TIDM12ZB
RNS Number : 8353C
Barclays Bank UK PLC
13 February 2020
13 February 2020
Barclays Bank UK PLC
Annual Report and Accounts 2019
UK Listing Authority submission
In compliance with Disclosure Guidance & Transparency Rule
(DTR) 4.1, Barclays Bank UK PLC announces that its Annual Report
2019 will today be submitted to the National Storage Mechanism and
will shortly be available for inspection at:
http://www.morningstar.co.uk/uk/NSM
The document, together with the Pillar 3 Report for 2019, may
also be accessed via Barclays PLC's website at
home.barclays/investorrelations
Additional information
The following information is extracted from the Barclays Bank UK
PLC Annual Report 2019 (page references are to pages in the Annual
Report) which can be found at home.barclays/investorrelations and
constitutes the material required by DTR 6.3.5 to be communicated
to the media in unedited full text through a Regulatory Information
Service. This material is not a substitute for reading the Barclays
Bank UK PLC Annual Report 2019 in full.
Strategic Report
Performance review
The Strategic Report was approved by the Board of Directors on
12 February 2020 and signed on their behalf by the Chair.
Overview
Barclays Bank UK PLC is the wholly-owned ring-fenced bank of
Barclays PLC and consists of Personal Banking, Business Banking and
Barclaycard Consumer UK businesses.
The consolidation of Barclays Bank UK PLC and its subsidiaries
is referred to as the Barclays Bank UK Group. The consolidation of
Barclays Bank UK PLC's parent entity, Barclays PLC and its
subsidiaries, is referred to as the Barclays Group.
Barclays Bank UK PLC serves retail customers in the UK across
the entire spectrum of their banking needs.
Barclays Bank UK PLC also support small and medium-sized
businesses, providing the financing, saving and transactional
products and services they need to grow.
Our structure
Personal and Business Banking
Offers retail solutions to help customers with their day-to-day
banking needs and service business clients, from high growth
start-ups to small and medium-sized enterprises, with specialist
advice and their business banking needs.
Barclaycard Consumer UK
A leading credit card provider, offering flexible borrowing and
payment solutions, while delivering a leading customer
experience.
Barclays Bank UK PLC is supported by the Barclays Group-wide
service company, Barclays Execution Services Limited (BX) which
provides technology, operations and functional services to
businesses across the Barclays Group.
Strategic priorities
Barclays Bank UK PLC is a purpose-driven organisation. We aspire
to create opportunities to rise for all of our stakeholders. Our
strategy has been developed to balance the needs of our customers
and clients, our colleagues, our shareholder and wider society. For
further detail on our purpose and strategy, see pages 8 to 11 of
the Barclays PLC Annual Report 2019.
Barclays Bank UK PLC's business model provides a diversified
earnings portfolio to its shareholder, Barclays PLC.
Barclays Bank UK PLC places customers at the centre of what we
do. This means listening to our customers, and adapting our
products and services to ensure we have the capabilities to support
their ever-evolving needs - from receiving their first salary
payment, through moving home to saving and investing for
retirement. It also means transforming the way we organise
ourselves by creating a core team centred around our customers'
needs, enabling us to move faster.
As part of our transformation we are using technology to improve
our service and make it more efficient and reliable for our
customers. We continue to make progress in eliminating the causes
of complaints and improving the quality of our service.
Nevertheless, accelerating progress on behalf of our customers
remains a key priority, as the interruptions to our services and
the level of complaints we receive from our customers is still more
than we would like.
The way we serve our customers is increasingly digital, a
reflection of how most of our customers now prefer to interact with
us. Further investment in our digital capabilities remains
fundamental to our strategy, ensuring that our customers have the
flexibility to manage the majority of their day-to-day banking
needs via mobile and online banking.
This allows us to understand our customers' needs to a degree
never previously possible, meaning we can tailor our services
accordingly and deliver insights to customers, which help them
manage their finances more effectively.
Additionally, the investment we are making in our technology,
especially moving to the Cloud, means that we can get products to
customers more quickly and deliver a more personalised digital
experience.
However, we recognise that more complex needs, like property
transactions, still need to be dealt with in person. That's why
we're also investing in our physical locations, using technology
wherever possible, to make them quicker and easier to use for
everyone.
Operating environment
The lower interest rate environment makes borrowing more
affordable but, combined with intense competition in the mortgage
market and our focus on secured lending, continues to compress our
net interest margin.
The accelerated pace of change in this competitive environment
has also moved the traditional boundaries of retail banking and
reshaped customer expectations. We are making good progress in
meeting these new expectations, for example, with balance tracking,
spending categorisation and a controls hub allowing customers to
manage the types of spend they want, but we recognise that we still
have more to do.
We must also continue to adapt to evolving regulation, for
example offering alternatives to traditional forms of credit in
unsecured lending.
Our achievements in 2019
We continued to progress our digital strategy through 2019. As
at the end of the year, 59% of our products were provided to our
customers through digital channels and the number of digitally
active customers increased by 6% to 11.4m year on year.
We upgraded our mobile banking offering so that our customers
can now use one app to access their Barclaycard account alongside
other Barclays products. This upgrade also meant that 1.2 million
Barclaycard customers, who previously had no relationship with us
other than their credit card, can now access more of our products
and services through the Barclays App.
We have also improved the products and services that we offer
our customers. 2019 saw us launch our market-leading unsecured
business loans, enabling Business Banking clients to borrow up to
GBP100,000 digitally - an increase from GBP25,000 previously. This
is another industry first for Barclays, as we are currently the
only bank able to offer an instant answer on clients' eligibility
for lending at this scale, and making funds available the next
working day.
We have progressed with efforts to improve our digital estate,
data capabilities and ultimately create the opportunity to better
engage partners. We have continued our support for some of the most
promising emerging FinTechs through our network of Rise sites and
deepened our strategic relationship with MarketFinance (a peer-to-
peer invoice discounting platform).
Overall, our relentless focus on customers is reflected in an
improved Net Promoter Score(a) for Barclays Bank UK Group of +18
(2018: +17) and +11 (2018: +9) for the Barclaycard brand, which
shows the strength and depth of our relationships.
Our role in society
Our success over the long term is tied inextricably to the
preservation of our environment and the progress of our
communities. For detail on our integration of social and
environmental issues into our business, please refer to pages 32 to
35 in the Barclays PLC Annual Report 2019.
Focus for 2020 and beyond
We aim to continue the progress made during 2019 in driving down
complaints, by continuing to identify and address the root cause of
customer problems, and by making selective investments to improve
infrastructure.
We want to continue to improve our customers' digital experience
in 2020, as well as developing enhancements to our online and
mobile platforms. We will continue to invest in equipping our
people with the tools and skills they need to achieve this, as well
as strengthening our culture.
We are also creating an integrated banking, advice and
investments platform, building on our award winning(b) mobile
banking app. Customers will be able to access financial planning
services and investment products, as an extension of their existing
banking products and services.
Finally, we will continue to embed our new ways of working into
our organisation, in order to ensure that we are able to meet our
customers' ever-evolving needs.
Notes
a Net promoter score is a view of how willing customers are to recommend
our products and services to others.
b Best use of mobile at FStech Awards 2019.
Strategic Report
Managing risk
The Barclays Bank UK Group is exposed to internal and external
risks as part of our ongoing activities. These risks are managed as
part of our business model.
Enterprise Risk Management Framework
Within the Barclays Bank UK Group, risks are identified and
overseen through the Enterprise Risk Management Framework (ERMF),
which supports the business in its aim to embed effective risk
management and a strong risk management culture.
The ERMF governs the way in which the Barclays Bank UK Group
identifies and manages its risks. The ERMF is approved by the
Barclays PLC board on recommendation of the Barclays Group Chief
Risk Officer; it is then adopted by the Barclays Bank UK Group with
minor modifications where needed.
The management of risk is embedded into each level of the
business, with all colleagues being responsible for identifying and
controlling risks.
Risk appetite
Risk appetite defines the level of risk we are prepared to
accept across the different risk types, taking into consideration
varying levels of financial and operational stress. Risk appetite
is key for our decision making processes, including ongoing
business planning and setting of strategy, new product approvals
and business change initiatives.
The Barclays Bank UK Group may choose to adopt a lower risk
appetite than allocated to it by the Barclays Group.
Three Lines of Defence
The first line of defence is comprised of the revenue generating
and customer facing areas, along with all associated support
functions, including Finance, Treasury, Human Resources and
Operations and Technology. The first line identifies the risks,
sets the controls and escalates risk events to the second line of
defence.
The second line of defence is made up of Risk and Compliance and
oversees the first line by setting the limits, rules and
constraints on their operations, consistent with the risk
appetite.
The third line of defence is comprised of Internal Audit,
providing independent assurance over the effectiveness of
governance, risk management and control over current, systemic and
evolving risks.
Although the Legal function does not sit in any of the three
lines, it works to support them all and plays a key role in
overseeing Legal risk throughout the bank. The Legal function is
also subject to oversight from the Risk and Compliance functions
(second line) with respect to the management of operational and
conduct risks.
Monitoring the risk profile
Together with a strong governance process, using Business and
Barclays Group-level Risk Committees as well as Board level forums,
the Barclays Bank UK PLC Board receives regular information in
respect of the risk profile of the Barclays Bank UK Group.
Information received includes measures of risk profile against risk
appetite as well as identification of new and emerging risks.
We believe that our structure and governance supports us in
managing risk in the changing economic, political and market
environments.
The ERMF defines eight principal risks(a) How risks are managed
--------------------------------------------------------------------------------------- -----------------------------
Financial Principal Risks Credit Risk The risk of loss to the Credit risk teams identify,
Barclays Bank UK Group from evaluate, sanction, limit and
the failure of clients, monitor various forms of
customers or counterparties, credit
including sovereigns, to exposure, individually and in
fully honour their aggregate.
obligations to the Barclays
Bank UK Group, including
the whole and timely payment
of principal, interest,
collateral and other
receivables.
----------------------------- ------------------------- ----------------------------- -----------------------------
Treasury and Capital Risk Liquidity Risk: Treasury and capital risk is
identified and managed by
specialists in Capital
Planning, Liquidity,
Asset and Liability
Management and Market Risk. A
range of approaches are used
appropriate
to the risk, such as; limits;
plan monitoring; internal and
external stress testing.
----------------------------- ------------------------- -----------------------------
The risk that the Barclays
Bank UK Group is unable to
meet its contractual or
contingent obligations
or that it does not have the
appropriate amount, tenor and
composition of funding and
liquidity
to support its assets.
------------------------- -----------------------------
Capital Risk:
The risk that the Barclays
Bank UK Group has an
insufficient level or
composition of capital
to support its normal
business activities and to
meet its regulatory capital
requirements
under normal operating
environments or stressed
conditions (both actual and
as defined for
internal planning or
regulatory testing purposes).
This includes the risk from
the Barclays
Bank UK Group's pension
plans.
Interest Rate Risk in the
Banking Book:
The risk that the Barclays
Bank UK Group is exposed to
capital or income volatility
because
of a mismatch between the
interest rate exposures of
its (non-traded) assets and
liabilities.
------------------------- ----------------------------- -----------------------------
Market Risk The risk of loss arising from A range of complementary
potential adverse changes in approaches to identify and
the value of the Barclays evaluate market risk are used
Bank to capture
UK Group's assets and exposure to market risk.
liabilities from fluctuation These are measured,
in market variables controlled and monitored by
including, but not market risk specialists.
limited to, interest rates,
foreign exchange, equity
prices, commodity prices,
credit spreads,
implied volatilities and
asset correlations.
----------------------------- ------------------------- ----------------------------- -----------------------------
Non-Financial Principal Risks Operational Risk The risk of loss to the Operational risk comprises
Barclays Bank UK Group from the following risks; data
inadequate or failed management and information,
processes or systems, execution
human factors or due to risk, financial reporting,
external events (for example fraud, payments processing,
fraud) where the root cause people, physical security,
is not due premises,
to credit or market risks. prudential regulation,
supplier, tax, technology and
transaction operations.
It is not always cost
effective or possible to
attempt to eliminate all
operational risks.
Operational risk is managed
across the businesses and
functions through an internal
control
environment with a view to
limiting the risk to
acceptable residual levels.
------------------------- ----------------------------- -----------------------------
Model Risk The risk of the potential Models are independently
adverse consequences from validated and approved prior
financial assessments or to implementation and their
decisions based performance
on incorrect or misused model is monitored on a continual
outputs and reports. basis.
------------------------- ----------------------------- -----------------------------
Conduct Risk The risk of detriment to The Compliance function sets
customers, clients, market the minimum standards
integrity, effective required, and provides
competition or Barclays oversight to monitor
Bank UK Group from the that these risks are
inappropriate supply of effectively managed and
financial services, including escalated where appropriate.
instances of
wilful or negligent
misconduct.
------------------------- ----------------------------- -----------------------------
Reputation Risk The risk that an action, Reputation risk is managed by
transaction, investment or embedding our purpose and
event, decision or business values and maintaining a
relationship controlled
will reduce trust in the culture within the Barclays
Barclays Bank UK Group's Bank UK Group, with the
integrity and/or competence. objective of acting with
integrity, enabling
strong and trusted
relationships with customers
and clients, colleagues and
broader society.
------------------------- ----------------------------- -----------------------------
Legal Risk The risk of loss or The Legal function supports
imposition of penalties, colleagues in identifying and
damages or fines from the limiting legal risks.
failure of the Barclays
Bank UK Group to meet its
legal obligations including
regulatory or contractual
requirements.
------------------------- ----------------------------- -----------------------------
Note
a The ERMF defines eight principal risks. For further information
on the how these principal risks apply specifically to Barclays
Bank UK Group, please see pages 39 to 42.
Strategic Report
Performance measures
Financial performance measures
The performance of Barclays Bank UK PLC contributes to the
Barclays Group, upon which the delivery of strategy is
measured.
Income Statement
Barclays Bank UK Group results 2019 2018
For the year ended 31 December GBPm GBPm
------------------------------- ------- -------
Total income 7,322 5,606
Credit impairment charges (709) (624)
------------------------------- ------- -------
Net operating income 6,613 4,982
Operating costs (4,358) (3,356)
Litigation and conduct (1,586) (78)
------------------------------- ------- -------
Total operating expenses (5,944) (3,434)
Profit before tax 669 1,548
Tax charge (513) (405)
------------------------------- ------- -------
Profit after tax 156 1,143
Attributable to:
Equity holders of the parent 3 1,038
Other equity instrument holders 153 105
-------------------------------- --- -----
Profit after tax 156 1,143
-------------------------------- --- -----
Income Statement commentary
The UK banking business was acquired from Barclays Bank PLC on 1
April 2018, resulting in the prior period containing nine months of
full business operations, compared to 12 months in the current
period. As such, detailed period on period analysis of the income
statement has not been provided and the commentary below therefore
encapsulates themes and factors impacting the current period
performance only.
Profit before tax was GBP669m, including the impact of a
GBP1,400m provision for Payment Protection Insurance (PPI). The
income environment in 2019 was challenging, with continuing margin
pressure reflecting increased refinancing activity by mortgage
customers, lower interest earning lending (IEL) balances in UK
cards and the mix effect from growth in secured lending.
Nevertheless, the business continued to deliver strong growth in
balances, increasing mortgage lending by GBP6.4bn and growing
customer deposits by GBP8.2bn. Barclays Bank UK PLC also delivered
cost efficiencies that outweighed continued investment.
Total income was GBP7,322m, consisting of:
-- Personal Banking income of GBP4,112m reflecting ongoing mortgage
margin pressure, offset by mortgage and deposit balance growth,
with improved deposit margins
-- Barclaycard Consumer UK income of GBP1,997m reflecting a continued
reduced risk appetite and reduced borrowing by customers, which
resulted in a lower level of IEL balances, partially offset by
increased debt sales
-- Business Banking income of GBP1,361m reflecting deposit growth,
with improved deposit margins
-- This was partially offset by an expense of GBP148m in Head Office
primarily due to hedge arrangements.
Credit impairment charges of GBP709m comprised Personal Banking
charges of GBP196m, Barclaycard Consumer UK charges of GBP472m
Business Banking charges of GBP45m, and Head Office releases of
GBP4m. 2018 included a GBP100m specific charge in Q418 relating to
the impact of anticipated economic uncertainty in the UK. The 30
and 90 day arrears rates in UK cards decreased to 1.7% (Q418: 1.8%)
and 0.8% (Q418: 0.9%) respectively.
Total Operating expenses of GBP5,944m, included litigation and
conduct charges of GBP1,586m. Operating costs were GBP4,358m
comprising GBP3,036m in Personal Banking, GBP585m in Barclaycard
Consumer UK, GBP717m in Business Banking and GBP20m in Head
Office.
Balance Sheet Information
The following assets and liabilities represent key balance sheet
items for Barclays Bank UK Group:
2019 2018
As at 31 December GBPm GBPm
------------------------------------------------------------------ ------- -------
Assets
Loans and advances at amortised cost 197,569 188,565
Financial assets at fair value through other comprehensive income 19,322 6,710
Cash and balances at central banks 24,305 40,669
Liabilities
Deposits at amortised cost 205,696 197,485
------------------------------------------------------------------ ------- -------
Balance Sheet commentary
Loans and advances at amortised cost increased 5% to GBP197.6bn
reflecting growth in mortgage lending and increased investment in
debt securities, held as part of the liquidity buffer. The
increased investment in debt securities was driven by a shift in
the composition of the liquidity pool from cash and balances at
central banks to debt securities, which is also reflected in the
increase in financial assets at fair value through other
comprehensive income.
Deposits at amortised cost increased 4% to GBP205.7bn
demonstrating franchise strength across both Personal and Business
Banking.
Other Metrics and Capital(a)
Throughout 2018, Barclays Bank UK PLC was regulated by the
Prudential Regulation Authority (PRA) on an individual basis only.
From 1 January 2019, as part of structural reform, Barclays Bank UK
Group became regulated by the PRA as a ring-fenced bank. Due to the
change in scope, there are no comparatives.
2019
-----
As at 31 December GBPbn
---------------------------------- -----
Common equity tier 1 (CET1) ratio 13.5%
Total risk weighted assets (RWAs) 75.0
Average UK leverage ratio 5.2%
---------------------------------- -----
Note
a Capital, RWAs and leverage are calculated applying the IFRS 9 transitional
arrangement of the Capital Requirement Regulation (CRR) as amended
by the Capital Requirements Regulation II (CRR II) applicable as
at the reporting date. For further information on the implementation
of CRR II see page 85.
Capital commentary
The Barclays Bank UK Group CET1 ratio as at 31 December 2019 was
13.5%, which is above regulatory capital minimum requirements.
Non-financial performance measures
Barclays Bank UK PLC is part of the Barclays Group which uses a
variety of quantitative and qualitative measures to track and
assess holistic strategic delivery.
Barclays Bank UK PLC has addressed the Non-Financial Reporting
requirements contained in sections 414CA and 414CB of the Companies
Act 2006 through the disclosure contained in Barclays PLC Annual
report on pages 39 to 40.
Strategic Report
Our people and culture
We believe that the culture of Barclays Group is built and
shaped by the thousands of professionals around the world who serve
our customers and clients with a shared purpose and values. Our
people make a critical difference to our success, and our
investment in them protects and strengthens our culture. Barclays
Bank UK PLC colleague themes and initiatives are aligned to
Barclays Group values and strategic goals. The following
sub-sections are therefore consistent with those detailed in the
People Section of the Barclays PLC Annual Report 2019 and figures
mentioned are for Barclays Group, other than as specifically
mentioned.
Colleague engagement
We have an established approach to engaging colleagues which
includes the majority of mechanisms recommended the UK's Financial
Reporting Council and with new governance requirements in 2019.
This ensures that we understand their perspective, take it into
account in our decision making at the most senior level, and share
with them our strategy and progress.
That extends to those who work for us indirectly as well, such
as contractors, although in a more limited way. In 2020, our
supplier code of conduct will require organisations with more than
250 employees to demonstrate that they have an effective workforce
engagement approach of their own.
It's important to us that our Board members are engaged with our
people - directly, and indirectly through our management team. The
Board regularly receives reports on colleague engagement
activity.
Together with direct engagement, this reporting approach and
dedicated time at board meetings helps our Board take the issues of
interest to our colleagues into account in their decision making.
This has enabled them to confirm that our workforce engagement
approach is effective.
Listening to our people
Our regular colleague survey formally captures the views of our
people and is a key part of how we track colleague engagement,
alongside more granular colleague sentiment tracking across our
businesses. Barclays Bank UK PLC's overall engagement score(a)
reduced slightly to 76% in 2019, but 78% of our colleagues would
still recommend Barclays Group as a good place to work.
The results from the survey are an important part of the
conversations our leaders have about how we run the business, and
it's a specific focus for our Executive Committee and our
Board.
We monitor our culture across the organisation, and in
individual business areas, through Culture Dashboards. These
combine colleague survey data with other metrics about our
business, so that we can see the effect our people's engagement has
on our performance, and on the continued strength of our culture.
82% of our people have heard or read the speeches of senior leaders
across the Barclays Group talking about the character and culture
of Barclays Group.
Keeping our people informed
In addition to these data sources, our leaders, including our
Board, engage face to face with colleagues to hear what they think.
That might be through site visits, large-scale town halls, training
and development activity, mentoring, informal breakfast sessions,
committee membership, diversity and wellbeing programmes, or focus
and consultative groups.
We make sure we're regularly keeping everyone up to date on the
strategy, performance and progress of the organisation through a
strategically-coordinated, multichannel approach across a
combination of leader-led engagement, and digital and print
communication, including blogs, vlogs and podcasts.
We also engage with our people collectively through a strong and
effective partnership with Unite, as well as the Barclays Group
European Forum, which represents all Barclays Group colleagues
within the European Union.
These conversations help us to deliver things like a collective
pay deal for our Unite covered colleagues, who represent 84% of the
Group's UK-based colleagues, as well as more complex business
change and our long-term focus on colleague wellbeing. We regularly
brief our union partners on the strategy and progress of the
business and seek their input on ways in which we can improve the
colleague experience of working in Barclays. The collective
bargaining coverage of Unite in the UK represents c.52% of our
global workforce.
Building a supportive culture
Diversity of thought and experience works best when everyone
feels included. People who feel they can be themselves at work are
happier and more productive, so we believe that creating an
inclusive and diverse culture isn't just the right thing to do, but
is also best for our business.
Our policies require managers to give full and fair
consideration to those with a disability on the basis of their
aptitudes and abilities; both when hiring and through ongoing
people management, as well as ensuring opportunities for training,
career development and promotion are available to all. As part of
our commitment to the UK government Disability Confident scheme, we
encourage applications from people with a disability, or a physical
or mental health condition.
We encourage our people to benefit from Barclays Group
performance by enrolling in our share plans, further strengthening
their commitment to the organisation.
Note
a Engagement score is a measure of employee satisfaction, which indicates
levels of fulfilment in Barclays.
Strategic Report
Having regard to our stakeholders in our decision making
Section 172(1) statement
The Directors have acted in a way that they considered, in good
faith, to be most likely to promote the success of Barclays Bank UK
PLC for the benefit of its member as a whole, and in doing so had
regard, amongst other matters, to:
-- the likely consequences of any decision in the long term;
-- the interests of the Company's employees;
-- the need to foster the Company's business relationships with suppliers,
customers and others;
-- the impact of the Company's operations on the community and the
environment;
-- the desirability of the Company maintaining a reputation for high
standards of business conduct; and
-- the need to act fairly as between members of the Company.
The Directors also took into account the views and interests of
a wider set of stakeholders, including our pensioners, our
regulators, the Government, and non-government organisations. You
can find out more about who are key stakeholders are, how
management and/or the Directors engaged with them, the key issues
raised and actions taken on pages 14 to 15 of the Barclays PLC
Annual Report 2019 which is incorporated by reference into this
statement.
Considering this broad range of interests is an important part
of the way the Board makes decisions, although in balancing those
different perspectives it won't always be possible to deliver
everyone's desired outcome.
How does the Board engage with stakeholders?
The Board will sometimes engage directly with certain
stakeholders on certain issues, but the size and distribution of
our stakeholders and of the Barclays Bank UK Group means that
stakeholder engagement often takes place at an operational
level.
In addition, to ensure a more efficient and effective approach,
certain stakeholder engagement is led at Barclays Group level, in
particular where matters are of group-wide significance or have the
potential to impact the reputation of the Barclays Group.
The Board considers and discusses information from across the
organisation to help it understand the impact of Barclays Bank UK
Group's operations, and the interests and views of our key
stakeholders. It also reviews strategy, financial and operational
performance as well as information covering areas such as key
risks, and legal and regulatory compliance. This information is
provided to the Board through reports sent in advance of each Board
meeting, and through in-person presentations.
As a result of these activities, the Board has an overview of
engagement with stakeholders, and other relevant factors, which
enables the Directors to comply with their legal duty under section
172 of the Companies Act 2006.
For more details on how our Board operates, and the way in which
it reaches decisions, including the matters it discussed and
debated during the year, please see pages 16 to 17 of the
Governance Report.
The following are some examples of how the Directors have had
regard to the matters set out in sections 172 (a)-(f) when
discharging their section 172 duties and the effect of that on
certain of the decisions taken by them.
Engagement in action
(a) Being accountable for our decisions
Our governance is designed to ensure that we take into account
the views of all our stakeholders, so that our decision-making is
collaborative and well-informed - both before and after we make our
decisions public.
In October 2019 we announced that we would be withdrawing
over-the-counter access to cash for our customers at Post Offices
in the UK. This was a decision made after carefully balancing the
economic impact of a significant increase in transaction fees, and
our ability to put in place comprehensive plans to safeguard our
customers' access to cash. Following our announcement, we continued
to engage with customers, Members of Parliament, and government. It
became clear from this further engagement that our full
participation in the Post Office Banking Framework was crucial to
the viability of the Post Office network at this point in time.
As a result of that further engagement and debate, we reversed
our decision. The Board has reviewed the planning and
decision-making process around this issue. This has highlighted and
re-confirmed, amongst other things, the importance of listening to
all of our stakeholders, on an ongoing basis.
(b) Our role in society/investing in communities
The Board in setting and overseeing the Company's citizenship
agenda has considered the interests of colleagues, customers and
the Company's impact on the community. Barclays Group is considered
part of the fabric of the UK due to its number of customers and
colleagues. Through the products and services, we offer, we help
people to buy a home, build a nest egg, start a business and
support their family. Whilst this is our prime responsibility, we
strongly believe there is bigger role Barclays Group can play in
society.
One example of this is the 'Thriving Local Economies'
initiative. At a time of economic and political uncertainty and
squeezed living standards, our success as a country will be driven
by thriving local economies and by ensuring the businesses and
people in those communities have the right support, and skills, to
make the most of the opportunities that exist.
Through investment in our 'Thriving Local Economies' initiative,
we will make a difference in communities across the UK by
partnering with a range of others initially in pilot schemes in
four different local economies running for a five-year period - a
metropolitan area, a smaller town, a rural community and a coastal
area. The aim of the pilots, which focus on boosting skills and the
growth of local business by targeting bespoke initiatives utilising
the best of our citizenship flagship programmes, is to gain a deep
understanding of the needs of our stakeholders, in particular our
customers and the communities, and how best we can serve them.
In 2019 we extended the LifeSkills programme to help millions of
adults across the country, providing them with the skills,
knowledge and confidence to succeed in the workplace. For further
detail on LifeSkills and our other community programmes (Connect
with Work, Eagle Labs and Unreasonable Impact) please see page 34
of the Barclays PLC Annual Report 2019.
YourBank is another example of how we are thinking differently
about the branches that are last in town or remote. We are working
with the communities in each of these towns to make them more
sustainable as a banking service for the longer term. The Board has
reviewed and endorsed the Company's commitment in these cases not
to close these branches until at least October 2021.
(c) Serving and protecting our customers
Our customers' behaviours continue to evolve, placing even
greater reliance on our digital capabilities in how we serve their
needs in the most convenient way for them. Given the increased
reliance they place on them, our customers expect those digital
capabilities to be available whenever they need them, and for them
to protect their interests at all times.
Despite the challenging market environment, the Board concurs
with management that it is critical that our investment keeps pace
with those expectations. The Board has, as a result, continued to
direct heavy investment in our technology, specifically, in areas
of most concern to our customers, such as operational resilience,
cyber security and in supporting our customers against the ever
present threat of scams; ensuring that Barclays Group is as safe to
bank with virtually as it has been physically for over 325
years.
The further build out of our digital capability in 2020 and
beyond remains fundamental to our strategy to put customers at the
centre of everything we do. More detail on our technology
initiatives can be found on page 10 of the Barclays PLC Annual
Report 2019 'Becoming more digital' section.
Sir Ian Cheshire
Chair - Barclays Bank UK PLC
12 February 2020
Governance
Directors' Report
Directors' responsibility statement
The Directors have responsibility for ensuring that the Company
and the Barclays Bank UK Group keep accounting records which
disclose with reasonable accuracy the financial position of the
Company and the Barclays Bank UK Group and which enable them to
ensure that the financial statements comply with the Act.
The Directors are also responsible for preparing a Strategic
Report, Directors' Report and Corporate Governance Statement in
accordance with applicable law and regulations.
The Directors are responsible for the maintenance and integrity
of the Annual Report and financial statements as they appear on 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 a general responsibility for taking such
steps as are reasonably open to them to safeguard the assets of the
Company and to prevent and detect fraud and other
irregularities.
The Directors, whose names and functions are set out on page 16,
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 the Company
and the undertakings included in the consolidation taken as a whole;
and
b The management report on pages 1 to 9 which is incorporated in
the Directors' Report, includes a fair review of the development
and performance of the business and the position of the Company
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
Katie Marshall
Company Secretary
12 February 2020
Registered in England.
Company No. 9740322
Risk review
Material existing and emerging risks
Material existing and emerging risks to the Barclays Bank UK
Group's future performance
The Barclays Bank UK Group has identified a broad range of risks
to which its businesses are exposed. Material risks are those to
which senior management pay particular attention and which could
cause the delivery of the Barclays Bank UK Group's strategy,
results of operations, financial condition and/or prospects to
differ materially from expectations. Emerging risks are those which
have unknown components, the impact of which could crystallise over
a longer time period. In addition, certain other factors beyond the
Barclays Bank UK Group's control, including escalation of terrorism
or global conflicts, natural disasters, epidemic outbreaks and
similar events, although not detailed below, could have a similar
impact on the Barclays Bank UK Group.
Material existing and emerging risks potentially impacting more
than one principal risk
i) Business conditions, general economy and geopolitical
issues
The Barclays Bank UK Group's operations are subject to
potentially unfavourable global and local economic and market
conditions, as well as geopolitical developments, which may have a
material effect on the Barclays Bank UK Group's business, results
of operations, financial condition and prospects.
A deterioration in global or local economic and market
conditions may lead to (among other things): (i) deteriorating
business, consumer or investor confidence and lower levels of fixed
asset investment and productivity growth, which in turn may lead to
lower client activity, including lower demand for borrowing from
creditworthy customers; (ii) higher default rates, delinquencies,
write-offs and impairment charges as borrowers struggle with the
burden of additional debt; (iii) subdued asset prices and payment
patterns, including the value of any collateral held by the
Barclays Bank UK Group; and (iv) revisions to calculated expected
credit losses (ECLs) leading to increases in impairment
allowances.
In addition, the Barclays Bank UK Group's ability to borrow from
other financial institutions or raise funding from external
investors may be affected by deteriorating economic conditions and
market disruption.
Geopolitical events may lead to further financial instability
and affect economic growth. In particular, in the UK, the decision
to leave the EU may give rise to further economic and political
consequences including for investment and market confidence in the
UK and the remainder of EU. See'(ii) Process of UK withdrawal from
the EU' below for further details.
ii) Process of UK withdrawal from the EU
The manner in which the UK withdraws from the EU will likely
have a marked impact on general economic conditions in the UK and
the EU. The UK's future relationship with the EU and its trading
relationships with the rest of the world could take a number of
years to resolve. This may lead to a prolonged period of
uncertainty, unstable economic conditions and market volatility,
including fluctuations in interest rates and foreign exchange
rates.
Whilst the exact impact of the UK's withdrawal from the EU is
unknown, the Barclays Bank UK Group continues to monitor the risks
that may have a more immediate impact for its business, including,
but not limited to:
-- Credit spreads could widen leading to reduced investor appetite
for the Barclays Bank UK Group's debt securities. This could negatively
impact the Barclays Bank UK Group's cost of and/or access to funding.
In addition, market and interest rate volatility could affect the
underlying value of assets in the banking book and securities held
by the Barclays Bank UK Group for liquidity purposes.
-- A credit rating agency downgrade applied directly to the Barclays
Bank UK Group, or indirectly as a result of a credit rating agency
downgrade to the UK Government, could significantly increase the
Barclays Bank UK Group's cost of and/or reduce its access to funding,
widen credit spreads and materially adversely affect the Barclays
Bank UK Group's interest margins and liquidity position.
-- A UK recession with lower growth, higher unemployment and falling
UK property prices could lead to increased impairments in relation
to a number of the Barclays Bank UK Group's portfolios, including,
but not limited to, its UK mortgage portfolio, UK unsecured lending
portfolio (including credit cards), commercial real estate exposures,
and its ESHLA portfolio.
-- The ability to attract, or prevent the departure of, qualified
and skilled employees may be impacted by the UK's and the EU's
future approach to the EU freedom of movement and immigration from
the EU countries and this may impact the Barclays Bank UK Group's
access to the EU talent pool.
-- Changes to current EU 'Passporting' rights may require further
adjustment to the current model for the Barclays Bank UK Group's
cross-border banking operation which could increase operational
complexity and/or costs for the Barclays Bank UK Group.
-- The legal framework within which the Barclays Bank UK Group operates
could change and become more uncertain if the UK takes steps to
replace or repeal certain laws currently in force, which are based
on EU legislation and regulation (including EU regulation of the
banking sector) following its withdrawal from the EU. Certainty
around the ability to maintain existing contracts, enforceability
of certain legal obligations and uncertainty around the jurisdiction
of the UK courts may be affected until the impacts of the loss
of the current legal and regulatory arrangements between the UK
and EU and the enforceability of UK judgements across the EU are
fully known.
-- Should the UK see reduced access to financial markets infrastructures
(including exchanges, central counterparties and payments services
or other support services provided by third party suppliers) service
provision for clients could be impacted, likely resulting in reduced
market share and revenue and increased operating costs for the
Barclays Bank UK Group.
iii) The impact of interest rate changes on the Barclays Bank UK
Group's profitability
Any changes to the Bank of England base interest rate are
significant for the Barclays Bank UK Group, especially given the
uncertainty as to the direction of interest rates and the pace at
which interest rates may change.
A continued period of low interest rates and flat yield curves,
including any further cuts, may affect and continue to put pressure
on the Barclays Bank UK Group's net interest margins (the
difference between its lending income and borrowing costs) and
could adversely affect the profitability and prospects of the
Barclays Bank UK Group.
However, whilst interest rate rises could positively impact the
Barclays Bank UK Group's profitability as income increases due to
margin de-compression, further increases in interest rates, if
larger or more frequent than expected, could lead to generally
weaker than expected growth, reduced business confidence and higher
unemployment, which in turn could cause stress in the lending
portfolio. Resultant higher credit losses driving an increased
impairment charge would most notably impact retail unsecured
portfolios and could have a material effect on the Barclays Bank UK
Group's business, results of operations, financial condition and
prospects.
In addition, changes in interest rates could have an adverse
impact on the value of the securities held in the Barclays Bank UK
Group's liquid asset portfolio. Consequently, this could create
more volatility than expected through the Barclays Bank UK Group's
FVOCI reserves.
iv) The competitive environments of the banking and financial
services industry
The Barclays Bank UK Group's businesses are conducted in
competitive environments, with increased competition scrutiny, and
the Barclays Bank UK Group financial performance depends upon the
Barclays Bank UK Group's ability to respond effectively to
competitive pressures whether due to competitor behaviour, new
entrants to the market, consumer demand, technological changes or
otherwise.
This competitive environment, and the Barclays Bank UK Group's
response to it, may have a material adverse effect on the Barclays
Bank UK Group's ability to maintain existing or capture additional
market share, business, results of operations, financial condition
and prospects.
v) Regulatory change agenda and impact on business model
The Barclays Bank UK Group remains subject to ongoing
significant levels of regulatory change and scrutiny. As a result,
regulatory risk will remain a focus for senior management.
Furthermore, a more intensive regulatory approach and enhanced
requirements may adversely affect the Barclays Bank UK Group's
business, capital and risk management strategies and/or may result
in the Barclays Bank UK Group deciding to modify its legal entity,
capital and funding structures and business mix, or to exit certain
business activities altogether or not to expand in areas despite
otherwise attractive potential.
There are several significant pieces of legislation and areas of
focus which will require significant management attention, cost and
resource, including:
-- Changes in prudential requirements may impact minimum requirements
for own funds and eligible liabilities (MREL) (including requirements
for internal MREL), leverage, liquidity or funding requirements,
applicable buffers and/or add-ons to such minimum requirements
and risk weighted assets calculation methodologies all as may
be set by international, EU or national authorities. Such or
similar changes to prudential requirements or additional supervisory
and prudential expectations, either individually or in aggregate,
may result in, among other things, a need for further management
actions to meet the changed requirements, such as:
- increasing capital, MREL or liquidity resources, reducing leverage
and risk weighted assets;
- restricting distributions on capital instruments;
- modifying the terms of outstanding capital instruments;
- modifying legal entity structure (including with regard to issuance
and deployment of capital, MREL and funding);
- changing the Barclays Bank UK Group's business mix or exiting
other businesses;
- and/or undertaking other actions to strengthen the Barclays Bank
UK Group's position.
-- The Barclays Group is subject to supervisory stress testing of
which Barclays Bank UK PLC forms a component part. These exercises
currently include the programmes of the Bank of England (BoE)
and the European Banking Authority (EBA). Failure to meet the
requirements of regulatory stress tests, or the failure by regulators
to approve the stress test results and capital plans of the Barclays
Group, could result in the Barclays Group or certain of its members
including the Barclays Bank UK PLC being required to enhance
their capital position, limit capital distributions or position
additional capital in specific subsidiaries.
For further details on the regulatory supervision of, and
regulations applicable to, the Barclays Bank UK Group, see
Supervision and regulation on pages 93 to 96.
vi) The impact of climate change on the Barclays Bank UK Group's
business
The risks associated with climate change are subject to rapidly
increasing societal, regulatory and political focus, both in the UK
and internationally. Embedding climate risk into the Barclays Bank
UK Group's risk framework in line with regulatory expectations, and
adapting the Barclays Bank UK Group's operations and business
strategy to address both the financial risks resulting from: (i)
the physical risk of climate change; and (ii) the risk from the
transition to a low carbon economy, could have a significant impact
on the Barclays Bank UK Group's business.
Physical risks from climate change arise from a number of
factors and relate to specific weather events and longer-term
shifts in the climate. The nature and timing of extreme weather
events are uncertain but they are increasing in frequency and their
impact on the economy is predicted to be more acute in the future.
The potential impact on the economy includes, but is not limited
to, lower GDP growth, higher unemployment and significant changes
in asset prices and profitability of industries. Damage to the
properties and operations of borrowers could impair asset values
and the creditworthiness of customers leading to increased default
rates, delinquencies, write-offs and impairment charges in the
Barclays Bank UK Group's portfolios. In addition, the Barclays Bank
UK Group's premises and resilience may also suffer physical damage
due to weather events leading to increased costs for the Barclays
Bank UK Group.
As the economy transitions to a low-carbon economy, financial
institutions such as the Barclays Bank UK Group may face
significant and rapid developments in stakeholder expectations,
policy, law, regulation which could impact the lending activities
the Barclays Bank UK Group undertakes, as well as the risks
associated with its lending portfolios and the value of the
Barclays Bank UK Group's assets. As sentiment towards climate
change shifts and societal preferences change, the Barclays Bank UK
Group may face greater scrutiny of the type of business it
conducts, adverse media coverage and reputational damage, which may
in turn impact customer demand for the Barclays Bank UK Group's
products, returns on certain business activities and the value of
certain assets resulting in impairment charges.
In addition, the impacts of physical and transition climate
risks can lead to second order connected risks, which have the
potential to affect the Barclays Bank UK Group's retail and
wholesale portfolios. The impacts of climate change may increase
losses for those sectors sensitive to the effects of physical and
transition risks. Any subsequent increase in defaults and rising
unemployment could create recessionary pressures, which may lead to
wider deterioration in the creditworthiness of the Barclays Bank UK
Group's clients, higher ECLs, and increased charge-offs and
defaults among retail customers.
If the Barclays Bank UK Group does not adequately embed risks
associated with climate change into its risk framework to
appropriately measure, manage and disclose the various financial
and operational risks it faces as a result of climate change, or
fails to adapt its strategy and business model to the changing
regulatory requirements and market expectations on a timely basis,
it may have a material and adverse impact on the Barclays Bank UK
Group's level of business growth, competitiveness, profitability,
capital requirements, cost of funding, and financial condition.
For further details on the Barclays Bank UK Group's approach to
climate change, see page 36 of climate change risk management.
vii) Impact of benchmark interest rate reforms on the Barclays
Bank UK Group
For several years, global regulators and central banks have been
driving international efforts to reform key benchmark interest
rates and indices, such as the London Interbank Offered Rate
("LIBOR"), which are used to determine the amounts payable under a
wide range of transactions and make them more reliable and robust.
This has resulted in significant changes to the methodology and
operation of certain benchmarks and indices, the adoption of
alternative "risk-free" reference rates and the proposed
discontinuation of certain reference rates (including LIBOR), with
further changes anticipated.
The Barclays Bank UK Group predominantly offers products which
reference central bank rates rather than LIBOR and other indices
which are likely to be subject to reform. Consequently, the product
offering and business model are unlikely to be significantly
affected. Nevertheless, there are other ways the Barclays Bank UK
Group could be affected.
Uncertainty as to the nature of such potential changes, the
availability and/or suitability of alternative "risk-free"
reference rates and other reforms may adversely affect a broad
range of transactions (including any securities, loans and
derivatives which use LIBOR to determine the amount of interest
payable that are included in the Barclays Bank UK Group's financial
assets and liabilities) that use these reference rates and indices
and introduce a number of risks for the Barclays Bank UK Group,
including, but not limited to:
-- Conduct risk: in undertaking actions to transition away from using
certain reference rates (including LIBOR), the Barclays Bank UK
Group faces conduct risks, which may lead to customer complaints,
regulatory sanctions or reputational impact if the Barclays Bank
UK Group is (i) considered to be undertaking market activities
that are manipulative or create a false or misleading impression,
(ii) misusing sensitive information or not identifying or appropriately
managing or mitigating conflicts of interest, (iii) providing customers
with inadequate advice, misleading information, unsuitable products
or unacceptable service, (iv) not taking an appropriate or consistent
response to remediation activity or customer complaints, (v) providing
regulators with inaccurate regulatory reporting or (vi) colluding
or inappropriately sharing information with competitors;
-- Financial risks: the valuation of certain of the Barclays Bank
UK Group's financial assets and liabilities may change. Moreover,
transitioning to alternative "risk-free" reference rates may impact
the ability of members of the Barclays Bank UK Group to calculate
and model amounts receivable by them on certain financial assets
and determine the amounts payable on certain financial liabilities
(such as debt securities issued by them) because currently alternative
"risk-free" reference rates (such as the Sterling Overnight Index
Average (SONIA) and the Secured Overnight Financing Rate (SOFR))
are look-back rates whereas term rates (such as LIBOR) allow borrowers
to calculate at the start of any interest period exactly how much
is payable at the end of such interest period. This may have an
adverse effect on the Barclays Bank UK Group's cashflows;
-- Operational risk: changes to existing reference rates and indices,
discontinuation of any reference rate or index and transition to
alternative "risk-free" reference rates may require changes to
the Barclays Bank UK Group's IT systems, trade reporting infrastructure,
operational processes, and controls. In addition, if any reference
rate or index (such as LIBOR) is no longer available to calculate
amounts payable, the Barclays Bank UK Group may incur additional
expenses in amending documentation for new and existing transactions
and/or effecting the transition from the original reference rate
or index to a new reference rate or index; and
-- Accounting risk: an inability to apply hedge accounting in accordance
with IFRS could lead to increased volatility in the Barclays Bank
UK Group's financial results and performance.
Any of these factors may have an adverse effect on the Barclays
Bank UK Group's business, results of operations, financial
condition and prospects.
For further details on the impacts of benchmark interest rate
reforms on the Barclays Bank UK Group, see Note 13 on pages 131 to
137.
Material existing and emerging risks impacting individual
principal risks
i) Credit risk
Credit risk is the risk of loss to the Barclays Bank UK Group
from the failure of clients, customers or counterparties, including
sovereigns, to fully honour their obligations to members of the
Barclays Bank UK Group, including the whole and timely payment of
principal, interest, collateral and other receivables.
a) Impairment
The introduction of the impairment requirements of IFRS 9
Financial Instruments, resulted in impairment loss allowances that
are recognised earlier, on a more forward-looking basis and on a
broader scope of financial instruments, and may continue to have a
material impact on the Barclays Bank UK Group's business, results
of operations, financial condition and prospects.
Measurement involves complex judgement and impairment charges
could be volatile, particularly under stressed conditions.
Unsecured products with longer expected lives, such as credit
cards, are the most impacted. Taking into account the transitional
regime, the capital treatment on the increased reserves has the
potential to adversely impact the Barclays Bank UK Group's
regulatory capital ratios.
In addition, the move from incurred losses to ECLs has the
potential to impact the Barclays Bank UK Group's performance under
stressed economic conditions or regulatory stress tests. For more
information, refer to Note 1 on pages 113 to 117.
b) Specific sectors and concentrations
The Barclays Bank UK Group is subject to risks arising from
changes in credit quality and recovery rates of loans and advances
due from borrowers and counterparties in any specific portfolio.
Any deterioration in credit quality could lead to lower
recoverability and higher impairment in a specific sector. The
following are areas of uncertainties to the Barclays Bank UK
Group's portfolio which could have a material impact on
performance:
-- Consumer affordability has remained a key area of focus, particularly
in unsecured lending. Macroeconomic factors, such as rising unemployment,
that impact a customer's ability to service unsecured debt payments
could lead to increased arrears in unsecured products.
-- UK real estate market. UK property represents a significant portion
of the overall Group retail and corporate credit exposure. In 2019,
property price growth across the UK has slowed, particularly in
London and the South East where the Barclays Bank UK Group's exposure
has high concentration. The Barclays Bank UK Group is at risk of
increased impairment from a material fall in property prices.
For further details on the Barclays Bank UK Group's approach to
credit risk, see credit risk management on pages 37 to 38 and
credit risk performance on pages 44 to 76.
ii) Treasury and capital risk
There are three primary types of treasury and capital risk faced
by the Barclays Bank UK Group:
a) Liquidity risk
Liquidity risk is the risk that the Barclays Bank UK Group is
unable to meet its contractual or contingent obligations or that it
does not have the appropriate amount, tenor and composition of
funding and liquidity to support its assets. This could cause the
Barclays Bank UK Group to fail to meet regulatory liquidity
standards or be unable to support day-to-day banking activities.
Key liquidity risks that the Barclays Bank UK Group faces
include:
-- The stability of the Barclays Bank UK Group's current funding profile:
In particular, that part which is based on accounts and deposits
payable on demand or at short notice, could be affected by general
UK economic conditions and the Barclays Bank UK Group failing to
preserve the current level of customer and investor confidence
in the financial services sector. The Barclays Bank UK Group benefits
from the additional deposit stability generated as a result of
the guarantees provided under the Financial Services Compensation
Scheme but recognises that there is the potential for outflow of
deposits or the reduction of the ability to access retail deposit
funding on reasonable terms if the arrangement is altered or removed
in future. In the interest of generating greater resilience to
liquidity stress events and to benefit from diversified sources
of funding, the Barclays Bank UK Group holds distinct relations
with various counterparties with the intention of creating issuance
capability for debt instruments which is independent of Barclays
Group and to support its own funding requirements in addition to
funding provided by the Barclays Group. Counterparties are likely
however to incorporate an assessment of the health of the Barclays
Group in addition to the Barclays Bank UK Group specifically when
making investment decisions. As with all financial institutions
arranging funding, several factors, including adverse macroeconomic
conditions, adverse outcomes in conduct and legal, competition
and regulatory matters and loss of confidence by investors, counterparties
and/or customers in the Barclays Bank UK Group, can affect the
ability of the Barclays Bank UK Group to access money or capital
markets and/or the cost and other terms upon which the Barclays
Bank UK Group is able to obtain market funding.
-- Credit rating changes and the impact on funding costs: Rating agencies
regularly review credit ratings given to Barclays Bank UK PLC.
Credit ratings are based on a number of factors, including some
which are not within the Barclays Bank UK Group's control (such
as political and regulatory developments, changes in rating methodologies,
macro-economic conditions and the UK's sovereign credit rating).
Whilst the impact of a credit rating change will depend on a number
of factors (including the type of issuance and prevailing market
conditions), any reductions in a credit rating (in particular,
any downgrade below investment grade) may affect the Barclays Bank
UK Group's access to the money or capital markets and/or terms
on which the Barclays Bank UK Group is able to obtain market funding,
increase costs of funding and credit spreads, reduce the size of
the Barclays Bank UK Group's deposit base, trigger additional collateral
or other requirements in derivative contracts and other secured
funding arrangements or limit the range of counterparties who are
willing to enter into transactions with the Barclays Bank UK Group.
Any of these factors could have a material adverse effect on the
Barclays Bank UK Group's business, results of operations, financial
condition and prospects.
b) Capital risk
Capital risk is the risk that the Barclays Bank UK Group has an
insufficient level or composition of capital to support its normal
business activities and to meet its regulatory capital requirements
under normal operating environments or stressed conditions (both
actual and as defined for internal planning or regulatory stress
testing purposes). This includes the risk from the Barclays Bank UK
Group's pension plans. Key capital risks that the Barclays Bank UK
Group faces include:
-- Failure to meet prudential capital requirements: This could lead
to the Barclays Bank UK Group being unable to support some or all
of its business activities, a failure to pass regulatory stress
tests, increased cost of funding due to deterioration in investor
appetite or credit ratings, restrictions on distributions including
the ability to meet dividend targets, and/or the need to take additional
measures to strengthen the Barclays Bank UK Group's capital or
leverage position.
-- Adverse changes in FX rates impacting capital ratios: The Barclays
Bank UK Group equity is held in Sterling. However, some capital
resources (e.g. MREL) are denominated in foreign currencies. Changes
in foreign currency exchange rates may adversely impact the Sterling
equivalent value of these items. As a result, the Barclays Bank
UK Group's regulatory capital ratios are sensitive to foreign currency
movements. Failure to appropriately manage the Barclays Bank UK
Group's balance sheet to take account of foreign currency movements
could result in an adverse impact on its regulatory capital.
c) Interest rate risk in the banking book
Interest rate risk in the banking book is the risk that the
Barclays Bank UK Group is exposed to capital or income volatility
because of a mismatch between the interest rate exposures of its
(non-traded) assets and liabilities. The Barclays Bank UK Group's
hedge programmes for interest rate risk in the banking book rely on
behavioural assumptions and, as a result, the success of the
hedging strategy cannot be guaranteed. A potential mismatch in the
balance or duration of the hedge assumptions could lead to earnings
deterioration. A decline in GBP interest rates may also compress
net interest margin on retail portfolios. In addition, the Barclays
Bank UK Group's liquidity pool is exposed to potential capital
and/or income volatility due to movements in market rates and
prices.
For further details on the Barclays Bank UK Group's approach to
treasury and capital risk, see treasury and capital risk management
on pages 38 to 39 and treasury and capital risk performance on
pages 78 to 87.
.
iii) Operational risk
Operational risk is the risk of loss to the Barclays Bank UK
Group from inadequate or failed processes or systems, human factors
or due to external events where the root cause is not due to credit
or market risks. Examples include:
a) Operational resilience
The loss of or disruption to business processing is a material
inherent risk within the Barclays Bank UK Group and across the
financial services industry, whether arising through impacts on the
Barclays Bank UK Group's technology systems, real estate services
including its retail branch network, or availability of personnel
or services supplied by third parties. Failure to build resilience
and recovery capabilities into business processes or into the
services of technology, real estate or suppliers on which the
Barclays Bank UK Group's business processes depend, may result in
significant customer detriment, costs to reimburse losses incurred
by the Barclays Bank UK Group's customers, and reputational
damage.
b) Cyber threats
The frequency of cyber-attacks continues to grow and is a global
threat that is inherent across all industries. The financial sector
remains a primary target for cyber criminals, hostile nation
states, opportunists and hacktivists and there is an increasing
level of sophistication in criminal hacking for the purpose of
stealing money, stealing, destroying or manipulating data
(including customer data) and/or disrupting operations, where
multiple threats exist including threats arising from malicious
emails, distributed denial of service (DDoS) attacks, payment
system compromises, insider attackers, supply chain and
vulnerability exploitation. Cyber events have a compounding impact
on services and customers, e.g. data breaches in social networking
sites, retail companies and payments networks.
Any failure in the Barclays Bank UK Group's cyber-security
policies, procedures or controls and/or its IT systems, may result
in significant financial losses, major business disruption,
inability to deliver customer services, or loss of data or other
sensitive information (including as a result of an outage) and may
cause associated reputational damage. Any of these factors could
increase costs (including, but not limited to, costs relating to
notification of, or compensation for customers) or may affect the
Barclays Bank UK Group's ability to retain and attract customers.
Regulators in the UK and Europe continue to recognise
cyber-security as an increasing systemic risk to the financial
sector and have highlighted the need for financial institutions to
improve their monitoring and control of, and resilience
(particularly of critical services) to cyber-attacks, and to
provide timely notification of them, as appropriate. Given the
Barclays Bank UK Group's reliance on technology, a cyber-attack
could have a material adverse effect on its business, results of
operations, financial condition and prospects.
For further details on the Barclays Bank UK Group's approach to
cyber threats, see operational risk performance on pages 89 to
90.
c) New and emergent technology
Technological advancements present opportunities to develop new
and innovative ways of doing business across the Barclays Bank UK
Group, with new solutions being developed both in-house and in
association with third-party companies. Introducing new forms of
technology, however, also has the potential to increase inherent
risk. Failure to evaluate, actively manage and closely monitor risk
exposure during all phases of business development could introduce
new vulnerabilities and security flaws and have a material adverse
effect on the Barclays Bank UK Group's business, results of
operations, financial condition and prospects.
d) External fraud
The level and nature of fraud threats continues to evolve,
particularly with the increasing use of digital products and the
greater functionality available online. Criminals continue to adapt
their techniques and are increasingly focused on targeting
customers and clients through ever more sophisticated methods of
social engineering. External data breaches also provide criminals
with the opportunity to exploit the growing levels of compromised
data. These fraud threats could lead to customer detriment, loss of
business, missed business opportunity and reputational damage, all
of which could have a material adverse effect on the Barclays Bank
UK Group's business, results of operations, financial condition and
prospects. Furthermore, recent changes in the regulatory landscape
has seen increased levels of liability being taken by the Barclays
Bank UK Group as part of a voluntary code in the UK to provide
additional protection to customers and clients who are victims of
Authorised Push Payment scams.
e) Data management and information protection
The Barclays Bank UK Group holds and processes large volumes of
data, including personally identifiable information, intellectual
property, and financial data. The General Data Protection
Regulation (GDPR) has strengthened the data protection rights of
customers and increased the accountability of the Barclays Bank UK
Group in its management of such data. Failure to accurately collect
and maintain this data, protect it from breaches of confidentiality
and interference with its availability exposes the Barclays Bank UK
Group to the risk of loss or unavailability of data (including
customer data discussed under 'v) Conduct risk, d) Data protection
and privacy' below) or data integrity issues. Any of these failures
could have a material adverse effect on the Barclays Bank UK
Group's business, results of operations, financial condition and
prospects.
f) Processing error
As a large, complex financial institution, the Barclays Bank UK
Group faces the risk of material errors in existing operational
processes, or from new processes as a result of on-going change
activity, including payments and client transactions. Material
operational or payment errors could disadvantage the Barclays Bank
UK Group's customers, clients or counterparties and could have a
material adverse effect on the Barclays Bank UK Group's business,
results of operations, financial condition and prospects.
g) Supplier exposure
The Barclays Bank UK Group depends on suppliers, including
Barclays Execution Services Limited, for the provision of many of
its services and the development of technology. Whilst the Barclays
Bank UK Group depends on suppliers, it remains fully accountable
for any risk arising from the actions of suppliers. The dependency
on suppliers and sub-contracting of outsourced services introduces
concentration risk where the failure of specific suppliers could
have an impact on the Barclays Bank UK Group's ability to continue
to provide material services to its customers. Failure to
adequately manage supplier risk could have a material adverse
effect on the Barclays Bank UK Group's business, results of
operations, financial condition and prospects.
h) 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 relevant 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, include credit impairment charges
for amortised cost assets, taxes, fair value of financial
instruments, and provisions including conduct and legal,
competition and regulatory matters. There is a risk that if the
judgement exercised, or the estimates or assumptions used,
subsequently turn out to be incorrect, this could result in
material losses to the Barclays Bank UK Group, beyond what was
anticipated or provided for. Further development of standards and
interpretations under IFRS could also materially impact the
financial results, condition and prospects of the Barclays Bank UK
Group. For further details on the accounting estimates and
policies, see the Notes to the audited financial statements on
pages 113 to 164.
i) Tax risk
The Barclays Bank UK Group is required to comply with the tax
laws and practice of all countries in which it has business
operations. There is a risk that the Barclays Bank UK Group could
suffer losses due to additional tax charges, other financial costs
or reputational damage as a result of failing to comply with such
laws and practice, or by failing to manage its tax affairs in an
appropriate manner. In addition, increasing customer tax reporting
requirements for UK and international customers and the
digitisation of the administration of tax has potential to increase
the Barclays Bank UK Group's tax compliance obligations
further.
j) Ability to hire and retain appropriately qualified
employees
As a regulated financial institution, the Barclays Bank UK Group
requires diversified and specialist skilled colleagues. The
Barclays Bank UK Group's ability to attract, develop and retain a
diverse mix of talent is key to the delivery of its core business
activity and strategy. This is impacted by a range of external and
internal factors, such as the UK's decision to leave the EU and the
enhanced individual accountability applicable to the banking
industry. Failure to attract or prevent the departure of
appropriately qualified and skilled employees could have a material
adverse effect on the Barclays Bank UK Group's business, results of
operations, financial condition and prospects. Additionally, this
may result in disruption to service which could in turn lead to
disenfranchising certain customer groups, customer detriment and
reputational damage.
For further details on the Barclays Bank UK Group's approach to
operational risk, see operational risk management on pages 39 to 40
and operational risk performance on pages 89 to 91.
iv) Model risk
Model risk is the risk of potential adverse consequences from
financial assessments or decisions based on incorrect or misused
model outputs and reports. The Barclays Bank UK Group relies on
models to support a broad range of business and risk management
activities, including informing business decisions and strategies,
measuring and limiting risk, valuing exposures (including the
calculation of impairment), conducting stress testing, assessing
capital adequacy, supporting new business acceptance and risk and
reward evaluation, managing client assets, and meeting reporting
requirements. Models are, by their nature, imperfect and incomplete
representations of reality because they rely on assumptions and
inputs, and so they may be subject to errors affecting the accuracy
of their outputs. For instance, the quality of the data used in
models across the Barclays Bank UK Group has a material impact on
the accuracy and completeness of its risk and financial metrics.
Models may also be misused. Model errors or misuse may result in
(among other things) the Barclays Bank UK Group making
inappropriate business decisions and/or inaccuracies or errors
being identified in the Barclays Bank UK Group's risk management
and regulatory reporting processes. This
could result in significant financial loss, imposition of
additional capital requirements, enhanced regulatory supervision
and reputational damage, all of which could have a material adverse
effect on the Barclays Bank UK Group's business, results of
operations, financial condition and prospects.
For further details on the Barclays Bank UK Group's approach to
model risk, see model risk management on page 40 and model risk
performance on page 92.
v) Conduct risk
Conduct risk is the risk of detriment to customers, clients,
market integrity, effective competition or the Barclays Bank UK
Group from the inappropriate supply of financial services,
including instances of wilful or negligent misconduct. This risk
could manifest itself in a variety of ways:
a) Employee misconduct
The Barclays Bank UK Group's business is exposed to risk from
potential non-compliance with its policies and instances of wilful
and negligent misconduct by employees, all of which could result in
enforcement action or reputational harm. It is not always possible
to deter employee misconduct, and the precautions we take to
prevent and detect this activity may not always be effective.
Employee misconduct could have a material adverse effect on the
Barclays Bank UK Group's customers, clients, market integrity as
well as reputation, financial condition and prospects.
b) Product governance and life cycle
The ongoing review management and governance of new and amended
products has come under increasing regulatory focus (for example,
the recast of the Markets in Financial Instruments Directive and
guidance in relation to the adoption of the EU Benchmarks
Regulation) and the Barclays Bank UK Group expects this to
continue. The following could lead to poor customer outcomes: (i)
ineffective product governance, including design, approval and
review of products, and (ii) inappropriate controls over internal
and third party sales channels and post sales services, such as
complaints handling, collections and recoveries. The Barclays Bank
UK Group is at risk of financial loss and reputational damage as a
result.
c) Financial crime
The Barclays Bank UK Group may be adversely affected if it fails
to effectively mitigate the risk that third parties or its
employees facilitate, or that its products and services are used to
facilitate, financial crime (money laundering, terrorist financing
and proliferation financing, breaches of economic and financial
sanctions, bribery and corruption, and the facilitation of tax
evasion). UK and US regulations covering financial institutions
continue to focus on combating financial crime. Failure to comply
may lead to enforcement action by the Barclays Bank UK Group's
regulators, including severe penalties, which may have a material
adverse effect on the Barclays Bank UK Group's business, financial
condition and prospects.
d) Data protection and privacy
Proper handling of personal data is critical to sustaining
long-term relationships with our customers and clients and
complying with privacy laws and regulations. Failure to protect
personal data can lead to potential detriment to our customers and
clients, reputational damage, enforcement action and financial loss
which may be substantial (see 'iii) Operational risk, (e) Data
management and information protection' above).
e) Regulatory focus on culture and accountability
Regulators around the world continue to emphasise the importance
of culture and personal accountability and enforce the adoption of
adequate internal reporting and whistleblowing procedures to help
to promote appropriate conduct and drive positive outcomes for
customers, colleagues, clients and markets. The requirements and
expectations of the UK Senior Managers Regime, Certification Regime
and Conduct Rules have driven additional accountabilities for
individuals across the Barclays Bank UK Group with an increased
focus on governance and rigour. Failure to meet these requirements
and expectations may lead to regulatory sanctions, both for the
individuals and the Barclays Bank UK Group.
For further details on the Barclays Bank UK Group's approach to
conduct risk, see conduct risk management on page 41 and conduct
risk performance on page 92.
vi) Reputation risk
Reputation risk is the risk that an action, transaction,
investment, event, decision or business relationship will reduce
trust in the Barclays Bank UK Group's integrity and/or
competence.
Any material lapse in standards of integrity, compliance,
customer service or operating efficiency may represent a potential
reputation risk. Stakeholder expectations constantly evolve, and so
reputation risk is dynamic and varies between geographical regions,
groups and individuals. A risk arising in one business area can
have an adverse effect upon the Barclays Bank UK Group's overall
reputation and any one transaction, investment or event (in the
perception of key stakeholders) can reduce trust in the Barclays
Bank UK Group's integrity and competence. The Barclays Bank UK
Group's association with sensitive topics and sectors has been, and
in some instances continues to be, an area of concern for
stakeholders, including (i) the financing of, and investments in,
businesses which operate in sectors that are sensitive because of
their relative carbon intensity or local environmental impact; (ii)
potential association with human rights violations (including
combating modern slavery) in the Barclays Bank UK Group's
operations or supply chain and by clients and customers; and (iii)
the financing of businesses which manufacture and export military
and riot control goods and services.
Reputation risk could also arise from negative public opinion
about the actual, or perceived, manner in which the Barclays Bank
UK Group conducts its business activities, or the Barclays Bank UK
Group's financial performance, as well as actual or perceived
practices in banking and the financial services industry generally.
Modern technologies, in particular online social media channels and
other broadcast tools that facilitate communication with large
audiences in short time frames and with minimal costs, may
significantly enhance and accelerate the distribution and effect of
damaging information and allegations. Negative public opinion may
adversely affect the Barclays Bank UK Group's ability to retain and
attract customers, in particular, corporate and retail depositors,
and to retain and motivate staff, and could have a material adverse
effect on the Barclays Bank UK Group's business, results of
operations, financial condition and prospects.
In addition to the above, reputation risk has the potential to
arise from operational issues or conduct matters which cause
detriment to customers, clients, market integrity, effective
competition or the Barclays Bank UK Group (see "iii) Operational
risk" above).
For further details on the Barclays Bank UK Group's approach to
reputation risk, see reputation risk management on page 41 and
reputation risk performance on page 92.
vii) Legal risk and legal, competition and regulatory
matters
The Barclays Bank UK Group conducts activities in a highly
regulated market which exposes it and its employees to legal risk
arising from (i) the multitude of laws and regulations that apply
to the businesses it operates, which are highly dynamic, may vary
between jurisdictions, and are often unclear in their application
to particular circumstances especially in new and emerging areas;
and (ii) the diversified and evolving nature of the Barclays Bank
UK Group's businesses and business practices. In each case, this
exposes the Barclays Bank UK Group and its employees to the risk of
loss or the imposition of penalties, damages or fines from the
failure of members of the Barclays Bank UK Group to meet their
respective legal obligations, including legal or contractual
requirements. Legal risk may arise in relation to a number of the
risk factors identified above, including (without limitation) as a
result of (i) the UK's withdrawal from the EU, (ii) benchmark
reform, (iii) the regulatory change agenda, and (iv) rapidly
evolving rules and regulations in relation to data protection,
privacy and cyber-security.
A breach of applicable legislation and/or regulations by the
Barclays Bank UK Group or its employees could result in criminal
prosecution, regulatory censure, potentially significant fines and
other sanctions. Where clients, customers or other third parties
are harmed by the Barclays Bank UK Group's conduct, this may also
give rise to civil legal proceedings, including class actions.
Other legal disputes may also arise between the Barclays Bank UK
Group and third parties relating to matters such as breaches or
enforcement of legal rights or obligations arising under contracts,
statutes or common law. Adverse findings in any such matters may
result in the Barclays Bank UK Group being liable to third parties
or may result in the Barclays Bank UK Group's rights not being
enforced as intended.
Details of legal, competition and regulatory matters to which
the Barclays Bank UK Group is currently exposed are set out in Note
24. In addition to matters specifically described in Note 24, the
Barclays Bank UK Group is engaged in various other legal
proceedings which arise in the ordinary course of business. The
Barclays Bank UK Group is also subject to requests for information,
investigations and other reviews by regulators, governmental and
other public bodies in connection with business activities in which
the Barclays Bank UK Group is, or has been, engaged.
The outcome of legal, competition and regulatory matters, both
those to which the Barclays Bank UK Group is currently exposed and
any others which may arise in the future, is difficult to predict.
In connection with such matters, the Barclays Bank UK Group may
incur significant expense, regardless of the ultimate outcome, and
any such matters could expose the Barclays Bank UK Group to any of
the following outcomes: substantial monetary damages, settlements
and/or fines; remediation of affected customers and clients; other
penalties and injunctive relief; additional litigation; criminal
prosecution; the loss of any existing agreed protection from
prosecution; regulatory restrictions on the Barclays Bank UK
Group's business operations including the withdrawal of
authorisations; increased regulatory compliance requirements or
changes to laws or regulations; suspension of operations; public
reprimands; loss of significant assets or business; a negative
effect on the Barclays Bank UK Group's reputation; loss of
confidence by investors, counterparties, clients and/or customers;
risk of credit rating agency downgrades; potential negative impact
on the availability and/or cost of funding and liquidity; and/or
dismissal or resignation of key individuals. In light of the
uncertainties involved in legal, competition and regulatory
matters, there can be no assurance that the outcome of a particular
matter or matters will not have a material adverse effect on the
Barclays Bank UK Group's business, results of operations, financial
condition and prospects.
Consolidated financial statements
Consolidated income statement
2019 2018(a,b)
For the year ended 31 December Notes GBPm GBPm
-------------------------------------- ----- ------- ---------
Interest income 3 7,218 5,267
Interest expense 3 (1,413) (830)
-------------------------------------- ----- ------- ---------
Net interest income 5,805 4,437
-------------------------------------- ----- ------- ---------
Fee and commission income 4 1,674 1,315
Fee and commission expense 4 (368) (273)
-------------------------------------- ----- ------- ---------
Net fee and commission income 1,306 1,042
-------------------------------------- ----- ------- ---------
Net trading Income 5 33 30
Net investment income 6 172 86
Other income 6 11
-------------------------------------- ----- ------- ---------
Total income 7,322 5,606
Credit impairment charges 7 (709) (624)
-------------------------------------- ----- ------- ---------
Net operating income 6,613 4,982
-------------------------------------- ----- ------- ---------
Staff costs 28 (1,252) (1,016)
Infrastructure costs 8 (382) (307)
Administration and general expenses 8 (2,724) (2,033)
Provisions for litigation and conduct 22 (1,586) (78)
-------------------------------------- ----- ------- ---------
Operating expenses (5,944) (3,434)
-------------------------------------- ----- ------- ---------
Profit before tax 669 1,548
Taxation 9 (513) (405)
-------------------------------------- ----- ------- ---------
Profit after tax 156 1,143
-------------------------------------- ----- ------- ---------
Attributable to:
-------------------------------------- ----- ------- ---------
Equity holders of the parent 3 1,038
Other equity instrument holders 153 105
-------------------------------------- ----- ------- ---------
Profit after tax 156 1,143
-------------------------------------- ----- ------- ---------
Notes
a From 2019, due to an IAS 12 update, the tax relief on payments
in relation to AT1 instruments has been recognised in the tax charge
of the income statement, whereas it was previously recorded in
retained earnings. Comparatives have been restated, reducing the
tax charge for 2018 by GBP28m. Further detail can be found in Note
1.
b Barclays Bank UK PLC acquired the UK banking business from Barclays
Bank PLC on 1 April 2018.
c As permitted by section 408(3) of the Companies Act 2006 an income
statement for the parent company has not been presented.
Consolidated financial statements
Consolidated statement of comprehensive income
2019 2018
For the year ended 31 December GBPm GBPm
------------------------------------------------------------------------------------------- ----- -----
Profit after tax 156 1,143
------------------------------------------------------------------------------------------- ----- -----
Other comprehensive income/(loss) that may be recycled to profit or loss:
Fair value through other comprehensive income reserve movement relating to debt securities
Net gains/(losses) from changes in fair value 438 (73)
Net (losses)/gains due to fair value hedging (391) 72
Net (gains) transferred to net profit on disposal (48) (27)
Tax 5 11
Cash flow hedging reserve
Net gains from changes in fair value 143 26
Net (gains)/ losses transferred to net profit (6) 1
Tax (34) (7)
------------------------------------------------------------------------------------------- ----- -----
Other comprehensive income that may be recycled to profit or loss 107 3
Other comprehensive income/(loss) not recycled to profit or loss:
------------------------------------------------------------------------------------------- ----- -----
Tax - -
------------------------------------------------------------------------------------------- ----- -----
Other comprehensive income not recycled to profit or loss - -
------------------------------------------------------------------------------------------- ----- -----
Other comprehensive income for the year 107 3
------------------------------------------------------------------------------------------- ----- -----
Total comprehensive income for the year 263 1,146
------------------------------------------------------------------------------------------- ----- -----
Consolidated financial statements
Consolidated balance sheet
2019 2018
As at 31 December Notes GBPm GBPm
------------------------------------------------------------------ ----- ------- -------
Assets
Cash and balances at central banks 24,305 40,669
Cash collateral and settlement balances 4,331 3,349
Loans and advances at amortised cost 17 197,569 188,565
Reverse repurchase agreements and other similar secured lending 1,761 1,759
Trading portfolio assets 11 860 151
Financial assets at fair value through the income statement 12 3,571 3,880
Derivative financial instruments 13 192 241
Financial assets at fair value through other comprehensive income 14 19,322 6,710
Goodwill and intangible assets 20 3,530 3,534
Property, plant and equipment 18 893 498
Deferred tax assets 9 810 792
Other assets 1,254 1,157
------------------------------------------------------------------ ----- ------- -------
Total assets 258,398 251,305
------------------------------------------------------------------ ----- ------- -------
Liabilities
Deposits at amortised cost 17 205,696 197,485
Cash collateral and settlement balances 214 239
Repurchase agreements and other similar secured borrowing 13,420 11,978
Debt securities in issue 8,271 11,172
Subordinated liabilities 25 7,688 7,548
Trading portfolio liabilities 11 1,704 1,269
Derivative financial instruments 13 740 419
Current tax liabilities 9 458 984
Other liabilities 21 2,034 1,888
Provisions 22 1,660 1,380
------------------------------------------------------------------ ----- ------- -------
Total liabilities 241,885 234,362
------------------------------------------------------------------ ----- ------- -------
Equity
Called up share capital and share premium 26 5 5
Other equity instruments 26 2,560 2,070
Other reserves 27 183 76
Retained earnings 13,765 14,792
------------------------------------------------------------------ ----- ------- -------
Total equity 16,513 16,943
------------------------------------------------------------------ ----- ------- -------
Total liabilities and equity 258,398 251,305
------------------------------------------------------------------ ----- ------- -------
The Board of Directors approved the financial statements on
pages 105 to 164 on 12 February 2020.
Sir Ian Cheshire
Chair
Matt Hammerstein
Chief Executive
James Mack
Chief Financial Officer
Consolidated financial statements
Consolidated statement of changes in equity
Called up
share
capital Other
and share equity Other Retained
premium(a) instruments(a) reserves(b) earnings(c) Total equity
GBPm GBPm GBPm GBPm GBPm
--------------------------------------------- ----------- ---------------- ------------ ------------ ------------
Balance as at 1 January 2019 5 2,070 76 14,792 16,943
Profit after tax - 153 - 3 156
Financial assets at fair value through other
comprehensive income - - 4 - 4
Cash flow hedges - - 103 - 103
--------------------------------------------- ----------- ---------------- ------------ ------------ ------------
Total comprehensive income for the year - 153 107 3 263
--------------------------------------------- ----------- ---------------- ------------ ------------ ------------
Issue and exchange of other equity
instruments - 490 - - 490
Equity settled share schemes - - - 32 32
Other equity instruments coupons paid - (153) - - (153)
Vesting of employee share schemes - - - (12) (12)
Dividends paid - - - (1,050) (1,050)
Balance as at 31 December 2019 5 2,560 183 13,765 16,513
--------------------------------------------- ----------- ---------------- ------------ ------------ ------------
Balance as at 1 January 2018 5 - 20 21 46
Profit after tax - 105 - 1,038 1,143
Financial assets at fair value through other
comprehensive income - - (17) - (17)
Cash flow hedges - - 20 - 20
--------------------------------------------- ----------- ---------------- ------------ ------------ ------------
Total comprehensive income for the year - 105 3 1,038 1,146
--------------------------------------------- ----------- ---------------- ------------ ------------ ------------
Issue of new ordinary shares 13,044 - - - 13,044
Equity settled share schemes - - - 19 19
Net equity impact of the UK banking business
transfer - 2,070 53 46 2,169
Capital reorganisation (13,044) - - 13,044 -
Other equity instruments coupons paid - (105) - - (105)
Vesting of employee share schemes - - - (10) (10)
Dividends paid - - - (350) (350)
Capital contribution from Barclays Bank PLC - - - 983 983
Other reserve movements - - - 1 1
--------------------------------------------- ----------- ---------------- ------------ ------------ ------------
Balance as at 31 December 2018(d) 5 2,070 76 14,792 16,943
--------------------------------------------- ----------- ---------------- ------------ ------------ ------------
Notes
a For further details, refer to Note 26.
b For further details, refer to Note 27.
c From 2019, due to an IAS 12 update, the tax relief on payments
in relation to AT1 instruments has been recognised in the tax charge
of the income statement, whereas it was previously recorded in
retained earnings. Comparatives have been restated, reducing the
tax charge for 2018 by GBP28m. Further detail can be found in Note
1.
d Barclays Bank UK PLC acquired the UK banking business from Barclays
Bank PLC on 1 April 2018.
Consolidated financial statements
Consolidated cash flow statement
2019 2018(a)
For the year ended 31 December GBPm GBPm
------------------------------------------------------------------------------------------ -------- -------
Reconciliation of profit before tax to net cash flows from operating activities:
Profit before tax 669 1,548
Adjustment for non-cash items:
Credit impairment charges 709 624
Depreciation, amortisation and impairment of property, plant, equipment and intangibles 150 50
Other provisions 1,665 104
Other non-cash movements 110 (364)
Changes in operating assets and liabilities
Cash collateral and settlement balances (531) (130)
Loans and advances at amortised cost (10,117) (4,022)
Repurchase and reverse repurchase agreements 1,440 (592)
Deposits and debt securities in issue 5,310 6,532
Derivative financial instruments 370 (5,854)
Trading assets and liabilities (274) (647)
Financial assets and liabilities at fair value 309 1,736
Other assets and liabilities (1,835) 561
Corporate income tax paid (1,086) (128)
Net cash from operating activities (3,111) (582)
------------------------------------------------------------------------------------------- -------- -------
Net cash acquired from the acquisition of the UK banking business - 45,940
Purchase of financial assets at fair value through other comprehensive income (11,846) (899)
Purchase of property, plant and equipment and intangibles (30) (38)
Net cash from investing activities (11,876) 45,003
------------------------------------------------------------------------------------------- -------- -------
Dividends paid and coupon payments on other equity instruments (1,203) (455)
Net issue of shares and other equity instruments 490 -
Issuance of subordinated debt 157 -
Vesting of employee share schemes (12) (10)
------------------------------------------------------------------------------------------- -------- -------
Net cash from financing activities (568) (465)
------------------------------------------------------------------------------------------- -------- -------
Effect of exchange rates on cash and cash equivalents (737) 325
------------------------------------------------------------------------------------------- -------- -------
Net increase in cash and cash equivalents (16,292) 44,281
------------------------------------------------------------------------------------------- -------- -------
Cash and cash equivalents at beginning of year 44,334 53
------------------------------------------------------------------------------------------- -------- -------
Cash and cash equivalents at end of year 28,042 44,334
------------------------------------------------------------------------------------------- -------- -------
Cash and cash equivalents comprise:
Cash and balances at central banks 24,305 40,669
Loans and advances to banks with original maturity less than three months 87 491
Cash collateral and settlement balances with banks with original maturity less than three
months 3,650 3,174
28,042 44,334
------------------------------------------------------------------------------------------ -------- -------
Note
a From 2019, the effect of exchange rates on cash and cash equivalents
has been disclosed. Comparatives have been restated, reducing other
non-cash movements by GBP325m.
Interest received by Barclays Bank UK Group was GBP7,218m (2018:
GBP5,267m) and interest paid by Barclays Bank UK Group was
GBP1,413m (2018: GBP830m).
As at 31 December 2019, the Barclays Bank UK Group was required
to maintain balances with central banks in respect of interbank
payment schemes of GBP388m (2018: GBP672m).
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.
Financial statements of Barclays Bank UK PLC
Parent company accounts
Balance sheet
------------------------------------------------------------------ ----- ----------------
2019 2018
As at 31 December Notes GBPm GBPm
------------------------------------------------------------------ ----- ------- -------
Assets
Cash and balances at central banks 24,305 40,664
Cash collateral and settlement balances 4,331 3,364
Loans and advances at amortised cost 17 197,960 188,606
Reverse repurchase agreements and other similar secured lending 1,761 1,759
Trading portfolio assets 11 860 151
Financial assets at fair value through the income statement 12 3,571 3,880
Derivative financial instruments 13 193 241
Financial assets at fair value through other comprehensive income 14 19,322 6,710
Investment in subsidiaries 454 463
Goodwill and intangible assets 20 3,382 3,386
Property, plant and equipment 18 893 498
Deferred tax assets 9 810 790
Other assets 1,079 939
------------------------------------------------------------------ ----- ------- -------
Total assets 258,921 251,451
------------------------------------------------------------------ ----- ------- -------
Liabilities
Deposits at amortised cost 17 206,764 199,031
Cash collateral and settlement balances 214 239
Repurchase agreements and other similar secured borrowing 13,420 11,978
Debt securities in issue 7,778 9,912
Subordinated liabilities 25 7,688 7,548
Trading portfolio liabilities 11 1,704 1,269
Derivative financial instruments 13 740 436
Current tax liabilities 9 451 990
Other liabilities 21 1,903 1,676
Provisions 22 1,613 1,348
------------------------------------------------------------------ ----- ------- -------
Total liabilities 242,275 234,427
------------------------------------------------------------------ ----- ------- -------
Equity
Called up share capital and share premium 26 5 5
Other equity instruments 26 2,560 2,070
Other reserves 27 285 178
Retained earnings(a) 13,796 14,771
------------------------------------------------------------------ ----- ------- -------
Total equity 16,646 17,024
------------------------------------------------------------------ ----- ------- -------
Total liabilities and equity 258,921 251,451
------------------------------------------------------------------ ----- ------- -------
Note
a As permitted by section 408(3) of the Companies Act 2006 an income
statement for the parent company has not been presented. Included
in shareholders' equity for the Bank is a profit after tax for
the year ended 31 December 2019 of GBP208m (2018: GBP1,154m).
The Board of Directors approved the financial statements on
pages 110 to 112 on 12 February 2020.
Sir Ian Cheshire
Chair
Matthew Hammerstein
Chief Executive
James Mack
Chief Financial Officer
Statement of changes in
equity
----------------------- ---------------------- ---------------------- ----------------- ------------ ------------
Called up share
capital and share Other equity Retained
premium(a) instruments(a) Other reserves(b) earnings(c) Total equity
GBPm GBPm GBPm GBPm GBPm
----------------------- ---------------------- ---------------------- ----------------- ------------ ------------
Balance as at 1 January
2019 5 2,070 178 14,771 17,024
Profit after tax - 153 - 55 208
Financial assets at
fair value through
other comprehensive
income - - 4 - 4
Cash flow hedges - - 103 - 103
----------------------- ---------------------- ---------------------- ----------------- ------------ ------------
Total comprehensive
income for the year - 153 107 55 315
----------------------- ---------------------- ---------------------- ----------------- ------------ ------------
Issue and exchange of
other equity
instruments - 490 - - 490
Equity settled share
schemes - - - 32 32
Other equity
instruments coupons
paid - (153) - - (153)
Vesting of employee
share schemes - - - (12) (12)
Dividends paid - - - (1,050) (1,050)
Balance as at 31
December 2019 5 2,560 285 13,796 16,646
----------------------- ---------------------- ---------------------- ----------------- ------------ ------------
Balance as at 1 January
2018 5 - 121 33 159
Profit after tax - 105 - 1,049 1,154
Financial assets at
fair value through
other comprehensive
income - - (17) - (17)
Cash flow hedges - - 20 - 20
Total comprehensive
income for the year - 105 3 1,049 1,157
----------------------- ---------------------- ---------------------- ----------------- ------------ ------------
Issue of new ordinary
shares 13,044 - - - 13,044
Equity settled share
schemes - - - 19 19
Net equity impact of
the UK banking
business transfer - 2,070 54 46 2,170
Capital reorganisation (13,044) - - 13,044 -
Other equity
instruments coupons
paid - (105) - - (105)
Vesting of employee
share schemes - - - (10) (10)
Dividends paid - - - (350) (350)
Capital contribution
from Barclays Bank PLC - - - 941 941
Other movements - - - (1) (1)
Balance as at 31
December 2018(d) 5 2,070 178 14,771 17,024
----------------------- ---------------------- ---------------------- ----------------- ------------ ------------
Notes
a For further details, refer to Note 26.
b For further details, refer to Note 27.
c From 2019, due to an IAS 12 update, the tax relief on payments
in relation to AT1 instruments has been recognised in the tax charge
of the income statement, whereas it was previously recorded in
retained earnings. This change does not impact earnings per share
or return on average tangible shareholders' equity. Comparatives
have been restated, reducing the tax charge for 2018 by GBP28m.
Further detail can be found in Note 1.
d Barclays Bank UK PLC acquired the UK banking business from Barclays
Bank PLC on 1 April 2018.
Cash flow statement
------------------------------------------------------------------------------------------ -----------------
2019 2018(a)
For the year ended 31 December GBPm GBPm
------------------------------------------------------------------------------------------ -------- -------
Reconciliation of profit before tax to net cash flows from operating activities:
Profit before tax 703 1,554
Adjustment for non-cash items:
Credit impairment charges 710 622
Depreciation, amortisation and impairment of property, plant, equipment and intangibles 150 50
Other provisions 1,611 105
Other non-cash movements 113 (353)
Changes in operating assets and liabilities
Cash collateral and settlement balances (516) (124)
Loans and advances at amortised cost (9,797) (4,341)
Reverse repurchase agreements and other similar lending 1,440 (592)
Deposits and debt securities in issue 5,599 6,478
Derivative financial instruments 352 (5,836)
Trading assets and liabilities (274) (647)
Net decrease in financial assets and liabilities at fair value 309 1,718
Other assets and liabilities (1,753) 590
Corporate income tax paid (1,083) (132)
Net cash from operating activities (2,436) (908)
------------------------------------------------------------------------------------------ -------- -------
Net cash acquired from the acquisition of the UK banking business 45,936
Purchase of financial assets at fair value through other comprehensive income (11,846) (899)
Purchase of property, plant and equipment and intangibles (28) (38)
Net cash from investing activities (11,874) 44,999
------------------------------------------------------------------------------------------ -------- -------
Dividends paid and other coupon payments on equity instruments (1,203) (455)
Net issue of shares and other equity instruments 490
Issuance of subordinated debt 157 -
Vesting of employee share schemes (12) (10)
------------------------------------------------------------------------------------------ -------- -------
Net cash from financing activities (568) (465)
------------------------------------------------------------------------------------------ -------- -------
Effect of exchange rates on cash and cash equivalents (737) 325
------------------------------------------------------------------------------------------ -------- -------
Net increase in cash and cash equivalents (15,615) 43,951
------------------------------------------------------------------------------------------ -------- -------
Cash and cash equivalents at beginning of year 43,984 33
------------------------------------------------------------------------------------------ -------- -------
Cash and cash equivalents at end of year 28,369 43,984
------------------------------------------------------------------------------------------ -------- -------
Cash and cash equivalents comprise:
Cash and balances at central banks 24,305 40,664
Loans and advances to banks with original maturity less than three months 414 146
Cash collateral and settlement balances with banks with original maturity less than three
months 3,650 3,174
------------------------------------------------------------------------------------------ -------- -------
28,369 43,984
------------------------------------------------------------------------------------------ -------- -------
Note
a From 2019, the effect of exchange rates on cash and cash equivalents
has been disclosed. Comparatives have been restated, reducing other
non-cash movements by GBP325m.
Interest received by Barclays Bank UK PLC was GBP7,026m (2018:
GBP5,170m) and interest paid by Barclays Bank UK PLC was GBP1,233m
(2018: GBP741m).
As at 31 December 2019, Barclays Bank UK PLC was required to
maintain balances with central banks in respect of interbank
payment schemes of GBP388m (2018: GBP672m).
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.
Notes to the financial statements
For the year ended 31 December 2019
This section describes Barclays Bank UK Group's significant
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 particular note, the
accounting policy and/or critical accounting estimate is contained
with the relevant note.
1 Significant accounting policies
1. Reporting entity
Barclays Bank UK PLC is a public limited company, registered in
England under company number 9740322.
These financial statements are prepared for Barclays Bank UK PLC
and its subsidiaries (the Barclays Bank UK Group) under Section 399
of the Companies Act 2006. The Barclays Bank UK Group is a major UK
financial services provider engaged in retail banking, credit
cards, wholesale banking, wealth management and investment
management services. In addition, separate financial statements
have been presented for the parent company.
2. Compliance with International Financial Reporting
Standards
The consolidated financial statements of the Barclays Bank UK
Group, and the separate financial statements of Barclays Bank UK
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 separate financial statements are set out below,
and in the relevant notes to the financial statements. These
policies have been consistently applied with the exception of the
adoption of IFRS 16 Leases, IFRIC Interpretation 23 Uncertainty
over Income Tax Treatments, the amendments to IAS 12 Income Taxes,
the amendments to IAS 19 Employee Benefits, and the amendments to
IFRS 9, IAS 39 and IFRS 7 which were applied from 1 January
2019.
3. Basis of preparation
The consolidated and separate financial statements have been
prepared under the historical cost convention modified to include
the fair valuation of 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
(GBPm), the functional currency of Barclays Bank UK PLC.
The financial statements have been prepared on a going concern
basis, in accordance with the Companies Act 2006 as applicable to
companies using IFRS.
4. Accounting policies
The Barclays Bank UK Group prepares financial statements in
accordance with IFRS. The Barclays Bank UK 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 Bank UK Group applies IFRS 10 Consolidated financial
statements.
The consolidated financial statements combine the financial
statements of Barclays Bank UK PLC and all its subsidiaries.
Subsidiaries are entities over which Barclays Bank UK PLC has
control. The Barclays Bank UK Group has control over another entity
when the Barclays Bank UK Group has all of the following:
1) power over the relevant activities of the investee, for example
through voting or other rights
2) exposure to, or rights to, variable returns from its involvement
with the investee and
3) the ability to affect those returns through its power over the
investee.
The assessment of control is based on the consideration of all
facts and circumstances. The Barclays Bank UK Group reassesses
whether it controls an investee if facts and circumstances indicate
that there are changes to one or more of the three elements of
control.
Intra-group transactions and balances are eliminated on
consolidation. Consistent accounting policies are used throughout
the Barclays Bank UK 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.
None of the Barclays Bank UK Group's subsidiaries are
significant in the context of the Barclays Bank UK Group's
business, results or financial position. A complete list of all
subsidiaries is presented in Note 35.
In the individual financial statements of Barclays Bank UK PLC,
investments in subsidiaries are stated at cost less impairment.
(ii) Foreign currency translation
The Barclays Bank UK Group applies IAS 21 The Effects of Changes
in Foreign Exchange Rates. Transactions in foreign currencies are
translated into Sterling at the rate ruling on the date of the
transaction. Foreign currency monetary balances are translated into
Sterling at the period end exchange rates. Exchange gains and
losses on such balances are taken to the income statement.
Non-monetary foreign currency balances are carried at historical
transaction date exchange rates.
(iii) Financial assets and liabilities
The Barclays Bank UK Group applies IFRS 9 Financial Instruments
to the recognition, classification and measurement, and
derecognition of financial assets and financial liabilities and the
impairment of financial assets. The Barclays Bank UK Group applies
the requirements of IAS 39 Financial Instruments: Recognition and
Measurement for hedge accounting purposes.
Recognition
The Barclays Bank UK Group recognises financial assets and
liabilities when it becomes a party to the terms of the contract.
Trade date or settlement date accounting is applied depending on
the classification of the financial asset.
Classification and measurement
Financial assets are classified on the basis of two
criteria:
i) the business model within which financial assets are managed; and
ii) their contractual cash flow characteristics (whether the cash flows
represent 'solely payments of principal and interest' (SPPI)).
The Barclays Bank UK Group assesses the business model criteria
at a portfolio level. Information that is considered in determining
the applicable business model includes (i) policies and objectives
for the relevant portfolio, (ii) how the performance and risks of
the portfolio are managed, evaluated and reported to management,
and (iii) the frequency, volume and timing of sales in prior
periods, sales expectation for future periods, and the reasons for
such sales.
The contractual cash flow characteristics of financial assets
are assessed with reference to whether the cash flows represent
SPPI. In assessing whether contractual cash flows are SPPI
compliant, interest is defined as consideration primarily for the
time value of money and the credit risk of the principal
outstanding. The time value of money is defined as the element of
interest that provides consideration only for the passage of time
and not consideration for other risks or costs associated with
holding the financial asset. Terms that could change the
contractual cash flows so that it would not meet the condition for
SPPI are considered, including: (i) contingent and leverage
features, (ii) non-recourse arrangements and (iii) features that
could modify the time value of money.
Financial assets are measured at amortised cost if they are held
within a business model whose objective is to hold financial assets
in order to collect contractual cash flows, and their contractual
cash flows represent SPPI.
Financial assets are measured at fair value through other
comprehensive income if they are held within a business model whose
objective is achieved by both collecting contractual cash flows and
selling financial assets, and their contractual cash flows
represent SPPI.
Other financial assets are measured at fair value through profit
and loss. There is an option to make an irrevocable election on
initial recognition for non traded equity investments to be
measured at fair value through other comprehensive income, in which
case dividends are recognised in profit or loss, but gains or
losses are not reclassified to profit or loss upon derecognition,
and the impairment requirements of IFRS 9 do not apply.
The accounting policy for each type of financial asset or
liability is included within the relevant note for the item. The
Barclays Bank UK Group's policies for determining the fair values
of the assets and liabilities are set out in Note 15.
Derecognition
The Barclays Bank UK 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% or more in the present value of the cash flows or a substantive
qualitative amendment - is accounted for as an extinguishment of
the original financial liability and the recognition of a new
financial liability.
Transactions in which the Barclays Bank UK 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 Barclays Bank UK 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.
Accounting for 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 Barclays
Bank UK 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
Barclays Bank UK Group obtains such loans or cash collateral, in
exchange for the transfer of collateral.
The Barclays Bank UK Group purchases (a reverse repurchase
agreement) or borrows securities subject to a commitment to resell
or return them. The securities are not included in the balance
sheet as the Barclays Bank UK 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, unless it is designated or
mandatorily at fair value through profit and loss.
The Barclays Bank UK 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 Barclays Bank UK 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, unless it is designated at fair value through profit and
loss.
(iv) Issued debt and equity instruments
The Barclays Bank UK 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
Barclays Bank UK Group having an 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 AGM 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.
5. New and amended standards and interpretations
The accounting policies adopted are consistent with those of the
previous financial year, with the exception of the adoption of IFRS
16 Leases, IFRIC Interpretation 23 Uncertainty over Income Tax
Treatment, the amendments to IAS 12 Income Taxes, the amendments to
IAS 19 Employee Benefits, and the amendments to IFRS 9, IAS 39 and
IFRS 7 which were applied from 1 January 2019.
IFRS 16 - Leases
IFRS 16 Leases, which replaced IAS 17 Leases, was applied
effective from 1 January 2019. IFRS 16 does not result in a
significant change to lessor accounting; however, for lessee
accounting there is no longer a distinction between operating and
finance leases. Instead, the lessee is required to recognise both a
right of use (ROU) asset and lease liability on-balance sheet.
There is a recognition exemption permitted for leases with a term
of 12 months or less.
The Barclays Bank UK Group applied IFRS 16 on a modified
retrospective basis and took advantage of the option not to restate
comparative periods. The Barclays Bank UK Group applied the
following transition options available under the modified
retrospective approach:
-- To calculate the right of use asset equal to the lease liability,
adjusted for prepaid or accrued payments.
-- To rely on the previous assessment of whether leases are onerous
in accordance with IAS 37 immediately before the date of initial
application as an alternative to performing an impairment review.
The Barclays Bank UK Group adjusted the carrying amount of the
ROU asset at the date of initial application by the previous carrying
amount of its onerous lease provision.
-- To apply the recognition exception for leases with a term not exceeding
12 months.
-- To use hindsight in determining the lease term if the contract
contains options to extend or terminate the lease.
Upon adoption of IFRS 16, the Barclays Bank UK Group applied the
transition option which permitted the ROU asset to equal the lease
liability, adjusted for prepaid or accrued prepayments. This
approach resulted in a lease liability of GBP504m and a ROU asset
of GBP510m being recognised as at 1 January 2019. The difference in
the lease liability and the ROU asset was a result of the following
adjustments:
-- an increase in the ROU asset as a result of rental prepayments
of GBP22m and,
-- a decrease in the ROU asset as a result of onerous lease provisions
previously recognised of GBP13m and GBP3m of rent free adjustments.
The ROU asset was recorded within in property, plant and
equipment and the lease liability within other liabilities.
When measuring lease liabilities, the Barclays Bank UK Group
discounted lease payments using the incremental borrowing rate at 1
January 2019. The weighted average applied was 4.08%.
The following shows a reconciliation between the operating lease
commitments as at 31 December 2018 and the lease liability recorded
as at 1 January 2019.
GBPm
---------------------------------------------------------------------------------------------- -----
Operating lease commitment as at 31 December 2018 as disclosed in the Barclays Bank UK Group
consolidated financial statements 430
Impact of discounting using the Barclays Bank UK Group's incremental borrowing rate (73)
Recognition exemption for short term leases (9)
Extension and termination options reasonably certain to be exercised 156
---------------------------------------------------------------------------------------------- -----
Lease liability recognised as at 1 January 2019 504
---------------------------------------------------------------------------------------------- -----
IFRIC Interpretation 23 - Uncertainty over Income Tax
Treatment
IFRIC 23 clarifies the application of IAS 12 to accounting for
income tax treatments that have yet to be accepted by tax
authorities, in scenarios where it may be unclear how tax law
applies to a particular transaction or circumstance, or whether a
taxation authority will accept an entity's tax treatment. IFRIC 23
has been applied from 1 January 2019. There was no significant
effect from the adoption of IFRIC 23 in relation to accounting for
uncertain tax positions.
IAS 12 - Income Taxes - Amendments to IAS 12
The IASB amended IAS 12 in order to clarify the accounting
treatment of the income tax consequences of dividends. As a result
of the amendment, the tax consequences of all payments on financial
instruments that are classified as equity for accounting purposes,
where those payments are considered to be a distribution of profit,
will be included in, and will reduce, the income statement tax
charge. The amendments of IAS 12 were applied to the income tax
consequences of dividends recognised on or after the beginning of
the earliest comparative period. This resulted in reducing the tax
charge and increasing profit after tax for 2019 by GBP41m and 2018
by GBP28m. This change does not impact retained earnings.
IAS 19 - Employee Benefits - Amendments to IAS 19
The IASB issued amendments to the guidance in IAS 19, Employee
Benefits, in connection with accounting for plan amendments,
curtailments and settlements. The amendments have been applied to
plan amendments, curtailments or settlements occurring on or after
1 January 2019. There was no significant effect from the adoption
of the amendments of IAS 19.
IFRS 9, IAS 39 and IFRS 7 Amendments relating to Interest Rate
Benchmark Reform
IFRS 9, IAS 39 and IFRS 7 were amended in September 2019. The
amendments are effective for periods beginning on or after 1
January 2020 with earlier application permitted. The Barclays Bank
UK Group elected to early adopt the amendments with effect from 1
January 2019. The amendments have been endorsed by the EU.
IFRS 9 allows companies when they first apply IFRS 9, to choose
as an accounting policy to continue to apply the hedge accounting
requirements of IAS 39. The Barclays Bank UK Group made the
election to continue to apply the IAS 39 hedge accounting
requirements, and consequently, the amendments to IAS 39 have been
adopted by the Barclays Bank UK Group.
The objective of the amendments are to provide temporary
exceptions from applying specific hedge accounting requirements
during the period of uncertainty resulting from interest rate
benchmark reform. Each of the exceptions adopted by the Barclays
Bank UK Group are described below.
-- Highly probable requirement
When determining whether a forecast transaction or cash flow is
highly probable, the Barclays Bank UK Group assumes that the
interest rate benchmark on which the hedged cash flows are based is
not altered as a result of the reform. This amendment has also been
applied when cash flows are still expected to occur in respect of
amounts remaining in the cash flow hedge reserve.
-- Prospective assessments
When performing prospective assessments, the Barclays Bank UK
Group assumes that the interest rate benchmark on which the hedged
risk and/or hedging instrument are based is not altered as a result
of the interest rate benchmark reform.
-- Retrospective assessments
The Barclays Bank UK Group will not discontinue hedge accounting
during the period of IBOR-related uncertainty solely because the
retrospective effectiveness falls outside the required 80-125%
range.
-- Hedge of a non-contractually specified benchmark portion of an
interest rate
The Barclays Bank UK Group only considers at inception of such a
hedging relationship whether the separately identifiable
requirement is met.
The amendments to IFRS 7 require certain disclosures to be made
in the first period that the amendments to IFRS 9 or IAS 39 are
adopted. Refer to Note 13 where these disclosures have been
included.
Future accounting developments
The following accounting standards have been issued by the IASB
but are not yet effective.
IFRS 17 - Insurance contracts
In May 2017, the IASB issued IFRS 17 Insurance Contracts, a
comprehensive new accounting standard for insurance contracts
covering recognition and measurement, presentation and disclosure.
Once effective, IFRS 17 will replace IFRS 4 Insurance Contracts
that was issued in 2005.
IFRS 17 applies to all types of insurance contracts (i.e. life,
non-life, direct insurance and re-insurance), regardless of the
type of entities that issue them, as well as to certain guarantees
and financial instruments with discretionary participation
features. A few scope exceptions will apply.
In June 2019, the IASB published an exposure draft with proposed
amendments to IFRS 17. The proposed amendments that are expected to
be relevant to the Barclays Bank UK Group are changes to the
scoping of IFRS 17, changes in the effective date of IFRS 17 and
changes to IFRS 9 which were consequential amendments as a result
of IFRS 17.
The standard is currently effective from 1 January 2021,
although the amendments would change the effective date to 1
January 2022, and the standard has not yet been endorsed by the EU.
The Barclays Bank UK Group is currently assessing the expected
impact of adopting this standard.
6. 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:
-- Credit impairment charges on page 121
-- Tax on page 125
-- Fair value of financial instruments on page 137
-- Provisions including conduct and legal, competition and regulatory
matters on page 149.
7. Other disclosures
To improve transparency and ease of reference, by concentrating
related information in one place, certain disclosures required
under IFRS have been included within the Risk review section as
follows:
-- Credit risk on page 37 and the tables on pages 44 to 76
-- Market risk on page 39 and page 88
-- Treasury and capital risk - capital on page 38 and the tables on
pages 85 to 87
-- Treasury and capital risk - liquidity on page 38 and the tables
on pages 78 to 84.
These disclosures are covered by the Audit opinion (included on
pages 98 to 104) where referenced as audited.
The notes included in this section focus on the results and
performance of the Barclays Bank UK Group. Information on the
income generated, expenditure incurred, segmental performance, tax
and dividends are included here.
2 Segmental reporting
Presentation of segmental reporting
The Barclays Bank UK 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.
For segmental reporting purposes, the Barclays Bank UK Group
divisions are defined as:
-- Personal Banking which comprises Personal and Premier banking,
Mortgages, Savings, Investments and Wealth management.
-- Barclaycard Consumer UK which comprises the Barclaycard UK consumer
credit cards business.
-- Business Banking which offers products, services and specialist
advice to clients ranging from start-ups to medium-sized businesses
and is where the ESHLA loan portfolio is held.
The below table also includes Head Office which comprises head
office and central support functions.
Analysis of results by business
----------------------------------------------------------------------------------- --------- ------- -------------
Personal Business Head Barclays Bank
Banking Barclaycard Consumer UK Banking Office UK Group
For the year ended 31 December 2019 GBPm GBPm GBPm GBPm GBPm
---------------------------------------------- ---------- ----------------------- --------- ------- -------------
Total income 4,112 1,997 1,361 (148) 7,322
Credit impairment (charges)/releases (196) (472) (45) 4 (709)
---------------------------------------------- ---------- ----------------------- --------- ------- -------------
Net operating income/(expenses) 3,916 1,525 1,316 (144) 6,613
Operating costs (3,036) (585) (717) (20) (4,358)
Litigation and conduct (705) (876) (2) (3) (1,586)
---------------------------------------------- ---------- ----------------------- --------- ------- -------------
Total operating expenses (3,741) (1,461) (719) (23) (5,944)
Other net income/(expenses) - - - - -
---------------------------------------------- ---------- ----------------------- --------- ------- -------------
Profit/(loss) before tax 175 64 597 (167) 669
---------------------------------------------- ---------- ----------------------- --------- ------- -------------
Total assets GBP187.3bn GBP16.1bn GBP55.0bn - GBP258.4bn
---------------------------------------------- ---------- ----------------------- --------- ------- -------------
Number of employees (full time equivalent)(a) 17,800 500 3,100 200 21,600
---------------------------------------------- ---------- ----------------------- --------- ------- -------------
Average number of employees (full time
equivalent) 22,000
For the year ended 31 December 2018(b)
---------------------------------------------- ---------- ----------------------- --------- ------- -------------
Total income 3,152 1,578 991 (115) 5,606
Credit impairment (charges)/releases (100) (477) (48) 1 (624)
---------------------------------------------- ---------- ----------------------- --------- ------- -------------
Net operating income/(expenses) 3,052 1,101 943 (114) 4,982
Operating costs (2,271) (486) (571) (28) (3,356)
Litigation and conduct (12) (50) (9) (7) (78)
---------------------------------------------- ---------- ----------------------- --------- ------- -------------
Total operating expenses (2,283) (536) (580) (35) (3,434)
---------------------------------------------- ---------- ----------------------- --------- ------- -------------
Profit/(loss) before tax 769 565 363 (149) 1,548
---------------------------------------------- ---------- ----------------------- --------- ------- -------------
Total assets (GBPbn) GBP179.4bn GBP16.5bn GBP55.4bn - GBP251.3bn
---------------------------------------------- ---------- ----------------------- --------- ------- -------------
Number of employees (full time equivalent)(a) 19,000 300 3,300 200 22,800
---------------------------------------------- ---------- ----------------------- --------- ------- -------------
Notes
a Personal Banking employees includes those individuals that are
shared across other segments within the Barclays Bank UK Group.
b The segments have been in place since 1 April 2018, following the
acquisition of the UK banking business. Prior to the acquisition
of the UK banking business, all income and expenses were associated
with Personal Banking.
Income by geographic region
The Barclays Bank UK Group generates income from business
activities in the United Kingdom.
4 Net fee and commission income
Accounting for net fee and commission income
The Barclays Bank UK Group applies IFRS 15 Revenue from
Contracts with Customers. The standard establishes a five-step
model governing revenue recognition. The five-step model requires
the Barclays Bank UK Group to (i) identify the contract with the
customer, (ii) identify each of the performance obligations
included in the contract, (iii) determine the amount of
consideration in the contract, (iv) allocate the consideration to
each of the identified performance obligations and (v) recognise
revenue as each performance obligation is satisfied.
The Barclays Bank UK Group recognises fee and commission income
charged for services provided by the Barclays Bank UK Group as the
services are provided, for example on completion of the underlying
transaction.
Fee and commission income is disaggregated below by fee types
that reflect the nature of the services offered across the Barclays
Bank UK Group and operating segments, in accordance with IFRS 15.
It includes a total for fees in scope of IFRS 15. Refer to Note 2
for more detailed information about operating segments.
2019
-------------------------------------------------------------------------------
Personal Banking Barclaycard Consumer UK Business Banking Head Office Total
GBPm GBPm GBPm GBPm GBPm
------------------------------------- ---------------- ----------------------- ---------------- ----------- -----
Fee type
Transactional 706 208 160 - 1,074
Advisory 177 - - - 177
Other 260 5 158 - 423
------------------------------------- ---------------- ----------------------- ---------------- ----------- -----
Total revenue from contracts with
customers 1,143 213 318 - 1,674
Other non-contract fee income -
------------------------------------- ---------------- ----------------------- ---------------- ----------- -----
Fee and commission income 1,143 213 318 - 1,674
------------------------------------- ---------------- ----------------------- ---------------- ----------- -----
Fee and commission expense (322) (31) (15) - (368)
------------------------------------- ---------------- ----------------------- ---------------- ----------- -----
Net fee and commission income 821 182 303 - 1,306
------------------------------------- ---------------- ----------------------- ---------------- ----------- -----
2018
-------------------------------------------------------------------------------
Personal Banking Barclaycard Consumer UK Business Banking Head Office Total
GBPm GBPm GBPm GBPm GBPm
------------------------------------- ---------------- ----------------------- ---------------- ----------- -----
Fee type
Transactional 516 176 129 - 821
Advisory 188 - - - 188
Other 189 3 114 - 306
------------------------------------- ---------------- ----------------------- ---------------- ----------- -----
Total revenue from contracts with
customers 893 179 243 - 1,315
Other non-contract fee income - - - - -
------------------------------------- ---------------- ----------------------- ---------------- ----------- -----
Fee and commission income 893 179 243 - 1,315
------------------------------------- ---------------- ----------------------- ---------------- ----------- -----
Fee and commission expense (240) (24) (9) - (273)
------------------------------------- ---------------- ----------------------- ---------------- ----------- -----
Net fee and commission income 653 155 234 - 1,042
------------------------------------- ---------------- ----------------------- ---------------- ----------- -----
Fee types
Transactional
Transactional fees are service charges on deposit accounts, cash
management services and transactional processing fees including
interchange and merchant fee income generated from credit and bank
card usage. Transaction and processing fees are recognised at the
point in time the transaction occurs or service is performed. They
include banking services such as Automated Teller Machine (ATM)
fees, wire transfer fees, balance transfer fees, overdraft or late
fees and foreign exchange fees, among others. Interchange and
merchant fees are recognised upon settlement of the card
transaction payment.
Barclays Bank UK Group incurs certain card related costs
including those related to cardholder reward programmes. To the
extent cardholder reward programmes costs are attributed to
customers that settle their outstanding balance each period
(transactors) they are expensed when incurred and presented in fee
and commission expense while costs related to customer who
continuously carry an outstanding balance (revolvers) are included
in the effective interest rate of the receivable (refer to Note
3).
Advisory
Advisory fees are generated from wealth management services.
Wealth management advisory fees primarily consists of asset-based
fees for advisory accounts of wealth management clients and are
based on the market value of client assets. They are earned over
the period the services are provided and are generally recognised
quarterly when the market value of client assets is determined.
Contract assets and contract liabilities
The Barclays Bank UK Group had no material contract assets or
contract liabilities as at 31 December 2019 (2018: nil).
Impairment on fee receivables and contract assets
During 2019, there have been no material impairments recognised
in relation to fees receivable and contract assets (2018: nil).
Fees in relation to transactional business can be added to
outstanding customer balances. These amounts may be subsequently
impaired as part of the overall loans and advances balance.
Remaining performance obligations
The Barclays Bank UK Group applies the practical expedient of
IFRS 15 and does not disclose information about remaining
performance obligations that have original expected durations of
one year or less or because the Barclays Bank UK Group has a right
to consideration that corresponds directly with the value of the
service provided to the client or customer.
Costs incurred in obtaining or fulfilling a contract
The Barclays Bank UK Group expects that incremental costs of
obtaining a contract such as success fee and commission fees paid
are recoverable and therefore capitalised. Such contract costs in
the amount of GBP6m at 31 December 2019 (2018: nil).
Capitalised contract costs are amortised based on the transfer
of services to which the asset relates which typically ranges over
the expected life of the relationship. In 2019, the amount of
amortisation was GBP1m (2018: GBPnil) and there was no impairment
loss recognised in connection with the capitalised contract costs
(2018: GBPnil).
10 Dividends on ordinary shares
The 2019 financial statements include GBP1,050m (2018: GBP350m)
of dividend paid. This includes the final dividend declared in
relation to the prior year of GBP700m (2018: GBPnil) and half year
dividends of GBP350m (2018: GBP350m). This results in a total
dividend for the year of 208p (2018: 69p) per ordinary share.
Dividends paid on other equity instruments amounted to GBP153m
(2018: GBP105m). For further detail on other equity instruments,
please refer to Note 26.
The Directors have approved a full year dividend in respect of
2019 of GBP220m, which will be paid on or around 25 March 2020. The
financial statements for the year ended 31 December 2019 do not
reflect this dividend, which will be accounted for in shareholders'
equity as an appropriation of retained profits in the year ending
31 December 2020. Dividends are funded out of distributable
reserves.
15 Fair value of financial instruments
Accounting for financial assets and liabilities - fair
values
Financial instruments that are held for trading are recognised
at fair value through profit or loss. In addition, financial assets
are held at fair value through profit or loss if they do not
contain contractual terms that give rise on specified dates to cash
flows that are SPPI, or if the financial asset is not held in a
business model that is either (i) a business model to collect the
contractual cash flows or (ii) a business model that is achieved by
both collecting contractual cash flows and selling. Subsequent
changes in fair value for these instruments are recognised in the
income statement in net investment income, except if reporting it
in trading income reduces an accounting mismatch.
All financial instruments are initially recognised at fair value
on the date of initial recognition (including transaction costs,
other than financial instruments held at fair value through profit
or loss) and depending on the subsequent classification of the
financial asset or liability, 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 price that would be
received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement
date.
Wherever possible, fair value is determined by reference to a
quoted market price for that instrument. For many of the Barclays
Bank UK Group's financial assets and liabilities for which quoted
prices are not available, 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 inputs including, for example, interest rate yield
curves and currency rates.
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. The best evidence of
an instrument's fair value on initial recognition is typically the
transaction price. However, if fair value can be evidenced by
comparison with other observable current market transactions in the
same instrument, or is based on a valuation technique whose inputs
include only data from observable markets, then the instrument
should be recognised at the fair value derived from such observable
market data.
For valuations that have made use of 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,
dependent 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 possible changes in significant unobservable inputs is shown on
page 140.
Critical accounting estimates and judgements
The valuation of financial instruments often involves a
significant degree of judgement and complexity, in particular where
valuation models make use of unobservable inputs ('Level 3' assets
and liabilities). This note provides information on these
instruments, including the related unrealised gains and losses
recognised in the period, a description of significant valuation
techniques and unobservable inputs, and a sensitivity analysis.
Valuation
IFRS 13 Fair value measurement requires an entity to classify
its assets and liabilities according to a hierarchy that reflects
the observability of significant market inputs. The three levels of
the fair value hierarchy are defined below.
Quoted market prices - Level 1
Assets and liabilities 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. An active market is one in which transactions
occur with sufficient volume and frequency to provide pricing
information on an ongoing basis.
Valuation technique using observable inputs - Level 2
Assets and liabilities classified as Level 2 have been valued
using models whose inputs are observable either directly or
indirectly. Valuations based on observable inputs include assets
and liabilities 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.
Valuation technique using significant unobservable inputs -
Level 3
Assets and liabilities 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.
Unobservable input levels are generally determined via reference to
observable inputs, historical observations or using other
analytical techniques.
The following table shows Barclays Bank UK Group's assets and
liabilities that are held at fair value disaggregated by valuation
technique (fair value hierarchy) and balance sheet
classification:
Assets and liabilities held at fair value
---------------------------------------------- ---------------------------------- ----------------------------------
2019 2018
---------------------------------- ----------------------------------
Valuation technique using Valuation technique using
---------------------------------- ----------------------------------
Barclays Bank UK Group Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
As at 31 December GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------------------------------------- ------- ------- ------- ------- ------- ------- ------- -------
Trading portfolio assets 384 476 - 860 - 151 - 151
Financial assets at fair value through the
income statement - 38 3,533 3,571 - 28 3,852 3,880
Derivative financial assets - 192 - 192 - 241 - 241
Financial assets at fair value through other
comprehensive income 6,162 13,160 - 19,322 2,901 3,809 - 6,710
---------------------------------------------- ------- ------- ------- ------- ------- ------- ------- -------
Total assets 6,546 13,866 3,533 23,945 2,901 4,229 3,852 10,982
---------------------------------------------- ------- ------- ------- ------- ------- ------- ------- -------
Trading portfolio liabilities (1,331) (373) - (1,704) (1,252) (17) - (1,269)
Derivative financial liabilities - (740) - (740) - (419) - (419)
---------------------------------------------- ------- ------- ------- ------- ------- ------- ------- -------
Total liabilities (1,331) (1,113) - (2,444) (1,252) (436) - (1,688)
---------------------------------------------- ------- ------- ------- ------- ------- ------- ------- -------
The following table shows Barclays Bank UK PLC's assets and
liabilities that are held at fair value disaggregated by valuation
technique (fair value hierarchy) and balance sheet
classification:
Assets and liabilities
held at fair value
------------------------------ -------------------------------- -------------------------------
2019 2018
-------------------------------- -------------------------------
Valuation technique using Valuation technique using
-------------------------------- -------------------------------
Level Level Level Level Level Level
Barclays Bank UK PLC 1 2 3 Total 1 2 3 Total
As at 31 December GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------ ------- ------- ----- ------- -------- ----- ----- -------
Trading portfolio assets 384 476 - 860 - 151 - 151
Financial assets at
fair value through
the income statement - 38 3,533 3,571 - 28 3,852 3,880
Derivative financial
assets - 193 - 193 - 241 - 241
Financial assets at
fair value through
other comprehensive
income 6,162 13,160 - 19,322 2,901 3,809 - 6,710
------------------------------ ------- ------- ----- ------- -------- ----- ----- -------
Total assets 6,546 13,867 3,533 23,946 2,901 4,229 3,852 10,982
------------------------------ ------- ------- ----- ------- -------- ----- ----- -------
Trading portfolio liabilities (1,331) (373) - (1,704) (1,252) (17) - (1,269)
Derivative financial
liabilities - (740) - (740) - (436) - (436)
------------------------------ ------- ------- ----- ------- -------- ----- ----- -------
Total liabilities (1,331) (1,113) - (2,444) (1,252) (453) - (1,705)
------------------------------ ------- ------- ----- ------- -------- ----- ----- -------
Level 3 movement analysis
The following table summarises the movements in the Level 3
balances during the period. Transfers have been reflected as if
they had taken place at the beginning of the year.
Asset transfer between Level 3 and Level 2 is due to an increase
in observable market activity related to an input.
Analysis of movements in Level 3 assets and
liabilities
------------------------------------------------ ----------- --------- ---------- ---------- ----- ---- --------
Total gains and
losses in the period
recognised in the
income statement Transfers
--------------------- -----------
Total
gains or
As at 1 losses As at 31
January Trading Other recognised December
2019 Purchases(a) Sales Issues Settlements income(b) income in OCI In Out 2019
Barclays
Bank UK
Group and
PLC GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------- ------- ------------ ----- ------ ----------- --------- ---------- ---------- ----- ---- --------
Non-asset
backed
loans 3,852 - - - (551) 244 - - - (15) 3,530
Other - 3 - - - - - - - - 3
---------- ------- ------------ ----- ------ ----------- --------- ---------- ---------- ----- ---- --------
Financial
assets at
fair
value
through
the
income
statement 3,852 3 - - (551) 244 - - - (15) 3,533
---------- ------- ------------ ----- ------ ----------- --------- ---------- ---------- ----- ---- --------
As at 1 As at 31
January December
2018 2018
GBPm GBPm
---------- ------- ------------ ----- ------ ----------- --------- ---------- ---------- ----- ---- --------
Non-asset
backed
loans - 4,432 - - (604) 24 - - - - 3,852
---------- ------- ------------ ----- ------ ----------- --------- ---------- ---------- ----- ---- --------
Financial
assets at
fair
value
through
the
income
statement - 4,432 - - (604) 24 - - - - 3,852
---------- ------- ------------ ----- ------ ----------- --------- ---------- ---------- ----- ---- --------
Notes
a On 1 April 2018, GBP4.4bn of non-asset backed loans were transferred
as part of the acquisition of the UK banking business.
b Trading income represents gains on Level 3 financial assets which
is offset by losses on derivative hedge disclosed within Level
2.
Non-asset backed loans
Description: Largely made up of fixed rate loans, extended to
counterparties in the Education, Social Housing and Local Authority
sectors.
Valuation: Fixed rate loans are valued using models that
discount expected future cash flows based on interest rates and
loan spreads.
Observability: Within this loan population, the loan spread is
generally unobservable. Unobservable loan spreads are determined by
incorporating funding costs, the level of comparable assets such as
gilts, issuer credit quality and other factors.
Level 3 sensitivity: The sensitivity of fixed rate loans is
calculated by applying a shift to loan spreads, aligned to the
prudent valuation framework for calculating market data uncertainty
around an unobservable valuation input. The prudent valuation
framework additionally requires Barclays Bank UK PLC to be
capitalised to 50% of the impact of such valuation uncertainty
being realised in the income statement. On a portfolio level, the
sensitivity is equivalent to an averages stress to the input loan
spread of 65bp.
Unrealised gains and losses on Level 3 financial assets and
liabilities
The following tables disclose the unrealised gains and losses
recognised in the year arising on Level 3 financial assets and
liabilities held at year end.
Unrealised gains and losses recognised during the period on Level 3 assets and liabilities
held at year end
======================================================================================================================
2019 2018
================================================== ==================================================
Income statement Income statement
============================ ============================
Other
Barclays Bank Other compre- compre-
UK Group and hensive hensive
PLC Trading income Other income income Total Trading income Other income income Total
As at 31
December GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------------- -------------- ------------ ------------- ----- -------------- ------------ ------------- -----
Financial
assets at
fair value
through the
income
statement 244 - - 244 24 - - 24
-------------- -------------- ------------ ------------- ----- -------------- ------------ ------------- -----
Total 244 - - 244 24 - - 24
-------------- -------------- ------------ ------------- ----- -------------- ------------ ------------- -----
Significant unobservable inputs
The following table discloses the valuation techniques and
significant unobservable inputs for assets and liabilities
recognised at fair value and classified as Level 3 along with the
range of values used for those significant unobservable inputs:
2019 2018
Range Range
----------------------- -------------------------------- ---------- -------- --------
Valuation technique(s) Significant unobservable inputs Min Max Min Max Units(a)
----------------------- ----------------------- -------------------------------- --- ----- --- --- --------
Non-asset backed loans Discounted cash flows Loan spread 31 1,884 31 531 bps
----------------------- ----------------------- -------------------------------- --- ----- --- --- --------
Note
a The units used to disclose ranges for significant unobservable
inputs are percentages, points and basis points. Points are a percentage
of par; for example, 100 points equals 100% of par. A basis point
equals 1/100th of 1%; for example, 150 basis points equals 1.5%.
The following section describes the significant unobservable
inputs identified in the table above, and the sensitivity of fair
value measurement of the instruments categorised as Level 3 assets
or liabilities to increases in significant unobservable inputs.
Where sensitivities are described, the inverse relationship will
also generally apply.
Where reliable interrelationships can be identified between
significant unobservable inputs used in fair value measurement, a
description of those interrelationships is included below.
Loan spread
Loan spreads typically represent the difference in yield between
an instrument and a benchmark security or reference rate. Loan
spreads typically reflect credit quality, the level of comparable
assets such as gilts and other factors, and form part of the yield
used in a discounted cash flow calculation.
The ESHLA portfolio primarily consists of long-dated fixed rate
loans extended to counterparties in the UK Education, Social
Housing and Local Authority sectors. The loans are categorised as
Level 3 in the fair value hierarchy due to their illiquid nature
and the significance of unobservable loan spreads to the valuation.
Valuation uncertainty arises from the long-dated nature of the
portfolio, the lack of secondary market in the loans and the lack
of observable loan spreads. The majority of ESHLA loans are to
borrowers in heavily regulated sectors that are considered low
credit risk, and have a history of near zero defaults since
inception and where Barclays is often afforded a position as a
secured creditor. While the overall loan spread range is from 31bps
to 1,884bps (2018: 30bps to 531bps), the vast majority of spreads
are concentrated towards the bottom end of this range, with 99% of
the loan notional being valued with spreads less than 200bps
consistently for both years.
In general, a significant increase in loan spreads in isolation
will result in a fair value decrease for a loan.
Sensitivity analysis of valuations using unobservable inputs
================================================================= ========== ============
2019 2018
------------------------------- ------------------------
Favourable Unfavourable Favourable Unfavourable
changes changes changes changes
------------- ---------------- ---------- ------------
GBPm GBPm GBPm GBPm
-------------------------------- ------------- ---------------- ---------- ------------
Non asset backed loans 89 (264) 133 (248)
-------------------------------- ------------- ---------------- ---------- ------------
Total 89 (264) 133 (248)
-------------------------------- ------------- ---------------- ---------- ------------
The effect of stressing unobservable inputs to a 90(th)
percentile confidence interval of a potential range of values,
alongside considering the impact of using alternative models, would
be to increase fair values by up to GBP89m (2018: GBP133m) or to
decrease fair values by up to GBP264m (2018: GBP248m). All the
potential effect would impact profit and loss. The asymmetry in the
favourable and unfavourable changes in the sensitivity analysis is
attributable to Investing and Funding costs with the prudential
valuation framework contributing to the unfavourable side only.
Portfolio exemptions
The Barclays Bank UK Group uses the portfolio exemption in IFRS
13 Fair Value Measurement to measure the fair value of groups of
financial assets and liabilities. Instruments are measured using
the price that would be received to sell a net long position (i.e.
an asset) for a particular risk exposure or to transfer a net short
position (i.e. a liability) for a particular risk exposure in an
orderly transaction between market participants at the balance
sheet date under current market conditions. Accordingly, the
Barclays Bank UK Group measures the fair value of the group of
financial assets and liabilities consistently with how market
participants would price the net risk exposure at the measurement
date.
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 GBP13m (2018:
GBP14m) for financial instruments measured at fair value and
GBP224m (2018: GBP231m) for financial instruments carried at
amortised cost. The decrease in financial investments measured at
fair value of GBP1m (2018: GBPnil) was driven by amortisation and
releases of GBP1m (2018: GBPnil). The decrease of GBP7m in
financial instruments carried at amortised cost is driven by
amortisation and releases of GBP12m (2018: GBP18m) offset by
additions of GBP5m (2018: GBPnil).
Comparison of carrying amounts and fair values
The following tables summarise the fair value of financial
assets and liabilities measured at amortised cost on Barclays Bank
UK Group's and Barclays Bank UK PLC's balance sheet:
2019 2018
-------------------------------------------------- ---------------------------------------------------
Barclays
Bank UK Carrying Fair Carrying
Group amount value Level 1 Level 2 Level 3 amount Fair value Level 1 Level 2 Level 3
As at 31
December GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------- --------- --------- --------- -------- ------- --------- ---------- --------- -------- -------
Financial
assets
Loans and
advances at
amortised
cost 197,569 196,342 1,925 6,661 187,756 188,565 186,891 2,034 3,670 181,187
Reverse
repurchase
agreements
and other
similar
secured
lending 1,761 1,761 - 1,761 - 1,759 1,759 - 1,759 -
Financial
liabilities
Deposits at
amortised
cost (205,696) (205,701) (191,931) (3,956) (9,814) (197,485) (197,504) (191,641) (17) (5,846)
Repurchase
agreements
and other
similar
secured
borrowing (13,420) (13,420) - (13,420) - (11,978) (11,978) - (11,978) -
Debt
securities
in issue (8,271) (8,644) - (8,151) (493) (11,172) (11,681) - (10,425) (1,256)
Subordinated
liabilities (7,688) (8,022) - (8,022) - (7,548) (7,548) - (7,548) -
------------- --------- --------- --------- -------- ------- --------- ---------- --------- -------- -------
2019 2018
-------------------------------------------------- ---------------------------------------------------
Barclays Carrying Fair Carrying
Bank UK PLC amount value Level 1 Level 2 Level 3 amount Fair value Level 1 Level 2 Level 3
As at 31
December GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------- --------- --------- --------- -------- ------- --------- ---------- --------- -------- -------
Financial
assets
Loans and
advances at
amortised
cost 197,960 196,739 1,959 7,548 187,232 188,606 186,932 2,034 3,715 181,183
Reverse
repurchase
agreements
and other
similar
secured
lending 1,761 1,761 - 1,761 - 1,759 1,759 - 1,759 -
Financial
liabilities
Deposits at
amortised
cost (206,764) (206,768) (191,931) (5,023) (9,814) (199,031) (199,049) (191,642) (1,561) (5,846)
Repurchase
agreements
and other
similar
secured
borrowing (13,420) (13,420) - (13,420) - (11,978) (11,978) - (11,978) -
Debt
securities
in issue (7,778) (8,151) - (8,151) - (9,912) (10,425) - (10,425) -
Subordinated
liabilities (7,688) (8,022) - (8,022) - (7,548) (7,548) - (7,548) -
------------- --------- --------- --------- -------- ------- --------- ---------- --------- -------- -------
The fair value is an estimate of the price that would be
received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement
date. As a wide range of valuation techniques are available, it may
not be appropriate to directly compare this fair value information
to independent market sources or other financial institutions.
Different valuation methodologies and assumptions can have a
significant impact on fair values which are based on unobservable
inputs.
Financial assets
The carrying value of financial assets held at amortised cost is
determined in accordance with the relevant accounting policy in
Note 17.
Loans and advances at amortised cost
The fair value of loans and advances, for the purpose of this
disclosure, is derived from discounting expected cash flows in a
way that reflects the current market price for lending to issuers
of similar credit quality. Where market data or credit information
on the underlying borrowers is unavailable, a number of
proxy/extrapolation techniques are employed to determine the
appropriate discount rates.
Reverse repurchase agreements and other similar secured
lending
The fair value of reverse repurchase agreements approximates
carrying amount as these balances are generally short dated and
fully collateralised.
Financial liabilities
The carrying value of financial liabilities held at amortised
cost (including customer accounts, other deposits, repurchase
agreements and cash collateral on securities lent, debt securities
in issue and subordinated liabilities) is determined in accordance
with the accounting policy in Note 1.
Deposits at amortised cost
In many cases, the fair value disclosed approximates 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 with longer-term maturities, mainly time deposits, are
estimated using discounted cash flows applying either market rates
or current rates for deposits of similar remaining maturities.
Consequently the fair value discount is minimal.
Repurchase agreements and other similar secured borrowing
The fair value of repurchase agreements approximates carrying
amounts as these balances are generally short dated.
Debt securities in issue
Fair values of other debt securities in issue are based on
quoted prices where available, or where the instruments are short
dated, carrying amount approximates fair value.
Subordinated liabilities
Fair values for dated and undated convertible and
non-convertible loan capital are based on quoted market rates for
the issuer concerned or issuers with similar terms and
conditions.
25 Subordinated liabilities
Accounting for subordinated liabilities
Subordinated liabilities are measured at amortised cost using
the effective interest method under IFRS 9.
Barclays Bank UK Group and PLC
--------------------------------
2019 2018
GBPm GBPm
----------------------------------- --------------- ---------------
As at 1 January 7,548 -
Issuances 157 -
Acquisition of UK banking business - 3,001
Other (17) 4,547
----------------------------------- --------------- ---------------
As at 31 December 7,688 7,548
----------------------------------- --------------- ---------------
The GBP157m issuance relates to $200m of 5.088%
Fixed-to-Floating Rate Subordinated Notes, intra-group to Barclays
PLC.
Subordinated liabilities include accrued interest and none of
the subordinated liabilities are secured.
Barclays Bank UK Group and PLC
--------------------------------
2019 2018
Initial call date Maturity date GBPm GBPm
------------------------------------------------ ------------------ -------------- --------------- ---------------
Barclays Bank UK PLC notes issued intra-group to
Barclays PLC
2.625% Fixed Rate Subordinated Callable Notes
(EUR 1,250m) 2020 2025 1,071 1,129
4.375% Fixed Rate Subordinated Notes (USD 1,250m) 2024 994 985
5.20% Fixed Rate Subordinated Notes (USD 683m) 2026 516 500
4.836% Fixed Rate Subordinated Callable Notes
(USD 800m) 2027 2028 629 607
5.088% Fixed-to-Floating Rate Subordinated
Callable Notes (USD 200m) 2029 2030 154 -
Barclays Bank UK PLC intra-group loans from
Barclays PLC
3.20% Fixed Rate Subordinated Loan (USD 1,350m) 2021 1,025 1,026
3.65% Fixed Rate Subordinated Loan (USD 1,100m) 2025 861 846
Various Fixed and Floating Rate Subordinated Loans 2,438 2,455
------------------------------------------------------------------------------------ --------------- ---------------
Total subordinated liabilities 7,688 7,548
------------------------------------------------------------------------------------ --------------- ---------------
Subordinated Liabilities
Subordinated liabilities are issued by Barclays Bank UK PLC for
the development and expansion of the business and to strengthen the
capital base. The principal terms of these liabilities are
described below:
Currency and Maturity
In addition to the individual subordinated liabilities listed in
the table, the GBP2,438m balance of intra-group loans is made up of
various fixed and
floating rate loans from Barclays PLC with notional amounts
denominated in USD 2,027m and EUR 1,000m, with maturities ranging
from 2021 to 2041. Certain intra-group loans have a call date one
year prior to their maturity.
Subordination
All subordinated liabilities are issued intra-group to Barclays
PLC. Both the subordinated notes and the subordinated loans rank
behind the claims of depositors and other unsecured unsubordinated
creditors but before the claims of the holders of their equity.
However, the subordinated notes rank behind the subordinated
loans.
Interest
Interest on the floating rate loans is set by reference to
market rates at the time of issuance and is fixed periodically in
advance, based on the
related interbank rate.
Interest on fixed rate notes and loans is set by reference to
market rates at the time of issuance and fixed until maturity.
Interest on fixed rate callable notes and loans is set by
reference to market rates at the time of issuance and fixed until
the call date. After the call date, in the event that the notes or
loans are not redeemed, the interest rate will be re-set to either
a fixed or floating rate until maturity based on market rates.
Repayment
Those notes and loans with a call date are repayable at the
option of the Issuer, on conditions governing the respective
liabilities, some in whole or in part, and some only in whole. The
remaining instruments outstanding at 31 December 2019 are
redeemable only on maturity, subject in particular cases to
provisions allowing an early redemption in the event of certain
changes in tax law or to certain changes in legislation or
regulations.
In certain cases, any repayments prior to maturity may require
the prior approval of the PRA.
There are no committed facilities in existence at the balance
sheet date which permit the refinancing of debt beyond the date of
maturity.
26 Ordinary shares, share premium, and other equity
Called up share capital, allotted
and fully paid
------------------------------------ ---------- -------- -------- ---------- ------------
Total
share
Ordinary Ordinary capital Other
Number share share and share equity
of shares capital premium premium instruments
m GBPm GBPm GBPm GBPm
------------------------------------ ---------- -------- -------- ---------- ------------
As at 1 January 2019 505 5 - 5 2,070
AT1 securities issuance - - - - 1,188
AT1 securities redemption - - - - (698)
As at 31 December 2019 505 5 - 5 2,560
------------------------------------ ---------- -------- -------- ---------- ------------
As at 1 January 2018 505 5 - 5 -
Issue of new ordinary shares - - 13,044 13,044 -
Net equity impact of the UK banking
business transfer - - - - 2,070
Capital Reorganisation - - (13,044) (13,044) -
As at 31 December 2018 505 5 - 5 2,070
------------------------------------ ---------- -------- -------- ---------- ------------
Ordinary shares
The issued ordinary share capital of Barclays Bank UK PLC, as at
31 December 2019, comprised 505m (2018: 505m) ordinary shares of
GBP0.01 each.
Capital Reorganisation
On 11 September 2018, the High Court of Justice in England and
Wales confirmed the cancellation of the share premium account of
Barclays Bank UK PLC, with the balance of GBP13,044m credited to
retained earnings.
Other equity instruments
Other equity instruments of GBP2,560m (2018: GBP2,070m) include
AT1 securities issued to Barclays PLC. Barclays PLC uses funds from
the market issuance to purchase AT1 securities from Barclays Bank
UK Group. The AT1 securities are perpetual securities with no fixed
maturity and are structured to qualify as AT1 instruments under
prevailing capital rules applicable as at the relevant issue
date.
In 2019, there were two issuances of AT1 instruments, in the
form of Fixed Rate Resetting Perpetual Subordinated Contingent
Convertible Securities (2018: none), totalling GBP1,188m (2018:
GBPnil). There was also one redemption in 2019 (2018: none),
totalling GBP698m.
AT1 equity instruments
----------------------------------------------------- -------------------------
2019 2018
Initial
call date GBPm GBPm
----------------------------------------------------- ----------- ----- -----
AT1 equity instruments - Barclays Bank UK Group
7.0% Perpetual Subordinated Contingent Convertible
Securities 2019 - 698
7.25% Perpetual Subordinated Contingent Convertible
Securities 2023 750 750
5.875% Perpetual Subordinated Contingent Convertible
Securities 2024 622 622
7.125% Perpetual Subordinated Contingent Convertible
Securities 2025 693 -
6.375% Perpetual Subordinated Contingent Convertible
Securities 2025 495 -
----------------------------------------------------- ----------- ----- -----
Total AT1 equity instruments 2,560 2,070
------------------------------------------------------------------ ----- -----
27 Reserves
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.
Fair value through other comprehensive income reserve
The fair value through other comprehensive income reserve
represent the changes in the fair value of fair value through other
comprehensive income investments since initial recognition.
Other reserves and other shareholders' equity
Other reserves and other shareholders' equity relate to the
merger reserve for Barclays Bank UK Group and the Group
Reconstruction Relief for Barclays Bank UK PLC, in respect of the
transfer of the UK banking business.
Barclays Bank Barclays Bank
UK Group UK PLC
--------------- ---------------
2019 2018 2019 2018
GBPm GBPm GBPm GBPm
--------------------------------------- ------- ------ ------- ------
Fair value through other comprehensive
income reserve (29) (33) (29) (33)
Cash flow hedging reserve 123 20 123 20
Other reserves and other shareholders'
equity 89 89 191 191
--------------------------------------- ------- ------ ------- ------
Total 183 76 285 178
--------------------------------------- ------- ------ ------- ------
Notes
The term Barclays Bank UK Group refers to Barclays Bank UK PLC
together with its subsidiaries. Unless otherwise stated, the income
statement analysis compares the year ended 31 December 2019 to the
corresponding twelve months of 2018 and balance sheet analysis as
at 31 December 2019 with comparatives relating to 31 December 2018.
The abbreviations 'GBPm' and 'GBPbn' represent millions and
thousands of millions of Pounds Sterling respectively.
There are a number of key judgement areas, for example
impairment calculations, which are based on models and which are
subject to ongoing adjustment and modifications. Reported numbers
reflect best estimates and judgements at the given point in
time.
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 results
glossary that can be accessed at
home.barclays/investor-relations/reports-and-events/latest-financial-results.
The information in this announcement, which was approved by the
Board of Directors on 12 February 2020, does not comprise statutory
accounts within the meaning of Section 434 of the Companies Act
2006. Statutory accounts for the year ended 31 December 2019, which
contain an unmodified audit report under Section 495 of the
Companies Act 2006 (which does not make any statements under
Section 498 of the Companies Act 2006) will be delivered to the
Registrar of Companies in accordance with Section 441 of the
Companies Act 2006.
Barclays Bank UK Group is an issuer in the debt capital markets.
Consistent with its usual practice, Barclays Bank UK Group expects
that from time to time over the coming year it will meet with
investors via formal road shows and other ad hoc meetings to
discuss these results and other matters relating to the Barclays
Bank UK Group.
Forward-looking statements
Barclays Bank UK Group cautions readers that no forward-looking
statement is a guarantee of future performance and that actual
results or other financial condition or performance measures 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.
Forward-looking statements can be made in writing but also may be
made verbally by members of the management of the Barclays Bank UK
Group (including, without limitation, during management
presentations to financial analysts) in connection with this
document. Examples of forward-looking statements include, among
others, statements or guidance regarding or relating to the
Barclays Bank UK Group's future financial position, income growth,
assets, impairment charges, provisions, business strategy, capital,
leverage and other regulatory ratios, payment of dividends
(including dividend payout ratios and expected payment strategies),
projected levels of growth in the banking and financial markets,
projected costs or savings, any commitments and targets, estimates
of capital expenditures, plans and objectives for future
operations, projected employee numbers, IFRS impacts 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. The forward-looking
statements speak only as at the date on which they are made and
such statements may be affected by changes in legislation, the
development of standards and interpretations under IFRS, including
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 applicable to past, current and future
periods; macroeconomic and business conditions in the United
Kingdom and in any systemically important economy which impacts the
United Kingdom; the effects of any 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 any entity within the
Barclays Bank UK Group or any securities issued by such entities;
the potential for one or more countries exiting the Eurozone;
instability as a result of the exit by the UK from the European
Union and the disruption that may subsequently result in the UK;
and the success of future acquisitions, disposals and other
strategic
transactions. A number of these influences and factors are
beyond the Barclays Bank UK Group's control. As a result, the
Barclays Bank UK Group's actual financial position, future results,
dividend payments, capital, leverage or other regulatory ratios or
other financial and non-financial metrics or performance measures
may differ materially from the statements or guidance set forth in
the Barclays Bank UK Group's forward-looking statements.
Subject to our obligations under the applicable laws and
regulations of any relevant jurisdiction, (including, without
limitation, the UK), in relation to disclosure and ongoing
information, we undertake no obligation to update publicly or
revise any forward-looking statements, whether as a result of new
information, future events or otherwise.
For further information, please contact:
Investor Relations Media Relations
Adam Strachan Tom Hoskin
+1 212 526 8442 +44 (0) 20 7116 4755
James Johnson
+44 (0) 20 7116 7233
About Barclays
Barclays is a British universal bank. We are diversified by
business, by different types of customer and client, and geography.
Our businesses include consumer banking and payments operations
around the world, as well as a top-tier, full service, global
corporate and investment bank, all of which are supported by our
service company which provides technology, operations and
functional services across the Group.
For further information about Barclays, please visit our website
www.barclays.com
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR FLFEAFAIFLII
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