction in the remaining balance that would be settled should the Group default or not perform in terms of contractual agreements.
'Debt buy-backs'
Purchases of the Group's issued debt
securities, including equity accounted instruments, leading to their de-recognition from the balance sheet.
'Debt restructures'
When the terms and provisions of outstanding debt agreements are changed, often to improve cash flow and the ability of the borrower to repay the debt. It can involve altering the repayment
schedule as well as reducing the debt or interest charged on the loan.
'Debt securities in issue'
Transferable certificates of indebtedness of the Group to the bearer of the certificates. These are liabilities of the Group and include certificates of deposit.
'Deferred cash bonus'
Performance award granted on a discretionary basis and paid in cash to employees for, and subject to, providing future service over a period of usually three years. These awards also include
provisions for potential clawback in accordance with the FSA Remuneration Code.
'Deferred share bonus'
Performance award granted on a discretionary basis and paid in shares to employees for, and subject
to, providing future service over a period of usually three years. These awards also include provisions for potential clawback in accordance with the FSA Remuneration Code.
'Delinquency'
See 'Arrears'.
'Diversification effect'
Reflects the fact the risk of a diversified portfolio is smaller than the sum of the risks of its constituent parts. It is measured as the sum of the individual asset class DVaR estimates less the
total DVaR.
'Dividend payout ratio'
Dividends paid per share as a fraction of earnings per share.
'Dodd-Frank Act (DFA)'
The US Dodd-Frank Wall Street Reform and Consumer Protection Act. The DFA is intended to address
perceived deficiencies and gaps in the regulatory framework for financial services in the United States and implements comprehensive changes across the financial regulatory landscape.
'Domestic-Systematically Important Banks (D-SIBs)'
Domestic
financial institutions whose size, complexity and systemic interconnectedness, mean that their distress or failure would cause significant disruption to the domestic financial system and economic activity.
'Early warning indicators (EWI)'
A risk management tool which includes a range of market indicators for early signs of risk either in the market or specific to Barclays.
'Early warning lists (EWL)'
Categorisations for wholesale
customers used by Corporate Banking, Wealth and Investment Management and Absa Wealth to identify at an early stage those customers where it is believed that difficulties may develop, allowing timely corrective action to be taken. There are three
categories of EWL, with risk increasing from EWL 1 (caution) to EWL 2 (medium) and EWL 3 (high). It is expected that most cases would be categorised EWL 1 before moving to 2 or 3, but it is recognised that in some cases may be categorised to EWL 2
or 3 directly.
'Economic capital'
An internal measure of the minimum equity and preference capital required for the Group to maintain its credit rating based upon its risk profile.
'Economic profit'
Profit attributable to equity holders of the Parent excluding amortisation of acquired intangible assets less a capital charge representing adjusted average shareholders' equity excluding
non-controlling interests multiplied by the Group cost of capital.
'Egg'
The
credit card portfolio acquired from Egg in 2011.
370  I
'Encumbered'
Subject to a lien or a charge to secure a liability.
'Equities and Prime Services'
Trading businesses encompassing Cash Equities, Equity Derivatives & Equity Financing.
'Equity products'
Products linked to equity markets. This category includes listed equities, exchange traded derivatives, equity derivatives, preference shares and contract for difference (CFD) products.
'Equity risk'
In the context of trading book capital requirements, the risk of change in market value of an equity investment.
'Equity structural hedge'
An interest rate hedge in place to
manage the volatility in net earnings generated by businesses on the Group's equity, with the impact allocated to businesses in line with their economic capital usage.
'Euro Interbank Offered Rate (EURIBOR)'
A benchmark interest
rate at which banks can borrow funds from other banks in the European interbank market.
'Europe'
Geographic segment comprising countries in which Barclays operates within the EU (excluding UK), Northern
Continental and Eastern Europe.
'Europe Retail and Business
Banking (Europe RBB)'
Operating segment that provides retail banking and credit card services in Spain, Italy, Portugal and France.
'Expected losses'
The Group's measure of anticipated losses for exposures captured under an internal ratings based credit risk approach for capital adequacy calculations. It is measured as the Barclays modelled
view of anticipated losses based on Probability of Default (PD), Loss Given Default (LGD) and Exposure at Default (EAD), with a one year time horizon.
'Expected shortfall'
The average of all one day hypothetical
losses in excess of DVaR.
'Exposure at default (EAD)'
The estimation of the extent to which Barclays may be exposed to a customer or counterparty in the event of, and at the time of, that counterparty's default. At default, the customer may not
have drawn the loan fully or may already have repaid some of the principal, so that exposure may be less than the approved loan limit.
'External Credit Assessment Institutions (ECAI)'
Institutions whose credit assessments may be used by credit institutions for the determination of risk weight exposures according to the Capital Requirements Directives (CRD).
'F-IRB / Foundation-Internal Ratings Based'
See 'Internal Ratings Based (IRB) approach'.
'Financial Conduct Authority (FCA)'
The statutory body responsible for conduct of business regulation and supervision of UK
authorised firms from 1 April 2013. The FCA will also have responsibility for the prudential regulation of firms that do not fall within the PRA's scope.
'Financial Services Compensation Scheme (FSCS)'
The
UK's fund for compensation of authorised financial services firms that are unable to pay claims.
'FirstPlus'
The second charge lending business included within the Barclaycard segment. Since September 2008, FirstPlus has
been closed to new business.
'Fitch'
A credit rating agency.
'Fixed charge'
Security taken over a specific asset of a borrower to secure the repayment of a loan. In this arrangement the asset is signed over to the creditor and the borrower would need the lender's
permission to sell it. The lender also registers a charge against the asset which remains in force until the loan is repaid.
'Fixed Income, Currency and Commodities (FICC)'
Trading businesses encompassing Rates, Credit, Emerging Markets,
Commodities, Foreign Exchange & Fixed Income Financing.
'Forbearance'
Forbearance programmes to assist customers in financial difficulty through agreements to accept less than contractual amounts due where financial distress would otherwise prevent satisfactory
repayment within the original terms and conditions of the contract. These agreements may be initiated by the customer, Barclays or a third party and include approved debt counselling plans, minimum due reductions, interest rate concessions and
switches from capital and interest repayments to interest-only payments.
'Foreign exchange derivatives'
Derivatives linked to the foreign exchange market. This category includes FX spot and forward contracts, FX swaps and FX options.
'Foreign exchange risk'
Measures the impact of changes in
foreign exchange rates and volatilities.
'FSA Remuneration
Code'
The FSA's Remuneration Code contained in SYSC (Senior Management Arrangements, Systems and Controls) 19A of the FSA Handbook.
'Funded'
Exposures where the notional amount of the transaction is funded. Represents exposures where a commitment to provide future funding has been made and the funds have been released.
'Funding for Lending Scheme (FLS)'
Scheme launched by the
Bank of England in July 2012 to incentivise banks and building societies to lend to UK households and non-financial companies through reduced funding costs, the benefits of which are passed on to UK borrowers in the form of cheaper and more easily
available loans.
'Funding gap/ mismatch'
In the context of Eurozone balance sheet funding exposures, the excess of local euro denominated external assets, such as customer loans, over local euro denominated liabilities, such as customer
deposits.
'Funds and fund-linked products'
Includes holdings in mutual funds, hedge funds, fund of funds and fund linked derivatives.
'Gains on acquisitions'
The amount by which the
acquirer's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities, recognised in a business combination, exceeds the cost of the combination.
'Global-Systematically Important Banks (G-SIBs)'
See
'Globally-Systematically Important Financial Institutions (G-SIFIs)'
'Globally-Systematically Important Financial Institutions (G-SIFIs)'
Global financial institutions whose size, complexity
and systemic interconnectedness, mean that their distress or failure would cause significant disruption to the wider financial system and economic activity. The Financial Stability Board (FSB) and the Basel Committee on Banking Supervision (BCBS)
have identified an initial group of 29 globally systemically important banks.
'Gross charge-off rates'
Represents the balances charged-off to recoveries in the reporting period, expressed as a
percentage of average outstanding balances excluding balances in recoveries. Charge-off to recoveries generally occurs when the collections focus switches from the collection of arrears to
I  371
Glossary of terms continued
the recovery of the entire outstanding balance, and represents a fundamental change in the relationship between the bank and the customer. This is a measure of the proportion of customers that
have gone into default during the period.
'Gross new
lending'
New lending advanced to customers during the period.
'Group'
Barclays PLC together with its subsidiaries.
'Guarantees'
Unless
 otherwise described, an undertaking by a third party to pay a creditor should a debtor fail to do so. It is a form of credit substitution.
'Haircut'
The valuation percentage applicable to each type
of collateral, largely based on liquidity and price volatility of the underlying security.
'Head Office and Other Operations'
A business segment comprising Brand and Marketing, Finance, Head Office, Human Resources,
Internal Audit, Legal and Compliance, Risk, Treasury and Tax and other operations.
'High Net Worth'
Businesses within the Wealth and Investment Management segment that provide banking and other services to
high net worth customers.
'Home loan'
A loan to purchase a residential property. The property is then used as collateral to guarantee repayment of the loan. The borrower gives the lender a lien against the property and the lender can
foreclose on the property if the borrower does not repay the loan per the agreed terms. Also known as a residential mortgage.
'Impaired loans'
Loans are reported as Credit Risk Loans (defined above) and comprise loans where individually identified
impairment allowances have been raised and also includes loans which are fully collateralised or where indebtedness has already been written down to the expected realisable value. The impaired loan category may include loans, which, while impaired,
are still performing.
'Impairment allowances'
A provision held on the balance sheet as a result of the raising of a charge against profit for incurred losses in the lending book. An impairment allowance may either be identified or unidentified
and individual or collective.
'Incentive awards'
Total of current year and deferred bonus plus sales commissions, guaranteed incentives and long term incentive plan awards.
'Income'
Total income net of insurance claims, unless
otherwise specified.
'Incremental Risk Charge (IRC)'
A capital requirement applicable to unsecuritised credit products to cover credit migration and default risk in the trading book that is not covered by Value at Risk (VaR). IRC is computed on all
fixed income positions subject to specific risk. It calculates the incremental risk arising from rating migrations and defaults, beyond what is already captured in specific market risk, to a 99.9% confidence level over a one year holding period.
'Independent Commission on Banking (ICB)'
Body set up by HM Government to identify structural and non-structural measures to reform the UK banking system and promote competition.
'Individual liquidity guidance (ILG)'
Guidance given to a
firm about the amount, quality and funding profile of liquidity resources that the FSA has asked the firm to maintain.
'Inflation risk'
Measures the impact of changes in inflation rates and volatilities on cash instruments and derivatives.
'Interchange'
Income paid to a credit card issuer for the
clearing and settlement of a sale or cash advance transaction.
'Interest rate products'
In the context of the fair value of financial instruments, these are products with a payoff linked to interest rates. This category includes interest rate swaps, swaptions, caps and exotic interest
rate derivatives.
'Interest rate risk (IRR)'
The risk of interest rate volatility adversely impacting the Groups net interest margin. In the context of the calculation of market risk DVaR, measures the impact of changes in interest (swap)
rates and volatilities on cash instruments and derivatives.
'Internal Assessment Approach (IAA)'
One of three types of calculation that a firm with permission to use the Internal Ratings-Based (IRB) approach must apply to securitisation exposures. It consists of mapping a firm's internal
rating methodology for credit exposures to those of an external credit assessment institution (ECAI) to determine the appropriate risk weight based on the ratings based approach. Its applicability is limited to certain types of exposures, mainly
ABCP programmes related to liquidity facilities and credit enhancement.
'Internal Capital Adequacy Assessment Process ('ICAAP')'
Companies are required to perform a formal Internal Capital Adequacy Assessment Process (ICAAP) as part of the Pillar 2 requirements (BIPRU) and to provide this document to the FSA on a yearly
basis. The ICAAP document summarises the Group's risk management framework, including approach to managing all risks (i.e. Pillar 1 and non-Pillar 1 risks) and the Group's risk appetite, economic capital and stress testing frameworks.
'Internal funding rates'
The Group's mechanism for pricing intra-group funding and liquidity.
'Internal model method (IMM)'
In the context of Risk Weighted Assets, Counterparty Credit Risk, Risk Weighted Assets for
which the exposure amount has been derived via the use of an FSA approved internal model.
'Internal-Ratings Based (IRB)'
An approach under the Basel 2 framework that relies on the bank's internal models to
derive the risk weights. The IRB approach is divided into two alternative applications, Advanced and Foundation:
–
Advanced IRB (AIRB): the bank uses its own estimates of probability of default (PD), loss given default (LGD) and credit conversion factor to
model a given risk exposure.
–
Foundation IRB: the bank applies its own PD as for Advanced, but it uses standard parameters for the LGD and the credit conversion factor. The
Foundation IRB approach is specifically designed for wholesale credit exposures. Hence retail, equity, securitisation positions and non-credit obligations asset exposures are treated under Standardised or A-IRB.
'Investment Banking'
Fee generating businesses encompassing Advisory, Debt and Equity Origination.
'Investment grade'
A debt security, treasury bill or similar instrument with a credit rating of AAA to BBB as measured by external agencies.
'ISDA Master Agreement'
The most commonly used master
contract for OTC derivative transactions internationally. It is part of a framework of documents, designed to enable OTC derivatives to be documented fully and flexibly. The framework consists of a master agreement, a schedule, confirmations,
definition booklets, and a credit support annex. The ISDA master agreement
372  I
is published by the International Swaps and Derivatives Association (ISDA).
'Letters of credit'
A letter typically used for the purposes of international trade guaranteeing that a debtor's payment to a creditor will be received on time and in full. In the event that the debtor is unable
to make payment, the bank will be required to cover the full or remaining amount of the purchase.
'Leveraged finance'
Loans or other financing agreements provided to companies whose overall level of debt is high in
relation to their cash flow (net debt: EBITDA) typically arising from private equity sponsor led acquisitions of the businesses concerned.
'Liquidity and Credit enhancements'
Credit enhancement
facilities are used to enhance the creditworthiness of financial obligations and cover losses due to asset default. Two general types of credit enhancement are third-party loan guarantees and self-enhancement through overcollateralisation. Liquidity
enhancement makes funds available if required, for other reasons than asset default, e.g. to ensure timely repayment of maturing commercial paper.
'Liquidity Coverage Ratio (LCR)'
The ratio of the stock of
high quality liquid assets to expected net cash outflows over the next 30 days. High-quality liquid assets should be unencumbered, liquid in markets during a time of stress and, ideally, be central bank eligible. These include, for example,
cash and claims on central governments and central banks. The Basel 3 rules require this ratio to be at least 100% and it is expected to apply from 2015.
'Liquidity Pool'
The Group liquidity pool comprises cash at
central banks and highly liquid collateral specifically held by the Group as a contingency to enable the bank to meet cash outflows in the event of stressed market conditions.
'Liquidity risk appetite (LRA)'
The level of liquidity risk
that the Group chooses to take in pursuit of its business objectives and in meeting its regulatory obligations.
'Loan capital'
Part of capital, excluding equity capital employed that earns a fixed rate of interest instead of dividends,
and must be repaid within a specified period, irrespective of financial position.
'Loan impairment'
Charges on loans and advances to customers and banks and in respect of undrawn facilities and guarantees.
'Loan loss rate'
Is quoted in basis 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.
'Loan to deposit ratio'
The ratio of loans and advances to customer accounts. This excludes particular liabilities issued by the retail businesses that have characteristics comparable to retail deposits (for example
structured Certificates of Deposit and retail bonds), which are included within debt securities in issue.
'Loan to value (LTV) ratio'
Expresses the amount borrowed against an asset (i.e. a mortgage) as a percentage of the
appraised value of the asset. The ratios are used in determining the appropriate level of risk for the loan and are generally reported as an average for new mortgages or an entire portfolio.
'London Interbank Offered Rate (LIBOR)'
A benchmark interest
rate at which banks can borrow funds from other banks in the London interbank market.
'Long-term refinancing operation
(LTRO)'
The European Central Bank's 3 year long term bank refinancing operation.
'Loss Given Default (LGD)'
The fraction of Exposure at
Default (EAD) (defined above) that will not be recovered following default. LGD comprises the actual loss (the part that is not expected to be recovered), together with the economic costs associated with the recovery process.
'Management DVaR'
For internal market risk management purposes, the investment bank uses a Daily Value at Risk (DVaR) with a two-year equally weighted historical period, at a 95% confidence level, for all trading
portfolios and certain banking books.
'Mandate and
Scale'
A risk management approach utilising limits and triggers to formally review and control business activities to ensure that they are within external expectations (Barclays
mandate) and are of an appropriate scale relative to the risk and reward of the underlying activities, avoiding concentrations which may lead to unexpected losses of a scale that would be detrimental to the stability of the relevant business line or
the Group.
'Mark to market approach'
One of three types of calculation that a firm may use to calculate the exposure values for counterparty risk. It uses a measure of alpha, as specified by the regulator, multiplied by a modelled
forecast called the effective expected positive exposure.
'Marked
to market (MTM) LTV ratio'
The loan amount as a percentage of the current value of the asset used to secure the loan.
'Market risk'
The risk of the Group suffering financial loss
due to changes in market prices. In the context of Risk Weighted Assets by Risk, it is the component of risk weighted assets that represents the risk of loss resulting from fluctuations in the market value of positions held in equities, commodities,
currencies, derivatives and interest rates.
'Master netting
agreements'
A contract that enables a bank to offset all credit and debit balances of the same customer or group of customers (or a range of designated accounts of the same
customer) in the case of the customer's default or bankruptcy, resulting in a reduced exposure.
'Matchbook/ Matched book'
The borrowing of funds under a repurchase agreement at one rate and simultaneous lending of funds
under a reverse repurchase agreement at a higher rate, for the purpose of earning a spread.
'Material holdings'
In the context of Capital Resources, a deduction from Tier 1 capital and Tier 2 capital representing a
regulated entity's investment in either (i) the capital of a credit or a financial institution that exceeds either 10% of the share capital of that credit or financial institution or 10% of the total capital of the regulated entity itself
or (ii) an insurance entity where the regulated entity owns more than 20% of the capital in the insurance entity or exercises significant influence.
'Medium Term Notes (MTNs)'
Corporate notes, continuously
offered by a company to investors through a dealer. Investors can choose from differing maturities, ranging from 9 months to 30 years.
'Model validation'
Refers to an array of processes and techniques to ensure that a statistical model is fit for purpose.
'Modelled—VaR'
In the context of risk weighted assets,
market risk calculated using value at risk models laid down by the FSA (BIPRU).
I  373
Glossary of terms continued
'Modelled – charges add-on
and non VaR'
In the context of risk weighted assets, any additional Market Risk not captured within Modelled VaR, including Incremental Risk charges and Correlation Risk.
'Money market funds'
Investment funds typically invested in short-term debt securities.
'Monoline protection'
Protection against credit losses provided by a monoline insurer – an entity which specialises in
providing credit protection to the holders of debt instruments in the event of default by a debt security counterparty. This protection is typically held in the form of derivatives such as Credit Default Swaps (CDS) referencing the underlying
exposures held.
'Moody's'
A credit rating agency.
'Mortgage Backed Securities (MBS)'
Securities that represent interests in a group of mortgages. Investors in these
securities have the right to cash received from future mortgage payments (interest and/or principal).
'National Loan Guarantee Scheme (NLGS)'
A funding scheme launched by the UK government in March 2012, aimed at lowering the
cost of borrowing for small businesses. The NLGS uses government guarantees on unsecured borrowing by participating banks, enabling them to borrow at a cheaper rate. The Banks pass on the entire benefit that they receive from the guarantees to
businesses across the UK through cheaper loans. Changes in market conditions since the introduction of the NLGS make it likely that, in the future, banks will choose to deliver credit easing to the economy through the Funding for Lending Scheme
(FLS).
'Net asset value per share'
Computed by dividing shareholders' equity excluding non-controlling interests by the number of issued ordinary shares.
'Net interest income'
The difference between interest
received on assets and interest paid on liabilities.
'Net interest
income on customer assets'
Represents interest received from customers less interest expense for funding those assets at the relevant internal funding rate.
'Net interest margin'
Annualised net interest income divided by the sum of the average assets and average liabilities for those businesses.
'Net investment income'
Changes in the fair value of
financial instruments designated at fair value, dividend income and the net result on disposal of available for sale assets.
'Net Stable Funding Ratio (NSFR)'
The ratio of available stable funding to required stable funding over a one year time
horizon, assuming a stressed scenario. The ratio is required to be over 100% with effect from 2015. Available stable funding would include such items as equity capital, preferred stock with a maturity of over 1 year, or liabilities with a maturity
of over 1 year. The required amount of stable funding is calculated as the sum of the value of the assets held and funded by the institution, multiplied by a specific Required Stable Funding (RSF) factor assigned to each particular asset type, added
to the amount of potential liquidity exposure multiplied by its associated RSF factor.
'Net tangible asset value per share'
Computed by dividing shareholders' equity, excluding non-controlling interests,
less goodwill and intangible assets, by the number of issued ordinary shares.
'Net trading income'
Gains and losses arising from trading positions which are held at fair value, in respect of both
market-making and customer business, together with interest, dividends and funding costs relating to trading activities.
'Non-asset backed debt
instruments'
Debt instruments not backed by collateral, including government bonds; US agency bonds; corporate bonds; commercial paper; certificates of deposit; convertible bonds;
corporate bonds and issued notes.
'Non-customer generated
margin'
Non customer income (mainly the impact of the product structural hedge and the equity structural hedge) as a percentage of the sum of average customer assets and
liabilities.
'Non-customer net interest income'
Principally comprises the impact of product and equity structural hedges, as well as certain other net interest income received on government bonds and other debt securities held for the purposes
of interest rate hedging and liquidity for local banking activities.
'Non-model method (NMM)'
In the context of Risk Weighted Assets, Counterparty credit risk, Risk Weighted Assets where the exposure amount has been derived through the use of FSA (BIPRU) norms, as opposed to an internal
model.
'Non-performance costs'
Costs other than performance costs.
'Non-performing loans'
A loan that is in default or close to being in default because interest or capital payments are not
made on time.
'Notch'
A single unit of measurement in a credit rating scale.
'Operational risk'
The risk of loss resulting from inadequate or failed internal processes, people and systems or from
external events, including legal risk. In the context of Risk Weighted Assets, it is the component of risk weighted assets that represents the risk of loss resulting from inadequate or failed internal processes, people and systems or from external
events, including legal risk.
'Operational risk
charge'
The capital set aside to cover potential losses from operational risk events over a one year time horizon to a 99.90% confidence.
'Other credit products'
In the context of the fair value of financial instruments', these are products linked to the credit risk of a referenced entity, index or a basket. This category includes collateralised
synthetic obligations (non-asset backed CDOs) and OTC derivatives. The OTC derivatives are CDS single name; CDS index; CDS index tranche and Nth to default basket swaps (in which the payout is linked to one in a series of defaults, such as first-,
second- or third to-default, with the contract terminating at that point).
'Over the counter derivatives (OTC)'
Derivative contracts that are traded (and privately negotiated) directly between two
parties. They offer flexibility because, unlike standardised exchange-traded products, they can be tailored to fit specific needs.
'Own
credit'
The effect of changes in the Group's own credit standing on the fair value of financial liabilities.
'Payment Protection Insurance (PPI) redress'
Provision for
the settlement of PPI mis-selling claims and related claims management costs.
'PCRL Coverage ratio'
Impairment allowances as a percentage of total CRL (Credit Risk Loan) and PPL (Potential Problem Loan)
balances. See 'Credit Risk Loans (CRLs)' and 'Potential Problem Loans (PPLs)'.
374  I
'Performance awards'
Annual performance incentives (including deferred incentives), long-term incentive awards and commission payments. A detailed description of the Group's incentive plans is provided in the
Directors' Remuneration Report.
'Performance
costs'
The accounting charge recognised in the period for performance awards. For deferred incentives and long-term incentives, the accounting charge is spread over the relevant
periods in which the employee delivers service.
'Potential Credit
Risk Loans (PCRLs)'
Comprise the outstanding balances to Potential Problem Loans (defined below) and the three categories of Credit Risk Loans (defined above).
'Potential Problem Loans (PPLs)'
Loans where serious doubt exists as to the ability of the borrowers to continue to comply with repayment terms in the near future.
'Present value of 1bp (PV01)'
The change in market value of
an instrument given an instantaneous 1bp parallel shift in the yield curve.
'
Primary Stress Tests'
A stress test of the key liquid, hedgeable risk factors for each of the major asset classes.
'Prime'
Loans of a higher credit quality and would be expected to satisfy the criteria for inclusion into Government programmes.
'Prime Services'
Involves financing of fixed income and
equity positions using Repo and Stock Lending facilities. The Prime Services business also provides brokerage facilitation services for Hedge Fund clients offering execution and clearance facilities for a variety of asset classes.
'Principal'
The
 amount borrowed, or the part of the amount borrowed which remains unpaid (excluding interest).
'Principal Investments'
Private equity investments.
'Private equity investments'
Equity securities in operating
companies not quoted on a public exchange. Investment in private equity often involves the investment of capital in private companies or the acquisition of a public company that results in the delisting of public equity. Capital for private equity
investment is raised by retail or institutional investors and used to fund investment strategies such as leveraged buyouts, venture capital, growth capital, distressed investments and mezzanine capital.
'Private-label securitisation'
Residential mortgage backed security transactions sold or guaranteed by entities that are not sponsored or owned by the government.
'Privately placed senior unsecured notes'
Unsecured medium
term notes issued directly to the counterparty.
'Probability of
default (PD)'
The likelihood that a loan will not be repaid and will fall into default. PD may be calculated for each client who has a loan (normally applicable to wholesale
customers/clients) or for a portfolio of clients with similar attributes (normally applicable to retail customers). To calculate PD, Barclays assesses the credit quality of borrowers and other counterparties and assigns them an internal risk rating.
Multiple rating methodologies may be used to inform the rating decision on individual large credits, such as internal and external models, rating agency ratings, and for wholesale assets market information such as credit spreads. For smaller
credits, a single source may suffice such as the result from an internal rating model.
'Product structural
hedge'
An interest rate hedge that converts short term interest margin volatility on product balances (such as non-interest bearing current accounts and managed rate deposits) into
a more stable medium term rate and which is built on a monthly basis to achieve a targeted maturity profile.
'Project Merlin'
Encompasses statements made by the major UK banks (Barclays, HSBC, Lloyds Banking Group, RBS and Santander)
and HM Government to demonstrate their clear and shared intent to work together to help the UK economy recover and grow, particularly with regard to promoting lending to business.
'Proprietary trading'
When a bank, brokerage or other
financial institution trades on its own account, at its own risk, rather than on behalf of customers, so as to make a profit for itself.
'Prudential Regulatory Authority (PRA)'
The statutory body responsible for the prudential supervision of banks, building societies, insurers and a small number of significant investment firms in the UK from 1 April 2013. The PRA
will be a subsidiary of the Bank of England.
'Public
benchmark'
Unsecured medium term notes issued in public syndicated transactions.
'Recoveries Impairment Coverage Ratio'
Impairment allowance
held against recoveries balances expressed as a percentage of balance in recoveries.
'Recoveries proportion of outstanding balances'
Represents the amount of recoveries (gross month-end customer balances of
all accounts that have charged-off) as at the period end compared to total outstanding balances. The size of the recoveries book would ultimately have an impact on the overall impairment requirement on the portfolio. Balances in recoveries will
decrease if: assets are written-off; amounts are collected; assets are sold to a third party (i.e. debt sale).
'Redenomination risk'
The risk of financial loss to the Group should one or more countries exit from the Euro, potentially
leading to the devaluation of local balance sheet assets and liabilities.
'Regulatory capital'
The amount of capital that a bank holds to satisfy regulatory requirements.
'Renegotiated loans'
Loans are generally renegotiated either as part of an ongoing customer relationship or in response to
an adverse change in the circumstances of the borrower. In the latter case renegotiation can result in an extension of the due date of payment or repayment plans under which the Group offers a concessionary rate of interest to genuinely distressed
borrowers. This will result in the asset continuing to be overdue and will be individually impaired where the renegotiated payments of interest and principal will not recover the original carrying amount of the asset. In other cases, renegotiation
will lead to a new agreement, which is treated as a new loan.
'Repurchase agreement (repo) / reverse repurchase agreement (reverse
repo)'
Arrangements that allow counterparties to use financial securities as collateral for an interest bearing cash loan. The borrower agrees to sell a security to the lender
subject to a commitment to repurchase the asset at a specified price on a given date. For the party selling the security (and agreeing to repurchase it in the future) it is a repurchase agreement or repo; for the counterparty to the transaction
(buying the security and agreeing to sell in the future) it is a reverse repurchase agreement or reverse repo.
I  375
Glossary of terms continued
'Reserve Capital Instruments
(RCIs)'
Hybrid issued capital securities which may be debt or equity accounted, depending on the terms. Under FSA rules, they qualify as other Tier 1 capital.
'Residential Mortgage-Backed Securities (RMBS)'
Securities that represent interests in a group of residential mortgages. Investors in these securities have the right to cash received from future mortgage payments (interest and/or principal).
'Rest of World'
The operations of Corporate Banking in Africa and Asia.
'Restructured loans'
Comprises loans where, for economic or legal reasons related to the debtor's financial
difficulties, a concession has been granted to the debtor that would not otherwise be considered. Where the concession results in the expected cash flows discounted at the original effective interest rate being less than the loan's carrying
value, an impairment allowance will be raised.
'Retail and
Business Banking (RBB)'
UK Retail and Business Banking, Europe Retail and Business Banking, Africa Retail and Business Banking and Barclaycard.
'Retail Loans'
Loans to individuals or small and medium enterprises rather than to financial institutions and larger businesses. It includes both secured and unsecured loans such as mortgages and credit card
balances, as well as loans to certain smaller business customers, typically with exposures up to £3m or with a turnover up to £5m.
'Return on average equity'
Calculated as profit after tax
and non-controlling interests for the period, divided by average allocated equity for the period. Average allocated equity is calculated as 10% of average risk weighted assets, adjusted for capital deductions, including goodwill and intangible
assets.
'Return on average risk weighted assets'
Calculated as profit after tax for the period divided by average risk weighted assets for the period.
'Return on average shareholders' equity'
Calculated as
profit for the period attributable to equity holders of the parent divided by average shareholders' equity for the period, excluding non-controlling interests.
'Return on average tangible equity'
Calculated as profit
after tax and non-controlling interests for the period, divided by average allocated tangible equity for the period. Average allocated tangible equity is calculated as 10% of average risk weighted assets, adjusted for capital deductions, excluding
goodwill and intangible assets.
'Return on average tangible
shareholders'
equity' Calculated as profit for the period attributable to equity holders of the parent divided by average shareholders' equity for the period, excluding
non-controlling interests, goodwill and intangible assets.
'Risk
adjusted net interest margin'
Annualised net interest income less the income statement impairment charge on loans and advances, divided by total average customer assets for the
relevant businesses.
'Risk appetite'
Defined as the level of risk that Barclays is prepared to sustain whilst pursuing its business strategy, recognising a range of possible outcomes as business plans are implemented.
'Risk asset ratio'
A measure of the risk attached to the assets of a business using definitions of capital and risk weightings established in accordance with the Basel Capital Accord as implemented by the FSA.
'Risk weighted assets (RWAs)'
A measure of a bank's assets adjusted for their associated risks. Risk weightings are established in accordance with the Basel Capital Accord as implemented by the FSA.
'Second Lien'
Debt that is issued against the same collateral as higher lien debt but that is subordinate to it. In the case of default, compensation for this debt will only be received after the first lien has
been repaid and thus represents a riskier investment than the first lien.
'Secondary Stress Tests'
A stress test of illiquid risks, risks associated with structural positions and risks not otherwise captured within the stress framework.
'Securities Financing Transactions (SFT)'
In the context of
risk weighted assets (RWAs), any of the following transactions: a repurchase transaction, a securities or commodities lending or borrowing transaction, or a margin lending transaction whereby cash collateral is received or paid in respect of the
transfer of a related asset.
'Securities lending
arrangements'
Arrangements whereby securities are legally transferred to a third party subject to an agreement to return them at a future date. The counterparty generally provides
collateral against non performance in the form of cash or other assets.
'Securitisation'
Typically, a process by which debt instruments such as mortgage loans or credit card balances are aggregated into a pool, which is used to back new securities. A company sells assets to a special
purpose vehicle (SPV) which then issues securities backed by the assets. This allows the credit quality of the assets to be separated from the credit rating of the original borrower and transfers risk to external investors.
'Securitisation positions'
In the context of Capital Resources, a deduction from Core Tier 1 and Qualifying Tier 2 capital in respect of the Group's exposure to securitisation assets, such as RMBS. A
'securitisation' in this context means a transaction or scheme, whereby the credit risk associated with an exposure or pool of exposures is tranched and has the following characteristics: (a) payments in the transaction or scheme are
dependent upon the performance of the exposure or pool of exposures; and (b) the subordination of tranches determines the distribution of losses during the ongoing life of the transaction or scheme.
'Securitised Products'
A business within Investment Banking that offers a range of products relating to residential mortgage backed securities, commercial mortgage backed securities and other asset backed securities, in
addition to restructuring and unwinding legacy credit structures.
'SIV-Lites'
Special
 Purpose Entities (SPEs) which invest in diversified portfolios of interest earning assets to take advantage of the spread differentials between the assets in the Structured Investment Vehicle (SIV) and the funding cost. Unlike SIVs they are not
perpetual, making them more like CDOs, which have fixed maturity dates.
'South Africa'
The operations of Africa RBB based in South Africa.
'Sovereign exposure(s)'
Exposures to central governments, including holdings in government bonds and local government bonds.
376  I
'Special Purpose Entities (SPEs)
/ Special Purpose Vehicles (SPVs)'
Entities created to accomplish a narrow and well defined objective. There are often specific restrictions or limits around their ongoing
activities. Transactions with SPEs take a number of forms, including:
–
The provision of financing to fund asset purchases, or commitments to provide finance for future purchases.
–
Derivative transactions to provide investors in the SPE with a specified exposure.
–
The provision of liquidity or backstop facilities which may be drawn upon if the SPE experiences future funding difficulties.
–
Direct investment in the notes issued by SPEs.
'Spread risk'
Measures the impact of changes to the swap
spread, i.e. the difference between swap rates and government bond yields.
'Standards & Poor's'
A credit rating agency.
'Standby facilities, credit lines and other commitments'
Agreements to lend to a customer in the future, subject to certain conditions. Such commitments are either made for a fixed period, or have no specific maturity but are cancellable by the lender subject to notice requirements.
'Statutory'
Line
 items of income, expense, profit or loss, assets, liabilities or equity stated in accordance with the requirements of the UK Companies Act 2006, which incorporates the requirements of International Financial Reporting Standards (IFRS). See
'Adjusted profit before tax' for details of the adjustments made to the statutory results in arriving at the adjusted profit.
'STD / Standardised approach'
A method of calculating Risk Weighted Assets that relies on a mandatory framework set by the regulator to derive risk weights based on counterparty type and a credit rating provided by an External
Credit Assessment Institute.
'Stress Testing'
A process which involves identifying possible future adverse events or changes in economic conditions that could have unfavourable effects on the Group (either financial or non-financial),
assessing the Group's ability to withstand such changes, and identifying management actions to mitigate the impact.
'Stressed VAR (SVaR)'
An estimate of the potential loss arising from a 12-month period of significant financial stress. SVaR
uses DVaR methodology based on inputs calibrated to historical data from a continuous twelve month period that maximises the DVaR based capital at a 99% one-tailed confidence limit (also see 'value-at-risk (VaR)' and 'daily value at
risk (DVaR)').
'Structural currency exposures'
Foreign currency exposures arising from the net assets of overseas or otherwise non-sterling operations such as subsidiaries, associates, joint ventures and branches. The value of the net assets of
these operations increases or decreases due to changes in sterling exchange rates, which may be mitigated by hedging.
'Structural hedge'
An interest rate hedge which functions to reduce the impact of the volatility of short-term interest rate
movements on positions that exist within the balance sheet that carry interest rates that do not re-price with market rates. See 'Equity structural hedge' and 'Product structural hedge'.
'Structured Investment Vehicles (SIVs)'
Special Purpose Entities (SPEs) which invest in diversified portfolios of interest earning assets to take advantage of the spread differentials between the assets in the SIV and the funding cost.
'Structured notes'
Investments which pay a return linked to the value or level of a specified asset or index and sometimes offer capital protection if the value declines. Structured notes can be linked to equities,
interest rates, funds, commodities and foreign currency.
'Sub-prime'
Loans
 to borrowers typically having weak credit histories that include payment delinquencies and potentially more severe problems such as court judgements and bankruptcies. They may also display reduced repayment capacity as measured by credit scores,
high debt-to-income ratios, or other criteria indicating heightened risk of default.
'Subordinated liabilities'
Liabilities which, in the event of insolvency or liquidation of the issuer, are subordinated to
the claims of depositors and other creditors of the issuer.
'Subordination'
The state of prioritising repayments of principal and interest on debt to a creditor lower than repayments to other creditors by the same debtor. That is, claims of a security are settled by a
debtor to a creditor only after the claims of securities held by other creditors of the same debtor have been settled.
'Supervisory Formula (SF) method'
One of three types of calculation that a firm with permission to use the Internal
Ratings-Based (IRB) approach must apply to securitisation exposures. The others are the ratings based method (RBM) and the internal assessment approach (IAA). Applies to non-rated exposures based on inputs that the originator must supply.
'Tangible equity'
Equity adjusted for the deduction of intangible assets and goodwill.
'Term premium'
Additional interest required by investors to hold assets with a longer period to maturity.
'The
Bank'
Barclays Bank PLC.
'Through-The-Cycle (TTC)'
Refers to credit risk measures which seek to capture the average risk characteristics of a credit
asset over a credit cycle.
'Tier 1 capital'
A measure of a bank's financial strength defined by the FSA. It captures Core Tier 1 capital plus other Tier 1 securities in issue, but is subject to a deduction in respect of material
holdings in financial companies.
'Tier 1 capital
ratio'
The ratio expresses Tier 1 capital as a percentage of risk weighted assets.
'Tier 1 notes / Tier One Notes (TONS)'
Hybrid issued capital
securities which are accounted for as liabilities. Under FSA rules, they qualify as other Tier 1 capital.
'Tier 2 capital'
Includes qualifying subordinated debt and other Tier 2 securities in issue, eligible collective impairment
allowances, unrealised available for sale equity gains and revaluation reserves. It is subject to deductions relating to the excess of expected loss over regulatory impairment allowance, securitisation positions and material holdings in financial
companies.
'Trading Book'
A regulatory classification consisting of all positions in financial instruments or commodities which Barclays deems to be held with trading intent or to be hedging other instruments in the trading
book. Trading book positions attract market risk and counterparty credit risk regulatory capital requirements (or capital deduction where required).
I  377
Glossary of terms continued
'Turnbull Guidance'
Published by the Financial Reporting Council, the Turnbull Guidance ('Internal Control: Revised Guidance for Directors on the UK Corporate Governance Code') provides best practice for
risk management and internal control in UK PLCs.
'Twin-peaks
regulation'
A structure of financial regulation under which there are two regulatory bodies, one which is responsible for prudential regulation and one which is responsible for
conduct of business regulation. In the UK, the two responsible bodies (from 1 April 2013) are the Prudential Regulatory Authority (PRA) and the Financial Conduct Authority (FCA).
'UK'
Geographic segment where Barclays operates comprising
the UK.
'UK Bank levy'
A levy that applies to UK banks, building societies and the UK operations of foreign banks. The levy is payable based on a percentage of the chargeable equity and liabilities of the bank on its
balance sheet date.
'UK Retail and Business Banking (UK
RBB)'
A leading UK high street bank providing current account and savings products and Woolwich branded mortgages. UK RBB also provides unsecured loans, protection products and
general insurance as well as banking and money transmission services to small and medium enterprises.
'Unencumbered'
Assets not used to secure liabilities or otherwise pledged.
'Unfunded'
Exposures
 where the notional amount of the transaction is unfunded. Represents exposures where a commitment to provide future funding has been made and the funds have not been released.
'US economic sanctions'
US economic sanctions, administered
by the Office of Foreign Assets Control, against designated foreign countries, nationals and others.
'Valuation weighted
approach'
In the context of credit risk disclosures on secured home loans, a means of calculating marked to market LTVs derived by comparing total outstanding balance and the value
of total collateral we hold against these balances.
'Value at Risk
(VaR)'
See 'DVaR'.
'Watchlists (WL)'
The Investment Bank and Absa Wholesale (Absa Capital and Absa Business Banking) use the Watchlist
framework to monitor and manage clients where there are grounds for concern regarding their financial health. Clients are assigned a specific Watchlist category based on various qualifying criteria relating to the severity of their financial
difficulties. As an obligor's financial health improves or deteriorates their Watchlist classification will change accordingly.
'Wealth and Investment Management (WIM)'
Provides a full range of wealth management services to affluent and high net worth clients globally, including banking, credit, investments and advisory services.
'Wholesale loans/lending'
Lending to larger businesses, financial institutions and sovereign entities.
'Write-off'
Refers
 to the point where it is determined that an asset is irrecoverable, or it is no longer considered economically viable to try and recover the asset or it is deemed immaterial or full and final settlement is reached and the shortfall written off. In
the event of write-off, the customer balance is removed from the balance sheet and the impairment reserve held against the asset is released.
'Wrong-way risk'
Relates to a trading exposure and arises
when there is significant correlation between the underlying asset and the counterparty, which in the event of default would lead to a significant mark-to-market loss.
378  I
Signatures
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorised the undersigned to sign this annual report on its behalf.
Date March 13, 2013
Barclays PLC
(Registrant)
By
/s/ Chris Lucas
Chris Lucas, Group Finance Director
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused
and authorised the undersigned to sign this annual report on its behalf.
Date March 13, 2013
Barclays Bank PLC
(Registrant)
By
/s/ Chris Lucas
Chris Lucas, Group Finance Director
EXHIBIT INDEX
Exhibit
Description
1.1
Articles of Association of Barclays PLC (incorporated by reference to the Form 6-K filed on May 13th, 2010)
1.2
Articles of Association of Barclays Bank PLC (incorporated by reference to the Form 6-K filed on May 13th, 2010)
2.1
Long Term Debt Instruments: Neither Barclays PLC nor Barclays Bank PLC is party to any single instrument relating to long-term debt pursuant to which a total amount of securities
exceeding 10% of either Barclays PLC's or Barclays Bank PLC's total assets (on a consolidated basis) is authorised to be issued. Each of Barclays PLC and Barclays Bank PLC hereby agrees to furnish to the Securities and Exchange Commission
(the "Commission"), upon its request, a copy of any instrument defining the rights of holders of its long-term debt or the rights of holders of the long-term debt of any of its subsidiaries for which consolidated or unconsolidated
financial statements are required to be filed with the Commission.
4.0
Rules of the Barclays Group Performance Share Plan (2005) (incorporated by reference to the 2006 Form 20-F filed on March 26th, 2007)
4.1
Rules of the Barclays PLC Renewed 1986 Executive Share Option Scheme (incorporated by reference to the Barclays PLC Registration Statement on Form S-8 (File no. 333-153723) filed on
September 29th, 2008)
4.2
Rules of the Barclays PLC Approved Incentive Share Option Plan (incorporated by reference to the Barclays PLC Registration Statement on Form S-8 (File no. 333-153723) filed on
September 29th, 2008)
4.3
Rules of the Barclays PLC Unapproved Incentive Share Option Plans (incorporated by reference to the Barclays PLC Registration Statement on Form S-8 (File no. 333-153723) filed on
September 29th, 2008)
4.4
Rules of the Barclays PLC Executive Share Award Scheme – Incorporated by reference to the Barclays PLC Registration Statement on Form S-8 (File no. 333-173899) filed on May
3rd, 2011)
4.5
Rules of the Barclays Group Special Award Performance Share Plan (incorporated by reference to the Barclays PLC Registration Statement on Form S-8 (File no. 333-153723) filed on
September 29th, 2008
4.6
Rules of the Barclays Group Incentive Share Plan (incorporated by reference to the Barclays PLC Registration Statement on Form S-8 (File no. 333-153723) filed on
September 29th, 2008)
4.7
Rules of Barclays Bank PLC 1999 Directors Deferred Compensation Plan (amended and restated, effective January 1, 2008) (incorporated by reference to Barclays Bank PLC's
Registration Statement on Form S-8 (File no. 333-149301) filed on February 19th, 2008)
4.8
Rules of Barclays Bank PLC Senior Management Deferred Compensation Plan (amended and restated, effective January 1, 2008) (incorporated by reference to Barclays Bank PLC's
Registration Statement on Form S-8 (File no. 333-149302) filed on February 19th, 2008)
4.9
Rules of the Barclays Group Share Value Plan – Incorporated by reference to the Barclays PLC Registration Statement on Form S-8 (File no. 333-183110) filed on August 7th,
2012)
4.10
Rules of the Barclays PLC Long Term Incentive Plan incorporated by reference to the Barclays PLC Registration Statement on Form S-8 (File no. 333-173899) filed on May 3rd,
2011)
4.11
Service Contract – Antony Jenkins
4.12
Contract of Employment – Christopher Lucas (incorporated by reference to the 2006 Form 20-F filed on March 26th, 2007)
4.13
Appointment Letter – Sir John Sunderland (incorporated by reference to the 2005 Form 20-F filed on March 29, 2006)
4.14
Appointment Letter – Sir Andrew Likierman (incorporated by reference to the 2005 Form 20-F filed on March 29, 2006)
4.15
Appointment Letter – Fulvio Conti (incorporated by reference to the 2006 Form 20-F filed on March 26, 2007)
4.16
Appointment Letter – David Booth (incorporated by reference to the 2007 20-F filed on March 26, 2008)
4.17
Appointment Letter – Sir Michael Rake (incorporated by reference to the 2007 20-F filed on March 26, 2008)
4.18
Appointment Letter – Simon Fraser (incorporated by reference to the 2008 Form 20-F filed on March 24, 2008)
4.19
Appointment Letter – Reuben Jeffery III (incorporated by reference to the 2009 Form 20-F filed on March 19, 2010)
4.20
Appointment Letter – Dambisa Moyo (incorporated by reference to the 2010 Form 20-F filed on March 21, 2011)
4.21
Appointment Letter – Sir David Walker
4.22
Appointment Letter – Tim Breedon
4.23
Appointment Letter – Diane de Saint Victor
4.24
Indemnity Letter – Sir Andrew Likierman (incorporated by reference to the 2005 Form 20-F filed on March 29th, 2006)
4.25
Indemnity Letter – Sir John Sunderland (incorporated by reference to the 2005 Form 20-F filed on March 29th, 2006)
4.26
Amended and Restated Stock Purchase Agreement, dated as of June 16, 2009, by and among Barclays Bank PLC, Barclays PLC (solely for the purposes of Section 6.16, Section 6.18
and Section 6.24) and BlackRock, Inc. (incorporated by reference to the 2009 Form 20-F filed on March 19th, 2010)
4.27
Stockholder Agreement, dated as of December 1, 2009, by and among BlackRock, Inc., Barclays Bank PLC and Barclays BR Holdings S.à r.l. (incorporated by reference to the
2009 Form 20-F filed on March 19th, 2010)
7.1
Ratios of earnings to fixed charges. The calculations can be found in the Barclays Bank PLC financial data on page 363 of the Form 20-F.
7.2
Ratios of earnings to combined fixed charges, preference share dividends and similar appropriations. The calculations can be found in the Barclays Bank PLC financial data on page
363 of the Form 20-F.
8.1
List of subsidiaries
11.1
Code of Ethics
12.1
Certifications filed pursuant to 17 CFR 240. 13(a)-14(a)
13.1
Certifications filed pursuant to 17 CFR 240. 13(a) and 18 U.S.C 1350(a) and 1350(b)
15.1
Consent of PricewaterhouseCoopers LLP for incorporation by reference of reports in certain securities registration statements of Barclays PLC and Barclays Bank PLC.