| Filed by Barclays PLC Pursuant to Rule 425 under the Securities Act of 1933
Subject Companies:
Barclays PLC (Commission File No. 333-195965) Barclays Bank PLC (Commission File No. 333-190038)
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Barclays PLC
Group Strategy Update
Building Barclays as the ‘Go-To’ bank
8 May 2014
Filed by Barclays PLC Pursuant to
Rule 425 under the Securities Act of 1933 and
deemed filed pursuant to Rule 14d-2 under the
Securities Exchange Act of 1934
Subject Companies:
Barclays PLC
(Commission File No. 333-195965)
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GROUP CORE NON-CORE CONCLUSION
Repositioning and simplifying Barclays
Rightsizing and focusing the Investment Bank
Establishing a dedicated non-core unit and a new Personal & Corporate Banking business
Allocating capital to growth businesses
Delivering a structurally lower cost base
Generating higher and more sustainable returns
2 | Group Strategy Update | 8 May 2014
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GROUP CORE NON-CORE CONCLUSION
Rebalancing the Group to improve returns
Regulatory landscape shifted significantly
IB - overweight FICC Group - overweight IB
Increasing capital requirements
1 FICC2 as % of 2 IB as %
Accelerated timetable for leverage FY 2013 FY 2013 total IB of Group requirements
Sharply increased UK bank levy Risk weighted assets Risk weighted assets
71 51 (RWAs) (RWAs)
Subdued economic environment Income 54 Profit before tax3 44
Quantitative Easing and low interest rates
Average allocated
Over-reliance on Macro products 57 equity
Leverage exposure 62
IB Return on average
5.8 equity (RoE)3
Our objective remains to become the ‘Go-To’ bank; the way we get there will be different
1 On CRD IV basis | 2 Includes Exit Quadrant | 3 Excludes CTA |
3 | Group Strategy Update | 8 May 2014
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GROUP CORE NON-CORE CONCLUSION
A focused international bank delivering improved, sustainable returns and growth
Playing to our Focusing on high Eliminating marginal or Relentlessly focusing existing strengths growth businesses declining businesses on costs
Grow our large, Reallocate capital Re-align certain assets Resize the IB within the successful retail and towards traditional and businesses for exit or Group for through the corporate franchises banking activities and run-off cycle returns >12% growth businesses
Leverage dual home Discontinue certain FICC Maintain positioning for markets in US and UK Achieve above average businesses impacted by economic recovery in the growth outside the UK, new regulation UK and other key
Grow presence in particularly in the US markets Equities, Banking, Credit Manage down the non-(cards, investment and certain Macro core portfolio while Complete significant, banking), and across products less impacted preserving capital structural cost reductions Africa by regulation and with across the Group scale advantage
…building on our track record
#1 in UK credit card US card receivables Reduced Exit Quadrant Q1 2014 delivered lowest receivables1 increased >10x since 2004 RWAs by 37% in 2013 quarterly operating expenses since 2009
Achieved record 10% One of the largest banks in Commodities business excluding CTA stock share of UK Africa by assets and profit refocused to match the mortgages with strong new environment Widespread deployment
Top 5 for global M&A returns of mobile banking as announced and completed
2 2 alternative, lower cost
#1 in UK IPOs deals in 2013 channel
1 Source: Nilson | 2 Source: Dealogic |
4 | Group Strategy Update | 8 May 2014
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GROUP CORE NON-CORE CONCLUSION
Reorganising to a simpler, more focused and balanced structure
Barclays Group
Personal & Africa Investment Barclays Non-Core Barclaycard Corporate Banking Banking Bank (BNC)
1
FY RWAs c.£120bn RWAs c.£35bn RWAs c.£40bn RWAs c.£120bn RWAs c.£115bn 2013 Leverage c.£330bn Leverage c.£45bn Leverage c.£65bn Leverage c.£490bn Leverage c.£400bn
UK Retail UK cards Retail/cards and Banking Existing Exit Quadrant
Corporate Banking US cards Insurance Macro Assets
Wealth Europe cards Wealth Credit Additional Europe retail
Business Solutions Corporate Banking Equities and corporate
Investment banking Additional non-core elements of the IB
Other non-strategic businesses and assets
Preliminary FY 2013 adjusted results1,2
Income £25.7bn Return on average equity (RoE) c.12%
Impairment(£2.2bn) Risk weighted assets (RWAs) c.£320bn
Operating expenses(£16.2bn) Average allocated equity c.£36bn
Profit before tax £7.3bn Leverage exposure c.£960bn
1 Excludes CTA and adjusting items and on CRD IV basis | 2 Includes Head Office as part of ‘core’, representing c.£5bn RWAs and c.£30bn leverage exposure |
5 | Group Strategy Update | 8 May 2014 Preliminary estimates; to be superseded by July 2014 restatement
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GROUP CORE NON-CORE CONCLUSION
Personal & Corporate Banking:
Established scale franchise, anchored from the UK
Preliminary
FY 20131 (£bn)
Income 8.8
Impairment(0.6)
Operating expenses(5.5)
Profit before tax 2.7
Financial performance measures2
RoE 11-12%
Leverage exposure c.£330bn
RWAs c.£120bn
Average allocated equity c.£17bn
Highlights
Combining strong UK market positions with international Corporate and Wealth franchises covering larger clients:
- 15 million retail customers
- 800,000 small businesses
- 35,000 corporate customers
- £200bn wealth client assets
Well controlled risk and positioned to leverage economic recovery in the UK and connected international markets
Supported by common industrial strength product platforms and digital innovation to drive differentiated customer and client experience and reduce cost
Provides one continuum for meeting the needs of individuals and businesses
1 Excludes CTA of c.£0.4bn and adjusting items | 2 CRD IV basis |
6 | Group Strategy Update | 8 May 2014 Preliminary estimates; to be superseded by July 2014 restatement
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GROUP CORE NON-CORE CONCLUSION
Barclaycard:
High returning business, with strong growth opportunity
Preliminary
FY 20131 (£bn)
Income 4.1
Impairment(1.1)
Operating expenses (1.8)
Profit before tax 1.2
Financial performance measures 2
RoE 16-17%
Leverage exposure c.£45bn
RWAs c.£35bn
Average allocated equity c.£5bn
Highlights
Consistent delivery of growth at high returns across consumer payments businesses in five markets – with Absa Card now included in Africa Banking
Leading franchise with increased share across all markets and businesses three years in a row
Recent growth achieved through:
– Increase of 7.7 million customers over three years
– Increase in balances by 41% over three years
– Selective acquisitions
– Leveraging a combination of bank, partner and direct distribution channels
Remains well positioned, with high competitive advantage as a result of:
– Leading cost structure
– Ability to drive relevant new product innovations
– World class analytics
– Scale in both Europe and the US
– Scale in both consumer issuing and merchant acquiring
1 Excludes CTA and adjusting items | 2 CRD IV basis |
7 | Group Strategy Update | 8 May 2014 Preliminary estimates; to be superseded by July 2014 restatement
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GROUP CORE NON-CORE CONCLUSION
Africa Banking: Longer term growth, with competitive advantage in many countries
Preliminary
FY 20131 (£bn)
Income 4.0
Impairment (0.5)
Operating expenses (2.5)
Profit before tax 1.0
Financial performance measures 2
RoE 8-9%
Leverage exposure c.£65bn
RWAs c.£40bn
Average equity c.£4bn
Highlights
12 countries with a network of more than 1,400 branches and over 10,900 ATMs
More than 45,000 employees and over 12 million customers
Customer assets of approximately £36bn
Competitive advantage through a combination of:
– Being part of a global group
– Having a well established local presence
Ambitious target to be top three by revenue in the next three years in South Africa, Kenya, Ghana, Botswana and Zambia
Focusing our efforts on three areas:
– Turnaround of our retail franchise across Africa
– Investing in corporate banking across the continent
– Capturing the growth opportunity in wealth, investment management and insurance
1 Excludes CTA and adjusting items | 2 CRD IV basis |
8 | Group Strategy Update | 8 May 2014 Preliminary estimates; to be superseded by July 2014
restatement
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GROUP CORE NON-CORE CONCLUSION
Core Investment Bank
Barclays Group
Personal & Corporate Banking
Barclaycard
Africa Banking
Investment Bank RWAs c.£120bn
Leverage c.£330bn
RWAs c.£35bn
Leverage c.£45bn
RWAs c.£40bn
Leverage c.£65bn RWAs c.£40bn
RWAs c.£120bn
Leverage c.£490bn
Leverage c.£65bn
UK Retail
Corporate Banking
Wealth UK cards
US cards
Europe cards
Business Solutions Retail/cards and Insurance
Wealth
Corporate Banking
Investment banking Banking
Macro
Credit
Equities
Barclays Non-Core
(BNC) RWAs c.£115bn
Leverage c.£400bn
Existing Exit Quadrant Assets
Additional Europe retail and corporate
Additional non-core elements of the IB
Other non-strategic businesses and assets
Preliminary FY 2013 adjusted results1,2
Income
Impairment
Operating expenses
Profit before tax
£25.7bn
Return on average equity (RoE)
c.12%
(£2.2bn)
Risk weighted assets (RWAs)
c.£320bn
(£16.2bn)
Average allocated equity
c.£36bn
£7.3bn
Leverage exposure
c.£960bn
1 CRD IV basis | 2 Includes Head Office as part of ‘core’, representing c.£5bn RWAs and c.£30bn leverage exposure | 3 Excludes CTA and adjusting items |
9 | Group Strategy Update | 8 May 2014 Preliminary estimates; to be superseded by July 2014 restatement
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GROUP CORE NON-CORE CONCLUSION
Core Investment Bank:
Building on competitive advantages
Core Investment Bank Non-core Investment Bank
1
FY RWAs: c.£120bn RWAs: c.£90bn
2013 Leverage exposure: c.£490bn Leverage exposure: c.£340bn
Global Equities Global Credit Right-sized Macro Markets
Exit Quadrant Assets
Cash Equities Credit Products Foreign Exchange Most physical commodities
Equity Derivatives Securitised Products Certain Emerging Markets products
Rates
Equity Prime Municipals Capital intensive Macro Markets transactions Fixed income secondary trading to be standard, cleared and collateralised, short term and executed on the Principal Businesses electronic flow platform where relevant Investments
Credit
Banking
ECM DCM Front-to-back efficiency driven Origination led headcount reductions
Banking Advisory
Build on leading positions in our home markets of the UK and the US, where we are already well positioned
Exit those products with low returns under new regulatory rules
Structurally lower the cost base through infrastructure efficiencies and refining the client proposition
Improve capital efficiency of Markets businesses
1 CRD IV basis |
10 | Group Strategy Update | 8 May 2014 Preliminary estimates; to be superseded by July 2014 restatement
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GROUP CORE NON-CORE CONCLUSION
Capitalising on strength of existing client franchise
Our two home markets represent largest
Where we have strong market positions Focusing on smaller number of key clients investment banking revenue pools
Global revenue pools by region1
Target top three fee share with (H1 2013) core clients
Top 3 all International Bonds2
– c.1,000 clients generated >75%
Top 2 USD Covered Bonds2 of total Investment Bank
Top 5 Banking fee share2 revenues in 2013
US Top 5 in Announced M&A2 Focus resources on leading clients,
Top 5 Equities trading platform1 meaningfully reducing the number of Americas Top 5 US Rates franchise1 non-core global, corporate and 59% and UK institutional clients
Full Macro trading capabilities
A tiered service model based on client profitability
Further leverage existing strong 2 client franchises
#1 in UK IPOs
#1 EMEA Rates franchise1
– Dual home markets in UK and Europe #1 EUR Covered Bonds2 US
20% excl. UK #1 in Sterling Bonds2
– Maintain relevant and efficient UK 2 footprint in all other geographies
Top 3 Banking fee share
Top 4 Euromarket Bonds2 More selective balance sheet use to
Top 5 in Announced M&A2 support core client activity Asia
21% Full Macro trading capabilities
Pacific
NOTE Market positions based on 2013 data | 1Coalition: Revenue Pools are based upon the 1H13 results, and adopt the ‘franchise’ view; market positions are based upon the FY13 results, adopt the ‘product’ view and are based on the Coalition Index banks|
2 Dealogic |
11 | Group Strategy Update | 8 May 2014 Preliminary estimates; to be superseded by July 2014 restatement
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GROUP CORE NON-CORE CONCLUSION
Rescaling the Investment Bank enables greater balance
Balance Sheet – FY 2013 and FY 2016 P&L – FY 2013
Total Group (100%)
53%
46% c.£844bn
£222bn 11%
19%
50%
£2.8bn
1 £10.7bn c.£2.5bn c.£400bn c.£120bn c.£8.7bn
c.60% c.35% c.50% £30% 38% c.30% 44% c.40%
Leverage exposure RWAs Adjusted income Adjusted PBT2
FY 2013 Investment Bank (as previously published) % of FY 2016 core Investment Bank % of Total Group FY 2013 core Investment Bank % of Total Total Group Group
1: 2016 leverage exposure estimated on the basis of calculation methodology set out in BCBS Jan-14 proposals. All other regulatory metrics calculated on a CRD IV basis |2 Excluding CTA
12 | Group Strategy Update | 8 May 2014 Preliminary estimates; to be superseded by July 2014 restatement
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GROUP CORE NON-CORE CONCLUSION
Focus on Barclays Non-Core
Barclays Group
Personal & Corporate Banking
FY 20131
Barclaycard
Africa Banking
Investment Bank
RWAs c.£120bn
Leverage c.£330bn
RWAs c.£35bn
Leverage c.£45bn
RWAs c.£40bn
Leverage c.£65bn
RWAs c.£120bn
Leverage c.£490bn
UK Retail
Corporate Banking
Wealth
UK cards
US cards
Europe cards
Business Solutions Retail/cards and Insurance
Wealth
Corporate Banking
Investment banking
Banking
Macro
Credit
Equities
Preliminary FY 2013 adjusted results1,2
Income £25.7bn Return on average equity (RoE) c.12%
Impairment (£2.2bn) Risk weighted assets (RWAs) c.£320bn
Operating expenses (£16.2bn) Average allocated equity c.£36bn
Profit before tax £7.3bn Leverage exposure c.£960bn
Barclays Non-Core (BNC)
RWAs c.£115bn Leverage c.£400bn
Existing Exit Quadrant Assets
Additional Europe retail and corporate
Additional non-core elements of the IB
Other non-strategic businesses and assets
1 Excludes CTA and adjusting items and on CRD IV basis | 2 Includes Head Office as part of ‘core’, representing c.£5bn RWAs and c.£30bn leverage exposure |
13 | Group Strategy Update | 8 May 2014 Preliminary estimates; to be superseded by July 2014 restatement
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GROUP CORE NON-CORE CONCLUSION
Structural cost reduction being achieved
Group cost guidance1 (£bn) Core cost targets1 (£bn)
Original Group cost target and interim guidance Revised Group cost guidance Core cost targets
18.7 c.(9%) c.(13%)
19 19
18 18 c.(10%) c.17 17 c.16.3 17 c.16.2
16 16
17.5
15 16.8 15 <14.5
14 14
13 13
Costs to 2013 2014 2015 2013 2016 achieve £1.2bn c.£1.6b c.£0.5bn2
(CTA)
Transform n
Of original £2.7bn CTA estimate, approximately £1.45bn has been spent to date; an additional £800m is required principally to reposition the Investment Bank, including a gross reduction of 7,000 FTE through to 2016 across core and non-core
2016 core cost target of <£14.5bn assumes constant currency rates and excludes large extraordinary items, such as conduct charges
Majority of future savings expected to occur through headcount reductions and greater levels of automation in all businesses
1 Excludes provisions for PPI and IRHP redress, goodwill impairment and CTA | 2 £0.2bn of additional CTA expected in 2016 across both core and non-core |
14 | Group Strategy Update | 8 May 2014 Preliminary estimates; to be superseded by July 2014 restatement
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GROUP CORE NON-CORE CONCLUSION
Accelerated CTA to increase 2014 headcount reduction
Estimated £1.6bn of CTA with increase in gross headcount reduction to c.14,000 for 2014
Front Office and Distribution reductions
Savings driven by branch network transformation across UK, Europe and Africa
Front Office restructuring across all businesses, including Director and Managing Director reductions
Product and geography realignments
c.14,000 Operations and Technology reductions
c.50% FTE c.40%
reduction Firm wide organisational review, including de-layering
Savings driven by automation of IT platforms across the Group and move to digital channels in retail businesses
Operational efficiencies, including infrastructure consolidation
c.10%
Central Function reductions
Firm wide organisational review, including de-layering
Impact of strategy changes
Consolidation through creation of shared services and automation
15 | Group Strategy Update | 8 May 2014 Preliminary estimates; to be superseded by July 2014 restatement
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GROUP CORE NON-CORE CONCLUSION
Allocated capital will reflect greater balance of the Group
FY 13 pre-resegmentation (£bn) FY 13 post-resegmentation estimate (£bn) FY 16 guidance (£bn)
Leverage exposure £1.4tn £1.4tn c.£1.1tn1
RWAs £436bn £436bn c.£400bn
c.55%
BNC BNC
26% <15%
Retail and c.115 c.50 Commercial 49% +15% 214
Core
Core (excl. IB) c.55% 46% (excl. IB) c.230 c.200
Investment Maintained Bank 51%
222 Core IB Core IB
28% £30% c.120 c.120
The core Investment Bank will represent no more than 30% of the Group’s RWAs
1 2016 leverage exposure estimated on the basis of calculation methodology set out in BCBS Jan-14 proposals. All other regulatory metrics calculated on a CRD IV basis |
16 | Group Strategy Update | 8 May 2014 Preliminary estimates; to be superseded by July 2014 restatement
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GROUP CORE NON-CORE CONCLUSION
Core businesses expected to maintain average adjusted RoE >12% on a much higher equity base
% Core c.12 >12
c.3 Non-core c.9-10 drag <3%
c.6
6.1
1.6 Group 4.5 >9% 3.5 1.0
2013 Adjusting 2013 CTA 2013 Non-core 2013 2013-16 Proforma Income growth/ 2016 Core Statutory RoE items Adjusted RoE Adjusted RoE drag Core RoE Capital core RoE cost reduction adjusted RoE excl. CTA accretion target Group Core Core
Average allocated equity (£bn) 52 c.36 48-50
Core businesses estimated to deliver adjusted RoE excluding CTA of >12% by Returns target takes into account increase in the total equity 2016, achieved through: base to meet CET1 and leverage ratio targets
Net core cost savings of greater than £1.7bn
These plans will reduce the RoE drag from Barclays Non-Core Growth in our retail and corporate franchises and selected IB businesses from c.6% to <3% in 2016, of which c.50bps is Europe retail Continuous optimisation of core Investment Bank RWAs
17 | Group Strategy Update | 8 May 2014 Preliminary estimates; to be superseded by July 2014 restatement
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GROUP CORE NON-CORE CONCLUSION
Rebalanced Barclays – a preliminary snapshot of FY 2013
Barclays Group Core BNC
Preliminary FY 20131 (£bn)
Income 28.2 25.7 2.5
Impairment (3.1)(2.2)(0.9)
Operating expenses (18.7)(16.2)(2.5)
Profit before tax 6.4 7.3 (1.0)
RoE/(Non-core RoE drag) 6.1% c.12% c.(6%)
Leverage exposure (£bn) 1.4tn c.960 c.400
RWAs (£bn) 436 c.320 c.115
Average allocated equity 52 c.36 c.16
Highlights: Core business
Over 90% of income and improved
profit before tax
Strong returns already generated
with adjusted RoE1 of c.12%
achieved in 2013
Cost efficiency expected to improve
further
Non-core drag on RoE represents the
difference between Group RoE and
core RoE
1 Excludes CTA and adjusting items. Financial measures presented on CRD IV basis |
18 | Group Strategy Update | 8 May 2014 Preliminary estimates; to be superseded by July 2014 restatement
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GROUP CORE NON-CORE CONCLUSION
2016 Transform financial commitments
1 Capital CRD IV FL CET1 ratio >11.0% Group 2 Leverage Leverage ratio >4.0%
3 Dividend Payout ratio 40-50%
4 Returns Adjusted RoE >12%
Barclays Core
Adjusted operating expenses
5 Cost
<£14.5bn
Barclays Non-Core 6 Returns Drag on adjusted RoE <(3%)
19 | Group Strategy Update | 8 May 2014
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Core Investment Bank and Barclays Non-Core
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GROUP CORE NON-CORE CONCLUSION
Investment Bank:
Preliminary 2013 core Investment Bank financials
Preliminary
FY 20131 (£bn)
Banking income 2.1
Markets income 6.6
Macro 2.4
Credit 1.9
Equities 2.3
Income 8.7
Impairment 0
Operating expenses (6.2)
Profit before tax 2.5
Financial performance measures 2
RoE 9-10%
Leverage exposure c.£490bn
RWAs c.£120bn
Average allocated equity c.£17bn
Highlights
Core Investment Bank being run with returns focus:
– Build on competitive advantage of having dual US and UK home markets
– Focus on products where we have scale and high returns
– Reshape business to better align Credit with DCM and Equities with ECM
– Focus Macro trading operations on simpler, collateralised, shorter dated products and increasingly execute on electronic platforms
Continue to manage down resources and operating expenses:
– Simplifying Markets product offering
– Re-engineering Operations and Technology
– Rationalising infrastructure
Run the core Investment Bank with c.£400bn of leverage exposure and c.£120bn of RWAs in 2016
Projected average through the cycle RoE >12%
1 Excludes CTA of c.£0.2bn and adjusting items | 2 CRD IV basis |
21 | Group Strategy Update | 8 May 2014 Preliminary estimates; to be superseded by July 2014 restatement
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GROUP CORE NON-CORE CONCLUSION
Barclays Non-Core:
Run-down will be a critical element of Transform
` Preliminary
FY 20131 (£bn)
Income 2.5
Impairment (0.9)
Operating expenses (2.5)
Profit/loss before tax (1.0)
Financial performance measures 2
Leverage exposure c.£400bn
RWAs c.£115bn
Average allocated equity c.£16bn
Overview
Income primarily driven by Investment Bank Markets businesses and net interest income on European mortgages
Impairment principally related to Europe retail and corporate exposures
Operating expenses principally reflect non-core Investment Bank cost base and Europe retail operations
Majority of leverage exposure relates to pre-CRD IV rates portfolio and trading book in BNC
Adjusted non-core RoE1 drag of c.6% in 2013
1 Excludes CTA of c.£0.5bn and adjusting items | 2 CRD IV basis |
22 | Group Strategy Update | 8 May 2014 Preliminary estimates; to be superseded by July 2014 restatement
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GROUP CORE NON-CORE CONCLUSION
Rigorous discipline is being applied to non-core
Composition of BNC Selection criteria and components
Approximate split of FY 2013 RWAs (£bn) Strategic attractiveness
– Limited growth opportunities for Barclays
Non-core IB Europe retail Non-core Corporate Additional Non-core
– Businesses with poor strategic fit
c.115 Returns c.2–Businesses not expected to meet leverage and RWA c.7 returns hurdles c.16 Expanded non-core unit includes:
– Previous Investment Bank Exit Quadrant with additional challenged FICC businesses and Principal Investments
– All of Europe retail
– Certain Corporate assets and other smaller Wealth and
59 Barclaycard portfolios
3
9 Management and governance c.90 Dedicated management team and own governance
– Delegated authority from Group ExCo, reporting to CEO
Non-core trading assets to be managed by dedicated traders;
47 sharing of expertise with core where required
Will act in a commercial way and preserve tangible net asset value and capital as a priority FY 2013 FY 2013 Strong track record of running down legacy assets – reduced Exit Quadrant RWAs BNC RWAs Exit Quadrant Assets by 37% in 2013
23 | Group Strategy Update | 8 May 2014 Preliminary estimates; to be superseded by July 2014 restatement
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GROUP CORE NON-CORE CONCLUSION
Investment Bank assets are majority of non-core
Portfolios and businesses included:
Split of FY 2013
Non-strategic
RWAs (£bn) businesses Portfolio and Other Assets Book
c.10
24
Investment Bank Exit Quadrant c.35 Assets Trading 22 book run-off
Pre-CRD IV Rates portfolio
‘Trading book run-off’ comprises non-core elements of commodities, emerging markets, fixed income financing and securitised products
Counterparty credit risk is included in pre-CRD IV Rates portfolio, Portfolio Assets Book and Trading book run-off
Leverage exposure related to Investment Bank non-core is estimated at c.£340bn
Preliminary FY 13 Income RWAs
(£m)(£bn)
Portfolio Assets Book 142 24
Pre-CRD IV Rates portfolio(140) 22
Investment Bank 2 47
Exit Quadrant Assets
Trading book run-off c.710 c.35
Non-strategic businesses and other c.785 c.10
Additional non-core assets c.1,495 c.45
Total Investment Bank non-core c.1,500 c.90
| Group Strategy Update | 8 May 2014 Preliminary estimates; to be superseded by July 2014 restatement
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GROUP CORE NON-CORE CONCLUSION
Selected corporate, retail and other assets constitute remainder of non-core
Portfolios and businesses included:
Split of FY13
CRD IV RWAs Other retail
assets Europe Retail
Exit Quadrant
Fair value Corporate
loans c.2
c.2
Non-core non-UK 9 Existing
corporate operations c.2 Europe and
Corporate
Exit Quadrant
Assets
c.7
Additional 3
Europe retail
assets
Corporate Europe
Exit Quadrant
Europe retail will be managed as a going concern as options are
assessed
Europe retail principally relates to high quality mortgage portfolios in
Spain and Italy which run-down organically at c.9% per year and
have stable average >90 day delinquency rate of 80bps
The additional non-core assets include £15.7bn of fair value, long
dated Corporate loans
Leverage exposure related to these non-core assets is estimated at
c.£60bn
Preliminary FY 13 Income RWAs
(£m)(£bn)
Europe retail Exit Quadrant 118 9
Corporate Europe Exit Quadrant 80 3
Europe and Corporate 198 12
Exit Quadrant Assets
Additional Europe retail assets c.530 c.7
Non-core non-UK Corporate operations c.80 c.2
Fair value, long dated Corporate loans c.(100) c.2
Other retail assets c.290 c.2
Additional non-core assets c.800 c.15
Total other non-core c.1,000 c.25
25 | Group Strategy Update | 8 May 2014 Preliminary estimates; to be superseded by July 2014 restatement
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GROUP CORE NON-CORE CONCLUSION
Non-core will be tightly managed to reduce RWAs and leverage
Anticipated RWA reduction of c.55% by 2016 (£bn) Anticipated reduction in leverage exposure of c.55% by 2016 (£bn)
c.400 c.55% c.115 c.55% Non-IB 25 c.80 c.300 c.50 c.1801 IB 90
2013 2014 2016 2013 2014 2016
Sales and run-off expected to drive RWA reductions Leverage exposure to reduce by 55%, as assets attracting
Remaining RWAs at end of 2016 are assumed to be primarily significant leverage regulatory add-ons are exited and/or European mortgages and long-dated counterparty credit risk more efficiently netted from our pre-CRD IV Rates portfolio Reduction in the non-core demonstrates scale of exit over the
Progress will not always be linear and may be dependent on planned period market conditions Anticipate meaningful reduction in 2014, with greater reductions in 2015-16
Preservation of net tangible asset value of the Group will be a priority as RoE drag is reduced from c.6% in 2013 to <3% in 2016
1 2016 leverage exposure estimated on the basis of calculation methodology set out in BCBS Jan-14 proposals. All other regulatory metrics calculated on a CRD IV basis |
26 | Group Strategy Update | 8 May 2014 Preliminary estimates; to be superseded by July 2014 restatement
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GROUP CORE NON-CORE CONCLUSION
Preliminary adjusted results FY 2013
Personal & Core
Preliminary FY 2013 Barclaycar Africa Barclays Total
Corporate Investment BNC
(£bn) 1 d Banking Core3 Group
Banking Bank
Income 8.8 4.1 4.0 8.7 25.7 2.5 28.2
Impairment (0.6)(1.1)(0.5) 0 (2.2)(0.9)(3.1)
Operating expenses (5.5)(1.8)(2.5)(6.2)(16.2)(2.5)(18.7)
Adjusted profit 2.7 1.2 1.0 2.5 7.3(1.0) 6.4
before tax
Adjusted financial performance measures2
Return on average equity 11-12% 16-17% 8-9% 9-10% c.12% c.(6%) 6.1%
Leverage exposure c.£330bn c.£45bn c.£65bn c.£490bn c.£960bn c.£400bn £1.4tn
RWAs c.£120bn c.£35bn c.£40bn c.£120bn c.£320bn c.£115bn £436bn
Average allocated equity c.£17bn c.£5bn c.£4bn c.£17bn c.£36bn c.£16bn £52bn
1 Excludes CTA of c.£1.2bn and adjusting items | 2 CRD IV basis | 3 Total core also includes Head Office |
27 | Group Strategy Update | 8 May 2014 Preliminary estimates; to be superseded by July 2014 restatement
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Conclusion
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GROUP CORE NON-CORE CONCLUSION
2016 Transform financial commitments
1 Capital CRD IV FL CET1 ratio >11.0%
Group 2 Leverage Leverage ratio >4.0%
3 Dividend Payout ratio 40-50%
4 Returns Adjusted RoE >12%
Core
5 Cost Adjusted operating expenses
<£14.5bn
Barclays Non-Core 6 Returns Drag on adjusted RoE <(3%)
29 | Group Strategy Update | 8 May 2014
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Q&A
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Important Notice
The information, statements and opinions contained in this document do not constitute a public offer under any applicable legislation or an offer to sell or solicitation of any offer to buy any securities or financial instruments or any advice or recommendation with respect to such securities or other financial instruments.
NOT FOR DISTRIBUTION, IN WHOLE OR IN PART, INTO ANY JURISDICTION IN WHICH IT WOULD BE UNLAWFUL TO DO SO.
THE DISTRIBUTION OF THIS DOCUMENT INTO ANY JURISDICTION MAY BE RESTRICTED BY LAW. PERSONS INTO WHOSE POSSESSION THIS DOCUMENT COMES SHOULD INFORM THEMSELVES ABOUT AND OBSERVE ANY SUCH RESTRICTION. FAILURE TO COMPLY WITH ANY SUCH RESTRICTIONS MAY CONSTITUTE A VIOLATION OF APPLICABLE SECURITIES LAWS.
Exchange Offer
The following statement is relevant to holders of certain existing securities of Barclays Bank PLC that are the subject of exchange offers launched by Barclays
PLC and Barclays Bank PLC on 15 May 2014 (the “Exchange Offer Securities”), and these investors should read this statement before reviewing the Group
Strategy Update presentation.
If you are not a holder of these Exchange Offer Securities, you may proceed directly to reviewing the Group Strategy Update presentation.
On May 15, 2014, Barclays PLC (“Barclays”) and Barclays Bank PLC (“Barclays Bank”, and together with Barclays, the “Offerors”) launched invitations to holders (“Holders”) of certain existing tier 1 securities (the “Existing T1 Securities”) issued by Barclays Bank to offer to exchange any or all of such securities for new additional tier 1 securities (the “New AT1 Securities”) to be issued by Barclays (the “Exchange Offers”).
Barclays has filed with the Securities and Exchange Commission (the “SEC”) a registration statement on Form F-4 (including the prospectus contained therein) and a tender offer statement on Schedule TO and other documents relating to the Exchange Offers. Holders are advised to read carefully the registration statement, the preliminary prospectus contained therein, the final prospectus when available, the tender offer statement and other documents as they contain important information about the Exchange Offers and procedures for participating in the Exchange Offers. Copies of these documents are available for free by visiting EDGAR on the SEC website at www.sec.gov. In addition, copies of the registration statement, prospectus and tender offer statement may be obtained free of charge by contacting Barclays at Barclays Investor Relations , Barclays PLC, 1 Churchill Place, London E14 5HP, United Kingdom (telephone: 011-44-20-7116-1000).
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Exchange Offer (continued)
This document must be read in conjunction with the prospectus. No offer or invitation to acquire or exchange any securities is being made pursuant to this document. This document and the prospectus contain important information, which must be read carefully before any decision is made with respect to the Exchange Offers. Holders should reach their own investment decision about the New AT1 Securities only after consultation with their own financial, legal and tax advisers (as such Holder deems appropriate) about risks associated with participating in the Exchange Offers and with an investment in the New AT1 Securities and the suitability of participating in the Exchange Offers and investing in the New AT1 Securities in light of the particular characteristics and terms of the New AT1 Securities and of such Holder’s particular financial circumstances. Any individual or company whose Existing T1 Securities are held on its behalf by a clearing system, broker, dealer, bank, custodian, trust company or other nominee or intermediary must contact such entity if it wishes to participate in the Exchange Offers. None of the Offerors, dealer managers or the exchange agents appointed in relation to the Exchange Offers makes any recommendation as to whether Holders should offer Existing T1 Securities for exchange pursuant to the Exchange Offers.
The information in this document has been provided by Barclays and its subsidiaries (the “Group”) or obtained from publicly available sources. This document speaks as at the date hereof. None of the Offerors, their respective advisers or any other party is under any duty to update or inform any recipient of any changes to information in this document, provide any recipient with access to any additional information or to correct any inaccuracies in any such information which may become apparent. No representation or warranty (express or implied) is given by Barclays, any member of the Group or any of their respective affiliates, agents, directors, partners and employees that the information in this document is correct or complete, and none of them accepts any liability whatsoever for any loss or damage howsoever arising from any use of this document or otherwise arising in connection therewith.
This document has been issued by and is the sole responsibility of Barclays. None of the dealer managers appointed in relation to the Exchange Offers or their respective affiliates, agents, directors, partners and employees accepts any responsibility whatsoever for, or makes any representation or warranty, express or implied, as to the contents of this document or for any other statement made or purported to be made by it, or on its behalf, in connection with Barclays, the Group, the Exchange Offers or any of the securities referred to herein. Subject to applicable law, each of the joint dealer managers accordingly disclaims any and all responsibility and/or liability, whether arising in tort, contract or otherwise, which it might otherwise have in respect of this document or any such statement. This document is published solely for informational purposes and does not constitute investment advice. Recipients should consult with their own legal, regulatory, tax, business, investment, financial and accounting advisors to the extent that they deem it necessary, and make their own investments, hedging and trading decisions (including decisions regarding the suitability of the Exchange Offers) based upon their own judgment as so advised, and not upon any information herein.
In certain jurisdictions, the distribution of this document may be restricted by law. Persons into whose possession this document comes are required to inform themselves about and to observe any such restrictions. For details of the jurisdictional restrictions, please refer to the prospectus.
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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 Barclays PLC’s and its subsidiaries’ (the Group) 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 and provisions, business strategy, capital, leverage and other regulatory ratios, payment of dividends (including dividend pay-out ratios), projected levels of growth in the banking and financial markets, projected costs or savings, original and revised commitments and targets in connection with the Transform Programme and Group Strategy Update, run-down of assets and businesses within Barclays Non-Core, estimates of capital expenditures and plans and objectives for future operations, projected employee numbers 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. These may be affected by changes in legislation, the development of standards and interpretations under International Financial Reporting Standards (IFRS), evolving practices with regard to the interpretation and application of accounting and regulatory standards, the outcome of current and future legal proceedings and regulatory investigations, future levels of conduct provisions, the policies and actions of governmental and regulatory authorities, geopolitical risks and the impact of competition. In addition, factors including (but not limited to) the following may have an effect: capital, leverage and other regulatory rules (including with regard to the future structure of the Group) applicable to past, current and future periods; UK, US, Africa 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 securities; volatility in capital markets; changes in credit ratings of the Group; the potential for one or more countries exiting the Eurozone; the implementation of the Transform Programme; and the success of future acquisitions, disposals and other strategic transactions. A number of these influences and factors are beyond the Group’s control. As a result, the Group’s actual future results, dividend payments, and capital and leverage ratios 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 and it should not be assumed that they have been revised or updated in the light of new information or future events. Except as required by the Prudential Regulation Authority, the Financial Conduct Authority, 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.
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