Barclays PLC · 2013. 2. 12. · Single digit growth . £210-230bn Mid 30s 14-15% . £11.7bn . £257bn3 Proforma. 39% . 13.7%. RoE. FY 12 . FY 15 . ... • Gamma investment at an

Barclays PLC Becoming the ‘Go-To’ bank

12 February 2013

NEW IMAGE TO BE ADDED

2 | Barclays Strategic Review | 12 February 2013

Our goal

To make Barclays the ‘Go-To’ bank for all of our stakeholders


Our strategic plan


Transform programme

Turnaround Return

Acceptable Numbers

Sustain Forward

Momentum

Turnaround

Return Acceptable Numbers

Sustain FORward Momentum

Stabilise the organisation, provide context for the change to come, maintain short-term momentum

Improve business returns define and execute plan to deliver RoE above CoE

Become the ‘Go-To’ bank for our stakeholders – customers and clients, colleagues, investors and wider society


Transform overview

Turnaround






0-9 MONTHS

0-3 YEARS

0-5 YEARS


Turnaround - our purpose

To help people achieve their ambitions – in the right way


Turnaround - our values

Respect Integrity Service Excellence Stewardship

We respect and value those we work with, and the contribution that they make

We act fairly, ethically and openly in all we do

We put our clients and customers at the centre of what we do

We use our energy, skills and resources to deliver the best, sustainable results

We are passionate about leaving things better than we found them


Turnaround

Delivering financial objectives for 2012

Demonstrating our resilience and strong franchise

Commitment of our staff



…above… Return on

Equity Cost of Equity


Business Performance Review - assumptions

• Muted economic outlook

• Estimated costs for Basel 3 and other regulatory changes included

• Reputational risks assessed through purpose and values lens

• Head Office allocations considered, but not included in business metrics


2 Reposition

15 Business units

1 Invest and grow

4 Exit

4 Business units

3 Transition

Current ability to generate sustainable RoE above CoE High Low

Mar

ket a

ttra

ctiv

enes

s

High

Low

The Business Performance Review (BPR) underpinned the decisions to determine the shape of the Group based on a rigorous bottom-up analysis of 75 business units

Business Performance Review

39 Business units

17 Business units


2 Reposition

15 Business units

1 Invest and grow

39 Business units

4 Exit

4 Business units

3 Transition

17 Business units

Key metrics 2012

Income (£bn) 4.5

PBT (£bn) 0.5

B3 RWA (£bn) 62

Key metrics 2012

Income (£bn) 22.0

PBT (£bn) 7.7

B3 RWA (£bn) 287

Key metrics 2012

Income (£bn) 0.4

PBT (£bn) (1.1)

B3 RWA (£bn) 92

Key metrics 2012

Income (£bn) 2.2

PBT (£bn) 1.0

B3 RWA (£bn) 21

18% RoE

Current ability to generate sustainable RoE above CoE High Low

Mar

ket a

ttra

ctiv

enes

s

High

Low

1All footnotes are listed in the appendix

BPR – financial output 1


Investment Bank Largest business in the Group and well positioned to be one of the few full-service global investment banks, leveraging on our strong UK and US positions to serve our clients

A leader in FICC

• Mature, at scale platforms

• Client-orientated flow business model

Large US and UK franchises, complemented by global reach

• Consistent growth in Equities and IBD in both US and UK

Focus on returns generation under Basel 3

• Proactive RWA management in FICC

• Right-sizing across all divisions to reflect market opportunities

• Profitable growth in the front-book

• Reduce legacy asset drag on returns


FICC A leading scale player with top tier position across products

• Strong and diversified business, well positioned to benefit from retrenchment of competitors

• Leader in client-driven flow businesses

• Scale player with operating efficiencies

• State-of-the art trading platform e.g. BARX

• Ongoing technology investment programme to maintain competitive advantage

• Proactive RWA management – plans to reduce legacy book from £79bn to £36bn in 2015

Best Flow House European FICC House of the Year

Best Multi-Asset Class Platform

Euromoney Awards 2012

1st

2nd

3rd

4th

5th

6th

7th

8th

9th

Rank

ing


Equities and Investment Banking Division Monetise market share gains in key markets

• Good progress in build-outs in a tough market environment

• Material market share gains in US and UK, which represent half the global revenue pool

• Growth based on ability to provide global reach to clients

• Focus on generating sustainable returns

• Though lower capital intensity, continue to scrutinise RWAs

• Right-size our footprint in some markets to reflect current market opportunity

• Reassess market conditions for improvement or worsening

#2 in US ECM

#1 in overall UK (ECM, M&A and DCM)

Highest ever ranking demonstrating growth2

Moved from #5 to #1 of overall UK IBD fees

2008-2012 Best Debt House

2012 share of reported Equities revenues vs. competitors2

Progression since 2010 Euromoney

Awards 2012

£bn


Structured Capital Markets

• Closing our Structured Capital Markets tax-related business unit

• We will not engage in complex structures where the primary objective is accessing tax benefits

• Incompatible with our purpose and the new tax principles we are publishing today


Investment Banking The Investment Bank will remain a large and very important part of the Group going forward

Single digit growth

£210-230bn

Mid 30s

14-15%

£11.7bn

£257bn3

39%

13.7%

FY 15 FY 12

Income

Proforma B3 RWA

Comp:Income

RoE4


Corporate Banking In 2010 the business was repositioned and turnaround is progressing well

Adjusted PBT

(314)

204

551

2010 2011 2012

• Deal decisively with legacy issues

• Exited Russia, Indonesia and India Retail

• Reduce legacy portfolios in Europe5

• Continue to strengthen our market leading UK franchise

• Leverage our home market in UK and increasingly in Africa

• Provide multinational clients with full suite of investment banking and corporate products

• Plan for modest income growth but significant RoE improvement to over 10% by 2015

£m

2010


UK RBB A leading franchise in our UK home market

• High performing despite macroeconomic environment

• Focus on deepening customer engagement and enhancing customer satisfaction, with innovation and technology

• Drive income growth in Business Banking and mortgages

• Sharpen focus on costs to drive reduction in Cost:Income ratio to mid-50s

• RoE target of high teens by 2015


Barclaycard Business model set up to drive growth

• Eighth largest consumer payments company in the world processing >£240bn annually

• Top three in all markets and businesses except the US (top ten) and gained or maintained market share two years in a row6

• Unique advantages of geographic diversification and scale on both the consumer issuing and merchant acquiring sides of payments

• Doubled PBT in the past three years and nearly 300% over the past six years

• Business model set up to drive growth through scale economics, diversification, world class analytics and innovation

• Plan for modest income growth while maintaining >20% RoE

Mobile

Card

Contactless


Wealth & Investment Management Top ten wealth manager globally7

• Business entering high return phase

• Fragmented global market represents significant opportunity

• Strategic investment plan over last three years is yielding results

• PBT has more than doubled since 2009

• Further plans to improve high-return areas and reposition lower-return areas (HNW Asia)

• Gamma investment at an advanced stage and now have IT platforms and bankers on board to deliver significant growth

• Income growth to generate significant increase in RoE to high teens


One Africa Area of higher economic growth

• One of the largest banks across Africa with a home market in South Africa and critical mass across most of our 12 African countries

• One Africa strategy is to build the ‘Go-To’ bank integrating our businesses across the continent

• Global, regional and local relationship banking model creating a compelling proposition for customers and clients

• Opportunities for growth by broadening our services in leading markets and investing in local geographies where local presence is essential

• Over £900m PBT generated across all African businesses in 2012


Africa RBB Underlying fundamentals still strong

• RBB is complemented by other African businesses, notably IB, Corporate and Cards

• Some areas of variable performance but clear plans to improve returns in those units

• Focus on building the most innovative, digital banking solutions in Africa, leveraging our global technology capabilities

• Achieve RoE above CoE by 2015


Europe RBB Restructure business, manage risks tightly and reduce costs

• Unsatisfactory returns, facing significant macro-economic challenges

• Businesses need to be repositioned

• Infrastructure and cost base to be reduced by 30%, near halving of 2010 run-rate costs

• Run-off of £23bn low-performing legacy assets, to be accelerated through dedicated asset optimisation team

• Target profitable mass affluent segment

• Plans driven by right-sizing of cost base to appropriate level of income and risk tightly managed

• Deliver a low, but positive RoE in 2015


Costs – Strategic battleground Cost target of £16.8bn in 2015 excluding £0.7bn cost to achieve

19.7 19.2

18.5 16.8

0.7 (1.7)

148,000

141,000 139,000

4,600

4,300 4,200

2010 2011 2012 2015 2015 Cost to achieve Target Cost reduction

Adjusted Operating Expenses (£bn)

Full Time Equivalents

Distribution Points


Group RWA progression Significant management actions to reduce low-returning RWAs, providing a buffer for further regulatory headwinds and investment in high return RWAsa

387

468

440

Dec 12 CRD IV and IFRS 10 impact

(estimated)

Jan 13 CRD IV

pro forma

Legacy Asset reductions

Other reductions

/optimisations

Net organic growth/further

regulatory change

Dec 15 Target

£bn

47

(47) 81

(28)

(75)


Capital structure Our target capital structure is intended to support CRD IV and ICB regulations

Barclays Q4 2012 Capital Structure

(Basel 2.5)

17.1% Total Capital Ratio

10.9% CT1

2.4% T1 (traditional)

3.8% T2

Barclays target CRD IV/ICB

Capital Structure

17.0% Total Capital Ratio

10.5% CET1

1.5% AT1

5.0% T2/Senior unsecured

2% CCN


Capital ratios Transitional CET1 in 2015 is expected to be well above 10.5%

10.9% 10.6%

8.2%

>10.5%

Reported Basel 2.5

CT1

Transitional Basel 3 CET1

Fully Loaded Basel 3 CET1

Target Transitional CET1 Ratio

Dec 12 Jan 13 Pro forma Dec 15

Group loan to deposit ratio 118% 110% 103-107%

Customer deposits/total funding

(excl. Absa)

47% 53% 60-65%

WAM wholesale funding (excl. liquidity pool)

58 mths

61 mths

Mid-50s mths


Superior funding and liquidity Funding outlook to 2015

2011 2012 2015 • Increased customer and client deposits

• Reduced reliance on wholesale unsecured funding

• Growing usage of secured funding, while maintaining reasonable encumbrance levels

• Dramatic improvement in wholesale funding costs since summer 2012, which has been sustained in 2013

• Overall funding costs expected to fall

• Liquidity buffer targeted to reduce to £125-150bn in 2015, with the projected annual cost expected to fall to £300m9

Reduce risk weighted assets by £75bn gross by 2015 and invest in higher return businesses

Reduce operating expenses by £1.7bn by 2015 through a new approach to strategically manage costs

Reposition the European and Asian equities and IBD businesses


Key actions

Grow our UK, US and African franchises

Restructure the European retail and corporate businesses

Focus on activities which support our customers and clients

Close Structured Capital Markets tax-related business unit


Sustain Forward Momentum 0-5 YEARS

Controls Cost

Culture Rewards



Culture

Rewards

Controls

Cost

• Embed Goal, Purpose and Values

• Tone at the top

• Leadership framework

• Balanced scorecard



Culture

Rewards

Controls

Cost

• Balanced scorecard

• Maintain principles – pay for performance and for best talent

• Continue to adjust income distribution

• Target Group compensation to net income ratio in mid 30s



Culture

Rewards

Controls

Cost

• Starts with individual responsibility – culture

• Strong oversight from world-class compliance function

• Have made a start – more to do

• Getting balance right requires training, investment and integration



Culture

Rewards

Controls

Cost

• Strategic battleground for the next decade

• Requires fundamentally different approach

• Technology key

• Have already started the journey

Turnaround







Transform overview

Turnaround






0-9 MONTHS

0-3 YEARS

0-5 YEARS


Risks

Legacy issues

Significant change in Regulation

Failure to Execute

Major Economic Downturn


Risks – UK regulation

Ring-fence based on minimum liabilities with appropriate asset mix

Will establish operating service company

Some uncertainty remains

Best current estimate is that ongoing cost lower than earlier estimates

Confident could adapt Group structure if required

Legacy issues


Failure to Execute



Risks – legacy issues

Legacy issues


Failure to Execute



Risks – failure to execute

Only risk under our control

Rests squarely with me and my team

Recognise you need to be able to monitor progress

Legacy issues


Failure to Execute



Clear 2015 financial targets

Dividend Payout Ratio 19% 30%

Core Capital Ratio 10.9% >10.5%

Cost:Income Ratio 64% mid-50s

Pro forma B3 RWAs £468bn3 £440bn

Operating Expenses £18.5bn £16.8bn

2012 Results 2015 Targets

Return on Equity 7.8% > Group

CoE

Balanced scorecard

• Embed purpose and values

• Assessing performance against

• Customers and clients, company, conduct, colleagues and citizenship


Commitments – non-financial

Financial reporting

• Provide greater disclosure and transparency

• Committed to industry-leading financial reporting


Our goal


Barclays PLC Becoming the ‘Go-To’ bank

12 February 2013

NEW IMAGE TO BE ADDED

Documents

Barclays PLC · 2013. 2. 12. · Single digit growth . £210-230bn Mid 30s 14-15% . £11.7bn . £257bn3 Proforma. 39% . 13.7%. RoE. FY 12 . FY 15 . ... • Gamma investment at an